EXECUTION COPY
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$85,000,000
CREDIT AGREEMENT
among
AXIOHM TRANSACTION SOLUTIONS, INC.,
as Borrower,
The Several Lenders
from Time to Time Parties Hereto,
▇▇▇▇▇▇ BROTHERS INC.,
as Arranger
▇▇▇▇▇▇ COMMERCIAL PAPER INC.,
as Syndication Agent
and
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
Dated as of October 2, 1997
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS.......................................................................... 2
1.1 Defined Terms........................................................................ 2
1.2 Other Definitional Provisions........................................................ 26
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS...................................................... 26
2.1 Term Loan Commitments................................................................ 26
2.2 Procedure for Term Loan Borrowing.................................................... 27
2.3 Repayment of Term Loans.............................................................. 27
2.4 Revolving Credit Commitments......................................................... 28
2.5 Procedure for Revolving Credit Borrowing............................................. 29
2.6 Repayment of Loans; Evidence of Debt................................................. 29
2.7 Commitment Fees, etc................................................................. 30
2.8 Termination or Reduction of Revolving Credit Commitments............................. 31
2.9 Optional Prepayments................................................................. 31
2.10 Mandatory Prepayments and Commitment Reductions...................................... 31
2.11 Conversion and Continuation Options.................................................. 32
2.12 Minimum Amounts and Maximum Number of Eurodollar Tranches............................ 33
2.13 Interest Rates and Payment Dates..................................................... 33
2.14 Computation of Interest and Fees..................................................... 34
2.15 Inability to Determine Interest Rate................................................. 34
2.16 Pro Rata Treatment and Payments...................................................... 35
2.17 Requirements of Law.................................................................. 37
2.18 Taxes................................................................................ 38
2.19 Indemnity............................................................................ 40
2.20 Change of Lending Office............................................................. 40
2.21 Replacement of Lenders............................................................... 40
2.22 Illegality........................................................................... 41
2.23 Swing Line Commitment................................................................ 41
2.24 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans.................... 41
SECTION 3. LETTERS OF CREDIT.................................................................... 43
3.1 L/C Commitment....................................................................... 43
3.2 Procedure for Issuance of Letter of Credit........................................... 43
3.3 Commissions, Fees and Other Charges.................................................. 44
3.4 L/C Participations................................................................... 44
3.5 Reimbursement Obligation of the Borrower............................................. 45
3.6 Obligations Absolute................................................................. 46
3.7 Letter of Credit Payments............................................................ 46
3.8 Applications......................................................................... 46
SECTION 4. REPRESENTATIONS AND WARRANTIES....................................................... 46
4.1 Financial Condition.................................................................. 46
4.2 No Change............................................................................ 48
4.3 Corporate Existence; Compliance with Law............................................. 48
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4.4 Corporate Power; Authorization; Enforceable Obligations.............................. 48
4.5 No Legal Bar......................................................................... 48
4.6 No Material Litigation............................................................... 49
4.7 No Default........................................................................... 49
4.8 Ownership of Property; Liens......................................................... 49
4.9 Intellectual Property................................................................ 49
4.10 Taxes................................................................................ 49
4.11 Federal Regulations.................................................................. 50
4.12 Labor Matters........................................................................ 50
4.13 ERISA................................................................................ 50
4.14 Investment Company Act; Other Regulations............................................ 50
4.15 Subsidiaries......................................................................... 51
4.16 Use of Proceeds...................................................................... 51
4.17 Environmental Matters................................................................ 51
4.18 Accuracy of Information, etc......................................................... 52
4.19 Security Documents................................................................... 52
4.20 Solvency............................................................................. 54
4.21 Senior Indebtedness.................................................................. 54
4.22 Regulation H......................................................................... 54
SECTION 5. CONDITIONS PRECEDENT................................................................. 54
5.1 Conditions to Initial Extension of Credit............................................ 54
5.2 Conditions to Each Extension of Credit............................................... 59
SECTION 6. AFFIRMATIVE COVENANTS................................................................ 59
6.1 Financial Statements................................................................. 59
6.2 Certificates; Other Information...................................................... 60
6.3 Payment of Obligations............................................................... 61
6.4 Conduct of Business and Maintenance of Existence, etc................................ 61
6.5 Maintenance of Property; Insurance................................................... 61
6.6 Inspection of Property; Books and Records; Discussions............................... 61
6.7 Notices.............................................................................. 62
6.8 Environmental Laws................................................................... 62
6.9 Interest Rate Protection............................................................. 64
6.10 Additional Collateral, etc........................................................... 64
6.11 Limitation on Designated Senior Debt................................................. 66
SECTION 7. NEGATIVE
COVENANTS....................................................................................... 66
7.1 Financial Condition Covenants........................................................ 66
7.2 Limitation on Indebtedness........................................................... 68
7.3 Limitation on Liens.................................................................. 69
7.4 Limitation on Fundamental Changes.................................................... 71
7.5 Limitation on Sale of Assets......................................................... 71
7.6 Limitation on Dividends.............................................................. 72
7.7 Limitation on Capital Expenditures................................................... 73
7.8 Limitation on Investments, Loans and Advances........................................ 73
7.9 Limitation on Optional Payments and Modifications of Debt Instruments or Merger
Agreement, etc...................................................................... 74
7.10 Limitation on Transactions with Affiliates........................................... 74
7.11 Limitation on Sales and Leasebacks................................................... 75
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7.12 Limitation on Changes in Fiscal Periods.............................................. 75
7.13 Limitation on Negative Pledge Clauses................................................ 75
7.14 Limitation on Restrictions on Subsidiary Distributions............................... 75
7.15 Limitation on Lines of Business...................................................... 75
7.16 Limitation on Activities of the Dardel and Axiohm-Inv................................ 75
SECTION 8. EVENTS OF DEFAULT.................................................................... 76
SECTION 9. THE AGENTS........................................................................... 79
9.1 Appointment.......................................................................... 79
9.2 Delegation of Duties................................................................. 80
9.3 Exculpatory Provisions............................................................... 80
9.4 Reliance by Administrative Agent..................................................... 80
9.5 Notice of Default.................................................................... 80
9.6 Non-Reliance on Agents and Other Lenders............................................. 81
9.7 Indemnification...................................................................... 81
9.8 Agent in Its Individual Capacity..................................................... 82
9.9 Successor Administrative Agent....................................................... 82
9.10 Authorization to Release Liens....................................................... 82
9.11 Arranger............................................................................. 83
SECTION 10. MISCELLANEOUS....................................................................... 83
10.1 Amendments and Waivers............................................................... 83
10.2 Notices.............................................................................. 84
10.3 No Waiver; Cumulative Remedies....................................................... 84
10.4 Survival of Representations and Warranties........................................... 84
10.5 Payment of Expenses.................................................................. 85
10.6 Successors and Assigns; Participations and Assignments............................... 85
10.7 Adjustments; Set-off................................................................. 88
10.8 Counterparts......................................................................... 89
10.9 Severability......................................................................... 89
10.10 Integration.......................................................................... 89
10.11 GOVERNING LAW........................................................................ 89
10.12 Submission To Jurisdiction; Waivers.................................................. 89
10.13 Acknowledgements..................................................................... 90
10.14 WAIVERS OF JURY TRIAL................................................................ 90
10.15 Confidentiality...................................................................... 90
10.16 Post Closing Restructuring Transactions.............................................. 90
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ANNEXES:
A Pricing Grid
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Acceptance
F-1 Form of Legal Opinion of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
F-2 Form of Legal Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
F-3 Form of Legal Opinion of ▇▇▇▇▇▇▇▇▇ and May
F-4 Form of Legal Opinion of Gide Loyrette Nouel
F-5 Form of Legal Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
F-6 Form of Legal Opinion of ▇▇▇▇▇ & Overy
F-7 Form of Legal Opinion of Sparks ▇▇▇, P.C.
G-1 Form of Term Note
G-2 Form of Revolving Credit Note
G-3 Form of Swing Line Note
H Form of Prepayment Option Notice
I Form of Exemption Certificate
J Form of Nantissement de Fonds de Commerce
K-1 Form of Australian Pledge Agreement
K-2 Form of U.K. Pledge Agreement
K-3 Form of French Pledge Agreements
L-1 Form of Notice of Borrowing (Drawings)
L-2 Form of Notice of Borrowing (Conversions)
L-3 Form of Notice of Borrowing (Continuations
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CREDIT AGREEMENT, dated as of October 2, 1997, among AXIOHM TRANSACTION
SOLUTIONS, INC. (f/k/a DH Technology, Inc.), a California corporation (the
"BORROWER"), the several banks and other financial institutions or entities
from time to time parties to this Agreement (the "LENDERS"), ▇▇▇▇▇▇ BROTHERS
INC., as arranger, ▇▇▇▇▇▇ COMMERCIAL PAPER INC., as syndication agent (in
such capacities, the "SYNDICATION AGENT"), and UNION BANK OF CALIFORNIA,
N.A., as administrative agent (the "ADMINISTRATIVE AGENT").
W I T N E S S E T H:
WHEREAS, AX Acquisition Corporation ("ACQUISITION CO."), a wholly owned
subsidiary of Axiohm IPB, Inc. ("AXIOHM-IPB"), which is a wholly owned
subsidiary of Axiohm S.A.R.L. ("AXIOHM S.A.R.L."), made an offer (the "TENDER
OFFER") to purchase up to 7,000,000 (but not fewer than 6,500,000) of the
outstanding shares (the "SHARES") of common stock (which represented
approximately 88.0% of the Shares outstanding as of July 11, 1997), without
par value, of the Borrower, pursuant to an Offer to Purchase dated July 16,
1997 (as amended, supplemented or otherwise modified from time to time, the
"OFFER TO PURCHASE") at a price of $25.00 per Share;
WHEREAS, the Offer to Purchase was made pursuant to an Agreement and
Plan of Merger dated as of July 14, 1997 (including the schedules thereto,
the "MERGER AGREEMENT") among Axiohm S.A.R.L., Acquisition Co. and the
Borrower, which provides that (i) immediately prior to the Merger (as defined
below), Acquisition Co. will offer in an exchange offer made pursuant to an
exemption under the Securities Act of 1933, as amended (the "EXCHANGE OFFER")
to (x) the shareholders of Axiohm S.A.R.L. and (y) the shareholders of Dardel
Technologies, S.A., a French corporation ("DARDEL") and a shareholder of
Axiohm S.A.R.L., the right to exchange their stock of Axiohm S.A.R.L. (or
Dardel, as the case may be), with Acquisition Co. for an aggregate of
approximately 5,518,524 of the Shares acquired by Acquisition Co. in the
Tender Offer and an aggregate of approximately $12,197,900 in cash, (ii)
simultaneously with the consummation of the Exchange Offer, Axiohm-IPB will
sell to the Borrower, and the Borrower will purchase from Axiohm-IPB, all of
the outstanding shares of capital stock of Acquisition Co. in exchange for
the assumption by the Borrower, on a joint and several basis with Acquisition
Co. and Axiohm-IPB, of all obligations of Axiohm-IPB or Acquisition Co. in
respect of the $175,000,000 Credit Agreement, dated as of August 19, 1997,
among Axiohm S.A.R.L., Axiohm-IPB, Acquisition Co., the lenders party thereto
and ▇▇▇▇▇▇ Commercial Paper Inc., as arranger, syndication agent and
administrative agent (the "TENDER FACILITY") and in respect of the Interim
Preferred Stock described below, and (iii) immediately following the events
described in the foregoing clauses (i) and (ii) (collectively, the
"PRE-MERGER TRANSACTIONS"), Acquisition Co. will be merged (the "MERGER")
with and into the Borrower, with the Borrower being the surviving corporation
of the Merger;
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WHEREAS, (i) to provide a portion of the financing for the Tender Offer
and certain related expenses, (A) Acquisition Co. required the Tender
Facility and (B) Acquisition Co. received $24,000,000 as cash equity
constituting proceeds of $24,000,000 in liquidation value of preferred stock
(the "INTERIM PREFERRED STOCK") issued by Axiohm-IPB and (ii) to provide a
portion of the financing for the Merger and certain related expenses, the
refinancing of certain indebtedness of the Borrower, the repayment of amounts
owing under the Tender Facility and to provide financing for future working
capital and other general corporate purposes, the Borrower will require at
the time of the Merger financing comprised of senior credit facilities made
available pursuant to this Agreement equal to $85,000,000, comprised of term
loan facilities aggregating $50,000,000 and a $35,000,000 revolving credit
facility and $120,000,000 in proceeds of unsecured senior subordinated notes
(as more fully defined herein, the "SENIOR SUBORDINATED NOTES") issued by the
Borrower;
WHEREAS, after giving effect to the Pre-Merger Transactions and the
Merger, (i) the Borrower will succeed to all rights and obligations of
Acquisition Co., (ii) Dardel will be a wholly owned Subsidiary of the
Borrower, (iii) 100% of the stock of Axiohm S.A.R.L. will be owned either
directly by the Borrower or indirectly by the Borrower through its ownership
of Dardel and (iv) Axiohm-IPB will continue as a wholly owned Subsidiary of
Axiohm S.A.R.L.; and
WHEREAS, the Lenders are willing to make the senior credit facilities
referred to above available at the time of the Merger upon and subject to the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the terms listed in this
Section 1.1 shall have the respective meanings set forth in this Section 1.1.
"ADJUSTMENT DATE": as defined in the Pricing Grid.
"ADMINISTRATIVE AGENT": as defined in the preamble hereto.
"AFFILIATE": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, control of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
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"AGENTS": the collective reference to the Syndication Agent and the
Administrative Agent.
"AGREEMENT": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"APPLICABLE MARGIN": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
Base Rate Eurodollar
Loans Loans
--------- ----------
Revolving Credit Loans and
Swing Line Loans 1.50% 2.50%
Tranche A Term Loans 1.50% 2.50%
Tranche B Term Loans 2.00% 3.00%
; PROVIDED, that on and after the first Adjustment Date occurring at least
one year after the Merger, the Applicable Margin with respect to Revolving
Credit Loans, Swing Line Loans and Tranche A Term Loans will be determined
pursuant to the Pricing Grid.
"APPLICATION": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"ASSET SALE": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by clause
(a), (b), (c), (d), (e) or (f) of Section 7.5) which yields gross proceeds to
the Borrower or any of its Subsidiaries (valued at the initial principal
amount thereof in the case of non-cash proceeds consisting of notes or other
debt securities and valued at fair market value in the case of other non-cash
proceeds) in excess of $100,000.
"ASSIGNEE": as defined in Section 10.6(c).
"ASSIGNMENT AND ACCEPTANCE": as defined in Section 10.6(c).
"ASSIGNOR": as defined in Section 10.6(c).
"AUSTRALIAN PLEDGE AGREEMENT": the Pledge Agreement to be executed and
delivered by the Borrower in favor of the Administrative Agent, substantially
in the form of Exhibit K-1, as the same may be amended, supplemented or
otherwise modified from time to time.
"AVAILABLE REVOLVING CREDIT COMMITMENT": as to any Revolving Credit
Lender at any time, an amount equal to the excess, if any, of (a) such
Lender's Revolving Credit Commitment over (b) such Lender's Revolving
Extensions of Credit; provided, that in
4
calculating any Lender's Revolving Extensions of Credit for the purpose of
determining such Lender's Available Revolving Credit Commitment pursuant to
Section 2.7(a), the aggregate principal amount of Swing Line Loans then
outstanding shall be deemed to be zero.
"AXIOHM-IPB": as defined in the recitals hereto.
"AXIOHM-INV": Axiohm Investissements, a Subsidiary of the Borrower
organized in France.
"BASE RATE": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day, (b) the Base CD Rate in effect on such day plus
1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of
1%. For purposes hereof: "PRIME RATE" shall mean the rate of interest per
annum publicly announced from time to time by Citibank, N.A. as its prime
rate in effect at its principal office in New York City (the Prime Rate not
being intended to be the lowest rate of interest charged by the
Administrative Agent in connection with extensions of credit to debtors);
"BASE CD RATE" shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the C/D Reserve Percentage and (b) the C/D
Assessment Rate; and "THREE-MONTH SECONDARY" CD Rate shall mean, for any day,
the secondary market rate for three-month certificates of deposit reported as
being in effect on such day (or, if such day shall not be a Business Day, the
next preceding Business Day) by the Board through the public information
telephone line of the Federal Reserve Bank of New York (which rate will,
under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if
such rate shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City received
at approximately 10:00 A.M., New York City time, on such day (or, if such day
shall not be a Business Day, on the next preceding Business Day) by the
Administrative Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it. Any change in the
Base Rate due to a change in the Prime Rate, the Three-Month Secondary CD
Rate or the Federal Funds Effective Rate shall be effective as of the opening
of business on the effective day of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate,
respectively.
"BASE RATE LOANS": Loans the rate of interest applicable to which is
based upon the Base Rate.
"BENEFITTED LENDER": as defined in Section 10.7(a).
"BOARD": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
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"BORROWER": as defined in the preamble hereto.
"BORROWING DATE": any Business Day specified by the Borrower as a date
on which the Borrower requests the relevant Lenders to make Loans hereunder.
"BUSINESS": as defined in Section 4.17(b).
"BUSINESS DAY": (i) for all purposes other than as covered by clause
(ii) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close
and (ii) with respect to all notices and determinations in connection with,
and payments of principal and interest on, Eurodollar Loans, any day which is
a Business Day described in clause (i) and which is also a day for trading by
and between banks in Dollar deposits in the interbank eurodollar market.
"CAPITAL EXPENDITURES": for any period, with respect to any Person, the
aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital
assets or additions to equipment (including replacements, capitalized repairs
and improvements during such period) which should be capitalized under GAAP
on a consolidated balance sheet of such Person and its Subsidiaries.
"CAPITAL LEASE OBLIGATIONS": as to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination
thereof, which obligations are required to be classified and accounted for as
capital leases on a balance sheet of such Person under GAAP and, for the
purposes of this Agreement, the amount of such obligations at any time shall
be the capitalized amount thereof at such time determined in accordance with
GAAP.
"CAPITAL STOCK": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and
all equivalent ownership interests in a Person (other than a corporation) and
any and all warrants, rights or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of one year or less from the date of
acquisition issued by any Lender or by any commercial bank organized under
the laws of the United States or any state thereof having combined capital
and surplus of not less than $500,000,000; (c) commercial paper of an issuer
rated at least A-2 by Standard & Poor's Ratings Services ("S&P") or P-2 by
▇▇▇▇▇'▇ Investors Service, Inc. ("MOODY'S"), or carrying an equivalent rating
by a nationally recognized rating agency, if both of the two named rating
agencies cease publishing ratings of commercial paper
6
issuers generally, and maturing within nine months from the date of
acquisition; (d) repurchase obligations of any Lender or of any commercial
bank satisfying the requirements of clause (b) of this definition, having a
term of not more than 30 days with respect to securities issued or fully
guaranteed or insured by the United States government; (e) securities with
maturities of one year or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by
any political subdivision or taxing authority of any such state, commonwealth
or territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by ▇▇▇▇▇'▇;
(f) securities with maturities of one year or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this definition;
or (g) shares of money market mutual or similar funds which invest at least
95% of their assets in assets satisfying the requirements of clauses (a)
through (f) of this definition.
"C/D ASSESSMENT RATE": for any day as applied to any Base Rate Loan,
the annual assessment rate in effect on such day which is payable by a member
of the Bank Insurance Fund maintained by the Federal Deposit Insurance
Corporation (the "FDIC") classified as well-capitalized and within supervisory
subgroup "B" (or a comparable successor assessment risk classification) within
the meaning of 12 C.F.R. SECTION 327.4 (or any successor provision) to the
FDIC (or any successor) for the FDIC's (or such successor's) insuring time
deposits at offices of such institution in the United States.
"C/D RESERVE PERCENTAGE": for any day as applied to any Base Rate Loan,
that percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve requirement for
a Depositary Institution (as defined in Regulation D of the Board as in
effect from time to time) in respect of new non-personal time deposits in
Dollars having a maturity of 30 days or more.
"CLOSING DATE": the date on which the conditions precedent set forth in
Section 5.1 shall have been satisfied, which date shall not occur later than
October 16, 1997.
"CODE": the Internal Revenue Code of 1986, as amended from time to time.
"COLLATERAL": all Property of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security
Document.
"COMMITMENT": as to any Lender, the sum of the Tranche A Term Loan
Commitment, the Tranche B Term Loan Commitment and the Revolving Credit
Commitment of such Lender.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of Section
4001 of ERISA
7
or is part of a group which includes the Borrower and which is treated as a
single employer under Section 414 of the Code.
"COMPLIANCE CERTIFICATE": a certificate duly executed by a Responsible
Officer substantially in the form of Exhibit B.
"CONFIDENTIAL INFORMATION MEMORANDUM": the Confidential Information
Memorandum dated September 1997 and furnished to the Lenders.
"CONSOLIDATED CURRENT ASSETS": at any date, all amounts (other than
cash and Cash Equivalents) which would, in conformity with GAAP, be set forth
opposite the caption "total current assets" (or any like caption) on a
consolidated balance sheet of the Borrower and its Subsidiaries at such date.
"CONSOLIDATED CURRENT LIABILITIES": at any date, all amounts which
would, in conformity with GAAP, be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet of
the Borrower and its Subsidiaries at such date, but excluding (a) the current
portion of any Funded Debt of the Borrower and its Subsidiaries and (b)
without duplication of clause (a) above, all Indebtedness consisting of
Revolving Credit Loans or Swing Line Loans to the extent otherwise included
therein.
"CONSOLIDATED EBITDA": for any period, Consolidated Net Income for such
period PLUS, without duplication and to the extent reflected as a charge in
the statement of such Consolidated Net Income for such period, the sum of (a)
total income tax expense, (b) interest expense, amortization or writeoff of
debt discount and debt issuance costs and commissions, discounts and other
fees and charges associated with Indebtedness (including the Loans), (c)
depreciation and amortization expense, (d) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, (e) any
extraordinary or non-recurring expenses or losses (including, whether or not
otherwise includable as a separate item in the statement of such Consolidated
Net Income for such period, losses on sales of assets outside of the ordinary
course of business), (f) any other non-cash charges (other than non-cash
charges in connection with the Borrower's use of the LIFO method of inventory
accounting) and (g) for the period from the Closing Date through the end of
the 1998 fiscal year, up to $3 million in the aggregate of transaction
expenses and restructuring charges, and MINUS, to the extent included in the
statement of such Consolidated Net Income for such period, the sum of (a)
interest income, (b) any extraordinary or non-recurring income or gains
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, gains on the sales
of assets outside of the ordinary course of business) and (c) any other
non-cash income, all as determined on a consolidated basis.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO": for any period, the ratio
of (a) Consolidated EBITDA for such period less the aggregate amount actually
paid by the Borrower and its Subsidiaries in cash during such period on
account of Capital
8
Expenditures (excluding the principal amount of Indebtedness incurred in
connection with such expenditures) or taxes to (b) Consolidated Fixed Charges
for such period.
"CONSOLIDATED FIXED CHARGES": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense for such period, (b)
provision for cash income taxes made by the Borrower or any of its
Subsidiaries on a consolidated basis in respect of such period and (c)
scheduled payments made during such period on account of principal of
Indebtedness (other than Indebtedness of the types described in clauses (f),
(g) and (k) of the definition thereof) of the Borrower or any of its
Subsidiaries (including scheduled principal payments in respect of the Term
Loans).
"CONSOLIDATED INTEREST COVERAGE RATIO": for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense
for such period.
"CONSOLIDATED INTEREST EXPENSE": for any period, total cash
interest expense (including that attributable to Capital Lease Obligations)
of the Borrower and its Subsidiaries for such period with respect to all
outstanding Indebtedness of the Borrower and its Subsidiaries (including,
without limitation, all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance financing and
net costs under Interest Rate Protection Agreements to the extent such net
costs are allocable to such period in accordance with GAAP).
"CONSOLIDATED LEVERAGE RATIO": as at the last day of any period of four
consecutive fiscal quarters, the ratio of (a) Consolidated Total Debt on such
day to (b) Consolidated EBITDA for such period; PROVIDED that for purposes of
calculating Consolidated EBITDA of the Borrower and its Subsidiaries for any
period, the Consolidated EBITDA of any Person acquired by the Borrower or its
Subsidiaries during such period shall be included on a PRO FORMA basis for
such period (assuming the consummation of each such acquisition and the
incurrence or assumption of any Indebtedness in connection therewith occurred
on the first day of such period) if the consolidated balance sheet of such
acquired Person and its consolidated Subsidiaries as at the end of the period
preceding the acquisition of such Person and the related consolidated
statements of income and stockholders' equity and of cash flows for the
period in respect of which Consolidated EBITDA is to be calculated (i) have
been previously provided to the Administrative Agent and the Lenders and (ii)
either (A) have been reported on without a qualification arising out of the
scope of the audit (other than a "going concern" or like qualification or
exception) by independent certified public accountants of nationally
recognized standing or (B) have been found acceptable by the Administrative
Agent.
"CONSOLIDATED NET INCOME": for any period, the consolidated net income
(or loss) of the Borrower and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; PROVIDED that there shall be excluded (a) the
income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged
9
into or consolidated with the Borrower or any of its Subsidiaries, (b) the
income (or deficit) of any Person (other than a Subsidiary of the Borrower)
in which the Borrower or any of its Subsidiaries has an ownership interest,
except to the extent that any such income is actually received by the
Borrower or such Subsidiary in the form of dividends or similar distributions
and (c) the undistributed earnings of any Subsidiary of the Borrower to the
extent that the declaration or payment of dividends or similar distributions
by such Subsidiary is not at the time permitted by the terms of any
Contractual Obligation (other than under any Loan Document) or Requirement of
Law applicable to such Subsidiary.
"CONSOLIDATED TOTAL DEBT": at any date, the sum of, without
duplication, (a) the aggregate principal amount of all Funded Debt of the
Borrower and its Subsidiaries at such date, determined on a consolidated
basis in accordance with GAAP PLUS (b) all indebtedness of such Person for
borrowed money MINUS (c) the amount of cash held by the Borrower and the
Subsidiary Guarantors in an aggregate amount not to exceed $5,000,000 to the
extent such cash is not subject to a Lien (except in favor of the Lenders).
"CONSOLIDATED WORKING CAPITAL": at any date, the excess of Consolidated
Current Assets on such date over Consolidated Current Liabilities on such
date.
"CONTINUING DIRECTOR": (i) any director of the board of directors of
the Borrower on the Closing Date, (ii) a director whose nomination for
election to the board of directors of the Borrower is recommended by at least
50% of the then Continuing Directors or (iii) a director elected to the board
of directors of the Borrower with the approval of the holders of at least 80%
of the common stock of the Borrower having voting power for the election of
directors held by the Permitted Investors.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"DARDEL": as defined in the recitals hereto.
"DEFAULT": any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"DISCLOSURE LETTER": the Disclosure Letter dated as of the date hereof
between the Syndication Agent, the Lenders and the Borrower, as amended,
supplemented or otherwise modified from time to time.
"DISPOSITION": with respect to any Property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof; and
the terms "DISPOSE" and "DISPOSED OF" shall have correlative meanings.
10
"DOLLARS" and "$": dollars in lawful currency of the United States.
"DOMESTIC SUBSIDIARY": any Subsidiary of any Loan Party organized under
the laws of any jurisdiction within the United States.
"ECF PERCENTAGE": 75%; PROVIDED, that, with respect to each fiscal year
of the Borrower ending on or after December 31, 1997, the ECF Percentage
shall be reduced to 50% if the Consolidated Leverage Ratio as of the last day
of such fiscal year is less than 3.00 to 1.00.
"ENVIRONMENTAL CONSULTANT": as defined in Section 6.8(d).
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of
Law (including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ENVIRONMENTAL PERMITS": any and all permits, licenses, registrations,
approvals, notifications, exemptions and any other authorization required
under any Environmental Law.
"ENVIRONMENTAL PROFESSIONAL": as defined in Section 6.8(c).
"ENVIRONMENTAL PROGRAM": as defined in Section 6.8(c).
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained by a member
bank of the Federal Reserve System.
"EURODOLLAR BASE RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days
prior to the beginning of such Interest Period. In the event that such rate
does not appear on Page 3750 of the Telerate Service (or otherwise on such
service), the "EURODOLLAR BASE RATE" for purposes of this definition shall be
11
determined by reference to such other comparable publicly quoted service for
displaying eurodollar rates as may be reasonably selected by the
Administrative Agent or, in the absence of such availability, by reference to
the rate at which the Administrative Agent is offered Dollar deposits at or
about 11:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market where
its eurodollar and foreign currency and exchange operations are then being
conducted for delivery on the first day of such Interest Period for the
number of days comprised therein.
"EURODOLLAR LOANS": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"EURODOLLAR TRANCHE": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"EVENT OF DEFAULT": any of the events specified in Section 8, PROVIDED
that any requirement for the giving of notice, the lapse of time, or both,
has been satisfied.
"EXCESS CASH FLOW": for any fiscal year of the Borrower, the excess, if
any, of (a) the sum, without duplication, of (i) Consolidated Net Income for
such fiscal year, (ii) an amount equal to the amount of all non-cash charges
(including depreciation and amortization) deducted in arriving at such
Consolidated Net Income, (iii) decreases in Consolidated Working Capital for
such fiscal year, (iv) an amount equal to the aggregate net non-cash loss on
the Disposition of Property by the Borrower and its Subsidiaries during such
fiscal year (other than sales of inventory in the ordinary course of
business), to the extent deducted in arriving at such Consolidated Net Income
and (v) the net increase during such fiscal year (if any) in deferred tax
accounts of the Borrower LESS (b) the sum, without duplication, of (i) an
amount equal to the amount of all non-cash credits included in arriving at
such Consolidated Net Income, (ii) the aggregate amount actually paid by the
Borrower and its Subsidiaries in cash during such fiscal year on account of
Capital Expenditures (excluding the principal amount of Indebtedness incurred
in connection with such expenditures and any such expenditures financed with
the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount
of all prepayments of Revolving Credit Loans and Swing Line Loans during such
fiscal year to the extent accompanying permanent optional reductions of the
Revolving Credit Commitments and all optional prepayments of the Term Loans
during such fiscal year, (iv) the aggregate amount of all regularly scheduled
principal payments of Funded Debt (including, without
12
limitation, the Term Loans) of the Borrower and its Subsidiaries made during
such fiscal year (other than in respect of any revolving credit facility to
the extent there is not an equivalent permanent reduction in commitments
thereunder), (v) increases in Consolidated Working Capital for such fiscal
year, (vi) an amount equal to the aggregate net non-cash gain on the
Disposition of Property by the Borrower and its Subsidiaries during such
fiscal year (other than sales of inventory in the ordinary course of
business), to the extent included in arriving at such Consolidated Net
Income, and (vii) the net decrease during such fiscal year (if any) in
deferred tax accounts of the Borrower.
"EXCESS CASH FLOW APPLICATION DATE": as defined in Section 2.10(c).
"EXCHANGE OFFER": as defined in the recitals hereto.
"EXCLUDED FOREIGN SUBSIDIARIES": any Foreign Subsidiary the pledge of
all or any part of whose Capital Stock as Collateral would, in the good faith
judgment of the Borrower, result in material adverse tax consequences to the
Borrower, PROVIDED that the term "Foreign Subsidiary" shall not include any
Subsidiary (a) which is properly treated as a partnership or branch of the
Borrower or a Domestic Subsidiary for United States federal income tax
purposes and (b) the pledge of all or any part of whose Capital Stock as
Collateral would not result in material adverse tax consequences to the
Borrower.
"FACILITY": each of (a) the Tranche A Term Loan Commitments and the
Tranche A Term Loans made thereunder (the "TRANCHE A TERM LOAN FACILITY"), (b)
the Tranche B Term Loan Commitments and the Tranche B Term Loans made
thereunder (the "TRANCHE B TERM LOAN FACILITY") and (c) the Revolving Credit
Commitments and the extensions of credit made thereunder (the "REVOLVING
CREDIT FACILITY").
"FEDERAL FUNDS EFFECTIVE RATE": for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it.
"FRENCH PLEDGE AGREEMENTS": the Pledge Agreements creating a charge
over the stock capital of Axiohm S.A.R.L., Dardel and Axiohm Investissements
to be executed and delivered by the Borrower and Dardel in favor of the
Administrative Agent, substantially in the form of Exhibit K-3, as the same
may be amended, supplemented or otherwise modified from time to time.
"FRENCH SECURITY DOCUMENT": the Nantissement de Fonds de Commerce to be
executed and delivered by Axiohm S.A.R.L., substantially in the form of
Exhibit J, as the same may be amended, supplemented or otherwise modified
from time to time.
13
"FOREIGN SUBSIDIARY": any Subsidiary of any Loan Party that is not a
Domestic Subsidiary.
"FUNDED DEBT": as to any Person, all Indebtedness of such Person that
matures more than one year from the date of its creation or matures within
one year from such date but is renewable or extendible, at the option of such
Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year from such date,
including, without limitation, all current maturities and current sinking
fund payments in respect of such Indebtedness whether or not required to be
paid within one year from the date of its creation and, in the case of the
Borrower, Indebtedness in respect of the Loans.
"FUNDING OFFICE": the office specified from time to time by the
Administrative Agent as its funding office by notice to the Borrower and the
Lenders.
"GAAP": generally accepted accounting principles in the United States
as in effect from time to time set forth in the opinions and pronouncements
of the Accounting Principles Board and the American Institute of Certified
Public Accountants and the statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity
as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances of the Borrower as of
the date of determination, except that for purposes of Section 7.1, GAAP
shall be determined on the basis of such principles in effect on the date
hereof and consistent with those used in the preparation of the December 31,
1996 audited financial statements of the Borrower delivered pursuant to
Section 4.1(c). In the event that any "Accounting Change" (as defined below)
shall occur and such change results in a change in the method of calculation
of financial covenants, standards or terms in this Agreement, then the
Borrower and the Administrative Agent agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect
such Accounting Changes with the desired result that the criteria for
evaluating the Borrower's financial condition shall be the same after such
Accounting Changes as if such Accounting Changes had not been made. Until
such time as such an amendment shall have been executed and delivered by the
Borrower, the Administrative Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Changes had not occurred.
"Accounting Changes" refers to changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the
Financial Accounting Standards Board of the American Institute of Certified
Public Accountants or, if applicable, the SEC.
"GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government (including, without limitation, the National
Association of Insurance Commissioners).
14
"GUARANTEE AND COLLATERAL AGREEMENT": the Guarantee and Collateral
Agreement to be executed and delivered by the Borrower and each Subsidiary
Guarantor, substantially in the form of Exhibit A, as the same may be
amended, supplemented or otherwise modified from time to time.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"), any
obligation of (a) the guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the
creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends or other obligations
(the "PRIMARY OBLIGATIONS") of any other third Person (the "PRIMARY OBLIGOR") in
any manner, whether directly or indirectly, including, without limitation,
any obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase Property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment
of such primary obligation or (iv) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect thereof;
PROVIDED, HOWEVER, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course
of business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability
in respect thereof as determined by the Borrower in good faith.
"H-S-R ACT": the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of 1976,
as amended.
"INCUR": as defined in Section 7.2.
"INDEBTEDNESS": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of Property or services (other than
current trade payables and accrued current obligations incurred in the
ordinary course of such Person's business), (c) all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments,
(d) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to Property acquired by such Person
(even though
15
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), (e)
all Capital Lease Obligations of such Person, (f) all obligations of such
Person, contingent or otherwise, as an account party under acceptance, letter
of credit or similar facilities, (g) all obligations of such Person,
contingent or otherwise, to purchase, redeem, retire or otherwise acquire for
value any Capital Stock (other than common stock) of such Person, (h) all
Guarantee Obligations of such Person in respect of obligations of the kind
referred to in clauses (a) through (g) above; (i) all obligations of the kind
referred to in clauses (a) through (h) above secured by (or for which the
holder of such obligation has an existing right, contingent or otherwise, to
be secured by) any Lien on Property (including, without limitation, accounts
and contract rights) owned by such Person, whether or not such Person has
assumed or become liable for the payment of such obligation, (j) for the
purposes of Section 8(e) only, all obligations of such Person in respect of
Interest Rate Protection Agreements and (k) the liquidation value of any
preferred Capital Stock of such Person or of its Subsidiaries held by any
Person other than such Person and its Wholly Owned Subsidiaries. It is
understood and agreed that the amount of any Indebtedness described in clause
(i) for which recourse is limited to certain property of such Person shall be
the lower of (x) the amount of the obligation and (y) the fair market value
of the property of such Person securing such obligation to the extent of
recourse to such property.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTELLECTUAL PROPERTY": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all
rights to ▇▇▇ at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
"INTEREST PAYMENT DATE": (a) as to any Base Rate Loan, the last day of
each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last
day of such Interest Period, (c) as to any Eurodollar Loan having an Interest
Period longer than three months, each day which is three months, or a whole
multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period and (d) as to any Loan (other than any Revolving
Credit Loan that is a Base Rate Loan and any Swing Line Loan), the date of
any repayment or prepayment made in respect thereof.
16
"INTEREST PERIOD": as to any Eurodollar Loan, (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its Notice of Borrowing with
respect thereto; and (b) thereafter, each period commencing on the last day
of the next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the Borrower
by irrevocable notice to the Administrative Agent not less than three
Business Days prior to the last day of the then current Interest Period with
respect thereto; PROVIDED that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event
such Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the
Revolving Credit Termination Date or beyond the date final payment is
due on the Tranche A Term Loans or the Tranche B Term Loans, as the case
may be, shall end on the Revolving Credit Termination Date or such due
date, as applicable;
(iii) any Interest Period that begins on the last 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 Business Day of a calendar month ending
one, two, three or six months thereafter, as the case may be, as
designated in the relevant Notice of Borrowing; and
(iv) the Borrower shall use reasonable efforts to select Interest
Periods so as not to require a payment or prepayment of any Eurodollar
Loan during an Interest Period for such Loan.
"INTEREST RATE PROTECTION AGREEMENT": any interest rate protection
agreement, interest rate futures contract, interest rate option, interest
rate cap or other interest rate hedge arrangement, to or under which the
Borrower or any of its Subsidiaries is a party or a beneficiary on the date
hereof or becomes a party or a beneficiary after the date hereof.
"ISSUING LENDER": one or more Lenders to be selected by the Syndication
Agent and the Borrower (with the consent of such Lender) after the
Syndication Date, in its capacity as issuer of any Letter of Credit.
"L/C COMMITMENT": $7,500,000.
"L/C FEE PAYMENT DATE": the last day of each March, June, September and
December and the last day of the Revolving Credit Commitment Period.
17
"L/C OBLIGATIONS": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not then been reimbursed pursuant to Section 3.5.
"L/C PARTICIPANTS": the collective reference to all the Revolving
Credit Lenders other than the Issuing Lender.
"LENDERS": as defined in the preamble hereto. Letters of Credit: as
defined in Section 3.1(a).
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, whether or not
filed, recorded or otherwise perfected under applicable law (including,
without limitation, any conditional sale or other title retention agreement
and any capital lease having substantially the same economic effect as any of
the foregoing and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"LOAN": as defined in Section 2.1.
"LOAN DOCUMENTS": this Agreement, the Security Documents, the
Syndication Letter Agreement, the Applications and the Notes.
"LOAN PARTIES": the Borrower and each Subsidiary of the Borrower which
is a party to a Loan Document.
"MAJORITY FACILITY LENDERS": with respect to any Facility, the holders
of more than 50% of the aggregate unpaid principal amount of the Term Loans
or the Total Revolving Extensions of Credit, as the case may be, outstanding
under such Facility (or, in the case of the Revolving Credit Facility, prior
to any termination of the Revolving Credit Commitments, the holders of more
than 50% of the Total Revolving Credit Commitments).
"MAJORITY REVOLVING CREDIT FACILITY LENDERS": the Majority Facility
Lenders in respect of the Revolving Credit Facility.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
consummation of the Merger, (b) the business, assets, property or condition
(financial or otherwise) of the Borrower, Axiohm S.A.R.L. and their
Subsidiaries taken as a whole or (c) the validity or enforceability of this
Agreement or any of the other Loan Documents or the rights or remedies of the
Agents or the Lenders hereunder or thereunder.
18
"MATERIAL ENVIRONMENTAL AMOUNT": an amount payable by the Borrower
and/or its Subsidiaries in excess of $1,000,000 per fiscal year for remedial
costs, compliance costs, compensatory damages, punitive damages, fines,
penalties or any combination thereof, in any case pursuant to any
Environmental Law or with respect to any Materials of Environmental Concern.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"MERGER": as defined in the recitals hereto.
"MERGER AGREEMENT": as defined in the recitals hereto.
"MORTGAGED PROPERTIES": the real properties listed on Schedule 1.1B to
the Disclosure Letter, as to which the Administrative Agent for the benefit
of the Lenders shall be granted a Lien pursuant to the Mortgages.
"MORTGAGES": each of the mortgages and deeds of trust made by any Loan
Party in favor of, or for the benefit of, the Administrative Agent for the
benefit of the Lenders, substantially in the form of Exhibit D (with such
changes thereto as shall be advisable under the law of the jurisdiction in
which such mortgage or deed of trust is to be recorded), as the same may be
amended, supplemented or otherwise modified from time to time.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents
(including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such Asset Sale or
Recovery Event, net of attorneys' fees, accountants' fees, investment banking
fees and other professional fees, amounts required to be applied to the
repayment of Indebtedness secured by a Lien expressly permitted hereunder on
any asset which is the subject of such Asset Sale or Recovery Event (other
than any Lien pursuant to a Security Document), the amount of such net cash
proceeds which are attributable to (and payable to) minority interests, the
amount of any reserve reasonably maintained by the Borrower and its
Subsidiaries with respect to indemnification obligations owing pursuant to
the definitive documentation pursuant to which the Asset Sale is consummated
(with any unused portion of such reserve to constitute Net Cash Proceeds on
the date upon which the indemnification obligations terminate) and other
reasonable fees and expenses actually incurred in connection
19
therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and (b) in connection with any
issuance or sale of equity securities or debt securities or instruments or
the incurrence of loans, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees, accountants'
fees and other professional fees, underwriting discounts and commissions and
other reasonable fees and expenses actually incurred in connection therewith.
"NON-EXCLUDED TAXES": as defined in Section 2.18(a).
"NON-U.S. LENDER": as defined in Section 2.18(d).
"NOTES": the collective reference to any promissory note evidencing
Loans.
"NOTICE OF BORROWING": (i) with respect to (a) any borrowing of Loans,
a Notice of Borrowing (Drawings), substantially in the form of Exhibit L-1,
(b) any conversion of Loans, a Notice of Borrowing (Conversions),
substantially in the form of Exhibit L-2 and (c) any continuation of
Eurodollar Loans, a Notice of Borrowing (Continuations), substantially in the
form of Exhibit L-3 or (ii) telephonic notice of any such borrowing,
conversion or continuation promptly confirmed in writing (in a form
reasonably acceptable to the Administrative Agent).
"OBLIGATIONS": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) the
Loans and all other obligations and liabilities of the Borrower to the
Administrative Agent or to any Lender (or, in the case of Interest Rate
Protection Agreements, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with,
this Agreement, any other Loan Document, the Letters of Credit, any Interest
Rate Protection Agreement entered into with any Lender or any affiliate of
any Lender or any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by the
Borrower pursuant hereto) or otherwise.
"OFFER TO PURCHASE": as defined in the recitals hereto.
"OTHER TAXES": any and all present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies arising from
any payment made hereunder or from the execution, delivery or enforcement of,
or otherwise with respect to, this Agreement.
20
"PARTICIPANT": as defined in Section 10.6(b).
"PAYMENT OFFICE": the office specified from time to time by the
Administrative Agent as its payment office by notice to the Borrower and the
Lenders.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).
"PERMITTED INVESTORS": collectively, Dardel, Messrs. ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ Gibier and ▇▇▇▇▇▇▇ ▇▇▇▇▇, and Persons under their control (PROVIDED
that for purposes of this definition, control of a Person means the power,
directly or indirectly, to direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise).
"PERSON": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"PLAN": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an employer as defined in
Section 3(5) of ERISA.
"PRE-MERGER TRANSACTIONS": as defined in the recitals hereto.
"PRICING GRID": the pricing grid attached hereto as Annex A.
"PRO FORMA BALANCE SHEET": as defined in Section 4.1(a).
"PROJECTIONS": as defined in Section 6.2(c).
"PROPERTIES": as defined in Section 4.17(a).
"PROPERTY": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"RECOVERY EVENT": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating
to any asset (other than inventory) of the Borrower or any of its
Subsidiaries.
"REFUNDED SWING LINE LOANS": as defined in Section 2.24.
"REFUNDING DATE": as defined in Section 2.24.
21
"REGISTER": as defined in Section 10.6(d).
"REGULATION G": Regulation G of the Board as in effect from time to
time.
"REGULATION U": Regulation U of the Board as in effect from time to
time.
"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to reimburse
the Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of
Credit.
"REINVESTMENT DEFERRED AMOUNT": with respect to any Reinvestment Event,
the aggregate Net Cash Proceeds received by the Borrower or any of its
Subsidiaries in connection therewith which are not applied to prepay the Term
Loans or reduce the Revolving Credit Commitments pursuant to Section 2.10(b)
as a result of the delivery of a Reinvestment Notice.
"REINVESTMENT EVENT": any Asset Sale or Recovery Event in respect of
which the Borrower has delivered a Reinvestment Notice.
"REINVESTMENT NOTICE": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing and
that the Borrower (directly or indirectly through a Subsidiary) intends and
expects to use all or a specified portion of the Net Cash Proceeds of an
Asset Sale or Recovery Event to acquire assets useful in its business.
"REINVESTMENT PREPAYMENT AMOUNT": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire assets
useful in the Borrower's business.
"REINVESTMENT PREPAYMENT DATE": with respect to any Reinvestment Event,
the earlier of (a) the date occurring twelve months after such Reinvestment
Event and (b) the date on which the Borrower shall have determined not to, or
shall have otherwise ceased to, acquire assets useful in the Borrower's
business with all or any portion of the relevant Reinvestment Deferred Amount.
"REORGANIZATION": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of
ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Reg. SECTION
2615.
"REQUIRED LENDERS": the holders of more than 50% of (a) until the
Closing Date, the Commitments and (b) thereafter, the sum of (i) the
aggregate unpaid principal amount
22
of the Term Loans and (ii) the Total Revolving Credit Commitments or, if the
Revolving Credit Commitments have been terminated, the Total Revolving
Extensions of Credit.
"REQUIRED PREPAYMENT LENDERS": the Majority Facility Lenders in respect
of each Facility.
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case,
applicable to or binding upon such Person or any of its Property or to which
such Person or any of its Property is subject.
"RESPONSIBLE OFFICER": the chief executive officer, president or chief
financial officer of the Borrower, but in any event, with respect to
financial matters, the chief financial officer of the Borrower.
"REVOLVING CREDIT COMMITMENT": as to any Lender, the obligation of such
Lender, if any, to make Revolving Credit Loans and participate in Swing Line
Loans and Letters of Credit, in an aggregate principal and/or face amount not
to exceed the amount set forth under the heading Revolving Credit Commitment
opposite such Lender's name on Schedule 1.1A to the Disclosure Letter or in
the Assignment and Acceptance pursuant to which such Lender became a party
hereto, as the same may be changed from time to time pursuant to the terms
hereof. The original amount of the Total Revolving Credit Commitments is
$35,000,000.
"REVOLVING CREDIT COMMITMENT PERIOD": the period from and including the
Closing Date to the Revolving Credit Termination Date.
"REVOLVING CREDIT LENDER": each Lender which has a Revolving Credit
Commitment or which has made Revolving Credit Loans.
"REVOLVING CREDIT LOANS": as defined in Section 2.4.
"REVOLVING CREDIT NOTE": as defined in Section 2.6(e).
"REVOLVING CREDIT PERCENTAGE": as to any Revolving Credit Lender at any
time, the percentage which such Lender's Revolving Credit Commitment then
constitutes of the Total Revolving Credit Commitments (or, at any time after
the Revolving Credit Commitments shall have expired or terminated, the
percentage which the aggregate principal amount of such Lender's Revolving
Credit Loans then outstanding constitutes of the aggregate principal amount
of the Revolving Credit Loans then outstanding).
"REVOLVING CREDIT TERMINATION DATE": the earlier of (a) the Scheduled
Revolving Credit Termination Date and (b) the date on which all the Term
Loans shall mature or be paid in full.
23
"REVOLVING EXTENSIONS OF CREDIT": as to any Revolving Credit Lender at
any time, an amount equal to the sum of (a) the aggregate principal amount of
all Revolving Credit Loans made by such Lender then outstanding, (b) such
Lender's Revolving Credit Percentage of the L/C Obligations then outstanding
and (c) such Lender's Revolving Credit Percentage of the aggregate principal
amount of Swing Line Loans then outstanding.
"SCHEDULED REVOLVING CREDIT TERMINATION DATE": October 2, 2002.
"SEC": the Securities and Exchange Commission (or successors thereto or
an analogous Governmental Authority).
"SECURITY DOCUMENTS": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages, the Australian Pledge Agreement, the
French Pledge Agreements and the U.K. Pledge Agreement, the French Security
Document and all other security documents hereafter delivered to the
Administrative Agent granting a Lien on any Property of any Person to secure
the obligations and liabilities of any Loan Party under any Loan Document.
"SENIOR SUBORDINATED NOTE INDENTURE": the Indenture entered into by the
Borrower and certain of its Subsidiaries in connection with the issuance of
the Senior Subordinated Notes, together with all instruments and other
agreements entered into by the Borrower and certain of its Subsidiaries in
connection therewith, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with Section 7.9.
"SENIOR SUBORDINATED NOTES": the unsecured senior subordinated notes of
the Borrower issued on the Closing Date pursuant to the Senior Subordinated
Note Indenture, and unsecured senior subordinated notes of the Borrower
registered under the Securities Act of 1933, as amended, with terms identical
in all material respects to those issued on the Closing Date.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"SOLVENT": when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the present fair saleable value of
the assets of such Person will, as of such date, exceed the amount of all
liabilities of such Person, contingent or otherwise, as of such date, as such
value is established and such liabilities are evaluated in accordance with
Section 101(32) of the federal Bankruptcy Code and the state laws governing
determinations of the insolvency of debtors of New York and each state where
such Person is doing business or has its principal place of business, (b) the
present fair saleable value of the tangible and intangible assets of such
Person will, as of such date, be greater than the amount that will be
required to pay the liability of such Person on its debts as such debts
become absolute and matured, (c) such Person will not
24
have, as of such date, an unreasonably small amount of capital with which to
conduct its business, and (d) such Person will be able to pay its debts as
they mature. For purposes of this definition, (i) debt means liability on a
claim and (ii) claim means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured or (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured.
"SUBSIDIARY": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers
of such corporation, partnership or other entity are at the time owned, or
the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a Subsidiary or to Subsidiaries in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"SUBSIDIARY GUARANTOR": each Subsidiary of the Borrower (other than any
Excluded Foreign Subsidiary) that guarantees the Obligations pursuant to the
Guarantee and Collateral Agreement.
"SWING LINE COMMITMENT": the obligation of the Swing Line Lender to
make Swing Line Loans pursuant to Section 2.23 in an aggregate principal
amount at any one time outstanding not to exceed $4,500,000.
"SWING LINE LENDER": Union Bank of California, N.A., in its capacity as
the lender of Swing Line Loans.
"SWING LINE LOANS": as defined in Section 2.23.
"SWING LINE PARTICIPATION AMOUNT": as defined in Section 2.24.
"SYNDICATION DATE": the date on which the Syndication Agent completes
the syndication of the Facilities and the entities selected in such
syndication process become parties to this Agreement, which date shall be no
later than October 31, 1997.
"SYNDICATION LETTER AGREEMENT": the letter agreement, dated as of the
date hereof, between the Borrower and the Syndication Agent relating to the
syndication of the Facilities.
"TENDER FACILITY": as defined in the recitals hereto.
25
"TENDER OFFER": as defined in the recitals hereto.
"TERM LOAN LENDERS": the collective reference to the Tranche A Term
Loan Lenders and the Tranche B Term Loan Lenders.
"TERM LOANS": the collective reference to the Tranche A Term Loans and
Tranche B Term Loans.
"TERM NOTE": as defined in Section 2.6(e).
"TOTAL REVOLVING CREDIT COMMITMENTS": at any time, the aggregate amount
of the Revolving Credit Commitments at such time.
"TOTAL REVOLVING EXTENSIONS OF CREDIT": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Credit Lenders
at such time.
"TRANCHE A TERM LOAN": as defined in Section 2.1.
"TRANCHE A TERM LOAN COMMITMENT": as to any Lender, the obligation of
such Lender, if any, to make a Tranche A Term Loan to the Borrower hereunder
in a principal amount not to exceed the amount set forth under the heading
Tranche A Term Loan Commitment opposite such Lender's name on Schedule 1.1A
to the Disclosure Letter or in the Assignment and Acceptance pursuant to
which such Lender became a party hereto. The original aggregate amount of
the Tranche A Term Loan Commitments is $35,000,000.
"TRANCHE A TERM LOAN LENDER": each Lender which has a Tranche A Term
Loan Commitment or which has made a Tranche A Term Loan.
"TRANCHE A TERM LOAN PERCENTAGE": as to Tranche A Term Loan Lender at
any time, the percentage which such Lender's Tranche A Term Loan Commitment
then constitutes of the aggregate Tranche A Term Loan Commitments (or, at any
time after the Closing Date, the percentage which the aggregate principal
amount of such Lender's Tranche A Term Loans then outstanding constitutes of
the aggregate principal amount of the Tranche A Term Loans then outstanding).
"TRANCHE B TERM LOAN": as defined in Section 2.1.
"TRANCHE B TERM LOAN COMMITMENT": as to Tranche B Term Loan Lender, the
obligation of such Lender, if any, to make a Tranche B Term Loan to the
Borrower hereunder in a principal amount not to exceed the amount set forth
under the heading "Tranche B Term Loan Commitment" opposite such Lender's
name on Schedule 1.1A or in the Assignment and Acceptance pursuant to which
such Lender became a party hereto. The original aggregate amuount of the
Tranche B Term Loan Commitments is $15,000,000.
26
"TRANCHE B TERM LOAN LENDER": each Lender which has a Tranche B
Term Loan Commitment or which has made a Tranche B Term Loan.
"TRANCHE B TERM LOAN PERCENTAGE": as to any Lender at any time,
the percentage which such Lender's Tranche B Term Loan Commitment then
constitutes of the aggregate Tranche B Term Loan Commitments (or, at any
time after the Closing Date, the percentage which the aggregate
principal amount of such Lender's Tranche B Term Loans then outstanding
constitutes of the aggregate principal amount of the Tranche B Term
Loans then outstanding).
"TRANSACTION DOCUMENTATION": collectively, the Merger Agreement,
the Offer to Purchase (including all documents and materials filed with
the SEC in connection therewith), the Senior Subordinated Note Indenture
and all documentation executed in connection with the Exchange Offer and
the other transactions contemplated hereby, in each case, including all
schedules, exhibits, certificates, documents and agreements entered
into, executed or delivered in connection therewith, and as each such
agreement, filing, schedule, exhibit, certificate or document may be
amended, supplemented or otherwise modified from time to time in
accordance with Section 7.9.
"TRANSFEREE": as defined in Section 10.15.
"TYPE": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"U.K. PLEDGE AGREEMENT": the Pledge Agreement to be executed and
delivered by the Borrower in favor of the Administrative Agent,
substantially in the form of Exhibit K-2, as the same may be amended,
supplemented or otherwise modified from time to time.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"UNITED STATES": the United States of America.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular
27
provision of this Agreement, Section and Exhibit references are to this
Agreement unless otherwise specified, and Schedule references are to the
Disclosure Letter unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 TERM LOAN COMMITMENTS. Subject to the terms and conditions
hereof, (a) each Tranche A Term Loan Lender severally agrees to make a term
loan (a "TRANCHE A TERM LOAN") to the Borrower on the Closing Date in an
amount not to exceed the amount of the Tranche A Term Loan Commitment of such
Lender and (b) each Tranche B Term Loan Lender severally agrees to make a
term loan (a "TRANCHE B TERM LOAN") to the Borrower on the Closing Date in an
amount not to exceed the amount of the Tranche B Term Loan Commitment of such
Lender. The Term Loans may from time to time be Eurodollar Loans or Base
Rate Loans, as determined by the Borrower and notified to the Administrative
Agent in accordance with Sections 2.2 and 2.13.
2.2 PROCEDURE FOR TERM LOAN BORROWING. The Borrower shall give
the Administrative Agent irrevocable Notice of Borrowing (which notice must
be received by the Administrative Agent prior to 10:00 A.M., New York City
time, one Business Day prior to the anticipated Closing Date) requesting that
the Term Loan Lenders make the Term Loans on the Closing Date and specifying
the amount to be borrowed. The Term Loans made on the Closing Date shall
initially be Base Rate Loans or Eurodollar Loans (if prior to the time the
Borrower gives the Administrative Agent notice in accordance with this
Section 2.2, the Borrower shall have executed an indemnity agreement in form
and substance satisfactory to the Syndication Agent) and no Term Loan may be
converted into or continued as a Eurodollar Loan having an Interest Period in
excess of one month prior to the Syndication Date; PROVIDED that the
Eurodollar Rate shall be redetermined as of the Syndication Date (based on
the Interest Period selected by the Borrower and communicated to the
Administrative Agent in accordance with the terms hereof) and such
redetermined Eurodollar Rate shall apply to all Eurodollar Loans outstanding
as of the Syndication Date. Upon receipt of such notice the Administrative
Agent shall promptly notify each Term Loan Lender thereof. Not later than
12:00 Noon, New York City time, on the Closing Date each Term Loan Lender
shall make available to the Administrative Agent at the Funding Office an
amount in immediately available funds equal to the Term Loan or Term Loans to
be made by such Lender. The Administrative Agent shall make available to the
Borrower with the aggregate of the amounts made available to the
Administrative Agent by the Term Loan Lenders in immediately available funds.
2.3 REPAYMENT OF TERM LOANS. (a) The Tranche A Term Loan of each
Tranche A Lender shall mature in 20 consecutive quarterly installments,
commencing on March 31, 1998, each of which shall be in an amount equal to
such Lender's Tranche A Term Loan Percentage multiplied by the amount set
forth below opposite such installment:
28
Installment Principal Amount
----------- ----------------
March 31, 1998 $ 700,000
June 30, 1998 700,000
September 30, 1998 700,000
December 31, 1998 700,000
March 31, 1999 1,850,000
June 30, 1999 1,850,000
September 30, 1999 1,850,000
December 31, 1999 1,850,000
March 31, 2000 1,850,000
June 30, 2000 1,850,000
September 30, 2000 1,850,000
December 31, 2000 1,850,000
March 31, 2001 2,175,000
June 30, 2001 2,175,000
September 30, 2001 2,175,000
December 31, 2001 2,175,000
March 31, 2002 2,175,000
June 30, 2002 2,175,000
September 30, 2002 2,175,000
December 31, 2002 2,175,000
(b) The Tranche B Term Loan of each Tranche B Lender shall mature
in 24 consecutive quarterly installments, commencing on March 31, 1998, each
of which shall be in an amount equal to such Lender's Tranche B Term Loan
Percentage multiplied by the amount set forth below opposite such installment:
Installment Principal Amount
----------- ----------------
March 31, 1998 $ 100,000
June 30, 1998 100,000
September 30, 1998 100,000
December 31, 1998 100,000
March 31, 1999 100,000
June 30, 1999 100,000
September 30, 1999 100,000
December 31, 1999 100,000
March 31, 2000 100,000
June 30, 2000 100,000
September 30, 2000 100,000
December 31, 2000 100,000
March 31, 2001 100,000
June 30, 2001 100,000
29
September 30, 2001 100,000
December 31, 2001 100,000
March 31, 2002 100,000
June 30, 2002 100,000
September 30, 2002 100,000
December 31, 2002 100,000
March 31, 2003 3,250,000
June 30, 2003 3,250,000
September 30, 2003 3,250,000
December 31, 2003 3,250,000
2.4 REVOLVING CREDIT COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("REVOLVING CREDIT LOANS") to the Borrower from time
to time during the Revolving Credit Commitment Period in an aggregate
principal amount at any one time outstanding which, when added to such
Lender's Revolving Credit Percentage of the sum of (i) the L/C Obligations
then outstanding and (ii) the aggregate principal amount of the Swing Line
Loans then outstanding, does not exceed the amount of such Lender's Revolving
Credit Commitment. During the Revolving Credit Commitment Period the
Borrower may use the Revolving Credit Commitments by borrowing, prepaying the
Revolving Credit Loans in whole or in part, and reborrowing, all in
accordance with the terms and conditions hereof. The Revolving Credit Loans
may from time to time be Eurodollar Loans or Base Rate Loans, as determined
by the Borrower and notified to the Administrative Agent in accordance with
Sections 2.5 and 2.11, PROVIDED that no Revolving Credit Loan shall be made
as a Eurodollar Loan after the day that is one month prior to the Revolving
Credit Termination Date.
(b) The Borrower shall repay all outstanding Revolving Credit
Loans on the Revolving Credit Termination Date.
2.5 PROCEDURE FOR REVOLVING CREDIT BORROWING. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, PROVIDED that the Borrower shall give
the Administrative Agent irrevocable Notice of Borrowing (which notice must
be received by the Administrative Agent prior to 12:00 Noon, New York City
time, (a) three Business Days prior to the requested Borrowing Date, in the
case of Eurodollar Loans, or (b) one Business Day prior to the requested
Borrowing Date, in the case of Base Rate Loans), specifying (i) the amount
and Type of Revolving Credit Loans to be borrowed, (ii) the requested
Borrowing Date and (iii) in the case of Eurodollar Loans, the respective
amounts of each such Type of Loan and the respective lengths of the initial
Interest Period therefor. Any Revolving Credit Loans made on the Closing
Date shall initially be Base Rate Loans and no Revolving Credit Loan may be
made as, converted into or continued as a Eurodollar Loan having an Interest
Period in excess of one month prior to the Syndication Date; PROVIDED that
the Eurodollar Rate shall be redetermined as of the Syndication Date (based
on the Interest Period selected by the Borrower and communicated to the
Administrative Agent in accordance with the terms hereof) and such
redetermined Eurodollar Rate shall apply to all
30
Eurodollar Loans outstanding as of the Syndication Date. Each borrowing
under the Revolving Credit Commitments shall be in an amount equal to (x) in
the case of Base Rate Loans, $500,000 or a whole multiple thereof (or, if the
then aggregate Available Revolving Credit Commitments are less than $500,000
such lesser amount) and (y) in the case of Eurodollar Loans, $500,000 or a
whole multiple thereof; PROVIDED, that the Swing Line Lender may request, on
behalf of the Borrower, borrowings under the Revolving Credit Commitments
which are Base Rate Loans in other amounts pursuant to Section 2.24. Upon
receipt of any such notice from the Borrower, the Administrative Agent shall
promptly notify each Revolving Credit Lender thereof. Each Revolving Credit
Lender will make the amount of its PRO RATA share of each borrowing available
to the Administrative Agent for the account of the Borrower at the Funding
Office prior to 12:00 Noon, New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to the
Borrower by the Administrative Agent crediting the account of the Borrower on
the books of the Funding Office with the aggregate of the amounts made
available to the Administrative Agent by the Revolving Credit Lenders and in
like funds as received by the Administrative Agent.
2.6 REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of the appropriate Revolving Credit Lender or Term Loan Lender, as
the case may be, (i) the then unpaid principal amount of each Revolving
Credit Loan of such Revolving Credit Lender on the Revolving Credit
Termination Date (or such earlier date on which the Loans become due and
payable pursuant to Section 8), (ii) the then unpaid principal amount of each
Swing Line Loan of such Swing Line Lender on the Revolving Credit Termination
Date (or such earlier date on which the Loans become due and payable pursuant
to Section 8) and (iii) the principal amount of each Term Loan of such Term
Loan Lender in installments according to the amortization schedule set forth
in Section 2.3 (or on such earlier date on which the Loans become due and
payable pursuant to Section 8). The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Loans from time to time
outstanding from the date hereof until payment in full thereof at the rates
per annum, and on the dates, set forth in Section 2.13.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to
such Lender resulting from each Loan of such Lender from time to time,
including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 10.6(e), and a subaccount therein
for each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type thereof and each
Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to
each Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
31
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.6(b) shall, to the extent permitted
by applicable law, be PRIMA FACIE evidence of the existence and amounts of
the obligations of the Borrower therein recorded; PROVIDED that the failure
of any Lender or the Administrative Agent to maintain the Register or any
such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made
to such Borrower by such Lender in accordance with the terms of this
Agreement.
(e) The Borrower agrees that, promptly following the request to
the Administrative Agent by any Lender, the Borrower will execute and deliver
to such Lender (i) a promissory note of the Borrower evidencing any Term
Loans (a "TERM NOTE"), Revolving Credit Loans (a "REVOLVING CREDIT NOTE") or
Swing Line Loans, as the case may be, of such Lender, substantially in the
forms of Exhibit G-1, G-2 or G-3, respectively, with appropriate insertions
as to date and principal amount.
2.7 COMMITMENT FEES, ETC. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the Closing Date to the last
day of the Revolving Credit Commitment Period, computed at the rate per annum
of .375% on the average daily amount of the Available Revolving Credit
Commitment of such Lender during the period for which payment is made,
payable quarterly in arrears on the last day of each March, June, September
and December and on the Revolving Credit Termination Date, commencing on the
first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Arranger and the Syndication
Agent the fees in the amounts and on the dates from time to time agreed to in
writing by the Borrower and the Syndication Agent.
(c) The Borrower agrees to pay to the Administrative Agent the
fees in the amounts and on the dates from time to time agreed to in writing
by the Borrower and the Administrative Agent.
2.8 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS. The
Borrower shall have the right, upon not less than two Business Days' notice
to the Administrative Agent, to terminate the Revolving Credit Commitments
or, from time to time, to reduce the amount of the Revolving Credit
Commitments; PROVIDED that no such termination or reduction of Revolving
Credit Commitments shall be permitted to the extent that, after giving effect
thereto and to any prepayments of the Revolving Credit Loans and Swing Line
Loans made on the effective date thereof, the Total Revolving Extensions of
Credit would exceed the Total Revolving Credit Commitments. Any such
reduction shall be in an amount equal to $500,000, or a whole multiple
thereof, and shall reduce permanently the Revolving Credit Commitments then
in effect.
2.9 OPTIONAL PREPAYMENTS. The Borrower may at any time and from
time to time prepay the Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent at
least three Business Days prior thereto in the case of
32
Eurodollar Loans and at least one Business Day prior thereto in the case of
Base Rate Loans, which notice shall specify the date and amount of prepayment
and whether the prepayment is of Eurodollar Loans or Base Rate Loans;
PROVIDED that if a Eurodollar Loan is prepaid on any day other than the last
day of the Interest Period applicable thereto, the Borrower shall also pay
any amounts owing pursuant to Section 2.19. Upon receipt of any such notice
the Administrative Agent shall promptly notify each relevant Lender thereof.
If any such notice is given, the amount specified in such notice shall be due
and payable on the date specified therein, together with (except in the case
of Revolving Credit Loans which are Base Rate Loans and Swing Line Loans)
accrued interest to such date on the amount prepaid. Partial prepayments of
Term Loans and Revolving Credit Loans shall be in an aggregate principal
amount of $500,000 or a whole multiple thereof.
2.10 MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS. (a) Unless
the Required Prepayment Lenders shall otherwise agree, if any Capital Stock
or Indebtedness shall be issued or Incurred by the Borrower or any of its
Subsidiaries (excluding any Indebtedness Incurred in accordance with Section
7.2 or Capital Stock issued in accordance with Section 7.9), an amount equal
to 100% of the Net Cash Proceeds of any Indebtedness Incurred and 75% of the
Net Cash Proceeds of any Capital Stock issued shall be applied on the date of
such issuance or Incurrence toward the prepayment of the Term Loans and the
reduction of the Revolving Credit Commitments as set forth in Section 2.10(d).
(b) Unless the Required Prepayment Lenders shall otherwise agree,
if on any date the Borrower or any of its Subsidiaries shall receive Net Cash
Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment
Notice shall be delivered in respect thereof, such Net Cash Proceeds shall be
applied on such date toward the prepayment of the Term Loans and the
reduction of the Revolving Credit Commitments as set forth in Section
2.10(d); PROVIDED that notwithstanding the foregoing, (i) the aggregate Net
Cash Proceeds of Asset Sales and Recovery Events that may be excluded from
the foregoing requirement pursuant to a Reinvestment Notice shall not exceed
$2,000,000 in any fiscal year of the Borrower and (ii) on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to the relevant Reinvestment Event shall be applied toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.10(d).
(c) Unless the Required Prepayment Lenders shall otherwise agree,
if, for any fiscal year of the Borrower commencing with the fiscal year
ending December 31, 1997, there shall be Excess Cash Flow, the Borrower
shall, on the relevant Excess Cash Flow Application Date, apply the ECF
Percentage of such Excess Cash Flow toward the prepayment of the Term Loans
and the reduction of the Revolving Credit Commitments as set forth in Section
2.10(d). Except as set forth in Section 2.16(d), each such prepayment and
commitment reduction shall be made on a date (an "EXCESS CASH FLOW
APPLICATION DATE") no later than five days after the earlier of (i) the date
on which the financial statements of the Borrower referred to in Section
6.1(a), for the fiscal year with respect to which such prepayment is made,
are required to be delivered to the Lenders and (ii) the date such financial
statements are actually delivered.
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(d) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to this Section 2.10 shall be applied,
FIRST, to the prepayment of the Term Loans and, SECOND, to reduce permanently
the Revolving Credit Commitments. Any such reduction of the Revolving Credit
Commitments shall be accompanied by prepayment of the Revolving Credit Loans
and/or Swing Line Loans to the extent, if any, that the Total Revolving
Extensions of Credit exceed the amount of the Total Revolving Credit
Commitments as so reduced, PROVIDED that if the aggregate principal amount of
Revolving Credit Loans and Swing Line Loans then outstanding is less than the
amount of such excess (because L/C Obligations constitute a portion thereof),
the Borrower shall, to the extent of the balance of such excess, replace
outstanding Letters of Credit and/or deposit an amount in cash in a cash
collateral account established with the Administrative Agent for the benefit
of the Lenders on terms and conditions satisfactory to the Administrative
Agent. The application of any prepayment pursuant to this Section 2.10 shall
be made, FIRST, to Base Rate Loans and, SECOND, to Eurodollar Loans. Each
prepayment of the Loans under this Section 2.10 (except in the case of
Revolving Credit Loans that are Base Rate Loans and Swing Line Loans) shall
be accompanied by accrued interest to the date of such prepayment on the
amount prepaid.
2.11 CONVERSION AND CONTINUATION OPTIONS. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to Base Rate Loans by
giving the Administrative Agent at least two Business Days' prior irrevocable
Notice of Borrowing of such election, PROVIDED that any such conversion of
Eurodollar Loans may only be made on the last day of an Interest Period with
respect thereto. The Borrower may elect from time to time to convert Base
Rate Loans to Eurodollar Loans by giving the Administrative Agent at least
three Business Days' prior irrevocable Notice of Borrowing of such election
(which notice shall specify the length of the initial Interest Period
therefor), PROVIDED that no Base Rate Loan under a particular Facility may be
converted into a Eurodollar Loan (i) when any Event of Default has occurred
and is continuing and the Administrative Agent or the Majority Facility
Lenders in respect of such Facility have determined in its or their sole
discretion not to permit such conversions or (ii) after the date that is one
month prior to the final scheduled termination or maturity date of such
Facility. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable Notice of Borrowing to the Administrative Agent,
in accordance with the applicable provisions of the term "Interest Period"
set forth in Section 1.1, of the length of the next Interest Period to be
applicable to such Loans, PROVIDED that no Eurodollar Loan under a particular
Facility may be continued as such (i) when any Event of Default has occurred
and is continuing and the Administrative Agent has or the Majority Facility
Lenders in respect of such Facility have determined in its or their sole
discretion not to permit such continuations or (ii) after the date that is
one month prior to the final scheduled termination or maturity date of such
Facility, and PROVIDED, FURTHER, that if the Borrower shall fail to give any
required notice as described above in this paragraph or if such continuation
is not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to Base Rate Loans on the last day of such then
expiring Interest Period. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.
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2.12 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF EURODOLLAR TRANCHES.
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurodollar Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, (a) after giving
effect thereto, the aggregate principal amount of the Eurodollar Loans
comprising each Eurodollar Tranche shall be equal to $500,000 or a whole
multiple thereof and (b) no more than eight Eurodollar Tranches shall be
outstanding at any one time.
2.13 INTEREST RATES AND PAYMENT DATES. 2.(a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with
respect thereto at a rate per annum equal to the Eurodollar Rate determined
for such day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and
Reimbursement Obligations (whether or not overdue) shall bear interest at a
rate per annum which is equal to (x) in the case of the Loans, the rate that
would otherwise be applicable thereto pursuant to the foregoing provisions of
this Section 2.13 PLUS 2% or (y) in the case of Reimbursement Obligations,
the rate applicable to Base Rate Loans under the Revolving Credit Facility
PLUS 2%, and (ii) if all or a portion of any interest payable on any Loan or
Reimbursement Obligation or any commitment fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to the rate applicable to Base Rate Loans under the relevant
Facility PLUS 2% (or, in the case of any such other amounts that do not
relate directly to the Loans, the Base Rate PLUS 4%), in each case, with
respect to clauses (i) and (ii) above, from the date of such non-payment
until such amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, PROVIDED that interest accruing pursuant to paragraph (c) of this
Section 2.13 shall be payable from time to time on demand.
2.14 COMPUTATION OF INTEREST AND FEES. 2.(a) Interest, fees and
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to Base
Rate Loans the rate of interest on which is calculated on the basis of the
Prime Rate, the interest thereon shall be calculated on the basis of a 365-
(or 366-, as the case may be) day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and the
relevant Lenders of each determination of a Eurodollar Rate. Any change in
the interest rate on a Loan resulting from a change in the Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective. The
Administrative Agent shall as soon as practicable notify the Borrower and the
relevant Lenders of the effective date and the amount of each such change in
interest rate.
35
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error.
The Administrative Agent shall, at the request of the Borrower, promptly
deliver to the Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to Section
2.13(a).
2.15 INABILITY TO DETERMINE INTEREST RATE. If prior to the first
day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrower and the relevant Lenders as soon as practicable thereafter. If
such notice is given (x) any Eurodollar Loans under the relevant Facility
requested to be made on the first day of such Interest Period shall be made
as Base Rate Loans, (y) any Loans under the relevant Facility that were to
have been converted on the first day of such Interest Period to Eurodollar
Loans shall be continued as Base Rate Loans and (z) any outstanding
Eurodollar Loans under the relevant Facility shall be converted, on the last
day of the then current Interest Period, to Base Rate Loans. Until such
notice has been withdrawn by the Administrative Agent, no further Eurodollar
Loans under the relevant Facility shall be made or continued as such, nor
shall the Borrower have the right to convert Loans under the relevant
Facility to Eurodollar Loans.
2.16 PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account
of any commitment fee and any reduction of the Commitments of the Lenders
shall be made PRO RATA according to the respective Tranche A Term Loan
Percentages, Tranche B Term Loan Percentages or Revolving Credit Percentages,
as the case may be, of the relevant Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Term Loans shall be made PRO RATA
according to the respective outstanding principal amounts of the Term Loans
then held by the Term Loan Lenders (except as otherwise provided in Section
2.16(d)). The amount of each principal prepayment of the Term Loans shall be
applied to reduce the then remaining installments of the Tranche A Term Loans
and Tranche B Term Loans, as the case may be, in the inverse order of their
respective maturities. Amounts prepaid on account of the Term Loans may not
be reborrowed.
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(c) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Credit Loans shall be
made PRO RATA according to the respective outstanding principal amounts of
the Revolving Credit Loans then held by the Revolving Credit Lenders.
(d) Notwithstanding anything to the contrary in Sections 2.9, 2.10
or 2.16, so long as any Tranche A Term Loans are outstanding, each Tranche B
Term Loan Lender may, at its option, decline up to 50% of the portion of any
optional prepayment or mandatory prepayment applicable to the Tranche B Term
Loans of such Lender; accordingly, with respect to the amount of any optional
prepayment described in Section 2.9 or mandatory prepayment described in
Section 2.10 that is allocated to Tranche B Term Loans (such amount, the
"TRANCHE B PREPAYMENT AMOUNT"), at any time when Tranche A Term Loans remain
outstanding, the Borrower will, (i) in the case of any optional prepayment
which the Borrower wishes to make, not later than ten Business Days prior to
the date on which the Borrower wishes to make such optional prepayment, and
(ii) in the case of any mandatory prepayment required to be made pursuant to
Section 2.10, in lieu of applying such amount to the prepayment of Tranche B
Term Loans, as provided in paragraph Section 2.10(d), on the date specified
in Section 2.10 for such prepayment, give the Administrative Agent telephonic
notice (promptly confirmed in writing) requesting that the Administrative
Agent prepare and provide to each Tranche B Term Loan Lender a notice (each,
a "PREPAYMENT OPTION NOTICE") as described below. As promptly as practicable
after receiving such notice from the Borrower, the Administrative Agent will
send to each Tranche B Term Loan Lender a Prepayment Option Notice, which
shall be in the form of Exhibit H, and shall include an offer by the Borrower
to prepay on the date (each a "PREPAYMENT DATE") that is five Business Days
after the date of the Prepayment Option Notice, the relevant Term Loans of
such Lender by an amount equal to the portion of the Prepayment Amount
indicated in such Lender's Prepayment Option Notice as being applicable to
such Lender's Tranche B Term Loans. On the Prepayment Date, (i) the Borrower
shall pay to the Administrative Agent the aggregate amount necessary to
prepay that portion of the outstanding relevant Term Loans in respect of
which Tranche B Term Loan Lenders have accepted prepayment as described above
(such Lenders, the "ACCEPTING LENDERS"), and such amount shall be applied to
reduce the Tranche B Prepayment Amounts with respect to each Accepting
Lender, (ii) the Borrower shall pay to the Administrative Agent an amount
equal to 50% of the portion of the Tranche B Prepayment Amount not accepted
by the Accepting Lenders, and such amount shall be applied to the prepayment
of the Tranche A Term Loans, and (C) the Borrower shall be entitled to retain
the remaining 50% of the portion of the Tranche B Prepayment Amount not
accepted by the Accepting Lenders. Each Term Loan Lender other than an
Accepting Lender shall receive its portion of any optional prepayment or
mandatory prepayment as set forth in Sections 2.9, 2.10 and 2.16.
(e) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made
prior to 12:00 Noon, New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Payment Office,
in Dollars and in immediately available funds. The Administrative Agent
shall distribute such payments to the Lenders promptly upon receipt in like
funds as received. If any payment
37
hereunder (other than payments on the Eurodollar Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day. If any payment on a Eurodollar Loan
becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day unless the
result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day. In the case of any extension of any payment of
principal pursuant to the preceding two sentences, interest thereon shall be
payable at the then applicable rate during such extension.
(f) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to
the Administrative Agent by the required time on the Borrowing Date therefor,
such Lender shall pay to the Administrative Agent, on demand, such amount
with interest thereon at a rate equal to the daily average Federal Funds
Effective Rate for the period until such Lender makes such amount immediately
available to the Administrative Agent. A certificate of the Administrative
Agent submitted to any Lender with respect to any amounts owing under this
Section 2.16(f) shall be conclusive in the absence of manifest error. If
such Lender's share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of such
Borrowing Date, the Administrative Agent shall also be entitled to recover
such amount with interest thereon at the rate per annum applicable to Base
Rate Loans under the relevant Facility, on demand, from the Borrower.
(g) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective PRO RATA
shares of a corresponding amount. If such payment is not made to the
Administrative Agent by the Borrower within three Business Days of such
required date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available
pursuant to the preceding sentence, such amount with interest thereon at the
rate per annum equal to the daily average Federal Funds Effective Rate.
Nothing herein shall be deemed to limit the rights of the Administrative
Agent or any Lender against the Borrower.
2.17 REQUIREMENTS OF LAW. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit, any
Application or any Eurodollar Loan made by
38
it, or change the basis of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes covered by Section 2.18
and changes in the rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such
Lender, by an amount which such Lender deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or issuing or
participating in Letters of Credit, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender, upon its demand, any additional amounts necessary
to compensate such Lender for such increased cost or reduced amount
receivable. If any Lender becomes entitled to claim any additional amounts
pursuant to this Section 2.17, it shall promptly notify the Borrower (with a
copy to the Administrative Agent) of the event by reason of which it has
become so entitled.
(b) If any Lender shall have determined that the adoption of or
any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof shall have the
effect of reducing the rate of return on such Lender's or such corporation's
capital as a consequence of its obligations hereunder or under or in respect
of any Letter of Credit to a level below that which such Lender or such
corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Lender to be
material, then from time to time, after submission by such Lender to the
Borrower (with a copy to the Administrative Agent) of a written request
therefor, the Borrower shall promptly pay to such Lender such additional
amount or amounts as will compensate such Lender for such reduction.
(c) A certificate (providing reasonable support as to the amounts
requested) as to any additional amounts payable pursuant to this Section 2.17
submitted by any Lender to the Borrower (with a copy to the Administrative
Agent) shall be conclusive in the absence of manifest error. The obligations
of the Borrower pursuant to this Section 2.17 shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
2.18 TAXES. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or
39
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes and
franchise taxes (imposed in lieu of net income taxes) imposed on any Agent or
any Lender as a result of a present or former connection between such Agent
or such Lender and the jurisdiction of the Governmental Authority imposing
such tax or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from such Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("NON-EXCLUDED TAXES") or Other Taxes are required to be withheld
from any amounts payable to any Agent or any Lender hereunder, the amounts so
payable to such Agent or such Lender shall be increased to the extent
necessary to yield to such Agent or such Lender (after payment of all
Non-Excluded Taxes and Other Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement,
PROVIDED, HOWEVER, that the Borrower shall not be required to increase any
such amounts payable to any Lender with respect to any Non-Excluded Taxes (i)
that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this subsection or (ii) that are
United States withholding taxes imposed on amounts payable to such Lender at
the time the Lender becomes a party to this Agreement, except to the extent
that such Lender's assignor (if any) was entitled, at the time of assignment,
to receive additional amounts from the Borrower with respect to such
Non-Excluded Taxes pursuant to Section 2.18(a).
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to
the Administrative Agent for the account of the relevant Agent or Lender, as
the case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Agents the required receipts or other
required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by any Agent or any Lender as a result of
any such failure. The agreements in this Section 2.18 shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
(d) Each Lender (or Transferee) that is not a citizen or resident
of the United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States (or any jurisdiction
thereof), or any estate or trust that is subject to federal income taxation
regardless of the source of its income (a "NON-U.S. LENDER") shall deliver to
the Borrower and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
two copies of either U.S. Internal Revenue Service Form 1001 or Form 4224,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest" a statement substantially in the form of
Exhibit I and a Form W-8, or any subsequent versions thereof or successors
thereto properly completed and duly
40
executed by such Non-U.S. Lender claiming complete exemption from, or a
reduced rate of, U.S. federal withholding tax on all payments by the Borrower
under this Agreement and the other Loan Documents. Such forms shall be
delivered by each Non-U.S. Lender on or before the date it becomes a party to
this Agreement (or, in the case of any Participant, on or before the date
such Participant purchases the related participation). In addition, each
Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each
Non-U.S. Lender shall promptly notify the Borrower at any time it determines
that it is no longer in a position to provide any previously delivered
certificate to the Borrower (or any other form of certification adopted by
the U.S. taxing authorities for such purpose). Notwithstanding any other
provision of this Section 2.18(b), a Non-U.S. Lender shall not be required to
deliver any form pursuant to this Section 2.18(d) that such Non-U.S. Lender
is not legally able to deliver.
(e) Without limiting the requirements of Section 2.18(d), a Lender
that is entitled to an exemption from or reduction of non-U.S. withholding
tax under the law of the jurisdiction in which the Borrower is located, or
any treaty to which such jurisdiction is a party, with respect to payments
under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, PROVIDED that such Lender is
legally entitled to complete, execute and deliver such documentation and in
such Lender's reasonable judgment such completion, execution or submission
would not materially prejudice the legal position of such Lender.
(f) If the Administrative Agent or any Lender receives a refund in
respect of Non-Excluded Taxes paid by the Borrower, which in the good faith
judgment of such Lender is allocable to such payment, it shall promptly pay
such refund, together with any other amounts paid by the Borrower in
connection with such refunded Non-Excluded Taxes, to the Borrower, net of all
out-of-pocket expenses of such Lender incurred in obtaining such refund,
PROVIDED, that the Borrower agrees to promptly return such refund to the
Administrative Agent or the applicable Lender, as the case may be, if it
receives notice from the Administrative Agent or applicable Lender that such
Administrative Agent or Lender is required to repay such refund.
2.19 INDEMNITY. The Borrower agrees to indemnify each Lender and
to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with
the provisions of this Agreement or (c) the making of a prepayment of
Eurodollar Loans on a day which is not the last day of an Interest Period
with respect thereto. Such indemnification may include an amount equal to
the excess, if any, of (i) the amount of interest which would have accrued on
the amount so prepaid, or not so borrowed, converted or continued, for the
period from the date of such prepayment or of such failure to borrow, convert
or continue to the last day of such Interest Period (or, in the case of a
failure to borrow, convert or continue, the Interest Period that would
41
have commenced on the date of such failure) in each case at the applicable
rate of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) OVER (ii) the amount of interest
(as reasonably determined by such Lender) which would have accrued to such
Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank eurodollar market. A certificate
(providing reasonable support as to any amounts due) as to any amounts
payable pursuant to this Section 2.19 submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
2.20 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.17, 2.18(a)
or 2.22 with respect to such Lender, it will, if requested by the Borrower,
use reasonable efforts (subject to overall policy considerations of such
Lender) to designate another lending office for any Loans affected by such
event with the object of avoiding the consequences of such event; PROVIDED,
that such designation is made on terms that, in the sole judgment of such
Lender, cause such Lender and its lending office(s) to suffer no economic,
legal or regulatory disadvantage, and PROVIDED, FURTHER, that nothing in this
Section 2.20 shall affect or postpone any of the obligations of any Borrower
or the rights of any Lender pursuant to Section 2.17, 2.18(a) or 2.22.
2.21 REPLACEMENT OF LENDERS. If, at any time, so long as no
Default or Event of Default shall have occurred and be continuing (a) the
Borrower becomes obligated to pay additional amounts described in Sections
2.17 or 2.18 as a result of any conditions described in such Sections, (b)
any of the events described in Section 2.22 shall occur and any Lender is
thereby prohibited from making or maintaining Eurodollar Loans as
contemplated by this Agreement or (c) any Lender becomes insolvent and its
assets become subject to a receiver, liquidator, trustee, custodian or other
Person having similar powers, then the Borrower may, on ten Business Days
prior written notice to the Administrative Agent and such Lender, replace
such Lender by causing such Lender to (and such Lender shall) assign pursuant
to Section 10.6(c) all of its rights and obligations under this Agreement to
a Lender or other entity selected by the Borrower and reasonably acceptable
to the Administrative Agent (which consent shall not be unreasonably withheld
or delayed) for a purchase price equal to the outstanding principal amount of
such Lender's Loans and all accrued interest and fees and, as shall be paid
by either the Borrower or the assignee (as they may agree), other amounts
accrued and unpaid hereunder; PROVIDED that (i) the Borrower shall have no
right to replace the Administrative Agent (but may replace such Person as a
Lender), (ii) neither the Administrative Agent nor any Lender shall have any
obligation to the Borrower to find a replacement Lender or other such entity
and (iii) in the event of replacement of a Lender to which the Borrower
becomes obligated to pay additional amounts referred to in this Section, in
order for the Borrower to be entitled to replace such a Lender, such
replacement must take place no later than 180 days after the Lender shall
have demanded payment of additional amounts under one of the Sections
described in this Section. In the case of a replacement of a Lender to which
the Borrower becomes obligated to pay additional amounts referred to in this
Section, the Borrower shall pay such additional amounts to such Lender prior
to such Lender being replaced and the payment of such additional amounts
shall be a condition to the replacement of such Lender.
42
2.22 ILLEGALITY. Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender
to make or maintain Eurodollar Loans as contemplated by this Agreement, (a)
the commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans
shall forthwith be cancelled and (b) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect
to such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to Section
2.19.
2.23 SWING LINE COMMITMENT. 2.(a) Subject to the terms and
conditions hereof, the Swing Line Lender agrees to make a portion of the
credit otherwise available to the Borrower under the Revolving Credit
Commitments from time to time during the Revolving Credit Commitment Period
by making swing line loans ("SWING LINE LOANS") to the Borrower; PROVIDED
that (i) the aggregate principal amount of Swing Line Loans outstanding at
any time shall not exceed the Swing Line Commitment then in effect
(notwithstanding that the Swing Line Loans outstanding at any time, when
aggregated with the Swing Line Lender's other outstanding Revolving Credit
Loans hereunder, may exceed the Swing Line Commitment then in effect) and
(ii) the Borrower shall not request, and the Swing Line Lender shall not
make, any Swing Line Loan if, after giving effect to the making of such Swing
Line Loan, the aggregate amount of the Available Revolving Credit Commitments
would be less than zero. During the Revolving Credit Commitment Period, the
Borrower may use the Swing Line Commitment by borrowing, repaying and
reborrowing, all in accordance with the terms and conditions hereof. Swing
Line Loans shall be Base Rate Loans only.
(b) The Borrower shall repay all outstanding Swing Line Loans on
the Revolving Credit Termination Date.
2.24 PROCEDURE FOR SWING LINE BORROWING; REFUNDING OF SWING LINE
LOANS. (a) Whenever the Borrower desires that the Swing Line Lender make
Swing Line Loans it shall give the Swing Line Lender irrevocable telephonic
notice (except as otherwise agreed to by the Swing Line Lender and the
Borrower) confirmed promptly in writing (which telephonic notice must be
received by the Swing Line Lender not later than 1:00 P.M., New York City
time, on the proposed Borrowing Date), specifying (i) the amount to be
borrowed and (ii) the requested Borrowing Date (which shall be a Business Day
during the Revolving Credit Commitment Period). Not later than 3:00 P.M.,
New York City time, on the Borrowing Date specified in a notice in respect of
Swing Line Loans, if given, the Swing Line Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the amount of the Swing Line Loan to be made by the Swing Line
Lender. The Administrative Agent shall make the proceeds of such Swing Line
Loan available to the Borrower on such Borrowing Date by depositing such
proceeds in the account of the Borrower with the Administrative Agent on such
Borrowing Date in immediately available funds.
43
(b) The Swing Line Lender, at any time and from time to time in
its sole and absolute discretion may, on behalf of the Borrower (which hereby
irrevocably directs the Swing Line Lender to act on its behalf), on one
Business Day's notice given by the Swing Line Lender no later than 12:00
Noon, New York City time, request each Revolving Credit Lender to make, and
each Revolving Credit Lender hereby agrees to make, a Revolving Credit Loan,
in an amount equal to such Revolving Credit Lender's Revolving Credit
Percentage of the aggregate amount of the Swing Line Loans (the "REFUNDED
SWING LINE LOANS") outstanding on the date of such notice, to repay the Swing
Line Lender. Each Revolving Credit Lender shall make the amount of such
Revolving Credit Loan available to the Administrative Agent at the Funding
Office in immediately available funds, not later than 10:00 A.M., New York
City time, one Business Day after the date of such notice. The proceeds of
such Revolving Credit Loans shall be immediately applied by the Swing Line
Lender to repay the Refunded Swing Line Loans. The Borrower irrevocably
authorizes the Swing Line Lender to charge the Borrower's accounts with the
Administrative Agent (up to the amount available in each such account) in
order to immediately pay the amount of such Refunded Swing Line Loans to the
extent amounts received from the Revolving Credit Lenders are not sufficient
to repay in full such Refunded Swing Line Loans.
(c) If prior to the time a Revolving Credit Loan would have
otherwise been made pursuant to Section 2.24(b), one of the events described
in Section 8(f) shall have occurred and be continuing with respect to the
Borrower or if for any other reason, as determined by the Swing Line Lender
in its sole discretion, Revolving Credit Loans may not be made as
contemplated by Section 2.24(b), each Revolving Credit Lender shall, on the
date such Revolving Credit Loan was to have been made pursuant to the notice
referred to in Section 2.24(b) (the "REFUNDING DATE"), purchase for cash an
undivided participating interest in an amount equal to (i) its Revolving
Credit Percentage TIMES (ii) the aggregate principal amount of Swing Line
Loans then outstanding which were to have been repaid with such Revolving
Credit Loans (the "SWING LINE PARTICIPATION AMOUNT").
(d) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Lender's Swing Line Participation
Amount, the Swing Line Lender receives any payment on account of the Swing
Line Loans, the Swing Line Lender will distribute to such Lender its Swing
Line Participation Amount (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender's
participating interest was outstanding and funded and, in the case of
principal and interest payments, to reflect such Lender's PRO RATA portion of
such payment if such payment is not sufficient to pay the principal of and
interest on all Swing Line Loans then due); PROVIDED, HOWEVER, that in the
event that such payment received by the Swing Line Lender is required to be
returned, such Revolving Credit Lender will return to the Swing Line Lender
any portion thereof previously distributed to it by the Swing Line Lender.
(e) Each Revolving Credit Lender's obligation to make the Loans
referred to in Section 2.24(b) and to purchase participating interests
pursuant to Section 2.24(c) shall be absolute and unconditional and shall not
be affected by any circumstance, including, without limitation, (i) any
setoff, counterclaim, recoupment, defense or other right which such Revolving
44
Credit Lender or the Borrower may have against the Swing Line Lender, the
Borrower or any other Person for any reason whatsoever; (ii) the occurrence
or continuance of a Default or an Event of Default or the failure to satisfy
any of the other conditions specified in Section 5; (iii) any adverse change
in the condition (financial or otherwise) of the Borrower; (iv) any breach of
this Agreement or any other Loan Document by the Borrower, any other Loan
Party or any other Revolving Credit Lender; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
SECTION 3. LETTERS OF CREDIT
3.1 L/C COMMITMENT. (a) After the Syndication Date, subject to
the terms and conditions hereof, the Issuing Lender, in reliance on the
agreements of the other Revolving Credit Lenders set forth in Section 3.4(a),
agrees to issue letters of credit ("LETTERS OF CREDIT") for the account of
the Borrower on any Business Day during the Revolving Credit Commitment
Period in such form as may be approved from time to time by the Issuing
Lender; PROVIDED that the Issuing Lender shall have no obligation to issue
any Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment or (ii) the aggregate amount of
the Available Revolving Credit Commitments would be less than zero. Each
Letter of Credit shall (i) be denominated in Dollars and (ii) expire no later
than the earlier of (x) the first anniversary of its date of issuance and (y)
the date which is five Business Days prior to the Scheduled Revolving Credit
Termination Date, PROVIDED that any Letter of Credit with a one-year term may
provide for the renewal thereof for additional one-year periods (which shall
in no event extend beyond the date referred to in clause (y) above).
(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
(c) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by,
any applicable Requirement of Law.
3.2 PROCEDURE FOR ISSUANCE OF LETTER OF CREDIT. The Borrower may
from time to time after the Syndication Date request that the Issuing Lender
issue a Letter of Credit by delivering to the Issuing Lender at its address
for notices specified herein an Application therefor, completed to the
satisfaction of the Issuing Lender, and such other certificates, documents
and other papers and information as the Issuing Lender may reasonably
request. Upon receipt of any Application, the Issuing Lender will process
such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such
Letter of Credit to the beneficiary thereof or as otherwise may be agreed to
by the Issuing Lender and the Borrower. The Issuing Lender shall furnish a
copy of such Letter of Credit to the Borrower promptly following the issuance
thereof. The Issuing Lender shall
45
promptly furnish to the Administrative Agent, which shall in turn promptly
furnish to the Lenders, notice of the issuance of each Letter of Credit
(including the amount thereof). The letter of credit identified on Schedule
3.2 to the Disclosure Letter shall at all times on and after the Syndication
Date (PROVIDED that on such date Union Bank of California, N.A. shall be a
Lender party hereto) be deemed to be a Letter of Credit for all purposes of
this Agreement and the other Loan Documents, and, Union Bank of California,
N.A. shall be the Issuing Lender in respect thereof.
3.3 COMMISSIONS, FEES AND OTHER CHARGES. (a) The Borrower will
pay a commission on all outstanding Letters of Credit at a per annum rate
equal to the Applicable Margin then in effect with respect to Eurodollar
Loans under the Revolving Credit Facility MINUS the fronting fee referred to
below, shared ratably among the Revolving Credit Lenders and payable
quarterly in arrears on each L/C Fee Payment Date after the issuance date.
In addition, the Borrower shall pay to the Issuing Lender for its own account
a fronting fee of 1/4 of 1% per annum, payable quarterly in arrears on each
L/C Fee Payment Date after the Issuance Date.
(b) In addition to the foregoing fees and commissions, to the
extent agreed to by the Borrower and the Issuing Lender, the Borrower shall
pay or reimburse the Issuing Lender for such normal and customary costs and
expenses as are incurred or charged by the Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit.
3.4 L/C PARTICIPATIONS. (a) The Issuing Lender irrevocably
agrees to grant and hereby grants to each L/C Participant, and, to induce the
Issuing Lender to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and purchases
from the Issuing Lender, on the terms and conditions hereinafter stated, for
such L/C Participant's own account and risk an undivided interest equal to
such L/C Participant's Revolving Credit Percentage in the Issuing Lender's
obligations and rights under each Letter of Credit issued hereunder and the
amount of each draft paid by the Issuing Lender thereunder. Each L/C
Participant unconditionally and irrevocably agrees with the Issuing Lender
that, if a draft is paid under any Letter of Credit for which the Issuing
Lender is not reimbursed in full by the Borrower in accordance with the terms
of this Agreement, such L/C Participant shall pay to the Issuing Lender upon
demand at the Issuing Lender's address for notices specified herein an amount
equal to such L/C Participant's Revolving Credit Percentage of the amount of
such draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to
the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit
is paid to the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Lender on
demand an amount equal to the product of (i) such amount, times (ii) the
daily average Federal Funds Effective Rate during the period from and
including the date such payment is required to the date on which such payment
is immediately available to the Issuing Lender, times (iii) a fraction the
numerator of which is the number of days that elapse during such period and
the denominator of which is 360. If any such amount required to be paid by
any L/C Participant
46
pursuant to Section 3.4(a) is not made available to the Issuing Lender by
such L/C Participant within three Business Days after the date such payment
is due, the Issuing Lender shall be entitled to recover from such L/C
Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum applicable to Base Rate Loans under the
Revolving Credit Facility. A certificate of the Issuing Lender submitted to
any L/C Participant with respect to any amounts owing under this Section
shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant
its PRO RATA share of such payment in accordance with Section 3.4(a), the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrower or otherwise, including proceeds of collateral
applied thereto by the Issuing Lender), or any payment of interest on account
thereof, the Issuing Lender will distribute to such L/C Participant its PRO
RATA share thereof; PROVIDED, HOWEVER, that in the event that any such
payment received by the Issuing Lender shall be required to be returned by
the Issuing Lender, such L/C Participant shall return to the Issuing Lender
the portion thereof previously distributed by the Issuing Lender to it.
3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER. The Borrower agrees
to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Lender for the amount of (a) such
draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by the Issuing Lender in connection with such payment. Each such
payment shall be made to the Issuing Lender at its address for notices
specified herein in lawful money of the United States and in immediately
available funds. Interest shall be payable on any and all amounts remaining
unpaid by the Borrower under this Section from the date such amounts become
payable (whether at stated maturity, by acceleration or otherwise) until
payment in full at the rate set forth in Section 2.13(c). Each drawing under
any Letter of Credit shall (unless an event of the type described in clause
(i) or (ii) of Section 8(f) shall have occurred and be continuing with
respect to the Borrower, in which case the procedures specified in Section
3.4 for funding by L/C Participants shall apply) constitute a request by the
Borrower to the Administrative Agent for a borrowing pursuant to Section 2.5
of Base Rate Loans (or, at the option of the Administrative Agent and the
Swing Line Lender in their sole discretion, a borrowing pursuant to Section
2.24 of Swing Line Loans) in the amount of such drawing. The Borrowing Date
with respect to such borrowing shall be the date of such drawing.
3.6 OBLIGATIONS ABSOLUTE. The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender, any beneficiary of
a Letter of Credit or any other Person. The Borrower also agrees with the
Issuing Lender that the Issuing Lender shall not be responsible for, and the
Borrower's Reimbursement Obligations under Section 3.5 shall not be affected
by, among other things, the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower
and any beneficiary of any Letter of Credit or any other party to which such
47
Letter of Credit may be transferred or any claims whatsoever of the Borrower
against any beneficiary of such Letter of Credit or any such transferee. The
Issuing Lender shall not be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of the Issuing Lender. The Borrower agrees that any action taken or omitted
by the Issuing Lender under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards or care specified in
the Uniform Commercial Code of the State of New York, shall be binding on the
Borrower and shall not result in any liability of the Issuing Lender to the
Borrower.
3.7 LETTER OF CREDIT PAYMENTS. If any draft shall be presented
for payment under any Letter of Credit, the Issuing Lender shall promptly
notify the Borrower of the date and amount thereof. The responsibility of
the Issuing Lender to the Borrower in connection with any draft presented for
payment under any Letter of Credit shall, in addition to any payment
obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are substantially in
conformity with such Letter of Credit.
3.8 APPLICATIONS. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the
provisions of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement
and to make the Loans and issue or participate in the Letters of Credit, the
Borrower hereby represents and warrants to each Agent and each Lender that:
4.1 FINANCIAL CONDITION. (a) The unaudited PRO FORMA
consolidated balance sheet of the Borrower and its consolidated Subsidiaries
as at the Closing Date (including the notes thereto) (the "PRO FORMA BALANCE
SHEET"), copies of which have heretofore been furnished to each Lender, has
been prepared giving effect (as if such events had occurred on such date) to
(i) the consummation of the Merger, (ii) the Loans to be made and the Senior
Subordinated Notes to be issued on the Closing Date and the use of proceeds
thereof, (iii) the other transactions contemplated hereby and (iv) the
payment of fees and expenses in connection with the foregoing. The Pro Forma
Balance Sheet has been prepared based on the best information available to
the Borrower as of the date of delivery thereof, and presents fairly on a PRO
FORMA basis the estimated financial position of Borrower and its consolidated
Subsidiaries as at the Closing Date, assuming that the events specified in
the preceding sentence had actually occurred at such date.
(b) The audited consolidated balance sheets of Axiohm S.A.R.L. as
at December 31, 1995 and December 31, 1996, and the related consolidated
statements of income and of cash flows for the fiscal years ended on such
dates, reported on by and accompanied by an unqualified
48
report from Price Waterhouse, present fairly the consolidated financial
condition of Axiohm S.A.R.L. as at such dates, and the consolidated results
of its operations and its consolidated cash flows for the respective fiscal
years then ended. The unaudited consolidated balance sheet of Axiohm
S.A.R.L. as at June 30, 1997, and the related unaudited consolidated
statements of income and cash flows for the six-month period ended on such
date, present fairly the consolidated financial condition of Axiohm S.A.R.L.
as at such date, and the consolidated results of its operations and its
consolidated cash flows for the six-month period then ended (subject to
normal year-end audit adjustments). All such financial statements, including
the related schedules and notes thereto, have been prepared in accordance
with GAAP applied consistently throughout the periods involved (except as
approved by the aforementioned firm of accountants and disclosed therein.
Axiohm S.A.R.L. and its Subsidiaries do not have any material Guarantee
Obligations, contingent liabilities and liabilities for taxes, or any
long-term leases or unusual forward or long-term commitments, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction or other obligation in respect of derivatives, which are not
reflected in the most recent financial statements referred to in this
paragraph (b). During the period from December 31, 1996 to and including the
date hereof, there has been no Disposition by Axiohm S.A.R.L. or its
Subsidiaries of any material part of its business or Property or, except as a
part of the Pre-Merger Transactions, any transfer of Capital Stock to any
Person other than Axiohm S.A.R.L. or a Subsidiary Guarantor that is a
Domestic Subsidiary.
(c) The audited consolidated balance sheets of the Borrower as at
December 31, 1994, December 31, 1995 and December 31, 1996, and the related
consolidated statements of income and of cash flows for the fiscal years
ended on such dates, reported on by and accompanied by an unqualified report
from KPMG Peat Marwick LLP, present fairly the consolidated financial
condition of the Borrower as at such dates, and the consolidated results of
its operations and its consolidated cash flows for the respective fiscal
years then ended. The unaudited consolidated balance sheet of the Borrower
as at June 30, 1997, and the related unaudited consolidated statements of
income and cash flows for the six-month period ended on such date, present
fairly the consolidated financial condition of the Borrower as at such date,
and the consolidated results of its operations and its consolidated cash
flows for the six-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). The Borrower and
its Subsidiaries do not have any material Guarantee Obligations, contingent
liabilities and liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including, without limitation, any interest
rate or foreign currency swap or exchange transaction or other obligation in
respect of derivatives, which are not reflected in the most recent financial
statements referred to in this paragraph (c). During the period from
December 31, 1996 to and including the date hereof there has been no
Disposition by the Borrower or its Subsidiaries of any material part of its
business or Property.
4.2 NO CHANGE. Since December 31, 1996 there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.
49
4.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the
Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority, and the legal right, to own and operate
its Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where
its ownership, lease or operation of Property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law, except, in the case of clauses (c) and (d), to the extent that the
failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
4.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each
Loan Party has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party and, in
the case of the Borrower, to borrow hereunder. Each Loan Party has taken all
necessary corporate action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party and, in the case of
the Borrower, to authorize the borrowings on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the Merger and the borrowings hereunder or with
the execution, delivery, performance, validity or enforceability of this
Agreement or any of the Loan Documents, except (i) consents, authorizations,
filings and notices have been obtained or made and are in full force and
effect and (ii) the filings referred to in Section 4.19(b). Each Loan
Document has been duly executed and delivered on behalf of each Loan Party
party thereto. This Agreement constitutes, and each other Loan Document upon
execution will constitute, a legal, valid and binding obligation of each Loan
Party party thereto, enforceable against each such Loan Party in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at law).
4.5 NO LEGAL BAR. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit,
the borrowings hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or any Contractual Obligation of the Borrower or any
of its Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation (other
than the Liens created by the Security Documents). No Requirement of Law or
Contractual Obligation applicable to the Borrower or any of its Subsidiaries
could reasonably be expected to have a Material Adverse Effect.
4.6 NO MATERIAL LITIGATION. Except as provided in Schedule 4.6 to
the Disclosure Letter, no litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any of
its Subsidiaries or against any of their respective properties or revenues
(a) with respect
50
to any of the Loan Documents or any of the transactions contemplated hereby
or thereby, or (b) which could reasonably be expected to have a Material
Adverse Effect.
4.7 NO DEFAULT. Neither the Borrower nor any of its Subsidiaries
is in default under or with respect to any of its Contractual Obligations in
any respect which could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.
4.8 OWNERSHIP OF PROPERTY; LIENS. Except as set forth in Schedule
4.9 to the Disclosure Letter (which exceptions could not reasonably be
expected to have a Material Adverse Effect), each of the Borrower and its
Subsidiaries has title in fee simple to, or a valid leasehold interest in,
all its real property, and good title to, or a valid leasehold interest in,
all its other material Property, except for any defects in title that do not
interfere in any material respect with its ability to conduct its business as
currently conducted or to utilize such properties and assets for their
intended purposes, and none of such Property is subject to any Lien except as
permitted by Section 7.3.
4.9 INTELLECTUAL PROPERTY. Except as set forth in Schedule 4.9 to
the Disclosure Letter (which exceptions could not reasonably be expected to
have a Material Adverse Effect); (i) the Borrower and each of its
Subsidiaries owns, or is licensed to use, all Intellectual Property necessary
for the conduct of its business as currently conducted; (ii) no material
claim has been asserted and is pending by any Person challenging or
questioning the use of any Intellectual Property or the validity or
effectiveness of any Intellectual Property, nor does the Borrower know of any
valid basis for any such claim; and (iii) the use of Intellectual Property by
the Borrower and its Subsidiaries does not infringe on the rights of any
Person in any material respect.
4.10 TAXES. Each of the Borrower and each of its Subsidiaries has
filed or caused to be filed all Federal, state and other material tax returns
which are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
Property and all other taxes, fees or other charges imposed on it or any of
its Property by any Governmental Authority (other than any the amount or
validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have
been provided on the books of the Borrower or its Subsidiaries, as the case
may be); no tax Lien has been filed, and, to the knowledge of the Borrower,
no claim is being asserted, with respect to any such tax, fee or other charge.
4.11 FEDERAL REGULATIONS. No part of the proceeds of any Loans
will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation G or
Regulation U as now and from time to time hereafter in effect in violation of
the provisions of the Regulations of the Board. If requested by any Lender
or the Administrative Agent, the Borrower will furnish to the Administrative
Agent and each Lender a statement to the foregoing effect in conformity with
the requirements of FR Form G-3 or FR Form U-1 referred to in Regulation G or
Regulation U, as the case may be.
51
4.12 LABOR MATTERS. There are no strikes or other labor disputes
against the Borrower or any of its Subsidiaries pending or, to the knowledge
of the Borrower, threatened that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. Hours worked by
and payment made to employees of the Borrower and its Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Requirement of Law dealing with such matters that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect.
All payments due from the Borrower or any of its Subsidiaries on account of
employee health and welfare insurance that (individually or in the aggregate)
could reasonably be expected to have a Material Adverse Effect if not paid
have been paid or accrued as a liability on the books of the Borrower or the
relevant Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan,
and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code. No termination of a Single Employer Plan
has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during
such five-year period. The present value of all accrued benefits under each
Single Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits by a material amount. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan which has resulted or could reasonably
be expected to result in a material liability under ERISA, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
material liability under ERISA if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as
of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
4.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. No Loan Party is
an "investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended. No Loan Party is subject to regulation under any Requirement of Law
(other than Regulation X of the Board) which limits its ability to incur
Indebtedness.
4.15 SUBSIDIARIES. The Subsidiaries listed on Schedule 4.15 to
the Disclosure Letter constitute as of the Closing Date all the Subsidiaries
of the Borrower at the date hereof.
4.16 USE OF PROCEEDS. (a) The proceeds of the Term Loans will be
used (i) to refinance the borrowings of Acquisition Co. under the Tender
Facility, (ii) to finance the redemption of the Interim Preferred Stock
issued by Axiohm-IPB in connection with the Tender Offer, (iii) to refinance
certain indebtedness of the Borrower outstanding after the Merger, (iv) to
finance the payment to be made to shareholders of Axiohm S.A.R.L. in
connection with the Exchange Offer and (v) the payment of the fees and
expenses of the Merger and the Tender Offer and the transactions contemplated
thereby.
52
(b) The proceeds of the Revolving Credit Loans and Swing Line Loans
shall be used for working capital purposes and other general corporate
purposes of the Borrower and its Subsidiaries; PROVIDED that up to $2,400,000
of the proceeds of Revolving Credit Loans may be used for the purposes set
forth in Section 4.16(a). Letters of Credit shall be used to provide credit
support for insurance and other general corporate requirements of the
Borrower and its Subsidiaries.
4.17 ENVIRONMENTAL MATTERS. Except as in the aggregate could not
reasonably be expected to result in the payment of a Material Environmental
Amount:
(a) The facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "PROPERTIES") do not contain, and,
to the best knowledge of the Borrower, have not previously contained, any
Materials of Environmental Concern in amounts or concentrations or under
circumstances which (i) constitute or constituted a violation of, or (ii)
could give rise to liability under, any Environmental Law.
(b) The Properties and all operations at the Properties are in
material compliance, and have, to the best knowledge of the Borrower, in the
last five years been in material compliance, with all applicable
Environmental Laws, and there is, to the best knowledge of the Borrower, no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by
the Borrower or any of its Subsidiaries (the "BUSINESS"). Neither the
Borrower nor any of its Subsidiaries has assumed or retained any liability of
any other Person under Environmental Laws.
(c) Neither the Borrower nor any of its Subsidiaries has received
or is aware of any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the Properties or
the Business, nor does the Borrower have knowledge or reason to believe that
any such notice will be received or is being threatened.
(d) To the best knowledge of the Borrower, Materials of
Environmental Concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location which could give
rise to liability under, any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed of at, on
or under any of the Properties in violation of, or in a manner that could
give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be named
as a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements outstanding
under any Environmental Law with respect to the Properties or the Business.
53
(f) To the best knowledge of the Borrower, there has been no
release or threat of release of Materials of Environmental Concern at or from
the Properties, or arising from or related to the operations of the Borrower
or any Subsidiary in connection with the Properties or otherwise in
connection with the Business, in violation of or in amounts or in a manner
that could give rise to liability under Environmental Laws.
For purposes of Section 8(b) of this Agreement, each of the
foregoing representations and warranties contained in this Section 4.17 that
are qualified by the knowledge or best knowledge of the Borrower shall be
deemed not to be so qualified.
4.18 ACCURACY OF INFORMATION, ETC. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement
(including the financial statements of Axiohm S.A.R.L. as at and for the
period ended December 31, 1994) furnished to the Administrative Agent or the
Lenders or any of them, by or on behalf of any Loan Party for use in
connection with the transactions contemplated by this Agreement or the other
Loan Documents, contained as of the date such statement, information,
document or certificate was so furnished (or, in the case of the Confidential
Information Memorandum, as of the date of this Agreement), any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements contained herein or therein, taken as a whole,
not misleading. The projections and PRO FORMA financial information
contained in the materials referenced above are based upon good faith
estimates and assumptions believed by management of the Borrower to be
reasonable at the time made, it being recognized by the Lenders that such
financial information as it relates to future events is not to be viewed as
fact and that actual results during the period or periods covered by such
financial information may differ from the projected results set forth therein
by a material amount. As of the date hereof, the representations and
warranties contained in the Merger Agreement are true and correct in all
material respects. There is no fact known to any Loan Party that could
reasonably be expected to have a Material Adverse Effect that has not been
expressly disclosed herein, in the other Loan Documents, in the Confidential
Information Memorandum or in any other documents, certificates and statements
furnished to the Administrative Agent and the Lenders for use in connection
with the transactions contemplated hereby and by the other Loan Documents.
4.19 SECURITY DOCUMENTS. (a) The Guarantee and Collateral
Agreement is effective to create in favor of the Administrative Agent, for
the benefit of the Lenders, a legal, valid and enforceable security interest
in the Collateral described therein and proceeds thereof. In the case of the
Pledged Stock described in the Guarantee and Collateral Agreement, when stock
certificates representing such Pledged Stock are delivered to the
Administrative Agent, and in the case of the other Collateral described in
the Guarantee and Collateral Agreement, when financing statements in
appropriate form are filed in the offices specified on Schedule 4.19(a) to
the Disclosure Letter and such other filings as are specified on Schedule 3
to the Guarantee and Collateral Agreement, the Guarantee and Collateral
Agreement shall constitute a fully perfected Lien on, and security interest
in, all right, title and interest of the Loan Parties in such Collateral and
the proceeds thereof, as security for the Obligations (as defined in the
Guarantee and
54
Collateral Agreement), in each case prior and superior in right to any other
Person (except, in the case of Collateral other than Pledged Stock, Liens
permitted by Section 7.3).
(b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on
Schedule 4.19(b) to the Disclosure Letter, each such Mortgage shall
constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in the Mortgaged Properties and the
proceeds thereof, as security for the Obligations (as defined in the relevant
Mortgage), in each case prior and superior in right to any other Person.
(c) The French Security Document is effective to create in favor
of the Administrative Agent, for the benefit of the Lenders, a legal, valid
and enforceable security interest in the collateral described therein and
proceeds thereof. In the case of the collateral described in the French
Security Document, the French Security Document shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in the collateral and the proceeds thereof, as security for
the Secured Liabilities (as defined in the French Security Document), in each
case prior and superior in right to any other Person (except Liens permitted
by Section 7.3).
(d) The Australian Pledge Agreement is effective to create in
favor of the Administrative Agent, for the benefit of the Lenders, a legal,
valid and enforceable security interest in the Pledged Stock described
therein. When stock certificates representing such Pledged Stock are
delivered to the Administrative Agent, the Australian Pledge Agreement shall
constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Pledge Stock, as security for
the Secured Moneys (as defined in the Australian Pledge Agreement), prior and
superior in right to any other Person.
(e) The U.K. Pledge Agreement is effective to create in favor of
the Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the Pledged Stock described therein. When
stock certificates representing such Pledged Stock are delivered to the
Administrative Agent, the U.K. Pledge Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in such Pledge Stock, as security for the Secured
Liabilities (as defined in the U.K. Pledge Agreement), prior and superior in
right to any other Person.
(f) The French Pledge Agreements are effective to create in favor
of the Administrative Agent, for the benefit of the Lenders, a legal, valid
and enforceable security interest in the Pledged Stock described therein.
When the formalities of perfection set forth in Article 2.1 or 12 (as
applicable) of the French Pledge Agreements have been consummated, the French
Pledge Agreements shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such Pledge
Stock, as security for the Secured Liabilities (as defined in the French
Pledge Agreements), prior and superior in right to any other Person.
55
4.20 SOLVENCY. With due consideration given to Section 2.1 of the
Guarantee and Collateral Agreement, each Loan Party is, and after giving
effect to the Merger and Exchange Offer and the incurrence of all
Indebtedness and obligations being incurred in connection herewith and
therewith will be and will continue to be, Solvent.
4.21 SENIOR INDEBTEDNESS. The Obligations constitute Senior
Indebtedness of the Borrower under and as defined in the Senior Subordinated
Note Indenture. The obligations of each Subsidiary Guarantor under the
Guarantee and Collateral Agreement constitute Senior Indebtedness of such
Subsidiary Guarantor under and as defined in the Senior Subordinated Note
Indenture.
4.22 REGULATION H. No Mortgage encumbers improved real property
which is located in an area that has been identified by the Secretary of
Housing and Urban Development as an area having special flood hazards and in
which flood insurance has been made available under the National Flood
Insurance Act of 1968.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS TO INITIAL EXTENSION OF CREDIT. The agreement of
each Lender to make the initial extension of credit requested to be made by
it is subject to the satisfaction, prior to or concurrently with the making
of such extension of credit on the Closing Date, of the following conditions
precedent:
(a) LOAN DOCUMENTS. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly authorized
officer of the Borrower, (ii) the Guarantee and Collateral Agreement,
executed and delivered by a duly authorized officer of each party
thereto, (iii) each of the Mortgages, executed and delivered by a duly
authorized officer of each party thereto, (iv) the French Security
Document, executed and delivered by a duly authorized officer of each
party thereto, (v) the Australian Pledge Agreement, executed and
delivered by a duly authorized officer of each party thereto, (vi) the
U.K. Pledge Agreement executed and delivered by a duly authorized
officer of each party thereto, (vii) the French Pledge Agreements, and
the related statements of pledge (declarations ▇▇ ▇▇▇▇), executed and
delivered by a duly authorized office of each party thereto and (viii)
for the account of each relevant Lender, Notes conforming to the
requirements hereof and executed and delivered by a duly authorized
officer of the Borrower.
(b) MERGER, ETC. The following transactions shall have been
consummated, in each case, on terms and conditions reasonably
satisfactory to the Lenders:
(i) The Merger shall have been, or shall be concurrently,
consummated pursuant to the Merger Agreement and all required
stockholder approval to effect the Merger shall have been obtained;
and the Merger Agreement shall not have been amended, supplemented,
waived or otherwise
56
modified in any material respect without the prior written consent
of the Administrative Agent;
(ii) The Exchange Offer shall have been consummated and,
after giving effect to the Exchange Offer and the Merger, the
Borrower shall own, directly or indirectly, at least 90% of the
stock of Axiohm S.A.R.L.; and
(iii) The Borrower shall have issued and sold the Senior
Subordinated Notes.
(c) PRO FORMA BALANCE SHEET; FINANCIAL STATEMENTS. The Lenders
shall have received (i) the Pro Forma Balance Sheet, (ii) audited
consolidated financial statements of the Borrower for the 1994, 1995 and
1996 fiscal years, (iii) audited consolidated financial statements of
Axiohm S.A.R.L. for its 1994, 1995 and 1996 fiscal years and (iv)
unaudited interim consolidated financial statements of the Borrower and
Axiohm S.A.R.L. for each fiscal month and quarterly period ended
subsequent to the date of the latest applicable financial statements
delivered pursuant to clauses (ii) and (iii) of this paragraph as to
which such financial statements are available, and such financial
statements shall not, in the reasonable judgment of the Lenders, reflect
any material adverse change in the consolidated financial condition of
the Borrower and its Subsidiaries or Axiohm S.A.R.L. and its
Subsidiaries, as reflected in the financial statements or projections
contained in the Confidential Information Memorandum.
(d) APPROVALS. All governmental (including compliance with the
H-S-R Act in respect of the Merger and the Exchange Offer, and any
required French governmental approvals in respect of the Exchange
Offer), shareholder and third party approvals (including debtholders',
landlords' and other consents) reasonably necessary or advisable in
connection with the Merger, the Exchange Offer, the financings
contemplated hereby and the continuing operations of Axiohm S.A.R.L.,
Axiohm-IPB, the Borrower and their Subsidiaries after the Merger shall
have been obtained and be in full force and effect and all applicable
waiting periods shall have expired without any action being taken or
threatened by any competent authority which would restrain, prevent or
otherwise impose adverse conditions on the Tender Offer or the Merger.
(e) RELATED AGREEMENTS. The Administrative Agent shall have
received (in a form reasonably satisfactory to the Syndication Agent),
with a copy for each Lender, true and correct copies, certified as to
authenticity by the Borrower, of the Transaction Documentation and such
other documents or instruments as may be reasonably requested by the
Syndication Agent, including, without limitation, a copy of the Senior
Subordinated Note Indenture and any other debt instrument, security
agreement or other material contract to which the Loan Parties may be a
party. The documents and materials filed publicly by Axiohm S.A.R.L.,
Acquisition Co. and the Borrower in connection with the Merger shall
have been furnished to the Administrative Agent and shall be reasonably
satisfactory in form and substance.
57
(f) REFINANCING OF TENDER FACILITY. All obligations of
Acquisition Co. or the Borrower under the Tender Facility shall have
been refinanced with the proceeds of the Facilities and the Senior
Subordinated Notes.
(g) FEES. The Lenders, the Syndication Agent and the
Administrative Agent shall have received all fees required to be paid,
and all expenses for which invoices have been presented, on or before
the Closing Date.
(h) SOLVENCY ANALYSIS. The Lenders shall have received a
satisfactory solvency opinion from Valuemetrics, Inc., which shall
document the solvency of Axiohm S.A.R.L., Axiohm-IPB, the Borrower and
each of their Subsidiaries taken as a whole after giving effect to the
Tender Offer, the Merger and the other transactions contemplated hereby.
(i) INSURANCE. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.5 hereof
and Section 5.3 of the Guarantee and Collateral Agreement.
(j) LIEN SEARCHES. The Administrative Agent shall have received
the results of a recent lien search in each of the jurisdictions where
assets of the Loan Parties are located, and such search shall reveal no
liens on any of the assets of the Borrower or its Subsidiaries except
for liens permitted by Section 7.3.
(k) INDEBTEDNESS, LIENS OR PREFERRED CAPITAL STOCK. Neither
Acquisition Co., the Borrower nor their Subsidiaries shall have any
outstanding Indebtedness, Liens or preferred Capital Stock after giving
effect to the Merger other than such Indebtedness, Liens or preferred
Capital Stock permitted by Sections 7.2 and 7.3.
(l) CLOSING CERTIFICATE. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan
Party, dated the Closing Date, substantially in the form of Exhibit C,
with appropriate insertions and attachments.
(m) LEGAL OPINIONS. The Administrative Agent shall have received
the following executed legal opinions:
(i) the legal opinion of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, counsel to
the Borrower and its Subsidiaries, substantially in the form of
Exhibit F-1;
(ii) the legal opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
counsel to the Borrower and its Subsidiaries, substantially in the
form of Exhibit F-2;
(iii) the legal opinion of ▇▇▇▇▇▇▇▇▇ and May, French counsel
to the Borrower and its Subsidiaries, substantially in the form of
Exhibit F-3;
58
(iv) the legal opinion of special Gide Loyrette Nouel, French
counsel to the Agents and the Lenders, substantially in the form of
Exhibit F-4;
(v) the legal opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., Australian
counsel to the Borrower, substantially in the form of Exhibit F-5;
(vi) the legal opinion of ▇▇▇▇▇ & Overy, U.K. counsel to the
Agents and the Lenders, substantially in the form of Exhibit F-6;
and
(vii) the legal opinion of Sparks ▇▇▇, P.C., Colorado counsel
to the Borrower and its subsidiaries, substantially in the form of
Exhibit F-7.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Syndication Agent may
reasonably require.
(n) PLEDGED STOCK; STOCK POWERS. The Administrative Agent shall
have received the certificates representing the shares of Capital Stock
pledged pursuant to the Guarantee and Collateral Agreement, the
Australian Pledge Agreement, the French Pledge Agreement and the U.K.
Pledge Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the
pledgor thereof.
(o) FILINGS, REGISTRATIONS AND RECORDINGS. Each document
(including, without limitation, any Uniform Commercial Code financing
statement) required by the Security Documents or under law or reasonably
requested by the Administrative Agent to be filed, registered or
recorded in order to create in favor of the Administrative Agent, for
the benefit of the Lenders, a perfected Lien on the Collateral described
therein, prior and superior in right to any other Person (other than
with respect to Liens expressly permitted by Section 7.3), shall be in
proper form for filing, registration or recordation.
(p) MORTGAGES, ETC. (i) The Administrative Agent shall have
received a Mortgage with respect to each Mortgaged Property, executed
and delivered by a duly authorized officer of each party thereto.
(ii) If requested by the Administrative Agent, the Administrative
Agent shall have received, and the title insurance company issuing the
policy referred to in Section 5.1(m)(iii) (the "TITLE INSURANCE COMPANY")
shall have received, maps or plats of an as-built survey of the sites of
the Mortgaged Properties certified to the Administrative Agent and the
Title Insurance Company in a manner satisfactory to them, dated a date
satisfactory to the Administrative Agent and the Title Insurance Company
by an independent professional licensed land surveyor satisfactory to
the Administrative Agent and the Title Insurance Company, which maps or
plats and the surveys on which they are based shall be made in
accordance with the Minimum Standard Detail Requirements for Land Title
Surveys jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping in 1992,
and, without limiting the generality of the foregoing, there shall be
surveyed and shown on such maps,
59
plats or surveys the following: (A) the locations on such sites of all
the buildings, structures and other improvements and the established
building setback lines; (B) the lines of streets abutting the sites and
width thereof; (C) all access and other easements appurtenant to the
sites; (D) all roadways, paths, driveways, easements, encroachments and
overhanging projections and similar encumbrances affecting the site,
whether recorded, apparent from a physical inspection of the sites or
otherwise known to the surveyor; (E) any encroachments on any adjoining
property by the building structures and improvements on the sites; (F)
if the site is described as being on a filed map, a legend relating the
survey to said map; and (G) the flood zone designations, if any, in
which the Mortgaged Properties are located.
(iii) The Administrative Agent shall have received in respect of
each Mortgaged Property a mortgagee's title insurance policy (or
policies) or marked up unconditional binder for such insurance. Each
such policy shall (A) be in an amount satisfactory to the Administrative
Agent; (B) be issued at ordinary rates; (C) insure that the Mortgage
insured thereby creates a valid first Lien on such Mortgaged Property
free and clear of all defects and encumbrances, except as disclosed
therein; (D) name the Administrative Agent for the benefit of the
Lenders as the insured thereunder; (E) be in the form of ALTA Loan
Policy - 1970 (Amended 10/17/70 and 10/17/84) (or equivalent policies);
(F) contain such endorsements and affirmative coverage as the
Administrative Agent may reasonably request and (G) be issued by title
companies satisfactory to the Administrative Agent (including any such
title companies acting as co-insurers or reinsurers, at the option of
the Administrative Agent). The Administrative Agent shall have received
evidence satisfactory to it that all premiums in respect of each such
policy, all charges for mortgage recording tax, and all related
expenses, if any, have been paid.
(iv) If requested by the Administrative Agent, the Administrative
Agent shall have received (A) a policy of flood insurance which (1)
covers any parcel of improved real property which is encumbered by any
Mortgage (2) is written in an amount not less than the outstanding
principal amount of the indebtedness secured by such Mortgage which is
reasonably allocable to such real property or the maximum limit of
coverage made available with respect to the particular type of property
under the National Flood Insurance Act of 1968, whichever is less, and
(3) has a term ending not later than the maturity of the Indebtedness
secured by such Mortgage and (B) confirmation that the Borrower has
received the notice required pursuant to Section 208(e)(3) of Regulation
H of the Board.
(v) The Administrative Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the
title policy or policies referred to in Section 5.1(m)(iii) and a copy
of all other material documents affecting the Mortgaged Properties.
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including, without
60
limitation, its initial extension of credit) is subject to the satisfaction
of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by any Loan Party in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as
of such date as if made on and as of such date.
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extensions of credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the
Borrower hereunder shall constitute a representation and warranty by the
Borrower as of the date of such extension of credit that the conditions
contained in this Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain
in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or any Agent hereunder, the Borrower shall and
shall cause each of its Subsidiaries to:
6.1 FINANCIAL STATEMENTS. Furnish to each Agent and each Lender:
(a) as soon as available, but in any event within 90 days after
the end of each fiscal year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related audited
consolidated statements of income and of cash flows for such year,
setting forth in each case in comparative form the figures for the
previous year, reported on without a going concern or like qualification
or exception, or qualification arising out of the scope of the audit, by
KPMG Peat Marwick LLP or other independent certified public accountants
of nationally recognized standing; and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each
fiscal year of the Borrower, the unaudited consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at the end of such
quarter and the related unaudited consolidated statements of income and
of cash flows for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein and with
prior periods (except as approved by such accountants or officer, as the case
may be, and disclosed therein).
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6.2 CERTIFICATES; OTHER INFORMATION. Furnish to each Agent and
each Lender, or, in the case of clause (g), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in
such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer
stating that, to the best of each such Responsible Officer's knowledge,
each Loan Party during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained
in this Agreement and the other Loan Documents to which it is a party to
be observed, performed or satisfied by it, and that such Responsible
Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate and (ii) in the case of
quarterly or annual financial statements, (x) a Compliance Certificate
containing all information and calculations necessary for determining
compliance by the Borrower and its Subsidiaries with the provisions of
this Agreement referred to therein as of the last day of the fiscal
quarter or fiscal year of the Borrower, as the case may be, and (y) to
the extent not previously disclosed to the Administrative Agent, a
listing of any county or state within the United States where any Loan
Party keeps inventory or equipment and of any Intellectual Property
acquired by any Loan Party since the date of the most recent list
delivered pursuant to this clause (y) (or, in the case of the first such
list so delivered, since the Closing Date) the value of which exceeds
$50,000;
(c) as soon as available, and in any event no later than 45 days
after the end of each fiscal year of the Borrower, a detailed
consolidated budget for the following fiscal year (including a projected
consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of the following fiscal year, and the related consolidated
statements of projected cash flow, projected changes in financial
position and projected income), and, as soon as available, significant
revisions, if any, of such budget and projections with respect to such
fiscal year (collectively, the "PROJECTIONS"), which Projections shall in
each case be accompanied by a certificate of a Responsible Officer
stating that such Projections are based on reasonable estimates,
information and assumptions as of the time such Projections were
delivered and that such Responsible Officer has no reasonable basis to
believe that such Projections are incorrect or misleading in any
material respect; PROVIDED that such certificate may state that the
Responsible Officer gives no assurance that such Projections will be
achieved;
(d) to the extent approval is required by the Required Lenders
pursuant to Section 7.9, no later than 10 Business Days prior to the
effectiveness thereof, copies of substantially final drafts of any
proposed amendment, supplement, waiver or other modification with
respect to the Senior Subordinated Note Indenture;
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(e) to the extent not previously delivered hereunder, within five
days after the same are sent, copies of all financial statements and
reports which the Borrower sends to the holders of any class of its debt
securities or public equity securities and within five days after the
same are filed, copies of all financial statements and reports which the
Borrower may make to, or file with, the SEC, including any materials
filed in respect of the Exchange Offer or the Merger; and
(f) promptly, such additional financial and other information
regarding the business of the Borrower and its Subsidiaries as they
relate to the Loan Documents as any Lender (through the Administrative
Agent) may from time to time reasonably request.
6.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy
at or before maturity or before they become delinquent, as the case may be,
all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have
been provided on the books of the Borrower or its Subsidiaries, as the case
may be.
6.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE, ETC. (a)(i)
Subject to Section 7.15, continue to engage in business of the same general
type as now conducted by it, (ii) preserve, renew and keep in full force and
effect its corporate existence and (iii) take all reasonable action to
maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of its business, except, in each case, as otherwise permitted
by Section 7.4 and except, in the case of clause (iii) above, to the extent
that failure to do so could not reasonably be expected to have a Material
Adverse Effect; and (b) comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.5 MAINTENANCE OF PROPERTY; INSURANCE. (a) Subject to Section
7.5, keep all Property useful and necessary in its business in good working
order and condition, ordinary wear and tear excepted and (b) maintain with
financially sound and reputable insurance companies insurance on all its
Property in at least such amounts and against at least such risks (but
including in any event public liability, product liability and business
interruption) as are usually insured against in the same general area by
companies engaged in the same or a similar business.
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. (a)
Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and activities and
(b) permit representatives of any Lender to visit and inspect any of its
properties and examine and make abstracts from any of its books and records
at any reasonable time and as often as may reasonably be desired and, with
reasonable notice, to discuss the business, operations, properties and
financial and other condition of the Borrower and its Subsidiaries with
officers and employees of the Borrower and its Subsidiaries and with its
independent certified public accountants.
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6.7 NOTICES. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental
Authority, which in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of
its Subsidiaries in which the amount involved is $1,500,000 or more and
not covered by insurance or in which injunctive or similar relief is
sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof:
(i) the occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Plan; and
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement
of a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower or the relevant Subsidiary
proposes to take with respect thereto.
6.8 ENVIRONMENTAL LAWS. (a)(i) Comply with all Environmental Laws
applicable to it, and obtain, comply with and maintain any and all
Environmental Permits necessary for its operations as conducted and as
planned; and (ii) take all reasonable efforts to ensure that all of its
tenants, subtenants, contractors, subcontractors, and invitees comply with
all Environmental Laws, and obtain, comply with and maintain any and all
Environmental Permits, applicable to any of them insofar as any failure to so
comply, obtain or maintain reasonably could be expected to adversely affect
the Borrower or any of its Subsidiaries. For purposes of this Section
6.8(a), noncompliance by the Borrower or any of its Subsidiaries with any
applicable Environmental Law or Environmental Permit shall be deemed not to
constitute a breach of this covenant if, upon learning of any actual or
suspected noncompliance, the Borrower or any applicable Subsidiary shall
promptly undertake all reasonable efforts to achieve compliance, and PROVIDED
that, in any case, such non-compliance, and any other noncompliance with
Environmental Law, individually or in the aggregate, could not reasonably be
expected to give
64
rise to a Material Adverse Effect or materially and adversely affect the
value of any Mortgaged Property.
(b) Promptly comply with all material orders and directives of all
Governmental Authorities regarding Environmental Laws, other than such orders
and directives as to which appropriate proceedings have been timely and
properly taken in good faith, and PROVIDED that the pendency of any and all
such proceedings could not reasonably be expected to give rise to a Material
Adverse Effect.
(c) Promptly (and in any case within six months) after the Closing
Date, complete the development of, and implement in all material respects, a
program to promote compliance with and to minimize prudently any liabilities
or potential liabilities under any Environmental Law that may affect the
Borrower or any of its Subsidiaries (the "ENVIRONMENTAL PROGRAM"). The
Environmental Program shall be developed with the assistance of a reputable
independent environmental consulting firm or other independent environmental
professional, in either case, reasonably acceptable to the Agents (an
"ENVIRONMENTAL PROFESSIONAL"). Upon either Agent's request, a reasonably
detailed written description of the Environmental Program shall be provided
to the Agents prior to finalization thereof, after which, upon either Agent's
request, the Borrower and the Environmental Professional involved shall
confer with the Agents concerning the Environmental Program. The Agents
shall have the right, but shall not have any duty, to obtain, review, or
discuss any such description.
(d) Prior to acquiring any ownership or leasehold interest in real
property, or other interest in any real property that could give rise to the
Borrower or any of its Subsidiaries being found an owner, operator, or
otherwise subject to potential liability under any Environmental Law (or any
entity with such interests in any real property): (i) obtain a written report
by a reputable independent environmental consultant reasonably acceptable to
the Agents (an "ENVIRONMENTAL CONSULTANT") of the Environmental Consultant's
assessment of the presence or potential presence of significant levels of any
Materials of Environmental Concern on, in, under, or about such property, or
of other conditions that could give rise to potentially significant liability
under or violations of Environmental Law relating to such acquisition, and
notify the Administrative Agent of such potential acquisition; and (ii) if
requested by the Administrative Agent after learning of such potential
acquisition, provide such report to the Administrative Agent and afford the
Administrative Agent a reasonable opportunity to review and, if requested by
the Administrative Agent, discuss such report with the Environmental
Consultant who prepared it and a knowledgeable representative of the
Borrower. The Administrative Agent shall have the right, but shall not have
any duty, to obtain, review, or discuss any such report.
(e) Promptly upon Administrative Agent's request if there has
occurred or the Administrative Agent reasonably anticipates an Event of
Default, permit an environmental consultant whom the Administrative Agent in
its discretion designates, subject to the approval of the Borrower, which
shall not be unreasonably withheld or delayed, to perform an environmental
assessment (including, without limitation: reviewing documents; interviewing
knowledgeable persons; and sampling and analyzing soil, air, surface water,
groundwater, and/or other media in or about property owned or leased by the
Borrower or any of its Subsidiaries, or on which
65
operations of the Borrower or any of its Subsidiaries otherwise take place.)
Such environmental assessment shall be in form, scope, and substance
reasonably satisfactory to the Administrative Agent, subject to the approval
of the Borrower, which shall not be unreasonably withheld or delayed. The
Borrower or any of its Subsidiaries shall cooperate fully in the conduct of
such environmental assessment, and shall pay the reasonable costs of such
environmental assessment immediately upon written demand by the
Administrative Agent. The Administrative Agent shall have the right, but
shall not have any duty, to request and/or obtain such environmental
assessment.
6.9 INTEREST RATE PROTECTION. In the case of the Borrower, within
60 days after the Closing Date, enter into Interest Rate Protection
Agreements to the extent necessary to provide that at least $20,000,000 in
aggregate principal amount of the Term Loans is subject to either a fixed
interest rate or interest rate protection for a period of not less than two
years, which Interest Rate Protection Agreements shall have terms and
conditions reasonably satisfactory to the Agents.
6.10 ADDITIONAL COLLATERAL, ETC. (a) With respect to any Property
acquired after the Closing Date by the Borrower or any of its Subsidiaries
(other than (x) any Property described in paragraph (b), (c) or (d) below or
owned by an Excluded Foreign Subsidiary and (y) any Property subject to a
Lien expressly permitted by Section 7.3(g)) as to which the Administrative
Agent, for the benefit of the Lenders, does not have a perfected Lien,
promptly (i) execute and deliver to the Administrative Agent such supplements
or amendments to the Guarantee and Collateral Agreement or such other
documents as the Administrative Agent deems necessary or reasonably advisable
in order to grant to the Administrative Agent, for the benefit of the
Lenders, a security interest in such Property and (ii) take all actions
necessary or reasonably advisable to grant to the Administrative Agent, for
the benefit of the Lenders, a perfected first priority security interest in
such Property, including without limitation, the filing of Uniform Commercial
Code financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be requested by the
Administrative Agent.
(b) With respect to any fee interest in any real estate having a
value (together with improvements thereof) of at least $1,000,000 acquired
after the Closing Date by the Borrower or any of its Subsidiaries (other than
any such real estate subject to a Lien expressly permitted by Section
7.3(g)), promptly (i) execute and deliver a first priority mortgage or deed
of trust, as the case may be, in favor of the Administrative Agent, for the
benefit of the Lenders, covering such real estate, in form and substance
reasonably satisfactory to the Administrative Agent, (ii) if reasonably
requested by the Administrative Agent, provide the Lenders with (x) title and
extended coverage insurance covering such real estate in an amount at least
equal to the purchase price of such real estate (or such other amount as
shall be reasonably specified by the Administrative Agent) as well as a
current ALTA survey thereof, together with a surveyor's certificate and (y)
any consents or estoppels reasonably deemed necessary or reasonably advisable
by the Administrative Agent in connection with such mortgage or deed of
trust, each of the foregoing in form and substance reasonably satisfactory to
the Administrative Agent and (iii) if reasonably requested by the
Administrative Agent, deliver to the Administrative Agent legal
66
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(c) With respect to any new Subsidiary (other than an Excluded Foreign
Subsidiary) created or acquired after the Closing Date by the Borrower (which,
for the purposes of this paragraph (c), shall include any existing Subsidiary
that ceases to be an Excluded Foreign Subsidiary) or any of its Subsidiaries,
promptly (i) execute and deliver to the Administrative Agent such supplements or
amendments to the Guarantee and Collateral Agreement as the Administrative Agent
deems necessary or reasonably advisable in order to grant to the Administrative
Agent, for the benefit of the Lenders, a perfected first priority security
interest in the Capital Stock of such new Subsidiary which is owned by the
Borrower or any of its Subsidiaries, (ii) deliver to the Administrative Agent
the certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of the
Borrower or such Subsidiary, as the case may be, (iii) cause such new Subsidiary
(A) to become a party to the Guarantee and Collateral Agreement and (B) to take
such actions necessary or reasonably advisable to grant to the Administrative
Agent for the benefit of the Lenders a perfected first priority security
interest in the Collateral described in the Guarantee and Collateral Agreement
with respect to such new Subsidiary, including, without limitation, the filing
of Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Guarantee and Collateral Agreement or by law or as may be
reasonably requested by the Administrative Agent, and (iv) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or acquired
after the Closing Date by the Borrower or any of its Subsidiaries or any
Excluded Foreign Subsidiary that existed on the Closing Date which owns assets
with a value in excess of $1,000,000, promptly (i) execute and deliver to the
Administrative Agent such supplements or amendments to the Guarantee and
Collateral Agreement (or, if such Excluded Foreign Subsidiary owns assets with a
value in excess of $1,000,000, such other pledge or security agreement) as the
Administrative Agent deems necessary or reasonably advisable in order to grant
to the Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in the Capital Stock of such new Subsidiary which is
owned by the Borrower or any of its Subsidiaries (PROVIDED that in no event
shall more than 65% of the total outstanding Capital Stock of any such new
Subsidiary be required to be so pledged), (ii) deliver to the Administrative
Agent the certificates representing such Capital Stock, together with undated
stock powers, in blank, executed and delivered by a duly authorized officer of
the Borrower or such Subsidiary, as the case may be, and (iii) if reasonably
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(e) Promptly notify the Administrative Agent if (i) the value of the plant,
property and equipment of the Borrower and its Subsidiaries located in Mexico
exceeds $1,000,000 or (ii)
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the value of the inventory of the Borrower and its Subsidiaries located in
Mexico exceeds the lesser of (A) $5,000,000 or (B) 20% of the aggregate
worldwide inventory of the Borrower and its Subsidiaries; and, unless, at such
time, the Consolidated Leverage Ratio as at the last day of the most recent
period of four consecutive fiscal quarters of the Borrower is less than 2.50 to
1.00, take all actions necessary or reasonably advisable in order to grant to
the Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in such assets, including, without limitation, the
establishment and maintenance of a trust with an independent financial
institution for such purpose.
6.11 LIMITATION ON DESIGNATED SENIOR DEBT. Designate any Indebtedness as
"Designated Senior Debt" under the Senior Subordinated Note Indenture.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Letter of Credit remains outstanding or any Loan or other amount is
owing to any Lender or any Agent hereunder, the Borrower shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly:
7.1 FINANCIAL CONDITION COVENANTS.
(a) CONSOLIDATED LEVERAGE RATIO. Permit the Consolidated Leverage Ratio as
at the last day of any period of four consecutive fiscal quarters of the
Borrower (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending with any fiscal quarter set forth below to exceed the ratio
set forth below opposite such fiscal quarter:
Consolidated
Fiscal Quarter Leverage Ratio
-------------- --------------
December 31, 1997 5.50 to 1.00
March 31, 1998 5.50 to 1.00
June 30, 1998 5.50 to 1.00
September 30, 1998 5.25 to 1.00
December 31, 1998 4.75 to 1.00
March 31, 1999 3.50 to 1.00
June 30, 1999 3.50 to 1.00
September 30, 1999 3.50 to 1.00
December 31, 1999 3.50 to 1.00
March 31, 2000 2.50 to 1.00
June 30, 2000 2.50 to 1.00
September 30, 2000 2.50 to 1.00
December 31, 2000 2.50 to 1.00
March 31, 2001 1.50 to 1.00
June 30, 2001 1.50 to 1.00
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September 30, 2001 1.50 to 1.00
December 31, 2001 1.50 to 1.00
March 31, 2002 1.50 to 1.00
June 30, 2002 1.50 to 1.00
September 30, 2002 1.50 to 1.00
December 31, 2002 1.50 to 1.00
Thereafter 1.50 to 1.00
; PROVIDED, that for the purposes of determining the ratio described above for
the fiscal quarters of the Borrower ending December 31, 1997, March 31, 1998 and
June 30, 1998, Consolidated EBITDA for the relevant period shall be deemed to
equal Consolidated EBITDA for such fiscal quarter (and, in the case of the
latter two such determinations, each previous fiscal quarter commencing after
the Closing Date) MULTIPLIED BY 4, 2 and 4/3, respectively.
(b) CONSOLIDATED INTEREST COVERAGE RATIO. Permit the Consolidated Interest
Coverage Ratio for any period of four consecutive fiscal quarters of the
Borrower (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:
Consolidated Interest
Fiscal Quarter Coverage Ratio
-------------- --------------
December 31, 1997 1.75 to 1.00
March 31, 1998 1.50 to 1.00
June 30, 1998 1.70 to 1.00
September 30, 1998 1.90 to 1.00
December 31, 1998 2.10 to 1.00
March 31, 1999 3.10 to 1.00
June 30, 1999 3.10 to 1.00
September 30, 1999 3.10 to 1.00
December 31, 1999 3.10 to 1.00
March 31, 2000 4.50 to 1.00
June 30, 2000 4.50 to 1.00
September 30, 2000 4.50 to 1.00
December 31, 2000 4.50 to 1.00
March 31, 2001 6.50 to 1.00
June 30, 2001 6.50 to 1.00
September 30, 2001 6.50 to 1.00
December 31, 2001 6.50 to 1.00
March 31, 2002 65.0 to 1.00
June 30, 2002 6.50 to 1.00
September 30, 2002 6.50 to 1.00
December 31, 2002 6.50 to 1.00
Thereafter 6.50 to 1.00
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(c) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Permit the Consolidated
Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters
of the Borrower ending with any fiscal quarter set forth below to be less than
the ratio set forth below opposite such fiscal quarter:
Consolidated Fixed
Fiscal Quarter Charge Coverage Ratio
-------------- ---------------------
September 30, 1998 1.00 to 1.00
December 31, 1998 1.05 to 1.00
March 31, 1999 1.05 to 1.00
June 30, 1999 1.20 to 1.00
September 30, 1999 1.20 to 1.00
December 31, 1999 1.20 to 1.00
March 31, 2000 1.50 to 1.00
June 30, 2000 1.50 to 1.00
September 30, 2000 1.50 to 1.00
December 31, 2000 1.50 to 1.00
March 31, 2001 1.70 to 1.00
June 30, 2001 1.70 to 1.00
September 30, 2001 1.70 to 1.00
December 31, 2001 1.70 to 1.00
March 31, 2002 1.70 to 1.00
June 30, 2002 1.70 to 1.00
September 30, 2002 1.70 to 1.00
December 31, 2002 1.70 to 1.00
Thereafter 1.70 to 1.00
7.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to exist
(in each case, to "INCUR") any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness between the Borrower and a Subsidiary or between one
Subsidiary and another; PROVIDED that (a) if the Borrower is the obligor on
such Indebtedness, such Indebtedness is expressly subordinated in liquidation
to the prior payment in full in cash of all Obligations; and (b) if a
Subsidiary that is not a Subsidiary Guarantor is the obligor on such
Indebtedness, such Indebtedness owing to the Borrower or any Subsidiary
Guarantor, together with all intercompany Indebtedness owing from all
Subsidiaries that are not Subsidiary Guarantors to the Borrower or a
Subsidiary Guarantor, does not exceed $5,000,000 in aggregate principal
amount at any time outstanding;
70
(c) Indebtedness secured by Liens permitted by Section 7.3(g) in an
aggregate principal amount not to exceed $2,000,000 at any one time outstanding;
(d) Capital Lease Obligations in an aggregate principal amount not to exceed
$5,000,000 at any one time outstanding;
(e) Indebtedness outstanding on the date hereof and listed on Schedule
7.2(e) to the Disclosure Letter and any refinancings, refundings, renewals or
extensions thereof (without any increase in the principal amount thereof);
(f) unsecured Indebtedness of any Loan Party incurred in the ordinary course
of business as a result of open account arrangements or accrued expenses in
current account payables;
(g) Guarantee Obligations of any Indebtedness permitted by this Section 7.2;
and
(h) Indebtedness under Interest Rate Protection Agreements required by
Section 6.9;
(i) unsecured Indebtedness (x) in respect of a revolving credit facility
(the "FRENCH REVOLVER") for the purpose of funding the working capital needs in
the ordinary course of business of Axiohm S.A.R.L.; PROVIDED that (i) the Dollar
equivalent (determined in good faith by the Borrower) of the aggregate
outstanding principal amount thereof (the "AXIOHM S.A.R.L. EQUIVALENT
OUTSTANDINGS") shall not exceed $10,000,000 at any one time and (ii) on the date
of any incurrence thereof, after giving effect thereto, the sum of the Axiohm
S.A.R.L. Equivalent Outstandings and aggregate Revolving Extensions of Credit of
all Revolving Credit Lenders shall not exceed the aggregate Revolving Credit
Commitments of all Revolving Credit Lenders; PROVIDED, FURTHER, that a Letter of
Credit (in a face amount not to exceed $10,000,000) shall be issued to support
the obligations under the French Revolver and for purposes of this clause (ii)
only, the undrawn and unexpired amount of such Letter of Credit shall be deemed
to be a Revolving Extension of Credit, but, to the extent of the undrawn and
unexpired amount of any such outstanding Letter of Credit, any Axiohm S.A.R.L.
Equivalent Outstandings shall not be deemed to be outstanding or (y) of Axiohm
S.A.R.L. in an aggregate principal Dollar equivalent (determined in good faith
by Axiohm S.A.R.L.) amount at any time outstanding not to exceed $2,000,000;
(j) additional Indebtedness of Subsidiaries that are not Subsidiary
Guarantors in an aggregate principal amount at any time outstanding not to
exceed $5,000,000;
(k) guarantees made in the ordinary course of business by the Borrower or
any of its Subsidiaries of obligations of any Subsidiary Guarantor that is a
Domestic Subsidiary; and
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(l) (i) Indebtedness of the Borrower in respect of the Senior Subordinated
Notes in an aggregate principal amount not to exceed $120,000,000 and (ii)
Guarantee Obligations of any Subsidiary Guarantor in respect of such
Indebtedness subordinated to the Obligations to the same extent as such
Indebtedness.
7.3 LIMITATION ON LIENS. Create, incur, assume or suffer to exist any Lien
upon any of its Property or revenues, whether now owned or hereafter acquired,
except for:
(a) Liens for taxes not yet due or which are being contested in good faith
by appropriate proceedings, PROVIDED that adequate reserves with respect thereto
are maintained on the books of the Borrower or its Subsidiaries, as the case may
be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 30 days or which are being contested in good
faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e) zoning restrictions, easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case materially
detract from the value of the Property subject thereto or materially interfere
with the ordinary conduct of the business of the Borrower or any of its
Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f) to the
Disclosure Letter, securing Indebtedness permitted by Section 7.2(e), PROVIDED
that no such Lien is spread to cover any additional Property after the Closing
Date and that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other Subsidiary
incurred pursuant to Section 7.2(c) to finance the acquisition of fixed or
capital assets, PROVIDED that (i) such Liens shall be created within 90 days of
the acquisition of such fixed or capital assets, (ii) such Liens do not at any
time encumber any Property other than the Property financed by such Indebtedness
and (iii) the amount of Indebtedness secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
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(i) any interest or title of a lessor under any lease entered into by the
Borrower or any other Subsidiary in the ordinary course of its business and
covering only the assets so leased;
(j) Liens arising from precautionary UCC financing statement filings
regarding operating leases or consignment arrangements entered into by the
Borrower or its Subsidiaries in the ordinary course of business;
(k) licenses, sublicenses, leases and subleases permitted hereunder granted
to others not interfering in any material respect in the business of the
Borrower or any of its Subsidiaries;
(l) attachment or judgment Liens which are not outstanding for more than
thirty (30) days in an aggregate amount (not paid or fully covered by insurance
as to which the relevant insurance company has acknowledged coverage)
outstanding at any one time not in excess of $1,000,000;
(m) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by the Borrower or any
of its Subsidiaries in the ordinary course of business; and
(n) Liens on property at the time of its acquisition or existing on property
or assets of a Person which becomes a Subsidiary after the date hereof, PROVIDED
that (i) such Liens existed at the time of such acquisition or at the time such
Person became a Subsidiary and were not created in anticipation thereof, and
(ii) any such Lien is not spread to cover any additional property or assets,
including property or assets of such corporation after the time such corporation
becomes a Subsidiary; and
(o) Liens in favor of customs and revenue authorities arising as a matter of
law to secure the payment of customs duties in connection with the importation
of goods by the Borrower or its Subsidiaries.
7.4 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of, all or substantially all
of its Property or business, or make any material change in its present method
of conducting business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with or
into the Borrower (PROVIDED that the Borrower shall be the continuing or
surviving corporation) or with or into any Subsidiary Guarantor that is a
Domestic Subsidiary (PROVIDED that the Subsidiary Guarantor shall be the
continuing or surviving corporation);
(b) any Subsidiary of the Borrower may Dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Borrower or any Subsidiary
Guarantor that is a Domestic Subsidiary;
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(c) the Pre-Merger Transactions and, immediately thereafter (and
substantially concurrently therewith) the Merger, may be consummated, so long as
concurrently therewith all amounts outstanding under the Tender Facility shall
be repaid in full; and
(d) transactions permitted by Section 7.5.
7.5 LIMITATION ON SALE OF ASSETS. Dispose of any of its Property or
business (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary's Capital Stock to any Person,
except:
(a) the Disposition of obsolete or worn out property in the ordinary course
of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the Borrower
or any Subsidiary Guarantor that is a Domestic Subsidiary;
(e) the licensing and sublicensing of Intellectual Property of the Borrower
and its Subsidiaries in the ordinary course of business;
(f) the leasing or subleasing of real property of the Borrower and its
Subsidiaries in the ordinary course of business;
(g) Dispositions permitted by Section 7.11; and
(h) Asset Sales the Net Cash Proceeds of which are applied toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.10.
7.6 LIMITATION ON DIVIDENDS. Declare or pay any dividend (other than
dividends payable solely in common stock or warrants to purchase common stock of
the Person making such dividend) on, or make any payment on account of, or set
apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any shares of any
class of Capital Stock of the Borrower or any Subsidiary or any warrants or
options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Subsidiary (collectively, "RESTRICTED PAYMENTS"), except that:
(a) any Subsidiary may make Restricted Payments to the Borrower or any
Subsidiary Guarantor that is a Domestic Subsidiary;
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(b) the Exchange Offer;
(c) (i) as long as no Default or Event of Default shall have occurred and be
continuing, the Borrower may make (including tax indemnification amounts)
Restricted Payments into a trust in connection with the purchase of vested
options on the Borrower's common stock in an amount not to exceed $2,000,000 as
contemplated by the Merger Agreement and (ii) at any time, such trust may make
payments or distributions in accordance with the terms of the agreements
governing the operation of such trust; PROVIDED that in no event shall the
Borrower make Restricted Payments pursuant to this clause (c) in an amount in
excess of $2,000,000; and
(d) so long as no Default or Event of Default shall have occurred and be
continuing, the Borrower may repurchase its common stock at fair market value in
an amount not to exceed $500,000 during the 1998 and 1999 fiscal years of the
Borrower and $750,000 during the 2000 fiscal year of the Borrower.
7.7 LIMITATION ON CAPITAL EXPENDITURES. Make or commit to make (by way of
the acquisition of securities of a Person or otherwise) any Capital Expenditure,
except Capital Expenditures of the Borrower and its Subsidiaries in the ordinary
course of business not exceeding the amount set forth below with respect to any
fiscal year of the Borrower:
Fiscal Year Amount
----------- ------
1997 $ 3,000,000
1998 $ 10,500,000
1999 $ 11,500,000
2000 $ 12,500,000
2001 $ 13,500,000
2002 $ 14,500,000
Thereafter $ 14,500,000
7.8 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance, loan,
extension of credit (by way of guaranty or otherwise) or capital contribution
to, or purchase any stock, bonds, notes, debentures or other securities of or
any assets constituting all or a material part of a business unit of, or make
any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) loans and advances to employees of the Borrower or its Subsidiaries in
the ordinary course of business (including, without limitation, for travel,
entertainment and
75
relocation expenses) in an aggregate amount for the Borrower
and its Subsidiaries not to exceed $500,000 at any one time outstanding;
(e) so long as no Default or Event of Default shall have occurred and be
continuing, the purchase of all or substantially all of the assets of Saint
Maxim, a company organized in Taiwan, for aggregate consideration not in excess
of $250,000;
(f) the Tender Offer and the Pre-Merger Transactions;
(g) investments made by the Borrower or any of its Subsidiaries with the
proceeds of any Reinvestment Deferred Amount;
(h) investments, loans or advances by the Borrower or any of its
Subsidiaries in or to the Borrower or any Person that, prior to such investment,
loan or advance is a Subsidiary Guarantor that is a Domestic Subsidiary;
(i) cash pledged to the Lenders pursuant to the Loan Documents;
(j) investments by the Borrower or its Subsidiaries in Interest Rate
Protection Agreements required by Section 6.9;
(k) investments in the form of intercompany Indebtedness permitted by
Section 7.2(b) and (j); and
(l) so long as no Default or Event of Default shall have occurred and be
continuing, other investments by the Borrower or any Subsidiary in any Person
having an aggregate (for all said investments) fair market value (measured as of
the date such investment is made) not to exceed $3,000,000.
7.9 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT
INSTRUMENTS OR MERGER AGREEMENT, ETC. (a) Make or offer to make any payment,
prepayment, repurchase or redemption of or otherwise defease or segregate
funds with respect to the Senior Subordinated Notes (other than scheduled
interest payments required to be made in cash; provided that such scheduled
interest payments may not be made with "Permitted Proceeds" (as defined in the
Senior Subordinated Note Indenture) at any time when payments of interest on
the Senior Subordinated Notes are prohibited pursuant to Sections 10.02 or
10.03 of the Senior Subordinated Note Indenture except with Permitted
Proceeds), (b) amend, modify, waive or otherwise change, or consent or agree
to any amendment, modification, waiver or other change to, any of the terms
of (i) the Senior Subordinated Notes (other than any such amendment,
modification, waiver or other change which (A) would extend the maturity or
reduce the amount of any payment of principal thereof or which would reduce
the rate or extend the date for payment of interest thereon and (B) does not
involve the payment of a consent fee), (ii) the Merger Agreement or (iii) any
class of its Capital Stock or (c) designate any Indebtedness as "Designated
Senior Debt" for the purposes of the Senior Subordinated Note Indenture.
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7.10 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than the
Borrower or any Subsidiary in the ordinary course of business on fair and
reasonable terms) unless such transaction is (a) otherwise permitted under this
Agreement, (b) in the ordinary course of business of the Borrower or such
Subsidiary, as the case may be, and (c) upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person which is not an
Affiliate. Notwithstanding the foregoing, the following transactions may be
consummated: (i) the Tender Offer, the Pre-Merger Transactions and each of the
transactions provided for or described in the Transaction Documentation, (ii)
each of the employment agreements entered into by any of the Loan Parties and
▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇ dated as of July 14, 1997, (iii) as set forth on
Schedule 7.10 to the Disclosure Letter, (iv) Restricted Payments permitted by
Section 7.6, and (v) the payment of fees and indemnities to directors, officers
and employees of the Loan Parties in the ordinary course of business.
7.11 LIMITATION ON SALES AND LEASEBACKS. Enter into any arrangement with
any Person providing for the leasing by the Borrower or any Subsidiary of real
or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary, except if the Net Cash
Proceeds of such sale are applied toward the prepayment of the Term Loans and
the reduction of the Revolving Credit Commitments pursuant to Section 2.10.
7.12 LIMITATION ON CHANGES IN FISCAL PERIODS. Permit the fiscal year of
the Borrower to end on a day other than December 31 or change the Borrower's
method of determining fiscal quarters.
7.13 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into or suffer to exist
or become effective any agreement which prohibits or limits the ability of the
Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist
any Lien upon any of its Property or revenues, whether now owned or hereafter
acquired, other than (a) this Agreement and the other Loan Documents, (b) any
agreements governing any purchase money Liens or Capital Lease Obligations
otherwise permitted hereby (in which case, any prohibition or limitation shall
only be effective against the assets financed thereby) and (c) the Senior
Subordinated Note Indenture.
7.14 LIMITATION ON RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of the Borrower to (a) pay dividends or make any
other distributions in respect of any Capital Stock of such Subsidiary held by,
or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the
Borrower, (b) make loans or advances to the Borrower or any other Subsidiary of
the Borrower or (c) transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents and (ii) any restrictions with respect to a Subsidiary imposed
pursuant to an agreement which has been entered into in
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connection with the Disposition of all or substantially all of the Capital
Stock or assets of such Subsidiary otherwise permitted hereunder.
7.15 LIMITATION ON LINES OF BUSINESS. Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the date of this Agreement or
which are reasonably related or incidental thereto.
7.16 LIMITATION ON ACTIVITIES OF THE DARDEL AND AXIOHM-INV. Permit
Dardel or Axiohm-Inv, notwithstanding anything to the contrary in this
Agreement or any other Loan Document, to (a) conduct, transact or otherwise
engage in, or commit to conduct, transact or otherwise engage in, any
business or operations other than those incidental to its ownership of the
Capital Stock of its Subsidiary, (b) incur, create, assume or suffer to exist
any Indebtedness or other liabilities or financial obligations, except (i)
nonconsensual obligations imposed by operation of law, (ii) pursuant to the
Loan Documents to which it is a party and (iii) obligations with respect to
its Capital Stock (other than any such obligations constituting
Indebtedness), (c) own, lease, manage or otherwise operate any properties or
assets (including cash and cash equivalents) other than the ownership of
shares of Capital Stock of its Subsidiary, (d) create or permit to exist any
Subsidiary other than a wholly owned Subsidiary or (e) directly or
indirectly, convey, sell, transfer of otherwise dispose of, or create,
assume, incur or permit to be created, assumed, incurred or to exist, any
Lien of any kind upon, any Capital Stock of its Subsidiary (except pursuant
to the Loan Documents).
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within five days after any such interest or other amount becomes
due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by any Loan Party
herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) (i) Any Loan Party shall default in the observance or performance of
any agreement contained in clause (ii) of Section 6.4(a) (with respect to
any Loan Party), Section 6.7(a), Section 7, or Sections 5.6 or 5.8 of the
Guarantee and Collateral Agreement or (ii) an "Event of Default" under and
as defined in any Mortgage shall have occurred and be continuing; or
78
(d) Any Loan Party shall default in the observance or performance of any
other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days after notice
to the Borrower from the Administrative Agent or the Required Lenders; or
(e) The Borrower or any of its Subsidiaries shall (i) default in making
any payment of any principal of any Indebtedness (including, without
limitation, any Guarantee Obligation, but excluding the Loans) beyond the
period of grace, if any, provided in the instrument or agreement under which
such Indebtedness was created; or (ii) default in making any payment of any
interest on any such Indebtedness beyond the period of grace (not to exceed
30 days), if any, provided in the instrument or agreement under which such
Indebtedness was created; or (iii) default in the observance or performance
of any other agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or beneficiary of such Indebtedness (or a trustee or agent on behalf
of such holder or beneficiary) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or
(in the case of any such Indebtedness constituting a Guarantee Obligation)
to become payable; PROVIDED, that a default, event or condition described in
clause (i), (ii) or (iii) of this paragraph (e) shall not at any time
constitute an Event of Default under this Agreement unless, at such time,
one or more defaults, events or conditions of the type described in clauses
(i), (ii) and (iii) of this paragraph (e) shall have occurred and be
continuing with respect to Indebtedness the outstanding principal amount of
which exceeds in the aggregate $1,000,000; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above which
(A) results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against the Borrower or
any of its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry
of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) the Borrower or any of its
79
Subsidiaries shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth
in clause (i), (ii), or (iii) above; or (v) the Borrower or any of its
Subsidiaries shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event 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 commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate
for purposes of Title IV of ERISA, (v) the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a withdrawal
from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi)
any other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could, in the
sole judgment of the Required Lenders, reasonably be expected to have a
Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance as to which the relevant insurance
company has acknowledged coverage) of $1,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 30 days from the entry thereof; or
(i) Any of the Security Documents shall cease, for any reason, to be in
full force and effect, or any Loan Party or any Affiliate of any Loan Party
shall so assert, or any Lien created by any of the Security Documents shall
cease to be enforceable and of the same effect and priority purported to be
created thereby; or
(j) The guarantee contained in Section 2 of the Guarantee and Collateral
Agreement shall cease, for any reason, to be in full force and effect or any
Loan Party or any Affiliate of any Loan Party shall so assert; or
(k) (i) The Permitted Investors shall cease to own of record and
beneficially an amount of common stock of the Borrower equal to at least 40%
of the amount of common stock of the Borrower have voting power for the
election of directors of the Borrower; (ii) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT")), excluding the Permitted Investors,
shall become, or obtain rights (whether by means or
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warrants, options or otherwise) to become, the "beneficial owner" (as
defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly
or indirectly, of more than 25% of the outstanding common stock of the
Borrower; or (iii) the board of directors of the Borrower shall cease to
consist of a majority of Continuing Directors; or
(l) The Senior Subordinated Notes or the guarantees thereof shall cease,
for any reason, to be validly subordinated to the Obligations or the
obligations of the Subsidiary Guarantors under the Guarantee and Collateral
Agreement, as the case may be, as provided in the Senior Subordinated Note
Indenture, or any Loan Party, any Affiliate of any Loan Party, the trustee
in respect of the Senior Subordinated Notes or the holders of at least 25%
in aggregate principal amount of the Senior Subordinated Notes shall so
assert;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Majority Revolving Credit Facility Lenders,
the Administrative Agent may, or upon the request of the Majority Revolving
Credit Facility Lenders, the Administrative Agent shall, by notice to the
Borrower declare the Revolving Credit Commitments to be terminated forthwith,
whereupon the Revolving Credit Commitments shall immediately terminate; and (ii)
with the consent of the Required Lenders, the Administrative Agent may, or upon
the request of the Required Lenders, the Administrative Agent shall, by notice
to the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including, without limitation, all amounts of L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have presented
the documents required thereunder) to be due and payable forthwith, whereupon
the same shall immediately become due and payable. With respect to all Letters
of Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be applied
by the Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrower (or such other Person as may be lawfully entitled thereto).
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SECTION 9. THE AGENTS
9.1 APPOINTMENT. Each Lender hereby irrevocably designates and appoints
the Agents as the agents of such Lender under this Agreement and the other Loan
Documents, and each such Lender irrevocably authorizes each Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against any Agent.
9.2 DELEGATION OF DUTIES. Each Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
9.3 EXCULPATORY PROVISIONS. Neither any Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except to the extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Agents under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or for any failure
of any Loan Party a party thereto to perform its obligations hereunder or
thereunder. The Agents shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4 RELIANCE BY ADMINISTRATIVE AGENT. Each Agent shall be entitled to
rely, and shall be fully protected in relying, upon any instrument, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype 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 the Loan Parties), independent accountants and
other experts selected by the Administrative Agent. The Agents may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or
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transfer thereof shall have been filed with the Administrative Agent. Each
Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless it shall first receive
such advice or concurrence of the Required Lenders (or, if so specified by
this Agreement, all Lenders) as it deems appropriate 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. Each Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
9.5 NOTICE OF DEFAULT. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received notice from a Lender or the Borrower 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 Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Lenders (or, if so specified by this Agreement, all Lenders); PROVIDED that
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
9.6 NON-RELIANCE ON AGENTS AND OTHER LENDERS. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereinafter
taken, including any review of the affairs of a Loan Party or any affiliate
of a Loan Party, shall be deemed to constitute any representation or warranty
by any Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any 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 business, operations,
property, financial and other condition and creditworthiness of the Loan
Parties and their affiliates and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon any 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 the other Loan
Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, no Agent
shall have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of any Loan Party or
any affiliate of a Loan Party which may come into the possession of such
Agent or any of its officers, directors, employees, agents, attorneys-in-fact
or affiliates.
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9.7 INDEMNIFICATION. The Lenders agree to indemnify each Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Revolving Credit Percentages, Tranche A Term Loan Percentages and
Tranche B Term Loan Percentages in effect on the date on which indemnification
is sought under this Section 9.7 (or, if indemnification is sought after the
date upon which the Commitments shall have terminated and the Loans shall have
been paid in full, ratably in accordance with such Percentages immediately prior
to such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Loans) be imposed on, incurred by or
asserted against such Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such 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 which are found by a final and nonappealable decision of a court
of competent jurisdiction to have resulted from such Agent's gross negligence or
willful misconduct. The agreements in this Section 9.7 shall survive the payment
of the Loans and all other amounts payable hereunder.
9.8 AGENT IN ITS INDIVIDUAL CAPACITY. Each Agent and its affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with any Loan Party as though such Agent were not an Agent. With respect to its
Loans made or renewed by it and with respect to any Letter of Credit issued or
participated in by it, each Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not an Agent, and the terms "Lender" and "Lenders" shall
include each Agent in its individual capacity.
9.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign as
Administrative Agent upon 30 days' notice to the Lenders and the Borrower. If
the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, which successor agent
shall (unless an Event of Default under Section 8(a) or Section 8(f) with
respect to the Borrower shall have occurred and be continuing) be approved by
the Borrower (which approval shall not be unreasonably withheld or delayed),
whereupon such successor agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. If no successor agent has accepted appointment as
Administrative Agent by the date that is 30 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall assume and perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. The
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Syndication Agent may, at any time, by notice to the Lenders and the
Administrative Agent, resign as Syndication Agent hereunder, whereupon the
duties, rights, obligations and responsibilities hereunder shall
automatically be assumed by, and inure to the benefit of, the Administrative
Agent, without any further act by the Syndication Agent, the Administrative
Agent or any Lender. After any retiring Agent's resignation as Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement
and the other Loan Documents.
9.10 AUTHORIZATION TO RELEASE LIENS. The Administrative Agent is hereby
irrevocably authorized by each of the Lenders to release any Lien covering any
Property of the Borrower or any of its Subsidiaries that is the subject of a
Disposition which is permitted by this Agreement or which has been consented to
in accordance with Section 10.1.
9.11 ARRANGER. The Arranger, in its capacity as such, shall not have any
duties or any responsibilities hereunder nor any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against the Arranger in its capacity as such.
SECTION 10. MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may, or
(with the written consent of the Required Lenders) the Agents and each Loan
Party party to the relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders, or the Agents, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
PROVIDED that no such waiver and no such amendment, supplement or modification
shall (i) forgive the principal amount or extend the final scheduled date of
maturity of any Loan, extend the scheduled date of any amortization payment in
respect of any Term Loan, reduce the stated rate of any interest, fee or letter
of credit commission payable hereunder or extend the scheduled date of any
payment thereof, or increase the amount or extend the expiration date of any
Lender's Revolving Credit Commitment, in each case without the consent of each
Lender directly affected thereby; (ii) amend, modify or waive any provision of
this Section 10.1 or reduce any percentage specified in the definition of
Required Lenders or Required Prepayment Lenders, consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents, release all or substantially all of the
Collateral or release all or substantially all of the Subsidiary Guarantors from
their obligations under the Guarantee and Collateral Agreement, in each case
without the written consent of all Lenders; (iii) amend, modify or waive any
condition precedent to any extension of credit under the Revolving Credit
Facility set forth in Section 5.2 (including, without limitation, in connection
with any waiver of
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an existing Default or Event of Default) without the written consent of the
Majority Revolving Credit Facility Lenders; (iv) reduce the percentage
specified in the definition of Majority Facility Lenders without the written
consent of all Lenders under each affected Facility; (v) amend, modify or
waive any provision of Section 9 without the written consent of the Agents;
(vi) amend, modify or waive any provision of Section 2.23 or 2.24 without the
written consent of the Swing Line Lender; or (vii) amend, modify or waive any
provision of Section 3 without the written consent of the Issuing Lender. Any
such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties,
the Lenders, the Administrative Agent and all future holders of the Loans. In
the case of any waiver, the Loan Parties, the Lenders and the Administrative
Agent shall be restored to their former position and rights hereunder and
under the other Loan Documents, and any Default or Event of Default
waived shall be deemed to be cured and not continuing; but no such waiver
shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
10.2 NOTICES. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telecopy), and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered, or three Business Days after being deposited in
the mail, postage prepaid, or, in the case of telecopy notice, when received,
addressed as follows in the case of the Borrower, the Syndication Agent and the
Administrative Agent, and as set forth in an administrative questionnaire
delivered to the Administrative Agent in the case of the Lenders, or to such
other address as may be hereafter notified by the respective parties hereto:
The Borrower: Axiohm Transaction Solutions, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
The Syndication Agent: ▇▇▇▇▇▇ Commercial Paper Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
The Administrative Agent: Union Bank of California, N.A.
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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PROVIDED that any notice, request or demand to or upon any of the parties hereto
shall not be effective until received (except in the case of any notice, request
or demand to or upon any of the Loan Parties by any of the Agents or the Lenders
in connection with the exercise of remedies of any of the Agents or the Lenders
pursuant to the Loan Documents or otherwise, including, without limitation, any
notice pursuant to Section 8).
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the either Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
10.5 PAYMENT OF EXPENSES. The Borrower agrees (a) to pay or reimburse
the Agents for all their reasonable out-of-pocket costs and expenses incurred
in connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Agents, (b) to pay or
reimburse each Lender and the Agents for all its costs and expenses incurred
in connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the fees and disbursements of counsel (including the
allocated fees and expenses of in-house counsel) to each Lender and of
counsel to the Agents, (c) to pay, indemnify, and hold each Lender and the
Agents harmless from, any and all recording and filing fees or any amendment,
supplement or modification of, or any waiver or consent under or in respect
of, this Agreement, the other Loan Documents and any such other documents,
and (d) to pay, indemnify, and hold each Lender and the Agents and their
respective officers, directors, employees, affiliates, agents and controlling
persons (each, an "indemnitee") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents and any such other
documents, including, without limitation, any of the foregoing relating to
the use of proceeds of the Loans or the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of the
Borrower any of its Subsidiaries or any of the Properties (all the foregoing
in this clause (d), collectively, the "indemnified liabilities"), PROVIDED that
the Borrower shall have no obligation hereunder to any indemnitee with
respect to indemnified liabilities to the extent such indemnified liabilities
are found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted
87
from the gross negligence or willful misconduct of such indemnitee. Without
limiting the foregoing (including, without limitation, the proviso to the
preceding sentence), and to the extent permitted by applicable law, the
Borrower agrees not to assert and to cause its Subsidiaries not to assert,
and hereby waives and agrees to cause its Subsidiaries to so waive, all
rights for contribution or any other rights of recovery with respect to all
claims, demands, penalties, fines, liabilities, settlements, damages, costs
and expenses of whatever kind or nature, under or related to Environmental
Laws, that any of them might have by statute or otherwise against any
Indemnitee. The agreements in this Section 10.5 shall survive repayment of
the Loans and all other amounts payable hereunder.
10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Agents, all future holders of the Loans and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agents and each Lender.
(b) Any Lender may, without the consent of the Borrower, in accordance with
applicable law, at any time sell to one or more banks, financial institutions or
other entities (each, a "PARTICIPANT") participating interests in any Loan owing
to such Lender, any Commitment of such Lender or any other interest of such
Lender hereunder and under the other Loan Documents. In the event of any such
sale by a Lender of a participating interest to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Agents shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents. In no event shall any Participant under any such
participation have any right to approve any amendment or waiver of any provision
of any Loan Document, or any consent to any departure by any Loan Party
therefrom, except to the extent that such amendment, waiver or consent would
reduce the principal of, or interest on, the Loans or any fees payable
hereunder, or postpone the date of the final maturity of the Loans, in each case
to the extent subject to such participation. The Borrower agrees that if amounts
outstanding under this Agreement and the Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement, PROVIDED that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in Section 10.7(a) as fully as if it
were a Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of Sections 2.17, 2.18 and 2.19 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it was a Lender; PROVIDED that, in the case of Section 2.18, such
Participant shall have complied with the requirements of said Section and
PROVIDED, FURTHER, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the
88
amount of the participation transferred by such transferor Lender to such
Participant had no such transfer occurred and the Borrower shall not be
required to pay a greater amount.
(c) Any Lender (an "Assignor") may, in accordance with applicable law and
with written notice to the Syndication Agent, at any time and from time to
time assign to any Lender or any Affiliate thereof or a Person under common
management with such Lender or, with the consent of the Borrower and the
Agents (which, in each case, shall not be unreasonably withheld or delayed),
to an additional bank, financial institution or other entity (an "ASSIGNEE")
all or any part of its rights and obligations under this Agreement pursuant
to an Assignment and Acceptance (an "ASSIGNMENT AND ACCEPTANCE"),
substantially in the form of Exhibit E, executed by such Assignee, such
Assignor, the Syndication Agent and the Administrative Agent (and, where the
consent of the Borrower is required pursuant to the foregoing provisions, by
the Borrower) and delivered to the Administrative Agent for its acceptance
and recording in the Register; PROVIDED that no such assignment to an
Assignee (other than any Lender or any Affiliate thereof) shall be in an
aggregate principal amount of less than $5,000,000 (other than in the case of
an assignment of all of a Lender's interests under this Agreement), unless
otherwise agreed by the Borrower, the Syndication Agent and the
Administrative Agent. Any such assignment need not be ratable as among the
Facilities. Upon such execution, delivery, acceptance and recording, from and
after the effective date determined pursuant to such Assignment and
Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with a Commitment and/or Loans as set forth
therein, and (y) the Assignor thereunder shall, to the extent provided in
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of
an Assignor's rights and obligations under this Agreement, such assigning
Lender shall cease to be a party hereto). Notwithstanding any provision of
this Section 10.6, the consent of the Borrower shall not be required for any
assignment which occurs at any time when any of the events described in
Section 8(f) shall have occurred and be continuing.
(d) The Administrative Agent shall maintain at its address referred to in
Section 10.2 a copy of each Assignment and Acceptance delivered to it and a
register (the "REGISTER") for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Loans owing to, each
Lender from time to time and any Notes evidencing such Loans. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders shall treat each Person whose
name is recorded in the Register as the owner of the Loan and any Note
evidencing such Loan recorded therein for all purposes of this Agreement. Any
assignment of any Loan whether or not evidenced by a Note shall be effective
only upon appropriate entries with respect thereto being made in the Register
(and each Note shall expressly so provide). Any assignment or transfer of all or
part of a Loan evidenced by a Note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Note evidencing such
Loan, accompanied by a duly executed Assignment and Acceptance, and thereupon
one or more new Notes in the same aggregate principal amount shall be issued to
the designated Assignee and the old Notes shall be returned by the
Administrative Agent to the Borrower marked cancelled. The Register shall be
89
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof or a Person under common management
with such Lender, by the Borrower, the Administrative Agent, the Syndication
Agent and the Issuing Lender) together with payment to the Administrative
Agent of a registration and processing fee of $2,000 (except that no such
registration and processing fee shall be payable (y) in connection with an
assignment by Union Bank of California, N.A. or (z) in the case of an
Assignee which is already a Lender or is an affiliate of a Lender or a Person
under common management with a Lender), the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders
and the Borrower. On or prior to such effective date, the Borrower, at its
own expense, upon request, shall execute and deliver to the Administrative
Agent (in exchange for the Revolving Credit Note and/or Term Notes, as the
case may be, of the assigning Lender) a new Revolving Credit Note and/or Term
Notes, as the case may be, to the order of such Assignee in an amount equal
to the Revolving Credit Commitment and/or applicable Term Loans, as the case
may be, assumed or acquired by it pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained a Revolving Credit Commitment
and/or Term Loans, as the case may be, upon request, a new Revolving Credit
Note and/or Term Notes, as the case may be, to the order of the assigning
Lender in an amount equal to the Revolving Credit Commitment and/or
applicable Term Loans, as the case may be, retained by it hereunder. Such new
Notes shall be dated the Closing Date and shall otherwise be in the form of
the Note replaced thereby.
(f) For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this Section 10.6 concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
10.7 ADJUSTMENTS; SET-OFF. (a) Except to the extent that this Agreement
provides for payments to be allocated to the Lenders under a particular
Facility, if any Lender (a "BENEFITTED LENDER") shall at any time receive any
payment of all or part of its Loans or the Reimbursement Obligations owing to
it, or interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 8(f), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans or the Reimbursement Obligations owing to
such other Lender, or interest thereon, such Benefitted Lender shall purchase
for cash from the other Lenders a participating interest in such portion of each
such other Lender's Loan and/or of the Reimbursement Obligations owing to each
such other Lender, or shall provide such other Lenders with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such
Benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; PROVIDED that
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if all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded, and
the purchase price and benefits returned, to the extent of such recovery, but
without interest.
(b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, upon the occurrence and during the continuance
of an Event of Default, without prior notice to the Borrower, any such notice
being expressly waived by the Borrower to the extent permitted by applicable
law, upon any amount becoming due and payable by the Borrower hereunder (whether
at the stated maturity, by acceleration or otherwise) to set off and appropriate
and apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of the Borrower. Each Lender agrees promptly to notify the Borrower and
the Administrative Agent after any such setoff and application made by such
Lender, PROVIDED that the failure to give such notice shall not affect the
validity of such setoff and application.
10.8 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
10.9 SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10.10 INTEGRATION. This Agreement and the other Loan Documents represent
the agreement of the Borrower, the Administrative Agent and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender relative
to subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby irrevocably
and unconditionally:
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(a) submits for itself and its Property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States for the Southern District of New York, and appellate
courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 10.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to ▇▇▇ in
any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section 10.12 any special, exemplary, punitive or consequential damages.
10.13 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
Administrative Agent and Lenders, on one hand, and the Borrower, on the other
hand, in connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower and the Lenders.
10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
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10.15 CONFIDENTIALITY. Each of the Agents and each Lender agrees to
keep confidential all non-public information provided to it by any Loan Party
pursuant to this Agreement that is designated by such Loan Party as
confidential; PROVIDED that nothing herein shall prevent any Agent or any
Lender from disclosing any such information (a) to the Administrative Agent,
any other Lender or any affiliate of any Lender, (b) to any Participant or
Assignee (each, a "TRANSFEREE") or prospective Transferee which agrees to
comply with the provisions of this Section 10.15, (c) to the employees,
directors, agents, attorneys, accountants and other professional advisors of
such Lender or its affiliates, (d) upon the request or demand of any
Governmental Authority having jurisdiction over the such Agent or such
Lender, (e) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law,
(f) if requested or required to do so in connection with any litigation or
similar proceeding, (g) which has been publicly disclosed other than in
breach of this Section 10.15, (h) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment
portfolio in connection with ratings issued with respect to such Lender, or
(i) in connection with the exercise of any remedy hereunder or under any
other Loan Document.
10.16 POST CLOSING RESTRUCTURING TRANSACTIONS. (a) Notwithstanding the
provisions of Sections 7.2, 7.4, 7.5, 7.6, 7.8, 7.10 or 7.16, the Borrower and
its Subsidiaries may, subject to compliance with the conditions set forth in
paragraph (b) below, consummate the following transactions:
(i) the Borrower may sell a 48% interest in Axiohm S.A.R.L. to
Axiohm-Inv for fair value (approximately $55,000,000), represented by a
promissory note made by Axiohm-Inv to the Borrower, which promissory note
shall be pledged pursuant to the Guarantee and Collateral Agreement, and
contribute its remaining 4% interest in Axiohm S.A.R.L. to Dardel;
(ii) Dardel may contribute its 52% interest in Axiohm S.A.R.L. (except
for one share to be retained by Dardel) to Axiohm-Inv;
(iii) Dardel may distribute or sell, or Axiohm-Inv may issue, one share
of Axiohm-Inv either to Borrower or to a Domestic Subsidiary; and
(iv) Axiohm S.A.R.L. may distribute 100% of the Capital Stock of
Axiohm-IPB to Axiohm-Inv, after giving effect to which Axiohm-IPB will be a
wholly owned Subsidiary of Axiohm-Inv, Axiohm-Inv will be a wholly owned
Subsidiary of Dardel (except for the one share owned by Borrower directly or
through a Domestic Subsidiary), and Dardel will be a wholly owned Subsidiary
of the Borrower.
(b) The right of the Borrower and its Subsidiaries to consummate the
transactions described in paragraph (a) above is subject to the following
conditions:
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(i) after giving effect to each such transaction and to any check the
box elections made by the Borrower under the Internal Revenue Code in
connection therewith, the guarantees and Collateral held by the
Administrative Agent will remain unimpaired, except that, if Axiohm S.A.R.L.
ceases to be a U.S. branch for U.S. income tax purposes and as a result
thereof Axiohm S.A.R.L. becomes an Excluded Foreign Subsidiary, the
guarantee of Axiohm S.A.R.L. will be released, the pledge of 35% of the
Capital Stock of Axiohm S.A.R.L. will be released and Axiohm S.A.R.L. will
be released from the French Security Document; and
(ii) in connection with such transactions, the Borrower and its
Subsidiaries will deliver to the Administrative Agent such documents and
other information, and will execute and deliver such amendments and other
instruments, as shall be required to give effect to the requirements
described in clause (b)(i) above, and will deliver to the Administrative
Agent such legal opinions in respect thereof as the Administrative Agent
shall reasonably request.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
AXIOHM TRANSACTION SOLUTIONS, INC.
By:
--------------------------
Name:
Title:
▇▇▇▇▇▇ COMMERCIAL PAPER INC., as
Syndication Agent and as a Lender
By:
--------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A., as
Administrative Agent and as a Lender
By:
--------------------------
Name:
Title:
ANNEX A
PRICING GRID FOR REVOLVING CREDIT LOANS, SWING LINE LOANS AND
TRANCHE A TERM LOANS
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
Applicable Margin Applicable Margin
Consolidated Leverage Ratio for Eurodollar Loans for Base Rate Loans
---------------------------------------------------------------------------------------------------
Greater than or equal to 3.50 to 1.00 2.50% 1.50%
---------------------------------------------------------------------------------------------------
Less than 3.50 to 1.00 but greater than or equal to 3.00
to 1.00 2.25% 1.25%
---------------------------------------------------------------------------------------------------
Less than 3.00 to 1.00 but greater than or equal to 2.50
to 1.00 2.00% 1.00%
---------------------------------------------------------------------------------------------------
Less than 2.50 to 1.00 1.75% 0.75%
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
Changes in the Applicable Margin with respect to Revolving Credit Loans and
Tranche A Term Loans resulting from changes in the Consolidated Leverage Ratio
shall become effective on the date (the "ADJUSTMENT DATE") on which financial
statements are delivered to the Lenders pursuant to Section 6.1 (but in any
event not later than the 45th day after the end of each of the first three
quarterly periods of each fiscal year or the 90th day after the end of each
fiscal year, as the case may be) and shall remain in effect until the next
change to be effected pursuant to this paragraph. If any financial statements
referred to above are not delivered within the time periods specified above,
then, until such financial statements are delivered, the Consolidated Leverage
Ratio as at the end of the fiscal period that would have been covered thereby
shall for the purposes of this definition be deemed to be greater than 3.50 to
1.00. In addition, at all times while an Event of Default shall have occurred
and be continuing, the Consolidated Leverage Ratio shall for the purposes of
this definition be deemed to be greater than 3.50 to 1.00. Each determination of
the Consolidated Leverage Ratio pursuant to this definition shall be made with
respect to the period of four consecutive fiscal quarters of the Borrower ending
at the end of the period covered by the relevant financial statements.