<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended June 30, 1994 Commission file number 1-9334
Baldwin Technology Company, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3258160
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
65 ROWAYTON AVENUE, ROWAYTON, CONNECTICUT 06853
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 203-838-7470
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange
on Which Registered
CLASS A COMMON STOCK AMERICAN STOCK EXCHANGE
PAR VALUE $.01
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
Aggregate market value of the voting stock held by non-affiliates of
the registrant as of August 31, 1994 was $77,999,779.
Number of shares of Common Stock outstanding at August 31, 1994:
Class A Common Stock 15,936,230
Class B Common Stock 1,865,000
----------
Total 17,801,230
DOCUMENTS INCORPORATED BY REFERENCE
Items 10, 11, 12 and 13 are incorporated by reference from the Baldwin
Technology Company, Inc. Proxy Statement for the 1994 Annual Meeting of
Stockholders to be held on November 17, 1994 into Part III of this Form 10-K.
(A definitive proxy statement will be filed with the Securities and Exchange
Commission within 120 days after the close of the fiscal year covered by this
Form 10-K.)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Item 1. Business 1
Item 2. Properties 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 6
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters 7
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 8. Financial Statements and Supplementary Data 16
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 38
Item 10. Directors, Executive Officers and Key Employees of the
Registrant 38
Item 11. Executive Compensation 38
Item 12. Security Ownership of Certain Beneficial Owners and
Management 38
Item 13. Certain Relationships and Related Transactions 38
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K 39
</TABLE>
<PAGE> 3
PART I
ITEM 1. BUSINESS
Baldwin Technology Company, Inc. ("Baldwin" or the "Company") is a
leading international manufacturer of material handling, accessory, control and
pre-press equipment for the printing industry. The Company offers its
customers a broad range of products designed to enhance the productivity and
increase the cost-efficiency of printing presses while addressing the
environmental concerns and safety issues involved in the printing process.
Baldwin's products include cleaning systems, fountain solution and ink control
systems, press and web control systems, web and material handling systems,
newspaper inserter equipment and automated imposition and plate exposure
equipment.
The Company sells its products both to printers to upgrade the
quality and capability of existing presses and to printing press manufacturers
which incorporate the Company's products with their own equipment for sale to
printers. The Company has product development and manufacturing facilities, as
well as sales and service operations, in its three major sectors: the Americas,
Europe and Asia Pacific.
INDUSTRY OVERVIEW
Baldwin operates in a highly fragmented market. The Company defines
its business as that of providing material handling, accessory, control and
pre-press equipment for the printing industry. The Company believes that it
produces the most complete line of material handling, accessory, control and
pre-press equipment for the printing industry.
The Company's products are used by printers engaged in all printing
processes including lithography, gravure, letterpress and flexography. The
Company's products are designed to improve the printing processes in terms of
both quality of the finished product as well as the efficiency. The largest
share of its business is in offset printing. Offset printing is the largest
segment of the domestic printing market and is used primarily for printing
magazines, business forms, catalogs, greeting cards, packaging and newspapers.
Although offset printing represents a significant segment of the U.S.
commercial printing industry, it is not currently the most significant segment
of the international printing market. The Company believes that the future
growth of this international market will be attributable in large part to the
increased use of offset printing. The Company has established operations in
each of its three major sectors to take advantage of growth opportunities in
these markets. Baldwin's worldwide operations enable it to closely monitor new
product developments in different printing markets and to introduce new
products, or adapt existing ones, to meet the printing requirements of specific
local markets throughout the world.
PRINCIPAL PRODUCTS
The Company manufactures and sells more than 150 different products
to printers and printing press manufacturers. The Company's product
development is focused on the needs of the printer. Typically, it takes a new
product several years after its introduction to make a significant contribution
to the Company's net sales. Initially, after the introduction of a new
product, the Company's marketing efforts usually focus on printers. With the
exception of the Company's Kansa and Misomex product lines, as a product
progresses through its life cycle, the percentage of sales to printing press
manufacturers generally increases as the product's acceptance by the industry
increases and printers begin to specify certain of the Company's products as
part of their accessory equipment package when ordering new presses. The
Company's Kansa and Misomex product lines are primarily marketed to printers.
Historically, the Company's products have had
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a long life cycle as the Company continually upgrades and refines its product
lines to meet customer needs and changes in printing press technology. The
Company's product lines have expanded about equally through both internal
product development and acquisitions of product lines and companies.
The Company's products range in price from under $100 to
approximately $325,000. Baldwin's principal products are:
CLEANING SYSTEMS. The Company's first Cleaning Systems product was
the Press Washer which cleaned the ink train of an offset press. Additional
Cleaning Systems products include the Automatic Blanket Cleaner, Newspaper
Blanket Cleaner and Chill Roll Cleaner and more recently the Guide Roll
Cleaner, which all reduce paper waste, volatile organic compound ("VOC")
solvent usage and press downtime, as well as improve productivity, print
quality and safety of operation for the press operator. In the fiscal years
ended June 30, 1994, 1993 and 1992, net sales of Cleaning Systems represented
approximately 32.6%, 37.8% and 37.6% of the Company's net sales, respectively.
FOUNTAIN SOLUTION CONTROL SYSTEMS. Fountain Solution Control Systems
control the supply, temperature, cleanliness, chemical composition and certain
other characteristics of water used in the offset printing process. Among the
most important of these products are the Company's Refrigerated Circulators,
which circulate and control the fountain solution within the printing press.
In the fiscal years ended June 30, 1994, 1993 and 1992, net sales of Fountain
Solution Control Systems represented approximately 12.6%, 11.7% and 14.8% of
the Company's net sales, respectively.
INK CONTROL SYSTEMS. The Company's Ink Control Systems control and
regulate many aspects of the ink feed system on a printing press. These
products include Ink Agitators, Ink Mixers and Ink Level Systems which reduce
wasted ink, paper and VOC solvent usage and allow for the use of recycled ink
containers.
IN-LINE FINISHING SYSTEMS. The Company's In-line Finishing products
allow printers to perform automatically, at press speeds, functions which
previously required special handling in the bindery. These functions include
numbering, perforating, gluing and cutting.
MATERIAL HANDLING/STACKING SYSTEMS. Baldwin's Material
Handling/Stacking Systems automate the handling of the printed product.
Counting, stacking, book-packing and compressing printed materials help to
increase press utilization and productivity, reduce and control waste and
decrease pressroom labor requirements.
WEB CONTROL AND PRESS PROTECTION SYSTEMS. The Company's Web Control
Systems improve print quality by precisely controlling the flow of paper
through a web offset press while also reducing waste and increasing press
productivity. The Company's Press Protection Systems, designed in response to
the increasing number of web leads used in printing today's colorful
newspapers, provide an auto-arming electronic package offering high quality
press protection in the event of a web break.
WEB HANDLING SYSTEMS. The Company's Web Handling Systems, produced
by its Enkel and Amal subsidiaries, unwind, rewind and splice paper and other
materials supplied to presses in webs and also control the tension and position
of web materials. This equipment eliminates unnecessary press stoppages and
allows a more efficient flow of printed work. In the fiscal years ended June
30, 1994, 1993 and 1992, net sales of Web Handling Systems represented
approximately 12.9%, 11.6% and 8.9% of the Company's net sales, respectively.
NEWSPAPER INSERTER EQUIPMENT AND MAILING MACHINE SYSTEMS. The
Company's Newspaper Inserter Equipment collates and inserts sections and
advertising
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material into newspapers. Its Mailing Machine Systems fold, label and prepare
newspapers for mailing.
AUTOMATED IMPOSITION, PLATE EXPOSURE AND PLOTTING AND CUTTING
SYSTEMS. The Company's Automated Imposition and Plate Exposure Systems are
used by printers to automate a labor intensive operation that results in the
high quality and accuracy of images on plates used in the offset printing
process. The Company's Plotting and Cutting systems are widely used in the
packaging and corrugated carton industries and are designed to plot, cut,
crease and mill a wide range of materials. In the fiscal years ended June 30,
1994, 1993 and 1992, net sales of Automated Imposition and Plate Exposure
Systems represented approximately 14.0%, 12.8% and 12.8% of the Company's net
sales, respectively.
WORLDWIDE OPERATIONS
The Company believes that it is the only manufacturer of material
handling, accessory, control and pre-press equipment for the printing industry
which has complete product development, manufacturing and marketing facilities
in three major sectors: the Americas, Europe and Asia Pacific.
The following table sets forth the percentages of the Company's net
sales attributable to its three sectors in the fiscal years ended June 30,
1994, 1993 and 1992:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Americas 42.5% 36.9% 31.9%
Europe 29.5 35.1 37.9
Asia Pacific 28.0 28.0 30.2
---- ----- -----
Total 100.0% 100.0% 100.0%
====== ====== ======
</TABLE>
In its Americas sector, the Company operates in North, Central and
South America through its four U.S. subsidiaries. In its European sector, the
Company operates through its German subsidiary, which was established in 1972,
and through its other operating subsidiaries in Sweden, the Netherlands and
England. In its Asia Pacific sector, the Company operates through its
subsidiaries in Japan (established in 1968), Hong Kong, China and Australia.
All of the Company's subsidiaries are wholly owned.
For additional information relating to the Company's operations in its
three principal sectors, see Note 6 of Notes to Consolidated Financial
Statements of the Company.
ACQUISITION STRATEGY
An important element of the Company's growth strategy is to make
strategic acquisitions of companies and product lines in related business
areas. The Company's acquisition strategy involves (i) acquiring new material
handling, accessory, control and pre-press products for the printing industry
which can be sold through the Company's own, or the acquired entity's,
distribution network and which can benefit from the Company's manufacturing
expertise and financial support; (ii) entering new end-user market segments or
extending existing markets; and (iii) acquiring companies which contribute new
products to the Company or which help the Company manufacture and sell its
products outside the United States. After it makes an acquisition, the Company
typically supports the existing management of the acquired entity and
participates actively with that management in implementing operational
strategies with a view to enhancing the entity's sales, productivity and
operating results.
3
<PAGE> 6
MARKETING, SALES AND SUPPORT
MARKETING. The Company markets its products in almost all developed
countries throughout the world. Although Baldwin markets a similar line of
products in each of these countries, its product mix and distribution channels
vary from country to country. The Company has 100 direct sales representatives
in its three principal markets and approximately 185 dealers worldwide. The
Company markets its products to printing press manufacturers and to printers.
Baldwin estimates that for the fiscal year ended June 30, 1994 approximately
41% of its net sales were to printing press manufacturers and approximately 59%
of its net sales were directly to printers.
In its Americas sector, the Company markets its products primarily
through direct sales representatives. In its European sector, the Company
utilizes both direct sales representatives and an extensive dealer network. In
its Asia Pacific sector, the Company markets its products through direct sales
representatives in Japan, Hong Kong, China and Australia and through dealers
throughout the rest of Asia.
SUPPORT. The Company is committed to after-sales service and support
of its products throughout the world. Baldwin employs approximately 113
service technicians, who are complemented by product engineers, to provide
field service for the Company's products on a global basis.
BACKLOG. The Company's backlog was $58,455,000 as of June 30, 1994,
$56,088,000 as of June 30, 1993 and $53,191,000 as of June 30, 1992. Backlog
represents product orders which Baldwin has received from its customers under
valid contracts or purchase orders.
CUSTOMERS. The Company has a diverse customer base. In the fiscal
year ended June 30, 1994 no customer accounted for 10% of the Company's net
sales. In the fiscal year ended June 30, 1993, one customer accounted for
11.3% of the Company's net sales. The ten largest customers of Baldwin
accounted for less than 41% of the Company's net sales for the fiscal year
ended June 30, 1994. Sales of Baldwin's products are not seasonal. However,
its sales have traditionally been greater in the second six months of its
fiscal year than in the first six months of its fiscal year.
RESEARCH, DEVELOPMENT AND ENGINEERING
The Company believes its research and development effort has been an
important factor in establishing and maintaining its leadership position in the
field of material handling, accessory, control and pre-press equipment for the
printing industry. Baldwin has devoted substantial efforts to adapt its
products to almost all models and sizes of printing presses in use worldwide.
The Company has product development facilities at each of its
manufacturing locations. This decentralized approach to research and
development permits the Company to react quickly to meet the needs of its
customers.
Baldwin employs approximately 149 persons whose primary function is
new product development or modification of existing products. The Company's
total expenditures for research, development and engineering for the fiscal
years ended June 30, 1994, 1993 and 1992 were $15,409,000, $16,711,000 and
$16,970,000, respectively, representing approximately 8% of the Company's net
sales in each year.
PATENTS
The Company owns and licenses a number of patents and patent
applications relating to a substantial number of Baldwin's products. These
products represented a substantial portion of the Company's net sales in the
fiscal year ended June 30, 1994. The Company's patents expire at different
times through June, 2009; however, the expiration of patents in the near future
is not expected
4
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to have a material adverse effect on the Company's sales. The Company has also
relied upon and intends to continue to rely upon unpatented proprietary
technology, including the proprietary engineering required to adapt its
products to a wide range of models and sizes of printing presses. The Company
believes its rights under, and interests in, its patents and patent
applications, as well as its proprietary technology, are sufficient for its
business as currently conducted.
MANUFACTURING
The Company conducts its manufacturing operations through a number of
operating subsidiaries in each of its three sectors. In North America, the
Company's Baldwin Americas Corporation has subsidiaries with manufacturing
facilities located on the East Coast, in the Midwest and on the West Coast.
In Europe, the Company has subsidiaries with manufacturing and
assembly facilities in Germany, Sweden and the United Kingdom. These
facilities manufacture and assemble complete lines of products that are in
demand by printers worldwide and by printing press manufacturers in Europe for
shipment throughout the world. The Company also has sales/service facilities
in Germany, Sweden and the United Kingdom. Baldwin's Japanese and Chinese
subsidiaries manufacture and assemble the Company's products and, with sales
support from the Company's Hong Kong and Australian subsidiaries, market them
throughout Asia.
In general, raw materials required by the Company can be obtained from
various sources in the quantities desired. The Company has no long-term supply
contracts and does not consider itself dependent on any individual supplier.
The nature of most operations of the Company is such that there is
little, if any, negative effect upon the environment, and the Company has not
experienced any serious problems in complying with environmental protection
laws and regulations.
COMPETITION
The printing press accessory industry is highly fragmented. Although
the Company believes it produces the most complete line of material handling,
accessory, control and pre-press equipment for the printing industry, numerous
companies manufacture and sell products that compete with one or more of the
Company's products. The Company competes from time to time with printing press
manufacturers who, as a part of their businesses, produce material handling,
accessory and control equipment for the printing industry and who generally
have larger staffs and greater financial resources than the Company.
The Company competes by offering customers a broad product line,
coupled with a well-known reputation for the reliability of its products and
its commitment to service and after-sale support. Some of the Company's
products with patent protection have little or no direct competition. The
Company's ability to compete effectively in the future will depend upon the
continued reliability of its products, after-sale service, ability to keep its
market position as its patents expire and ability to develop new products which
meet the demands of the printing industry.
EMPLOYEES
The Company employs 1,055 persons, 505 of whom are production
employees and approximately 142 of whom are management and administrative
employees. Approximately 34% of the Company's 126 employees in its Baldwin
Graphic Products Division in the United States are represented by the
International Association of Machinists and Aerospace Workers under a contract
which expires on November 9, 1996. Approximately 29 and 27 of the Company's
120 employees at its Misomex AB subsidiary are represented by the Swedish
Industrial Salaried Employees'
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Association and the Swedish Metal Workers' Union, respectively, under contracts
for indefinite terms. At Amal AB in Sweden, 3 employees are represented by
Ledarna (SALF), 28 employees are represented by Lundsorganisationen, Metall and
20 employees are represented by Tjanstemannene Central Organisation, Svenska
Industritjanstemanna Forbundet under contracts with indefinite terms. At
Baldwin Gegenheimer GmbH, a German subsidiary of the Company, approximately 44
of the Company's 224 employees are represented by the IG Metall (Metalworker's
Union) under a contract with indefinite terms. The Company considers relations
with its employees and with its unions to be good.
ITEM 2. PROPERTIES
The Company's facilities are divided among its three sectors and total
approximately 632,000 square feet.
In North America, manufacturing and office space leased by the Company
and its subsidiaries total approximately 280,000 square feet of which space
approximately 8,400 square feet is sublet. An additional 52,800 square feet of
office and manufacturing space is owned by Kansa Corporation, subject to an
Industrial Revenue Bond.
In Europe, the Company has leased facilities totalling approximately
204,000 square feet comprised of office and manufacturing facilities in Germany
(approximately 113,000 square feet), Sweden (approximately 64,000 square feet),
the United Kingdom (approximately 23,000 square feet) and the Netherlands
(approximately 4,000 square feet). In addition, the Company owns manufacturing
facilities in Sweden totalling approximately 61,000 square feet.
In Asia, the Company leases office and manufacturing facilities of
approximately 30,700 square feet in Japan and office facilities aggregating
approximately 2,800 square feet in Hong Kong, Beijing, Melbourne and Sydney.
The Company believes that its facilities are adequate to carry on its
business as currently conducted.
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Company is a party
or to which any of its property is subject, other than routine litigation
incidental to the Company's business or which is covered by insurance and which
would not have a material adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders since November
18, 1993.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
(a) PRICE RANGE OF CLASS A COMMON STOCK
The Company's Class A Common Stock is traded on the American Stock
Exchange ("AMEX") under the symbol "BLD". The following chart sets forth, for
the calendar periods indicated, the range of closing prices for the Class A
Common Stock on the AMEX, as reported by the AMEX.
<TABLE>
<CAPTION>
1992 HIGH LOW
- - - - - ---- ------ -----
<S> <C> <C>
First Quarter 6.50 4.625
Second Quarter 4.875 3.75
Third Quarter 4.25 3.625
Fourth Quarter 4.875 3.5625
</TABLE>
<TABLE>
<CAPTION>
1993
- - - - - ----
<S> <C> <C>
First Quarter 5.75 4.125
Second Quarter 5.00 3.50
Third Quarter 4.625 3.375
Fourth Quarter 5.375 4.50
</TABLE>
<TABLE>
<CAPTION>
1994
- - - - - ----
<S> <C> <C>
First Quarter 5.75 4.875
Second Quarter 5.625 4.25
Third Quarter (through September 13) 5.50 4.25
</TABLE>
(b) CLASS B COMMON STOCK
The Company's Class B Common Stock has no established public trading
market.
(c) APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
As of August 31, 1994, the approximate number of record holders
(excluding those listed under a nominee name) of the Company's Class A and
Class B Common Stock totaled 603 and 26, respectively. The Company believes,
however, that there are in excess of 4,400 beneficial owners of its Class A
Common Stock.
(d) DIVIDENDS
Declarations of dividends depend upon the earnings and financial
position of the Company and are within the discretion of the Company's Board of
Directors. No dividend in cash or property can be declared or paid on shares
of Class B Common Stock unless simultaneously therewith there is declared or
paid, as the case may be, a dividend in cash or property on shares of Class A
Common Stock of at least 105% of the dividend on shares of Class B Common Stock
(see Note 11--Notes to Consolidated Financial Statements). The Company
declared dividends on the Class A Common Stock and the Class B Common Stock for
the fiscal year ended June 30, 1992 in the amounts of $.012 and $.01 per share.
See Note 9--Notes to Consolidated Financial Statements and "Liquidity and
Capital Resources" within "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for restrictions on dividends.
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ITEM 6. SELECTED FINANCIAL DATA
The Company's income statement and balance sheet data as they relate
to the years ended June 30, 1994, 1993, 1992, 1991 and 1990, have been derived
from the Company's audited financial statements (including the Consolidated
Balance Sheet of the Company at June 30, 1994 and 1993 and the related
Consolidated Statement of Income of the Company for the years ended June 30,
1994, 1993 and 1992 appearing elsewhere herein). The following information
should be read in conjunction with the aforementioned financial statements and
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations".
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales $198,055 $215,759 $221,474 $218,767 $180,168
Cost of goods sold (1) 130,051 142,564 147,071 137,150 113,684
-------- -------- -------- -------- --------
Gross profit 68,004 73,195 74,403 81,617 66,484
Selling, general and
administrative expenses(2) 42,068 42,532 41,575 42,901 28,860
Research, development
and engineering
expenses 15,409 16,711 16,970 16,007 13,666
Restructuring charge 880 1,706
-------- -------- -------- -------- --------
Operating income 10,527 13,072 14,152 22,709 23,958
Interest expense 3,694 5,850 7,167 7,737 2,077
Interest income 381 285 483 699 949
Other (income) expense,
net (887) (462) (809) (3,095) (915)
-------- -------- -------- -------- --------
Income from continuing
operations before taxes 8,101 7,969 8,277 18,766 23,745
-------- -------- -------- -------- --------
Provision for income taxes 3,969 4,303 7,507 10,205 11,753
Income from continuing
operations 4,132 3,666 770 8,561 11,992
(Loss) income from
discontinued operations (1,842) (1,683) 154
Loss on disposal of
discontinued operations (5,894)
Extraordinary loss on
extinguishment of debt (1,105)
Cumulative effect of
change in accounting
for income taxes 1,229
-------- -------- -------- -------- --------
Net income (loss) $ 4,132 $ 3,790 $ (6,966) $ 6,878 $ 12,146
======== ======== ======== ======== ========
</TABLE>
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<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Income (loss) per share
from:
Continuing operations $ 0.23 $ 0.21 $ 0.05 $ 0.50 $ 0.69
Discontinued operations (0.11) (0.10) 0.01
Disposal of discontinued
operations (0.35)
Extinguishment of debt (0.06)
Cumulative effect of
change in accounting
for income taxes 0.07
-------- -------- -------- -------- --------
Net income (loss) per
share $ 0.23 $ 0.22 $ (0.41) $ 0.40 $ 0.70
======== ======== ======== ======== ========
Cash dividends declared
per share
Class A Common Stock $ 0.012 $ 0.09 $ 0.10
======== ======== ========
Class B Common Stock $ 0.01 $ 0.057 $ 0.095
======== ======== ========
Weighted average shares
outstanding 18,015 17,593 17,106 17,378 17,423
======== ======== ======== ======== ========
BALANCE SHEET DATA
(AS OF THE END OF
EACH PERIOD):
Working capital $ 45,098 $ 34,414 $ 34,313 $ 35,245 $ 36,435
Total assets 187,216 188,479 206,936 212,683 142,967
Short-term debt 6,033 16,257 13,828 24,476 9,363
Long-term debt 32,230 25,998 36,668 36,019 1,686
Shareholders' equity 88,080 82,864 85,135 83,114 79,277
</TABLE>
(1) Includes all technical service expense, a portion of which was
previously classified as an item of Operating Expenses in prior financial
statement presentations. (See Note 4--Notes to Consolidated Financial
Statements).
(2) Includes amortization expense for intangible assets which was
previously classified as an item of Other Income and Expense in prior financial
statement presentations. (See Note 4--Notes to Consolidated Financial
Statements).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL. The Company does not consider its business to be seasonal;
however, its sales have traditionally been greater in the second six months of
its fiscal year than in the first six months of its fiscal year. The following
schedule shows the Company's net sales for six month periods over the last five
fiscal years to reflect the comparison.
<TABLE>
<CAPTION>
FIRST SIX SECOND SIX
FISCAL YEAR MONTHS MONTHS
- - - - - ----------- ---------- ----------
<S> <C> <C>
1994 $ 91,858,000 $106,197,000
1993 104,376,000 111,383,000
1992 108,310,000 113,164,000
1991 106,601,000 112,166,000
1990 82,429,000 97,739,000
</TABLE>
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RESULTS OF OPERATIONS
The following tables set forth certain of the items (expressed as a
percentage of net sales) included in the Selected Financial Data and should be
read in connection with the Consolidated Financial Statements of the Company
including the Notes to such Statements, presented elsewhere in this report.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 65.7 66.1 66.4
Gross profit 34.3 33.9 33.6
Selling, general and administrative expenses 21.2 19.7 18.8
Research, development and engineering expenses 7.8 7.7 7.7
Restructuring Charge .4 .8
Operating income 5.3 6.1 6.3
Interest expense 1.9 2.7 3.2
Interest income .2 .1 .2
Other (income) expense, net (.5) (.2) (.4)
Income from continuing operations before taxes 4.1 3.7 3.7
Provision for income taxes 2.0 2.0 3.4
Income from continuing operations 2.1 1.7 .3
Loss from discontinued operations (.8)
Loss on disposal of discontinued operations (2.6)
Extraordinary (loss) on extinguishment of debt (.5)
Cumulative effect of change in accounting for
income taxes .6
Net income (loss) 2.1% 1.8% (3.1)%
</TABLE>
COMPANY'S FISCAL YEAR ENDED JUNE 30, 1994 VERSUS FISCAL YEAR ENDED JUNE 30,
1993
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
consolidated financial statements.
NET SALES. Net sales for the fiscal year ended June 30, 1994
decreased by $17,704,000, or 8.2%, to $198,055,000 from $215,759,000 for the
fiscal year ended June 30, 1993. The decrease in sales for 1994 was due
primarily to product volume. Currency rate fluctuations attributable to the
Company's overseas operations accounted for a decrease of $3,195,000 in net
sales for the current year.
In terms of local currency, sales changes were mixed within the
European Sector. Sales increased in Sweden by 24.4%, increased in the United
Kingdom by 1.5% and decreased in Germany by 17.7%. In the Company's Asia
Pacific Sector, local currency sales decreased 20.4% in Japan but increased in
Australia, Hong Kong and China. In the Americas Sector net sales increased by
4% for the year due to a continued strengthening in the U.S. printing equipment
market.
GROSS PROFIT. Gross profit for the fiscal year ended June 30, 1994
was $68,004,000 (34.3% of net sales), as compared to $73,195,000 (33.9% of net
sales) for the fiscal year ended June 30, 1993, a decrease of $5,191,000 or
7.1%. The primary reason for the decline in gross profit was decreased volume.
Currency rate fluctuations decreased gross profit by $930,000.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $42,068,000 (21.2% of net sales) for the fiscal
year ended June 30, 1994, as compared to $42,532,000 (19.7% of net sales) for
the prior year a decrease of $464,000. Currency rate fluctuations reduced the
10
<PAGE> 13
current year's expenses by $711,000. Although the Company continued to
implement cost reduction and control programs during fiscal 1994, the benefits
derived from these actions were largely offset by an increase in bad debt
expense. During fiscal 1994 the Company increased its reserve for bad debts by
approximately $1,300,000 relating to a Japanese customer which filed for
reorganization. Selling expenses increased in fiscal 1994 also, due to
increased trade show expenses, new product introduction costs and a planned
increase in marketing and selling personnel.
INTEREST EXPENSE. Interest expense for the fiscal year ended June 30,
1994 was $3,694,000, as compared to $5,850,000 for the fiscal year ended June
30, 1993. Interest expense decreased primarily as a result of the Company
refinancing its debts at lower interest rates and a reduction in the amount of
outstanding indebtedness. Foreign currency exchange effects reduced interest
expense by $635,000. Interest income was $381,000 and $285,000 for the fiscal
years ended June 30, 1994 and June 30, 1993, respectively. Other income was
$887,000 and $462,000 for the fiscal years ended June 30, 1994 and June 30,
1993, respectively, with the increase primarily due to increased royalty
income.
INCOME TAXES. The Company's effective tax rate was 49% for the fiscal
year ended June 30, 1994 as compared to 54% for the fiscal year ended June 30,
1993. The effective rate reflects the impact of foreign source income which is
taxed at substantially higher rates than domestic income. The decrease from
the prior year's effective rate is primarily caused by income generated by
domestic operations which is taxed at rates which are generally lower than
foreign rates and the recognition of previously unrecognized deferred tax
benefits (see Note 10--Notes to Consolidated Financial Statements).
NET INCOME. Net income for the fiscal year ended June 30, 1994
increased to $4,132,000 from $3,790,000 for the fiscal year ended June 30,
1993. Net income for the year ended June 30, 1993 includes an extraordinary
charge on extinguishment of debt of $1,105,000 or $0.06 per share and a benefit
for the cumulative effect of a change in accounting for income taxes of
$1,229,000 or $0.07 per share (see Notes 9 and 10--Notes to Consolidated
Financial Statements). Net income per share was $0.23 and $0.22 for the fiscal
years ended June 30, 1994 and 1993, respectively. Weighted average equivalent
shares outstanding during the fiscal years ended June 30, 1994 and June 30,
1993 were 18,015,295 and 17,592,845, respectively.
COMPANY'S FISCAL YEAR ENDED JUNE 30, 1993 VERSUS FISCAL YEAR ENDED JUNE 30,
1992
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
consolidated financial statements.
NET SALES. Net sales for the fiscal year ended June 30, 1993
decreased by $5,715,000, or 2.6%, to $215,759,000 from $221,474,000 for the
fiscal year ended June 30, 1992. Currency rate fluctuations attributable to
the Company's overseas operations accounted for an increase of $6,184,000 in
net sales for the current year, substantially all of which was in the Asia
Pacific Sector. The overall decrease in sales for 1993 was due primarily to
product volume.
In terms of local currency, the Company's European Sector net sales
decreased 9.6% as a result of a slowdown in that sector's German printing
equipment market. The sector's Swedish, Dutch and British markets either
increased or equalled prior year sales. In the Company's Asia Pacific Sector,
local currency sales decreased 15.9% due to the economic slowdown in the
Japanese market. Domestic net sales increased by 13.5% for the year due to a
strengthening in the U.S. printing equipment market experienced throughout the
Company's Americas Sector.
11
<PAGE> 14
GROSS PROFIT. Gross profit for the fiscal year ended June 30, 1993
was $73,195,000 (33.9% of net sales), as compared to $74,403,000 (33.6% of net
sales) for the fiscal year ended June 30, 1992, a decrease of $1,208,000 or
1.6%. Currency rate fluctuations favorably impacted margins by $1,887,000, but
the effect was offset by lower sales levels.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $42,532,000 (19.7% of net sales) for the fiscal
year ended June 30, 1993, as compared to $41,575,000 (18.8% of net sales) for
the prior year. Currency rate fluctuations added $463,000 to the current
year's expenses. The remaining increase was due to increased bad debt
allowances which offset the benefits of cost reduction and control programs.
Total operating expenses for the year ended June 30, 1993 include a
restructuring charge (see Note 5--Notes to Consolidated Financial Statements)
of $880,000 relating to workforce rationalization and were impacted unfavorably
by $997,000 due to currency rate fluctuations.
INTEREST EXPENSE. Interest expense for the fiscal year ended June 30,
1993 was $5,850,000, as compared to $7,167,000 for the fiscal year ended June
30, 1992. Decreased interest expense, which is primarily related to
acquisition financing, is mainly due to reductions in outstanding indebtedness
and declining interest rates. Foreign currency exchange effects were minimal.
Interest income was $285,000 and $483,000 for the fiscal years ended June 30,
1993 and June 30, 1992, respectively.
INCOME TAXES. The Company's effective tax rate was 54% for the fiscal
year ended June 30, 1993 as compared to 90.7% for the fiscal year ended June
30, 1992. The effective rate reflects the impact of foreign source income
which is taxed at substantially higher rates than domestic income. The
decrease from the prior year's effective rate is primarily caused by income
generated by domestic operations which is taxed at rates which are generally
lower than foreign rates and the benefit of previously unrecognized deferred
taxes (see Note 10--Notes to Consolidated Financial Statements).
INCOME FROM CONTINUING OPERATIONS. Income from continuing operations
for the fiscal year ended June 30, 1993 increased to $3,666,000 from $770,000
for the fiscal year ended June 30, 1992. Income per share from continuing
operations was $0.21 and $0.05 for the fiscal years ended June 30, 1993 and
1992, respectively. Weighted average equivalent shares outstanding during the
fiscal years ended June 30, 1993 and June 30, 1992 were 17,592,845 and
17,105,750, respectively.
NET LOSS OR INCOME. Net income for the year ended June 30, 1993 of
$3,790,000 or $0.22 per share includes the extraordinary charge on
extinguishment of debt of $1,105,000 or $0.06 per share and a benefit for the
cumulative effect of a change in accounting for income taxes of $1,229,000 or
$0.07 per share (see Notes 9 and 10--Notes to Consolidated Financial
Statements) and increased by $328,000 due to currency rate fluctuations. For
the year ended June 30, 1992, the net loss of $6,966,000 or $0.41 per share
included the net loss from discontinued operations (see Note 3--Notes to
Consolidated Financial Statements) of $1,842,000 or $0.11 per share as well as
the loss on disposal of the discontinued operations of $5,894,000 or $0.35 per
share.
IMPACT OF INFLATION
The Company's results are affected by the impact of inflation on
manufacturing and operating costs. Historically, the Company has used selling
price adjustments, cost containment programs and improved operating
efficiencies to offset the otherwise negative impact of inflation on its
operations.
12
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
On October 29, 1993, the Company completed the refinancing of it's
long-term debt with the issuance of $25,000,000 of 8.17% senior notes (the
"Senior Notes") due October 29, 2000. The Senior Notes require the payment of
interest only for the first three years with equal annual principal repayments
of $6,250,000 in each of years four through seven. The proceeds of the Senior
Notes along with approximately $5,000,000 in available cash were used to retire
all of the Company's indebtedness under a Credit Agreement with a syndicate of
banks dated September 27, 1990.
In November, 1993, the Company entered into a three-year $20,000,000
Revolving Credit Agreement (the "Revolver") with NationsBank of North Carolina
as Agent. The Senior Notes and the Revolver require the Company to maintain
certain financial covenants and have certain restrictions regarding the payment
of dividends, limiting them throughout the terms of the Senior Notes and the
Revolver to $3,000,000 plus 50% of the Company's net income after June 30,
1993. In addition, the Company was required to pledge certain of the shares of
it's domestic subsidiaries as collateral for both the Senior Notes and the
Revolver.
Both the Senior Notes and the Revolver require the Company to maintain
a ratio of current assets to current liabilities (as those terms are defined in
the agreements) of not less than 1.4 to 1. At June 30, 1994, this ratio was
1.77 to 1.
The net cash used by investing activities increased by $2,093,000 from
$2,370,000 at June 30, 1993 to $4,463,000 at June 30, 1994 primarily due to the
capitalization of $1,203,000 of costs associated with the Company's debt
refinancing as well as a $1,383,000 increase in the recorded amount of prepaid
income taxes. The net cash used by financing activities increased during the
period ended June 30, 1994 as compared to the period ended June 30, 1993
primarily due to the differential between sales and purchases of treasury
stock.
The Company's working capital increased by $10,684,000 or 31% from
$34,414,000 at June 30, 1993 to $45,098,000 at June 30, 1994. The net increase
was largely attributable to decreases in loans payable and the current-portion
of long-term debt which resulted from the Company's debt refinancing.
Currency effects increased working capital by $1,242,000 for the period.
Decreases in net trade receivables and inventories were partially offset by
increases in other current assets which increased primarily due to officer
loans of $2,145,000 and royalties receivable of $527,000 for the period. The
net decrease in current assets was more than offset by the decrease in current
liabilities for the period. Decreases in trade payables more than offset the
decreases in cash and short-term securities.
The Company maintains relationships with foreign and domestic banks
which have extended credit facilities to the Company totaling $32,600,000,
including amounts available under the Revolver. As of June 30, 1994, the
Company had outstanding $9,253,000 under these lines of credit, of which
$3,362,000 is classified as long-term debt. Total debt levels as reported on
the balance sheet at June 30, 1994 are $299,000 higher then they would have
been if June 30, 1993 exchange rates had been used.
Net capital expenditures made to meet the normal business needs of the
Company for the fiscal years ended June 30, 1994 and June 30, 1993, including
commitments for capital lease payments, were $1,819,000 and $2,042,000,
respectively.
13
<PAGE> 16
The Company believes its cash flow from operations and available bank
lines of credit are sufficient to finance its working capital and other capital
requirements for the near and long-term future.
14
<PAGE> 17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Accountants 16
Consolidated Balance Sheet at June 30, 1994 and June 30, 1993 17
Consolidated Statement of Income for the years ended June 30, 1994,
June 30, 1993 and June 30, 1992 19
Consolidated Statement of Changes in Shareholders' Equity for the
years ended June 30, 1994, June 30, 1993 and June 30, 1992 20
Consolidated Statement of Cash Flows for the years ended June 30,
1994, June 30, 1993 and June 30, 1992 21
Notes to Consolidated Financial Statements 23
</TABLE>
15
<PAGE> 18
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
BALDWIN TECHNOLOGY COMPANY, INC.
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, of changes in shareholders' equity
and of cash flows present fairly, in all material respects, the financial
position of Baldwin Technology Company, Inc. and its subsidiaries at June 30,
1994 and 1993, and the results of their operations and their cash flows for
each of the three years in the period ended June 30, 1994, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 10 of Notes to Consolidated Financial Statements, the
Company changed its method of accounting for income taxes by adopting FASB
Statement No. 109, "Accounting for Income Taxes", effective July 1, 1992.
PRICE WATERHOUSE LLP
Stamford, Connecticut
August 19, 1994
16
<PAGE> 19
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
JUNE 30, JUNE 30,
1994 1993
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 9,768 $ 12,859
Short-term securities 8,766 6,817
Accounts receivable trade, net of allowance for
doubtful accounts of $3,209 ($1,831 at
June 30, 1993) 31,253 34,455
Notes receivable, trade 12,411 12,799
Inventories 32,939 33,907
Prepaid expenses and other 8,263 4,383
-------- --------
Total current assets 103,400 105,220
-------- --------
MARKETABLE SECURITIES, at cost:
(Market $1,190 at June 30, 1994 and $932 at June 30,
1993) 918 849
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and buildings 2,284 2,119
Machinery and equipment 8,516 8,334
Furniture and fixtures 5,075 4,818
Leasehold improvements 1,615 1,574
Capital leases 7,295 7,001
-------- --------
24,785 23,846
Less: Accumulated depreciation and amortization 17,172 14,782
-------- --------
Net property, plant and equipment 7,613 9,064
-------- --------
PATENTS, TRADEMARKS AND ENGINEERING DRAWINGS, at cost,
less accumulated amortization of $2,584 ($1,975 at
June 30, 1993) 6,123 5,924
GOODWILL, less accumulated amortization of $7,579
($5,786 at June 30, 1993) 60,584 61,831
OTHER ASSETS 8,578 5,591
-------- --------
TOTAL ASSETS $187,216 $188,479
======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
17
<PAGE> 20
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
JUNE 30, JUNE 30,
1994 1993
-------- --------
<S> <C> <C>
CURRENT LIABILITIES:
Loans payable $ 5,891 $ 9,069
Current portion of long-term debt 142 7,188
Accounts payable, trade 11,472 12,655
Notes payable, trade 11,079 13,489
Accrued salaries, commissions, bonus and profit-sharing 7,861 7,538
Customer deposits 4,139 3,447
Accrued and withheld taxes 1,742 1,859
Income taxes payable 4,374 2,676
Other accounts payable and accrued liabilities 11,602 12,885
-------- --------
Total current liabilities 58,302 70,806
-------- --------
LONG-TERM LIABILITIES:
Long-term debt 32,230 25,998
Other long-term liabilities 8,604 8,811
-------- --------
Total long-term liabilities 40,834 34,809
-------- --------
Total liabilities 99,136 105,615
-------- --------
SHAREHOLDERS' EQUITY:
Class A Common Stock, $.01 par, 45,000,000 shares
authorized, 16,010,706 shares issued at June 30,
1994 (16,000,707 at June 30, 1993) 160 160
Class B Common Stock, $.01 par, 4,500,000 shares
authorized, 2,000,000 shares issued 20 20
Capital contributed in excess of par value 54,837 54,795
Retained earnings 35,980 31,848
Cumulative translation adjustment (1,900) (3,792)
Less: Treasury stock, at cost:
Class A--21,756 shares (21,056 at June 30, 1993)
Class B--135,000 shares (6,000 at June 30, 1993) (1,017) (167)
-------- --------
Total shareholders' equity 88,080 82,864
-------- --------
COMMITMENTS
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $187,216 $188,479
======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
18
<PAGE> 21
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
-----------------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Net sales $198,055 $215,759 $221,474
Cost of goods sold * 130,051 142,564 147,071
-------- -------- --------
Gross profit 68,004 73,195 74,403
-------- -------- --------
Operating expenses:
General and administrative ** 23,595 24,823 23,165
Selling 18,473 17,709 18,410
Engineering 9,949 10,234 10,131
Research and development 5,460 6,477 6,839
Restructuring charge (Note 5) 880 1,706
-------- -------- --------
57,477 60,123 60,251
-------- -------- --------
Operating income 10,527 13,072 14,152
-------- -------- --------
Other (income) expense:
Interest expense 3,694 5,850 7,167
Interest (income) (381) (285) (483)
Other expense (income), net (887) (462) (809)
-------- -------- --------
2,426 5,103 5,875
-------- -------- --------
Income from continuing operations before taxes 8,101 7,969 8,277
-------- -------- --------
Provision for income taxes:
Domestic:
Federal 1,211 104 68
State 637 298 257
Foreign 2,121 3,901 7,182
-------- -------- --------
Total income taxes 3,969 4,303 7,507
-------- -------- --------
Income from continuing operations 4,132 3,666 770
-------- -------- --------
Discontinued operations: (Note 3)
Loss from discontinued operations (1,842)
Loss on disposal of discontinued operations (5,894)
--------
Total loss from discontinued operations (7,736)
--------
Extraordinary loss on extinguishment of debt
(net of $384 tax benefit--Notes 1 and 9) (1,105)
--------
Cumulative effect of change in accounting for
income taxes (Note 10) 1,229
-------- -------- --------
Net income (loss) $ 4,132 $ 3,790 $ (6,966)
======== ======== ========
Income (loss) per share from:
Continuing operations $ 0.23 $ 0.21 $ 0.05
-------- -------- --------
Discontinued operations (0.11)
Disposal of discontinued operations (0.35)
--------
Total discontinued operations (0.46)
--------
Extinguishment of Debt (0.06)
--------
Cumulative effect of change in accounting
for income taxes 0.07
--------
Net income (loss) per share $ 0.23 $ 0.22 $ (0.41)
======== ======== ========
Weighted average shares outstanding 18,015 17,593 17,106
======== ======== ========
</TABLE>
* Includes all technical service expense, a portion of which was
previously classified as an item of Operating Expenses in prior financial
statement presentations. (See Note 4--Notes to Consolidated Financial
Statements).
** Includes amortization expense for intangible assets which was
previously classified as an item of Other Income and Expense in prior financial
statement presentations. (See Note 4--Notes to Consolidated Financial
Statements).
The accompanying notes to consolidated financial statements
are an integral part of these statements.
19
<PAGE> 22
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
CAPITAL
CLASS A CLASS B CONTRIBUTED
COMMON STOCK COMMON STOCK IN EXCESS
---------------------- -------------------- OF PAR
SHARES AMOUNT SHARES AMOUNT VALUE
----------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1991 15,279,797 $153 2,000,000 $20 $51,095
Year ended June 30, 1992:
Net loss for the year
Dividends
Dividends reinvested 112 1
Stock issued in connection with:
Japan Minority Interest 200,000 2 2,024
Kansa Corporation Acquisition 160,000 1 983
Stock options exercised 261,546 3 605
Translation adjustment
Transaction loss on hedge of net
investment in foreign subsidiaries
---------- ---- --------- --- -------
Balance at June 30, 1992 15,901,455 159 2,000,000 20 54,708
Year ended June 30, 1993:
Net income for the year
Stock options exercised 99,252 1 335
Sale of treasury stock (248)
Translation adjustment
Transaction loss on hedge of net
investment in foreign subsidiaries
---------- ---- --------- --- -------
Balance at June 30, 1993 16,000,707 160 2,000,000 20 54,795
Year ended June 30, 1994:
Net income for the year
Stock options exercised 9,999 42
Purchase of treasury stock
Translation adjustment
Transaction gain on hedge of net
investment in foreign subsidiaries
---------- ---- --------- --- -------
Balance at June 30, 1994 16,010,706 $160 2,000,000 $20 $54,837
========== ==== ========= === =======
</TABLE>
<TABLE>
<CAPTION>
TREASURY
CUMULATIVE STOCK
RETAINED TRANSLATION --------------------
EARNINGS ADJUSTMENTS SHARES AMOUNT
-------- ----------- -------- --------
<S> <C> <C> <C> <C>
Balance at June 30, 1991 $35,221 $240 (827,056) $(3,615)
Year ended June 30, 1992:
Net loss for the year (6,966)
Dividends (197)
Dividends reinvested
Stock issued in connection with:
Japan Minority Interest
Kansa Corporation Acquisition
Stock options exercised
Translation adjustment 5,976
Transaction loss on hedge of net
investment in foreign subsidiaries (411)
------- ------- -------- -------
Balance at June 30, 1992 28,058 5,805 (827,056) (3,615)
Year ended June 30, 1993:
Net income for the year 3,790
Stock options exercised
Sale of treasury stock 800,000 3,448
Translation adjustment (9,338)
Transaction loss on hedge of net
investment in foreign subsidiaries (259)
------- ------- -------- -------
Balance at June 30, 1993 31,848 (3,792) (27,056) (167)
Year ended June 30, 1994:
Net income for the year 4,132
Stock options exercised
Purchase of treasury stock (129,700) (850)
Translation adjustment 1,880
Transaction gain on hedge of net
investment in foreign subsidiaries 12
------- ------- -------- -------
Balance at June 30, 1994 $35,980 $(1,900) (156,756) $(1,017)
======= ======= ======== =======
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
20
<PAGE> 23
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
-------------------------------------
1994 1993 1992
----- ------ ------
<S> <C> <C> <C>
Cash flows from operating activities:
Income from continuing operations $ 4,132 $ 3,666 $ 770
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,729 5,189 6,637
Accrued retirement pay 152 155 616
Provision for losses on accounts receivable 1,589 814 83
Restructuring charge 816 1,706
Changes in assets and liabilities net of
effects from acquisitions of
subsidiaries:
Accounts and notes receivable 3,741 5,750 10,287
Inventories 1,639 3,854 759
Prepaid expenses and other (3,704) (500) 3,687
Customer deposits 612 (316) 294
Accrued compensation 150 745 (540)
Accounts and notes payable, trade (4,612) (1,079) 477
Income taxes payable 1,557 (4,216) (916)
Accrued and withheld taxes (163) (223) (586)
Other accounts payable and accrued
liabilities (1,675) (718) (675)
Interest payable 353 (50) (87)
-------- -------- --------
Net cash provided by continuing
operations 8,500 13,887 22,512
-------- -------- --------
Operating loss from
discontinued operations (1,842)
-------- -------- --------
Net cash provided by operating
activities 8,500 13,887 20,670
-------- -------- --------
Cash flows from investing activities:
Acquisition of subsidiaries, net of
cash acquired (743)
Additions of property, net (1,009) (988) (2,237)
Additions of patents, trademarks and
drawings, net (810) (1,054) (454)
Other assets (2,644) (328) 364
-------- -------- --------
Net cash used by investing
activities (4,463) (2,370) (3,070)
-------- -------- --------
Cash flows from financing activities:
Long-term borrowings 34,722 299 583
Short-term borrowings 11,807 10,143 9,497
Long-term debt repayment (35,835) (8,448) (14,447)
Short-term debt repayment (15,301) (7,466) (12,136)
Stock options exercised 42 336 607
Principal payments under capital lease
obligations (739) (1,539) (1,466)
Other long-term liabilities 286 22 661
Treasury stock purchased (850)
Dividends paid (197)
Sale of treasury stock 3,200
-------- -------- --------
Net cash (used) provided by
financing activities (5,868) (3,453) (16,898)
-------- -------- --------
Effect of exchange rate changes 689 865 1,030
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents (1,142) 8,929 1,732
Cash and cash equivalents at beginning
of year 19,676 10,747 9,015
-------- -------- --------
Cash and cash equivalents at end of year $ 18,534 $ 19,676 $ 10,747
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
21
<PAGE> 24
BALDWIN TECHNOLOGY COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
----------------------------
1994 1993 1992
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash paid during the period for:
Interest $3,356 $5,900 $7,254
Income taxes $3,471 $8,098 $7,679
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
FISCAL YEAR ENDED JUNE 30, 1994. The Company established deferred tax assets
during the current year in a non-cash transaction of $1,200,000.
The Company entered into capital lease agreements of $169,000 during the year
ended June 30, 1994.
FISCAL YEAR ENDED JUNE 30, 1993. The Company adopted FAS 109, "Accounting for
Income Taxes", effective July 1, 1992. The cumulative effect on prior years
was recorded as a separate component of net income and deferred tax assets were
established in a non-cash transaction of $1,229,000 (See Note 10--Notes to
Consolidated Financial Statements).
Deferred loan origination costs (see Notes 1 and 9--Notes to Consolidated
Financial Statements) of $1,489,000 were expensed net of related deferred tax
liabilities of $384,000 in connection with the Company's debt refinancing in a
non-cash transaction which reduced "Other assets" and "Other long-term
liabilities".
A restructuring charge (see Note 5--Notes to Consolidated Financial Statements)
was expensed during the fourth quarter of the fiscal year in a non-cash
transaction of $880,000, recorded as a current liability in "Other accounts
payable and accrued liabilities".
The Company entered into capital lease agreements of $327,000 and $1,472,000
for the years ended June 30, 1993 and 1992, respectively.
DISCLOSURE OF ACCOUNTING POLICY:
For purposes of the statement of cash flows, the Company considers all highly
liquid instruments with original maturities of three months or less to be cash
equivalents.
The accompanying notes to consolidated financial statements
are an integral part of these statements.
22
<PAGE> 25
BALDWIN TECHNOLOGY COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--ORGANIZATION OF BUSINESS:
Baldwin Technology Company, Inc. and its subsidiaries ("Baldwin" or
the "Company") are engaged primarily in the development, manufacture and sale
of material handling, accessory, control and pre-press equipment for the
printing industry.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following are the significant accounting policies followed by the
Company:
CONSOLIDATION. The consolidated financial statements include the
accounts of Baldwin and its wholly owned subsidiaries. All significant
intercompany transactions have been eliminated in consolidation.
TRANSLATION OF FOREIGN CURRENCIES. All assets and liabilities of
foreign subsidiaries are translated into dollars at year-end (current) exchange
rates and components of revenue and expense are translated at average rates for
the year. The resulting translation adjustments are included in shareholders'
equity. Gains and losses on foreign currency exchange transactions are
reflected in the statement of income. Net transaction gains, credited to
income for the years ended June 30, 1994, 1993 and 1992 were $48,000, $140,000
and $264,000, respectively.
INVENTORIES. Inventories are stated at the lower of cost or market.
Cost is determined on the last-in, first-out (LIFO) method for domestic
inventories and the first-in, first-out (FIFO) method for foreign inventories.
If the FIFO method had been used for all inventories, the total stated amount
for inventories would have been $453,000 and $261,000 greater as of June 30,
1994 and 1993, respectively.
PLANT AND EQUIPMENT. The Company depreciates its assets over their
estimated useful lives. Plant and equipment additions are depreciated using
primarily the straight-line method. Repair and maintenance expenditures are
expensed as incurred.
PATENT, TRADEMARKS AND ENGINEERING DRAWINGS. The cost of acquired
patents, trademarks and engineering drawings are being amortized on a
straight-line basis over the estimated useful lives of the related assets.
GOODWILL. Goodwill represents the excess of purchase price over the
fair market value of net assets acquired and is being amortized over 40 years
on a straight-line basis. Goodwill is measured for possible impairment, as of
each balance sheet date, based upon undiscounted future cash flows from the
related operations. Should such undiscounted future cash flows be less than
the carrying value, a charge to operations for the shortfall would be provided.
Goodwill increased $526,000 in fiscal 1994 (decreased $10,924,000 in fiscal
1993) due to the impact of foreign exchange fluctuations, primarily on the
portion of goodwill related to the European operations which is predominately
denominated in Swedish Krona.
DEFERRED LOAN ORIGINATION COSTS. At June 30, 1994, these costs were
$1,903,000 less $628,000 of accumulated amortization ($700,000 less $336,000 of
accumulated amortization at June 30, 1993) and were included in "Other Assets".
Deferred loan origination costs related to the Company's debt which was
23
<PAGE> 26
refinanced during fiscal 1994 (see Note 9--Notes to Consolidated Financial
Statements) were charged off at June 30, 1993.
NET INCOME PER SHARE. Net income per share is based on the weighted
average number of common and common equivalent shares outstanding during the
period. Common equivalent shares outstanding for the years ended June 30,
1994, 1993 and 1992 were 83,770, 19,575 and 304,052, respectively.
NOTE 3--DISCONTINUED OPERATIONS:
During the fourth quarter of fiscal 1992, the Company adopted a formal
plan to discontinue operations of its thermographic and forms handling
business. The Company completed the disposition of it's thermographic and
forms handling business in fiscal 1993.
The fiscal 1992 provision of $5,894,000 for loss on disposal of
discontinued operations includes a provision to dispose of all assets,
anticipated phase-out losses from operations until final disposition, accruals
of employee benefit and severance costs, settlement of lease obligations and
other anticipated expenses.
The operating (loss) of the thermographic and forms handling
operations comprised the following for the year ended June 30, 1992:
<TABLE>
<CAPTION>
1992
-------
<S> <C>
Net Sales $ 2,013
Cost of Sales and Expenses 3,915
-------
(Loss) before income taxes (1,902)
Income tax (benefit) (60)
-------
(Loss) from discontinued operations $(1,842)
=======
</TABLE>
A summary of the net liabilities of the thermographic and forms
handling equipment business at June 30, 1992 is as follows:
<TABLE>
<CAPTION>
JUNE 30, 1992
-------------
<S> <C>
Current Assets $3,292,000
Other Assets 3,009,000
----------
6,301,000
----------
Current Liabilities 7,427,000
Other Liabilities 143,000
----------
7,570,000
----------
Discontinued Operations Reserve $1,269,000
==========
</TABLE>
NOTE 4--RECLASSIFICATION:
The Company previously classified a portion of it's Technical Service
activities as a net operating expense prior to 1994 in financial statement
presentations. In 1994, technical Service expense was reclassified for all
periods presented as a component of Cost of Goods Sold. Technical Service
expenses previously recorded as operating expenses in the amounts of
$2,732,000, $2,379,000, $1,724,000 and $730,000 for the periods ended June 30,
1993, 1992, 1991 and 1990, respectively, were reclassified to Cost of Goods
Sold.
During the year, the Company reclassified the expense for amortization
of intangible assets, (i.e., patents, engineering drawings and trademarks,
goodwill and deferred loan origination costs), that were previously recorded as
a component of "Other Expense" to "General and Administrative Expense".
Intangible amortization in the amounts of $2,499,000, $2,474,000, $2,528,000
and $1,051,000 for the periods ended June 30, 1993, 1992, 1991 and 1990,
respectively, were reclassified to General and Administrative Expense.
24
<PAGE> 27
NOTE 5--RESTRUCTURING CHARGE:
Historically, the Company has used cost containment and reduction
programs to offset unfavorable changes in business activity due to the economy.
As a result of the deepening recession in parts of Europe, the Company
established a restructuring reserve of $880,000 during the fourth quarter of
fiscal 1993 related to the rationalization of its workforce. During the fourth
quarter of fiscal 1992, a restructuring charge of $1,706,000 was accrued to
cover the costs of consolidating certain facilities and product lines in order
to reduce excess manufacturing capacity and reduce certain administrative
costs. The Company has classified the recorded liabilities as current in
"Other accrued liabilities".
At June 30, 1994, there were no remaining accrued liabilities for the
restructuring reserve established for the year ended June 30, 1993 for
workforce rationalization. The remaining $764,000 liability established for
the restructuring reserve for the year ended June 30, 1992 relates to excess
facility sublease subsidy and relocation costs of certain facilities in the
amounts of $454,000 and $310,000, respectively.
NOTE 6--BUSINESS SEGMENT INFORMATION:
The Company operates primarily in the printing industry. The Company,
through its subsidiaries, operates in three geographic sectors: the Americas,
Europe and Asia Pacific.
A summary of the results by geographic sector is as follows (in
thousands):
<TABLE>
<CAPTION>
ADJUST-
MENTS
AND
THE ASIA ELIMI-
AMERICAS EUROPE PACIFIC NATIONS CONSOLIDATED
-------- ------ ------- ------- ------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1994
Sales to unaffiliated
customers $84,113 $58,456 $55,486 $198,055
Transfers between
geographic areas 3,381 8,938 1,917 $(14,236) 0
------- ------- ------- -------- --------
Total revenue $87,494 $67,394 $57,403 $(14,236) $198,055
======= ======= ======= ======== ========
Operating profit $ 9,696 $ 1,207 $ 4,808 $ 15,711
======= ======= ======= ========
General corporate
expenses (4,297)
Interest expense, net (3,313)
--------
Income from continuing
operations before taxes $ 8,101
========
Identifiable assets $67,259 $69,174 $39,881 $ 0 $176,314
======= ======= ======= ========
Corporate assets 10,902
--------
Total assets $187,216
========
Total liabilities $35,586 $40,112 $23,438 $ 0 $ 99,136
======= ======= ======= ======== ========
</TABLE>
25
<PAGE> 28
<TABLE>
<CAPTION>
ADJUST-
MENTS
AND
THE ASIA ELIMI-
AMERICAS EUROPE PACIFIC NATIONS CONSOLIDATED
-------- ------ ------- ------- ------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1993
Sales to unaffiliated
customers $79,644 $75,763 $60,352 $215,759
Transfers between
geographic areas 5,169 7,455 2,556 $(15,180) 0
------- ------- ------- -------- --------
Total revenue $84,813 $83,218 $62,908 $(15,180) $215,759
======= ======= ======= ======== ========
Operating profit $ 8,706 $ 2,373 $ 8,142 $ 19,221
======= ======= ======= ========
General corporate
expenses (5,687)
Interest expense, net (5,565)
--------
Income from continuing
operations before taxes $ 7,969
========
Identifiable assets $57,421 $69,377 $57,236 $ (4,522) $179,512
======= ======= ======= ========
Corporate assets 8,967
--------
Total assets $188,479
========
Total liabilities $43,247 $62,343 $29,720 $(29,695) $105,615
======= ======= ======= ======== ========
YEAR ENDED JUNE 30, 1992
Sales to unaffiliated
customers $70,662 $83,970 $66,842 $221,474
Transfers between
geographic areas 4,568 7,230 2,223 $(14,021) 0
------- ------- ------- -------- --------
Total revenue $75,230 $91,200 $69,065 $(14,021) $221,474
======= ======= ======= ======== ========
Operating profit $ 2,274 $ 8,436 $10,471 $ 21,181
======= ======= ======= ========
General corporate
expenses (6,220)
Interest expense, net (6,684)
--------
Income from
continuing
operations before
taxes $ 8,277
========
Identifiable assets $61,455 $93,586 $51,576 $ (5,096) $201,521
======= ======= ======= ========
Corporate assets 5,415
--------
Total assets $206,936
========
Total liabilities $44,057 $69,928 $30,188 $(22,372) $121,801
======= ======= ======= ======== ========
</TABLE>
No customer accounted for 10% of the Company's net sales in the fiscal
year ended June 30, 1994. In the fiscal year ended June 30, 1993 one customer
accounted for 11.3% of the Company's net sales. In the fiscal year ended June
30, 1992 one customer accounted for 10.9% of the Company's net sales.
26
<PAGE> 29
NOTE 7--INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 30, 1994
--------------------------------------------
DOMESTIC FOREIGN TOTAL
---------- --------- ---------
<S> <C> <C> <C>
Raw materials $ 7,283,000 $ 6,708,000 $13,991,000
In process 4,472,000 5,560,000 10,032,000
Finished goods 4,347,000 4,569,000 8,916,000
----------- ----------- -----------
$16,102,000 $16,837,000 $32,939,000
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1993
--------------------------------------------
DOMESTIC FOREIGN TOTAL
---------- --------- ---------
<S> <C> <C> <C>
Raw materials $ 7,152,000 $ 6,513,000 $13,665,000
In process 4,792,000 6,174,000 10,966,000
Finished goods 4,258,000 5,018,000 9,276,000
----------- ----------- -----------
$16,202,000 $17,705,000 $33,907,000
=========== =========== ===========
</TABLE>
Foreign inventories increased $671,000 (decreased $2,338,000 in 1993)
due to translation rates in effect at June 30, 1994 when compared to rates at
June 30, 1993.
NOTE 8--LOANS PAYABLE:
<TABLE>
<CAPTION>
Short-term indebtedness at June 30, 1994: Rate Amount
- - - - - ----------------------------------------- ------ --------
<S> <C> <C>
Foreign subsidiary 6.59% (average) $5,891,000
==========
<CAPTION>
Short-term indebtedness at June 30, 1993: Rate Amount
- - - - - ----------------------------------------- ------ --------
<S> <C> <C>
U.S. subsidiaries 6.97% (average) $3,728,000
Foreign subsidiaries 8.45% (average) 5,341,000
----------
$9,069,000
==========
</TABLE>
27
<PAGE> 30
NOTE 9--LONG-TERM DEBT:
<TABLE>
<CAPTION>
JUNE 30, 1994 JUNE 30, 1993
--------------------------- ---------------------------
CURRENT LONG-TERM CURRENT LONG-TERM
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Notes payable in equal annual
installments from October,
1997 through October, 2000,
interest rates 8.17% $25,000,000
Note payable November, 1997
interest rate (1.25% over
LIBOR) 5.875% 3,250,000
Note payable by foreign
subsidiary March, 1999,
interest rate 3.8% 3,006,000
Notes payable by foreign
subsidiary through
June, 1997, interest
rate (2.75% over
LIBOR) 10.66% $3,859,000 $16,712,000
Note payable through
June, 1997, interest
rate (60% fixed at
10.82%, 40% at 2.75%
over LIBOR) 8.92%
(average) 8,288,000
Industrial revenue
bonds payable in
annual installments
through November,
1999, interest rates
9% to 11% 78,000 453,000 73,000 531,000
Notes payable by
foreign subsidiary
through 2002,
interest rates 8%
8.7% and 12.9% 45,000 363,000 45,000 408,000
Notes payable through
April, 1995, interest
rates 6% 3,168,000
Notes payable through
October, 1999,
interest rates 5.5%
to 7.75% 19,000 158,000 43,000 59,000
-------- ----------- ---------- -----------
$142,000 $32,230,000 $7,188,000 $25,998,000
======== =========== ========== ===========
</TABLE>
Notes payable, denominated in currencies other than the U.S. dollar,
increased by $299,000, (decreased by $2,656,000 in 1993), due to translation
rates in effect at June 30, 1994 when compared to rates at June 30, 1993.
The industrial revenue bonds are collateralized by the building and
specific equipment as outlined in the indenture relating thereto.
Approximately $408,000 of the loans included above are collateralized by assets
of a foreign subsidiary of the Company. The notes payable from October, 1997
through October, 2000 (the "Senior Notes") and note payable November, 1997 (the
"Revolver", a $20,000,000 credit facility) are collateralized by a pledge of
the capital stock of the Company's domestic subsidiaries. The Company
refinanced its long-term debt through the issuance of $25,000,000 of
seven-year, 8.17% unsecured Senior Notes privately placed with an institutional
lender. The Senior Notes require payment of interest only for the first three
years with equal annual principal repayments in years four through seven. The
Senior Notes and the Revolver require the Company to maintain certain financial
covenants and have certain restrictions regarding the payments of dividends,
limiting them to $3,000,000 plus 50% of the Company's net income after June 30,
1993. In addition, both the Senior notes and the Revolver require the Company
to maintain a ratio of current assets to current liabilities (as these terms
are defined in the agreements) of not less than 1.4 to 1. At June 30, 1994,
this ratio was 1.77 to 1. In
28
<PAGE> 31
conjunction with the refinancing, the Company applied approximately $5,000,000
of cash reflected on the June 30, 1993 balance sheet to a reduction of its
long-term debt. The Company expensed all previously deferred loan origination
costs in connection with the refinanced debt in the amount of $1,105,000 (after
tax benefits of $384,000). The charge is classified as an extraordinary item
in the Consolidated Statement of Income.
Maturities of long-term debt in each fiscal year succeeding June 30,
1994 are as follows:
<TABLE>
<S> <C>
1995 $ 142,000
1996 147,000
1997 157,000
1998 9,663,000
1999 9,422,000
2000 and thereafter 12,841,000
-----------
$32,372,000
===========
</TABLE>
At June 30, 1994, the Company had available lines of credit of
$32,600,000 upon which $9,253,000 had been drawn and of which $3,362,000 is
included in long-term debt. Only the Revolver has associated commitment fees
with that line of credit. The commitment fees, which are calculated quarterly,
are equal to between one-quarter and one-half of one percent per annum of the
unused portion of the Revolver. Commitment fees for the seven months ended
June 30, 1994 were $29,000.
NOTE 10--TAXES ON INCOME:
The Company adopted FAS 109, "Accounting for Income Taxes", effective
July 1, 1992. The cumulative effect on prior years of the adoption of this new
accounting principle was a benefit of $1,229,000 reported as a separate
component of net income, and a corresponding deferred tax asset. The Company
has not recognized the benefit of any unused net operating loss carryforwards
as the result of adopting FAS 109. The Company had previously been accounting
for income taxes under FAS 96, "Accounting for Income Taxes".
Income from continuing operations before taxes and the provision for
income taxes allocated to continuing operations are comprised of:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
----------------------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Income (loss) from continuing
operations before taxes:
Domestic $6,656,000 $3,429,000 $(1,373,000)
Foreign 1,445,000 4,540,000 9,650,000
---------- ---------- -----------
$8,101,000 $7,969,000 $ 8,277,000
========== ========== ===========
Provision for income taxes:
Currently payable:
Domestic $3,048,000 $ 402,000 $ 325,000
Foreign 2,475,000 4,632,000 7,884,000
---------- ---------- -----------
5,523,000 5,034,000 8,209,000
---------- ---------- -----------
Deferred (prepaid):
Domestic (1,200,000)
Foreign (354,000) (731,000) (702,000)
---------- ---------- -----------
(1,554,000) (731,000) (702,000)
---------- ---------- -----------
Total income tax expense
allocated to continuing operations $3,969,000 $4,303,000 $ 7,507,000
========== ========== ===========
</TABLE>
29
<PAGE> 32
Income tax benefits allocated to currently payable taxes from the
domestic and foreign extraordinary loss on extinguishment of debt were $9,000
and $375,000, respectively, for the year ended June 30, 1993. Income tax
benefits allocated to currently payable taxes from domestic discontinued
operations amounted to $60,000 for the year ended June 30, 1992.
Income tax benefits allocated to foreign prepaid taxes due to the
cumulative effect of adopting FAS 109 were $1,229,000 for the year ended June
30, 1993.
Deferred income taxes are provided on temporary differences between
the financial reporting basis and tax basis of the Company's assets and
liabilities. The opening balance of the valuation allowance was decreased by
$1,200,000 during the current year due to the improvement in domestic earnings.
The principal temporary differences which give rise to deferred tax assets and
liabilities at June 30, 1994 are as follows:
<TABLE>
<CAPTION>
DEFERRED TAX
-----------------------------
ASSETS LIABILITIES TOTAL
----------- ----------- -----------
<S> <C> <C> <C>
Foreign tax credit carryforwards $ 8,360,000
Foreign net operating loss carryforwards 6,554,000
Inventories 1,752,000
Pension 1,201,000
Other, individually less than 5% of
"Net Deferred Tax Asset" 2,315,000 $1,097,000
----------- ----------
Net Deferred Tax Asset and Liability $20,182,000 $1,097,000 $19,085,000
=========== ==========
Valuation Allowance 15,665,000
-----------
Total Net Deferred Tax Assets $ 3,420,000
===========
</TABLE>
At June 30, 1994, the Company has foreign tax credit carryforwards for
book purposes of $8,360,000 and for tax purposes of $7,291,000, which expire
from fiscal 1995 to fiscal 1999. At June 30, 1994, net operating loss
carryforwards of $21,263,000 are available to reduce future foreign taxable
income ($370,000 of which expire from fiscal 1998 to fiscal 1999, $2,649,000 of
which expire from fiscal 2000 to fiscal 2002 and the remainder of which have an
indefinite carryforward period).
It has not been necessary to provide for income taxes on $8,451,000 of
cumulative undistributed earnings of subsidiaries outside the United States
because of the Company's intention to reinvest those reserves. In those
instances where the Company expects to remit earnings, the tax effect on the
results of operations after considering available tax credits would not be
significant.
The total income tax expense allocated to continuing operations was
more than the computed "expected" tax (determined by applying the United States
Federal statutory income tax rate of 34% to income from continuing operations
before taxes) by $1,215,000, $1,594,000 and $4,693,000 for the years ended June
30, 1994, 1993 and 1992. The reasons for the difference are as follows:
30
<PAGE> 33
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
--------------------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Computed "expected" tax $2,754,000 $2,709,000 $2,814,000
State income taxes, net of federal
income tax benefit 420,000 197,000 170,000
Foreign income taxed at higher than
the U.S. statutory rate 1,795,000 3,083,000 2,776,000
Unrecognized deferred tax benefit 1,627,000
Recognition of previously
unrecognized tax benefits (1,200,000) (2,038,000)
Goodwill write-off not deductible
for taxes 232,000 234,000 226,000
Other reconciling items,
individually less than 5% of
the "expected" tax (32,000) 118,000 (106,000)
---------- ---------- ----------
Total income tax expense $3,969,000 $4,303,000 $7,507,000
========== ========== ==========
</TABLE>
NOTE 11--COMMON STOCK:
The holders of the Company's Class A Common Stock, voting as a
separate class, are entitled to elect 25% of the members of the Board of
Directors. Holders of Class B Common Stock, voting as a separate class, are
entitled to elect the remaining Directors, so long as the number of outstanding
shares of Class B Common Stock is equal to at least 12.5% of the number of
outstanding shares of both classes of Common Stock as of the record date of the
Company's Annual Meeting. If the number of outstanding shares of Class B
Common Stock is less than 12.5% of the total number of outstanding shares of
both classes of Common Stock, the holders of Class A Common Stock, voting as a
separate class, continue to elect a number of Directors equal to 25% of the
total number of Directors constituting the entire Board of Directors and the
remaining directors are elected by the holders of both classes of Common Stock,
with the holders of Class A Common stock having one vote per share and the
holders of Class B Common Stock having ten votes per share. As of June 30,
1994, the number of outstanding shares of Class B Common Stock constituted
10.4% (11.1% in 1993) of the total number of outstanding shares of both classes
of Common Stock.
The Class A Common Stock has no conversion rights; however, Class B
Common Stock is convertible into Class A Common Stock on a one-for-one basis.
In addition, no dividend in cash or property may be declared or paid on shares
of Class B Common Stock without a dividend being declared or paid on shares of
Class A Common Stock of at least 105% of that on the Class B Common Stock.
Dividends declared during the year ended June 30, 1992 totaled $197,000.
In November, 1992, the Company sold 800,000 shares of its Class A
Common Stock, which were held as treasury stock at June 30, 1992, for $4.00 per
share. Prior to that sale, these shares were registered under the Securities
Act of 1933, as amended, by means of a Registration Statement on Form S-2. The
Company prepaid existing long-term indebtedness with the proceeds.
The Company's stock repurchase program authorization for $4,000,000
for Class "A" Common Stock and 500,000 shares of Class "B" Common Stock was
increased to $5,000,000 for Class "A" Common Stock in July of 1994. As of June
30, 1994, 880,356 shares of Class "A" Common Stock (826,056 in 1993) and
135,000 shares of Class B Common Stock (6,000) had been repurchased for
$4,724,000 ($3,663,000 in 1993) under this program.
31
<PAGE> 34
NOTE 12--STOCK OPTIONS:
The 1986 Stock Option Plan, as amended, allows for the granting, at
fair market value at the date of grant, of incentive stock options,
non-qualified stock options, and tandem stock appreciation rights (SARS) for up
to a total of 2,220,000 and 590,000 shares of Class A and Class B Common Stock,
respectively. Options to purchase shares of the Company's Class B Common Stock
are granted at a price per share of no less than 125% of the fair market value
of a share of Class A Common Stock on the date of grant. All options become
exercisable in three equal annual installments commencing on the second
anniversary of the date of grant. Unexercised options terminate no later than
ten years from the date of grant.
<TABLE>
<CAPTION>
OPTION PRICE
1986 STOCK OPTION PLAN CLASS A CLASS B RANGE
- - - - - ---------------------- ------- ------- ------------
<S> <C> <C> <C>
Outstanding at June 30, 1992 839,000 290,000 $3.98 - $9.94
Granted 315,000 $5.50
Canceled (105,000) $3.98 - $9.94
Exercised* (164,000) $3.98
--------- -------
Outstanding at June 30, 1993 885,000 290,000 $4.00 - $9.94
--------- -------
Granted 310,000 $3.88 - $3.94
Canceled (175,001) (115,000) $4.00 - $9.94
Exercised (9,999) $4.00
--------- -------
Outstanding at June 30, 1994 1,010,000 175,000 $3.88 - $9.94
========= =======
Exercisable at June 30, 1994 253,333 74,999 $4.00 - $9.94
========= =======
</TABLE>
* A portion of the consideration received upon exercise of these options
was 64,748 shares of the Company's Class A Common Stock.
The 1990 Directors' Stock Option Plan provides for the granting, at
fair market value at the date of grant, of up to 100,000 shares of the
Company's Class A and Class B Common Stock as non-qualified stock options to
members of the Company's Board of Directors who are not employees ("Eligible
Directors") of the Company or any of its subsidiaries. Grants are made on the
third business day subsequent to each Annual Meeting of Stockholders, including
the 1990 meeting, to each Eligible Director for 1,000 shares of Class A and
Class B Common Stock in proportion to the number of shares of each such class
then outstanding. Restrictions under the Directors' Stock Option Plan are
similar to those of the 1986 Stock Option Plan, as amended, except with regard
to the exercise date, which is twelve months after the date of grant, and
termination of options, which is generally nine months after termination of
service as a director. During the year ended June 30, 1994, 3,556 and 444
(3,532 and 468 in 1993) shares of Class A and Class B Common Stock were granted
at exercise prices of $4.88 and $6.09, ($4.50 and $5.63 in 1993) respectively.
During fiscal 1993, 881 Class A and 119 of Class B options with option prices
of $4.75 and $5.94, respectively, were canceled. At June 30, 1994, options for
10,695 and 1,305 shares of Class A and Class B Common Stock, respectively, were
exercisable at option prices between $3.75 to $5.94.
On March 29, 1990, the Board of Directors of the Company granted stock
options to purchase 1,000 shares each of the Company's Class A Common Stock to
two non-employee Directors at $9.75 per share, which become exercisable the
same as options granted under the Company's 1986 Stock Option Plan and
terminate five years after the date of grant. During the year ended June 30,
1994 these shares became exercisable.
32
<PAGE> 35
NOTE 13--SUPPLEMENTAL COMPENSATION:
Subsidiaries within the Company's Americas Sector maintain profit
sharing, savings and retirement plans. Amounts expensed under these plans were
as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
--------------------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Baldwin Technology Corporation ("BTC")
and Baldwin Graphic Systems ("BGS") $446,000 $543,000 $385,000
Kansa Corporation 176,000 132,000 70,000
Enkel Corporation 114,000 92,000 19,000
Misomex of North America, Inc. 41,000 44,000
-------- -------- --------
Total expense $777,000 $811,000 $474,000
======== ======== ========
</TABLE>
Company contributions to the BTC/BGS and Kansa plans are discretionary
and are subject to approval by their respective Boards. The Enkel plan
requires a company contribution equal to the total participant contribution
which may not exceed 15% of the total compensation paid to the employees of
Enkel. The Misomex of North America plan requires contributions as determined
by their Board of Directors.
Certain subsidiaries within the Company's European Sector maintain
pension plans. Amounts expensed under these plans were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
-------------------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Baldwin Gegenheimer GmbH. $287,000 $335,000 $407,000
Misomex--AB 280,000 344,000 506,000
Amal--AB 57,000 82,000
Baldwin Graphics--B.V. 52,000 23,000
Misomex--U.K. 84,000 89,000
-------- -------- --------
Total expense $760,000 $873,000 $913,000
======== ======== ========
</TABLE>
The amount of expense relating to the European pension plans is
determined based upon, among other things, the age, salary and years of service
of employees within the plans. The Company's German, British, Swedish Amal AB
and Netherlands subsidiaries make annual contributions to the plans equal to
the amounts accrued for pension expense.
In Germany, at Baldwin Gegenheimer GmbH, there is an additional
pension plan covering five employees, three of whom are retired. This defined
benefit plan provides for benefits, at maturity age, in lump sum payments on
retirement or death or as a disability pension in case of disability. This
plan is partially funded by insurance contracts. In Sweden, at Misomex AB, (as
listed above), there are two defined benefit pension plans, one covering 21
retired employees and the other covering 122 employees, 65 of whom are retired.
The unfunded, but recorded, liability related to the Misomex AB plan at June
30, 1994 was $3,453,000 ($3,617,000 in 1993). The recorded liability is
sufficient to cover obligations earned under the plan.
33
<PAGE> 36
The following table sets forth the components of net pension costs of
the defined benefit plans for the year ended June 30,
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Service Cost - benefits earned during the period $ 77,000 $ 94,000
Interest on projected benefit obligation 258,000 362,000
Annual return on plan assets 9,000 7,000
Net amortization and deferrals (93,000) (100,000)
-------- --------
Net pension cost $251,000 $363,000
======== ========
</TABLE>
The following table sets forth the funded status of the above defined
benefit pension plans for the year ended June 30,
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $2,176,000 $2,100,000
Accumulated benefit obligation $3,083,000 $2,931,000
========== ==========
Plan assets at fair value $ 379,000 $ 107,000
Projected benefit obligation 3,575,000 3,447,000
---------- ----------
Plan assets less than projected
benefit obligation (3,196,000) (3,340,000)
Unrecognized transition asset 337,000 324,000
Unrecognized actuarial gain (1,366,000) (1,279,000)
---------- ----------
Accrued pension costs $4,225,000 $4,295,000
========== ==========
Actuarial assumptions
Discount rate 3% to 8% 3% to 10%
Rate of increase in compensation levels 5% to 7% 6.5% to 7%
Expected rate of return on plan assets 7% 7.5%
</TABLE>
There is one retirement plan within the Company's Asia Pacific Sector.
The Company's Japanese subsidiary maintains a non-contributory retirement plan
covering all employees, excluding directors (the "Japanese Retirement
Program"). Amounts expensed under the program are determined based on
participating employees' salary and length of service. The Japanese Retirement
Program is fully accrued and partially funded through insurance contracts.
Expense relating to this program was $325,000, $296,000 and $118,000 for the
years ended June 30, 1994, 1993 and 1992, respectively.
Officers and key employees of the Company participate in various
incentive compensation plans. Amounts expensed under such plans were
$2,090,000, $2,367,000 and $1,209,000 for the years ended June 30, 1994, 1993
and 1992, respectively.
The Company adopted FAS 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions", as of July 1, 1992, the effect of which was
immaterial.
34
<PAGE> 37
NOTE 14--COMMITMENTS:
Future minimum annual lease payments under capital leases, which
consist of buildings, and machinery and equipment with accumulated depreciation
amounting to $5,606,000 at June 30, 1994 and $4,761,000 at June 30, 1993,
together with the present value of the minimum lease payments are as follows at
June 30, 1994.
<TABLE>
<CAPTION>
FISCAL YEAR ENDING JUNE 30, AMOUNT
- - - - - --------------------------- ----------
<S> <C>
1995 $ 794,000
1996 520,000
1997 332,000
1998 321,000
1999 338,000
2000 and thereafter 312,000
-----------
Total minimum lease payments 2,617,000
Less--Amount representing interest (866,000)
-----------
Present value of minimum lease payments $ 1,751,000
===========
</TABLE>
At June 30, 1994, $1,238,000 ($1,614,000 at June 30, 1993) is included
in other long-term liabilities representing the long-term portion of the
present value of minimum lease payments.
Rental expense amounted to approximately $4,672,000, $4,409,000 and
$4,893,000 for the years ended June 30, 1994, 1993 and 1992, respectively.
Aggregate future annual rentals under noncancellable leases for periods of more
than one year at June 30, 1994 are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDING JUNE 30, AMOUNT
- - - - - --------------------------- ----------
<S> <C>
1995 $ 4,405,000
1996 $ 3,540,000
1997 $ 2,771,000
1998 $ 2,624,000
1999 $ 2,290,000
2000 and thereafter $10,237,000
</TABLE>
35
<PAGE> 38
NOTE 15--RELATED PARTIES:
On July 1, 1990, the Company, through each of it's subsidiaries,
Baldwin Americas Corporation (BAM), Baldwin Europe Consolidated Inc. (BEC) and
Baldwin Asia Pacific Corporation (BAP) entered into consulting agreements with
Polestar Limited ("Polestar"), a corporation wholly owned by Wendell M. Smith,
Chairman of the Board and Chief Executive Officer. The consulting agreements
have terms of one year, but are automatically extended for additional one-year
terms unless either party gives prior notice of termination. Under the
consulting agreements, Polestar is obligated to provide certain management
services outside the United States and will receive compensation equal to 2% of
the annual consolidated after-tax profits of BAM, BEC and BAP and their
respective subsidiaries, in each case, not to exceed $150,000. For the years
ended June 30, 1994, 1993 and 1992 the aggregate compensation expensed under
these agreements was $84,000, $147,000 and $86,000, respectively.
On November 30, 1993, the Company entered into a loan and pledge
agreement and promissory note with Gerald A. Nathe, President and Director of
the Company and on March 11, 1994, the Company entered into loan and pledge
agreements and promissory notes with D. John Youngman, Vice President and
Director and William J. Lauricella, Chief Financial Officer and Treasurer of
the Company. The loans were made in order to enable the Company's officers to
purchase shares of the Company's Common Stock from non-employee shareholders.
Mr. Nathe was loaned $1,817,321 to purchase 315,144 shares of the Company's
Common Stock and Mr. Youngman and Mr. Lauricella were each loaned $164,063 to
purchase 25,000 shares each of the Company's Common Stock. All of the shares
purchased have been pledged as collateral for the demand promissory notes and
each of the notes are interest bearing, with interest payable on the
anniversary dates at LIBOR rates plus 1.25% reset on the first day of each
succeeding January, April, July and October.
The Company employs the firm of Morgan, Lewis & Bockius as its legal
counsel. Samuel B. Fortenbaugh III, a Director of the Company, is a partner in
this law firm. In the fiscal years ended June 30, 1994, 1993, and 1992, the
Company incurred legal fees of approximately $252,000, $151,000, and $150,000,
respectively, payable to Morgan, Lewis & Bockius.
On July 1, 1990, Baldwin Technology Corporation (BTC) and Baldwin
Graphic Systems, Inc. (BGS), two subsidiaries of BAM, entered into an agreement
with Harold W. Gegenheimer, Chairman Emeritus, guaranteed by the Company, to
replace various prior agreements including royalty and employment agreements,
retirement plans and bonus arrangements. The new agreement guarantees a
compensation amount of $200,000 per year. Simultaneously, a separate agreement
was made with Mr. Gegenheimer and the Company whereby the Company was released
from certain prior agreements, as noted above, and agreed to pay a minimum
guaranteed amount of compensation of $200,000 per year, not to exceed $350,000
per year, based on one and one-half percent (1.5%) of the Company's annual net
after tax profits. The amount expensed under these two agreements was $400,000
for each of the years ended June 30, 1994, 1993 and 1992.
36
<PAGE> 39
NOTE 16--QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized quarterly financial data for fiscal 1994 and fiscal 1993
are as follows (in thousands except per share data):
<TABLE>
<CAPTION>
QUARTER
-------------------------------------------------------
FISCAL 1994 FIRST SECOND THIRD FOURTH
- - - - - ----------- ------- ------ ------- ------
<S> <C> <C> <C> <C>
Net sales $46,412 $45,446 $49,403 $56,794
Costs and expenses
Cost of goods sold (1) 30,219 30,592 33,626 35,614
Operating expenses (2) 13,927 13,665 13,898 15,987
Interest, net 983 850 769 711
Other (income) expense (74) (421) (439) 47
------- ------- ------- -------
Income before taxes 1,357 760 1,549 4,435
Provision for income taxes 727 395 821 2,026
------- ------- ------- -------
Net income $ 630 $ 365 $ 728 $ 2,409
======= ======= ======= =======
Income per share from:
Net income per share $ 0.04 $ 0.02 $ 0.04 $ 0.13
======= ======= ======= =======
Weighted average shares
outstanding 17,974 18,072 18,053 17,973
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
QUARTER
----------------------------------------------------
FISCAL 1993 FIRST SECOND THIRD FOURTH
- - - - - ----------- ------- ------ ------- ------
<S> <C> <C> <C> <C>
Net sales $50,466 $53,910 $49,101 $62,282
Costs and expenses
Cost of goods sold (1) 33,579 35,550 33,144 40,291
Operating expenses (2) 13,833 14,851 13,880 16,679
Restructuring charge 880
Interest, net 1,584 1,531 1,163 1,287
Other expense (income) 238 (521) (261) 82
------- ------- ------- -------
Income from continuing operations
before taxes 1,232 2,499 1,175 3,063
Provision for income taxes 678 1,374 990 1,261
------- ------- ------- -------
Income from continuing operations 554 1,125 185 1,802
Extraordinary loss on
extinguishment of debt (1,105)
Cumulative effect of change
in accounting for income taxes 1,229
------- ------- ------- -------
Net income $ 1,783 $ 1,125 $ 185 $ 697
======= ======= ======= =======
Income (loss) per share from:
Continuing operations $0.03 $0.07 $0.01 $0.10
Extinguishment of debt (0.06)
Cumulative effect of change in
accounting for income taxes 0.07
------- ------- ------- -------
Net income per share $ 0.10 $ 0.07 $ 0.01 $ 0.04
======= ======= ======= =======
Weighted average shares
outstanding 17,074 17,410 17,957 17,942
======= ======= ======= =======
</TABLE>
(1) Includes all technical service expense, a portion of which was
previously classified as an item of Operating Expenses in prior financial
statement presentations. (See Note 4--Notes to Consolidated Financial
Statements).
(2) Includes amortization expense for intangible assets which was
previously classified as an item of Other Income and Expense in prior financial
statement presentations. (See Note 4--Notes to Consolidated Financial
Statements).
37
<PAGE> 40
NOTE 17--SUBSEQUENT EVENT:
On July 26, 1994 the Board of Directors granted non-qualified options
for 100,000 shares of Class A Common Stock and 100,000 shares of Class B Common
Stock to certain executives under the Company's 1986 Stock Option Plan. The
options were granted at the fair market value on the day of grant ($4.90 and
$6.09, respectively) and are otherwise identical with regard to restrictions on
options previously granted as described in Note 12--Notes to Consolidated
Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no Form 8-K filed within 24 months prior to the date of
the most recent financial statements reporting a change of accountants and/or
reporting a disagreement on any matter of accounting principle or financial
statement disclosure.
PART III
ITEMS 10, 11, 12 AND 13.
Information required under these items is contained in the Company's
1994 Proxy Statement, which will be filed with the Securities and Exchange
Commission within 120 days after the close of the Company's fiscal year end;
accordingly, this information is therefore incorporated herein by reference.
38
<PAGE> 41
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial statements required by Item 14 are listed in the
index included in Item 8 of Part II.
(a)(2) The following is a list of financial statement schedules filed
as part of this Report:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants on Financial Statement Schedules 43
Schedule II--Amounts Receivable from Related Parties 44
Schedule VIII--Valuation and Qualifying Accounts 45
Schedule IX--Short-term Borrowings 46
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
(a)(3) The following is a list of all exhibits filed as part of this
Report:
INDEX TO EXHIBITS
3.1 Restated Certificate of Incorporation of the Company as filed
with the Secretary of State of the State of Delaware on
November 4, 1986. Filed as Exhibit 3.1 to the company's
registration statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
3.2 Certificate of Amendment of the Certificate of Incorporation
of the Company as filed with the Secretary of State of the
State of Delaware on November 21, 1988. Filed as Exhibit 3.2
to the Company's Registration Statement (No. 33-26121) on
Form S-1 and incorporated herein by reference.
3.3 Certificate of Amendment of the Certificate of Incorporation
of the Company as filed with the Secretary of State of the
State of Delaware on November 20, 1990. Filed as Exhibit 3.3
to the Company's Report on Form 10-K for the fiscal year ended
June 30, 1991 and incorporated herein by reference.
3.4 By-Laws of the Company. Filed as Exhibit 3.2 to the Company's
Registration Statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
10.1 Baldwin Technology Company, Inc. Amended and Restated 1986
Stock Option Plan. Filed as Exhibit 10.2 to the Company's
Registration Statement (No. 33-31163) on form S-1 and
incorporated herein by reference.
10.2 Amendment to the Baldwin Technology Company, Inc. Amended and
Restated 1986 Stock Option Plan. Filed as Exhibit 10.2 to the
Company's Report on Form 10-K for the fiscal year ended June
30, 1991 and incorporated herein by reference.
10.3 Baldwin Technology Company, Inc. 1990 Directors' Stock Option
Plan. Filed as Exhibit 10.3 to the Company's Report on Form
10-K for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
39
<PAGE> 42
10.4 Baldwin Technology Corporation Profit Sharing Plan, as amended
and restated. Filed as Exhibit 10.2 to the Company's
Registration Statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
10.5 Baldwin Technology Corporation Executive and Key Person Bonus
Plan. Filed as Exhibit 10.4 to the Company's Registration
Statement (No. 33-10028) on Form S-1 and incorporated herein
by reference.
10.6 Agreement, effective as of July 1, 1990, between Baldwin
Technology Corporation, Baldwin Graphic Systems, Inc. and
Harold W. Gegenheimer, as guaranteed by Baldwin Technology
Company, Inc. Filed as Exhibit 10.6 to the Company's Report on
Form 10-K for the fiscal year ended June 30, 1991 and
incorporated herein by reference.
10.7 Agreement, effective as of July 1, 1990, between Baldwin
Technology Company, Inc. and Harold W. Gegenheimer. Filed as
Exhibit 10.7 to the Company's Report on Form 10-K for the
fiscal year ended June 30, 1991 and incorporated herein by
reference.
10.8 Consulting Agreement, effective as of July 1, 1991, between
Baldwin Technology Company, Inc. and Judith G. Hyers. Filed
as Exhibit 10.8 to the Company's Report on Form 10-K for the
fiscal year ended June 30, 1991 and incorporated herein by
reference.
10.9 Consulting Agreements dated as of January 1, 1990 between each
of Baldwin Americas Corporation, Baldwin Asia Pacific
Corporation and Baldwin Europe Consolidated Inc., and
Polestar, Ltd. filed as Exhibit 10.8 on the Company's Form
10-K dated September 25, 1990 and incorporated herein by
reference.
10.10 * Employment Agreement dated as of July 1, 1990 between the
Company and Wendell M. Smith filed as Exhibit 10.9 to the
Company's Form 10-K dated September 25, 1990 and incorporated
herein by reference.
10.11 License Agreement between Baldwin Technology Corporation and
Hans Jacobs Moestue, as assigned to Moestue Limited. Filed as
Exhibit 10.15 to the Company's Registration Statement (No.
33-10028) on Form S-1 and incorporated herein by reference.
10.12 * Employment Agreement, dated as of November 16, 1988, between
Baldwin-Japan Limited and Akira Hara. Filed as Exhibit 10.22
to the Company's Registration Statement (No. 33-26121) on
Form S-1 and incorporated herein by reference.
10.13 Stock Purchase Agreement, dated as of April 13, 1990, between
RZ Corporation, The Dyson-Kissner-Moran Corporation and the
Company. Filed as Exhibit 1 to the Company's Form 8-K dated
April 26, 1990 and incorporated herein by reference.
10.14 Amendment No. 1 to the Company's Form 8-K (as filed on April
13, 1990) and dated October 9, 1990 for the acquisition of
Misomex AB and subsidiaries and Misomex of North America,
Inc.--Exhibits (a) and (b) incorporated herein by reference.
10.15 Assignment of Stock Purchase Agreement, dated May 27, 1990,
between the Company and Misomex Acquisition Company. Filed as
Exhibit 2 to the Company's Form 8-K dated August 13, 1990 and
incorporated herein by reference.
40
<PAGE> 43
10.16 Assignment of Stock Purchase Agreement dated May 28, 1990,
between the Company and Misomex Acquisition AB. Filed as
Exhibit 3 to the Company's Form 8-K dated August 13, 1990 and
incorporated herein by reference.
10.17 Agreement and Plan of Merger, dated as of April 26, 1989,
among Enkel Corporation, Bengt Kuller, Enkel Acquisition
Corporation and the Company. Filed as Exhibit I to the
Company's report on Form 8-K dated May 7, 1989 and
incorporated herein by reference.
10.18 Baldwin Technology Company, Inc. Dividend Reinvestment Plan.
Filed as Exhibit 10.49 to the Company's Report on Form 10-K
for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
10.19 Baldwin Technology Company, Inc. Employee Stock Ownership
Plan. Filed as Exhibit 10.50 to the Company's Report on Form
10-K for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
10.20 Consulting Agreement dated as of June 30, 1989 between Baldwin
Asia Pacific Corporation and A-PLUS LTD. Filed as Exhibit
10.51 to the Company's Report on Form 10-K for the fiscal year
ended June 30, 1991 and incorporated herein by reference.
10.21 Baldwin Technology Company, Inc. Worldwide Employee Stock
Ownership Plan. Filed as Exhibit 10.52 to the Company's
Report on Form 10-K for the fiscal year ended June 30, 1991
and incorporated herein by reference.
10.22 * Employment Agreement, effective as of August 5, 1993 between
Baldwin Technology Company, Inc. and Gerald A. Nathe (filed
herewith).
10.23 8.17% Senior Note Agreement dated October 29, 1993 between
Baldwin Technology Company, Inc. and its subsidiaries Baldwin
Americas Corporation and Baldwin Technology Ltd. and John
Hancock Mutual Life Insurance Company, John Hancock Variable
Life Insurance Company and John Hancock Life Insurance Company
(filed herewith).
10.24 $20,000,000 Revolving Credit Agreement dated November, 1993
between Baldwin Technology Company, Inc. and its subsidiaries
Baldwin Americas Corporation and Baldwin Technology Ltd. and
NationsBank of North Carolina, National Association (filed
herewith).
21. List of Subsidiaries of Registrant (filed herewith).
23. Consent of Price Waterhouse (filed herewith).
27. Financial Data Schedule (filed herewith).
28. Post-effective Amendment to the Company's previously filed
Form S-8's, Nos. 33-20611 and 33-30455. Filed as Exhibit 28
to the Company's Report on Form 10-K for the fiscal year ended
June 30, 1991 and incorporated herein by reference.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the registrant during the last
quarter of the period covered by this report.
41
<PAGE> 44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
BALDWIN TECHNOLOGY COMPANY, INC.
(REGISTRANT)
By: WENDELL M. SMITH
------------------------
WENDELL M. SMITH
(CHIEF EXECUTIVE OFFICER)
Dated: September 23, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - - - - --------- ------- ----
<S> <C> <C>
WENDELL M. SMITH
- - - - - ----------------------------
(WENDELL M. SMITH) Chairman of the Board,
Chief Executive
Officer and Director September 23, 1994
GERALD A. NATHE
- - - - - ---------------------------
(GERALD A. NATHE) President and Director September 23, 1994
AKIRA HARA
- - - - - ---------------------------
(AKIRA HARA) Vice President and Director September 23, 1994
D. JOHN YOUNGMAN
- - - - - ---------------------------
(D. JOHN YOUNGMAN) Vice President and Director September 23, 1994
WILLIAM J. LAURICELLA
- - - - - ---------------------------
(WILLIAM J. LAURICELLA) Treasurer and Chief
Financial Officer September 23, 1994
HELEN P. OSTER
- - - - - ---------------------------
(HELEN P. OSTER) Secretary September 23, 1994
WARREN W. SMITH
- - - - - ---------------------------
(WARREN W. SMITH) Chief Accounting Officer September 23, 1994
SAMUEL B. FORTENBAUGH III
- - - - - ---------------------------
(SAMUEL B. FORTENBAUGH III) Director September 23, 1994
JUDITH G. HYERS
- - - - - ---------------------------
(JUDITH G. HYERS) Director September 23, 1994
M. RICHARD ROSE
- - - - - ---------------------------
(M. RICHARD ROSE) Director September 23, 1994
RALPH R. WHITNEY, JR.
- - - - - ---------------------------
(RALPH R. WHITNEY, JR.) Director September 23, 1994
</TABLE>
42
<PAGE> 45
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Shareholders of
BALDWIN TECHNOLOGY COMPANY, INC.
Our audits of the consolidated financial statements of Baldwin
Technology Company, Inc. and its subsidiaries referred to in our report dated
August 19, 1994 appearing on page 16 in this Annual Report on Form 10-K also
included an audit of the Financial Statement Schedules listed in Item 14(a) (2)
of this Form 10-K.
In our opinion, these Financial Statement Schedules present fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
Stamford, Connecticut
August 19, 1994
43
<PAGE> 46
SCHEDULE II
BALDWIN TECHNOLOGY COMPANY, INC
AMOUNTS RECEIVABLE FROM RELATED PARTIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT
BEGINNING BALANCE
OF AT END
NAME OF DEBTOR PERIOD ADDITIONS DEDUCTIONS OF PERIOD
- - - - - --------------------- ---------- --------- ------------------------- ----------------
AMOUNTS AMOUNTS NOT
COLLECTED WRITTEN OFF CURRENT CURRENT
--------- ----------- ------- -------
<S> <C> <C> <C>
Gerald A. Nathe (1) $0 $1,871 $1,871
D. John Youngman (1) $0 $ 167 $ 167
William J. Lauricella (1) $0 $ 167 $ 167
</TABLE>
(1) All notes receivable are payable upon demand and carry interest rates of
LIBOR plus 1.25% which are set quarterly. The notes receivable are
collateralized by, in the case of Mr. Nathe, a pledge of 315,144 shares of the
Company's Common Stock and in the cases of from Mr. Youngman and Mr.
Lauricella, a pledge by each of 25,000 shares of the Company's Common Stock.
Amounts receivable above include interest receivable through June 30, 1994.
See Note 15 - Notes to Consolidated Financial Statements.
44
<PAGE> 47
SCHEDULE VIII
BALDWIN TECHNOLOGY COMPANY, INC
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED CHARGED
BEGINNING TO TO BALANCE
OF COSTS AND OTHER AT END
PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
--------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Year ended June 30,
1994
Allowance for doubtful
accounts (deducted
from accounts
receivable) $ 1,831 $1,589(1) $ 211 $ 3,209
Valuation allowance
for deferred tax
asset (deducted
from prepaid and
other assets) $16,537 $328 $ 1,200(2) $15,665
Year ended June 30,
1993
Allowance for doubtful
accounts (deducted
from accounts
receivable) $ 1,099 $ 814 $ 82 $ 1,831
Valuation allowance
for deferred tax
asset (deducted
from prepaid and
other assets) $ 16,537(3) $16,537
Year ended June 30,
1992
Allowance for
doubtful accounts
(deducted from
accounts receivable) $ 1,502 $ 83 $ 486 $ 1,099
</TABLE>
(1) The amount expensed is primarily due to a potential bad debt in the
Company's Asia Pacific Sector where the debtor has filed a plan of
reorganization.
(2) The reduction in the amount of the valuation allowance is the result
of improved earnings in the Company's domestic operations. See Note
10 - Notes to Consolidated Financial Statements.
(3) Amount recorded is a result of adoption of FASB Statement No. 109,
Accounting for Income Taxes.
45
<PAGE> 48
SCHEDULE IX
BALDWIN TECHNOLOGY COMPANY, INC.
SHORT-TERM BORROWINGS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
OUT- OUT- INTEREST
CATEGORY OF BALANCE WEIGHTED STANDING STANDING RATE
AGGREGATE AT AVERAGE DURING DURING DURING
SHORT-TERM END OF INTEREST THE THE THE
BORROWINGS PERIOD RATE(1) PERIOD PERIOD(1) PERIOD(1)
---------- -------- -------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Year ended
June 30, 1994 Banks $5,891 6.59% $16,193 $ 8,920 7.71%
Year ended
June 30, 1993 Banks $9,069 7.84% $15,062 $11,428 8.68%
Year ended
June 30, 1992 Banks $6,505 7.92% $19,131 $12,266 9.63%
</TABLE>
(1) Averages are weighted by month for the period of time granted.
Averages reflect the monthly amount of short-term borrowings in use
and the respective rates of interest therein.
46
<PAGE> 49
EXHIBIT INDEX
--------------
Exhibit
No. Description
- - - - - ------- -----------
3.1 Restated Certificate of Incorporation of the Company as
filed with the Secretary of State of the State of Delaware
on November 4, 1986. Filed as Exhibit 3.1 to the company's
registration statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
3.2 Certificate of Amendment of the Certificate of Incorporation
of the Company as filed with the Secretary of State of the
State of Delaware on November 21, 1988. Filed as Exhibit 3.2
to the Company's Registration Statement (No. 33-26121) on
Form S-1 and incorporated herein by reference.
3.3 Certificate of Amendment of the Certificate of Incorporation
of the Company as filed with the Secretary of State of the
State of Delaware on November 20, 1990. Filed as Exhibit 3.3
to the Company's Report on Form 10-K for the fiscal year ended
June 30, 1991 and incorporated herein by reference.
3.4 By-Laws of the Company. Filed as Exhibit 3.2 to the Company's
Registration Statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
10.1 Baldwin Technology Company, Inc. Amended and Restated 1986
Stock Option Plan. Filed as Exhibit 10.2 to the Company's
Registration Statement (No. 33-31163) on form S-1 and
incorporated herein by reference.
10.2 Amendment to the Baldwin Technology Company, Inc. Amended
and Restated 1986 Stock Option Plan. Filed as Exhibit 10.2
to the Company's Report on Form 10-K for the fiscal year
ended June 30, 1991 and incorporated herein by reference.
10.3 Baldwin Technology Company, Inc. 1990 Directors' Stock
Option Plan. Filed as Exhibit 10.3 to the Company's Report
on Form 10-K for the fiscal year ended June 30, 1991 and
incorporated herein by reference.
<PAGE> 50
EXHIBIT INDEX (Con't)
-------------
Exhibit
No. Description
- - - - - ------- -----------
10.4 Baldwin Technology Corporation Profit Sharing Plan, as
amended and restated. Filed as Exhibit 10.2 to the Company's
Registration Statement (No. 33-10028) on Form S-1 and
incorporated herein by reference.
10.5 Baldwin Technology Corporation Executive and Key Person Bonus
Plan. Filed as Exhibit 10.4 to the Company's Registration
Statement (No. 33-10028) on Form S-1 and incorporated herein
by reference.
10.6 Agreement, effective as of July 1, 1990, between Baldwin
Technology Corporation, Baldwin Graphic Systems, Inc. and
Harold W. Gegenheimer, as guaranteed by Baldwin Technology
Company, Inc. Filed as Exhibit 10.6 to the Company's Report
on Form 10-K for the fiscal year ended June 30, 1991 and
incorporated herein by reference.
10.7 Agreement, effective as of July 1, 1990, between Baldwin
Technology Company, Inc. and Harold W. Gegenheimer. Filed
as Exhibit 10.7 to the Company's Report on Form 10-K for the
fiscal year ended June 30, 1991 and incorporated herein by
reference.
10.8 Consulting Agreement, effective as of July 1, 1991, between
Baldwin Technology Company, Inc. and Judith G. Hyers. Filed
as Exhibit 10.8 to the Company's Report on Form 10-K for the
fiscal year ended June 30, 1991 and incorporated herein by
reference.
10.9 Consulting Agreements dated as of January 1, 1990 between
each of Baldwin Americas Corporation, Baldwin Asia Pacific
Corporation and Baldwin Europe Consolidated Inc., and
Polestar, Ltd. filed as Exhibit 10.8 on the Company's Form
10-K dated September 25, 1990 and incorporated herein by
reference.
10.10 * Employment Agreement dated as of July 1, 1990 between the
Company and Wendell M. Smith filed as Exhibit 10.9 to the
Company's Form 10-K dated September 25, 1990 and
incorporated herein by reference.
10.11 License Agreement between Baldwin Technology Corporation
and Hans Jacobs Moestue, as assigned to Moestue Limited.
Filed as Exhibit 10.15 to the Company's Registration
Statement (No 33-10028) on Form S-1 and incorporated herein
by reference.
10.12 * Employment Agreement, dated as of November 16, 1988,
between Baldwin-Japan Limited and Akira Hara. Filed as
Exhibit 10.22 to the Company's Registration Statement
(No. 33-26121) on Form S-1 and incorporated herein by
reference.
10.13 Stock Purchase Agreement, dated as of April 13, 1990,
between RZ Corporation, The Dyson-Kissner-Moran Corporation
and the Company. Filed as Exhibit 1 to the Company's Form
8-K dated April 26, 1990 and incorporated herein by reference.
10.14 Amendment No. 1 to the Company's Form 8-K (as filed on April
13, 1990) and dated October 9, 1990 for the acquisition of
Misomex AB and subsidiaries and Misomex of North America,
Inc.--Exhibits (a) and (b) incorporated herein by reference.
10.15 Assignment of Stock Purchase Agreement, dated May 27, 1990,
between the Company and Misomex Acquisition Company. Filed as
Exhibit 2 to the Company's Form 8-K dated August 13, 1990 and
incorporated herein by reference.
<PAGE> 51
EXHIBIT INDEX (Con't)
-------------
Exhibit
No. Description
- - - - - ------- -----------
10.16 Assignment of Stock Purchase Agreement dated May 28, 1990,
between the Company and Misomex Acquisition AB. Filed as
Exhibit 3 to the Company's Form 8-K dated August 13, 1990
and incorporated herein by reference.
10.17 Agreement and Plan of Merger, dated as of April 26, 1989,
among Enkel Corporation, Bengt Kuller, Enkel Acquisition
Corporation and the Company. Filed as Exhibit I to the
Company's report on Form 8-K dated May 7, 1989 and
incorporated herein by reference.
10.18 Baldwin Technology Company, Inc. Dividend Reinvestment Plan.
Filed as Exhibit 10.49 to the Company's Report on Form 10-K
for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
10.19 Baldwin Technology Company, Inc. Employee Stock Ownership
Plan. Filed as Exhibit 10.50 to the Company's Report on Form
10-K for the fiscal year ended June 30, 1991 and incorporated
herein by reference.
10.20 Consulting Agreement dated as of June 30, 1989 between Baldwin
Asia Pacific Corporation and A-PLUS LTD. Filed as Exhibit
10.51 to the Company's Report on Form 10-K for the fiscal year
ended June 30, 1991 and incorporated herein by reference.
10.21 Baldwin Technology Company, Inc. Worldwide Employee Stock
Ownership Plan. Filed as Exhibit 10.52 to the Company's
Report on Form 10-K for the fiscal year ended June 30, 1991
and incorporated herein by reference.
10.22 * Employment Agreement, effective as of August 5, 1993 between
Baldwin Technology Company, Inc. and Gerald A. Nathe (filed
herewith).
10.23 8.17% Senior Note Agreement dated October 29, 1993 between
Baldwin Technology Company, Inc. and its subsidiaries Baldwin
Americas Corporation and Baldwin Technology Ltd. and John
Hancock Mutual Life Insurance Company, John Hancock Variable
Life Insurance Company and John Hancock Life Insurance
Company (filed herewith).
10.24 $20,000,000 Revolving Credit Agreement dated November, 1993
between Baldwin Technology Company, Inc. and its subsidiaries
Baldwin Americas Corporation and Baldwin Technology Ltd. and
NationsBank of North Carolina, National Association (filed
herewith).
21. List of Subsidiaries of Registrant (filed herewith).
23. Consent of Price Waterhouse (filed herewith).
27. Financial Data Schedule (filed herewith).
28. Post-effective Amendment to the Company's previously filed
Form S-8's, Nos. 33-20611 and 33-30455. Filed as Exhibit
28 to the Company's Report on Form 10-K for the fiscal year
ended June 30, 1991 and incorporated herein by reference.
<PAGE> 1
EXHIBIT 10.22
January 31, 1994
Mr. Gerald A. Nathe
11448 Bronzedale Drive
Oakton, VA 22124
Dear Mr. Nathe:
This Agreement sets forth the terms of your employment with Baldwin
Technology Company, Inc., a Delaware corporation (the "Company"), and your
continued employment with Baldwin Americas Corporation, a Delaware corporation
and a wholly owned subsidiary of the Company ("BAM"), and is effective as of
August 5, 1993.
1. DUTIES. During the term of your employment hereunder, you
shall be employed as the President of each of the Company and BAM, and you
shall direct and manage the business, affairs and property of the Company
subject to the direction of the Chief Executive Officer of the Company (the
"Chief Executive Officer") and the Board of Directors of the Company (the
"Board of Directors").
2. COMPENSATION. As compensation for your services during the
term of your employment hereunder:
A. Salary. You shall be paid a salary at the annual
rate of one hundred seventy-five thousand dollars ($175,000) (hereinafter
referred to as your "base salary"), payable in appropriate installments to
conform with regular payroll dates for salaried personnel of the Company or
BAM.
<PAGE> 2
B. Reviews and Adjustments. As of July 1, 1994 and each
succeeding July 1 during the term of your employment hereunder, your
performance shall be reviewed by the Chief Executive Officer and your
attainment of mutually agreed-upon objectives evaluated; your base salary for
the twelve (12) months beginning on such July 1 may be adjusted upward (but not
downward) by the Board of Directors, with some consideration made for the level
of inflation over the immediately preceding July 1.
C. Incentive Compensation ("Bonus"). During the term of
your employment hereunder, and at such other times subsequent thereto as are
otherwise set forth herein, you shall be paid annually, within three (3) months
of the end of each fiscal year, beginning with the fiscal year ending June 30,
1994, incentive compensation equal to the aggregate of (i) one-half of one
percent (.5%) of the Company's net income after taxes (excluding extraordinary
items) for such fiscal year, as set forth in the Company's Consolidated and
Audited Statement of Income contained in its Annual Report on Form 10-K as
filed with the Securities and Exchange Commission ("SEC") and as reported to
the Company's stockholders, plus (ii) an amount determined for such fiscal year
under the Company's or BAM's Executive & Key Person Bonus Plan (the "Bonus
Plan"), as in effect at that time; provided, however, that such incentive
compensation shall not exceed the product of two (2) times your base salary
under Paragraph 2A hereof for such fiscal year.
D. Deferred Compensation. You shall be paid, at such
times as are set forth in this Agreement, deferred compensation based upon an
amount equal to forty percent (40%) of your Final Average Pay (the "Deferred
Compensation"). For purposes of this Agreement, the term "Final Average Pay"
shall mean an amount equal to (i) the total
2
<PAGE> 3
of (a) the sum of the base salaries and incentive compensation paid to you with
respect to each of the two (2) fiscal years ending immediately preceding the
fiscal year in which you become entitled to the Deferred Compensation, plus (b)
the base salary and incentive compensation payable to you at the time that you
become entitled to the Deferred Compensation (annualized to twelve (12)
months), (ii) divided by three (3). The annual amount of Deferred Compensation
payable to you under this Agreement shall not exceed one hundred seventy-five
thousand dollars ($175,000). The amount equal to forty percent (40%) of your
Final Average Pay, when calculated, shall then be restated to a monthly amount
by dividing such amount by twelve (12) (the "Monthly Amount"), and the Monthly
Amount shall be paid monthly, to you or your estate, as the case may be,
beginning on the day set forth in this Agreement, for a period of one hundred
eighty (180) months or the period ending with the month of your death,
whichever is longer. In this regard, if you die after the date on which you
first become entitled to payment of the Deferred Compensation, whether or not
the first payment of the Monthly Amount has been made, and prior to the payment
of the Monthly Amount for one hundred eighty (180) months, the Monthly Amount
shall be paid monthly for the balance of such one hundred eighty (180) month
period to the beneficiary or beneficiaries designated by you in writing to the
Company, or, if none are designated, to your estate. There shall be no
Deferred Compensation payable unless and until you shall have served under this
Agreement for a period of five years; from the beginning of the sixth year
through the end of the tenth year of service under this Agreement, the amount
of Deferred Compensation shall vest in twenty percent (20%) annual increments
so that only after a full ten (10) years of service under this Agreement
3
<PAGE> 4
shall the amount as set forth by formula above be due and payable, and then
only in certain instances as set forth elsewhere in this Agreement.
3. STOCK AND STOCK OPTIONS.
A. Class A Stock.
(i) The Company shall issue or transfer to you,
at such times when you have earned them and at no cost to you, a total of two
hundred thousand (200,000) shares of the Company's Class A Common Stock, par
value $.01 per share ("Class A Stock") in five (5) equal installments of forty
thousand (40,000) shares each. You will be deemed to have earned the first
installment of forty thousand (40,000) shares of Class A Stock on a date (the
"First Installment Date") when (a) on or after the first anniversary of the
effective date of this Agreement (August 5, 1994), (b) the closing price of the
Class A Stock on the American Stock Exchange (the "Fair Market Value")
increases by two dollars ($2.00) per share over the price at which it traded on
the effective date of this Agreement ($3.875 per share); each subsequent
installment of Class A Stock shall similarly be deemed to be earned by you when
the Fair Market Value of the Class A Stock increases by an additional two
dollars ($2.00) per share over the Fair Market Value at which the previous
installment was earned. A stock certificate for the Class A Stock so earned
shall be issued and delivered to you within fifteen (15) days of the date such
stock was deemed to be earned by you.
(ii) In the event of a reorganization,
recapitalization, change of shares, stock split, spinoff, stock dividend,
reclassification, subdivision or combination of shares, merger, consolidation,
rights offering, or any other change in the corporate structure
4
<PAGE> 5
or shares of capital stock of the Company, the number of shares and increase in
price of the Fair Market Value as stated in Paragraph 3A(i) hereof shall be
adjusted appropriately.
(iii) With regard to each installment of the Class
A Stock issued under Paragraph 3A(i) hereof, the Company grants to you the
right to require the Company to include the Class A Stock issued to you in any
registration statement that the Company may file in the future (said right to
be known as the "Piggy-Back Registration Rights"). In the event the Company
does not file and cause to become effective a registration statement subsequent
to your earning each installment of the Class A Stock as outlined in Paragraph
3A(i) hereof on which you could have exercised your Piggy-Back Registration
Rights, the Company further grants to you a one-time right to demand that the
Company file and cause to become effective a registration statement for each
installment of the Class A Stock issued to you under Paragraph 3A(i) hereof, by
written notice to the Company (said right to be known as the "Demand
Registration Rights"). In the event you notify the Company of your exercise of
a Demand Registration Right, the Company shall use its best efforts to have a
registration statement with respect to the Class A Stock issued under Paragraph
3A(i) hereof prepared, filed and declared effective by the SEC as soon as
practicable. Notwithstanding anything in this section to the contrary, the
Company shall not be required to file a registration statement during the
period between (a) the date on which its financial statements for any fiscal
year become available and (b) the date on which it is required to file an
annual report with respect to such fiscal year on Form 10-K under the
Securities Exchange Act of 1934; provided, however, that the Company shall
during such period be required to continue to use its best efforts to prepare
such registration statement for filing
5
<PAGE> 6
and to file such registration statement as soon as possible after the date
described in clause (b) above. Your rights to exercise each of the Demand
Registration Rights shall expire, respectively, on or before the earlier of (a)
the date the Company files and causes to become effective a registration
statement on which you could have exercised your Piggy-Back Registration Rights
for each installment of Class A Stock issued under Paragraph 3A(i) hereof, or
(b) three years after the date each installment of shares of the Class A Stock
is issued to you under Paragraph 3A(i) hereof.
B. Class A Stock Options. On August 5, 1993, the
Company granted to you a non-qualified stock option, pursuant to the Company's
1986 Amended and Restated Stock Option Plan (the "1986 Plan"), to purchase up
to two hundred thousand (200,000) shares of Class A Stock. A copy of the
written agreement evidencing such grant is attached as Exhibit "A".
C. Class B Stock. In order to facilitate your purchase
of three hundred fifteen thousand one hundred forty four (315,144) shares of
the Company's Class B Common Stock, par value $.01 per share (the "Class B
Stock"), the Company has loaned to you one million eight hundred seventeen
thousand three hundred twenty-one dollars and sixteen cents ($1,817,321.16)
(the "Loan") for you to purchase the Class B Stock. The Loan shall (i) bear
interest, payable annually, at a rate equal to the Company's borrowing rate (as
adjusted quarterly) on its U.S. short-term banking facilities, (ii) require
pledging by you of the Class B Stock (until sold in part or in full as
described herein) and (iii) require repayment by you prior to the last day of
your employment by the Company, except in case of your death, in which instance
repayment shall be within six (6) months of the date of your
6
<PAGE> 7
death. Notwithstanding anything to the contrary contained in this Paragraph
3C, at any time that you sell any of the shares of Class B Stock while any
amount of the Loan remains unpaid, you shall, within five (5) days of receipt
of the funds from such sale, pay to the Company, in repayment of part or all,
as the case may be, of the Loan, an amount equal to $5.77 times the number of
shares of the Class B Stock so sold, but not in excess of the unpaid balance of
the Loan, plus interest, as set forth in this Paragraph 3C, on the amount so
repaid to the extent that such interest accrued to the date of such repayment.
4. LIFE INSURANCE. During the term of your employment
hereunder, the Company, subject to your insurability, shall pay the premiums on
a contract or contracts of life insurance on your life in the aggregate amount
of five hundred thousand dollars ($500,000), which contract or contracts may be
owned by your spouse or such other party as may be designated by you.
5. REIMBURSEMENT OF EXPENSES. In addition to the compensation
provided for herein, the Company shall reimburse to you, or pay directly, all
reasonable expenses incurred by you in connection with the business of the
Company, and its subsidiaries and affiliates, including but not limited to
business-class travel if overseas, reasonable accommodations, and
entertainment, subject to documentation in accordance with the Company's
policy. In this connection, it is understood that certain business of the
Company will require the presence of your spouse, and this Paragraph 5 applies
as well to such expenses relating to her.
7
<PAGE> 8
6. EXTENT OF SERVICES.
A. In General. During the term of your employment
hereunder, except as otherwise permitted by this Paragraph 6, you shall devote
your best and full-time efforts to the business and affairs of the Company.
B. Limitation on Other Services. During the term of
your employment hereunder, you shall not undertake employment with, or
participate in, the conduct of the business affairs of any other person,
corporation, or entity, except at the direction or with the written approval of
the Board of Directors. The foregoing limitation shall not apply to your
current part- time involvement in the business affairs of Graphic Equipment
Technologies A/S, a Denmark corporation, and its subsidiaries, and Polestar,
Ltd., a Bermuda corporation (the "Outside Businesses"); provided, however, that
the time you devote to such activities shall not interfere with the performance
by you of your duties and obligations to the Company.
C. Personal Investments. Nothing herein shall preclude
you from having, making, or managing personal investments which do not involve
your active participation in the affairs of the entities in which you so
invest, but, unless approved in writing by the Board of Directors, during the
term of your employment hereunder, you shall not have more than a one percent
(1%) ownership interest in any entity which is directly competitive with any
business conducted by the Company at that time; provided, however, that the
foregoing limitation shall not apply to any investment you may have in the
Outside Businesses. The phrase "conducted by the Company" as used in this
Paragraph 6C and in Paragraph 13 hereof shall mean the business conducted by
the Company or by any corporation or other
8
<PAGE> 9
entity in which the Company owns stock possessing fifty percent (50%) or more
of the stock (either voting or non-voting) in such corporation or fifty percent
(50%) or more of the equity interests (either voting or non-voting) in such
other entity (a "Subsidiary").
7. LOCATION. Your duties hereunder shall be performed for the
Company worldwide, with particular emphasis in BAM's office in Elkwood,
Virginia.
8. VACATION; OTHER BENEFITS.
A. Vacation. During the term of your employment
hereunder, you shall be entitled to a vacation or vacations, with pay,
totalling four (4) weeks in each fiscal year. You may accumulate up to twelve
(12) weeks vacation, but not more than three (3) weeks from any single prior
year. Any such accumulated vacation may be used in any subsequent year or
years in addition to the four (4) weeks of vacation to which you are entitled
for each such year.
B. The Company's Benefit Plans. During the term of your
employment hereunder, you shall be eligible for inclusion, to the extent
permitted by law, as a full-time employee of the Company or any Subsidiary, in
any and all (i) pension, profit sharing, savings, and other retirement plans
and programs as in effect at the time, (ii) life and health (medical, dental,
hospitalization, short-term and long-term disability) insurance plans and
programs as in effect at the time, (iii) stock option and stock purchase plans
and programs as in effect at the time, (iv) accidental death and dismemberment
protection plans and programs as in effect at the time, (v) travel accident
insurance plans and programs as in effect at the time, and (vi) other plans and
programs at the time sponsored by the Company or any Subsidiary for employees
or executives generally as in effect at the time, including
9
<PAGE> 10
any and all plans and programs that supplement any or all of the foregoing
types of plans or programs (except for any annual bonus plan, other than the
Bonus Plan, for employees in general).
C. Automobile and Professional Services. During the
term of your employment hereunder, (i) the Company shall provide an automobile
for your continued business use pursuant to the arrangement between you and BAM
that was in effect immediately prior to this Agreement, and (ii) the Company
shall reimburse to you, or pay directly, upon submission by you to the Company
of statements for services, the amounts payable by you to any person or persons
of your choice that you retain to advise you with regard to financial,
investment, and tax matters; provided, however, that such reimbursement or
payment shall not exceed six thousand dollars ($6,000) per fiscal year
beginning with the fiscal year ending June 30, 1994.
D. Post-Termination Benefits. In addition to any other
payments and benefits provided in this Agreement, effective with the
termination of your employment by the Company without cause, you shall be
entitled to (a) continued medical and dental benefits for a period of two (2)
years from the effective date of your termination or until you secure other
employment, whichever occurs first, and (b) reimbursement of reasonable
expenses incurred by you in connection with job search services.
9. TERMINATION OF EMPLOYMENT.
A. Termination by the Company Without Cause. The
Company may, without cause, terminate your employment hereunder at any time
upon ten (10) or more
10
<PAGE> 11
days' written notice to you. In the event your employment is terminated under
this Paragraph 9A, the Company shall pay to you the following:
(i) A single lump sum payment, not later than the
last day of your employment, of:
(a) Any accrued but unpaid salary set
forth in Paragraph 2A (as adjusted by Paragraph 2B) hereof, including salary in
respect of any accrued and accumulated vacation, due to you at the date of such
termination;
(b) Any amounts owing, but not yet paid,
pursuant to Paragraph 5 hereof; and
(c) An amount equal to the product of
two and nine-tenths (2.9) times your "base salary" as defined in Paragraph 2A
(as adjusted by Paragraph 2B) hereof;
(ii) A single lump sum payment of any accrued but
unpaid incentive compensation set forth in Paragraph 2C hereof due to you at
the date of such termination for the fiscal year ending immediately prior to
the date of such termination, which shall be paid within three (3) months of
the end of such fiscal year;
(iii) A single lump sum payment of any incentive
compensation set forth in Paragraph 2C hereof earned in the fiscal year of the
termination of your employment, which incentive compensation shall be
determined on the basis of the Company's operations through June 30 of such
fiscal year, and shall be pro-rated through the last day of your employment,
and shall be paid within three (3) months of such June 30; and
11
<PAGE> 12
(iv) If and to the extent vested, the Deferred
Compensation as set forth in Paragraph 2D hereof, with payment of the Monthly
Amount beginning on the first day of the month immediately succeeding the last
day of your employment. The Company shall have no further obligation to you
under this Agreement and you shall have no further obligation to the Company
under this Agreement except as provided in Paragraph 12 and Paragraph 13
hereof.
B. Termination by Mutual Consent. You may terminate
your employment hereunder at any time with the written consent of the Company.
In the event your employment is terminated under this Paragraph 9B, the Company
shall pay to you the following:
(i) A single lump sum payment, not later than the
last day of your employment, of:
(a) Any accrued but unpaid salary set
forth in Paragraph 2A (as adjusted by Paragraph 2B) hereof, including salary in
respect of any accrued and accumulated vacation, due to you at the date of such
termination;
(b) Any amounts owing, but not yet paid,
pursuant to Paragraph 5 hereof; and
(c) An amount equal to your annual "base
salary" as defined in Paragraph 2A hereof (as adjusted by Paragraph 2B);
(ii) A single lump sum payment of any accrued but
unpaid incentive compensation set forth in Paragraph 2C hereof due to you at
the date of such termination
12
<PAGE> 13
for the fiscal year ending immediately prior to the date of such termination,
which shall be paid within three (3) months of the end of such fiscal year;
(iii) A single lump sum payment of any incentive
compensation set forth in Paragraph 2C hereof earned in the fiscal year of the
termination of your employment, which incentive compensation shall be
determined on the basis of the Company's operations through June 30 of such
fiscal year, and shall be pro-rated through the last day of your employment,
and shall be paid within three (3) months of such June 30; and
(iv) If and to the extent vested, the Deferred
Compensation as set forth in Paragraph 2D hereof, with payment of the Monthly
Amount beginning on the first day of the month immediately succeeding the last
day of your employment. The Company shall have no further obligation to you
under this Agreement and you shall have no further obligation to the Company
under this Agreement except as provided in Paragraph 12 and Paragraph 13
hereof.
C. Termination by the Company With Cause. The Company
may for cause terminate your employment hereunder at any time by written notice
to you. In such event, the Company shall pay to you the following:
(i) A single lump sum payment, within ten (10)
days of the last day of your employment, of
(a) Any accrued but unpaid salary set
forth in Paragraph 2A (as adjusted by Paragraph 2B) hereof, including salary in
respect of any accrued and accumulated vacation, due to you at the date of such
termination; and
13
<PAGE> 14
(b) Any amounts owing, but not yet paid,
pursuant to Paragraph 5 hereof;
(ii) A single lump sum payment of any accrued but
unpaid incentive compensation set forth in Paragraph 2C hereof due to you at
the date of such termination for the fiscal year ending immediately prior to
the date of such termination, which shall be paid within three (3) months of
the end of such fiscal year; and
(iii) If and to the extent vested, the Deferred
Compensation as set forth in Paragraph 2D hereof, with payment of the Monthly
Amount beginning on the first day of the month immediately succeeding the last
day of your employment. You shall forfeit the incentive compensation set forth
in Paragraph 2C hereof for the fiscal year in which such termination occurs.
The Company shall have no further obligation to you under this Agreement and
you shall have no further obligation to the Company under this Agreement except
as provided in Paragraph 12 and Paragraph 13 hereof. For purposes of this
Agreement, the term "cause" shall mean (1) a failure by you to remedy either
(a) a continuing neglect in the performance of your duties under this
Agreement, or (b) any action taken by you that seriously prejudices the
interests of the Company, in either event within ten (10) days of the Company's
written notice to you of such neglect or action, or (2) your conviction of a
felony.
D. Events. If any of the following described events
occurs during the term of your employment hereunder, you may terminate your
employment hereunder by written notice to the Company either prior to, or not
more than six (6) months after, the happening of such event. In such event,
your employment hereunder will be terminated effective as
14
<PAGE> 15
of the later of ten (10) days after the notice or ten (10) days after the event
and the Company shall make to you the same payments that the Company would have
been obligated to make to you under Paragraph 9A hereof if the Company had
terminated your employment hereunder effective on such date. The events, the
occurrence of which shall permit you to terminate your employment hereunder
under this Paragraph 9D, are as follows:
(i) New CEO. The failure of the Company to
appoint you the Chief Executive Officer of the Company, effective within seven
(7) days of any termination of employment of Wendell M. Smith as the Chief
Executive Officer.
(ii) New President. The removal of you or the
election of any other person as the President of the Company; provided,
however, that you shall not have approved such removal or such election, in
your capacity as a director, by voting for such removal or such election.
(iii) Merger, etc.. Any merger or consolidation by
the Company or BAM with or into any other entity or any sale by the Company or
BAM of substantially all of its assets; provided, however, that you shall not
have approved such transaction, in your capacity as a director, by voting for
it.
(iv) Change of Control. Any change of a majority
of the directors of the Company occurring within any thirteen (13) month
period, or the acquisition by a single person or entity or a related group of
persons or entities, of shares of any class or classes of voting stock of the
Company representing twenty-five percent (25%) or more of the total votes
entitled to be cast by all of the then outstanding shares of all classes of
voting
15
<PAGE> 16
stock of the Company; provided, however, that you shall not have approved such
change in directors or acquisition, in your capacity as a shareholder or
director, by voting for any of such new directors or for such acquisition and
that there shall be excluded from any such calculation of percentage of
ownership all stock held by any officer of the Company on the effective date of
this Agreement.
(v) Liquidation. The adoption by the Company of
any plan of liquidation providing for the distribution of all or substantially
all of its assets; provided, however, that you shall not have approved the
adoption of such plan, in your capacity as a director, by voting for it.
(vi) Breach of Agreement. The failure by the
Company to observe or comply in any material respect with any of the provisions
of this Agreement, including a material diminution in your duties, or the
assignment to you of duties that are materially inconsistent with your duties
or that materially impair your ability to function as the President of the
Company, the President of BAM, or both, if such failure has not been cured
within thirty (30) days after written notice thereof has been given by you to
the Company.
E. DISABILITY OR DEATH. If you should suffer a
Permanent Disability, the Company may terminate your employment hereunder upon
ten (10) or more days' prior written notice to you. For purposes of this
Agreement, a "Permanent Disability" shall be deemed to have occurred only when
you are qualified for benefits under the Company's or a Subsidiary's Long Term
Disability Insurance Policy. In the event of the termination of your
employment hereunder by reason of Permanent Disability or death at any time,
the Company shall pay:
16
<PAGE> 17
(i) In the case of Permanent Disability only, to
you, in conformity with regular payroll dates for salaried personnel of the
Company or BAM, an amount equal to fifty percent (50%) of the base salary you
were receiving at the date of such termination under Paragraph 2A (as adjusted
by Paragraph 2B) hereof, payable through August 5, 2003, at which time monthly
payments of the Deferred Compensation set forth in Paragraph 2D hereunder shall
begin; provided, however, that the amount payable under this Paragraph 9E(i)
(but not the Deferred Compensation payments) shall be reduced to the extent of
any payments made to you through any company-sponsored group disability plan;
(ii) To you or your legal representative, or any
beneficiary or beneficiaries designated by you in writing to the Company, a
single lump sum payment of:
(a) Within ten (10) days of the last day
of your employment, any accrued but unpaid salary set forth in Paragraph 2A (as
adjusted by Paragraph 2B) hereof, including salary in respect of any accrued
and accumulated vacation, due to you at the date of such termination;
(b) Within ten (10) days of the last day
of your employment, any amounts owing, but not yet paid, pursuant to Paragraph
5 hereof;
(c) A single lump sum payment of any
accrued but unpaid incentive compensation as set forth in Paragraph 2C hereof
due to you at the date of such termination for the fiscal year ending
immediately prior to the date of such termination, which shall be paid within
three (3) months of the end of such fiscal year; and
(d) Any incentive compensation set forth
in Paragraph 2C hereof earned in the fiscal year in which the termination of
your employment occurs, which
17
<PAGE> 18
incentive compensation shall be determined on the basis of the Company's
operations through June 30 of such fiscal year, and shall be pro-rated through
the last day of your employment, and shall be paid within three (3) months of
such June 30; and
(iii) In the case of death only, to your legal
representative, or any beneficiary or beneficiaries designated by you in
writing, the vested portion of the Deferred Compensation set forth in Paragraph
2D hereof, with payment of the Monthly Amount beginning on the first day of the
month immediately succeeding the last day of your employment.
F. No Excess Parachute Payments Notwithstanding
anything to the contrary contained in this Agreement, if the Company obtains a
written opinion of its tax counsel ("Tax Counsel") to the effect that there
exists a material possibility that any payment to which you would (but for the
application of this Paragraph 9F) be entitled under this Agreement, would (but
for such application) be treated as an "excess parachute payment" (as defined
in Section 280G(b) of the Internal Revenue Code and the Treasury Regulations
promulgated thereunder):
(i) Unless you and the Company agree to an
alternative amendment of this Agreement that satisfies the requirements of
Paragraph 9F(ii) hereof, this Agreement shall be amended by reducing the
payments to which you are entitled hereunder, in the order specified in the
last sentence of this Paragraph 9F, to the extent necessary so that, in the
opinion of Tax Counsel, there does not exist a material possibility that any
payment to which you are entitled under this Agreement (as so amended) will be
treated as an excess parachute payment; or
18
<PAGE> 19
(ii) If you and the Company agree to amend this
Agreement by modifying the amount and/or timing of the payments to which you
are entitled hereunder in a manner other than that specified in Paragraph 9F(i)
hereof, and if, in the opinion of Tax Counsel, there does not exist a material
possibility that any payment to which you are entitled under this Agreement (as
so amended) will be treated as an excess parachute payment, this Agreement
shall be so amended.
An amendment to this Agreement pursuant to Paragraph 9F(i) hereof
shall reduce, first, the Deferred Compensation (and, concomitantly, the Monthly
Amount), second (if applicable), the amount payable under Paragraph 9A(i)(c)
hereof by virtue of your election under Paragraph 9D hereof to treat an event
described therein as constituting the termination of your employment, and
third, on a pro-rata basis, all other amounts (other than amounts payable
pursuant to Paragraph 5 hereof, which shall in any event be paid in full) to
which you are entitled hereunder.
G. Retirement. If not previously terminated under any
of the previously outlined provisions, your employment hereunder shall
terminate when you retire from full-time employment with the Company, which
shall occur no earlier than August 5, 2003, at which time the Company shall pay
to you the following:
(i) A single lump sum payment, not later than the
last day of your employment, of:
(a) Any accrued but unpaid salary set
forth in Paragraph 2A (as adjusted by Paragraph 2B) hereof, including salary in
respect of any accrued and accumulated vacation, due to you at the date of such
termination; and
19
<PAGE> 20
(b) Any amounts owing, but not yet paid,
pursuant to Paragraph 5 hereof;
(ii) A single lump sum payment of any accrued but
unpaid incentive compensation as set forth in Paragraph 2C hereof due to you at
the date of such termination for the fiscal year ending immediately prior to
the date of such termination, which shall be paid within three (3) months of
the end of such fiscal year;
(iii) A single lump sum payment of any incentive
compensation set forth in Paragraph 2C hereof earned in the fiscal year of the
termination of your employment, which incentive compensation shall be
determined on the basis of the Company's operations through June 30 of such
fiscal year, and shall be pro-rated through the last day of your employment,
and shall be paid within three (3) months of such June 30; and
(iv) The Deferred Compensation as set forth in
Paragraph 2D hereof, with payment of the Monthly Amount beginning on the first
day of the month immediately succeeding the last day of your employment. The
Company shall have no further obligation to you under this Agreement and you
shall have no further obligation to the Company under this Agreement except as
provided in Paragraph 12 and Paragraph 13 hereof.
10. SOURCE OF PAYMENTS. All payments provided for hereunder shall
be paid from the general funds of the Company. The Company may, but shall not
be required to, make any investment or investments whatsoever, including the
purchase of a life insurance contract or contracts on your life, to provide it
with funds to satisfy its obligations
20
<PAGE> 21
hereunder; provided, however, that neither you nor your beneficiary or
beneficiaries, nor any other person, shall have any right, title, or interest
whatsoever in or to any such investment or contracts. If the Company shall
elect to purchase a life insurance contract or contracts on your life to
provide the Company with funds to satisfy its obligations hereunder, the
Company shall at all times be the sole and complete owner and beneficiary of
such contract or contracts, and shall have the unrestricted right to use all
amounts and to exercise all options and privileges thereunder without the
knowledge or consent of you, your beneficiary or beneficiaries, or any other
person, it being expressly agreed that neither you, any such beneficiary or
beneficiaries, nor any other person shall have any right, title, or interest
whatsoever in or to any such contract or contracts. Notwithstanding anything
to the contrary contained in this Paragraph 10, if the Company purchases any
such contract or contracts, you shall have the right, upon the termination of
your employment by the Company to purchase as soon after such termination as
possible any one or more of such contracts for an amount equal to the cash
surrender value thereof; provided, however, that you notify the Company in
writing of your intention to make any such purchase no later than thirty (30)
days subsequent to such termination.
11. ENFORCEMENT OF RIGHTS. Nothing in this Agreement, and no
action taken pursuant to its terms, shall create or be construed to create a
trust or escrow account of any kind, or a fiduciary relationship between the
Company and you, your beneficiary or beneficiaries, or any other person. You,
your beneficiary or beneficiaries, and any other person or persons claiming a
right to any payments or interests hereunder shall rely solely on the unsecured
promise of the Company, and nothing herein shall be construed to give
21
<PAGE> 22
you, your beneficiary or beneficiaries, or any other person or persons, any
right, title, interest, or claim in or to any specific asset, fund, reserve,
account, or property of any kind whatsoever owned by the Company or in which it
may have any right, title, or interest now or in the future, but you or your
beneficiary or beneficiaries shall have the right to enforce a claim for
benefits hereunder against the Company in the same manner as any unsecured
creditor. Notwithstanding anything to the contrary set forth in this Paragraph
11, the Company agrees to consider the feasibility of paying to a so-called
"rabbi trust," as described in the Internal Revenue Service's Revenue Procedure
92-64, the amounts necessary for the Company to fund the Deferred Compensation
set forth in Paragraph 2D hereof.
12. INVENTIONS AND CONFIDENTIAL INFORMATION. So long as you shall
be employed by the Company or BAM, you agree promptly to make known to the
Company the existence of any and all creations, inventions, discoveries, and
improvements made or conceived by you, either solely or jointly with others,
during the term of this Agreement and for three (3) years thereafter, and to
assign to the Company the full exclusive right to any and all such creations,
inventions, discoveries, and improvements relating to any subject matter with
which the Company is now or shall become concerned, or relating to any other
subject matter if made with the use of the Company's time, materials, or
facilities. To the fullest extent permitted by law, any of the foregoing
inventions shall be considered as "work-made-for-hire" and the Company shall be
the owner thereof. You further agree, without charge to the Company but at its
expense, if requested to do so by the Company, to execute, acknowledge, and
deliver all papers, including applications or assignments for patents,
trademarks, and copyrights, and papers relating
22
<PAGE> 23
thereto, as may be considered by the Company to be necessary or desirable to
obtain or assign to the Company any and all patents, trademarks, or copyrights
for any and all such creations, inventions, discoveries, and improvements in
any and all countries, and to vest title thereto in the Company in all such
creations, inventions, discoveries, and improvements as indicated above
conceived during your employment by the Company, and for three (3) years
thereafter. You further agree that you will not disclose to any third person
any trade secrets or proprietary information of the Company, or use any trade
secrets or proprietary information of the Company in any manner, except in the
pursuit of your duties as an employee of the Company, and that you will return
to the Company all materials (whether originals or copies) containing any such
trade secrets or proprietary information (in whatever medium) on termination
of your employment by the Company. The obligations set forth in this Paragraph
12 shall survive the termination of your employment hereunder. This Paragraph
12 replaces the agreement executed by you on January 5, 1993, which prior
agreement is now null and void.
13. RESTRICTIVE COVENANT. For a period of three (3) years after
the termination of your employment by the Company, you shall not, in any
geographical location at which there is at that time business conducted by the
Company which was conducted by the Company at the date of such termination,
directly or indirectly, own, manage, operate, control, be employed by,
participate in, or be connected in any manner with, the ownership, management,
operation, or control of any business similar to or competitive with such
business conducted by the Company without the written consent of the Company.
23
<PAGE> 24
14. LEGAL FEE. The Company shall reimburse to you, or pay
directly, upon submission in either event to the Company of a statement for
services, the amount payable by you to any attorney of your choice that you
have retained to advise you with regard to this Agreement; provided, however,
that such reimbursement or payment shall not exceed ten thousand dollars
($10,000).
15. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach or asserted breach thereof, shall be
settled by arbitration to be held in New York, New York in accordance with the
rules then obtaining of the American Arbitration Association, and the judgment
upon the award rendered may be entered in any court having jurisdiction
thereof. The arbitrator shall determine which party shall bear the costs of
such arbitration, including attorneys' fees.
16. NON-ASSIGNABILITY. Your rights and benefits hereunder are
personal to you, and shall not be alienated, voluntarily or involuntarily,
assigned or transferred.
17. BINDING EFFECT. This Agreement shall be binding upon the
parties hereto, and their respective assigns, successors, executors,
administrators, and heirs. In the event the Company becomes a party to any
merger, consolidation, or reorganization, this Agreement shall remain in full
force and effect as an obligation of the Company or its successors in interest.
None of the payments provided for by this Agreement shall be subject to seizure
for payment of any debts or judgments against you or your beneficiary or
beneficiaries, nor shall you or any such beneficiary or beneficiaries have any
right to transfer or encumber any right or benefit hereunder; provided,
however, that the undistributed
24
<PAGE> 25
portion of the Deferred Compensation shall at all times be subject to set-off
by the Company for debts owed by you to the Company.
18. ENTIRE AGREEMENT. This Agreement contains the entire
agreement relating to your employment by the Company and BAM. It may not be
changed orally, and may be changed only by an agreement in writing signed by
the party against whom enforcement of any waiver, change, modification,
extension, deletion or revocation is sought.
19. NOTICES. All notices and communications hereunder shall be in
writing, sent by certified or registered mail, return receipt requested,
postage prepaid; by facsimile transmission, time and date of receipt noted
thereon; or by hand-delivery properly receipted. The actual date of receipt as
shown by the receipt therefor shall determine the time at which notice was
given. All payments required hereunder by the Company to you shall be sent
postage prepaid, or, at your election, shall be transferred to you
electronically to such bank as you designate in writing to the Company,
including designation of the applicable electronic address. The foregoing
items (other than any electronic transfer to you) shall be addressed as follows
(or to such other address as the Company and you may designate in writing from
time to time):
To the Company: To you:
- - - - - --------------- -------
Baldwin Technology Company, Inc. Gerald A. Nathe
65 Rowayton Avenue 11448 Bronzedale Drive
Rowayton, CT 06853 Oakton, VA 22124
Facsimile: 203-852-7040 Facsimile: 703-825-7525
25
<PAGE> 26
20. NEW YORK LAW TO GOVERN. This Agreement shall be governed by,
and construed and enforced according to, the domestic laws of the State of New
York without giving effect to the principles of conflict of laws thereof.
Very truly yours,
BALDWIN TECHNOLOGY COMPANY, INC.
By: /s/ Wendell M. Smith
---------------------
AGREED TO AND ACCEPTED:
/s/ Gerald A. Nathe
- - - - - --------------------
Gerald A. Nathe
26
<PAGE> 1
EXHIBIT 10.23
================================================================================
BALDWIN AMERICAS CORPORATION
BALDWIN TECHNOLOGY LIMITED
$25,000,000 of
8.17% JOINT AND SEVERAL SENIOR NOTES DUE OCTOBER 29, 2000
(PPN: 05777* AA 8)
________________________________________________________________________________
NOTE AGREEMENT
________________________________________________________________________________
Dated as of October 29, 1993
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. AUTHORIZATION OF ISSUE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. PURCHASE AND SALE OF NOTES; CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. PREPAYMENT; SCHEDULED PAYMENTS OF PRINCIPAL . . . . . . . . . . . . . . . . . . . . . . . 3
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5A Financial Reporting by the Company . . . . . . . . . . . . . . . . . . . . . . . . 5
5B Information Required by Rule 144A . . . . . . . . . . . . . . . . . . . . . . . . 8
5C Inspection of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5D Corporate Existence, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5E Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5F Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5G Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5H Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5I Scope of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5J Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5K Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5L Maintenance of Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . 9
5M Payment of Trade Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6A Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6A(1) Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6A(2) Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6B Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6C Liens and Other Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6C(1) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6C(2) Loans, Advances and Investments . . . . . . . . . . . . . . . . . . . . . . 12
6C(3) Sale of Stock and Debt of Subsidiaries . . . . . . . . . . . . . . . . . . . 13
6C(4) Merger and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . 13
6C(5) Subsidiary Dividend and other
Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6C(6) Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 15
6C(7) Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6D Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6D(1) Company Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6D(2) Subsidiary Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6E Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6F Tax Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
8 REPRESENTATIONS, COVENANTS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . 20
8A Organization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8B Business; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8C Actions Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8D Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8E Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8F Conflicting Agreements and Other Matters . . . . . . . . . . . . . . . . . . . . . 22
8G Offering of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8H Regulation G, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8I ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8J Governmental Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8K Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8L Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8M Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8N Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8O Status Under Certain Federal Statute . . . . . . . . . . . . . . . . . . . . . . . 25
9 REPRESENTATIONS OF THE PURCHASERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11A Note Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11B Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11C Consent to Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11D Persons Deemed Owners; Participations . . . . . . . . . . . . . . . . . . . . . . 35
11E Survival of Representations and Warranties;
Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11F Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11G Disclosure to Other Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11H Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11I Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11J Solicitation of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11K Reproduction of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11L Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11M Consent to Jurisdiction and Service . . . . . . . . . . . . . . . . . . . . . . . 37
11N Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11O Form, Registration, Transfer and Exchange of
Notes; Lost Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11P Joint and Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
PURCHASER SCHEDULE
EXHIBIT A - Form of Note
EXHIBIT B - Wiring Instructions
EXHIBIT C-1 - Form of Opinion of Counsel to the Company, the
Borrowers and the Affiliate Guarantors
EXHIBIT C-2 - Form of Opinion of Bermuda Counsel to BTL
-ii-
<PAGE> 4
EXHIBIT D - Form of Officers' Certificate
EXHIBIT E-1 - Form of Affiliate Guaranty from the Company
EXHIBIT E-2 - Form of Affiliate Guaranty from the Affiliate
Guarantors
EXHIBIT F - Form of Contribution Agreement
EXHIBIT G - Form of Subordination Agreement
SCHEDULE 3H - Debt to be Repaid
SCHEDULE 6C(1) - Debt Secured by Liens
SCHEDULE 6C(6) - Transactions with Affiliates
SCHEDULE 8A - Incorporation and Foreign Qualifications of
the Company and Subsidiaries; Ownership
of Subsidiaries
SCHEDULE 8C - Actions Pending
-iii-
<PAGE> 5
BALDWIN AMERICAS CORPORATION
700 Hackney Avenue
Elkwood, Virginia 22718
--------------------------
BALDWIN TECHNOLOGY LIMITED
Clarendon House
Church Street
Hamilton, HM11 Bermuda
--------------------------
BALDWIN TECHNOLOGY COMPANY, INC.
65 Rowayton Avenue
Rowayton, Connecticut 06853
As of October 29, 1993
To: Each of the Purchasers
Listed on the Purchaser
Schedule
Gentlemen:
The undersigned, Baldwin Technology Company, Inc., a Delaware
corporation (the "COMPANY"), Baldwin Americas Corporation, a Delaware
corporation ("BAM"), and Baldwin Technology Limited, a Bermuda corporation
("BTL"; BAM and BTL are hereinafter referred to individually as a "BORROWER"
and collectively as the "BORROWERS"), agree with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Borrowers will authorize
the issue and sale of their Joint and Several Senior Promissory Notes, in the
aggregate principal amount of $25,000,000, to be dated the date of issue, to
mature October 29, 2000, to bear interest on the unpaid principal balance from
the date of issue until the principal shall have become due and payable at the
rate of 8.17% per annum, payable semi-annually in arrears, and to bear interest
on overdue principal, overdue premium and, to the extent permitted by law,
overdue interest, at the rate of 10.17% per annum and to be substantially in
the form of EXHIBIT A. Such notes, which may be issued pursuant to any
provision of this Agreement and any such notes which may be issued hereunder in
substitution or exchange for any such notes pursuant to any such provision, are
collectively referred to as the "NOTES".
2. PURCHASE AND SALE OF NOTES; CLOSING.
2A. PURCHASE AND SALE OF NOTES. Subject to the terms and
conditions of this Agreement, the Borrowers shall sell to each of you (each
individually a "PURCHASER" and, collectively, the "PURCHASERS"), and each
Purchaser shall severally purchase from the Borrowers, Notes of the respective
principal amounts, or aggregate principal amounts, set forth after its name in
the PURCHASER SCHEDULE at a price equal to 100% of such principal amount,
registered in its name or that of its nominee or nominees specified in the
PURCHASER SCHEDULE.
2B. CLOSING. The purchase and sale of the Notes shall take place
at the offices of the Purchasers' special counsel, Sullivan & Worcester
("SPECIAL COUNSEL"), One Post Office Square, Boston, Massachusetts 02109, at a
closing (the "CLOSING") to be held on October 29, 1993 or on such other date as
the Purchasers and the Borrowers may agree (the "CLOSING DATE"). At the
Closing, the Borrowers will
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deliver to each Purchaser the Note or Notes to be purchased by it, against
payment of the purchase price therefor by transfer of immediately available
funds in accordance with the wiring instructions stated on EXHIBIT B.
3. CONDITIONS OF CLOSING. Each Purchaser's obligation to
purchase and pay for its Note or Notes is subject to the fulfillment to its
satisfaction or its written waiver, on or before the Closing Date, of the
following conditions:
3A. OPINION OF COMPANY COUNSEL. Each Purchaser shall have
received opinions, dated the Closing Date and addressed to it, from Morgan,
Lewis & Bockius, counsel to the Company, the Borrowers and the Affiliate
Guarantors, in substantially the form of EXHIBIT C-1, and from Conyers, Dill &
Pearman, Bermuda counsel to BTL, in substantially the form of EXHIBIT C-2. To
the extent that either opinion referred to above in this PARAGRAPH 3A is
rendered in reliance upon the opinion of any other counsel, each Purchaser
shall have received a copy of the opinion of such other counsel, dated the
Closing Date and addressed to it, or a letter from such other counsel, dated
the Closing Date and addressed to it, in form and substance satisfactory to
each Purchaser, authorizing it to rely on such other counsel's opinion.
3B. OPINION OF PURCHASERS' SPECIAL COUNSEL. Each Purchaser shall
have received from the Purchasers' Special Counsel an opinion satisfactory to
it as to such matters incident to the transactions contemplated by this
Agreement as it may reasonably request.
3C. REPRESENTATIONS AND WARRANTIES; COMPLIANCE; NO DEFAULT. The
representations and warranties contained in PARAGRAPH 8 shall be true on and as
of the Closing Date; there shall exist on the Closing Date no Default or Event
of Default; the Company, the Borrowers and the Affiliate Guarantors shall each
have performed and complied with all agreements and conditions contained in
this Agreement required to be performed or complied with by it on or prior to
the Closing; and the Company and the Borrowers shall each have delivered to
each Purchaser an Officers' Certificate in the form of EXHIBIT D, dated the
Closing Date, certifying as to the matters set forth in this PARAGRAPH 3C.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The offering,
issuance, purchase and sale of, and payment for, the Notes to be purchased by
the Purchasers on the Closing Date on the terms and conditions of this
Agreement (including the use of the proceeds of such Notes by the Borrowers)
shall not violate any applicable law or governmental regulation (including,
without limitation, section 5 of the Securities Act or Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System) and shall not subject
any Purchaser to any tax, penalty, liability or other condition adverse to it
under or pursuant to any applicable law or governmental regulation, and the
Purchasers shall have received such certificates or other evidence as they may
request to establish compliance with this condition.
3E. PRIVATE PLACEMENT NUMBER. A Private Placement Number shall
have been assigned to the Notes by Standard & Poor's CUSIP Service Bureau.
3F. PROCEEDINGS. All corporate and other proceedings taken or to
be taken by the Company, the Borrowers and the Affiliate Guarantors in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be satisfactory in substance and form to each
Purchaser and Purchasers' Special Counsel, and each Purchaser shall have
received all such counterpart originals or certified or other copies of such
documents as it may reasonably request.
3G. CONSENT OF LENDERS AND OTHER PERSONS. The Company and the
Borrowers shall have received the written consent of all Persons whose consent
is necessary for the transactions contemplated by this Agreement satisfactory
in form and substance to each Purchaser.
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<PAGE> 7
3H. REPAYMENT OF DEBT. Concurrently with the Closing, the
Borrowers shall have applied or the Company shall have caused its appropriate
Subsidiary to apply $24,550,000 of the net proceeds of the sale of the Notes to
the repayment of the Debt identified on SCHEDULE 3H and all such Debt shall
have been repaid in its entirety.
3I. GUARANTIES. Each of the Company, Baldwin Europe Consolidated
Inc., a Delaware corporation ("BEC"), and Baldwin Asia Pacific Corporation, a
Delaware corporation ("BAP"), shall have guaranteed the payment of the Notes
and the performance by the Borrowers of their obligations under this Agreement
pursuant to separate guaranties in the form of EXHIBIT E-1 in respect of the
Company and in the form of EXHIBIT E-2 in respect of BEC and BAP, such
guaranties shall be in full force and effect, and the Purchasers shall have
received from the Company and the Borrowers such confirmation thereof as they
or their Special Counsel may reasonably request.
3J. CONTRIBUTION AGREEMENT. The Company, the Borrowers, BEC and
BAP shall have entered into a Contribution Agreement in the form of EXHIBIT F
hereto (the "CONTRIBUTION AGREEMENT"), such agreement shall be in full force
and effect, and the Purchasers shall have received from the Company and the
Borrowers such confirmation thereof as they or their Special Counsel may
reasonably request.
4. PREPAYMENT; SCHEDULED PAYMENTS OF PRINCIPAL. The Notes may be
prepaid only under the circumstances set forth in PARAGRAPHS 4A and 4D and
shall be repaid in accordance with PARAGRAPH 4C or upon any acceleration of
final maturity as provided in PARAGRAPH 7.
4A. OPTIONAL PREPAYMENT WITH MAKE WHOLE PREMIUM. The Borrowers
shall have the option of prepaying the Notes at any time or from time to time
in whole or in part (in minimum amounts of $1,000,000 or larger amounts which
are integral multiples of $250,000), at 100% of the principal amount so
prepaid, plus interest accrued thereon to the Settlement Date and the Make
Whole Premium, if any. All partial prepayment(s) of the Notes pursuant to this
PARAGRAPH 4A shall be applied to the obligations of the Borrowers to make the
mandatory repayments of principal required in PARAGRAPH 4C below in inverse
order of maturity.
4B. NOTICE OF OPTIONAL PREPAYMENT. The Borrowers shall give each
Holder to be prepaid in whole or in part pursuant to PARAGRAPH 4A irrevocable
written notice of such prepayment at least 30 days prior to the Settlement
Date, specifying (i) the Settlement Date and (ii) the Called Principal of the
Notes held by each such Holder, and stating that such prepayment is an optional
prepayment pursuant to PARAGRAPH 4A of this Agreement. Upon the giving of such
notice, the Called Principal as specified in such notice, together with
interest thereon to the Settlement Date and the Make Whole Premium, if any,
shall become due and payable on the Settlement Date. On the date which is two
(2) Business Days prior to the Settlement Date of a prepayment under PARAGRAPH
4A, the Borrowers shall deliver to the Holder of each Note being prepaid an
Officers' Certificate stating whether a Make Whole Premium is payable in
connection with such prepayment and setting forth in detail the calculations
used in making such determination.
4C. SCHEDULED PAYMENTS OF PRINCIPAL. The Borrowers shall,
beginning October 29, 1997 and on each October 29th thereafter until October
29, 1999, repay $6,250,000 of the aggregate principal amount of the Notes, each
at 100% of the principal amount so prepaid plus interest accrued thereon to the
date of payment. On October 29, 2000, all remaining principal and accrued
interest then outstanding under the Notes shall be repaid in full.
4D. PREPAYMENT UPON CHANGE OF CONTROL. The Borrowers shall give
prompt written notice (a "CHANGE OF CONTROL NOTICE") to each Holder not less
than 30 days prior to the effective date of any Change of Control which
requires or has received the approval of the Company's stockholders or Board of
Directors. The Change of Control Notice shall identify the Persons involved,
describe the transaction, include such financial and other information as is
available to the Company and the Borrowers with
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<PAGE> 8
reasonable effort that shall be reasonably necessary to each Holder to make an
informed decision as to whether to elect to require prepayment and set forth
the effective date of such proposed Change of Control. Any Holder, by giving
written notice of such election not later than five (5) Business Days prior to
the stated effective date of such Change of Control, shall have the option to
require the Borrowers to prepay all, but not less than all, of its Notes at
100% of the principal amount thereof plus interest accrued thereon to the
Settlement Date and the Make Whole Premium, if any. Any such prepayment shall
be made on the effective date of the Change of Control.
If the proposed terms of a proposed Change of Control change
substantially, the Borrowers shall deliver to each Holder a revised Change of
Control Notice which includes the information required above and each Holder
shall then have another opportunity to elect to require prepayment of its Notes
(by delivering to the Borrowers written notice of such election not later than
ten (10) days following receipt of such revised Change of Control Notice), and
any such prepayment shall occur on the later to occur of (a) the effective date
of such Change of Control or (b) three (3) Business Days following the
Borrowers' receipt of the Holders election to require repayment.
On the date which is two (2) Business Days prior to the Settlement
Date of a prepayment under this PARAGRAPH 4D, the Borrowers shall deliver to
the Holder of each Note being prepaid an Officers' Certificate stating whether
a Make Whole Premium is payable in connection with such prepayment and setting
forth in detail the calculations used in making such determination.
If the Borrowers fail to give proper notice of a Change of Control or
if a Change of Control occurs with respect to which the Borrowers were not
obligated to give prior notice, then, without limitation of any other rights
the Holders may have by reason thereof under this Agreement, any Holder whose
Notes were not prepaid in connection with such Change of Control may at any
time thereafter or, if the Borrowers give a Change of Control Notice after a
Change of Control has occurred, not later than thirty (30) days following the
date that the Borrowers gave such Change of Control Notice, require the
Borrowers to prepay in full the aggregate principal amount of its Notes at 100%
of the principal amount so prepaid plus accrued interest to the Settlement Date
and the Make Whole Premium, if any.
4E. APPLICATION OF PAYMENTS. Upon any partial prepayment of the
Notes pursuant to PARAGRAPH 4A and any scheduled repayment of the Notes
pursuant to PARAGRAPH 4C, the principal amount so prepaid plus the interest
accrued thereon and the Make Whole Premium, if any, shall be allocated to all
Notes at the time outstanding in proportion to their respective outstanding
principal amounts. All payments made to the Holders on account of the Notes
shall be applied first to expenses, then to accrued interest (including accrued
interest on interest and on the Make Whole Premium, if any), then to the Make
Whole Premium, if any, and then to principal.
4F. RETIREMENT OF NOTES. The Company and the Borrowers shall not,
and shall not permit any of their Affiliates to, prepay or otherwise retire in
whole or in part prior to their stated maturity (other than by prepayment
pursuant to PARAGRAPH 4A or 4D, scheduled repayment pursuant to PARAGRAPH 4C or
upon acceleration of such final maturity pursuant to PARAGRAPH 7A), or purchase
or otherwise acquire, directly or indirectly, Notes held by any Holder unless
the Company, such Borrower or such Affiliate shall have offered to prepay or
otherwise retire or purchase or otherwise acquire, as the case may be, the same
proportion of the aggregate principal amount of Notes held by each other Holder
at the time outstanding upon the same terms and conditions. No Notes so
prepaid or otherwise retired or purchased or otherwise acquired by the Company,
either Borrower or any their Affiliates shall thereafter be reissued or deemed
to be outstanding for any purpose under this Agreement.
4G. MAKE WHOLE PREMIUM. The Borrowers acknowledge that the Make
Whole Premium due at any optional prepayment or prepayment upon a Change of
Control or upon acceleration of final maturity
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<PAGE> 9
has been negotiated with the Purchasers to provide a bargained for rate of
return on the Notes and is not a penalty.
5. AFFIRMATIVE COVENANTS. The Company and the Borrowers covenant
and agree that:
5A. FINANCIAL REPORTING BY THE COMPANY. The Company will deliver
to each Holder and to any prospective Transferee of a Note designated by any
Holder in writing to the Borrowers:
(i) as soon as practicable and in any event not more than
45 days after the end of each quarterly period in each fiscal year of
the Company (except the fourth quarter), a consolidated (and upon the
request of any Holder, consolidating) balance sheet of the Company and
its Subsidiaries as at the end of such quarterly period and for the
fiscal year to date, and the related consolidated (and, with respect
to statements of income and changes in shareholders' equity, upon the
request of any Holder, consolidating) statements of income, of changes
in shareholders' equity and of cash flows of the Company and its
Subsidiaries for such period(s) setting forth, in each case in
comparative form, figures for the corresponding period(s) in the
preceding fiscal year of the Company, all in reasonable detail and in
accordance with GAAP and certified by the chief accounting officer or
chief financial officer of the Company as fairly presenting the
consolidated (and, if requested, consolidating) financial condition of
the Company and its Subsidiaries as at the dates indicated and the
consolidated results of their operations and cash flows, in each case
for the periods indicated, in conformity with GAAP (except as
disclosed in the certificate of such chief accounting officer or chief
financial officer with any changes in accounting policies discussed in
reasonable detail), subject to changes resulting from year-end
adjustments not material in scope or amount;
(ii) as soon as practicable and in any event not more than
90 days after the end of each fiscal year of the Company, a
consolidated and consolidating balance sheet of the Company and its
Subsidiaries as of the end of such year and the related consolidated
(and, with respect to statements of income and changes in
shareholders' equity, upon the request of any Holder, consolidating)
statements of income, of cash flows and of changes in shareholders'
equity of the Company and its Subsidiaries for such year, and setting
forth in each case, in comparative form, corresponding figures for the
preceding fiscal year of the Company, all in reasonable detail and in
accordance with GAAP and (a) in the case of such consolidated
financial statements accompanied by a report thereon of Price
Waterhouse or other independent certified public accountants of
recognized national standing selected by the Company, which report
shall be without limitations to the scope of the audit and shall state
that such consolidated financial statements present fairly the
financial condition of the Company and its Subsidiaries as at the
dates indicated and the consolidated results of their operations and
cash flows for the periods indicated in conformity with GAAP (except
as otherwise specified in such report) and that the audit by such
accountants in connection with such consolidated financial statements
has been made in accordance with generally accepted auditing standards
and (b) in the case of any consolidating financial statements,
certified by the chief accounting officer or chief financial officer
of the Company as presenting fairly the information contained therein
in conformity with GAAP;
(iii) together with each delivery of financial statements
of the Company and its Subsidiaries pursuant to SUBPARAGRAPHS (I) and
(II) of THIS PARAGRAPH 5A, a certificate of the chief financial
officer of the Company (a) stating that (i) the signer has reviewed
the terms of this Agreement and the Notes and has made, or caused to
be made under his supervision, a review in reasonable detail of the
transactions and condition of the Company and its Subsidiaries during
the fiscal period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
fiscal period, and that to the best of his knowledge after reasonable
investigation the signer has no knowledge of the existence as at the
date of such certificate, of any condition or event which constitutes
a Default or Event of Default or, if any such
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<PAGE> 10
condition or event existed or exists, specifying the nature and period
of existence thereof and what action the Company and the Borrowers
have taken, are taking or propose to take with respect thereto and
(ii) the Company, the Borrowers and their Subsidiaries are in
compliance with the provisions of PARAGRAPHS 6A, 6B, 6C and 6D and (b)
demonstrating (with computations in reasonable detail) compliance by
the Company, the Borrowers and their Subsidiaries with the provisions
of PARAGRAPHS 6A, 6B, 6C(4)(V) and 6D;
(iv) together with each delivery of financial statements
of the Company and its Subsidiaries pursuant to SUBPARAGRAPH (II) of
this PARAGRAPH 5A, a certificate by the Company's independent public
accountants stating (a) that their audit examination has included a
review of the terms of this Agreement and the Notes as they relate to
accounting matters and that such review is sufficient to enable them
to make the statement referred to in CLAUSE (C) of this SUBPARAGRAPH
(IV), (b) whether, in the course of their audit examination, there has
been disclosed the existence during the fiscal year covered by such
financial statements (and whether they have knowledge of the existence
as of the date of such accountants' certificate) of any condition or
event which constitutes a Default or Event of Default under PARAGRAPH
6A, 6B, 6C (other than PARAGRAPHS 6C(1) and 6C(6)), or 6D, and if
during their audit examination there has been disclosed (or if they
have knowledge of) such a condition or event, specifying the nature
and period of existence thereof (it being understood, however, that
such accountants shall not be liable to any Person by reason of their
failure to obtain knowledge of any Default or Event of Default which
would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards), and (c) that
based on their annual examination nothing came to their attention
which causes them to believe that the information contained in the
certificate of the Company's chief financial officer delivered
pursuant to SUBPARAGRAPH (III) of this PARAGRAPH 5A insofar as it
relates to accounting or auditing matters is not correct or that the
matters set forth in such certificate are not stated in accordance
with the terms of this Agreement (it being understood that such
independent public accountants' examination was not primarily directed
toward determining the accuracy of such information);
(v) promptly after receipt thereof by the Company or
either Borrower, copies of all material reports submitted to the
Company or such Borrower by independent public accountants and
consultants in connection with each annual, interim or special audit
of the books of the Company or any Significant Subsidiaries made by
such accountants;
(vi) promptly after any officer of the Company, either
Borrower or any of their Subsidiaries obtain knowledge (a) that a
condition or event exists that constitutes a Default or Event of
Default, (b) that any Holder has given any notice or taken any other
action with respect to a claimed Default or Event of Default under
this Agreement, (c) of any condition or event peculiar to the Company,
either Borrower or their Subsidiaries which could reasonably be
expected to have a Material Adverse Effect on the Company, any
Significant Subsidiary or the Consolidated Group, (d) that any Person
has given any notice to the Company, either Borrower or any of their
Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in SUBPARAGRAPH
(III) of PARAGRAPH 7A, (e) of the institution of any litigation
involving claims against the Company, either Borrower or any of their
Subsidiaries equal to or greater than $500,000 with respect to any
single cause of action or $1,000,000 in the aggregate, (f) of the
assertion by any Person of a claim for breach or violation of any
Environmental Law or for damages resulting from such breach or
violation against the Company, either Borrower or any of their
Subsidiaries which if adversely determined against the Company or such
Borrower or Subsidiary would have a Material Adverse Effect on the
Company or such Borrower or Subsidiary or on the Consolidated Group,
(g) of the assertion of any claim by any Person seeking injunctive
relief against the Company, either Borrower or any of their
Subsidiaries which would impair the conduct by the Company, either
Borrower or any of their Subsidiaries of its business in the ordinary
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<PAGE> 11
course or the performance of this Agreement, the Notes or any Related
Agreement, or (h) the occurrence of any default or any event of
default under the Revolving Credit Facility or any other agreement,
instrument or note evidencing or pursuant to which any other Debt, the
outstanding principal amount of which exceeds $1,000,000, has been
issued by the Company, either Borrower or any of their Subsidiaries,
an Officers' Certificate specifying the nature and period of existence
of any such condition or event, or specifying the notice given or
action taken by such Holder or Person and the nature of such claimed
Default, Event of Default, event or condition, and what action the
Company or the Borrowers have taken, are taking or propose to take
with respect thereto;
(vii) promptly after any officer of the Company, either
Borrower or any of their Subsidiaries obtain knowledge of the
occurrence of any (i) "reportable event", as such term is defined in
section 4043 of ERISA with respect to any Plan, (ii) "prohibited
transaction" as such term is defined in section 4975 of the Code, in
connection with any Plan or any trust created thereunder which is not
otherwise exempt under a statutory, class or administrative exemption,
(iii) event described in PARAGRAPH 6E, (iv) reorganization or
termination of any Multiemployer Plan to which the Company, either
Borrower or any Related Person is obligated or has been obligated to
contribute, (v) termination of any Plan, or proceedings to terminate
any Plan which are pending or threatened, (vi) liability to or on
account of any Plan under section 4062, 4063 or 4064 of ERISA which
will or may be incurred by the Company, either Borrower or a Related
Person, a written notice specifying the nature thereof, what action
the Company, such Borrower or any Related Person has taken, is taking
or proposes to take with respect thereto, and, when known, any action
taken or threatened by the Internal Revenue Service or the PBGC with
respect thereto;
(viii) promptly after the transmission thereof, copies of
all such financial statements, proxy statements, notices and reports
as the Company, either Borrower or any of their Subsidiaries shall
send to its public debtholders or public stockholders and copies of
all registration statements (without exhibits) and all reports which
the Company, either Borrower or any of their Subsidiaries files with
the SEC;
(ix) promptly after the transmission thereof, copies of
all such financial statements, notices, certificates and reports as
the Company, either Borrower or any of their Subsidiaries shall send
to the lender(s) under the Revolving Credit Facility or to any other
lender, or group of lenders, if the aggregate Debt outstanding to such
lender, or group of lenders, (x) from the Company, the Borrowers and
their Subsidiaries (other than BAP and its Subsidiaries or BEC and its
Subsidiaries) exceeds $1,000,000 or (y) from BAP and its Subsidiaries
or BEC and its Subsidiaries exceeds $3,000,000;
(x) promptly after receipt thereof, copies of all
reports, statements and notices the Company, either Borrower or any of
their Subsidiaries may receive in accordance with Section 13(d) or
14(d) of the Exchange Act and the rules and regulations promulgated
thereunder by the SEC; and
(xi) with reasonable promptness, such other information
and data with respect to the Company, either Borrower or any of their
Subsidiaries as from time to time may be reasonably requested by any
Holder.
5B. INFORMATION REQUIRED BY RULE 144A. Each of them will, upon
the request of any Holder, provide such Holder, and any qualified institutional
buyer designated by such Holder, such financial and other information as such
Holder may reasonably determine to be necessary in order to permit compliance
with the information requirements of Rule 144A in connection with a resale or
proposed resale of Notes. For the purpose of this PARAGRAPH 5B, the term
"qualified institutional buyer" shall have the meaning specified in Rule 144A.
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<PAGE> 12
5C. INSPECTION OF PROPERTY. Each of them will permit any Person
designated by any Holder, at such Holder's expense (unless such inspection
shall be made during the continuance of a Default or after the occurrence of an
Event of Default, in which event the reasonable expense of such inspection
shall be borne by the Borrowers), to visit and inspect any of the properties of
itself or any of its Subsidiaries, to examine the corporate books and financial
records of itself or any of its Subsidiaries and make copies thereof or
extracts therefrom and to discuss the affairs, finances and accounts of itself
or any of its Subsidiaries with the principal officers of it or such
Subsidiary, and (prior to the occurrence and continuance of a Default or Event
of Default, upon consent of the Company or either Borrower (which consent shall
not be unreasonably withheld) and at the expense of the Holder, and during the
continuance of a Default or after the occurrence of an Event of Default without
the consent of the Company or either Borrower and at the expense of the
Borrowers) the Company's and each Borrower's independent public accountants
(and by this provision the Company and the Borrowers authorize such accountants
to discuss with any Person so designated the affairs, finances and accounts of
the Company, the Borrowers and their Subsidiaries), all at such reasonable
times and as often as such Holder may reasonably request.
5D. CORPORATE EXISTENCE, ETC. Each of them shall at all times
preserve and keep in full force and effect its and its Subsidiaries' corporate
existence, and rights and franchises material to the business of the Company,
any Significant Subsidiary or the Consolidated Group except as otherwise
specifically permitted by PARAGRAPH 6C(4), and will qualify, and will cause
each of its Subsidiaries to qualify, to do business in any jurisdiction where
the failure to do so would have a Material Adverse Effect on the Company, any
Significant Subsidiary or the Consolidated Group.
5E. PAYMENT OF TAXES AND CLAIMS. Each of them will pay, and will
cause each of its Subsidiaries to pay, (i) all income taxes before the same
shall become delinquent, except where such income taxes are contested in good
faith by appropriate proceedings promptly instituted and diligently conducted,
if adequate reserves therefor have been established on its books of account in
accordance with GAAP, and (ii) all other taxes, assessments and other
governmental charges imposed upon it or any of its properties or assets or in
respect of any of its franchises, business, income or profits before any
penalty or interest accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums which
have become due and payable, provided that no such tax, assessment, charge or
claim need be paid if it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and if such reserves
or other appropriate provision, if any, as shall be required by GAAP shall have
been made therefor.
5F. COMPLIANCE WITH LAWS, ETC. Each of them will comply, and will
cause each of its Subsidiaries to comply, with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority
(including, without limitation, the Occupational Safety and Health Act of 1970,
as amended, ERISA and all Environmental Laws), the violation of which would
have a Material Adverse Effect on the Company, any Significant Subsidiary or
the Consolidated Group.
5G. MAINTENANCE OF PROPERTIES. Each of them will maintain or make
adequate arrangements for the maintenance of, and will cause each of its
Subsidiaries to maintain or make adequate arrangements for the maintenance of,
in good repair and working order and condition, subject to reasonable wear and
tear and obsolescence, all properties used or useful in its or their business,
and from time to time make or cause to be made all appropriate repairs,
renewals and replacements thereof.
5H. INSURANCE. Each of them will maintain, and will cause each of
its Subsidiaries to maintain, with financially sound and reputable insurers,
insurance with respect to its properties and business and the properties and
business of its Subsidiaries in such forms and amounts and against such risks
customarily insured against by corporations of established reputation engaged
in the same or similar business and similarly situated.
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<PAGE> 13
5I. SCOPE OF BUSINESS. Each of them will engage, and will cause
its Subsidiaries to engage, only in businesses in substantially the same fields
as the businesses conducted on the date of this Agreement and described in the
Memorandum.
5J. USE OF PROCEEDS. The Borrowers will use $24,550,000 of the
proceeds of the sale of the Notes for repayment of the Debt designated on
SCHEDULE 3H and $450,000 of the proceeds for working capital of BAM and not for
any purpose which would violate any applicable law or governmental regulation
or which is otherwise prohibited under PARAGRAPH 6B or 8H.
5K. ENVIRONMENTAL COMPLIANCE. Each of them (i) will obtain and
maintain, and will cause each of its Subsidiaries to obtain and maintain, all
permits, licenses, and other authorizations that are required under all
Environmental Laws, (ii) will comply, and cause each of its Subsidiaries to
comply, with all terms and conditions of all such permits, licenses, and
authorizations and with all other applicable limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables contained in all Environmental Laws or in any regulation, ordinance,
code, plan, order, decree, judgment, injunction, notice, or demand letter
issued, entered, promulgated, or approved thereunder, except to the extent that
failure so to do does not have a Material Adverse Effect on the Company, either
Borrower, or any of their Subsidiaries, and (iii) will operate, and will cause
each of its Subsidiaries to operate, all property owned or leased by it such
that no claim or obligation, including a clean-up obligation, which would have
a Material Adverse Effect on the Company, either Borrower or any of their
Subsidiaries, shall arise under any Environmental Law, and if any claim is made
against the Company, either Borrower or their Subsidiaries or any such
obligation of the Company, either Borrower or any of their Subsidiaries, which
would have a Material Adverse Effect on the Company, either Borrower, any of
their Subsidiaries or the Consolidated Group, arises under any Environmental
Law, the party against whom such claim is made shall timely satisfy such claim
or obligation.
5L. MAINTENANCE OF BOOKS AND RECORDS. Each of them will do, and
will cause each of its Subsidiaries to do, the following: (i) keep proper
records and books of account with respect to its business activities in which
proper entries are made in the ordinary course of all dealings or transactions
of or in relation to its business and affairs; (ii) set up on its books
adequate reserves with respect to all taxes, assessments, charges, levies and
claims; and (iii) set up on its books reserves against doubtful accounts
receivable, advances and all other proper reserves (including reserves for
depreciation, obsolescence or amortization of its property). All
determinations pursuant to this PARAGRAPH 5L shall be made in accordance with,
or as required by, GAAP. Notwithstanding the foregoing, the Company, either
Borrower or any of their Subsidiaries may make adjustments and changes in the
manner in which their books and records are kept; provided, that:
(a) all such adjustments and changes shall be required or
permitted by GAAP but need not conform with its prior
accounting practice;
(b) each Holder shall be given (i) written notice from the Company
of all such changes or adjustments with the delivery of the
financial statements required by PARAGRAPH 5A(I) or 5A(II), as
the case may be, for the fiscal period in which such
adjustment or change was first put into effect, and (ii) with
the delivery of the financial statements required by PARAGRAPH
5A(II) a description by the independent certified public
accountants who audited such financial statements of the
effect of all such changes and adjustments put into effect in
the preceding fiscal year on such financial statements (a)
which are required by generally accepted auditing standards to
be referred to in such financial statements or such
independent certified public accountants' opinion thereon or
(b) if not required by generally accepted auditing standards,
with respect to which the Required Holders have reasonably
requested a description;
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(c) the financial covenants and ratios set forth in PARAGRAPH 6A
and the ratios set forth in PARAGRAPH 6D(1) shall continue to
be calculated without regard to such adjustments or changes
unless and until each Holder has consented thereto.
5M. PAYMENT OF TRADE PAYABLES. Each of them will pay, and will
cause each of its Subsidiaries to pay, all Trade Payables promptly (i) in
accordance with their terms or (ii) in accordance with prior practice, if
paying Trade Payables in accordance with such prior practice (and not in
accordance with their terms) would not, in each circumstance or in the
aggregate, have a Material Adverse Effect on the Company, any Significant
Subsidiary or the Consolidated Group.
6. NEGATIVE COVENANTS. The Company and the Borrowers covenant
and agree that:
6A. FINANCIAL COVENANTS. They will not:
6A(1). CONSOLIDATED NET WORTH. Permit Consolidated Net Worth,
calculated as of the last day of any fiscal quarter of the Company after June
30, 1993, to be less than (i) $70,000,000, plus (ii) an amount equal to 50% of
the aggregate of the Consolidated Net Income (without deduction for quarterly
losses) in each fiscal quarter thereafter.
6A(2). CURRENT RATIO. Permit the Current Ratio, calculated as of the
last day of any fiscal quarter after June 30, 1993, to be less than 1.4 to 1.0.
6B. RESTRICTED PAYMENTS. They will not make, and will not permit
any of their Subsidiaries to make, any Restricted Payments unless:
(i) the aggregate of all such Restricted Payments made
after June 30, 1993 does not exceed the sum of (x) $3,000,000; plus
(y) the net cash proceeds received by the Company from the issuance of
shares of Eligible Capital Stock; plus (z)(a) 50% of the Consolidated
Net Income from June 30, 1993 through the Company's fiscal quarter
most recently ended for which financial statements have been (or are
required to have been) furnished to the Holders in accordance with
PARAGRAPH 5A(I) or 5A(II), as the case may be, taken as a single
accounting period or, (b) in the event Consolidated Net Income for
such period shall be a negative number, 100% of such amount (expressed
as a negative number); and
(ii) no Event of Default or Default exists immediately
before or immediately after such payment or would otherwise reasonably
be anticipated to result therefrom.
6C. LIENS AND OTHER RESTRICTIONS. They will not, and will not
permit any of their Subsidiaries to:
6C(1). LIENS. Create, assume or suffer to exist any Lien on its
property or assets, whether now owned or hereafter acquired or upon any income
or profits therefrom, or transfer any property for the purpose of subjecting
the same to the payment of obligations in priority to the payment of its
general creditors except for:
(i) Liens on Fixed Assets incurred by the Company, either
Borrower or any of their Subsidiaries in the ordinary course of
business in connection with the acquisition or construction thereof,
which secure all or part of the purchase price thereof (including
Capitalized Leases) and Liens existing on property at the time of its
purchase or construction thereof; provided, however, that (a) each
such Lien is confined solely to the property so purchased or
constructed, improvements thereto and proceeds thereof, (b) such Liens
secure only the purchase price for such property and the amount of the
Debt secured by such Lien does not exceed 80% of the cost of such
property, (c) the Debt secured by such Lien is incurred at the time of
the acquisition, or within
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<PAGE> 15
one hundred twenty (120) days following the date of acquisition, of
the Fixed Assets subject thereto, and (d) the Debt secured thereby
would otherwise be permitted by PARAGRAPH 6D;
(ii) Liens representing any renewal, refunding or
extension of any Lien permitted by CLAUSE (I) of this PARAGRAPH 6C(1)
provided that the principal amount secured and then outstanding is not
increased, the Lien is not extended to other property and the Debt
secured thereby would be permitted under PARAGRAPH 6D;
(iii) Liens, and other charges incidental to the conduct of
its business, or the ownership of its property (including charges for
taxes or otherwise arising by operation of law, mechanics', carriers',
workers', repairmen's, warehousers' or other similar liens), which are
not incurred in connection with the borrowing of money or the securing
of Debt, provided in each case the obligation secured is not overdue
or is being contested in good faith by appropriate actions or
procedures promptly instituted and diligently conducted and such
reserves as shall be required by GAAP shall have been made therefor
and which in the aggregate do not materially diminish the value of the
property or assets of the Company, any Significant Subsidiary or of
the Consolidated Group;
(iv) Liens existing as of this date securing Debt and
listed on SCHEDULE 6C(1);
(v) deposits or pledges to secure worker's compensation,
unemployment insurance, old age benefits or other social security
obligations or retirement benefits;
(vi) Liens arising out of deposits in connection with, or
to secure the performance of, bids, tenders, trade contracts not for
the payment of money or leases, or to secure statutory obligations or
surety or appeal bonds, performance bonds or other pledges or deposits
for purposes of like nature in the ordinary course of business;
(vii) Liens arising under Title IV of ERISA which would not
have a Material Adverse Effect on the Company, any Significant
Subsidiary or on the Consolidated Group;
(viii) survey exceptions or encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct of the
activities of the Company and its Subsidiaries or which customarily
exist on properties of Persons engaged in similar activities and
similarly situated and which do not in any event have a Material
Adverse Effect on, or materially impair their use in the operation of
the business of, the Company, any Significant Subsidiary or the
Consolidated Group;
(ix) Liens arising from judgments or decrees not
constituting a Default or Event of Default unless such lien remains
undischarged, unstayed on appeal, unbonded and undismissed for a
period of sixty (60) consecutive days;
(x) Liens on receivables and inventory of the Company,
the Borrowers and their Subsidiaries if the aggregate principal amount
of the Debt (exclusive of any Debt set forth on Schedule 6C(1)),
secured by all such Liens does not at any time exceed $15,000,000; and
(xi) Liens on any capital stock of the Borrowers and the
Company's other Subsidiaries if the aggregate principal amount of the
Debt (exclusive of the Funded Debt represented by the Notes) secured
by all such Liens does not at any time exceed $20,000,000, provided
that the Notes are secured by all such Liens equally and ratably with
all other Debt secured thereby pursuant to a written agreement in form
and substance satisfactory to the Holders and their Special Counsel,
the
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<PAGE> 16
enforceability of which has been confirmed to the satisfaction of the
Holders and their Special Counsel.
6C(2). LOANS, ADVANCES AND INVESTMENTS. Make or permit to remain
outstanding any loan or advance to, or extend credit to, or own, purchase or
acquire any stock (including that of the Company), obligations or securities
of, or any other interest in, or make any capital contribution to any Person
(other than the present investment of the Company and its Subsidiaries in their
respective Subsidiaries), except that the Company and any of its Subsidiaries
may:
(i) make or permit to remain outstanding loans or
advances to any Wholly-Owned Subsidiary of the Company provided that
any such loans to a Borrower are subordinated to the payment of the
Funded Debt represented by the Notes and any such loans to an
Affiliate Guarantor are subordinated to such Affiliate Guarantor's
obligations under its Affiliate Guaranty, in each case pursuant to a
subordination agreement in the form of EXHIBIT G and the
enforceability of which has been confirmed to the reasonable
satisfaction of the Holders and their Special Counsel (a
"SUBORDINATION AGREEMENT");
(ii) acquire and own stock, obligations or securities
received in settlement of debts (created in the ordinary course of
business) owing to the Company or such Subsidiary;
(iii) own, purchase or acquire: (a) securities issued or
directly and fully and unconditionally guaranteed or insured by the
United States of America, Japan or any country which is a member of
the European Economic Community or any agency thereof backed by the
full faith and credit of the United States of America, Japan or any
country which is a member of the European Economic Community and
maturing within one (1) year from the date of acquisition; (b) demand
deposits in banks in the ordinary course of business (not for
investment purposes); (c) time deposits, or certificates of deposit
maturing within one (1) year from the date of acquisition issued by
commercial banks which are members of the Federal Reserve System and
chartered under the laws of the United States of America or any state
or the District of Columbia or Japan or any country which is a member
of the European Economic Community whose short-term securities are
rated at least A-1 (or then existing equivalent) by Standard & Poor's
Corporation and at least P-1 (or then existing equivalent) by Moody's
Investors Service, Inc.; (d) prime commercial paper maturing not more
than 270 days from the date of acquisition, having as at any date a
rating of at least A-1 (or the existing equivalent) from Standard &
Poor's Corporation or at least P-1 (or then existing equivalent) from
Moody's Investors Service, Inc. and issued by a corporation organized
in any state of the United States of America or the District of
Columbia or Japan or any country which is a member of the European
Economic Community; and (e) securities of the type described in CLAUSE
(A) of this SUBPARAGRAPH but issued or directly and fully and
unconditionally guaranteed or insured by any country (or agency backed
by the full faith and credit thereof) other than the United States of
America, Japan or a member of the European Economic Community and
investments of the type described in CLAUSES (C) and (D) of this
SUBPARAGRAPH of a bank chartered or a corporation organized in any
jurisdiction other than the United States of America, any state
thereof or the District of Columbia, Japan or a member of the European
Economic Community, provided that the aggregate of all such securities
and investments, together with the aggregate amount of demand deposits
in banks located in all countries other than the United States of
America, Japan or a member of the European Economic Community does not
exceed at any time $5,000,000;
(iv) endorse negotiable instruments for collection in the
ordinary course of business;
(v) purchase or acquire stock of any Person if
immediately after such purchase or acquisition such Person will be an
80% Subsidiary of the Company, provided that if, after giving pro
forma effect to such purchase or acquisition as if it had occurred as
of the first day of the most
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<PAGE> 17
recently completed fiscal quarter for which financial statements were
delivered pursuant to PARAGRAPH 5A, such 80% Subsidiary would have
been a Significant Subsidiary as of such date, then such 80%
Subsidiary shall have become an Affiliate Guarantor;
(vi) make or permit to remain outstanding loans or
advances to their employees other than advances to employees for
expenses incurred in the ordinary course of business and loans to
employees provided the aggregate principal amount of all such loans by
the Company and its Subsidiaries does not at any time exceed
$2,500,000 less the principal amount of any such loans which has been
repaid as of the date of determination and provided further (i) the
proceeds of such loans are used solely by such employees to acquire
common stock of the Company; (ii) such loans are secured by a pledge
by the employee of the stock so acquired; and (iii) such loans are
otherwise made on terms no less favorable to the Person making such
loan than those which might be obtained at arm's length between
unaffiliated parties;
(vii) make capital contributions to either Borrower or the
Subsidiaries of the Borrowers or any Affiliate Guarantor or the
Subsidiaries of the Affiliate Guarantors; and
(viii) may make Restricted Payments to the extent permitted
by PARAGRAPH 6B.
6C(3). SALE OF STOCK AND DEBT OF SUBSIDIARIES. Either directly or
indirectly by the issuance of rights, options for or securities convertible
into such shares, issue, sell or otherwise dispose of, or part with control of,
any shares of capital stock (other than directors' qualifying shares) or Debt
of either Borrower or any other Subsidiary of the Company, except for (i) the
issuance, sale or other disposition of shares of such capital stock to the
Company or another Wholly-Owned Subsidiary of the Company; and (ii) sales of
shares of then issued capital stock of a Subsidiary of the Company (other than
the capital stock of either Borrower or any Affiliate Guarantor) to a Person
which is not a Wholly-Owned Subsidiary of the Company, if immediately after
such sale the issuer of such capital stock is no longer a Subsidiary of the
Company and the sale would otherwise be permitted under PARAGRAPH 6C(4).
6C(4). MERGER AND SALE OF ASSETS. Merge or consolidate with any
other Person or sell, lease or transfer or otherwise dispose of its assets to
any Person or Persons, except, that:
(i) any Wholly-Owned Subsidiary of the Company may merge
with the Company (provided that the Company shall be the continuing or
surviving corporation) or merge or consolidate with any one or more
other Wholly-Owned Subsidiaries of the Company (provided if either
Borrower or any Affiliate Guarantor is a party to such merger or
consolidation it shall be the continuing or surviving corporation
except in the case of a merger or consolidation involving either
Borrower and any Affiliate Guarantor, in which case such Borrower
shall be the controlling or surviving corporation);
(ii) any Wholly-Owned Subsidiary of the Company (other
than either Borrower or any Affiliate Guarantor) may sell, lease,
transfer or otherwise dispose of any of its assets to the Company or
another Wholly-Owned Subsidiary of the Company provided that
immediately after giving effect to such transaction, no Default or
Event of Default would result therefrom or otherwise exist immediately
before or immediately after such transaction;
(iii) the Company may merge or consolidate with any other
corporation, provided that (a) the Company shall be the continuing or
surviving corporation; (b) immediately after giving effect to such
transaction, were the Company or any of its Subsidiaries to incur
additional Debt of $1.00, no Default or Event of Default would result
therefrom; and (c) no Default or Event of Default would otherwise
exist immediately before or immediately after such merger or
consolidation;
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<PAGE> 18
(iv) a Wholly-Owned Subsidiary of the Company may merge or
consolidate with any other corporation, provided that (a) such
Subsidiary shall be the continuing or surviving corporation; (b) such
Subsidiary shall continue to be a Wholly- Owned Subsidiary of the
Company; (c) immediately after giving effect to such transaction, were
the Company or any of its Subsidiaries to incur additional Debt of
$1.00, no Default or Event of Default would result therefrom; and (d)
no Default or Event of Default would otherwise exist immediately
before or immediately after such merger or consolidation;
(v) the Company or any of its Subsidiaries may sell,
transfer or otherwise dispose of some or all of its properties or
assets for such consideration as may be determined to be fair and
adequate by the Board of Directors of the Company or such Subsidiary
(a "DISPOSITION"); provided, however, that (a) no Default or Event of
Default exists immediately before or immediately after and giving
effect to such Disposition or would otherwise reasonably be
anticipated to result therefrom, and (b) immediately after and giving
effect to any such Disposition, the aggregate book value, as reflected
on the most recent balance sheet of the Company furnished to the
Holders pursuant to PARAGRAPH 5A(I) or 5A(II), as the case may be, of
all such properties and assets so sold by the Company and its
Subsidiaries (which, in the case of a sale of capital stock of a
Subsidiary, shall equal the seller's share of the aggregate book value
of the properties and assets of such Subsidiary and its Subsidiaries,
calculated on a consolidated basis) ("ASSETS SOLD") during the then
current fiscal year, less the aggregate amount of Qualifying
Reinvestments then made by the Company and its Subsidiaries during
such fiscal year, does not exceed 10% of Consolidated Net Tangible
Assets at the end of the fiscal year immediately preceding such
Disposition; and
(vi) the Company or any of its Subsidiaries may sell
inventory in the ordinary course of business and BJL may sell
receivables in the ordinary course of its business in accordance with
its past practices.
For purposes of SUBPARAGRAPH (V) of this PARAGRAPH 6C(4), a "QUALIFYING
REINVESTMENT" is the use of proceeds of Assets Sold to (A) purchase not more
than ninety (90) days prior to nor more than three hundred sixty-five (365)
days after the date of such Disposition (x) tangible, depreciable assets or
equipment or real property or depreciable improvements thereon usable in the
same business as the Assets Sold, or (y) either (1) purchase all of the
outstanding capital stock or other equity interests of a Person which is
immediately after such purchase a Subsidiary of the Company and is engaged in
any such business, or (2) purchase all or substantially all of the assets and
business of a Person which is engaged in any such business, or (B) permanently
repay Consolidated Debt, if such repayment is made within 90 days after the
date of such Disposition.
6C(5). SUBSIDIARY DIVIDEND AND OTHER RESTRICTIONS. Enter into, or be
otherwise subject to, any contract or agreement (including its charter) which
limits the amount of, or otherwise imposes restrictions on the payment of,
dividends by any of the Company's Subsidiaries or distributions on any other
securities of any of the Company's Subsidiaries held by either Borrower or the
Company.
6C(6). TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE
6C(6), directly or indirectly engage in any transaction (including, without
limitation, the purchase, sale or exchange of assets or the payment of salary,
bonuses and other compensation for services rendered) with any present or
former stockholder (other than Persons who do not own and have not owned,
directly or indirectly, any shares of stock of any Subsidiary of the Company
and who do not own and have not owned, directly or indirectly, at any one time
more than ten (10) shares of common stock of the Company and any shares of any
other class of capital stock of the Company), officer or Affiliate (other than
a Wholly-Owned Subsidiary of the Company) or to any successor, assign,
Affiliate or transferee thereof, except in the ordinary course of business
pursuant to the reasonable requirements of the Company's, the Borrower's or
their Subsidiaries' business and upon terms which might be obtained at arms'
length between unaffiliated parties.
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<PAGE> 19
6C(7). SALE AND LEASEBACK. Enter into any Sale and Leaseback
Transaction, unless the obligation incurred and evidenced by such leasing
arrangement would be a Capitalized Lease Obligation and the Debt incurred would
be permitted to be incurred by PARAGRAPH 6D.
6D. DEBT.
6D(1). COMPANY DEBT. The Company will not create, incur, assume or
otherwise become or remain directly or indirectly liable with respect to any
Debt, other than:
(i) its Guaranty of the Funded Debt represented by the
Notes;
(ii) its Guaranty of the Funded Debt from time to time
outstanding under the Revolving Credit Facility in an aggregate
principal amount not at any time to exceed $20,000,000;
(iii) Debt outstanding as of the date of this Agreement
other than the Debt set forth in SCHEDULE 3H;
(iv) other Funded Debt of the Company if, at the time of
incurrence thereof and after giving effect thereto, (a) no Default or
Event of Default exists or would otherwise reasonably be anticipated
to result from such transaction, (b) the ratio of Consolidated Funded
Debt to Consolidated Total Capitalization, in each case calculated on
the basis of the most recently available financial information and
giving pro forma effect to the incurrence of such Funded Debt and the
application of the net proceeds therefrom, would not exceed 0.55 to
1.00, and (c) the financial tests set forth in PARAGRAPH 6A,
calculated on the basis of the most recently available financial
information, would have been satisfied on a pro forma basis; and
(v) other Debt of the Company if, at the time of
incurrence thereof and after giving effect thereto, (a) no Default or
Event of Default exists or would otherwise reasonably be anticipated
to result from such transaction, (b) the ratio of Consolidated Debt to
Consolidated Total Capitalization, in each case calculated on the
basis of the most recently available financial information and giving
pro forma effect to the incurrence of such Debt and the application of
the net proceeds therefrom, would not exceed 0.60 to 1.00, and (c) the
financial tests set forth in PARAGRAPH 6A, calculated on the basis of
the most recently available financial information, would have been
satisfied on a pro forma basis.
6D(2). SUBSIDIARY DEBT. The Borrowers will not, and the Company will
not permit any of its other Subsidiaries to, create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to Debt other than:
(i) the Funded Debt represented by the Notes and the
Affiliate Guaranties;
(ii) the Funded Debt from time to time outstanding to the
Borrowers under the Revolving Credit Facility in an aggregate
principal amount not at any time to exceed $20,000,000, and any
Guaranties of such Funded Debt;
(iii) Debt of Wholly-Owned Subsidiaries of the Company for
loans permitted under PARAGRAPH 6C(2)(I); and
(iv) any other Debt; provided, however, (a) at the time of
such incurrence and after giving effect thereto, the Company would be
able to incur an additional $1.00 of Debt without breach of PARAGRAPH
6(D)(1)(V); and (b) that the aggregate principal amount of all such
other Debt of the Company's Subsidiaries (other than the Borrowers)
shall not at any one time exceed
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<PAGE> 20
$25,000,000 (which amount shall include amounts outstanding under the
Revolving Credit Facility only if (1) the Company or any of its
Subsidiaries (other than the Borrowers) is a borrower thereunder or
(2) any of the Company's Subsidiaries (other than the Affiliate
Guarantors) has Guarantied the obligations of the Borrowers
thereunder).
6E. COMPLIANCE WITH ERISA. They will not and will not permit any
of their Subsidiaries or any Related Person, if it will have a Material Adverse
Effect on the Company, any Significant Subsidiary or the Consolidated Group to:
(i) engage in any transaction in connection with which a
civil penalty could be assessed pursuant to section 502(i) of ERISA or
a tax imposed by section 4975 of the Code, terminate or withdraw from
any Plan (other than a Multiemployer Plan) in a manner, or take any
other action with respect to any such Plan (including, without
limitation, a substantial cessation of business operations or an
amendment of a Plan within the meaning of section 4041(e) of ERISA),
which could result in any liability of the Company or either Borrower
or any Related Person to the PBGC, to a Plan, to a Plan participant,
to the Department of Labor or to a trustee appointed under section
4042(b) or (c) of ERISA), incur any liability to the PBGC or a Plan on
account of a withdrawal from or a termination of a Plan under section
4063 or 4064 of ERISA, incur any liability for post-retirement
benefits under any and all welfare benefit plans (as defined in
section 3(1) of ERISA), fail to make full payment when due of all
amounts which, under the provisions of any Plan or applicable law, the
Company, either Borrower or any Related Person is required to pay as
contributions thereto, or permit to exist any accumulated funding
deficiency, whether or not waived, with respect to any Plan (other
than a Multiemployer Plan);
(ii) at any time permit the termination of any defined
benefit pension plan intended to be qualified under Section 401(a) and
Section 501(a) of the Code unless such plan is funded so that the
value of all benefit liabilities upon the termination date does not
exceed the then current value of all assets in such plan;
(iii) if the Company, either Borrower or any Related Person
becomes obligated under a Multiemployer Plan, permit the aggregate
complete or partial withdrawal liability under Title IV of ERISA with
respect to Multiemployer Plans incurred by the Company, either
Borrower, any of their Subsidiaries or any Related Person or the
aggregate liability under Title IV of ERISA incurred by the Company or
its Subsidiaries or any Related Person to exceed any amount the
payment of which would have a Material Adverse Effect on the Company,
any Significant Subsidiary or the Consolidated Group.
For the purposes of SUBPARAGRAPH (III) of this PARAGRAPH 6E, the amount of the
withdrawal liability of the Company, either Borrower, or any Related Person at
any date shall be the aggregate present value of the amount claimed to have
been incurred less any portion thereof as to which the Company reasonably
believes, after appropriate consideration of possible adjustments arising under
subtitle E of Title IV of ERISA, neither it, nor either Borrower, nor any of
their Subsidiaries nor any Related Person will have any liability, provided
that the Company shall obtain promptly written advice from independent
actuarial consultants supporting such determination. Upon the request of any
Holder, the Company will request and obtain a current statement of withdrawal
liability from each Multiemployer Plan to which the Company, either Borrower or
any Related Person is or has been obligated to contribute and (y) transmit a
copy of such statement to each Holder, within 15 days after the Company
receives the same.
As used in this PARAGRAPH 6E, the term "accumulated funding deficiency" has the
meaning specified in section 302 of ERISA and section 412 of the Code, the
terms "present value" and "current value" have the meanings specified in
section 3 of ERISA, the term "benefit liabilities" has the meaning specified in
section
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<PAGE> 21
4001(a)(16) of ERISA and the term "amount of unfunded liabilities" has the
meaning specified in section 4001(18) of ERISA.
6F. TAX SHARING. They will not, and will not on behalf of their
Subsidiaries, consent to or permit the filing of or be a party to any
consolidated income tax return with any Person (other than a consolidated
return of the Company and its Subsidiaries).
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur or
condition shall exist and be continuing for any reason whatsoever, and whether
such occurrence or condition shall be voluntary or involuntary or come about or
be effected by operation of law or otherwise (any such event or condition and
continuation shall constitute an "EVENT OF DEFAULT"):
(i) the Borrowers default in the payment of any principal
or Make Whole Premium of any Note when the same shall become due,
either by the terms thereof or otherwise as provided in this
Agreement; or
(ii) the Borrowers default in the payment of any interest
of any Note when the same shall become due, either by the terms
thereof or otherwise as provided in this Agreement and such default
shall continue for five (5) days thereafter; or
(iii) the Company, either Borrower or any of their
Subsidiaries defaults (whether as primary obligor or guarantor or
surety) in any payment of principal of, premium, if any, or interest
on any Debt other than that evidenced by the Notes beyond any period
of grace provided with respect thereto, the outstanding principal
amount of which Debt exceeds $1,000,000 in the aggregate, or fails to
perform or observe any other agreement, term or condition contained in
any agreement under which any such Debt is created (or if any other
event thereunder or under any such agreement shall occur and be
continuing), and the effect of such failure or other event is to
cause, or to permit the holder or holders of such Debt (or a trustee
on behalf of such holder or holders) to cause, such Debt to become due
or be repurchased prior to any stated maturity unless prior to any
acceleration of the Notes on account of such default, failure or other
event, the Company, either Borrower or such Subsidiary, as the case
may be, shall have obtained the written waiver of such default,
failure or other event by the holders of such Debt in respect of which
such default, failure or other event shall have occurred and shall
have delivered a copy of the same to each Holder; or
(iv) any representation or warranty made by the Company or
the Borrowers in this Agreement or in any writing furnished in
connection with or pursuant to this Agreement shall be false in any
material respect on the date as of which made; or
(v) the Company, either Borrower or any of their
Subsidiaries fails to perform or observe any covenant contained in
PARAGRAPH 5D, 6A, 6B, 6C or 6D or the Company or any Affiliate
Guarantor fails to perform or observe any covenant contained in
PARAGRAPH 2 of their respective Affiliate Guaranties; or
(vi) the Company, either Borrower or any of their
Subsidiaries fails to perform or observe any other agreement, term or
condition of this Agreement, or the Company, either Borrower, or any
Affiliate Guarantor fails to perform any provision of the Contribution
Agreement or, to the extent it is a party thereto, any provision
(other than PARAGRAPH 2) of their respective Affiliate Guaranties, and
such failure shall not be remedied within 30 days of such failure; or
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<PAGE> 22
(vii) the Company, either Borrower or any other Significant
Subsidiary voluntarily or involuntarily suspends or discontinues
operations or liquidates all or substantially all of its assets, or
the Company, either Borrower or any of their Subsidiaries makes an
assignment for the benefit of creditors or is generally not paying its
debts as such debts become due or otherwise becomes insolvent; or
(viii) the Company, either Borrower or any of their
Subsidiaries petitions or applies to any tribunal for, or consents to,
the appointment of, or taking possession by, a trustee, receiver,
custodian, liquidator or similar official of the Company, either
Borrower or any of their Subsidiaries, or of any substantial part of
the assets of the Company, either Borrower or any of their
Subsidiaries, or commences a voluntary case under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law, whether now or
hereafter in effect ("BANKRUPTCY LAW") of the United States or any
proceedings relating to the Company, either Borrower or any of their
Subsidiaries under the Bankruptcy Law of any other jurisdiction; or
(ix) any such petition or application is filed, or any
such proceedings are commenced, against the Company, either Borrower
or any of their Subsidiaries and the Company, such Borrower or such
Subsidiary by any act indicates its approval thereof, consent thereto
or acquiescence therein, or an order, judgment or decree is entered
appointing any such trustee, receiver, custodian, liquidator or
similar official, or approving the petition in any such proceedings,
and such order, judgment or decree remains unstayed and in effect for
more than 30 days; or
(x) any decree or order for relief in respect of the
Company, either Borrower or any of their Subsidiaries pursuant to
proceedings described in SUBPARAGRAPH (VIII) and (IX) of this
PARAGRAPH 7A, is entered under any Bankruptcy Law of any jurisdiction;
or
(xi) any order, judgment or decree is entered in any
proceedings against the Company, either Borrower or any of their
Subsidiaries decreeing the dissolution of the Company, such Borrower
or such Subsidiary; or
(xii) any order, judgment or decree is entered in any
proceedings against the Company, either Borrower or any of their
Subsidiaries which requires a split-up of the Company, such Borrower
or such Subsidiary, or requires the divestiture of any assets of the
Company, either Borrower or any of their Subsidiaries, or the
divestiture of the capital stock of either Borrower or any of the
Company's or either Borrower's Subsidiaries; or
(xiii) a final judgment or judgments for the payment of
money in which the aggregate amount of such judgment or of all such
judgments exceeds $1,000,000 (net of insurance proceeds, if any) is
rendered against the Company, either Borrower or any of their
Subsidiaries and within ten days thereof such judgment or judgments
are not discharged or execution thereof stayed pending appeal, or
within ten days after the expiration of any such stay, such judgment
or judgments are not discharged; or
(xiv) the report of the certified public accountants with
respect to any of the audited financial statements furnished pursuant
to PARAGRAPH 5A for any fiscal year shall state that such financial
statements do not present a true and fair view of the Company's and
its Subsidiaries state of affairs and profit (or loss) as of the close
of such fiscal year, or shall contain any Impermissible Qualification;
or
(xv) the Company or any Affiliate Guarantor or any of
their successors seeks to terminate their respective Affiliate
Guaranties or have any of such Affiliate Guaranties declared
unenforceable
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<PAGE> 23
or any order, judgment or decree is entered declaring any of the
Affiliate Guaranties to be unenforceable; or
(xvi) the Company, either Borrower, any Affiliate Guarantor
or any other Subsidiary of the Company party to any Subordination
Agreement fails to perform or observe (a) any agreement, term or
condition (other than PARAGRAPH 2) of such Subordination Agreement and
such failure shall not be remedied within 30 days of such failure or
(b) any covenant contained in PARAGRAPH 2 of such Subordination
Agreement;
then (a) if such event is an Event of Default specified in SUBPARAGRAPH (VII),
(VIII), (IX), (X) or (XI) of this PARAGRAPH 7A, all of the Notes at the time
outstanding shall automatically become due and payable at par together with
interest accrued thereon, without presentment, demand, protest or notice of any
kind, all of which are expressly waived by the Borrowers; (b) if such event is
an Event of Default specified in subparagraph (I), (II) or (XV) of this
PARAGRAPH 7A, at the option of any Holder upon demand, all of the Notes held by
such Holder at the time outstanding shall become immediately due and payable at
par together with interest accrued thereon and together with the Make Whole
Premium, if any, without presentment, other demand, protest or notice of any
kind, all of which are hereby waived by the Borrowers; and (c) if such event is
any other Event of Default, the Required Holder(s) may at its or their option
by written notice to the Borrowers declare all of the Notes to be, and all of
the Notes shall thereupon be and become, immediately due and payable at par
together with interest accrued thereon and together with the Make Whole
Premium, if any, with respect to each Note, without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrowers.
7B. RESCISSION OF ACCELERATION. At any time after any or all of
the Notes shall have been declared immediately due and payable pursuant to
CLAUSES (B) and (C) of the concluding paragraph of PARAGRAPH 7A, the Required
Holder(s) may, by notice in writing to the Borrowers, rescind and annul such
declaration and its consequences if (i) the Borrowers shall have paid all
overdue interest on the Notes, the principal of and Make Whole Premium, if any,
payable with respect to any Notes which have become due otherwise than by
reason of such declaration, and interest on such overdue interest and overdue
principal at the amount specified in the Notes, (ii) none of the Borrowers, the
Company or the Affiliate Guarantors shall have paid any principal of or Make
Whole Premium, if any, or interest on the Notes which have become due solely by
reason of such declaration, (iii) all Events of Default and Defaults, other
than non-payment of amounts which have become due solely by reason of such
declaration, shall have been cured or waived pursuant to PARAGRAPH 11C, and
(iv) no judgment or decree shall have been entered for the payment of any
amounts of principal of or Make Whole Premium, if any, or interest on the Notes
due pursuant to the Notes or this Agreement solely by reason of such
declaration. No such rescission or annulment shall extend to or affect any
subsequent Event of Default or Default or impair any right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall
become or be declared immediately due and payable pursuant to PARAGRAPH 7A, or
any such declaration under CLAUSE (B) or (C) of the concluding paragraph of
PARAGRAPH 7A shall be rescinded and annulled pursuant to PARAGRAPH 7B, the
Borrowers shall forthwith give written notice thereof to each other Holder at
the time outstanding.
7D. OTHER REMEDIES. If any Event of Default shall occur and be
continuing, any Holder may proceed to protect and enforce its rights under this
Agreement and such Note by exercising such remedies as are available to such
Holder in respect thereof under applicable law, either by suit in equity or by
action at law, or both, whether for specific performance of any covenant or
other agreement contained in this Agreement or the Notes or in aid of the
exercise of any power granted in this Agreement or the Notes, in such order as
such Holder may determine in its sole discretion. No remedy conferred in this
Agreement or the Notes upon any Holder is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise. No failure or delay by any Holder
in
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<PAGE> 24
exercising any right or remedy under this Agreement or under the Notes or any
other document executed in connection therewith shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or remedy
preclude any other right or remedy hereunder or thereunder.
8. REPRESENTATIONS AND WARRANTIES. The Company and the Borrowers represent
and warrant that:
8A. ORGANIZATION, ETC. The Company and BAM are corporations duly
organized, validly existing and in good standing under the laws of the State of
Delaware, BTL is a corporation duly organized, validly existing and in good
standing under the laws of Bermuda, each of the Company's other Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated as set forth in SCHEDULE 8A, and the
Company, each Borrower and each of their Subsidiaries has the corporate power
and authority to own, operate and lease its respective property and to carry on
its respective business as now being conducted. The Company, each Borrower and
each of their Subsidiaries is duly qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the failure
to do so would have a Material Adverse Effect on the Company, any Significant
Subsidiary or the Consolidated Group. Each of the Borrowers, BEC and BAP are
Wholly-Owned Subsidiaries of the Company. SCHEDULE 8A sets forth the
jurisdiction of incorporation of the Company's Subsidiaries (other than the
Borrowers) and each jurisdiction in which the Company, each Borrower or any of
their Subsidiaries is authorized to do business as a foreign corporation. This
Agreement, the Notes, the Contribution Agreement and any Subordination
Agreement to which it is a party have been duly authorized by all necessary
corporate action on the part of the Borrowers and, when executed and delivered
by the Borrowers, will constitute legal, valid and binding obligations of the
Borrowers, and, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the enforcement or priority of creditors' rights
generally, now or hereafter in effect, and subject to the provision that
equitable remedies shall be within the discretion of the court having
jurisdiction to exercise the same, are enforceable in accordance with their
respective terms. This Agreement (with respect to the Company) and the
Related Agreements to which the Company, any Affiliate Guarantor or any other
Subsidiary of the Company is party have been duly authorized by all necessary
corporate action on the part of the Company, such Affiliate Guarantor or such
other Subsidiary, as the case may be, and, when executed and delivered by the
Company, such Affiliate Guarantor or such other Subsidiary, as the case may be,
will constitute legal, valid and binding obligations of the Company, such
Affiliate Guarantor and such other Subsidiary, as the case may be, and, subject
to bankruptcy, insolvency, reorganization, moratorium and other laws affecting
the enforcement or priority of creditors' rights generally, now or hereafter in
effect, and subject to the provision that equitable remedies shall be within
the discretion of the court having jurisdiction to exercise the same, are
enforceable in accordance with their respective terms. There are no
Subsidiaries of the Company or either Borrower in existence as of the date
hereof other than those listed in SCHEDULE 8A. All of the outstanding capital
stock of the Company is validly issued, fully paid and non-assessable.
8B. BUSINESS; FINANCIAL STATEMENTS. The Company has furnished
each Purchaser with (i) audited consolidated balance sheets of the Company and
its Subsidiaries as of June 30 in each of the years 1988 through 1993 and the
related consolidated statements of income, of changes in shareholders' equity
and of cash flows and, as applicable, changes in financial position or cash
flows for the periods of twelve months ended on each such date; (ii) the
unaudited Balance Sheet of BAM as of June 30 in each of the years 1991 through
1993 and (iii) the unaudited Balance Sheet of BTL as of October 28, 1993. The
financial statements referred to in this PARAGRAPH 8B, including any related
schedules and/or notes (the "FINANCIAL STATEMENTS"), are true and correct in
all material respects, have been prepared in accordance with GAAP and show all
liabilities of the Company and its consolidated Subsidiaries (including BAM and
BTL) required to be shown therein accordance with GAAP. The balance sheets
included in the Financial Statements fairly present the condition of the
Company and its consolidated Subsidiaries (including BAM), of BAM and of BTL,
as the case may be, as at the dates thereof, and the statements of income, of
changes in shareholders' equity and of cash flows included in the Financial
Statements fairly present the results of the operations, the
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<PAGE> 25
changes in shareholders' equity and the cash flows of the Company and its
consolidated Subsidiaries (including BAM) for the periods indicated. The
Company has furnished each Purchaser with each filing or report filed with the
SEC under Section 13 or 15(d) of the Exchange Act in respect of the fiscal year
ended June 30, 1993. There has been no change which has had a Material Adverse
Effect on the Company, any Significant Subsidiary or the Consolidated Group
since June 30, 1993.
8C. ACTIONS PENDING. Except as disclosed in SCHEDULE 8C, there is
no action, suit, investigation or proceeding pending or, to the knowledge of
the Company, either Borrower or any of their Subsidiaries, threatened against
the Company, either Borrower or any of their Subsidiaries, or any properties or
rights of the Company, either Borrower or any of their Subsidiaries, by or
before any court, arbitrator or administrative or governmental body which might
have a Material Adverse Effect on the Company, any Significant Subsidiary or
the Consolidated Group, or impairs either Borrower's ability to perform this
Agreement, the Notes, the Contribution Agreement or any Subordination Agreement
to which it is a party, the Company's ability to perform this Agreement or the
Related Agreements to which it is a party or any Affiliate Guarantor's or any
of the Company's other Subsidiaries' ability to perform the Related Agreements
to which it is a party.
8D. TITLE TO PROPERTIES. Each of the Company, the Borrowers and
their Subsidiaries has good title to its respective real properties (other than
properties which it leases) and good title to all of its other respective
properties and assets, including the properties and assets reflected in the
balance sheets as of June 30, 1993 included in the Financial Statements (other
than properties and assets disposed of in the ordinary course of business),
subject to no Lien of any kind except Liens permitted by PARAGRAPH 6C(1). All
leases necessary in any material respect for the conduct of the respective
businesses of the Company, the Borrowers and their Subsidiaries are valid and
subsisting and are in full force and effect. As of the date of this Agreement,
all of the outstanding capital stock of the Borrowers and each of the
Subsidiaries listed in SCHEDULE 8A is validly issued, fully paid and
non-assessable, and is 100% owned directly or indirectly by the Company or, if
not, is owned by the Persons and in the amounts listed on SCHEDULE 8A, which
Persons collectively own 100% of the issued and outstanding shares of capital
stock of such Borrower and each such Subsidiary, and all such capital stock
owned by the Company, either Borrower or their Subsidiaries and is owned free
and clear of any Lien of any kind and the Company, such Borrower or such other
Subsidiary has the right, subject only to limitations imposed by applicable law
to receive dividends and distributions on such capital stock.
8E. TAX RETURNS AND PAYMENTS. Each of the Company, the Borrowers
and their Subsidiaries has filed all Federal, State, local and foreign income
tax returns, franchise tax returns, real and personal property tax returns and
other tax returns required by law to be filed by or on behalf of them or with
respect to their respective properties or assets other than those which the
failure to file in the aggregate do not and will not have a Material Adverse
Effect on the Company, any Significant Subsidiary or the Consolidated Group,
and all taxes, assessments and other governmental charges imposed upon any of
the Company, the Borrowers or their Subsidiaries and any of their respective
properties, assets, income or franchises which are due and payable have been
paid, other than those presently payable without penalty or interest, those
presently being contested in good faith by appropriate proceedings diligently
conducted and for which such reserves or other appropriate provisions, if any,
as may be required by GAAP have been made and those which in the aggregate with
all other unpaid taxes, assessment and governmental charges do not and will not
have a Material Adverse Effect on the Company, any Significant Subsidiary or
the Consolidated Group.
8F. CONFLICTING AGREEMENTS AND OTHER MATTERS. None of the
Company, the Borrowers or any of their Subsidiaries is in violation of any term
of its charter or by-laws, or in breach of any term of any agreement (including
any agreement with stockholders), instrument, order, judgment, decree, statute,
law, rule or regulation to which it is subject, the consequences of which
violation or breach are reasonably likely to have a Material Adverse Effect on
the Company, any Significant Subsidiary or the Consolidated Group or impair
either Borrower's ability to perform this Agreement, the Notes, the
Contribution Agreement or any Subordination Agreement to which it is a party,
the Company's ability to perform this Agreement or the
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<PAGE> 26
Related Agreements to which it is a party or any Affiliate Guarantor's or any
of the Company's other Subsidiaries' ability to perform the Related Agreements
to which it is a party. None of the Company, the Borrowers or any of their
Subsidiaries is a party to any contract or agreement or subject to any charter
or other corporate restriction which has a Material Adverse Effect on the
Company, any Significant Subsidiary or the Consolidated Group. Neither the
execution and delivery of this Agreement, the Notes and the Related Agreements,
nor the offering, issuance and sale of the Notes, nor fulfillment of nor
compliance with the terms and provisions of this Agreement, the Notes and the
Related Agreements, will conflict with the provisions of, or constitute a
default under, or result in any violation of, or result in the creation of any
Lien upon any of the properties or assets of the Company, either Borrower or
any of their Subsidiaries pursuant to, its charter or by-laws, any award of any
arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
it is subject. None of the Company, the Borrowers or any of their Subsidiaries
is a party to, or otherwise subject to any provision contained in, any
instrument evidencing Debt, any agreement relating thereto or any other
contract or agreement (including its charter) which limits the amount of, or
otherwise imposes restrictions on the incurring of, the Funded Debt to be
evidenced by the Notes and the Affiliate Guaranties.
8G. OFFERING OF NOTES. None of the Company or the Borrowers nor
any agent acting on their behalf has, directly or indirectly, offered the Notes
or any similar security of the Company or either Borrower for sale to, or
solicited any offers to buy the Notes or any similar security of the Company or
either Borrower from, or otherwise approached or negotiated with respect
thereto with, any Person other than 30 Institutional Investors, and none of the
Company or the Borrowers nor any agent acting on their behalf has taken or will
take any action which would subject the issuance or sale of the Notes to the
provisions of Section 5 of the Securities Act or to the registration provisions
of any securities or Blue Sky law of any applicable jurisdiction. Upon
issuance of the Notes, the Notes will not be of the same class as any
securities of either Borrower listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer quotation system, within the meaning of Rule 144A.
8H. REGULATION G, ETC. None of the Company, the Borrowers or any
of their Subsidiaries owns or has any present intention of acquiring any
"margin stock" as defined in Regulation G (12 CFR Part 207) of the Board of
Governors of the Federal Reserve System (herein called "margin stock"). None
of the proceeds of the sale of the Notes will be used, directly or indirectly,
for the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any margin stock or for the purpose of maintaining, reducing or
retiring any indebtedness which was originally incurred to purchase or carry
any stock that is currently a margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of such
Regulation G. Neither of the Company or either Borrower nor any agent acting
on their behalf has taken or will take any action which might cause this
Agreement or the Notes to violate Regulation G, Regulation T, Regulation U,
Regulation X or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act, in each case as in effect now or
as the same may hereafter be in effect.
8I. ERISA.
(a) To the knowledge of the Company and the Borrowers,
neither the Company nor any Related Person has breached any of the fiduciary
rules of ERISA or engaged in any prohibited transaction in connection with
which the Company or any Related Person could be subjected to (in the case of
any such breach) a suit for damages or (in the case of any such prohibited
transaction), either a civil penalty assessed pursuant to section 502(i) of
ERISA, a tax imposed under section 4975 of the Code or a lien imposed under
section 412(n) of the Code, in any such case which would have a Material
Adverse Effect on the Company, any Significant Subsidiary or the Consolidated
Group.
(b) No Plan subject to Title IV of ERISA or any trust
created under any such Plan has been terminated since September 2, 1974 other
than any such Plan or trust, the termination of which did
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<PAGE> 27
not or would not give rise to a liability which had or would have a Material
Adverse Effect on the Company, any Significant Subsidiary or the Consolidated
Group. Neither the Company nor any Related Person has within the past six
years contributed, or had any obligation to contribute, to a single employer
plan that has at least two contributing sponsors not under common control or
ceased operations at a facility under circumstances which could result in
liability under the Code or ERISA which would have a Material Adverse Effect on
the Company, any Significant Subsidiary or the Consolidated Group. No
liability to the PBGC has been or is expected by the Company or any Related
Person to be incurred with respect to any Plan by the Company or any Related
Person which would have a Material Adverse Effect on the Company, any
Significant Subsidiary or the Consolidated Group. There has been no reportable
event (within the meaning of section 4043(b) of ERISA) or any other event or
condition with respect to any Plan which presents a risk of termination of any
such Plan by the PBGC under circumstances which in any case would have a
Material Adverse Effect on the Company, any Significant Subsidiary or the
Consolidated Group.
(c) Except to the extent the failure to do so would not
have a Material Adverse Effect on the Company, any Significant Subsidiary or
the Consolidated Group, (i) full payment has been made (or will be made within
the period described in section 412 of the Code) of all amounts which the
Company or any Related Person is required under the terms of each Plan to have
paid as contributions to such Plan as of the last day of the most recent fiscal
year of such Plan ended prior to the date hereof (or will be made within the
period described in section 404 of the Code), (ii) no accumulated funding
deficiency (as defined in section 302 of ERISA and section 412 of the Code),
whether or not waived, exists with respect to any Plan, and (iii) each Plan
satisfies the minimum funding standard of section 412 of the Code.
(d) (i) Neither the Company nor any Related Person has
been obligated to contribute to any Multiemployer Plan, the withdrawal from
which would have a Material Adverse Effect on the Company, any Significant
Subsidiary or the Consolidated Group, and (ii) neither the Company nor any
Related Person has been notified by the sponsor of a Multiemployer Plan to
which the Company or any Related Person is obligated or has been obligated to
contribute that such Multiemployer Plan has been terminated or is in
reorganization and no Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated if such reorganization or termination would
result in a liability which would have a Material Adverse Effect on the
Company, any Significant Subsidiary or the Consolidated Group.
(e) Neither the Company nor any Related Person has, or is
expected to incur, any liability for post retirement benefits under any and all
welfare benefit plans (as defined in section 3(1) of ERISA), whether written or
unwritten, which are or have been established or maintained, or to which
contributions are or have been made, by the Company or any Related Person which
would have a Material Adverse Effect on the Company, any Significant Subsidiary
or the Consolidated Group.
(f) Neither the Company nor any Related Person has
engaged in any transaction that could result in the incurrence of any
liabilities under section 4069 or section 4212 of ERISA which would have a
Material Adverse Effect on the Company, any Significant Subsidiary or the
Consolidated Group.
(g) The execution and delivery of this Agreement and the
issuance and sale of the Notes will not involve any transaction which is
subject to the prohibitions of section 406 of ERISA or in connection with which
a tax could be imposed pursuant to section 4975 of the Code. The
representation by the Company in the preceding sentence is made in reliance
upon and subject to the accuracy of each Purchaser's representation in
PARAGRAPH 9(II) as to the source of the funds to be used to pay the purchase
price of the Notes to be purchased by it. With respect to any Plan identified
in writing to the Company in accordance with CLAUSE (E) of PARAGRAPH 9(II),
neither the Company nor any "affiliate" (as defined in Section V(c) of PTE
84-14) is described in the proviso of such CLAUSE (E). The Company is neither
a "party in interest" (as defined in Title I, Section 3(14) of ERISA, nor a
"disqualified person" (as defined in Section 4915(e)(2) of the Code, with
respect to any Plan identified pursuant to PARAGRAPH 9(II)(E) or (F).
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<PAGE> 28
8J. GOVERNMENTAL CONSENT. Neither the nature of the Company,
either Borrower or any of their Subsidiaries, nor any of their respective
businesses or properties, nor any relationship between the Company, the
Borrowers or any of their Subsidiaries and any other Person, nor any
circumstance in connection with the execution and delivery of this Agreement
and the Related Agreements, or the offering, issuance, sale or delivery of the
Notes is such as to require any authorization, consent, approval, exemption or
any action by or notice to or filing with any court or administrative or
governmental body in connection with the execution and delivery of this
Agreement and the Related Agreements and the offering, issuance, sale or
delivery of the Notes (other than any filing required in connection with an
exemption from the registration requirements of any federal or state securities
laws) or fulfillment of or compliance with the terms and provisions hereof, of
the Related Agreements and of the Notes.
8K. ENVIRONMENTAL MATTERS. Each of the Company, the Borrowers and
their Subsidiaries has obtained authorizations that are required and are in
compliance with all terms and conditions of all permits, licenses, and other
authorizations required to be obtained by it under all applicable environmental
laws, including any and all laws, statutes, ordinances, rules, regulations,
orders, decrees, permits, concessions, grants, franchises, licenses or
governmental restrictions or determinations of any governmental authority
relating to emissions, discharges, releases, or threatened release of
contaminants into the environment (including, without limitation, ambient air,
surface water, ground water, or land) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of contaminants, fuels, chemicals or waste materials, including,
without limitation, the Clean Air Act, the Clean Water Act, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Section
9601 et seq., the Occupational Safety and Health Act, RCRA, the Safe Drinking
Water Act and the Toxic Substances Control Act, all as amended (collectively
"ENVIRONMENTAL LAWS"), and are also in compliance with all other applicable
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables contained in those Environmental Laws or
in any regulation, ordinance, code, plan, order, decree, judgment, injunction,
notice, or demand letter issued, entered, promulgated, or approved thereunder,
except to the extent that failure so to comply does not have a Material Adverse
Effect on the Company, the Borrowers or any of their Subsidiaries. The Company
and the Borrowers are not aware of any prior use of any of the owned or leased
properties of the Company, the Borrowers or any of their Subsidiaries by any
Person, that constitutes a violation of any Environmental Laws, except to the
extent that such violation does not have a Material Adverse Effect on the
Company, either Borrower, any of their Subsidiaries or the Consolidated Group.
The Company and the Borrowers are not aware of any event, condition, or
activity which may interfere with or prevent continued compliance by the
Company, the Borrowers and their Subsidiaries with all Environmental Laws,
except to the extent that failure so to continue to comply would not have a
Material Adverse Effect on the Company, either Borrower, any of their
Subsidiaries or the Consolidated Group.
8L. LABOR RELATIONS. There is not now pending, nor to the
knowledge of the Company, the Borrowers or any of their Subsidiaries
threatened, any strike, work stoppage, work slow down, or material grievance or
other dispute between the Company, the Borrowers or any of their Subsidiaries
and any bargaining unit or significant number of its respective employees.
8M. FINANCIAL CONDITION. After giving effect to the transactions
contemplated hereby, (i) the aggregate present fair saleable value of the
assets of each of the Company, each Borrower and each Affiliate Guarantor will
be greater than the amount that will be required to pay the probable
liabilities of such Person on its debts, including contingent liabilities, as
they become absolute and mature; (ii) each of the Company, each Borrower and
each Affiliate Guarantor has (and has no reason to believe that it will not
have) sufficient capital for the conduct of its business; and (iii) each of the
Company, each Borrower and each Affiliate Guarantor does not intend to incur,
and does not believe it has incurred, debts beyond its ability to pay as they
mature.
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8N. DISCLOSURE. Neither this Agreement, the Notes nor any other
document, certificate or statement furnished to the Purchasers by or on behalf
of the Company or the Borrowers in connection herewith (including without
limitation the Memorandum and the Related Agreements) contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein, in light of the
circumstances under which they were made, not misleading. There is no fact
peculiar to the Company, the Borrowers or any of their Subsidiaries which has a
Material Adverse Effect on the Company, any Significant Subsidiary or the
Consolidated Group and which has not been set forth in this Agreement or in the
other documents, certificates and statements furnished to the Purchasers by or
on behalf of the Company or the Borrowers prior to the date hereof in
connection with the transactions contemplated by this Agreement.
8O. STATUS UNDER CERTAIN FEDERAL STATUTES. Neither the Company
nor either Borrower nor any Affiliate Guarantor is (a) an "investment company"
or a company "controlled" by an "investment company" or an "open-end investment
company" or a "unit investment trust" or a "face-amount certificate company",
within the meaning of the Investment Company Act of 1940, as amended, (b) a
"holding company" or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act
of 1935, as amended, or (c) a "carrier", as defined in section 11,301(a)(1) of
Title 49 of the United States Code and subject to the provisions of such Title.
Neither the Company nor either Borrower nor any of their Subsidiaries is a
"national of any designated foreign country", within the meaning of the Foreign
Assets Control Regulations or the Cuban Assets Control Regulations of the
United States Treasury Department, 31 C.F.R., Subtitle B, Chapter V, as
amended, or any regulations or rulings issued thereunder. Neither the sale of
the Notes nor the use of such proceeds by the Borrowers as required by this
Agreement will violate the Foreign Assets Control Regulations, the Foreign
Funds Control Regulations, the Transaction Control Regulations, the Cuban
Assets Control Regulations, the Iranian Assets Control Regulations, the Libyan
Sanctions Regulations, the Iranian Transactions Regulations, the Iraqi
Sanctions Regulations, the Haitian Transactions Regulations, or any other
regulations of the U.S. Treasury Department (as set forth in 31 C.F.R.,
Subtitle B, Chapter V, as amended), or any of Executive Orders 12,722, 12,724,
12,808 and 12,810 of the President of the United States.
9. REPRESENTATIONS OF THE PURCHASERS.
(i) Each Purchaser represents that it is purchasing its Notes
for its own account, or for one or more separate accounts maintained by it or
for the account of one or more pension or trust funds, in each case for
investment and not with a view to the distribution thereof or with any present
intention of distributing or selling any of the Notes, provided that the
disposition of a Purchaser's property shall at all times be within its control.
The Company and the Borrowers acknowledge that a sale of Notes by a Purchaser
to one or more Qualified Institutional Buyers in compliance with Rule 144A
would not be a distribution of such Notes or otherwise constitute a breach of
the foregoing representation.
(ii) Each Purchaser represents that, with respect to each
source of funds to be used by it to pay the purchase price of the Notes
purchased by it hereunder (respectively, the "SOURCE"), at least one of the
following statements is accurate as of the Closing Date:
(a) The Source is not "plan assets" as defined in 29 CFR
Section 2510.3-101;
(b) The Source is a "governmental plan" as defined in
Title I, Section 3(32) of ERISA;
(c) The Source is not a "separate account" as defined in
Title I, Section 3(17) of ERISA;
(d) The Source is either (i) an insurance company pooled
separate account, in which case the purchase is exempt in accordance
with Prohibited Transaction Exemption ("PTE") 90-1
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(issued January 29, 1990), or (ii) a bank collective investment fund,
in which case the purchase is exempt in accordance with PTE 91-38
(issued July 21, 1991);
(e) The Source is an "investment fund" managed by a
"qualified professional asset manager" or "QPAM" (as defined in Part V
of PTE 84-14, issued March 13, 1984), and the purchase is exempt under
PTE 84-14, provided that no other party to the transactions described
in this Agreement and no "affiliate" of such other party (as defined
in Section V(c) of PTE 84-14) has at this time, and during the
immediately preceding one year has exercised the authority to appoint
or terminate said QPAM as manager of the assets of any plan identified
in writing pursuant to this PARAGRAPH (E) or to negotiate the terms of
said QPAM's management agreement on behalf of any such identified
plans; or
(f) The Source is a plan or a separate account comprised
of plans identified in writing pursuant to this PARAGRAPH (F).
As used in this PARAGRAPH 9, the terms "employee benefit plan", "governmental
plan" and "separate account" shall have the respective meanings assigned to
such terms in Section 3 of ERISA.
10. DEFINITIONS. For the purposes of this Agreement, the
following terms shall have the respective meanings specified with respect
thereto:
10A. MAKE WHOLE PREMIUM TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to PARAGRAPH 4A or 4D or is
declared to be immediately due and payable pursuant to PARAGRAPH 7A.
"DISCOUNTED VALUE" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
from their respective scheduled due dates, in accordance with accepted
financial practice and at a discount factor (applied on a semi-annual basis)
equal to the Discount Rate with respect to such Called Principal.
"DISCOUNT RATE" shall mean, with respect to the Called Principal of
any Note, the yield to maturity of the Called Principal implied by (a) the
yield reported as of 10:00 A.M. (New York City time) on the date which is two
Business Days prior to the Settlement Date with respect to such Called
Principal, on the display designated as "Page 5" on the Telerate Service (or
such other display as may replace Page 5 of the Telerate Service) for actively
traded U.S. Treasury securities having a maturity equal to the Remaining Life
of such Called Principal as of such Settlement Date, or (b) if such yields
shall not be reported as of such time or the yields reported as of such time
shall not be ascertainable, the Treasury Constant Maturity Series yields
reported, for the latest day for which such yields shall have been so reported
as of the second Business Day next preceding the Settlement Date with respect
to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or
any comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Life of such
Called Principal as of such Settlement Date plus, in either case, (c) 50 basis
points. Such implied yield shall be determined, if necessary, by (x)
converting U.S. Treasury Bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (y) interpolating linearly
between yields reported for various maturities.
"MAKE WHOLE PREMIUM" shall mean, with respect to any Note, a premium
equal to the excess, if any, of (x) the Discounted Value over (y) the sum of
(i) such Called Principal plus (ii) interest accrued thereon as of and due on
the Settlement Date with respect to such Called Principal. The Make Whole
Premium shall in no event be less than zero.
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<PAGE> 31
"REMAINING LIFE" shall mean, with respect to the Called Principal of
any Note, the number of years (calculated to nearest one-twelfth year) which
will elapse between the Settlement Date with respect to such Called Principal
and its scheduled due date.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due during the Remaining Life of such Called Principal if
no payment of such Called Principal were made prior to its scheduled due date.
"SETTLEMENT DATE" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
PARAGRAPH 4A or 4D or is declared to be immediately due and payable pursuant to
PARAGRAPH 7A.
10B. OTHER TERMS.
"AFFILIATE" shall mean as to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct common control with,
such Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of such corporation, whether through the
ownership of voting securities, by contract or otherwise.
"AFFILIATE GUARANTIES" shall mean the Guaranty of the Company in the
form of EXHIBIT E-1 and of the other Affiliate Guarantors in the form of
EXHIBIT E-2.
"AFFILIATE GUARANTOR(S)" shall mean as of the date hereof BAP and BEC
and as of any other date in question BAP, BEC and any of the Company's other
Subsidiaries which at the time in question is a guarantor of the payment of the
Notes and the performance by the Borrowers of their obligations under this
Agreement pursuant to an Affiliate Guaranty in the form of EXHIBIT E-2 and is a
party to the Contribution Agreement and the enforceability of such Affiliate
Guaranty and the Contribution Agreement against such new Affiliate Guarantor
has been confirmed to the reasonable satisfaction of the Holders and their
Special Counsel.
"AGREEMENT" shall have the meaning specified in PARAGRAPH 11C.
"BAM" shall have the meaning specified in the first paragraph of this
Agreement.
"BANKRUPTCY LAW" shall have the meaning specified in SUBPARAGRAPH
(VIII) of PARAGRAPH 7A.
"BAP" shall have the meaning specified in PARAGRAPH 3I.
"BEC" shall have the meaning specified in PARAGRAPH 3I.
"BJL" shall mean Baldwin Japan Ltd., a Wholly-Owned Subsidiary of BAP.
"BORROWER(S)" shall have the meaning specified in the first paragraph
of this Agreement.
"BTL" shall have the meaning specified in the first paragraph of this
Agreement.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in Boston, Massachusetts are required or
authorized to be closed.
"CAPITALIZED LEASE" shall mean, as applied to any Person, any lease of
any property (whether real, personal or mixed) by such Person which would, in
accordance with GAAP, be required to be classified and
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<PAGE> 32
accounted for as a capitalized lease on a balance sheet of such Person, other
than, in the case of the Company, either Borrowers or any of their
Subsidiaries, any such lease under which the Company, such Borrower or such
Subsidiary is the lessor.
"CAPITALIZED LEASE OBLIGATION" shall mean any rental obligation under
a Capitalized Lease taken at the amount thereof accounted for as indebtedness
(net of interest expense) in accordance with GAAP.
"CHANGE OF CONTROL" shall occur if any Person, or group of Persons
(other than Wendell M. Smith, Akira Hara, Gerald A. Nathe, William J.
Lauricella, and David J. Youngman, individually or acting in concert) acting in
concert, in one or more transactions, acquires beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of shares of Capital
Stock of the Company, the ownership of which entitles the holder(s) to cast
more than fifty percent (50%) of the votes entitled to vote generally in the
election of directors of the Company.
"CLOSING" and "CLOSING DATE" shall have the meanings specified in
PARAGRAPH 2B.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COMPANY" shall have the meaning specified in the first paragraph of
this Agreement.
"CONSOLIDATED DEBT" shall mean, as at any date of determination, the
aggregate total Debt of the Company and its Subsidiaries on a consolidated
basis, determined in accordance with GAAP.
"CONSOLIDATED FUNDED DEBT" shall mean, as at any date of
determination, the aggregate total Funded Debt of the Company and its
Subsidiaries on a consolidated basis, determined in accordance with GAAP.
"CONSOLIDATED GROUP" shall mean the Company and its Subsidiaries,
taken as a whole.
"CONSOLIDATED NET INCOME" shall mean, with respect to any period,
consolidated gross revenues of the Company and its Subsidiaries less all
operating and non-operating expenses of the Company and its Subsidiaries
including all charges of a proper character (including current and deferred
taxes on income, provision for taxes on unremitted foreign earnings which are
included in gross revenues, amortization, depreciation and current additions to
reserves), but not including in gross revenues any gains (net of expenses and
taxes applicable thereto) in excess of losses resulting from the sale,
conversion or other disposition of assets (other than inventory and used
equipment in the ordinary course of the business of the Company and its
Subsidiaries), any earnings or losses attributable to any corporation which is
not a Subsidiary of the Company, any gains arising from transactions of a non-
recurring and material nature, any gains arising from the sale or
discontinuation of operations, any gains resulting from the write- up of
assets, any equity of the Company or any of its Subsidiaries in the unremitted
earnings of any corporation which is not a Subsidiary of the Company, any
earnings of any Person acquired by the Company or any of its Subsidiaries
through purchase, merger or consolidation or otherwise for any year prior to
the year of acquisition, any revenues of the Company or any of its Subsidiaries
from sales of goods or services to any other Subsidiary of the Company, or to
the Company, or any deferred credit representing the excess of equity in any
Subsidiary at the date of acquisition over the cost of the investment in such
Subsidiary; all determined in accordance with GAAP.
"CONSOLIDATED NET TANGIBLE ASSETS" shall mean (i) Consolidated Total
Assets, less (ii) the sum of (a) patents, copyrights, trademarks, trade names,
franchises, goodwill, and other similar intangibles; (b) unamortized debt
discount and expense; and (c) all liabilities of the Company and its
Subsidiaries on a consolidated basis as of the most recent balance sheet,
determined in accordance with GAAP, other than Consolidated Funded Debt,
minority interests and deferred taxes.
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"CONSOLIDATED NET WORTH" shall mean, on any date as of which the
amount thereof is to be determined, the shareholders' equity of the Company and
its Subsidiaries, determined on a consolidated basis in accordance with GAAP,
except that such amount shall (i) include preferred stock (other than preferred
stock which would not qualify as Eligible Capital Stock), and (ii) exclude
non-cash losses from discontinued operations and any foreign exchange
translation adjustments.
"CONSOLIDATED TOTAL ASSETS" shall mean the aggregate total assets of
the Company and its Subsidiaries on a consolidated basis as of the most recent
balance sheet, determined in accordance with GAAP.
"CONSOLIDATED TOTAL CAPITALIZATION" shall mean (a) for purposes of
PARAGRAPH 6D(1)(IV), the sum of (i) Consolidated Funded Debt, plus (ii)
Consolidated Net Worth; and (b) for purposes of PARAGRAPH 6D(1)(V), the sum of
(i) Consolidated Debt plus (ii) Consolidated Net Worth.
"CONTRIBUTION AGREEMENT" shall have the meaning specified in PARAGRAPH
3J.
"CURRENT DEBT" shall mean, as applied to any Person, (i) any Debt of
such Person maturing within one year or less from the creation thereof and not
renewable or extendable beyond such period pursuant to the terms thereof (which
amount shall exclude the aggregate principal amount of any Funded Debt which is
required to be paid during the next twelve (12) months) and (ii) bankers and
trade acceptances, whenever maturing.
"CURRENT RATIO" shall mean on any date as of which the amount thereof
is to be determined, the ratio of (a) the sum of (i) the current assets of the
Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP, plus (ii) the lesser of (x) the amount equal to the undrawn
availability under the Revolving Credit Facility as of the date of
determination or (y) the maximum amount which could be drawn on the Revolving
Credit Facility if after giving effect thereto, on a pro forma basis, the ratio
of Consolidated Funded Debt to Consolidated Total Capitalization as set forth
in PARAGRAPH 6D(1)(IV) and the ratio of Consolidated Debt to Consolidated Total
Capitalization as set forth in PARAGRAPH 6D(1)(V) would be satisfied, to (b)
the current liabilities of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"DEBT" shall mean, as applied to any Person, (i) obligations of such
Person for borrowed money, (ii) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations of such
Person to pay the deferred purchase price of property or services, (iv)
Capitalized Lease Obligations of such Person, (v) obligations of such Person to
purchase securities or other property that arise out of or in connection with
the sale of the same or substantially similar securities or property, (vi)
obligations of such Person to reimburse any other Person in respect of amounts
paid under a letter of credit or similar instrument, (vii) obligations with
respect to interest rate and currency swaps and similar obligations obligating
such Person to make payments, whether periodically or upon the happening of a
contingency, except that if any agreement relating to such obligations provides
for the netting of amounts payable by and to such Person thereunder or if any
such agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligations shall be the net
amount thereof, (viii) Debt secured by (or for which the holder of such Debt
has an existing right, contingent or otherwise, to be secured by) a Lien on any
asset of such Person, whether or not such Debt is assumed by such Person, (ix)
any recourse obligations of such Person in connection with a sale of
receivables (except sales of receivables by BJL permitted by PARAGRAPH
6C(4)(VI)), (x) obligations of such Person to make payment for any products,
materials or supplies or for any transportation or services regardless of the
non-delivery or nonfurnishing thereof, (xi) Guaranties by such Person of Debt
of others, and (xii) any other items (excluding (a) items of contingency
reserves or reserves for deferred income taxes, (b) Trade Payables other than
set forth in CLAUSE (X) of this paragraph, (c) accrued salaries, bonuses and
profit sharing contributions, (d) accrued pension obligations, (e) customer
deposits, (f) taxes payable, and (g) other accrued liabilities
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which if a payable would be a Trade Payable) which in accordance with GAAP
would be determining total liabilities as shown on the liabilities side of the
balance sheet of such person.
"DEFAULT" shall mean any event or condition which with the giving of
notice or the passage of time, or both, would become an Event of Default.
"80% SUBSIDIARY" shall mean as to any Person, a Subsidiary of such
Person at least 80% of the total combined voting power of all classes of Voting
Stock of which and at least 80% of the beneficial interest of which, or at
least 80% of the equity interest of which, if such Subsidiary is not a
corporation, are owned directly or indirectly through Subsidiaries by such
Person.
"ELIGIBLE CAPITAL STOCK" shall mean any class or series of capital
stock of the Company other than any class or series which has fixed payment
obligations or is redeemable at the option of the holder unless such fixed
payment obligations or repurchase obligations on exercise of such redemption
option can be satisfied, at the election of the Company, through the issuance
of shares of common stock.
"ENVIRONMENTAL LAWS" shall have the meaning specified in PARAGRAPH 8K.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EVENT OF DEFAULT" shall have the meaning specified in PARAGRAPH 7A.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FINANCIAL STATEMENTS" shall have the meaning specified in PARAGRAPH
8B.
"FIXED ASSETS" shall mean all assets of the Company and its
Subsidiaries which are classified as "property, plant and equipment" on the
balance sheet in accordance with GAAP.
"FUNDED DEBT" shall mean, as applied to any Person, (i) any Debt of
such Person maturing more than one year from the creation thereof or which is
renewable or extendable beyond one year from such date pursuant to the terms
thereof and (ii) any Current Debt which remains outstanding beyond one year
from the date of its creation or incurrence, but excluding bankers or trade
acceptances whenever maturing.
"GAAP" shall mean accounting principles generally accepted in the
United States applied on a consistent basis throughout the relevant periods.
"GUARANTY", as applied to any Person, shall mean any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course of
business) or discounted or sold with recourse by such Person, or in respect of
which such Person is otherwise directly or indirectly liable, including,
without limitation, any such obligation in effect guaranteed by such Person
through any agreement (contingent or otherwise) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
the solvency or any balance sheet or other financial condition of the obligor
of such obligation, or to make payment for any products, materials or supplies
or for any transportation or services regardless of the non-delivery or
nonfurnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected against loss in respect
thereof. The amount of any Guaranty shall be equal to the amount of the
obligation guaranteed.
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<PAGE> 35
"HOLDER" as to any Note, shall mean the Person at the time shown as
the holder thereof on the register referenced in PARAGRAPH 11O hereof.
"IMPERMISSIBLE QUALIFICATION" shall mean, with respect to the opinion
or report of the Company's certified public accountants as to any financial
statements supplied under PARAGRAPH 5A, any qualification or exception to such
opinion or certification or comment thereon which:
(i) is of a "going concern" or similar nature;
(ii) indicates that the scope of the examination of
matters relevant to such financial statements was limited to an extent
not consistent with generally accepted auditing standards; or
(iii) relates to the treatment or classification of any
item in such financial statements and, as a condition to its removal,
would require an adjustment to such item of which the effect would be
to cause the Company to be in default of one or more of its
obligations under PARAGRAPH 6A.
"INSTITUTIONAL INVESTOR" shall mean each Purchaser, any insurance
company, pension fund, mutual fund, investment company, bank, savings bank,
savings and loan association, investment banking company, trust company, or any
finance or credit company, any portfolio or any investment fund managed by any
of the foregoing, or any other institutional investor, and any nominee of the
foregoing.
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien, purchase option, call or right, or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any Capitalized Lease, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction).
"MATERIAL ADVERSE EFFECT" shall mean, (i) with respect to any Person,
any material adverse effect on such Person's business, assets, liabilities,
financial condition, results of operations or business prospects, (ii) with
respect to a group of Persons "taken as a whole", any material adverse effect
on such Persons' business, assets, liabilities, financial conditions, results
of operations or business prospects taken as a whole on, where appropriate, a
consolidated basis in accordance with GAAP, and (iii) with respect to this
Agreement, the Notes and the Related Agreements, ANY IMPAIRMENT, TO ANY DEGREE,
on the binding nature, validity or enforceability thereof as obligations of the
Borrowers, the Company or any Affiliate Guarantor, as the case may be.
"MEMORANDUM" shall mean the Confidential Private Placement Memorandum
prepared by Dean Witter Reynolds Inc. in connection with the offering of the
Notes on the basis of information supplied by the Company.
"MULTIEMPLOYER PLAN" shall mean any plan which is a "multiemployer
plan" as such term is defined in section 4001(a)(3) of ERISA.
"NOTE(S)" shall have the meaning specified in PARAGRAPH 1.
"OFFICERS' CERTIFICATE" shall mean a certificate signed in the name of
the Company and/or either Borrower by any two of the President, a Vice
President and the Treasurer of the Company or such Borrower, as the case may
be.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
other governmental authority succeeding to any of its functions.
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"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, a government or
any department or agency thereof, and any other form of business organization
(whether or not incorporated).
"PLAN" shall mean an "employee pension benefit plan" (as defined in
section 3(2) of ERISA) which is or has been established or maintained, or to
which contributions are or have been made, by the Company or any of its Related
Persons.
"PTE" shall have the meaning specified in PARAGRAPH 9(II)(D).
"PURCHASER(S)" shall have the meaning specified in PARAGRAPH 2A.
"QUALIFIED INSTITUTIONAL BUYER" shall have the meaning specified in
Rule 144A.
"RELATED AGREEMENTS" shall mean the Affiliate Guaranties, the
Contribution Agreement and the Subordination Agreements.
"RELATED PERSON" shall, for plan purposes, mean, with respect to any
Person, any trade or business, whether or not incorporated, which, together
with such Person, is under common control, as defined in section 414 (b), (c),
(m) or (o) of the Code.
"REQUIRED HOLDER(S)" shall mean the Holder or Holders of at least a
majority of the aggregate principal amount of the Notes at the time
outstanding.
"RESTRICTED PAYMENTS" shall mean the declaration, payment or making,
directly or indirectly, of any dividend, payment or other distribution, other
than dividends payable solely in common stock of the Company, on or in respect
to any of the capital stock of the Company, either Borrower or any of their
Subsidiaries (other than a Wholly-Owned Subsidiary of the Company) or the
setting apart of any funds or property therefor, or the making of any payment
on account of the purchase, redemption, retirement or other acquisition, direct
or indirect, of, or the forgiveness or foreclosure of any Debt owed to the
Company, either Borrower or any of their Subsidiaries and secured by a pledge
of, the capital stock of the Company, either Borrower or any of their
Subsidiaries (other than a purchase or other acquisition of capital stock of a
Wholly-Owned Subsidiary of the Company from such Wholly-Owned Subsidiary by the
Company or another Wholly-Owned Subsidiary of the Company).
"REVOLVING CREDIT FACILITY" shall mean the credit facility not to
exceed $20,000,000 in the aggregate to be extended to the Borrowers by
NationsBank, and its participants and assigns, substantially on the terms of
the commitment letter dated September 22, 1993 between NationsBank and the
Company.
"RULE 144A" shall mean Rule 144A promulgated under the Securities Act,
as such rule may be amended from time to time and including any successor rule
thereto.
"SALE AND LEASEBACK TRANSACTION" of a Person shall mean any
arrangement whereby (a) property has been sold or transferred by such Person
with the intention on the part of such Person of taking back a lease of such
property pursuant to which the rental payments are calculated to amortize the
purchase price of such property substantially over the useful life of such
property, and (b) such property is in fact so leased by such Person.
"SEC" shall mean the United States Securities and Exchange Commission,
or any governmental body or agency hereafter succeeding to the functions of
such Securities and Exchange Commission in the administration of the Securities
Act and/or the Exchange Act.
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<PAGE> 37
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SIGNIFICANT SUBSIDIARY" shall mean (a) each Borrower, (b) each
Affiliate Guarantor, and (c) each other Subsidiary of the Company of which the
net income (calculated by reference to the components included in the
definition of Consolidated Net Income), or if such Subsidiary has Subsidiaries
of its own, of which the consolidated net income of such Subsidiary and its
Subsidiaries, determined in either case for the latest fiscal year for which
financial statements have been provided under PARAGRAPH 5A(II), exceeded twenty
percent (20%) of Consolidated Net Income.
"SPECIAL COUNSEL" shall have the meaning specified in PARAGRAPH 2B.
"SUBORDINATION AGREEMENT" shall have the meaning specified in
PARAGRAPH 6C(2)(I).
"SUBSIDIARY" shall mean as to any Person (i) any corporation of which
such Person shall, at the time as of which any determination is being made,
own, either directly or through its Subsidiaries, more than (x) 50% of the
total combined voting power of all classes of the Voting Stock and (y) 50% of
the beneficial interest, (ii) any other corporation which is otherwise
permitted to be consolidated with such Person under GAAP, and (iii) any
partnership, association, joint venture or other form of business organization,
whether or not it constitutes a legal entity, in which such Person directly or
indirectly, through its Subsidiaries has more than 50% of the equity interest
at the time.
"TRADE PAYABLES" shall mean amounts payable by the Company or its
Subsidiaries to suppliers of goods and services incurred in the ordinary course
of business.
"TRANSFEREE" shall mean any direct or indirect transferee of all or
any part of any Note purchased by a Purchaser under this Agreement.
"VOTING STOCK" shall mean any securities of any class of a Person
whose holders are entitled under ordinary circumstances to vote for the
election of directors of such Person (or Persons performing similar functions)
(irrespective of whether at the time securities of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
"WHOLLY-OWNED SUBSIDIARY" shall mean with respect to any Person, a
Subsidiary of such Person, all of the outstanding shares of capital stock of
every class or series of which (other than directors' qualifying shares), or
all of the equity interest of which, if such Subsidiary is not a corporation,
are at the time owned, directly or indirectly through Subsidiaries, by such
Person.
11. MISCELLANEOUS
11A. NOTE PAYMENTS. The Borrowers agree that, so long as a
Purchaser shall hold any Note, they will make payments of principal of such
Note and Make Whole Premium, if any, and interest thereon, which comply with
the terms of this Agreement, by wire transfer of immediately available funds
for credit to its respective account or accounts as specified in the PURCHASER
SCHEDULE, or such other account or accounts in the United States as it may
designate in writing, notwithstanding any contrary provision herein or in such
Note with respect to the place of payment. Each Purchaser agrees that, before
disposing of any Note, it will make a notation thereon (or on a schedule
attached thereto) of all principal payments previously made and of the date to
which interest has been paid. The Borrowers agree to afford the benefits of
this PARAGRAPH 11A to any Transferees which shall have made the same agreement
in writing as each Purchaser has made in this PARAGRAPH 11A.
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<PAGE> 38
11B. EXPENSES. The Company and the Borrowers agree, whether or not
the transactions provided for hereby shall be consummated, to pay on demand,
and save each Purchaser and its Transferees harmless against liability for the
payment of, all out- of-pocket expenses arising in connection with such
transactions, including (i) all document production and duplication charges and
the reasonable fees and expenses of Purchasers' Special Counsel in connection
with this Agreement, the transactions provided for hereby and all document
production and duplication charges and the reasonable fees and expenses of any
special counsel or other special advisers engaged by the Purchasers in
connection with any subsequent proposed modification requested by the Company
or the Borrowers of, or proposed consent requested of the Company or the
Borrowers under, this Agreement, the Notes or any Related Agreement, whether or
not such proposed modification shall be effected or such proposed consent
granted, (ii) the costs of obtaining a private placement number for the Notes,
as called for by PARAGRAPH 3E, and (iii) the costs and expenses, including
reasonable attorneys' fees and the fees of any other special advisers, incurred
by any Purchaser or any of its Transferees in enforcing any rights under this
Agreement, any of the Notes or any Related Agreement or in responding to any
subpoena or other legal process issued in connection with this Agreement or the
transactions provided for hereby or thereby or by reason of any Purchaser's or
any Transferee's having acquired any Note, including without limitation costs
and expenses incurred in any bankruptcy case. The obligations of the Company
and the Borrowers under this PARAGRAPH 11B shall survive the transfer of any
Note or portion thereof or interest therein by each Purchaser or any Transferee
and the payment of any Note.
11C. CONSENT TO AMENDMENTS. This Agreement may not be amended, and
neither the Company nor either Borrower may take any action herein prohibited,
or omit to perform any act herein required to be performed by it, without the
written consent of the Required Holder(s), except that no change to the
interest rate of, or Make Whole Premium payable on, the Notes or the mandatory
repayment as provided in PARAGRAPH 4C or 4D or any change to this paragraph
shall be made without the written consent of the Holder or Holders of all Notes
at the time outstanding. Each Holder of any Note at the time or thereafter
outstanding shall be bound by any consent authorized by this PARAGRAPH 11C,
whether or not such Note shall have been marked to indicate such consent, but
any Notes issued thereafter may bear a notation referring to any such consent.
No course of dealing between the Company and/or the Borrowers or either of them
and the Holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any Holder of such
Note. As used herein and in the Notes, the term "THIS AGREEMENT" and
references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
11D. PERSONS DEEMED OWNERS; PARTICIPATIONS. The Company and the
Borrowers may treat the Person at the time shown on the Note register
referenced in PARAGRAPH 11O in whose name any Note is issued as the owner and
Holder of such Note for the purpose of receiving payment of principal of and
Make Whole Premium, if any, and interest on such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue, and neither the
Company nor the Borrowers shall be affected by notice to the contrary.
11E. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein or made in writing by or on
behalf of the Company or either Borrower or any Affiliate Guarantor in
connection herewith shall survive the execution and delivery of this Agreement,
the Notes and the Related Agreements, the transfer by any Purchaser of any Note
or portion thereof or interest therein and the payment of any Note and may be
relied upon by any Transferee,
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<PAGE> 39
regardless of any investigation made at any time by or on behalf of any
Purchaser or any Transferee. This Agreement, the Notes and the Related
Agreements embody the entire agreement and understanding among the Purchasers
and the Company, the Borrowers and the Affiliate Guarantors and supersede all
prior agreements and understandings relating to the subject matter hereof and
thereof.
11F. SUCCESSORS AND ASSIGNS. All covenants and other agreements in
this Agreement contained by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto (including, without limitation, any Transferee) whether so
expressed or not.
11G. DISCLOSURE TO OTHER PERSONS. The Company and the Borrowers
acknowledge that the Holder of any Note may deliver copies of any financial
statements and other documents delivered to such Holder, and disclose any other
information disclosed to such Holder, by or on behalf of the Company, either
Borrower or any other Subsidiary of the Company in connection with or pursuant
to this Agreement to (i) such Holder's directors, officers, employees, agents
and professional consultants, (ii) any other Holder of any Note, (iii) any
Person to which such Holder offers to sell such Note or any part thereof, (iv)
any Person to which such Holder sells or offers to sell a participation in all
or any part of such Note, (v) any federal or state regulatory authority having
jurisdiction over such Holder, (vi) the National Association of Insurance
Commissioners or any similar organization, (vii) Standard & Poor's Corporation
(in connection with obtaining a private placement number for the Notes) or
(viii) any other Person to which such delivery or disclosure may be necessary
or appropriate (a) in compliance with any law, rule, regulation or order
applicable to such Holder, (b) in response to any subpoena or other legal
process, (c) in connection with any litigation to which such Holder is a party
or (d) in order to protect such Holder's investment in such Note. Each Holder
agrees that prior to disclosing any information which has been marked
confidential and is not publicly available received from the Company, either
Borrower or any of their Subsidiaries to any Persons described in CLAUSE (III)
and (IV) above, it will obtain an agreement from such Person to maintain such
information in confidence (subject to the right to disclose any such
information to the Persons identified in CLAUSES (I) through (VIII) above and
in the case of CLAUSES (III) and (IV) above, subject to this sentence).
11H. NOTICES. All notices and other written communications
provided for hereunder shall be given in writing and shall be sent by overnight
delivery service (with charges prepaid) or by facsimile transmission with the
original of such transmission being sent by overnight delivery service (with
charges prepaid), and (i) if to any Purchaser or its nominee, addressed to such
Person at the address specified for such communications in the PURCHASER
SCHEDULE, or at such other address as such Person shall have specified to the
Company in writing, (ii) if to any other Holder of any Note, addressed to such
other Holder at such address as is specified for such Holder in the Note
register referenced in PARAGRAPH 11O and (iii) if to the Company, the Borrowers
or either Borrower addressed to them or it c/o the Company at 65 Rowayton
Avenue, Rowayton, Connecticut 06853, Attention: President or at such other
address as the Company, the Borrowers or such Borrower, as the case may be,
shall have specified to the Holder of each Note in writing given in accordance
with this PARAGRAPH 11H. Notice so given shall be effective upon the earlier
of the date of delivery or the first business day at the place of delivery
after dispatch.
11I. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11J. SOLICITATION OF NOTEHOLDERS. None of the Company, the
Borrowers or any of their Subsidiaries will, directly or indirectly, pay or
cause to be paid any remuneration, whether by way of
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<PAGE> 40
supplemental or additional interest, fee or otherwise, to any Holder of the
Notes for any consent by such Holder in its capacity as a Holder of Notes to
any waiver or amendment of any of the terms of the Notes or of this Agreement
or of any Related Agreement unless such remuneration is concurrently paid, on
the same terms, ratably to the Holders of all of the Notes then outstanding.
11K. REPRODUCTION OF DOCUMENTS. This Agreement, the Notes, and all
related documents, including (a) consents, waivers and modifications which may
subsequently be executed, (b) documents received by the Purchasers on their
purchase of the Notes (except the Notes themselves), and (c) financial
statements, certificates and other information previously or subsequently
furnished to each Purchaser, may be reproduced by the Purchasers by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process and each Purchaser may destroy any original document so
reproduced. The Company and the Borrowers agree and stipulate that any such
reproduction shall, to the extent permitted by applicable law, be admissible in
evidence as the original itself in any judicial or administrative proceeding
whether or not the original is in existence and whether or not the reproduction
was made by a Purchaser in the regular course of business, and that any
enlargement, facsimile or further reproduction of the reproduction shall
likewise be admissible in evidence.
11L. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of The Commonwealth of Massachusetts (without giving effect to principles of
conflicts law).
11M. CONSENT TO JURISDICTION AND SERVICE. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THE COMPANY AND EACH BORROWER HEREBY ABSOLUTELY AND
IRREVOCABLY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS AND OF ANY FEDERAL COURT LOCATED IN SAID
JURISDICTION IN CONNECTION WITH ANY ACTIONS OR PROCEEDINGS BROUGHT AGAINST IT
BY ANY HOLDER ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY NOTE OR ANY
RELATED AGREEMENT. THE COMPANY AND EACH BORROWER HEREBY WAIVES AND AGREES NOT
TO ASSERT IN ANY SUCH ACTION OR PROCEEDING, IN EACH CASE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) IT IS NOT PERSONALLY SUBJECT TO
THE JURISDICTION OF ANY SUCH COURT, (B) IT IS IMMUNE FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO IT OR ITS PROPERTY,
(C) ANY SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, OR
(D) THIS AGREEMENT, ANY NOTE OR ANY RELATED AGREEMENT MAY NOT BE ENFORCED IN OR
BY ANY SUCH COURT. IN ANY SUCH ACTION OR PROCEEDING, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE COMPANY AND EACH BORROWER HEREBY ABSOLUTELY
AND IRREVOCABLY WAIVES PERSONAL IN HAND SERVICE OF ANY SUMMONS, COMPLAINT,
DECLARATION OR OTHER PROCESS AND HEREBY ABSOLUTELY AND IRREVOCABLY AGREES THAT
THE SERVICE MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED, IN THE CASE OF THE COMPANY AND BAM, TO IT AT ITS ADDRESS
SET FORTH IN OR FURNISHED PURSUANT TO THE PROVISIONS OF THIS AGREEMENT OR BY
ANY OTHER MANNER PROVIDED BY LAW, OR IN THE CASE OF BTL, TO IT IN THE CARE OF
THE COMPANY AT THE COMPANY'S ADDRESS SET FORTH OR FURNISHED PURSUANT TO THE
PROVISIONS OF THIS AGREEMENT OR BY ANY OTHER MANNER PROVIDED BY LAW, AND BTL
HEREBY DESIGNATES THE COMPANY AS ITS AGENT FOR SERVICE OF PROCESS IN ANY SUCH
ACTION. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY OR EITHER BORROWER IN ANY
APPROPRIATE JURISDICTION.
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<PAGE> 41
11N. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
11O. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST
NOTES. The Notes are issuable and transferable as registered notes without
coupons in denominations of at least $1,000,000 except as may be necessary to
reflect any principal amount not evenly divisible by $1,000,000 or any
principal amount less than $1,000,000. The Borrowers shall keep at the
Company's principal office or, if such office is no longer located in the State
of Connecticut or The Commonwealth of Massachusetts, at the principal banking
office in Boston, Massachusetts of the First National Bank of Boston, a
register in which the Borrowers shall provide for the registrations of Notes
and of transfers of Notes and shall cause to be recorded therein the names and
addresses of the Holders from time to time of the Notes and all transfers
thereof provided, however, that the Borrowers shall be required to record the
transfer of a Note only if and when a subsequent holder shall have presented
such Note to the Borrowers for inspection, properly endorsed or assigned and in
order for transfer, and delivered to the Borrowers a written notice of its
acquisition of such Note and designated in writing an address to which payments
on and notices in respect of such Note shall be transmitted. Upon surrender
for registration of transfer of any Note at the principal office of the
Company, the Borrowers shall, at their expense, execute and deliver one or more
new Notes of like tenor and of a like aggregate principal amount, registered in
the name of such Transferee or Transferees. At the option of the Holder of any
Note, such Note may be exchanged for other Notes of like tenor and of any
authorized denominations, or a like aggregate principal amount, upon surrender
of the Note to be exchanged at the principal office of the Company. Whenever
any Notes are so surrendered for exchange, the Borrowers shall, at their
expense, execute and deliver the Notes which the Holder making the exchange is
entitled to receive. Every Note surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the Holder of such Note or such Holder's attorney
duly authorized in writing. Any Note or Notes issued in exchange for any Note
or upon transfer thereof shall carry the rights to unpaid interest and interest
to accrue which were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such transfer or
exchange. Upon receipt of written notice from the Holder of any Note of the
loss, theft, destruction or mutilation of such Note and, in the case of any
such loss, theft or destruction, upon receipt of the unsecured indemnification
agreement of such Holder, or in the case of any such mutilation upon surrender
and cancellation of such Note, the Borrowers will make and deliver a new Note,
of like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11P. JOINT AND SEVERAL OBLIGATIONS. Each and every representation,
warranty, covenant and agreement made in this Agreement by the Company and
Borrowers shall be their joint and several obligation whether or not so
expressed, and each and every representation, warranty, covenant and agreement
made by the Borrowers under the Notes shall be joint and several, whether or
not so expressed, and such obligations of the Company and/or the Borrowers
shall not be subject to any counterclaim, setoff, recoupment or defense based
upon any claim the Company or Borrower may have against the other, you or any
Holder.
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<PAGE> 42
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to
the Company and the Borrowers, whereupon this letter shall become a binding
agreement among the Purchasers, the Borrowers and the Company.
Very truly yours,
BALDWIN TECHNOLOGY COMPANY, INC.
By:___________________________________
Title:
BALDWIN AMERICAS CORPORATION
By:___________________________________
Title:
BALDWIN TECHNOLOGY LIMITED
By:___________________________________
Title:
The foregoing Agreement is
hereby accepted as of the date
first above written.
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By:____________________________
Title:
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
By:____________________________
Title:
JOHN HANCOCK LIFE INSURANCE
COMPANY OF AMERICA
By:____________________________
Title:
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<PAGE> 43
EXHIBIT A
BALDWIN AMERICAS CORPORATION
BALDWIN TECHNOLOGY LIMITED
8.17% Joint and Several Senior Note
due October 29, 2000
PPN 05777* AA 8
No. R-__ ___________ __, ____
$_______________
FOR VALUE RECEIVED, the undersigned, Baldwin Americas Corporation, a
Delaware corporation, and Baldwin Technology Limited, a Bermuda corporation
(together, with their respective successors, the "BORROWERS"), hereby jointly
and severally promise to pay to the order of _______________, ________________
or its registered assigns ("HOLDER"), the principal sum of
____________________________________________, Dollars ($___________) on October
29, 2000, with interest (computed on the basis of a 360-day year of twelve
30-day months) on the principal amount from time to time unpaid at the rate of
8.17% per annum from the date hereof, payable semi-annually in arrears on April
29 and October 29 of each year with the first of such payments to be made on
April 29, 1994. Any overdue payment of principal, any overdue payment of
premium and, to the extent permitted by applicable law, any overdue payment of
interest, shall bear interest at the rate of 10.17% per annum, whether overdue
by acceleration or otherwise. All principal and interest shall in all events
be paid in full on October 29, 2000.
This note is one of the series of Joint and Several Senior Notes (the
"NOTES") issued by the Borrowers pursuant to a Note Agreement dated as of
October 29, 1993 among the Borrowers, Baldwin Technology Company, Inc., John
Hancock Mutual Life Insurance Company, John Hancock Variable Life Insurance
Company and John Hancock Life Insurance Company of America, as amended from
time to time (the "AGREEMENT"). The Holder is entitled, equally and ratably
with holders of all other Notes, to the benefits of the Agreement and each of
the Affiliate Guaranties and the Subordination Agreements provided for therein.
Payments of principal, premium, if any, and interest are to be made at
the place specified by the Holder in the Purchaser Schedule to the Agreement or
at such other place as the Holder shall designate to the Borrowers in writing,
in lawful money of the United States of America. If any payment of principal,
premium, if any, or interest on or in respect of this note becomes due and
payable on any day which is a Saturday, Sunday or any day on which commercial
banks in Boston, Massachusetts, are required or authorized to be closed the
payment shall be due and payable on the next preceding Business Day.
This note is a registered note and, as provided in the Agreement, upon
surrender of this note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the Holder or
such Holder's attorney duly authorized in writing, a new note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the
Borrowers may treat the person in whose name this note is registered as the
owner hereof for the purpose of receiving payment and for all other purposes,
and the Borrowers shall not be affected by any notice to the contrary.
This note may be declared or may otherwise become due and payable
prior to its expressed maturity in the events, on the terms, with the premium
and in the manner and amounts as provided in the Agreement.
This note is not subject to prepayment or redemption at the option of
the Borrowers prior to its expressed maturity except on the terms, with the
premium and in the manner and amounts as provided in the Agreement.
<PAGE> 44
-2-
The Borrowers and every maker, endorser and guarantor hereof or of the
indebtedness evidenced hereby (a) waives presentment, demand, notice, protest
and all other demands, notices and suretyship defenses generally, in connection
with the delivery, acceptance, performance, default or enforcement of or under
this note, and (b) agrees to pay, to the extent permitted by law, all costs and
expenses, including, without limitation, reasonable attorneys' fees, incurred
or paid by the Holder hereof in enforcing this note and any collateral or
security therefor on default, whether or not litigation is commenced.
Capitalized terms used in this note and not defined herein shall have
the meanings given therefor in the Agreement.
WITNESS: BALDWIN AMERICAS CORPORATION
______________________________ By:___________________________
Title:
WITNESS: BALDWIN TECHNOLOGY LIMITED
______________________________ By:____________________________
Title:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR QUALIFIED UNDER STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, AND
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, OR (B) IF SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE
RULES AND REGULATIONS IN EFFECT THEREUNDER AND ANY APPLICABLE STATE SECURITIES
LAWS.
<PAGE> 1
EXHIBIT 10.24
REVOLVING CREDIT AGREEMENT
by and among
BALDWIN AMERICAS CORPORATION
AND
BALDWIN TECHNOLOGY LIMITED,
as Borrowers
and
BALDWIN TECHNOLOGY COMPANY, INC.
and
NATIONSBANK OF NORTH CAROLINA,
NATIONAL ASSOCIATION,
as Lender
and
NATIONSBANK OF NORTH CAROLINA,
NATIONAL ASSOCIATION,
as Agent
November 23, 1993
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND TERMS
<S> <C> <C>
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Accounts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Advance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Applicable Commitment Percentage" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Assignment and Acceptance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Authorized Officer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Baldwin Foreign Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Baldwin Guaranty" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Baldwin Pledge Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Baldwin Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Baldwin Technology" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Baldwin Technology Pledge Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"BAM Foreign Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"BAM Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"BAM Subsidiary Guaranty" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Base Rate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Board" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Borrower Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Borrowers Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Borrowers Pledge Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Borrowing Base" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Borrowing Base Certificate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Borrowing Notice" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"BTL Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"BTL Foreign Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Business Day" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Capital Expenditures" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Capitalized Lease Obligation" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Capitalized Leases" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Collateral" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Consolidated Cash Flow" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Consolidated Fixed Charge Ratio" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Consolidated Fixed Charges" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Consolidated Funded Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Consolidated Group" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Consolidated Interest Expense" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Consolidated Net Income" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Consolidated Net Tangible Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Consolidated Net Worth" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Consolidated Operating EBIT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Consolidated Total Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Consolidated Total Capitalization" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
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"Consolidated Total Indebtedness" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Contingent Obligation" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Current Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Current Ratio" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Dollars" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
"Eligible Capital Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Eligible Accounts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Eligible Inventory" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Enkel International" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Enkel Pledge Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Environmental Laws" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"ERISA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"Exchange Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"Existing Capitalized Leases" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"Federal Funds Effective Rate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"Fiscal Quarter" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Fiscal Year" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Funded Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Generally Accepted Accounting Principles" or "GAAP" . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Guaranties" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Guarantors" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Hazardous Material" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Indebtedness" or "Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Indebtedness for Money Borrowed" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Intercreditor Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Interest Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Inventory" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
"Investment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
"Lending Office" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
"LIBOR Business Day" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
"LIBOR Interest Addition" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
"LIBOR Loan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
"LIBOR Rate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
"Lien" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
"Loan" or "Loans" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
"Loan Documents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
"Material Adverse Effect" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
"Multiemployer Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
"Obligations" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
"Permitted Encumbrances" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
"Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
"Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
"Pledge Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
"Pledged Baldwin Technology Subsidiary Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
"Pledged BAM Subsidiary Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
"Pledged Borrower Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
"Pledged Borrower Subsidiary Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
"Pledged BTL Subsidiary Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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"Pledged Enkel Subsidiary Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
"Pledged Sector Subsidiary Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
"Pledged Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
"Prime Loan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
"Prime Rate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
"Principal Office" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
"Rate Hedging Obligations" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
"Regulation D" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
"Regulatory Change" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
"Related Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
"Required Lenders" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
"Reserve Requirement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
"Restricted Payments" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
"Revolving Credit Facility" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
"Revolving Credit Notes" or "Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
"Revolving Credit Termination Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
"Revolving Loan Commitment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
"SEC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
"Sector Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
"Sector Subsidiary Guaranty" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
"Security Instruments" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
"Senior Note Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
"Senior Note Documents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
"Significant Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
"Single Employer Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
"Solvent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
"Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
"Total Commitment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
"Total Fee Baseline" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
"Unavailable Commitment Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
"Voting Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
1.2. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
1.3. Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II
REVOLVING CREDIT FACILITY
2.1. Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.2. Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.3. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.4. Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.5. Payment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.6. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.7. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.8. Pro Rata Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.9. Voluntary Reduction in Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.10. Prepayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.11. Conversions and Elections of Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.12. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.13. Deficiency Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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2.14. Unavailable Commitment Amount; Reduction in Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.15. Authority to Debit Borrower Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE III
YIELD PROTECTION AND ILLEGALITY
3.1. Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.2. Suspension of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.3. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.4. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.5. Substitution of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV
CONDITIONS TO MAKING LOANS
4.1. Conditions of Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.2. Conditions of Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE V
SECURITY; GUARANTIES
5.1. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.2. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.3. New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.4 Certain Stock Owned by Sector Subsidiaries and Other Baldwin Subsidiaries . . . . . . . . . . . . . . . . . 39
5.5. Filing and Recording Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.6. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Organization, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.2. Business; Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.3. Actions Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.4. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.5. Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.6. Conflicting Agreements and Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.7. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.8. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.9. Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.10. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.11. Status Under Certain Federal Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.12. Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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6.13. No Consents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.14. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.15. Restrictions on Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.16. No Senior or Equal Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.17. Survival of Warranties and Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VII
AFFIRMATIVE COVENANTS
7.1. Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.2. Inspection of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.3. Corporate Existence, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.4. Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.5. Compliance with Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.6. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.7. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.8. Scope of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.9. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.10. Maintenance of Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.11. Payment of Trade Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.12. Pay Indebtedness to Lenders and Perform other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.13. Environmental Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.14. Notice of Discharge of Hazardous Material or Environmental Complaint . . . . . . . . . . . . . . . . . . . 56
7.15. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.16. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.17. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.18. New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VIII
NEGATIVE COVENANTS
8.1. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.2. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.3. Liens and Other Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.4. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.5. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.6. Tax Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.7. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.8. Amendments to Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE IX
EVENTS OF DEFAULT AND ACCELERATION
9.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.2. Agent to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.3. Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
</TABLE>
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9.4. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.5. Allocation of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE X
THE AGENT
10.1. Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.2. Attorneys-in-fact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.3. Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.4. Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.5. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.6. No Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.8. Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.9. Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.10. Sharing of Payments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.11. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE XI
MISCELLANEOUS
11.1. Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.3. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.4. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.5. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.6. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.9. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.10. Representation and Warranty of the Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.11. Agreement Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.12. CONSENT TO JURISDICTION; OTHER WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
EXHIBIT A Applicable Commitment Percentages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B Form of Assignment and Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C Form of Borrowing Base Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D Borrowing Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
EXHIBIT E Form of Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
EXHIBIT F Form of Solvency Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
EXHIBIT G-1 Form of Opinions of Counsel
for the Borrowers and the Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .G-1-1
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EXHIBIT G-2 Form of Opinion of Bermuda Counsel for BTL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .G-2-1
EXHIBIT H [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1
EXHIBIT I Form of Notice of Appointment (or
Revocation) of Authorized Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
SCHEDULE 6.1 Incorporation, Foreign Qualification and Ownership of Borrowers, Borrower Subsidiaries and Baldwin
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
SCHEDULE 6.3 Actions Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
SCHEDULE 8.3(a) Indebtedness Secured by Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
SCHEDULE 8.3(f) Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5
SCHEDULE 8.4(a) Existing Junior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6
SCHEDULE 8.4(b) Existing Capitalized Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
SCHEDULE 9.3(k) Permitted Holders of More than 49%
Voting Control of Baldwin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
</TABLE>
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<PAGE> 9
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of November 23, 1993 (as
amended or supplemented from time to time, the "Agreement"), is made by and
among:
BALDWIN AMERICAS CORPORATION, a corporation organized and existing
under the laws of the State of Delaware and currently having its principal
executive office in Elkwood, Virginia ("BAM"), and BALDWIN TECHNOLOGY LIMITED,
a corporation organized and existing under the laws of Bermuda and currently
having its principal place of business in Hamilton, Bermuda ("BTL") (BAM and
BTL being referred to collectively as the "Borrowers" and individually as a
"Borrower");
BALDWIN TECHNOLOGY COMPANY, INC., a corporation organized and existing
under the laws of the State of Delaware ("Baldwin"), of which BAM and BTL are
wholly-owned Subsidiaries,
NATIONSBANK OF NORTH CAROLINA, NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the United States
of America ("NationsBank"), and each other lender which may hereafter execute
and deliver an Assignment and Acceptance (as defined below) with respect to
this Agreement pursuant to Section 11.1 (hereinafter NationsBank and all such
lenders may be referred to individually as a "Lender" or collectively as the
"Lenders"); and
NATIONSBANK OF NORTH CAROLINA, NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the United States
of America in its capacity as agent for the Lenders (in such capacity, the
"Agent").
W I T N E S S E T H:
WHEREAS, the Borrowers have applied to the Lenders for revolving
credit loans in a maximum aggregate principal amount outstanding at any time of
$20,000,000 (as such maximum amount may be reduced from time to time) under the
terms and conditions hereinafter set forth, the proceeds of which revolving
credit loans shall be used by the Borrowers from time to time to support
working capital needs, to repay existing debt and for general corporate
purposes of the Borrowers; and
WHEREAS, the Lenders are willing to make such revolving credit loans
to the Borrowers, in the maximum aggregate principal amount outstanding at any
time of $20,000,000 (as such maximum amount may be reduced from time to time)
under the terms and conditions hereinafter set forth;
NOW, THEREFORE, the Borrowers, Baldwin, the Lenders and the Agent
agree as follows:
<PAGE> 10
ARTICLE I
DEFINITIONS AND TERMS
1.1. DEFINITIONS. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Accounts" means all accounts receivable owing to any Borrower
or any of its consolidated Subsidiaries;
"Advance" means a borrowing of new funds under the Revolving
Credit Facility consisting of the aggregate principal amount of a
Prime Loan or a LIBOR Loan;
"Affiliate" means a Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or
is under common control with, a Borrower, a Borrower Subsidiary,
Baldwin or a Baldwin Subsidiary; (ii) which beneficially owns or holds
5% or more of any class of the outstanding voting stock (or in the
case of a Person which is not a corporation, 5% or more of the equity
interest) of a Borrower, a Borrower Subsidiary, Baldwin or a Baldwin
Subsidiary; or (iii) 5% or more of any class of the outstanding voting
stock (or in the case of a Person which is not a corporation, 5% or
more of the equity interest) of which is beneficially owned or held by
a Borrower, a Borrower Subsidiary, Baldwin or a Baldwin Subsidiary.
The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting stock, by
contract or otherwise;
"Applicable Commitment Percentage" means, for each Lender,
with respect to the Obligations hereunder, a fraction (expressed as a
percentage), the numerator of which shall be the amount of such
Lender's Revolving Loan Commitment at the date of determination and
the denominator of which shall be the Total Commitment, which
Applicable Commitment Percentage for each Lender as of the Closing
Date is as set forth in Exhibit A attached hereto and incorporated
herein by reference; provided that the Applicable Commitment
Percentage of each Lender shall be increased or decreased to reflect
any assignments to or by such Lender effected in accordance with
Section 11.1 hereof;
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of Exhibit B attached hereto and incorporated
herein by reference (with blanks appropriately filled in) executed by
the assignor Lender, the assignee,
2
<PAGE> 11
the Agent and the Borrowers and delivered to the Agent in connection
with an assignment of a Lender's interest under this Agreement
pursuant to Section 11.1;
"Authorized Officer" means (i) any of the Chairman, President,
Executive Vice Presidents, Senior Vice Presidents, Vice Presidents or
Chief Financial Officer of any Borrower, or (ii) any other person
expressly designated by any person described in clause (i) as an
Authorized Officer for purposes of this Agreement, as set forth from
time to time in a certificate to such effect delivered to the Agent in
substantially the form of Exhibit I hereto;
"Baldwin Foreign Subsidiary" means any Subsidiary of Baldwin
(other than BAM, BTL, any Borrower Subsidiary or any Sector
Subsidiary) that is organized and existing under the laws of a country
other than the United States;
"Baldwin Guaranty" means that Guaranty Agreement of even date
herewith by and between Baldwin and the Agent, pursuant to which
Baldwin has unconditionally guaranteed the payment and performance of
the Obligations, as the same may be modified, amended, or supplemented
from time to time as therein permitted;
"Baldwin Pledge Agreement" means that Pledge Agreement of even
date herewith by and between Baldwin and the Agent, pursuant to which
Baldwin has assigned, transferred, pledged and set over unto the Agent
for the benefit of the Lenders its Pledged Borrower Stock and Pledged
Sector Subsidiary Stock, together with all dividends paid upon, all
securities received in addition to and in exchange for, and all rights
to subscribe for securities incident to, its Pledged Borrower Stock
and Pledged Sector Subsidiary Stock, to secure the payment and
performance of Baldwin's obligations pursuant to the Baldwin Guaranty
and the Baldwin Pledge Agreement, as the same may be modified, amended
or supplemented from time to time as therein permitted;
"Baldwin Subsidiary" means BAM, BTL, any Sector Subsidiary or
any other Subsidiary of Baldwin;
"Baldwin Technology" means Baldwin Technology Corporation, a
corporation organized and existing under the laws of the State of
Connecticut, and a wholly-owned Subsidiary of BAM;
"Baldwin Technology Pledge Agreement" means that Pledge
Agreement of even date herewith by and between Baldwin Technology and
the Agent, pursuant to which Baldwin Technology has assigned,
transferred, pledged and set over
3
<PAGE> 12
unto the Agent for the benefit of the Lenders its Pledged Baldwin
Technology Subsidiary Stock, together with all dividends paid upon,
all securities received in addition to and in exchange for, and all
rights to subscribe for securities incident to, its Pledged Baldwin
Technology Subsidiary Stock, to secure the payment and performance of
Baldwin Technology's obligations pursuant to the BAM Subsidiary
Guaranty and the Baldwin Technology Pledge Agreement, as the same may
be modified, amended or supplemented from time to time as therein
permitted;
"BAM Foreign Subsidiary" means Enkel Foreign Sales Corporation
or any other Subsidiary of BAM (other than Baldwin Technology, Kansa
Corporation, Enkel Corporation, Misomex of North America, Inc. or
Baldwin Graphic Systems, Inc.) that is organized and existing under
the laws of a country other than the United States.
"BAM Subsidiary" means (i) Baldwin Technology, (ii) Kansa
Corporation, a Kansas corporation, (iii) Enkel Corporation, a Delaware
corporation, (iv) Enkel Foreign Sales Corporation, a United States
Virgin Islands corporation, (v) Enkel International, (vi) Misomex of
North America, Inc., a Delaware corporation, (vii) Baldwin Graphic
Systems, Inc., a Delaware corporation, or (viii) any other Person
that is, at any time, a Subsidiary of BAM;
"BAM Subsidiary Guaranty" means that Guaranty Agreement of
even date herewith by and among the BAM Subsidiaries (other than Enkel
Foreign Sales Corporation and Enkel International) and the Agent,
pursuant to which such BAM Subsidiaries have unconditionally, jointly
and severally guaranteed the payment and performance of the
Obligations, as the same may be modified, amended, or supplemented
from time to time as therein permitted;
"Base Rate" means, with respect to a LIBOR Loan, in respect of
the Interest Period specified by an Authorized Officer in the
Borrowing Notice for such LIBOR Loan, the rate (expressed as a
percentage and rounded upward if necessary to the nearest 1/100 of 1%)
(which shall be the same for each day of such Interest Period)
determined by the Agent in good faith in accordance with its usual
procedures for its customers generally to be the average of the rates
per annum for deposits in Dollars offered to major money center banks
in the London interbank market at approximately 11:00 A.M. London time
two (2) LIBOR Business Days prior to the commencement of the
applicable Interest Period in an amount approximately equal to the
principal amount of, and for a period comparable to the Interest
Period for, such LIBOR Loan;
4
<PAGE> 13
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body);
"Borrower Subsidiary" means any Subsidiary of a Borrower;
"Borrowers Account" means (i) demand deposit account number
001-009-27-319 in the name of BAM and BTL with NationsBank of Georgia,
National Association , or (ii) any successor account of the Borrowers
with the Agent, which may be maintained at one or more offices of the
Agent, or an agent for the Agent;
"Borrowers Pledge Agreement" means that Pledge Agreement of
even date herewith by and between each Borrower and the Agent,
pursuant to which each Borrower has assigned, transferred, pledged and
set over unto the Agent for the benefit of the Lenders its Pledged
Borrower Subsidiary Stock, together with all dividends paid upon, all
securities received in addition to and in exchange for, and all rights
to subscribe for securities incident to, its Pledged Borrower
Subsidiary Stock, to secure the payment and performance of the
Obligations, as the same may be modified, amended or supplemented from
time to time as therein permitted;
"Borrowing Base" means the sum, as of the date of
determination of (i) Eligible Accounts multiplied by 80%, plus (ii)
Eligible Inventory that constitutes raw materials or finished goods,
in each case valued at cost or fair market value, whichever is lower,
multiplied by 50%, plus (iii) Eligible Inventory that constitutes
work-in-process, valued at cost or fair market value, whichever is
lower, multiplied by 35%; provided, however, the Agent, based upon
reasonable justification, may, from time to time, with the consent of
all Lenders reduce or increase the percentage of Eligible Accounts or
Eligible Inventory, or both, that shall be used in calculating the
Borrowing Base. The Agent shall provide the Borrowers with written
notice outlining all proposed changes and the reasons therefore;
"Borrowing Base Certificate" means a certificate in the form
set forth in Exhibit C attached hereto and incorporated herein by
reference, together with all exhibits and schedules affixed thereto as
required to be provided by the terms thereof;
"Borrowing Notice" has the meaning specified in Section 2.3(b);
5
<PAGE> 14
"BTL Subsidiary" means, at any time, any Subsidiary of BTL;
"BTL Foreign Subsidiary" means any Subsidiary of BTL that is
organized and existing under the laws of a country other than the
United States;
"Business Day" means any day which is not a Saturday, Sunday
or legal holiday and which is a day on which NationsBank is open for
business generally with the public in the State of North Carolina and
commercial banks are not authorized or required to be closed in New
York City;
"Capital Expenditures" means for any period the sum of (i) the
aggregate gross amount of additions to property, plant and equipment
(which are classified as such in accordance with GAAP and have a
useful life in excess of one year) of Baldwin and its Subsidiaries
during such period plus (ii) with respect to any Capitalized Lease
entered into by Baldwin or any Baldwin Subsidiary during such period,
the capitalized amount of the obligations of Baldwin or such
Subsidiary with respect to such Capitalized Lease determined in
accordance with GAAP applied on a consistent basis;
"Capitalized Lease Obligation" means any payment obligation
under or with respect to any Capitalized Lease;
"Capitalized Leases" means all leases which have been or
should be capitalized in accordance with GAAP as in effect from time
to time including Statement No. 13 of the Financial Accounting
Standards Board and any successor thereof;
"Closing Date" means the date as of which this Agreement is
executed by the Borrowers, the Agent and NationsBank and on which the
conditions set forth in Section 4.1 hereof have been satisfied or
waived by NationsBank;
"Code" means the Internal Revenue Code of 1986, as amended
from time to time;
"Collateral" means all assets, instruments and other
properties, real, personal and intellectual, and interests now or
hereafter subject to a Lien granted pursuant to any Security
Instrument and all products and proceeds thereof;
"Consolidated Cash Flow" means, with respect to Baldwin and
its Subsidiaries for any period, the aggregate sum of (i) Consolidated
Operating EBIT, plus (ii) depreciation and amortization, on a
consolidated basis in accordance with GAAP;
6
<PAGE> 15
"Consolidated Fixed Charge Ratio" means, with respect to
Baldwin and its Subsidiaries for any period, the sum of (i)
Consolidated Operating EBIT, (ii) depreciation and (iii)
amortization, divided by Consolidated Fixed Charges, on a consolidated
basis in accordance with GAAP;
"Consolidated Fixed Charges" means, with respect to Baldwin
and its Subsidiaries for any period, the sum of (i) Consolidated
Interest Expense, (ii) current maturities of Funded Debt, (iii) (to
the extent not included in clause (ii)) current maturities of
Capitalized Leases, (iv) dividend expense and (v) without
duplication, other Capital Expenditures, on a consolidated basis in
accordance with GAAP;
"Consolidated Funded Debt" means, as at any date of
determination, the aggregate total Funded Debt of Baldwin and its
Subsidiaries on a consolidated basis in accordance with GAAP;
"Consolidated Group" means Baldwin and its Subsidiaries, taken
as a whole;
"Consolidated Interest Expense" means, with respect to Baldwin
and its Subsidiaries for any period, the gross interest expense of
Baldwin and its Subsidiaries determined on a consolidated basis in
accordance with GAAP applied on a consistent basis, including, without
limitation, (i) the amortization of debt discounts, (ii) the
amortization of all fees (including, without limitation, fees with
respect to interest rate protection agreements) payable in connection
with the incurrence of Indebtedness to the extent included in interest
expense and (iii) the portion of any Capitalized Lease allocable to
interest expense. For purposes of the foregoing, gross interest
expense shall be determined after (x) giving effect to any net
payments made or received by Baldwin and its Subsidiaries with respect
to interest rate protection agreements entered into as a hedge against
interest rate exposure; and (y) excluding therefrom the gross interest
expense of any Person accrued prior to the date it becomes a
Subsidiary;
"Consolidated Net Income" means, with respect to any period,
consolidated gross revenues of Baldwin and its Subsidiaries less all
operating and non-operating expenses of Baldwin and its Subsidiaries
including all charges of a proper character (including current and
deferred taxes on income, provision for taxes on unremitted foreign
earnings which are included in gross revenues, amortization,
depreciation and current additions to reserves), but not including in
gross revenues any gains (net of expenses and
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taxes applicable thereto) in excess of losses resulting from the sale,
conversion or other disposition of assets (other than Inventory and
used equipment in the ordinary course of the business of Baldwin and
its Subsidiaries), any earnings or losses attributable to any
corporation which is not a Subsidiary of Baldwin, any gains arising
from transactions of a nonrecurring and material nature, any gains
arising from the sale or discontinuation of operations, any gains
resulting from the write-up of assets, any equity of Baldwin or any of
its Subsidiaries in the unremitted earnings of any corporation which
is not a Subsidiary of Baldwin, any earnings of any Person acquired by
Baldwin or any of its Subsidiaries through purchase, merger or
consolidation or otherwise for any year prior to the year of
acquisition, any revenues of Baldwin or any of its Subsidiaries from
sales of goods or services to any other Subsidiary of Baldwin or to
Baldwin, or any deferred credit representing the excess of equity in
any Subsidiary at the date of acquisition over the cost of the
investment in such Subsidiary; all determined in accordance with GAAP;
"Consolidated Net Tangible Assets" means (i) Consolidated
Total Assets, less (ii) the sum of (a) unamortized patents,
copyrights, trademarks, trade names, franchises, goodwill, and other
similar intangibles; (b) unamortized debt discount and expense; and
(c) all liabilities of Baldwin and its Subsidiaries on a consolidated
basis as of the most recent balance sheet, determined in accordance
with GAAP, other than Consolidated Funded Debt, minority interests and
deferred taxes;
"Consolidated Net Worth" means, on any date as of which the
amount thereof is to be determined, the shareholders' equity of
Baldwin and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP, except that such amount shall (i) include
preferred stock (other than preferred stock which would not qualify as
Eligible Capital Stock), and (ii) exclude non-cash losses from
discontinued operations and any foreign exchange translation
adjustments;
"Consolidated Operating EBIT" means, with respect to Baldwin
and its Subsidiaries for any period, the sum of (i) Consolidated Net
Income, (ii) Consolidated Interest Expense and (iii) (to the extent
deducted in calculating Consolidated Net Income) current and deferred
taxes on income and provision for taxes on unremitted foreign earnings
which are included in gross revenues, all on a consolidated basis in
accordance with GAAP;
"Consolidated Total Assets" means the aggregate total assets
of Baldwin and its Subsidiaries on a consolidated
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<PAGE> 17
basis as of the most recent balance sheet, determined in accordance with GAAP;
"Consolidated Total Capitalization" means (a) for purposes of Section
8.4(a)(iv) hereof, the sum of (i) Consolidated Funded Debt, plus (ii)
Consolidated Net Worth; and (b) for purposes of Section 8.4(a)(v) hereof, the
sum of (i) Consolidated Total Indebtedness plus (ii) Consolidated Net Worth;
"Consolidated Total Indebtedness" means the aggregate total
Indebtedness of Baldwin and its Subsidiaries, on a consolidated basis in
accordance with GAAP;
"Contingent Obligation" of any Person means any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including obligations of such Person however
incurred:
(i) to purchase such Indebtedness or other obligation of
the primary obligor or any property or assets constituting security
therefor;
(ii) to advance or supply funds in any manner (A) for the
purchase or payment of such Indebtedness or other obligation of the
primary obligor, or (B) to maintain a minimum working capital, net
worth or other balance sheet condition or any income statement
condition of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation;
(iii) to grant or convey any lien, security interest, pledge,
charge or other encumbrance on any property or assets of such Person to
secure payment of such Indebtedness or other obligation of the primary
obligor;
(iv) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the owner or
holder of such Indebtedness or obligation of the ability of the primary
obligor to make payment of such Indebtedness or other obligation; or
(v) otherwise to assure the owner of the Indebtedness or
such obligation of the primary obligor against loss in respect thereof;
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"Current Debt" means, as applied to any Person, (i) all Indebtedness of
such Person that matures within one year or less from the date of its creation
and is not renewable or extendable beyond such period at the option of such
Person, including all payments in respect of Funded Debt that are required to
be made within one year from the date of determination of such Funded Debt, and
(ii) bankers and trade acceptances, whenever maturing.
"Current Ratio" shall mean on any date as of which the amount thereof
is to be determined, the ratio of (a) the current assets of Baldwin and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP, to
(b) the current liabilities of Baldwin and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP;
"Default" means any event or condition which, with the giving or
receipt of notice or lapse of time or both, would constitute an Event of
Default hereunder;
"Dollars" and the symbol "$" means dollars constituting legal tender
for the payment of public and private debts in the United States of America;
"Eligible Capital Stock" means any class or series of capital stock of
Baldwin other than any class or series which has fixed payment obligations or
is redeemable at the option of the holder unless such fixed payment obligations
or repurchase obligations on exercise of such redemption option can be
satisfied, at the election of Baldwin through the issuance of shares of common
stock;
"Eligible Accounts" means those Accounts of BAM or any of its
consolidated Subsidiaries which Accounts are not greater than one hundred
twenty (120) days past the due date thereof (based on the terms thereof, as
opposed to the respective invoice date) and are determined by the Agent in the
reasonable exercise of its discretion to be an Eligible Account, provided that,
without limiting the generality of the foregoing, the following Accounts
shallnot be deemed Eligible Accounts: any Account (a) that is not a bona fide
existing obligation created by the sale and actual delivery of inventory, goods
or other property or the furnishing of services or other good and sufficient
consideration to customers of BAM or the respective BAM Subsidiary in the
ordinary course of business, (b) that is subject to any material dispute,
contra-account, defense, offset or counterclaim or any Lien or the inventory,
goods, property, services or other consideration of which such Account
constitutes proceeds is subject to any such Lien other than a Lien in favor of
BAM or the respective BAM Subsidiary,
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(c) in respect of which the inventory, goods, property, services or other
consideration have been rejected in such amount that is material, (d) that is
due from Baldwin, BTL, any Affiliate, any Baldwin Subsidiary or any Borrower
Subsidiary, (e) that has been classified by BAM or the respective BAM
Subsidiary as doubtful or against collection of which reserves have otherwise
been established, (f) that is payable by any person located outside the United
States (which shall not be deemed to include any territories of the United
States) and that exceeds, when aggregated with all other such Accounts coming
within this clause (f), 10% of the aggregate Eligible Accounts, (g) with
respect to which any representation or warranty contained in any Loan Document
is incorrect in any material respect at any time, (h) that is payable by the
United States or any of its departments, agencies or instrumentalities or by
any state or other governmental entity and that exceeds, when aggregated with
all other such Accounts coming within this clause (h), 10% of the aggregate
Eligible Accounts, (i) that is payable by any person that is the subject of any
proceeding seeking to adjudicate it a bankruptcy or insolvent or seeking
liquidation, winding up or reorganization, arrangement, protection, relief or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief or protection of debtors or seeking the appointment
of a receiver, trustee, custodian or other similar official for it or for any
substantial part of its property, or that is not generally paying its debts as
they become due or has admitted in writing its inability to pay its debts
generally or has made a general assignment for the benefit of creditors, (j)
that is evidenced by a promissory note or other instrument the maturity date of
which is not more than 120 days after the date of execution thereof, (k) the
payment of which is subordinate to other obligations or claims, or (l) that
does not comply in all material respects with all applicable legal
requirements;
"Eligible Inventory" means the Inventory of BAM or any of its
consolidated Subsidiaries which Inventory is usable and saleable, less (to the
extent otherwise included in Eligible Inventory) any Inventory
(a) that is not owned solely by BAM or the respective BAM
Subsidiary;
(b) that is leased to any third party or on consignment;
(c) to which BAM or the respective BAM Subsidiary does not
have good, valid and marketable title;
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(d) that is in transit to any third party (other than the
agents or warehouse of BAM or the respective BAM Subsidiary);
(e) that is not located at or in transit to any property
that is owned or leased by BAM or the respective BAM Subsidiary (or an
agent or warehouse of BAM or the respective BAM Subsidiary);
(f) that is not located in the United States and that
exceeds, when aggregated with all other such Accounts coming within
this clause (f), 15% of the aggregate Eligible Inventory; or
(g) that does not conform in all material respects to any
representations and warranties with respect thereto contained in any
Loan Documents;
and less any reserves required by GAAP for obsolete inventory, market value
declines, bill and hold (deferred shipment) sales and goods returned or
rejected;
"Enkel International" means Enkel International Sales Corporation, an
Illinois corporation;
"Enkel Pledge Agreement" means that Pledge Agreement of even date
herewith by and between Enkel Corporation and the Agent, pursuant to which
Enkel Corporation has assigned, transferred, pledged and set over to the Agent
for the benefit of the Lenders its Pledged Enkel Subsidiary Stock, together
with all dividends paid upon, all securities received in addition to and in
exchange for, and all rights to subscribe for securities incident to, its
Pledged Enkel Subsidiary Stock, to secure the payment and performance of Enkel
Corporation's obligations pursuant to the BAM Subsidiary Guaranty and the Enkel
Pledge Agreement, as the same may be modified, amended or supplemented from
time to time, as therein permitted;
"Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation
and Recovery Act, the Toxic Substances Control Act, as amended, the Clean Air
Act, as amended, the Clean Water Act, as amended, any other "Superfund" or
"Superlien" law or any other federal, or applicable state or local statute,
law, ordinance, code, rule, regulation, order or decree regulating, relating
to, or imposing liability or standards of conduct concerning, any hazardous,
toxic or dangerous
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<PAGE> 21
waste, substance or material, as now or at any time hereafter in effect;
"ERISA" means, at any date, the Employee Retirement Income Security Act
of 1974 and the regulations thereunder, all as the same shall be in effect at
such date;
"Event of Default" means any of the occurrences set forth as such in
Section 9.1 hereof;
"Exchange Act" means the Securities Exchange Act of 1934, as amended;
"Existing Capitalized Leases" means those Capitalized Leases of Baldwin
and its Subsidiaries existing on the Closing Date that are listed on Schedule
8.4.
"Federal Funds Effective Rate" for any day, as used herein, means the
rate per annum (rounded upward to the nearest 1/100 of 1%) announced by the
Federal Reserve Bank of New York (or any successor) on such day as being the
weighted average of the rates on overnight Federal funds transactions arranged
by Federal funds brokers on the previous trading day, as computed and announced
by such Federal Reserve Bank (or any successor) in substantially the same
manner as such Federal Reserve Bank computes and announces the weighted average
it refers to as the "Federal Funds Effective Rate" as of the date of this
Agreement; provided, if such Federal Reserve Bank (or its successor) does not
announce such rate on any day, the "Federal Funds Effective Rate" for such day
shall be the Federal Funds Effective Rate for the last day on which such rate
was announced;
"Fiscal Quarter" of Baldwin or any Borrower means the 3-month period
ending each March 31, June 30, September 30 and December 31 in any Fiscal Year;
"Fiscal Year" of Baldwin or any Borrower means the 12-month period of
the Borrower commencing on July 1 of each calendar year and ending on June 30
of the subsequent calendar year;
"Funded Debt" shall mean, as applied to any Person, (i) all
Indebtedness of such Person that matures more than one year from the date of
its creation or matures within one year or less from the date of its creation
but is renewable or extendable at the option of such Person to a date more than
one year from the date of its creation, and (ii) any Current Debt which remains
outstanding beyond one year from
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<PAGE> 22
the date of its creation or its occurrence, but excluding bankers or trade
acceptances whenever maturing;
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States of America applied on a
consistent basis through the relevant periods;
"Guaranties" means, collectively, the Baldwin Guaranty, the Sector
Subsidiary Guaranty, the BAM Subsidiary Guaranty and any other guaranty
executed by a BAM Subsidiary, a BTL Subsidiary or other Person pursuant to
Section5.3 or 8.3(b) hereof, as such Guaranties may be amended or supplemented
from time to time;
"Guarantors" means, collectively, Baldwin, the Sector Subsidiaries, the
BAM Subsidiaries (other than BAM Foreign Subsidiaries, the BTL Subsidiaries
(other than BTL Foreign Subsidiaries) and any other Person that has executed a
Guaranty and (pursuant to such Guaranty) is a guarantor of the Obligations;
"Hazardous Material" means and includes any hazardous or toxic waste,
substance or material, the generation, handling, storage, disposal, treatment
or emission of which is subject to any Environmental Law in effect on any date;
"Indebtedness" or "Debt" of a Person shall mean (i) indebtedness of
such Person for borrowed money, whether short-term or long-term and whether
secured or unsecured, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations of such
Person under Capitalized Leases, (iv) obligations of such Person arising under
acceptance facilities, (v) the undrawn face amount of, and unpaid reimbursement
obligations in respect of, all letters of credit issued for the account of such
Person, (vi) all obligations of such Person upon which interest charges are
customarily paid, (vii) all obligations of such Person under conditional sale
or other title retention agreements relating to property purchased by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (viii) all executory obligations of such Person in respect of Rate
Hedging Obligations, except that if any agreement relating to such obligations
provides for the netting of amounts payable by and to such Person thereunder or
if any such agreement provides for the simultaneous payment of amounts by and
to such Person, then in each such case, the amount of such obligations shall be
the net amount thereof, and (ix) all
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<PAGE> 23
Contingent Obligations in respect of Indebtedness of other Persons;
"Indebtedness for Money Borrowed" of a Person means (i) all
indebtedness, obligations and liabilities of such Person for money borrowed
which are evidenced by bonds, debentures, notes or other similar instruments,
whether short-term or long-term and whether secured or unsecured, and (ii) all
Capitalized Leases; provided, however, the term "Indebtedness for Money
Borrowed" shall specifically exclude payroll indebtedness and trade
indebtedness incurred in the ordinary course of business provided such trade
indebtedness has a maturity of less than one year;
"Intercreditor Agreement" means that Intercreditor Agreement of even
date herewith by and among NationsBank as collateral agent thereunder, the
Agent, John Hancock Mutual Life Insurance Company, John Hancock Variable Life
Insurance Company, John Hancock Life Insurance Company of America, and
acknowledged and agreed to by BAM and BTL, as amended or supplemented from time
to time;
"Interest Period" for each LIBOR Loan means a period commencing on the
date such LIBOR Loan is made or converted and each subsequent period commencing
on the last day of the immediately preceding Interest Period for such LIBOR
Loan, as the case may be, and ending, at the Borrowers' option, on the date
one, two, three or six months thereafter as notified to the Agent by an
Authorized Officer three (3) LIBOR Business Days prior to the beginning of such
Interest Period; provided, that,
(i) if an Interest Period for a LIBOR Loan would end on a
day which is not a LIBOR Business Day, such Interest Period shall be
extended to the next LIBOR Business Day (unless such extension would
cause the applicable Interest Period to end in the succeeding calendar
month, in which case such Interest Period shall end on the next
preceding LIBOR Business Day);
(ii) any Interest Period which begins on the last LIBOR
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last LIBOR Business Day of a calendar
month;
(iii) no Interest Period shall extend past the third
anniversary of the Closing Date; and
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(iv) there shall not be more than five (5) Interest Periods
with respect to LIBOR Loans in effect on any day;
"Inventory" means and includes any and all goods, merchandise and other
personal property, including, without limitation, goods in transit now owned or
hereafter acquired by any Borrower or any of its consolidated Subsidiaries and
held for sale or lease, furnished under any contract of service or held as raw
materials, work-in-process, or supplies or materials used or consumed in such
Borrower's or Borrower Subsidiary's business;
"Investment" means with respect to any Person any direct or indirect
loans or advances of money, credit (including all indebtedness and accounts
receivable from such other Person) or property to, or purchases, repurchases or
acquisitions of the securities or obligations or all or a substantial part of
the assets or properties of, or partnership or joint venture interests in, or a
capital contribution to or other form of investment in, any other Person or the
assumption of any liability of another Person which, in each case, does not
arise from sales to such other Person in the ordinary course of business;
"Lending Office" means, as to each Lender, the Lending Office of such
Lender designated on the signature pages hereof or in an Assignment and
Acceptance or such other office of such Lender (or of an affiliate of such
Lender) as such Lender may from time to time specify to the Borrower and the
Agent as the office by which its Loans are to be made and maintained;
"LIBOR Business Day" means a Business Day on which the relevant
international financial markets are open for the transaction of the business
contemplated by this Agreement in London, England and New York, New York;
"LIBOR Interest Addition" means 1.25%;
"LIBOR Loan" means all of the Loans for which the rate of interest is
determined by reference to the LIBOR Rate;
"LIBOR Rate" means, for the Interest Period for any LIBOR Loan, the
rate of interest per annum determined pursuant to the following formula:
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<PAGE> 25
LIBOR Rate = Base Rate + LIBOR Interest Addition
1 - Reserve Requirement
in effect on the first
day of the Interest
Period applicable to
such LIBOR Loan
"Lien" means any mortgage, pledge, security interest, encumbrance,
statutory or other lien (including any agreement to give any of the foregoing,
any conditional sale or other title retention agreement, any lease in the
nature thereof and the filing of or agreement to give any financing statement
under the Uniform Commercial Code of any jurisdiction, except as a
precautionary filing in connection with true leases) or any other type of
preferential arrangement securing any obligation;
"Loan" or "Loans" means any of the LIBOR Loans or Prime Loans, as the
context may require, made pursuant to Section 2.1 hereof;
"Loan Documents" means collectively, and individually any one of, this
Agreement, the Revolving Credit Notes, the Intercreditor Agreement, the
Guaranties, the Security Instruments, and all other instruments and documents
hereafter executed and delivered by any Borrower, any Guarantor or any other
Person in connection with the Loans made under this Agreement, as any or all of
the same may be amended, modified or supplemented from time to time;
"Material Adverse Effect" on a Person means a material adverse effect
on the business, properties or condition, financial or otherwise, of such
Person;
"Multiemployer Plan" means any Plan which is a "multiemployer plan" as
such term is defined in section 4001(a)(3) of ERISA.
"Obligations" means all obligations, liabilities and Indebtedness of
any Borrower with respect to the payment of (i) all principal and interest on
the Loans as evidenced by the Notes, and (ii) all fees, expenses and other
payments required by or under this Agreement or any other Loan Document to
which it is a party;
"Permitted Encumbrances" means each Lien permitted under Section 8.3(a)
hereof;
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a government or
agency or political subdivision thereof;
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"Plan" means an "employee pension benefit plan" (as defined in section
3(2) of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by Baldwin, any Borrower or any of their
Related Persons.
"Pledge Agreements" means, collectively, the Borrowers Pledge
Agreement, the Baldwin Pledge Agreement and the Baldwin Technology Pledge
Agreement, the Enkel Pledge Agreement, or any other pledge agreement executed
by any Person pursuant to Section 5.3, 8.3(b) or 8.3(c) hereof, pursuant to
which stock is pledged to secure the Obligations, as any such Pledge Agreement
may be amended or supplemented from time to time;
"Pledged Baldwin Technology Subsidiary Stock" means all of the capital
stock of each Subsidiary of Baldwin Technology, now or hereafter issued and
outstanding;
"Pledged BAM Subsidiary Stock" means (a) all of the capital stock, now
or hereafter issued and outstanding of each BAM Subsidiary other than a BAM
Foreign Subsidiary, and (b) sixty-five percent (65%) of all of the capital
stock, now or hereafter issued and outstanding, of each BAM Foreign Subsidiary;
"Pledged Borrower Stock" means all of the capital stock of each
Borrower, now or hereafter issued and outstanding;
"Pledged Borrower Subsidiary Stock" means the Pledged BAM Subsidiary
Stock and the Pledged BTL Subsidiary Stock, collectively;
"Pledged BTL Subsidiary Stock" means (a) all of the capital stock, now
or hereafter issued and outstanding, of each BTL Subsidiary other than a BTL
Foreign Subsidiary, and (b) sixty-five percent (65%) of all of the capital
stock, now or hereafter issued and outstanding, of any BTL Foreign Subsidiary;
"Pledged Enkel Subsidiary Stock" means (a) all of the capital stock,
now or hereafter issued and outstanding, of each Subsidiary of Enkel
Corporation other than a BAM Foreign Subsidiary and (b) sixty-five percent
(65%) of all of the capital stock, now or hereafter issued and outstanding, of
each Subsidiary of Enkel that is a BAM Foreign Subsidiary;
"Pledged Sector Subsidiary Stock" means all of the capital stock of
each Sector Subsidiary now or hereafter issued and outstanding;
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"Pledged Stock" means the Pledged Borrower Stock, the Pledged Borrower
Subsidiary Stock, the Pledged Baldwin Technology Subsidiary Stock, the Pledged
Enkel Subsidiary Stock and the Pledged Sector Subsidiary Stock, collectively;
"Prime Loan" means all of the Loans for which the rate of interest is
determined by reference to the Prime Rate;
"Prime Rate" means the rate of interest per annum established by the
Agent as its prime rate from time to time. The Prime Rate is not necessarily
the best or the lowest rate of interest offered by the Agent;
"Principal Office" means the principal office of the Agent at
NationsBank Corporate Center, 100 North Tryon Street, Charlotte, North Carolina
28255-0065, Attention: Michelle J. Kirby or such other office and address as
the Agent may from time to time designate;
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and however and whenever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts, warrants and those commonly known as
interest rate "swap" agreements; and (ii) any and all cancellations, buybacks,
reversals, terminations or assignments of any of the foregoing;
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time;
"Regulatory Change" means, with respect to any Lender, any change
effective after the Closing Date (or in the case of an assignee of a Lender
after the effective date of such assignment) in United States federal or state
laws or regulations (including Regulation D and capital adequacy regulations)
or foreign laws or regulations or the adoption or making after such date of any
interpretations, guidelines, policies, directives or requests applying to a
class of banks, which includes such Lender, under any United States federal or
state or foreign laws or regulations (whether or not having the force of law),
by any court or
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governmental or monetary authority charged with the interpretation or
administration thereof whether or not failure to comply therewith would be
unlawful and whether or not published or proposed prior to the date hereof (and
including without limitation any such change related to or in response to the
August 1988 report of the Bank Committee on Banking Regulations and Supervisory
Practices);
"Related Person" shall, for plan purposes, mean, with respect to any
Person, any trade or business, whether or not incorporated, which, together
with such Person, is under common control, as defined in section 414(b) or (c)
of the Code.
"Required Lenders" means, as of any date, Lenders on such date having
Credit Exposures (as defined below) aggregating at least a majority of the
aggregate Credit Exposures of all the Lenders on such date. For purposes of
the preceding sentence, the amount of the "Credit Exposure" of each Lender
shall be equal to the aggregate principal amount of the Loans owing to such
Lender, or if there are no Loans outstanding from such Lender, the aggregate
unutilized amount of such Lender's Revolving Loan Commitment;
"Reserve Requirement" means, for any LIBOR Loan, the average aggregate
rate at which reserves (including, without limitation, any marginal,
supplemental or emergency reserves) are required to be maintained with respect
thereto under Regulation D by the Lenders with respect to Dollar funding in the
London interbank market in the case of any LIBOR Loan. Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such Lenders by reason of any Regulatory
Change against (i) any category of liabilities which includes deposits by
reference to which the Base Rate is to be determined or (ii) any category of
extensions of credit or other assets which include LIBOR Loans;
"Restricted Payments" shall mean (a) the declaration, payment or
making, directly or indirectly, of any dividend, payment or other distribution,
other than dividends payable solely in common stock of Baldwin, on or with
respect to any of the capital stock of Baldwin, any Borrower or any of their
Subsidiaries or the setting apart of any funds or property therefor, or (b) the
making of any payment on account of the purchase, redemption, retirement or
other acquisition, direct or indirect, or, or the forgiveness or foreclosure of
any Debt owed to Baldwin, any Borrower or any of their Subsidiaries and secured
by a pledge of, the capital stock of Baldwin, any Borrower or any of their
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<PAGE> 29
Subsidiaries (other than a purchase or other acquisition of capital stock of a
Sector Subsidiary from such Sector Subsidiary by Baldwin or another Sector
Subsidiary of Baldwin);
"Revolving Credit Facility" means the facility described in Article II
hereof providing for Loans to the Borrowers by the Lenders in the aggregate
principal amount of the Total Commitment;
"Revolving Credit Notes" or "Notes" means the revolving credit
promissory notes of the Borrower executed and delivered to the Lenders as
provided in Section 2.7 hereof in substantially the form attached hereto as
Exhibit E and incorporated herein by reference;
"Revolving Credit Termination Date" means the earlier to occur of (i)
the third anniversary of the Closing Date, or (ii) any other date upon which
the Total Commitment shall terminate in accordance with the terms hereof;
"Revolving Loan Commitment" means with respect to each Lender, the
obligation of such Lender to make Loans to the Borrower up to an aggregate
principal amount at any one time outstanding equal to such Lender's Applicable
Commitment Percentage of the Total Commitment as the same may be increased or
decreased from time to time pursuant to this Agreement;
"SEC" means the United States Securities and Exchange Commission, or
any governmental body or agency hereafter succeeding to the functions of such
securities and Exchange Commission in the administration of the Securities Act
of 1933, as amended, or the Exchange Act.
"Sector Subsidiary" means (i) Baldwin Europe Consolidated Inc., a
Delaware corporation, or (ii) Baldwin Asia Pacific Corporation, a Delaware
corporation;
"Sector Subsidiary Guaranty" means that Guaranty Agreement of even date
herewith by and among the Sector Subsidiaries and the Agent, pursuant to which
the Subsidiaries have unconditionally, jointly and severally guaranteed the
payment and performance of the Obligations, as the same may be modified,
amended, or supplemented from time to time as therein permitted;
"Security Instruments" means collectively, and individually any one of,
the Pledge Agreements and all other agreements, instruments and other
documents, whether now existing or hereafter in effect, pursuant to which any
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Borrower, any Guarantor or any other Person shall grant or convey to the Agent
for the benefit of the Lenders a Lien or other right or interest in property as
security for all or any portion of the Obligations;
"Senior Note Agreement" means the Senior Note Agreement dated as of
October 29, 1993, among Baldwin, BAM and BTL and the Purchasers (as defined
therein);
"Senior Note Documents" means, collectively, (a) the Senior Note
Agreement, (b) the Joint and Several Senior Notes by BAM and BTL pursuant to
the Senior Note Agreement, (c) the Guaranty executed by Baldwin in favor of the
Purchasers and other Assured Parties (as defined therein), pursuant to the
Senior Note Agreement, (d) the other guaranties executed by any Borrower
Subsidiaries, Sector Subsidiaries or other Person in connection with the Joint
and Several Senior Notes or the Senior Note Agreement, (e) any pledge
agreements executed by Baldwin or any other Person in connection with the Joint
and Several Senior Notes or the Senior Note Agreement, and (f) the other
Related Agreements (as defined in the Senior Note Agreement);
"Significant Subsidiary" means (a) each Borrower, (b) each Guarantor,
and (c) each other Subsidiary of Baldwin which at the time in question would
satisfy the definition of a "Significant Subsidiary" as set forth in Regulation
S-X promulgated under the Exchange Act (17 C.F.R. Section 210.1-02(v)) on the
date of this Agreement on the basis that Baldwin's and its other Subsidiaries'
equity in the income from continuing operations of such Subsidiary exceeds 20
percent (20%) of such income of the Consolidated Group;
"Single Employer Plan" means any Plan covered by Title IV of ERISA of
Baldwin, any Borrower or any of their Subsidiaries, which is not a
Multi-employer Plan;
"Solvent" means, when used with respect to any Person, that at the time
of determination:
(i) the fair value of its assets (both at fair valuation
and at present fair saleable value on an orderly basis) is in excess of
the total amount of its liabilities, including, without limitation,
Contingent Obligations; and
(ii) it is then able and expects to be able to pay its
debts as they mature and does not intend to, and does not believe that
it will, incur debts beyond its ability to repay such debts as they
mature; and
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(iii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
With respect to Contingent Obligations, such liabilities shall be computed at
the amount which, in light of all the facts and circumstances existing at the
time, represent the amount which can reasonably be expected to become an actual
or matured liability;
"Subsidiary" means as to any Person (i) any corporation of which such
Person shall, at the time as of which any determination is being made, own,
either directly or through its Subsidiaries, more than (x) 50% of the total
combined voting power of all classes of the Voting Stock and (y) 50% of the
beneficial interest, (ii) any other corporation which is otherwise permitted to
be consolidated with such Person under GAAP, and (iii) any partnership,
association, joint venture or other form of business organization, whether or
not it constitutes a legal entity, in which such Person directly or indirectly,
through its Subsidiaries has more than 50% of the equity interest at the time;
"Total Commitment" means an amount equal to $20,000,000, as reduced
from time to time in accordance with Section 2.9 or Section 2.14 hereof;
"Total Fee Baseline" means, at any time, an amount equal to the Total
Commitment at such time;
"Unavailable Commitment Amount" has the meaning assigned in Section
2.14 hereof;
"Voting Stock" shall mean any securities of any class of a Person whose
holders are entitled under ordinary circumstances to vote for the election of
directors of such Person (or Persons performing similar functions)
(irrespective of whether at the time securities of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
1.2. ACCOUNTING TERMS. Unless otherwise specified herein, all accounting terms
not specifically defined herein shall have the meanings assigned to such terms
and shall be interpreted in accordance with GAAP applied on a consistent basis.
1.3. OTHER TERMS. All references to the Borrower, the Lenders or the Agent
shall be deemed to include any successor or permitted assign of any thereof.
The terms "hereof," "herein," "hereunder," "hereto," and similar terms shall be
deemed to refer to this Agreement as a whole and not to any particular
provision hereof, unless the context shall clearly require otherwise. All
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plural terms shall have a corresponding meaning when used in the singular, and
all singular terms shall have a corresponding meaning when used in the plural.
ARTICLE II
REVOLVING CREDIT FACILITY
2.1. COMMITMENT. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the Borrowers from
time to time from the Closing Date until, but not including, the Revolving
Credit Termination Date on a pro rata basis as to the total borrowing requested
by the Borrowers on any day determined by such Lender's Applicable Commitment
Percentage up to but not exceeding the Revolving Loan Commitment of such
Lender; provided, however, that the Lender will not be required and shall have
no obligation to make any Advance (i) so long as a Default or an Event of
Default has occurred and is continuing or (ii) if the Agent has accelerated the
maturity of the Revolving Credit Notes as a result of an Event of Default or
(iii) if the Borrowers have not furnished to the Agent the Borrowing Base
Certificate required pursuant to Section 7.1(m) hereof; provided further,
however, that immediately after giving effect to each Advance, the aggregate
principal amount of outstanding Loans shall not exceed the lesser of: (a) the
Total Commitment less the Unavailable Commitment Amount (without duplication)
and (b) the Borrowing Base (as set forth on the Borrowing Base Certificate most
recently delivered to the Agent pursuant to Section 7.1(m) hereof or
otherwise). Within such limits, the Borrowers may borrow, repay and reborrow
hereunder, on any Business Day from the Closing Date until, but (as to
borrowings and reborrowings) not including, the Revolving Credit Termination
Date; provided, however, that (x) no LIBOR Loan shall be made less than one
month before the third anniversary of the Closing Date and (y) each LIBOR Loan
may, subject to the provisions of Section 2.5, be repaid only on the last day
of the Interest Period with respect thereto (except as permitted by Section
2.10(c) hereof). If at any time the aggregate principal amount of outstanding
Loans exceeds the lesser of (i) the Total Commitment less the Unavailable
Commitment Amount (without duplication) and (ii) the Borrowing Base, each
Borrower, jointly and severally, shall immediately reduce the outstanding
principal balance of the Loans to the extent of such excess, together with
accrued and unpaid interest on the amounts prepaid and payment of all sums
payable by any Borrower as set forth in Section 3.4 hereof.
2.2. AMOUNTS. Each Advance made hereunder and conversions under
Section 2.11 shall be in an amount of at least $750,000 or
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such greater amount which is an integral multiple of $250,000 in excess thereof
or in an amount equal to the entire difference of the Total Commitment less the
aggregate principal amount of Loans then outstanding.
2.3. ADVANCES.
(a) Each Advance shall be, at the option of the Borrowers
specified in the Borrowing Notice furnished to the Agent pursuant to subsection
2.3(b) hereof, either a Prime Loan or a LIBOR Loan, which shall in each case be
made or maintained by each Lender at its Principal Office. Not more than five
(5) Prime Loans and five (5) LIBOR Loans may be outstanding at the same time.
(b) An Authorized Officer shall give the Agent (1) at
least three (3) LIBOR Business Days' irrevocable telephonic notice of each
Advance that will be a LIBOR Loan prior to 11:00 A.M., Charlotte, North
Carolina time; or (2) irrevocable telephonic notice of each Advance that will
be a Prime Loan prior to 11:00 A.M., Charlotte, North Carolina time, on the day
of such proposed Prime Loan (each such notice referred to in subpart (1) and
(2) being referred to as a "Borrowing Notice"). Each such Borrowing Notice,
which shall be effective upon receipt by the Agent, shall specify the amount of
the borrowing, the type (Prime or LIBOR) of Loan, the date of borrowing and, if
a LIBOR Loan, the Interest Period to be used in the computation of interest.
An Authorized Officer shall provide the Agent written confirmation of each such
telephonic notice in the form attached hereto as Exhibit D and incorporated
herein by reference with appropriate insertions, but failure to provide such
confirmation shall not affect the validity of such telephonic notice. Notice
of receipt of such Borrowing Notice shall be provided by the Agent to each
Lender by telephone with reasonable promptness, but not later than 1:00 P.M.,
Charlotte, North Carolina time, on the same day as Agent's receipt of such
telephonic notice. The Agent shall provide each Lender written confirmation of
such telephonic confirmation, but failure to provide such notice shall not
affect the validity of such telephonic notice.
(c) Not later than 3:00 P.M., Charlotte, North Carolina
time, on the date specified for each borrowing under this Article II, each
Lender shall, pursuant to the terms and subject to the conditions of this
Agreement, make the amount of the Advance or Advances to be made by it on
such day available to the Agent, by depositing or transferring the proceeds
thereof in Dollars and in immediately available funds at the Principal Office.
The amount so received by the Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Borrowers by depositing the
proceeds thereof in Dollars and in immediately available funds in the
Borrowers' Account.
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2.4. PAYMENT OF INTEREST.
(a) Each Borrower, jointly and severally, shall pay
interest to the Agent at the Principal Office for the account of each Lender on
the outstanding and unpaid principal amount of each Loan made by such Lender
for the period commencing on the date of such Loan until such Loan shall be due
at the then applicable Prime Rate for Prime Loans or LIBOR Rate for LIBOR
Loans, as designated by an Authorized Officer pursuant to Section 2.3 hereof
or as otherwise provided herein; provided, however, that if any amount shall
not be paid when due (at maturity, by acceleration or otherwise), such amount
shall bear interest thereafter (1) in the case of a LIBOR Loan, until the end
of the current Interest Period with respect to such LIBOR Loan, at a rate of
two percent (2%) above such LIBOR Rate or the maximum rate permitted by
applicable law, whichever is lower and (2) after the end of such Interest
Period, and at all such times with respect to Prime Loans, at a rate of
interest per annum which shall be two percent (2%) above the Prime Rate or the
maximum rate permitted by applicable law, whichever is lower, from the date
such amount was due and payable until the date such amount is paid in full.
(b) Interest on each LIBOR Loan shall be computed on the
basis of a year of 360 days and calculated for the actual number of days
elapsed. Interest on each Prime Loan shall be computed on the basis of a year
of 365 days and calculated for the actual number of days elapsed. Interest on
each Loan shall be paid (1) quarterly in arrears on each December 31, March 31,
June 30 and September 30 beginning December 31, 1993 and continuing through and
including the Revolving Credit Termination Date with respect to any Prime Loan
outstanding during such quarter, (2) on the last day of the applicable Interest
Period for each LIBOR Loan, provided that if such Interest Period extends for
six months, interest shall also be paid on the day three months after the first
day of such Interest Period, and (3) upon payment in full of the principal
amount of such Loan. Payments of interest with respect to each LIBOR Loan
pursuant to the preceding sentence shall consist of accrued and unpaid interest
on the applicable LIBOR Loan from and including the first day of the Interest
Period applicable to such LIBOR Loan (or, in the case of the payment of
interest on the last day of an Interest Period of six months for a LIBOR Loan,
from and including the date of prior payment of interest on such LIBOR Loan
during such Interest Period) to but excluding the date of payment. Payments of
interest with respect to each Prime Loan pursuant to the second preceding
sentence shall consist of accrued and unpaid interest on the applicable Prime
Loan from and including the first day such Prime Loan is outstanding to but
excluding either the date of payment or conversion of such Prime Loan.
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(c) Promptly after the determination of any interest rate
provided for herein or any change therein, the Agent shall give notice thereof
to the Borrowers.
2.5. PAYMENT OF PRINCIPAL.
(a) The principal amount of each Loan shall be due and
payable in full on the Revolving Credit Termination Date. Each Borrower,
jointly and severally, shall be responsible for each such principal amount.
(b) Each payment of principal (including any prepayment)
of any Loan shall be made in an amount of at least $750,000 or such greater
amount which is an integral multiple of $250,000 in excess thereof or in an
amount equal to the entire outstanding principal balance of such Loan to the
Agent at the Principal Office, for the account of each Lender's applicable
Lending Office, in Dollars and in immediately available funds before 3:00 P.M.,
Charlotte, North Carolina time, on the date such payment is due. Dollar
payments received by the Agent after such time shall be deemed received on the
next succeeding Business Day. The Agent may, but shall not be obligated to,
debit the amount of any such payment which is not made by such time to any
ordinary deposit account of the Borrowers with the Agent. Any Borrower shall
endeavor to give the Agent prior telephonic notice of any payment of principal,
such notice to be given by not later than 11:00 A.M., Charlotte, North Carolina
time, on the date of such payment.
(c) The Agent shall deem any payment by or on behalf of
the Borrowers hereunder that is not made both (1) in Dollars and in immediately
available funds and (2) prior to 3:00 P.M., Charlotte, North Carolina time
(other than if such payment is made by a debit by the Agent to an account of
any Borrower therewith), to be a non-conforming payment. Any such payment
shall not be deemed to be received by the Agent until the time such funds
become available funds, provided that in the case of a nonconforming payment
described in clause (2) above such payment shall be deemed received on the next
succeeding Business Day. The Agent shall give prompt telephonic notice to the
Borrowers and each of the Lenders (confirmed in writing) if any payment is
non-conforming.
(d) In the event that any payment hereunder or under the
Notes becomes due and payable on a day other than a Business Day, then, subject
to the restrictions set forth in clause (ii) of the definition of "Interest
Period," such due date shall be extended to the next succeeding Business Day;
provided that interest shall continue to accrue during the period of any such
extension.
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2.6. USE OF PROCEEDS. The proceeds of the Loans made pursuant to
the Revolving Credit Facility shall be used by the Borrowers and their
Subsidiaries to finance working capital needs, for the repayment of any debt
obligations of the Borrowers and their Subsidiaries existing on the date of
this Agreement and for general corporate purposes of the Borrowers.
2.7. NOTES. All Loans made by each Lender shall be evidenced by,
and be repayable with interest, jointly and severally by each Borrower, in
accordance with the terms of, a promissory note payable to the order of such
Lender in the amount of its Applicable Commitment Percentage of the Total
Commitment, which Note shall be dated the Closing Date or such later date
pursuant to an Assignment and Acceptance and shall be duly completed, executed
and delivered by each Borrower. Each Lender is hereby authorized to record the
date and amount of each Loan made by such Lender, and the date and amount of
each payment of principal thereof, on such Lender's internal books and records
and then attach such information as a schedule to its Note, provided that the
failure of any Lender so to record any such information (or any error in such
recordation) shall not affect the Obligations of any Borrower with respect to
such Loan.
2.8. PRO RATA PAYMENTS. Except as otherwise provided herein, (a)
each payment by any Borrower on account of the principal of and interest on the
Loans and fees (other than the Agent's fees payable under Section 10.11 hereof,
which shall be retained by the Agent) described in this Agreement shall be made
to the Agent for the account of the Lenders pro rata based on their Applicable
Commitment Percentages (other than with respect to a "deficiency advance" under
Section 2.13), (b) all payments to be made by any Borrower for the account of
each of the Lenders on account of principal, interest and fees, shall be made
without set-off or counterclaim, and (c) the Agent will promptly distribute
payments received to the Lenders entitled thereto.
2.9. VOLUNTARY REDUCTION IN COMMITMENT. The Borrowers shall have
the right from time to time, upon not less than three (3) Business Days written
notice signed by all of the Borrowers to the Agent, to reduce the Total
Commitment. The Agent shall give each Lender, within one (1) Business Day,
telephonic notice (confirmed in writing) of such reduction. Each such
reduction shall be in the aggregate amount of $750,000 or such greater amount
which is in an integral multiple of $250,000 in excess thereof, or such lesser
amount as shall constitute the Total Commitment then existing as a result of
any one or more previous reductions thereof, and shall permanently reduce the
Revolving Loan Commitment of each Lender pro rata. No such reduction shall
result in the payment of any LIBOR Loan other than on the last day of the
Interest Period of such Loan (except as permitted by Section 2.10(c)). Each
reduction of the Total Commitment shall
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be accompanied by payment of the Notes, jointly and severally by the Borrowers,
to the extent that the aggregate principal amount of the outstanding Loans
exceeds the Total Commitment after giving effect to such reduction, together
with accrued and unpaid interest on the amounts prepaid and payment of all sums
payable by any Borrower as set forth in Section 3.4 hereof.
2.10. PREPAYMENT OF LOANS. Each Borrower shall have the right from
time to time to prepay all or a portion of outstanding principal balance under
the Loans, (a) without penalty at any time with respect to Prime Loans, (b)
without penalty at the end of the applicable Interest Period with respect to
LIBOR Loans and (c) prior to the end of the applicable Interest Period with
respect to LIBOR Loans upon receipt by the Agent, for the benefit of the
Lenders entitled thereto, of all sums payable by any Borrower as set forth in
Section 3.4 hereof.
2.11. CONVERSIONS AND ELECTIONS OF INTEREST PERIODS. The duration
of the initial Interest Period for each LIBOR Loan shall be as specified in the
Borrowing Notice. Provided that no Event of Default shall have occurred and be
continuing and subject to the limitations set forth below and in Sections
3.1(b), 3.2, 3.3 and 3.5(b) hereof, the Borrowers may on three (3) LIBOR
Business Days' notice to the Agent on or before 11:00 A.M. Charlotte, North
Carolina time:
(a) elect a subsequent Interest Period for all or a
portion of the outstanding LIBOR Loans to begin on the last day of the Interest
Period for such LIBOR Loans;
(b) convert all or a portion of the outstanding LIBOR
Loans to Prime Loans on the last day of the Interest Period for such LIBOR
Loans; and
(c) convert all or a portion of the outstanding Prime
Loans to LIBOR Loans on any date.
Notice of any such elections or conversions shall specify the
effective date of such election or conversion and the Interest Period to be
applicable to the LIBOR Loan as continued or converted. Each election and
conversion pursuant to this Section 2.11 shall be binding on all of the
Borrowers and shall be subject to the limitations on LIBOR Loans set forth in
the definition of "Interest Period" herein and in Sections 2.1, 2.2 and 2.3
hereof. If the Agent does not receive a notice of election of duration of an
Interest Period or to convert an outstanding LIBOR Loan by the time prescribed
above, the Borrowers shall be deemed to have elected to convert such LIBOR Loan
to a Prime Loan on the last day of the Interest Period for such LIBOR Loan.
All such continuations or conversions of Loans
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shall be effected pro rata based on the Applicable Commitment Percentages of
the Lenders.
2.12. FEES.
(a) For the period beginning on the date of each Lender's
commitment hereunder and ending on the Revolving Credit Termination Date, the
Borrowers agree, jointly and severally, to pay to the Agent, for the pro rata
benefit of the Lenders based on their Applicable Commitment Percentages, an
unused commitment fee for such period equal to the sum of: (i) the amount
determined by applying a rate of one-half of one percent (0.5%) per annum to
the amount by which the average daily amount during such period of the Total
Fee Baseline exceeds the sum of the average daily amount during such period of
outstanding Loans to all Borrowers, plus (ii) the amount determined by applying
a rate of one-fourth of one percent (.25%) per annum to the average daily
Unavailable Commitment Amount during such period. Such payments of fees
provided for in this Section 2.12(a) shall be due in arrears on each December
31, March 31, June 30 and September 30 beginning December 31, 1993 and
continuing through and including the Revolving Credit Termination Date.
Notwithstanding the foregoing, and without limitation of or prejudice to any
other right or remedy available to the Borrower by contract or at law, so long
as any Lender fails to make available any portion of its Revolving Loan
Commitment when requested, such Lender shall not be entitled to receive payment
of its pro rata share of such fee until such Lender shall make available such
portion.
(b) The Borrowers have agreed to pay to NationsBank a
structuring fee as set forth in that Letter Agreement of even date herewith by
and between the Borrowers and NationsBank.
2.13. DEFICIENCY ADVANCES. No Lender shall be responsible for any
default of any other Lender in respect to such other Lender's obligation to
make any Loan hereunder nor shall the Revolving Loan Commitment of any Lender
hereunder be increased as a result of such default of any other Lender.
Without limiting the generality of the foregoing, in the event any Lender shall
fail to advance funds to the Borrowers as herein provided, NationsBank may in
its discretion, but shall not be obligated to, advance under the Note in its
favor as a Lender all or any portion of such amount (the "deficiency advance")
and shall thereafter be entitled to payments of principal of and interest on
such deficiency advance in the same manner and at the same interest rate or
rates to which such other Lender would have been entitled had it made such
advance under its Note; provided that, upon payment to NationsBank from such
other Lender of the entire outstanding amount of such deficiency advance,
together with interest thereon, from the most recent date or dates interest was
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paid to NationsBank by any Borrower on each Loan comprising the deficiency
advance at the Federal Funds Effective Rate, then such payment shall be
credited against the Note of NationsBank in full payment of such deficiency
advance and the Borrowers shall be deemed to have borrowed the amount of such
deficiency advance from such other Lender as of the most recent date or dates,
as the case may be, upon which any payments of interest were made by any
Borrower thereon.
2.14. UNAVAILABLE COMMITMENT AMOUNT; REDUCTION IN COMMITMENT. The
Total Commitment shall be reduced from time to time by an amount (the
"Unavailable Commitment Amount") equal to: (I) the aggregate amount of all then
outstanding Indebtedness for Money Borrowed (other than Existing Capitalized
Leases) of each Borrower, Borrower Subsidiary, Sector Subsidiary, Subsidiary of
a Sector Subsidiary and any other Baldwin Subsidiary (other than Indebtedness
under the Senior Note Documents), less (II) $10,000,000; provided that the
Unavailable Commitment Amount shall not be less than $0.
2.15. AUTHORITY TO DEBIT BORROWER ACCOUNT. To the extent the Agent
is entitled to withdraw any amount from the Borrower Account pursuant to any
Loan Document, each Borrower hereby authorizes the Agent to debit such amount
from the Borrower Account even if it is maintained with a Person other than the
Agent.
ARTICLE III
YIELD PROTECTION AND ILLEGALITY
3.1. ADDITIONAL COSTS.
(a) Each Borrower, jointly and severally, shall promptly
pay to the Agent for the account of a Lender from time to time, following
delivery of the written explanation required under Section 3.1(c), such amounts
as such Lender may reasonably determine to be necessary to compensate it for
any material costs incurred by such Lender which it determines are attributable
to its making or maintaining any LIBOR Loan or its obligation to make any LIBOR
Loans, or any reduction in any amount receivable by such Lender under this
Agreement or the Notes in respect of any of such LIBOR Loans or such
obligation, including reductions in the rate of return on a Lender's capital
(such increases in costs and reductions in amounts receivable and returns being
herein called "Additional Costs"), resulting from any Regulatory Change which:
(1) changes the basis of taxation of any amounts payable to such Lender under
this Agreement or its Notes in respect of any of such LIBOR Loans (other than
changes in respect of taxes imposed on or measured by the income of such Lender
or
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of its applicable Lending Office by any jurisdiction in which the Lender is
subject to tax and other than changes for which (and only to the extent that)
the Lender may obtain a foreign tax credit or similar offset or tax benefit);
or (2) imposes or modifies any reserve, special deposit, or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, such Lender (other than the Reserve
Requirement or any other such reserve, deposit or requirement reflected in the
LIBOR Rate, computed in accordance with the definition of such term set forth
in Section 1.1 hereof); or (3) has or would have the effect of reducing the
rate of return on capital of any such Lender to a level below that which the
Lender could have achieved but for such Regulatory Change (taking into
consideration such Lender's policies with respect to capital adequacy); or (4)
imposes any other condition, not involving a change in the basis of taxation,
adversely affecting such Lender under this Agreement or the Notes. Each Lender
will notify the Borrowers of any event occurring after the Closing Date which
would entitle it to compensation pursuant to this Section 3.1(a) as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation.
(b) Without limiting the effect of the foregoing
provisions of this Section 3.1, in the event that, by reason of any Regulatory
Change, any Lender either (1) incurs Additional Costs based on or measured by
the excess above a specified level of the amount of a category of deposits or
other liabilities of such Lender which includes deposits by reference to which
the interest rate on LIBOR Loans is determined as provided in this Agreement or
a category of extensions of credit or other assets of such Lender which
includes LIBOR Loans or (2) becomes subject to restrictions on the amount of
such a category of liabilities or assets which it may hold, then, if such
Lender so elects by notice to the other Lenders, the Agent and the Borrowers,
the obligation of such Lender to make, and to convert Prime Loans into, LIBOR
Loans hereunder shall be suspended until the date such Regulatory Change ceases
to be in effect and the Borrowers shall, on the last day(s) of the then current
Interest Period(s) for outstanding LIBOR Loans, convert such LIBOR Loans into
Prime Loans, in accordance with Section 2.11 hereof.
(c) Each Lender will notify the Borrowers of any event
occurring after the date of this Agreement that will entitle such Lender to
compensation under Section 3.1 as promptly as practicable; provided, however,
that each Lender will designate a different Lending Office for the Loans of
such Lender affected by such event or by the matters requiring compensation
pursuant to Section 3.4, and take other measures, if such designation or other
measures will avoid the need for, or reduce the amount of, such compensation
and will not result in a material cost to, or be otherwise disadvantageous to,
such Lender in its
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determination. Determinations by any Lender for purposes of this Section 3.1
of the effect of any Regulatory Change on its costs of making or maintaining,
or being committed to make, Loans, or on amounts receivable by it in respect of
Loans, and of the additional amounts required to compensate the Lender in
respect of any Additional Costs, shall be conclusive absent demonstrable error.
The Lender requesting such compensation shall upon request furnish to the
Borrowers a written explanation of the Regulatory Change and calculations, in
reasonable detail, and setting forth such Lender's determination of any such
Additional Costs.
(d) Each Lender that is not incorporated under the laws
of the United States of America or a state thereof agrees that it will deliver
to the Borrowers and the Agent, at the time of its entering into this Agreement
and, in any event, prior to any Person making any payment to such Lender
hereunder, (1) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor applicable form, as the case may be, or
other manner of certification, establishing that payments of interest, fees and
other amounts hereunder are either not subject to or totally exempt from United
States Federal withholding tax and (2) an Internal Revenue Service Form W-8 or
W-9 or successor applicable form. Each such Lender also agrees to deliver to
the Borrowers and the Agent two further copies of the said Form 1001 or 4224
and Form W-8 or W-9, or successor applicable forms or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrowers,
unless in any such case a Regulatory Change has occurred prior to the date on
which any such delivery would otherwise be required and such Regulatory Change
in and of itself (that is, not as a result of a change in Lending Office or
other action on the part of the Lender) prevents such Lender from duly
completing and delivering any such form with respect to it and such Lender so
advises each of the Borrowers and the Agent. Such Lender shall certify (1) in
the case of a Form 1001 or 4224, that it is entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes and (2) in the case of a Form W-8 or W-9, that it is entitled to
an exemption from United States backup withholding tax. Any failure by the
Lender to comply with this Section 3.1(d) or Section 11.1(f) shall, without
limitation, preclude such Lender from obtaining payment from the Borrowers of
any additional costs under Section 3.1(a) to the extent such additional costs
are proximately caused by such failure to comply.
3.2. SUSPENSION OF LOANS. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any
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interest rate for any LIBOR Loan for any Interest Period therefor, the Agent
determines (which determination shall be conclusive absent manifest error)
that:
(a) quotations of interest rates for the relevant
deposits referred to in the definition of "Base Rate" in Section 1.1 hereof are
not being provided in the relevant amounts or for the relevant maturities for
purposes of determining the rate of interest for such LIBOR Loan as provided in
this Agreement; or
(b) the relevant rates of interest referred to in the
definition of "Base Rate" in Section 1.1 hereof upon the basis of which the
LIBOR Rate for such Interest Period is to be determined do not adequately
reflect the cost to the Lenders of making or maintaining such LIBOR Loan for
such Interest Period;
then the Agent shall give the Borrowers prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make LIBOR Loans or to convert Prime Loans into LIBOR Loans, and the Borrowers
shall, on the last day(s) of the then current Interest Period(s) for
outstanding LIBOR Loans convert such LIBOR Loans into Prime Loans, if available
hereunder, in accordance with Section 2.11 hereof. The Agent shall give the
Borrowers notice describing in reasonable detail any event or condition
described in this Section 3.2 promptly following the Agent's determination that
the availability of LIBOR Loans is, or is to be, suspended as a result thereof.
3.3. ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender to honor its
obligation to make or maintain LIBOR Loans hereunder, then such Lender shall
promptly notify the Borrowers thereof (with a copy to the Agent) and such
Lender's obligation to make or continue LIBOR Loans, or convert Prime Loans
into LIBOR Loans, shall be suspended until such time as such Lender may again
make and maintain LIBOR Loans, and such Lender's outstanding LIBOR Loans shall
be converted into Prime Loans in accordance with Section 2.11 hereof or, in the
event such Lender's outstanding LIBOR Loans must be converted into Prime Loans
prior to the end of the current Interest Period therefor, such Lender's
outstanding LIBOR Loans shall be so converted at such time, provided that each
Borrower, jointly and severally, shall be obligated to pay such Lender such
amounts as may otherwise be required pursuant to Section 3.4 hereof in such
instance.
3.4. COMPENSATION. Each Borrower, jointly and severally, shall
promptly pay to the Agent for the account of each Lender, upon the request of
such Lender through the Agent, such amount or amounts as shall be sufficient
(in the reasonable determination
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of Lender) to compensate it for any loss, cost or out-of-pocket expense
incurred by it as a result of:
(a) any payment, prepayment or conversion of a LIBOR
Loan, including without limitation in connection with any reduction in the
Total Commitment pursuant to Sections 2.9, 2.14 or 2.15 hereof, on a date other
than the last day of the Interest Period for such LIBOR Loan; or
(b) any failure by the Borrowers to borrow a LIBOR Loan
on the date for such borrowing specified in the relevant Borrowing Notice under
Section 2.3 hereof;
such compensation to include, without limitation, an amount equal to the
excess, if any, of (1) the amount of interest which would have accrued on the
principal amount so paid, prepaid, converted, not borrowed or reduced for the
period from the date of such payment, prepayment, conversion, failure to borrow
or reduction to the last day of the then current Interest Period for such Loan
(or, in the case of a failure to borrow, the Interest Period for such Loan
which would have commenced on the date scheduled for such borrowing) at the
applicable rate of interest for such LIBOR Loan provided for herein minus the
LIBOR Interest Addition for such Loan over (2) the interest component of the
amount such Lender would have bid in the London interbank market for Dollar
deposits of leading banks of amounts comparable to such principal amount and
maturities comparable to such period (as reasonably determined by such Lender).
A determination of a Lender as to the amounts payable pursuant to this Section
3.4 shall be conclusive absent demonstrable error. The Lender requesting
compensation under this Section 3.4 shall furnish to the Borrowers upon written
request written calculations in reasonable detail setting forth such Lender's
determination of the amount of such compensation.
3.5. SUBSTITUTION OF LOANS. If (a) the obligation of any Lender to
make, continue or convert a Prime Loan into a LIBOR Loan has been suspended
pursuant to Section 3.1(b), 3.2 or 3.3 hereof, or (b) any Lender has required
payment of compensation under Section 3.1(a) and the Borrowers have elected
upon five LIBOR Business Days prior written notice signed by all of the
Borrowers to the Agent that this Section 3.5 shall be applicable, then in
either event, unless and until the Borrowers have been notified that the
circumstances resulting in such suspension or compensation no longer exist or
are no longer applicable, all Loans which otherwise would have been so made,
continued or converted shall be made or continued as Prime Loans by such
Lender, and all payments of interest and principal thereon shall be made by the
Borrowers on such dates as if such Prime Loans had been made as, remained or
converted into LIBOR Loans.
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ARTICLE IV
CONDITIONS TO MAKING LOANS
4.1. CONDITIONS OF INITIAL ADVANCE. The obligation of NationsBank
to make the initial Advance is subject to the condition precedent that
NationsBank shall have received, on or before the Closing Date, in form and
substance satisfactory to it, the following:
(a) executed originals of each of this Agreement, the
Notes, the Intercreditor Agreement, the Guaranties, the Pledge Agreements and
the other Loan Documents, together with all schedules and exhibits thereto;
(b) copies of the executed Senior Note Documents;
(c) certificates of insurance evidencing compliance with
the insurance requirements contained herein and in the Security Instruments;
(d) the Pledged Borrower Stock, the Pledged Sector
Subsidiary Stock, the Pledged BAM Subsidiary Stock, the Pledged Baldwin
Technology Subsidiary Stock, and the Pledged Enkel Subsidiary Stock, with such
stock powers duly executed in blank as NationsBank shall require;
(e) written evidence of Baldwin's Consolidated Net Worth
in an amount not less than $70,000,000;
(f) a certificate of the Chief Financial Officer of BAM
and Baldwin, respectively, and the Vice President and Treasurer of BTL,
certifying that each Borrower is Solvent, and that Baldwin and its Subsidiaries
on a consolidated basis are Solvent, in each case as of the Closing Date after
giving effect to the transactions contemplated hereby on such date, such
certificates being in the form attached hereto as Exhibit F and incorporated
herein by reference;
(g) consolidated financial statements of Baldwin and its
Subsidiaries balance sheets of BAM, compilation report and balance sheet of
BTL, all as described in Section 6.2 ;
(h) (1) unaudited consolidated and consolidating balance
sheet for Baldwin and its Subsidiaries as of September 30, 1993, (2) an
unaudited consolidated cash flow statement for Baldwin and its Subsidiaries for
the current Fiscal Year through and including September 30, 1993, (3) an
unaudited balance sheet for BAM as of September 30, 1993, and (4) an unaudited
cash flow statement for BAM for the current Fiscal Year through and including
September 30, 1993;
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(i) organizational chart of Baldwin, each Borrower, each
Sector Subsidiary and certain Affiliates, as selected by and in detail
acceptable to the Agent;
(j) notice of appointment of additional Authorized
Officers, if any;
(k) work papers of BAM relating to Accounts of BAM and its
consolidated Subsidiaries, which work papers were prepared in connection with
the consolidated financial statements of Baldwin and its Subsidiaries described
in Section 6.2 that are dated as of June 30, 1993;
(l) a certificate of the Chief Financial Officer of BAM
that (1) all of the Eligible Inventory reflected in the initial Borrowing Base
Certificate complies in all respects, as of October 31, 1993, with the
definition of "Eligible Inventory", and (2) that each of the Eligible Accounts
reflected in the initial Borrowing Base Certificate complies in all respects,
as of October 31, 1993, with the definition of "Eligible Accounts";
(m) favorable written opinions of counsel and certain
local counsel to the Borrowers and the Guarantors dated the Closing Date,
addressed to the Agent and the Lenders and satisfactory to Smith Helms Mulliss
& Moore, special counsel to the Agent, with regard collectively to the matters
set forth in Exhibit G-1 and Exhibit G-2 attached hereto and incorporated
herein by reference;
(n) resolutions of the board of directors (or of the
appropriate committee thereof) of each Borrower certified by its Secretary or
Assistant Secretary as of the Closing Date, appointing the initial Authorized
Officers and approving and adopting the Loan Documents to be executed by such
Borrower on the Closing Date, and authorizing the execution, delivery and
performance thereof; and specimen signatures of officers of each Borrower
executing the Loan Documents, certified by the Secretary or Assistant Secretary
of each Borrower;
(o) resolutions of the board of directors (or the
appropriate committee thereof) of Baldwin certified by its Secretary or
Assistant Secretary as of the Closing Date, approving and adopting the Loan
Documents to be executed by Baldwin on the Closing Date, and authorizing the
execution, delivery and performance thereof; and specimen signatures of
officers of Baldwin executing the Loan Documents, certified by the Secretary or
Assistant Secretary thereof;
(p) resolutions of the board of directors of each Sector
Subsidiary (or the appropriate committee thereof), certified by its Secretary
or Assistant Secretary as of the
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Closing Date, approving and adopting the Loan Documents to be executed by such
Sector Subsidiary and authorizing the execution, delivery and performance
thereof; and specimen signatures of officers of each Sector Subsidiary
executing the Loan Documents, certified by the Secretary or Assistant Secretary
thereof;
(q) resolutions of the board of directors of Baldwin
Technology (or appropriate committee thereof), certified by its Secretary or
Assistant Secretary as of the Closing Date, approving and adopting the Loan
Documents to be executed by Baldwin Technology on the Closing Date, and
authorizing the execution, delivery and performance thereof; and specimen
signatures of officers of Baldwin Technology executing the Loan Documents,
certified by the Secretary or Assistant Secretary thereof;
(r) with respect to each Borrower Subsidiary, resolutions
of the board of directors (or the appropriate committee thereof) of such
Borrower Subsidiary certified by its Secretary or Assistant Secretary as of the
Closing Date, approving and adopting the Loan Documents to be executed by such
Borrower Subsidiary on the Closing Date, and authorizing the execution,
delivery and performance thereof; and specimen signatures of officers of such
Borrower Subsidiary executing the Loan Documents, certified by the Secretary or
Assistant Secretary thereof;
(s) (i) the charter documents of each of the Borrowers,
Baldwin, and the Sector Subsidiaries certified as of a recent date by the
Secretary of State of such corporation's state of incorporation, and (ii) the
charter documents of each Borrower Subsidiary certified as of the Closing Date
as true, correct and complete by such corporation's Secretary or Assistant
Secretary;
(t) the bylaws of each of the Borrowers, Baldwin, the
Sector Subsidiaries, Baldwin Technology and each Borrower Subsidiary certified
as of the Closing Date as true, correct and complete by such corporation's
Secretary or Assistant Secretary;
(u) (i) for each of the Borrowers, Baldwin and the Sector
Subsidiaries certificates issued as of a recent date by the Secretary of State
of the state of its incorporation as to its corporate good standing therein,
and (ii) for each Borrower Subsidiary, a "long-form" certificate issued as of
a recent date by the Secretary of State of the state of its incorporation as to
its corporate good standing therein;
(v) appropriate certificates of qualification of each of
the Borrowers, Baldwin, the Sector Subsidiaries, Baldwin Technology and each
Borrower Subsidiary to do business and of its corporate good standing issued as
of a recent date by the
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Secretary of State of each jurisdiction in which the failure to qualify to do
business would reasonably be expected to have a Material Adverse Effect on
Baldwin, and Significant Subsidiary or the Consolidated Group;
(w) certificates of the relevant taxing authorities in
each of the jurisdiction referred to in clauses (u) and (v) above with respect
to each Borrower and each Guarantor, certifying that each of the Borrowers and
each of the Guarantors has filed all necessary tax returns and paid all taxes
due and owing.
(x) executed Letter Agreement of even date herewith
regarding the structuring fee and evidence of payment thereof;
(y) initial Borrowing Notice;
(z) initial Borrowing Base Certificate;
(aa) all fees payable by the Borrower on or before the
Closing Date to the Agent and the Lenders (which may be paid from the proceeds
of the initial Advance); and
(ab) such other documents, instruments, certificates and
opinions as the Agent or any Lender may reasonably request on or prior to the
Closing Date in connection with the consummation of the transactions
contemplated hereby.
4.2. CONDITIONS OF LOANS. The obligations of the Lenders to make any
Advance hereunder on or subsequent to the Closing Date are subject to the
satisfaction of the following conditions:
(a) the Agent shall have received a notice of such
borrowing or request as required by Section 2.3 hereof;
(b) the representations and warranties of Baldwin, the
Borrowers, the Guarantors and the Baldwin Subsidiaries set forth in Article VI
hereof and in each of the other Loan Documents shall be true and correct in all
material respects on and as of the date of such Advance, with the same effect
as though such representations and warranties had been made on and as of such
date, except to the extent that such representations and warranties expressly
relate to an earlier date; and
(c) at the time of each such Advance, (1) no Default or
Event of Default shall have occurred and be continuing, (2) the Agent shall not
have accelerated the maturity of the Notes as a result of an Event of Default,
(3) no Material Adverse Effect with respect to Baldwin, any Significant
Subsidiary or the Consolidated Group shall have occurred since the date of the
most recent financial statements delivered to the Agent pursuant to Section
7.1, and (4) all of the Security Instruments shall have
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remained in full force and effect, and the perfection and priority of the Liens
granted thereunder shall have remained unchanged.
In the case of each Advance hereunder (other than the initial Advance if such
initial Advance is made on the Closing Date) the Borrower's notice to the Agent
with respect to the making of such Advance shall be deemed to be a
representation and warranty by the Borrower on the date of such Advance as to
the satisfaction of the conditions referred to in (b) and (c) of this Section
4.2.
ARTICLE V
SECURITY; GUARANTIES
5.1. SECURITY. As security for the full and timely payment and
performance of all Obligations now existing or hereafter arising, the Borrowers
and Baldwin shall on or before the Closing Date cause to be delivered to the
Agent, in form and substance acceptable to the Agent, each of the Pledge
Agreements together with certificates representing the Pledged Sector
Subsidiary Stock, the Pledged Borrower Stock, the Pledged BAM Subsidiary Stock,
the Pledged Baldwin Technology Subsidiary Stock and such stock powers duly
executed in blank as may be required by the Agent.
5.2. GUARANTY. To guarantee the full and timely payment and
performance of all Obligations now existing or hereafter arising, the Borrowers
and Baldwin shall cause to be delivered to the Agent, in form and substance
acceptable to the Agent, on or before the Closing Date: (1) the Baldwin
Guaranty, (2) the Sector Subsidiary Guaranty and (3) the BAM Subsidiary
Guaranty.
5.3. NEW SUBSIDIARIES. (a) If any Borrower acquires or forms a new
Subsidiary (or if Enkel International ever owns any assets), the Borrowers
shall immediately cause such Subsidiary (including Enkel International) to
execute a guaranty of the Obligations in substantially the form of the BAM
Subsidiary Guaranty (with appropriate changes to reflect such Subsidiary's name
and relationship to the respective Borrower), unless such Subsidiary is a BAM
Foreign Subsidiary or a BTL Foreign Subsidiary. The Borrowers shall also
immediately pledge and deliver to the Agent, and shall promptly cause any other
relevant stockholder to pledge and deliver to the Agent, all issued and
outstanding stock of such Subsidiary (or, if such Subsidiary is a BAM Foreign
Subsidiary or BTL Foreign Subsidiary, 65% of the issued and outstanding stock
of such Subsidiary) (in each case, pursuant to a pledge agreement substantially
similar to the form of the Baldwin Technology Pledge Agreement, to be executed
by such stockholder at such time) together with stock powers executed in blank.
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(b) If Baldwin acquires or forms a new direct Subsidiary, (or if
Baldwin Asia Pacific Ltd., which is currently a direct Subsidiary of Baldwin,
does not become, within 90 days of the date hereof, and thereafter remain, a
direct, wholly-owned Subsidiary of BAP), Baldwin shall immediately cause such
Subsidiary to execute a guaranty of the Obligations in substantially the form
of the Sector Subsidiary Guaranty, unless such Subsidiary is a Baldwin Foreign
Subsidiary. Baldwin shall also immediately pledge and deliver to the Agent,
all issued and outstanding stock of such Subsidiary (including Baldwin Asia
Pacific Ltd.) (or, if such Subsidiary is a Baldwin Foreign Subsidiary, 65% of
the issued and outstanding stock of such Subsidiary) (in each case, pursuant to
a pledge agreement substantially similar to the form of the Baldwin Pledge
Agreement, to be executed by Baldwin at such time) together with stock powers
executed in blank.
(c) The Lenders are and will be unwilling to make any Advances to any
Borrower after the date of acquisition or formation of any such Subsidiary (or
after Enkel International owns any assets, or if Baldwin Asia Pacific Ltd. is
not a direct, wholly-owned Subsidiary of BAP at the time specified above)
unless and until the respective guaranty and pledge agreement required by
subsection (a) or (b) above have been executed and delivered to the Agent,
together with the respective shares and stock powers.
5.4 CERTAIN STOCK OWNED BY SECTOR SUBSIDIARIES AND OTHER BALDWIN
SUBSIDIARIES. The Borrower and Baldwin shall promptly deliver to the Agent any
guaranty or pledge agreement executed by a Sector Subsidiary or any other
Baldwin Subsidiary pursuant to Section 8.3(b)(i) or 8.3(c) together with the
shares of stock pledged thereunder and stock powers executed in blank. The
Lenders are, and will be, unwilling to make any Advance to any Borrower after
the date of any loan, advance, issuance, sale or other disposition of any
shares giving rise to the obligation of a Sector Subsidiary or other Baldwin
Subsidiary to execute such a guaranty or pledge agreement, unless and until
such guaranty or pledge agreement has been executed and delivered to the Agent,
together with such shares and stock powers executed in blank.
5.5. FILING AND RECORDING INSTRUMENTS. The Borrowers shall at their
expense execute, deliver and file and re-file and record and re-record or
cause to be filed and re-filed and recorded and re-recorded all instruments
deemed necessary or advisable by the Agent to be filed and re-filed and
recorded or re-recorded and shall continue or cause to be continued the Liens
in the Collateral under the Loan Documents for so long as any of the
Obligations shall be outstanding and until the Revolving Credit Termination
Date.
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5.6. FURTHER ASSURANCES. At the request of the Agent, the Borrowers
will execute by their duly authorized officers, alone or with the Agent, any
certificate, instrument, statement or document and will procure any such
certificate, instrument, statement or document (and pay all connected costs)
which the Agent reasonably deems necessary to create or preserve the Liens (and
the perfection and priority thereof) of the Agent for the benefit of the
Lenders contemplated hereby and by the other Loan Documents.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Each Borrower and Baldwin represents and warrants (which
representations and warranties shall survive the delivery of the documents
mentioned herein and the making of the Loan) that:
6.1. ORGANIZATION, ETC. Baldwin and BAM are corporations duly
organized, validly existing and in good standing under the laws of the State of
Delaware, BTL is a corporation duly organized, validly existing and in good
standing under the laws of Bermuda, each of the Baldwin Subsidiaries and each
of the BAM Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated as set
forth in Schedule 6.1, and Baldwin, each Borrower and each of their
Subsidiaries has the corporate power and authority to own, operate and lease
its respective property and to carry on its respective business as now being
conducted. Baldwin, each Borrower and each of their Subsidiaries is duly
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the failure to do so would have a
Material Adverse Effect on Baldwin, any Significant Subsidiary or the
Consolidated Group. Each of the Borrowers, BEC and BAP are wholly-owned
Subsidiaries of Baldwin. Schedule 6.1 sets forth the jurisdiction of
incorporation of the Baldwin Subsidiaries and each jurisdiction in which
Baldwin, each Borrower or any of their Subsidiaries is authorized to do
business as a foreign corporation. This Agreement, the Notes, the Borrowers
Pledge Agreement and any other Loan Agreement to which any Borrower is a party
have been duly authorized by all necessary corporate action on the part of such
Borrower and, when executed and delivered by such Borrower, will constitute
legal, valid and binding obligations of such Borrower, and, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws affecting the
enforcement or priority of creditors' rights generally, now or hereafter in
effect, and subject to the provision that equitable remedies shall be within
the discretion of the court having jurisdiction to exercise the same, are
enforceable in accordance with their respective terms. The Guaranties, the
Pledge Agreements and any other Loan Document
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to which Baldwin, any Sector Subsidiary, any BAM Subsidiary or any BTL
Subsidiary, as the case may be, and when executed and delivered by Baldwin,
such Sector Subsidiary, such BAM Subsidiary, or such BTL Subsidiary, as the
case may be, will constitute legal, valid and binding obligations of Baldwin,
such Sector Subsidiary, such BAM Subsidiary, or such BTL Subsidiary, as the
case may be, and, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the enforcement or priority of creditors' rights
generally, now or hereafter in effect, and subject to the provision that
equitable remedies shall be within the discretion of the court having
jurisdiction to exercise the same, are enforceable in accordance with their
respective terms. There are no Subsidiaries of Baldwin or any Borrower in
existence as of the Closing Date other than those listed in Schedule 6.1. As
of the Closing Date, neither Baldwin nor any Borrower owns any equity interest
in any Person other than the Persons set out in Schedule 6.1. All of the
outstanding capital stock of Baldwin is validly issued, fully paid and non-
assessable.
6.2. BUSINESS; FINANCIAL STATEMENTS. Baldwin has furnished the
Agent and each Lender with (i) audited consolidated balance sheets of Baldwin
and its Subsidiaries as of June 30 in each of the years 1988 through 1993 and
the related consolidated statements of income, of changes in shareholders'
equity and of cash flows and, as applicable, changes in financial position or
cash flows for the periods of twelve months ended on each such date; (ii) the
unaudited compiled balance sheet of BAM as of June 30 in each of the years 1990
through 1993 together with a compilation report with respect to the balance
sheet of BAM as of June 30, 1993, such report to be issued by the same
independent certified public accountants that prepared the audited balance
sheet of Baldwin and its Subsidiaries for the year ended June 30, 1993; and
(iii) the unaudited balance sheet of BTL as of October 28, 1993. The financial
statements referred to in this paragraph 6.2 including any related schedules
and/or notes (the "Financial Statements"), are true and correct in all material
respects, have been prepared in accordance with GAAP and show all liabilities
of Baldwin and its consolidated Subsidiaries (and in the case of the balance
sheet of BAM, all liabilities of BAM) required to be shown therein accordance
with GAAP. The balance sheets included in the Financial Statements fairly
present the condition of Baldwin and its consolidated Subsidiaries (including
BAM), of BAM and of BTL, as the case may be, as at the dates thereof, and the
statements of income, of changes in shareholders' equity and of cash flows
included in the Financial Statements fairly present the results of the
operations, the changes in shareholders' equity and the cash flows of Baldwin
and its consolidated Subsidiaries (including BAM) for the periods indicated.
Baldwin has furnished the Agent and each Lender with each filing or report
filed with the SEC under Section 13 or
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15(d) of the Exchange Act in respect of the fiscal year ended June 30, 1993.
There has been no change or event which has had a Material Adverse Effect on
Baldwin, any Significant Subsidiary or the Consolidated Group since June 30,
1993.
6.3. ACTIONS PENDING. Except as disclosed in Schedule 6.3, there is
no action, suit, investigation or proceeding pending or, to the knowledge of
any Borrower or any Borrower Subsidiary, threatened against Baldwin, any
Borrower or any of their Subsidiaries, or any properties or rights of Baldwin,
any Borrower or any of their Subsidiaries, by or before any court, arbitrator
or administrative or governmental body which might have a Material Adverse
Effect on Baldwin, any Significant Subsidiary or the Consolidated Group, or
impair any Borrower's ability to perform this Agreement, the Notes, the
Borrowers Pledge Agreement or any other Loan Document to which it is a party,
Baldwin's ability to perform the Baldwin Guaranty or any other Loan Document
Agreement to which it is a party or any Guarantor's ability to perform any
Guaranty, Pledge Agreement or other Loan Documents to which it is a party.
There are no actions or proceedings filed or pending or (to the best knowledge
of each Borrower) investigations pending or threatened against Baldwin, any
Borrower or any of their Subsidiaries which questions the validity or legality
or seeks damages in connection with this Agreement, the Notes or any other Loan
Document or any action taken or to be taken with respect to any of the
foregoing or any of the transactions contemplated hereby or thereby.
6.4. TITLE TO PROPERTIES. Each of Baldwin, the Borrowers and their
Subsidiaries has good title to its respective real properties (other than
properties which it leases) and good title to all of its other respective
properties and assets, including the properties and assets reflected in the
balance sheets as of June 30, 1993 included in the Financial Statements (other
than properties and assets disposed of in the ordinary course of business),
subject to no Lien of any kind except Liens permitted by Section 8.3(a). All
leases necessary in any material respect for the conduct of the respective
businesses of Baldwin, the Borrowers and their Subsidiaries are valid and
subsisting and are in full force and effect. As of the date of this Agreement,
all of the outstanding capital stock of the Borrowers, each of the Sector
Subsidiaries, each of the BAM Subsidiaries, and each of the other Baldwin
Subsidiaries listed in Schedule 6.1 is validly issued, fully paid and
non-assessable, is owned by the Persons and in the amounts listed on Schedule
6.1, which Persons collectively own 100% of the issued and outstanding shares
of capital stock of such Borrower and each such Subsidiary, and all such
capital stock owned by Baldwin, any Borrower or their Subsidiaries is owned
free and clear of any Lien of any kind and Baldwin, such Borrower or such other
Subsidiary has the right,
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subject only to limitations imposed by applicable law to receive dividends and
distributions on such capital stock.
6.5. TAX RETURNS AND PAYMENTS. Each of Baldwin, the Borrowers and
their Subsidiaries has filed all Federal, State, local and foreign income tax
returns, franchise tax returns, real and personal property tax returns and
other tax returns required by law to be filed by or on behalf of them or with
respect to their respective properties or assets other than those which the
failure to file in the aggregate do not and will not have a Material Adverse
Effect on Baldwin, any Significant Subsidiary or the Consolidated Group, and
all taxes, assessments and other governmental charges imposed upon any of
Baldwin, the Borrowers or their Subsidiaries or any of their respective
properties, assets, income or franchises which are due and payable have been
paid, other than those presently payable without penalty or interest, those
presently being contested in good faith by appropriate proceedings diligently
conducted and for which such reserves or other appropriate provisions, if any,
as may be required by GAAP have been made and those which in the aggregate with
all other unpaid taxes, assessments and governmental charges do not and will
not have a Material Adverse Effect on Baldwin, any Significant Subsidiary or
the Consolidated Group.
6.6. CONFLICTING AGREEMENTS AND OTHER MATTERS. None of Baldwin, the
Borrowers or any of their Subsidiaries is in violation of any term of its
charter or by-laws, or in breach of any term of any agreement (including any
agreement with stockholders), instrument, indenture, order, judgment, decree,
statute, law, rule or regulation to which it is subject, the consequences of
which violation or breach are reasonably likely to have a Material Adverse
Effect on Baldwin, any Significant Subsidiary or the Consolidated Group or
impair any Borrower's ability to perform this Agreement, the Notes, the
Borrowers Pledge Agreement or any other Loan Document to which it is a party,
Baldwin's ability to perform the Baldwin Guaranty or the other Loan Documents
to which it is a party or any Guarantor's ability to perform any Guaranty,
Pledge Agreement or other Loan Document to which it is a party. None of
Baldwin, the Borrowers or any of their Subsidiaries is a party to any contract
or agreement or subject to any charter or other corporate restriction which has
a Material Adverse Effect on Baldwin, any Significant Subsidiary or the
Consolidated Group. Neither the execution and delivery of this Agreement, the
Notes and the Loan Documents, nor fulfillment of nor compliance with the terms
and provisions of this Agreement, the Notes and the Loan Documents, will
conflict with the provisions of, or constitute a default under, or result in
any violation of, or result in the creation of any Lien upon any of the
properties or assets of Baldwin, any Borrower or any of their Subsidiaries
pursuant to, its charter or bylaws, any award of any arbitrator or any
agreement (including
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any agreement with stockholders), instrument, order, judgment, decree, statute,
law, rule or regulation to which it is subject. None of Baldwin, the Borrowers
or any of their Subsidiaries is a party to, or otherwise subject to any
provision contained in, any instrument evidencing Indebtedness, any agreement
relating thereto or any other contract or agreement (including its charter)
which limits the amount of, or otherwise imposes restrictions on the incurring
of, the Funded Debt to be evidenced by the Notes.
6.7. ERISA.
(a) To the best of each Borrower's knowledge, neither Baldwin
nor any Borrower nor any Related Person has breached any of the fiduciary rules
of ERISA or engaged in any prohibited transaction in connection with which
Baldwin, any Borrower or any Related Person could be subjected to (in the case
of any such breach) a suit for damages or (in the case of any such prohibited
transaction), either a civil penalty assessed pursuant to section 502(i) of
ERISA, a tax imposed under such section 4975 of the Code or a lien imposed
under section 412(n) of the Code, in any such case which would have a Material
Adverse Effect on Baldwin, any Significant Subsidiary or the Consolidated
Group.
(b) No Plan subject to Title IV of ERISA or any trust
created under any such Plan has been terminated since September 2, 1974 which
termination may reasonably be expected to have a Material Adverse Effect on
Baldwin, any Significant Subsidiary or the Consolidated Group. Neither Baldwin
nor any Borrower nor any Related Person has within the past six years
contributed, or had any obligation to contribute, to a single employer plan
that has at least two contributing sponsors not under common control or ceased
operations at a facility under circumstances which could result in liability
under the Code or ERISA that may reasonably be expected to have a Material
Adverse Effect on Baldwin, any Significant Subsidiary or the Consolidated
Group. No liability to the PBGC has been or is expected by Baldwin, any
Borrower or any Related Person to be incurred with respect to any Plan by
Baldwin, any Borrower or any Related Person which may reasonably be expected to
have a Material Adverse Effect on Baldwin, any Significant Subsidiary or the
Consolidated Group. There has been no reportable event (within the meaning of
section 4043(b) of ERISA) or any other event or condition with respect to any
Plan which presents a risk of termination of any such Plan by the PBGC under
circumstances which in any case could result in liability which may reasonably
be expected to have a Material Adverse Effect on Baldwin, any Significant
Subsidiary or the Consolidated Group.
(c) Except to the extent failure to do so would not
result in liability which may reasonably be expected to have a
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Material Adverse Effect on Baldwin, any Significant Subsidiary or the
Consolidated Group, (i) full payment has been made (or will be made within the
period described in section 412 of the Code) of all amounts which Baldwin, any
Borrower or any Related Person is required under the terms of each Plan to have
paid as contributions to such Plan as of the last day of the most recent fiscal
year of such Plan ended prior to the date hereof (or will be made within the
period described in section 404 of the Code), (ii) no accumulated funding
deficiency (as defined in section 302 of ERISA and section 412 of the Code),
whether or not waived, exists with respect to any Plan, and (iii) each Plan
satisfies the minimum funding standard of section 412 of the Code.
(d) (i) neither Baldwin nor any Borrower nor any Related
Person has been obligated to contribute to any Multiemployer Plan the
withdrawal from which has given rise or could give rise to liability that may
reasonably be expected to have a Material Adverse Effect on Baldwin, any
Significant Subsidiary or the Consolidated Group, and (iii) neither Baldwin nor
any Borrower nor any Related Person has been notified by the sponsor of a
Multiemployer Plan to which Baldwin, any Borrower or any Related Person is
obligated or has been obligated to contribute that such Multiemployer Plan has
been terminated or is in reorganization and no Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated if such reorganization or
termination could result in liability which may reasonably be expected to have
a Material Adverse Effect on Baldwin, any Significant Subsidiary or the
Consolidated Group.
(e) Neither Baldwin nor any Borrower nor any Related
Person has, or is expected to incur, any liability for post retirement benefits
under any and all welfare benefit plans (as defined in section 3(1) of ERISA),
whether written or unwritten, which are or have been established or maintained,
or to which contributions are or have been made, by Baldwin, any Borrower or
any Related Person which may reasonably be expected to have a Material Adverse
Effect on Baldwin, any Significant Subsidiary or the Consolidated Group.
(f) Neither Baldwin nor any Borrower nor any Related
Person has engaged in any transaction that could result in the incurrence of
any liabilities under section 4069 or section 4212 of ERISA which may
reasonably be expected to have a Material Adverse Effect on Baldwin, any
Significant Subsidiary or the Consolidated Group.
(g) The execution and delivery of this Agreement and the
making of the Loans will not involve any transaction which is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax could be
imposed pursuant to section 4975 of the Code. The foregoing representation in
this paragraph
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(g) is made in reliance upon the representation and warranty of the Lenders set
forth in section 11.10 hereof.
6.8. ENVIRONMENTAL MATTERS. Each of Baldwin, the Borrowers and their
Subsidiaries has obtained all permits, licenses and other authorizations that
are required and is in compliance with all terms and conditions of all permits,
licenses, and other authorizations required to be obtained by it under all
applicable Environmental Laws, and is also in compliance with all other
applicable limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables contained in any
Environmental Laws or in any regulation, ordinance, code, plan, order, decree,
judgment, injunction, notice, or demand letter issued, entered, promulgated, or
approved thereunder, except to the extent that failure so to comply does not
have a Material Adverse Effect on Baldwin, any Borrower or any of their
Subsidiaries. The Borrowers and Baldwin are not aware of any prior use of any
of the owned or leased properties of Baldwin, the Borrowers or any of their
Subsidiaries by any Person, that constitutes a violation of any Environmental
Laws, except to the extent that such violation does not have a Material Adverse
Effect on Baldwin, any Borrower, or any of their Subsidiaries. Neither any
Borrower nor Baldwin is aware of any event, condition, or activity which may
interfere with or prevent continued compliance by Baldwin, the Borrowers and
their Subsidiaries with all Environmental Laws, except to the extent that
failure so to continue to comply would not have a Material Adverse Effective on
Baldwin, Borrower or any of their Subsidiaries.
6.9. LABOR RELATIONS. There is not now pending, nor to the
knowledge of any Borrower or any Borrower Subsidiary threatened, any strike,
work stoppage, work slow-down, or material grievance or other dispute between
Baldwin, any Borrower or any of their Subsidiaries and any bargaining unit or
significant number of its respective employees.
6.10. DISCLOSURE. Neither this Agreement, the Notes, the other Loan
Documents nor any other document, certificate or statement furnished to the
Agent or any Lender by or on behalf of Baldwin, any Borrower or any Guarantor
in connection herewith contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which they
were made, not misleading; provided that, an Event of Default shall not occur
solely because the Borrowers inadvertently include among the Eligible Accounts
referred to in any Borrowing Base Certificate an Account that fails to be an
Eligible Account because it is subject to a Lien (of which no Borrower has
knowledge or notice) or the inventory, goods, property, services or
consideration of which such Account
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constitutes proceeds is subject to any Lien (of which no Borrower has knowledge
or notice); provided further, in each case, upon any Borrower obtaining
knowledge or receiving notice that any such Account is not an Eligible Account,
the Borrowers shall promptly notify the Agent and the Lenders and shall
promptly deliver to the Agent a corrected Borrowing Base Certificate with such
Account removed from the Eligible Accounts. There is no fact peculiar to
Baldwin, any Borrower or any of their Subsidiaries which has a Material Adverse
Effect on Baldwin, any Significant Subsidiary or the Consolidated Group and
which has not been set forth in this Agreement, the Notes, the other Loan
Documents or in other documents, certificates and statements furnished to the
Agent and the Lenders by or on behalf of Baldwin, any Borrower or any Guarantor
prior to the date hereof in connection with the transactions contemplated by
this Agreement.
6.11. STATUS UNDER CERTAIN FEDERAL STATUTES. Neither Baldwin nor any
Borrower nor any of their Subsidiaries is (a) an "investment company" or a
company "controlled" by an "investment company" or an "open-end investment
company" or a "unit investment trust" or a "face-amount certificate company",
within the meaning of the Investment Company Act of 1940, as amended, (b) a
"holding company" or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act
of 1935, as amended, or (c) a "carrier", as defined in section 11,301(a)(1) of
Title 49 of the United States Code and subject to the provision of such Title.
Neither Baldwin nor any Borrower nor any of their Subsidiaries is a "national
of any designated foreign country", within the meaning of the Foreign Assets
Control Regulations or the Cuban Assets Control Regulations of the United
States Treasury Department, 31 C.F.R., Subtitle B, Chapter V, as amended, or
any regulations or rulings issued thereunder. Neither the making of the Loans
nor the use of such proceeds by the Borrowers as required by this Agreement
will violate the Foreign Assets Control Regulations, the Foreign Funds Control
Regulations, the Transaction Control Regulations, the Cuban Assets Control
Regulations, the Iranian Assets Control Regulations, the Libyan Sanctions
Regulations, the Iranian Transactions Regulations, the Iraqi Sanctions
Regulations, the Haitian Transactions Regulations, or any other regulations of
the U.S. Treasury Department (as set forth in 31 C.F.R., Subtitle B, Chapter V,
as amended), or any of Executive Orders 12,722, 12,724, 12,808 and 12,810 of
the President of the United States.
6.12. MARGIN STOCK. Neither Baldwin nor any Borrower nor any of their
respective Subsidiaries is engaged principally in, or has as one of its
important activities, the business of extending credit for the purpose of
purchasing or carrying any
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"margin stock" as such terms is defined in Regulation U, as amended (12 C.F.R.
Part 221), of the Board. The proceeds of the borrowings made pursuant to
Section 2.1 hereof will be used by the Borrowers only for the purposes set
forth in Section 2.6 hereof. None of such proceeds will be used by any
Borrower or any Borrower Subsidiary, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of said Regulation U
or Regulation X (12 C.F.R. Part 224) of the Board. Neither any Borrower nor
any agent authorized to act, and acting, in its behalf (other than the other
parties to this Agreement) has taken or will take any action which would cause
this Agreement or any of the Loan Documents to violate any regulation of the
Board or to violate the Exchange Act or any state securities laws, in each case
as in effect on the date hereof.
6.13. NO CONSENTS, ETC. Neither the respective businesses or
properties of Baldwin, any Borrower, any Borrower Subsidiary, any Sector
Subsidiary or any Baldwin Subsidiary nor any relationship between Baldwin, any
Borrower, any Borrower Subsidiary, any Sector Subsidiary or any of Baldwin
Subsidiary and any other Person, nor any circumstance in connection with the
execution, delivery and performance of the Loan Documents and the transactions
contemplated thereby is such as to require a consent, approval or authorization
of, or filing, registration or qualification with, any governmental or other
authority or any other Person on the part of Baldwin, any Borrower, any
Borrower Subsidiary, any Sector Subsidiary or any Baldwin Subsidiary as a
condition to the execution, delivery and performance of, or consummation of the
transactions contemplated by, this Agreement or the other Loan Documents,
except where such consent, approval, authorization, filing, registration or
qualification has been obtained or effected, or will be obtained or effected in
the ordinary course or where the failure to obtain or effect the same could not
reasonably be expected to have a Material Adverse Effect on Baldwin, any
Significant Subsidiary or the Consolidated Group.
6.14. SOLVENCY. Baldwin, each Borrower, each Guarantor, and each of
their Subsidiaries is Solvent after giving effect to the transactions
contemplated by this Agreement and the other Loan Documents.
6.15. RESTRICTIONS ON DIVIDENDS. Except as set forth in this
Agreement, there are no restrictions on the ability of any Subsidiary to pay
dividends to Baldwin or any Borrower.
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6.16. NO SENIOR OR EQUAL DEBT. Neither Baldwin nor any Borrower, nor
any Borrower Subsidiary nor any Sector Subsidiary is directly or indirectly
liable with respect to (i) any Indebtedness that is senior to the Obligations,
or (ii) any Indebtedness for Money Borrowed (other than the Existing
Capitalized Leases and other than the Indebtedness under the Senior Note
Documents) that ranks equal to or pari passus with the Obligations.
6.17. SURVIVAL OF WARRANTIES AND REPRESENTATIONS. Each Borrower
covenants, warrants and represents to the Agent that all representations and
warranties of the Borrowers contained in this Agreement and the other Loan
Documents shall survive the execution, delivery and acceptance hereof and
thereof by the parties hereto and thereto and the closing of the transactions
described herein or related hereto and any investigation at any time made by or
on behalf of the Agent shall not diminish the Agent's right to reply thereon.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until all principal and interest on the Loans are paid in full, all
fees, charges and other expenses then due and owing are paid in full and the
Total Commitment has been terminated in accordance with the terms hereof,
unless the Required Lenders shall otherwise consent in writing, each Borrower
and Baldwin will:
7.1. FINANCIAL REPORTING. Deliver or cause to be delivered to the
Agent and each Lender:
(a) as soon as practicable and in any event not more than 45
days after the end of each Fiscal Quarter of Baldwin (except the fourth
quarter), (i) a consolidated (and upon the request of the Agent or any Lender,
consolidating) balance sheet of Baldwin and its Subsidiaries, and a balance
sheet of each of BAM and BTL, in each case as at the end of such Fiscal Quarter
and for the Fiscal Year to date, and (ii) the related consolidated (and, with
respect to statements of income and changes in shareholders' equity, upon the
request of the Agent or any Lender, consolidating) statements of income, of
changes in shareholders' equity and of cash flows of Baldwin and its
Subsidiaries, and the respective statements of income and of changes in
shareholders' equity of each of BAM and BTL, in each case for such period(s)
setting forth, in each case in comparative form, figures for the corresponding
period(s) in the preceding Fiscal Year of Baldwin, all in reasonable detail and
in accordance with GAAP and certified by the chief accounting officer or chief
financial officer of Baldwin, BAM and BTL as
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fairly presenting the consolidated (and, if requested, consolidating) financial
condition of Baldwin and its Subsidiaries, and the financial condition of each
of BAM and BTL, as at the dates indicated and the consolidated results of their
operations and cash flows, in each case for the periods indicated, in
conformity with GAAP (except as disclosed in the certificate of such chief
accounting officer or chief financial officer with any changes in accounting
policies discussed in reasonable detail), subject to changes resulting from
year-end adjustments not material in scope or amount;
(b) as soon as practicable and in any event not more than
90 days after the end of each Fiscal Year of Baldwin, (i) a consolidated and
consolidating balance sheet of Baldwin and its Subsidiaries, and a balance
sheet of each of BAM and BTL, in each case as of the end of such Fiscal Year
and (ii) the related consolidated (and with respect to statements of income and
changes in shareholders' equity, upon the request of the Agent or any Lender,
consolidating) statements of income, of cash flows and of changes in
shareholders' equity of Baldwin and its Subsidiaries, and the respective
statements of income and of changes in shareholders' equity of each of BAM and
BTL, for such Fiscal Year, and setting forth in each case, in comparative form,
corresponding figures for the preceding Fiscal Year of Baldwin, all in
reasonable detail and in accordance with GAAP and (i) in the case of such
consolidated financial statements accompanied by a report thereon of Price
Waterhouse or other independent certified public accountants of recognized
national standing selected by Baldwin, which report shall be without
limitations to the scope of the audit and shall state that such consolidated
financial statements present fairly the financial condition of Baldwin and its
Subsidiaries as at the dates indicated and the consolidated results of their
operations and cash flows for the periods indicated in conformity with GAAP
(except as otherwise specified in such report) and that the audit by such
accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards and (ii) in the
case of the financial statement of each of BAM and BTL, accompanied by a review
report with respect to such financial statements prepared by the same
independent certified public accountants that prepared the report referred to
in clause (i) above for such Fiscal Year;
(c) together with each delivery of financial statements
of Baldwin and its Subsidiaries pursuant to subparagraphs (a) and (b) of this
Section 7.1, a certificate of the chief financial officer of Baldwin and each
Borrower (i) stating that (A) the signer has reviewed the terms of this
Agreement and the Notes and has made, or caused to be made under his
supervision, a review in reasonable detail of the transactions and condition of
Baldwin and its Subsidiaries during
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the fiscal period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such fiscal period, and
that to the best of his knowledge after reasonable investigation the signer has
no knowledge of the existence as at the date of such certificate, of any
condition or event which constitutes a Default or Event of Default or, if any
such condition or event existed or exists, specifying the nature and period of
existence thereof and what action Baldwin and the Borrowers have taken, are
taking or propose to take with respect thereto and (ii) Baldwin, the Borrowers
and their Subsidiaries are in compliance with the provisions of Sections 8.1,
8.2, 8.3 and 8.4 hereof and (B) demonstrating (with computations in reasonable
detail) compliance by Baldwin, the Borrowers and their Subsidiaries with the
provisions of Sections 8.1, 8.2, 8.3 and 8.4;
(d) together with each delivery of financial statements
of Baldwin and its Subsidiaries pursuant to subparagraph (b) of this Section
7.1, a certificate by Baldwin's independent public accountants stating (i) that
their audit examination has included a review of the terms of this Agreement
and the Notes as they relate to accounting matters and that such review is
sufficient to enable them to make the statement referred to in clause (iii) of
this subparagraph (d), (ii) whether, in the course of their audit examination,
there has been disclosed the existence during the Fiscal Year covered by such
financial statements (and whether they have knowledge of the existence as of
the date of such accountants' certificate) of any condition or event which
constitutes a Default or Event of Default under Sections 8.1, 8.2, 8.3 (other
than 8.3(a) or 8.3(g)) and 8.4 hereof, and if during their audit examination
there has been disclosed (or if they have knowledge of) such a condition or
event, specifying the nature and period of existence thereof (it being
understood, however, that such accountants shall not be liable to any Person by
reason of their failure to obtain knowledge of any Default or Event of Default
which would not be disclosed in the course of an audit conducted in accordance
with generally accepted auditing standards), and (iii) that based on their
annual examination nothing came to their attention which causes them to believe
that the information contained in the certificate of Baldwin's and each
Borrower's chief financial officer delivered pursuant to subparagraph (c) of
this Section 7.1 insofar as it relates to accounting or auditing matters is not
correct or that the matters set forth in such certificate are not stated in
accordance with the terms of this Agreement (it being understood that such
independent public accountants' examination was not primarily directed toward
determining the accuracy of such information);
(e) promptly after receipt thereof by Baldwin or any
Borrower, copies of all material reports submitted to Baldwin or
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such Borrower by independent public accountants and consultants in connection
with each annual, interim or special audit of the books of Baldwin or any
Significant Subsidiary made by such accountants;
(f) promptly after any officer of Baldwin, any Borrower or
any of their Subsidiaries obtains knowledge (i) that a condition or event
exists that constitutes a Default or Event of Default, (ii) that the Agent or
any Lender has given any notice or taken any other action with respect to a
claimed Default or Event of Default under this Agreement, (iii) of any
condition or event peculiar to Baldwin, any Borrower or any of their
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect on Baldwin, any Significant Subsidiary or the Consolidated Group, (iv)
that any Person has given any notice to Baldwin, any Borrower or any of their
Subsidiaries or taken any other action with respect to a claimed default or
event or condition of the type referred to in Section [9.1(j)], (v) of the
institution of any litigation involving claims against Baldwin, any Borrower or
any of their Subsidiaries equal to or greater than $500,000 with respect to any
single cause of action or $1,000,000 in the aggregate, (vi) of the assertion
by any Person of a claim for breach or violation of any Environmental Law or
for damages resulting from such breach or violation against Baldwin, any
Borrower or any of their Subsidiaries which if adversely determined against
Baldwin or such Borrower or Subsidiary would have a Material Adverse Effect on
Baldwin or such Borrower or Subsidiary or on the Consolidated Group, (vii) of
the assertion of any claim by any Person seeking injunctive relief against
Baldwin, any Borrower or any of their Subsidiaries which would impair the
conduct by Baldwin, any Borrower or any of their Subsidiaries of its business
in the ordinary course or the performance of this Agreement, the Notes or any
Loan Document or (viii) the occurrence of any default or any event of default
under any Senior Note Document or any other agreement, instrument or note
evidencing or pursuant to which any other Indebtedness, the outstanding
principal amount of which exceeds $1,000,000, has been issued by Baldwin, any
Borrower or any of their Subsidiaries, specifying the nature and period of
existence of any such condition or event, or specifying the notice given or
action taken by the Agent or such Lender or Person and the nature of such
claimed Default, Event of Default, event or condition, and what action the
Borrowers have taken, are taking or propose to take with respect thereto;
(g) promptly after any officer of Baldwin, any Borrower
or any of their Subsidiaries obtains knowledge of the occurrence of any (i)
"reportable event", as such term is defined in section 4043 of ERISA, with
respect to any Plan, (ii) "prohibited transaction" as such term is defined in
section 4975 of the Code, in connection with any Plan or any trust created
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thereunder which is not otherwise exempt under a statutory, class or
administrative exemption, (iii) event described in Section 8.5, (iv)
reorganization or termination of any Multiemployer Plan to which Baldwin, any
Borrower or any Related Person is obligated or has been obligated to
contribute, (v) termination of any Plan, or proceedings to terminate any Plan
which are pending or threatened, (vi) liability to or on account of any Plan
under section 4062, 4063 or 4064 of ERISA which will or may be incurred by
Baldwin, any Borrower or a Related Person, a written notice specifying the
nature thereof, what action Baldwin, such Borrower or any Related Person has
taken, is taking or proposes to take with respect thereto, and, when known, any
action taken or threatened by the Internal Revenue Service or the PBGC with
respect thereto;
(h) promptly after the transmission thereof, copies of
all such financial statements, proxy statements, notices and reports as
Baldwin, any Borrower or any of their Subsidiaries shall send to its public
debtholders or public stockholders and copies of all registration statements
(without exhibits) and all reports which Baldwin, any Borrower or any of their
Subsidiaries files with the SEC;
(i) promptly after the transmission thereof, copies of
all such financial statements, notices, certificates and reports as Baldwin,
any Borrower or any of their Subsidiaries shall send to any holder under the
Senior Note Documents or to any other lender, or group of lenders, if the
aggregate Debt outstanding to such lender, or group of lenders, (x) from
Baldwin, the Borrowers and their Subsidiaries (other than the Sector
Subsidiaries and their Subsidiaries) exceeds $1,000,000 or (y) from the Sector
Subsidiaries and their Subsidiaries exceeds $3,000,000;
(j) promptly after receipt thereof, copies of all
reports, statements and notices Baldwin, any Borrower or any of their
Subsidiaries may receive in accordance with Section 13(d) or 14(d) of the
Exchange Act and the rules and regulations promulgated thereunder by the SEC;
(k) promptly upon any such occurrence, written notice of
any event resulting in a mandatory reduction in the Total Commitment, an
increase in the Unavailable Commitment Amount, or prepayment of the Loans, and
of the net proceeds, if any, realized by any Borrower in connection therewith
or as a result thereof;
(l) as soon as practicable and in any event not more than
60 days after the end of each Fiscal Year (each, a "Prior Fiscal Year") of
Baldwin, a copy of consolidating financial projections (including consolidating
projected balance sheets and income statements) and consolidated projected cash
flow
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statements, for Baldwin, each Borrower, each Sector Subsidiary and any other
direct Subsidiary of Baldwin, in each case with respect to the Fiscal Year
immediately following such Prior Fiscal Year;
(m) as soon as practicable and in any event within
thirty (30) days of the end of each calendar quarter, a Borrowing Base
Certificate as at the end of such calendar quarter together with a summary of
Accounts aging and schedule of Inventory, and accompanied by a certificate of
an Authorized Officer that, at no time since the delivery of the previous
Borrowing Base Certificate to the Agent, was the Borrowing Base less than the
aggregate principal amount of Loans outstanding;
(n) with reasonable promptness, such other information
and data with respect to Baldwin, any Borrower or any of their Subsidiaries as
from time to time may be reasonably requested by the Agent or any Lender.
7.2. INSPECTION OF PROPERTY. Permit any Person designated by the
Agent or any Lender, at the Agent's or such Lender's expense (unless such
inspection shall be made during the continuance of a Default or after the
occurrence of an Event of Default, in which event the reasonable expense of
such inspection shall be borne by the Borrowers, jointly and severally), to
visit and inspect any of the properties of itself or any of its Subsidiaries,
to examine the corporate books and financial records of itself or any of its
Subsidiaries and make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of itself or any of its Subsidiaries with the
principal officers of it or such Subsidiary, and (prior to the occurrence and
continuance of a Default or Event of Default), upon consent of any Borrower
(which consent shall not be unreasonably withheld) and at the expense of the
Agent or such Lender (and during the continuance of a Default or after the
occurrence of an Event of Default without the consent of Baldwin or any
Borrower and at the expense of the Borrowers) Baldwin's and each Borrower's
independent public accountants (and by this provision the Borrowers authorize
such accountants to discuss with any Person so designated the affairs, finances
and accounts of Baldwin, the Borrowers and their Subsidiaries), all at such
reasonable times and as often as the Agent or such Lender may reasonably
request.
7.3. CORPORATE EXISTENCE, ETC. At all times preserve and keep in full
force and effect its, and their Subsidiaries', corporate existence, and rights
and franchises material to the business of Baldwin, any Significant Subsidiary
or the Consolidated Group except as otherwise specifically permitted by Section
8.3(d), and qualify, and cause each of its Subsidiaries to qualify, to do
business in any jurisdiction where the failure
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to do so would have a Material Adverse Effect on Baldwin, any Significant
Subsidiary or the Consolidated Group.
7.4. PAYMENT OF TAXES AND CLAIMS. Pay, and cause each of their
Subsidiaries to pay, (i) all income taxes before the same shall become
delinquent, except where such income taxes are contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, and only
if adequate reserves therefor have been established on its books of account in
accordance with GAAP, and (ii) all other taxes, assessments and other
governmental charges imposed upon it or any of its properties or assets or with
respect to any of its franchises, business, income or profits before any
penalty or interest accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums which
have become due and payable, except where such tax, assessment, charge or claim
is being contested in good faith by appropriate proceedings promptly instituted
and diligently conducted and only if such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have been made therefor,
and except, in either case, for income taxes, other taxes, assessments, and
other charges which in the aggregate with all other unpaid taxes, assessments
and governmental charges do not and will not have a Material Adverse Effect on
Baldwin, any Significant Subsidiary or the Consolidated Group.
7.5. COMPLIANCE WITH LAWS, ETC. Comply, and cause each of their
Subsidiaries to comply, with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority (including, without
limitation, the Occupational Safety and Health Act of 1970, as amended, ERISA
and all Environmental Laws), the violation of which would have a Material
Adverse Effect on Baldwin, any Significant Subsidiary or the Consolidated
Group.
7.6. MAINTENANCE OF PROPERTIES. Maintain or make adequate
arrangements for the maintenance of, and cause each of their Subsidiaries to
maintain or make adequate arrangements for the maintenance of, in good repair
and working order and condition, subject to reasonable wear and tear and
obsolescence, all properties used or useful in its or their business, and from
time to time make or cause to be made all appropriate repairs, renewals and
replacements thereof.
7.7. INSURANCE. Maintain, and cause each of their Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with respect
to its properties and business and the properties and business of Baldwin and
such Subsidiaries in such forms and amounts and against such risks customarily
insured against by corporations of established reputation engaged
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in the same or similar business and similarly situated, and notify the Agent
promptly of any event or occurrence causing a material loss thereof and the
estimated (or actual, if available) amount of such loss.
7.8. SCOPE OF BUSINESS. Engage, and cause each of their Subsidiaries
to engage, only in Businesses in substantially the same fields as the
businesses conducted on the date of this Agreement.
7.9. ENVIRONMENTAL COMPLIANCE. (i) Obtain and maintain, and cause
each of their Subsidiaries to obtain and maintain, all permits, licenses, and
other authorizations that are required under all Environmental Laws, (ii)
comply, and cause each of their Subsidiaries to comply, with all terms and
conditions of all such permits, licenses, and authorizations and with all other
applicable limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables contained in all
Environmental Laws or in any regulation, ordinance, code, plan, order, decree,
judgment, injunction, notice, or demand letter issued, entered, promulgated, or
approved thereunder, except to the extent that failure to do so does not have a
Material Adverse Effect on Baldwin, any Borrower, or any of their Subsidiaries,
and (iii) operate, and cause each of their Subsidiaries to operate, all
property owned or leased by it such that no claim or obligation, including a
clean-up obligation, which could have a Material Adverse Effect on Baldwin, any
Borrower or any of their Subsidiaries, shall arise under any Environmental Law,
and if any claim is made against Baldwin, any Borrower or any of their
Subsidiaries or any such obligation of Baldwin, any Borrower or any of their
Subsidiaries, which would have a Material Adverse Effect on Baldwin, any
Borrower, any of their Subsidiaries or the Consolidated Group, arises under any
Environmental Law, the party against whom such claim is made shall timely
satisfy such claim or obligation.
7.10. MAINTENANCE OF BOOKS AND RECORDS. Do, and cause each of their
Subsidiaries to do, the following: (i) keep proper records and books of
account with respect to its business activities in which proper entries are
made in the ordinary course of all dealings or transactions of or in relation
to its business and affairs; (ii) set up on its books adequate reserves with
respect to all taxes, assessments, charges, levies and claims; and (iii) set up
on its books reserves against doubtful accounts receivable, advances and all
other proper reserves (including reserves for depreciation, obsolescence or
amortization of its property). All determinations pursuant to this Section
7.10 shall be made in accordance with, or as required by, GAAP.
Notwithstanding the foregoing, Baldwin, any Borrower or any of their
Subsidiaries may make adjustments and
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changes in the manner in which their books and records are kept; provided,
that:
(a) all such adjustments and changes shall be required or
permitted by GAAP but need not conform with its prior accounting practice;
(b) the Agent and each Lender shall be given (i) written
notice from Baldwin and each Borrower of all such changes or adjustments with
the delivery of the financial statements required by Section 7.1(a) or 7.1(b),
as the case may be, for the fiscal period in which such adjustment or change
was first put into effect, and (ii) with the delivery of the financial
statements required by Section 7.1(b) a description by the independent
certified public accountants who audited such financial statements of the
effect of all such changes and adjustments put into effect in the preceding
Fiscal Year on such financial statements (i) which are required by GAAP to be
referred to in such financial statements or such independent certified public
accountants' opinions thereon, or (ii) if not required by GAAP, with respect to
which the Agent has reasonably requested a description;
(c) the financial covenants and ratios set forth in Section
8.1 and the ratios set forth in Section 8.4(a) shall continue to be calculated
without regard to such adjustments or changes unless and until the Agent and
each Lender has consented thereto.
7.11. PAYMENT OF TRADE PAYABLES. Pay, and cause each of its
Subsidiaries to pay, all trade payables promptly (i) in accordance with their
terms or (ii) in accordance with prior practice, if paying trade payables in
accordance with such prior practice (and not in accordance with their terms)
would not, in each circumstance or in the aggregate, have a Material Adverse
Effect on Baldwin, any Significant Subsidiary or the Consolidated Group.
7.12. PAY INDEBTEDNESS TO LENDERS AND PERFORM OTHER COVENANTS. (a)
Make full and timely payment of the principal of and interest on the Notes and
all other Obligations whether now existing or hereafter arising; and (b) duly
comply with all terms and covenants contained in all other Loan Documents.
7.13. ENVIRONMENTAL REPORTS. Promptly provide to the Agent true,
accurate and complete copies of any and all material documents, including
reports, submissions, notices, orders, directives, findings and correspondence
made or received by Baldwin, any Borrower or any Subsidiary to or from the
United States Environmental Protection Agency ("EPA") or any other federal,
state or local authority pursuant to any federal, state
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or local law, code or ordinance and all rules and regulations promulgated
thereunder which require informational submissions pursuant to Environmental
Laws regarding or in connection with any matter or situation that would
reasonably be likely to result in a Material Adverse Effect on Baldwin, any
Significant Subsidiary or the Consolidated Group.
7.14. NOTICE OF DISCHARGE OF HAZARDOUS MATERIAL OR ENVIRONMENTAL
COMPLAINT. Give to the Agent immediate written notice of any complaint, order,
directive, claim, citation or notice by any governmental authority or any other
Person to Baldwin, any Borrower or any of their Subsidiaries regarding or in
connection with any matter that is reasonably likely to result in a Material
Adverse Effect on Baldwin, any Significant Subsidiary or the Consolidated
Group, with respect to (a) air emissions, (b) spills, releases or discharges to
soils or improvements located thereon, surface water, groundwater or the sewer,
septic system or waste treatment, storage or disposal systems servicing
property owned or leased by Baldwin, any Borrower or any of their Subsidiaries,
(c) noise emissions, (d) solid or liquid waste disposal, or (e) the use,
generation, storage, transportation or disposal of Hazardous Material. Such
notices shall include, among other information, the name of the party who filed
the claim, the nature of the claim and the actual or potential amount of the
claim. Each Borrower shall, and shall cause Baldwin and each of their
Subsidiaries to, promptly comply in all material respects with its obligations
under law with regard to such matters. However, no Borrower shall be obligated
to give such notice to the Agent or any Lender of any use, generation, storage,
transportation, disposal, discharge or existence of any Hazardous Material
which occurs legally.
7.15. INDEMNIFICATION. Each Borrower and Baldwin hereby agrees,
jointly and severally, to defend, indemnify and hold the Agent and the Lenders
harmless from and against any and all claims, losses, liabilities, damages and
out-of-pocket expenses (including, without limitation, cleanup costs and
reasonable attorneys' fees including those arising by reason of any of the
aforesaid or an action against Baldwin, any Borrower or any of their
Subsidiaries under this indemnity) of or against the Agent or any Lender
arising directly or indirectly from, out of or by reason of the handling,
storage, treatment, emission, leakage, spillage, discharge, release or disposal
of any Hazardous Material by or in respect of Baldwin, any Borrower or any
Subsidiary or on property owned or leased by Baldwin, any Borrower or any
Subsidiary. This indemnity shall apply notwithstanding any negligent or other
contributory conduct by or on the part of the Agent or any Lender or any one or
more other Persons (excluding the gross negligence or willful misconduct of the
Agent or any Lender). The provisions of this Section 7.15 shall survive
repayment of the Obligations, occurrence of the
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Revolving Credit Termination Date and expiration or termination of this
Agreement.
7.16. FURTHER ASSURANCES. At its cost and expense, upon request of
the Agent, duly execute and deliver or cause to be duly executed and delivered,
to the Agent such further instruments, documents, certificates, financing and
continuation statements, and do and cause to be done such further acts as may
be reasonably necessary to carry out more effectively the provisions and
purposes of this Agreement and the other Loan Documents.
7.17. USE OF PROCEEDS. Use the proceeds of the Loans solely for the
purposes set forth in Section 2.6 of this Agreement.
7.18. NEW SUBSIDIARIES. Promptly following the formation or
acquisition of any Subsidiary of any Borrower or any direct Subsidiary of
Baldwin (other than a BAM Foreign Subsidiary, a BTL Foreign Subsidiary or a
Baldwin Foreign Subsidiary) subsequent to the Closing Date, cause to be
delivered to the Agent for the benefit of the Lenders each of the following,
each in form reasonably acceptable to the Agent:
(a) a guaranty agreement pursuant to which such
Subsidiary guarantees all of the Obligations;
(b) an opinion of counsel to each Borrower and such
Subsidiary dated as of the date of delivery of the guaranty agreement provided
in the foregoing clause (a) and addressed to the Agent and the Lenders, in form
and substance reasonably acceptable to the Agent, substantially to the effect
that:
(1) such Subsidiary is duly organized, validly
existing and in good standing in the jurisdiction of its incorporation and has
the requisite corporate power and authority to execute and deliver the guaranty
agreement described in clause (a) of this Section 7.18; and
(2) with respect to such Subsidiary, its execution,
delivery and performance of the guaranty agreement delivered pursuant to clause
(a) of this Section 7.18 to which such Subsidiary is a signatory has been duly
authorized by all requisite corporate action (including any required
shareholder approval), such document has been duly executed and delivered by it
and constitutes its valid and binding obligation, enforceable against such
Subsidiary in accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization, fraudulent
transfer or conveyance or other similar laws affecting the enforceability of
creditors' rights generally and to the effect of general principles of equity
which
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may limit the availability of equitable remedies (whether in a proceeding at
law or in equity); and
(c) current copies of the charter and bylaws of such
Subsidiary and resolutions of the Board of Directors (and, if required by such
charter, bylaws or by applicable laws, of the shareholders) of such Subsidiary
authorizing the actions and the execution, delivery and performance of this
guaranty agreement described in clause (a) of this Section 7.18 and a
certificate or certificates of the Secretary of State, Department of Revenue or
appropriate government authority certifying that such Subsidiary is duly
qualified to transact business as a foreign corporation in such jurisdiction
from each jurisdiction in which the failure to be so qualified would have a
Material Adverse Effect on Baldwin, any Significant Subsidiary or the
Consolidated Group.
ARTICLE VIII
NEGATIVE COVENANTS
Until all principal and interest on the Loans are paid in full, all
fees, charges and other expenses then due and owing are paid in full and the
Total Commitment has been terminated in accordance with the terms hereof,
unless the Required Lenders shall otherwise consent in writing, each Borrower
and Baldwin covenants and agrees that:
8.1. FINANCIAL COVENANTS. It will not:
(a) Consolidated Net Worth. Permit Consolidated Net
Worth, calculated as of the last day of any Fiscal Quarter of Baldwin
after June 30, 1993, to be less than (i) $70,000,000, plus (ii) an
amount equal to 50% of the aggregate of the Consolidated Net Income
(without deduction for quarterly losses) in each Fiscal Quarter
thereafter.
(b) Current Ratio. Permit the Current Ratio, calculated
as of the last day of any Fiscal Quarter after June 30, 1993, to be
less than 1.3 to 1.0.
(c) Funded Debt to Cash Flow. Permit as of the last day
of any Fiscal Quarter of Baldwin after September 30, 1993, the ratio
of Consolidated Funded Debt to Consolidated Cash Flow for the period
indicated below ending as of such Fiscal Quarter end to be greater
than the ratio set forth opposite such period below:
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<TABLE>
<CAPTION>
Required Ratio of Funded Debt
Period to Consolidated Cash Flow
------ -------------------------
<S> <C>
Each period of four 2.75 to 1.00
consecutive Fiscal
Quarters ended
December 31, 1993,
March 31, 1994,
June 30, 1994, and
September 30, 1994
Each period of four 2.10 to 1.00
consecutive Fiscal
Quarters ended
December 31, 1994
March 31, 1995,
June 30, 1995,
September 30, 1995, and
each December 31,
March 31, June 30 and
September 30 thereafter.
</TABLE>
(d) Fixed Charge Ratio. Permit the Consolidated Fixed
Charge Ratio for the period indicated below to be less than the ratio
set forth below opposite such period below:
<TABLE>
<CAPTION>
Required Consolidated
Period Fixed Charge Ratio
------ ------------------
<S> <C>
Each period of four 2.00 to 1.00
consecutive Fiscal
Quarters ended
December 31, 1993,
March 31, 1994,
June 30, 1994, and
September 30, 1994
Each period of four 2.50 to 1.00
consecutive Fiscal
Quarters ended
December 31, 1994,
March 31, 1995,
June 30, 1995,
September 30, 1995, and
each December 31,
March 31, June 30 and
September 30 thereafter
</TABLE>
8.2. RESTRICTED PAYMENTS. (a) Baldwin will not make, and the
Borrowers will not permit Baldwin to make, any Restricted Payments, unless the
aggregate of all such Restricted Payments made by Baldwin after June 30, 1993
does not exceed the sum of
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(x) $3,000,000; plus (y) the net cash proceeds received by Baldwin from the
issuance of shares of Eligible Capital Stock; plus (z)(A) 50% of the
Consolidated Net Income from June 30, 1993 through Baldwin's Fiscal Quarter
most recently ended for which financial statements have been (or are required
to have been) furnished to the Agent or any Lender in accordance with Section
7.1(a) or 7.1(b), as the case may be, taken as a single accounting period or,
(B) in the event Consolidated Net Income for such period shall be a negative
number, 100% of such amount (expressed as a negative number); provided,
further, however, that no Restricted Payment shall be permitted by Baldwin if
an Event of Default or Default exists immediately before or immediately after
such payment or would otherwise reasonably be anticipated to result therefrom.
(b) No Borrower will make, and neither Borrower nor Baldwin
will permit any Baldwin Subsidiary or any Borrower Subsidiary to make, any
Restricted Payments (other than dividends by any Baldwin Subsidiary or
distributions on any other securities of any Baldwin Subsidiary held by either
Borrower or Baldwin) if an Event of Default or Default exists immediately
before or immediately after such payment or would otherwise reasonably be
anticipated to result therefrom.
8.3. LIENS AND OTHER RESTRICTIONS. It will not, and will not
permit any Borrower Subsidiary or any Baldwin Subsidiary to:
(a) Liens. Create, assume or suffer to exist any Lien on
its or any Borrower Subsidiary's or Baldwin Subsidiary's property or
assets, whether now owned or hereafter acquired or upon any income or
profits therefrom, or transfer any property for the purpose of
subjecting the same to the payment of obligations in priority to the
payment of its general creditors except for:
(i) Liens on fixed assets incurred by Baldwin,
any Borrower or any of their Subsidiaries in the ordinary
course of business in connection with the acquisition or
construction thereof, which secure all or part of the purchase
price thereof (including Capitalized Leases) and Liens
existing on property at the time of its purchase or
construction thereof; provided, however, that (A) each such
Lien is confined solely to the property so purchased or
constructed, improvements thereto and proceeds thereof, (B)
such Liens secure only the purchase price for such property
and the amount of the Debt secured by such Lien does not
exceed 80% of the cost of such property, (C) the Indebtedness
secured by such Lien is incurred at the time of the
acquisition, or within one hundred twenty (120) days following
the date of acquisition, of the
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fixed assets subject thereto, and (D) the Indebtedness
secured thereby would otherwise be permitted by Section 8.4;
(ii) Liens representing any renewal, refunding or
extension of any Lien permitted by clause (i) of this Section
8.3(a) provided that the principal amount secured and then
outstanding is not increased, the Lien is not extended to
other property and the Indebtedness secured thereby would be
permitted under Section 8.4;
(iii) Liens, and other charges incidental to the
conduct of its business, or the ownership of its property
(including charges for taxes or otherwise arising by operation
of law, mechanics', carriers', workers', repairmen's,
warehousers' or other similar liens), which are not incurred
in connection with the borrowing of money or the securing of
Indebtedness, provided in each case the obligation secured is
not overdue or is being contested in good faith by appropriate
actions or proceedings promptly instituted and diligently
conducted and such reserves as shall be required by GAAP shall
have been made therefor and which in the aggregate do not
materially diminish the value of the property or assets of
Baldwin, any Significant Subsidiary or the Consolidated Group;
(iv) Liens existing as of this date securing
Indebtedness listed on Schedule 8.3(a);
(v) deposits or pledges to secure worker's
compensation, unemployment insurance, old age benefits or
other social security obligations or retirement benefits;
(vi) Liens arising out of deposits in connection
with, or to secure the performance of, bids, tenders, trade
contracts not for the payment of money or leases, or to secure
statutory obligations or surety or appeal bonds, performance
bonds or other pledges or deposits for purposes of like nature
in the ordinary course of business;
(vii) Liens arising under Title IV of ERISA which
would not have a Material Adverse Effect on Baldwin, any
Significant Subsidiary or the Consolidated Group;
(viii) survey exceptions or encumbrances, easements
or reservations, or rights of others for rights-of-way,
utilities and other similar purposes, or zoning or other
restrictions as to the use of real
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properties, which are necessary for the conduct of the
activities of Baldwin and its Subsidiaries or which customarily
exist on properties of Persons engaged in similar activities
and similarly situated and which do not in any event have a
Material Adverse Effect on, or materially impair their use in
the operation of the business of, Baldwin, any Significant
Subsidiary or the Consolidated Group;
(ix) Liens arising from judgments or decrees not
constituting a Default or Event of Default unless such lien
remains undischarged, unstayed on appeal, unbonded and
undismissed for a period of sixty (60) consecutive days;
(x) Liens on receivables and inventory of Baldwin,
the Borrowers and their Subsidiaries if the aggregate
principal amount of the Indebtedness (exclusive of any
Indebtedness set forth on Schedule 8.3(a)), secured by all
such Liens does not at any time exceed $10,000,000, and the
aggregate book value of such receivables and inventory does
not at any time exceed $15,000,000; and
(xi) Liens on any capital stock of the Borrowers,
the Borrower Subsidiaries and the Sector Subsidiaries securing
the Indebtedness under the Senior Note Documents, provided
that the aggregate principal amount of such Indebtedness
secured by all such Liens does not at any time exceed
$25,000,000 and provided further that the Notes hereunder are
secured by all such Liens at least equally and ratably with
such Indebtedness under the Senior Note Documents, pursuant to
a written agreement in form and substance satisfactory to the
Agent and the Lenders and their counsel, the enforceability of
which has been confirmed to the satisfaction of the Agent and
the Lenders and their counsel.
(b) Loans, Advances and Investments. Make or permit to
remain outstanding any loan or advance to, or extend credit to, or
own, purchase or acquire any stock (including that of Baldwin),
obligations or securities of, or any other interest in, or make any
capital contribution to any Person (other than the present investment
of Baldwin and its Subsidiaries in their respective Subsidiaries),
except that Baldwin and (except as set forth below) any of its
Subsidiaries may:
(i) make or permit to remain outstanding loans or
advances to any wholly-owned Subsidiary of Baldwin
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provided that any such loans to a Borrower are
subordinated to the payment of the Obligations and any such
loans to a Guarantor are subordinated to such Guarantor's
obligations under its Guaranty, in each case pursuant to a
subordination agreement in a form satisfactory to the Agent and
the Lenders and the enforceability of which has been confirmed
to the reasonable satisfaction of the Agent and the Lenders and
their counsel (a "Subordination Agreement"), provided, however,
that no Borrower may make or permit to remain outstanding any
such loan or advance, except (A) a loan by a Borrower to one of
its Subsidiaries or (B) a loan by BAM to Baldwin or a Sector
Subsidiary, or (C) a loan by BTL to a Subsidiary of a Sector
Subsidiary if and only if such loan is reflected by a
promissory note that (i) is signed by such Subsidiary of a
Sector Subsidiary, (ii) has a term of not more than one year,
(iii) is payable in United States dollars (or as to which
arrangements for currency conversion that are reasonably
acceptable to the Agent have been made), (iv) is governed by
New York law, (v) is otherwise reasonably acceptable to the
Agent, and (vi) has been (prior to or on the same day as the
making of such loan) pledged and delivered by BTL to the Agent
(along with a respective pledge agreement executed by BTL in a
form reasonably acceptable to the Agent) as additional
Collateral securing the Obligations, or (D) the loan in the
principal amount of $16,750,000 from BTL to Baldwin German
Capital Holding GmbH existing on the date thereof.
(ii) acquire and own stock, obligations or
securities received in settlement of debts (created in the
ordinary course of business) owing to Baldwin or such
Subsidiary;
(iii) own, purchase or acquire: (A) securities
issued or directly and fully and unconditionally guaranteed or
insured by the United States of America, Japan or any country
which is a member of the European Economic Community or any
agency thereof backed by the full faith and credit of the
United States of America, Japan or any country which is a
member of the European Economic Community and maturing within
one (1) year from the date of acquisition; (B) demand deposits
in banks in the ordinary course of business (not for
investment purposes); (C) time deposits, or certificates of
deposit maturing within one (1) year from the date of
acquisition issued by commercial banks which are members of
the Federal Reserve System and chartered under the laws of the
United States of
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America or any state or the District of Columbia or
Japan or any country which is a member of the European Economic
Community whose short-term securities are rated at least A-1
(or then existing equivalent) by Standard & Poor's Corporation
and at least P-1 (or then existing equivalent) by Moody's
Investors Service, Inc.; (D) prime commercial paper maturing
not more than 270 days from the date of acquisition, having as
at any date a rating of at least A-1 (or the existing
equivalent) from Standard & Poor's Corporation or at least P-1
(or then existing equivalent) from Moody's Investors Service,
Inc. and issued by a corporation organized in any state of the
United States of America or the District of Columbia or Japan
or any country which is a member of the European Economic
Community; and (E) securities of the type described in clause
(A) of this subparagraph but issued or directly and fully and
unconditionally guaranteed or insured by any country (or agency
backed by the full faith and credit thereof) other than the
United States of America, Japan or a member of the European
Economic Community and investments of the type described in
clauses (C) and (D) of this subparagraph of a bank chartered or
a corporation organized in any jurisdiction other than the
United States of America, any state thereof or the District of
Columbia, Japan or a member of the European Economic Community,
provided that the aggregate of all such securities and
investments, together with the aggregate amount of demand
deposits in banks located in all countries other than the
United States of America, Japan or a member of the European
Economic Community does not exceed at any time
$5,000,000,provided, however, that BAM may not own, purchase or
acquire any securities, investments or demand deposits
described in this subparagraph (E);
(iv) endorse negotiable instruments for collection in
the ordinary course of business;
(v) purchase or acquire stock of any Person if
immediately after such purchase or acquisition such Person
will be an 80% Subsidiary of Baldwin, provided that if, after
giving pro forma effect to such purchase or acquisition as if
it had occurred as of the first day of the most recently
completed Fiscal Quarter for which financial statements were
delivered pursuant to Section 6.1, such 80% Subsidiary would
have been a Significant Subsidiary as of such date, then such
80% Subsidiary shall have become a Guarantor;
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(vi) make or permit to remain outstanding loans or
advances to their employees other than advances to employees
for expenses incurred in the ordinary course of business and
loans to employees provided the aggregate principal amount of
all such loans by Baldwin and its Subsidiaries does not at any
time exceed $2,500,000 less the principal amount of any such
loans which has been repaid as of the date of determination
and provided further (i) the proceeds of such loans are used
solely by such employees to acquire common stock of Baldwin;
(ii) such loans are secured by a pledge by the employee of the
stock so acquired; and (iii) such loans are otherwise made on
terms no less favorable to the Person making such loan than
those which might be obtained at arm's length between
unaffiliated parties;
(vii) make capital contributions to any Borrower,
Borrower Subsidiary, any Guarantor or any Subsidiary of a
Sector Subsidiary; and
(viii) make Restricted Payments to the extent permitted
by Section 8.2;
(c) Sale of Stock and Indebtedness of Subsidiaries.
Either directly or indirectly by the issuance of rights, options for
or securities convertible into such shares, issue, sell or otherwise
dispose of, or part with control of, any shares of capital stock
(other than directors' qualifying shares) or Indebtedness of any
Borrower, any Borrower Subsidiary or any Baldwin Subsidiary, except
for (i) the issuance, sale or other disposition of (A) shares of the
capital stock of any Borrower or any Sector Subsidiary to Baldwin or
any Sector Subsidiary,provided, that in the case of such an issuance,
sale or disposition of shares to a Sector Subsidiary, the Borrowers
and Baldwin shall immediately cause such Sector Subsidiary to pledge
and deliver such shares to the Agent (pursuant to a pledge agreement
substantially similar to the form of the Baldwin Pledge Agreement to
be executed by such Sector Subsidiary at such time) together with
stock powers executed in blank, as Collateral securing payment and
performance of the Obligations, (B) shares of the capital stock of any
Borrower Subsidiary to the respective Borrower, or (C) shares of the
capital stock of any other Baldwin Subsidiary to Baldwin, or (ii)
sales of shares of then issued capital stock of a Baldwin Subsidiary
(other than the capital stock of any Borrower or any Guarantor, and
other than any Subsidiary of a Sector Subsidiary to whom any capital
contribution has been made pursuant to Section 8.3(b)(vii), and other
than any stock pledged, or required to be pledged, to the Agent
pursuant to this Agreement or any other Loan Document), if
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immediately after such sale the issuer of such capital stock is no
longer a Baldwin Subsidiary and the sale would otherwise be permitted
under Section 8.3(d).
(d) Merger and Sale of Assets. Merge or consolidate with
any other Person or sell, lease or transfer or otherwise dispose of
its assets to any Person or Persons, except, that:
(i) any wholly-owned Subsidiary of Baldwin (other
than a Borrower) may merge with Baldwin (provided that Baldwin
shall be the continuing or surviving corporation) or merge or
consolidate with any one or more other wholly-owned
Subsidiaries of Baldwin (provided if any Borrower or any
Guarantor is a party to such merger or consolidation it shall
be the continuing or surviving corporation except in the case
of a merger or consolidation involving any Borrower and any
Guarantor, in which case such Borrower shall be the
controlling or surviving corporation);
(ii) any wholly-owned Subsidiary of Baldwin (other
than any Borrower or any Guarantor) may sell, lease, transfer
or otherwise dispose of any of its assets to Baldwin or
another wholly-owned Subsidiary of Baldwin provided that
immediately after giving effect to such transaction, no
Default or Event of Default would result therefrom or
otherwise exist immediately before or immediately after such
transaction;
(iii) Baldwin may merge or consolidate with any
other corporation, provided that (A) Baldwin shall be the
continuing or surviving corporation; (B) immediately after
giving effect to such transaction, were Baldwin or any of its
Subsidiaries to incur additional Debt of $1.00, no Default or
Event of Default would result therefrom; (C) no Default or
Event of Default would otherwise exist immediately before or
immediately after such merger or consolidation; and (D) the
aggregate book value of the assets acquired by Baldwin and its
Subsidiaries as a result of mergers or consolidations
permitted by Sections 8.3(d)(iii) and 8.3(d)(iv) shall not
exceed $15,000,000 in any one year;
(iv) a wholly-owned Subsidiary of Baldwin (other
than a Borrower) may merge or consolidate with any other
corporation (other than a Borrower ), provided that (A) such
Subsidiary shall be the continuing or surviving corporation,
except that if either such Subsidiary or the other corporation
is a Guarantor, the
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continuing or surviving corporation shall be a
Guarantor; (B) subject to the exception in clause (A), such
Subsidiary shall continue to be a wholly-owned Subsidiary of
the Company; (C) immediately after giving effect to such
transaction, were Baldwin or any of its Subsidiaries to incur
additional Debt of $1.00, no Default or Event of Default would
result therefrom; (D) no Default or Event of Default would
otherwise exist immediately before or immediately after such
merger or consolidation; and (E) the aggregate book value of
the assets acquired by Baldwin and its Subsidiaries s a result
of mergers or consolidations permitted by Section 8.3(d)(iii)
and 8.3(d)(iv) shall not exceed $15,000,000 in any one year;
(v) Baldwin, any Borrower or any of their
Subsidiaries may sell, transfer or otherwise dispose of some
or all of its properties or assets for such consideration as
may be determined to be fair and adequate by the Board of
Directors of Baldwin, such Borrower or such Subsidiary (a
"Disposition"); provided, however, that (A) no Default or
Event of Default exists immediately before or immediately
after and giving effect to such Disposition or would otherwise
reasonably be anticipated to result therefrom, and (B)
immediately after and giving effect to any such Disposition,
the aggregate book value, as reflected on the most recent
balance sheet of Baldwin furnished to the Agent and the
Lenders pursuant to Section 7.1(a) or 7.1(b), as the case may
be, of all such properties and assets so sold by Baldwin, the
Borrowers and their Subsidiaries (which, in the case of a sale
of capital stock of a Subsidiary, shall equal the seller's
share of the aggregate book value of the properties and assets
of such Subsidiary and its Subsidiaries, calculated on a
consolidated basis) ("Assets Sold") during the then current
Fiscal Year, (less the aggregate amount of Qualifying
Reinvestments then made by Baldwin, the Borrowers and their
Subsidiaries during such Fiscal Year,) does not exceed 10% of
Consolidated Net Tangible Assets at the end of the Fiscal Year
immediately preceding such Disposition; and
(vi) Baldwin, any Borrower or any of their
Subsidiaries may sell inventory in the ordinary course of
business and Baldwin Japan Limited, a wholly-owned Subsidiary
of Baldwin Asia Pacific Corporation, may sell receivables in
the ordinary course of its business in accordance with its
past practices.
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For purposes of subparagraph (v) of this Section 8.3(d), a "Qualifying
Reinvestment" is the use of proceeds of Assets Sold to (A) purchase not more
than ninety (90) days prior to nor more than three hundred sixty-five (365)
days after the date of such Disposition (x) tangible, depreciable assets or
equipment or real property or depreciable improvements thereon usable in the
same business as the Assets Sold, or (y) either (1) purchase all of the
outstanding capital stock or other equity interests of such business, or (2)
purchase all or substantially all of the assets and business of a Person which
is engaged in any such business, or (B) permanently repay Consolidated
Indebtedness, if such repayment is made within 90 days after the date of such
Disposition.
(e) Subsidiary Dividend and Other Restrictions. Except
as set forth in this Agreement, enter into, or be otherwise subject
to, any contract or agreement (including its charter) which limits the
amount of, or otherwise imposes restrictions on the payment of,
dividends by any of the Baldwin Subsidiaries or Borrower Subsidiaries
or distributions on any other securities of any of the Baldwin
Subsidiaries or Borrower Subsidiaries held by any Borrower, any
Guarantor or Baldwin.
(f) Transactions with Affiliates. Except as set forth on
Schedule 8.3(f), directly or indirectly engage in any transaction
(including, without limitation, the purchase, sale or exchange of
assets or the payment of salary, bonuses and other compensation for
services rendered) with any present or former stockholder (other than
Persons who do not own and have not owned, directly or indirectly, any
shares of stock of any Subsidiary of Baldwin and who do not own and
have not owned, directly or indirectly, at any time more than ten (10)
shares of common stock of Baldwin and any shares of any other class of
capital stock of Baldwin), officer or Affiliate or to any successor,
assign, Affiliate or transferee thereof, except in the ordinary course
of business pursuant to the reasonable requirements of Baldwin's, the
Borrower's or their Subsidiaries' business and upon terms which might
be obtained at arms' length between unaffiliated parties.
(g) Sale and Leaseback. Enter into any sale and
leaseback transaction, unless the obligation incurred and evidenced by
such leasing arrangement would be a Capitalized Lease Obligation and
the Indebtedness incurred would be permitted to be incurred by Section
8.4.
8.4. INDEBTEDNESS.
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(a) Baldwin Indebtedness. Baldwin will not create,
incur, assume, suffer to exist, or otherwise become or remain directly or
indirectly liable with respect to any Indebtedness, other than:
(i) its guaranty of the Obligations;
(ii) its guaranty of the Funded Debt from time to
time outstanding under the Senior Note Documents in an
aggregate principal amount not at any time to exceed
$25,000,000, which guaranty and Indebtedness shall at all
times rank equal to and pari passus with (or junior to) the
Obligations;
(iii) Indebtedness outstanding as of the Closing
Date that is set forth on Schedule 8.4(a), and all of which
Indebtedness shall at all times be junior and subordinate to
the Obligations;
(iv) other Funded Debt of Baldwin if, at the time of
incurrence thereof and after giving effect thereto, (A) no
Default or Event of Default exists or would otherwise
reasonably be anticipated to result from such transaction, (B)
the ratio of Consolidated Funded Debt to Consolidated Total
Capitalization, in each case calculated on the basis of the
most recently available financial information and giving pro
forma effect to the incurrence of such Funded Debt and the
application of the net proceeds therefrom, would not exceed
0.55 to 1.00, (C) the financial tests set forth in Section
8.1, calculated on the basis of the most recently available
financial information, would be satisfied on a pro forma
basis; (D) all such Indebtedness is and shall at all times be
junior and subordinate to the Obligations; and
(v) other Indebtedness of Baldwin if, at the time of
incurrence thereof and after giving effect thereto, (A) no
Default or Event of Default exists or would otherwise
reasonably be anticipated to result from such transaction, (B)
the ratio of Consolidated Indebtedness to Consolidated Total
Capitalization, in each case calculated on the basis of the
most recently available financial information and giving pro
forma effect to the incurrence of such Indebtedness and the
application of the net proceeds therefrom, would not exceed
0.60 to 1.00, and (C) the financial tests set forth in Section
8.1, calculated on the basis of the most recently available
financial information, would be satisfied on a pro forma
basis; (D) no such Indebtedness shall rank senior to the
Obligations; and
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(E) all such Indebtedness that constitutes Indebtedness
for Money Borrowed (other than Existing Capitalized Leases) is
and shall at all times be junior and subordinate to the
Obligations.
(b) Subsidiary Debt. The Borrowers will not, and the
Borrowers and Baldwin will not permit any of their Subsidiaries to, create,
incur, assume or otherwise become or remain directly or indirectly liable with
respect to Indebtedness other than:
(i) the Funded Debt represented by the Notes and
the Guaranties;
(ii) the Funded Debt of the Borrowers and the
guarantees of the Sector Subsidiaries and any other Guarantors
(as defined herein) from time to time outstanding under the
Senior Note Documents in an aggregate principal amount not at
any time to exceed $25,000,000, which Indebtedness shall at
all times rank equal to and pari passus with (or junior to) to
the Obligations;
(iii) Indebtedness of wholly-owned Subsidiaries of
Baldwin for loans permitted under Section 8.3(b)(i);
(iv) any other Indebtedness of the Borrowers, any
Borrower Subsidiary, any Sector Subsidiary, or any Subsidiary
of a Sector Subsidiary; provided, however, (A) at the time of
the incurrence of such Indebtedness and after giving effect
thereto, Baldwin would be able to incur an additional $1.00 of
Indebtedness without breach of Section 8.4(a)(v); (B) that the
sum of (1) the aggregate principal amount of all such
Indebtedness of the Borrowers, Borrower Subsidiary and Sector
Subsidiaries plus (2) the aggregate principal amount of all
such Indebtedness of any Subsidiaries of Sector Subsidiaries
that constitutes Indebtedness for Money Borrowed (other than
Existing Capitalized Leases) shall not at any time exceed
$15,000,000; (C) no such Indebtedness shall rank senior to the
Obligations; and (D) all such Indebtedness of any Borrower,
Borrower Subsidiary or Sector Subsidiary that constitutes
Indebtedness for Money Borrowed (other than Existing
Capitalized Leases) is and shall at all times be junior and
subordinate to the Obligations.
(c) Priority of Obligations. The foregoing
notwithstanding, the Borrowers and Baldwin will not, and will not permit any
Borrower Subsidiary, any Sector Subsidiary or any Guarantor, to create, incur,
assume, suffer to exist, or
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otherwise become or remain directly or indirectly liable with respect to any
Indebtedness that (i) is or would be senior to the Obligations, or (ii) to the
extent that it constitutes or would constitute Indebtedness for Money Borrowed
of Baldwin, any Borrower, any Borrower Subsidiary or any Sector Subsidiary
(other than Existing Capitalized Leases and other than the Indebtedness under
the Senior Note Documents), ranks or would rank equal to or pari passus with
the Obligations.
(d) Indebtedness Affecting Unavailable Commitment Amount.
The foregoing notwithstanding, the Borrowers and Baldwin will not, and will not
permit any Borrower Subsidiary, Sector Subsidiary or Subsidiary of a Sector
Subsidiary to, create, incur, assume, suffer to exist, or otherwise become
directly or indirectly liable with respect to any Indebtedness that would,
after giving effect to such Indebtedness in calculating the Unavailable
Commitment Amount pursuant to Section 2.14 hereof, reduce the Total Commitment
to an amount less than the then aggregate principal amount of outstanding
Loans.
8.5. COMPLIANCE WITH ERISA. It will not and will not permit any
Borrower Subsidiary or Baldwin Subsidiary or any Related person, if it will
have a Material Adverse Effect on Baldwin, any Significant Subsidiary or the
Consolidated Group to:
(a) engage in any transaction in connection with which
Baldwin or any Borrower or Related Person could be subject to either a
civil penalty assessed pursuant to section 502(i) of ERISA or a tax
imposed by section 4975 of the Code, terminate or withdraw from any
Plan in a manner, or take any other action with respect to any such
Plan (including, without limitation, a substantial cessation of
business operations or an amendment of a Plan within the meaning of
section 4041(e) or ERISA), which could result in any liability of
Baldwin or any Borrower or any Related Person to the PBGC, to a Plan,
to a Plan participant, to the Department of Labor or to a trustee
appointed under section 4042(b) or (c) or ERISA), incur any liability
to the PBGC or a Plan on account of a withdrawal from or a termination
of a Plan under section 4063 or 4064 of ERISA, incur any liability for
post-retirement benefits under any and all welfare benefit plans (as
defined in section 3(1) of ERISA), fail to make full payment when due
of all amounts which, under the provisions of any Plan or applicable
law, Baldwin, any Borrower or any Related Person is required to pay as
contributions thereto, or permit to exist any accumulated funding
deficiency, whether or not waive, with respect to any Plan (other than
a Multiemployer Plan);
(b) at any time permit the termination of any Single
Employer Plan intended to be qualified under Section 401(a)
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and Section 501(a) of the Code unless such Plan is funded so that the
value of all benefit liabilities upon the termination date does not
exceed the then current value of all assets in such Plan;
(c) if Baldwin, any Borrower or any Related Person
becomes obligated under a Multiemployer Plan, permit the aggregate
complete or partial withdrawal liability under Title IV of ERISA with
respect to Multiemployer Plans incurred by Baldwin, any Borrower or
any of their Subsidiaries or any Related Person to exceed any amount
the payment of which would have a Material Adverse Effect on Baldwin,
any Significant Subsidiary or the Consolidated Group.
For the purposes of subparagraph (iii) of this Section 8.5, the amount of the
withdrawal liability of Baldwin, any Borrower, or any Related Person at any
date shall be the aggregate present value of the amount claimed to have been
incurred less any portion thereof as to which Baldwin and each Borrower
reasonably believes, after appropriate consideration of possible adjustments
arising under subtitle E of Title IV of ERISA, neither Baldwin, nor any
Borrower, nor any of their Subsidiaries nor any Related Person will have any
liability, provided that Baldwin and the Borrowers shall obtain promptly
written advice from independent actuarial consultants supporting such
determination. Each Borrower and Baldwin will (x) once in each calendar year,
beginning in 1993, request and obtain a current statement of withdrawal
liability from each MultiEmployer Plan to which Baldwin, any Borrower or any
Related Person is or has been obligated to contribute and (y) transmit a copy
of such statement to the Agent and each Lender within 15 days after Baldwin or
such Borrower receives the same.
As used in this Section8.5, the term "accumulated funding deficiency"
has the meaning specified in section 302 of ERISA and section 412 of the Code,
the terms "present value" and "current value" have the meanings specified in
section 3 of ERISA, the term "benefit liabilities" has the meaning specified in
section 4001(a)(16) of ERISA and the term "amount of unfunded liabilities" has
the meaning specified in section 4001(18) of ERISA.
8.6. TAX SHARING. It will not, and will not permit any Borrower
Subsidiary or Baldwin Subsidiary to, consent to or permit the filing of or be a
party to any consolidated income tax return with any Person (other than a
consolidated return of Baldwin and its Subsidiaries).
8.7. FISCAL YEAR. It will not, and will not permit any Borrower
Subsidiary or Baldwin Subsidiary to, change its Fiscal
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Year without the prior written consent of the Agent (which consent will not be
unreasonably withheld), provided that, notwithstanding the foregoing, the
fiscal year of any Baldwin Subsidiary organized under the laws of the Kingdom
of Sweden may be changed to end on May 31 of each year and the last days of its
first three fiscal quarters to end on the last day of the immediately preceding
August, November and February.
8.8. AMENDMENTS TO AGREEMENTS. It will not, and will not permit any
Borrower Subsidiary or Baldwin Subsidiary to, to amend, modify or supplement
(i) any of the Senior Note Documents, (ii) any other agreement if such
amendment, modification or supplement would have a Material Adverse Effect on
Baldwin, any Significant Subsidiary or the Consolidated Group.
8.9. OWNERSHIP OF BORROWER AND GUARANTOR STOCK. The foregoing
notwithstanding, none of the capital stock of any Borrower or any Guarantor
shall be owned by any Person other than a Borrower or Guarantor, except
pursuant to a foreclosure on or sale of such stock pursuant to a Pledge
Agreement or other pledge agreement expressly contemplated by a Loan Document.
ARTICLE IX
EVENTS OF DEFAULT AND ACCELERATION
9.1. EVENTS OF DEFAULT. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body), that is to say:
(a) if default shall be made in the due and punctual
payment of the principal of any Loan when and as the same shall be due and
payable whether at maturity, by acceleration or otherwise; or
(b) if default shall be made in the due and punctual
payment of any amount of interest on any Loan or of any fees payable under
this Agreement or amounts requested by the Agent pursuant to Section 3.4 hereof
on the date on which the same shall be due and payable and such default shall
continue for more than five days; or
(c) if default shall be made in the performance or
observance of any covenant set forth in Section 7.1(f), 7.14, 7.18, 8.1, 8.2,
8.3(d) or 8.3(e) hereof; or
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(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant or agreement contained in
this Agreement, the Notes, the Guaranties, the Pledge Agreements, or any other
Loan Document (other than as described in clauses (a), (b) or (c) above) and
such default shall continue for 30 or more days after the earlier of: (i) any
Borrower's knowledge of such default and (ii) receipt by any Borrower of notice
of such default from the Agent; or
(e) (i) if an event of default shall occur under any of
the Senior Note Documents; or (ii) if a default shall occur, which is not
waived, (A) in the payment of any principal, interest or premium with respect
to any Indebtedness (other than the Loans) of Baldwin, any Guarantor, any
Borrower or any Baldwin Subsidiary or (B) in the performance or observance of
any covenant contained in any agreement or instrument under or pursuant to
which any such Indebtedness may have been issued, created, assumed, guaranteed
or secured by Baldwin, any Guarantor, any Borrower or any Baldwin Subsidiary,
and such default shall continue for more than the period of grace, if any,
therein specified, and such default shall then permit the holder of any such
Indebtedness to accelerate the maturity thereof, provided that, in the case of
this subparagraph (ii), the aggregate unpaid principal amount of all such
Indebtedness as to which such default shall occur and be continuing exceeds at
any time $1,000,000; or
(f) if any representation or warranty of Baldwin, any
Borrower, any Guarantor or any other Baldwin Subsidiary contained herein or in
other Loan Document shall be false in any material respect on the date as of
which made or given; or
(g) (1) if Baldwin, any Guarantor, any Borrower or any
Baldwin Subsidiary shall be unable to pay its debts generally as they become
due; (2) file a petition to take advantage of any insolvency statute; (3) make
an assignment for the benefit of its creditors; (4) commence a proceeding for
the appointment of a receiver, trustee, liquidator or conservator of itself or
of the whole or substantially all of its property; (5) file a petition or
answer seeking reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the United
States of America or any state or similar law of any other country; or
(h) (1) if a court of competent jurisdiction shall enter
an order, judgment or decree appointing a custodian, receiver, trustee, or
conservator of Baldwin, any Guarantor, any Borrower or any Baldwin Subsidiary
or of the whole or substantially all of its properties, or a liquidation of
Baldwin, any Guarantor, any Borrower or any Significant Subsidiary or of the
whole or substantially all of its properties, or approve a
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petition filed against Baldwin, any Guarantor, any Borrower or any Baldwin
Subsidiary seeking reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the United
States of America or any state or similar law of any other country, or if,
under the provisions of any other law for the relief or aid of debtors, a court
of competent jurisdiction shall assume custody or control of Baldwin, any
Guarantor, any Borrower or any Baldwin Subsidiary or of the whole or
substantially all of its properties and such order, judgment, decree, approval
or assumption remains unstayed or undismissed for a period of thirty (30)
consecutive days; or (2) if there is commenced against Baldwin, any Guarantor,
any Borrower or any Baldwin Subsidiary any proceeding or petition seeking
reorganization, arrangement or similar relief under the federal bankruptcy laws
or any other applicable law or statute of the United States of America or any
state which proceeding or petition remains unstayed and undismissed for a
period of sixty (60) consecutive days; or (3) if Baldwin, any Guarantor, any
Borrower or any Baldwin Subsidiary takes any action to indicate its consent to
or approval of any such proceeding or petition; or
(i) if (1) any one or more judgments where the amount not
covered by insurance (or the amount as to which the insurer denies liability)
is in excess of $1,000,000 in aggregate amount is rendered against Baldwin, any
Guarantor, any Borrower or any Baldwin Subsidiary, or (2) there is any
attachment, injunction or execution against any of Baldwin, any Guarantor, any
Borrower's or any Baldwin Subsidiary's properties for any aggregate amount in
excess of $1,000,000; and in each event there shall be any period of thirty
(30) consecutive days during which a stay of enforcement of such judgment,
attachment, injunction or execution, by reason of a pending appeal or
otherwise, shall not be in effect unless such judgment, attachment, injunction
or execution shall have been vacated, satisfied or dismissed or bonded pending
appeal;
(j) if (1) Baldwin, any Guarantor, any Borrower or any
Baldwin Subsidiary shall engage in any prohibited transaction (as described in
Section 6.7(a) hereof) involving any employee pension benefit plan of Baldwin,
any Guarantor, any Borrower or any Baldwin Subsidiary, (2) any accumulated
funding deficiency (as referred to in Section 6.7(c) hereof), whether or not
waived, shall exist with respect to any Single Employer Plan, (3) a reportable
event (as referred to in Section 7.1(g)(i) hereof) shall occur with respect to,
or proceedings shall commence to have a trustee appointed, or a trustee shall
be appointed to administer or to terminate, any Single Employer Plan, which
reportable event or institution or proceedings is likely to result in the
termination of such Single Employer Plan for purposes of Title IV of ERISA, and
in the case of such a reportable event, the continuance of such reportable
event shall
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be unremedied for thirty (30) days after notice of such reportable event is
given, as the case may be, (4) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, or (5) Baldwin, any Guarantor, any Borrower or
any Baldwin Subsidiary shall withdraw from a Multi-employer Plan for purposes
of Title IV of ERISA, and, as a result of any such withdrawal, Baldwin, any
Guarantor, any Borrower or any Baldwin Subsidiary shall incur withdrawal
liability to such Multi-employer Plan; and in each case in clauses (1) through
(5) of this Section 10.1(k), such event or condition, together with all other
such events or conditions, if any, is reasonably likely to result in a Material
Adverse Effect; or
(k) if any Person, or group of related Persons or group
of Persons acting in concert (other than the Persons specified by name and
title in Schedule 9.1(k)), that does not hold (as of the Closing Date) at least
50% of the outstanding voting control (as measured by the total number of votes
able to be cast by all common stock holders) (the "Voting Control") of Baldwin,
acquires more than 49% of the Voting Control of Baldwin, unless, at the option
of the Agent and the Lenders (which option may be exercised in their sole
discretion within thirty (30) days after the Agent and each Lender receives
written notice from an Authorized Officer of such change in Voting Control,
such notice to expressly identify the Agent's and Lenders' rights under this
Section 9.1(k)), (i) the Notes and all Obligations are prepaid in full and the
Revolving Credit Facility is terminated, or (ii) the Agent and the Lenders
expressly consent to such change in the Voting Control of Baldwin;
then, and in any such event and at any time thereafter, if such Event of
Default or any other Event of Default shall then be continuing, (A) the Agent,
with the consent of the Required Lenders, may, and at the direction of the
Required Lenders shall, declare any obligation of the Lenders to make further
Loans terminated, whereupon the obligation of each Lender to make further Loans
hereunder shall terminate immediately; and (B) the Agent shall at the direction
of the Required Lenders, at their option, declare by notice to any Borrower any
or all of the Obligations to be immediately due and payable, and the same,
including all interest accrued thereon and all other Obligations of any
Borrower to the Lenders, shall forthwith become immediately due and payable
without presentment, demand, protest, further notice or other formality of any
kind, all of which are hereby expressly waived, anything contained herein or in
any instrument evidencing the Obligations to the contrary notwithstanding;
provided, however, that notwithstanding the above, if there shall occur an
Event of Default under clause (g)(2), (3), (4) or (5) or (h)(1) or (2) above,
then the obligation of the Lenders described in clause (A) above shall
automatically terminate and any and all of the Obligations shall be immediately
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due and payable without the necessity of any action by the Agent or the
Required Lenders or notice by the Agent or the Lenders.
9.2. AGENT TO ACT. In case any one or more Events of Default shall
occur and be continuing, the Agent may, and at the direction of the Required
Lenders shall, proceed to protect and enforce their rights or remedies either
by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or
in any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.
9.3. CUMULATIVE RIGHTS. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or
remedies contained herein or in any other Loan Document, and every such right
or remedy shall be cumulative and shall be in addition to every other such
right or remedy contained herein and therein or now or hereafter existing at
law or in equity or by statute, or otherwise.
9.4. NO WAIVER. No course of dealing between any Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies hereunder shall operate as a waiver
of any rights or remedies hereunder and no single or partial exercise of any
rights or remedies hereunder shall operate as a waiver or preclude the exercise
of any other rights or remedies hereunder or of the same right or remedy on a
future occasion.
9.5. ALLOCATION OF PROCEEDS. If an Event of Default has occurred and
is continuing, and the maturity of the Notes has been accelerated pursuant to
Article IX hereof, all payments received by the Agent hereunder in respect of
any principal of or interest on the Obligations or any other amounts payable by
any Borrower hereunder shall be applied by the Agent in the following order:
(a) amounts due to the Agent and the Lenders, or any one
of them, pursuant to Sections 2.12, 3.1, 3.4, 7.15 and 11.5 hereof;
(b) amounts due to the Agent pursuant to Section 10.11
hereof;
(c) payments of interest, to be applied in accordance
with Section 2.8 hereof;
(d) payments of principal, to be applied in accordance
with Section 2.8 hereof; and
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(e) payments of all other amounts due under this
Agreement, if any, to be applied to the Lenders to whom such amounts are due,
pro rata in the proportion that the amount due to each Lender bears to the
amount due to all Lenders.
ARTICLE X
THE AGENT
10.1. APPOINTMENT. Each Lender (including NationsBank in its capacity
as Lender) hereby irrevocably designates and appoints NationsBank as the Agent
of the Lenders under this Agreement, and each of the Lenders hereby irrevocably
authorizes NationsBank as the Agent for such Lender, to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers as are expressly delegated to the Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. The Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any of the
Lenders, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against the Agent.
10.2. ATTORNEYS-IN-FACT. The Agent may execute any of its duties
under this Agreement by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible to the Lenders for the gross negligence or
willful misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
10.3. LIMITATION ON LIABILITY. Neither the Agent nor any of its
officers, directors, employees, agents or attorneys-in-fact shall be liable to
the Lenders for any action lawfully taken or omitted to be taken by it or them
under or in connection with this Agreement except for its or their own gross
negligence or willful misconduct. Neither the Agent nor any of its affiliates
shall be responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by Baldwin, any Borrower, any
Guarantor or any Baldwin Subsidiary, or any officer thereof contained in this
Agreement or in any of the other Loan Documents, or in any certificate, report,
statement or other document referred to or provided for in or received by the
Agent under or in connection with this Agreement or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any of the other Loan Documents, or for any failure of Baldwin, any Borrower,
any Guarantor or any Baldwin Subsidiary to perform its obligations thereunder.
The Agent shall not be under any obligation to any of the Lenders to ascertain
or to inquire as to
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the observance or performance of any of the terms, covenants or conditions of
this Agreement or any of the other Loan Documents on the part of Baldwin, any
Borrower, or any Guarantor or to inspect the properties, books or records of
Baldwin, any Borrower, any Guarantor or any Baldwin Subsidiary.
10.4. RELIANCE. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any Note, writing, resolution, notice, consent
certificate, affidavit, letter, cablegram, telegram, telecopy or telex message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to any Borrower), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes unless an Assignment and Acceptance shall
have been filed with and accepted by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement unless
it shall first receive advice or concurrence of the Lenders or the Required
Lenders as provided in this Agreement or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all present and future
holders of the Notes.
10.5. NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrowers
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." In the event that the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Lenders and the Borrowers. The Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the
Required Lenders; provided that, unless and until the Agent shall have received
such directions, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Event of
Default as it shall deem advisable in the best interests of the Lenders.
10.6. NO REPRESENTATIONS. Each Lender expressly acknowledges that
neither the Agent nor any of its affiliates has made any representations or
warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of
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Baldwin, any Borrower, any Guarantor or any Baldwin Subsidiary, shall be deemed
to constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the financial condition, creditworthiness, affairs, status and nature of
Baldwin, the Borrowers, any Guarantor and the Baldwin Subsidiaries and made its
own decision to enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and to make such investigation
as it deems necessary to inform itself as to the status and affairs, financial
or otherwise, of Baldwin, any Borrower, any Guarantor and any Baldwin
Subsidiary. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Agent hereunder, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of Baldwin,
any Borrower, any Guarantor or any Baldwin Subsidiary which may come into the
possession of the Agent or any of its affiliates.
10.7. INDEMNIFICATION. The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Borrowers and without
limiting any obligations of the Borrowers so to do), ratably according to the
respective principal amount of the Loans held by them (or, if no Loans are
outstanding, ratably in accordance with their respective Applicable Commitment
Percentages as then in effect) from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may at any
time (including without limitation at any time following the payment of the
Notes) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or any other document contemplated
by or referred to herein or the transactions contemplated hereby or any action
taken or omitted by the Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct. The agreements in this Section 10.7 shall
survive the payment of the Obligations and the termination of this Agreement.
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10.8. LENDER. NationsBank and its affiliates may make loans to,
accept deposits from and generally engage in any kind of business with Baldwin,
the Borrowers, the Guarantors and the Baldwin Subsidiaries as though it were
not the Agent hereunder. With respect to its Loans made or renewed by it and
any Note issued to it, NationsBank shall have the same rights and powers under
this Agreement as any Lender and may exercise the same as though it were not
the Agent, and the terms "Lender" and "Lenders" shall, unless the context
otherwise indicates, include NationsBank in its individual capacity.
10.9. RESIGNATION. If the Agent shall resign as Agent under this
Agreement, then the Required Lenders may appoint a successor Agent for the
Lenders, which shall be a commercial bank organized under the laws of the
United States or any state thereof, having a combined surplus and capital of
not less than $500,000,000, which is acceptable to the Borrowers and as to
which the Borrowers will not unreasonably withhold their approval, whereupon
such successor Agent shall succeed to the rights, powers and duties of the
former Agent and the obligations of the former Agent shall be terminated and
canceled, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement; provided, however, if the
Required Lenders cannot agree as to a successor Agent within ninety (90) days
after such resignation, the Agent shall appoint a successor Agent meeting the
qualifications set forth above, which is acceptable to the Borrowers and as to
which the Borrowers will not unreasonably withhold their approval and the
parties hereto agree to execute whatever documents are necessary to effect such
action under this Agreement or any other document executed pursuant to this
Agreement; provided, however, in such event, all provisions of this Agreement
and the Loan Documents shall remain in full force and effect. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
X shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
10.10. SHARING OF PAYMENTS, ETC. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, set-off, counterclaim
or otherwise, obtain payment with respect to the Obligations (other than any
payment pursuant to Section 2.14 or Article III) which results in its receiving
more than its pro rata share of the aggregate payments with respect to all of
the Obligations (other than any payment pursuant to Section 2.14 or Article
III), then (A) such Lender shall be deemed to have simultaneously purchased
from the other Lenders a share in their Obligations so that the amount of the
Obligations held by each of the Lenders shall be pro rata and (B) such other
adjustments shall be made from time to time as shall be equitable to insure
that the Lenders share such payments ratably; provided, however,
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that for purposes of this Section 10.10 the term "pro rata" shall be determined
with respect to both the Revolving Loan Commitment of each Lender and to the
Total Commitments after subtraction in each case of amounts, if any, by which
any such Lender has not funded its share of the outstanding Loans. If all or
any portion of any such excess payment is thereafter recovered from the Lender
which received the same, the purchase provided in this Section 10.10 shall be
rescinded to the extent of such recovery, without interest. The Borrowers
expressly consent to the foregoing arrangements and agree that each Lender so
purchasing a portion of the other Lenders' Obligations may exercise all rights
of payment (including, without limitation, all rights of set-off, banker's lien
or counterclaim) with respect to such portion as fully as if such Lender were
the direct holder of such portion.
10.11. FEES. Each Borrower agrees, jointly and severally, to pay to
the Agent, for its individual account, in the event a financial institution
other than NationsBank becomes a Lender hereunder at any time, an Agent's fee
in such amount as shall be agreed to from time to time by the Borrowers and the
Agent, such fee to be paid in quarterly installments in arrears on each July
31, October 31, January 31 and April 30 with respect to the period commencing
with the Closing Date and continuing until and including the Revolving Credit
Termination Date.
ARTICLE XI
MISCELLANEOUS
11.1. ASSIGNMENTS AND PARTICIPATIONS.
(a) At any time after the Closing Date each Lender may,
with the prior consent of the Agent and the Borrowers (whose consent shall not
be unreasonably withheld), assign to one or more banks or financial
institutions all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of the Note payable
to its order); provided, that (1) each such assignment shall be of a constant,
and not a varying, percentage of all of the assigning Lender's rights and
obligations under this Agreement, (2) the assigning Lender shall execute an
Assignment and Acceptance and the Borrowers hereby agree to execute replacement
Notes to give effect to the assignment if it shall have consented to such
assignment, (3) the minimum Revolving Loan Commitment which shall be assigned
is $5,000,000, (4) after giving effect to such assignment the assignor shall
retain a Revolving Loan Commitment of not less than $5,000,000, (5) such
assignee shall have an office located in the United States and (6) such
assigning Lender, such assignee, the Agent and the Borrowers shall have
executed and delivered an Assignment and Acceptance. Upon such execution,
delivery, approval and acceptance, from and after the
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effective date specified in each Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder or under such Note have been assigned or negotiated to it
pursuant to such Assignment and Acceptance, have the rights and obligations of
a Lender hereunder as fully as if such assignee had been named as a Lender in
this Agreement and a holder of such Note and (y) the assignor thereunder shall,
to the extent that rights and obligations hereunder or under such Note have
been assigned or negotiated by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this
Agreement. No assignee shall have the right to further assign its rights and
obligations pursuant to this Section 11.1. Any Lender who makes an assignment
shall pay to the Agent a one-time administrative fee of $5,000.00 which fee
shall not be reimbursed by the Borrowers.
(b) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (1) the
assignment made under such Assignment and Acceptance is made under such
Assignment and Acceptance without recourse to the assigning Lender; (2) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Baldwin, any
Borrower, any Guarantor or any Baldwin Subsidiary or the performance or
observance by Baldwin, any Borrower, any Guarantor or any Baldwin Subsidiary of
any of its obligations under any Loan Document or any other instrument or
document furnished pursuant hereto; (3) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements delivered pursuant to Section 6.2 hereof and such other Loan
Documents and other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment and
Acceptance; (4) such assignee will, independently and without reliance upon the
Agent, such assigning Lender or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement; (5)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement, the Note, any
Letter of Credit and the other Loan Documents as are delegated to the Agent by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto; and (6) such assignee agrees that it assumes, and will be
bound by and will perform in accordance with their terms all of the obligations
which by the terms of this Agreement are required to be performed by it as a
Lender and a holder of such Note.
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(c) The Agent shall maintain at its address referred to
herein a copy of each Assignment and Acceptance delivered to and accepted by
it.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender, the Agent shall give prompt notice thereof to
the Borrowers.
(e) No assignee Lender shall be entitled to receive any
greater payment under Article III than the assigning Lender would have been
entitled to receive in respect of the rights hereunder transferred to the
assignee Lender. The consent of the Borrowers to such transfer shall not
affect the preceding sentence.
(f) If, pursuant to this Section 11.1, any interest in
this Agreement or any Note is transferred to any assignee Lender which is
organized under the laws of any jurisdiction other than the United States or
any state thereof, the assigning Lender shall cause such assignee Lender,
concurrently with the effectiveness of such transfer, (1) to represent to the
assigning Lender (for the benefit of the assigning Lender, the Agent and the
Borrowers) that under applicable law and treaties no taxes will be required to
be withheld by the Agent, the Borrowers or the assigning Lender with respect to
any payments to be made to such assignee Lender in respect of the Loans, (2) to
furnish to the assigning Lender, the Agent and the Borrowers (x) either United
States Internal Revenue Service Form 4224 or United States Internal Revenue
Service Form 1001 or successor applicable form or other manner of certification
wherein such assignee Lender claims entitlement to complete exemption from
United States Federal withholding tax on all payments hereunder and (y) either
United States Internal Revenue Service Form W-8 or United States Internal
Revenue Service Form W-9 wherein such assignee Lender claims entitlement to
exemptions from United States information reporting and back up withholding and
(3) to agree (for the benefit of the assigning Lender, the Agent and the
Borrowers) to provide the assigning Lender, the Agent and the Borrowers further
or successor forms in accordance with Section 3.1(d), and to comply from time
to time with all applicable United States laws and regulations with regard to
such withholding tax exemption.
(g) Nothing herein shall prohibit any Lender from
pledging or assigning any Note to any Federal Reserve Bank in accordance with
applicable law.
(h) Each Lender may sell participations to one or more
banks or other entities as to all or a portion of its rights and obligations
under this Agreement; provided, that (1) such Lender's obligations under this
Agreement shall remain unchanged, (2) such Lender shall remain solely
responsible to the other
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parties hereto for the performance of such obligations and shall be solely
responsible for any withholding tax or other tax consequences caused by such
participation, (3) such Lender shall remain the holder of any Note issued to it
for the purpose of this Agreement, (4) such participations shall be in a
minimum amount of $1,000,000 and shall include an allocable portion of such
Lender's Participation, and (5) the Borrowers, the Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and with regard to
any and all payments to be made under this Agreement; provided, that the
participation agreement between a Lender and its participants may provide that
such Lender will obtain the approval of such participant prior to such Lender's
agreeing to any amendment or waiver of any provisions of this Agreement which
would (A) extend the maturity of the Note, (B) reduce the interest rate
hereunder, (C) increase the Revolving Loan Commitment of the Lender granting
the participation or (D) release all or any substantial part of the Collateral
other than in accordance with the terms of the Loan Documents, and (6) the sale
of any such participations which require any Borrower to file a registration
statement with the United States Securities and Exchange Commission or under
the securities regulations or laws of any state shall not be permitted.
11.2. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective on the day on which delivered to
such party (against receipt therefor) at the address set forth below or such
other address as such party shall specify to the other parties in writing (or,
in the case of telephonic notice or notice by telecopy (where the receipt of
such message is verified by return) expressly provided for hereunder, when
received at such telephone or telecopy number as may from time to time be
specified in written notice to the other parties hereto or otherwise received),
or if sent prepaid by certified or registered mail return receipt requested on
the third Business Day after the day on which mailed, or if sent prepaid by a
national overnight courier service, on the first Business Day after the day on
which delivered to such service against receipt therefor, addressed to such
party at said address:
(a) If to BAM:
Baldwin Americas Corporation
c/o Baldwin Technology Company, Inc.
65 Rowayton Avenue
Rowayton, CT 06853
Attention: William J. Lauricella
Telephone: 203-838-7470
Telefacsimile: 203-852-7040
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(b) if to BTL:
Baldwin Technology Limited
c/o Baldwin Technology Company, Inc.
65 Rowayton Avenue
Rowayton, CT 06853
Attention: William J. Lauricella
Telephone: 203-838-7470
Telefacsimile: 203-852-7040
(c) If to Baldwin:
Baldwin Technology Company, Inc.
65 Rowayton Avenue
Rowayton, CT 06853
Attention: William J. Lauricella
Telephone: 203-838-7470
Telefacsimile: 203-852-7040
(d) if to NationsBank or the Agent:
NationsBank of North Carolina,
National Association
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255-0065
Attention: Michelle J. Kirby
Telephone: 704-386-8389
Telefacsimile: 704-386-8694
with a copy to:
NationsBank of North Carolina,
National Association
Corporate Banking
767 Fifth Avenue
5th Floor
New York, New York 10153-0083
Attention: Philip Cope
Telephone: 212-644-9333
Telefacsimile: 212-593-1083
(e) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature of each Assignment and
Acceptance.
11.3. SETOFF. Each Borrower agrees that all of the Borrower's
deposits or deposit accounts, of any kind, or any of the Borrower's interest in
any deposits or deposit accounts
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thereof, now or hereafter pledged, mortgaged, transferred or assigned to the
Agent or a Lender or otherwise in the possession or control of the Agent or
such Lender (other than any of the foregoing held in trust) for any purpose for
the account or benefit of the Borrower and including any balance of any deposit
account or of any credit of the Borrower with the Agent or such Lender, whether
now existing or hereafter established, shall be subject to the right of setoff
of the Agent and each Lender at any time or times during the continuance of an
Event of Default with or, to the extent permitted by applicable law, without
prior notice, to apply such deposits or any part thereof to such of the
Obligations of the Borrower to the Agent or such Lender then past due and in
such amounts as they may elect, and whether or not the Collateral or the
responsibility of other Persons primarily, secondarily or otherwise liable may
be deemed adequate. For the purposes of this paragraph, all remittances and
property shall be deemed to be in the possession of the Agent or such Lender as
soon as the same may be put in transit to it by mail or carrier or by other
bailee. All Lenders receiving any proceeds hereunder or applied to any
Obligations are subject to Section 10.10 hereof.
11.4. SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the execution and delivery to the Lenders of this Agreement, the Notes and the
Loan Documents and shall continue in full force and effect until all principal
and interest on the Loans are paid in full and all fees, charges and other
expenses then due and owing are paid in full and no Lender has any Revolving
Loan Commitment hereunder. Whenever in this Agreement, any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and permitted assigns of such party and all covenants, provisions and
agreements by or on behalf of any Borrower which are contained in this
Agreement and the Notes shall inure to the benefit of the successors and
permitted assigns of the Lenders or any of them.
11.5. EXPENSES. Each Borrower agrees, jointly and severally, (a) to
pay or reimburse the Agent for all its out-of-pocket costs and expenses
incurred in connection with the preparation, negotiation and execution of, and
any amendment, supplement or modification to, this Agreement or any of the
other Loan Documents, including, without limitation, the reasonable fees and
disbursements of counsel to the Agent, (b) to pay or reimburse the Agent and
the Lenders for all their out-of-pocket costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement (including without limitation any costs and expenses occurred in
connection with any workout, enforcement or bankruptcy proceeding), and
including without limitation, the reasonable fees and disbursements of counsel
to the Agent, (c) to pay, indemnify and
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hold the Agent and the Lenders harmless from any and all recording and filing
fees and any and all liabilities with respect to, or resulting from any failure
of any Borrower to pay or delay by any Borrower in paying, documentary, stamp,
excise and other similar taxes, if any, which may be payable or determined to
be payable in connection with the execution and delivery of, or consummation of
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, (d) to pay, indemnify, and hold the Agent and
the Lenders harmless from and against any and all other out-of-pocket
liabilities, costs, expenses or disbursements of any kind or nature whatsoever
arising in connection with any claim or litigation by any Person (other than a
party hereto) resulting from the execution, delivery, enforcement, performance
and administration of this Agreement or the transactions contemplated hereby or
in any respect relating to any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of any Loan (all the
foregoing, collectively, the "indemnified liabilities"); provided, however,
that the Borrowers shall have no obligation hereunder with respect to
indemnified liabilities arising from the willful misconduct or gross negligence
of any Lender or the Agent. The agreements in this Section 11.5 shall survive
repayment of the Notes and all other Obligations hereunder.
11.6. AMENDMENTS. No amendment, modification or waiver of any
provision of this Agreement or any of the Loan Documents and no consent by the
Lenders to any departure therefrom by any Borrower shall be effective unless
such amendment, modification or waiver shall be in writing and signed by the
Agent, but only upon having received the written consent of the Required
Lenders, and (with respect to amendments, modifications and waivers) by the
Borrowers, and the same shall then be effective only for the period and on the
conditions and for the specific instances and purposes specified in such
writing; provided, however, that, no such amendment, modification or waiver
(a) which changes, extends or waives any provision of
Section 10.10 or this Section 11.6, the amount of or the due date of any
scheduled installment of or the rate of interest payable on any Obligation,
changes the definition of Required Lenders, which increases or extends the
Revolving Loan Commitment of any Lender or which waives any Event of Default
under Section 9.1(h) or (i) shall be effective unless in writing and signed by
each of the Lenders affected thereby; or
(b) which affects the rights, privileges, immunities or
indemnities of the Agent, shall be effective unless in writing and signed by
the Agent.
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No notice to or demand on any Borrower in any case shall entitle any Borrower
to any other or further notice or demand in similar or other circumstances,
except as otherwise expressly provided herein.
11.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart. All
signatures need not be on one counterpart.
11.8. TERMINATION. The termination of this Agreement shall not affect
any rights of any Borrower, the Lenders or the Agent or any obligation of any
Borrower, the Lenders or the Agent, arising prior to the effective date of such
termination, and the Obligations arising prior to termination have been
irrevocably Fully Satisfied. The rights granted to the Agent for the benefit
of the Lenders hereunder and under the other Loan Documents shall continue in
full force and effect, notwithstanding the termination of this Agreement, until
all of the Obligations have been Fully Satisfied after the termination hereof
or the Borrowers have furnished the Lenders and the Agent with an
indemnification satisfactory to the Agent and each Lender with respect thereto.
All representations, warranties, covenants, waivers and agreements contained
herein shall survive termination hereof until the Obligations have been Fully
Satisfied unless otherwise provided herein. "Fully Satisfied" means, with
respect to the Obligations as of any date, that, on or before such date, (a)
all amounts then due and payable with respect to the Loan Documents on or
before such date shall have been paid in full in cash, (b) all principal,
interest, fees, expenses and other amounts then due and payable by any Borrower
to the Agent and the Lenders shall have been paid in full in cash, and (c) the
Revolving Loan Commitments of each Lender shall have expired or been
terminated. Notwithstanding the foregoing, if after receipt of any payment of
all or any part of the Obligations, any Lender is for any reason compelled to
surrender such payment to any Person because such payment is determined to be
void or voidable as a preference, impermissible setoff, a diversion of trust
funds or for any other reason, this Agreement shall continue in full force and
each Borrower, jointly and severally, shall be liable to, and shall indemnify
and hold such Lender harmless for, the amount of such payment surrendered until
such Lender shall have been finally and irrevocably paid in full. The
provisions of the foregoing sentence shall be and remain effective
notwithstanding any contrary action which may have been taken by the Lenders in
reliance upon such payment, and any such contrary action so taken shall be
without prejudice to the Lenders' rights under this Agreement and shall be
deemed to have been conditioned upon such payment having become final and
irrevocable.
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11.9. GOVERNING LAW. ALL DOCUMENTS EXECUTED PURSUANT TO THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING, WITHOUT LIMITATION, THIS AGREEMENT
AND EACH OF THE LOAN DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS MADE UNDER, AND
FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS AND
JUDICIAL DECISIONS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
11.10. REPRESENTATION AND WARRANTY OF THE LENDERS. Each Lender
hereby represents, and upon the request of a Borrower, each assignee and
participant pursuant to Section 11.1 will represent, that no part of any funds
used by such Lender to fund any Loan or other extension of credit to any
Borrower made by it constitutes or will constitute assets of any Plan.
11.11. AGREEMENT CONTROLS. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any term of this
Agreement, the terms and provisions of this Agreement shall control.
11.12. CONSENT TO JURISDICTION; OTHER WAIVERS. (A) IN THE EVENT THAT
ANY ACTION, SUIT OR OTHER PROCEEDING IS BROUGHT AGAINST ANY BORROWER BY OR ON
BEHALF OF THE AGENT OR ANY OF THE LENDERS TO ENFORCE THE OBSERVANCE OR
PERFORMANCE OF ANY OF THE PROVISIONS OF THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, INCLUDING WITHOUT LIMITATION THE COLLECTION OF ANY AMOUNTS OWING
HEREUNDER, EACH BORROWER HEREBY IRREVOCABLY (I) CONSENTS TO THE EXERCISE OF
JURISDICTION OVER SUCH BORROWER AND ITS PROPERTY BY THE UNITED STATES DISTRICT
COURT, WESTERN DISTRICT OF NORTH CAROLINA, AND BY THE NORTH CAROLINA GENERAL
COURT OF JUSTICE, SUPERIOR COURT DIVISION, TWENTY-SIXTH JUDICIAL DISTRICT, AND
(II) WAIVES ANY OBJECTION SUCH BORROWER MIGHT NOW OR HEREAFTER HAVE OR ASSERT
TO THE VENUE OF ANY SUCH PROCEEDING IN ANY COURT DESCRIBED IN CLAUSE (I) ABOVE.
(B) IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN
DOCUMENTS OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT,
OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF,
OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING BETWEEN ANY BORROWER AND THE
AGENT OR ANY OF THE LENDERS, EACH BORROWER, THE AGENT AND THE LENDERS HEREBY
WAIVE TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION.
(C) EXCEPT AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO
IN SUBSECTION (B) OF THIS SECTION 11.12 ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY OTHER DAMAGES THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.
94
<PAGE> 103
(D) EACH PARTY HERETO (I) CERTIFIES THAT NEITHER ANY
REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR ANY OF THE LENDERS HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR ANY LENDER WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (II)
ACKNOWLEDGES THAT THE AGENT AND EACH OF THE LENDERS HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS HEREIN.
[SIGNATURES ON FOLLOWING PAGE]
95
<PAGE> 104
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
BALDWIN AMERICAS CORPORATION
By:_______________________________
Name:_____________________________
Title: __________________________
BALDWIN TECHNOLOGY LIMITED
By:_______________________________
Name:_____________________________
Title: __________________________
BALDWIN TECHNOLOGY COMPANY, INC.
By:_______________________________
Name:_____________________________
Title: __________________________
NATIONSBANK OF NORTH CAROLINA,
NATIONAL ASSOCIATION,
as Agent for the Lenders
By:_______________________________
Name:_____________________________
Title: __________________________
SIGNATURE PAGE 1 OF 2
96
<PAGE> 105
NATIONSBANK OF NORTH CAROLINA,
NATIONAL ASSOCIATION, as Lender
By:_______________________________
Name:_____________________________
Title: __________________________
Lending Office:
NationsBank of North Carolina,
National Association
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina
28255-0065
Attention: Michelle J. Kirby
Telephone: 704-386-8389
Telefacsimile: 704-386-8694
Wire Transfer Instructions:
NationsBank of North Carolina,
National Association
Charlotte, North Carolina
ABA# 053000196
Reference: Account __________
Account Name: ____
Attention: __________________
SIGNATURE PAGE 2 OF 2
<PAGE> 106
EXHIBIT E
Form of Note
_______________(1) [____________,___________](2)
November __, 1993
FOR VALUE RECEIVED, each of BALDWIN AMERICAS CORPORATION, a Delaware
corporation ("BAM") and BALDWIN TECHNOLOGY LIMITED, a Bermuda corporation
("BTL") (BAM and BTL being referred to collectively as the "Borrowers"), hereby
promises, jointly and severally, to pay to the order of
___________________________________(3)(the "Lender"), in its individual
capacity, at the office of NationsBank of North Carolina, National Association,
as agent for the Lenders (defined below) (the "Agent"), located at NationsBank
Corporate Center, 100 North Tryon Street, Charlotte, North Carolina 28255 (or
at such other place or places within the United States as the Agent may
designate) at the times set forth in the Revolving Credit Agreement dated as of
November __, 1993 among the Borrowers, Baldwin Technology Company, Inc.
("Baldwin"), the Lenders (as defined in the Agreement) and the Agent (all
capitalized terms not otherwise defined herein shall have the respective
meanings set forth in the Agreement), in lawful money of the United States of
America, in immediately available funds, the principal amount of
[________________](4) DOLLARS ($__________)(1) or, if less than such principal
amount, the aggregate unpaid principal amount of all Loans made by the Lender
to the Borrowers pursuant to the Agreement and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates provided in Article II of the Agreement. The holder
of this Note is authorized to record the date and amount of each Loan made by
the Lender pursuant to Section 2.7 of the Agreement, and the date and amount of
each payment or prepayment of principal on such Lender's internal books and
records and then attach such information as a schedule to this Note, provided
that the failure of the Lender to make such recordation (or any error in such
recordation) shall not affect the obligations of any Borrower hereunder or
under the Agreement.
_______________________________
1 Insert Lender's Pro Rata Share of Total Revolving Commitment in arabic
numerals.
2 Insert name of city of Agent's Principal Office.
3 Insert name of Lender in capital letters
4 Insert Lender's Pro Rata Share of Total Commitment in words.
E-1
<PAGE> 107
If payment of all sums due hereunder is accelerated under the terms of
the Agreement, the then remaining principal amount and accrued but unpaid
interest shall bear interest which shall be payable on demand (i) in the case
of a LIBOR Loan, until the end of the Interest Period with respect to such
LIBOR Loan, at a rate of two percent (2%) per annum above such LIBOR Rate, and
(ii) thereafter, and with respect to Prime Loans, at a rate two percent (2%)
per annum in excess of the Prime Rate or the maximum rate permitted under
applicable law, if lower, until such principal and interest have been paid in
full. Further, in the event of such acceleration, this Note shall become
immediately due and payable, without presentation, demand, protest or other
notice of any kind, all of which are hereby waived by each Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, each Borrower, jointly and severally, agrees to pay, in
addition to the principal and interest, the reasonable out-of-pocket costs of
collection, including reasonable attorneys' fees, as provided in Section 11.5
of the Agreement.
Interest hereunder shall be computed on the basis of a 360-day year in
the case of a Prime Loan and a 365-day year in the case of a LIBOR Loan, each
for the actual number of days in the interest period.
This Note is secured by the Borrowers Pledge Agreement, the Baldwin
Pledge Agreement, the Baldwin Technology Pledge Agreement and the Enkel Pledge
Agreement, pursuant to which each Borrower, Baldwin, Baldwin Technology and
Enkel Corporation has assigned, transferred, pledged and set over unto the
Agent for the benefit of the Lenders the Pledged Stock, together with all
dividends paid upon, all securities received in addition to and in exchange
for, and all rights to subscribe for securities incident to, the Pledged Stock.
This Note is guaranteed by the Baldwin Guaranty, the Sector Subsidiary
Guaranty, and the BAM Subsidiary Guaranty , pursuant to which each of Baldwin,
each Sector Subsidiary, and each BAM Subsidiary has guaranteed the payment and
performance of the Obligations.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby
waive to the full extent permitted by law the benefits of all provisions of law
for stay or delay of execution or sale of property or other satisfaction of
judgment against any of them on account of liability hereon until judgment be
obtained and execution issued against any other of them and returned satisfied
or until it can be shown that the maker or any other party hereto had no
property available for the satisfaction of the debt evidenced by this
instrument, or until any other proceedings can be
E-2
<PAGE> 108
had against any of them, also their right, if any, to require the
holder hereof to hold as security for this Note any Collateral deposited by any
of said Persons as security. Protest, notice of protest, notice of dishonor or
diligence are hereby waived by all parties bound hereon.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
E-3
<PAGE> 109
IN WITNESS WHEREOF, the Borrower has caused this Note to be made,
executed and delivered by its duly authorized officer as of the date and year
first above written, all pursuant to authority duly granted.
BALDWIN AMERICAS CORPORATION
By:
-------------------------------
Name:
-----------------------------
Title:
--------------------
BALDWIN TECHNOLOGY LIMITED
By:
-------------------------------
Name:
-----------------------------
Title:
--------------------
E-4
<PAGE> 1
EXHIBIT 21
<TABLE>
<CAPTION>
SUBSIDIARIES OF THE REGISTRANT JURISDICTION
------------
<S> <C>
Baldwin Americas Corporation Delaware
Baldwin Europe Consolidated Inc. Delaware
Baldwin Asia Pacific Corporation Delaware
Baldwin Technology Limited Bermuda
SUBSIDIARIES OF BALDWIN AMERICAS CORPORATION
Baldwin Technology Corporation Connecticut
Misomex of North America, Inc. Delaware
Enkel Corporation Delaware
Baldwin Graphic Systems, Inc. Delaware
SUBSIDIARIES OF BALDWIN TECHNOLOGY CORPORATION
Kansa Corporation Kansas
SUBSIDIARIES OF ENKEL CORPORATION
Enkel International Sales Corporation Illinois
Enkel Foreign Sales Corporation US Virgin Island
SUBSIDIARIES OF BALDWIN EUROPE CONSOLIDATED INC.
Baldwin Europe Consolidated BV Netherlands
Baldwin Technology France SA France
SUBSIDIARIES OF BALDWIN EUROPE CONSOLIDATED BV
Baldwin Graphic Equipment BV Netherlands
Baldwin German Capital Holding GmbH Germany
Baldwin U.K. Holding Limited United Kingdom
B S Holding AB Sweden
SUBSIDIARIES OF BALDWIN GERMAN CAPITAL HOLDING GMBH
Baldwin Gegenheimer GmbH Germany
Misomex GmbH Germany
Baldwin Auslandsbeteiligungs Holding GmbH Germany
SUBSIDIARIES OF BALDWIN U.K. HOLDING LIMITED
Misomex U.K. Limited United Kingdom
Misomex Engineering Limited United Kingdom
SUBSIDIARIES OF B S HOLDING AB
Amal AB Sweden
Misomex AB Sweden
SUBSIDIARIES OF BALDWIN GEGENHEIMER GMBH
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
Baldwin Gegenheimer Ltd. United Kingdom
SUBSIDIARIES OF BALDWIN AUSLANDSBETEILIGUNGS HOLDING GMBH
Baldwin Hungaria Ltd. Hungary
Graphics Financing Ireland Ireland
SUBSIDIARIES OF MISOMEX U.K. LIMITED
Dale Graphics U.K. Ltd. United Kingdom
SUBSIDIARIES OF AMAL AB
ContiGraph AB Sweden
SUBSIDIARIES OF MISOMEX AB
AB Estomatic Sweden
Misomex Marketing AB Sweden
Opme Oy Finland
SUBSIDIARIES OF GRAPHICS FINANCING IRELAND
Altoste Limited Ireland
SUBSIDIARIES OF BALDWIN ASIA PACIFIC CORPORATION
Baldwin Asia Pacific Ltd. Hong Kong
Baldwin Japan Ltd. Japan
Baldwin Printing Control Equipment (Beijing) Company, Ltd. China
BAP VC Limited British Virgin
Islands
SUBSIDIARIES OF BALDWIN ASIA PACIFIC LTD
Baldwin Graphic Equipment Pty. Ltd. Australia
Baldwin Printing Controls Ltd. Hong Kong
SUBSIDIARIES OF BALDWIN JAPAN LTD.
Baldwin Japan Trading Ltd. Japan
Kansai Baldwin Sales Ltd. Japan
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Registration Statements on Form S-8 (No.
33-20611 and No. 33-30455) and the Registration Statements on Form S-3 (No.
33-33104, No. 33-42265 and No. 33-41586) of Baldwin Technology Company, Inc.
of our report dated August 19, 1994 appearing on page 16 of this Annual Report
on Form 10-K. We also consent to the incorporation by reference of our report
on the Financial Statement Schedules, which appears on page 43 of this Form
10-K.
PRICE WATERHOUSE LLP
Stamford, Connecticut
September 20, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS IN THE COMPANY'S CURRENT REPORT ON FORM 10-K AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1994
<PERIOD-END> JUN-30-1994
<CASH> $9,768
<SECURITIES> $8,766
<RECEIVABLES> $46,873
<ALLOWANCES> $3,209
<INVENTORY> $32,939
<CURRENT-ASSETS> $103,400
<PP&E> $24,785
<DEPRECIATION> $17,172
<TOTAL-ASSETS> $187,216
<CURRENT-LIABILITIES> $58,302
<BONDS> 0
<COMMON> $180
0
0
<OTHER-SE> $87,900
<TOTAL-LIABILITY-AND-EQUITY> $187,216
<SALES> $198,055
<TOTAL-REVENUES> $198,055
<CGS> $130,051
<TOTAL-COSTS> $130,051
<OTHER-EXPENSES> $57,477
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $3,694
<INCOME-PRETAX> $8,101
<INCOME-TAX> $3,969
<INCOME-CONTINUING> $4,132
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $4,132
<EPS-PRIMARY> $0.23
<EPS-DILUTED> $0.23
</TABLE>
