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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
OCTOBER 2, 1997
AXIOHM TRANSACTION SOLUTIONS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 0-13459 94-2917470
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(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
15070 AVENUE OF SCIENCE
SAN DIEGO, CALIFORNIA 92128
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(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(619) 451-3485
DH TECHNOLOGY, INC.
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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Item 2. Acquisition or Disposition of Assets.
(a) On October 2, 1997 the Registrant completed a series of transactions
with Axiohm S.A., a private French company ("Axiohm"), pursuant to an Agreement
and Plan of Merger, dated July 14, 1997 among Registrant, Axiohm and AX
Acquisition Corporation, a California corporation (the "Purchaser") and an
indirect wholly-owned subsidiary of Axiohm. Previously, on August 21, 1997, the
Purchaser had completed a cash tender offer for 7,000,000 shares of Registrant's
Common Stock at a price of $25 per share (the "Tender Offer").
The Tender Offer was financed by the incurrence by Purchaser of $166.2
million of senior indebtedness to Lehman Commercial Paper Inc., as advisor,
arranger and administrative agent under a secured credit facility (the
"Tender Facility") and through the issuance and sale by Axiohm IPB, Inc.
("Axiohm IPB"), a wholly-owned subsidiary of Axiohm, of $24.0 million in
liquidation preference of interim preferred stock (the "Interim Preferred
Stock") to LB I Group Inc. (collectively, the "Tender Financing").
On October 2, 1997, Purchaser exchanged 5,518,524 shares of the Common
Stock it had acquired in the Tender Offer and approximately $12.2 million in
cash for certain of the outstanding shares of capital stock of Axiohm and all of
the outstanding shares of capital stock of Dardel Technologies S.A., which held
the remaining shares of capital stock of Axiohm (the "Axiohm Exchange").
Registrant has agreed to register under the Securities Act of 1933, as amended,
the shares of its common stock which were transferred in the Axiohm Exchange for
resale by the holders thereof. Immediately after the Axiohm Exchange, pursuant
to a Purchase and Assumption Agreement dated October 2, 1997 among Axiohm IPB,
Purchaser and Registrant, Registrant purchased from Axiohm IPB all of
Purchaser's outstanding capital stock in exchange for the assumption by
Registrant of the obligations incurred in the Tender Financing (the "Acquisition
of Purchaser").
Immediately after the Axiohm Exchange and the Acquisition of Purchaser,
Purchaser was merged with and into Registrant (the "Merger"). The remaining
1,481,476 shares of Registrant's Common Stock acquired in the Tender Offer and
held by Purchaser at the time of the Merger were canceled in the Merger.
Immediately following the Merger, approximately 85% of Registrant's outstanding
Common Stock was held by former Axiohm shareholders, of which 1,753,144 shares
were beneficially owned by Patrick Dupuy and 1,740,555 shares were beneficially
owned by Gilles Gibier, who became Co-Chairmen of the Board of Directors of the
Registrant upon completion of the Tender Offer, and 15% was held by former
public shareholders of Registrant.
Although Registrant was the surviving corporation in the Merger, the Merger
is being treated as a purchase of Registrant by Axiohm for accounting purposes.
The name of the surviving corporation has been changed from "DH Technology,
Inc." to "Axiohm Transaction Solutions, Inc." and Axiohm has become a
wholly-owned subsidiary of Axiohm Transaction Solutions, Inc. All of Axiohm's
subsidiaries prior to the Merger, except for Purchaser, which did not survive
the Merger, remain as direct or indirect subsidiaries of Registrant.
Registrant financed the repayment of the Tender Facility and the redemption
of the Interim Preferred Stock, the payments made in the Axiohm Exchange and
certain fees and expenses incurred in
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connection with the series of transactions with (i) borrowings of approximately
$57.0 million under a new $85.0 million credit facility that provides for term
loans in the aggregate principal amount of $50.0 million (the "Term Loan
Facility") and revolving loans and letters of credit up to $35.0 million (the
"Revolving Credit Facility" and, together with the Term Loan Facility, the "New
Credit Facility") and (ii) the proceeds of a private placement (the "Offering")
of $120,000,000 of its 9-3/4% Senior Subordinated Notes due 2007 (the "Notes").
The Notes were sold to Lehman Brothers Inc. as initial purchaser, who has
advised Registrant that it resold the Notes to "qualified institutional buyers"
and "accredited investors" and to certain offshore investors. See Item 9 of
this Report for additional information regarding the Offering.
Registrant's obligations under the New Credit Facility and the related
documents have been secured by first priority liens upon substantially all of
the real and personal property of Registrant and its wholly owned subsidiaries,
Stadia Colorado Corp., Cognitive Solutions, Inc. and Axiohm, and pledges of
100% of the capital stock of Stadia Colorado Corp., Cognitive Solutions, Inc.
and Axiohm IPB, and 65% of the capital stock of DH Technology Pty. Ltd. and DH
Technology Plc. In addition, Stadia Colorado Corp., Cognitive Solutions, Inc.
and Axiohm IPB have unconditionally guaranteed the obligations under the New
Credit Facility.
(b) Axiohm (together with its consolidated subsidiaries) is a designer,
manufacturer and marketer of thermal transaction printing mechanisms and
thermal and impact transaction printers for both standard and
application-specific uses. In 1994 Axiohm purchased the assets and operations
of NCR's transaction printer business and placed the business in a
wholly-owned U.S. subsidiary, Axiohm IPB. Axiohm maintains executive offices
in Sevres, France, marketing and research and development facilities in
Montrouge, France, and manufacturing facilities in Puiseaux, France. Axiohm
IPB maintains manufacturing, marketing, research and development and
administration facilities in Ithaca, New York.
The Registrant intends to continue to use the assets of Axiohm and its
subsidiaries for the same purposes such assets were used by Axiohm and its
subsidiaries.
Item 5. Other Events.
On October 1, 1997, George Ryan resigned as a director of the Registrant
pursuant to the Agreement and Plan of Merger. The resulting vacancy was filled
by Nicolas Dourassof. Mr. Dourassof has served as a director of Axiohm since
1996. He is a Managing Director of ABN AMRO Investissement, the investment
subsidiary of ABN AMRO, a position he has held since 1996. Prior to joining ABN
AMRO Investissement, Mr. Dourassof had served since 1995 as the Director of the
Acquisition Financing Department of Banque De Neuflize, Schlumberger Mallet, a
subsidiary of ABN AMRO.
On October 2, 1997, Bernard Patry was appointed Vice President of Sales and
Marketing of Transaction Products and Malcolm Unsworth was appointed Vice
President of Operations of the Registrant.
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Mr. Patry has served as a director of Axiohm since 1988, and as Vice
President of Axiohm from 1996 to September 1997. From 1991 to 1995 Mr. Patry
was the Chief Executive Officer of Axiohm, and from 1995 to 1996, he was Vice
President of Marketing and Business Development of Axiohm.
Mr. Unsworth was the Vice President and General Manager of Axiohm IPB from
April 1996 to September 1997. Prior to joining Axiohm IPB, Mr. Unsworth worked
for Schlumberger for 17 years in various North American General Manager
positions including the Retail Petroleum Systems Division, the Transducer
Division, the Electricity Measurement Division and the Defense Systems Group.
In two of these positions, Mr. Unsworth was the immediate General Manager
following the acquisition of the businesses by Schlumberger and led the
consolidation and rationalization activity of numerous businesses within each
group.
Item 7. Financial Statements and Exhibits.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The Registrant has found that it is impracticable to provide the
required financial statements as of the date of filing of this report on Form 8-
K. The Registrant intends to file the following financial statements no later
than sixty (60) days after the deadline for filing this report on Form 8-K.
1. Report of Independent Accountants.
2. Consolidated Balance Sheet of Axiohm S.A. as of December 31, 1996 and
December 31, 1995.
3. Consolidated Statement of Income of Axiohm S.A. for the Years Ended
December 31, 1996, 1995 and 1994.
4. Consolidated Statement of Cash Flows of Axiohm S.A. for the Years
Ended December 31, 1996, 1995 and 1994.
5. Consolidated Statement of Shareholders' Equity of Axiohm S.A. for the
Years Ended December 31, 1996, 1995 and 1994.
6. Notes to the Consolidated Financial Statements.
7. Unaudited Consolidated Balance Sheet of Axiohm S.A. as of June 30,
1997 and Audited Consolidated Balance Sheet of Axiohm S.A. as of
December 31, 1996.
8. Unaudited Consolidated Statement of Income of Axiohm S.A. for the Six
Months Ended June 30, 1997 and 1996.
9. Unaudited Consolidated Statement of Cash Flows of Axiohm S.A. for the
Six Months Ended June 30, 1997 and 1996.
10. Notes to the Unaudited Consolidated Financial Statements.
(b) PRO FORMA FINANCIAL INFORMATION
The Registrant has found that it is impracticable to provide the
required pro forma financial information as of the date of filing of this
report on Form 8-K. The Registrant intends to file the
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following pro forma financial information no later than sixty (60) days after
the deadline for filing this report on Form 8-K.
1. Unaudited Pro Forma Combined Balance Sheet as of June 30, 1997.
2. Unaudited Pro Forma Combined Statements of Operations for the Year
Ended December 31, 1996.
3. Unaudited Pro Forma Combined Statements of Operations for the Six
Months Ended June 30, 1996.
4. Unaudited Pro Forma Combined Statements of Operations for the Six
Months Ended June 30, 1997.
5. Notes to the Unaudited Pro Forma Combined Financial Statements.
(c) EXHIBITS
EXHIBIT NO. DESCRIPTION
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2.1 Agreement and Plan of Merger dated as of July 14, 1997, among
the Registrant, Axiohm S.A. and AX Acquisition
Corporation--incorporated by reference to Exhibit (c)(1)
of the Registrant's Schedule 14D-9 dated July 16, 1997.
2.2 Purchase and Assumption Agreement, dated October 2, 1997,
among Axiohm IPB, Purchaser and the Registrant.
3.1 Certificate of Ownership of the Registrant filed with the
California Secretary of State on October 2, 1997.
3.2 Amended and Restated Bylaws of the Registrant.
4.1 Indenture, dated as of October 2, 1997 among the
Registrant, the Guarantors named therein and The
Bank of New York, as trustee.
4.2 $117,300,000 9-3/4% Senior Subordinated Note due 2007 and
Subsidiary Guarantee.
4.3 $2,350,000 9-3/4% Senior Subordinated Note due 2007 and
Subsidiary Guarantee.
4.4 $350,000 9-3/4% Senior Subordinated Note due 2007 and
Subsidiary Guarantee.
10.1 Registration Rights Agreement, dated as of October 2, 1997
among the Registrant, Axiohm S.A., Axiohm IPB, Inc.,
Dardel Technologies S.A., Stadia Colorado Corp., Cognitive
Solutions, Inc. and Lehman Brothers Inc.
10.2 Purchase Agreement, dated September 25, 1997, among the
Registrant, Axiohm IPB Inc., Cognitive Solutions, Inc.,
Stadia Colorado Corp. and Lehman Brothers Inc.
10.3 Employment Agreement between the Registrant and William H.
Gibbs dated as of July 14, 1997.
10.4 Employment Agreement between the Registrant and Walter
Sobon dated as of July 14, 1997.
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10.5 Employment Agreement between the Registrant and Janet
Shanks dated as of July 14, 1997.
10.6 Employment Agreement between the Registrant and David
Ledwell dated as of July 14, 1997.
10.7 Credit Agreement, dated October 2, 1997, among the
Registrant as Borrower, Lehman Brothers Inc., as arranger,
and Lehman Commercial Paper Inc., as syndication agent and
administrative agent.
10.8 Guarantee and Collateral Agreement, dated as of October 2,
1997, between the Registrant, Lehman Brothers, Inc., Lehman
Commercial Paper Inc. and certain of Registrant's
subsidiaries.
Item 9. Sale of Equity Securities Pursuant to Regulation S.
On October 2, 1997, the Registrant completed an Offering of $120,000,000 of
its 9-3/4% Senior Subordinated Notes (the "Notes"). The Notes were sold by the
Registrant to Lehman Brothers Inc. as initial purchaser (the "Initial
Purchaser") in an unregistered private placement. The discount to the Initial
Purchasers was 2.75% of the principal amount of the Notes purchased (or an
aggregate of $3.3 million).
The Registrant has been advised that the Initial Purchaser subsequently
resold the Notes in the United States to "qualified institutional buyers" in
reliance on Rule 144A under the Securities Act of 1933 (the "Securities Act")
and outside of the United States in offshore transactions to investors in
reliance on Regulation S under the Securities Act. In addition, the Company has
been advised that the Initial Purchasers have resold a portion of the Notes in
the United States to a limited number of institutions that are "accredited
investors" within the meaning of Rule 501(a)(1), (2), (3) or (7) under
the Securities Act.
Pursuant to a Registration Rights Agreement dated October 2, 1997 (the
"Registration Rights Agreement") among the Registrant, certain of the
Registrant's domestic subsidiaries, as guarantors of the Registrant's
obligations under the Notes (the "Guarantors") and the Initial Purchaser, the
Registrant and the Guarantors have agreed to use their best efforts to file a
registration statement no later than 60 days after the closing of the Offering,
with respect to an offer to exchange the Notes for new senior subordinated notes
of the Registrant registered under the Securities Act, with terms identical to
those of the Notes, and to cause such registration statement to become effective
no later than 120 days after the closing of the Offering.
The foregoing summary of the Notes and the Registration Rights Agreement
does not purport to be complete and is subject to, and qualified in its
entirety by reference to, all of the provisions of the Notes and Registration
Rights Agreement which, in addition to the Indenture under which the Notes
were issued, are filed as Exhibits to this Current Report on Form 8-K.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AXIOHM TRANSACTION SOLUTIONS, INC.
Dated: October 17, 1997 By: /s/ Janet W. Shanks
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Janet W. Shanks
Chief Accounting Officer
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INDEX TO EXHIBITS FILED WITH
THE CURRENT REPORT ON FORM 8-K DATED OCTOBER 2, 1997
EXHIBIT NO. DESCRIPTION
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2.1 Agreement and Plan of Merger dated as of July 14, 1997, among
the Registrant, Axiohm S.A. and AX Acquisition
Corporation--incorporated by reference to Exhibit (c)(1) of
the Registrant's Schedule 14D-9 dated July 16, 1997.
2.2 Purchase and Assumption Agreement, dated October 2, 1997,
among Axiohm IPB, Purchaser and the Registrant.
3.1 Certificate of Ownership of the Registrant filed with the
California Secretary of State on October 2, 1997.
3.2 Amended and Restated Bylaws of the Registrant.
4.1 Indenture, dated as of October 2, 1997 among the Registrant,
the Guarantors named therein and The Bank of New York, as
trustee.
4.2 $117,300,000 9-3/4% Senior Subordinated Note due 2007 and
Subsidiary Guarantee.
4.3 $2,350,000 9-3/4% Senior Subordinated Note due 2007 and
Subsidiary Guarantee.
4.4 $350,000 9-3/4% Senior Subordinated Note due 2007 and
Subsidiary Guarantee.
10.1 Registration Rights Agreement, dated as of October 2, 1997
among the Registrant, Axiohm, Axiohm IPB, Dardel
Technologies S.A., Stadia Colorado Corp., Cognitive
Solutions, Inc. and Lehman Brothers Inc.
10.2 Purchase Agreement, dated September 25, 1997, among the
Registrant, Axiohm IPB, Cognitive Solutions, Inc., Stadia
Colorado Corp. and Lehman Brothers Inc.
10.3 Employment Agreement between the Registrant and William H.
Gibbs dated as of July 14, 1997.
10.4 Employment Agreement between the Registrant and Walter Sobon
dated as of July 14, 1997.
10.5 Employment Agreement between the Registrant and Janet Shanks
dated as of July 14, 1997.
10.6 Employment Agreement between the Registrant and David Ledwell
dated as of July 14, 1997.
10.7 Credit Agreement, dated October 2, 1997, among the Registrant as
Borrower, Lehman Brothers Inc., as arranger, and Lehman
Commercial Paper Inc., as syndication agent and administrative
agent.
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10.8 Guarantee and Collateral Agreement, dated as of October 2,
1997, between the Registrant, Lehman Brothers, Inc., Lehman
Commercial Paper Inc. and certain of Registrant's subsidiaries.
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PURCHASE AND ASSUMPTION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into this 2nd day
of October 1997, by and among Axiohm IPB, Inc., a Delaware corporation
("IPB"), AX Acquisition Corporation ("AX"), a California corporation and a
wholly-owned subsidiary of IPB, and DH Technology, Inc., a California
corporation ("DH").
WHEREAS, AX, DH and Axiohm S.A., a French corporation ("Axiohm")
are parties to an Agreement and Plan of Merger dated as of July 14, 1997 (the
"Merger Agreement");
WHEREAS, pursuant to the Merger Agreement, AX conducted a tender
offer (the "Tender Offer") pursuant to which it purchased 7,000,000 shares of
the common stock, no par value, of DH (the "DH Common Stock");
WHEREAS, in connection with the closing of the Tender Offer, IPB,
AX and Axiohm entered into (i) a Cumulative Redeemable Exchangeable Preferred
Stock Purchase Agreement, dated as of August 19, 1997, with the purchasers
listed therein and LB I Group Inc. (such agreement, together with all
agreements entered into in connection therewith, is hereinafter referred to
collectively as the "Preferred Stock Agreement") pursuant to which, among
other things, IPB issued to LB I Group Inc., as placement agent, 240 shares
of IPB's Cumulative Redeemable Exchangeable Preferred Stock and (ii) a Credit
Agreement, dated as of August 19, 1997, with Lehman Commercial Paper, Inc.
and the lenders from time to time parties thereto (such agreement, together
with all agreements entered into in connection therewith, is hereinafter
referred to collectively as the "Credit Agreement") pursuant to which, among
other things, AX borrowed $166.2 million;
WHEREAS, simultaneously with the consummation of the transactions
contemplated hereby, AX will consummate the Axiohm Exchange (as defined in
the Merger Agreement), pursuant to which AX will transfer to the shareholders
of Axiohm an aggregate of 5,518,524 shares of DH Common Stock and $12,197,900
in exchange for all of the outstanding shares of capital stock of Axiohm;
WHEREAS, pursuant to the Merger Agreement, the parties hereto
desire that DH purchase from IPB and IPB sell to DH all of the outstanding
shares of the capital stock of AX (the "AX Shares") which are owned by IPB in
exchange for the assumption by DH, on a joint and several basis with AX, of
any and all obligations with respect to indebtedness incurred, or preferred
stock issued, by AX or IPB in connection with the Tender Offer and the Axiohm
Exchange, including such obligations arising pursuant to the Credit Agreement
and the Preferred Stock Agreement;
NOW, THEREFORE, in consideration of the premises, representations,
warranties, covenants, agreements and promises herein contained, the parties
agree as follows:
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SECTION 1. PURCHASE AND SALE AX SHARES
At the Closing, IPB shall sell to DH, and DH shall purchase from
IPB, the AX Shares in exchange for the assumption, in accordance with Section
2 hereof, by DH, on a joint and several basis with AX, of any and all
obligations with respect to indebtedness incurred, or preferred stock issued,
by AX or IPB in connection with the Tender Offer and the Axiohm Exchange,
including such obligations arising pursuant to the Credit Agreement and the
Preferred Stock Agreement (collectively, the "Assumed Obligations and
Liabilities").
SECTION 2. ASSUMPTION OF OBLIGATIONS
DH hereby agrees to assume and become responsible for, as of the
Closing Date, on a joint and several basis with AX, the Assumed Obligations
and Liabilities and agrees to pay, perform or otherwise discharge the Assumed
Obligations and Liabilities as and when due. DH hereby agrees to execute and
deliver such further and additional instruments, agreements and other
documents as may be necessary to evidence or carry out the provisions hereof.
SECTION 3. CLOSING
3.1. CLOSING. The sale of the AX Shares and the assumption of the
Assumed Obligations and Liabilities contemplated by this Agreement (the
"Closing") shall occur on October 2, 1997 or such other date and at such
place as may be mutually agreed to by the parties hereto (the "Closing Date").
3.2. DELIVERIES. At the Closing, IPB shall deliver or cause to be
delivered to DH a certificate representing the AX Shares, together with an
executed stock power and such other endorsements, instruments or documents as
may be reasonably necessary or appropriate to carry out the transactions
contemplated hereby. At the Closing, DH shall deliver such instruments,
agreements and other documents as may be necessary to evidence or carry out
the provisions hereof.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF DH
DH hereby represents and warrants to AX and IPB as of the date
hereof and as of the Closing, as follows:
4.1. ORGANIZATION, STANDING AND AUTHORITY. DH is a corporation
which is duly organized, validly existing and in good standing under the laws
of the State of California. DH has all requisite power and authority,
without the consent of any other person, and has taken all necessary action
by its board of directors and has received all necessary approvals from its
shareholders to execute and deliver this Agreement and to carry out the
transactions contemplated hereby.
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4.2. VALIDITY. This Agreement has been duly executed and
delivered and constitutes the lawful, valid and binding obligation of DH,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors rights generally, or by general
equitable principles. No approval, authorization, registration, consent,
order or other action of or filing with any person, including any court,
administrative agency or other government authority, is required for the
execution and delivery by DH of this Agreement or the performance by DH of
its obligations hereunder, other than any consents obtained prior to the time
of execution and delivery.
4.3. ACKNOWLEDGMENT REGARDING AX SHARES. DH acknowledges that (i)
the AX Shares it is receiving hereunder have not been registered in the
United States under the Securities Act of 1933, as amended (the "Securities
Act"), or the securities laws of any country, state or regulatory body and
are being offered and sold in reliance upon exemptions from the requisite
requirements of the Securities Act and such laws and may not be transferred
or resold without registration under such laws unless an exemption is
available and (ii) it is acquiring the AX Shares for investment and not with
a view to the resale or distribution thereof.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF AX AND IPB
AX and IPB each hereby represents and warrants to DH as of the date
hereof and as of the Closing, as follows:
5.1. ORGANIZATION, STANDING AND AUTHORITY. AX is a corporation
which is duly organized, validly existing and in good standing under the laws
of the State of California. IPB is a corporation which is duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Each of AX and IPB has all requisite power and authority, without
the consent of any other person, and has taken all necessary action by the
board of directors and has received all necessary approvals from its sole
shareholder to execute and deliver this Agreement and to carry out the
transactions contemplated hereby.
5.2. VALIDITY. This Agreement has been duly executed and
delivered and constitutes the lawful, valid and legally binding obligation of
each of AX and IPB, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors rights generally, or by general equitable
principles. No approval, authorization, registration, consent, order or
other action of or filing with any person, including any court,
administrative agency or other government authority, is required for the
execution and delivery by either AX or IPB of this Agreement or the
performance by either AX or IPB of its obligations hereunder.
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5.3. THE AX SHARES. At the Closing, IPB will have good and
indefeasible title to the AX Shares and the absolute right to sell, assign,
transfer and deliver the same, free and clear of all claims, security
interests, liens, pledges, charges, escrows, options, proxies, rights of
first refusal, preemptive rights, mortgages, hypothecations, prior
assignments, title retention agreements, voting agreements, transfer
restriction agreements, indentures, security agreements or any other
limitation, encumbrance or restriction of any kind, other than the pledge of
the AX Shares in connection with the Assumed Obligations and Liabilities.
SECTION 6. COVENANTS
IPB hereby covenants and agrees not to, after the date hereof,
sell, transfer, assign, pledge, hypothecate or otherwise dispose of any of
the AX Shares or grant any rights with respect to the AX Shares, or enter
into any agreement with respect thereto, except pursuant to the terms hereof,
and except for the pledge of the AX Shares in connection with the Assumed
Obligations and Liabilities.
SECTION 7. CONDITIONS TO OBLIGATIONS TO CLOSE
The respective obligations of each party to effect the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing Date of the following conditions:
7.1. No statute, rule, regulation, executive order, decree,
ruling, injunction or other order (whether temporary, preliminary or
permanent) shall have been enacted, entered, promulgated or enforced by any
United States federal or state court or governmental authority, or any French
national or provincial court or governmental authority, as the case may be,
which prohibits, restrains, enjoins or restricts the consummation of the
transactions contemplated hereby;
7.2. Any waiting period applicable to the transactions
contemplated hereby under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and French law, if applicable, shall have terminated or
expired;
7.3. AX shall own at least 6,500,000 shares of DH Common Stock,
(whether purchased pursuant to the Tender Offer or otherwise acquired), LESS
the number of shares transferred in the Axiohm Exchange; and
7.4. The Axiohm Exchange shall have been consummated.
SECTION 8. TERMINATION
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This Agreement shall terminate and shall be of no further force and
effect if the Closing has not occurred on or before November 30, 1997.
SECTION 9. GENERAL PROVISIONS
9.1. SURVIVAL AND INDEMNIFICATION. All representations,
warranties, covenants and agreements contained in this Agreement or in any
agreement and document delivered pursuant hereto shall be deemed to be
material and to have been relied upon by the parties hereto and to survive
the date hereof. Each party shall indemnify and hold harmless the other from
any and all loss, liability, cost, expense, claim or obligation arising from
any breach of any representation and warranty or failure to fulfill any
covenant or agreement hereunder.
9.2. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or
delivered when delivered personally, when sent via facsimile or when sent by
registered or certified mail addressed as follows:
If to AX or IPB to:
AX Acquisition Corporation or
Axiohm IPB, Inc.
BP 675-1 a rue D'Arceuil
92542 Montrouge Cedex, FRANCE
Facsimile: 11-33-1-49-65-94-13
Attention: Patrick Dupuy
If to DH to:
DH Technology, Inc.
15070 Avenue of Science
San Diego, CA 92128
Facsimile: (619) 451-0326
Attention: William H. Gibbs
or to such other address as such party may indicate by a notice delivered to
the other party hereto.
9.3. EXPENSES. Each party to this Agreement shall pay its own
costs and expenses in connection with the transactions contemplated hereby.
9.4. COUNTERPARTS. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
9.5. ENTIRE TRANSACTION. This Agreement and the Merger Agreement
contain the
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entire understanding among the parties with respect to the actions
contemplated hereby and supersede all other agreements, understandings and
undertakings among the parties on the subject matter hereof.
9.6. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
9.7. AMENDMENTS. The parties hereto, by mutual agreement in
writing, may amend, modify and supplement this Agreement. Any such amendment
shall be validly and sufficiently authorized for purposes of this Agreement
if it is evidenced by a writing signed by the parties hereto.
9.8. INTERPRETATION. Titles and headings to sections herein are
inserted for convenience of reference only and are not intended to be a part
or to affect the meanings or interpretation of this Agreement. Whenever
required by the context, singular numbers shall include the plural and plural
numbers shall include the singular, and the gender of any pronoun shall
include the other gender.
9.9. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
* * *
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed or
caused this Agreement to be executed all as of the date first written above.
AX ACQUISITION CORPORATION
By: /s/ Patrick Dupuy
-----------------------------------------------
Patrick Dupuy, President
AXIOHM IPB, INC.
By: /s/ Patrick Dupuy
-----------------------------------------------
Patrick Dupuy, President
DH TECHNOLOGY, INC.
By: /s/ William H. Gibbs
-----------------------------------------------
William H. Gibbs, Chief Executive Officer
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<PAGE>
CERTIFICATE OF OWNERSHIP
OF
DH TECHNOLOGY, INC.
WILLIAM H. GIBBS and JANET W. SHANKS hereby certify that:
1. They are the President and Chief Executive Officer, and the Secretary,
respectively, of DH Technology, Inc., a California corporation.
2. The names and status of the corporations proposing to merge and the
names of the states under the laws of which such corporations are organized are
as follows:
Name of Corporation Status State of Incorporation
------------------- ------ ----------------------
DH Technology, Inc. Parent California
AX Acquisition Corporation Subsidiary California
3. DH Technology, Inc. owns one hundred percent (100%) of the outstanding
shares of AX Acquisition Corporation.
4. The following resolutions were duly adopted by the Board of Directors
of DH Technology, Inc.:
WHEREAS: It is deemed in the best interest of this corporation to effect a
merger of AX Acquisition Corporation into this corporation;
NOW THEREFORE BE IT RESOLVED: That AX Acquisition Corporation be merged
into this corporation pursuant to Section 1110 of the California
Corporations Code; and
RESOLVED FURTHER: That effective upon the merger of AX Acquisition
Corporation into this corporation, this corporation assumes all of the
liabilities of AX Acquisition Corporation; and
RESOLVED FURTHER: That Article I of the Articles of Incorporation of this
corporation is amended to read in full as follows:
"I.
The name of this corporation is Axiohm Transaction Solutions, Inc."
<PAGE>
We declare under penalty of perjury under the laws of the State of
California that the matters set forth in this Certificate of Ownership are true
and correct of our own knowledge.
Dated: October 2, 1997
/s/ William H. Gibbs
----------------------------
William H. Gibbs
President and Chief Executive Officer
/s/ Janet W. Shanks
-----------------------------
Janet W. Shanks
Secretary
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
AXIOHM TRANSACTION SOLUTIONS, INC.
<PAGE>
AMENDED AND RESTATED
BYLAWS OF
AXIOHM TRANSACTION SOLUTIONS, INC.
TABLE OF CONTENTS
Page
----
ARTICLE I
CORPORATE OFFICES
1.1 PRINCIPAL OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 OTHER OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 PLACE OF MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 SPECIAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 NOTICE OF SHAREHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . 2
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE . . . . . . . . . . . . 2
2.6 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 ADJOURNED MEETING; NOTICE. . . . . . . . . . . . . . . . . . . . . . 3
2.8 VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT. . . . . . . . . . 5
2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING . . . . . . 5
2.11 RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING CONSENTS . . . . 6
2.12 PROXIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.13 INSPECTORS OF ELECTION. . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
DIRECTORS
3.1 POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 NUMBER OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS . . . . . . . . . . . . . . 8
3.4 RESIGNATION AND VACANCIES. . . . . . . . . . . . . . . . . . . . . . 8
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3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE . . . . . . . . . . . . . . 9
3.6 REGULAR MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . .10
3.7 SPECIAL MEETINGS; NOTICE . . . . . . . . . . . . . . . . . . . . . .10
3.8 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
3.9 WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . .10
3.10 ADJOURNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.11 NOTICE OF ADJOURNMENT . . . . . . . . . . . . . . . . . . . . . . .11
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING . . . . . . . . .11
3.13 FEES AND COMPENSATION OF DIRECTORS. . . . . . . . . . . . . . . . .11
3.14 APPROVAL OF LOANS TO OFFICERS.. . . . . . . . . . . . . . . . . . .11
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . .11
4.2 MEETINGS AND ACTION OF COMMITTEES. . . . . . . . . . . . . . . . . .12
ARTICLE V
OFFICERS
5.1 OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
5.2 ELECTION OF OFFICERS . . . . . . . . . . . . . . . . . . . . . . . .13
5.3 SUBORDINATE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . .13
5.4 REMOVAL AND RESIGNATION OF OFFICERS. . . . . . . . . . . . . . . . .13
5.5 VACANCIES IN OFFICES . . . . . . . . . . . . . . . . . . . . . . . .13
5.6 CHAIRMAN OF THE BOARD. . . . . . . . . . . . . . . . . . . . . . . .13
5.7 PRESIDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
5.8 VICE PRESIDENTS. . . . . . . . . . . . . . . . . . . . . . . . . . .14
5.9 SECRETARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
5.10 CHIEF FINANCIAL OFFICER . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. . . . . . . . . . . . . .15
6.2 INDEMNIFICATION OF OTHERS. . . . . . . . . . . . . . . . . . . . . .15
6.3 PAYMENT OF EXPENSES IN ADVANCE . . . . . . . . . . . . . . . . . . .16
6.4 INDEMNITY NOT EXCLUSIVE. . . . . . . . . . . . . . . . . . . . . . .16
6.5 INSURANCE INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . .16
6.6 CONFLICTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
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<PAGE>
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER . . . . . . . . . . . .17
7.2 MAINTENANCE AND INSPECTION OF BYLAWS . . . . . . . . . . . . . . . .17
7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS. . . . . . . .18
7.4 INSPECTION BY DIRECTORS. . . . . . . . . . . . . . . . . . . . . . .18
7.5 ANNUAL REPORT TO SHAREHOLDERS; WAIVER. . . . . . . . . . . . . . . .18
7.6 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . .18
7.7 REPRESENTATION OF SHARES OF OTHER CORPORATIONS . . . . . . . . . . .19
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. . . . . . . .19
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS. . . . . . . . . . . . . .20
8.3 CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED. . . . . . . . . .20
8.4 CERTIFICATES FOR SHARES. . . . . . . . . . . . . . . . . . . . . . .20
8.5 LOST CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . .20
8.6 CONSTRUCTION; DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .21
ARTICLE IX
AMENDMENTS
9.1 AMENDMENT BY SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . .21
9.2 AMENDMENT BY DIRECTORS . . . . . . . . . . . . . . . . . . . . . . .21
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<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
AXIOHM TRANSACTION SOLUTIONS, INC.
ARTICLE I
CORPORATE OFFICES
1.1 PRINCIPAL OFFICE. The board of directors shall fix the location
of the principal executive office of the corporation at any place within or
outside the State of California. If the principal executive office is located
outside such state and the corporation has one or more business offices in such
state, then the board of directors shall fix and designate a principal business
office in the State of California.
1.2 OTHER OFFICES. The board of directors may at any time establish
branch or subordinate offices at any place or places where the corporation is
qualified to do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 PLACE OF MEETINGS. Meetings of shareholders shall be held at any
place within or outside the State of California designated by the board of
directors. In the absence of any such designation, shareholders' meetings shall
be held at the principal executive office of the corporation.
2.2 ANNUAL MEETING. The annual meeting of shareholders shall be held
each year on a date and at a time designated by the board of directors. At the
meeting, directors shall be elected, and any other proper business may be
transacted.
2.3 SPECIAL MEETING. A special meeting of the shareholders may be
called at any time by the board of directors, or by the chairman of the board,
or by the president, or by one or more shareholders holding shares in the
aggregate entitled to cast not less than ten percent (10%) of the votes at that
meeting.
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<PAGE>
If a special meeting is called by any person or persons other than the
board of directors or the president or the chairman of the board, then the
request shall be in writing, specifying the time of such meeting and the general
nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the chairman of the board, the president, any vice president or
the secretary of the corporation. The officer receiving the request shall cause
notice to be promptly given to the shareholders entitled to vote, in accordance
with the provisions of Sections 2.4 and 2.5 of these bylaws, that a meeting will
be held at the time requested by the person or persons calling the meeting, so
long as that time is not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, then the person or persons requesting
the meeting may give the notice. Nothing contained in this paragraph of this
Section 2.3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the board of directors may be held.
2.4 NOTICE OF SHAREHOLDERS' MEETINGS. All notices of meetings of
shareholders shall be sent or otherwise given in accordance with Section 2.5 of
these bylaws not less than ten (l0) (or, if sent by third-class mail pursuant to
Section 2.5 of these bylaws, thirty (30)) nor more than sixty (60) days before
the date of the meeting. The notice shall specify the place, date, and hour of
the meeting and (i) in the case of a special meeting, the general nature of the
business to be transacted (no business other than that specified in the notice
may be transacted) or (ii) in the case of the annual meeting, those matters
which the board of directors, at the time of giving the notice, intends to
present for action by the shareholders (but subject to the provisions of the
next paragraph of this Section 2.4 any proper matter may be presented at the
meeting for such action). The notice of any meeting at which directors are to
be elected shall include the name of any nominee or nominees who, at the time of
the notice, the board intends to present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California (the
"Code"), (ii) an amendment of the articles of incorporation, pursuant to Section
902 of the Code, (iii) a reorganization of the corporation, pursuant to Section
1201 of the Code, (iv) a voluntary dissolution of the corporation, pursuant to
Section 1900 of the Code, or (v) a distribution in dissolution other than in
accordance with the rights of outstanding preferred shares, pursuant to section
2007 of the Code, then the notice shall also state the general nature of that
proposal.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Written notice of
any meeting of shareholders shall be given either (i) personally or (ii) by
first-class mail or (iii) by third-class mail but only if the corporation has
outstanding shares hold of record by five hundred (500) or more persons
(determined as provided in Section 605 of the Code) on the
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<PAGE>
record date for the shareholders' meeting, or (iv) by telegraphic or other
written communication. Notices not personally delivered shall be sent charges
prepaid and shall be addressed to the shareholder at the address of that
shareholder appearing on the books of the corporation or given by the
shareholder to the corporation for the purpose of notice. If no such address
appears on the corporation's books or is given, notice shall be deemed to have
been given if sent to that shareholder by mail or telegraphic or other written
communication to the corporation's principal executive office, or if published
at least once in a newspaper of general circulation in the county where that
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at that address, then all future notices or reports shall be deemed to have been
duly given without further mailing if the same shall be available to the
shareholder on written demand of the shareholder at the principal executive
office of the corporation for a period of one (1) year from the date of the
giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.6 QUORUM. The presence in person or by proxy of the holders of a
majority of the shares entitled to vote thereat constitutes a quorum for the
transaction of business at all meetings of shareholders. The shareholders
present at a duly called or held meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to con-
stitute a quorum.
2.7 ADJOURNED MEETING; NOTICE. Any shareholders' meeting, annual or
special, whether or not a quorum is present, may be adjourned from time to time
by the vote of the majority of the shares represented at that meeting, either in
person or by proxy. In the absence of a quorum, no other business may be
transacted at that meeting except as provided in Section 2.6 of these bylaws.
When any meeting of shareholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at the meeting at which the
adjournment is taken. However, if a new record date for the adjourned meeting
is fixed or if the adjournment is for more than forty-five (45) days from the
date set for the original meeting, then notice of the adjourned meeting shall be
given. Notice
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<PAGE>
of any such adjourned meeting shall be given to each shareholder of record
entitled to vote at the adjourned meeting in accordance with the provisions of
Sections 2.4 and 2.5 of these bylaws. At any adjourned meeting the corporation
may transact any business which might have been transacted at the original
meeting.
2.8 VOTING. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section
2.11 of these bylaws, subject to the provisions of Sections 702 through 704 of
the Code (relating to voting shares held by a fiduciary, in the name of a
corporation or in joint ownership).
The shareholder's vote may be by voice vote or by ballot; provided,
however, that any election for directors must be by ballot if demanded by any
shareholder at the meeting and before the voting has begun.
Except as provided in the last paragraph of this Section 2.8, or as
may be otherwise provided in the articles of incorporation, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote of the shareholders. Any shareholder entitled to vote on
any matter may vote part of the shares in favor of the proposal and refrain from
voting the remaining shares or, except when the matter is the election of
directors, may vote them against the proposal; but, if the shareholder fails to
specify the number of shares which the shareholder is voting affirmatively, it
will be conclusively presumed that the shareholder's approving vote is with
respect to all shares which the shareholder is entitled to vote.
If a quorum is present, the affirmative vote of the majority of the
shares represented and voting at a duly held meeting (which shares voting
affirmatively also constitute at least a majority of the required quorum) shall
be the act of the shareholders, unless the vote of a greater number or a vote by
classes is required by the Code or by the articles of incorporation.
At a shareholders' meeting at which directors are to be elected, a
shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes which such shareholder normally
is entitled to cast) if the candidates' names have been placed in nomination
prior to commencement of the voting and the shareholder has given notice prior
to commencement of the voting of the shareholder's intention to cumulate votes.
If any shareholder has given such a notice, then every shareholder entitled to
vote may cumulate votes for candidates in nomination either (i) by giving one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which that shareholder's shares are
normally entitled or (ii) by distributing the shareholder's votes on the same
principle among any or all of the candidates, as the shareholder thinks fit.
The candidates receiving the highest number of affirmative votes, up to the
number of directors to be elected, shall be elected; votes against any candidate
and votes withheld shall have no legal effect.
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<PAGE>
2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT. The
transactions of any meeting of shareholders, either annual or special, however
called and noticed, and wherever held, shall be as valid as though they had been
taken at a meeting duly held after regular call and notice, if a quorum be
present either in person or by proxy, and if, either before or after the
meeting, each person entitled to vote, who was not present in person or by
proxy, signs a written waiver of notice or a consent to the holding of the meet-
ing or an approval of the minutes thereof. The waiver of notice or consent or
approval need not specify either the business to be transacted or the purpose of
any annual or special meeting of shareholders, except that if action is taken or
proposed to be taken for approval of any of those matters specified in the
second paragraph of Section 2.4 of these bylaws, the waiver of notice or consent
or approval shall state the general nature of the proposal. All such waivers,
consents, and approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened. Attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by the Code to be
included in the notice of the meeting but not so included, if that objection is
expressly made at the meeting.
2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any
action which may be taken at any annual or special meeting of shareholders may
be taken without a meeting and without prior notice, if a consent in writing,
setting forth the action so taken, is signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take that action at a meeting at which all shares entitled to
vote on that action were present and voted.
In the case of election of directors, such a consent shall be
effective only if signed by the holders of all outstanding shares entitled to
vote for the election of directors. However, a director may be elected at any
time to fill any vacancy on the board of directors, provided that it was not
created by removal of a director and that it has not been filled by the
directors, by the written consent of the holders of a majority of the
outstanding shares entitled to vote for the election of directors.
All such consents shall be maintained in the corporate records. Any
shareholder giving a written consent, or the shareholder's proxy holders, or a
transferee of the shares, or a personal representative of the shareholder, or
their respective proxy holders, may revoke the consent by a writing received by
the secretary of the corporation before written consents of the number of shares
required to authorize the proposed action have been filed with the secretary.
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<PAGE>
If the consents of all shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
shareholders has not been received, then the secretary shall give prompt notice
of the corporate action approved by the shareholders without a meeting. Such
notice shall be given to those shareholders entitled to vote who have not
consented in writing and shall be given in the manner specified in Section 2.5
of these bylaws. In the case of approval of (i) a contract or transaction in
which a director has a direct or indirect financial interest, pursuant to
Section 310 of the Code, (ii) indemnification of a corporate "agent," pursuant
to Section 317 of the Code, (iii) a reorganization of the corporation, pursuant
to Section 1201 of the Code, and (iv) a distribution in dissolution other than
in accordance with the rights or outstanding preferred shares, pursuant to
Section 2007 of the Code, the notice shall be given at least ten (10) days
before the consummation of any action authorized by that approval.
2.11 RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING CONSENTS.
For purposes of determining the shareholders entitled to notice of any meeting
or to vote thereat or entitled to give consent to corporate action without a
meeting, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) days nor less than ten (10) days before the date of
any such meeting nor more than sixty (60) days before any such action without a
meeting, and in such event only shareholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the Code.
If the board of directors does not so fix a record date:
(a) the record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the
close of business on the business day next preceding the day on which
notice is given or, if notice is waived, at the close of business on
the business day next preceding the day on which the meeting is hold;
and
(b) the record date for determining shareholders entitled to
give consent to corporate action in writing without a meeting, (i)
when no prior action by the board has been taken, shall be the day on
which the first written consent is given, or (ii) when prior action by
the board has been taken, shall be at the close of business on the day
on which the board adopts the resolution relating to that action, or
the sixtieth (60th) day before the date of such other action,
whichever is later.
The record date for any other purpose shall be as provided in Article
VIII of these bylaws.
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<PAGE>
2.12 PROXIES. Every person entitled to vote for directors, or on any
other matter, shall have the right to do so either in person or by one or more
agents authorized by a written proxy signed by the person and filed with the
secretary of the corporation. A proxy shall be deemed signed if the
shareholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the shareholder or the
shareholder's attorney-in-fact. A validly executed proxy which does not state
that it is irrevocable shall continue in full force and effect unless (i) the
person who executed the proxy revokes it prior to the time of voting by
delivering a writing to the corporation stating that the proxy is revoked or by
executing a subsequent proxy and presenting it to the meeting or by voting in
person at the meeting, or (ii) written notice of the death or incapacity of the
maker of that proxy is received by the corporation before the vote pursuant to
that proxy is counted; provided, however, that no proxy shall be valid after the
expiration of eleven (11) months from the date of the proxy, unless otherwise
provided in the proxy. The dates contained on the forms of proxy presumptively
determine the order of execution, regardless of the postmark dates on the
envelopes in which they are mailed. The revocability of a proxy that states on
its face that it is irrevocable shall be governed by the provisions of Sections
705(e) and 705(f) of the Code.
2.13 INSPECTORS OF ELECTION. Before any meeting of shareholders, the
board of directors may appoint an inspector or inspectors of election to act at
the meeting or its adjournment. If no inspector of election is so appointed,
then the chairman of the meeting may, and on the request of any shareholder or a
shareholder's proxy shall, appoint an inspector or inspectors of election to act
at the meeting. The number of inspectors shall be either one (1) or three (3).
If inspectors are appointed at a meeting pursuant to the request of one (1) or
more shareholders or proxies, then the holders of a majority of shares or their
proxies present at the meeting shall determine whether one (1) or three (3)
inspectors are to be appointed. If any person appointed as inspector fails to
appear or fails or refuses to act, then the chairman of the meeting may, and
upon the request of any shareholder or a shareholder's proxy shall, appoint a
person to fill that vacancy.
Such inspectors shall:
(a) determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the
existence of a quorum, and the authenticity, validity, and effect of
proxies;
(b) receive votes, ballots or consents;
(c) hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) count and tabulate all votes or consents;
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(e) determine when the polls shall close;
(f) determine the result; and
(g) do any other acts that may be proper to conduct the election
or vote with fairness to all shareholders.
ARTICLE III
DIRECTORS
3.1 POWERS. Subject to the provisions of the Code and any
limitations in the articles of incorporation and these bylaws relating to action
required to be approved by the shareholders or by the outstanding shares, the
business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS. The authorized number of directors shall be
seven (7) until changed by a duly adopted amendment to the articles of
incorporation or by an amendment to this bylaw adopted by the vote or written
consent of holders of a majority of the outstanding shares entitled to vote;
provided, however, that, if the number of directors has been increased to at
least five (5), an amendment reducing the number of directors to a number less
than five (5) cannot be adopted if the votes cast against its adoption at a
meeting, or the shares not consenting in the case of action by written consent,
are equal to more than sixteen and two-thirds percent (16-2/3%) of the
outstanding shares entitled to vote. Directors need not be shareholders of the
corporation.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
No amendment may change the stated maximum number of authorized directors to a
number greater than two times the stated minimum number of authorized directors
minus one.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors shall be
elected at each annual meeting of shareholders to hold office until the next
annual meeting. Each director, including a director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
3.4 RESIGNATION AND VACANCIES. Any director may resign effective on
giving written notice to the chairman of the board, the president, the secretary
or the board of directors, unless the notice specifies a later time for that
resignation to become effective. If the
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resignation of a director is effective at a future time, the board of directors
may elect a successor to take office when the resignation becomes effective.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
affirmative vote of a majority of the shares represented and voting at a duly
held meeting at which a quorum is present (which shares voting affirmatively
also constitute a majority of the required quorum), or by the unanimous written
consent of all shares entitled to vote thereon. Each director so elected shall
hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the board of directors shall be deemed to
exist (i) in the event of the death, resignation or removal of any director,
(ii) if the board of directors by resolution declares vacant the office of a
director who has been declared of unsound mind by an order of court or convicted
of a felony, (iii) if the authorized number of directors is increased, or (iv)
if the shareholders fail, at any meeting of shareholders at which any director
or directors are elected, to elect the number of directors to be elected at that
meeting.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors, but any such election
other than to fill a vacancy created by removal, if by written consent, shall
require the consent of the holders of a majority of the outstanding shares
entitled to vote thereon.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE; AGENDAS. Regular
meetings of the board of directors may be held at any place within or outside
the state of California that has been designated from time to time by resolution
of the board. In the absence of such a designation, regular meetings shall be
held at the principal executive office of the corporation. Special meetings of
the board may be held at any place within or outside the State of California
that has been designated in the notice of the meeting or, if not stated in the
notice or if there is no notice, at the principal executive office of the
corporation.
Any meeting, regular or special, may be held by conference telephone
or similar communication equipment, so long as all directors participating in
the meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.
At any regular or special meeting of the board of directors, the only
matters which the board may consider will be those described in the notice of
the meeting and those approved by the chairman of the board or a co-chairman of
the board.
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3.6 REGULAR MEETINGS. Regular meetings of the board of directors may
be held without notice if the times of such meetings are fixed by the board of
directors.
3.7 SPECIAL MEETINGS; NOTICE. Special meetings of the board of
directors for any purpose or purposes may be called at any time by the chairman
of the board or any co-chairman of the board.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.8 QUORUM. A majority of the authorized number of directors shall
constitute a quorum for the transaction of business, except to adjourn as
provided in Section 3.10 of these bylaws. Every act or decision done or made by
a majority of the authorized number of directors then in office shall be
regarded as the act of the board of directors, subject to the provisions of
Section 310 of the Code (as to approval of contracts or transactions in which a
director has a direct or indirect material financial interest), Section 311 of
the Code (as to appointment of committees) , Section 317(e) of the Code (as to
indemnification of directors), the articles of incorporation, and other
applicable law.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the authorized number of directors
then in office.
3.9 WAIVER OF NOTICE. Notice of a meeting need not be given to any
director (i) who signs a waiver of notice or a consent to holding the meeting or
an approval of the minutes thereof, whether before or after the meeting, or (ii)
who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to such directors. All such waivers, consents,
and approvals shall be filed with the corporate records or made part of the
minutes of the meeting. A waiver of notice need not specify the purpose of any
regular or special meeting of the board of directors.
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3.10 ADJOURNMENT. A majority of the directors present, whether or
not constituting a quorum, may adjourn any meeting to another time and place.
3.11 NOTICE OF ADJOURNMENT. Notice of the time and place of holding
an adjourned meeting need not be given unless the meeting is adjourned for more
than twenty-four (24) hours. If the meeting is adjourned for more than twenty-
four (24) hours, then notice of the time and place of the adjourned meeting
shall be given before the adjourned meeting takes place, in the manner specified
in Section 3.7 of these bylaws, to the directors who were not present at the
time of the adjournment.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any action
required or permitted to be taken by the board of directors may be taken without
a meeting, provided that all members of the board individually or collectively
consent in writing to that action. Such action by written consent shall have
the same force and effect as a unanimous vote of the board of directors. Such
written consent and any counterparts thereof shall be filed with the minutes of
the proceedings of the board.
3.13 FEES AND COMPENSATION OF DIRECTORS. Directors and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
board of directors. This Section 3.13 shall not be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee or otherwise and receiving compensation for those services.
3.14 APPROVAL OF LOANS TO OFFICERS. The corporation may, upon the
approval of the board of directors alone, make loans of money or property to, or
guarantee the obligations of, any officer of the corporation or its parent or
subsidiary, whether or not a director, or adopt an employee benefit plan or
plans authorizing such loans or guaranties provided that (i) the board of
directors determines that such a loan or guaranty or plan may reasonably be
expected to benefit the corporation, (ii) the corporation has outstanding shares
held of record by 100 or more persons (determined as provided in Section 605 of
the Code) on the date of approval by the board of directors, and (iii) the
approval of the board of directors is by a vote sufficient without counting the
vote of any interested director or directors.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS. The board of directors may, by
resolution adopted by a majority of the authorized number of directors,
designate one (1) or more
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committees, each consisting of two or more directors, to serve at the pleasure
of the board. The board may designate one (1) or more directors as alternate
members of any committee, who may replace any absent member at any meeting of
the committee. The appointment of members or alternate members of a committee
requires the vote of a majority of the authorized number of directors. Any
committee, to the extent provided in the resolution of the board, shall have all
the authority of the board, except with respect to:
(a) the approval of any action which, under the Code, also
requires shareholders' approval or approval of the outstanding shares;
(b) the filling of vacancies on the board of directors or in any
committee;
(c) the fixing of compensation of the directors for serving on
the board or any committee;
(d) the amendment or repeal of these bylaws or the adoption of
new bylaws;
(e) the amendment or repeal of any resolution of the board of
directors which by its express terms is not so amendable or
repealable;
(f) a distribution to the shareholders of the corporation,
except at a rate or in a periodic amount or within a price range
determined by the board of directors; or
(g) the appointment of any other committees of the board of
directors or the members of such committees.
4.2 MEETINGS AND ACTION OF COMMITTEES. Meetings and actions of
committees shall be governed by, and held and taken in accordance with, the
provisions of Article III of these bylaws, Section 3.5 (place of meetings),
Section 3.6 (regular meetings), Section 3.7 (special meetings and notice),
Section 3.8 (quorum), Section 3.9 (waiver of notice), Section 3.10 (adjourn-
ment), Section 3.11 (notice of adjournment), and Section 3.12 (action without
meeting), with such changes in the context of those bylaws as are necessary to
substitute the committee and its members for the board of directors and its
members; provided, however, that the time of regular meetings of committees may
be determined either by resolution of the board of directors or by resolution of
the committee, that special meetings of committees may also be called by
resolution of the board of directors, and that notice of special meetings of
committees shall also be given to all alternate members, who shall have the
right to attend all meetings of the committee. The board of directors may adopt
rules for the government of any committee not inconsistent with the provisions
of these bylaws.
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ARTICLE V
OFFICERS
5.1 OFFICERS. The officers of the corporation shall be a president,
a secretary and a chief financial officer. The corporation may also have, at
the discretion of the board of directors, a chairman of the board, one or more
vice presidents, one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 5.3 of these bylaws. Any number of offices may be held by
the same person.
5.2 ELECTION OF OFFICERS. The officers of the corporation, except
such officers as may be appointed in accordance with the provisions of Section
5.3 or Section 5.5 of these bylaws, shall be chosen by the board, subject to the
rights, if any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS. The board of directors may appoint, or may
empower the president to appoint, such other officers as the business of the
corporation may require, each of whom shall hold office for such period, have
such authority, and perform such duties as are provided in these bylaws or as
the board of directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if
any, of an officer under any contract of employment, any officer may be removed,
either with or without cause, by the board of directors at any regular or
special meeting of the board or, except in case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD. The chairman of the board, if such an
officer be elected, shall, if present, preside at meetings of the board of
directors and exercise and perform such other powers and duties as may from time
to time be assigned to him by the board
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of directors or as may be prescribed by these bylaws. If there is no president,
then the chairman of the board shall also be the chief executive officer of the
corporation and shall have the powers and duties prescribed in Section 5.7 of
these bylaws. The board in its discretion may elect two or more individuals to
serve as co-chairmen.
5.7 PRESIDENT. Subject to such supervisory powers, if any, as may be
given by the board of directors to the chairman of the board, if there be such
an officer, the president shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction, and control of the business and the officers of
the corporation. He shall preside at all meetings of the shareholders and, in
the absence or nonexistence of a chairman of the board, at all meetings of the
board of directors. He shall have the general powers and duties of management
usually vested in the office of president of a corporation, and shall have such
other powers and duties as may be prescribed by the board of directors or these
bylaws.
5.8 VICE PRESIDENTS. In the absence or disability of the president,
the vice presidents, if any, in order of their rank as fixed by the board of di-
rectors or, if not ranked, a vice president designated by the board of
directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
board of directors, these bylaws, the president or the chairman of the board.
5.9 SECRETARY. The secretary shall keep or cause to be kept, at the
principal executive office of the corporation or such other place as the board
of directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors and shareholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all shareholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the shareholders and of the board of directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other
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powers and perform such other duties as may be prescribed by the board of
directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER. The chief financial officer shall keep
and maintain, or cause to be kept and maintained, adequate and correct books and
records of accounts of the properties and business transactions of the cor-
poration, including accounts of its assets, liabilities, receipts,
disbursements,, gains, losses, capital, retained earnings, and shares. The
books of account shall at all reasonable times be open to inspection by any
director.
The chief financial officer shall deposit all money and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request it, an account of
all of his transactions as chief financial officer and of the financial condi-
tion of the corporation, and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or these bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. The corporation
shall, to the maximum extent and in the manner permitted by the Code, indemnify
each of its directors and officers against expenses (as defined in Section
317(a) of the Code), judgments, fines, settlements, and other amounts actually
and reasonably incurred in connection with any proceeding (as defined in Section
317(a) of the Code), arising by reason of the fact that such person is or was an
agent of the corporation. For purposes of this Article VI, a "director" or
"officer" of the corporation includes any person (i) who is or was a director or
officer of the corporation, (ii) who is or was serving at the request of the
corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or (iii) who was a director or officer of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
6.2 INDEMNIFICATION OF OTHERS. The corporation shall have the power,
to the extent and in the manner permitted by the Code, to indemnify each of its
employees and agents (other than directors and officers) against expenses (as
defined in Section 317(a) of the Code), judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with any proceeding (as
defined in Section 317(a) of the Code), arising by reason of the fact that such
person is or was an agent of the corporation. For purposes of this Article VI,
an
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"employee" or "agent" of the corporation (other than a director or officer)
includes any person (i) who is or was an employee or agent of the corporation,
(ii) who is or was serving at the request of the corporation as an employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or (iii) who was an employee or agent of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
6.3 PAYMENT OF EXPENSES IN ADVANCE. Expenses incurred in defending
any civil or criminal action or proceeding for which indemnification is required
pursuant to Section 6.1 or for which indemnification is permitted pursuant to
Section 6.2 following authorization thereof by the Board of Directors shall be
paid by the corporation in advance of the final disposition of such action or
proceeding upon receipt of an undertaking by or on behalf of the indemnified
party to repay such amount if it shall ultimately be determined that the
indemnified party is not entitled to be indemnified as authorized in this
Article VI.
6.4 INDEMNITY NOT EXCLUSIVE. The indemnification provided by this
Article VI shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office, to the extent that such additional rights to indemnification are
authorized in the Articles of Incorporation.
6.5 INSURANCE INDEMNIFICATION. The corporation shall have the power
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation against any liability
asserted against or incurred by such person in such capacity or arising out of
such person's status as such, whether or not the corporation would have the
power to indemnify him against such liability under the provisions of this
Article VI.
6.6 CONFLICTS. No indemnification or advance shall be made under
this Article VI, except where such indemnification or advance is mandated by law
or the order, judgment or decree of any court of competent jurisdiction, in any
circumstance where it appears:
(1) That it would be inconsistent with a provision of the
Articles of Incorporation, these bylaws, a resolution of the
shareholders or an agreement in effect at the time of the accrual of
the alleged cause of the action asserted in the proceeding in which
the expenses were incurred or other amounts were paid, which prohibits
or otherwise limits indemnification; or
(2) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
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ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER. The corporation
shall keep either at its principal executive office or at the office of its
transfer agent or registrar (if either be appointed), as determined by
resolution of the board of directors, a record of its shareholders listing the
names and addresses of all shareholders and the number and class of shares held
by each shareholder.
A shareholder or shareholders of the corporation who holds at least
five percent (5%) in the aggregate of the outstanding voting shares of the
corporation or who holds at least one percent (1%) of such voting shares and has
filed a Schedule 14B with the Securities and Exchange Commission relating to the
election of directors, may (i)inspect and copy the records of shareholders'
names, addresses, and shareholdings during usual business hours on five (5)
days' prior written demand on the corporation, (ii) obtain from the transfer
agent of the corporation, on written demand and on the tender of such transfer
agent's usual charges for such list, a list of the names and addresses of the
shareholders who are entitled to vote for the election of directors, and their
shareholdings, as of the most recent record date for which that list has been
compiled or as of a date specified by the shareholder after the date of demand.
Such list shall be made available to any such shareholder by the transfer agent
on or before the later of five (5) days after the demand is received or five (5)
days after the date specified in the demand as the date as of which the list is
to be compiled.
The record of shareholders shall also be open to inspection on the
written demand of any shareholder or holder of a voting trust certificate, at
any time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as the holder of a voting trust
certificate.
Any inspection and copying under this Section 7.1 may be made in
person or by an agent or attorney of the shareholder or holder of a voting trust
certificate making the demand.
7.2 MAINTENANCE AND INSPECTION OF BYLAWS. The corporation shall keep
at its principal executive office or, if its principal executive office is not
in the State of California, at its principal business office in California the
original or a copy of these bylaws as amended to date, which bylaws shall be
open to inspection by the shareholders at all reasonable times during office
hours. If the principal executive office of the Corporation is outside the
State of California and the corporation has no principal business office in such
state, then the secretary shall, upon the written request of any shareholder,
furnish to that shareholder a copy of these bylaws as amended to date.
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7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS. The
accounting books and records and the minutes of proceedings of the shareholders,
of the board of directors, and of any committee or committees of the board or
directors shall be kept at such place or places as are designated by the board
of directors or, in absence of such designation, at the principal executive
office of the corporation. The minutes shall be kept in written form, and the
accounting books and records shall be kept either in written form or in any
other form capable of being converted into written form.
The minutes and accounting books and records shall be open to
inspection upon the written demand of any shareholder or holder of a voting
trust certificate, at any reasonable time during usual business hours, for a
purpose reasonably related to the holder's interests as a shareholder or as the
holder of a voting trust certificate. The inspection may be made in person or
by an agent or attorney and shall include the right to copy and make extracts.
Such rights of inspection shall extend to the records of each subsidiary
corporation of the corporation.
7.4 INSPECTION BY DIRECTORS. Every director shall have the absolute
right at any reasonable time to inspect all books, records, and documents of
every kind as well as the physical properties of the corporation and each of its
subsidiary corporations. Such inspection by a director may be made in person or
by an agent or attorney. The right of inspection includes the right to copy and
make extracts of documents.
7.5 ANNUAL REPORT TO SHAREHOLDERS; WAIVER. The board of directors
shall cause an annual report to be sent to the shareholders not later than one
hundred twenty (120) days after the close of the fiscal year adopted by the
corporation. Such report shall be sent at least fifteen (15) days (or, if sent
by third-class mail, thirty-five (35) days) before the annual meeting of
shareholders to be held during the next fiscal year and in the manner specified
in Section 2.5 of these bylaws for giving notice to shareholders of the
corporation.
The annual report shall contain (i) a balance sheet as of the end of
the fiscal year, (ii) an income statement, (iii) a statement of changes in
financial position for the fiscal year, and (iv) any report of independent
accountants or, if there is no such report, the certificate of an authorized
officer of the corporation that the statements were prepared without audit from
the books and records of the corporation.
The foregoing requirement of an annual report shall be waived so long
as the shares of the corporation are held by fewer than one hundred (100)
holders of record.
7.6 FINANCIAL STATEMENTS. If no annual report for the fiscal year
has been sent to shareholders, then the corporation shall, upon the written
request of any shareholder made more than one hundred twenty (120) days after
the close of such fiscal year, deliver or mail to the person making the request,
within thirty (30) days thereafter, a copy of a balance sheet as
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of the end of such fiscal year and an income statement and statement of changes
in financial position for such fiscal year.
If a shareholder or shareholders holding at least five percent (5%) of
the outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than thirty (30) days before the date of the request, and for a
balance sheet of the corporation as of the end of that period, then the chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, the statements referred to in the first paragraph of
this Section 7.6 shall likewise be delivered or mailed to the shareholder or
shareholders within thirty (30) days after the request.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or by the certificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.
7.7 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The chairman of
the board, the president, any vice president, the chief financial officer, the
secretary or assistant secretary of this corporation, or any other person
authorized by the board of directors or the president or a vice president, is
authorized to vote, represent, and exercise on behalf of this corporation all
rights incident to any and all shares of any other corporation or corporations
standing in the name of this corporation. The authority herein granted may be
exercised either by such person directly or by any other person authorized to do
so by proxy or power of attorney duly executed by such person having the
authority.
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. For
purposes of determining the shareholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or the shareholders
entitled to exercise any rights in respect of any other lawful action (other
than action by shareholders by written consent without a meeting), the board of
directors may fix, in advance, a record date, which shall not be more than sixty
(60) days before any such action. In that case, only shareholders of record at
the close of business on the date so fixed are entitled to receive the dividend,
distribution or
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allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date so fixed, except as otherwise provided in the Code.
If the board of directors does not so fix a record date, then the
record date for determining shareholders for any such purpose shall be at the
close of business on the day on which the board adopts the applicable resolution
or the sixtieth (60th) day before the date of that action, whichever is later.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS. From time to time,
the board of directors shall determine by resolution which person or persons may
sign or endorse all checks, drafts, other orders for payment of money, notes or
other evidences of indebtedness that are issued in the name of or payable to the
corporation, and only the persons so authorized shall sign or endorse those
instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED. The board of
directors, except as otherwise provided in these bylaws, may authorize any
officer or officers, or agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation; such authority
may be general or confined to specific instances. Unless so authorized or
ratified by the board of directors or within the agency power of an officer, no
officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or for any amount.
8.4 CERTIFICATES FOR SHARES. A certificate or certificates for
shares of the corporation shall be issued to each shareholder when any of such
shares are fully paid. The board of directors may authorize the issuance of
certificates for shares partly paid provided that these certificates shall state
the total amount of the consideration to be paid for them and the amount
actually paid. All certificates shall be signed in the name of the corporation
by the chairman of the board or the vice chairman of the board or the president
or a vice president and by the chief financial officer or an assistant treasurer
or the secretary or an assistant secretary, certifying the number of shares and
the class or series of shares owned by the shareholder. Any or all of the
signatures on the certificate may be facsimile.
In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed on a certificate ceases to be that
officer, transfer agent or registrar before that certificate is issued, it may
be issued by the corporation with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue.
8.5 LOST CERTIFICATES. Except as provided in this Section 8.5, no
new certificates for shares shall be issued to replace a previously issued
certificate unless the latter is
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<PAGE>
surrendered to the corporation and cancelled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.6 CONSTRUCTION; DEFINITIONS. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions in the
Code shall govern the construction of these bylaws. Without limiting the
generality of this provision, the singular number includes the plural, the
plural number includes the singular, and the term "person" includes both a
corporation and a natural person.
ARTICLE IX
AMENDMENTS
9.1 AMENDMENT BY SHAREHOLDERS. New bylaws may be adopted or these
bylaws may be amended or repealed by the vote or written consent of holders of a
majority of the outstanding shares entitled to vote; provided, however, that if
the articles of incorporation of the corporation set forth the number of
authorized directors of the corporation, then the authorized number of directors
may be changed only by an amendment of the articles of incorporation.
9.2 AMENDMENT BY DIRECTORS. Subject to the rights of the
shareholders as provided in Section 9.1 of these bylaws, other than a bylaw or
an amendment of a bylaw changing the authorized number of directors (except to
fix the authorized number or directors pursuant to a bylaw providing for a
variable number of directors), may be adopted, amended or repealed by the board
of directors.
-21-
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AXIOHM TRANSACTION SOLUTIONS, INC.
AXIOHM IPB, INC.
STADIA COLORADO CORP.
COGNITIVE SOLUTIONS, INC.
SENIOR SUBORDINATED NOTES
AND
NEW SENIOR SUBORDINATED NOTES
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007
INDENTURE
Dated as of October 2, 1997
THE BANK OF NEW YORK
as Trustee
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . 19
Section 1.03. Incorporation by Reference of Trust Indenture Act . . . . 19
Section 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . 20
ARTICLE II.
THE NOTES
Section 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . 20
Section 2.02. Execution and Authentication. . . . . . . . . . . . . . . 21
Section 2.03. Registrar and Paying Agent. . . . . . . . . . . . . . . . 21
Section 2.04. Paying Agent to Hold Money in Trust . . . . . . . . . . . 22
Section 2.05. Holder Lists. . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . 22
Section 2.07. Replacement Notes . . . . . . . . . . . . . . . . . . . . 35
Section 2.08. Outstanding Notes . . . . . . . . . . . . . . . . . . . . 35
Section 2.09. Treasury Notes. . . . . . . . . . . . . . . . . . . . . . 35
Section 2.10. Temporary Notes . . . . . . . . . . . . . . . . . . . . . 36
Section 2.11. Cancellation. . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.12. Defaulted Interest. . . . . . . . . . . . . . . . . . . . 36
Section 2.13. Cusip Numbers . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE III.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee. . . . . . . . . . . . . . . . . . . . 37
Section 3.02. Selection of Notes to be Redeemed . . . . . . . . . . . . 37
Section 3.03. Notice of Redemption. . . . . . . . . . . . . . . . . . . 37
Section 3.04. Effect of Notice of Redemption. . . . . . . . . . . . . . 38
Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . 38
Section 3.06. Notes Redeemed in Part. . . . . . . . . . . . . . . . . . 39
Section 3.07. Optional Redemption . . . . . . . . . . . . . . . . . . . 39
Section 3.08. Mandatory Redemption. . . . . . . . . . . . . . . . . . . 39
Section 3.09. Offer to Purchase by Application of Excess Proceeds . . . 39
i
<PAGE>
ARTICLE IV.
COVENANTS
Section 4.01. Payment of Notes. . . . . . . . . . . . . . . . . . . . . 41
Section 4.02. Maintenance of Office or Agency . . . . . . . . . . . . . 41
Section 4.03. Reports . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.04. Compliance Certificate. . . . . . . . . . . . . . . . . . 42
Section 4.05. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 4.06. Stay, Extension and Usury Laws. . . . . . . . . . . . . . 43
Section 4.07. Restricted Payments . . . . . . . . . . . . . . . . . . . 44
Section 4.08. Dividend and Other Payment Restrictions AffectinG
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 46
Section 4.09. Incurrence of Indebtedness and Issuance of
Preferred Stock. . . . . . . . . . . . . . . . . . . . . 47
Section 4.10. Asset Sales . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.11. Transactions with affiliates. . . . . . . . . . . . . . . 51
Section 4.12. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.13. Line of Business. . . . . . . . . . . . . . . . . . . . . 52
Section 4.14. Corporate Existence . . . . . . . . . . . . . . . . . . . 52
Section 4.15. Offer to Repurchase Upon Change of Control. . . . . . . . 52
Section 4.16. No Senior Subordinated Debt . . . . . . . . . . . . . . . 54
Section 4.17. Designation of Unrestricted Subsidiaries. . . . . . . . . 54
Section 4.18. Payments for Consent. . . . . . . . . . . . . . . . . . . 55
ARTICLE V.
SUCCESSORS
Section 5.01. Merger, consolidation, or Sale of Assets. . . . . . . . . 55
Section 5.02. Successor Corporation Substituted . . . . . . . . . . . . 55
ARTICLE VI.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . 56
Section 6.02. Acceleration. . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.03. Other Remedies. . . . . . . . . . . . . . . . . . . . . . 58
Section 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . 59
Section 6.05. Control by majority . . . . . . . . . . . . . . . . . . . 59
Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . 59
Section 6.07. Rights of Holders of Notes to Receive Payment . . . . . . 60
Section 6.08. Collection Suit by Trustee. . . . . . . . . . . . . . . . 60
Section 6.09. Trustee May File Proofs of Claim. . . . . . . . . . . . . 60
Section 6.10. Priorities. . . . . . . . . . . . . . . . . . . . . . . . 61
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . 61
ARTICLE VII.
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TRUSTEE
Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . 61
Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . 63
Section 7.03. Individual Rights of Trustee. . . . . . . . . . . . . . . 63
Section 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . 64
Section 7.05. Notice of Defaults. . . . . . . . . . . . . . . . . . . . 64
Section 7.06. Reports by Trustee to Holders of the Notes. . . . . . . . 64
Section 7.07. Compensation and Indemnity. . . . . . . . . . . . . . . . 64
Section 7.08. Replacement of Trustee. . . . . . . . . . . . . . . . . . 65
Section 7.09. Successor Trustee by Merger, etc. . . . . . . . . . . . . 66
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . 66
Section 7.11. Preferential Collection of Claims Against Company . . . . 67
ARTICLE VIII.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.02. Legal Defeasance and Discharge. . . . . . . . . . . . . . 67
Section 8.03. Covenant Defeasance . . . . . . . . . . . . . . . . . . . 67
Section 8.04. Conditions to Legal or Covenant Defeasance. . . . . . . . 68
Section 8.05. Deposited Money and Government Securities to be
held in Trust; Other Miscellaneous Provisions. . . . . . 69
Section 8.06. Repayment to Company. . . . . . . . . . . . . . . . . . . 70
Section 8.07. Reinstatement . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE IX.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes . . . . . . . . . . . 71
Section 9.02. With Consent of Holders of Notes. . . . . . . . . . . . . 71
Section 9.03. Compliance with Trust Indenture Act . . . . . . . . . . . 73
Section 9.04. Revocation and Effect of Consents . . . . . . . . . . . . 73
Section 9.05. Notation on or Exchange of Notes. . . . . . . . . . . . . 73
Section 9.06. Trustee to Sign Amendments, etc . . . . . . . . . . . . . 74
Section 9.07. Execution of Supplemental Indenture . . . . . . . . . . . 74
ARTICLE X.
SUBORDINATION
Section 10.01. Agreement to Subordinate. . . . . . . . . . . . . . . . . 74
Section 10.02. Liquidation; Dissolution; Bankruptcy. . . . . . . . . . . 74
Section 10.03. Default on Designated Senior Debt . . . . . . . . . . . . 75
Section 10.04. Acceleration of Notes . . . . . . . . . . . . . . . . . . 76
Section 10.05. When Distribution Must be Paid Over . . . . . . . . . . . 76
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<PAGE>
Section 10.06. Notice by Company . . . . . . . . . . . . . . . . . . . . 76
Section 10.07. Subrogation . . . . . . . . . . . . . . . . . . . . . . . 76
Section 10.08. Relative Rights . . . . . . . . . . . . . . . . . . . . . 77
Section 10.09. Subordination May Not be Impaired by Company. . . . . . . 77
Section 10.10. Distribution or Notice to Representative. . . . . . . . . 77
Section 10.11. Rights of Trustee and Paying Agent. . . . . . . . . . . . 77
Section 10.12. Authorization to Effect Subordination . . . . . . . . . . 78
Section 10.13. Amendments. . . . . . . . . . . . . . . . . . . . . . . . 78
Section 10.14. Reliance by Holders of Senior Debt on Subordination
Provisions . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE XI. GUARANTEE OF THE NOTES . . . . . . . 78
Section 11.01. Subsidiary Guarantee. . . . . . . . . . . . . . . . . . . 78
Section 11.02. Execution and Delivery of Subsidiary Guarantee. . . . . . 80
Section 11.03. Guarantors may Consolidate, etc. on Certain Terms . . . . 80
Section 11.04. Releases Following Sale of Assets.. . . . . . . . . . . . 81
Section 11.05. Additional Guarantors.. . . . . . . . . . . . . . . . . . 82
Section 11.06. Limitation on Guarantor Liability.. . . . . . . . . . . . 83
Section 11.07. Trustee to Include Paying Agent . . . . . . . . . . . . . 83
ARTICLE XII.
SUBORDINATION
Section 12.01. Agreement to Subordinate. . . . . . . . . . . . . . . . . 83
Section 12.02. Liquidation; Dissolution; Bankruptcy. . . . . . . . . . . 83
Section 12.03. Default on Designated Guarantor Senior Debt.. . . . . . . 84
Section 12.04. Acceleration of Notes.. . . . . . . . . . . . . . . . . . 85
Section 12.05. When Distribution Must be Paid Over.. . . . . . . . . . . 85
Section 12.06. Notice by Guarantor.. . . . . . . . . . . . . . . . . . . 86
Section 12.07. Subrogation.. . . . . . . . . . . . . . . . . . . . . . . 86
Section 12.08. Relative Rights.. . . . . . . . . . . . . . . . . . . . . 86
Section 12.09. Subordination may not be Impaired by Guarantors . . . . . 86
Section 12.10. Distribution or Notice to Representative. . . . . . . . . 87
Section 12.11. Rights of Trustee and Paying Agent. . . . . . . . . . . . 87
Section 12.12. Authorization to Effect Subordination . . . . . . . . . . 87
Section 12.13. Amendments. . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.14. Reliance by Holders of Guarantor Senior Debt on
Subordination Provisions . . . . . . . . . . . . . . . . 88
ARTICLE XIII.
MISCELLANEOUS
Section 13.01. Trust Indenture Act Controls. . . . . . . . . . . . . . . 88
Section 13.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 13.03. Communication by Holders of Notes With Other
holders of notes . . . . . . . . . . . . . . . . . . . . 89
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<PAGE>
Section 13.04. Certificate and Opinion as to Conditions Precedent. . . . 89
Section 13.05. Statements Required in Certificate or Opinion . . . . . . 90
Section 13.06. Rules by Trustee and Agents . . . . . . . . . . . . . . . 90
Section 13.07. No Personal Liability of Directors, Officers,
Employees and Stockholders . . . . . . . . . . . . . . . 90
Section 13.08. Consent to Jurisdiction; Service or Process . . . . . . . 90
Section 13.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.10. No Adverse Interpretation of Other Agreements . . . . . . 91
Section 13.11. Successors. . . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.12. Severability. . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.13. Counterpart Originals . . . . . . . . . . . . . . . . . . 91
Section 13.14. Table of Contents, Headings, etc. . . . . . . . . . . . . 91
v
<PAGE>
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
Exhibit E FORM OF SUBSIDIARY GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
vi
<PAGE>
CROSS-REFERENCE TABLE*
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
310 (a)(1) . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . 7.10
(b). . . . . . . . . . . . . . . 7.10
(c). . . . . . . . . . . . . . . N.A.
311 (a). . . . . . . . . . . . . . . 7.11
(b). . . . . . . . . . . . . . . 7.11
(c). . . . . . . . . . . . . . . N.A.
312 (a). . . . . . . . . . . . . . . 2.05
(b). . . . . . . . . . . . . . . 11.03
(c). . . . . . . . . . . . . . . 11.03
313 (a). . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . 7.07
(c). . . . . . . . . . . . . . . 7.06;11.02
(d). . . . . . . . . . . . . . . 7.06
314 (a). . . . . . . . . . . . . . . 4.03;11.02
(b). . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . 11.04
(c)(2) . . . . . . . . . . . . . 11.04
(c)(3) . . . . . . . . . . . . . N.A.
(d). . . . . . . . . . . . . . . N.A.
(e). . . . . . . . . . . . . . . 11.05
(f). . . . . . . . . . . . . . . N.A.
315 (a). . . . . . . . . . . . . . . 7.01
(b). . . . . . . . . . . . . . . 7.05,11.02
(c). . . . . . . . . . . . . . . 7.01
(d). . . . . . . . . . . . . . . 7.01
(e). . . . . . . . . . . . . . . 6.11
316 (a)(last sentence) . . . . . . . 2.09
(a)(1)(A). . . . . . . . . . . . 6.05
(a)(1)(B). . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . N.A.
(b). . . . . . . . . . . . . . . 6.07
(c). . . . . . . . . . . . . . . 2.12
317 (a)(1) . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . 6.09
(b). . . . . . . . . . . . . . . 2.04
318 (a). . . . . . . . . . . . . . . 11.01
(b). . . . . . . . . . . . . . . N.A.
<PAGE>
(c). . . . . . . . . . . . . . . 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of this Indenture.
<PAGE>
INDENTURE dated as of October 2, 1997 by and among Axiohm Transaction
Solutions, Inc., a California corporation (the "Company"), Axiohm IPB, Inc.,
a Delaware corporation ("IPB"), Stadia Colorado Corp., a Colorado corporation
("Stadia"), Cognitive Solutions, Inc., a California corporation ("Cognitive"
and, together with IPB and Stadia, the "Guarantors") and The Bank of New
York, a New York banking corporation as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 9 3/4% Senior Subordinated Notes due 2007 (the "Senior Subordinated
Notes") and the new 9 3/4% Senior Subordinated Notes due 2007 (the "New
Senior Subordinated Notes" and, together with the Senior Subordinated Notes,
the "Notes"):
ARTICLE I.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. DEFINITIONS.
"144A GLOBAL NOTE" means the global note in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with and registered in the name of the Depositary or its nominee that will be
issued in a denomination equal to the outstanding principal amount of the
Notes sold in reliance on Rule 144A.
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or
in contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or
otherwise; PROVIDED THAT beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"APPLICABLE PROCEDURES" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures
of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition
of any assets or
1
<PAGE>
rights (including, without limitation, by way of a sale and leaseback)
(PROVIDED THAT the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries taken as
a whole will be governed by Section 4.15 hereof and/or Article 5 hereof and
not by the provisions of Section 4.10), and (ii) the issue or sale by the
Company or any of its Restricted Subsidiaries of Equity Interests of any of
the Company's Restricted Subsidiaries, in the case of either clause (i) or
(ii), whether in a single transaction or a series of related transactions (a)
that have a fair market value in excess of $1.0 million or (b) for Net
Proceeds in excess of $1.0 million. Notwithstanding the foregoing: (i) a
transfer of assets by the Company to a Guarantor or by a Guarantor to the
Company or another Guarantor or by a non-Guarantor Foreign Subsidiary to
another non-Guarantor Foreign Subsidiary, (ii) an issuance of Equity
Interests by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary, (iii) a Restricted Payment that is permitted by Section 4.07
hereof, (iv) a transfer of Capital Stock of a Foreign Subsidiary for cash
and/or Indebtedness permitted by clause (xv) of Section 4.09 hereof and (v) a
disposition of inventory or Cash Equivalents in the ordinary course of
business, will, in each case, not be deemed to be Asset Sales.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"BOARD OF DIRECTORS" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.
"BORROWING BASE" means, with respect to any Restricted Subsidiary that
is a Foreign Subsidiary and is not a Guarantor, the sum of (x) 75% of the net
book value of the non-Affiliate accounts receivable of such Restricted
Foreign Subsidiary in accordance with GAAP and (y) 40% of the net book value
of the inventory of such Restricted Foreign Subsidiary in accordance with
GAAP.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"CAPITAL MARKET TRANSACTION" means (i) any direct or indirect public
offering or private placement of subordinated debt or equity securities of
the Company or any of its Subsidiaries or (ii) the incurrence of any other
Indebtedness by the Company or any of its Subsidiaries, or any direct or
indirect parent holding company of the Company (other than Permitted Debt);
PROVIDED, that, in each case, either such transaction does not violate the
New Credit Facility or the Indebtedness under the New Credit Facility has
been paid in full and all commitments thereunder have been terminated.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of corporate stock, (iii) in the case of a partnership or limited
2
<PAGE>
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than one year from the date of acquisition, (iii) certificates of
deposit, time deposits and eurodollar time deposits with maturities of not
more than one year from the date of acquisition, bankers' acceptances with
maturities of not more than one year from the date of acquisition and
overnight bank deposits, in each case with any lender party to the New Credit
Facility or any Permitted Refinancing Indebtedness or with any domestic
commercial bank having capital and surplus in excess of $500.0 million and a
Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with
a term of not more than thirty days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper rated at least P-2 by Moody's Investors Service, Inc. or at
least A-2 by Standard & Poor's Ratings Services with maturities of not more
than 270 days from the date of acquisition, (vi) readily marketable direct
obligations issued by any State of the United States of America or any
political subdivision thereof having maturities of not more than one year
from the date of acquisition and rated at least A by Moody's Investors
Service, Inc. or A by Standard & Poor's Corporation, and (vii) investment
funds investing 95% of their assets in securities of the types described in
clauses (i)-(vi) above.
"CEDEL" means Cedel Bank, societe anonyme.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act) (other than persons who are, or groups
of persons who are, made up entirely of Principals and/or their Related
Parties); (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company; (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of
which is that any "person" (as defined above), other than one or more
Principals or their respective Related Parties, becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire,
whether such right is currently exercisable or is exercisable only upon the
occurrence of a subsequent condition), directly or indirectly, of more than
35% of the total of the Voting Stock of the Company (measured by voting power
rather than number of shares), PROVIDED, that no Principal and his Related
Parties beneficially own (as so defined), directly or indirectly, in the
aggregate a greater percentage of the total voting power of the Voting Stock
of the Company than such other person or have the right or ability by voting
power, contract or otherwise, to elect or designate for election a majority
of the Board of Directors of the Company (for purposes of this clause (iii),
such other person shall be deemed to beneficially own any Voting Stock of a
person held by another person (a "parent corporation"), if such other
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person "beneficially owns" (as so defined), directly or indirectly, more than
50% of the voting power of the Voting Stock of such parent corporation and
the Principals and the Related Parties "beneficially own" (as so defined),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of such parent corporation than such other
person and do not have the right or ability by voting power, contract or
otherwise, to elect or designate for election a majority of the Board of
Directors of such parent corporation), (iv) the first day on which a majority
of the members of the Board of Directors of the Company are not Continuing
Directors; or (v) the Company consolidates with, or merges with or into, any
Person, or any Person consolidates with, or merges with or into, the Company,
in any such event pursuant to a transaction in which any of the outstanding
Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where the
Voting Stock of the Company outstanding immediately prior to such transaction
is converted into or exchanged for Voting Stock (other than Disqualified
Stock) of the surviving or transferee Person constituting a majority of the
outstanding shares of such Voting Stock of such surviving or transferee
Person (immediately after giving effect to such conversion or exchange).
"COMPANY" means Axiohm Transaction Solutions, Inc., a California
corporation, until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i)
an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale (to the extent such losses were deducted in
computing such Consolidated Net Income), plus (ii) provision for taxes based
on income or profits of such Person and its Restricted Subsidiaries for such
period, to the extent that such provision for taxes was included in computing
such Consolidated Net Income, plus (iii) consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions, discounts
and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing
such Consolidated Net Income, plus (iv) depreciation, amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it
represents an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of
such Person and its Restricted Subsidiaries for such period to the extent
that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, minus (v) non-cash items
increasing such Consolidated Net Income for such period, in each case, on a
consolidated basis and determined in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a
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consolidated basis, determined in accordance with GAAP; provided that (i) the
Net Income (but not loss) of any Person that is not a Restricted Subsidiary
or that is accounted for by the equity method of accounting shall be included
only to the extent of the amount of dividends or distributions paid in cash
to the referent Person or a Restricted Subsidiary, (ii) the Net Income of any
Restricted Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary
of that Net Income is not at the date of determination permitted without any
prior governmental approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, (iii) the Net
Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded, (iv) the
cumulative effect of a change in accounting principles shall be excluded and
(v) the Net Income (or loss) of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Company or one of its
Subsidiaries.
"CONTINUING DIRECTOR" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture, (ii) was nominated for
election or elected to such Board of Directors with the approval of a
majority of the Continuing Directors who were members of such Board at the
time of such nomination or election, or (iii) was elected to such Board of
Directors with the approval of the holders of 80% or more of the voting
securities held by the Principals and their Related Parties.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of
the Trustee specified in Section 13.02 hereof or such other address as to
which the Trustee may give notice to the Company.
"CREDIT AGREEMENT" means the Credit Agreement, dated as of the date
hereof, among the Company, Lehman Brothers Inc., as arranger, Lehman
Commercial Paper Inc., as syndication agent and administrative agent and the
lenders from time to time party thereto, as such agreement may be amended,
restated, modified, renewed, refunded, replaced or refinanced from time to
time thereafter, including any appendices, exhibits or schedules to any of
the foregoing, as the same may be in effect from time to time, in each case,
as such agreements may be amended, modified, supplemented, renewed, refunded,
replaced, refinanced, extended or restated from time to time (whether with
the original agents and lenders or other agents and lenders or otherwise, and
whether provided under the original credit agreement or other credit
agreements or otherwise), including any appendices, exhibits or schedules to
any of the foregoing.
"DARDEL" means Dardel Technologies S.A., a French corporation.
"DEFAULT" means any event that is or with the passage of time or the
giving of notice (or both) would be an Event of Default.
"DEFINITIVE NOTE" means a certificated Note registered in the name
of the Holder thereof and issued in accordance with Section 2.07 hereof, in
the form of Exhibit A hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of
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Exchanges of Interests in the Global Note" attached thereto.
"DEPOSITARY" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof
as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to
the applicable provision of this Indenture.
"DESIGNATED GUARANTOR SENIOR DEBT" means with respect to any
Guarantor (i) any Indebtedness of such Guarantor outstanding under the Credit
Agreement and (ii) any other Guarantor Senior Debt permitted under this
Indenture, which, at the date of determination, has an aggregate principal
amount outstanding of, or under which at the date of creation thereof or
determination, the holders thereof are committed to lend, at least $25.0
million and is specifically designated by the Guarantor in the instrument
evidencing or governing such Guarantor Senior Debt as "Designated Guarantor
Senior Debt" for purposes of this Indenture.
"DESIGNATED SENIOR DEBT" means (i) any Indebtedness outstanding
under the Credit Agreement and (ii) any other Senior Debt permitted under
this Indenture, which, at the date of determination, has an aggregate
principal amount outstanding of, or under which at the date of creation
thereof or determination, the holders thereof are committed to lend, at least
$25.0 million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Debt as "Designated Senior Debt" for
purposes of this Indenture.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof,
in whole or in part, on or prior to the date that is 91 days after the date
on which the Notes mature, except to the extent that such Capital Stock is
solely redeemable with, or solely exchangeable for, any Capital Stock of such
Person that is not Disqualified Stock.
"DOMESTIC SUBSIDIARY" means a Subsidiary that is formed under the
laws of the United States of America or of a state or territory thereof.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"EUROCLEAR" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE NOTES" means the Notes issued in the Exchange Offer
pursuant to Section 2.07(f).
"EXCHANGE OFFER" has the meaning set forth in the Registration
Rights Agreement.
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"EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set forth
in the Registration Rights Agreement.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the New Credit Facility) in
existence on the date hereof, until such amounts are repaid.
"FIXED CHARGES" means, with respect to any Person for any period,
the sum, without duplication, of (i) the consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions, discounts
and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), (ii) the consolidated interest of such Person and its
Restricted Subsidiaries that was capitalized during such period, (iii) any
interest expense on Indebtedness of another Person that is Guaranteed by such
Person or one of its Restricted Subsidiaries or secured by a Lien on assets
of such Person or one of its Restricted Subsidiaries (whether or not such
Guarantee or Lien is called upon) and (iv) the product of (a) all dividend
payments, whether or not in cash, on any series of preferred stock of such
Person or any of its Restricted Subsidiaries, other than dividend payments on
Equity Interests payable solely in Equity Interests of the Company, times (b)
a fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate
of such Person, expressed as a decimal, in each case, on a consolidated basis
and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person
for such period. In the event that the Company or any of its Restricted
Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other
than revolving credit borrowings) or issues preferred stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation
of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the
Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to
such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that
have been made by the Company or any of its Restricted Subsidiaries,
including through mergers or consolidations and including any related
financing transactions and including the Merger as an acquisition by the
Company, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to
have occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated without
giving effect to clause (iii) of the proviso set forth in the definition of
Consolidated Net Income, (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation Date, shall be
excluded,
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and (iii) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of
the referent Person or any of its Restricted Subsidiaries following the
Calculation Date.
"FOREIGN SUBSIDIARY" means any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant
segment of the accounting profession, which are in effect on the date hereof.
"GLOBAL NOTES" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.07(b)(iv),
2.07(d)(ii) or 2.07(f) hereof.
"GLOBAL NOTE LEGEND" means the legend set forth in Section
2.07(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged.
"GUARANTEE" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part
of any Indebtedness.
"GUARANTOR" means each of (i) Axiohm IPB, Inc., Stadia Colorado
Corp. and Cognitive Solutions, Inc. and (ii) any other subsidiary that
executes a Subsidiary Guarantee in accordance with the provisions of this
Indenture, and their respective successors and assigns.
"GUARANTOR SENIOR DEBT" means with respect to each Guarantor (i)
all Indebtedness of such Guarantor outstanding under the New Credit Facility
permitted under the covenant described above under Section 4.09 hereof, (ii)
any other Indebtedness permitted to be incurred by such Guarantor under the
terms of this Indenture, unless the instrument under which such Indebtedness
is incurred expressly provides that it is on a parity with or subordinated in
right of payment to the Notes, and (iii) all Obligations with respect to the
foregoing. Notwithstanding anything to the contrary in the foregoing,
Guarantor Senior Debt will not include (w) any liability for federal, state,
local or other taxes owed or owing by the Company, (x) any Indebtedness of
the Guarantor to the Company or other Affiliates, (y) any trade payables, or
(z) any Indebtedness of the type described in clause (ii), or any Obligations
with respect thereto, that is incurred in violation of this Indenture;
PROVIDED, THAT this clause (z) shall not be read to negate the requirement in
clause (i) in the preceding sentence that Indebtedness outstanding under the
New
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Credit Facility be permitted under Section 4.09 hereof, to qualify as
Guarantor Senior Debt.
"HEDGING OBLIGATIONS" means, with respect to any Person, the net
payment Obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii)
other agreements or arrangements in the ordinary course of business designed
to protect such Person against fluctuations in commodity prices, interest
rates or currency exchange rates.
"HOLDER" means a Person in whose name a Note is registered.
"IAI GLOBAL NOTE" means the global Note in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the balance deferred
and unpaid of the purchase price of any property or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging Obligations) would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP, as well
as all Indebtedness (of the types described above) of others secured by a
Lien on any asset of such Person (whether or not such Indebtedness is assumed
by such Person) and, to the extent not otherwise included, the Guarantee by
such Person of any Indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value
thereof in the case of any Indebtedness that does not require current
payments of interest and (ii) the principal amount thereof, together with any
interest thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"INDENTURE" means this Indenture, as amended or supplemented from
time to time.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"INITIAL PURCHASER" means Lehman Brothers Inc.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness), advances or capital
contributions (excluding commission, travel and entertainment, relocation,
and similar advances to officers and employees made in the ordinary
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course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If the Company or any of its Restricted Subsidiaries
sells or otherwise disposes of any Equity Interests of any direct or indirect
Restricted Subsidiary of the Company such that, after giving effect to any
such sale or disposition, such Person is no longer a direct or indirect
Restricted Subsidiary of the Company, the Company or such Restricted
Subsidiary, as the case may be, shall be deemed to have made an Investment on
the date of any such sale or disposition equal to the fair market value of
the Equity Interests of such Restricted Subsidiary not sold or disposed of in
an amount determined as provided in the final paragraph of the Section 4.07
hereof.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
"LETTER OF TRANSMITTAL" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset, whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in any asset and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"LIQUIDATED DAMAGES" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"MERGER AGREEMENT" means the Agreement and Plan of Merger, dated as
of July 14, 1997 among DH Technology, Inc., Axiohm S.A. and AX Acquisition
Corporation, as in effect on the date hereof.
"NET CASH PROCEEDS" means the aggregate cash proceeds received from
any Capital Market Transaction, in each case net of (i) all commissions
(including any underwriter's discounts); (ii) other ordinary and reasonable
fees and expenses (including legal fees and expenses) incurred as a
consequence of such Capital Market Transaction and (iii) in the case of a
Capital Market Transaction of the nature described in clause (ii) of the
definition thereof, any required repayment of Senior Debt that is actually
made with such proceeds.
"NET INCOME" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i)
any gain (but not loss), together with any related provision for
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taxes on such gain (but not loss), realized in connection with (a) any Asset
Sale (including, without limitation, dispositions pursuant to sale and
leaseback transactions) or (b) the disposition of any securities by such
Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries and (ii)
any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but
not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting, investment banking and brokers fees and sales commissions)
and any relocation expenses incurred as a result thereof, taxes paid or
payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), and any reserve for
adjustment in respect of the sale price of such asset or assets established
in accordance with GAAP.
"NEW CREDIT FACILITY" means the Credit Agreement, including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time.
"NEW SENIOR SUBORDINATED NOTES" means the Company's 9 3/4% New
Senior Subordinated Notes due 2007 to be issued pursuant to this Indenture
(i) in the Exchange Offer or (ii) upon the request of any holder of Senior
Subordinated Notes covered by a Shelf Registration Statement, in exchange for
such Senior Subordinated Notes.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise), or (c) constitutes the lender; (ii) no default with
respect to which (including any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness of
the Company or any of its Restricted Subsidiaries to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; and (iii) as to which the lenders have
been notified in writing that they will not have any recourse to the stock or
assets of the Company or any of its Restricted Subsidiaries; PROVIDED,
HOWEVER, that Indebtedness that would otherwise be Non-Recourse Debt but for
the reason that the Company or a Restricted Subsidiary may be directly or
indirectly liable as a guarantor, such Indebtedness will be considered
Non-Recourse Debt if the guarantee of such Indebtedness was permitted at the
time of its incurrence by Sections 4.07 and 4.09 hereof.
"NON-U.S. PERSON" means a person who is not a U.S. Person.
"NOTE CUSTODIAN" means the Trustee, as custodian with respect to
the Notes in global
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form, or any successor entity thereto.
"NOTES" means the Senior Subordinated Notes and the New Senior
Subordinated Notes.
"OBLIGATIONS" means any principal, premium, if any, interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company or its Subsidiaries
whether or not a claim for post-filing interest is allowed in such
proceeding), penalties, fees, charges, expenses, indemnifications,
reimbursement obligations, damages (including Liquidated Damages), guarantees
and other liabilities or amounts payable under the documentation governing
any Indebtedness or in respect thereof.
"OFFERING" means the Offering of the Senior Subordinated Notes by
the Company.
"OFFICER" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary, any Vice-President or any Assistant
Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 13.05 hereof.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.05 hereof. The counsel may be an employee of or counsel to the Company,
any Subsidiary of the Company or the Trustee.
"PARTICIPANT" means, with respect to DTC, Euroclear or Cedel, a
Person who has an account with DTC, Euroclear or Cedel, respectively (and,
with respect to DTC, shall include Euroclear and Cedel).
"PARTICIPATING BROKER-DEALER" has the meaning set forth in the
Registration Rights Agreement
"PERMITTED BUSINESS" means (i) the lines of business conducted by
the Company and its Subsidiaries on the date hereof or to which the Company's
or its Subsidiaries' technology is applicable; (ii) the design, manufacture
and sale of input or output devices (including printers) or other devices
related to, involved with or used in the processing of commercial, retail,
point-of-sale, industrial or financial transactions or to bar coding or item
identification; and (iii) any business reasonably related or incidental
thereto or which is an extension thereof, including, without limitation, the
design and sale of ancillary software, electronic components, the sale of
consumable products, or the provision of related services.
"PERMITTED INVESTMENTS" means (i) any Investment in the Company or
in a Guarantor; (ii) any Investment in Cash Equivalents or deposit accounts
maintained in the ordinary course of business; (iii) any Investment by the
Company or any Restricted Subsidiary of the Company, if as
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a result of such Investment (a) such Person becomes a Guarantor or (b) such
Person is merged, consolidated or amalgamated with or into, or transfers or
conveys substantially all of its assets to, or is liquidated into, the
Company or a Guarantor; (iv) any Investment made as a result of the receipt
of non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10; (v) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock)
of the Company; (vi) any Investment received involuntarily; (vii) any
Investment received in connection with or as a result of a bankruptcy,
workout or reorganization of any Person; (viii) advances and extensions of
credit in the nature of accounts receivable arising from the sale or lease of
goods or services or the licensing of property in the ordinary course of
business; (ix) other Investments by the Company or any Restricted Subsidiary
in any Person having an aggregate fair market value (measured as of the date
each such Investment is made and without giving effect to subsequent changes
in value), when taken together with all other Investments made pursuant to
this clause (ix) that are at the time outstanding (net of returns of capital,
dividends paid on Investments and repurchases of Investments), not to exceed
$5.0 million; (x) Investments in the form of intercompany Indebtedness or
Guarantees of Indebtedness permitted under clauses (vi), (vii) and (xi) of
Section 4.09 hereof; (xi) Investments arising in connection with Hedging
Obligations that are incurred in the ordinary course of business for the
purpose of fixing or hedging currency, commodity or interest rate risk
(including with respect to any floating rate Indebtedness that is permitted
by the terms of this Indenture to be outstanding) in connection with the
conduct of the business of the Company and its Subsidiaries and not for
speculative purposes; and (xii) any Investment existing on the date hereof
and any amendment, modification, restatement, supplement, extension, renewal,
refunding, replacement, refinancing, in whole or in part, thereof.
"PERMITTED LIENS" means (i) Liens securing Senior Debt or Guarantor
Senior Debt of the Company or its Restricted Subsidiaries; (ii) Liens
securing Indebtedness that is pari passu in right of payment with the Notes,
provided that the Notes are equally and ratably secured; (iii) Liens existing
on the date hereof; (iv) Liens on property of a Person existing at the time
such Person or such Person's parent corporation becomes a Subsidiary of the
Company or any Subsidiary of the Company; PROVIDED THAT such Liens were in
existence prior to the contemplation of such transaction and do not extend to
any assets other than those of such Person; (v) Liens on property existing at
the time of acquisition thereof by the Company or any Subsidiary of the
Company, PROVIDED THAT such Liens were in existence prior to the
contemplation of such acquisition and extend only to the property so acquired
and the proceeds thereof; (vi) Liens to secure any Permitted Refinancing
Indebtedness incurred to refinance any Indebtedness secured by any Lien
referred to in the foregoing clauses (i) through (v), PROVIDED, HOWEVER, that
such new Lien shall be limited to all or part of the same property that
secured the original Lien (PROVIDED THAT such Liens may extend to
after-acquired property, including any assets or Capital Stock of any
subsequently formed or acquired Subsidiary, if such original Lien included
such property or assets as collateral) and the Indebtedness secured by such
Lien at such time is not increased to any amount greater than permitted under
clauses (ii), (iii) and (xiv) of Section 4.09 hereof; or, in the case of
other Senior Debt, or, in the case of other Indebtedness, the outstanding
principal amount or, if greater, committed amount of the Indebtedness
described under clauses (i) through (v), as the case may be, at the time the
original Lien became a Permitted Lien; (vii) Liens in favor
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of the Company or any Guarantor; (viii) Liens incurred in the ordinary course
of business of the Company or any Restricted Subsidiary with respect to
obligations that do not exceed $5.0 million in the aggregate at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially
detract from the value of the property or materially impair the use thereof
in the operation of business by the Company or such Restricted Subsidiary;
(ix) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds, deposits to secure the performance of bids,
trade contracts, government contracts, leases or licenses or other
obligations of a like nature incurred in the ordinary course of business
(including, without limitation, landlord Liens on leased properties); (x)
Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently prosecuted, PROVIDED THAT any
reserve or other appropriate provision as shall be required to conform with
GAAP shall have been made therefor; (xi) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clause (xii) of the second
paragraph of Section 4.09 hereof covering only the assets acquired with such
Indebtedness, together with any additions and accessions thereto and
replacements, substitutions and proceeds (including insurance proceeds)
thereof; (xii) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other like Liens arising in the ordinary course
of business in respect of obligations not overdue for a period in excess of
60 days or which are being contested in good faith by appropriate proceedings
promptly instituted and diligently prosecuted; PROVIDED, that any reserve or
other appropriate provision as shall be required to conform with GAAP shall
have been made therefor; (xiii) easements, rights-of-way, zoning and similar
restrictions and other similar encumbrances or title defects incurred, or
leases or subleases granted to others, in the ordinary course of business,
which do not in any case materially detract from the value of the property
subject thereto or do not interfere with or adversely affect in any material
respect the ordinary conduct of the business of the Company and its
Restricted Subsidiaries taken as a whole; (xiv) Liens in favor of customs and
revenue authorities to secure payment of customs duties in connection with
the importation of goods in the ordinary course of business and other similar
Liens arising in the ordinary course of business; (xv) leases or subleases
granted to third Persons not interfering with the ordinary course of business
of the Company or its Restricted Subsidiaries; (xvi) Liens (other than any
Lien imposed by ERISA or any rule or regulation promulgated thereunder)
incurred or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance, and other types of social
security; (xvii) deposits made in the ordinary course of business to secure
liability to insurance carriers, and Liens on the proceeds of insurance
granted to insurance carriers solely to secure the payment of financed
premiums; (xviii) any attachment or judgment Lien not constituting an Event
of Default under clause (i) of Section 6.01 hereof; (xix) any interest or
title of a lessor or sublessor under any operating lease; (xx) Liens arising
by virtue of any common law, statutory or contractual provision relating to
bankers' liens, rights of set-off or similar rights and remedies as to
deposit or securities accounts maintained in the ordinary course of business;
(xxi) Liens in favor of a trustee under any indenture securing amounts due to
the trustee in connection with its services under such indenture; and (xxii)
Liens under licensing agreements for use of intellectual property entered
into in the ordinary course of business.
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"PERMITTED PROCEEDS" means (i) any Net Cash Proceeds from a Capital
Market Transaction and (ii) the proceeds from any trust created as described
under Article VIII hereof PROVIDED THAT such trust at the time of its
creation does not violate the New Credit Facility.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease
or refund other Indebtedness of the Company or any of its Restricted
Subsidiaries; PROVIDED THAT: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount of (or accreted value, if applicable), plus accrued and
unpaid interest on, any other Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses
incurred in connection therewith, including any premiums on principal) except
in the case of revolving indebtedness under clause (iii) of Section 4.09
hereof may be refinanced up to the limitations described in such clause
(iii); (ii) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to any
other Indebtedness, such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of the Indebtedness
extended, refinanced, renewed, replaced, defeased or refunded, and is
subordinated in right of payment to, or is ranked in right of payment with
respect to, the Notes on terms at least as favorable to the Holders of Notes
as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred either by the Company or a Restricted Subsidiary who
is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, limited liability company,
unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"PRINCIPAL" means each of Patrick Dupuy, Gilles Gibier or William
Gibbs.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section
2.07(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"PUBLIC EQUITY OFFERING" means any underwritten primary public
offering of the Common Stock or other Voting Stock of the Company, pursuant
to an effective registration statement (other than a registration statement
on Form S-4, Form S-8, or any successor or similar form) under the Securities
Act.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of
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October 2, 1997, by and among the Company and the other parties named on the
signature pages thereof, as such agreement may be amended, modified or
supplemented from time to time.
"REGULATION S" means Regulation S promulgated under the Securities
Act.
"REGULATION S GLOBAL NOTE" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of and registered in the
name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Notes initially sold in reliance on Rule
903 of Regulation S.
"RELATED PARTY" means, with respect to any Principal, (i) any
spouse or immediate family member (in the case of an individual) of such
Principal or (ii) a Person, the beneficiaries, stockholders, partners,
owners, members or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons
referred to in the immediately preceding clause (i).
"REPRESENTATIVE" means the indenture trustee or other trustee,
agent or representative for any Senior Debt.
"RESPONSIBLE OFFICER" means when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee including
any vice president, assistant vice president, secretary, assistant secretary,
treasurer, assistant treasurer, trust officer or any other officer of the
Trustee who (a) customarily performs functions similar to those performed by
the persons who at the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of such person's knowledge of
and familiarity with the particular subject and (b) who shall have direct
responsibility for the administration of this Indenture.
"RESTRICTED DEFINITIVE NOTE" means a Definitive Note bearing the
Private Placement Legend.
"RESTRICTED GLOBAL NOTE" means a Global Note bearing the Private
Placement Legend.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED PERIOD" means the 40-day restricted period as defined
in Regulation S.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary; provided that, on the
Effective Date of this Indenture, all Subsidiaries of the Company shall be
Restricted Subsidiaries of the Company.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
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"RULE 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR DEBT" means (i) all Indebtedness outstanding under the New
Credit Facility permitted under the covenant described above under Section
4.09 hereof, (ii) any other Indebtedness permitted to be incurred by the
Company under the terms of this Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is on a parity with
or subordinated in right of payment to the Notes, and (iii) all Obligations
with respect to the foregoing. Notwithstanding anything to the contrary in
the foregoing, Senior Debt will not include (w) any liability for federal,
state, local or other taxes owed or owing by the Company, (x) any
Indebtedness of the Company to any of its Subsidiaries or other Affiliates,
(y) any trade payables, or (z) any Indebtedness of the type described in
clause (ii), or any Obligations with respect thereto, that is incurred in
violation of this Indenture; PROVIDED, THAT this clause (z) shall not be read
to negate the requirement in clause (i) in the preceding sentence that
Indebtedness outstanding under the New Credit Facility be permitted under
Section 4.09 hereof, to qualify as Senior Debt.
"SENIOR SUBORDINATED NOTES" means Notes evidenced by Restricted
Global Notes or Restricted Definitive Notes.
"SHELF REGISTRATION STATEMENT" means the Shelf Registration
Statement as defined in the Registration Rights Agreement
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation
S-X, promulgated pursuant to the Securities Act, as such Regulation is in
effect on the date hereof.
"STATED MATURITY" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.
"SUBSIDIARY" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of
the total voting power of shares of Capital Stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"SUBSIDIARY GUARANTEE" means any guarantee of the Notes by a
Guarantor.
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"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.
"TRUSTEE" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture
and thereafter means the successor serving hereunder.
"UNRESTRICTED DEFINITIVE NOTE" means one or more Definitive Notes that do not
bear and are not required to bear the Private Placement Legend.
"UNRESTRICTED GLOBAL NOTE" means a permanent global Note in the
form of Exhibit A attached hereto that bears the Global Note Legend and that
has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the
name of the Depositary, representing a series of Notes that do not bear the
Private Placement Legend.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary that is designated
by a resolution of the Board of Directors as an Unrestricted Subsidiary; but
only to the extent that such Subsidiary: (i) has no Indebtedness other than
Non-Recourse Debt; (ii) is not party to any agreement, contract, arrangement
or understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted
Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of the Company; (iii) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (a) to subscribe for additional Equity Interests or (b)
to maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results; and (iv) has not
guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries;
"U.S. PERSON" means a U.S. person as defined in Rule 902(o) under
the Securities Act.
"VOTING STOCK" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the
sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment, by (ii)
the then outstanding principal amount of such Indebtedness.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
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"Affiliate Transaction" . . . . . . . . . . . . . 4.11
"Asset Sale Offer". . . . . . . . . . . . . . . . 3.09
"Change of Control Offer" . . . . . . . . . . . . 4.15
"Change of Control Payment" . . . . . . . . . . . 4.15
"Change of Control Payment Date" . . . . . . . . 4.15
"Covenant Defeasance" . . . . . . . . . . . . . . 8.03
"DTC" . . . . . . . . . . . . . . . . . . . . . . 2.03
"Event of Default". . . . . . . . . . . . . . . . 6.01
"Excess Proceeds" . . . . . . . . . . . . . . . . 4.10
"incur" . . . . . . . . . . . . . . . . . . . . . 4.09
"Legal Defeasance" . . . . . . . . . . . . . . . 8.02
"Offer Amount". . . . . . . . . . . . . . . . . . 3.09
"Offer Period". . . . . . . . . . . . . . . . . . 3.09
"Paying Agent". . . . . . . . . . . . . . . . . . 2.03
"Permitted Debt". . . . . . . . . . . . . . . . . 4.09
"Purchase Date" . . . . . . . . . . . . . . . . . 3.09
"Registrar" . . . . . . . . . . . . . . . . . . . 2.03
"Restricted Payments" . . . . . . . . . . . . . . 4.07
SECTION 1.03. . . . . . . . . . . . . . . . . . . . .
INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"INDENTURE SECURITIES" means the Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee; and
"OBLIGOR" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
SECTION 1.04. . . . . . . . . . . . . . . . . . . . . RULES
OF CONSTRUCTION.
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Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE II.
THE NOTES
SECTION 2.01. . . . . . . . . . . . . . . . . . . . . FORM
AND DATING.
(a) GENERAL. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof. The aggregate principal amount of Notes outstanding shall
not exceed $120 million plus the aggregate principal amount of any Note replaced
pursuant to Section 2.07 that is held by a bona fide purchaser.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company and the Trustee,
by their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby. However, to the extent any provision of
any Note conflicts with the express provisions of this Indenture, the provisions
of this Indenture shall govern and be controlling.
(b) GLOBAL NOTES. Notes issued in global form shall be substantially
in the form of Exhibit A attached hereto (including the Global Note Legend and
the "Schedule of Exchanges in the Global Note" attached thereto). Notes issued
in definitive form shall be substantially in the form of Exhibit A attached
hereto (but without the Global Note Legend and without the "Schedule of
Exchanges of Interests in the Global Note" attached thereto). Each Global Note
shall represent such of the outstanding Notes as shall be specified therein and
each shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect
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exchanges and redemptions. Any endorsement of a Global Note to reflect the
amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Note Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.06 hereof.
(c) EUROCLEAR AND CEDEL PROCEDURES APPLICABLE. The provisions of
the "Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel
Bank" and "Customer Handbook" of Cedel Bank shall be applicable to transfers
of beneficial interests in Global Notes that are held by Participants through
Euroclear or Cedel Bank.
SECTION 2.02. . . . . . . . . . . . . . . . . . . . .
EXECUTION AND AUTHENTICATION.
An Officer shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an
Officer, authenticate Notes for original issue up to the aggregate principal
amount stated in paragraph 4 of the Notes. The aggregate principal amount of
Notes outstanding at any time may not exceed such amount except as provided
in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or
an Affiliate of the Company.
SECTION 2.03. . . . . . . . . . . . . . . . . . . . .
REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("REGISTRAR") and an
office or agency where Notes may be presented for payment ("PAYING AGENT").
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and
the term "Paying Agent" includes any additional paying agent. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company shall notify the Trustee in writing of the name and address of any
Agent not a party to this Indenture. If the Company
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fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Company or any of its Subsidiaries may act as
Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. . . . . . . . . . . . . . . . . . . . .
PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes,
and will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time
may require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or
a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying
Agent. Upon any bankruptcy or reorganization proceeding relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. . . . . . . . . . . . . . . . . . . . .
HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of all Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
the Holders of Notes and the Company shall otherwise comply with TIA Section
312(a).
SECTION 2.06. . . . . . . . . . . . . . . . . . . . .
TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF GLOBAL NOTES. A Global Note may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Notes will be exchanged by the Company for Definitive Notes if (i) the
Company delivers to the Trustee written notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer
a clearing agency registered
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under the Exchange Act and, in either case, a successor Depositary is not
appointed by the Company within 90 days after the date of such notice from
the Depositary or (ii) the Company in its sole discretion determines that the
Global Notes (in whole but not in part) should be exchanged for Definitive
Notes and delivers a written notice to such effect to the Trustee or (iii)
there shall have occurred and be continuing a Default or an Event of Default
with respect to the Notes. Upon the occurrence of either of the preceding
events in (i), (ii) or (iii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.11 hereof. Every Note authenticated and delivered in exchange for, or in
lieu of, a Global Note or any portion thereof, pursuant to Section 2.07 or
2.11 hereof, shall be authenticated and delivered in the form of, and shall
be, a Global Note. A Global Note may not be exchanged for another Note other
than as provided in this Section 2.06(a), however, beneficial interests in a
Global Note may be transferred and exchanged as provided in Section 2.06(b),
(c) or (f) hereof.
(b) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE GLOBAL
NOTES. The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions
of this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well
as one or more of the other following subparagraphs, as applicable:
(i) TRANSFER OF BENEFICIAL INTERESTS IN THE SAME GLOBAL NOTE.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest
in the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; PROVIDED,
HOWEVER, that prior to the expiration of the Restricted Period,
transfers of beneficial interests in the Regulation S Global Note may
not be made to a U.S. Person or for the account or benefit of a U.S.
Person (other than an Initial Purchaser). Beneficial interests in any
Unrestricted Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in the same Unrestricted
Global Note. No written orders or instructions shall be required to be
delivered to the Registrar to effect the transfers described in this
Section 2.06(b)(i).
(ii) ALL OTHER TRANSFERS AND EXCHANGES OF BENEFICIAL INTERESTS IN
GLOBAL NOTES. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above,
the transferor of such beneficial interest must deliver to the Registrar
either (A) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in another Global Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such
increase or (B)
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(1) a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures directing
the Depositary to cause to be issued a Definitive Note in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Note
shall be registered to effect the transfer or exchange referred to in
(1) above. Upon consummation of an Exchange Offer by the Company in
accordance with Section 2.06(f) hereof, the requirements of this Section
2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the
Registrar of the instructions contained in the Letter of Transmittal
delivered by the Holder of such beneficial interests in the Restricted
Global Notes. Upon satisfaction of all of the requirements for transfer
or exchange of beneficial interests in Global Notes contained in this
Indenture and the Notes or otherwise applicable under the Securities
Act, the Trustee shall adjust the principal amount of the relevant
Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) TRANSFER OF BENEFICIAL INTERESTS TO ANOTHER RESTRICTED GLOBAL
NOTE. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including
the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications, certificates and Opinion Counsel required by item (3)
thereof, if applicable.
(iv) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN A RESTRICTED
GLOBAL NOTE FOR BENEFICIAL INTERESTS IN THE UNRESTRICTED GLOBAL NOTE. A
beneficial interest in any Restricted Global Note may be exchanged by
any holder thereof for a beneficial interest in an Unrestricted Global
Note or transferred to a Person who takes delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note if the exchange
or transfer complies with the requirements of Section 2.06(b)(ii) above
and:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
holder of the beneficial interest to be transferred, in the case of an
exchange, or the transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the
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Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of Counsel
in form reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement Legend
are no longer required in order to maintain compliance with the Securities
Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) TRANSFER OR EXCHANGE OF BENEFICIAL INTERESTS FOR DEFINITIVE
NOTES.
(i) RESTRICTED BENEFICIAL INTERESTS TO RESTRICTED DEFINITIVE
NOTES. If any holder of a beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note,
then, upon receipt by the Registrar of the following documentation:
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(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule
904 under the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed
in subparagraphs (B) through (D) above, a certificate to the effect set
forth in Exhibit B hereto, including the certifications, certificates
and Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to the Company
or any of its Subsidiaries, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and
the Company shall execute and the Trustee shall authenticate and deliver to
the Person designated in the instructions a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this Section
2.06(c) shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest shall
instruct the Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so registered.
Any Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the
Private Placement Legend and shall be subject to all restrictions on transfer
contained therein.
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(ii) Notwithstanding 2.06(c)(i) hereof, a holder of a
beneficial interest in a Restricted Global Note may exchange such
beneficial interest for an Unrestricted Definitive Note or may transfer
such beneficial interest to a Person who takes delivery thereof in the form
of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder
of such beneficial interest, in the case of an exchange, or the transferee,
in the case of a transfer, is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person who
is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Definitive
Note that does not bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit C hereto, including the certifications
in item (1)(b) thereof;
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a Definitive Note that does not
bear the Private Placement Legend, a certificate from such holder in the
form of Exhibit B hereto, including the certifications in item (4) thereof;
(3) and in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company, to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are not required in order to maintain compliance
with the Securities Act.
(iii) If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a Definitive
Note or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Definitive Note, then, upon satisfaction of the
conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause
the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Company shall
execute and the Trustee shall authenticate and deliver to the Person
designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iii) shall be
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registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Notes are so registered. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this section
2.06(c)(iii) shall not bear the Private Placement Legend. A beneficial
interest in an Unrestricted Global Note cannot be exchanged for a
Definitive Note bearing the Private Placement Legend or transferred to a
Person who takes delivery thereof in the form of a Definitive Note bearing
the Private Placement Legend.
(d) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR BENEFICIAL
INTERESTS.
(i) RESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES. If any Holder of a Restricted Definitive
Note proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Notes
to a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred
to a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred
to a Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications, certificates and Opinion
of Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set forth
in Exhibit B hereto, including
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the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (C) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii) RESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS IN
UNRESTRICTED GLOBAL NOTES. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the Holder,
in the case of an exchange, or the transferee, in the case of a transfer,
is not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to exchange
such Notes for a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to transfer
such Notes to a Person who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note, a certificate from
such Holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests of if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the
Securities Act, that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order to
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maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note at any
time. Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the applicable Unrestricted Definitive Note and
increase or cause to be increased the aggregate principal amount of one of
the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial
interest in an Unrestricted Global Note is effected at a time when an
Unrestricted Global Note has not yet been issued, the Company shall issue
and, upon receipt of an authentication order in accordance with Section 2.02
hereof, the Trustee shall authenticate one or more Unrestricted Global Notes
in an aggregate principal amount equal to the principal amount of Definitive
Notes so transferred.
(e) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR DEFINITIVE NOTES.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of
transfer or exchange, the requesting Holder shall present or surrender to the
Registrar the Definitive Notes duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed by
such Holder or by his attorney, duly authorized in writing. In addition, the
requesting Holder shall provide any additional certifications, documents and
information, as applicable, required pursuant to the following provisions of
this Section 2.06(e).
(i) Restricted Definitive Notes may be transferred to and
registered in the name of Persons who take delivery thereof if the
Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904,
then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver (x) a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel required
by item (3) thereof, if applicable.
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(ii) Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person
or Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the Holder,
in the case of an exchange, or the transferee, in the case of a transfer,
is not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for an Unrestricted Definitive Note, a certificate from
such Holder in the form of Exhibit C hereto, including the certifications
in item (1)(a) thereof;
(2) if the Holder of such Restricted Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the form
of an Unrestricted Definitive Note, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in item (4) thereof;
and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company to the
effect that such exchange or transfer is in compliance with the Securities
Act, that the restrictions on transfer contained herein and in the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act, and such Restricted Definitive Note is being exchanged or
transferred in compliance with any applicable blue sky securities laws of
any State of the United States.
(iii) A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request for such a transfer, the
Registrar shall register the Unrestricted Definitive Notes pursuant to the
instructions from the Holder thereof.
(f) EXCHANGE OFFER. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue
and, upon receipt of an authentication order in accordance with Section 2.02,
the Trustee shall authenticate (i) one or more Unrestricted Global Notes in
an aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by
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Persons that are not (x) broker-dealers, (y) Persons participating in the
distribution of the Exchange Notes or (z) Persons who are affiliates (as
defined in Rule 144) of the Company and accepted for exchange in the Exchange
Offer and (ii) Definitive Notes in an aggregate principal amount equal to the
principal amount of the Restricted Definitive Notes accepted for exchange in
the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee
shall cause the aggregate principal amount of the applicable Restricted
Global Notes to be reduced accordingly, and the Company shall execute and the
Trustee shall authenticate and deliver to the Persons designated by the
Holders of Definitive Notes so accepted Definitive Notes in the appropriate
principal amount.
(g) LEGENDS. The following legends shall appear on the face of
all Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) PRIVATE PLACEMENT LEGEND.
(A) Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in substantially the
following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN
THE THIRD SENTENCE HEREOF. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"),
OR (C) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND,
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS
THAN $250,000, AN
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OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT (F) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED ON AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," AND
"UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes issued
in exchange therefor or substitution thereof) shall not bear the Private
Placement Legend.
(ii) GLOBAL NOTE LEGEND. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF AXIOHM TRANSACTION
SOLUTIONS, INC."
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such time
as all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a particular Global Note has been redeemed,
repurchased or canceled in whole and not in part, each such Global Note shall
be returned to or retained and canceled by the Trustee in accordance with
Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Note or for Definitive Notes, the principal amount of Notes
represented by such Global Note shall be reduced accordingly and an
endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the
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direction of the Trustee to reflect such reduction; and if the beneficial
interest is being exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Note,
such other Global Note shall be increased accordingly and an endorsement
shall be made on such Global Note by the Trustee or by the Depositary at the
direction of the Trustee to reflect such increase.
(i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other
than any such transfer taxes or similar governmental charge payable
upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10,
4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register
the transfer of or exchange any Note selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed
in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and ending
at the close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being
redeemed in part or (C) to register the transfer of or to exchange a
Note between a record date and the next succeeding Interest Payment
Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes,
and none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in
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accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a transfer or exchange may be submitted by
facsimile.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon the written order of
the Company signed by an Officer of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
reasonable expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section as
not outstanding. Except as set forth in Section 2.09 hereof, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control
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with the Company, shall be considered as though not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes that a Trustee
actually knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by an Officer of the Company. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate Definitive Notes in exchange for
temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return such
canceled Notes to the Company (subject to the record retention requirement of
the Exchange Act). The Company may not issue new Notes to replace Notes that it
has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or,
upon the written request of the Company, the Trustee in the name and at the
expense of the Company) shall mail or cause to be mailed to Holders a notice
that states the special record date, the related payment date and the amount of
such interest to be paid.
SECTION 2.13. CUSIP NUMBERS.
The Company in issuing the Notes may use "CUSIP" numbers (if then generally
in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of
redemption as a convenience to Holders; PROVIDED that any such notice may state
that no representation is made as to the correctness or accuracy of such CUSIP
numbers either as printed on the Notes or as contained
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in such notice and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company
shall promptly notify the Trustee of any change in any "CUSIP" numbers.
ARTICLE III.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30
days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, the Trustee
shall select the Notes to be redeemed among the Holders of the Notes in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
pro rata basis, by lot or by such other method the Trustee shall deem fair and
appropriate; PROVIDED THAT no Notes of $1,000 or less shall be redeemed in part.
In the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed (including CUSIP numbers) and
shall state:
(a) the redemption date;
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(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion thereof shall be issued in the name of the Holder thereof
upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes or portions thereof called for redemption ceases to
accrue on and after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; PROVIDED, HOWEVER, that the Company
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Notes called for redemption become irrevocably due and payable on the redemption
date at the redemption price. A notice of redemption may not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the
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related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption shall not be
so paid upon surrender for redemption because of the failure of the Company
to comply with the preceding paragraph, interest shall be paid on the unpaid
principal, from the redemption date until such principal is paid, and to the
extent lawful on any interest not paid on such unpaid principal, in each case
at the rate provided in the Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
The optional redemption provisions shall be as stated in the
Definitive Notes, Restricted Definitive Notes and the Global Notes issued
pursuant to this Indenture, substantially in the form of Annex A hereto. Any
redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as described in Sections 4.10 and 4.15 hereof, the Company shall not
be required to make mandatory redemption or sinking fund payments with respect
to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to all Holders to purchase Notes (an "ASSET SALE
OFFER"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "OFFER PERIOD"). No later than five
Business Days after the termination of the Offer Period (the "PURCHASE DATE"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "OFFER AMOUNT") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
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Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a PRO RATA basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a PRO RATA basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been
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tendered, all Notes tendered, and shall deliver to the Trustee an Officers'
Certificate stating that such Notes or portions thereof were accepted for
payment by the Company in accordance with the terms of this Section 3.09.
The Company, the Depositary or the Paying Agent, as the case may be, shall
promptly (but in any case not later than five days after the Purchase Date)
mail or deliver to each tendering Holder an amount equal to the purchase
price of the Notes tendered by such Holder and accepted by the Company for
purchase, and the Company shall promptly issue a new Note, and the Trustee,
upon written request from the Company shall authenticate and mail or deliver
such new Note to such Holder, in a principal amount equal to any unpurchased
portion of the Note surrendered. Any Note not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company shall
publicly announce the results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE IV.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay
all Liquidated Damages, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee
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with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; PROVIDED, HOWEVER,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC,
so long as any Notes are outstanding, the Company shall furnish to the Holders
of Notes (i) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the
Company were required to file such Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations;" that describes
the financial condition and results of operations of the Company and its
consolidated Subsidiaries (showing in reasonable detail, either on the face of
the financial statements or in the footnotes thereto and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports. In
addition, whether or not required by the rules and regulations of the SEC, the
Company shall file a copy of all such information and reports with the SEC for
public availability (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA Section 314(a).
(b) For so long as any Notes remain outstanding, the Company shall furnish
to the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
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SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to a Responsible Officer of the
Trustee, within 90 days after the end of each fiscal year, an Officers'
Certificate stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of,
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any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been
enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company) or
to the direct or indirect holders of the Company's or any of its Restricted
Subsidiaries' Equity Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than Disqualified Stock) of
the Company); (ii) purchase, redeem or otherwise acquire or retire for value
(including without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company; (iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated in right of payment to the Notes, except a
payment of interest or principal at Stated Maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "RESTRICTED PAYMENTS"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph under Section 4.09(a)
hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the date hereof (excluding Restricted Payments permitted by clauses (ii),
(iii) and (vi) (to the extent such distribution is paid to the Company or a
Restricted Subsidiary) of the next succeeding paragraph), is less than the sum
of (i) 50% of the Consolidated Net Income of the Company for the period (taken
as one accounting period) from the beginning of the first fiscal quarter
commencing after the date hereof to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are available at the time
of such Restricted Payment (or, if such Consolidated Net Income for such period
is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net
cash proceeds received by the Company from the issue or sale since the date
hereof of Equity Interests of the Company (other than Disqualified
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Stock), or of Disqualified Stock or debt securities of the Company that have
been converted into such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or convertible debt securities
that have been converted into Disqualified Stock), plus (iii) to the extent
that any Restricted Investment that was made after the date hereof is sold
for cash or otherwise liquidated or repaid for cash, the lesser of (A) the
cash return of capital with respect to such Restricted Investment (less the
cost of disposition, if any) and (B) the initial amount of such Restricted
Investment.
The foregoing provisions will not prohibit (i) the payment of any
dividend or the making of any payment or distribution within 60 days after
the date of declaration thereof, if at said date of declaration such payment
or distribution would have complied with the provisions of this Indenture;
(ii) the redemption, repurchase, retirement, defeasance or other acquisition
of any Indebtedness subordinated in right of payment to the Notes or Equity
Interests of the Company in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to a Subsidiary of the Company)
of, other Equity Interests of the Company (other than any Disqualified
Stock); PROVIDED THAT the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (c) (ii) of the preceding
paragraph; (iii) the defeasance, redemption, repurchase or other acquisition
of Indebtedness subordinated in right of payment to the Notes with the net
cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv)
the repurchase, redemption or other acquisition or retirement for value of
any Equity Interests of the Company or any Restricted Subsidiary held by any
employee or director of the Company (or any of its Subsidiaries), other than
a Principal, or any former employee or director of the Company (or any of its
Subsidiaries) issued pursuant to any management equity plan or stock option
plan or any other management or employee benefit plan or agreement; PROVIDED,
HOWEVER, that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests pursuant to this clause (iv) shall not
exceed $1.0 million in any twelve-month period and shall not exceed $3.0
million in the aggregate; (v) repurchases of Equity Interests deemed to occur
upon the cashless exercise of stock options; (vi) the payment of any dividend
by a Subsidiary of the Company to the holders of its Equity Interests on a
pro rata basis to all holders of Equity Interests, including the Company or
any Restricted Subsidiary of the Company; and (vii) payments in accordance
with the terms of the Merger Agreement; PROVIDED THAT with respect to clauses
(ii), (iii), (iv) and (v) above, no Default or Event of Default shall have
occurred and be continuing immediately after such transaction.
The amount of all Restricted Payments (other than cash) shall be
the fair market value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the
Board of Directors whose resolution with respect thereto shall be delivered
to the Trustee, such determination to be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing if such fair market value exceeds $1.0 million. Not later than the
date of making any Restricted Payment, the Company
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shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, together with a
copy of any fairness opinion or appraisal required by this Indenture.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on the ability of
any Restricted Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in,
or measured by, its profits, or (b) pay any indebtedness owed to the Company
or any of its Restricted Subsidiaries, (ii) make loans or advances to the
Company or any of its Restricted Subsidiaries or (iii) transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of
(a) Existing Indebtedness as in effect on the date hereof, (b) the New Credit
Facility as in effect as of the date hereof, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, PROVIDED THAT such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in the New
Credit Facility as in effect on the date hereof, (c) this Indenture and the
Notes, (d) applicable law, (e) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the
extent such Indebtedness was incurred in connection with or in contemplation
of such acquisition), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the Person
or such Person's Subsidiaries, or the property or assets of the Person or
such Person's Subsidiaries, so acquired, PROVIDED THAT, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Indenture
to be incurred, (f) by reason of customary non-assignment, subletting and
restriction on transfer provisions or restrictions on cash or other deposits
or net worth under leases, licenses or other contracts entered into in the
ordinary course of business, PROVIDED THAT such restrictions are limited to
the property or assets that are the subject of such lease, license or
contract and not in connection with a financing transaction, (g) any
restriction on cash deposits by reason of customary security deposits entered
into in the ordinary course of business, (h) any restriction with respect to
a Subsidiary imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of
such Subsidiary pending the closing of such sale or disposition, (i) purchase
money obligations for property acquired in the ordinary course of business
that impose restrictions of the nature described in clause (iii) above on the
property so acquired, together with any accessions and additions thereto,
replacements and substitutions therefor and the proceeds (including insurance
proceeds thereof), (j) Indebtedness of Guarantors, PROVIDED THAT such
Indebtedness was permitted to be incurred pursuant to this Indenture, or (k)
Permitted Refinancing Indebtedness, PROVIDED THAT the restrictions contained
in the agreements governing such Permitted Refinancing Indebtedness are no
more restrictive than those contained
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in the agreements governing the Indebtedness being refinanced.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED
STOCK.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "INCUR") any
Indebtedness (including Acquired Debt) and that the Company will not issue
any Disqualified Stock and will not permit any of its Restricted Subsidiaries
to issue any shares of preferred stock; PROVIDED, HOWEVER, that the Company
or any Guarantor may incur Indebtedness (including Acquired Debt) or issue
shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which
such additional Indebtedness is incurred or such Disqualified Stock is issued
would have been at least 2.00 to 1.00, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) shall not apply to the
incurrence of any of the following items of Indebtedness (collectively,
"PERMITTED DEBT"):
(i) the incurrence by the Company and the Guarantors of
Indebtedness represented by the Notes and the Subsidiary Guarantees;
(ii) the incurrence by the Company of term Indebtedness under the
New Credit Facility and related Guarantees under the New Credit
Facility; PROVIDED that the aggregate principal amount of all term
Indebtedness outstanding under the New Credit Facility after giving
effect to such incurrence, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred pursuant to this clause (ii) does not exceed an
amount equal to $50.0 million less the aggregate amount of all
repayments, optional or mandatory (other than repayments in connection
with the incurrence of Permitted Refinancing Indebtedness), of the
principal of any term Indebtedness under the New Credit Facility that
have been made since the date hereof;
(iii) the incurrence by the Company of revolving credit
Indebtedness under the New Credit Facility, letters of credit (with
letters of credit being deemed to have a principal amount equal to the
maximum potential liability of the Company and its Restricted
Subsidiaries thereunder) and related Guarantees under the New Credit
Facility; PROVIDED that the aggregate principal amount of all revolving
Indebtedness (with letters of credit being deemed to have a principal
amount equal to the maximum potential liability of the Company and its
Restricted Subsidiaries thereunder) outstanding under the New Credit
Facility after giving effect to such incurrence,
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including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any other Indebtedness incurred pursuant to this
clause (iii), does not exceed $35.0 million, less the amount outstanding
under clause (xiv) below and the aggregate amount of Asset Sale proceeds
applied to repay and permanently reduce the availability of revolving
credit Indebtedness under the New Credit Facility pursuant to Section
4.10;
(iv) the incurrence by the Company and its Restricted Subsidiaries
of the Existing Indebtedness;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred in the normal
course of business for the purpose of fixing or hedging currency,
commodity or interest rate risk (including with respect to any floating
rate Indebtedness that is permitted by the terms of this Indenture to be
outstanding) in connection with the conduct of their respective
businesses and not for speculative purposes;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between the Company and a
Restricted Subsidiary or between one Restricted Subsidiary and another;
PROVIDED, HOWEVER, that (a) if the Company is the obligor on such
Indebtedness, such Indebtedness is expressly subordinated in liquidation
to the prior payment in full in cash of all Obligations with respect to
the Notes and this Indenture; (b) if a Restricted Subsidiary, that is
not a Guarantor, is the obligor on such Indebtedness, such Indebtedness
owning to the Company or any Guarantor, together with all intercompany
Indebtedness owing from all Restricted Subsidiaries that are not
Guarantors to the Company or a Guarantor, does not exceed $5.0 million
in aggregate principal amount at any time outstanding; and (c) (A) any
subsequent event or issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the
Company or a Restricted Subsidiary of the Company and (B) any sale or
other transfer of any such Indebtedness to a Person that is not either
the Company or a Guarantor shall be deemed, in each case, to constitute
an incurrence of such Indebtedness by the Company or such Restricted
Subsidiary, as the case may be, that was not permitted by this clause
(vi);
(vii) the Guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Restricted Subsidiary of the Company
that was permitted to be incurred by another provision of this Section
4.09; PROVIDED, that the Guarantee of any Indebtedness of a Restricted
Subsidiary that is not or is no longer a Guarantor shall be deemed a
Restricted Investment at the time of such Guarantee or at the time such
Restricted Subsidiary's Guarantor status terminates in an amount equal
to the maximum principal amount so guaranteed, for so long as, and to
the extent that, such Guarantee remains outstanding;
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in respect of bid, performance, or advance
payment bonds and appeal and surety bonds;
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(ix) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund or replace Indebtedness
that was permitted by this Indenture to be incurred;
(x) the incurrence by the Company or any of the Guarantors of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
other Indebtedness incurred pursuant this clause (x), not to exceed the
difference of (a) $15.0 million less (b) the outstanding aggregate
principal amount incurred pursuant to clause (xi) below;
(xi) the incurrence by Restricted Subsidiaries that are not
Guarantors of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including
all Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any other Indebtedness incurred pursuant to this clause (xi) not
to exceed $5.0 million;
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or
cost of construction or improvement of property, plant or equipment used
in the business of the Company or such Restricted Subsidiary, in an
aggregate principal amount, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace Indebtedness
incurred pursuant to this clause (xii), not to exceed $5.0 million at
any time outstanding; PROVIDED, HOWEVER, that the Company and its
Restricted Subsidiaries may incur any amount of additional Indebtedness
of the type specified above in this clause (xii) so long as the sole
recourse of the obligee with respect to such Indebtedness is to the
property financed and any accessions and additions thereto, replacements
and substitutions therefor and the proceeds (including insurance
proceeds thereof);
(xiii) the issuance by a Restricted Subsidiary that is a Guarantor
of preferred stock to the Company or to any of its Restricted
Subsidiaries that are Guarantors; PROVIDED, HOWEVER, that any subsequent
event or issuance or transfer of any Equity Interests that results in
the owner of such preferred stock ceasing to be the Company or any of
its Restricted Subsidiaries that are Guarantors or any subsequent
transfer of such preferred stock to a Person, other than the Company or
one of its Restricted Subsidiaries that are Guarantors, shall be deemed
to be an issuance of preferred stock by such Subsidiary that was not
permitted by this clause (xiii);
(xiv) the incurrence by Foreign Subsidiaries that are not holding
companies or by Axiohm S.A. of Indebtedness under the New Credit
Facility or any Permitted Refinancing Indebtedness; PROVIDED, HOWEVER,
that the aggregate principal amount of outstanding Indebtedness incurred
pursuant to this clause (xiv) does not exceed $15.0
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million at any time; and PROVIDED, FURTHER, that out of the total
Indebtedness permitted pursuant to this clause (xiv), no more than $5.0
million of Indebtedness can be incurred by any such Foreign Subsidiary
that is not Axiohm S.A.; and
(xv) the incurrence by a Restricted Subsidiary that is a Foreign
Subsidiary and is not a Guarantor of Indebtedness in an amount not to
exceed the Borrowing Base of such Restricted Subsidiary; PROVIDED, that
none of the Company or any other such Restricted Subsidiary shall be
obligated, directly or indirectly, to pay principal, premium, interest
or other amounts thereon or in respect thereof (including by way of net
worth requirements, equity keepwells etc.).
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xv) above or
is entitled to be incurred pursuant to the first paragraph of this Section
4.09, the Company shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this Section 4.09 and such item
of Indebtedness will be treated as having been incurred pursuant to only one
of such clauses or pursuant to the first paragraph hereof. Accrual of
interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness will not be deemed to be an incurrence of
Indebtedness for purposes of this Section 4.09.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale or issue Equity Interests in any of
its Restricted Subsidiaries or sell Equity Interests in any of its Restricted
Subsidiaries, unless (i) the Company (or the Restricted Subsidiary, as the
case may be) receives consideration at the time of such Asset Sale at least
equal to the fair market value (which, in the case of any Asset Sale
involving shares or assets having a fair market value in excess of $2.0
million, shall be evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) of the assets or
Equity Interests issued or sold or otherwise disposed of and (ii) at least
85% of the consideration therefor received by the Company or such Restricted
Subsidiary is in the form of cash; PROVIDED THAT the amount of (x) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet) of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated
to the Notes or any Guarantee thereof) that are assumed by the transferee of
any such assets such that the Company or such Restricted Subsidiary has no
further liability shall be deemed to be cash for purposes of this provision,
(y) any securities, notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are immediately
converted by the Company or such Restricted Subsidiary into cash (to the
extent of the cash received), shall be deemed to be cash for purposes of this
provision and (z) the licensing of intellectual property which does not
constitute the transfer of substantially all of the economic value of such
property and does not limit the Company's use of such intellectual property
for Permitted Businesses shall be deemed to comply with clause (ii) above if
the payments thereon are in cash over time.
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Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option, (a) to repay
term Indebtedness under the New Credit Facility or other Senior Debt, (b) to
repay and permanently reduce the availability of revolving credit
Indebtedness under the New Credit Facility or (c) to the acquisition of a
controlling interest in another business or of all or substantially all of
the assets of another business, or to the making of a capital expenditure or
the acquisition of other long-term assets, in each case in Permitted
Businesses. Pending the final application of any such Net Proceeds, the
Company may temporarily reduce revolving Indebtedness or otherwise invest
such Net Proceeds in any manner that is not prohibited by this Indenture. Any
Net Proceeds from Asset Sales that are not applied or invested as provided in
the first sentence of this paragraph will be deemed to constitute "EXCESS
PROCEEDS." When the aggregate amount of Excess Proceeds exceeds $5.0 million,
the Company shall make an Asset Sale Offer pursuant to Section 3.09 hereof to
purchase the maximum principal amount of Notes that may be purchased out of
the Excess Proceeds, at an offer price in cash in an amount equal to 100% of
the aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in Section 4.09 hereof. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Company may use any remaining Excess Proceeds
for general corporate purposes. Upon completion of such offer to purchase,
the amount of Excess Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of their respective properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or Guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "AFFILIATE
TRANSACTION"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person and (ii) the
Company delivers to the Trustee (a) with respect to any Affiliate Transaction
or series of related Affiliate Transactions involving aggregate consideration
in excess of $2.5 million, a resolution of its Board of Directors set forth
in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors
and (b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $10.0
million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an investment banking
firm (or, if an investment banking firm is generally not qualified to give
such an opinion, by an appraisal firm) of national standing; PROVIDED THAT
none of the following shall be deemed to be Affiliate Transactions: (1) any
employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business that has been approved by a
majority of the disinterested members of the Board of Directors; PROVIDED
that any such employment agreement providing for aggregate remuneration of
under $200,000 shall not require any such Board of Directors approval;
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(2) transactions between or among the Company and/or its Restricted
Subsidiaries that are on fair and reasonable terms; (3) Restricted Payments
that are permitted by Section 4.07; (4) fees and compensation paid to members
of the Board of Directors of the Company and of its Subsidiaries in their
capacity as such, to the extent such fees and compensation are reasonable and
customary; (5) advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary course of
business and consistent with past practices; (6) maintenance in the ordinary
course of business of customary benefit programs or arrangements for
employees, officers or directors, including vacation plans, health and life
insurance plans, deferred compensation plans and retirement or savings plans
and similar plans; (7) fees and compensation paid to, and indemnity provided
on behalf of, officers, directors or employees of the Company or any of its
Restricted Subsidiaries, to the extent such fees and compensation are
reasonable and customary as determined by the Board of Directors of the
Company or of any such Restricted Subsidiary; and (8) payments in accordance
with the terms of the Merger Agreement.
SECTION 4.12. LIENS.
The Company shall not and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or otherwise
cause or suffer to exist or become effective any Lien of any kind securing
Indebtedness or trade payables (other than Permitted Liens) upon any of their
respective property or assets, now owned or hereafter acquired, unless all
payments due under this Indenture and the Notes are secured on an equal and
ratable basis with the obligations so secured until such time as such
obligations are no longer secured by a Lien.
SECTION 4.13. LINE OF BUSINESS.
The Company shall not, and shall not permit any Restricted
Subsidiary to engage in any business other than Permitted Businesses, except
to such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of
each of its Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or
any such Subsidiary and (ii) the rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries; PROVIDED, HOWEVER, that the
Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and its Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders of the Notes.
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SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes
(the "CHANGE OF CONTROL OFFER") at an offer price in cash equal to 101% of
the aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase (the "CHANGE OF
CONTROL PAYMENT"). Within 30 days following any Change of Control, the
Company shall send by first class mail a notice to each Holder stating: (1)
the transaction or transactions that constitute a Change of Control, that the
Change of Control Offer is being made pursuant to this Section 4.15 and that
all Notes tendered shall be accepted for payment; (2) the purchase price and
the purchase date, which shall be no earlier than 30 days and no later than
60 days from the date such notice is mailed (the "CHANGE OF CONTROL PAYMENT
DATE"); (3) that any Note not tendered shall continue to accrue interest; (4)
that, unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest after the Change of Control Payment
Date; (5) that Holders electing to have any Notes purchased pursuant to a
Change of Control Offer shall be required to surrender the Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day preceding the Change
of Control Payment Date; (6) that Holders shall be entitled to withdraw their
election if the Paying Agent receives, not later than the close of business
on the second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have the Notes
purchased; and (7) that Holders whose Notes are being purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof. The Company
shall comply with the requirements of Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of Notes in
connection with a Change of Control. The notice shall contain all other
instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Change of Control Offer. The Change of Control Offer shall
be made available to all Holders. If the Purchase Date is on or after an
interest record date and on or before the related interest payment date, any
accrued and unpaid interest shall be paid to the Person in whose name a Note
is registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Notes pursuant to the Change
of Control Offer. Other than as specifically provided in this Section 4.15,
any purchase pursuant to this Section 4.15 shall be made pursuant to Sections
3.01 through 3.06 hereof.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause
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to be delivered to the Trustee the Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Notes or
portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to each Holder of Notes so tendered the Change of Control
Payment for such Notes, and the Trustee shall promptly authenticate and mail
(or cause to be transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered by such
Holder, if any; PROVIDED THAT each such new Note shall be in a principal
amount of $1,000 or an integral multiple thereof. Prior to complying with
the provisions of this Section 4.15, the Company shall either repay all
outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of
Notes required by this Section 4.15. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
(c) Notwithstanding anything to the contrary in this Section 4.15,
the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in this Section 4.15 hereof and all other provisions of this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
SECTION 4.16. NO SENIOR SUBORDINATED DEBT.
Notwithstanding the provisions of Section 4.09 hereof, (i) the
Company shall not incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment
to any Senior Debt and senior in any respect in right of payment to the Notes
and (ii) no Guarantor shall incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to its Senior Debt and senior in any respect in right of
payment to its Subsidiary Guarantee.
SECTION 4.17. DESIGNATION OF UNRESTRICTED SUBSIDIARIES.
Any designation of an Unrestricted Subsidiary by the Board of Directors
shall be evidenced to the Trustee by filing with the Trustee a certified copy
of the resolution of the Board of Directors of the Company giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the terms of this Indenture governing the designation of
Unrestricted Subsidiaries and was permitted by Section 4.07 hereof. If, at
any time, any Unrestricted Subsidiary fails to meet the foregoing requirements
as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09, the Company shall be in default
of such covenant). The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED
THAT such designation shall be deemed to be an incurrence of Indebtedness by
a Restricted Subsidiary of the Company of any outstanding Indebtedness of
such Unrestricted Subsidiary and such designation shall only be permitted if
(i) such Indebtedness is
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permitted under Section 4.09 hereof, calculated on a pro forma basis as if
such designation had occurred at the beginning of the four-quarter reference
period, and (ii) no Default or Event of Default would be in existence
following such designation.
SECTION 4.18. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any notes for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is
offered to be paid or is paid to all Holders of the Notes that consent, waive
or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
ARTICLE V.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or
the Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state thereof
or the District of Columbia; (ii) the entity or Person formed by or surviving
any such consolidation or merger (if other than the Company) or the entity or
Person to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the Company
under the Notes and this Indenture pursuant to a supplemental indenture in a
form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) except in the
case of a merger of the Company with or into a Restricted Subsidiary of the
Company, the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in Section 4.09(a) hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance
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or other disposition is made shall succeed to, and be substituted for (so
that from and after the date of such consolidation, merger, sale, lease,
conveyance or other disposition, the provisions of this Indenture referring
to the "company" shall refer instead to the successor corporation and not to
the Company), and may exercise every right and power of the Company under
this Indenture with the same effect as if such successor Person had been
named as the Company herein; provided, however, that the predecessor Company
shall not be relieved from the obligation to pay the principal of and
interest on the Notes except in the case of a sale of all of the Company's
assets that meets the requirements of Section 5.01 hereof.
ARTICLE VI.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An Event of Default occurs if:
(i) the Company defaults for 30 days in the payment when due of
interest on, or Liquidated Damages, if any, with respect to, the Notes
(whether or not prohibited by the subordination provisions of this
Indenture);
(ii) the Company defaults in the payment when due of the principal
of or premium, if any, on the Notes (whether or not prohibited by the
subordination provisions of this Indenture) when the same becomes due and
payable at maturity upon redemption (including in connection with an offer to
purchase) or otherwise;
(iii) the Company fails to comply with the provisions of Section
5.01;
(iv) the Company or any of its Subsidiaries fails for 30 days to
comply with the provisions of Sections 4.07, 4.09, 4.10 or 4.15;
(v) the Company fails for 60 days after notice to comply with any
of its other agreements in this Indenture or the Notes;
(vi) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Subsidiaries
(or the payment of which is guaranteed by the Company or any of its
Subsidiaries), whether such Indebtedness or guarantee now exists, or is
created after the date hereof, which default (a) is caused by a failure to
pay principal of or premium, if any, or interest on such Indebtedness by the
expiration of the applicable grace period, if any, provided in such
Indebtedness on the date of such default (a "PAYMENT DEFAULT") or (b) results
in the acceleration of such Indebtedness prior to its express maturity, and,
in the case of each of clauses (a) and (b) above, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates without duplication $5.0 million or
more;
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(vii) the Company or any of its Subsidiaries fails to pay final
judgments aggregating in excess of $5.0 million, which judgments are not
paid, discharged or stayed, for a period of 60 consecutive days;
(viii) except as permitted by this Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person authorized to act on behalf of any Guarantor, shall
deny or disaffirm its obligations under its Subsidiary Guarantee;
(ix) the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in
an involuntary case,
(c) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(d) makes a general assignment for the benefit of its creditors,
or
(e) generally is not paying its debts as they become due; or
(x) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(b) appoints a Custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; or
(c) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days.
SECTION 6.02. ACCELERATION.
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If any Event of Default (other than an Event of Default specified in
clause (ix) or (x) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified
in clause (ix) or (x) of Section 6.01 hereof with respect to the Company or
any Significant Subsidiary or any group of Subsidiaries that, taken as a
whole would constitute a Significant Subsidiary, all outstanding Notes will
become due and payable without further action or notice. Holders of the Notes
may not enforce this Indenture or the Notes except as provided herein.
Subject to certain limitations, Holders of a majority in principal amount of
the then outstanding Notes may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of
Default relating to the payment of principal or interest) if it determines
that withholding notice is in their interest.
In case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Notes pursuant to
Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent
premium shall also become and be immediately due and payable, to the extent
permitted by law, anything in this Indenture or in the Notes to the contrary
notwithstanding. If an Event of Default occurs prior to October 1, 2002 by
reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on 1997 of the years
set forth below, as set forth below, expressed as percentages of principal
amount that would otherwise be due but for the provisions of this sentence,
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to
the date of payment:
YEAR PERCENTAGE
---- ----------
1997 . . . . . . . . . . . . . . . . . . 113.000%
1998 . . . . . . . . . . . . . . . . . . 111.375%
1999 . . . . . . . . . . . . . . . . . . 109.75%
2000 . . . . . . . . . . . . . . . . . . 108.125%
2001 . . . . . . . . . . . . . . . . . . 106.500%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available
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remedy to collect the payment of principal, premium, if any, and interest on
the Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(PROVIDED, HOWEVER, that the Holders of a majority in aggregate principal
amount of the then outstanding Notes may rescind an acceleration and its
consequences, including any related payment default that resulted from such
acceleration). Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee
determines may be unduly prejudicial to the rights of other Holders of Notes
or that may involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee
against any, claim, loss, liability, damage or expense, including counsel to
the Trustee's reasonable fees and expenses;
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(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision
of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due
dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(i) or (ii) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount
of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), its creditors or its property
and shall be entitled and empowered to collect, receive and distribute any
money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof. To the extent that
the payment of any such compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07 hereof out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of
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reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
FIRST: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
SECOND: to the holders of Senior Debt to the extent required by Article
10 or 12 hereof;
THIRD: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any
and interest, respectively;
FOURTH: without duplication, to the Holders of the Notes for any other
Obligations owing to the Holders under this Indenture and the Notes; and
FIFTH: to the Company, the Guarantors or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted
by it as a Trustee, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders
of more than 10% in principal amount of the then outstanding Notes.
ARTICLE VII.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
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(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture
and no others, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions whether in their original or facsimile form furnished to the
Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
In the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the case of any such
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liabilities for its own
grossly negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision
of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk
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its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder. The Trustee shall be under no obligation to
exercise any of its rights and powers under this Indenture at the request of
any Holders, unless such Holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed
by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel of its selection and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against any and all costs, expenses
and liabilities that might be incurred by it in compliance with such request
or direction.
(g) The Trustee shall not be deemed to have notice of any Default
or Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such
a default is received by the Trustee at the Corporate Trust Office of the
Trustee, and such notice references the Notes and this Indenture.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
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The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Company or any Affiliate
of the Company with the same rights it would have if it were not Trustee.
However, in the event that the Trustee acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the SEC for permission
to continue as trustee or resign. Any Agent may do the same with like rights
and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not
be responsible for any statement or recital herein or any statement in the
Notes or any other document in connection with the sale of the Notes or
pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs. Except in
the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice
if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of
the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of
such reporting date that complies with TIA Section 313(a) (but if no event
described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee
also shall comply with TIA Section 313(b)(2). The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange
on which the Notes are listed in accordance with TIA Section 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange or delisted therefrom.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder.
The Trustee's compensation shall not be limited by any law on compensation of
a trustee of an express trust. The Company shall
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reimburse the Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation
for its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee and any predecessor against any
and all claims, losses, liabilities, damages or expenses incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture, including the costs and expenses of enforcing
this Indenture against the Company (including this Section 7.07) and
defending itself against any claim (whether asserted by the Company or any
Holder or any other person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent
any such loss, liability or expense may be attributable to its gross
negligence or bad faith. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. Failure by the Trustee to so
notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel of its
selection and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture and the resignation or removal
of the Trustee.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(ix) or (x) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration
under any applicable Federal or State bankruptcy, solvency or otherwise
similar law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance
of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the
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Company in writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may at the expense of the Company petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may at the expense of the Company petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee,
PROVIDED all sums owing to the Trustee hereunder have been paid and subject
to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement
of the Trustee pursuant to this Section 7.08, the Company's obligations under
Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing
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business under the laws of the United States of America or of any state
thereof that is authorized under such laws to exercise corporate trustee
power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject
to TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or
been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE VIII.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding
Notes on the date the conditions set forth below are satisfied (hereinafter,
"LEGAL DEFEASANCE"). For this purpose, Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and
the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following
provisions which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of Holders of outstanding Notes to receive solely
from the trust fund described in Section 8.04 hereof, and as more fully set
forth in such Section, payments in respect of the principal of, premium, if
any, interest and Liquidated Damages, if any, on such Notes when such
payments are due, (b) the Company's obligations with respect to such Notes
under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and the Company's obligations
in connection therewith and (d) this Article Eight. Subject to compliance
with this Article Eight, the Company may
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exercise its option under this Section 8.02 notwithstanding the prior
exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Sections 4.07, 4.08,
4.09, 4.10, 4.11, 4.12, 4.13 and 4.15 hereof with respect to the outstanding
Notes on and after the date the conditions set forth below are satisfied
(hereinafter, "COVENANT DEFEASANCE"), and the Notes shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall
not be deemed outstanding for accounting purposes). For this purpose,
Covenant Defeasance means that, with respect to the outstanding Notes, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall
not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03
hereof, subject to the satisfaction of the conditions set forth in Section
8.04 hereof, Sections 6.01(v) through 6.01(vii) hereof shall not constitute
Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, interest and
Liquidated Damages, if any, on the outstanding Notes on the stated maturity
or on the applicable redemption date, as the case may be and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
(b) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this Indenture, there has
been
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a change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Holders of the outstanding Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and will
be subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had
not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that, subject
to customary assumptions and exclusions, the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit)
or insofar as Sections 6.01(ix) or 6.01(x) hereof is concerned, at any time
in the period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that, subject to customary assumptions and exclusions,
after the 91st day following the deposit, the trust funds will not be subject
to the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding creditors of
the Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that, subject to
customary assumptions and exclusions, there has been compliance with all
conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO
BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"TRUSTEE") pursuant to Section 8.04 hereof in respect of the outstanding
Notes shall be held in trust and applied by the Trustee, in accordance
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with the provisions of such Notes and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as Paying
Agent) as the Trustee may determine, to the Holders of such Notes of all sums
due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to
the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held
by it as provided in Section 8.04 hereof which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 8.04(a) hereof), are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall
be paid to the Company on its request or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Note shall thereafter,
as a secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause
to be published once, in the New York Times and The Wall Street Journal
(national edition), notice that such money remains unclaimed and that, after
a date specified therein, which shall not be less than 30 days from the date
of such notification or publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02
or 8.03 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit
had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 8.02 or 8.03 hereof, as the case
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may be; provided, however, that, if the Company makes any payment of
principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money
held by the Trustee or Paying Agent.
ARTICLE IX.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture, the Notes or the Subsidiary
Guarantees without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place
of certificated Notes or to alter the provisions of Article 2 hereof
(including the related definitions) in a manner that does not materially
adversely affect any Holder;
(c) to provide for the assumption of the Company's obligations to
the Holders of the Notes by a successor to the Company pursuant to Article
Five hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA; or
(f) to allow any Guarantor to guarantee the Notes.
Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee shall join with the Company in the execution
of any amended or supplemental Indenture authorized or permitted by the terms
of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects
its own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture and the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding
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(including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default
(other than a Default or Event of Default in the payment of the principal of,
premium, if any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any
provision of this Indenture or the Notes may be waived with the consent of
the Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange
offer for Notes). In addition, any amendment to the provisions of Article 10
or 12 hereof shall require the consent of the Holders of at least 75% in
aggregate principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for Notes) if
such amendment would adversely affect the rights of Holders of the Notes. In
addition, without the consent of at least 662/3% in principal amount of the
Notes then outstanding (including consents obtained in connection with a
tender offer or exchange offer for Notes), no waiver or amendment to this
Indenture may make any change in the provisions of Section 4.15 hereof that
adversely affects the rights of any Holder of Notes. Section 2.08 hereof
shall determine which Notes are considered to be "outstanding" for purposes
of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to
the Trustee of the consent of the Holders of Notes as aforesaid, and upon
receipt by the Trustee of the documents described in Section 7.02 hereof, the
Trustee shall join with the Company in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture directly
affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise, in which case the Trustee may in its discretion, but shall not
be obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure
of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof,
the Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent
of each Holder affected, an amendment or waiver under this Section 9.02 may
not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
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(b) reduce the principal of or change the fixed maturity of any
Note or alter the provisions with respect to the redemption of the Notes
(other than provisions relating to Sections 3.09, 4.10 and 4.15 hereof);
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, interest or Liquidated Damages, if any, on
the Notes (except a rescission of acceleration of the Notes by the Holders of
at least a majority in aggregate principal amount of the then outstanding
Notes and a waiver of the payment default that resulted from such
acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or premium, if any, interest or Liquidated Damages,
if any, on the Notes;
(g) waive a redemption payment with respect to any Note (other than
a payment required by Sections 4.10 or 4.15 hereof); or
(h) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA
as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the
same debt as the consenting Holder's Note, even if notation of the consent is
not made on any Note. However, any such Holder of a Note or subsequent
Holder of a Note may revoke the consent as to its Note if the Trustee
receives written notice of revocation before the date the waiver, supplement
or amendment becomes effective. An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or
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waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the
Trustee. The Company may not sign an amendment or supplemental Indenture
until the Board of Directors approves it. In executing any amended or
supplemental indenture, the Trustee shall be entitled to receive and (subject
to Section 7.01) shall be fully protected in relying upon, an Officer's
Certificate and an Opinion of Counsel stating that the execution of such
amended or supplemental indenture is authorized or permitted by this
Indenture.
SECTION 9.07. EXECUTION OF SUPPLEMENTAL INDENTURE.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article Nine or the modification
thereby of the trusts created by this Indenture, the Trustee shall be
entitled to receive, and shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
ARTICLE X.
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees, that the
Obligations evidenced by the Notes shall be subordinated in right of payment,
to the extent and in the manner provided in this Article 10, to the prior
payment in full in cash of all Senior Debt, whether outstanding on the date
hereof or hereafter incurred, assumed or guaranteed, and that the
subordination is for the benefit of the holders of Senior Debt.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property,
in an assignment for the benefit of creditors or any marshaling of the
Company's assets and liabilities:
(a) the holders of Senior Debt shall be entitled to receive
payment in full in cash of all Obligations due in respect of such Senior Debt
(including interest after the
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commencement of any such proceeding at the rate specified in the applicable
Senior Debt, whether or not an allowable claim) before the Holders of Notes
shall be entitled to receive any payment with respect to the Notes (provided
that Holders may receive Permitted Proceeds); and
(b) until all Obligations with respect to Senior Debt are paid in
full, in cash, any distribution to which Holders of the Notes would be
entitled but for this Article 10 (other than Permitted Proceeds as provided
in (a) above) shall be made to the holders of Senior Debt.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company may not make any payment or distribution to the Trustee or
any Holder of Notes or in respect of Obligations with respect to the Notes
and may not acquire from the Trustee or any Holder any securities for cash or
property (other than Permitted Proceeds) until all principal and other
Obligations with respect to the Senior Debt have been paid in full if:
(i) a default in the payment of the principal of, premium,
if any, or interest on Designated Senior Debt occurs or any other
default on Designated Senior Debt occurs and the maturity of such
Designated Senior Debt is accelerated in accordance with its terms; or
(ii) a default other than a payment default with respect to
Designated Senior Debt occurs and is continuing that then permits
holders of the Designated Senior Debt to accelerate its maturity and
the Trustee receives a notice of such default (a "Payment Blockage
Notice") from the Representative of the holders of such Designated
Senior Debt. Not more than one Payment Blockage Notice may be given in
any consecutive 360-day period, irrespective of the number of defaults
with respect to such Designated Senior Debt during such period;
PROVIDED, that in no event may the total number of days during which
any payment blockage period or periods is in effect exceed 179 days in
the aggregate during any 360 consecutive day period. If the Trustee
receives any such Payment Blockage Notice, no subsequent Payment
Blockage Notice shall be effective for purposes of this Article 10
unless and until all scheduled payments of principal, premium, if any,
and interest on the Notes that have come due have been paid in full,
in cash. No nonpayment default that existed or was continuing on the
date of delivery of any Payment Blockage Notice to the Trustee shall
be, or be made, the basis for a subsequent Payment Blockage Notice.
The Company shall resume payments on and distributions in respect of the
Notes and may acquire them upon the earliest of:
1. the date upon which the default is cured or waived by
written notice to the Trustee and the Company from the Person or Persons
who gave such Payment Blockage Notice and in the case of Designated Senior
Debt that has been accelerated, such acceleration has been rescinded;
2. in the case of a default referred to in clause (ii) above,
179 days after the date on which the applicable Payment Blockage Notice is
received, unless the
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maturity of any Designated Senior Debt has been accelerated and such
acceleration has not been rescinded; and
3. the payment in full of such Designated Senior Debt, if
this Indenture otherwise permits the payment, distribution or acquisition
at the time of such payment or acquisition.
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes that because of this Article 10 should
not have been made to the Trustee or such Holder, such payment shall be held
by the Trustee or such Holder, in trust for the benefit of, and shall be paid
forthwith over and delivered, upon written request, to, the holders of Senior
Debt as their interests may appear or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of all Obligations with respect to Senior Debt remaining unpaid to
the extent necessary to pay such Obligations in full in accordance with their
terms, after giving effect to any concurrent payment or distribution to or
for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary
duty to the holders of Senior Debt, and shall not be liable to any such
holders if the Trustee shall pay over or distribute to or on behalf of
Holders or the Company or any other Person money or assets to which any
holders of Senior Debt shall be entitled by virtue of this Article 10, except
if such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article 10, but failure to give
such notice shall not affect the subordination of the Notes to the Senior
Debt as provided in this Article 10.
SECTION 10.07. SUBROGATION.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes)
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to the rights of holders of Senior Debt to receive distributions applicable
to Senior Debt to the extent that distributions otherwise payable to the
Holders of Notes have been applied to the payment of Senior Debt. A
distribution made under this Article 10 to holders of Senior Debt that
otherwise would have been made to Holders of Notes is not, as between the
Company and Holders, a payment by the Company on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior Debt;
or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event
of Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or
failure to act by the Company or any Holder or by the failure of the Company
or any Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the
Holders of Notes for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Debt and other
Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
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Notwithstanding the provisions of this Article 10 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may
continue to make payments on the Notes, unless a Responsible Officer of the
Trustee shall have received at its Corporate Trust Office at least three
Business Days prior to the date of such payment written notice of facts that
would cause the payment of any Obligations with respect to the Notes to
violate this Article 10. Only the Company, a Representative or a holder of
Senior Debt may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof
of claim or proof of debt in the form required in any proceeding referred to
in Section 6.09 hereof at least 30 days before the expiration of the time to
file such claim, the a Representative of Designated Senior Debt are hereby
authorized to file an appropriate claim for and on behalf of the Holders of
the Notes.
SECTION 10.13. AMENDMENTS.
Any amendment to the provisions of this Article 10 shall require the
consent of the Holders of at least 75% in aggregate principal amount of the
Notes then outstanding (including consents obtained in connection with a
tender offer or exchange offer for Notes) if such amendment would adversely
affect the rights of Holders of the Notes.
SECTION 10.14. RELIANCE BY HOLDERS OF SENIOR DEBT ON SUBORDINATION
PROVISIONS.
Each Holder by accepting a Note acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Debt, whether such Senior
Debt was created or acquired before or after the issuance of the Senior
Subordinated Notes, to acquire and continue to hold such Senior Debt and such
holder of Senior Debt shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold such Senior
Debt.
ARTICLE XI.
GUARANTEE OF THE NOTES
SECTION 11.01. SUBSIDIARY GUARANTEE.
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Subject to Section 11.06 hereof, each of the Guarantors hereby, jointly
and severally, unconditionally guarantees to each Holder of a Note
authenticated and made available for delivery by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Notes and the Obligations of the
Company hereunder and thereunder, that: (a) the principal of, premium, if
any, interest and Liquidated Damages, if any, on the Notes will be promptly
paid in full when due, subject to any applicable grace period, whether at
maturity, by acceleration, redemption or otherwise, and interest on the
overdue principal, premium, if any, (to the extent permitted by law) interest
on any interest, if any, and Liquidated Damages, if any, on the Notes, and
all other payment Obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full and performed, all in
accordance with the terms hereof and thereof; and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
Obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, subject to any
applicable grace period, whether at stated maturity, by acceleration,
redemption or otherwise. Failing payment when so due of any amount so
guaranteed or any performance so guaranteed for whatever reason the
Guarantors will be jointly and severally obligated to pay the same
immediately. An Event of Default under this Indenture or the Notes shall
constitute an event of default under the Subsidiary Guarantees, and shall
entitle the Holders to accelerate the Obligations of the Guarantors hereunder
in the same manner and to the same extent as the Obligations of the Company.
The Guarantors hereby agree that their Obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same,
any waiver or consent by any Holder with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each Guarantor
hereby waives diligence, presentment, demand of payment, filing of claims
with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest, notice and
all demands whatsoever and covenants that this Subsidiary Guarantee will not
be discharged except by complete performance of the Obligations contained in
the Notes and this Indenture. If any Holder or the Trustee is required by
any court or otherwise to return to the Company, the Guarantors, or any Note
Custodian, Trustee, liquidator or other similar official acting in relation
to either the Company or the Guarantors, any amount paid by either to the
Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor
agrees that so long as any Obligations on the Notes are outstanding it shall
not be entitled to, and hereby waives, any right of subrogation in relation
to the Holders in respect of any Obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in Article 6 for
the purposes of this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of
the Obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such Obligations as provided in Article 6 hereof, such
Obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee. The
Guarantors shall have the right to seek contribution
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from any non-paying Guarantor so long as the exercise of such right does not
impair the rights of the Holders under the Subsidiary Guarantees.
SECTION 11.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 11.01, each
Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form of EXHIBIT E shall be endorsed by an Officer of
such Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Guarantor, by manual
or facsimile signature, by an Officer of such Guarantor.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth
in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates
the Note on which a Subsidiary Guarantee is endorsed, the Subsidiary
Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee
set forth in this Indenture on behalf of the Guarantors.
SECTION 11.03. GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) Notwithstanding Section 11.03(b), (i) any Guarantor may
consolidate with, merge into or transfer all or a part of its properties and
assets to the Company or any other Guarantor, (ii) any Guarantor may merge
with an Affiliate that has no significant assets or liabilities and was
incorporated solely for purpose of reincorporating such Guarantor in another
State of the United States; PROVIDED THAT such merged entity continues to be
a Guarantor; and (iii) any Foreign Guarantor may reorganize or otherwise
change its legal status or form even if it would not remain a Guarantor after
such reorganization or other change of legal status or form.
(b) Except as provided in Section 11.03(a) hereof or in a
transaction referred to in Section 11.04 hereof, no Guarantor may consolidate
with or merge with or into (whether or not such Guarantor is the surviving
Person), another corporation, Person or entity(except the Company or another
Guarantor), or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its assets to another corporation, Person or
entity unless: (i) subject to the provisions of Section 11.04, the Person
formed by or surviving any such consolidation or merger (if other than such
Guarantor) assumes all the obligations of such Guarantor pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee in the Form of EXHIBIT F hereto, under the Notes and this Indenture;
(ii) immediately after giving effect to such transaction, no Default or Event
of Default exists; and (iii) (a) the Company would be permitted by virtue of
the Company's pro forma Fixed Charge Coverage Ratio, immediately after giving
effect to such transaction, to incur at least
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$1.00 of additional Indebtedness (other than Permitted Debt) pursuant to the
Fixed Charge Coverage Ratio set forth in Section 4.09(a) hereof or (b) would
have a pro forma Fixed Charge Coverage Ratio that is equal to or greater than
the actual Fixed Charge Coverage Ratio for the same four-quarter period.
(c) In the case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor Person, by supplemental
indenture, executed and delivered to the Trustee and substantially in the
form of EXHIBIT H hereto, of the Subsidiary Guarantee endorsed upon the Notes
and the due and punctual performance of all of the covenants and conditions
of this Indenture to be performed by the Guarantor, such successor Person
shall succeed to and be substituted for the Guarantor with the same effect as
if it had been named herein as a Guarantor; PROVIDED that, solely for
purposes of computing Consolidated Net Income for purposes of clause (b) of
the first paragraph of Section 4.07 hereof, the Consolidated Net Income of
any Person other than the Company and its Restricted Subsidiaries shall only
be included for periods subsequent to the effective time of such merger,
consolidation, combination or transfer of assets. Such successor Person
thereupon may cause to be signed any or all of the Subsidiary Guarantees to
be endorsed upon all of the Notes issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the Trustee. All of the
Subsidiary Guarantees so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with the terms of this
Indenture as though all of such Subsidiary Guarantees had been issued at the
date of the execution hereof.
SECTION 11.04. RELEASES FOLLOWING SALE OF ASSETS.
Concurrently with any sale of assets (including, if applicable, all of
the Capital Stock of any Guarantor), any Liens in favor of the Trustee in the
assets sold thereby shall be released; PROVIDED that, in the event of an
Asset Sale, the Net Proceeds from such sale or other disposition are treated
in accordance with the provisions of Section 4.10 hereof. If the assets sold
in such sale or other disposition include all or substantially all of the
assets of any Guarantor or all of the Capital Stock of any Guarantor, then
such Guarantor (in the event of a sale or other disposition of all of the
Capital Stock of such Guarantor) or the Person acquiring the property (in the
event of a sale or other disposition of all or substantially all of the
assets of a Guarantor) shall be released from and relieved of its Obligations
under its Subsidiary Guarantee or Section 11.03 hereof, as the case may be;
PROVIDED that (i) in the event of an Asset Sale, the Net Proceeds from such
sale or other disposition are treated in accordance with the provisions of
Section 4.10 hereof and (ii) the Company is in compliance with all other
provisions of this Indenture applicable to such disposition. Upon delivery
by the Company to the Trustee of an Officers' Certificate to the effect of
the foregoing, the Trustee shall execute any documents reasonably required in
order to evidence the release of any Guarantor from its Obligation under its
Subsidiary Guarantee. Any Guarantor not released from its Obligations under
its Subsidiary Guarantee shall remain liable for the full amount of principal
of, premium, if any, interest and Liquidated Damages, if any, on the Notes
and for the other Obligations of such Guarantor under this Indenture as
provided in this Article 11.
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SECTION 11.05. ADDITIONAL GUARANTORS.
(a) If the Company or any of its Domestic Subsidiaries shall
acquire or create another Domestic Subsidiary after the date of the
Indenture, then such newly acquired or created Domestic Subsidiary shall (i)
execute a supplemental indenture substantially in the form of Exhibit F and
in form and substance satisfactory to the Trustee providing that such
Domestic Subsidiary shall become a Guarantor under the Indenture and (ii)
deliver an opinion of counsel to the effect INTER ALIA, that such
supplemental indenture has been duly authorized and executed by such Domestic
Subsidiary and constitutes the legal, valid, binding and enforceable
obligation of such Person (subject to such customary exceptions concerning
creditors rights', fraudulent transfers, public policy and equitable
principles as may be acceptable to the Trustee in its discretion), PROVIDED,
HOWEVER, this Section 11.05(a) shall not apply to any Domestic Subsidiary
that has been properly designated as an Unrestricted Subsidiary in accordance
with Section 4.17 hereof for so long as it continues to constitute an
Unrestricted Subsidiary.
(b) In addition, if an election is made to treat Dardel, Axiohm
S.A. or any other Foreign Subsidiary as a partnership or a branch for United
States federal income tax purposes, within five (5) days after the election
is made, Dardel, Axiohm S.A., or any other Foreign Subsidiary, as the case
may be, shall (i) execute a supplemental indenture substantially in the form
of Exhibit F and in form and substance satisfactory to the Trustee providing
that Dardel, Axiohm S.A. or any other Foreign Subsidiary, as the case may be,
shall become a Guarantor under the Indenture, (ii) execute any other
necessary documentation to be executed by a Guarantor and (iii) deliver an
opinion of counsel to the effect INTER ALIA, that such supplemental indenture
has been duly authorized and executed by Dardel and/or Axiohm S.A., as the
case may be, and constitutes the legal, valid, binding and enforceable
obligation of such Person (subject to such customary exceptions concerning
creditors rights', fraudulent transfers, public policy and equitable
principles as may be acceptable to the Trustee in its discretion), PROVIDED,
HOWEVER, that if Dardel, Axiohm S.A. or any other Foreign Subsidiary shall
cease to be treated as a partnership or a branch of the Company and Dardel,
Axiohm S.A. or any other Foreign Subsidiary, as the case may be, is no longer
a guarantor of any Indebtedness under the New Credit Facility, then, as of
the date such status as a partnership or a branch and as a guarantor under
the New Credit Facility terminates, such Subsidiary's status as a Guarantor
under the Indenture shall also terminate; PROVIDED, that if such Subsidiary
remains a Restricted Subsidiary, that it complies with paragraph Section
11.05(c) hereof.
(c) A Foreign Guarantor may not cease to be a Guarantor and remain
a Restricted Subsidiary of the Company, unless (a) all Investments made in
such Foreign Guarantor by the Company or any Restricted Subsidiary from the
date it became a Guarantor and which remain then outstanding shall be deemed
to be Restricted Investments made at the time the Foreign Guarantor ceased to
be a Guarantor; (b) any transaction that would have been an Asset Sale if the
Foreign Guarantor had not been a Guarantor at the time of such transaction
would comply with Section 4.10 hereof at the time the Foreign Guarantor
ceased to be a Guarantor; (c) all Indebtedness incurred by such Foreign
Guarantor and that is then outstanding shall be deemed to be Indebtedness
incurred by a Restricted Subsidiary that is not a Guarantor at the time the
Foreign Guarantor ceases to be a Guarantor; (d) after giving effect
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to such deemed Restricted Investments, deemed Asset Sales and deemed
incurrences of Indebtedness, there would not have occurred and be continuing
any Default or Event of Default; and (e) such Foreign Guarantor concurrent
with its ceasing to be a Guarantor of the Notes ceases to be a guarantor of
the New Credit Facility.
SECTION 11.06. LIMITATION ON GUARANTOR LIABILITY.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under
the Notes and this Indenture and (ii) the amount, if any, which would not
have (A) rendered such Guarantor "insolvent" (as such term is defined in the
United States Bankruptcy Code and in the Debtor and Creditor Law of the State
of New York) or (B) left such Guarantor with unreasonably small capital at
the time its Subsidiary Guarantee of the Notes was entered into; PROVIDED
that, it will be a presumption in any lawsuit or other proceeding in which a
Guarantor is a party that the amount guaranteed pursuant to the Subsidiary
Guarantee is the amount set forth in clause (i) above unless any creditor, or
representative of creditors of such Guarantor, or debtor in possession or
trustee in bankruptcy of the Guarantor, otherwise proves in such a lawsuit
that the aggregate liability of the Guarantor is the amount set forth in
clause (ii) above. In making any determination as to solvency or sufficiency
of capital of a Guarantor in accordance with the previous sentence, the right
of such Guarantor to contribution from other Guarantors, and any other rights
such Guarantor may have, contractual or otherwise, shall be taken into
account.
SECTION 11.07. TRUSTEE TO INCLUDE PAYING AGENT
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 11 shall in each case (unless the context
shall otherwise require) be construed as extending to and including such
Paying Agent within its meaning as fully and for all intents and purposes as
if such Paying Agent were named in this Article 11 in place of the Trustee.
ARTICLE XII.
SUBORDINATION
SECTION 12.01. AGREEMENT TO SUBORDINATE.
The Guarantors agree, and each Holder by accepting a Note agrees, that
the Obligations evidenced by the Subsidiary Guarantees shall be subordinated
in right of payment, to the extent and in the manner provided in this Article
12, to the prior payment in full in cash of all Guarantor Senior Debt,
whether outstanding on the date hereof or hereafter incurred, assumed or
guaranteed, and that the subordination is for the benefit of the holders of
Guarantor Senior Debt.
SECTION 12.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of any Guarantor in a liquidation or
dissolution of
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such Guarantor or in a bankruptcy, reorganization, insolvency, receivership
or similar proceeding relating to such Guarantor or its property, in an
assignment for the benefit of creditors or any marshaling of such Guarantor's
assets and liabilities:
(a) the holders of Guarantor Senior Debt shall be entitled to
receive payment in full in cash of all Obligations due in respect of such
Guarantor Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the applicable Guarantor Senior Debt,
whether or not an allowable claim) before the Holders of Notes shall be
entitled to receive any payment under the Subsidiary Guarantee of such
Guarantor (provided that Holders may receive Permitted Proceeds); and
(b) until all Obligations with respect to Guarantor Senior Debt
are paid in full, in cash, any distribution to which Holders of the Notes
would be entitled but for this Article 12 (other than Permitted Proceeds as
provided in (a) above) shall be made to the holders of Guarantor Senior Debt.
SECTION 12.03. DEFAULT ON DESIGNATED GUARANTOR SENIOR DEBT.
The Guarantors may not make any payment or distribution to the Trustee
or any Holder of Notes or in respect of Obligations in respect of such
Guarantor's Subsidiary Guarantee and may not acquire from the Trustee or any
Holder any securities for cash or property (other than Permitted Proceeds)
until all principal and other Obligations with respect to the Guarantor
Senior Debt have been paid in full if:
(i) a default in the payment of the principal of, premium, if
any, or interest on Designated Guarantor Senior Debt occurs or any other
default on Designated Guarantor Senior Debt occurs and the maturity of
such Designated Guarantor Senior Debt is accelerated in accordance with
its terms; or
(ii) a default other than a payment default with respect to
Designated Guarantor Senior Debt occurs and is continuing that then permits
holders of the Designated Guarantor Senior Debt to accelerate its maturity
and the Trustee receives a notice of such default (a "Payment Blockage
Notice") from the Representative of the holders of such Designated
Guarantor Senior Debt. Not more than one Payment Blockage Notice may be
given in any consecutive 360-day period, irrespective of the number of
defaults with respect to such Designated Guarantor Senior Debt during such
period; PROVIDED, that in no event may the total number of days during
which any payment blockage period or periods is in effect exceed 179 days
in the aggregate during any 360 consecutive day period. If the Trustee
receives any such Payment Blockage Notice, no subsequent Payment Blockage
Notice shall be effective for purposes of this Article 12 unless and until
all scheduled payments of principal, premium, if any, and interest on the
Notes and the Subsidiary Guarantees that have come due have been paid in
full, in cash. No nonpayment default that existed or was continuing on the
date of delivery of any Payment Blockage Notice to the Trustee shall be, or
be made, the basis for a subsequent Payment Blockage Notice.
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The Guarantors shall resume payments on and distributions in respect of
their Subsidiary Guarantees upon the earliest of:
1. the date upon which the default is cured or waived by
written notice to the Trustee and the Guarantors from the Person or Persons
who gave such Payment Blockage Notice and in the case of Designated
Guarantor Senior Debt that has been accelerated, such acceleration has been
rescinded;
2. in the case of a default referred to in clause (ii) above,
179 days after the date on which the applicable Payment Blockage Notice is
received, unless the maturity of any Designated Guarantor Senior Debt has
been accelerated and such acceleration has not been rescinded; and
3. the payment in full of such Designated Guarantor Senior
Debt, if this Indenture otherwise permits the payment, distribution or
acquisition at the time of such payment or acquisition.
SECTION 12.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Guarantors shall promptly notify holders of Guarantor Senior Debt of the
acceleration.
SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to a Subsidiary Guarantee that because of this
Article 12 should not have been made the Trustee or such Holder, such payment
shall be held by the Trustee or such Holder, in trust for the benefit of, and
shall be paid forthwith over and delivered, upon written request, to, the
holders of Guarantor Senior Debt as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to
which Guarantor Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Guarantor Senior Debt remaining unpaid to the extent necessary to
pay such Obligations in full in accordance with their terms, after giving
effect to any concurrent payment or distribution to or for the holders of
Guarantor Senior Debt.
With respect to the holders of Guarantor Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 12, and no implied covenants or
obligations with respect to the holders of Guarantor Senior Debt shall be
read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Guarantor Senior Debt, and
shall not be liable to any such holders if the Trustee shall pay over or
distribute to or on behalf of Holders or the Guarantors or any other Person
money or assets to which any holders of Guarantor Senior Debt shall be
entitled by virtue of this Article 12, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 12.06. NOTICE BY GUARANTOR.
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The Guarantors shall promptly notify the Trustee and the Paying Agent of
any facts known to the Guarantors that would cause a payment of any
Obligations with respect to the Subsidiary Guarantees to violate this Article
12, but failure to give such notice shall not affect the subordination of the
Subsidiary Guarantees to the Guarantor Senior Debt as provided in this
Article 12.
SECTION 12.07. SUBROGATION.
After all Guarantor Senior Debt is paid in full and until the Subsidiary
Guarantees are paid in full, Holders of Notes shall be subrogated (equally
and ratably with all other Indebtedness pari passu with the Notes) to the
rights of holders of Guarantor Senior Debt to receive distributions
applicable to Guarantor Senior Debt to the extent that distributions
otherwise payable to the Holders of Notes have been applied to the payment of
Guarantor Senior Debt. A distribution made under this Article 12 to holders
of Guarantor Senior Debt that otherwise would have been made to Holders of
Notes is not, as between the Guarantors and Holders, a payment by the
Guarantors on the Subsidiary Guarantees.
SECTION 12.08. RELATIVE RIGHTS.
This Article 12 defines the relative rights of Holders of Notes and
holders of Guarantor Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Guarantors and Holders of Notes, the
obligation of the Guarantors, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with the terms of the
Subsidiary Guarantees;
(2) affect the relative rights of Holders of Notes and creditors of
the Guarantors other than their rights in relation to holders of Guarantor
Senior Debt; or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Guarantor Senior Debt to receive
distributions and payments otherwise payable to Holders of Notes.
If the Guarantors fail because of this Article 12 to pay principal of or
interest on a Subsidiary Guarantee on the due date, the failure is still a
Default or Event of Default.
SECTION 12.09. SUBORDINATION MAY NOT BE IMPAIRED BY GUARANTORS.
No right of any holder of Guarantor Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Guarantor or any Holder or by the failure of
the Guarantors or any Holder to comply with this Indenture.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
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Whenever a distribution is to be made or a notice given to holders of
Guarantor Senior Debt, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of the Guarantors referred to
in this Article 12, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the
Holders of Notes for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Guarantor Senior Debt
and other Indebtedness of the Guarantors, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 12.
SECTION 12.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 12 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may
continue to make payments on the Notes, unless a Responsible Officer of the
Trustee shall have received at its Corporate Trust Office at least three
Business Days prior to the date of such payment written notice of facts that
would cause the payment of any Obligations with respect to the Notes to
violate this Article 12. Only the Guarantors, a Representative or a holder
of Guarantor Senior Debt may give the notice. Nothing in this Article 12
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Guarantor
Senior Debt with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
SECTION 12.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 12, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof
of claim or proof of debt in the form required in any proceeding referred to
in Section 6.09 hereof at least 30 days before the expiration of the time to
file such claim, the a Representative of Designated Guarantor Senior Debt are
hereby authorized to file an appropriate claim for and on behalf of the
Holders of the Notes.
SECTION 12.13. AMENDMENTS.
Any amendment to the provisions of this Article 12 shall require the
consent of the Holders of at least 75% in aggregate principal amount of the
Notes then outstanding (including consents obtained in connection with a
tender offer or exchange offer for Notes) if such
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amendment would adversely affect the rights of Holders of the Notes.
SECTION 12.14. RELIANCE BY HOLDERS OF GUARANTOR SENIOR DEBT ON
SUBORDINATION PROVISIONS.
Each Holder by accepting a Subsidiary Guarantee acknowledges and agrees
that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to each holder of any Guarantor Senior Debt,
whether such Guarantor Senior Debt was created or acquired before or after
the issuance of the Subsidary Guarantees, to acquire and continue to hold
such Guarantor Senior Debt and such holder of Guarantor Senior Debt shall be
deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold such Guarantor Senior Debt.
ARTICLE XIII.
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 13.02. NOTICES.
Any notice or communication by the Company or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), telex, telecopier
or overnight air courier guaranteeing next day delivery, to the others'
address:
If to the Company:
Axiohm Transaction Solutions, Inc.
15070 Avenue of Science
San Diego, California 92128
Telecopier No.:(619) 451-3573
Attention: Walter S. Sobon
With a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
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Palo Alto, California 94304-1050
Telecopier No.:(650) 496-6811
Attention: Henry P. Massey, Jr.
If to the Trustee:
The Bank of New York
21st Floor West, 101 Barclay Street
New York, New York 10286
Telecopier No.:(212) 815-5915
Attention: Corporate Trust Administration
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed
to any Person described in TIA Section 313(c), to the extent required by the
TIA. Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall mail
a copy to the Trustee and each Agent at the same time.
SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF
NOTES.
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Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection
of TIA Section 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 13.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS.
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No past, present or future director, officer, employee, incorporator or
stockholder of the Company or the Guarantors, as such, shall have any
liability for any obligations of the Company under the Notes, the Subsidiary
Guarantees, this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver
may not be effective to waive liabilities under the federal securities laws
and it is the view of the Commission that such a waiver is against public
policy.
SECTION 13.08. CONSENT TO JURISDICTION; SERVICE OR PROCESS.
(a) The parties hereto hereby irrevocably submit to the
jurisdiction of the United States District Court for the Southern District of
New York (or, if subject matter jurisdiction in that court is not available,
in any state court located within the City of New York) over any dispute
arising out of or relating to this Indenture and each party hereby
irrevocably agrees that all claims in respect of such dispute shall be heard
and determined in such court. The parties hereby irrevocably waive, to the
fullest extent permitted by applicable law, any objection which they may now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such
dispute. Each of the parties hereto agrees that a judgment in any such
dispute may be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law.
(b) Each of the parties hereto hereby consents to process being
served by any party to this Indenture in any suit, action or proceeding of
the nature specified in subsection (a) above by mailing a copy thereof in
accordance with the provisions of Section 13.02 hereof.
SECTION 13.09. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS
SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE
SUBSIDIARY GUARANTEES.
SECTION 13.10. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 13.11. SUCCESSORS.
All agreements of the Company and the Guarantors in this Indenture and
the Notes shall bind their respective successors and assigns. All agreements
of the Trustee in this Indenture shall bind its successors and assigns.
SECTION 13.12. SEVERABILITY.
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In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 13.13. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.14. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of October 2, 1997
AXIOM TRANSACTION SOLUTIONS, INC.
By: /s/ Stuart Groom
------------------------------
Name: Stuart Groom
Title: Vice President
AXIOM IPB, INC.
By: /s/ Stuart Groom
-------------------------------
Name: Stuart Groom
Title: Vice President
STADIA COLORADO CORP.
By: /s/ Stuart Groom
-------------------------------
Name: Stuart Groom
Title: Vice President
COGNITIVE SOLUTIONS, INC.
By: /s/ Stuart Groom
-------------------------------
Name: Stuart Groom
Title: Vice President
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THE BANK OF NEW YORK
By: /s/ Thomas E. Tabor
-------------------------------
Name: Thomas E. Tabor
Title: Assistant Treasurer
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EXHIBIT A
(Face of Note)
CUSIP/CINS ____________
9 3/4% Senior Subordinated Notes due 2007
No. ___ $__________
AXIOHM TRANSACTION SOLUTIONS, INC.
promises to pay to _________________________________________________
or registered assigns,
the principal sum of ________________________________________________
Dollars on ___________, 2007.
Interest Payment Dates: __________, and __________
Record Dates: __________, and __________
Dated: October 2, 1997
AXIOHM TRANSACTION SOLUTIONS, INC.
By:______________________________
Name:
Title:
(SEAL)
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By:__________________________________
A-1
<PAGE>
A-2
<PAGE>
(Back of Note)
9 3/4% Senior Subordinated Notes due 2007
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE THIRD SENTENCE HEREOF. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT)
(AN "IAI"), OR (C) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT
WILL NOT, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR
ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES
ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED ON AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," AND
"UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING.
A-3
<PAGE>
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF AXIOHM TRANSACTION SOLUTIONS, INC.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Axiom Transaction Solutions, Inc., a California
corporation (the "Company"), promises to pay interest on the principal amount
of this Note at 9 3/4% per annum from October 2, 1998 until maturity and
shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of
the Registration Rights Agreement referred to below. The Company will pay
interest and Liquidated Damages, if any, semi-annually in arrears on April 1
and October 1 of each year, or if any such day is not a Business Day, on the
next succeeding Business Day (each an "Interest Payment Date"). Interest on
the Notes will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance; PROVIDED
that if there is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from
such next succeeding Interest Payment Date; PROVIDED, FURTHER, that the first
Interest Payment Date shall be April 1, 1998. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue principal and premium, if any, from time to time on demand at a
rate that is 1% per annum in excess of the interest rate on the Notes then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time
to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons
who are registered Holders of Notes at the close of business on the March 15
or September 15 next preceding the Interest Payment Date, even if such Notes
are canceled after such record date and on or before such Interest Payment
Date, except as provided in Section 2.12 of the Indenture with respect to
defaulted interest. The Notes will be payable as to principal, premium, if
any, interest and Liquidated Damages, if any, at the office or agency of the
Company maintained for such purpose within or without the City and State of
New York, or, at the option of the Company, payment of interest and
Liquidated Damages may be made by check mailed to the Holders at their
addresses set forth in the register of Holders, and provided that payment by
wire transfer of immediately available funds will be required with respect to
principal of premium, interest,
A-4
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Liquidated Damages, if any, on, all Global Notes and all other Notes the
Holders of which shall have provided wire transfer instructions to the
Company or the Paying Agent. Such payment shall be in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any
Holder. The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as
of October 2, 1997 ("Indenture") between the Company, the Guarantors and the
Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject
to all such terms, and Holders are referred to the Indenture and such Act for
a statement of such terms. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the
indenture shall govern and be controlling. The Notes are general unsecured
obligations of the Company.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section, the Company
shall not have the option to redeem the Notes pursuant to Section 4.07 of the
Indenture prior to October 1, 2002. Thereafter, the Company shall have the
option to redeem the Notes, in whole or in part, upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed as percentages
of principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages, if any, thereon, to the applicable redemption date, if
redeemed during the twelve-month period beginning on October 1 of the years
indicated below:
YEAR PERCENTAGE
---- ----------
2002 . . . . . . . . . . . . . 104.875%
2003 . . . . . . . . . . . . . 103.250%
2004 . . . . . . . . . . . . . 101.625%
2005 and thereafter. . . . . . 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section,
prior to October 1, 2000, the Company may redeem on any one or more occasions
up to 35% of the original aggregate principal amount of the Notes initially
issued at a redemption price of 109.750% of the
A-5
<PAGE>
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the net cash proceeds
of any Public Equity Offering of common stock of the Company; PROVIDED THAT
at least 65% of the aggregate principal amount of the Notes originally issued
under this Indenture remain outstanding immediately after the occurrence of
each such redemption; and PROVIDED, FURTHER, THAT each such redemption shall
occur within 60 days of the date of the closing of such Public Equity
Offering.
6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below, the
Company shall not be required to make mandatory redemption payments with
respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon thr occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) such each Holder's
Notes (the "Change of Control Offer") at a price equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company shall
send by first class mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales,
within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $5 million, the Company shall commence an offer to all
Holders of Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the
Indenture to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of
purchase, in accordance with the procedures set forth in the Indenture. To
the extent that the aggregate amount of Notes tendered pursuant to an Asset
Sale Offer is less than the Excess Proceeds, the Company (or such Subsidiary)
may use such deficiency for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes to be purchased on a
pro rata basis. Holders of Notes that are the subject of an offer to
purchase will receive an Asset Sale Offer from the Company prior to any
related purchase date and may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on
Notes or portions thereof called
A-6
<PAGE>
for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company need not exchange
or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, it need not exchange or register the transfer of any Notes for a
period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then
outstanding Notes, and any existing default or compliance with any provision
of the Indenture or the Notes may be waived with the consent of the Holders
of a majority in principal amount of the then outstanding Notes. Without the
consent of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the
Notes in case of a merger or consolidation or sale of assets, to make any
change that would provide any additional rights or benefits to the Holders of
the Notes or that does not adversely affect the legal rights under the
Indenture of any such Holder, to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act or to allow any Guarantor to guarantee the
Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest or Liquidated Damages, if any, on
the Notes; (ii) default in payment when due of principal of or premium, if
any, on the Notes when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise,
(iii) failure by the Company to comply with Section 5.01 of the Indenture,
(iv) failure by the Company to comply with the provisions of Sections 4.07,
4.09, 4.10 or 4.15 of the Indenture which failure remains uncured for 30
days; (v) failure by the Company for 60 days after notice to the Company by
the Trustee or the Holders of at least 25% in principal amount of the Notes
then outstanding to comply with certain other agreements in the Indenture, or
the Notes; (vi) default under certain other agreements relating to
Indebtedness of the Company which default results in the acceleration of such
Indebtedness prior to its express maturity; (vii) certain final judgments for
the payment of money that remain undischarged for a period of 60 days; and
(viii) certain events of bankruptcy or insolvency with respect to the Company
or any of its
A-7
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Significant Subsidiaries. If any Event of Default occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising
from certain events of bankruptcy or insolvency, all outstanding Notes will
become due and payable without further action or notice. Holders may not
enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of
the then outstanding Notes may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of
Default relating to the payment of principal or interest) if it determines
that withholding notice is in their interest. The Holders of a majority in
aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or Event of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of interest on, or the
principal of, the Notes. The Company is required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and the Company
is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of
Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or the Guarantors, as such, shall
not have any liability for any obligations of the Company under the Notes,
the Subsidiary Guarantees or the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration
Rights Agreement dated as of October 2, 1997, between the Company and the
parties named on the signature pages thereof (the "Registration Rights
Agreement").
A-8
<PAGE>
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed
on the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The company will furnish to any holder upon written request and without
charge a copy of the indenture and/or the registration rights agreement.
requests may be made to:
Axiohm Transaction Solutions, Inc.
15070 Avenue of Science
San Diego, California 92128
Attention: Chief Financial Officer
A-9
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- ------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_______________________________________________________
To transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- ------------------------------------------------------------------------------
Date:
--------------
Your Signature:
----------------------
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
A-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.15 of the Indenture, check the box below:
Section 4.10 Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
Date: Your Signature:________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:_________
Signature Guarantee.
A-11
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE (1)
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a
part of another Global Note or Definitive Note for an interest in this Global
Note, have been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of decrease in Amount of increase in of this authorized signatory
Principal Amount Principal Amount Global Note of
of of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------- --------------------- --------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------------------
(1) THIS SHOULD BE INCLUDED ONLY IF THE NOTE ISSUED IN GLOBAL FORM.
A-12
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Axiohm Transaction Solutions, Inc.
15070 Avenue of Science
San Diego, California 92128
The Bank of New York.
Re: 9 3/4% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of October 2, 1997
(the "Indenture"), between Axiohm Transaction Solutions, Inc., as issuer (the
"Company"), Axiohm IPB, Inc. ("IPB"), Stadia Colorado Corp. ("Stadia"),
Cognitive Solutions, Inc. ("Cognitive" and, together with IPB and Stadia, the
"Guarantors") and The Bank of New York], as trustee. Capitalized terms used
but not defined herein shall have the meanings given to them in the
Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the
"Transfer"), to __________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies
that:
[CHECK ALL THAT APPLY]
1. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Note for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and
such Person and each such account is a "qualified institutional buyer" within
the meaning of Rule 144A in a transaction meeting the requirements of Rule
144A and such Transfer is in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed
on the 144A
B-1
<PAGE>
Global Note and/or the Definitive Note and in the Indenture and the
Securities Act.
2. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S.
The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a person in the
United States and (x) at the time the buy order was originated, the
Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or
through the facilities of a designated offshore securities market and neither
such Transferor nor any Person acting on its behalf knows that the
transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements
of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii)
the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not
being made to a U.S. Person or for the account or benefit of a U.S. Person
(other than an Initial Purchaser. Upon consummation of the proposed transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on Transfer
enumerated in the Private Placement Legend printed on the Regulation S Global
Note and/or the Definitive Note and in the Indenture and the Securities Act.
3. / / Check and complete if Transferee will take delivery of a beneficial
interest in the IAI Global Note or a Definitive Note pursuant to any
provision of the Securities Act other than Rule 144A or Regulation S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act
and any applicable blue sky securities laws of any state of the United
States, and accordingly the Transferor hereby further certifies that (check
one):
(a) / / such Transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
(b) / / such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) / / such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) / / such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of
the Securities Act other than
B-2
<PAGE>
Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies
that it has not engaged in any general solicitation within the meaning of
Regulation D under the Securities Act and the Transfer complies with the
transfer restrictions applicable to beneficial interests in a Restricted
Global Note or Restricted Definitive Notes and the requirements of the
exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in the form of Exhibit D to the Indenture and (2)
if such Transfer is in respect of a principal amount of Notes at the time of
transfer of less than $250,000, an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in compliance with
the Securities Act. Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the IAI Global Note and/or the
Definitive Notes and in the Indenture and the Securities Act.
4. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) / / CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the Restricted Global Notes, on Restricted Definitive Notes and in
the Indenture.
(b) / / CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any state of
the United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the Restricted Global Notes, on Restricted Definitive Notes and in
the Indenture.
(c) / / CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903
or Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will not be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed
on the Restricted
B-3
<PAGE>
Global Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
[Insert Name of Transferor]
By:
Name:
Title:
Dated
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) / / a beneficial interest in the:
(i) / / 144A Global Note (CUSIP ), or
(ii) / / Regulation S Global Note (CUSIP ), or
(iii) / / IAI Global Note (CUSIP ); or
(b) / / a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) / / a beneficial interest in the:
(i) / / 144A Global Note (CUSIP ), or
(ii) / / Regulation S Global Note (CUSIP ), or
(iii) / / IAI Global Note (CUSIP ); or
(iv) / / Unrestricted Global Note (CUSIP ); or
(b) / / a Restricted Definitive Note; or
(c) / / an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Axiohm Transaction Solutions, Inc.
15070 Avenue of Science
San Diego, California 92128
The Bank of New York.
Re: 9 3/4% Senior Subordinated Notes due 2007
(CUSIP )
Reference is hereby made to the Indenture, dated as of October 2, 1997
(the "Indenture"), between Axiohm Transaction Solutions, Inc., as issuer (the
"Company"), Axiohm IPB, Inc. ("IPB"), Stadia Colorado Corp. ("Stadia"),
Cognitive Solutions, Inc. ("Cognitive" and, together with IPB and Stadia, the
"Guarantors") and The Bank of New York], as trustee. Capitalized terms used
but not defined herein shall have the meanings given to them in the
Indenture.
, (the "Owner") owns and proposes to exchange the Note[s] or
interest in such Note[s] specified herein, in the principal amount of $
in such Note[s] or interests (the "Exchange"). In connection with the
Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial
Interests in an Unrestricted Global Note
(a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
connection with the Exchange of the Owner's beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted Global
Note in an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Global Notes and pursuant to and in
accordance with the United States Securities Act of 1933, as amended (the
"Securities Act"), (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest
in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE
C-1
<PAGE>
TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the
Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance
with the Securities Act and (iv) the Definitive Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(c) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in
an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest
is being acquired in compliance with any applicable blue sky securities laws
of any state of the United States.
(d) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner
hereby certifies (i) the Unrestricted Definitive Note is being acquired for
the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted Definitive Note
is being acquired in compliance with any applicable blue sky securities laws
of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Notes or Beneficial
Interests in Restricted Global Notes
(a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange
of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the
Owner's own account without transfer. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the Restricted
Definitive Note issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Definitive Note and in the Indenture and the Securities Act.
(b) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial interest
in the [CHECK ONE] / / 144A Global Note, / /
C-2
<PAGE>
Regulation S Global Note, / / IAI Global Note with an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer and (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to
the Restricted Global Notes and pursuant to and in accordance with the
Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial
interest issued will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the relevant Restricted Global Note
and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
[Insert Name of Owner]
By:
Name:
Title:
Dated ,
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Axiohm Transaction Solutions, Inc.
15070 Avenue of Science
San Diego, California 92128
The Bank of New York.
Re: 9 3/4% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of October 2, 1997
(the "Indenture"), between Axiohm Transaction Solutions, Inc., as issuer (the
"Company"), Axiohm IPB, Inc. ("IPB"), Stadia Colorado Corp. ("Stadia"),
Cognitive Solutions, Inc. ("Cognitive" and, together with IPB and Stadia, the
"Guarantors") and The Bank of New York], as trustee. Capitalized terms used
but not defined herein shall have the meanings given to them in the
Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) / / a beneficial interest in a Global Note, or
(b) / / a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth
in the Indenture and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Notes or any interest therein except
in compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for
which we are acting as hereinafter stated, that if we should sell the Notes
or any interest therein, we will do so only (A) to the Company or any
subsidiary thereof, (B) in
D-1
<PAGE>
accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and
to the Company a signed letter substantially in the form of this letter and,
if such transfer is in respect of a principal amount of Notes, at the time of
transfer of less than $250,000, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such transfer is in compliance
with the Securities Act, (D) outside the United States in accordance with
Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
provisions of Rule 144 under the Securities Act or (F) pursuant to an
effective registration statement under the Securities Act, and we further
agree to provide to any person purchasing the Definitive Note or beneficial
interest in a Global Note from us in a transaction meeting the requirements
of clauses (A) through (E) of this paragraph a notice advising such purchaser
that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company
may reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein
acquired by us must be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased
by us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.
[Insert Name of Accredited Investor]
By:
Name:
Title:
Dated: ,
D-2
<PAGE>
EXHIBIT E
SUBSIDIARY GUARANTEE
Subject to Section 11.06 of the Indenture, each Guarantor hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and made available for delivery by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes and the Obligations of the Company
under the Notes or under the Indenture, that: (a) the principal of, premium,
if any, interest and Liquidated Damages, if any, on the Notes will be
promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration, redemption or otherwise, and interest
on overdue principal, premium, if any, (to the extent permitted by law)
interest on any interest, if any, and Liquidated Damages, if any, on the
Notes and all other payment Obligations of the Company to the Holders or the
Trustee under the Indenture or under the Notes will be promptly paid in full
and performed, all in accordance with the terms thereof; and (b) in case of
any extension of time of payment or renewal of any Notes or any of such other
payment Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject
to any applicable grace period, whether at stated maturity, by acceleration,
redemption or otherwise. Failing payment when so due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the
Guarantors will be jointly and severally obligated to pay the same
immediately.
The obligations of the Guarantors to the Holders and to the Trustee
pursuant to this Subsidiary Guarantee and the Indenture are expressly set
forth in Article 11 and Article 12 of the Indenture, and reference is hereby
made to such Indenture for the precise terms of this Subsidiary Guarantee.
The terms of Articles 11 and 12 of the Indenture are incorporated herein by
reference. This Subsidiary Guarantee is subject to release as and to the
extent provided in Section 11.04 of the Indenture. The obligations of the
Guarantors to the Holders and to the Trustee pursuant to the Subsidiary
Guarantee and the Indenture are expressly subordinated to the extent set
forth in Article 12 of the Indenture and reference is hereby made to such
Indenture for the precise terms of such subordination.
This is a continuing Guarantee and shall remain in full force and effect
and shall be binding upon each Guarantor and its respective successors and
assigns to the extent set forth in the Indenture until full and final payment
of all of the Company's Obligations under the Notes and the Indenture and
shall inure to the benefit of the successors and assigns of the Trustee and
the Holders and, in the event of any transfer or assignment of rights by any
Holder or the Trustee, the rights and privileges herein conferred upon that
party shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. This is a
guarantee of payment and not a guarantee of collection.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized signatories.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Notes and the Indenture and
E-1
<PAGE>
(ii) the amount, if any, which would not have (A) rendered such Guarantor
"insolvent" (as such term is defined in the United States Bankruptcy Code and
in the Debtor and Creditor Law of the State of New York) or (B) left such
Guarantor with unreasonably small capital at the time its Subsidiary
Guarantee of the Notes was entered into; PROVIDED that, it will be a
presumption in any lawsuit or other proceeding in which a Guarantor is a
party that the amount guaranteed pursuant to the Subsidiary Guarantee is the
amount set forth in clause (i) above unless any creditor, or representative
of creditors of such Guarantor, or debtor in possession or trustee in
bankruptcy of such Guarantor, otherwise proves in such a lawsuit that the
aggregate liability of the Guarantor is limited to the amount set forth in
clause (ii) above. The Indenture provides that, in making any determination
as to the solvency or sufficiency of capital of a Guarantor in accordance
with the previous sentence, the right of such Guarantor to contribution from
other Guarantors and any other rights such Guarantor may have, contractual or
otherwise, shall be taken into account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
[GUARANTOR]
By:_________________________
Name:
Title:
E-2
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
_______ __, 1997 between Guarantor (the "New Guarantor"), a subsidiary of
Axiohm Transaction Solutions, Inc., a California corporation (the "Company"),
and The Bank of New York, as trustee under the indenture referred to below
(the "Trustee"). Capitalized terms used herein and not defined herein shall
have the meaning ascribed to them in the Indenture (as defined below).
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of September 30, 1997,
providing for the issuance of an aggregate principal amount of $100,000,000
of __% Senior Subordinated Notes due 2007 (the "Notes");
WHEREAS, Section 11.05 of the Indenture provides that under certain
circumstances the Company may cause, and Section 11.03 of the Indenture
provides that under certain circumstances the Company must cause, certain of
its subsidiaries to execute and deliver to the Trustee a supplemental
indenture pursuant to which such subsidiaries shall unconditionally guarantee
all of the Company's Obligations under the Notes pursuant to a Subsidiary
Guarantee on the terms and conditions set forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor and the Trustee mutually covenant and agree for the equal and
ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO SUBSIDIARY GUARANTEE. The New Guarantor hereby agrees,
jointly and severally with all other Guarantors, to guarantee the Company's
Obligations under the Notes and the Indenture on the terms and subject to the
conditions set forth in Article 11 and Article 12 of the Indenture and to be
bound by all other applicable provisions of the Indenture.
3. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, shareholder or agent of any Guarantor, as
such, shall have any liability for any obligations of the Company or any
Guarantor under the Notes, any Subsidiary
F-1
<PAGE>
Guarantees, the Indenture or this Supplemental Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
4. NEW YORK LAW TO GOVERN. The internal law of the State of New York
without regard to conflicts shall govern and be used to construe this
Supplemental Indenture.
5. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
7. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the correctness of the
recitals of fact contained herein, all of which recitals are made solely by
the New Guarantor.
F-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: ________________ [NAME OF NEW GUARANTOR]
By:____________________________
Name:
Title:
Dated: ________________ THE BANK OF NEW YORK
as Trustee
By:____________________________
Name:
Title:
F-3
<PAGE>
G-1
<PAGE>
CUSIP 054602 AA 5
CINS US 054602 AA 56
9 3/4% Senior Subordinated Notes due 2007
No. 1. $117,300,000
AXIOHM TRANSACTION SOLUTIONS, INC.
promises to pay to Cede & Co.
or registered assigns,
the principal sum of One Hundred Seventeen Million Three Hundred Thousand
Dollars on October 1, 2007.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Dated: October 2, 1997
AXIOHM TRANSACTION SOLUTIONS, INC.
By: /s/ Stuart Groom
-------------------------------
Name: Stuart Groom
Title: Vice President
(SEAL)
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By: /s/ Thomas E. Tabor
---------------------------------
Name: Thomas E. Tabor
Title: Assistant Treasurer
<PAGE>
(Back of Note)
9 3/4% Senior Subordinated Notes due 2007
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE THIRD
SENTENCE HEREOF. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"), OR (C) IT IS ACQUIRING
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C)
IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES OF LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED ON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.
<PAGE>
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF AXIOHM TRANSACTION SOLUTIONS, INC.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Axiom Transaction Solutions, Inc., a California corporation
(the "Company"), promises to pay interest on the principal amount of this
Note at 9 3/4% per annum from October 2, 1998 until maturity and shall pay
the Liquidated Damages, if any, payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company will pay
interest and Liquidated Damages, if any, semi-annually in arrears on April 1
and October 1 of each year, or if any such day is not a Business Day, on the
next succeeding Business Day (each an "Interest Payment Date"). Interest on
the Notes will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance; PROVIDED
that if there is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from
such next succeeding Interest Payment Date; PROVIDED, FURTHER, that the first
Interest Payment Date shall be April 1, 1998. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue principal and premium, if any, from time to time on demand at a
rate that is 1% per annum in excess of the interest rate on the Notes then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time
to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages, if any, to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium, if any,
interest and Liquidated Damages, if any, at the office or agency of the
Company maintained for such purpose within or without the City and State of
New York, or, at the option of the Company, payment of interest and
Liquidated Damages may be made by check mailed to the Holders at their
addresses set forth in the register of Holders, and provided that payment by
wire
<PAGE>
transfer of immediately available funds will be required with respect to
principal of premium, interest, Liquidated Damages, if any, on, all Global
Notes and all other Notes the Holders of which shall have provided wire
transfer instructions to the Company or the Paying Agent. Such payment shall
be in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of
October 2, 1997 ("Indenture") between the Company, the Guarantors and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the indenture shall govern and be
controlling. The Notes are general unsecured obligations of the Company.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section, the Company shall not
have the option to redeem the Notes pursuant to Section 4.07 of the Indenture
prior to October 1, 2002. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated
Damages, if any, thereon, to the applicable redemption date, if redeemed
during the twelve-month period beginning on October 1 of the years indicated
below:
YEAR PERCENTAGE
2002 104.875%
2003 103.250%
2004 101.625%
2005 and thereafter 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section, prior to
October 1, 2000, the Company may redeem on any one or more occasions up to 35%
of the original aggregate principal amount of the Notes initially issued at a
redemption price of 109.750% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of any Public Equity Offering of
<PAGE>
common stock of the Company; PROVIDED THAT at least 65% of the aggregate
principal amount of the Notes originally issued under this Indenture remain
outstanding immediately after the occurrence of each such redemption; and
PROVIDED, FURTHER, THAT each such redemption shall occur within 60 days of
the date of the closing of such Public Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) such each Holder's Notes (the "Change
of Control Offer") at a price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any, to
the date of purchase (the "Change of Control Payment"). Within 30 days
following any Change of Control, the Company shall send by first class mail a
notice to each Holder setting forth the procedures governing the Change of
Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within five
days of each date on which the aggregate amount of Excess Proceeds exceeds $5
million, the Company shall commence an offer to all Holders of Notes (as
"Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Indenture. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Company (or such Subsidiary) may use such
deficiency for general corporate purposes. If the aggregate principal amount
of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a pro rata
basis. Holders of Notes that are the subject of an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days
but not more than 60 days before the redemption date to each Holder whose Notes
are to be redeemed at its registered address. Notes in denominations larger
than $1,000 may be redeemed in part but only in whole multiples of $1,000,
unless all of the Notes held by a Holder are to be redeemed. On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar
<PAGE>
and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company need not exchange or register the transfer of any
Note or portion of a Note selected for redemption, except for the unredeemed
portion of any Note being redeemed in part. Also, it need not exchange or
register the transfer of any Notes for a period of 15 days before a selection
of Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as
its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the
consent of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the
Notes in case of a merger or consolidation or sale of assets, to make any
change that would provide any additional rights or benefits to the Holders of
the Notes or that does not adversely affect the legal rights under the
Indenture of any such Holder, to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act or to allow any Guarantor to guarantee the
Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest or Liquidated Damages, if any, on
the Notes; (ii) default in payment when due of principal of or premium, if
any, on the Notes when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise,
(iii) failure by the Company to comply with Section 5.01 of the Indenture,
(iv) failure by the Company to comply with the provisions of Sections 4.07,
4.09, 4.10 or 4.15 of the Indenture which failure remains uncured for 30
days; (v) failure by the Company for 60 days after notice to the Company by
the Trustee or the Holders of at least 25% in principal amount of the Notes
then outstanding to comply with certain other agreements in the Indenture, or
the Notes; (vi) default under certain other agreements relating to
Indebtedness of the Company which default results in the acceleration of such
Indebtedness prior to its express maturity; (vii) certain final judgments for
the payment of money that remain undischarged for a period of 60 days; and
(viii) certain events of bankruptcy or insolvency with respect to the Company
or any of its Significant Subsidiaries. If any Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Notes may declare all the Notes to be due and
payable. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders
may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in
<PAGE>
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default
or Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by
notice to the Trustee may on behalf of the Holders of all of the Notes waive
any existing Default or Event of Default and its consequences under the
Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes. The Company is required to
deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such
Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or
stockholder, of the Company or the Guarantors, as such, shall not have any
liability for any obligations of the Company under the Notes, the Subsidiary
Guarantees or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the Registration Rights Agreement
dated as of October 2, 1997, between the Company and the parties named on the
signature pages thereof (the "Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee
on Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
<PAGE>
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
AXIOHM TRANSACTION SOLUTIONS, INC.
15070 AVENUE OF SCIENCE
SAN DIEGO, CALIFORNIA 92128
ATTENTION: CHIEF FINANCIAL OFFICER
<PAGE>
ASSIGNMENT FORM
TO ASSIGN THIS NOTE, FILL IN THE FORM BELOW: (I) OR (WE) ASSIGN AND
TRANSFER THIS NOTE TO
______________________________________________________________________________
(INSERT ASSIGNEE'S SOC. SEC. OR TAX I.D. NO.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(PRINT OR TYPE ASSIGNEE'S NAME, ADDRESS AND ZIP CODE)
AND IRREVOCABLY APPOINT_______________________________________________________
TO TRANSFER THIS NOTE ON THE BOOKS OF THE COMPANY. THE AGENT MAY SUBSTITUTE
ANOTHER TO ACT FOR HIM.
______________________________________________________________________________
DATE: ______________ YOUR
SIGNATURE:______________________ (SIGN EXACTLY AS YOUR NAME APPEARS ON THE
FACE OF THIS NOTE)
SIGNATURE GUARANTEE.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS NOTE PURCHASED BY THE COMPANY PURSUANT
TO SECTION 4.10 OR 4.15 OF THE INDENTURE, CHECK THE BOX BELOW:
/ / SECTION 4.10 / / SECTION 4.15
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THE NOTE PURCHASED BY THE
COMPANY PURSUANT TO SECTION 4.10 OR SECTION 4.15 OF THE INDENTURE, STATE THE
AMOUNT YOU ELECT TO HAVE PURCHASED: $___________
Date: Your Signature:_______________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:_________
Signature Guarantee.
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(1)
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of increase of this authorized
Amount of decrease in in Global Note signatory
Principal Amount Principal Amount following such of
of of decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ----------------- --------------------- -------------------- ---------------------- -------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(1) This should be included only if the Note issued in global form.
<PAGE>
SUBSIDIARY GUARANTEE
Subject to Section 11.06 of the Indenture, each Guarantor hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and made available for delivery by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes and the Obligations of the Company
under the Notes or under the Indenture, that: (a) the principal of, premium,
if any, interest and Liquidated Damages, if any, on the Notes will be
promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration, redemption or otherwise, and interest
on overdue principal, premium, if any, (to the extent permitted by law)
interest on any interest, if any, and Liquidated Damages, if any, on the
Notes and all other payment Obligations of the Company to the Holders or the
Trustee under the Indenture or under the Notes will be promptly paid in full
and performed, all in accordance with the terms thereof; and (b) in case of
any extension of time of payment or renewal of any Notes or any of such other
payment Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject
to any applicable grace period, whether at stated maturity, by acceleration,
redemption or otherwise. Failing payment when so due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the
Guarantors will be jointly and severally obligated to pay the same
immediately.
The obligations of the Guarantors to the Holders and to the Trustee
pursuant to this Subsidiary Guarantee and the Indenture are expressly set
forth in Article 11 and Article 12 of the Indenture, and reference is hereby
made to such Indenture for the precise terms of this Subsidiary Guarantee.
The terms of Articles 11 and 12 of the Indenture are incorporated herein by
reference. This Subsidiary Guarantee is subject to release as and to the
extent provided in Section 11.04 of the Indenture. The obligations of the
Guarantors to the Holders and to the Trustee pursuant to the Subsidiary
Guarantee and the Indenture are expressly subordinated to the extent set
forth in Article 12 of the Indenture and reference is hereby made to such
Indenture for the precise terms of such subordination.
This is a continuing Guarantee and shall remain in full force and effect
and shall be binding upon each Guarantor and its respective successors and
assigns to the extent set forth in the Indenture until full and final payment
of all of the Company's Obligations under the Notes and the Indenture and
shall inure to the benefit of the successors and assigns of the Trustee and
the Holders and, in the event of any transfer or assignment of rights by any
Holder or the Trustee, the rights and privileges herein conferred upon that
party shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. This is a
guarantee of payment and not a guarantee of collection.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized signatories.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under
the Notes and the Indenture and (ii) the amount, if any, which would not have
(A) rendered such Guarantor "insolvent" (as such term is defined in the
United States Bankruptcy Code and in the Debtor and Creditor Law of the State
of
<PAGE>
New York) or (B) left such Guarantor with unreasonably small capital at the
time its Subsidiary Guarantee of the Notes was entered into; PROVIDED that,
it will be a presumption in any lawsuit or other proceeding in which a
Guarantor is a party that the amount guaranteed pursuant to the Subsidiary
Guarantee is the amount set forth in clause (i) above unless any creditor, or
representative of creditors of such Guarantor, or debtor in possession or
trustee in bankruptcy of such Guarantor, otherwise proves in such a lawsuit
that the aggregate liability of the Guarantor is limited to the amount set
forth in clause (ii) above. The Indenture provides that, in making any
determination as to the solvency or sufficiency of capital of a Guarantor in
accordance with the previous sentence, the right of such Guarantor to
contribution from other Guarantors and any other rights such Guarantor may
have, contractual or otherwise, shall be taken into account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
AXIOHM IPB, INC.
By: /s/ Stuart Groom
-------------------------
Name: Stuart Groom
Title: Vice President
STADIA COLORADO CORP.
By: /s/ Stuart Groom
-------------------------
Name: Stuart Groom
Title: Vice President
COGNITIVE SOLUTIONS, INC.
By: /s/ Stuart Groom
-------------------------
Name: Stuart Groom
Title: Vice President
<PAGE>
CUSIP 054602 AB 3
CINS US 054602 AB 30
9 3/4% Senior Subordinated Notes due 2007
No. 1. $2,350,000
AXIOHM TRANSACTION SOLUTIONS, INC.
promises to pay to Cede & Co.
or registered assigns,
the principal sum of Two Million, Three Hundred Fifty Thousand
Dollars on October 1, 2007.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Dated: October 2, 1997
AXIOHM TRANSACTION SOLUTIONS, INC.
By:/s/ Stuart Groom
-------------------------------
Name: Stuart Groom
Title: Vice President
(SEAL)
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By:/s/ Thomas E. Tabor
---------------------------
Name: Thomas E. Tabor
Title: Assistant Treasurer
<PAGE>
(Back of Note)
9 3/4% Senior Subordinated Notes due 2007
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE THIRD
SENTENCE HEREOF. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"), OR (C) IT IS ACQUIRING
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C)
IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES OF LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED ON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.
<PAGE>
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF AXIOHM TRANSACTION SOLUTIONS, INC.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Axiom Transaction Solutions, Inc., a California corporation
(the "Company"), promises to pay interest on the principal amount of this
Note at 9 3/4% per annum from October 2, 1998 until maturity and shall pay
the Liquidated Damages, if any, payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company will pay
interest and Liquidated Damages, if any, semi-annually in arrears on April 1
and October 1 of each year, or if any such day is not a Business Day, on the
next succeeding Business Day (each an "Interest Payment Date"). Interest on
the Notes will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance; PROVIDED
that if there is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from
such next succeeding Interest Payment Date; PROVIDED, FURTHER, that the first
Interest Payment Date shall be April 1, 1998. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue principal and premium, if any, from time to time on demand at a
rate that is 1% per annum in excess of the interest rate on the Notes then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time
to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages, if any, to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium, if any,
interest and Liquidated Damages, if any, at the office or agency of the
Company maintained for such purpose within or without the City and State of
New York, or, at the option of the Company, payment of interest and
Liquidated Damages may be made by check mailed to the Holders at their
addresses set forth in the register of Holders, and provided that payment by
wire
<PAGE>
transfer of immediately available funds will be required with respect to
principal of premium, interest, Liquidated Damages, if any, on, all Global
Notes and all other Notes the Holders of which shall have provided wire
transfer instructions to the Company or the Paying Agent. Such payment shall
be in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of
October 2, 1997 ("Indenture") between the Company, the Guarantors and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the indenture shall govern and be
controlling. The Notes are general unsecured obligations of the Company.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section, the Company shall not
have the option to redeem the Notes pursuant to Section 4.07 of the Indenture
prior to October 1, 2002. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated
Damages, if any, thereon, to the applicable redemption date, if redeemed
during the twelve-month period beginning on October 1 of the years indicated
below:
YEAR PERCENTAGE
2002 104.875%
2003 103.250%
2004 101.625%
2005 and thereafter 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section, prior to
October 1, 2000, the Company may redeem on any one or more occasions up to 35%
of the original aggregate principal amount of the Notes initially issued at a
redemption price of 109.750% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of any Public Equity Offering of
<PAGE>
common stock of the Company; PROVIDED THAT at least 65% of the aggregate
principal amount of the Notes originally issued under this Indenture remain
outstanding immediately after the occurrence of each such redemption; and
PROVIDED, FURTHER, THAT each such redemption shall occur within 60 days of
the date of the closing of such Public Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) such each Holder's Notes (the "Change
of Control Offer") at a price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any, to
the date of purchase (the "Change of Control Payment"). Within 30 days
following any Change of Control, the Company shall send by first class mail a
notice to each Holder setting forth the procedures governing the Change of
Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within five
days of each date on which the aggregate amount of Excess Proceeds exceeds $5
million, the Company shall commence an offer to all Holders of Notes (as
"Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Indenture. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Company (or such Subsidiary) may use such
deficiency for general corporate purposes. If the aggregate principal amount
of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a pro rata
basis. Holders of Notes that are the subject of an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days
but not more than 60 days before the redemption date to each Holder whose Notes
are to be redeemed at its registered address. Notes in denominations larger
than $1,000 may be redeemed in part but only in whole multiples of $1,000,
unless all of the Notes held by a Holder are to be redeemed. On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar
<PAGE>
and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company need not exchange or register the transfer of any
Note or portion of a Note selected for redemption, except for the unredeemed
portion of any Note being redeemed in part. Also, it need not exchange or
register the transfer of any Notes for a period of 15 days before a selection
of Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as
its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the
consent of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the
Notes in case of a merger or consolidation or sale of assets, to make any
change that would provide any additional rights or benefits to the Holders of
the Notes or that does not adversely affect the legal rights under the
Indenture of any such Holder, to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act or to allow any Guarantor to guarantee the
Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest or Liquidated Damages, if any, on
the Notes; (ii) default in payment when due of principal of or premium, if
any, on the Notes when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise,
(iii) failure by the Company to comply with Section 5.01 of the Indenture,
(iv) failure by the Company to comply with the provisions of Sections 4.07,
4.09, 4.10 or 4.15 of the Indenture which failure remains uncured for 30
days; (v) failure by the Company for 60 days after notice to the Company by
the Trustee or the Holders of at least 25% in principal amount of the Notes
then outstanding to comply with certain other agreements in the Indenture, or
the Notes; (vi) default under certain other agreements relating to
Indebtedness of the Company which default results in the acceleration of such
Indebtedness prior to its express maturity; (vii) certain final judgments for
the payment of money that remain undischarged for a period of 60 days; and
(viii) certain events of bankruptcy or insolvency with respect to the Company
or any of its Significant Subsidiaries. If any Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Notes may declare all the Notes to be due and
payable. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders
may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in
<PAGE>
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default
or Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by
notice to the Trustee may on behalf of the Holders of all of the Notes waive
any existing Default or Event of Default and its consequences under the
Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes. The Company is required to
deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such
Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or
stockholder, of the Company or the Guarantors, as such, shall not have any
liability for any obligations of the Company under the Notes, the Subsidiary
Guarantees or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the Registration Rights Agreement
dated as of October 2, 1997, between the Company and the parties named on the
signature pages thereof (the "Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee
on Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
<PAGE>
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
AXIOHM TRANSACTION SOLUTIONS, INC.
15070 AVENUE OF SCIENCE
SAN DIEGO, CALIFORNIA 92128
ATTENTION: CHIEF FINANCIAL OFFICER
<PAGE>
ASSIGNMENT FORM
TO ASSIGN THIS NOTE, FILL IN THE FORM BELOW: (I) OR (WE) ASSIGN AND
TRANSFER THIS NOTE TO
______________________________________________________________________________
(INSERT ASSIGNEE'S SOC. SEC. OR TAX I.D. NO.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(PRINT OR TYPE ASSIGNEE'S NAME, ADDRESS AND ZIP CODE)
AND IRREVOCABLY APPOINT_______________________________________________________
TO TRANSFER THIS NOTE ON THE BOOKS OF THE COMPANY. THE AGENT MAY SUBSTITUTE
ANOTHER TO ACT FOR HIM.
______________________________________________________________________________
DATE: ______________ YOUR
SIGNATURE:______________________ (SIGN EXACTLY AS YOUR NAME APPEARS ON THE
FACE OF THIS NOTE)
SIGNATURE GUARANTEE.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS NOTE PURCHASED BY THE COMPANY PURSUANT
TO SECTION 4.10 OR 4.15 OF THE INDENTURE, CHECK THE BOX BELOW:
/ / SECTION 4.10 / / SECTION 4.15
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THE NOTE PURCHASED BY THE
COMPANY PURSUANT TO SECTION 4.10 OR SECTION 4.15 OF THE INDENTURE, STATE THE
AMOUNT YOU ELECT TO HAVE PURCHASED: $___________
Date: Your Signature:_______________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:_________
Signature Guarantee.
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(1)
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of increase of this authorized
Amount of decrease in in Global Note signatory
Principal Amount Principal Amount following such of
of of decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ----------------- --------------------- -------------------- ---------------------- -------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(1) This should be included only if the Note issued in global form.
<PAGE>
SUBSIDIARY GUARANTEE
Subject to Section 11.06 of the Indenture, each Guarantor hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and made available for delivery by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes and the Obligations of the Company
under the Notes or under the Indenture, that: (a) the principal of, premium,
if any, interest and Liquidated Damages, if any, on the Notes will be
promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration, redemption or otherwise, and interest
on overdue principal, premium, if any, (to the extent permitted by law)
interest on any interest, if any, and Liquidated Damages, if any, on the
Notes and all other payment Obligations of the Company to the Holders or the
Trustee under the Indenture or under the Notes will be promptly paid in full
and performed, all in accordance with the terms thereof; and (b) in case of
any extension of time of payment or renewal of any Notes or any of such other
payment Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject
to any applicable grace period, whether at stated maturity, by acceleration,
redemption or otherwise. Failing payment when so due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the
Guarantors will be jointly and severally obligated to pay the same
immediately.
The obligations of the Guarantors to the Holders and to the Trustee
pursuant to this Subsidiary Guarantee and the Indenture are expressly set
forth in Article 11 and Article 12 of the Indenture, and reference is hereby
made to such Indenture for the precise terms of this Subsidiary Guarantee.
The terms of Articles 11 and 12 of the Indenture are incorporated herein by
reference. This Subsidiary Guarantee is subject to release as and to the
extent provided in Section 11.04 of the Indenture. The obligations of the
Guarantors to the Holders and to the Trustee pursuant to the Subsidiary
Guarantee and the Indenture are expressly subordinated to the extent set
forth in Article 12 of the Indenture and reference is hereby made to such
Indenture for the precise terms of such subordination.
This is a continuing Guarantee and shall remain in full force and effect
and shall be binding upon each Guarantor and its respective successors and
assigns to the extent set forth in the Indenture until full and final payment
of all of the Company's Obligations under the Notes and the Indenture and
shall inure to the benefit of the successors and assigns of the Trustee and
the Holders and, in the event of any transfer or assignment of rights by any
Holder or the Trustee, the rights and privileges herein conferred upon that
party shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. This is a
guarantee of payment and not a guarantee of collection.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized signatories.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under
the Notes and the Indenture and (ii) the amount, if any, which would not have
(A) rendered such Guarantor "insolvent" (as such term is defined in the
United States Bankruptcy Code and in the Debtor and Creditor Law of the State
of
<PAGE>
New York) or (B) left such Guarantor with unreasonably small capital at the
time its Subsidiary Guarantee of the Notes was entered into; PROVIDED that,
it will be a presumption in any lawsuit or other proceeding in which a
Guarantor is a party that the amount guaranteed pursuant to the Subsidiary
Guarantee is the amount set forth in clause (i) above unless any creditor, or
representative of creditors of such Guarantor, or debtor in possession or
trustee in bankruptcy of such Guarantor, otherwise proves in such a lawsuit
that the aggregate liability of the Guarantor is limited to the amount set
forth in clause (ii) above. The Indenture provides that, in making any
determination as to the solvency or sufficiency of capital of a Guarantor in
accordance with the previous sentence, the right of such Guarantor to
contribution from other Guarantors and any other rights such Guarantor may
have, contractual or otherwise, shall be taken into account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
AXIOHM IPB, INC.
By: /s/ Stuart Groom
-------------------------
Name: Stuart Groom
Title: Vice President
STADIA COLORADO CORP.
By: /s/ Stuart Groom
-------------------------
Name: Stuart Groom
Title: Vice President
COGNITIVE SOLUTIONS, INC.
By: /s/ Stuart Groom
-------------------------
Name: Stuart Groom
Title: Vice President
<PAGE>
CUSIP 054602 AB 3
CINS US 054602 AB 30
9 3/4% Senior Subordinated Notes due 2007
No. 1. $350,000
AXIOHM TRANSACTION SOLUTIONS, INC.
promises to pay to Cede & Co.
or registered assigns,
the principal sum of Three Hundred Fifty Thousand
Dollars on October 1, 2007.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Dated: October 2, 1997
AXIOHM TRANSACTION SOLUTIONS, INC.
By:/s/ Stuart Groom
------------------------------
Name: Stuart Groom
Title: Vice President
(SEAL)
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By:/s/ Thomas E. Tabor
--------------------------------
Name: Thomas E. Tabor
Title: Assistant Treasurer
<PAGE>
(Back of Note)
9 3/4% Senior Subordinated Notes due 2007
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE THIRD
SENTENCE HEREOF. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"), OR (C) IT IS ACQUIRING
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C)
IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES OF LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED ON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.
<PAGE>
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF AXIOHM TRANSACTION SOLUTIONS, INC.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Axiom Transaction Solutions, Inc., a California corporation
(the "Company"), promises to pay interest on the principal amount of this
Note at 9 3/4% per annum from October 2, 1998 until maturity and shall pay
the Liquidated Damages, if any, payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company will pay
interest and Liquidated Damages, if any, semi-annually in arrears on April 1
and October 1 of each year, or if any such day is not a Business Day, on the
next succeeding Business Day (each an "Interest Payment Date"). Interest on
the Notes will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance; PROVIDED
that if there is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from
such next succeeding Interest Payment Date; PROVIDED, FURTHER, that the first
Interest Payment Date shall be April 1, 1998. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue principal and premium, if any, from time to time on demand at a
rate that is 1% per annum in excess of the interest rate on the Notes then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time
to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages, if any, to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium, if any,
interest and Liquidated Damages, if any, at the office or agency of the
Company maintained for such purpose within or without the City and State of
New York, or, at the option of the Company, payment of interest and
Liquidated Damages may be made by check mailed to the Holders at their
addresses set forth in the register of Holders, and provided that payment by
wire
<PAGE>
transfer of immediately available funds will be required with respect to
principal of premium, interest, Liquidated Damages, if any, on, all Global
Notes and all other Notes the Holders of which shall have provided wire
transfer instructions to the Company or the Paying Agent. Such payment shall
be in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of
October 2, 1997 ("Indenture") between the Company, the Guarantors and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the indenture shall govern and be
controlling. The Notes are general unsecured obligations of the Company.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section, the Company shall not
have the option to redeem the Notes pursuant to Section 4.07 of the Indenture
prior to October 1, 2002. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated
Damages, if any, thereon, to the applicable redemption date, if redeemed
during the twelve-month period beginning on October 1 of the years indicated
below:
YEAR PERCENTAGE
2002 104.875%
2003 103.250%
2004 101.625%
2005 and thereafter 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section, prior to
October 1, 2000, the Company may redeem on any one or more occasions up to 35%
of the original aggregate principal amount of the Notes initially issued at a
redemption price of 109.750% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of any Public Equity Offering of
<PAGE>
common stock of the Company; PROVIDED THAT at least 65% of the aggregate
principal amount of the Notes originally issued under this Indenture remain
outstanding immediately after the occurrence of each such redemption; and
PROVIDED, FURTHER, THAT each such redemption shall occur within 60 days of
the date of the closing of such Public Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) such each Holder's Notes (the "Change
of Control Offer") at a price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any, to
the date of purchase (the "Change of Control Payment"). Within 30 days
following any Change of Control, the Company shall send by first class mail a
notice to each Holder setting forth the procedures governing the Change of
Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within five
days of each date on which the aggregate amount of Excess Proceeds exceeds $5
million, the Company shall commence an offer to all Holders of Notes (as
"Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Indenture. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Company (or such Subsidiary) may use such
deficiency for general corporate purposes. If the aggregate principal amount
of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a pro rata
basis. Holders of Notes that are the subject of an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days
but not more than 60 days before the redemption date to each Holder whose Notes
are to be redeemed at its registered address. Notes in denominations larger
than $1,000 may be redeemed in part but only in whole multiples of $1,000,
unless all of the Notes held by a Holder are to be redeemed. On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar
<PAGE>
and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company need not exchange or register the transfer of any
Note or portion of a Note selected for redemption, except for the unredeemed
portion of any Note being redeemed in part. Also, it need not exchange or
register the transfer of any Notes for a period of 15 days before a selection
of Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as
its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the
consent of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the
Notes in case of a merger or consolidation or sale of assets, to make any
change that would provide any additional rights or benefits to the Holders of
the Notes or that does not adversely affect the legal rights under the
Indenture of any such Holder, to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act or to allow any Guarantor to guarantee the
Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest or Liquidated Damages, if any, on
the Notes; (ii) default in payment when due of principal of or premium, if
any, on the Notes when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise,
(iii) failure by the Company to comply with Section 5.01 of the Indenture,
(iv) failure by the Company to comply with the provisions of Sections 4.07,
4.09, 4.10 or 4.15 of the Indenture which failure remains uncured for 30
days; (v) failure by the Company for 60 days after notice to the Company by
the Trustee or the Holders of at least 25% in principal amount of the Notes
then outstanding to comply with certain other agreements in the Indenture, or
the Notes; (vi) default under certain other agreements relating to
Indebtedness of the Company which default results in the acceleration of such
Indebtedness prior to its express maturity; (vii) certain final judgments for
the payment of money that remain undischarged for a period of 60 days; and
(viii) certain events of bankruptcy or insolvency with respect to the Company
or any of its Significant Subsidiaries. If any Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Notes may declare all the Notes to be due and
payable. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders
may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in
<PAGE>
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default
or Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by
notice to the Trustee may on behalf of the Holders of all of the Notes waive
any existing Default or Event of Default and its consequences under the
Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes. The Company is required to
deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such
Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or
stockholder, of the Company or the Guarantors, as such, shall not have any
liability for any obligations of the Company under the Notes, the Subsidiary
Guarantees or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the Registration Rights Agreement
dated as of October 2, 1997, between the Company and the parties named on the
signature pages thereof (the "Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee
on Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
<PAGE>
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
AXIOHM TRANSACTION SOLUTIONS, INC.
15070 AVENUE OF SCIENCE
SAN DIEGO, CALIFORNIA 92128
ATTENTION: CHIEF FINANCIAL OFFICER
<PAGE>
ASSIGNMENT FORM
TO ASSIGN THIS NOTE, FILL IN THE FORM BELOW: (I) OR (WE) ASSIGN AND
TRANSFER THIS NOTE TO
______________________________________________________________________________
(INSERT ASSIGNEE'S SOC. SEC. OR TAX I.D. NO.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(PRINT OR TYPE ASSIGNEE'S NAME, ADDRESS AND ZIP CODE)
AND IRREVOCABLY APPOINT_______________________________________________________
TO TRANSFER THIS NOTE ON THE BOOKS OF THE COMPANY. THE AGENT MAY SUBSTITUTE
ANOTHER TO ACT FOR HIM.
______________________________________________________________________________
DATE: ______________ YOUR
SIGNATURE:______________________ (SIGN EXACTLY AS YOUR NAME APPEARS ON THE
FACE OF THIS NOTE)
SIGNATURE GUARANTEE.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS NOTE PURCHASED BY THE COMPANY PURSUANT
TO SECTION 4.10 OR 4.15 OF THE INDENTURE, CHECK THE BOX BELOW:
/ / SECTION 4.10 / / SECTION 4.15
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THE NOTE PURCHASED BY THE
COMPANY PURSUANT TO SECTION 4.10 OR SECTION 4.15 OF THE INDENTURE, STATE THE
AMOUNT YOU ELECT TO HAVE PURCHASED: $___________
Date: Your Signature:_______________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:_________
Signature Guarantee.
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(1)
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of increase of this authorized
Amount of decrease in in Global Note signatory
Principal Amount Principal Amount following such of
of of decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ----------------- --------------------- -------------------- ---------------------- -------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(1) This should be included only if the Note issued in global form.
<PAGE>
SUBSIDIARY GUARANTEE
Subject to Section 11.06 of the Indenture, each Guarantor hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and made available for delivery by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes and the Obligations of the Company
under the Notes or under the Indenture, that: (a) the principal of, premium,
if any, interest and Liquidated Damages, if any, on the Notes will be
promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration, redemption or otherwise, and interest
on overdue principal, premium, if any, (to the extent permitted by law)
interest on any interest, if any, and Liquidated Damages, if any, on the
Notes and all other payment Obligations of the Company to the Holders or the
Trustee under the Indenture or under the Notes will be promptly paid in full
and performed, all in accordance with the terms thereof; and (b) in case of
any extension of time of payment or renewal of any Notes or any of such other
payment Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject
to any applicable grace period, whether at stated maturity, by acceleration,
redemption or otherwise. Failing payment when so due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the
Guarantors will be jointly and severally obligated to pay the same
immediately.
The obligations of the Guarantors to the Holders and to the Trustee
pursuant to this Subsidiary Guarantee and the Indenture are expressly set
forth in Article 11 and Article 12 of the Indenture, and reference is hereby
made to such Indenture for the precise terms of this Subsidiary Guarantee.
The terms of Articles 11 and 12 of the Indenture are incorporated herein by
reference. This Subsidiary Guarantee is subject to release as and to the
extent provided in Section 11.04 of the Indenture. The obligations of the
Guarantors to the Holders and to the Trustee pursuant to the Subsidiary
Guarantee and the Indenture are expressly subordinated to the extent set
forth in Article 12 of the Indenture and reference is hereby made to such
Indenture for the precise terms of such subordination.
This is a continuing Guarantee and shall remain in full force and effect
and shall be binding upon each Guarantor and its respective successors and
assigns to the extent set forth in the Indenture until full and final payment
of all of the Company's Obligations under the Notes and the Indenture and
shall inure to the benefit of the successors and assigns of the Trustee and
the Holders and, in the event of any transfer or assignment of rights by any
Holder or the Trustee, the rights and privileges herein conferred upon that
party shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. This is a
guarantee of payment and not a guarantee of collection.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized signatories.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under
the Notes and the Indenture and (ii) the amount, if any, which would not have
(A) rendered such Guarantor "insolvent" (as such term is defined in the
United States Bankruptcy Code and in the Debtor and Creditor Law of the State
of
<PAGE>
New York) or (B) left such Guarantor with unreasonably small capital at the
time its Subsidiary Guarantee of the Notes was entered into; PROVIDED that,
it will be a presumption in any lawsuit or other proceeding in which a
Guarantor is a party that the amount guaranteed pursuant to the Subsidiary
Guarantee is the amount set forth in clause (i) above unless any creditor, or
representative of creditors of such Guarantor, or debtor in possession or
trustee in bankruptcy of such Guarantor, otherwise proves in such a lawsuit
that the aggregate liability of the Guarantor is limited to the amount set
forth in clause (ii) above. The Indenture provides that, in making any
determination as to the solvency or sufficiency of capital of a Guarantor in
accordance with the previous sentence, the right of such Guarantor to
contribution from other Guarantors and any other rights such Guarantor may
have, contractual or otherwise, shall be taken into account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
AXIOHM IPB, INC.
By: /s/ Stuart Groom
-------------------------
Name: Stuart Groom
Title: Vice President
STADIA COLORADO CORP.
By: /s/ Stuart Groom
-------------------------
Name: Stuart Groom
Title: Vice President
COGNITIVE SOLUTIONS, INC.
By: /s/ Stuart Groom
-------------------------
Name: Stuart Groom
Title: Vice President
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of October 2, 1997
by and among
AXIOHM TRANSACTION SOLUTIONS, INC.
AXIOHM S.A.
AXIOHM IPB, INC.
DARDEL TECHNOLOGIES S.A.
STADIA COLORADO CORP.
COGNITIVE SOLUTIONS, INC.
and
LEHMAN BROTHERS INC.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of October 2, 1997 by and among Axiohm Transaction Solutions,
Inc., a California corporation (the "COMPANY"), Axiohm S.A., a French
corporation ("AXIOHM S.A."), Dardel Technologies S.A., a French corporation
("DARDEL"), Axiohm IPB, Inc., a Delaware corporation ("IPB"), Stadia Colorado
Corp., a California corporation ("STADIA"), Cognitive Solutions, Inc., a
California corporation ("COGNITIVE" and together with Axiohm S.A., Dardel, IPB
and Stadia the "GUARANTORS") and Lehman Brothers (the "INITIAL PURCHASER"), who
has agreed to purchase the Company's 9 3/4% Senior Subordinated Notes due 2007
(the "SENIOR SUBORDINATED NOTES") pursuant to and subject to the terms and
conditions of a certain purchase agreement, dated September 25, 1997 (the
"PURCHASE AGREEMENT"), by and among the Company, the Guarantors and the Initial
Purchaser. In order to induce the Initial Purchaser to purchase the Senior
Subordinated Notes, the Company and the Guarantors have agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchaser set
forth in Section 1 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall
have the following meanings:
ACT: The Securities Act of 1933, as amended and the rules and
regulations promulgated thereunder.
BROKER-DEALER: Any broker or dealer registered under the Exchange
Act.
BROKER-DEALER TRANSFER RESTRICTED SECURITIES: New Senior
Subordinated Notes that are acquired by a Broker-Dealer in the Exchange Offer in
exchange for Senior Subordinated Notes that such Broker-Dealer acquired for its
own account as a result of market-making activities or other trading activities
(other than Senior Subordinated Notes acquired directly from the Company or any
of its affiliates).
BUSINESS DAY: Any day except a Saturday, Sunday or other day in
the City of New York, or in the city of the corporate trust office of the
Trustee, on which banks are authorized to close.
CLOSING DATE: The date of this Agreement.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Senior Subordinated Notes to be issued in the Exchange
Offer, (ii) the maintenance of such Exchange Offer Registration Statement
continuously effective and the keeping of the Exchange Offer open for a period
not less than the minimum period required pursuant to Section 3(b) hereof, and
(iii) the delivery by the Company to the Registrar under the Indenture of New
Senior Subordinated Notes in the same aggregate principal amount as the
aggregate principal amount of Senior Subordinated Notes that were tendered by
Holders thereof pursuant to the Exchange Offer.
DAMAGES PAYMENT DATE: With respect to the transfer Restricted
Securities, each Interest Payment Date.
EFFECTIVENESS TARGET DATE: As defined in Section 5.
1
<PAGE>
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The registration by the Company under the Act of
the New Senior Subordinated Notes pursuant to an Exchange Offer Registration
Statement pursuant to which the Company offers the Holders of all outstanding
Transfer Restricted Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities held by such Holders for New Senior Subordinated
Notes in an aggregate principal amount equal to the aggregate principal amount
of the Transfer Restricted Securities tendered in such exchange offer by such
Holders.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchaser
proposes to sell the Senior Subordinated Notes to certain "qualified
institutional buyers," as such term is defined in Rule 144A under the Act, and
to certain institutional "accredited investors," as such term is defined in Rule
501(a)(1), (2), (3) and (7) of Regulation D under the Act ("ACCREDITED
INSTITUTIONS").
GLOBAL NOTE HOLDER: As defined in the Indenture.
HOLDERS: As defined in Section 2(b) hereof.
INDEMNIFIED HOLDER: As defined in Section 8(a) hereof.
INDENTURE: The Indenture, dated as of October 2, 1997, among the
Company, the Guarantors and The Bank of New York, as trustee (the "TRUSTEE"),
pursuant to which the Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
INITIAL PURCHASER: As defined in the preamble hereto.
INTEREST PAYMENT DATE: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
NEW SENIOR SUBORDINATED NOTES: The Company's 9 3/4% New Senior
Subordinated Notes due 2007 to be issued pursuant to the Indenture (i) in the
Exchange Offer or (ii) upon the request of any holder of Senior Subordinated
Notes covered by a Shelf Registration Statement, in exchange for such Senior
Subordinated Notes.
NOTES: The Senior Subordinated Notes and the New Senior
Subordinated Notes.
OFFERING MEMORANDUM: As defined in the Purchase Agreement.
PERSON: An individual, partnership, corporation, joint venture,
association, joint-stock company, trust or unincorporated organization, or a
government or agency or political subdivision thereof or any other entity.
PROSPECTUS: The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
2
<PAGE>
RECORD HOLDER: With respect to any Damages Payment Date relating
to Notes, each Person who is a Holder of Notes on the record date with respect
to the Interest Payment Date on which such Damages Payment Date shall occur.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company
and the Guarantors relating to (a) an offering of New Senior Subordinated Notes
pursuant to an Exchange Offer or (b) the registration for resale of Transfer
Restricted Securities pursuant to the Shelf Registration Statement, in each case
(i) which is filed pursuant to the provisions of this Agreement, and (ii)
including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
RESTRICTED BROKER-DEALER: Any Broker-Dealer which holds Broker-
Dealer Transfer Restricted Securities.
SHELF FILING DEADLINE: As defined in Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939, as amended (15 U.S.C.
Section 77aaa-77bbbb) as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Senior Subordinated Note,
until the earliest to occur of (a) the date on which such Senior Subordinated
Note is exchanged in the Exchange Offer and entitled to be resold to the public
by the Holder thereof without complying with the prospectus delivery
requirements of the Act, (b) the date on which such Senior Subordinated Note has
been effectively registered under the Act and disposed of in accordance with a
Shelf Registration Statement, (c) the date on which such Senior Subordinated
Note is distributed to the public pursuant to Rule 144 under the Act and (d) on
the date on which such Senior Subordinated Note is distributed by a Broker-
Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer
Registration Statement (including delivery of the Prospectus contained therein).
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public. The Company shall not be required to engage in more than one
Underwritten Registration or Underwritten Offering for the benefit of the
Holders, if any such Underwritten Registration or Underwriting Offering is
requested.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) TRANSFER RESTRICTED SECURITIES. The securities entitled to
the benefits of this Agreement are the Transfer Restricted Securities.
(b) HOLDERS OF TRANSFER RESTRICTED SECURITIES. A Person is
deemed to be a holder of Transfer Restricted Securities (each, a "HOLDER")
whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
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(a) Unless the Exchange Offer shall not be permissible under
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with), the Company and the Guarantors shall (i)
cause to be filed with the Commission as soon as practicable after the Closing
Date, but in no event later than 60 days after the Closing Date, the Exchange
Offer Registration Statement under the Act relating to the New Senior
Subordinated Notes and the Exchange Offer, (ii) use their respective best
efforts to cause such Exchange Offer Registration Statement to become effective
at the earliest possible time, but in no event later than 120 days after the
Closing Date, (iii) in connection with the foregoing, (A) file all pre-effective
amendments to such Exchange Offer Registration Statement as may be necessary in
order to cause such Exchange Offer Registration Statement to become effective,
(B) if applicable, file a post-effective amendment to such Exchange Offer
Registration Statement pursuant to Rule 430A under the Act and (C) cause all
necessary filings, if any, in connection with the registration and qualification
of the New Senior Subordinated Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the New Senior Subordinated Notes to
be offered in exchange for the Transfer Restricted Securities and to permit
sales of Broker-Dealer Transfer Restricted Securities by Broker-Dealers as
contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall cause the Exchange Offer
Registration Statement to be effective continuously and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
PROVIDED, HOWEVER, that in no event shall such period be less than 20 Business
Days. The Company and the Guarantors shall cause the Exchange Offer to comply
with all applicable federal and state securities laws. No securities other than
the Notes shall be included in the Exchange Offer Registration Statement. The
Company and the Guarantors shall use their respective best efforts to cause the
Exchange Offer to be Consummated on the earliest practicable date after the
Exchange Offer Registration Statement has become effective, but in no event
later than 30 Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in
the Prospectus contained in the Exchange Offer Registration Statement and
indicate that any Restricted Broker-Dealer who holds Senior Subordinated Notes
that are Transfer Restricted Securities and that were acquired for the account
of such Restricted Broker-Dealer as a result of market-making activities or
other trading activities (other than Transfer Restricted Securities acquired
directly from the Company), may exchange such Senior Subordinated Notes pursuant
to the Exchange Offer; however, such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of the New Senior Subordinated Notes received by such Broker-Dealer in the
Exchange Offer, which prospectus delivery requirement may be satisfied by the
delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer
Registration Statement. Such "Plan of Distribution" section shall also contain
all other information with respect to such resales of Broker-Dealer Transfer
Restricted Securities that the Commission may require in order to permit such
sales pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer
except to the extent required by the Commission as a result of a change in
policy after the date of this Agreement.
The Company and the Guarantors shall use their respective best
efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented and amended as required by the provisions of Section
6(c) below to the extent necessary to ensure that it is available for resales of
Broker-Dealer Transfer Restricted Securities acquired by Restricted Broker-
Dealers, and to ensure that it conforms with the requirements of this Agreement,
the Act and the policies, rules and regulations of the Commission
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as announced from time to time, for a period of one year from the date on
which the Exchange Offer Registration Statement is declared effective.
The Company and the Guarantors shall provide sufficient copies of
the latest version of such Prospectus to such Restricted Broker-Dealers promptly
upon request at any time during such one-year period in order to facilitate such
sales.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Company is not required to
file an Exchange Offer Registration Statement or to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or
Commission policy (after the procedures set forth in Section 6(a) below have
been complied with) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Company within 20 Business Days of the Consummation of the
Exchange Offer that (A) such Holder is prohibited by applicable law or
Commission policy from participating in the Exchange Offer, or (B) such Holder
may not resell the New Senior Subordinated Notes acquired by it in the Exchange
Offer to the public without delivering a prospectus and that the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder, or (C) such Holder is a Broker-Dealer
and holds Senior Subordinated Notes acquired directly from the Company or one of
its affiliates, then the Company and the Guarantors shall:
(x) cause to be filed a shelf registration statement
pursuant to Rule 415 under the Act, which may be an
amendment to the Exchange Offer Registration Statement (in
either event, the "SHELF REGISTRATION STATEMENT") on or
prior to the earliest to occur of (1) the 30th day after the
date on which the Company receives notice from the
Commission or determines that it is not required to file the
Exchange Offer Registration Statement pursuant to clause (i)
above, (2) the 30th day after the date on which the Company
receives notice from a Holder of Transfer Restricted
Securities as contemplated by clause (ii) above, and (3) the
60th day after the Closing Date (such earliest date being
the "SHELF FILING DEADLINE"), which Shelf Registration
Statement shall provide for resales of all Transfer
Restricted Securities the Holders of which shall have
provided the information required pursuant to Section 4(b)
hereof; and
(y) use their respective best efforts to cause such
Shelf Registration Statement to be declared effective by the
Commission on or before the 90th day after the Shelf Filing
Deadline.
The Company and the Guarantors shall use their respective best efforts to keep
such Shelf Registration Statement continuously effective, supplemented and
amended as required by and subject to the provisions of Sections 6(b) and (c)
hereof to the extent necessary to ensure that it is available for sales of
Transfer Restricted Securities by the Holders thereof entitled to the benefit of
this Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(c)(i)) following the date on which such Shelf Registration
Statement first becomes effective under the Act or such shorter period ending
when all of the Transfer Restricted Securities available for sale thereunder
have been sold pursuant thereto.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION
WITH THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
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furnishes to the Company in writing, within 20 Business Days after receipt of a
request therefor, such information as the Company may reasonably request for use
in connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this
Agreement is not filed with the Commission on or prior to the date specified for
such filing in this Agreement, (ii) any of such Registration Statements has not
been declared effective by the Commission on or prior to the date specified for
such effectiveness in this Agreement (the "EFFECTIVENESS TARGET DATE"), (iii)
the Exchange Offer has not been Consummated within 30 Business Days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within 30 days by a
post-effective amendment to such Registration Statement, the effectiveness of
another Registration Statement or the use of the Prospectus (as amended or
supplemented) is again permitted that cures such failure (each such event
referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), the Company
hereby agrees to pay Liquidated Damages to each Holder of Transfer Restricted
Securities with respect to the first 90-day period immediately following the
occurrence of such Registration Default, in an amount equal to $.05 per week per
$1,000 principal amount of Transfer Restricted Securities held by such Holder
for each week or portion thereof that the Registration Default continues. The
amount of the Liquidated Damages shall increase by an additional $.05 per week
per $1,000 in principal amount of Transfer Restricted Securities with respect to
each subsequent 90-day period until all Registration Defaults have been cured,
up to a maximum amount of Liquidated Damages of $.35 per week per $1,000
principal amount of Transfer Restricted Securities. All accrued Liquidated
Damages shall be paid to the Global Note Holder by the Company by wire transfer
of immediately available funds or by federal funds check and to Holders of
Certificated Securities by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified on each Damages Payment Date, as provided in the Indenture.
Notwithstanding anything to the contrary set forth herein, (1) upon filing of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (i) above, (2) upon the effectiveness of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (ii) above, (3) upon Consummation of the
Exchange Offer, in the case of (iii) above, or (4) upon the filing of a post-
effective amendment to the Registration Statement or an additional Registration
Statement that causes the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement) to again be declared effective or
the Prospectus to be made usable in the case of (iv) above, the Liquidated
Damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
security shall have been satisfied in full.
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SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with
the Exchange Offer, the Company and the Guarantors shall comply with all
applicable provisions of Section 6(c) below, shall use their respective best
efforts to effect such exchange to permit the sale of Broker-Dealer Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (which shall be in a manner consistent with the
terms of this Agreement), and shall comply with all of the following provisions:
(i) If, following the date hereof and prior to the Consummation
of the Exchange Offer, there has been published a change in Commission
policy with respect to exchange offers such as the Exchange Offer,
such that in the reasonable opinion of counsel to the Company there is
a substantial question as to whether the Exchange Offer is permitted
by applicable law or Commission policy, the Company and the Guarantors
hereby agree to seek a no-action letter or other favorable decision
from the Commission allowing the Company and the Guarantors to
Consummate an Exchange Offer for such Senior Subordinated Notes. The
Company and the Guarantors hereby agree to pursue the issuance of such
a decision to the Commission staff level but shall not be required to
take commercially unreasonable action to effect a change of Commission
policy. The Company and the Guarantors hereby agree, however, to take
all such other actions as are reasonably requested by the Commission
or otherwise required in connection with the issuance of such
decision, including without limitation, to (A) participate in
telephonic conferences with the Commission, (B) deliver to the
Commission staff an analysis prepared by counsel to the Company
setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C)
diligently pursue a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the Consummation thereof, a written representation to the
Company (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the
effect that (A) it is not an affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement
or understanding with any person to participate in, a distribution of
the New Senior Subordinated Notes to be issued in the Exchange Offer
and (C) it is acquiring the New Senior Subordinated Notes in its
ordinary course of business. Each Holder hereby acknowledges and
agrees that any Broker-Dealer and any such Holder using the Exchange
Offer to participate in a distribution of the securities to be
acquired in the Exchange Offer (1) could not under Commission policy
as in effect on the date of this Agreement rely on the position of the
Commission enunciated in MORGAN STANLEY AND CO., INC. (available June
5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION (available May 13,
1988), as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993, and similar no-action letters (including
any no-action letter obtained pursuant to clause (i) above), and (2)
must comply with the registration and prospectus delivery requirements
of the Act in connection with a secondary resale transaction and that
such a secondary resale transaction should be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K if the resales are of New Senior Subordinated Notes obtained by
such Holder in exchange for Senior Subordinated Notes acquired by such
Holder directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the
Guarantors are registering the Exchange Offer in reliance on the
position of the Commission
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enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May 13,
1988), MORGAN STANLEY AND CO., INC. (available June 5, 1991) and,
if applicable, any no-action letter obtained pursuant to clause (i)
above, (B) including a representation that neither the Company nor
any Guarantor has entered into any arrangement or understanding
with any Person to distribute the New Senior Subordinated Notes to
be received in the Exchange Offer and that, to the best of the
Company's and the Guarantors' information and belief, each Holder
participating in the Exchange Offer is acquiring the New Senior
Subordinated Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the New Senior Subordinated Notes received in the
Exchange Offer and (C) any other undertaking or representation
required by the Commission as set forth in any no-action letter
obtained pursuant to clause (i) above.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their respective best efforts to
effect such registration to permit the sale of the Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof, and pursuant thereto the Company and the Guarantors will
as expeditiously as possible, and in any event within the time periods and
otherwise in accordance with the provisions hereof, prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof.
(c) GENERAL PROVISIONS. In connection with any Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Exchange Offer Registration Statement and the related Prospectus required to
permit resales of Transfer Restricted Securities by Restricted Broker-Dealers),
the Company and the Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this
Agreement, as applicable; upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained
therein (A) to contain a material misstatement or omission or (B) not
to be effective and usable for resale of Transfer Restricted
Securities during the period required by this Agreement, the Company
and the Guarantors shall file promptly an appropriate amendment to
such Registration Statement, (1) in the case of clause (A), correcting
any such misstatement or omission, and (2) in the case of either
clause (A) or (B), use their respective best efforts to cause such
amendment to be declared effective and such Registration Statement and
the related Prospectus to become usable for their intended purpose(s)
as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as applicable,
or such shorter period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been sold;
cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Act, and to comply fully with the applicable provisions of
Rules 424, 430A and 462, as applicable under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
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(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or post-
effective amendment thereto has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission
for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the
Act or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or
sale in any jurisdiction, or the initiation of any proceeding for any
of the preceding purposes, (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact
made in the Registration Statement, the Prospectus, any amendment or
supplement thereto, or any document incorporated by reference therein
untrue, or that requires the making of any additions to or changes in
the Registration Statement or the Prospectus in order to make the
statements therein not misleading. If at any time the Commission
shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification
or exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(iv) upon written request, furnish to the Initial Purchaser,
and, upon written request, to each of the selling Holders and each of
the underwriter(s) in connection with such sale, if any, before filing
with the Commission, copies of any Registration Statement or any
Prospectus included therein or any amendments or supplements to any
such Registration Statement or Prospectus, which documents will be
subject to the review of such Holders and underwriter(s) in connection
with such sale, if any, for a period of at least five Business Days,
and the Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus to which a selling Holder of Transfer
Restricted Securities covered by such Registration Statement or the
underwriter(s) in connection with such sale, if any, shall reasonably
object within five Business Days after the receipt thereof. A selling
Holder or underwriter in connection with such sale, if any, shall be
deemed to have reasonably objected to such filing (A) if such
Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains a material misstatement
or omission or fails to comply with the applicable requirements of the
Act or (B) that any of the information furnished to the Company by
such selling Holder or underwriter in connection with such sale, if
any, and included in such Registration statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed is
incorrect in any respect;
(v) upon written request, promptly upon filing of any document
that is to be incorporated by reference into a Registration Statement
or Prospectus, provide copies of such document to the selling Holders
and to the underwriter(s) in connection with such sale, if any, make
the Company's and the Guarantors' representatives available for
discussion of such document and other customary due diligence matters,
and include such information in such document prior to the filing
thereof as such selling Holders or underwriter(s), if any, reasonably
may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or
accountant retained by such selling Holders or any of the
underwriter(s), all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's and
the Guarantors' officers, directors and employees to supply all
information reasonably requested by
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any such Holder, underwriter, attorney or accountant in connection
with such Registration Statement or any post-effective amendment
thereto subsequent to the filing thereof and prior to its
effectiveness;
(vii) if requested by any selling Holders or the underwriter(s)
in connection with such sale, if any, promptly incorporate in any
Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such
selling Holders and underwriter(s), if any, may reasonably request to
have included therein, including, without limitation, information
relating to the "Plan of Distribution" of the Transfer Restricted
Securities, information with respect to the principal amount of
Transfer Restricted Securities being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the offering
of the Transfer Restricted Securities to be sold in such offering; and
make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Company is
notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate
principal amount of Notes covered thereby or the underwriter(s) in
connection with such sale, if any;
(ix) furnish to each selling Holder and each of the
underwriter(s) in connection with such sale, if any, without charge,
at least one copy of the Registration Statement, as first filed with
the Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment
or supplement thereto as such Persons reasonably may request; the
Company and the Guarantors hereby consent to the use of the Prospectus
and any amendment or supplement thereto by each of the selling Holders
and each of the underwriter(s), if any, in connection with the
offering and the sale of the Transfer Restricted Securities covered by
the Prospectus or any amendment or supplement thereto;
(xi) enter into such agreements (including an underwriting
agreement), and make such representations and warranties, and take all
such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities
pursuant to any Registration Statement contemplated by this Agreement,
all to such extent as may be requested by the Initial Purchaser or by
any Holder of Transfer Restricted Securities or underwriter in
connection with any sale or resale pursuant to any Registration
Statement contemplated by this Agreement; and whether or not an
underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, the Company and the
Guarantors shall:
(A) furnish to each Initial Purchaser, each selling Holder and
each underwriter, if any, in such substance and scope as they may
request and as are customarily made by issuers to underwriters in
primary underwritten offerings, upon the date of the Consummation
of the Exchange Offer and, if applicable, the effectiveness of the
Shelf Registration Statement:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed on behalf of
the Company and each of the Guarantors by (y) the Chief
Executive Office, President or any Vice President and (z) a
principal financial or accounting officer of the Company and
each of the Guarantors, confirming, as of the date thereof, the
matters set forth in paragraphs (b),
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(c), (d) and (e) of Section 7 of the Purchase Agreement and such
other matters as such parties may reasonably request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel or
counsels for the Company and the Guarantors, covering the
matters set forth in paragraph (g) of Section 8 of the Purchase
Agreement and such other matter as such parties may reasonably
request, and in any event including a statement to the effect
that such counsel has participated in conferences with officers
and other representatives of the Company and the Guarantors,
representatives of the independent public accountants for the
Company and the Guarantors, the Initial Purchaser's
representatives and the Initial Purchaser's counsel in
connection with the preparation of such Registration Statement
and the related Prospectus and have considered the matters
required to be stated therein and the statements contained
therein, although such counsel has not independently verified
the accuracy, completeness or fairness of such statements; and
that such counsel advises that, on the basis of the foregoing
(relying as to materiality to a large extent upon facts provided
to such counsel by officers and other representatives of the
Company and the Guarantors and without independent check or
verification), no facts came to such counsel's attention that
caused such counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective, and, in the
case of the Exchange Offer Registration Statement, as of the
date of Consummation, contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the
opinion dated the date of Consummation of the Exchange Offer, as
of the date of Consummation, contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may state further
that such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness
of the financial statements, notes and schedules and other
financial data included in any Registration Statement
contemplated by this Agreement or the related Prospectus; and
(3) a customary comfort letter, dated as of the date of
Consummation of the Exchange Offer or the date of effectiveness
of the Shelf Registration Statement, as the case may be, from
the Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters by underwriters in connection with Underwritten
Offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 8(o) and (p) of the
Purchase Agreement, without exception;
(B) set forth in full or incorporated by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the
Company and the Guarantors pursuant to this clause (xi), if any.
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The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and, if
at any time the representations and warranties of the Company and the
Guarantors contemplated in clause (A)(1) above cease to be true and
correct, the Company and the Guarantors shall so advise the Initial
Purchaser and the underwriter(s), if any, each selling Holder and each
Restricted Broker-Dealer promptly and, if requested by such Persons,
shall confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if
any, and their respective counsel in connection with the registration
and qualification of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions as the selling
Holders or underwriter(s), if any, may request and do any and all
other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by
the applicable Registration Statement; PROVIDED, HOWEVER, that neither
the Company nor any Guarantor shall be required to register or qualify
as a foreign corporation where it is not now so qualified or to take
any action that would subject it to the service of process in suits or
to taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
(xiii) shall issue, upon the request of any Holder of Senior
Subordinated Notes covered by any Shelf Registration Statement
contemplated by this Agreement, New Senior Subordinated Notes, having
an aggregate principal amount equal to the aggregate principal amount
of the Senior Subordinated Notes surrendered to the Company by such
Holder in exchange therefor or being sold by such Holder; such New
Senior Subordinated Notes to be registered in the name of such Holder
or in the name of the purchaser(s) of such Notes, as the case may be;
in return, the Senior Subordinated Notes held by such Holder shall be
surrendered to the Company for cancellation;
(xiv) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities
to be sold and not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders or the underwriter(s), if any,
may request at least two Business Days prior to any sale of Transfer
Restricted Securities made by such underwriter(s);
(xv) use their respective best efforts to cause the disposition
of the Transfer Restricted Securities covered by the Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriter(s), if any, to consummate the
disposition of such Transfer Restricted Securities, subject to the
proviso contained in clause (xii) above;
(xvi) subject to Section 6(c)(i), if any fact or event
contemplated by clause 6(c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration
Statement covering such Transfer Restricted Securities and provide
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<PAGE>
the Trustee under the Indenture with printed certificates for the
Transfer Restricted Securities which are in a form eligible for
deposit with the Depositary Trust Company;
(xviii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD, and use their respective best
efforts to cause such Registration Statement to become effective and
approved by such governmental agencies or authorities as may be
necessary to enable the Holders selling Transfer Restricted Securities
to consummate the disposition of such Transfer Restricted Securities;
(xix) otherwise use their respective best efforts to comply
with all applicable rules and regulations of the Commission, and make
generally available to its security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) for the twelve-month period (A) commencing
at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm or best efforts
Underwritten Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration
Statement;
(xx) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement, and, in connection therewith, cooperate
with the Trustee and the Holders of Notes to effect such changes to
the Indenture as may be required for such Indenture to be so qualified
in accordance with the terms of the TIA; and execute and use their
respective best efforts to cause the Trustee to execute, all documents
that may be required to effect such changes and all other forms and
documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner;
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on
which similar securities issued by the Company are then listed if
requested by the Holders of a majority in aggregate principal amount
of Senior Subordinated Notes or the managing underwriter(s), if any;
and
(xxii) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of
Section 13 and Section 15(d) of the Exchange Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by
acquisition of a Transfer Restricted Security that, upon receipt of the notice
referred to in Section 6(c)(i) or any notice from the Company of the existence
of any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder
will forthwith discontinue disposition of Transfer Restricted Securities
pursuant to the applicable Registration Statement until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xvi) hereof, or until it is advised in writing (the "ADVICE") by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings that are incorporated by reference in
the Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities that was current at the time of receipt of such notice.
In the event the Company shall give any such notice, the time period regarding
the effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to Section
6(c)(i) or Section 6(c)(iii)(D) hereof to and including the date when each
selling Holder
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<PAGE>
covered by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof
or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors'
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including,
without limitation: (i) all registration and filing fees and expenses (including
filings made by any Initial Purchaser or Holder with the NASD (and, if
applicable, the fees and expenses of any "qualified independent underwriter")
and its counsel that may be required by the rules and regulations of the NASD);
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws; (iii) all expenses of printing (including printing
certificates for the New Senior Subordinated Notes to be issued in the Exchange
Offer and printing of Prospectuses); (iv) all fees and disbursements of counsel
for the Company and the Guarantors and, subject to Section 7(b) below, the
Holders of Transfer Restricted Securities; (v) all messenger and delivery
services and telephone expenses of the Company and the Guarantors; (vi) all
application and filing fees in connection with listing Notes on a national
securities exchange or automated quotation system pursuant to the requirements
hereof; and (vii) all fees and disbursements of independent certified public
accountants of the Company and the Guarantors (including the expenses of any
special audit and comfort letters required by or incident to such performance).
The Company and the Guarantors will, in any event, bear their
respective internal expenses (including, without limitation, all salaries and
expenses of any of their respective officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any Person, including special experts, retained by the Company or the
Guarantors.
(b) In connection with any Registration Statement required by
this Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchaser and the Holders of Transfer Restricted
Securities being tendered in the Exchange Offer and/or resold pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Latham & Watkins or such other counsel as may be chosen by the Holders of a
majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company shall indemnify and hold harmless each Holder,
its officers and employees and each person, if any, who controls any Initial
Purchaser within the meaning of the Securities Act (each such Person, an
"Indemnified Holder"), from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases and sales
of Notes), to which that Holder, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Registration Statement, any Preliminary Prospectus or the Prospectus or in
any amendment or supplement thereto or (B) in any blue sky application or other
document prepared or executed by the Company (or based upon any written
information furnished by the Company) specifically for the purpose of qualifying
any or all of the Notes under the securities laws of any state or
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<PAGE>
other jurisdiction (any such application, document or information being
hereinafter called a "BLUE SKY APPLICATION") or (ii) the omission or alleged
omission to state in any Registration Statement, any Preliminary Prospectus
or the Prospectus, or in any amendment or supplement thereto, or in any Blue
Sky Application any material fact required to be stated therein or necessary
to make the statements therein not misleading, and shall reimburse each
Holder and each such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by that Holder,
officer, employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred; PROVIDED, HOWEVER, that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged omission
made in any Registration Statement, any Preliminary Prospectus or the
Prospectus, or in any such amendment or supplement, or in any Blue Sky
Application, in reliance upon and in conformity with written information
concerning such Holder furnished to the Company by or on behalf of any Holder
specifically for inclusion therein PROVIDED FURTHER, that the Company shall
not be liable in any such case if a subsequent purchaser asserts that its
losses, claims, damages, liabilities or actions was based upon any untrue
statement or alleged untrue statement of material fact or omission or alleged
omission to state therein a material fact in the Preliminary Prospectus, if a
copy of the Registration Statement in which such untrue statement or alleged
untrue statement or omission or alleged omission was corrected had not been
sent or given to such subsequent purchaser by the Holder PROVIDED, that the
Company had delivered to the Holder such Registration Statement in requisite
quantity and a timely basis to permit such delivery or sending. The
foregoing indemnity agreement is in addition to any liability which the
Company may otherwise have to any Holder or to any officer, employee or
controlling person of that Holder.
(b) Each Holder, severally and not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of its directors,
and each person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company or any such
director, officer or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Registration Statement, any
Preliminary Prospectus or the Prospectus or in any amendment or supplement
thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in any Registration Statement, any Preliminary Prospectus or
the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent that
(i) the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
concerning such Holder furnished to the Company by or on behalf of that Holder
specifically for inclusion therein or (ii) such loss, claim, damage, liability
or action arises out of or is based upon any untrue statement or alleged untrue
statement of material fact or omission or alleged omission to state therein a
material fact in the Preliminary Prospectus, if a copy of the Registration
Statement in which such untrue statement or alleged untrue statement or omission
or alleged omission was corrected had not been sent or given to such subsequent
purchaser by the Holder PROVIDED, that the Company had delivered to the Holder
such Registration Statement in requisite quantity and a timely basis to permit
such delivery or sending, and shall reimburse the Company and any such director,
officer or controlling person for any legal or other expenses reasonably
incurred by the Company or any such director, officer or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred.
The foregoing indemnity agreement is in addition to any liability which any
Holder may otherwise have to the Company or any such director, officer, employee
or controlling person.
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<PAGE>
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, PROVIDED FURTHER, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; PROVIDED, HOWEVER, any
indemnified party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Lehman Brothers
Inc., in the case of the parties indemnified pursuant to Section 8(a), and by
the Company, in the case of parties indemnified pursuant to Section 8(b). No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall
for any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company, on the
16
<PAGE>
one hand, and the Holders, on the other, from the offering of the Notes or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company, on the one hand, and the Holders, on the other, with respect
to the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on
the one hand, and the Holders, on the other, with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds from
the offering of the Notes purchased under this Agreement (before deducting
expenses) received by the Company, on the one hand, and the total proceeds
received by such Holder upon its sale of Transfer Restricted Securities which
otherwise would give rise to the indemnification obligation. The relative
fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Holders, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and equitable if
contributions pursuant to this Section 8 were to be determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 8
shall be deemed to include, for purposes of this Section 8(d), any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 8(d), no Holder (and its related Indemnified
Holders) shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the total proceeds received by such Holder with
respect to the sale of its Notes, giving rise to its obligations hereunder,
exceeds the sum of (A) the amount paid by such Holders for such Notes, plus
(B) the amount of any damages which such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Holder's obligations to contribute as provided in this Section 8(d) are
several in proportion to their respective principal amount of Notes, held by
each of the Holders hereunder and not joint.
SECTION 9. RULE 144A
The Company and the Guarantors hereby agree with each Holder, for
so long as any Transfer Restricted Securities remain outstanding and during any
period in which the Company and the Guarantors are to subject to Section 13 or
15(d) of the Exchange Act, to make available to any Holder or beneficial owner
of Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities from such Holder or
beneficial owner, the information required by Rule 144A(d)(4) under the Act in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATION
No Holder may participate in any Underwritten Registration
hereunder unless such Holder (a) agrees to sell such Holder's Transfer
Restricted Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other documents
required under the terms of such underwriting arrangements.
17
<PAGE>
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in one Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer such offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; PROVIDED, that such investment bankers and managers must be
reasonably satisfactory to the Company. Such investment bakers and managers are
referred to herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) REMEDIES. Each Holder, in addition to being entitled to
exercise all rights provided herein, in the Indenture, the Purchase Agreement or
granted by law, including recovery of liquidated or other damages, will be
entitled to specific performance of its rights under this Agreement. The
Company and the Guarantors agree that monetary damages (including the Liquidated
Damages contemplated hereby) would not be adequate compensation for any loss
incurred by reason of a breach by them of the provisions of this Agreement and
hereby agree to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. Neither the Company nor any
Guarantor will on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Neither the Company nor any Guarantor is currently bound
by any agreement granting registration rights with respect to its securities
that conflicts with the registration rights set forth herein.
(c) ADJUSTMENTS AFFECTING THE NOTES. Neither the Company nor any
Guarantor will take any action, or permit any change to occur, with respect to
the Notes that would materially and adversely affect the ability of the Holders
to Consummate any Exchange Offer.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless (i) in the case of
Section 5 hereof and this Section 12(d), the Holders of all outstanding Transfer
Restricted Securities and (ii) in the case of all other provisions hereof, the
Company has obtained the written consent of Holders of a majority of the
outstanding principal amount of Transfer Restricted Securities. Notwithstanding
the foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose securities are not being tendered pursuant to
such Exchange Offer may be given by the Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities being tendered or registered.
(e) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under
the Indenture; and
18
<PAGE>
With a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Telecopier No.: (212) 751-4864
Attention: Raymond Y. Lin
(ii) if to the Company:
Axiohm Transaction Solutions, Inc.
15070 Avenue of Science
San Diego, California 92128
Telecopier No.: (619)451-3485
Attention: Chief Financial Officer
With a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Telecopier No.: (650) 493-6811
Attention: Henry P. Massey, Jr.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications shall
be concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; PROVIDED,
HOWEVER, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities from such Holder at a time
when such Holder could to transfer such Transfer Restricted Securities pursuant
to a Shelf Registration Statement. Each Holder of Transfer Restricted
Securities agrees to be bound by and comply with the terms and provisions of
this Agreement.
(g) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
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<PAGE>
(h) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement together with the other
Operative Documents (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
[signature pages follow]
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
AXIOHM TRANSACTION SOLUTIONS, INC.
By: /s/ Stuart Groom
------------------------------------
Name: Stuart Groom
Title: Vice President
AXIOHM S.A.
By: /s/ Patrick Dupuy
------------------------------------
Name: Patrick Dupuy
Title: Chairman
DARDEL TECHNOLOGIES S.A.
By: /s/ Patrick Dupuy
------------------------------------
Name: Patrick Dupuy
Title: Chairman
AXIOHM IPB, INC.
By: /s/ Stuart Groom
------------------------------------
Name: Stuart Groom
Title: Vice President
STADIA COLORADO CORP.
By: /s/ Stuart Groom
------------------------------------
Name: Stuart Groom
Title: Vice President
<PAGE>
COGNITIVE SOLUTIONS, INC.
By: /s/ Stuart Groom
------------------------------------
Name: Stuart Groom
Title: Vice President
LEHMAN BROTHERS INC.
By: /s/ Michael A. Goldberg
------------------------------------
Name: Michael A. Goldberg
Title: Vice President
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
AXIOHM TRANSACTION SOLUTIONS, INC.
AXIOHM S.A.
DARDEL TECHNOLOGIES S.A.
AXIOHM IPB, INC.
STADIA COLORADO CORP.
COGNITIVE SOLUTIONS, INC.
___________________________________________
$120,000,000
9 3/4% Senior Subordinated Notes due 2007
___________________________________________
PURCHASE AGREEMENT
September 25, 1997
LEHMAN BROTHERS INC.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
AXIOHM TRANSACTION SOLUTIONS, INC.
$120,000,000
9 3/4% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
September 25, 1997
New York, New York
LEHMAN BROTHERS INC.
Three World Financial Center
New York, New York 10285
Ladies & Gentlemen:
Axiohm Transaction Solutions, Inc., a California corporation (formerly
DH Technology, Inc., a California corporation (collectively, the "COMPANY"),
proposes to issue and sell to Lehman Brothers Inc. (the "INITIAL PURCHASER")
$120,000,000 aggregate principal amount of 9 3/4% Senior Subordinated Notes due
2007 (the "SENIOR SUBORDINATED NOTES"), subject to the terms and conditions set
forth herein. The Senior Subordinated Notes will be issued pursuant to an
indenture (the "INDENTURE"), to be dated the Closing Date (as defined below),
among the Company, the Guarantors (as defined below) and The Bank of New York,
as trustee (the "TRUSTEE").
The Senior Subordinated Notes and the New Senior Subordinated Notes
(as defined below) issuable in exchange therefor are collectively referred to
herein as the "NOTES." As used herein, the term "SUBSIDIARY" shall include each
entity listed on Schedule I hereto. The Notes will be guaranteed (the
"SUBSIDIARY GUARANTEES") by each of the entities listed on Schedule II hereto
(each, a "GUARANTOR"and collectively, the "GUARANTORS"). Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Indenture.
The Senior Subordinated Notes are being issued and sold in connection
with an Agreement and Plan of Merger (the "MERGER AGREEMENT"), dated as of July
14, 1997, by and among Axiohm S.A., a French corporation ("AXIOHM"), AX
Acquisition Corporation, a California corporation ("AX ACQUISITION") and DH
Technology, Inc., a California corporation, ("DH TECHNOLOGY"). The Merger
Agreement provides that AX Acquisition will offer (the "AXIOHM EXCHANGE OFFER")
to the shareholders of Axiohm the right to exchange their stock of Axiohm for a
portion of the shares of DH Technology acquired by AX Acquisition pursuant to a
tender offer (the "TENDER OFFER"). Simultaneously with the consummation of the
Axiohm Exchange Offer, Axiohm IPB, Inc., a Delaware corporation and a wholly
owned subsidiary of Axiohm ("IPB") will sell to DH Technology all of the
outstanding shares of AX Acquisition. Immediately following the events described
above, AX Acquisition will be merged with and into DH Technology (the "MERGER"),
with DH Technology being the surviving corporation of the Merger. Subsequent to
the consummation of the Merger, DH Technology will change its name to Axiohm
Transaction Solutions, Inc.
In order to provide a portion of the financing for the Tender Offer,
AX Acquisition entered into a $175 million senior secured credit facility (the
"TENDER FACILITY") and IPB issued $24 million in
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liquidation preference of Cumulative Redeemable Exchangeable Senior Preferred
Stock (the "INTERIM PREFERRED STOCK"). The Company will use (i) the proceeds
from the sale of the Senior Subordinated Notes, (ii) borrowings under a
credit agreement (the "NEW CREDIT FACILITY") by and among the Company, the
Guarantors, the lenders named therein and Lehman Commercial Paper Inc., (iii)
existing cash balances and (iv) a refund of prepaid interest and dividends
to: (a) refinance the Tender Facility, (b) redeem the Interim Preferred
Stock, (c) refinance outstanding indebtedness of DH Technology, (d) cashout
certain options owned by the shareholders of DH Technology, (e) purchase
shares of Axiohm and (f) pay transaction fees and expenses.
Holders (including subsequent transferees) of the Senior Subordinated
Notes will have the registration rights set forth in the registration rights
agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date,
in substantially the form of Exhibit A hereto, for so long as such Senior
Subordinated Notes constitute "TRANSFER RESTRICTED SECURITIES" (as defined in
the Registration Rights Agreement). Pursuant to the Registration Rights
Agreement, the Company and the Guarantors will agree to file with the Securities
and Exchange Commission (the "COMMISSION") under the circumstances set forth
therein, (i) a registration statement (the "EXCHANGE OFFER REGISTRATION
STATEMENT") under the Securities Act of 1933, as amended (the "SECURITIES ACT")
relating to the Company's 9 3/4% New Senior Subordinated Notes (the "NEW SENIOR
SUBORDINATED NOTES"), to be offered in exchange for the Senior Subordinated
Notes (such offer to exchange being referred to as the "EXCHANGE OFFER") and the
Subsidiary Guarantees thereof and (ii) a shelf registration statement pursuant
to Rule 415 under the Securities Act (the "SHELF REGISTRATION STATEMENT" and,
together with the Exchange Offer Registration Statement, the "REGISTRATION
STATEMENTS") relating to the resale by certain holders of the Senior
Subordinated Notes and to use their respective best efforts to cause such
Registration Statements to be declared and remain effective and usable for the
periods specified in the Registration Rights Agreement and to consummate the
Exchange Offer. This Agreement, the Indenture, the Notes, the Subsidiary
Guarantees and the Registration Rights Agreement are hereinafter sometimes
referred to collectively as the "OPERATIVE DOCUMENTS."
1. OFFERING MEMORANDUM. The Senior Subordinated Notes will be offered
and sold to the Initial Purchaser pursuant to one or more exemptions from the
registration requirements under the Securities Act. The Company and the
Guarantors have prepared a preliminary offering memorandum, dated September 16,
1997 (the "PRELIMINARY OFFERING MEMORANDUM"), and a final offering memorandum,
dated September 25, 1997 (the "OFFERING MEMORANDUM"), relating to the Senior
Subordinated Notes and the Subsidiary Guarantees. Copies of the Preliminary
Offering Memorandum have been, and copies of the Offering Memorandum will be,
delivered by the Company to the Initial Purchaser pursuant to the terms of this
Agreement. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offering and resale of the Senior Subordinated Notes by the Initial
Purchaser in accordance with Section 4 hereof (the "OFFERING").
Upon original issuance thereof, and until such time as the Company
determines (based upon an opinion of counsel, if the Company so requests) it to
be no longer required under the applicable requirements of the Securities Act,
the Senior Subordinated Notes (and all securities issued in exchange therefor or
in substitution thereof) shall bear the following legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE THIRD SENTENCE
HEREOF. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
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INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) (A "QIB") OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501 (A) (1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "IAI") OR (C) IT IS
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR
ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903
OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION"
AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER
OF THIS NOTE IN VIOLATION OF THE FOREGOING."
2. REPRESENTATIONS AND WARRANTIES. The Company and the Guarantors
represent and warrant to the Initial Purchaser that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum as of its date did not, and the Offering Memorandum as of the
Closing Date will not, and any amendment or supplement to them will not,
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
PROVIDED, HOWEVER, that the Company makes no representation or warranty as
to information contained in or omitted from the Preliminary Offering
Memorandum or the Offering Memorandum, as amended or supplemented, in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Initial Purchaser specifically for inclusion
in the Preliminary Offering Memorandum
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or the Offering Memorandum. No stop order preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum, or any
amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the
registration requirements of the Securities Act, has been issued.
(b) Each of the Company and its Subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation and is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or leasing of property or the conduct
of its business requires such qualification (except where the failure to be
so qualified and in good standing would not have a Material Adverse
Effect), and has all corporate power and authority necessary to own or hold
its properties and to conduct the business in which it is engaged as
described in the Preliminary Offering Memorandum and the Offering
Memorandum. As used herein, "MATERIAL ADVERSE EFFECT" means a material
adverse effect on the condition (financial or otherwise), results of
operations, business, earnings or prospects of the Company and its
Subsidiaries, taken as a whole, after giving effect to the Merger.
(c) Assuming the Senior Subordinated Notes are issued, sold and
delivered under the circumstances contemplated by the Offering Memorandum
and in this Agreement, that the representations and warranties and
covenants of the Initial Purchaser contained in Section 4 hereof are true,
correct and complete, and that the Initial Purchaser complies with its
covenants in Section 4 hereof, (i) registration under the Securities Act of
the Senior Subordinated Notes or the Subsidiary Guarantees or qualification
of the Indenture in respect of the Senior Subordinated Notes under the
Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE ACT"), is not
required in connection with the offer and sale of the Senior Subordinated
Notes to the Initial Purchaser in the manner contemplated by the Offering
Memorandum or this Agreement and (ii) the initial resales of the Senior
Subordinated Notes by the Initial Purchaser on the terms and in the manner
set forth in the Offering Memorandum and Section 4 hereof are exempt from
the registration requirements of the Securities Act.
(d) Immediately upon the closing of the sale of the Senior
Subordinated Notes hereunder, the Company will redeem, for cash, all of the
outstanding Interim Preferred Stock issued by IPB and subsequently assumed
by DH Technology and will repay any amounts outstanding under the Tender
Facility.
(e) All of the outstanding shares of capital stock of the Company and
each of its Subsidiaries have been duly authorized, validly issued, and are
fully paid and nonassessable and were not issued in violation of any
preemptive or similar rights.
(f) Except as set forth on Schedule III hereto, all of the
outstanding capital stock or equity interests of each of the Company's
Subsidiaries is owned by the Company, directly or through another
Subsidiary, free and clear of any security interest, claim, lien,
limitation on voting rights, encumbrance or adverse interest of any nature
(each, a "LIEN"), except for Liens arising from the New Credit Facility.
Except as disclosed in the Offering Memorandum, there are not currently,
and will not be as a result of the Offering, any outstanding subscriptions,
rights, warrants, calls, commitments of sale or options to acquire, or
instruments convertible into or exchangeable for, any capital stock or
other equity interest of the Company or any of its Subsidiaries.
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(g) The Company and its Subsidiaries have all requisite corporate
power and authority to execute, deliver and perform their respective
obligations under this Agreement, and each of the other Operative Documents
to which they may be a party and to consummate the transactions
contemplated hereby and thereby, including, without limitation, the
corporate power and authority to issue, sell and deliver the Senior
Subordinated Notes and the Subsidiary Guarantees as provided herein and
therein.
(h) This Agreement has been duly authorized, executed and delivered
by the Company and each of the Guarantors and is a valid and binding
agreement of the Company and each of the Guarantors, enforceable against
the Company and each Guarantor in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, moratorium,
reorganization or other similar laws and court decisions relating to or
affecting the rights of creditors generally and by general principles of
equity (whether considered in a proceeding in equity or at law).
(i) The Indenture has been duly authorized by the Company and each of
the Guarantors and, on the Closing Date, will have been validly executed
and delivered by the Company and each of the Guarantors. When the
Indenture has been duly executed and delivered by the Company and each of
the Guarantors, the Indenture will be a valid and binding agreement of the
Company, and each of the Guarantors, enforceable against the Company and
each Guarantor in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization
or other similar laws and court decisions relating to or affecting the
rights of creditors generally and by general principles of equity (whether
considered in a proceeding in equity or at law). On the Closing Date, the
Indenture will conform in all material respects to the requirements of the
Trust Indenture Act, and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder. The Offering
Memorandum contains an accurate summary, in all material respects, of the
terms of the Indenture.
(j) The Senior Subordinated Notes have been duly authorized for
issuance and sale to the Initial Purchaser by the Company pursuant to this
Agreement and, on the Closing Date, will have been validly executed and
delivered by the Company. When the Senior Subordinated Notes have been
issued, executed and authenticated in accordance with the terms of the
Indenture and delivered against payment therefor in accordance with the
terms hereof and thereof, the Senior Subordinated Notes will be valid and
binding obligations of the Company, enforceable against it in accordance
with their terms and entitled to the benefits of the Indenture, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, moratorium,
reorganization or other similar laws and court decisions relating to or
affecting the rights of creditors generally and by general principles of
equity (whether considered in a proceeding in equity or at law). The
Offering Memorandum contains an accurate summary, in all material respects,
of the terms of the Senior Subordinated Notes.
(k) The New Senior Subordinated Notes have been duly authorized for
issuance by the Company and, when issued, executed and authenticated in
accordance with the terms of the Exchange Offer and the Indenture, the New
Senior Subordinated Notes will be valid and binding obligations of the
Company, enforceable against it in accordance with their terms and entitled
to the benefits of the Indenture, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization or other
similar laws and court decisions relating to or affecting the rights of
creditors generally and by general principles of equity (whether considered
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in a proceeding in equity or at law). The Offering Memorandum contains an
accurate summary, in all material respects, of the terms of the New Senior
Subordinated Notes.
(l) The Subsidiary Guarantees to be endorsed on the Senior
Subordinated Notes by each Guarantor have been duly authorized by each
Guarantor and, on the Closing Date, will have been duly executed and
delivered by each such Guarantor. When the Senior Subordinated Notes have
been issued, executed and authenticated in accordance with the Indenture
and delivered against payment therefor in accordance with the terms hereof
and thereof, the Subsidiary Guarantees of each Guarantor endorsed thereon
will be valid and binding obligations of such Guarantor, enforceable
against such Guarantor in accordance with their terms and entitled to the
benefits of the Indenture, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization or other
similar laws and court decisions affecting the rights of creditors
generally and by general principles of equity (whether considered in a
proceeding in equity or at law). The Offering Memorandum contains an
accurate summary, in all material respects, of the terms of the Subsidiary
Guarantees to be endorsed on the Senior Subordinated Notes.
(m) The Subsidiary Guarantees to be endorsed on the New Senior
Subordinated Notes by each Guarantor have been duly authorized by each
Guarantor and, when issued, will have been duly executed and delivered by
each such Guarantor. When the New Senior Subordinated Notes have been
issued, executed and authenticated in accordance with the terms of the
Exchange Offer and the Indenture, the Subsidiary Guarantees of each
Guarantor endorsed thereon will be valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
terms and entitled to the benefits of the Indenture, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, moratorium,
reorganization or other similar laws and court decisions affecting the
rights of creditors generally and by general principles of equity (whether
considered in a proceeding in equity or at law). The Offering Memorandum
contains an accurate summary, in all material respects, of the terms of the
Subsidiary Guarantees to be endorsed on the New Senior Subordinated Notes.
(n) The Registration Rights Agreement has been duly authorized by the
Company and each of the Guarantors and, on the Closing Date, will have been
duly executed and delivered by the Company and each of the Guarantors.
When the Registration Rights Agreement has been duly executed and delivered
by the Company and each of the Guarantors, the Registration Rights
Agreement will be a valid and binding agreement of the Company and each of
the Guarantors, enforceable against the Company and each Guarantor in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization or other
similar laws and court decisions relating to or affecting the rights of
creditors generally and by general principles of equity (whether considered
in a proceeding in equity or at law). The Offering Memorandum contains an
accurate summary, in all material respects, of the terms of the
Registration Rights Agreement.
(o) The New Credit Facility has been duly authorized by the Company
and each of the Guarantors and, on the Closing Date, will have been duly
executed and delivered by the Company and each of the Guarantors. When the
New Credit Facility has been duly executed and delivered by the Company and
each of the Guarantors, the New Credit Facility will be a valid and binding
agreement of the Company and each of the Guarantors, enforceable against
the Company and each Guarantor in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, moratorium,
reorganization or other similar laws and court decisions relating to or
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affecting the rights of creditors generally and by general principles of
equity (whether considered in a proceeding in equity or at law).
(p) The execution, delivery and performance of this Agreement and the
other Operative Documents by the Company and each of the Guarantors,
compliance by the Company and each of the Guarantors with all the
provisions hereof and thereof, the issuance and sale of the Senior
Subordinated Notes by the Company, the issuance of the Subsidiary
Guarantees by the Guarantors and the consummation by the Company and the
Guarantors of the transactions contemplated hereby and thereby and as
described in the Offering Memorandum under the caption "Use of Proceeds,"
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, except as set forth
in the Offering Memorandum, any indenture, mortgage, deed of trust, lease,
loan or credit agreement or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound or to which any of their respective
properties or assets is subject, nor will any such actions result in any
violation of the provisions of the charter, by-laws, or other
organizational documents of the Company or any of its Subsidiaries or any
applicable law, statute or any rule, regulation, judgment, order or decree
of any court or governmental agency or body having jurisdiction over the
Company or any of its Subsidiaries or any of their respective properties or
assets, or result in the imposition or creation of (or the obligation to
create or impose) a Lien under, any agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries or their respective properties or assets is bound;
and except for such consents, approvals, authorizations, other orders,
filings, qualifications or registrations as may be required under
applicable state securities laws in connection with the purchase and
distribution of the Senior Subordinated Notes by the Initial Purchaser or
as set forth in the Registration Rights Agreement, no consent, approval,
authorization, other order, filing, qualification or registration with, any
such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement or the other Operative Documents
by the Company and each of the Guarantors, compliance by the Company and
each of the Guarantors with all the provisions hereof and thereof, the
consummation of the transactions contemplated hereby and thereby and as
defined in the Offering Memorandum under the caption "Use of Proceeds," the
issuance and sale of the Senior Subordinated Notes by the Company and the
issuance of the Subsidiary Guarantees by the Guarantors.
(q) Neither the Company nor any of its Subsidiaries is in breach or
violation of any of the terms or provisions of any indenture, mortgage,
deed of trust, lease, loan agreement or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound or to which any of their
respective properties or assets is subject, nor is the Company or any of
its Subsidiaries in violation of any provision of its charter, by-laws or
other organizational documents or any statute or any judgment, order rule
or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries or any of their
respective properties or assets (except in each case that could not
reasonably be expected to have a Material Adverse Effect).
(r) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its Subsidiaries is or could be a
party or to which any of their respective properties or assets is subject
which, if determined adversely to the Company or any of its Subsidiaries,
could reasonably be expected to have a Material Adverse Effect, otherwise
than as set forth in the Offering Memorandum.
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(s) Except for the Registration Rights Agreement and the registration
rights contemplated under the Merger Agreement, there are no contracts,
agreements or understandings between the Company or any Guarantor and any
person granting such person the right to require the Company or such
Guarantor to file a registration statement under the Securities Act with
respect to any securities of the Company, of any of its Subsidiaries or of
such Guarantor, owned, or to be owned, by such person or to require the
Company or such Guarantor to include such securities in any securities
being registered pursuant to any registration statement filed by the
Company under the Securities Act.
(t) Neither the Company nor any Subsidiary has sustained, since the
respective dates as of which information is given in the Offering
Memorandum other than as set forth in the Offering Memorandum (exclusive of
any amendments or supplements thereto subsequent to the date of this
Agreement), any material losses, liabilities, obligations (direct or
contingent) or interferences with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as
set forth or contemplated in the Offering Memorandum; and, since such date,
there have not been any material changes in the capital stock or long-term
debt of the Company or any of its Subsidiaries or any material adverse
changes in the condition (financial or otherwise), results of operations,
business, earnings or prospects of the Company or its Subsidiaries taken as
a whole (a "MATERIAL ADVERSE CHANGE"), or any developments that could
reasonably be expected to involve a prospective Material Adverse Change,
otherwise than as set forth or contemplated in the Offering Memorandum.
(u) The historical consolidated financial statements (including the
related notes) of the Company which appear in the Offering Memorandum
comply as to form in all material respects with the applicable accounting
requirements of the Securities Act, present fairly the consolidated
financial position and results of operations of the entities purported to
be shown thereby, at the dates and for the periods indicated and have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods involved, except as
described in the notes thereto. The PRO FORMA financial statements
included in the Preliminary Offering Memorandum and the Offering Memorandum
present fairly the historical and proposed transactions contemplated by
this Agreement and the other Operative Documents; and such PRO FORMA
financial statements comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") and the related
published rules and regulations thereunder, have been prepared on a basis
consistent with the historical consolidated financial statements of the
Company and its Subsidiaries, give effect to assumptions used in the
preparation thereof on a reasonable basis and in good faith and present
fairly the historical and proposed transactions contemplated by the
Preliminary Offering Memorandum and the Offering Memorandum. The other
financial and statistical information and data included in the Offering
Memorandum, historical and PRO FORMA, are accurately presented and prepared
on a basis consistent with the financial statements, historical and PRO
FORMA, included in the Offering Memorandum and the books and records of the
Company.
(v) KPMG Peat Marwick, who has certified the financial statements and
supporting schedules of the Company and whose report appears in the
Preliminary Offering Memorandum and the Offering Memorandum, are
independent public accountants with respect to the Company and the
Guarantors under Rule 101 of AICPA's Code of Professional Conduct and its
interpretations and rulings, during the periods covered by the financial
statements on which they reported and are contained in the Preliminary
Offering Memorandum and the Offering Memorandum.
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(w) The Company and each of its Subsidiaries have good and marketable
title in fee simple or leasehold to all real property and good title to all
personal property owned by each of them, in each case free and clear of all
Liens except (i) such as arise under the New Credit Facility, (ii) such as
are described in the Offering Memorandum or permitted under the Indenture
or (iii) such as do not materially affect the value of such property and do
not materially interfere with the use made and proposed to be made of such
property by the Company and its Subsidiaries; and all real property and
buildings held under lease by the Company and each of its Subsidiaries are
held by them under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property by the Company and each of its
Subsidiaries. The Company and each of its Subsidiaries enjoy peaceful and
undisturbed possession under all leases to which they are a party as
lessee, except for such leases that, singly or in the aggregate, would not
have a Material Adverse Effect. No consent need be obtained from any
person with respect to any such lease in connection with the transactions
contemplated hereby and in the Offering Memorandum, except for such
consents as have been obtained. None of the properties or assets, the
value of which is reflected in the latest balance sheet referred to in
Section 2(u) hereof, is held under any lease (except for properties or
assets held under capital leases and operating leases). Except for such
assets, plants and facilities as are not material, singly or in the
aggregate, to the business of the Company and its Subsidiaries, taken as a
whole, all tangible assets, plants and facilities of the Company and its
Subsidiaries are in good condition and repair (ordinary wear and tear
excepted) and are adequate, in the reasonable opinion of the Company and
its Subsidiaries, for the uses to which they are being put or would be put
in the ordinary course of business. The Company and its Subsidiaries
maintain such insurance as may be required by law and such other insurance,
to the extent and against such hazards and liabilities, as is customarily
maintained by companies similarly situated (which may include self-
insurance in the same form as is customarily maintained by companies
similarly situated).
(x) Except as set forth in the Offering Memorandum, the Company and
its Subsidiaries own or possess, or can acquire on reasonable terms,
adequate rights to use all material patents, patent applications,
trademarks, service marks, tradenames, trademark registrations, service
mark registrations, copyrights and licenses necessary for the conduct of
their businesses, and the conduct of their businesses will not conflict
with any such rights of others (except in any such case for any failure to
own or possess, lack of ability to acquire, or conflict that could
reasonably be expected to have a Material Adverse Effect).
(y) There is (i) no material unfair labor practice complaint pending
against the Company or any of its Subsidiaries or, threatened against any
of them, before the National Labor Relations Board, any state or local
labor relations board or any foreign labor relations board, and no material
grievance or material arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Company or any of
its Subsidiaries or threatened against any of them, (ii) no material
strike, labor dispute, slowdown or stoppage pending against the Company or
any of its Subsidiaries or threatened against any of them and (iii) except
as described in the Offering Memorandum, no union representation question
existing with respect to the employees of the Company and its Subsidiaries
which could reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has violated (y) any
federal, state or local law or foreign law relating to discrimination in
hiring, promotion or pay of employees applicable to the Company or any of
its Subsidiaries or (z) any applicable wage or hour laws in any manner that
could reasonably be expected to have a Material Adverse Effect.
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(z) The Company and each of its Subsidiaries is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act, as amended, or the rules and regulations
promulgated thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any of its Subsidiaries would have any
liability; neither the Company nor any of its Subsidiaries has incurred or
expects to incur liability under (i) Title IV of ERISA with respect to the
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412
or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "CODE"); and each
"pension plan" for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified
in all material respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(aa) The Company and its Subsidiaries (i) make and keep accurate
books and records and (ii) maintain internal accounting controls which
provide reasonable assurance that: (A) transactions are executed in
accordance with management's general or specific authorizations;
(B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (C) access to assets
is permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is compared
with the existing assets at reasonable intervals.
(ab) Neither the Company nor any of its Subsidiaries, nor any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its Subsidiaries, has used any
corporate funds during the last five years for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political
activity; made any unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of
any provision of the Foreign Corrupt Practices Act of 1977; or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(ac) Neither the Company nor any of its Subsidiaries is, and after
giving effect to the offering and sale of Senior Subordinated Notes and the
application of the net proceeds therefrom as described in the Offering
Memorandum will be (i) an "investment company" or a company "controlled" by
an "investment company" within the meaning of the Investment Company Act of
1940, as amended, or (ii) a "holding company" or a "subsidiary company" or
an "affiliate" of a holding company within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(ad) Neither the Company nor any of its Subsidiaries has violated in
any material respect any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS").
(ae) There is no alleged liability, potential liability, (including,
without limitation, alleged or potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resource damages,
property damages, personal injuries, penalties, constraints on operating
activities or any potential liabilities to third parties) of the Company or
any of its Subsidiaries arising out of, based on or resulting from (i) the
presence or release into the environment of any Hazardous Material (as
defined herein) at any location, whether or not owned by the Company or any
of its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect or
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(ii) any violation or alleged violation of any Environmental Law, which
alleged or potential liability is required to be disclosed in the
Offering Memorandum, other than as disclosed therein. The term
"HAZARDOUS MATERIAL" means (A) any "hazardous substance" as defined by
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (B) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act, as amended, (C) any petroleum
or petroleum product, (D) any polychlorinated biphenyl and (E) any
pollutant or contaminant or hazardous, dangerous or toxic chemical,
material waste or substance regulated under or within the meaning of
any other Environmental Law.
(af) Each of the Company and its Subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an "AUTHORIZATION") of, and has made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including without
limitation, under any applicable Environmental Laws, as are necessary to
own, lease, license and operate their respective properties and to conduct
their businesses, except where the failure to have any such Authorization
or to make any such filing or notice could not reasonably be expected to
have a Material Adverse Effect. Each such Authorization is valid and in
full force and effect and each of the Company and its Subsidiaries is in
compliance with all the terms and conditions thereof and with the rules and
regulations of the authorities and governing bodies having jurisdiction
with respect thereto; and no event has occurred (including, without
limitation, the receipt of any notice from any authority or governing body)
which allows or, after notice or lapse of time or both, would allow,
revocation, suspension or termination of any such Authorization or results
or, after notice or lapse of time or both, would result in any other
impairment of the rights of the holder of any such Authorization; and such
Authorizations contain no restrictions that are burdensome to the Company
or any of its Subsidiaries; except where such failure to be valid and in
full force and effect or to be in compliance, the occurrence of any such
event or the presence of any such restriction could not reasonably be
expected to have a Material Adverse Effect.
(ag) When the Senior Subordinated Notes and the Subsidiary Guarantees
are issued and delivered pursuant to this Agreement, neither the Senior
Subordinated Notes nor the Subsidiary Guarantees thereof will be of the
same class (within the meaning of Rule 144A under the Securities Act) as
any security of the Company or any Guarantor listed on any national
securities exchange registered under Section 6 of the Exchange Act or
quoted on an automated inter-dealer quotation system.
(ah) None of the Company, the Guarantors or any affiliate (as defined
in Rule 501(b) of Regulation D under the Securities Act ("REGULATION D"))
of the Company or any Guarantor has, directly or through any agent
(provided that no representation is made as to the Initial Purchaser or any
person acting on its behalf), (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of any security (as defined in
the Securities Act) that is or will be integrated with the offering and
sale of the Senior Subordinated Notes in a manner that would require the
registration of the Senior Subordinated Notes under the Securities Act or
(ii) engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offering of the
Senior Subordinated Notes, including, but not limited to, articles, notices
or other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Senior Subordinated
Notes have been issued and sold by the Company within the six-month period
immediately prior to the date hereof.
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(ai) Neither the Company nor any of its Subsidiaries has taken, nor
will any of them take, directly or indirectly, any action designed to, or
that might reasonably be expected to, violate or cause a violation of
Regulation M under the Securities Act.
(aj) Each of the Preliminary Offering Memorandum and the Offering
Memorandum as of its respective date and each amendment or supplement
thereto, as of its date, contains all the information specified in, and
meeting the requirements of Rule 144A(d)(4) under the Securities Act.
(ak) The Company does not intend to, nor does it believe that it
will, incur debts beyond its ability to pay such debts as they mature. The
present fair saleable value of the assets of the Company on a consolidated
basis exceeds the amount that will be required to be paid on or in respect
of the existing debts and other liabilities (including contingent
liabilities) of the Company on a consolidated basis as they become absolute
and matured. The assets of the Company on a consolidated basis do not
constitute unreasonably small capital to carry out the business of the
Company and its Subsidiaries, taken as a whole, as conducted or as proposed
to be conducted. Upon the issuance of the Senior Subordinated Notes the
present fair saleable value of the assets of the Company on a consolidated
basis will exceed the amount that will be required to be paid on or in
respect of the existing debts and other liabilities (including contingent
liabilities) of the Company on a consolidated basis as they become absolute
and matured. Upon the issuance of the Senior Subordinated Notes, the
assets of the Company on a consolidated basis will not constitute
unreasonably small capital to carry out its businesses as now conducted,
including the capital needs of the Company on a consolidated basis, taking
into account the projected capital requirements and capital availability.
(al) None of the Guarantors intends to, or believes that it will,
incur debts beyond its ability to pay such debts as they mature. The
present fair saleable value of the assets of each of the Guarantors on a
consolidated basis exceeds the amount that will be required to be paid on
or in respect of the existing debts and other liabilities (including
contingent liabilities) of each Guarantor on a consolidated basis as they
become absolute and matured. The assets of each Guarantor on a
consolidated basis do not constitute unreasonably small capital to carry
out the business of each Guarantor as conducted or as proposed to be
conducted. Upon the issuance of the Subsidiary Guarantees the present fair
saleable value of the assets of each Guarantor on a consolidated basis will
exceed the amount that will be required to be paid on or in respect of the
existing debts and other liabilities (including contingent liabilities) of
each Guarantor on a consolidated basis as they become absolute and matured.
Upon the issuance of the Subsidiary Guarantees, the assets of each
Guarantor on a consolidated basis will not constitute unreasonably small
capital to carry out its business as now conducted, including the capital
needs of each Guarantor on a consolidated basis, taking into account the
projected capital requirements and capital availability.
(am) No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Securities
Act (i) has imposed (or has informed the Company or any Guarantor that it
is considering imposing) any condition (financial or otherwise) on the
Company's or any Guarantor's retaining any rating assigned as of the date
hereof to the Company, any Guarantor or any securities of the Company or
any Guarantor or (ii) has indicated to the Company or any Guarantor that it
is considering (a) the downgrading, suspension or withdrawal of, or any
review for a possible change that does not indicate the direction of the
possible change
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in, any rating so assigned or (b) any change in the outlook for any rating
of the Company or any Guarantor.
(an) None of the Company, its Subsidiaries, the Guarantors or any of
its or their respective affiliates or any person acting on its or their
behalf has engaged or will engage in any "directed selling efforts" within
the meaning of Regulations S under the Securities Act with respect to the
Senior Subordinated Notes or the Subsidiary Guarantees.
(ao) Each certificate signed by any officer of the Company or any
Guarantor and delivered to the Initial Purchaser or counsel for the Initial
Purchaser shall be deemed to be a representation and warranty by the
Company or such Subsidiary Guarantor to the Initial Purchaser as to the
matters covered thereby.
(ap) Neither the Company nor any of its subsidiaries nor any agent
thereof acting on the behalf of them has taken, and none of them will take,
any action that might cause this Agreement or the issuance or sale of the
Senior Subordinated Notes or the transactions in connection with the Tender
Offer or the Merger to violate Regulation G (12 C.F.R. Part 207),
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
(aq) The Senior Subordinated Notes offered and sold in reliance on
Regulation S have been and will be offered and sold only in offshore
transactions.
(ar) The sale of the Senior Subordinated Notes pursuant to Regulation
S is not part of a plan or scheme to evade the registration provisions of
the Securities Act.
(as) The Company and its Subsidiaries have complied with all of the
provisions of Florida H.B. 1771, codified as Section 517.075, of the
Florida statutes, and all regulations promulgated thereunder relating to
companies doing business with the Government of Cuba or with any person or
any affiliate located in Cuba.
The Company acknowledges that the Initial Purchaser and, for purposes
of the opinions to be delivered to the Initial Purchaser pursuant to Section 8
hereof, counsel to the Company and the Guarantors and counsel to the Initial
Purchaser, will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
3. PURCHASE OF SENIOR SUBORDINATED NOTES BY THE INITIAL PURCHASER. On
the basis of the representations, warranties and covenants contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell to the Initial Purchaser, and the Initial Purchaser agrees to purchase
from the Company, an aggregate principal amount of $120.0 million Senior
Subordinated Notes. The purchase price for the Senior Subordinated Notes shall
be $972.50 per $1,000.00 principal amount of Senior Subordinated Note.
4. SALE AND RESALE OF THE SENIOR SUBORDINATED NOTES BY THE INITIAL
PURCHASER. The Initial Purchaser represents and warrants to the Company that it
will offer the Senior Subordinated Notes for resale only upon the terms and
conditions set forth in this Agreement and in the Offering Memorandum. The
Initial Purchaser hereby represents and warrants to, and agrees with, the
Company that the Initial Purchaser (i) is a qualified institutional buyer
("QUALIFIED INSTITUTIONAL BUYER") as defined in Rule 144A under the Securities
Act, as such rule may be amended from time to time ("RULE 144A"), and/or an
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institutional accredited investor ("ACCREDITED INVESTOR") as defined in Rule
501(a)(1),(2),(3) or (7) under Regulation D, (ii) is purchasing the Senior
Subordinated Notes pursuant to a private sale exempt from registration under the
Securities Act, (iii)(a) is not acquiring the Senior Subordinated Notes with a
view to distribution thereof or (b) with any present intention of offering or
selling any of the Senior Subordinated Notes in the case of each clause (a) and
(b) of this clause (iii) in a transaction that would violate the Securities Act
or the securities laws of any state of the United States or any other applicable
jurisdiction, (iv) will not solicit offers for, or offer or sell, the Senior
Subordinated Notes by means of any form of general solicitation or general
advertising within the meaning of Regulation D or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act and (v)
will solicit offers for the Senior Subordinated Notes only from, and will offer,
sell or deliver the Senior Subordinated Notes, as part of its initial offering,
only to (A) persons in the United States whom the Initial Purchaser reasonably
believes to be Qualified Institutional Buyers or, if any such person is buying
for one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to the Initial
Purchaser that each such account is a Qualified Institutional Buyer, to whom
notice has been given that such sale or delivery is being made in reliance on
Rule 144A, (B) to a limited number of other Accredited Investors that execute a
letter containing certain representations and agreements in the form attached as
Annex A to the Offering Memorandum, or (C) to persons permitted to purchase the
Senior Subordinated Notes in offshore transactions in reliance upon Regulation S
under the Securities Act (each, a "REGULATION S PURCHASER") (such persons
specified in clauses (A), (B), and (C) being referred to herein as the "ELIGIBLE
PURCHASERS") and in each case, in transactions under Rule 144A, Regulation D or
under Rule 903 of Regulation S in private sales exempt from registration under
the Securities Act (the "EXEMPT RESALES").
The Initial Purchaser further represents that (i) neither the Initial
Purchaser nor any of its affiliates or any person acting on its or their behalf
has engaged or will engage in any "directed selling efforts" within the meaning
of Regulation S with respect to the Senior Subordinated Notes or the Subsidiary
Guarantees; (ii) the Senior Subordinated Notes offered and sold by the Initial
Purchaser pursuant hereto in reliance on Regulation S have been and will be
offered and sold only in offshore transactions; (iii) the sale of the Senior
Subordinated Notes offered and sold by such Initial Purchaser pursuant hereto in
reliance on Regulation S is not part of a plan or scheme to evade the
registration provisions of the Act; (iv) the Initial Purchaser has not offered
or sold and will not offer or sell any Senior Subordinated Notes to persons in
the United Kingdom prior to the expiration of the period of six months from the
issue date of the Senior Subordinated Notes, except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their business or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (v) it has complied and will comply with
all applicable provisions of the Financial Services Act of 1986 with respect to
anything done by it in relation to the Senior Subordinated Notes in, from or
otherwise involving the United Kingdom; (vi) it has only issued or passed on and
will only issue or pass on in the United Kingdom any document received by it in
connection with the issuance of the Senior Subordinated Notes to a person who is
of a kind described in Article 11(3) of the Financial Services Act of 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom the
document may otherwise lawfully be issued or passed on; and (vii) the Initial
Purchaser agrees that it will not offer, sell or deliver any of the Senior
Subordinated Notes in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Senior Subordinated Notes in such jurisdictions;
and the Initial Purchaser understands that no action has been taken to permit a
public offering in any jurisdiction outside the United States where action would
be required for such purpose.
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5. DELIVERY OF AND PAYMENT FOR THE SENIOR SUBORDINATED NOTES. Delivery
of and payment for the Senior Subordinated Notes shall be made at the office of
Latham & Watkins at 885 Third Avenue, New York, New York 10022, at 9:00 a.m.,
New York City time, on October 2, 1997 or at such other date or place as shall
be determined by agreement between the Initial Purchaser and the Company. This
date and time of such delivery and payment are referred to herein as the
"CLOSING DATE." On the Closing Date, the Company shall deliver or cause to be
delivered, the Senior Subordinated Notes to the Initial Purchaser for the
account of the Initial Purchaser against payment to or upon the order of the
Company of the purchase price by wire transfer in federal (same-day) funds.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of the
Initial Purchaser hereunder. Upon delivery, the Senior Subordinated Notes shall
be in definitive fully registered form and registered in such names and in such
denominations as the Initial Purchaser shall request in writing not less than
two full business days prior to the Closing Date. For the purpose of expediting
the checking and packaging of the Senior Subordinated Notes, the Company shall
make the Senior Subordinated Notes available for inspection by the Initial
Purchaser in New York, New York, not later than 2:00 p.m., New York City time,
on the business day prior to the Closing Date.
6. FURTHER AGREEMENTS OF THE COMPANY AND THE GUARANTORS. Each of the
Company and the Guarantors hereby agrees with the Initial Purchaser:
(a) To advise the Initial Purchaser promptly and, if requested by the
Initial Purchaser, confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Senior Subordinated
Notes for offering or sale in any jurisdiction designated by the Initial
Purchaser pursuant to Section 6(h) hereof, or the initiation of any
proceeding by any state securities commission or any other federal or state
regulatory authority for such purpose and (ii) of the happening of any
event during the period referred to in Section 6(d) below that makes any
statement of a material fact made in the Preliminary Offering Memorandum or
the Offering Memorandum untrue or that requires any additions to or changes
in the Preliminary Offering Memorandum or the Offering Memorandum in order
to make the statements therein in the light of the circumstances under
which they were made not misleading. The Company and the Guarantors shall
use their best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any Senior Subordinated Notes
under any state securities or Blue Sky laws and, if at any time any state
securities commission or other federal or state regulatory authority shall
issue an order suspending the qualification or exemption of any Senior
Subordinated Notes under any state securities or Blue Sky laws, the Company
and the Guarantors shall use their best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time.
(b) To furnish to the Initial Purchaser and any persons identified by
the Initial Purchaser to the Company, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum and any
supplements and amendments thereto as the Initial Purchaser may reasonably
request.
(c) Prior to making any amendment or supplement to the Offering
Memorandum, the Company shall furnish a copy thereof to the Initial
Purchaser and counsel to the Initial Purchaser and will not effect any such
amendment or supplement to which the Initial Purchaser shall reasonably
object by notice to the Company after a reasonable period to review, which
shall not in any case be longer than one full business day after receipt of
such copy.
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(d) During such period as in the opinion of counsel for the Initial
Purchaser an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchaser and in connection
with market-making activities of the Initial Purchaser for so long as any
Senior Subordinated Notes are outstanding, (i) not to make any amendment or
supplement to the Offering Memorandum of which the Initial Purchaser shall
not previously have been advised or to which the Initial Purchaser shall
reasonably object after being so advised and (ii) to prepare promptly upon
the Initial Purchaser's reasonable request, any amendment or supplement to
the Offering Memorandum which may be necessary or advisable in connection
with such Exempt Resales or such market-making activities.
(e) If during the time period referred to in Section 6(d) above, any
event shall occur or condition exist as a result of which it becomes
necessary, in the opinion of counsel for the Initial Purchaser or counsel
for the Company and the Guarantors, to amend or supplement the Offering
Memorandum in order that the Offering Memorandum will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in light of the
circumstances existing at the time it is delivered to a purchaser, or if it
is necessary to amend or supplement the Preliminary Offering Memorandum or
the Offering Memorandum to comply with applicable law, to promptly prepare
such amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law and to furnish to the Initial
Purchaser and such other persons as the Initial Purchaser may designate
such number of copies as the Initial Purchaser may reasonably request.
(f) So long as any Senior Subordinated Notes remain outstanding and
are "Restricted Securities" within the meaning of Rule 144(a)(3) under the
Securities Act and during any period in which the Company and the
Guarantors are not subject to Section 13 or 15(d) of the Exchange Act, to
furnish to holders of the Senior Subordinated Notes and prospective
purchasers of Senior Subordinated Notes designated by such holders, upon
request of such holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities
Act (the "RULE 144A INFORMATION").
(g) So long as any of the Notes are outstanding, to furnish to the
Initial Purchaser as soon as available copies of all reports or other
communications furnished by the Company or any of the Guarantors to its
security holders or furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the
Company or any of the Guarantors is listed and such other publicly
available information concerning the Company and/or its Subsidiaries as the
Initial Purchaser may reasonably request.
(h) Prior to the sale of all Senior Subordinated Notes pursuant to
Exempt Resales as contemplated hereby, to cooperate with the Initial
Purchaser and counsel for the Initial Purchaser in connection with the
registration or qualification of the Senior Subordinated Notes for offer
and sale to the Initial Purchaser and pursuant to Exempt Resales under the
securities or Blue Sky laws of such jurisdictions as the Initial Purchaser
designates and to continue such qualifications in effect so long as
required for the Exempt Resales and to file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification. The Company will also arrange for the
determination of the eligibility for investment of the Senior Subordinated
Notes under the laws of such jurisdictions as the Initial Purchaser
reasonably requests. Notwithstanding the foregoing, the Company and the
Guarantors shall not be obligated to qualify as a foreign corporation in
any jurisdiction in which it is not now so qualified or to file a general
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consent to service of process in any jurisdiction or subject itself to
income taxation as doing business in any such jurisdiction other than as to
matters and transactions relating to the Preliminary Offering Memorandum,
the Offering Memorandum or Exempt Resales, in any jurisdiction in which it
is not now so subject.
(i) So long as any of the Notes are outstanding, (i) to mail and make
generally available as soon as practicable after the end of each fiscal
year to the record holders of the Notes a financial report of the Company
and its Subsidiaries on a consolidated basis, all such financial reports to
include a consolidated balance sheet, a consolidated statement of
operations, a consolidated statement of cash flows and a consolidated
statement of shareholders' equity as of the end of and for such fiscal
year, together with comparable information as of the end of and for the
preceding year, certified by the Company's independent public accountants
and (ii) to mail and make generally available as soon as practicable after
the end of each quarterly period (except for the last quarterly period of
each fiscal year) to such holders, a consolidated balance sheet, a
consolidated statement of operations and a consolidated statement of cash
flows as of the end of and for such period, and for the period from the
beginning of such year to the close of such quarterly period, together with
comparable information for the corresponding periods of the preceding year.
(j) To use all reasonable commercial efforts to permit the Senior
Subordinated Notes to be designated Private Offerings, Resales and Trading
through Automated Linkages Market ("PORTAL") securities in accordance with
the rules and regulations adopted by the National Association of Securities
Dealers, Inc. (the "NASD") relating to trading in the PORTAL market.
(k) To use all reasonable efforts to obtain the approval of The
Depository Trust Company ("DTC") for "book-entry" transfer of the Notes,
and to comply with all of its agreements set forth in the representation
letters of the Company and the Guarantors to DTC relating to the approval
of the Notes by DTC for "book-entry" transfer.
(l) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of the Company or any
Guarantor or any warrants, rights or options to purchase or otherwise
acquire debt securities of the Company or any Guarantor substantially
similar to the Notes and the Subsidiary Guarantees (other than (i) the
Notes and the Subsidiary Guarantees and (ii) commercial paper issued in the
ordinary course of business), without the prior written consent of the
Initial Purchaser.
(m) Not to, and will cause its affiliates not to, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) in a transaction that could be
integrated with the sale of the Senior Subordinated Notes to the Initial
Purchaser or pursuant to Exempt Resales in a manner which would require the
registration under the Securities Act of the Senior Subordinated Notes.
(n) Except following the effectiveness of any Registration Statement
and except for such offers as may be made as a result of, or subsequent to,
filing such Registration Statement or amendments thereto prior to the
effectiveness thereof, not to, and will cause its affiliates not to,
solicit any offer to buy or offer to sell the Senior Subordinated Notes by
means of any form of general solicitation or general advertising (as those
terms are used in Regulation D) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.
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(o) To apply the net proceeds from the sale of the Senior
Subordinated Notes as set forth under the caption "Use of Proceeds" in the
Offering Memorandum.
(p) To take such steps as shall be necessary to ensure that neither
the Company nor any of its Subsidiaries shall become an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended, or (ii) a "holding company" or a "subsidiary company" or an
"affiliate" of a holding company within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(q) Not to take, not to permit any of its Subsidiaries to take and to
use its best efforts to prevent its affiliates from taking, directly or
indirectly, any action designed to, or that might reasonably be expected
to, cause or result in stabilization or manipulation of the price of any
security of the Company or any of its Subsidiaries to facilitate the sale
or resale of the Senior Subordinated Notes. Except as permitted by the
Securities Act, the Company and its Subsidiaries will not distribute any
(i) preliminary offering memorandum, including, without limitation, the
Preliminary Offering Memorandum, (ii) offering memorandum, including,
without limitation, the Offering Memorandum or (iii) other offering
material in connection with the offering and sale of the Senior
Subordinated Notes.
(r) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of any Notes.
(s) To cause the Exchange Offer to be made in the appropriate form to
permit New Senior Subordinated Notes and guarantees thereof by the
Guarantors registered pursuant to the Securities Act to be offered in
exchange for the Senior Subordinated Notes and the Subsidiary Guarantees
and to comply with all applicable federal and state securities laws in
connection with the Exchange Offer.
(t) To comply with the agreements in the Indenture, the Registration
Rights Agreement and the other Operative Documents.
(u) To cause Axiohm S.A. and Dardel Technologies S.A. to execute the
Purchase Assumption and Registration Rights Assumption in the form attached
hereto as Exhibit B and Exhibit C, respectively, upon the election by each
such entity to be treated as a "pass-through" entity for United States
federal income tax purposes.
(v) To do all things required or necessary to be done or performed
under this Agreement by it prior to the Closing Date and to satisfy the
closing conditions set forth in Section 8 hereof.
7. EXPENSES. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of the obligations of the Company
and the Guarantors under this Agreement, including: (i) the fees, disbursements
and expenses of counsel to the Company and the Guarantors and accountants of the
Company and the Guarantors in connection with the sale and delivery of the
Senior Subordinated Notes to the Initial Purchaser and pursuant to Exempt
Resales, and all other fees or expenses in connection with the preparation,
printing, filing and distribution of the Preliminary Offering Memorandum, the
Offering Memorandum and all amendments and supplements to any of the foregoing
(including financial statements) specified in Section 6(b) and 6(d) prior to or
during the period specified in Section 6(d), including the mailing and
delivering of copies thereof to the Initial Purchaser and persons designated by
it in the
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quantities specified herein; (ii) all costs and expenses related to the
transfer and delivery of the Senior Subordinated Notes to the Initial
Purchaser and pursuant to the Exempt Resales, including any transfer or other
taxes payable thereon; (iii) all expenses in connection with the registration
or qualification of the Senior Subordinated Notes and the Subsidiary
Guarantees for offer and sale under the securities or Blue Sky laws of the
several states and all costs of producing any preliminary and supplemental
Blue Sky memoranda in connection therewith (including the filing fees and
reasonable fees and disbursements of counsel for the Initial Purchaser in
connection with such registration or qualification and memoranda relating
thereto); (iv) the cost of printing certificates representing the Senior
Subordinated Notes and the Subsidiary Guarantees, (v) all expenses and
listing fees in connection with the application for quotation of the Senior
Subordinated Notes on PORTAL; (vi) the fees and expenses of the Trustee and
the Trustee's counsel in connection with the Indenture, the Notes and the
Subsidiary Guarantees; (vii) the costs and expenses of any transfer agent,
registrar and/or depositary (including DTC); (viii) any fees charged by
rating agencies for the rating of the Notes; (ix) all costs and expenses of
the Exchange Offer and any Registration Statement, as set forth in the
Registration Rights Agreement; and (x) all other costs and expenses incident
to the performance of the obligations of the Company and the Guarantors
hereunder for which provision is not otherwise made in this Section.
8. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The obligations of the
Initial Purchaser to purchase the Senior Subordinated Notes under this Agreement
are subject to the satisfaction of each of the following:
(a) The Initial Purchaser shall not have discovered and disclosed to
the Company and the Guarantors on or prior to such Closing Date that the
Preliminary Offering Memorandum or the Offering Memorandum or any amendment
or supplement thereto contains an untrue statement of a fact which, in the
opinion of Latham & Watkins, counsel for the Initial Purchaser, is material
or omits to state a fact which, in the opinion of such counsel, is material
and is necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) All of the representations and warranties of the Company and the
Guarantors contained in this Agreement shall be true and correct on the
date hereof and on the Closing Date with the same force and effect as if
made on and as of the date hereof and the Closing Date, respectively. The
Company shall have performed or complied with all of the agreements herein
contained and required to be performed or complied with by it at or prior
to the Closing Date.
(c) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchaser not later than 10:00 a.m., New York
City time, on the day following the date of this Agreement or at such later
date and time as to which the Initial Purchaser may agree, and no stop
order suspending the qualification or exemption from qualification of the
Senior Subordinated Notes in any jurisdiction referred to in Section 6(h)
shall have been issued and no proceeding for that purpose shall have been
commenced or shall be pending or threatened.
(d) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date, prevent the issuance of the
Senior Subordinated Notes; no action, suit or proceeding shall have been
commenced and be pending against or affecting or threatened against, the
Company or any Guarantor before any court or arbitrator or any governmental
body, agency or official that, if adversely determined, could reasonably be
expected to have a Material Adverse Effect; and no stop order shall have
been issued preventing the use of the Offering Memorandum, or any amendment
or supplement thereto, or which could reasonably be expected to have a
Material Adverse Effect.
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<PAGE>
(e) Since the dates as of which information is given in the Offering
Memorandum other than as set forth on the Offering Memorandum (exclusive of
any amendments or supplements thereto subsequent to this Agreement), (i)
there shall not have occurred any events or circumstances that would have
any Material Adverse Effect, or any development that is reasonably likely
to result in a Material Adverse Effect, in the capital stock or the
long-term debt, or material increase in the short-term debt, of the Company
or any of its Subsidiaries from that set forth in the Offering Memorandum,
(ii) no dividend or distribution of any kind shall have been declared, paid
or made by the Company or any of its Subsidiaries on any class of its
capital stock and (iii) neither the Company nor any of its Subsidiaries
shall have incurred any liabilities or obligations, direct or contingent,
that are material, individually or in the aggregate, to the Company and its
Subsidiaries, taken as a whole, and that are required to be disclosed on a
balance sheet or notes thereto in accordance with generally accepted
accounting principles and are not disclosed on the latest balance sheet or
notes thereto included in the Offering Memorandum. Since the date hereof
and since the dates as of which information is given in the Offering
Memorandum, there shall not have occurred any Material Adverse Effect in
the properties, business, earnings, management, results of operations,
condition (financial or otherwise), affairs or prospects of the Company.
(f) The Initial Purchaser shall have received a certificate, dated
the Closing Date, signed on behalf of the Company by (i) the Chief
Executive Officer, President or any Vice President and (ii) a principal
financial or accounting officer of the Company, in form and substance
reasonably satisfactory to the Initial Purchaser, confirming, as of the
Closing Date, the matters set forth in paragraphs (b), (c), (d) and (e) of
this Section 8 and that, as of the Closing Date, the obligations of the
Company to be performed hereunder on or prior thereto have been duly
performed.
(g) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Senior Subordinated
Notes, the Subsidiary Guarantees, the Indenture, the Registration Rights
Agreement, the Offering Memorandum, the other Operative Documents and all
other legal matters relating to this Agreement and the transactions
contemplated hereby and thereby, shall be satisfactory in all material
respects to counsel for the Initial Purchaser, and the Company and its
Subsidiaries shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass upon
such matters.
(h) Wilson Sonsini Goodrich & Rosati, Professional Corporation,
counsel for the Company and the Guarantors, shall have furnished to the
Initial Purchaser its written opinion, as counsel to the Company, addressed
to the Initial Purchaser and dated the Closing Date, in the form attached
as Exhibit D hereto.
(i) McDermott, Will & Emery, counsel to IPB, shall have furnished to
the Initial Purchaser its written opinion, as counsel to IPB, addressed to
the Initial Purchaser and dated the Closing Date, in the form attached as
Exhibit E hereto.
(j) Sparks Dix, P.C., counsel to Stadia, shall have furnished to the
Initial Purchaser its written opinion, as counsel to Stadia, addressed to
the Initial Purchaser and dated the Closing Date, in the form attached as
Exhibit F hereto.
(k) The Initial Purchaser shall have received letters addressed to
the Initial Purchaser and dated the Closing Date to the effect that the
Initial Purchaser may rely on the opinion to the same extent as if it were
originally addressed to the Initial Purchaser from each of (i) Wilson
Sonsini Goodrich & Rosati, Professional Corporation, counsel to the Company
and Cognitive, (ii)
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McDermott, Will & Emery, counsel to the Company and IPB, (iii)
Slaughter & May, counsel to Axiohm S.A., (iv) Adrian Holmes,
Esq., counsel to DH Technology pty, (v) Mace and Jones, counsel to DH
Technology plc., and (vi) Sparks Dix P.C., counsel to Stadia, with respect
to the opinions delivered by such firms pursuant to the New Credit
Facility.
(l) The Initial Purchaser shall have received an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchaser, of Latham & Watkins, counsel to the Initial Purchaser, covering
such matters as are customarily covered in such opinions.
(m) On the Closing Date, the Initial Purchaser shall have received a
solvency opinion, in the form contemplated by the New Credit Facility, by
an independent third party addressed to the Trustee among others and
reasonably satisfactory to the Initial Purchaser as to the solvency of the
Company and its Subsidiaries following the consummation of the transactions
contemplated herein and by the Merger Agreement.
(n) In addition to the opinions of counsel required to be delivered
pursuant to paragraphs (h), (i), (j), (l) and (m) of this Section 8, the
Initial Purchaser shall receive all of the opinions to be delivered by the
firms stated in clause (k) above pursuant to the New Credit Facility.
(o) With respect to the letter of KPMG Peat Marwick delivered to the
Initial Purchaser concurrently with the execution of this Agreement (the
"INITIAL LETTER"), the Company and the Guarantors shall have furnished to
the Initial Purchaser a letter (as used in this paragraph, the "BRING-DOWN
LETTER") of such accountant, addressed to the Initial Purchaser and dated
such Closing Date (i) confirming that they are independent public
accountants under the guidelines of the AICPA, (ii) stating, as of the date
of the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Offering Memorandum, as of a date not more than
two days prior to the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial information and other
matters covered by the initial letter and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letter.
(p) With respect to the letter of Price Waterhouse delivered to the
Initial Purchaser concurrently with the execution of this Agreement (the
"INITIAL LETTER"), the Company and the Guarantors shall have furnished to
the Initial Purchaser a letter (as used in this paragraph, the "BRING-DOWN
LETTER") of such accountant, addressed to the Initial Purchaser and dated
such Closing Date (i) confirming that they are independent accountants
under the guidelines of the AICPA, (ii) stating, as of the date of the
bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Offering Memorandum, as of a date not more than
two days prior to the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial information and other
matters covered by the initial letter and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letter.
(q) The Company, the Guarantors and the Trustee shall have entered
into the Indenture and the Initial Purchaser shall have received
counterparts, conformed as executed, thereof.
(r) The Company, the Guarantors and the Initial Purchaser shall have
entered into the Registration Rights Agreement and the Initial Purchaser
shall have received counterparts, conformed as executed, thereof.
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<PAGE>
(s) The Company and the Guarantors shall have entered into the New
Credit Facility (the form and substance of which shall be reasonably
acceptable to the Initial Purchaser) and the Initial Purchaser shall have
received counterparts, conformed as executed, thereof and of all other
documents and agreements entered into in connection therewith.
(t) On the Closing Date, the Initial Purchaser shall have received
evidence satisfactory to the Initial Purchaser that the indebtedness under
the Tender Facility and the Interim Preferred Stock, in each case has been
repaid in full.
(u) On the Closing Date, the Initial Purchaser shall have received
evidence satisfactory to the Initial Purchaser that certain options held by
shareholders of DH Technology were cashed out as described in the Offering
Memorandum.
(v) Each condition to the closing contemplated by the Merger
Agreement shall have been satisfied or waived. There shall exist at and as
of the Closing Date (after giving effect to the transactions contemplated
by this Agreement and the New Credit Facility) no conditions that would
constitute a default (or an event that with notice or the lapse of time, or
both, would constitute a default) under the Merger Agreement. Prior to the
Closing Date, the Merger shall have been consummated on terms that conform
in all material respects to the description thereof in the Offering
Memorandum and the Initial Purchaser shall have received evidence
satisfactory to the Initial Purchaser of the consummation thereof. The
Company shall deliver to the Initial Purchaser copies of all of filings
made with any governmental entity (including, without limitation, the
United States Patent and Trademark Office, the United States Copyright
Office and the Department of Justice Antitrust Division) in order to effect
the Merger, as certified by an appropriate official thereof, on the Closing
Date. The Company shall deliver to the Initial Purchaser, as soon as
possible, copies of the certificates of ownership required to be filed
under California law in order to effect the Merger, as certified by the
Secretary of State of the State of California.
(w) Each condition to the initial borrowing under the New Credit
Facility (other than the issuance and sale of the Senior Subordinated Notes
pursuant hereto) shall have been satisfied or waived. There shall exist at
and as of the Closing Date (after giving effect to the transactions
contemplated by this Agreement) no conditions that would constitute a
default (or an event that with notice or the lapse of time, or both, would
constitute a default) under the New Credit Facility. At or prior to the
Closing Date, the closing under the New Credit Facility shall have been
consummated on terms that conform in all material respects to the
description thereof in the Offering Memorandum and the Initial Purchaser
shall have received evidence satisfactory to the Initial Purchaser of the
consummation thereof.
(x) (i) Neither the Company nor any of its Subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Offering Memorandum losses or interferences with their
businesses, taken as a whole, from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Offering Memorandum or (ii) since such date there
shall not have been any change in the capital stock or long-term debt of
the Company or any of its Subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of
operations of the Company and its Subsidiaries taken as a whole, otherwise
than as set forth or contemplated in the Offering Memorandum, the effect of
which, in any such case described in clause (i) or (ii), is, in the
judgment of the Initial Purchaser, so material and adverse
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<PAGE>
as to make it impracticable or inadvisable to proceed with the Offering
or the delivery of the Senior Subordinated Notes being delivered on the
Closing Date on the terms and in the manner contemplated herein and in
the Offering Memorandum.
(y) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or The Nasdaq National Market or
in the over-the-counter market shall have been suspended or materially
limited, or minimum prices shall have been established on such exchange by
the Commission, or by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium shall
have been declared by Federal or state authorities, (iii) the United States
shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the United States or
(iv) there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of international
conditions on the financial markets in the United States shall be such) as
to make it, in the judgment of the Initial Purchaser, impracticable or
inadvisable to proceed with the Offering or delivery of the Senior
Subordinated Notes being delivered on the Closing Date on the terms and in
the manner contemplated herein and in the Offering Memorandum.
(z) On or after the date hereof, (i) there shall not have occurred
any downgrading, suspension or withdrawal of, nor shall any notice have
been given of any potential or intended downgrading, suspension or
withdrawal of, or of any review (or of any potential or intended review)
for a possible change that does not indicate the direction of the possible
change in, any rating of the Company or any Guarantor or any securities of
the Company or any Guarantor (including, without limitation, the placing of
any of the foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by any
"nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act, (ii) there
shall not have occurred any change, nor shall notice have been given of any
potential or intended change, in the outlook for any rating of the Company
or any Guarantor by any such rating organization and (iii) no such rating
organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to the Notes than that on which the
Notes were marketed.
(aa) Latham & Watkins shall have been furnished with such documents,
in addition to those set forth above, as they may reasonably require for
the purpose of enabling them to review or pass upon the matters referred to
in this Section 8 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations,
warranties or conditions herein contained.
(ab) Prior to the Closing Date, the Company shall have furnished to
the Initial Purchaser such further information, certificates and documents
as the Initial Purchaser may reasonably request.
All opinions, certificates, letters and other documents required by
this Section 8 to be delivered by the Company will be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and substance
to the Initial Purchaser. The Company will furnish the Initial Purchaser with
such conformed copies of such opinions, certificates, letters and other
documents as it shall reasonably request.
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<PAGE>
9. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and each Guarantor, jointly and severally, shall
indemnify and hold harmless the Initial Purchaser, its directors, officers
and employees and each person, if any, who controls the Initial Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages,
liabilities, judgments and actions, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability, judgment or action relating to purchases and sales of Senior
Subordinated Notes), to which the Initial Purchaser, its directors,
officers, employees or controlling persons may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability, judgment or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained
(A) in any Preliminary Offering Memorandum or the Offering Memorandum or in
any amendment or supplement thereto or (B) in any blue sky application or
other document prepared or executed by the Company and the Guarantors (or
based upon any written information furnished by the Company and the
Guarantors) specifically for the purpose of qualifying any or all of the
Senior Subordinated Notes under the securities laws of any state or other
jurisdiction (any such application, document or information being
hereinafter called a "BLUE SKY APPLICATION") or (C) any Rule 144A
Information provided by the Company and any Guarantor to any holder or
prospective purchaser of Senior Subordinated Notes pursuant to Section 6(f)
or (ii) the omission or alleged omission to state in any Preliminary
Offering Memorandum or the Offering Memorandum, or in any amendment or
supplement thereto, or in any Blue Sky Application or in any Rule 144A
Information any material fact required to be stated therein or necessary to
make the statements therein not misleading, and shall reimburse the Initial
Purchaser and each such director, officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by
such Initial Purchaser, director, officer, employee or controlling person
in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability, judgment or action as such
expenses are incurred; PROVIDED, HOWEVER, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability, judgment or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made
in any Preliminary Offering Memorandum or the Offering Memorandum, or in
any such amendment or supplement, or in any Blue Sky Application or in any
Rule 144A Information, in reliance upon and in conformity with written
information concerning the Initial Purchaser furnished to the Company by or
on behalf of the Initial Purchaser specifically for inclusion therein;
PROVIDED FURTHER, that the indemnity agreement provided in this Section
9(a) with respect to any Preliminary Offering Memorandum shall not inure to
the benefit of the Initial Purchaser in any case in which a subsequent
purchaser asserts that its losses, claims, damages, liabilities, or actions
was based upon any untrue statement or alleged untrue statement of material
fact or omission or alleged omission to state therein a material fact in
the Preliminary Offering Memorandum, if a copy of the Offering Memorandum
in which such untrue statement or alleged untrue statement or omission or
alleged omission was corrected had not been sent or given to such
subsequent purchaser by the Initial Purchaser, PROVIDED that the Company
delivered such Offering Memorandum to the Initial Purchaser in requisite
quantity and on a timely basis to permit such delivery or sending. The
foregoing indemnity agreement is in addition to any liability which the
Company may otherwise have to the Initial Purchaser or to any director,
officer, employee or controlling person of the Initial Purchaser.
(b) The Initial Purchaser agrees to indemnify and hold harmless the
Company and the Guarantors, and their respective directors, officers and
employees and each person, if any, who
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controls the Company or any Guarantor within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages, liabilities, judgments or
actions, joint or several, or any action in respect thereof, to which
the Company, any Guarantor or any such director, officer or controlling
person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability, judgment or action
arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or
supplement thereto, or (B) in any Blue Sky Application or (C) any Rule
144A Information provided by the Company or any Guarantor to any holder
or prospective purchaser of Senior Subordinated Notes pursuant to
Section 6(f) or (ii) the omission or alleged omission to state in any
Preliminary Offering Memorandum or the Offering Memorandum, or in any
amendment or supplement thereto, or in any Blue Sky Application or Rule
144A Information any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and
in conformity with written information concerning the Initial Purchaser
furnished to the Company by or on behalf of the Initial Purchaser
specifically for inclusion therein, and PROVIDED FURTHER, that the
indemnity agreement provided in this Section 9(b) with respect to any
Preliminary Offering Memorandum shall not inure to the benefit of the
Initial Purchaser in any case in which a subsequent purchaser asserts
that its losses, claims, damages, liabilities, or actions was based upon
any untrue statement or alleged untrue statement of material fact or
omission or alleged omission to state therein a material fact in the
Preliminary Offering Memorandum, if a copy of the Offering Memorandum in
which such untrue statement or alleged untrue statement or omission or
alleged omission was corrected had not been sent or given to such
subsequent purchaser by the Initial Purchaser, PROVIDED that the Company
delivered such Offering Memorandum to the Initial Purchaser in requisite
quantity and on a timely basis to permit such delivery or sending, and
shall reimburse the Company, the Guarantors and any such director,
officer or controlling person for any legal or other expenses reasonably
incurred by the Company, any Guarantor or any such director, officer or
controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability,
judgment or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which the Initial
Purchaser may otherwise have to the Company, any Guarantor or any such
director, officer, employee or controlling person.
(c) Promptly after receipt by any person in respect of which
indemnity may be sought pursuant to Section 9(a) or (b) (the "INDEMNIFIED
PARTY") of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against any person against whom indemnity may be sought pursuant to Section
9(a) or (b) (the "INDEMNIFYING PARTY"), notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER,
that the failure to notify the indemnifying party shall not relieve it from
any liability which it may have under this Section 9 except to the extent
it has been materially prejudiced by such failure and, PROVIDED FURTHER,
that the failure to notify the indemnifying party shall not relieve it from
any liability which it may have to an indemnified party otherwise than
under this Section 9. If any such claim or action shall be brought against
an indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party and the payment of all fees and
expenses of such counsel shall be the responsibility of the indemnifying
party. After notice from the indemnifying party to the indemnified party
of its election to assume the defense of such claim or action, the
indemnifying
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party shall not be liable to the indemnified party under this
Section 9 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than
reasonable costs of investigation. In addition, any indemnified party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in
writing by the indemnifying party, (ii) the indemnifying party shall have
failed to assume the defense of such action or employ counsel reasonably
satisfactory to the indemnified party or (iii) the named parties to any
such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available
to the indemnifying party (in which case the indemnifying party shall not
have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed
as they are incurred. Such firm shall be designated in writing by Lehman
Brothers Inc., in the case of the parties indemnified pursuant to Section
9(a), and by the Company, in the case of parties indemnified pursuant to
Section 9(b). No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, suit or proceeding
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled
with the consent of the indemnifying party or if there be a final judgment
of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss
or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 9 shall for
any reason be unavailable or insufficient to hold harmless an indemnified
party under Section 9(a) or 9(b) in respect of any loss, claim, damage,
liability, judgment or any action in respect thereof, referred to therein,
then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage, liability,
judgment or action in respect thereof, (i) in such proportion as shall be
appropriate to reflect the relative benefits received by the Company and
the Guarantors, on the one hand, and the Initial Purchaser, on the other,
from the offering of the Senior Subordinated Notes or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and the Guarantors, on the one hand, and the Initial Purchaser, on
the other, with respect to the statements or omissions which resulted in
such loss, claim, damage, liability, judgment or action in respect thereof,
as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Guarantors, on the one hand, and
the Initial Purchaser, on the other, with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the
offering of the Senior Subordinated Notes purchased under this Agreement
(before deducting expenses) received by the Company, on the one
26
<PAGE>
hand, and the total discounts and commissions received by the Initial
Purchaser with respect to the Senior Subordinated Notes purchased under
this Agreement, on the other hand, bear to the total gross proceeds from
the offering of the Senior Subordinated Notes under this Agreement, in
each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Company and the Guarantors or the Initial
Purchaser, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The Company, the Guarantors and the Initial
Purchaser agree that it would not be just and equitable if contributions
pursuant to this Section 9 were to be determined by pro rata allocation
or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage,
liability, judgment or action in respect thereof, referred to above in
this Section 9 shall be deemed to include, for purposes of this Section
9(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9(d),
the Initial Purchaser shall not be required to contribute any amount in
excess of the amount by which the total price at which the Senior
Subordinated Notes purchased by it and distributed to investors in
Exempt Resales exceeds the amount of any damages which the Initial
Purchaser has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
(e) The remedies provided for in this Section 9 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The Initial Purchaser confirms and the Company and the Guarantors
acknowledge that the statements with respect to the offering of the Senior
Subordinated Notes by the Initial Purchaser set forth on the cover page of,
the stabilization legend in and the concession and reallowance figures
under the caption "Plan of Distribution" in, the Offering Memorandum are
correct and constitute the only information concerning such Initial
Purchaser furnished in writing to the Company and the Guarantors by or on
behalf of the Initial Purchaser specifically for inclusion in the Offering
Memorandum.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. The obligations of the
Initial Purchaser hereunder may be terminated by the Initial Purchaser by notice
given to and received by the Company and the Guarantors prior to delivery of and
payment for the Senior Subordinated Notes if, prior to that time, any of the
events described in Sections 8(z) or 8(aa) shall have occurred or if the Initial
Purchaser shall decline to purchase the Senior Subordinated Notes for any reason
permitted under this Agreement.
11. REIMBURSEMENT OF INITIAL PURCHASER'S EXPENSES. If (a) the Company
shall fail to tender the Senior Subordinated Notes for delivery to the Initial
Purchaser otherwise than for any reason permitted under this Agreement or (b)
the Initial Purchaser shall decline to purchase the Senior Subordinated Notes
for any reason permitted under this Agreement including termination of this
Agreement pursuant to Section 10 above, the Company and the Guarantors shall
reimburse the Initial Purchaser for the reasonable fees and expenses of its
counsel and for such other out-of-pocket expenses as shall have been incurred by
them in connection with this Agreement and the proposed purchase of the Senior
Subordinated Notes, and upon demand the Company and the Guarantors shall pay the
full amount thereof to the Initial Purchaser.
27
<PAGE>
12. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or sent by mail,
telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate Department
(Fax: (212) 528-8822), with copies to (i) Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Director of
Litigation (Fax: (212) 526-3738; and (ii) Latham & Watkins, 885 Third
Avenue, New York, New York 10022, Attention: Raymond Y. Lin (Fax: (212)
751-4864);
(b) if to the Company and the Guarantors, shall be delivered or sent
by mail, telex or facsimile transmission to the address of the Company set
forth in the Offering Memorandum, Attention: Walter S. Sobon (Fax: (619)
451-3573), with a copy to Wilson Sonsini Goodrich & Rosati, Professional
Corporation, 650 Page Mill Road, Palo Alto, California 94304-1050
Attention: Henry P. Massey, Jr. (Fax: (650) 496-6811);
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof. The Company and the Guarantors shall be entitled to
act and rely upon any request, consent, notice or agreement given or made on
behalf of the Initial Purchaser.
13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure
to the benefit of and be binding upon the Initial Purchaser, the Company, the
Guarantors and their respective successors and assigns. This Agreement and the
terms and provisions hereof are for the sole benefit of only those persons,
except that (A) the representations, warranties, indemnities and agreements of
the Company contained in Sections 2 and 9(a) of this Agreement shall also be
deemed to be for the benefit of directors, officers and any person who controls
the Initial Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and (B) the representations, warranties,
indemnities and agreements of the Initial Purchaser contained in Sections 4 and
9(b) of this Agreement shall be deemed to be for the benefit of directors,
officers, and any person controlling the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 13, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
14. SURVIVAL. The respective indemnities, representations, warranties and
agreements of the Company, the Guarantors and the Initial Purchaser contained in
this Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Senior Subordinated
Notes and shall remain in full force and effect, regardless of (i) any
investigation or statement as to the result thereof made by or on behalf of any
of them or any person controlling any of them (ii) acceptance of the Senior
Subordinated Notes and payment for them hereunder and (iii) termination of this
Agreement.
15. DEFINITION OF "BUSINESS DAY". For purposes of this Agreement,
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.
28
<PAGE>
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[Signature page follows]
29
<PAGE>
If the foregoing correctly sets forth the understanding among the
Initial Purchaser, the Company and the Guarantors please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement between us.
Very truly yours,
AXIOHM TRANSACTION SOLUTIONS, INC.
By: /s/ Walter S. Sobon
------------------------------------------
Name: Walter S. Sobon
Title: Chief Financial Officer
AXIOHM S.A.
By: /s/ Patrick Dupuy
------------------------------------------
Name: Patrick Dupuy
Title: Chairman
DARDEL TECHNOLOGIES S.A.
By: /s/ Patrick Dupuy
------------------------------------------
Name: Patrick Dupuy
Title: Chairman
AXIOHM IPB, INC.
By: /s/ Walter S. Sobon
------------------------------------------
Name: Walter S. Sobon
Title: Chief Financial Officer
STADIA COLORADO CORP.
By: /s/ Walter S. Sobon
------------------------------------------
Name: Walter S. Sobon
Title: Chief Financial Officer
<PAGE>
COGNITIVE SOLUTIONS, INC.
By: /s/ Walter S. Sobon
------------------------------------------
Name: Walter S. Sobon
Title: Chief Financial Officer
LEHMAN BROTHERS INC.
By: /s/ Michael A. Goldberg
------------------------------------------
Name: Michael A. Goldberg
Title: Vice President
<PAGE>
Schedule I
AXIOHM TRANSACTION SOLUTIONS, INC. SUBSIDIARIES
1. Dardel Technologies, S.A
2. Axiohm S.A.
3. Axiohm Limited
4. Axiohm Japan Inc.
5. DH Technology plc.
6. DH Technologia de Mexico, S.A.
7. DH Technology pty.
8. Stadia Colorado Corp.
9. Cognitive Solutions, Inc.
<PAGE>
SCHEDULE II
GUARANTORS
1. Axiohm IPB, Inc.
2. Axiohm S.A.*
3. Dardel Technologies S.A.**
4. Stadia Colorado Corp.
5. Cognitive Solutions, Inc.
- ------------------
* Axiohm S.A. shall become a Guarantor upon electing to be treated as a
"pass-through" entity for United States federal tax purposes. Such election
is to be made as soon as practicable after the Closing Date.
** Dardel Technologies S.A. shall become a Guarantor upon electing to be
treated as a "pass-through" entity for United States federal tax purposes.
Such election is to be made as soon as practicable after the Closing Date.
<PAGE>
SCHEDULE III
NON-WHOLLY OWNED SUBSIDIARIES OF AXIOHM TRANSACTION SOLUTIONS, INC.
1. Axiohm S.A.
2. Dardel Technologies S.A.
<PAGE>
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT B
FORM OF PURCHASE ASSUMPTION
PURCHASE AGREEMENT ASSUMPTION AGREEMENT
PURCHASE AGREEMENT ASSUMPTION AGREEMENT (this "AGREEMENT"), dated as
of __________, 1997, is by [Axiohm S.A.] [Dardel Technologies S.A.], a French
corporation (the "NEW GUARANTOR").
W I T N E S S E T H
WHEREAS, Axiohm Transaction Solutions, Inc., a California corporation,
(the "COMPANY") has heretofore executed and delivered to the Initial Purchaser a
purchase agreement (the "PURCHASE AGREEMENT"), dated as of September 25, 1997,
providing for the terms pursuant to which the Initial Purchaser will purchase
$120,000,000 of aggregate principal amount of 9 3/4% Senior Subordinated Notes
due 2007 (the "SENIOR SUBORDINATED NOTES") of the Company.
WHEREAS, the New Guarantor has elected to be treated as a "pass-
through" entity for United States federal income tax purposes (the
"ELECTION");and
WHEREAS, pursuant to the Purchase Agreement, the New Guarantor upon
the Election is required to execute this Agreement and become a party to the
Purchase Agreement;
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor covenants and agrees for the equal and ratable benefit of the Initial
Purchaser as follows:
1. ADDITIONAL GUARANTOR. The New Guarantor hereby agrees to be
deemed a "Guarantor" for all purposes under the Purchase Agreement and to
perform all obligations and duties of a Guarantor thereunder.
2. DEFINITIONS. Capitalized terms used herein but not defined shall
have the meanings given to such terms in the Purchase Agreement.
3. NEW YORK LAW TO GOVERN. The internal law of the State of New
York shall govern and be used to construe this Agreement.
4. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
[Signature on following page]
<PAGE>
IN WITNESS WHEREOF, the party hereto have caused this Agreement to be
duly executed and attested, all as of the date first above written.
[AXIOHM S.A.
By: ____________________________
Name:
Title:]
[DARDEL TECHNOLOGIES S.A.
By: ____________________________
Name:
Title:]
<PAGE>
EXHIBIT C
FORM OF REGISTRATION RIGHTS ASSUMPTION
REGISTRATION RIGHTS ASSUMPTION AGREEMENT
Registration Rights Assumption Agreement (this "AGREEMENT"), dated as
of ___________, 1997, is by [Axiohm S.A.] [Dardel Technologies S.A.], a French
corporation (the "NEW GUARANTOR").
W I T N E S S E T H
WHEREAS, Axiohm Transaction Solutions, Inc., a California corporation
(the "COMPANY"), has heretofore executed and delivered to the Initial Purchaser
a registration rights agreement (the "REGISTRATION RIGHTS AGREEMENT") dated
October 2, 1997, providing for registration rights whereby the Company, among
other things, will file with the Commission under the circumstances set forth
therein, (i) the Exchange Offer Registration Statement and (ii) the Shelf
Registration Statement and use its best efforts to cause such Registration
Statements to be declared effective and consummate the Exchange Offer;
WHEREAS, the New Guarantor has elected to be treated as a "pass-
through" entity for United States federal income tax purposes (the
"Election");and
WHEREAS, pursuant to the Purchase Agreement, the New Guarantor upon
the Election is required to execute this Agreement and become a party to the
Registration Rights Agreement;
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor covenants and agrees for the equal and ratable benefit of the Initial
Purchaser and each Holder of Transfer Restricted Securities as follows:
1. ADDITIONAL GUARANTOR. The New Guarantor hereby agrees to be
deemed a Guarantor for all purposes under the Registration Rights Agreement and
to perform all obligations and duties of a Guarantor thereunder.
2. DEFINITIONS. Capitalized terms used but not defined herein shall
have the meanings given to such terms in the Registration Rights Agreement.
3. NEW YORK LAW TO GOVERN. The internal law of the State of New
York shall govern and be used to construe this Agreement.
4. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
[Signature on following page]
<PAGE>
IN WITNESS WHEREOF, the party hereto has caused this Agreement to be
duly executed and attested, all as of the date first above written.
[AXIOHM S.A.
By: ____________________________
Name:
Title:]
[DARDEL TECHNOLOGIES S.A.
By: ____________________________
Name:
Title:]
<PAGE>
EXHIBIT D
FORM OF WILSON SONSINI GOODRICH & ROSATI, PROFESSIONAL CORPORATION OPINION
<PAGE>
EXHIBIT E
FORM OF MCDERMOTT, WILL & EMERY OPINION
<PAGE>
EXHIBIT F
FORM OF SPARKS DIX, P.C.
<PAGE>
DH TECHNOLOGY, INC.
EMPLOYMENT AGREEMENT
This Agreement is entered into as of July 14, 1997, by and between DH
Technology, Inc., a California corporation (the "Company") and William H.
Gibbs (the "Employee"). Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to them in the Merger Agreement
(defined below).
WHEREAS, Axiohm SA, a French corporation ("Axiohm"), Axiohm IPB, Inc., a
Delaware corporation and wholly-owned subsidiary of Axiohm ("Purchaser") and
the Company have entered into an Agreement and Plan of Merger (the "Merger
Agreement") which will result in a change in the ownership and control of the
Company and Axiohm becoming a wholly-owned subsidiary of the Company (the
"Transaction"); and
WHEREAS, the Company desires to retain the Employee on a full-time basis
in the capacity of Chief Executive Officer of the Company following the time
at which the Purchaser accepts for payment Shares tendered pursuant to the
Offer (the "Consummation of the Offer"), and the Employee desires to accept
such employment; and
WHEREAS the parties desire and agree to enter into an employment
relationship by means of this Agreement;
NOW THEREFORE in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:
1. CONDITION PRECEDENT. This Agreement shall become effective upon
the Consummation of the Offer and shall supersede in its entirety and without
limitation the employment agreement entered into by and between the Employee
and the Company on December 3, 1985 (the "Prior Agreement"). Prior to the
Consummation of the Offer, this Agreement shall be of no force or effect, and
the Employee's employment relationship with the Company shall be governed by
the Prior Agreement.
2. POSITION AND DUTIES. The Employee shall be employed, as of the
Consummation of the Offer, as Chief Executive Officer of the Company,
reporting to the Company's Board of Directors (the "Board") and assuming and
discharging such responsibilities as are commensurate with the Employee's
position. In performing his basic duties, the Employee shall work at his
current location, although the Employee acknowledges that frequent travel may
be necessary in carrying out his duties hereunder. The Employee shall
perform his duties faithfully and to the best of his ability and shall devote
his full business time and effort to the performance of his duties hereunder;
provided, however, that the foregoing shall not preclude the Employee from
engaging in civic, charitable or religious activities, from devoting a
reasonable amount of time to private investments, or from being employed by,
rendering
<PAGE>
services to or serving on the boards of directors of other entities, so long
as such activities, employment and/or service do not materially interfere or
conflict with his responsibilities to the Company.
3. EMPLOYMENT RELATIONSHIP. The Company and the Employee acknowledge
that the Employee's employment is and shall continue to be at-will, as
defined under applicable law. If the Employee's employment terminates for
any reason, the Employee shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this Agreement, or
as may otherwise be available in accordance with the Company's established
employee plans and policies at the time of termination.
4. COMPENSATION.
(a) BASE SALARY. For all services to be rendered by the Employee
pursuant to this Agreement, the Employee shall receive a minimum annual base
salary equal to his base salary approved by the Board in the normal course
prior to the Transaction, payable monthly in accordance with the Company's
normal payroll practices, increased from time to time by the Board consistent
with past practices, provided that in no event shall the Employee's annual
base salary be less than $225,000.
(b) BONUS. Beginning with the Company's current fiscal year, and
for each fiscal year thereafter during the term of this Agreement, the
Employee shall be eligible to receive a minimum target bonus of 50% of the
Employee's annual base salary based on performance of the Company as set
forth in the Company's annual operating plan to be agreed upon by the
Employee and the Board (the "Target Bonus").
(c) OPTION. Within six (6) months after the closing of the
Transaction, the Company shall grant an option to the Employee, on a date
chosen by the Employee and the Compensation Committee of the Board, for a
number of shares of the Company's Common Stock to be determined by the
Compensation Committee of the Board (the "Shares"), at a per Share purchase
price no greater than the then current fair market value of a Share, pursuant
to the Company's 1992 Stock Plan (the "1992 Plan") and standard form of stock
option agreement. Subject to the terms of the 1992 Plan, fifty percent (50%)
of the Shares shall vest on the date twenty-four (24) months after the date
of grant, and an additional one forty-eighth (1/48th) of the Shares shall
vest at the end of each month thereafter.
(d) AUTOMOBILE ALLOWANCE. During the term of this Agreement, the
Company shall make available to the Employee for his use an automobile
purchased by the Company. The Employee shall have the right to purchase the
automobile from the Company for $1 after three years from the date first
written above. Alternatively, the Company may provide the Employee with a car
allowance of not less than $1200 per month. The Company shall pay the cost
of maintenance and other automobile related expenses.
5. OTHER BENEFITS. The Employee shall be entitled to participate in
the employee benefit plans and programs of the Company, if any, to the extent
that his position, tenure, salary, age, health and other qualifications make
him eligible to participate in such plans or programs, subject to the rules
and
-2-
<PAGE>
regulations applicable thereto. The Company reserves the right to cancel or
change the benefit plans and programs it offers to its employees at any time.
6. EXPENSES. The Company shall reimburse the Employee for reasonable
travel, entertainment or other expenses incurred by the Employee in the
furtherance of or in connection with the performance of the Employee's duties
hereunder, in accordance with the Company's expense reimbursement policy as
in effect from time to time.
7. TERMINATION.
(a) INVOLUNTARY TERMINATION. If the Employee's employment with
the Company terminates as a result of Involuntary Termination, then, subject
to Section 9: (i) the Employee shall be entitled to receive a severance
payment equal to two times the Employee's Current Compensation (one and
one-half the Employee's Current Compensation if such Termination occurs after
the first anniversary of the Consummation of the Offer but on or before the
second anniversary of the Consummation of the Offer, and one times the
Employee's Current Compensation if such Termination occurs after the second
anniversary of the Consummation of the Offer); and (ii) the vesting and
exercisability of all outstanding stock options that were granted to the
Employee by the Company prior to the Consummation of the Offer shall
accelerate in full. Any severance payments to which the Employee is entitled
pursuant to this Section 7(a) shall be paid in lieu of any other severance or
severance-type benefits to which the Employee may be entitled under any other
company-sponsored plan, and shall be paid to the Employee in a lump sum
within fifteen (15) days of the Employee's Involuntary Termination.
(b) DISABILITY. If the Employee's employment with the Company
terminates as a result of Disability, the Company shall make available to the
Employee and the Employee's spouse and dependents group health, life and
other similar insurance plans substantially comparable to the group health,
life and other similar insurance plans in which the Employee or such
dependents participated on the date of such termination (the "Company
Coverage"). The Company Coverage shall be at the Company's expense for
twenty-four (24) months following such termination, and may be continued in
the Employee's discretion and at the Employee's expense indefinitely
thereafter. In addition, the Employee's stock options shall vest in full as
provided in clause (ii) of Section 7(a) above.
(c) DEATH. In the event of the Employee's death, this Agreement,
to the extent it has not already terminated, shall terminate on the last day
of the calendar month of the Employee's death. In addition (i) the
Employee's estate or beneficiaries shall be eligible for those benefits (if
any) as may then be established under the Company's severance and benefits
plans and policies existing at the time of the Employee's death, and (ii) the
Employee's stock options shall vest in full as provided in clause (ii) of
Section 7(a) above.
(d) OTHER TERMINATION. If the Employee's employment terminates
other than in an Involuntary Termination, or upon the Employee's Death or
Disability, then the Employee shall not be entitled to receive severance or
other benefits pursuant to this Agreement, but may be eligible for those
-3-
<PAGE>
benefits (if any) as may then be established under the Company's severance
and benefits plans and policies existing at the time of such termination.
8. DEFINITIONS.
(a) CAUSE. "Cause" shall mean the occurrence of any one or more
of the following: (i) the Employee's conviction by, or entry of a plea of
guilty or nolo contendere in, a court of final jurisdiction for any crime
which constitutes a felony in the jurisdiction involved (other than a felony
traffic offense), which felony materially injures the Company, its prospects
or its reputation; (ii) the Employee's misappropriation of funds or
commission of a material act of fraud, whether prior or subsequent to the
date hereof, upon the Company; (iii) gross negligence by the Employee in the
scope of the Employee's services to the Company; (iv) a willful breach by the
Employee of a material provision of this Agreement; or (v) a willful failure
of the Employee to substantially perform his duties hereunder.
Notwithstanding the foregoing, the Employee shall not be deemed to have been
terminated for Cause under clause (iii), (iv) or (v) of this Section 8(a)
unless the Board delivers a written notice to the Employee setting forth the
reasons for the Company's intention to terminate for Cause and specifically
identifying the manner in which the Board believes that the Employee has
engaged in such conduct, which conduct is not substantially corrected by the
Employee within 10 days following his receipt of such notice, and provides
the Employee with an opportunity, together with his counsel, if any, to be
heard before the Board.
(b) CURRENT COMPENSATION. "Current Compensation" shall mean an
amount equal to the Employee's three-year average annual base salary and
three-year average annual bonus over the three preceding fiscal years.
(c) DISABILITY. The Employee shall be considered to have suffered
a "Disability" for purposes of this Agreement if, at the end of any calendar
month during the term of this Agreement, the Employee is and has been for the
four consecutive full calendar months then ending, or for fifty percent or
more of the normal working days during the eight consecutive full calendar
months then ending, unable due to mental or physical illness or injury to
perform his duties under this Agreement in his normal and regular manner.
(d) INVOLUNTARY TERMINATION. "Involuntary Termination" shall mean
(i) without the Employee's express written consent, a reduction by the Board
of the Employee's duties, position or responsibilities relative to the
Employee's duties, position or responsibilities in effect immediately prior
to such reduction, or the removal of the Employee from such position, duties
and responsibilities, unless the Employee is provided with comparable duties,
position and responsibilities; (ii) without the Employee's express written
consent, a reduction by the Board of the Employee's base salary or Target
Bonus (as set forth in Section 4) in effect immediately prior to such
reduction; (iii) a reduction by the Board in the kind or level of employee
benefits to which the Employee is entitled immediately prior to such
reduction with the result that the Employee's overall benefits package is
significantly reduced; (iv) without the Employee's express written consent,
the relocation of the Employee by the Board to a facility or a location more
than thirty-five (35) miles from his current location; (v) any purported
-4-
<PAGE>
termination of the Employee by the Board which is not effected for Cause or
for which the grounds relied upon are not valid; or (vi) the failure of the
Company to obtain the assumption of this Agreement by any successors
contemplated in Section 11 below; provided, however, that an event described
above shall not constitute Involuntary Termination unless it is communicated
by the Employee to the Company in writing and is not corrected by the Company
in a manner that is reasonably satisfactory to the Employee (including full
retroactive correction with respect to any monetary matter) within ten days
of the Company's receipt of such written notice from the Employee.
9. GOLDEN PARACHUTE EXCISE TAX.
(a) BENEFITS CAP. In the event that the benefits under this
Agreement, when aggregated with any other payments or benefits received by
the Employee, or to be received by the Employee, would (i) constitute
"parachute payments" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), and (ii) but for this
provision, would be subject to the excise tax imposed by Section 4999 of the
Code or any similar or successor provision, then the Employee's benefits
shall be reduced to such lesser amount or degree as would result in no
portion of such benefits being subject to the excise tax under Section 4999
of the Code.
(b) DETERMINATION. Unless the Company and the Employee otherwise
agree in writing, any determination required under this Section shall be made
in writing by the Company's primary independent public accounting firm (the
"Accountants"), whose determination shall be conclusive and binding upon the
Employee and the Company for all purposes. For purposes of making the
calculations required by this Section, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and the Employee shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make its determination under this Section. The Company
shall bear all costs the Accountants may reasonably incur in connection with
any calculations contemplated by this Section.
10. RIGHT TO ADVICE OF COUNSEL. The Employee acknowledges that he has
had the right to consult with counsel and is fully aware of his rights and
obligations under this Agreement.
11. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. Any successor to the Company (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's
business and/or assets shall assume the obligations under this Agreement and
agree expressly to perform the obligations under this Agreement in the same
manner and to the same extent as the Company would be required to perform
such obligations in the absence of a succession. For all purposes under this
Agreement, the term "Company," shall include any successor to the Company's
business and/or assets which executes and delivers the assumption agreement
described in this subsection (a) or which becomes bound by the terms of this
Agreement by operation of law.
-5-
<PAGE>
(b) EMPLOYEE'S SUCCESSORS. Without the written consent of the
Company, the Employee shall not assign or transfer this Agreement or any
right or obligation under this Agreement to any other person or entity.
Notwithstanding the foregoing, the terms of this Agreement and all rights of
the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
12. NOTICE CLAUSE.
(a) MANNER. Any notice hereby required or permitted to be given
shall be sufficiently given if in writing and upon mailing by registered or
certified mail, postage prepaid, to either party at the address of such party
or such other address as shall have been designated by written notice by such
party to the other party.
(b) EFFECTIVENESS. Any notice or other communication required or
permitted to be given under this Agreement will be deemed given on the day
when delivered in person, or the third business day after the day on which
such notice was mailed in accordance with Section 12(a).
13. DISPUTES. In the event that a dispute arises over the terms or
enforcement of this Agreement, the parties agree to submit such dispute to
binding arbitration in San Diego, California by a single arbitrator engaged
through JAMS-Endispute, Inc., its successor firm or another private dispute
resolution firm acceptable to both parties. The arbitrator shall be selected
as follows: the arbitration firm shall present its panel of available
arbitrators, and each party shall sign rank of preference to each of such
panel with number 1 being the highest rank. The person on the panel with the
lowest total score shall be the arbitrator for a dispute. The arbitrator
shall have absolute discretion or authority to limit discovery relevant to
the matter and the length of the proceeding before the arbitrator. The
parties may not submit written briefs. The arbitrator shall rule on the
dispute in writing within ten (10) days after the close of hearings. The
time specified in this Section may be extended upon mutual agreement of the
parties. The decision of the arbitrator may be entered or registered in any
court of competent jurisdiction for execution and enforcement. The
arbitrator shall have the power to allocate between the parties the costs of
the proceeding and the attorneys' fees incurred in the proceeding as he or
she deems appropriate.
14. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal substantive laws, but not the choice of law
rules, of the state of California.
15. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement, or any terms hereof, shall not affect the validity or
enforceability of any other provision or term of this Agreement.
16. INTEGRATION. This Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and
supersedes all prior or contemporaneous agreements whether written or oral.
No waiver, alteration, or modification of any of the provisions of this
Agreement shall be binding unless in writing and signed by duly authorized
representatives of the parties hereto.
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<PAGE>
17. TAXES. All payments made pursuant to this Agreement shall be
subject to withholding of applicable income and employment taxes.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by a duly authorized officer, as of the day and year
first above written.
DH TECHNOLOGY, INC.
By: /s/ David Ledwell
---------------------------------
Title: Vice President
-------------------------------
WILLIAM H. GIBBS:
/s/ William Gibbs
--------------------------------------
-7-
<PAGE>
DH TECHNOLOGY, INC.
EMPLOYMENT AGREEMENT
This Agreement is entered into as of July 14, 1997, by and between DH
Technology, Inc., a California corporation (the "Company") and Walter Sobon
(the "Employee"). Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to them in the Merger Agreement (defined
below).
WHEREAS, Axiohm SA, a French corporation ("Axiohm"), Axiohm IPB, Inc., a
Delaware corporation and wholly-owned subsidiary of Axiohm ("Purchaser") and
the Company have entered into an Agreement and Plan of Merger (the "Merger
Agreement") which will result in a change in the ownership and control of the
Company and Axiohm becoming a wholly-owned subsidiary of the Company (the
"Transaction"); and
WHEREAS, the Company desires to retain the Employee on a full-time basis
in the capacity of Chief Financial Officer of the Company following the time
at which the Purchaser accepts for payment Shares tendered pursuant to the
Offer (the "Consummation of the Offer"), and the Employee desires to accept
such employment; and
WHEREAS the parties desire and agree to enter into an employment
relationship by means of this Agreement;
NOW THEREFORE in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:
1. CONDITION PRECEDENT. This Agreement shall become effective upon
the Consummation of the Offer and shall supersede any prior agreement or
understanding between the Employee and the Company relating to the Employee's
employment by the Company. Prior to the Consummation of the Offer, this
Agreement shall be of no force or effect.
2. POSITION AND DUTIES. The Employee shall be employed, as of the
Consummation of the Offer, as Chief Financial Officer of the Company,
reporting to the Chief Executive Officer of the Company and assuming and
discharging such responsibilities as are commensurate with the Employee's
position. In performing his basic duties, the Employee shall work at his
current location, although the Employee acknowledges that frequent travel may
be necessary in carrying out his duties hereunder. The Employee shall
perform his duties faithfully and to the best of his ability and shall devote
his full business time and effort to the performance of his duties hereunder;
provided, however, that the foregoing shall not preclude the Employee from
engaging in civic, charitable or religious activities, from devoting a
reasonable amount of time to private investments, or from being employed by,
rendering
<PAGE>
services to or serving on the boards of directors of other entities, so long
as such activities, employment and/or service do not materially interfere or
conflict with his responsibilities to the Company.
3. EMPLOYMENT RELATIONSHIP. The Company and the Employee acknowledge
that the Employee's employment is and shall continue to be at-will, as
defined under applicable law. If the Employee's employment terminates for
any reason, the Employee shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this Agreement, or
as may otherwise be available in accordance with the Company's established
employee plans and policies at the time of termination.
4. COMPENSATION.
(a) BASE SALARY. For all services to be rendered by the Employee
pursuant to this Agreement, the Employee shall receive a minimum annual base
salary of $160,000, payable monthly in accordance with the Company's normal
payroll practices, increased from time to time by the Board of Directors of
the Company (the "Board") consistent with past practices.
(b) BONUS. Beginning with the Company's current fiscal year, and
for each fiscal year thereafter during the term of this Agreement, the
Employee shall be eligible to receive a minimum target bonus of $50,000 based
on performance of the Company as set forth in the Company's annual operating
plan established by the Chief Executive Officer of the Company and the Board
(the "Target Bonus").
(c) OPTION. Within six (6) months after the closing of the
Transaction, the Company shall grant an option to the Employee for a number
of shares of the Company's Common Stock to be determined by the Compensation
Committee of the Board (the "Shares"), at a per Share purchase price no
greater than the then current fair market value of a Share, pursuant to the
Company's 1992 Stock Plan (the "1992 Plan") and standard form of stock option
agreement. Subject to the terms of the 1992 Plan, fifty percent (50%) of the
Shares shall vest on the date twenty-four (24) months after the date of
grant, and an additional twenty-five percent (25%) of the Shares shall vest
at the end of each year thereafter.
(d) AUTOMOBILE ALLOWANCE. During the term of this Agreement, the
Company shall provide the Employee an automobile allowance of not less than
$900 per month. The Employee agrees to have available for business use a
four-door automobile suitable for customers and clients.
5. OTHER BENEFITS. The Employee shall be entitled to participate in
the employee benefit plans and programs of the Company, if any, to the extent
that his position, tenure, salary, age, health and other qualifications make
him eligible to participate in such plans or programs, subject to the rules
and regulations applicable thereto. The Company reserves the right to cancel
or change the benefit plans and programs it offers to its employees at any
time.
6. EXPENSES. The Company shall reimburse the Employee for reasonable
travel, entertainment or other expenses incurred by the Employee in the
furtherance of or in connection with
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<PAGE>
the performance of the Employee's duties hereunder, in accordance with the
Company's expense reimbursement policy as in effect from time to time.
7. TERMINATION.
(a) INVOLUNTARY TERMINATION. If the Employee's employment with
the Company terminates as a result of Involuntary Termination, then, subject
to Section 9: (i) the Employee shall be entitled to receive a severance
payment equal to one times the Employee's Current Compensation, (provided,
however, that the severance payment shall be one and one-half times the
Employee's Current Compensation if such termination occurs in the first year
following Consummation of the Offer and William Gibbs' employment with the
Company terminates for any reason during such year, or one and one-quarter
times the Employee's Current Compensation if such termination occurs in the
second year following Consummation of the Offer and William Gibbs employment
with the Company terminates for any reason during such year); and (ii) the
vesting and exercisability of all outstanding stock options that were granted
to the Employee by the Company prior to the Consummation of the Offer shall
accelerate in full. Any severance payments to which the Employee is entitled
pursuant to this Section 7(a) shall be paid in lieu of any other severance or
severance-type benefits to which the Employee may be entitled under any other
company-sponsored plan, and shall be paid to the Employee in a lump sum
within fifteen (15) days of the Employee's Involuntary Termination.
(b) DISABILITY. If the Employee's employment with the Company
terminates as a result of Disability, the Company shall make available to the
Employee and the Employee's spouse and dependents group health, life and
other similar insurance plans substantially comparable to the group health,
life and other similar insurance plans in which the Employee or such
dependents participated on the date of such termination (the "Company
Coverage"). The Company Coverage shall be at the Company's expense for
twelve (12) months following such termination. In addition, the Employee's
stock options shall vest in full as provided in clause (ii) of Section 7(a)
above.
(c) DEATH. In the event of the Employee's death, this Agreement,
to the extent it has not already terminated, shall terminate on the last day
of the calendar month of the Employee's death. In addition (i) the
Employee's estate or beneficiaries shall be eligible for those benefits (if
any) as may then be established under the Company's severance and benefits
plans and policies existing at the time of the Employee's death, and (ii) the
Employee's stock options shall vest in full as provided in clause (ii) of
Section 7(a) above.
(d) OTHER TERMINATION. If the Employee's employment terminates
other than in an Involuntary Termination, or upon the Employee's Death or
Disability, then the Employee shall not be entitled to receive severance or
other benefits pursuant to this Agreement, but may be eligible for those
benefits (if any) as may then be established under the Company's severance
and benefits plans and policies existing at the time of such termination.
-3-
<PAGE>
8. DEFINITIONS.
(a) CAUSE. "Cause" shall mean the occurrence of any one or more
of the following: (i) the Employee's conviction by, or entry of a plea of
guilty or nolo contendere in, a court of final jurisdiction for any crime
which constitutes a felony in the jurisdiction involved (other than a felony
traffic offense), which felony materially injures the Company, its prospects
or its reputation; (ii) the Employee's misappropriation of funds or
commission of a material act of fraud, whether prior or subsequent to the
date hereof, upon the Company; (iii) gross negligence by the Employee in the
scope of the Employee's services to the Company; (iv) a willful breach by the
Employee of a material provision of this Agreement; or (v) a willful failure
of the Employee to substantially perform his duties hereunder.
Notwithstanding the foregoing, the Employee shall not be deemed to have been
terminated for Cause under clause (iii), (iv) or (v) of this Section 8(a)
unless the Chief Executive Officer of the Company delivers a written notice
to the Employee setting forth the reasons for the Company's intention to
terminate for Cause and specifically identifying the manner in which the
Chief Executive Officer believes that the Employee has engaged in such
conduct, which conduct is not substantially corrected by the Employee within
10 days following his receipt of such notice, and provides the Employee with
an opportunity, together with his counsel, if any, to be heard before the
Board.
(b) CURRENT COMPENSATION. "Current Compensation" shall mean an
amount equal to the sum of (i) the Employee's average annual (or annualized)
base salary over the three preceding fiscal years (or such lesser number of
years as may be applicable to the Employee); and (ii) the Employee's average
annual (or annualized) bonus over the three preceding fiscal years; provided,
however that if there are fewer than three years of actual bonus history, the
Employee's average bonus shall be calculated by including the Employee's
Target Bonus for the fiscal year in which the termination occurs. For
example, if the termination occurs in 1999, average bonus shall be calculated
based on actual bonuses earned for 1997 and 1998 and Target Bonus for 1999.
(c) DISABILITY. The Employee shall be considered to have suffered
a "Disability" for purposes of this Agreement if, at the end of any calendar
month during the term of this Agreement, the Employee is and has been for the
four consecutive full calendar months then ending, or for fifty percent or
more of the normal working days during the eight consecutive full calendar
months then ending, unable due to mental or physical illness or injury to
perform his duties under this Agreement in his normal and regular manner.
(d) INVOLUNTARY TERMINATION. "Involuntary Termination" shall mean
(i) without the Employee's express written consent, a reduction of the
Employee's duties, position or responsibilities relative to the Employee's
duties, position or responsibilities in effect immediately prior to such
reduction, or the removal of the Employee from such position, duties and
responsibilities, unless the Employee is provided with comparable duties,
position and responsibilities; (ii) without the Employee's express written
consent, a reduction of the Employee's base salary or Target Bonus (as set
forth in Section 4) in effect immediately prior to such reduction; (iii) a
reduction in the kind or level of employee benefits to which the Employee is
entitled immediately prior to such reduction with the result that the
Employee's overall benefits package is significantly reduced; (iv) without
the Employee's express
-4-
<PAGE>
written consent, the relocation of the Employee to a facility or a location
more than thirty-five (35) miles from his current location; (v) any purported
termination of the Employee which is not effected for Cause or for which the
grounds relied upon are not valid; or (vi) the failure of the Company to
obtain the assumption of this Agreement by any successors contemplated in
Section 11 below; provided, however, that an event described above shall not
constitute Involuntary Termination unless it is communicated by the Employee
to the Company in writing and is not corrected by the Company in a manner
that is reasonably satisfactory to the Employee (including full retroactive
correction with respect to any monetary matter) within ten days of the
Company's receipt of such written notice from the Employee.
9. GOLDEN PARACHUTE EXCISE TAX.
(a) BENEFITS CAP. In the event that the benefits under this
Agreement, when aggregated with any other payments or benefits received by
the Employee, or to be received by the Employee, would (i) constitute
"parachute payments" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), and (ii) but for this
provision, would be subject to the excise tax imposed by Section 4999 of the
Code or any similar or successor provision, then the Employee's benefits
shall be reduced to such lesser amount or degree as would result in no
portion of such benefits being subject to the excise tax under Section 4999
of the Code.
(b) DETERMINATION. Unless the Company and the Employee otherwise
agree in writing, any determination required under this Section shall be made
in writing by the Company's primary independent public accounting firm (the
"Accountants"), whose determination shall be conclusive and binding upon the
Employee and the Company for all purposes. For purposes of making the
calculations required by this Section, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and the Employee shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make its determination under this Section. The Company
shall bear all costs the Accountants may reasonably incur in connection with
any calculations contemplated by this Section.
10. RIGHT TO ADVICE OF COUNSEL. The Employee acknowledges that he has
had the right to consult with counsel and is fully aware of his rights and
obligations under this Agreement.
11. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. Any successor to the Company (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's
business and/or assets shall assume the obligations under this Agreement and
agree expressly to perform the obligations under this Agreement in the same
manner and to the same extent as the Company would be required to perform
such obligations in the absence of a succession. For all purposes under this
Agreement, the term "Company," shall include any successor to the Company's
business and/or assets which executes and delivers the assumption agreement
-5-
<PAGE>
described in this subsection (a) or which becomes bound by the terms of this
Agreement by operation of law.
(b) EMPLOYEE'S SUCCESSORS. Without the written consent of the
Company, the Employee shall not assign or transfer this Agreement or any
right or obligation under this Agreement to any other person or entity.
Notwithstanding the foregoing, the terms of this Agreement and all rights of
the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
12. NOTICE CLAUSE.
(a) MANNER. Any notice hereby required or permitted to be given
shall be sufficiently given if in writing and upon mailing by registered or
certified mail, postage prepaid, to either party at the address of such party
or such other address as shall have been designated by written notice by such
party to the other party.
(b) EFFECTIVENESS. Any notice or other communication required or
permitted to be given under this Agreement will be deemed given on the day
when delivered in person, or the third business day after the day on which
such notice was mailed in accordance with Section 12(a).
13. DISPUTES. In the event that a dispute arises over the terms or
enforcement of this Agreement, the parties agree to submit such dispute to
binding arbitration in San Diego, California by a single arbitrator engaged
through JAMS-Endispute, Inc., its successor firm or another private dispute
resolution firm acceptable to both parties. The arbitrator shall be selected
as follows: the arbitration firm shall present its panel of available
arbitrators, and each party shall sign rank of preference to each of such
panel with number 1 being the highest rank. The person on the panel with the
lowest total score shall be the arbitrator for a dispute. The arbitrator
shall have absolute discretion or authority to limit discovery relevant to
the matter and the length of the proceeding before the arbitrator. The
parties may not submit written briefs. The arbitrator shall rule on the
dispute in writing within ten (10) days after the close of hearings. The
time specified in this Section may be extended upon mutual agreement of the
parties. The decision of the arbitrator may be entered or registered in any
court of competent jurisdiction for execution and enforcement. The
arbitrator shall have the power to allocate between the parties the costs of
the proceeding and the attorneys' fees incurred in the proceeding as he or
she deems appropriate.
14. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal substantive laws, but not the choice of law
rules, of the state of California.
15. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement, or any terms hereof, shall not affect the validity or
enforceability of any other provision or term of this Agreement.
16. INTEGRATION. This Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and
supersedes all prior or contemporaneous agreements
-6-
<PAGE>
whether written or oral. No waiver, alteration, or modification of any of
the provisions of this Agreement shall be binding unless in writing and
signed by duly authorized representatives of the parties hereto.
17. TAXES. All payments made pursuant to this Agreement shall be
subject to withholding of applicable income and employment taxes.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by a duly authorized officer, as of the day and year
first above written.
DH TECHNOLOGY, INC.
By: /s/ William H. Gibbs
-----------------------------------------
Title: President and CEO
--------------------------------------
WALTER SOBON
/s/ Walter Sobon
---------------------------------------------
<PAGE>
DH TECHNOLOGY, INC.
EMPLOYMENT AGREEMENT
This Agreement is entered into as of July 14, 1997, by and between DH
Technology, Inc., a California corporation (the "Company") and Janet Shanks (the
"Employee"). Capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to them in the Merger Agreement (defined below).
WHEREAS, Axiohm SA, a French corporation ("Axiohm"), Axiohm IPB, Inc., a
Delaware corporation and wholly-owned subsidiary of Axiohm ("Purchaser") and the
Company have entered into an Agreement and Plan of Merger (the "Merger
Agreement") which will result in a change in the ownership and control of the
Company and Axiohm becoming a wholly-owned subsidiary of the Company (the
"Transaction"); and
WHEREAS, the Company desires to retain the Employee on a full-time basis in
the capacity of Chief Accounting Officer of the Company following the time at
which the Purchaser accepts for payment Shares tendered pursuant to the Offer
(the "Consummation of the Offer"), and the Employee desires to accept such
employment; and
WHEREAS the parties desire and agree to enter into an employment
relationship by means of this Agreement;
NOW THEREFORE in consideration of the promises and mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:
1. CONDITION PRECEDENT. This Agreement shall become effective upon the
Consummation of the Offer and shall supersede any prior agreement or
understanding between the Employee and the Company relating to the Employee's
employment by the Company. Prior to the Consummation of the Offer, this
Agreement shall be of no force or effect.
2. POSITION AND DUTIES. The Employee shall be employed, as of the
Consummation of the Offer, as Chief Accounting Officer of the Company, reporting
to the Chief Executive Officer of the Company and assuming and discharging such
responsibilities as are commensurate with the Employee's position. In
performing her basic duties, the Employee shall work at her current location,
although the Employee acknowledges that frequent travel may be necessary in
carrying out her duties hereunder. The Employee shall perform her duties
faithfully and to the best of her ability and shall devote her full business
time and effort to the performance of her duties hereunder; provided, however,
that the foregoing shall not preclude the Employee from engaging in civic,
charitable or religious activities, from devoting a reasonable amount of time to
private investments, or from being employed by, rendering services to or serving
on the boards of directors of other entities, so long as such activities,
employment and/or service do not materially interfere or conflict with her
responsibilities to the Company.
<PAGE>
3. EMPLOYMENT RELATIONSHIP. The Company and the Employee acknowledge
that the Employee's employment is and shall continue to be at-will, as defined
under applicable law. If the Employee's employment terminates for any reason,
the Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
policies at the time of termination.
4. COMPENSATION.
(a) BASE SALARY. For all services to be rendered by the Employee
pursuant to this Agreement, the Employee shall receive a minimum annual base
salary of $90,000, payable monthly in accordance with the Company's normal
payroll practices, increased from time to time by the Board of Directors of the
Company (the "Board") consistent with past practices.
(b) BONUS. Beginning with the Company's current fiscal year, and for
each fiscal year thereafter during the term of this Agreement, the Employee
shall be eligible to receive a minimum target bonus of $20,000 based on
performance of the Company as set forth in the Company's annual operating plan
established by the Chief Executive Officer of the Company and the Board (the
"Target Bonus").
(c) OPTION. Within six (6) months after the closing of the
Transaction, the Company shall grant an option to the Employee for a number of
shares of the Company's Common Stock to be determined by the Compensation
Committee of the Board (the "Shares"), at a per Share purchase price no greater
than the then current fair market value of a Share, pursuant to the Company's
1992 Stock Plan (the "1992 Plan") and standard form of stock option agreement.
Subject to the terms of the 1992 Plan, fifty percent (50%) of the Shares shall
vest on the date twenty-four (24) months after the date of grant, and an
additional twenty-five percent (25%) of the Shares shall vest at the end of each
year thereafter.
(d) AUTOMOBILE ALLOWANCE. During the term of this Agreement, the
Company shall provide the Employee an automobile allowance of not less than
$500 per month. The Employee agrees to have available for business use a
four-door automobile suitable for customers and clients.
5. OTHER BENEFITS. The Employee shall be entitled to participate in the
employee benefit plans and programs of the Company, if any, to the extent that
her position, tenure, salary, age, health and other qualifications make her
eligible to participate in such plans or programs, subject to the rules and
regulations applicable thereto. The Company reserves the right to cancel or
change the benefit plans and programs it offers to its employees at any time.
6. EXPENSES. The Company shall reimburse the Employee for reasonable
travel, entertainment or other expenses incurred by the Employee in the
furtherance of or in connection with the performance of the Employee's duties
hereunder, in accordance with the Company's expense reimbursement policy as in
effect from time to time.
2
<PAGE>
7. TERMINATION.
(a) INVOLUNTARY TERMINATION. If the Employee's employment with the
Company terminates as a result of Involuntary Termination, then, subject to
Section 9: (i) the Employee shall be entitled to receive a severance payment
equal to one times the Employee's Current Compensation (one-half the Employee's
Current Compensation if such Termination occurs after the second anniversary of
the Consummation of the Offer); and (ii) the vesting and exercisability of all
outstanding stock options that were granted to the Employee by the Company prior
to the Consummation of the Offer shall accelerate in full. Any severance
payments to which the Employee is entitled pursuant to this Section 7(a) shall
be paid in lieu of any other severance or severance-type benefits to which the
Employee may be entitled under any other company-sponsored plan, and shall be
paid to the Employee in a lump sum within fifteen (15) days of the Employee's
Involuntary Termination.
(b) DISABILITY. If the Employee's employment with the Company
terminates as a result of Disability, the Company shall make available to the
Employee and the Employee's spouse and dependents group health, life and other
similar insurance plans substantially comparable to the group health, life and
other similar insurance plans in which the Employee or such dependents
participated on the date of such termination (the "Company Coverage"). The
Company Coverage shall be at the Company's expense for twelve (12) months
following such termination. In addition, the Employee's stock options shall
vest in full as provided in clause (ii) of Section 7(a) above.
(c) DEATH. In the event of the Employee's death, this Agreement, to
the extent it has not already terminated, shall terminate on the last day of the
calendar month of the Employee's death. In addition (i) the Employee's estate
or beneficiaries shall be eligible for those benefits (if any) as may then be
established under the Company's severance and benefits plans and policies
existing at the time of the Employee's death, and (ii) the Employee's stock
options shall vest in full as provided in clause (ii) of Section 7(a) above.
(d) OTHER TERMINATION. If the Employee's employment terminates other
than in an Involuntary Termination, or upon the Employee's Death or Disability,
then the Employee shall not be entitled to receive severance or other benefits
pursuant to this Agreement, but may be eligible for those benefits (if any) as
may then be established under the Company's severance and benefits plans and
policies existing at the time of such termination.
8. DEFINITIONS.
(a) CAUSE. "Cause" shall mean the occurrence of any one or more of
the following: (i) the Employee's conviction by, or entry of a plea of guilty or
nolo contendere in, a court of final jurisdiction for any crime which
constitutes a felony in the jurisdiction involved (other than a felony traffic
offense), which felony materially injures the Company, its prospects or its
reputation; (ii) the Employee's misappropriation of funds or commission of a
material act of fraud, whether prior or subsequent to the date hereof, upon the
Company; (iii) gross negligence by the Employee in the scope of the Employee's
services to the Company; (iv) a willful breach by the Employee of a material
provision of this Agreement; or (v) a willful failure of the Employee to
substantially perform her duties hereunder. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated
3
<PAGE>
for Cause under clause (iii), (iv) or (v) of this Section 8(a) unless the
Chief Executive Officer of the Company delivers a written notice to the
Employee setting forth the reasons for the Company's intention to terminate
for Cause and specifically identifying the manner in which the Chief
Executive Officer believes that the Employee has engaged in such conduct,
which conduct is not substantially corrected by the Employee within 10 days
following her receipt of such notice, and provides the Employee with an
opportunity, together with her counsel, if any, to be heard before the Board.
(b) CURRENT COMPENSATION. "Current Compensation" shall mean an
amount equal to the Employee's three-year average annual base salary and three-
year average annual bonus over the three preceding fiscal years.
(c) DISABILITY. The Employee shall be considered to have suffered a
"Disability" for purposes of this Agreement if, at the end of any calendar month
during the term of this Agreement, the Employee is and has been for the four
consecutive full calendar months then ending, or for fifty percent or more of
the normal working days during the eight consecutive full calendar months then
ending, unable due to mental or physical illness or injury to perform her duties
under this Agreement in her normal and regular manner.
(d) INVOLUNTARY TERMINATION. "Involuntary Termination" shall mean
(i) without the Employee's express written consent, a reduction of the
Employee's duties, position or responsibilities relative to the Employee's
duties, position or responsibilities in effect immediately prior to such
reduction, or the removal of the Employee from such position, duties and
responsibilities, unless the Employee is provided with comparable duties,
position and responsibilities; (ii) without the Employee's express written
consent, a reduction of the Employee's base salary or Target Bonus (as set forth
in Section 4) in effect immediately prior to such reduction; (iii) a reduction
in the kind or level of employee benefits to which the Employee is entitled
immediately prior to such reduction with the result that the Employee's overall
benefits package is significantly reduced; (iv) without the Employee's express
written consent, the relocation of the Employee to a facility or a location more
than thirty-five (35) miles from her current location; (v) any purported
termination of the Employee which is not effected for Cause or for which the
grounds relied upon are not valid; or (vi) the failure of the Company to obtain
the assumption of this Agreement by any successors contemplated in Section 11
below; provided, however, that an event described above shall not constitute
Involuntary Termination unless it is communicated by the Employee to the Company
in writing and is not corrected by the Company in a manner that is reasonably
satisfactory to the Employee (including full retroactive correction with respect
to any monetary matter) within ten days of the Company's receipt of such written
notice from the Employee.
9. GOLDEN PARACHUTE EXCISE TAX.
(a) BENEFITS CAP. In the event that the benefits under this
Agreement, when aggregated with any other payments or benefits received by the
Employee, or to be received by the Employee, would (i) constitute "parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and (ii) but for this provision, would be subject
to the excise tax imposed by Section 4999 of the Code or any similar or
successor provision, then the Employee's benefits shall be reduced to such
lesser amount or degree as would result in no portion of such benefits being
subject to the excise tax under Section 4999 of the Code.
4
<PAGE>
(b) DETERMINATION. Unless the Company and the Employee otherwise
agree in writing, any determination required under this Section shall be made in
writing by the Company's primary independent public accounting firm (the
"Accountants"), whose determination shall be conclusive and binding upon the
Employee and the Company for all purposes. For purposes of making the
calculations required by this Section, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and the Employee shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make its determination under this Section. The Company
shall bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section.
10. RIGHT TO ADVICE OF COUNSEL. The Employee acknowledges that she has
had the right to consult with counsel and is fully aware of her rights and
obligations under this Agreement.
11. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. Any successor to the Company (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement in the same manner and
to the same extent as the Company would be required to perform such obligations
in the absence of a succession. For all purposes under this Agreement, the term
"Company," shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
(b) EMPLOYEE'S SUCCESSORS. Without the written consent of the
Company, the Employee shall not assign or transfer this Agreement or any right
or obligation under this Agreement to any other person or entity.
Notwithstanding the foregoing, the terms of this Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
12. NOTICE CLAUSE.
(a) MANNER. Any notice hereby required or permitted to be given
shall be sufficiently given if in writing and upon mailing by registered or
certified mail, postage prepaid, to either party at the address of such party or
such other address as shall have been designated by written notice by such party
to the other party.
(b) EFFECTIVENESS. Any notice or other communication required or
permitted to be given under this Agreement will be deemed given on the day when
delivered in person, or the third business day after the day on which such
notice was mailed in accordance with Section 12(a).
13. DISPUTES. In the event that a dispute arises over the terms or
enforcement of this Agreement, the parties agree to submit such dispute to
binding arbitration in San Diego, California by
5
<PAGE>
a single arbitrator engaged through JAMS-Endispute, Inc., its successor firm
or another private dispute resolution firm acceptable to both parties. The
arbitrator shall be selected as follows: the arbitration firm shall present
its panel of available arbitrators, and each party shall sign rank of
preference to each of such panel with number 1 being the highest rank. The
person on the panel with the lowest total score shall be the arbitrator for a
dispute. The arbitrator shall have absolute discretion or authority to limit
discovery relevant to the matter and the length of the proceeding before the
arbitrator. The parties may not submit written briefs. The arbitrator shall
rule on the dispute in writing within ten (10) days after the close of
hearings. The time specified in this Section may be extended upon mutual
agreement of the parties. The decision of the arbitrator may be entered or
registered in any court of competent jurisdiction for execution and
enforcement. The arbitrator shall have the power to allocate between the
parties the costs of the proceeding and the attorneys' fees incurred in the
proceeding as he or she deems appropriate.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal substantive laws, but not the choice of law rules,
of the state of California.
15. SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement, or any terms hereof, shall not affect the validity or
enforceability of any other provision or term of this Agreement.
16. INTEGRATION. This Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and supersedes
all prior or contemporaneous agreements whether written or oral. No waiver,
alteration, or modification of any of the provisions of this Agreement shall be
binding unless in writing and signed by duly authorized representatives of the
parties hereto.
17. TAXES. All payments made pursuant to this Agreement shall be subject
to withholding of applicable income and employment taxes.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by a duly authorized officer, as of the day and year first
above written.
DH TECHNOLOGY, INC.
By: /s/ William Gibbs
--------------------------------------
Title: President and CEO
----------------------------------
JANET SHANKS
/s/ Janet Shanks
--------------------------------------
6
<PAGE>
DH TECHNOLOGY, INC.
EMPLOYMENT AGREEMENT
This Agreement is entered into as of July 14, 1997, by and between DH
Technology, Inc., a California corporation (the "Company") and David Ledwell
(the "Employee"). Capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to them in the Merger Agreement (defined below).
WHEREAS, Axiohm SA, a French corporation ("Axiohm"), Axiohm IPB, Inc., a
Delaware corporation and wholly-owned subsidiary of Axiohm ("Purchaser") and the
Company have entered into an Agreement and Plan of Merger (the "Merger
Agreement") which will result in a change in the ownership and control of the
Company and Axiohm becoming a wholly-owned subsidiary of the Company (the
"Transaction"); and
WHEREAS, the Company desires to retain the Employee on a full-time basis in
the capacity of Executive Vice President, Transaction Products of the Company
following the time at which the Purchaser accepts for payment Shares tendered
pursuant to the Offer (the "Consummation of the Offer"), and the Employee
desires to accept such employment; and
WHEREAS the parties desire and agree to enter into an employment
relationship by means of this Agreement;
NOW THEREFORE in consideration of the promises and mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:
1. CONDITION PRECEDENT. This Agreement shall become effective upon the
Consummation of the Offer and shall supersede any prior agreement or
understanding between the Employee and the Company relating to the Employee's
employment by the Company. Prior to the Consummation of the Offer, this
Agreement shall be of no force or effect.
2. POSITION AND DUTIES. The Employee shall be employed, as of the
Consummation of the Offer, as Vice President, Transaction Products of the
Company, reporting to the Chief Executive Officer of the Company and assuming
and discharging such responsibilities as are commensurate with the Employee's
position. In performing his basic duties, the Employee shall work at his
current location, although the Employee acknowledges that frequent travel may be
necessary in carrying out his duties hereunder. The Employee shall perform his
duties faithfully and to the best of his ability and shall devote his full
business time and effort to the performance of his duties hereunder; provided,
however, that the foregoing shall not preclude the Employee from engaging in
civic, charitable or religious activities, from devoting a reasonable amount of
time to private investments, or from being employed by, rendering services to or
serving on the boards of directors of other entities, so long as such
activities,
<PAGE>
employment and/or service do not materially interfere or conflict with his
responsibilities to the Company.
3. EMPLOYMENT RELATIONSHIP. The Company and the Employee acknowledge
that the Employee's employment is and shall continue to be at-will, as defined
under applicable law. If the Employee's employment terminates for any reason,
the Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
policies at the time of termination.
4. COMPENSATION.
(a) BASE SALARY. For all services to be rendered by the Employee
pursuant to this Agreement, the Employee shall receive a minimum annual base
salary of $160,000, payable monthly in accordance with the Company's normal
payroll practices, increased from time to time by the Board of Directors of the
Company (the "Board") consistent with past practices.
(b) BONUS. Beginning with the Company's current fiscal year, and for
each fiscal year thereafter during the term of this Agreement, the Employee
shall be eligible to receive a minimum target bonus of $40,000 based on
performance of the Company as set forth in the Company's annual operating plan
established by the Chief Executive Officer of the Company and the Board (the
"Target Bonus").
(c) OPTION. Within six (6) months after the closing of the
Transaction, the Company shall grant an option to the Employee for a number of
shares of the Company's Common Stock to be determined by the Compensation
Committee of the Board (the "Shares"), at a per Share purchase price no greater
than the then current fair market value of a Share, pursuant to the Company's
1992 Stock Plan (the "1992 Plan") and standard form of stock option agreement.
Subject to the terms of the 1992 Plan, fifty percent (50%) of the Shares shall
vest on the date twenty-four (24) months after the date of grant, and an
additional twenty-five percent (25%) of the Shares shall vest at the end of each
year thereafter.
(d) AUTOMOBILE ALLOWANCE. During the term of this Agreement, the
Company shall provide the Employee an automobile allowance of not less than
$500 per month. The Employee agrees to have available for business use a
four-door automobile suitable for customers and clients.
5. OTHER BENEFITS. The Employee shall be entitled to participate in the
employee benefit plans and programs of the Company, if any, to the extent that
his position, tenure, salary, age, health and other qualifications make him
eligible to participate in such plans or programs, subject to the rules and
regulations applicable thereto. The Company reserves the right to cancel or
change the benefit plans and programs it offers to its employees at any time.
6. EXPENSES. The Company shall reimburse the Employee for reasonable
travel, entertainment or other expenses incurred by the Employee in the
furtherance of or in connection with
2
<PAGE>
the performance of the Employee's duties hereunder, in accordance with the
Company's expense reimbursement policy as in effect from time to time.
7. TERMINATION.
(a) INVOLUNTARY TERMINATION. If the Employee's employment with the
Company terminates as a result of Involuntary Termination, then, subject to
Section 9: (i) the Employee shall be entitled to receive a severance payment
equal to two times the Employee's Current Compensation (one times the Employee's
Current Compensation if such Termination occurs after the second anniversary of
the Consummation of the Offer); and (ii) the vesting and exercisability of all
outstanding stock options that were granted to the Employee by the Company prior
to the Consummation of the Offer shall accelerate in full. Any severance
payments to which the Employee is entitled pursuant to this Section 7(a) shall
be paid in lieu of any other severance or severance-type benefits to which the
Employee may be entitled under any other company-sponsored plan, and shall be
paid to the Employee in a lump sum within fifteen (15) days of the Employee's
Involuntary Termination.
(b) DISABILITY. If the Employee's employment with the Company
terminates as a result of Disability, the Company shall make available to the
Employee and the Employee's spouse and dependents group health, life and other
similar insurance plans substantially comparable to the group health, life and
other similar insurance plans in which the Employee or such dependents
participated on the date of such termination (the "Company Coverage"). The
Company Coverage shall be at the Company's expense for twelve (12) months
following such termination. In addition, the Employee's stock options shall
vest in full as provided in clause (ii) of Section 7(a) above.
(c) DEATH. In the event of the Employee's death, this Agreement, to
the extent it has not already terminated, shall terminate on the last day of the
calendar month of the Employee's death. In addition (i) the Employee's estate
or beneficiaries shall be eligible for those benefits (if any) as may then be
established under the Company's severance and benefits plans and policies
existing at the time of the Employee's death, and (ii) the Employee's stock
options shall vest in full as provided in clause (ii) of Section 7(a) above.
(d) OTHER TERMINATION. If the Employee's employment terminates other
than in an Involuntary Termination, or upon the Employee's Death or Disability,
then the Employee shall not be entitled to receive severance or other benefits
pursuant to this Agreement, but may be eligible for those benefits (if any) as
may then be established under the Company's severance and benefits plans and
policies existing at the time of such termination.
8. DEFINITIONS.
(a) CAUSE. "Cause" shall mean the occurrence of any one or more of
the following: (i) the Employee's conviction by, or entry of a plea of guilty or
nolo contendere in, a court of final jurisdiction for any crime which
constitutes a felony in the jurisdiction involved (other than a felony traffic
offense), which felony materially injures the Company, its prospects or its
reputation; (ii) the
3
<PAGE>
Employee's misappropriation of funds or commission of a material act of
fraud, whether prior or subsequent to the date hereof, upon the Company;
(iii) gross negligence by the Employee in the scope of the Employee's
services to the Company; (iv) a willful breach by the Employee of a material
provision of this Agreement; or (v) a willful failure of the Employee to
substantially perform his duties hereunder. Notwithstanding the foregoing,
the Employee shall not be deemed to have been terminated for Cause under
clause (iii), (iv) or (v) of this Section 8(a) unless the Chief Executive
Officer of the Company delivers a written notice to the Employee setting
forth the reasons for the Company's intention to terminate for Cause and
specifically identifying the manner in which the Chief Executive Officer
believes that the Employee has engaged in such conduct, which conduct is not
substantially corrected by the Employee within 10 days following his receipt
of such notice, and provides the Employee with an opportunity, together with
his counsel, if any, to be heard before the Board.
(b) CURRENT COMPENSATION. "Current Compensation" shall mean an
amount equal to the Employee's three-year average annual base salary and three-
year average annual bonus over the three preceding fiscal years.
(c) DISABILITY. The Employee shall be considered to have suffered a
"Disability" for purposes of this Agreement if, at the end of any calendar month
during the term of this Agreement, the Employee is and has been for the four
consecutive full calendar months then ending, or for fifty percent or more of
the normal working days during the eight consecutive full calendar months then
ending, unable due to mental or physical illness or injury to perform his duties
under this Agreement in his normal and regular manner.
(d) INVOLUNTARY TERMINATION. "Involuntary Termination" shall mean
(i) without the Employee's express written consent, a reduction of the
Employee's duties, position or responsibilities relative to the Employee's
duties, position or responsibilities in effect immediately prior to such
reduction, or the removal of the Employee from such position, duties and
responsibilities, unless the Employee is provided with comparable duties,
position and responsibilities; (ii) without the Employee's express written
consent, a reduction of the Employee's base salary or Target Bonus (as set forth
in Section 4) in effect immediately prior to such reduction; (iii) a reduction
in the kind or level of employee benefits to which the Employee is entitled
immediately prior to such reduction with the result that the Employee's overall
benefits package is significantly reduced; (iv) without the Employee's express
written consent, the relocation of the Employee to a facility or a location more
than thirty-five (35) miles from his current location; (v) any purported
termination of the Employee which is not effected for Cause or for which the
grounds relied upon are not valid; or (vi) the failure of the Company to obtain
the assumption of this Agreement by any successors contemplated in Section 11
below; provided, however, that an event described above shall not constitute
Involuntary Termination unless it is communicated by the Employee to the Company
in writing and is not corrected by the Company in a manner that is reasonably
satisfactory to the Employee (including full retroactive correction with respect
to any monetary matter) within ten days of the Company's receipt of such written
notice from the Employee.
4
<PAGE>
9. GOLDEN PARACHUTE EXCISE TAX.
(a) BENEFITS CAP. In the event that the benefits under this
Agreement, when aggregated with any other payments or benefits received by the
Employee, or to be received by the Employee, would (i) constitute "parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and (ii) but for this provision, would be subject
to the excise tax imposed by Section 4999 of the Code or any similar or
successor provision, then the Employee's benefits shall be reduced to such
lesser amount or degree as would result in no portion of such benefits being
subject to the excise tax under Section 4999 of the Code.
(b) DETERMINATION. Unless the Company and the Employee otherwise
agree in writing, any determination required under this Section shall be made in
writing by the Company's primary independent public accounting firm (the
"Accountants"), whose determination shall be conclusive and binding upon the
Employee and the Company for all purposes. For purposes of making the
calculations required by this Section, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and the Employee shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make its determination under this Section. The Company
shall bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section.
10. RIGHT TO ADVICE OF COUNSEL. The Employee acknowledges that he has had
the right to consult with counsel and is fully aware of his rights and
obligations under this Agreement.
11. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. Any successor to the Company (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement in the same manner and
to the same extent as the Company would be required to perform such obligations
in the absence of a succession. For all purposes under this Agreement, the term
"Company," shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
(b) EMPLOYEE'S SUCCESSORS. Without the written consent of the
Company, the Employee shall not assign or transfer this Agreement or any right
or obligation under this Agreement to any other person or entity.
Notwithstanding the foregoing, the terms of this Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
5
<PAGE>
12. NOTICE CLAUSE.
(a) MANNER. Any notice hereby required or permitted to be given
shall be sufficiently given if in writing and upon mailing by registered or
certified mail, postage prepaid, to either party at the address of such party or
such other address as shall have been designated by written notice by such party
to the other party.
(b) EFFECTIVENESS. Any notice or other communication required or
permitted to be given under this Agreement will be deemed given on the day when
delivered in person, or the third business day after the day on which such
notice was mailed in accordance with Section 12(a).
13. DISPUTES. In the event that a dispute arises over the terms or
enforcement of this Agreement, the parties agree to submit such dispute to
binding arbitration in San Diego, California by a single arbitrator engaged
through JAMS-Endispute, Inc., its successor firm or another private dispute
resolution firm acceptable to both parties. The arbitrator shall be selected as
follows: the arbitration firm shall present its panel of available arbitrators,
and each party shall sign rank of preference to each of such panel with number 1
being the highest rank. The person on the panel with the lowest total score
shall be the arbitrator for a dispute. The arbitrator shall have absolute
discretion or authority to limit discovery relevant to the matter and the length
of the proceeding before the arbitrator. The parties may not submit written
briefs. The arbitrator shall rule on the dispute in writing within ten (10)
days after the close of hearings. The time specified in this Section may be
extended upon mutual agreement of the parties. The decision of the arbitrator
may be entered or registered in any court of competent jurisdiction for
execution and enforcement. The arbitrator shall have the power to allocate
between the parties the costs of the proceeding and the attorneys' fees incurred
in the proceeding as he or she deems appropriate.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal substantive laws, but not the choice of law rules,
of the state of California.
15. SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement, or any terms hereof, shall not affect the validity or
enforceability of any other provision or term of this Agreement.
16. INTEGRATION. This Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and supersedes
all prior or contemporaneous agreements whether written or oral. No waiver,
alteration, or modification of any of the provisions of this Agreement shall be
binding unless in writing and signed by duly authorized representatives of the
parties hereto.
17. TAXES. All payments made pursuant to this Agreement shall be subject
to withholding of applicable income and employment taxes.
6
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by a duly authorized officer, as of the day and year first
above written.
DH TECHNOLOGY, INC.
By: /s/ William Gibbs
---------------------------------
Title: President and CEO
-------------------------------
DAVID LEDWELL
/s/ David Ledwell
---------------------------------
7
<PAGE>
EXECUTION COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$85,000,000
CREDIT AGREEMENT
AMONG
AXIOHM TRANSACTION SOLUTIONS, INC.,
AS BORROWER,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
LEHMAN BROTHERS INC.,
AS ARRANGER
LEHMAN COMMERCIAL PAPER INC.,
AS SYNDICATION AGENT
AND
LEHMAN COMMERCIAL PAPER INC.,
AS ADMINISTRATIVE AGENT
DATED AS OF OCTOBER 2, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Definitional Provisions. . . . . . . . . . . . . . . . . . . 25
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS. . . . . . . . . . . . . . . . . 26
2.1 Term Loan Commitments. . . . . . . . . . . . . . . . . . . . . . . 26
2.2 Procedure for Term Loan Borrowing. . . . . . . . . . . . . . . . . 26
2.3 Repayment of Term Loans. . . . . . . . . . . . . . . . . . . . . . 26
2.4 Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . 28
2.5 Procedure for Revolving Credit Borrowing . . . . . . . . . . . . . 28
2.6 Repayment of Loans; Evidence of Debt . . . . . . . . . . . . . . . 29
2.7 Commitment Fees, etc. . . . . . . . . . . . . . . . . . . . . . . 29
2.8 Termination or Reduction of Revolving Credit Commitments . . . . . 30
2.9 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . 30
2.10 Mandatory Prepayments and Commitment Reductions. . . . . . . . . . 30
2.11 Conversion and Continuation Options. . . . . . . . . . . . . . . . 31
2.12 Minimum Amounts and Maximum Number of Eurodollar Tranches. . . . . 32
2.13 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . . 32
2.14 Computation of Interest and Fees . . . . . . . . . . . . . . . . . 33
2.15 Inability to Determine Interest Rate . . . . . . . . . . . . . . . 33
2.16 Pro Rata Treatment and Payments. . . . . . . . . . . . . . . . . . 34
2.17 Requirements of Law. . . . . . . . . . . . . . . . . . . . . . . . 36
2.18 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.19 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.20 Change of Lending Office . . . . . . . . . . . . . . . . . . . . . 39
2.21 Replacement of Lenders . . . . . . . . . . . . . . . . . . . . . . 40
2.22 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . 40
3.1 L/C Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.2 Procedure for Issuance of Letter of Credit . . . . . . . . . . . . 41
3.3 Commissions, Fees and Other Charges. . . . . . . . . . . . . . . . 41
3.4 L/C Participations . . . . . . . . . . . . . . . . . . . . . . . . 42
3.5 Reimbursement Obligation of the Borrower . . . . . . . . . . . . . 43
3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . 43
3.7 Letter of Credit Payments. . . . . . . . . . . . . . . . . . . . . 43
3.8 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 44
4.1 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . 44
4.2 No Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . . 45
4.4 Corporate Power; Authorization; Enforceable Obligations. . . . . . 45
4.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . 46
-i-
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Page
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4.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . 46
4.9 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . 46
4.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.11 Federal Regulations. . . . . . . . . . . . . . . . . . . . . . . . 47
4.12 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.13 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.14 Investment Company Act; Other Regulations. . . . . . . . . . . . . 48
4.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.16 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.17 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 48
4.18 Accuracy of Information, etc . . . . . . . . . . . . . . . . . . . 49
4.19 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . 50
4.20 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.21 Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 51
4.22 Regulation H . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 51
5.1 Conditions to Initial Extension of Credit. . . . . . . . . . . . . 51
5.2 Conditions to Each Extension of Credit . . . . . . . . . . . . . . 56
SECTION 6. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 56
6.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 56
6.2 Certificates; Other Information. . . . . . . . . . . . . . . . . . 57
6.3 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . 58
6.4 Conduct of Business and Maintenance of Existence, etc. . . . . . . 58
6.5 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . 58
6.6 Inspection of Property; Books and Records; Discussions . . . . . . 59
6.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . 59
6.9 Interest Rate Protection . . . . . . . . . . . . . . . . . . . . . 61
6.10 Additional Collateral, etc . . . . . . . . . . . . . . . . . . . . 61
6.11 Limitation on Designated Senior Debt . . . . . . . . . . . . . . . 63
SECTION 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 63
7.1 Financial Condition Covenants. . . . . . . . . . . . . . . . . . . 63
7.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . 65
7.3 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . 66
7.4 Limitation on Fundamental Changes. . . . . . . . . . . . . . . . . 68
7.5 Limitation on Sale of Assets . . . . . . . . . . . . . . . . . . . 68
7.6 Limitation on Dividends. . . . . . . . . . . . . . . . . . . . . . 69
7.7 Limitation on Capital Expenditures . . . . . . . . . . . . . . . . 70
7.8 Limitation on Investments, Loans and Advances. . . . . . . . . . . 70
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments or Merger Agreement, etc . . . . . . . . . . . . . . . 71
7.10 Limitation on Transactions with Affiliates . . . . . . . . . . . . 71
7.11 Limitation on Sales and Leasebacks . . . . . . . . . . . . . . . . 71
7.12 Limitation on Changes in Fiscal Periods. . . . . . . . . . . . . . 72
7.13 Limitation on Negative Pledge Clauses. . . . . . . . . . . . . . . 72
7.14 Limitation on Restrictions on Subsidiary Distributions . . . . . . 72
7.15 Limitation on Lines of Business. . . . . . . . . . . . . . . . . . 72
-ii-
<PAGE>
Page
----
7.16 Limitation on Activities of the Dardel and Axiohm-Inv. . . . . . . 72
SECTION 8. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9. THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . 76
9.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . 76
9.4 Reliance by Administrative Agent . . . . . . . . . . . . . . . . . 77
9.5 Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . 77
9.6 Non-Reliance on Agents and Other Lenders . . . . . . . . . . . . . 77
9.7 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 78
9.8 Agent in Its Individual Capacity . . . . . . . . . . . . . . . . . 78
9.9 Successor Administrative Agent . . . . . . . . . . . . . . . . . . 79
9.10 Authorization to Release Liens . . . . . . . . . . . . . . . . . . 79
9.11 Arranger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.1 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . 79
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.3 No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . . 81
10.4 Survival of Representations and Warranties. . . . . . . . . . . . 81
10.5 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . 81
10.6 Successors and Assigns; Participations and Assignments. . . . . . 82
10.7 Adjustments; Set-off. . . . . . . . . . . . . . . . . . . . . . . 85
10.8 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.9 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . . 86
10.13 Acknowledgements. . . . . . . . . . . . . . . . . . . . . . . . . 87
10.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . 87
10.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 87
-iii-
<PAGE>
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 McDermott, Will & Emery
F-2 Form of Legal Opinion of Wilson, Sonsini, Goodrich & Rosati
F-3 Form of Legal Opinion of Slaughter and May
F-4 Form of Legal Opinion of Gide Loyrette Nouel
F-5 Form of Legal Opinion of Adrian Holmes, Esq.
F-6 Form of Legal Opinion of Allen & Overy
F-7 Form of Legal Opinion of Sparks Dix, P.C.
G-1 Form of Term Note
G-2 Form of Revolving Credit 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)
-iv-
<PAGE>
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"), LEHMAN
BROTHERS INC., as arranger, LEHMAN COMMERCIAL PAPER INC., as syndication agent
(in such capacities, the "SYNDICATION AGENT"), and LEHMAN COMMERCIAL PAPER INC.,
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. ("AXIOHM S.A."), 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., 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. and (y) the shareholders of Dardel Technologies,
S.A., a French corporation ("DARDEL") and a shareholder of Axiohm S.A., the
right to exchange their stock of Axiohm S.A. (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., Axiohm-IPB, Acquisition Co., the lenders
party thereto and Lehman 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;
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
<PAGE>
2
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. 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.; 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.
"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.
<PAGE>
3
"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 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 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.
"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
<PAGE>
4
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).
"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.
<PAGE>
5
"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 Moody's 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
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 Moody's; (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.
<PAGE>
6
"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 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
<PAGE>
7
Subsidiaries and (b) without duplication of clause (a) above, all
Indebtedness consisting of Revolving Credit 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 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
<PAGE>
8
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 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 $5,000,000 to
the extent such cash is not subject to a Lien (except in favor of the
Lenders).
"CONSOLIDATED WORKING CAPITAL": at any date, the excess of
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
<PAGE>
9
"CONTINUING DIRECTOR": (i) any director of the board of directors of
the Borrower on the Closing Date, (ii) a director whose nomination for
election to the board of directors of the Borrower is recommended by at
least 50% of the then Continuing Directors or (iii) a director elected to
the board of directors of the Borrower with the approval of the holders of
at least 80% of the common stock of the Borrower having voting power for
the election of directors held by the Permitted Investors.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"DARDEL": as defined in the recitals hereto.
"DEFAULT": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"DISCLOSURE LETTER": the Disclosure Letter dated as of the date
hereof between the Syndication Agent, the Lenders and the Borrower, as
amended, supplemented or otherwise modified from time to time.
"DISPOSITION": with respect to any Property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition
thereof; and the terms "DISPOSE" and "DISPOSED OF" shall have correlative
meanings.
"DOLLARS" and "$": 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.
<PAGE>
10
"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 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).
<PAGE>
11
"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 OVER (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 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 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
<PAGE>
12
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., 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., substantially in the form of
Exhibit J, as the same may be amended, supplemented or otherwise modified
from time to time.
"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
<PAGE>
13
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).
"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
<PAGE>
14
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 Hart-Scott-Rodino 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 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.
<PAGE>
15
"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 sue 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), the date of any
repayment or prepayment made in respect thereof.
"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
<PAGE>
16
(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.
"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.
<PAGE>
17
"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. 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.
"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.
<PAGE>
18
"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 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
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19
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.
"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. Patrick Dupuy,
Gilles Gibier and William Gibbs, 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).
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20
"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.
"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.
<PAGE>
21
"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 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 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
<PAGE>
22
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.
"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
and (b) such Lender's Revolving Credit Percentage of the L/C Obligations
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
<PAGE>
23
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 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.
"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.
"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.
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24
"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 amount of the
Tranche B Term Loan Commitments is $15,000,000.
"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
<PAGE>
25
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 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.
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26
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:
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
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27
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
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
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28
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 the L/C Obligations 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 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, $1,000,000 or a whole multiple thereof (or, if the then aggregate
Available Revolving Credit Commitments are less than $1,000,000, such lesser
amount) and (y) in the case of Eurodollar Loans, $2,500,000 or a whole multiple
of $1,000,000 in excess thereof. 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
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29
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) and (ii) 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.
(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") or Revolving Credit Loans (a "REVOLVING CREDIT NOTE"),
as the case may be, of such Lender, substantially in the forms of Exhibit G-1
or G-2, 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
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30
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 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 $1,000,000, 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 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) 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 $1,000,000 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
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31
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.
(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
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 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)
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
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32
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.
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 $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and (b) no more than eight
Eurodollar Tranches shall be outstanding at any one time.
2.13 INTEREST RATES AND PAYMENT DATES. (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%
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33
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. (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.
(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,
<PAGE>
34
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, PRO RATA based upon the then
remaining principal amount thereof. Amounts prepaid on account of the Term
Loans may not be reborrowed.
(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
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35
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 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
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36
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 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
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37
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
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.
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38
(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 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.
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39
(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 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
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40
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.
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.
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
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41
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 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, 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
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42
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 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
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43
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 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
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.
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44
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. 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 report from Price
Waterhouse, present fairly the consolidated financial condition of Axiohm
S.A. 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. 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. 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. 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. 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. 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
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45
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.
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
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46
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 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
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47
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.
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.
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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. 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.
(b) The proceeds of the Revolving Credit 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.
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49
(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.
(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. 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.
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50
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 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.
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51
(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.
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 de gage),
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.
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52
(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 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.;
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. for
its 1994, 1995 and 1996 fiscal years and (iv) unaudited interim
consolidated financial statements of the Borrower and Axiohm S.A. 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. 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., 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
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53
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.,
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.
(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., 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 McDermott, Will & Emery, counsel to
the Borrower and its Subsidiaries, substantially in the form of
Exhibit F-1;
(ii) the legal opinion of Wilson, Sonsini, Goodrich & Rosati,
counsel to the Borrower and its Subsidiaries, substantially in the
form of Exhibit F-2;
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54
(iii) the legal opinion of Slaughter and May, French counsel to
the Borrower and its Subsidiaries, substantially in the form of
Exhibit F-3;
(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 Adrian Holmes, Esq., Australian
counsel to the Borrower, substantially in the form of Exhibit F-5;
(vi) the legal opinion of Allen & 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 Dix, 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
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55
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, 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
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56
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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57
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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58
(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.
6.7 NOTICES. Promptly give notice to the Administrative Agent and
each Lender of:
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(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 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
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60
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 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
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61
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 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
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62
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) 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.
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63
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
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
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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 6.50 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
(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:
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65
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;
(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;
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(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) Indebtedness 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. in French francs; PROVIDED
that (i) the Dollar equivalent (determined in good faith by the Borrower)
of the aggregate outstanding principal amount thereof (the "AXIOHM S.A.
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. 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, for purposes of this clause (ii) only, the undrawn
and unexpired amount of any outstanding Letter of Credit (in a face amount
not to exceed $10,000,000) issued to support obligations under the French
Revolver shall not be deemed to be a Revolving Extension of Credit;
(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
(l) (i) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes in an aggregate principal amount not to exceed
$100,000,000 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;
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(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;
(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
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68
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;
(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;
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(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;
(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.
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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 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; and
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(j) investments by the Borrower or its Subsidiaries in Interest Rate
Protection Agreements required by Section 6.9.
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), (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.
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 William Gibbs or Walter Sobon 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
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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 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
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(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
(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 (not to exceed 10 days), 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
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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 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
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(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 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
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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).
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.
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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 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,
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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.
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
<PAGE>
79
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
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
<PAGE>
80
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 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;
or (vi) 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.
15070 Avenue of Science
San Diego, California 92128
Attention: Walter H. Gibbs
Telecopy: (619) 451-0326
Telephone: (619) 451-3485
The Syndication Agent: Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attention: Michele Swanson
Telecopy: (212) 528-0819
Telephone: (212) 526-0330
The Administrative Agent: Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attention: Michele Swanson
<PAGE>
81
Telecopy: (212) 528-0819
Telephone: (212) 526-0330
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
<PAGE>
82
"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 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. 7\E
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
<PAGE>
83
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 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
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84
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 Lehman Commercial Paper Inc. 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 if all or any portion of such excess payment or benefits is
thereafter recovered from such
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85
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:
(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
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86
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 sue 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.
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
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87
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.
<PAGE>
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: /s/ Stuart Groom
-------------------------------------
Name:
Title:
LEHMAN COMMERCIAL PAPER INC., as
Syndication Agent and as a Lender
By: /s/ Dennis J. Dee
-------------------------------------
Name:
Title:
LEHMAN COMMERCIAL PAPER INC., as
Administrative Agent and as a Lender
By: /s/ Dennis J. Dee
-------------------------------------
Name:
Title:
<PAGE>
Annex A
-------
PRICING GRID FOR REVOLVING CREDIT LOANS AND
TRANCHE A TERM LOANS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Consolidated Leverage Ratio Applicable Margin Applicable Margin
for Eurodollar for Base Rate
Loans 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 2.25% 1.25%
or equal to 3.00 to 1.00
- --------------------------------------------------------------------------------
Less than 3.00 to 1.00 but greater than 2.00% 1.00%
or equal to 2.50 to 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.
<PAGE>
EXECUTION COPY
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
GUARANTEE AND COLLATERAL AGREEMENT
made by
AXIOHM TRANSACTION SOLUTIONS, INC.
and certain of its Subsidiaries
in favor of
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent
Dated as of October 2, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
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SECTION 1. DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions. . . . . . . . . . . . . . . . . . . 5
SECTION 2. GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Right of Contribution. . . . . . . . . . . . . . . . . . . . . . . 6
2.3 No Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Amendments, etc. with respect to the Borrower Obligations. . . . . 6
2.5 Guarantee Absolute and Unconditional . . . . . . . . . . . . . . . 7
2.6 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.7 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3. GRANT OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . . 8
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 8
4.1 Representations in Credit Agreement. . . . . . . . . . . . . . . . 9
4.2 Title; No Other Liens. . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Perfected First Priority Liens . . . . . . . . . . . . . . . . . . 9
4.4 Chief Executive Office . . . . . . . . . . . . . . . . . . . . . . 9
4.5 Inventory and Equipment. . . . . . . . . . . . . . . . . . . . . . 9
4.6 Farm Products. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.7 Pledged Securities . . . . . . . . . . . . . . . . . . . . . . . . 9
4.8 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.9 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.1 Covenants in Credit Agreement. . . . . . . . . . . . . . . . . . . 11
5.2 Delivery of Instruments and Chattel Paper. . . . . . . . . . . . . 11
5.3 Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . 11
5.4 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . 11
5.5 Maintenance of Perfected Security Interest; Further
Documentation. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.6 Changes in Locations, Name, etc. . . . . . . . . . . . . . . . . . 12
5.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.8 Pledged Securities . . . . . . . . . . . . . . . . . . . . . . . . 12
5.9 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.10 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6. REMEDIAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Certain Matters Relating to Receivables. . . . . . . . . . . . . . 15
6.2 Communications with Obligors; Grantors Remain Liable . . . . . . . 15
6.3 Pledged Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.4 Proceeds to be Turned Over to Administrative Agent . . . . . . . . 17
6.5 Application of Proceeds. . . . . . . . . . . . . . . . . . . . . . 17
6.6 Code and Other Remedies. . . . . . . . . . . . . . . . . . . . . . 17
6.7 Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . 18
<PAGE>
6.8 Waiver; Deficiency . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7. THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . . 19
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. . . . 19
7.2 Duty of Administrative Agent . . . . . . . . . . . . . . . . . . . 21
7.3 Execution of Financing Statements. . . . . . . . . . . . . . . . . 21
7.4 Authority of Administrative Agent. . . . . . . . . . . . . . . . . 21
SECTION 8. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1 Amendments in Writing. . . . . . . . . . . . . . . . . . . . . . . 21
8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.3 No Waiver by Course of Conduct; Cumulative Remedies. . . . . . . . 21
8.4 Enforcement Expenses; Indemnification. . . . . . . . . . . . . . . 22
8.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 22
8.6 Set-Off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.9 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . . 23
8.13 Acknowledgements. . . . . . . . . . . . . . . . . . . . . . . . . 24
8.14 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . 24
8.15 Additional Grantors . . . . . . . . . . . . . . . . . . . . . . . 24
8.16 Releases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ii
<PAGE>
GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of October 2, 1997, made
by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "GRANTORS"), in favor of LEHMAN
COMMERCIAL PAPER INC., as Administrative Agent (in such capacity, the
"ADMINISTRATIVE AGENT") for the banks and other financial institutions (the
"LENDERS") from time to time parties to the Credit Agreement, dated as of
October 2, 1997 (as amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"), among AXIOHM TRANSACTION SOLUTIONS, INC. (the
"BORROWER"), the Lenders, LEHMAN BROTHERS INC., as Arranger, LEHMAN COMMERCIAL
PAPER INC., as Syndication Agent and Administrative Agent.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrower to make valuable transfers
to one or more of the other Grantors in connection with the operation of their
respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower under the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
SECTION 1. DEFINED TERMS
1.1 DEFINITIONS. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm
Products, Instruments and Inventory.
<PAGE>
2
(b) The following terms shall have the following meanings:
"AGREEMENT": this Guarantee and Collateral Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
"BORROWER OBLIGATIONS": the collective reference to the unpaid
principal of and interest on the Loans and Reimbursement Obligations and
all other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of the Loans and Reimbursement
Obligations and interest accruing at the then applicable rate provided in
the Credit Agreement 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) to the Administrative
Agent or any Lender (or, in the case of any Hedge Agreement referred to
below, 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, the Credit Agreement,
this Agreement, the other Loan Documents, any Letter of Credit or any Hedge
Agreement entered into by the Borrower with any Lender (or any Affiliate of
any Lender) or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to
the Administrative Agent or to the Lenders that are required to be paid by
the Borrower pursuant to the terms of any of the foregoing agreements).
"COLLATERAL": as defined in Section 3.
"COLLATERAL ACCOUNT": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.
"COPYRIGHTS": (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in SCHEDULE 6), all registrations and
recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to
obtain all renewals thereof.
"COPYRIGHT LICENSES": any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in
SCHEDULE 6), granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"EXCLUDED ASSETS": (i) shares of Axiohm S.A., Dardel and Axiohm-Inv
and (ii) any assets of Axiohm S.A., Dardel or Axiohm-Inv other than (A) any
Pledged Securities (including, without limitation, the common stock of
Axiohm-IPB) and (B) any assets of the types described in clauses (a)
through (l) of Section 3 in which a security interest may be perfected by
filing a financing statement under the Uniform Commercial Code in effect in
any state in the United States, it being understood that the grant by
Axiohm S.A. of a security interest in certain assets of Axiohm S.A.
excluded by this clause is being effected pursuant to
<PAGE>
3
the French Security Documents, and that the shares forming stock capital
of Axiohm S.A., Dardel and Axiohm-Inv are pledged under the French
Pledge Agreements.
"GENERAL INTANGIBLES": all "general intangibles" as such term is
defined in Section 9-106 of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, including, without
limitation, with respect to any Grantor, all contracts, agreements,
instruments and indentures in any form, and portions thereof, to which such
Grantor is a party or under which such Grantor has any right, title or
interest or to which such Grantor or any property of such Grantor is
subject, as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all rights of such
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of such Grantor to damages arising
thereunder and (iii) all rights of such Grantor to perform and to exercise
all remedies thereunder, in each case to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such contract, agreement, instrument or indenture is
not prohibited by such contract, agreement, instrument or indenture without
the consent of any other party thereto, would not give any other party to
such contract, agreement, instrument or indenture the right to terminate
its obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from the
other parties thereto (it being understood that the foregoing shall not be
deemed to obligate such Grantor to obtain such consents); PROVIDED, that
the foregoing limitation shall not affect, limit, restrict or impair the
grant by such Grantor of a security interest pursuant to this Agreement in
any Receivable or any money or other amounts due or to become due under any
such contract, agreement, instrument or indenture.
"GUARANTOR OBLIGATIONS": with respect to any Guarantor, the
collective reference to (i) the Borrower Obligations and (ii) all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement or any other Loan Document to which such
Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent or to the Lenders that are required to
be paid by such Guarantor pursuant to the terms of this Agreement or any
other Loan Document).
"GUARANTORS": the collective reference to each Grantor other than the
Borrower.
"HEDGE AGREEMENTS": as to any Person, all interest rate swaps, caps
or collar agreements or similar arrangements entered into by such Person
providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either
generally or under specific contingencies.
"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, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses,
and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.
"INTERCOMPANY NOTE": any promissory note evidencing loans made by any
Grantor to the Borrower or any of its Subsidiaries.
<PAGE>
4
"INVESTMENT PROPERTY": all "investment property" as such term is
defined in Section 9-115 of the New York UCC as enacted by the New York
Assembly and signed by the Governor of New York and to be in effect on
October 10, 1997.
"ISSUERS": the collective reference to each issuer of a Pledged
Security.
"NEW YORK UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"OBLIGATIONS": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"PATENTS": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without
limitation, any of the foregoing referred to in SCHEDULE 6, (ii) all
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to in SCHEDULE
6, and (iii) all rights to obtain any reissues or extensions of the
foregoing.
"PATENT LICENSE": all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell
any invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in SCHEDULE 6.
"PLEDGED NOTES": all promissory notes listed on SCHEDULE 2, if any,
all Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (other than promissory
notes issued in connection with extensions of trade credit by any Grantor
in the ordinary course of business).
"PLEDGED SECURITIES": the collective reference to the Pledged Notes
and the Pledged Stock.
"PLEDGED STOCK": the shares of Capital Stock listed on SCHEDULE 2,
together with any other shares, stock certificates, options or rights of
any nature whatsoever in respect of the Capital Stock of any Person that
may be issued or granted to, or held by, any Grantor while this Agreement
is in effect.
"PROCEEDS": all "proceeds" as such term is defined in Section 9-
306(1) of the Uniform Commercial Code in effect in the State of New York on
the date hereof and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Securities, collections thereon
or distributions or payments with respect thereto.
"RECEIVABLE": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"SECURITIES ACT": the Securities Act of 1933, as amended.
"TRADEMARKS": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source
<PAGE>
5
or business identifiers, and all goodwill associated therewith, now
existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise, and
all common-law rights related thereto, including, without limitation,
any of the foregoing referred to in SCHEDULE 6, and (ii) the right to
obtain all renewals thereof.
"TRADEMARK LICENSE": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred to
in SCHEDULE 6.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof,"
"herein", "hereto" 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 provision of this Agreement, and Section and Schedule references
are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral
or any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1 GUARANTEE. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Lenders and their respective
successors, indorsees, transferees and assigns, the prompt and complete
payment and performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, (i) the maximum liability of each Guarantor hereunder and
under the other Loan Documents shall in no event exceed the amount that would
render such Guarantor's obligations hereunder subject to avoidance as a
fraudulent transfer under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2) and (ii) the maximum liability of Axiohm S.A.,
Dardel and Axiohm-Inv hereunder and under the other Loan Documents is
expressly limited to a maximum amount equal to, from time to time, 70% of
their net assets as provided by their latest audited balance sheet as at the
date of any demand of payment under this Agreement.
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing the guarantee contained in this Section
2 or affecting the rights and remedies of the Administrative Agent or any
Lender hereunder.
(d) Subject to Section 8.16(c), the guarantee contained in this
Section 2 shall remain in full force and effect until all the Borrower
Obligations shall have been satisfied by payment in full, no Letter of Credit
shall be outstanding (unless such Letter of Credit has been cash
collateralized in full to the satisfaction of the Administrative Agent and
the Lenders) and the Commitments shall be terminated,
<PAGE>
6
notwithstanding that from time to time during the term of the Credit
Agreement the Borrower may be free from any Borrower Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the
Administrative Agent or any Lender from the Borrower, any of the Guarantors,
any other guarantor or any other Person by virtue of any action or proceeding
or any set-off or appropriation or application at any time or from time to
time in reduction of or in payment of the Borrower Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of any
Guarantor hereunder which shall, notwithstanding any such payment (other than
any payment made by such Guarantor in respect of the Borrower Obligations or
any payment received or collected from such Guarantor in respect of the
Borrower Obligations), remain liable for the Borrower Obligations up to the
maximum liability of such Guarantor hereunder until the Borrower Obligations
are paid in full, no Letter of Credit shall be outstanding and the
Commitments are terminated.
2.2 RIGHT OF CONTRIBUTION. Each Guarantor hereby agrees that to
the extent that a Guarantor shall have paid more than its proportionate share
of any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder which has
not paid its proportionate share of such payment. Each Guarantor's right of
contribution shall be subject to the terms and conditions of Section 2.3.
The provisions of this Section 2.2 shall in no respect limit the obligations
and liabilities of any Guarantor to the Administrative Agent and the Lenders,
and each Guarantor shall remain liable to the Administrative Agent and the
Lenders for the full amount guaranteed by such Guarantor hereunder.
2.3 NO SUBROGATION. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor
by the Administrative Agent or any Lender, no Guarantor shall be entitled to
be subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender
for the payment of the Borrower Obligations, nor shall any Guarantor seek or
be entitled to seek any contribution or reimbursement from the Borrower or
any other Guarantor in respect of payments made by such Guarantor hereunder,
until all amounts owing to the Administrative Agent and the Lenders by the
Borrower on account of the Borrower Obligations are paid in full, no Letter
of Credit shall be outstanding, (unless such Letter of Credit has been cash
collateralized in full to the satisfaction of the Administrative Agent and
the Lenders) and the Commitments are terminated. If any amount shall be paid
to any Guarantor on account of such subrogation rights at any time when all
of the Borrower Obligations shall not have been paid in full, such amount
shall be held by such Guarantor in trust for the Administrative Agent and the
Lenders, segregated from other funds of such Guarantor, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Administrative Agent in
the exact form received by such Guarantor (duly indorsed by such Guarantor to
the Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the
Administrative Agent may determine.
2.4 AMENDMENTS, ETC. WITH RESPECT TO THE BORROWER OBLIGATIONS.
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against any Guarantor and without notice to or
further assent by any Guarantor, any demand for payment of any of the
Borrower Obligations made by the Administrative Agent or any Lender may be
rescinded by the Administrative Agent or such Lender and any of the Borrower
Obligations continued, and the Borrower Obligations, or the liability of any
other Person upon or for any part thereof, or any collateral security
<PAGE>
7
or guarantee therefor or right of offset with respect thereto, may, from time
to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the
Administrative Agent or any Lender, and the Credit Agreement and the other
Loan Documents and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or
in part, as the Administrative Agent (or the Required Lenders or all Lenders,
as the case may be) may deem advisable from time to time, and any collateral
security, guarantee or right of offset at any time held by the Administrative
Agent or any Lender for the payment of the Borrower Obligations may be sold,
exchanged, waived, surrendered or released. Neither the Administrative Agent
nor any Lender shall have any obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Borrower
Obligations or for the guarantee contained in this Section 2 or any property
subject thereto.
2.5 GUARANTEE ABSOLUTE AND UNCONDITIONAL. Each Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of
the Borrower Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon the guarantee contained in this
Section 2 or acceptance of the guarantee contained in this Section 2; the
Borrower Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon the guarantee contained in this Section 2; and all
dealings between the Borrower and any of the Guarantors, on the one hand, and
the Administrative Agent and the Lenders, on the other hand, likewise shall
be conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment
to or upon the Borrower or any of the Guarantors with respect to the Borrower
Obligations. Each Guarantor understands and agrees that the guarantee
contained in this Section 2 shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity or
enforceability of the Credit Agreement or any other Loan Document, any of the
Borrower Obligations or any other collateral security therefor or guarantee
or right of offset with respect thereto at any time or from time to time held
by the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at
any time be available to or be asserted by the Borrower or any other Person
against the Administrative Agent or any Lender, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Borrower or such
Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Borrower Obligations, or
of such Guarantor under the guarantee contained in this Section 2, in
bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor,
the Administrative Agent or any Lender may, but shall be under no obligation
to, make a similar demand on or otherwise pursue such rights and remedies as
it may have against the Borrower, any other Guarantor or any other Person or
against any collateral security or guarantee for the Borrower Obligations or
any right of offset with respect thereto, and any failure by the
Administrative Agent or any Lender to make any such demand, to pursue such
other rights or remedies or to collect any payments from the Borrower, any
other Guarantor or any other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release
of the Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Administrative Agent or any Lender against any
Guarantor. For the purposes hereof "demand" shall include the commencement
and continuance of any legal proceedings.
2.6 REINSTATEMENT. The guarantee contained in this Section 2
shall continue to be effective, or be reinstated, as the case may be, if at
any time payment, or any part thereof, of any of
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8
the Borrower Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the Borrower
or any Guarantor or any substantial part of its property, or otherwise, all
as though such payments had not been made.
2.7 PAYMENTS. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the Payment Office.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative
Agent, and hereby grants to the Administrative Agent, for the ratable benefit
of the Lenders, a security interest in, all of the following property now
owned or at any time hereafter acquired by such Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or
interest (collectively, the "COLLATERAL"; PROVIDED that such term, and the
foregoing grant of a security interest, shall exclude the Excluded Assets) as
collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of such
Grantor's Obligations,:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Documents;
(d) all Equipment;
(e) all General Intangibles;
(f) all Instruments;
(g) all Intellectual Property;
(h) all Inventory;
(i) all Pledged Securities;
(j) all Investment Property;
(k) all books and records pertaining to the Collateral; and
(l) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES
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9
To induce the Administrative Agent and the Lenders to enter into
the Credit Agreement and to induce the Lenders to make their respective
extensions of credit to the Borrower thereunder, each Grantor hereby
represents and warrants to the Administrative Agent and each Lender that:
4.1 REPRESENTATIONS IN CREDIT AGREEMENT. In the case of each
Guarantor, the representations and warranties set forth in Section 4 of the
Credit Agreement as they relate to such Guarantor or to the Loan Documents to
which such Guarantor is a party, each of which is hereby incorporated herein
by reference, are true and correct, and the Administrative Agent and each
Lender shall be entitled to rely on each of them as if they were fully set
forth herein, PROVIDED that each reference in each such representation and
warranty to the Borrower's knowledge shall, for the purposes of this Section
4.1, be deemed to be a reference to such Guarantor's knowledge. In
particular, this Agreement has been duly authorized by the Board of Directors
of Axiohm S.A., Dardel and Axiohm-Inv at meetings held on __________, 1997,
in compliance with provisions of Article 98 of the July 24, 1996 Act and with
provisions of Articles 101 and SEQ. of the July 24, 1966 Act.
4.2 TITLE; NO OTHER LIENS. Except for the security interest
granted to the Administrative Agent for the ratable benefit of the Lenders
pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Grantor owns each item of the
Collateral free and clear of any and all Liens. No financing statement or
other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except such as have been filed in
favor of the Administrative Agent, for the ratable benefit of the Lenders,
pursuant to this Agreement or as are permitted by the Credit Agreement.
4.3 PERFECTED FIRST PRIORITY LIENS. The security interests
granted pursuant to this Agreement (a) upon completion of the filings and
other actions specified on SCHEDULE 3 (which, in the case of all filings and
other documents referred to on said Schedule, have been delivered to the
Administrative Agent in completed and duly executed form) will constitute
valid perfected security interests in all of the Collateral in favor of the
Administrative Agent, for the ratable benefit of the Lenders, as collateral
security for such Grantor's Obligations, enforceable in accordance with the
terms hereof against all creditors of such Grantor and any Persons purporting
to purchase any Collateral from such Grantor and (b) are prior to all other
Liens on the Collateral in existence on the date hereof except for (i)
unrecorded Liens permitted by the Credit Agreement which have priority over
the Liens on the Collateral by operation of law and (ii) other Liens
permitted by the Credit Agreement.
4.4 CHIEF EXECUTIVE OFFICE. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief
executive office or sole place of business are specified on SCHEDULE 4.
4.5 INVENTORY AND EQUIPMENT. On the date hereof, the Inventory
and the Equipment (other than mobile goods) are kept at the locations listed
on SCHEDULE 5.
4.6 FARM PRODUCTS. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
4.7 PLEDGED SECURITIES. (a) The shares of Pledged Stock pledged
by such Grantor hereunder constitute all the issued and outstanding shares of
all classes of the Capital Stock of each Issuer owned by such Grantor.
<PAGE>
10
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has
good and marketable title to, the Pledged Securities pledged by it hereunder,
free of any and all Liens or options in favor of, or claims of, any other
Person, except the security interest created by this Agreement.
4.8 RECEIVABLES. (a) No amount payable to such Grantor under or
in connection with any Receivable is evidenced by any Instrument or Chattel
Paper which has not been delivered to the Administrative Agent.
(b) None of the obligors on any Receivables is a Governmental
Authority.
(c) The amounts represented by such Grantor to the Lenders from
time to time as owing to such Grantor in respect of the Receivables will be
maintained in accordance with Section 6.6(a) of the Credit Agreement.
4.9 INTELLECTUAL PROPERTY. (a) SCHEDULE 6 lists all Intellectual
Property owned by such Grantor in its own name on the date hereof.
(b) On the date hereof, all material Intellectual Property is
valid, subsisting, unexpired and enforceable, has not been abandoned and does
not, to the knowledge of such Grantor, infringe the intellectual property
rights of any other Person.
(c) Except as set forth in SCHEDULE 6, on the date hereof, none of
the Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of,
or such Grantor's rights in, any Intellectual Property in any respect that
could reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending, or, to the knowledge of
such Grantor, threatened, on the date hereof (i) seeking to limit, cancel or
question the validity of any Intellectual Property or such Grantor's
ownership interest therein, or (ii) which, if adversely determined, would
have a material adverse effect on the value of any Intellectual Property.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and
the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of
<PAGE>
11
Credit shall be outstanding (unless such Letter of Credit has been cash
collateralized in full to the satisfaction of the Administrative Agent and
the Lenders) and the Commitments shall have terminated:
5.1 COVENANTS IN CREDIT AGREEMENT. In the case of each Guarantor,
such Guarantor shall take, or shall refrain from taking, as the case may be,
each action that is necessary to be taken or not taken, as the case may be,
so that no Default or Event of Default is caused by the failure to take such
action or to refrain from taking such action by such Guarantor or any of its
Subsidiaries.
5.2 DELIVERY OF INSTRUMENTS AND CHATTEL PAPER. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any Instrument or Chattel Paper, such Instrument or Chattel
Paper shall be promptly delivered to the Administrative Agent, duly indorsed
in a manner satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Agreement.
5.3 MAINTENANCE OF INSURANCE. (a) Such Grantor will maintain,
with financially sound and reputable companies, insurance policies (i)
insuring the Inventory and Equipment against loss by fire, explosion, theft
and such other casualties as may be reasonably satisfactory to the
Administrative Agent and (ii) to the extent requested by the Administrative
Agent, insuring such Grantor, the Administrative Agent and the Lenders
against liability for personal injury and property damage relating to such
Inventory and Equipment, such policies to be in such form and amounts and
having such coverage as may be reasonably satisfactory to the Administrative
Agent and the Lenders (with due consideration given to standard industry
practices from time to time).
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Administrative Agent of
written notice thereof, (ii) name the Administrative Agent as insured party
or loss payee, as the case may be, and (iii) be reasonably satisfactory in
all other respects to the Administrative Agent (with due consideration given
to standard industry practices from time to time).
(c) The Borrower shall deliver to the Administrative Agent and the
Lenders a report of a reputable insurance broker with respect to such
insurance during the month of August in each calendar year and such
supplemental reports with respect thereto as the Administrative Agent may
from time to time reasonably request.
5.4 PAYMENT OF OBLIGATIONS. Such Grantor will pay and discharge
or otherwise satisfy at or before maturity or before they become delinquent,
as the case may be, all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as
well as all claims of any kind (including, without limitation, claims for
labor, materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if the amount or validity thereof is
currently being contested in good faith by appropriate proceedings, reserves
in conformity with GAAP with respect thereto have been provided on the books
of such Grantor and such proceedings could not reasonably be expected to
result in the sale, forfeiture or loss of any material portion of the
Collateral or any interest therein.
5.5 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER
DOCUMENTATION. (a) Such Grantor shall maintain the security interest
created by this Agreement as a perfected security interest having at least
the priority described in Section 4.3 and shall defend such security interest
against the claims and demands of all Persons whomsoever.
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12
(b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in
reasonable detail.
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such
Grantor will promptly and duly execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code (or other similar
laws) in effect in any jurisdiction with respect to the security interests
created hereby.
5.6 CHANGES IN LOCATIONS, NAME, ETC. Such Grantor will not,
except upon 5 days' prior written notice to the Administrative Agent and
delivery to the Administrative Agent of (a) all additional executed financing
statements and other documents reasonably requested by the Administrative
Agent to maintain the validity, perfection and priority of the security
interests provided for herein and (b) if applicable, a written supplement to
SCHEDULE 5 showing any additional location at which Inventory or Equipment
shall be kept:
(i) permit any of the Inventory or Equipment to be kept at a location
other than those listed on SCHEDULE 5, except Inventory or Equipment with
an aggregate fair market value of less than $100,000 for a period of less
than 20 days;
(ii) change the location of its chief executive office or sole place
of business from that referred to in Section 4.4; or
(iii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Administrative Agent in
connection with this Agreement would become misleading.
5.7 NOTICES. Such Grantor will advise the Administrative Agent
and the Lenders promptly, after obtaining knowledge thereof, in reasonable
detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any of
its remedies hereunder; and
(b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.8 PLEDGED SECURITIES. (a) If such Grantor shall become
entitled to receive or shall receive any stock certificate (including,
without limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or reduction
of capital or any certificate issued in connection with any reorganization),
option or rights in respect of the Capital Stock of any Issuer, whether in
addition to, in substitution of, as a conversion of, or in exchange for, any
shares of the Pledged Stock, or otherwise in respect thereof, such Grantor
shall accept the same as the agent of the Administrative Agent and the
Lenders, hold the same in trust for the Administrative Agent
<PAGE>
13
and the Lenders and deliver the same forthwith to the Administrative Agent in
the exact form received, duly indorsed by such Grantor to the Administrative
Agent, if required, together with an undated stock power covering such
certificate duly executed in blank by such Grantor and with, if the
Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the
Pledged Securities upon the liquidation or dissolution of any Issuer shall be
paid over to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the Pledged
Securities or any property shall be distributed upon or with respect to the
Pledged Securities pursuant to the recapitalization or reclassification of
the capital of any Issuer or pursuant to the reorganization thereof, the
property so distributed shall, unless otherwise subject to a perfected
security interest in favor of the Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sums of money or property so paid or
distributed in respect of the Pledged Securities shall be received by such
Grantor, such Grantor shall, until such money or property is paid or
delivered to the Administrative Agent, hold such money or property in trust
for the Lenders, segregated from other funds of such Grantor, as additional
collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock or other equity securities of any nature or to
issue any other securities convertible into or granting the right to purchase
or exchange for any stock or other equity securities of any nature of any
Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Pledged Securities or Proceeds thereof
(except pursuant to a transaction expressly permitted by the Credit
Agreement), (iii) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the Pledged
Securities or Proceeds thereof, or any interest therein, except for the
security interests created by this Agreement or (iv) enter into any agreement
or undertaking restricting the right or ability of such Grantor or the
Administrative Agent to sell, assign or transfer any of the Pledged
Securities or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to
the Pledged Securities issued by it and will comply with such terms insofar
as such terms are applicable to it, (ii) it will notify the Administrative
Agent promptly in writing of the occurrence of any of the events described in
Section 5.8(a) with respect to the Pledged Securities issued by it and (iii)
the terms of Sections 6.3(c) and 6.7 shall apply to it, MUTATIS MUTANDIS,
with respect to all actions that may be required of it pursuant to Section
6.3(c) or 6.7 with respect to the Pledged Securities issued by it.
5.9 RECEIVABLES. (a) Other than in the ordinary course of
business consistent with its past practice (with due consideration given to
any changes in the business of the Loan Parties as a result of the Merger and
the other transactions contemplated hereby), such Grantor will not (i) grant
any extension of the time of payment of any Receivable, (ii) compromise or
settle any Receivable for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the payment of any Receivable,
(iv) allow any credit or discount whatsoever on any Receivable or (v) amend,
supplement or modify any Receivable in any manner that could adversely affect
the value thereof.
(b) Such Grantor will deliver to the Administrative Agent a copy
of each material demand, notice or document received by it that questions or
calls into doubt the validity or enforceability of more than 5% of the
aggregate amount of the then outstanding Receivables.
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14
5.10 INTELLECTUAL PROPERTY. (a) Such Grantor (either itself or
through licensees) will (i) continue to use each material Trademark on each
and every trademark class of goods applicable to its current line as
reflected in its current catalogs, brochures and price lists in order to
maintain each such Trademark in full force free from any claim of abandonment
for non-use, (ii) maintain as in the past the quality of products and
services offered under such Trademark, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends required
by applicable Requirements of Law, (iv) not adopt or use any mark which is
confusingly similar or a colorable imitation of such Trademark unless the
Administrative Agent, for the ratable benefit of the Lenders, shall obtain a
perfected security interest in such mark pursuant to this Agreement, and (v)
not (and not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby such Trademark may become invalidated or
impaired in any way.
(b) Such Grantor (either itself or through licensees) will not do
any act, or omit to do any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will
employ each material Copyright and (ii) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any
act whereby any material portion of the Copyrights may become invalidated or
otherwise impaired. Such Grantor will not (either itself or through
licensees) do any act whereby any material portion of the Copyrights may fall
into the public domain.
(d) Such Grantor (either itself or through licensees) will not do
any act that knowingly uses any material Intellectual Property to infringe
the intellectual property rights of any other Person.
(e) Such Grantor will notify the Administrative Agent and the
Lenders promptly if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse
determination or development (including, without limitation, the institution
of, or any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office or any
court or tribunal in any country) regarding such Grantor's ownership of, or
the validity of, any material Intellectual Property or such Grantor's right
to register the same or to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the
registration of any Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, such
Grantor shall report such filing to the Administrative Agent within five
Business Days after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Administrative Agent, such Grantor shall execute
and deliver, and have recorded, any and all agreements, instruments,
documents, and papers as the Administrative Agent may reasonably request to
evidence the Administrative Agent's and the Lenders' security interest in any
Copyright, Patent or Trademark and the goodwill and general intangibles of
such Grantor relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof, to maintain and pursue each application (and to obtain the relevant
registration) and to maintain
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15
each registration of the material Intellectual Property, including, without
limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall
(i) take such actions as such Grantor shall reasonably deem reasonably
appropriate under the circumstances to protect such Intellectual Property and
(ii) if such Intellectual Property is of material economic value, promptly
notify the Administrative Agent after it learns thereof and sue for
infringement, misappropriation or dilution, to seek injunctive relief where
appropriate and to recover any and all damages for such infringement,
misappropriation or dilution.
SECTION 6. REMEDIAL PROVISIONS
6.1 CERTAIN MATTERS RELATING TO RECEIVABLES. (a) The
Administrative Agent shall have the right to make test verifications of the
Receivables from time to time at reasonable intervals in any manner and
through any medium that it reasonably considers advisable with notice to the
Borrower, and each Grantor shall furnish all such assistance and information
as the Administrative Agent may require in connection with such test
verifications. At any time and from time to time, promptly following the
Administrative Agent's request and at the expense of the relevant Grantor,
such Grantor shall cause independent public accountants or others
satisfactory to the Administrative Agent to furnish to the Administrative
Agent reports showing reconciliations, aging and test verifications of, and
trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Receivables, in the ordinary course of business, and
the Administrative Agent may curtail or terminate said authority at any time
after the occurrence and during the continuance of an Event of Default. If
required by the Administrative Agent at any time after the occurrence and
during the continuance of an Event of Default, any payments of Receivables,
when collected by any Grantor, (i) shall be forthwith (and, in any event,
within two Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Administrative Agent if
required, in a Collateral Account maintained under the sole dominion and
control of the Administrative Agent, subject to withdrawal by the
Administrative Agent for the account of the Lenders only as provided in
Section 6.5, and (ii) until so turned over, shall be held by such Grantor in
trust for the Administrative Agent and the Lenders, segregated from other
funds of such Grantor. Upon the Administrative Agent's request, each such
deposit of Proceeds of Receivables shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments
included in the deposit.
(c) Promptly following the Administrative Agent's request, after
the occurrence and during the continuance of an Event of Default, each
Grantor shall deliver to the Administrative Agent all original and other
documents evidencing, and relating to, the agreements and transactions which
gave rise to the Receivables, including, without limitation, all original
orders, invoices and shipping receipts.
6.2 COMMUNICATIONS WITH OBLIGORS; GRANTORS REMAIN LIABLE. (a)
The Administrative Agent in its own name or in the name of others may at any
time after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
Receivables.
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16
(b) Upon the request of the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, each
Grantor shall notify obligors on the Receivables that the Receivables have
been assigned to the Administrative Agent for the ratable benefit of the
Lenders and that payments in respect thereof shall be made directly to the
Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables to observe and perform all
the conditions and obligations to be observed and performed by it thereunder,
all in accordance with the terms of any agreement giving rise thereto.
Neither the Administrative Agent nor any Lender shall have any obligation or
liability under any Receivable (or any agreement giving rise thereto) by
reason of or arising out of this Agreement or the receipt by the
Administrative Agent or any Lender of any payment relating thereto, nor shall
the Administrative Agent or any Lender be obligated in any manner to perform
any of the obligations of any Grantor under or pursuant to any Receivable (or
any agreement giving rise thereto), to make any payment, to make any inquiry
as to the nature or the sufficiency of any payment received by it or as to
the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to it or to which it
may be entitled at any time or times.
6.3 PLEDGED STOCK. (a) Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given
notice to the relevant Grantor of the Administrative Agent's intent to
exercise its corresponding rights pursuant to Section 6.3(b), each Grantor
shall be permitted to receive all cash dividends paid in respect of the
Pledged Stock and all payments made in respect of the Pledged Notes, in each
case paid in the normal course of business of the relevant Issuer and
consistent with past practice, to the extent permitted in the Credit
Agreement, and to exercise all voting and corporate rights with respect to
the Pledged Securities; PROVIDED, HOWEVER, that no vote shall be cast or
corporate right exercised or other action taken which, in the Administrative
Agent's reasonable judgment, would impair a material portion of the
Collateral or which would be inconsistent with or result in any violation of
any provision of the Credit Agreement, this Agreement or any other Loan
Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights
to the relevant Grantor or Grantors, (i) the Administrative Agent shall have
the right to receive any and all cash dividends, payments or other Proceeds
paid in respect of the Pledged Securities and make application thereof to the
Obligations in such order as the Administrative Agent may determine, and (ii)
any or all of the Pledged Securities shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its
nominee may thereafter exercise (x) all voting, corporate and other rights
pertaining to such Pledged Securities at any meeting of shareholders of the
relevant Issuer or Issuers or otherwise in such manner as to give effect to
the rights of the Administrative Agent and the Lenders under the Loan
Documents and (y) any and all rights of conversion, exchange and subscription
and any other rights, privileges or options pertaining to such Pledged
Securities as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of
any Issuer, or upon the exercise by any Grantor or the Administrative Agent
of any right, privilege or option pertaining to such Pledged Securities, and
in connection therewith, the right to deposit and deliver any and all of the
Pledged Securities with any committee, depositary, transfer agent, registrar
or other designated agency upon such terms and conditions as the
Administrative Agent may determine), all without liability except to account
for property actually
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17
received by it, but the Administrative Agent shall have no duty to any
Grantor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of
any Pledged Securities pledged by such Grantor hereunder to (i) comply with
any instruction received by it from the Administrative Agent in writing that
(x) states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement and applicable law,
without any other or further instructions from such Grantor, and each Grantor
agrees that each Issuer shall be fully protected in so complying, and (ii)
unless otherwise expressly permitted hereby, pay any dividends or other
payments with respect to the Pledged Securities directly to the
Administrative Agent.
6.4 PROCEEDS TO BE TURNED OVER TO ADMINISTRATIVE AGENT. In
addition to the rights of the Administrative Agent and the Lenders specified
in Section 6.1 with respect to payments of Receivables, if an Event of
Default shall occur and be continuing, all Proceeds received by any Grantor
consisting of cash, checks and other near-cash items shall be held by such
Grantor in trust for the Administrative Agent and the Lenders, segregated
from other funds of such Grantor, and shall, forthwith upon receipt by such
Grantor, be turned over to the Administrative Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Administrative
Agent, if required). All Proceeds received by the Administrative Agent
hereunder shall be held by the Administrative Agent in a Collateral Account
maintained under its sole dominion and control. All Proceeds while held by
the Administrative Agent in a Collateral Account (or by such Grantor in trust
for the Administrative Agent and the Lenders) shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in Section 6.5.
6.5 APPLICATION OF PROCEEDS. If an Event of Default shall have
occurred and be continuing, the Administrative Agent shall apply all or any
part of Proceeds constituting Collateral, whether or not held in any
Collateral Account, and any proceeds of the guarantee set forth in Section 2,
in payment of the Obligations in the following order:
FIRST, to pay incurred and unpaid fees and expenses of the
Administrative Agent under the Loan Documents;
SECOND, to the Administrative Agent, for application by it towards
payment of amounts then due and owing and remaining unpaid in respect of
the Obligations, PRO RATA among the Lenders according to the amounts of the
Obligations then due and owing and remaining unpaid to the Lenders;
THIRD, to the Administrative Agent, for application by it towards
prepayment of the Obligations, PRO RATA among the Lenders according to the
amounts of the Obligations then held by the Lenders; and
FOURTH, any balance of such Proceeds remaining after the Obligations
shall have been paid in full, no Letters of Credit shall be outstanding
(unless such Letter of Credit has been cash collateralized in full to the
satisfaction of the Administrative Agent and the Lenders) and the
Commitments shall have terminated shall be promptly paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.
6.6 CODE AND OTHER REMEDIES. If an Event of Default shall occur
and be continuing, the Administrative Agent, on behalf of the Lenders, may
exercise, in addition to all other rights and
<PAGE>
18
remedies granted to them in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the New York UCC or any other applicable
law. Without limiting the generality of the foregoing, the Administrative
Agent, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law
referred to below) to or upon any Grantor or any other Person (all and each
of which demands, defenses, advertisements and notices are hereby waived),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Administrative Agent or any Lender
or elsewhere upon such terms and conditions as it may deem advisable and at
such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Administrative Agent or any
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and
released. Each Grantor further agrees, at the Administrative Agent's
request, to assemble the Collateral and make it available to the
Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at such Grantor's premises or elsewhere. The
Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.6, after deducting all reasonable costs and
expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Administrative Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Administrative Agent may elect, and only after such application
and after the payment by the Administrative Agent of any other amount
required by any provision of law, including, without limitation, Section
9-504(1)(c) of the New York UCC, need the Administrative Agent account for
the surplus, if any, to any Grantor. To the extent permitted by applicable
law, each Grantor waives all claims, damages and demands it may acquire
against the Administrative Agent or any Lender arising out of the exercise by
them of any rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or
other disposition. Nothing herein shall be deemed to authorize the
Administrative Agent or the Lenders to take action in violation of applicable
law.
6.7 REGISTRATION RIGHTS. (a) If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 6.6, and if in the opinion of the Administrative Agent it
is necessary or reasonably advisable to have the Pledged Stock, or that
portion thereof to be sold, registered under the provisions of the Securities
Act, the relevant Grantor will cause the Issuer thereof to (i) execute and
deliver, and cause the directors and officers of such Issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all
such other acts as may be, in the opinion of the Administrative Agent,
necessary or advisable to register the Pledged Stock, or that portion thereof
to be sold, under the provisions of the Securities Act, (ii) use its best
efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of
the first public offering of the Pledged Stock, or that portion thereof to be
sold, and (iii) make all amendments thereto and/or to the related prospectus
which, in the opinion of the Administrative Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act and
the rules and regulations of the Securities and Exchange Commission
applicable thereto. Each Grantor agrees to cause such Issuer to comply with
the provisions of the securities or "Blue Sky" laws of any and all
jurisdictions which the Administrative
<PAGE>
19
Agent shall designate and to make available to its security holders, as soon
as practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire such securities for their
own account for investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Administrative Agent shall be under no obligation to delay a
sale of any of the Pledged Stock for the period of time necessary to permit
the Issuer thereof to register such securities for public sale under the
Securities Act, or under applicable state securities laws, even if such
Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to
be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Stock pursuant to this Section 6.7 valid
and binding and in compliance with any and all other applicable Requirements
of Law. Each Grantor further agrees that a breach of any of the covenants
contained in this Section 6.7 will cause irreparable injury to the
Administrative Agent and the Lenders, that the Administrative Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 6.7 shall
be specifically enforceable against such Grantor, and such Grantor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default
has occurred under the Credit Agreement.
6.8 WAIVER; DEFICIENCY. Each Grantor waives and agrees not to
assert any rights or privileges which it may acquire under Section 9-112 of
the New York UCC. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient
to pay its Obligations and the fees and disbursements of any attorneys
employed by the Administrative Agent or any Lender to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT, ETC.
(a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, each Grantor hereby gives the Administrative
Agent the power and right, on behalf of such Grantor, without notice to or
assent by such Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the
<PAGE>
20
payment of moneys due under any Receivable or with respect to any other
Collateral and file any claim or take any other action or proceeding in
any court of law or equity or otherwise deemed appropriate by the
Administrative Agent for the purpose of collecting any and all such
moneys due under any Receivable or with respect to any other Collateral
whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may request to evidence the
Administrative Agent's and the Lenders' security interest in such
Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.6
or 6.7, any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (3)
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect
of any Collateral; (5) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (6) settle, compromise
or adjust any such suit, action or proceeding and, in connection therewith,
give such discharges or releases as the Administrative Agent may deem
appropriate; (7) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions,
and in such manner, as the Administrative Agent shall in its sole
discretion determine; and (8) generally, sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the Administrative
Agent's option and such Grantor's expense, at any time, or from time to
time, all acts and things which the Administrative Agent deems necessary to
protect, preserve or realize upon the Collateral and the Administrative
Agent's and the Lenders' security interests therein and to effect the
intent of this Agreement, all as fully and effectively as such Grantor
might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the
power of attorney provided for in this Section 7.1(a) unless an Event of
Default shall have occurred and be continuing, and the power of attorney will
be executed in a manner intended to give effect to the intent of this
Agreement and the other Loan Documents and in accordance with applicable law.
<PAGE>
21
(b) If during the continuance of an Event of Default, any Grantor
fails to perform or comply with any of its agreements contained herein, the
Administrative Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such
agreement.
(c) The expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 7.1, together
with interest thereon at a rate per annum equal to the rate per annum at
which interest would then be payable on past due Revolving Credit Loans that
are Base Rate Loans under the Credit Agreement, from the date of payment by
the Administrative Agent to the date reimbursed by the relevant Grantor,
shall be payable by such Grantor to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof in a manner that is
consistent with the terms hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby
are released.
7.2 DUTY OF ADMINISTRATIVE AGENT. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect
or realize upon any of the Collateral or for any delay in doing so or shall
be under any obligation to sell or otherwise dispose of any Collateral upon
the request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent's and the Lenders' interests in the
Collateral and shall not impose any duty upon the Administrative Agent or any
Lender to exercise any such powers. The Administrative Agent and the Lenders
shall be accountable only for amounts that they actually receive as a result
of the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to any Grantor for any
act or failure to act hereunder, except for their own gross negligence or
willful misconduct.
7.3 EXECUTION OF FINANCING STATEMENTS. Pursuant to Section 9-402
of the New York UCC and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing
or recording documents or instruments with respect to the Collateral without
the signature of such Grantor in such form and in such offices as the
Administrative Agent reasonably determines appropriate to perfect the
security interests of the Administrative Agent under this Agreement. A
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction.
7.4 AUTHORITY OF ADMINISTRATIVE AGENT. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit Agreement and
by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Administrative Agent and the Grantors, the
Administrative Agent
<PAGE>
22
shall be conclusively presumed to be acting as agent for the Lenders with
full and valid authority so to act or refrain from acting, and no Grantor
shall be under any obligation, or entitlement, to make any inquiry respecting
such authority.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS IN WRITING. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified
except in accordance with Section 10.1 of the Credit Agreement.
8.2 NOTICES. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 10.2 of the Credit Agreement; PROVIDED that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on SCHEDULE 1.
8.3 NO WAIVER BY COURSE OF CONDUCT; CUMULATIVE REMEDIES. Neither
the Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise
be deemed to have waived any right or remedy hereunder or to have acquiesced
in any Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Administrative Agent or any Lender of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Administrative Agent or such Lender
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
8.4 ENFORCEMENT EXPENSES; INDEMNIFICATION. (a) Each Guarantor
agrees to pay or reimburse each Lender and the Administrative Agent for all
its costs and expenses incurred in collecting against such Guarantor under
the guarantee contained in Section 2 or otherwise enforcing or preserving any
rights under this Agreement and the other Loan Documents to which such
Guarantor is a party, including, without limitation, the fees and
disbursements of counsel to each Lender and of counsel to the Administrative
Agent.
(b) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities with respect to,
or resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect to
any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all 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 to
the extent the Borrower would be required to do so pursuant to Section 10.5
of the Credit Agreement.
<PAGE>
23
(d) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns; PROVIDED
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
8.6 SET-OFF. Each Grantor hereby irrevocably authorizes the
Administrative Agent and each Lender at any time and from time to time while
an Event of Default pursuant to Section 8(a) of the Credit Agreement shall
have occurred and be continuing, without notice to such Grantor or any other
Grantor, any such notice being expressly waived by each Grantor, to set-off
and appropriate and apply 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 the Administrative Agent or such Lender to or for the credit or the
account of such Grantor, or any part thereof in such amounts as the
Administrative Agent or such Lender may elect, against and on account of the
obligations and liabilities of such Grantor to the Administrative Agent or
such Lender hereunder and claims of every nature and description of the
Administrative Agent or such Lender against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan
Document or otherwise, as the Administrative Agent or such Lender may elect,
whether or not the Administrative Agent or any Lender has made any demand for
payment and although such obligations, liabilities and claims may be
contingent or unmatured. The Administrative Agent and each Lender shall
notify such Grantor promptly of any such set-off and the application made by
the Administrative Agent or such Lender of the proceeds thereof, PROVIDED
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Administrative Agent and each
Lender under this Section 8.6 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the
Administrative Agent or such Lender may have.
8.7 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.
8.8 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.
8.9 SECTION HEADINGS. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are
no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof and
thereof not expressly set forth or referred to herein or in the other Loan
Documents.
<PAGE>
24
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 SUBMISSION TO JURISDICTION; WAIVERS. Each Grantor hereby
irrevocably and unconditionally:
(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 of America 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 such
Grantor at its address referred to in Section 8.2 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 sue 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 any special, exemplary, punitive or consequential damages.
8.13 ACKNOWLEDGEMENTS. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a
party;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Grantor arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Grantors, on the one hand, and the Administrative
Agent and Lenders, 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 Grantors and the Lenders.
8.14 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
<PAGE>
25
8.15 ADDITIONAL GRANTORS. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 6.10 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement
upon execution and delivery by such Subsidiary of an Assumption Agreement in
the form of Annex 1 hereto.
8.16 RELEASES. (a) At such time as the Loans, the Reimbursement
Obligations and the other Obligations shall have been paid in full, the
Commitments have been terminated and no Letters of Credit shall be
outstanding (unless such Letter of Credit has been cash collateralized in
full to the satisfaction of the Administrative Agent and the Lenders), the
Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to survive
such termination) of the Administrative Agent and each Grantor hereunder
shall terminate, all without delivery of any instrument or performance of any
act by any party, and all rights to the Collateral shall revert to the
Grantors. At the request and sole expense of any Grantor following any such
termination, the Administrative Agent shall deliver to such Grantor any
Collateral held by the Administrative Agent hereunder, and promptly execute
and deliver to such Grantor such documents as such Grantor shall reasonably
request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Administrative Agent, at the request and sole expense of
such Grantor, shall promptly execute and deliver to such Grantor all releases
or other documents reasonably necessary or desirable for the release of the
Liens created hereby on such Collateral. At the request and sole expense of
the Borrower, a Subsidiary Guarantor shall be released from its obligations
hereunder in the event that it is no longer a Subsidiary of a Loan Party;
PROVIDED that the Borrower shall have delivered to the Administrative Agent,
at least ten Business Days prior to the date of the proposed release, a
written request for release identifying the relevant Subsidiary Guarantor and
the terms of the sale or other disposition in reasonable detail, including
the price thereof and any expenses in connection therewith, together with a
certification by the Borrower stating that such transaction and release are
in compliance with the Credit Agreement and the other Loan Documents.
(c) Any party hereto which becomes an Excluded Foreign Subsidiary
shall be automatically released from the terms hereof to an extent consistent
with Section 6.10 of the Credit Agreement upon notice to the Administrative
Agent.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of
the date first above written.
AXIOHM TRANSACTION SOLUTIONS, INC.
By: /s/ Stuart Groom
--------------------------------
Title:
AXIOHM S.A.
By: /s/ Patrick Dupuy
--------------------------------
Title: Chariman
DARDEL TECHNOLOGIES, S.A.
By: /s/ Patrick Dupuy
--------------------------------
Title:
AXIOHM-INVESTISSEMENTS
By: /s/ Patrick Dupuy
--------------------------------
Title: President
AXIOHM IPB, INC.
By: /s/ Stuart Groom
--------------------------------
Title:
STADIA COLORADO CORP.
By: /s/ Stuart Groom
--------------------------------
Title:
<PAGE>
COGNITIVE SOLUTIONS, INC.
By: /s/ Stuart Groom
--------------------------------
Title:
<PAGE>
SCHEDULE 1
NOTICE ADDRESSES OF GUARANTORS
<PAGE>
SCHEDULE 2
DESCRIPTION OF PLEDGED SECURITIES
<TABLE>
<CAPTION>
PLEDGED STOCK:
Issuer Class of Stock Stock Certificate No. No. of Shares
- ---------------------------- ---------------- --------------------- --------------
<S> <C> <C> <C>
Axiohm IPB, Inc.
Stadia Colorado Corp.
Cognitive Solutions,
Inc.
DH - Mexico
<CAPTION>
PLEDGED NOTES:
Issuer Payee Principal Amount
- --------------------------------- -------------------- -----------------------------
<S> <C> <C>
</TABLE>
<PAGE>
SCHEDULE 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
UNIFORM COMMERCIAL CODE FILINGS
[List each office where a financing statement is to be filed]
PATENT AND TRADEMARK FILINGS
[List all filings]
ACTIONS WITH RESPECT TO PLEDGED STOCK
OTHER ACTIONS
[Describe other actions to be taken]
<PAGE>
SCHEDULE 4
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
Grantor Location
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<PAGE>
SCHEDULE 5
LOCATION OF INVENTORY AND EQUIPMENT
Grantor Location
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<PAGE>
SCHEDULE 6
COPYRIGHTS AND COPYRIGHT LICENSES
PATENTS AND PATENT LICENSES
TRADEMARKS AND TRADEMARK LICENSES
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Guarantee
and Collateral Agreement, dated as of October 2, 1997 (the "AGREEMENT"), made
by the Grantors parties thereto for the benefit of Lehman Commercial Paper
Inc., as Administrative Agent. The undersigned agrees for the benefit of the
Administrative Agent and the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) of
the Agreement.
3. The terms of Sections 6.3(a) and 6.7 of the Agreement shall apply to
it, MUTATIS MUTANDIS, with respect to all actions that may be required of it
pursuant to Section 6.3(a) or 6.7 of the Agreement.
DH TECNOLOGIA DE MEXICO, S.A. DE C.V.
By __________________________________
Title _______________________________
Address for Notices:
_____________________________________
_____________________________________
Fax: ________________________________
<PAGE>
ANNEX 1 TO
GUARANTEE AND COLLATERAL AGREEMENT
ASSUMPTION AGREEMENT, dated as of ________________, 199_, made by
______________________________, a ______________ corporation (the "ADDITIONAL
GRANTOR"), in favor of Lehman Commercial Paper Inc., as administrative agent (in
such capacity, the "ADMINISTRATIVE AGENT") for the banks and other financial
institutions (the "LENDERS") parties to the Credit Agreement referred to below.
All capitalized terms not defined herein shall have the meaning ascribed to them
in such Credit Agreement.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Axiohm Transaction Solutions, Inc. (the "BORROWER"), the
Lenders, Lehman Brothers Inc., as arranger, Lehman Commercial Paper Inc., as
syndication agent, and the Administrative Agent have entered into a Credit
Agreement, dated as of October 2, 1997 (as amended, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT");
WHEREAS, in connection with the Credit Agreement, the Borrower and
certain of its Affiliates (other than the Additional Grantor) have entered
into the Guarantee and Collateral Agreement, dated as of October 2, 1997 (as
amended, supplemented or otherwise modified from time to time, the "GUARANTEE
AND COLLATERAL AGREEMENT"), in favor of the Administrative Agent for the
benefit of the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor to
become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver
this Assumption Agreement in order to become a party to the Guarantee and
Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. GUARANTEE AND COLLATERAL AGREEMENT. By executing and
delivering this Assumption Agreement, the Additional Grantor, as provided in
Section 8.15 of the Guarantee and Collateral Agreement, hereby becomes a
party to the Guarantee and Collateral Agreement as a Grantor thereunder with
the same force and effect as if originally named therein as a Grantor and,
without limiting the generality of the foregoing, hereby expressly assumes
all obligations and liabilities of a Grantor thereunder. The information set
forth in Annex 1-A hereto is hereby added to the information set forth in
Schedules ____________* to the Guarantee and Collateral Agreement. The
Additional Grantor hereby represents and warrants that each of the
representations and warranties contained in Section 4 of the Guarantee and
Collateral Agreement is true and correct on and as the date hereof (after
giving effect to this Assumption Agreement) as if made on and as of such date.
- -----------------------
* Refer to each Schedule which needs to be supplemented.
<PAGE>
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above
written.
[ADDITIONAL GRANTOR]
By: _________________________________
Name:
Title:
