<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended September 27, 1996
Commission file number 0-20287
------------------------
NU-KOTE HOLDING, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 16-1296153
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17950 PRESTON ROAD, SUITE 690,
DALLAS, TEXAS 75252
(Address of principal executive offices) (Zip Code)
</TABLE>
(214) 250-2785
(Registrant's telephone number, including area code)
------------------------
Indicate by check mark whether the registrant has (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
Number of shares of common stock of registrant outstanding at November 5,
1996:
<TABLE>
<CAPTION>
CLASS OUTSTANDING
- ----------------------------------------------- -----------------------------------------------
<S> <C>
Class A common stock $.01 par value 21,775,302
</TABLE>
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<PAGE>
NU-KOTE HOLDING, INC.
INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PART I--FINANCIAL INFORMATION
Consolidated Balance Sheets as of September 27, 1996 and March 31, 1996.................................. 3
Consolidated Statements of Operations and Retained Earnings for the Three Month Periods Ended September
27, 1996 and September 29, 1995........................................................................ 4
Consolidated Statements of Operations and Retained Earnings (Deficit) for the Six Month Periods Ended
September 27, 1996 and September 29, 1995.............................................................. 5
Consolidated Statements of Cash Flows for the Six Month Periods Ended September 27, 1996 and September
29, 1995............................................................................................... 6
Notes to Consolidated Financial Statements............................................................... 7
Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 14
PART II--OTHER INFORMATION
Other Information........................................................................................ 18
Signature Page........................................................................................... 20
Index to Exhibits........................................................................................ 21
</TABLE>
2
<PAGE>
NU-KOTE HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER
27, MARCH 31,
1996 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................... $ 5,256 $ 6,540
Accounts receivable, net........................ 83,506 94,440
Receivables from Pelikan........................ 7,513 5,622
Inventories, net................................ 117,162 115,226
Prepaid expenses................................ 12,880 9,618
Deferred income taxes........................... 10,287 8,122
------------ ------------
Total current assets........................ 236,604 239,568
Property, plant, and equipment, net............... 90,864 92,402
Other assets and deferred charges................. 9,861 7,430
Assets held for sale.............................. 2,065 2,065
Intangibles, net.................................. 23,756 24,950
------------ ------------
Total assets................................ $ 363,150 $ 366,415
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loans and current portion of long-term
debt.......................................... $ 7,929 $ 6,358
Accounts payable................................ 43,051 50,565
Payables to Pelikan............................. 3,464 2,481
Compensation related liabilities................ 14,232 14,563
Other accrued liabilities....................... 49,939 47,936
------------ ------------
Total current liabilities................... 118,615 121,903
Long-term debt, net of current maturities......... 115,712 111,843
Other liabilities................................. 16,588 17,433
Deferred income taxes............................. 9,487 10,327
------------ ------------
Total liabilities........................... 260,402 261,506
------------ ------------
Shareholders' equity:
Preferred stock, $.01 par value, 10,000,000
shares authorized; none issued
Class A common stock, $.01 par value, 40,000,000
shares authorized; 22,325,302 and 22,292,008
shares issued................................. 223 223
Class B common stock, $.01 par value, 15,000,000
shares authorized; none issued
Additional paid-in capital...................... 91,589 91,178
Retained earnings............................... 12,505 13,042
Foreign currency translation adjustments........ (1,343 ) 692
Treasury stock, at cost, 550,000 shares......... (226 ) (226)
------------ ------------
Total shareholders' equity.................. 102,748 104,909
------------ ------------
Total liabilities and shareholders'
equity.................................. $ 363,150 $ 366,415
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NU-KOTE HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 27, 1996
AND SEPTEMBER 29, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 27, SEPTEMBER 29,
1996 1995
------------- -------------
<S> <C> <C>
(UNAUDITED)
Net sales........................................................................... $ 86,241 $ 102,810
Cost of sales....................................................................... 65,533 72,407
------------- -------------
Gross margin.................................................................... 20,708 30,403
Selling, general and administrative expenses........................................ 15,656 18,591
Research and development expenses................................................... 2,571 2,773
Restructuring expense............................................................... 4,635 4,032
------------- -------------
Operating income (loss)......................................................... (2,154) 5,007
Interest expense.................................................................... 2,156 1,950
Other (income) expense items, net................................................... (382) 137
------------- -------------
Income (loss) before income taxes................................................... (3,928) 2,920
Provision (benefit) for income taxes................................................ (1,596) 1,057
------------- -------------
Net income (loss)............................................................... (2,332) 1,863
Retained earnings--Beginning of period.............................................. 14,837 4,778
------------- -------------
Retained earnings--End of period.................................................... $ 12,505 $ 6,641
------------- -------------
------------- -------------
Net income (loss) per share of common stock......................................... $ (0.11) $ 0.08
------------- -------------
------------- -------------
Weighted average shares outstanding................................................. 21,775,302 22,732,638
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
NU-KOTE HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS (DEFICIT)
FOR THE SIX MONTH PERIODS ENDED SEPTEMBER 27, 1996
AND SEPTEMBER 29, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER SEPTEMBER
27, 29,
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
Net sales......................................... $ 173,698 $ 206,932
Cost of sales..................................... 127,763 146,345
------------ ------------
Gross margin................................ 45,935 60,587
Selling, general and administrative expenses...... 33,026 37,491
Research and development expenses................. 5,131 4,806
Restructuring expense............................. 5,780 4,227
------------ ------------
Operating income............................ 1,998 14,063
Interest expense.................................. 4,024 3,719
Other (income) items, net......................... (1,093 ) (539 )
------------ ------------
Income (loss) before income taxes................. (933 ) 10,883
Provision (benefit) for income taxes.............. (396 ) 4,147
------------ ------------
Net income (loss)........................... (537 ) 6,736
Retained earnings (deficit)--Beginning of
period.......................................... 13,042 (95 )
------------ ------------
Retained earnings--End of period.................. $ 12,505 $ 6,641
------------ ------------
------------ ------------
Net income (loss) per share of common stock....... $ (0.02 ) $ 0.30
------------ ------------
------------ ------------
Weighted average shares outstanding............... 21,759,921 22,533,878
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
NU-KOTE HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED SEPTEMBER 27, 1996
AND SEPTEMBER 29, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 27, SEPTEMBER 29,
1996 1995
------------- -------------
<S> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net income (loss)................................................................. $ (537) $ 6,736
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Exchange gains.................................................................. (1,066) (326)
Depreciation and amortization................................................... 6,671 6,239
Deferred income taxes........................................................... (537) (1,548)
Tax benefit from exercise of stock options...................................... 75 696
Other........................................................................... (1,762) 626
Changes in working capital:
Accounts receivable............................................................. 9,043 (3,074)
Inventories..................................................................... (1,936) (7,725)
Prepaid expenses................................................................ (3,262) (1,199)
Accounts payable................................................................ (6,531) (9,124)
Compensation related liabilities................................................ (331) 1,714
Other accrued liabilities....................................................... 2,908 1,282
Cash paid for restructuring..................................................... (3,373) (10,122)
------------- -------------
Net cash used in operating activities......................................... (638) (15,825)
------------- -------------
Cash flows from investing activities:
Purchase of property, plant and equipment......................................... (6,145) (4,146)
Sale of property, plant and equipment............................................. 556
Acquisition of business........................................................... (6,107)
------------- -------------
Net cash used in investing activities......................................... (5,589) (10,253)
------------- -------------
Cash flows from financing activities:
Borrowings on long-term debt and other loans...................................... 50,651 31,333
Payments on long-term debt and other loans........................................ (43,863) (16,149)
Exercise of stock options......................................................... 337 1,244
------------- -------------
Net cash provided by financing activities..................................... 7,125 16,428
------------- -------------
Effect of exchange rate changes on cash............................................. (2,182) (774)
------------- -------------
Net decrease in cash................................................................ (1,284) (10,424)
Cash and cash equivalents at beginning of period.................................... 6,540 17,049
------------- -------------
Cash and cash equivalents at end of period.......................................... $ 5,256 $ 6,625
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
NU-KOTE HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. THE COMPANY
Nu-kote Holding, Inc. ("Nu-kote") and its wholly-owned subsidiaries are
referred to collectively as the "Company". The Company is one of the leading
independent manufacturers and distributors of impact and non-impact imaging
supplies for office and home printing devices, including the manufacture and
distribution of a full line of typewriter and printer ribbons, thermal fax
ribbons, cartridges and toners for laser printers, facsimile machines and
copiers, cartridges and ink for ink jet printers, specialty papers, calculator
ink rolls, and carbon paper.
The Company sells products primarily in the United States and Europe,
directly to wholesale and retail markets, and also to original equipment
manufacturers and distributors for resale under their brand names or private
labels. The Company distributes through virtually all major office supply
marketing channels, including wholesale distributors, office products dealers,
direct mail catalogs, office supply "super stores", warehouse clubs, information
processing specialists, value added resellers, and mass market retailers.
The consolidated balance sheet as of September 27, 1996 and the related
consolidated statements of operations and retained earnings (deficit) for the
three and six month periods and consolidated statements of cash flows for the
six month periods ended September 27, 1996 and September 29, 1995 are unaudited.
However, in the opinion of management, all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of such financial
statements have been included. Interim results are not necessarily indicative of
results for a full year.
The financial statements and notes are presented as permitted by Form 10-Q,
and do not contain all financial disclosures and details included in the
Company's annual financial statements and notes.
2. NET INCOME (LOSS) PER SHARE OF COMMON STOCK
Net income (loss) per share of common stock for the three and six month
periods ended September 27, 1996 and September 29, 1995 is based on the weighted
average number of common shares outstanding during the period and the effect of
considering common stock equivalents (stock options) under the treasury stock
method. Primary and fully diluted net income (loss) per share of common stock
are the same and, therefore, are not shown separately.
7
<PAGE>
3. ACCOUNTS RECEIVABLE
Accounts receivable are reflected net of allowances for doubtful accounts of
$3,832 and $3,933 at September 27, 1996 and March 31, 1996, respectively.
4. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 27, MARCH 31,
1996 1996
------------- ----------
<S> <C> <C>
Raw materials................................................................ $ 47,497 $ 42,291
Work-in-process.............................................................. 16,742 18,341
Finished goods............................................................... 52,923 54,594
------------- ----------
Total...................................................................... $ 117,162 $ 115,226
------------- ----------
------------- ----------
</TABLE>
Since physical inventories taken during the year do not necessarily coincide
with the end of a quarter, management has estimated the composition of
inventories with respect to raw materials, work-in-process and finished goods.
It is management's opinion that this estimate represents a reasonable
approximation of the inventory levels at September 27, 1996. The amounts at
March 31, 1996 are based upon the audited balance sheet at that date.
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost and consists of the
following components:
<TABLE>
<CAPTION>
SEPTEMBER 27, MARCH 31,
1996 1996
------------- ----------
<S> <C> <C>
Land......................................................................... $ 5,200 $ 5,323
Buildings and improvements................................................... 21,973 22,742
Machinery and equipment...................................................... 94,762 90,827
------------- ----------
121,935 118,892
Less accumulated depreciation and impairment provision....................... (31,071) (26,490)
------------- ----------
Total...................................................................... $ 90,864 $ 92,402
------------- ----------
------------- ----------
</TABLE>
Depreciation expense amounted to $2,859 and $2,684 for the three month
periods and $5,170 and $5,001 for the six month periods ended September 27, 1996
and September 29, 1995, respectively.
8
<PAGE>
6. INTANGIBLE ASSETS
Intangible assets consist of amounts allocated as a result of purchases of
existing businesses and are summarized as follows:
<TABLE>
<CAPTION>
AMORTIZATION SEPTEMBER 27, MARCH 31,
PERIOD 1996 1996
------------ ------------- ----------
<S> <C> <C> <C>
Goodwill...................................................... 20 years $ 9,880 $ 9,880
Covenants-not-to-compete...................................... 3-5 years 6,642 6,642
Trademark..................................................... 40 years 11,306 11,306
Technology license............................................ 8 years 1,272 1,272
------------- ----------
29,100 29,100
Less accumulated amortization................................. (5,344) (4,150)
------------- ----------
Total....................................................... $ 23,756 $ 24,950
------------- ----------
------------- ----------
</TABLE>
Covenant-not-to-compete agreements have been recorded at their net present
value using estimated discount rates of 7% and 16%. The trademark has been
recorded at its estimated value based upon royalty rates charged for its use,
discounted at an estimated rate of return of 35%. The technology license has
been recorded at its estimated fair value based on forecasted discounted cash
flows using a 16% discount rate.
7. LINE OF CREDIT
The Company has a line of credit in Colombia in the amount of $1,450.
Borrowings against the line of credit amounted to $803 and $681 at September 27,
1996 and March 31, 1996, respectively. The line bears interest at the prevailing
Colombia interest rate plus 2 percentage points. Average interest rates at
September 27, 1996 and March 31, 1996 were 17.7% and 22.6%, respectively.
8. LONG-TERM DEBT
Long-term debt of the Company consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 27, MARCH 31,
1996 1996
------------- ----------
<S> <C> <C>
Revolving lines of credit.................................................... $ 83,764 $ 75,919
Term loan.................................................................... 37,500 40,000
Other items.................................................................. 1,574 1,601
------------- ----------
122,838 117,520
Less current portion......................................................... (7,126) (5,677)
------------- ----------
Long-term debt, net of current portion....................................... $ 115,712 $ 111,843
------------- ----------
------------- ----------
</TABLE>
9
<PAGE>
The Company has amended and restated its credit facilities dated February
24, 1995 (the "Original Credit Agreement"). The Amended and Restated Credit
Agreement (the "Amended Credit Agreement") dated October 15, 1996 consists of
a five-year $200 million revolving credit arrangement. The Amended Credit
Agreement is comprised of a $150 million Domestic (U.S. dollar denominated)
facility and two multi-currency European facilities (the "Multi-currency
Facilities"). The Multi-currency Facilities are denominated in Swiss Francs,
British Pound Sterling, Deustchmarks and U.S. dollars. The Amended Credit
Agreement provides for affirmative and negative covenants customary in an
agreement of this nature and consistent with the Original Credit Agreement.
Interest rates and the collateral structure for the Amended Credit Agreement
are also substantially the same as the Original Credit Agreement.
9. INCOME TAXES
Following are the approximate effective blended tax rates for significant
jurisdictions:
<TABLE>
<S> <C>
North America................................................. 40%
Switzerland................................................... 22%
Germany....................................................... 64%
United Kingdom................................................ 33%
</TABLE>
The above resulted in a worldwide effective blended tax rate of 41% and 42%
for the three and six month periods ended September 27, 1996, respectively.
10. CONTINGENCIES
Three original equipment manufacturers filed lawsuits against Nu-kote
International, Inc. ("NII") alleging that certain NII ink jet replacement
cartridges, refill inks and packaging infringe their trademarks, trade dress and
patents and alleging, among other things, unfair competition and misleading
representations. The plaintiffs are seeking injunctive relief, monetary damages,
court costs and attorney's fees. The complaint in one of the cases has been
amended to name Nu-kote and Pelikan Produktions A.G. as defendants. All of the
cases are being vigorously contested, and in each case the Company or NII has
asserted affirmative defenses and counterclaims and has requested damages and
affirmative injunctive relief. All of the lawsuits are in the discovery stage.
In management's opinion, the ultimate resolution of these lawsuits will not have
a material adverse effect on the Company's financial position, results of future
operations or liquidity.
In connection with Nu-kote's acquisition of the Office Supplies Division and
the International Business Forms Division of Unisys Corporation ("Unisys"),
Unisys agreed to retain all liabilities resulting from or arising out of any
environmental conditions existing on or before January 16, 1987 at the Company's
Rochester, Macedon and Bardstown facilities and, additionally, to indemnify the
Company for such. State environmental agencies have alleged that environmental
contamination exists at all three sites. To date Unisys has handled all
remediation efforts related to these properties. As a result of the
indemnification from Unisys, in the opinion of management, the ultimate cost to
resolve
10
<PAGE>
these environmental matters will not have a material adverse effect on the
Company's financial position, results of future operations or liquidity.
In addition, the Company is involved in various routine legal matters. In
the opinion of the Company's management, the ultimate cost to resolve these
matters will not have a material adverse effect on the Company's financial
position, results of future operations or liquidity.
This note contains various "forward looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
and Exchange Act of 1934, which represent the Company's expectations or beliefs
concerning the possible outcome of the various litigation matters described
herein and estimates of the Company's liabilities associated with identified
environmental matters. The Company cautions that the actual outcome of the
various litigation matters could be affected by a number of factors beyond its
control, including, without limitation, judicial interpretations of applicable
laws, rules and regulations, the uncertainties and risks inherent in any
litigation, particularly a jury trial, the nature and extent of any counter
claims, and the scope of insurance coverage, and that the final resolution of
such matters could differ materially from the Company's current evaluation of
such matters. The Company further cautions that the statements regarding
identified environmental matters are qualified by important factors that could
cause the Company's actual liabilities to differ materially from those in the
forward looking statements, including, without limitation, the following: (i)
the actual nature and extent of contamination, if any; (ii) the remedial action
selected; (iii) the actual cleanup level required; (iv) changes in regulatory
requirements; (v) the ability of other responsible parties, if any, to pay their
respective shares; and (vi) any insurance recoveries.
11
<PAGE>
11. RESTRUCTURING EXPENSE
As a result of the Pelikan Hardcopy Division acquisition, the Company merged
certain of its operations with those of Pelikan Hardcopy Division. The plan to
integrate the Pelikan Hardcopy Division's operations included, among other
things, closure of the Company's manufacturing, distribution and administration
facility in Bardstown, Kentucky and merger of its operations into the Pelikan
Hardcopy Division's facility in Franklin, Tennessee; termination of contract
manufacturing and other contracts; closure of the Company's manufacturing
facility in Deeside, Wales and merger of its operations with the Pelikan
Hardcopy Division's operations in Scotland; consolidation of certain toner
manufacturing operations of ICMI's Connellsville, Pennsylvania facility and the
Pelikan Hardcopy Division's Derry, Pennsylvania facility; and consolidation of
sales and administrative organizations of the two companies. The Company
substantially completed the merger activities in fiscal 1996 and anticipates
completion in fiscal 1997.
Activity related to accrued restructuring costs during the quarters ended
September 27, 1996 and September 29, 1995 are as follows:
<TABLE>
<CAPTION>
AMOUNT AMOUNT
ACCRUED AT ACCRUED AT
END OF AMOUNT PAID ADDITIONAL BEGINNING
DESCRIPTION OF RESTRUCTURING EXPENSE QUARTER IN QUARTER PROVISION OF QUARTER
- ---------------------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Quarter Ended September 27, 1996:
Severance............................................... $ 2,693 $ 0 $ 2,693 $ 0
Lease cancellations..................................... 385 40 425
Facility maintenance and other.......................... 209 78 287
----------- ----------- ----------- -----
$ 3,287 $ 118 $ 2,693 $ 712
----------- ----------- ----------- -----
----------- ----------- ----------- -----
<CAPTION>
AMOUNT AMOUNT
ACCRUED AT ACCRUED AT
END OF AMOUNT PAID BEGINNING
DESCRIPTION OF RESTRUCTURING EXPENSE QUARTER IN QUARTER OF QUARTER
- ---------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Quarter Ended September 29, 1995:
Severance............................................... $ 10 $ 1,452 $ 1,462
Lease cancellations..................................... 1,120 45 1,165
Termination of contract manufacturing and other
contracts............................................. 1,081 556 1,637
Facility maintenance and other.......................... 259 1,218 1,477
----------- ----------- -----------
$ 2,470 $ 3,271 $ 5,741
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
12
<PAGE>
Activity related to accrued restructuring costs during the six month periods
ended September 27, 1996 and September 29, 1995 are as follows:
<TABLE>
<CAPTION>
AMOUNT AMOUNT
ACCRUED AT ACCRUED AT
END OF AMOUNT PAID ADDITIONAL BEGINNING
DESCRIPTION OF RESTRUCTURING EXPENSE QUARTER IN QUARTER PROVISION OF QUARTER
- ---------------------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Six Months Ended September 27, 1996:
Severance............................................... $ 2,693 $ 71 $ 2,693 $ 71
Lease cancellations..................................... 385 40 425
Facility maintenance and other.......................... 209 175 384
----------- ----------- ----------- -----
$ 3,287 $ 286 $ 2,693 $ 880
----------- ----------- ----------- -----
----------- ----------- ----------- -----
<CAPTION>
AMOUNT AMOUNT
ACCRUED AT ACCRUED AT
END OF AMOUNT PAID BEGINNING
DESCRIPTION OF RESTRUCTURING EXPENSE PERIOD IN PERIOD OF PERIOD
- ---------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Six Months Ended September 29, 1995:
Severance............................................... $ 10 $ 3,161 $ 3,171
Lease cancellations..................................... 1,120 90 1,210
Termination of contract manufacturing and other
contracts............................................. 1,081 1,269 2,350
Facility maintenance and other.......................... 259 1,375 1,634
----------- ----------- -----------
$ 2,470 $ 5,895 $ 8,365
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 27, 1996 COMPARED TO QUARTER ENDED SEPTEMBER 29, 1995
Net sales for the quarter ended September 27, 1996 were $86.2 million, a
decline of $16.5 million (16.1%) over the quarter ended September 29, 1995. As
was experienced in the first quarter of fiscal 1997, the decline in net sales
was due almost entirely to a 23% decline in worldwide sales of impact products
as compared to the previous year period.
For the quarter ended September 27, 1996, net sales of impact products in
North America were approximately $19.1 million reflecting a decline of 26% as
compared to the previous year period. Net sales of impact products in Europe
were $17.2 million, reflecting a decrease of 20%, as compared to the previous
year period. For the quarter ended September 27, 1996, net sales of impact
products represented 43% of worldwide net sales.
For the quarter ended September 27, 1996, sales of non-impact products were
down slightly as compared to the previous year period due to a 20% decline in
non-impact sales in Europe. This decline was due to a combination of price
reductions as well as a decline in the sales volume of toner products both of
which were not offset due to delays in the introduction of new non-impact
products. In North America, net sales of non-impact products were up 5% as
compared to the previous year period and reflect the ongoing successful
introduction of new ink jet printer supplies.
While the Company expects the decline in the sale of impact products to
continue, management believes that the degree of the decline will be more in
line with projections for the industry. The Company also expects to reverse the
decline in sales of non-impact products in Europe as well as continue the growth
in the sale of non-impact products in North America through the scheduled
introduction of new products as well as the repeat sales of products recently
introduced.
Cost of sales were $65.5 million (76.0% of net sales) for the quarter ended
September 27, 1996, compared to $72.4 million (70.4% of net sales) in the prior
year period. The increase in cost of sales percentage was attributable to the
effect of the initial stocking orders of the Pelikan "Easy-Click" and the
Nu-kote "Cartridge Plus" systems for ink jet printers using the HP
Deskjet-Registered Trademark- engines. The Company expects that in the future,
the gross profit margin for these newly issued product groups will significantly
improve due to (a) an increase in the sales volume of such products combined
with a reduction in the raw material cost of these products resulting from the
Company's recently established used cartridge recovery program, and (b) customer
re-orders of refill tanks associated with
14
<PAGE>
these products. Also included in cost of sales was a credit of approximately
$1.2 million received from a related party which pertained to the operation
of the Company's central warehouse in Europe.
Research and development expenses were $2.6 million for the quarter ended
September 27, 1996, down $0.2 million from the prior year period. Selling,
general and administrative expenses were $15.6 million (18.1% of net sales) for
the quarter ended September 27, 1996, compared to $18.6 million (18.0% of net
sales) for the prior year period.
Other income amounted to $0.4 million in the current period related
primarily to exchange gains.
Restructuring costs amounted to $4.6 million in the current period and were
in line with previous projections.
Interest expense was $2.1 million, up slightly as compared to the previous
year period.
For the quarter ended September 27, 1996 the Company reported a net loss
from operations of $2.3 million as compared to net income of $1.9 million for
the previous year period.
SIX MONTHS ENDED SEPTEMBER 27, 1996 COMPARED TO SIX MONTHS ENDED SEPTEMBER 29,
1995
Net sales for the six months ended September 27, 1996 were $173.7 million, a
decline of $33.2 million (16.1%) over the six months ended September 29, 1995.
The decline in net sales was due almost entirely to a 24% decline in worldwide
sales of impact products as compared to the previous year period.
Net sales of impact products in Europe declined 27% during the six month
period while net sales in North America declined approximately 21% for the
period with the sharpest decline occurring during the second quarter of the
current fiscal period.
For the six months ended September 27, 1996, net sales of impact products
represented 43% of worldwide net sales as compared to 51% for the prior year
period.
Net sales of non-impact products in Europe were down approximately 24% for
the six months ended September 27, 1996 as compared to the previous year period.
This decline was due to a combination of price reductions as well as a decline
in the sales volume of toner products both of which were not offset due to
delays in the introduction of new non-impact products. In North America, net
sales of non-impact products were up over 13% as compared to the previous year
period and reflect the ongoing successful introduction of new ink jet printer
supplies.
15
<PAGE>
While the Company expects the decline in the sale of impact products to
continue, management believes that the degree of the decline will be more in
line with projections for the industry. The Company also expects to reverse the
decline in sales of non-impact products in European as well as continue the
growth in the sale of non-impact products in North America through the scheduled
introduction of new products as well as the repeat sales of products recently
introduced.
Cost of sales were $127.8 million (73.6% of net sales) for the six months
ended September 27, 1996, as compared to $146.3 million (70.7% of net sales) in
the prior year period. The increase in cost of sales percentage was attributable
to the effect of the initial stocking orders of the Pelikan "Easy-Click" and the
Nu-kote "Cartridge Plus" systems for ink jet printers using the HP
Deskjet-Registered Trademark- engines. As previously indicated, the Company
expects that in the future, the gross profit margin for these newly issued
product groups will significantly improve due to (a) an increase in the sales
volume of such products combined with a reduction in the raw material cost of
these products resulting from the Company's recently established used cartridge
recovery program, and (b) customer re-orders of refill tanks associated with
these products.
Research and development expenses were $5.1 million for the six months ended
September 27, 1996, comparable to the prior year period. Selling, general and
administrative expenses were $33.0 million (19.0% of net sales) for the six
months ended September 27, 1996, down $4.5 million as compared to the prior year
period. The decrease in actual expenditures resulted from the implementation of
worldwide expense reduction programs.
Other income amounted to $1.1 million in the current period related
primarily to exchange gains.
Restructuring costs amounted to $5.8 million in the current period and were
in line with previous projections.
Interest expense was $4.0 million, up slightly as compared to the previous
year period.
For the six months ended September 27, 1996 the Company reported a net loss
from operations of $0.5 million as compared to net income of $6.7 million for
the previous year period.
EFFECT OF CURRENCY EXCHANGE RATES AND EXCHANGE RATE RISK MANAGEMENT
Because the Company conducts business in many countries, fluctuations in
foreign currency exchange rates affect the Company's financial position and
results of operations. It is the Company's policy to monitor currency exposures
and enter into hedging arrangements to manage the company's exposure to
currency fluctuations. As a result,
16
<PAGE>
the Company reported $1.1 million and $0.3 million, respectively in exchange
gains, in the six month periods reported.
LIQUIDITY AND CASH FLOW
For the six months ended September 27, 1996, cash used by operations
amounted to $0.6 million, and included a use of cash for restructuring of $3.4
million. Increases in inventories of $1.9 million and decreases in accounts
payable of $6.5 million were offset by a decrease in accounts receivable of $9.0
million. Capital expenditures, primarily related to purchases of ink jet, toner
and computer equipment were $6.1 million.
As of November 4, 1996, borrowings outstanding under the Company's Amended
Credit Agreement, as described in the following paragraph, amounted to $124.3
million, up $8.4 million from March 31, 1996. The company had approximately
$77.4 million available for future borrowings under the Amended Credit
Facilities. The Company anticipates that cash flow from its operations and
available borrowings under the Amended Credit Facilities will provide sufficient
working capital to operate the business and meet the Company's foreseeable
liquidity requirements.
The Company amended and restated its credit agreement dated February 1995.
As described more fully in Note 8 of "Notes to Consolidated Financial
Statements", the credit facilities dated October 15, 1996 now provide for a
five-year, $200.0 million revolving credit facility.
CAUTIONARY STATEMENT
The foregoing "Management's Discussion and Analysis of Financial Condition
and Results of Operations" section contains various "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934, which represent the Company's
expectations or beliefs concerning, among other things, future operating results
and various components thereof and the adequacy of future operations to provide
sufficient liquidity. The Company cautions that such matters necessarily involve
significant risks and uncertainties that could cause actual operating results
and liquidity needs to differ materially from such statements, including,
without limitation, general economic conditions, product demand and industry
capacity, competitive products and pricing, manufacturing efficiencies, new
product development, availability of raw materials and critical manufacturing
equipment, and the regulatory and trade environment.
17
<PAGE>
PART II--OTHER INFORMATION
ITEM 1--LEGAL PROCEEDINGS
See Item 3--Legal Proceedings in the registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1996 and Note 10 of Notes to Consolidated
Financial Statements for the three and six month periods ended September 27,
1996 and September 29, 1995 included elsewhere in this report.
ITEMS 2--3 INAPPLICABLE
ITEM 4--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The registrant's annual meeting of shareholders was held on August 14,
1996 (the "Annual Meeting").
(b) See item (c) below.
(c) The following matters were considered at the Annual Meeting and approved
by the votes indicated:
(i) Each of the following nominees was elected to the Board of Directors
of the registrant:
<TABLE>
<CAPTION>
VOTES FOR VOTES WITHHELD
------------ --------------
<S> <C> <C>
Theodore Barry 16,454,289 163,221
Donald A. Bolke 16,455,162 162,348
David F. Brigante 16,445,427 172,083
Richard C. Dresdale 16,014,361 603,149
Brian D. Finn 16,437,162 180,348
Hubbard C. Howe 16,445,507 172,003
Daniel M. Kerrane 16,025,836 591,674
John P. Rochon 16,111,366 506,144
</TABLE>
(ii) The Nu-kote Holding, Inc. Deferred Stock Compensation Plan was
approved by a vote of 16,312,148 shares "For", 110,141 shares
"Against", 118,608 shares "Abstain" and 76,613 broker non-votes.
(iii) The appointment of Coopers & Lybrand L.L.P. as the registrant's
independent auditors for the fiscal year ending March 31, 1997 was
ratified at the Annual Meeting by a vote of 16,609,075 shares
"For", 5,815 shares "Against" and 2,620 shares "Abstain".
(d) Inapplicable.
ITEM 5--INAPPLICABLE
18
<PAGE>
PART II--OTHER INFORMATION (CONTINUED)
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
- -----------
<S> <C>
10.36 Amended and Restated Credit Agreement, dated as of October 15, 1996, by and among Nu-kote International, Inc.,
as Borrower, Nu-kote Holding, Inc., as Guarantor, the lenders listed on the signature pages thereof, Barclays
Bank PLC, as Documentation Agent, and NationsBank of Texas, N.A., as Administrative Agent and Collateral Agent.
10.39 Amended and Restated Revolving Credit Facility, dated October 15, 1996, between Pelikan Produktions
AG and Pelikan Hardcopy (International) AG, as borrowers, BZW and NationsBanc Capital Markets,
Inc., as arrangers, Barclays Bank PLC, as agent, NationsBank of Texas, N.A., as collateral agent and
documentation agent, and Others.
10.40 Amended and Restated Revolving Credit Facility, dated October 15, 1996, between Pelikan Scotland
Limited, as borrower, BZW and NationsBanc Capital Markets, Inc., as arrangers, Barclays Bank PLC,
as agent, NationsBank of Texas, N.A., as collateral agent and documentation agent, and Others.
10.41 Nu-kote Holding, Inc. Senior Management Stock Appreciation Rights Plan, as amended and restated
September 27, 1996.
10.42 Form of Appreciation Right Notification (relating to Exhibit 10.41).
10.43 Nu-kote Holding, Inc. 1992 Stock Option Plan, as amended and restated September 27, 1996.
10.44 Nu-kote Holding, Inc. Deferred Stock Compensation Plan, as amended and restated September 27, 1996.
11.1 Statement regarding computation of per share earnings.
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K.
The registrant filed no reports on Form 8-K during the quarterly period
ended September 27, 1996.
19
<PAGE>
SIGNATURES
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 thereunto duly authorized.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ DAVID F. BRIGANTE
- ------------------------------ Chairman of the Board and November 8, 1996
David F. Brigante Chief Executive Officer
/s/ DANIEL M. KERRANE Executive Vice President
- ------------------------------ and Chief Financial November 8, 1996
Daniel M. Kerrane Officer
20
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
- ---------
<S> <C> <C>
10.36 -- Amended and Restated Credit Agreement, dated as of October 15, 1996, by and among
Nu-kote International, Inc., as Borrower, Nu-kote Holding, Inc., as Guarantor, the
lenders listed on the signature pages thereof, Barclays Bank PLC, as Documentation
Agent, and NationsBank of Texas, N.A., as Administrative Agent and Collateral Agent.
10.39 -- Amended and Restated Revolving Credit Facility, dated October 15, 1996, between
Pelikan Produktions AG and Pelikan Hardcopy (International) AG, as borrowers, BZW and
NationsBanc Capital Markets, Inc., as arrangers, Barclays Bank PLC, as agent,
NationsBank of Texas, N.A., as collateral agent and documentation agent, and Others.
10.40 -- Amended and Restated Revolving Credit Facility, dated October 15, 1996, between
Pelikan Scotland Limited, as borrower, BZW and NationsBanc Capital Markets, Inc., as
arrangers, Barclays Bank PLC, as agent, NationsBank of Texas, N.A., as collateral
agent and documentation agent, and Others.
10.41 -- Nu-kote Holding, Inc. Senior Management Stock Appreciation Rights Plan, as amended and
restated September 27, 1996.
10.42 -- Form of Appreciation Right Notification (relating to Exhibit 10.41).
10.43 -- Nu-kote Holding, Inc. 1992 Stock Option Plan, as amended and restated September 27,
1996.
10.44 -- Nu-kote Holding, Inc. Deferred Stock Compensation Plan, as amended and restated
September 27, 1996.
11.1 -- Statement regarding computation of earnings per share
27 -- Financial Data Schedule
</TABLE>
21
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF October 15, 1996
by and among
NU-KOTE INTERNATIONAL, INC.
as Borrower,
NU-KOTE HOLDING, INC.
as Guarantor,
THE LENDERS LISTED ON THE SIGNATURE PAGES HEREOF,
as Lenders,
BARCLAYS BANK PLC,
as Documentation Agent
and
NATIONSBANK OF TEXAS, N.A.
as Administrative Agent and Collateral Agent
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
NU-KOTE INTERNATIONAL, INC.
NU-KOTE HOLDING, INC.
CREDIT AGREEMENT
Dated as of October 15, 1996
TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement; Calculations; Computations . . . . . 27
1.3 Other Definitional Provisions. . . . . . . . . . . . . . . . . . . 27
SECTION 2. AMOUNTS AND TERMS OF REVOLVING CREDIT COMMITMENTS AND
REVOLVING CREDIT LOANS
2.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.2 Interest on the Revolving Credit Loans . . . . . . . . . . . . . . 31
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.4 Prepayments and Payments of Revolving Credit Loans; Reductions in
Revolving Credit Loan Commitments. . . . . . . . . . . . . . . . . 35
2.5 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.6 Special Provisions Governing Eurodollar Rate Loans; Increased
Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.7 Capital Adequacy Adjustment. . . . . . . . . . . . . . . . . . . . 42
2.8 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . 43
2.9 Tax Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 3. CONDITIONS TO REVOLVING CREDIT LOANS AND LETTERS OF CREDIT
3.1 Conditions to Initial Revolving Credit Loans and Letters of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
3.2 Conditions to All Revolving Credit Loans . . . . . . . . . . . . . 55
3.3 Conditions to Letters of Credit. . . . . . . . . . . . . . . . . . 57
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1 Organization, Powers, Good Standing, Business and Subsidiaries . . 57
4.2 Authorization of Borrowing, etc. . . . . . . . . . . . . . . . . . 58
4.3 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . 59
4.4 No Material Adverse Change; No Stock Payments. . . . . . . . . . . 59
4.5 Title to Properties; Liens . . . . . . . . . . . . . . . . . . . . 59
4.6 Litigation; Adverse Facts. . . . . . . . . . . . . . . . . . . . . 60
4.7 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 60
4.8 Materially Adverse Agreements; Performance of Agreements . . . . . 61
4.9 Governmental Regulation. . . . . . . . . . . . . . . . . . . . . . 61
<PAGE>
4.10 Securities Activities. . . . . . . . . . . . . . . . . . . . . . . 61
4.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 61
4.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
4.13 Licenses, Permits and Authorizations . . . . . . . . . . . . . . . 63
4.14 Intangible Property. . . . . . . . . . . . . . . . . . . . . . . . 63
4.15 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 5. AFFIRMATIVE COVENANTS
5.1 Financial Statements and Other Reports . . . . . . . . . . . . . . 65
5.2 Corporate Existence, etc.. . . . . . . . . . . . . . . . . . . . . 69
5.3 Payment of Taxes and Claims; Tax Consolidation . . . . . . . . . . 69
5.4 Maintenance of Properties; Insurance . . . . . . . . . . . . . . . 70
5.5 Inspection; Lender Meeting . . . . . . . . . . . . . . . . . . . . 70
5.6 Equal Security for Obligations; No Further Negative Pledges. . . . 70
5.7 Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . 71
5.8 Environmental Disclosure and Inspection. . . . . . . . . . . . . . 71
5.9 Hazardous Materials; Remedial Action . . . . . . . . . . . . . . . 72
5.10 Further Assurances; New Subsidiaries; Intellectual Property. . . . 73
5.11 Notice of Asset Transfers. . . . . . . . . . . . . . . . . . . . . 75
SECTION 6. NEGATIVE COVENANTS
6.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
6.2 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
6.3 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
6.4 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . 82
6.5 Restricted Junior Payments . . . . . . . . . . . . . . . . . . . . 83
6.6 Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . 85
6.7 Restriction on Fundamental Changes . . . . . . . . . . . . . . . . 86
6.8 Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . 90
6.9 Sale or Discount of Receivables. . . . . . . . . . . . . . . . . . 90
6.10 Transactions with Shareholders, Affiliates and Subsidiaries. . . . 90
6.11 Disposal of Subsidiary Stock . . . . . . . . . . . . . . . . . . . 91
6.12 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . 91
6.13 Restructuring and Affiliate Reorganizations. . . . . . . . . . . . 92
SECTION 7. GUARANTY OF HOLDING
7.1 Guaranty by Holding. . . . . . . . . . . . . . . . . . . . . . . . 92
7.2 Terms of Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 8. EVENTS OF DEFAULT
8.1 Failure to Make Payments when Due. . . . . . . . . . . . . . . . . 95
8.2 Default in Other Agreements. . . . . . . . . . . . . . . . . . . . 96
8.3 Breach of Certain Covenants. . . . . . . . . . . . . . . . . . . . 96
8.4 Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . 96
- ii -
<PAGE>
8.5 Other Defaults Under Agreement or Loan Documents . . . . . . . . 96
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.. . . . . . 97
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.. . . . . . . 97
8.8 Judgments and Attachments. . . . . . . . . . . . . . . . . . . . 98
8.9 Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . . 98
8.10 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
8.11 Withdrawal Liability Under Multiemployer Plan. . . . . . . . . . 99
8.12 Invalidity of Guaranties . . . . . . . . . . . . . . . . . . . . 99
8.13 Change of Control. . . . . . . . . . . . . . . . . . . . . . . . 99
8.14 Impairment of Collateral . . . . . . . . . . . . . . . . . . . . 100
8.15 Eurocurrency Credit Agreement. . . . . . . . . . . . . . . . . . 100
8.16 ERISA Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
8.17 Breach of Certain Original Credit Agreement Covenants. . . . . . 101
SECTION 9. AGENT
9.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . 102
9.2 Powers; General Immunity . . . . . . . . . . . . . . . . . . . . 102
9.3 Representations and Warranties; No Responsibility For Appraisal
of Creditworthiness. . . . . . . . . . . . . . . . . . . . . . . 104
9.4 Right to Indemnity . . . . . . . . . . . . . . . . . . . . . . . 104
9.5 Registered Persons Treated as Owner. . . . . . . . . . . . . . . 104
9.6 Collateral Documents; Appointment of Collateral Agent; Successor
Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . 105
9.7 Successor Agents . . . . . . . . . . . . . . . . . . . . . . . . 105
SECTION 10. MISCELLANEOUS
10.1 Representation of Lenders. . . . . . . . . . . . . . . . . . . . 106
10.2 Assignments and Participations in Revolving Credit Loans; Letters
of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
10.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
10.4 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
10.5 Set Off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
10.6 Ratable Sharing. . . . . . . . . . . . . . . . . . . . . . . . . 110
10.7 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 110
10.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
10.9 Survival of Warranties and Certain Agreements. . . . . . . . . . 111
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative. . . . . . 112
10.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 112
10.12 Obligations Several; Independent Nature of Lenders' Rights . . . 112
10.13 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
10.14 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 113
10.15 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 113
10.16 Consent to Jurisdiction and Service of Process; Waiver of
Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
10.17 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 114
- iii -
<PAGE>
10.18 Interest and Charges. . . . . . . . . . . . . . . . . . . . . 114
10.20 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . 115
- iv -
<PAGE>
EXHIBITS
IA FORM OF NOTICE OF BORROWING
IB FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF OPINIONS OF COMPANY'S COUNSEL
IV FORM OF OPINION OF DONOHOE, JAMESON & CARROLL, P.C.
V FORM OF CONFIDENTIALITY AGREEMENT
VI FORM OF COMPLIANCE CERTIFICATE
VII FORM OF ASSIGNMENT AGREEMENT
VIII FORM OF REVOLVING CREDIT NOTE
IX FORM OF ACKNOWLEDGEMENT
- v -
<PAGE>
SCHEDULES
1.1 LENDER'S ORIGINAL REVOLVING CREDIT COMMITMENTS AND PRO RATA SHARES
4.1-D SUBSIDIARIES
4.5 LEASED LOCATIONS
4.6 EXISTING LITIGATION
4.14 TRADEMARKS AND TRADE NAMES
- vi -
<PAGE>
NU-KOTE INTERNATIONAL, INC.
NU-KOTE HOLDING, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is dated as of October 15, 1996,
and entered into by and among NU-KOTE HOLDING, INC., a Delaware corporation
("Holding"), NU-KOTE INTERNATIONAL, INC., a Delaware corporation ("Company"),
THE LENDERS LISTED ON THE SIGNATURE PAGES HEREOF (together with each financial
institution that may become a party to this Credit Agreement as a Lender as
herein provided, referred to herein individually as a "Lender" and collectively
as "Lenders"), BARCLAYS BANK PLC, in its capacity as documentation agent
("Documentation Agent"), and NATIONSBANK OF TEXAS, N.A., as administrative agent
for Lenders (hereinafter, in such capacity, together with any successors thereto
in such capacity, referred to as "Agent"), and as collateral agent for Lenders.
R E C I T A L S
WHEREAS, Holding, Company, Lenders, Documentation Agent and Agent are
parties to that certain Credit Agreement, dated as of February 24, 1995, as
amended by that certain First Amendment to Credit Agreement, dated as of
June 21, 1995, and Second Amendment to Credit Agreement, dated as of February 5,
1996 (said Credit Agreement, as so amended or modified to the date hereof, the
"Original Credit Agreement");
WHEREAS, Holding, Company, Lenders, Collateral Agent, Documentation Agent
and Agent have agreed to restructure, increase, extend, and renew the
indebtedness under the Original Credit Agreement to provide for one revolving
line of credit in the aggregate amount of $150,000,000;
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Holding, Company, Lenders, Agent,
Documentation Agent and Collateral Agent agree that (i) all obligations under
the Original Credit Agreement, as modified herein, shall, after the Closing
Date, be evidenced by the Notes (as defined herein), this Agreement and the
other Domestic Loan Documents, and shall be secured by, among other things, the
Collateral as granted pursuant to the Collateral Documents (as defined herein)
and (ii) the Original Credit Agreement shall be amended and restated in its
entirety as follows:
<PAGE>
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms
The following terms used in this Agreement shall have the following
meanings:
"ACKNOWLEDGEMENT" to be executed and delivered by Holding, Company and each
Material Domestic Subsidiary on the Closing Date, substantially in the form
annexed hereto as EXHIBIT IX, as such may be amended, amended and restated,
supplemented or otherwise modified from time to time.
"ACQUISITION DEBT" means (i) Indebtedness assumed in connection with any
Permitted Acquisition, provided such Indebtedness was not created in
anticipation of any such Permitted Acquisition, and (ii) Indebtedness retained
as consideration by the applicable selling Person or Persons of any assets or
stock pursuant to a Permitted Acquisition.
"ACQUISITION VALUE" means, with respect to an acquisition of stock or
assets pursuant to subsection 6.7B(ii), the aggregate amount of (i) the purchase
price paid for such stock or assets (excluding (x) the amount, if any, of any
liabilities of any Person being acquired or any liabilities assumed by Holding,
Company or any Subsidiary thereof in connection with such acquisition and
(y) the amount or value of any stock of Holding, Company or any Subsidiary
thereof, or the cash proceeds from the issuance of any such stock, paid as
consideration for such acquisition), PLUS (ii) all legal and accounting fees and
expenses payable by Company or such Subsidiary in connection with such
acquisition as estimated in good faith by Company at the time Company or such
Subsidiary enters into a binding contractual commitment in respect of such
acquisition. Such good faith estimates shall be conclusive, and no Potential
Event of Default or Event of Default shall occur as a result of exceeding such
estimates; PROVIDED, however, that for other purposes of calculating the amounts
in subsection 6.7B, the actual amounts of such fees and expenses shall be used.
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination Date,
the rate (rounded upward to the next highest one-hundredth of one percent)
obtained by dividing (i) the Eurodollar Rate for that date by (ii) a percentage
equal to 100% minus the stated maximum rate of all reserves required to be
maintained against "Eurocurrency liabilities" as specified in Regulation D (or
against any other category of liabilities that includes deposits by reference to
which the interest rate on Eurodollar Rate Loans is determined or any category
of extensions of credit or other assets that includes loans by a non-United
States office of a Lender to United States residents).
"AFFECTED LENDER" means any Lender affected by any of the events described
in subsections 2.6B or 2.6C.
"AFFILIATE", as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this
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definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as applied
to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or
otherwise.
"AFTER TAX CASH FLOW" means, for any period, an amount equal to the sum
(without duplication) of (a) Consolidated Net Income, (b) to the extent
Consolidated Net Income has been reduced thereby, amortization expense,
depreciation expense, deferred taxes and other non-cash expenses, (c) losses on
Asset Sales, (d) extraordinary losses (excluding extraordinary items relating to
environmental and ERISA matters) and (e) other non-cash items reducing
Consolidated Net Income (excluding write-offs of Inventory and accounts
receivable) less the sum (without duplication) of (x) gains on Asset Sales,
(y) extraordinary gains (excluding extraordinary items relating to environmental
and ERISA matters) and (z) other non-cash items increasing Consolidated Net
Income, all as determined on a consolidated basis for Holding and its
Subsidiaries in conformity with GAAP (PROVIDED, HOWEVER, the effect on such
component amounts of Discontinued Operations shall be excluded from such
calculation).
"AGENT" has the meaning assigned to that term in the introductory paragraph
to this Agreement.
"AGGREGATE AMOUNTS DUE" has the meaning assigned to that term in
subsection 10.6.
"AGREEMENT" means this Credit Agreement as it may be amended, amended and
restated, supplemented or otherwise modified from time to time.
"APPLICABLE LAW" means (a) in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a
party, and (b) in respect of contracts relating to interest or finance charges
that are made or performed in the State of Texas, "Applicable Law" shall mean
the laws of the United States of America, including without limitation 12 USC
Sections 85 and 86, as amended from time to time, and any other statute of the
United States of America now or at any time hereafter prescribing the maximum
rates of interest on loans and extensions of credit, and the laws of the State
of Texas, including, without limitation, Article 5069-1.04, Title 79, Revised
Civil Statutes of Texas, 1925, as amended ("Art. 1.04"), and any other statute
of the State of Texas now or at any time hereafter prescribing maximum rates of
interest on loans and extensions of credit; provided that the parties hereto
agree that the provisions of Chapter 15, Title 79, Revised Civil Statutes of
Texas, 1925, as amended, shall not apply to Revolving Credit Loans, this
Agreement, or any other Loan Documents.
"APPLICABLE MARGIN" means 0.625% per annum; PROVIDED, HOWEVER, the
Applicable Margin shall be adjusted to be the margin set out below opposite the
applicable ratio on each Adjustment Date, in each case based upon the Interest
Coverage Ratio (as of the last day of the
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most recent preceding fiscal quarter for which financial statements have been
delivered as provided below (calculated for the period comprised of four
fiscal quarters ending on such date)):
Interest Coverage Ratio Applicable Margin
----------------------- -----------------
Greater than or equal to 6.5 to 1 0.625%
Greater than or equal to 5.0 to 1, but
less than 6.5 to 1 0.875%
Greater than or equal to 4.0 to 1, but
less than 5.0 to 1 1.000%
Less than 4.0 to 1 1.125%
For purposes of determining the Applicable Margin, "ADJUSTMENT DATE" means the
date of receipt by Agent of the financial statements and certificate described
in subsections 5.1(i) or 5.1(ii) and 5.1(iii) with respect to such fiscal
quarter (commencing with the date of receipt of Company's financial statements
as at and for the period ending on September 27, 1996, pursuant to
subsection 5.1(i) and the related certificate pursuant to subsection 5.1(iii)).
Notwithstanding the foregoing, at any time Company has failed to deliver such
financial statements or certificate in accordance with such provisions, the
Applicable Margin shall be 1.125% per annum until such time as Company shall
deliver such financial statements or certificate.
"ASSET SALE" means the sale, lease, assignment, exchange, disposition or
other transfer for value by Holding, Company or any Subsidiary (including,
without limitation, any sale/leaseback) to any Person other than Holding,
Company or any Subsidiary thereof of (i) any of the stock of any of Holding's
Subsidiaries which are not Material Subsidiaries, (ii) all or substantially all
of the assets of any division or line of business of Holding, Company or any
Subsidiary, or (iii) any other assets or rights, or related group of assets or
rights, of Holding, Company or any Subsidiary.
"ASSET TRANSFER" means (i) the transfer of property or assets of Company or
any of its Subsidiaries from one state, jurisdiction or country to another
state, jurisdiction or country or (ii) the sale, lease, assignment, exchange,
disposition or other transfer for value or otherwise (including by way of
dividend or distribution on its capital stock) by Holding, Company or any
Subsidiary (including, without limitation, any sale/leaseback) to Holding,
Company or any Subsidiary of (a) all or substantially all of the assets of any
division or line of business of Holding, Company or any Subsidiary or (b) any
other assets or rights, or related group of assets or rights, of Holding,
Company or any Subsidiary.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy" from time to time in effect, or any successor statute.
"BARCLAYS" has the meaning assigned to that term in the Recitals to this
Agreement.
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"BASE RATE" means the greater of: (i) the rate that NationsBank announces
from time to time as its prime lending rate (which rate may not necessarily be
the lowest or best rate actually charged to any customer), as in effect from
time to time, or (ii) the rate publicly announced from time to time as the
Federal Funds Rate, as in effect from time to time, PLUS .50% per annum.
"BASE RATE LOANS" means Revolving Credit Loans made by Lenders bearing
interest at rates determined by reference to the Base Rate as provided in
subsection 2.2A.
"BUSINESS DAY" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which either
is a legal holiday under the laws of either the State of Texas or the State of
New York or is a day on which banking institutions located in either state are
authorized or required by law or other governmental action to close, and
(ii) with respect to all notices, determinations, fundings and payments in
connection with the Eurodollar Rate, any day that is a Business Day described in
clause (i) and that is also a day for trading by and between banks in Dollar
deposits in the applicable interbank Eurodollar market.
"CAPITAL LEASE", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"CASH EQUIVALENTS" means (i) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (ii) certificates of deposit,
eurodollar time deposits, overnight bank deposits and bankers acceptances, each
with maturities of one year or less from the date of the acquisition thereof, of
any Lender identified on SCHEDULE 1.1 or any other commercial bank having
capital and surplus in excess of $500,000,000 ("QUALIFYING BANKS"),
(iii) commercial paper of the Qualifying Banks or any of their Affiliates or of
a domestic issuer rated at least A-1 by Standard & Poor's Ratings Group, a
Division of Mc-Graw Hill, Inc., a New York corporation, or any successor thereto
("S&P"), or at least P-1 by Moody's Investors Service, Inc., or any successor
thereto ("MOODY'S"); PROVIDED, that if such commercial paper is rated by both
S&P and Moody's, such ratings shall be at least A-1 and P-1, respectively and
(iv) with respect to investments by a Eurocurrency Borrower, (a) securities
issued or fully guaranteed or insured by the government of the United Kingdom,
Switzerland, Scotland or Germany or any agency thereof or any of those exempted
persons referred to in paragraphs 2, 5, 6, 8, 12 and 13 of Schedule 2 to the
Banking Act 1987, (b) certificates of deposit, sterling time deposits, overnight
bank deposits and bankers acceptances, each with maturities of one year or less
from the date of the acquisition thereof, of any Lender identified on
SCHEDULE 1.1 or any Qualifying Bank (but using the equivalent of $500,000,000 in
the case of a bank whose capital is not denominated in Dollars), (c) commercial
paper of the Qualifying Banks or any of their Affiliates or of a United Kingdom,
Switzerland, Scotland or Germany issuer rated at least A-1 by S&P or at least P-
1 by Moody's, subject to the proviso referred to in (iii) above or a comparable
rating of a foreign rating agency and (d) investments of the type described in
clauses (i) through (iii) above.
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<PAGE>
"CERTIFICATE OF EXEMPTION" has the meaning assigned to that term in
subsection 2.9.
"CLOSING DATE" means the date on or before October 15, 1996 on which the
initial Revolving Credit Loans are made and the conditions to initial Revolving
Credit Loans are satisfied.
"COLLATERAL" means all property made subject to a Lien pursuant to the
Collateral Documents and/or the Eurocurrency Security Documents.
"COLLATERAL AGENT" means NationsBank, in its capacity as collateral agent
under subsection 9.6 and the Collateral Documents, or any successor thereto
appointed in accordance with Section 9.6 hereof.
"COLLATERAL DOCUMENTS" means the Company Security Documents, the Holding
Security Documents, the Subsidiary Security Documents, the Acknowledgement and
all other instruments or documents heretofore, now or hereafter granting Liens
on property of Holding, Company or any Material Domestic Subsidiary to
Collateral Agent, for the benefit of Agent and Lenders and for the benefit of
the Eurocurrency Administrative Agent and the Eurocurrency Lenders.
"COMMITMENT FEE" has the meaning assigned to that term in subsection 2.3A.
"COMMITMENT FEE PERCENTAGE" means initially 0.250% per annum, and,
thereafter, on any date, the applicable percentage set forth below based upon
the Interest Coverage Ratio (as of the last day of the most recent preceding
fiscal quarter for which financial statements have been delivered as provided
below (calculated for the period comprised of four consecutive fiscal quarters
ending on such date)):
Interest Coverage Ratio Commitment Fee Percentage
----------------------- -------------------------
Greater than or equal to 5 to 1 0.250%
Less than 5 to 1 0.375%
Each change in the Commitment Fee Percentage resulting from a change in the
Interest Coverage Ratio as of the end of any fiscal quarter shall be effective
as of the date of receipt by Agent of the financial statements and certificate
described in subsections 5.1(i) or 5.1(ii) and 5.1(iii) with respect to such
fiscal quarter (commencing with the date of receipt of Company's financial
statements as at and for the period ending on September 27, 1996, pursuant to
subsection 5.1(i) and the related certificate pursuant to subsection 5.1(iii)).
Notwithstanding the foregoing, at any time Company has failed to deliver such
financial statements or such certificate in accordance with such provisions, the
Interest Coverage Ratio shall be deemed to be less than 5 to 1 until such time
as Company shall deliver such financial statements or certificate.
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<PAGE>
"COMPANY" has the meaning assigned to that term in the introductory
paragraph to this Agreement.
"COMPANY PATENT SECURITY AGREEMENT" means the Patent Security Agreement
executed and delivered by Company as of February 24, 1995, substantially in the
form annexed to the Original Credit Agreement as EXHIBIT XI thereto, as such
agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time.
"COMPANY PLEDGE AGREEMENT" means, collectively, the Pledge Agreement
executed and delivered by Company as of February 24, 1995, substantially in the
form annexed to the Original Credit Agreement as EXHIBIT IXB thereto, as such
agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time, and such other pledge agreements executed and
delivered by Company as of February 24, 1995 with respect to the capital stock
of any Foreign Subsidiary, as such agreements may be amended, amended and
restated, supplemented or otherwise modified from time to time.
"COMPANY SECURITY AGREEMENT" means the Security Agreement executed and
delivered by Company as of February 24, 1995, substantially in the form annexed
to the Original Credit Agreement as EXHIBIT VII thereto, as such agreement may
be amended, amended and restated, supplemented or otherwise modified from time
to time.
"COMPANY SECURITY DOCUMENTS" means all of the Company Security Agreement,
the Company Pledge Agreement, the Company Trademark Pledge and the Company
Patent Security Agreement.
"COMPANY TRADEMARK PLEDGE" means the Trademark Security Agreement executed
and delivered by Company as of February 24, 1995, substantially in the form
annexed to the Original Credit Agreement as EXHIBIT VIII thereto, as such
agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
annexed hereto as EXHIBIT VI delivered to Lenders by Holding and Company
pursuant to subsection 5.1(iii).
"CONSOLIDATED EBITDA" means, for any period, the sum (without duplication)
of (i) Consolidated Net Income, (ii) provisions for taxes based on income,
(iii) Consolidated Interest Expense, (iv) to the extent Consolidated Net Income
has been reduced thereby, amortization expense, depreciation expense and other
non-cash expenses, (v) losses on Asset Sales, (vi) extraordinary losses
(excluding extraordinary items relating to environmental matters and ERISA
matters), and (vii) other non-cash items reducing Consolidated Net Income
(excluding write-offs of Inventory and accounts receivable) LESS the sum
(without duplication) of (w) gains on Asset Sales, (x) Consolidated Interest
Income, (y) extraordinary gains (excluding extraordinary items relating to
environmental and ERISA matters) and (z) other non-cash items increasing
Consolidated Net Income, all as determined on a consolidated basis for Holding
and
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its Subsidiaries in conformity with GAAP; PROVIDED, HOWEVER, the effect on
such component amounts of Discontinued Operations shall be excluded from such
calculation.
"CONSOLIDATED GAAP CAPITAL EXPENDITURES" means, for any period, the sum of
all expenditures (whether paid in cash or accrued as liabilities) by Holding,
Company and its Material Subsidiaries during that period that are for items that
would be classified as "property, plant and equipment" or comparable items on
the consolidated balance sheet of Holding and its Subsidiaries in conformity
with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense, whether paid or accrued as liabilities (including the interest
component of Capital Leases), with respect to all outstanding Indebtedness of
Holding and its Subsidiaries for such period determined on a consolidated basis
in accordance with GAAP, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to any financing or
letters of credit and net costs under interest rate agreements and foreign
currency protection agreements to the extent that such costs are included within
interest expense under GAAP.
"CONSOLIDATED INTEREST INCOME" means, for any period, total interest income
earned by Holding and its Subsidiaries on cash or Cash Equivalents for such
period.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or loss)
of Holding and its Subsidiaries, after provisions for taxes and extraordinary
items, on a consolidated basis for such period taken as a single accounting
period determined in conformity with GAAP; PROVIDED that there shall be excluded
therefrom, the income (or loss) of any Person that becomes a Subsidiary of
Holding or is merged into or consolidated with Holding or any of its
Subsidiaries the assets of which are acquired by Holding or any of its
Subsidiaries, to the extent such income (or loss) accrued prior to the date of
such merger, consolidation or acquisition.
"CONSOLIDATED NET WORTH" means, as at any date of determination, the excess
of Consolidated Total Assets over Consolidated Total Liabilities, PLUS or MINUS
any foreign currency translation adjustments, of Holding and its Subsidiaries on
a consolidated basis in conformity with GAAP.
"CONSOLIDATED TOTAL ASSETS" means, as of any date of determination, all
property, whether real, personal, tangible, intangible or otherwise, which in
accordance with GAAP would be included in determining total assets as shown on
the assets portion of a consolidated balance sheet of Holding and its
Subsidiaries.
"CONSOLIDATED TOTAL DEBT" means, as of any date of determination, the sum,
without duplication, of (i) total long-term debt PLUS (ii) long-term Capital
Leases PLUS (iii) current portion of long-term debt and current portion of
Capital Leases PLUS (iv) notes payable, of Holding and its Subsidiaries on a
consolidated basis whether or not included on its consolidated balance sheet;
PROVIDED, HOWEVER, that the effect on such component amounts of Discontinued
Operations shall be excluded from such calculation.
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<PAGE>
"CONSOLIDATED TOTAL LIABILITIES" means, as of any date of determination,
the total liabilities which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a consolidated
balance sheet of Holding and its Subsidiaries.
"CONTINGENT OBLIGATION", as applied to any Person, means, without
duplication, any direct or indirect liability, contingent or otherwise, of that
Person (i) with respect to any indebtedness, lease, dividend or other obligation
of another if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such obligation
of another that such obligation of another will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of
such obligation will be protected (in whole or in part) against loss in respect
thereof or (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings. Contingent Obligations shall include, without limitation, (a) the
direct or indirect guaranty, endorsement (other than for collection or deposit
in the ordinary course of business), co-making, discounting with recourse or
sale with recourse by such Person of the obligation of another, (b) any interest
rate or currency agreement and (c) any liability of such Person for the
obligations of another through any agreement (contingent or otherwise) (x) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise), (y) to maintain the solvency or any balance sheet item, level of
income or financial condition of another, or (z) to make take-or-pay or similar
payments if required regardless of non-performance by any other party or parties
to an agreement, if in the case of any agreement described under subclauses (x)
or (y) of this sentence the primary purpose or intent thereof is as described in
the preceding sentence. The amount of any Contingent Obligation shall be equal
to the amount of the obligation to the extent so guaranteed or otherwise
supported.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision of
any material security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any material amount of its
properties is bound or to which it or any material amount of its properties is
subject.
"DISCONTINUED OPERATIONS" means the discontinued operations consisting of
Interfas Holding S.A., a corporation organized under the laws of France and a
Subsidiary of Holding, Interfas S.A., a corporation organized under the laws of
France and a Subsidiary of Holding, Nu-kote Canada, Inc., a corporation
organized under the laws of Canada and a Subsidiary of Holding, Nu-kote Canada
Holding, Inc., a corporation organized under the laws of Canada and a Subsidiary
of Holding, N-K Interface Limited, a corporation organized under the laws of
England and a Subsidiary of Holding, Nu-kote Quality Imaging GmbH, a corporation
organized under the laws of Germany and a Subsidiary of Holding, and Nu-Kote
Italia s.r.l., a corporation organized under the laws of Italy and a Subsidiary
of Holding.
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"DOCUMENTARY LETTERS OF CREDIT" means a commercial documentary Letter of
Credit under which Issuing Lender agrees to make payments for the account of
Company, on behalf of the Company or any Material Domestic Subsidiary, in
respect of the obligation of Company or any Material Domestic Subsidiary in
connection with the purchase of goods or services in the ordinary course of
business.
"DOCUMENTATION AGENT" has the meaning assigned to that term in the
introductory paragraph to this Agreement.
"DOLLAR EQUIVALENT" shall mean, with respect to an amount of any foreign
currency on any date, the amount of Dollars that may be purchased with such
amount of such foreign currency at the spot exchange rate with respect to such
foreign currency on such date.
"DOLLARS" and the sign "$" means the lawful money of the United States of
America.
"DOMESTIC LOAN DOCUMENTS" means this Agreement (including the Holding
Guaranty set forth herein), the Notes, the Letters of Credit, any Interest Hedge
Agreements entered into with any Lender, the Fee Letter, and the Collateral
Documents.
"DOMESTIC SUBSIDIARY" means a Subsidiary of Holding organized under the
laws of any state within the United States of America or the District of
Columbia.
"EMPLOYEE BENEFIT PLAN" means any Pension Plan, any employee welfare
benefit plan or any other employee benefit plan which is described in
Section 3(3) of ERISA and which is maintained, or contributed to, by Company or
any ERISA Affiliate of Company for employees of Company and any ERISA Affiliate
of Company.
"ENVIRONMENTAL CLAIM" means any written accusation, allegation, notice of
violation, claim, demand, abatement, compliance or other order or direction
(conditional or otherwise) by any governmental authority or any Person for
personal injury (including sickness, disease or death), tangible or intangible
property damage, damage to the environment, nuisance, pollution, contamination
or other adverse effects on the environment, or for fines, penalties or
restrictions, resulting from or based upon (i) the existence, or the
continuation of the existence, of a Release (whether sudden or non-sudden or
accidental or non-accidental), of, or exposure to, any Hazardous Material, in,
into or onto the environment at, in, by, from or related to any Facility,
(ii) the transportation, storage, treatment or disposal of Hazardous Materials
in connection with the operation of any Facility, or (iii) the violation, or
alleged violation, of any statutes, ordinances, orders, rules, regulations,
permits or licenses of or from any governmental authority, agency or court
relating to Hazardous Materials with respect to the Facilities.
"ENVIRONMENTAL LAWS" means all domestic and foreign laws relating to fines,
orders, injunctions, penalties, damages, contribution, cost recovery
compensation, losses or injuries resulting from the Release or threatened
Release of Hazardous Materials and to the generation, storage, transportation,
or disposal of Hazardous Materials, in any manner applicable to Holding
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<PAGE>
or any of its Subsidiaries or any of their respective Facilities, including,
without limitation, the Comprehensive Environmental Response, Compensation,
and Liability Act (42 U.S.C. Section 9601 ET SEQ.), the Hazardous Material
Transportation Act (49 U.S.C. Section 1801 ET SEQ.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 ET SEQ.), the Federal
Water Pollution Control Act (33 U.S.C. Section 1251 ET SEQ.), the Clean Air
Act (42 U.S.C. Section 7401 ET SEQ.), the Toxic Substances Control Act (15
U.S.C. Section 2601 ET SEQ.), the Occupational Safety and Health Act (29
U.S.C. Section 651 ET SEQ.) and the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. Section 11001 ET SEQ.), each as amended or
supplemented, and any analogous future or present local, state and federal
statutes and regulations promulgated pursuant thereto, each as in effect as
of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.
"ERISA AFFILIATE", as applied to any Person, means any trade or business
(whether or not incorporated) that is a member of a group of which that Person
is a member and that is under common control with that Person within the meaning
of the regulations promulgated under Sections 414(b) and (c) of the Internal
Revenue Code.
"EUROCURRENCY ADMINISTRATIVE AGENT" means Barclays Bank PLC in its capacity
as agent under the Eurocurrency Credit Agreements; PROVIDED that "Eurocurrency
Administrative Agent" shall also include any successor of Eurocurrency
Administrative Agent pursuant to the Eurocurrency Credit Agreements.
"EUROCURRENCY BORROWER" means each of Produktions, Pelikan Scotland,
Pelikan Hardcopy, and any other Foreign Subsidiary that is a borrower under any
Eurocurrency Credit Agreement.
"EUROCURRENCY COLLATERAL AGENT" means NationsBank of Texas, N.A. in its
capacity as collateral agent under the Eurocurrency Credit Agreements, and any
successor thereto.
"EUROCURRENCY CREDIT AGREEMENTS" means, collectively, the Swiss Facility
Agreement and the U.K. Facility Agreement, as each may have been or may be
amended, amended and restated, supplemented or otherwise modified from time to
time.
"EUROCURRENCY DOCUMENTATION AGENT" means NationsBank of Texas, N.A., in its
capacity as documentation agent under the Eurocurrency Credit Agreements, and
any successor thereto.
"EUROCURRENCY GUARANTIES" means the "Nu-Kote Guarantees" as defined in the
Eurocurrency Credit Agreements.
"EUROCURRENCY GUARANTY OBLIGATIONS" means all obligations of Holding,
Company and the Material Domestic Subsidiaries under the Eurocurrency
Guaranties.
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"EUROCURRENCY LENDER" means any lender under any Eurocurrency Credit
Agreement.
"EUROCURRENCY LOAN" means one or more of the Advances (as defined below)
made under any Eurocurrency Credit Agreement. For purposes of this definition,
the term "Advance" shall have the meaning ascribed thereto in each such
Eurocurrency Credit Agreement.
"EUROCURRENCY LOAN DOCUMENTS" means the Eurocurrency Credit Agreements, the
Eurocurrency Security Documents, any Interest Hedge Agreements entered into with
any Eurocurrency Lender, and the Eurocurrency Guaranties.
"EUROCURRENCY SECURITY DOCUMENTS" means the "Security Documents" as defined
in the Eurocurrency Credit Agreements.
"EURODOLLAR RATE" means, for any Interest Rate Determination Date, the
offered quotation, if any, to first class banks in the Eurodollar market by
NationsBank for Dollar deposits of amounts in immediately available funds
comparable to the principal amount of the Eurodollar Rate Loans for which the
Eurodollar Rate is being determined with maturities comparable to the Interest
Period for which such Eurodollar Rate will apply as of approximately 9:00 A.M.
(Dallas time) two Business Days prior to the commencement of such Interest
Period.
"EURODOLLAR RATE LOANS" means Revolving Credit Loans bearing interest at
rates determined by reference to the Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"EXCLUDED TAXES" means all taxes imposed on or by reference to the net
income or profit of any Lender or its applicable lending offices and all
franchise taxes, taxes on doing business or taxes measured by capital or net
worth imposed on any Lender or its applicable lending office, in each case,
imposed:
(i) by the jurisdiction in which the applicable lending office or
other branch of such Lender is located or in which such Lender is organized
or has its principal or registered office;
(ii) by reason of any connection between the jurisdiction imposing
such tax and such Lender other than a connection arising solely from this
Agreement or any transaction contemplated hereby;
(iii) by the United States of America or any political subdivision
thereof or therein including without limitation, branch profits taxes
imposed by the United States or similar taxes imposed by any subdivision
thereof; or
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(iv) by reason of the failure of any Lender to provide accurate
documentation required to be provided by such Lender pursuant to
subsection 2.9 hereof.
"EXECUTIVE OFFICER" of any Person means any Chairman of the Board,
President, Chief Financial Officer, Executive Vice President, Senior Vice
President-Finance, Corporate Controller, Treasurer or General Counsel of such
Person.
"EXISTING LETTERS OF CREDIT" means any Letter of Credit existing on the
Closing Date which was an outstanding Letter of Credit under the Original Credit
Agreement.
"EXISTING SELLER NOTES" means (i) the 10% Subordinated Promissory Note due
February 24, 1997 in the original principal amount of $665,000, dated
February 24, 1992, issued by Company in favor of Robert W. Blair and (ii) the
10% Subordinated Promissory Note due February 24, 1997 in the original principal
amount of $285,000, dated February 24, 1992, issued by Company in favor of
John W. Ridenour.
"FACILITIES" means any and all real property (including all buildings,
fixtures or other improvements located thereon) owned, leased or operated by
Holding, Company or any Material Subsidiary.
"FEDERAL FUNDS RATE" shall mean, 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 Dallas, 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 Agent from three
federal funds brokers of recognized standing selected by it.
"FEE LETTER" means that certain Structure and Arrangement Fee Letter dated
as of October 11, 1996, among the Company, NationsBank and NationsBanc Capital
Markets, Inc.
"FISCAL YEAR" means the fiscal year of Holding and its Subsidiaries.
"FIXED CHARGES" means, for any period, an amount equal to the sum of
(i) total scheduled principal payments (including principal component of Capital
Leases but excluding that certain $2,500,000 Term Loan (as defined in the
Original Credit Agreement) principal payment made on August 24, 1996) with
respect to all outstanding Indebtedness of Holding and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP,
(ii) Consolidated GAAP Capital Expenditures incurred for such period and
(iii) all Restricted Junior Payments paid during such period.
"FOREIGN LENDER" shall have the meaning assigned that term in
subsection 2.9.
"FOREIGN SUBSIDIARY" means a Subsidiary of Holding that is not organized
under the laws of any state within the United States of America or the District
of Columbia.
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"FUNDING DATE" means the date of the funding of a Revolving Credit Loan.
"FUTURE GRAPHICS" means Future Graphics, Inc., a California corporation and
a wholly-owned Subsidiary of Company.
"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 pronouncement of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, that are applicable to the circumstances as of the date of
determination. For purposes of certain calculations, GAAP shall be modified by
the requirements set forth in subsection 1.2.
"GERMAN ASSET TRANSFER" means any Asset Transfer involving fixtures,
machinery and equipment in which such assets are located in Germany immediately
before the Asset Transfer and are located in Switzerland or in the United
Kingdom immediately after the Asset Transfer.
"GOVERNMENT ACTS" has the meaning assigned thereto in subsection 2.8H.
"GREIF" means Greif-Werke GmbH, a German limited liability company and
wholly-owned Subsidiary of Company.
"HARDCOPY DEUTSCHLAND" means Pelikan Hardcopy Deutschland GmbH, a German
limited liability company and wholly-owned Subsidiary of Greif.
"HAZARDOUS MATERIALS" means (i) any oil, petroleum or petroleum derived
substance, any drilling fluids, produced waters and other wastes associated with
the exploration, development or production of crude oil, any flammable
substances or explosives, any radioactive materials, any hazardous wastes or
substances, any toxic wastes or substances or any other pollutants, which cause
any Facility to be in violation of any Environmental Laws, (ii) asbestos in any
form which is or could become friable, urea formaldehyde foam insulation, or any
oil or dielectric fluid containing levels of polychlorinated biphenyls in excess
of fifty parts per million; and (iii) any chemical, material or substance
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous waste", "restricted
hazardous waste", or "toxic substances" or words of similar import under any
applicable local, state or federal law or under the regulations adopted or
publications promulgated pursuant thereto, including, without limitation, the
statutes referenced in the definition of "Environmental Laws."
"HIGHEST LAWFUL RATE" means at the particular time in question the maximum
rate of interest which, under Applicable Law, the Lenders are then permitted to
charge on the Obligations. If the maximum rate of interest which, under
Applicable Law, Lenders are permitted to charge on the Obligations shall change
after the date hereof, the Highest Lawful Rate shall be automatically increased
or decreased, as the case may be, from time to time as of
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the effective time of each change in the Highest Lawful Rate without notice
to Company. For purposes of determining the Highest Lawful Rate under the
Applicable Law of the State of Texas, the applicable rate ceiling shall be
(a) the indicated rate ceiling described in and computed in accordance with
the provisions of Section (a)(1) of Art. 1.04, or (b) if the parties
subsequently contract as allowed by Applicable Law, the quarterly ceiling or
the annualized ceiling computed pursuant to Section (d) of Art. 1.04;
provided, however, that at any time the indicated rate ceiling, the quarterly
ceiling or the annualized ceiling shall be less than 18% per annum or more
than 24% per annum, the provisions of Sections (b)(1) and (2) of said Art.
1.04 shall control for purposes of such determination, as applicable.
"HOLDING" has the meaning assigned to that term in the introductory
paragraph to this Agreement.
"HOLDING COMMON STOCK" means the common stock and non-voting common stock
of Holding, par value $.01 per share.
"HOLDING GUARANTY" means the guaranty of Holding set forth in Section 7.
"HOLDING PATENT SECURITY AGREEMENT" means the Patent Security Agreement
executed and delivered by Holding as of February 24, 1995, substantially in the
form annexed to the Original Credit Agreement as EXHIBIT XI thereto, as such
agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time.
"HOLDING PLEDGE AGREEMENT" means the Pledge Agreement executed and
delivered by Holding as of February 24, 1995, substantially in the form annexed
as EXHIBIT IXA thereto, as such agreement may be amended, amended and restated,
supplemented or otherwise modified from time to time.
"HOLDING SECURITY AGREEMENT" means the Security Agreement executed and
delivered by Holding as of February 24, 1995, substantially in the form annexed
as EXHIBIT XVII thereto, as such agreement may be amended, amended and restated,
supplemented or otherwise modified from time to time.
"HOLDING SECURITY DOCUMENTS" means all of the Holding Guaranty, the Holding
Patent Security Agreement, the Holding Pledge Agreement, the Holding Security
Agreement and the Holding Trademark Pledge.
"HOLDING TRADEMARK PLEDGE" means the Trademark Security Agreement executed
and delivered by Holding as of February 24, 1995, substantially in the form
annexed as EXHIBIT VIII thereto, as such agreement may be amended, amended and
restated, supplemented or otherwise modified from time to time.
"ICMI" means International Communication Materials, Inc., a Pennsylvania
corporation and a wholly-owned Subsidiary of Company.
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"INDEBTEDNESS", as applied to any Person, means, without duplication,
(i) all indebtedness for borrowed money whether or not evidenced by a promissory
note, draft or similar instrument, (ii) that portion of obligations with respect
to Capital Leases that is properly classified as a liability on a balance sheet
in conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit, (iv) any obligation owed for all or any part of the
deferred purchase price of property or services, which purchase price is due
more than six months from the date of incurrence of the obligation in respect
thereof, and (v) all indebtedness to the extent secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person.
"INTEREST COVERAGE RATIO" means, for any period, the ratio of Consolidated
EBITDA to Consolidated Interest Expense.
"INTEREST HEDGE AGREEMENTS" means any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap, swap or
collar protection agreements, and forward rate currency or interest rate
options, as the same may be amended or modified and in effect from time to time,
and any and all cancellations, buy backs, reversals, terminations or assignments
of any of the foregoing.
"INTEREST PAYMENT DATE" means with respect to any Eurodollar Rate Loan the
last day of each Interest Period applicable to such Eurodollar Rate Loan;
PROVIDED that in the case of each Interest Period of six months, "Interest
Payment Date" shall also mean each Interest Period Anniversary Date for such
Interest Period.
"INTEREST PERIOD" means any interest period applicable to a Eurodollar Rate
Loan as determined pursuant to subsection 2.2B.
"INTEREST PERIOD ANNIVERSARY DATE" means for each Interest Period which is
six months, each three-month anniversary of the commencement of that Interest
Period.
"INTEREST RATE DETERMINATION DATE" means each date for calculating the
Eurodollar Rate for purposes of determining the interest rate in respect of an
Interest Period. The Interest Rate Determination Date shall be the second
Business Day prior to the first day of the related Interest Period for a
Eurodollar Rate Loan.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter.
"INVENTORY" means, on a consolidated basis, all goods, merchandise and
other personal property which are held for sale or lease by Holding and its
Subsidiaries, including those held
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for display or demonstration or out on lease or consignment or to be
furnished under a contract of service, or those which are raw materials,
components, work in process or materials used or consumed, or to be used or
consumed, in the business of Holding or any of its Subsidiaries.
"INVESTMENT", as applied to any Person, means any direct or indirect
purchase or other acquisition by that Person of, or of a beneficial interest in,
capital stock or other Securities of any other Person, or any direct or indirect
loan (including intercompany loans), advance (other than loans or advances to
employees for moving, travel and entertainment expenses, drawing accounts and
similar expenditures made in the ordinary course of business) or capital
contribution by that Person to any other Person, including all indebtedness and
accounts receivable from that other Person other than indebtedness and accounts
receivable that are current assets or arose from sales of goods or services to
that other Person in the ordinary course of business. The amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto and minus the amount of any portion of such Investment repaid
to such Person in cash (including as a return of capital), but without any other
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.
"ISSUING LENDER" means, with respect to any Letter of Credit, the Lender
that issues or causes its Affiliate to issue such Letter of Credit, determined
as provided in subsection 2.8; PROVIDED, however, that Company shall first
request that NationsBank issue each Letter of Credit.
"LATIN AMERICAN SUBSIDIARIES" means Nu-kote de Colombia S.A., a corporation
organized under the laws of Colombia and a Subsidiary of Company, Mercantiles
S.A., a corporation organized under the laws of Colombia and a Subsidiary of Nu-
Kote de Colombia S.A., Compania Manufactura Onix S.A., a corporation organized
under the laws of Colombia and a Subsidiary of Nu-kote de Colombia S.A., Nu-kote
Internacional de Mexico, S.A. de C.V., a corporation organized under the laws of
Mexico and a Subsidiary of Company and Nu-kote Latin America.
"LENDER" and "LENDERS" have the meanings assigned to such terms in the
introduction to this Agreement; PROVIDED that "Lender" and "Lenders" shall also
include the successors and permitted assignees of Lenders pursuant to
subsection 10.2.
"LETTER OF CREDIT" means any of the letters of credit issued, deemed to be
issued, or to be issued by Issuing Lender for the account of Company, on behalf
of Company or any Material Domestic Subsidiary, pursuant to subsection 2.8 and
for the purposes described in subsection 2.5B (and shall include the Existing
Letters of Credit); PROVIDED that, notwithstanding anything to the contrary
contained herein, any such Letter of Credit may be issued by an Affiliate of a
Lender; PROVIDED, FURTHER, that to the extent that a Letter of Credit is issued
by an Affiliate of a Lender, such Lender shall, for all purposes under this
Agreement, the Loan Documents and all other instruments and documents referred
to herein and therein be deemed to be the "Issuing Lender" with respect to such
Letter of Credit.
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"LETTER OF CREDIT USAGE" means, with respect to any Letter of Credit, as at
any date of determination, the sum of (i) the maximum aggregate amount which is
or at any time thereafter may become available for drawings under such Letter of
Credit then outstanding PLUS (ii) the aggregate amount of all drawings under
such Letter of Credit honored by Issuing Lender and not theretofore reimbursed
by Company.
"LETTER OF DOMESTIC ORGANIZATION" has the meaning assigned to that term in
subsection 2.9.
"LETTER OF NON-EXEMPTION" has the meaning assigned to that term in
subsection 2.9.
"LIEN" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).
"LOAN DOCUMENTS" means the Domestic Loan Documents and the Eurocurrency
Loan Documents.
"MARGIN STOCK" has the meaning assigned to that term in Regulations G and U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"MATERIAL DOMESTIC SUBSIDIARIES" means ICMI, Future Graphics, Nu-kote
Imaging and each other Domestic Subsidiary of Holding other than Company (a) the
gross revenues of which for the then most recently completed four fiscal
quarters constituted (or, with respect to any Domestic Subsidiary acquired
during such four fiscal quarters, would have constituted had the gross revenues
of such Subsidiary been included for such period) 5% or more of the consolidated
gross revenues of Holding and its Subsidiaries for such period, or (b) the
assets of which as of the end of any fiscal quarter constituted 5% or more of
the consolidated assets of Holding and its Subsidiaries as of the end of such
fiscal quarter. Material Domestic Subsidiaries shall also include (i) any
Domestic Subsidiary of Holding other than Company which is not a direct or
indirect Subsidiary of Company whether or not any of the requirements set forth
in clauses (a) or (b) above are satisfied with respect to such Subsidiary and
(ii) any other Domestic Subsidiary designated as such in written notice from
Holding to Agent.
"MATERIAL FOREIGN SUBSIDIARIES" means Produktions, Pelikan Scotland, Greif
and each other Foreign Subsidiary of Holding (a) the gross revenues of which for
the then most recently completed four fiscal quarters constituted (or, with
respect to any Foreign Subsidiary acquired during such four fiscal quarters,
would have constituted had the gross revenues of such Subsidiary been included
for such period) 5% or more of the consolidated gross revenues of Holding and
its Subsidiaries for such period, or (b) the assets of which as of the end of
any fiscal quarter constituted 5% or more of the consolidated assets of Holding
and its Subsidiaries as of the end of such fiscal quarter; provided, however,
that no Person classified as a Discontinued Operation shall be a Material
Foreign Subsidiary. Material Foreign Subsidiaries shall also include any direct
Foreign Subsidiary of Holding whether or not any of the
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requirements set forth in clause (a) or (b) are satisfied with respect to
such Subsidiary. For purposes of the calculations under clause (a) or (b)
above, revenues and assets of Foreign Subsidiaries shall be converted into
Dollars at the rates used for purposes of preparing the consolidated
financial statements of Holding and its Subsidiaries for each fiscal quarter.
"MATERIAL SUBSIDIARIES" means the Material Domestic Subsidiaries and the
Material Foreign Subsidiaries.
"MAXIMUM AMOUNT" means the maximum amount of interest which, under
Applicable Law, Lenders are permitted to charge on the Obligations.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is maintained for employees of Company or any
ERISA Affiliate of Company or to which Company or any ERISA Affiliate of Company
has, at any time within the preceding five years, made, or been obligated to
make, contributions.
"N-K INTERNATIONAL LIMITED" means N-K International Limited, a corporation
organized under the laws of England.
"NATIONSBANK" means NationsBank of Texas, N.A., a national banking
association.
"NET CASH PROCEEDS" means, with respect to any Asset Sale by any Person,
the cash and readily marketable cash equivalents received by such Person in
connection with such transaction (including cash proceeds of any property
received in consideration of any such Asset Sale) after deducting therefrom
reasonable costs and expenses (including without limitation brokerage
commissions, legal fees, accounting fees, investment banking and underwriting
fees and other similar commissions and fees) and, without duplication, (i) taxes
paid or payable by such Person as a result of such Asset Sale and
(ii) liabilities of such Person secured by any assets subject to such Asset Sale
other than Liens to secure the Obligations or the Eurocurrency Loans.
"NON-COMPETITION AGREEMENTS" mean the (i) Non-Competition Agreement, dated
February 26, 1993, between Laurie Goldstein and Future Graphics, (ii) Non-
Competition Agreement, dated as of February 26, 1993, between Eugene Fontana and
Future Graphics and (iii) Non-Competition Agreement, dated as of February 26,
1993, between Lionel Brown and Future Graphics.
"NOTICE OF BORROWING" means a notice substantially in the form annexed
hereto as EXHIBIT IA with respect to a proposed borrowing of Revolving Credit
Loans.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in the
form annexed hereto as EXHIBIT II with respect to a proposed conversion or
continuation of Revolving Credit Loans.
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"NOTICE OF ISSUANCE OF LETTER OF CREDIT" means a notice substantially in
the form annexed hereto as EXHIBIT IB with respect to a proposed issuance of a
Letter of Credit.
"NU-KOTE IMPERIAL" means Nu-kote Imperial, Ltd., a Delaware corporation and
wholly-owned Subsidiary of Holding.
"NU-KOTE IMAGING" means Nu-kote Imaging International, Inc., a Delaware
corporation and wholly-owned Subsidiary of Company.
"NU-KOTE LATIN AMERICA" means Nu-kote Latin America, Inc., a Delaware
corporation and a wholly-owed Subsidiary of Company.
"OBLIGATIONS" means all obligations and liabilities of every nature of
Holding, and/or Company, and the Material Domestic Subsidiaries from time to
time owed to Agent or Lenders or any of them under this Agreement, or any of the
other Domestic Loan Documents or reimbursement obligations with respect to the
Letters of Credit, including, without limitation, all liability of Company for
principal and interest on the Revolving Credit Loans or reimbursement
obligations owed to Agent or Lenders with respect to the Letters of Credit and
all interest thereon or for fees or expenses, reimbursements and
indemnifications and other amounts due or to become due hereunder or thereunder.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a certificate
executed on behalf of such corporation by its Chief Executive Officer, its
President, its Chief Financial Officer, its Corporate Controller or its
Treasurer; PROVIDED, that every Officers' Certificate with respect to the
compliance with a condition precedent to the making of any Revolving Credit
Loans hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement and the other Loan
Documents relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed opinion as
to whether or not such condition has been complied with, and (iii) a statement
as to whether, in the opinion of the signers, such condition has been complied
with.
"OPERATING LEASE" means, as applied to any Person, any lease (including,
without limitation, leases that may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"ORIGINAL CREDIT AGREEMENT" has the meaning assigned to that term in the
Recitals to this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation (or any successor
thereto).
"PELIKAN" means Pelikan Holding AG, a Swiss corporation.
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"PELIKAN ACQUISITION" means the acquisition on or about February 24, 1995
by Holding or one or more of its designated subsidiaries of the worldwide
hardcopy supply business of Pelikan through the acquisition of (i) substantially
all of the assets relating to the hardcopy division of Pelikan, Inc., a
Tennessee corporation, (ii) all of the issued and outstanding shares of
Produktions, (iii) all of the issued and outstanding shares of Pelikan Scotland,
(iv) all of the registered share capital of Greif, and (v) certain other assets
of Pelikan's sales and distribution companies located throughout Europe.
"PELIKAN HARDCOPY" means Pelikan Hardcopy (International) AG, a Swiss stock
company and wholly-owned Subsidiary of Produktions (other than for directors'
qualifying shares).
"PELIKAN PURCHASE AGREEMENT" means that certain Asset and Stock Purchase
Agreement, dated as of November 15, 1994, between Holding and Pelikan, as
modified and supplemented.
"PELIKAN RESTRUCTURING" means the restructuring of Holding and its
Subsidiaries contemplated by or in connection with the Pelikan Acquisition as
disclosed in writing specifically addressed to Lenders prior to February 24,
1995.
"PELIKAN SCOTLAND" means Pelikan Scotland Ltd., a limited liability company
organized under the laws of England and Wales and a wholly-owned Subsidiary of
Company.
"PENSION PLAN" means any employee pension benefit plan described in
Section 3(2) of ERISA which is subject to Section 412 of the Internal Revenue
Code and which is maintained by Company or any ERISA Affiliate of Company for
employees of Company or any ERISA Affiliate of Company, other than a
Multiemployer Plan.
"PERMITTED ACQUISITIONS" means acquisitions permitted pursuant to
subsection 6.7B(ii).
"PERMITTED ENCUMBRANCES" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not at the time required by subsection 5.3A;
(ii) Statutory Liens of landlords, Liens of carriers, warehousemen,
mechanics, materialmen, repairmen and suppliers, and other Liens incurred
in the ordinary course of business for sums not yet delinquent for a period
of more than 60 days, or being contested in good faith if such reserve or
other appropriate provision, if any, as shall be required by GAAP shall
have been made therefor;
(iii) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance
of tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds, trade
contracts (other than for borrowed money), self-retention, reimbursement
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or indemnity agreements as to insurance policies and other similar
obligations incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money);
(iv) Any attachment, judgment or similar Lien unless the writ,
judgment or other process it secures shall, within 60 days after the entry
thereof, not have been discharged or execution thereof stayed pending
appeal, or shall not have been discharged within 60 days after the
expiration of any such stay, and shall not be a matter that is adequately
covered by insurance and with respect to which the insurer has acknowledged
coverage in writing and any lis pendens provided the litigation related
thereto is being contested in good faith;
(v) Easements, rights-of-way, restrictions, covenants, conditions,
licenses, zoning requirements, minor defects or irregularities in title and
other similar charges or encumbrances not interfering in any material
respect with the ordinary conduct of the business of Holding and its
Subsidiaries or materially adversely affecting the value of the relevant
property;
(vi) Any interest or title of a lessor or lessee under any lease
permitted by this Agreement (including any Lien granted by such lessor or
lessee);
(vii) unperfected purchase-money Liens on Inventory incurred in
the ordinary course of business and Liens on goods for sale on consignment
or a similar basis;
(viii) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payment of customs duties in connection with the
importation of goods;
(ix) Liens on Inventory of Foreign Subsidiaries arising out of
retention of title arrangements for the supply of Inventory in the ordinary
course; and
(x) Licenses, shop rights and covenants not to sue and options
therefor entered into in the ordinary course with respect to patents,
trademarks and other intellectual property (including all registrations
thereof and applications to register therefor).
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, vehicle
trusts, business trusts, or other organizations, whether or not legal entities,
agencies, governments and political subdivisions thereof.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after notice
or lapse of time or both, would constitute an Event of Default if that condition
or event were not cured or removed within any applicable grace or cure period.
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"PRO RATA SHARE" means in relation to any Lender as of any date of
determination, as applicable, the percentage obtained by dividing the aggregate
amount of such Lender's Revolving Credit Commitment by the aggregate amount of
the Revolving Credit Commitments of all Lenders.
"PRODUKTIONS" means Pelikan Produktions AG, a Swiss stock company and
wholly-owned Subsidiary of Company.
"PROPOSED CLOSED FACILITIES" means those Facilities and related assets
owned by Company and/or its Subsidiaries on February 24, 1995 and which were
proposed to be closed after February 24, 1995, as described in writing
specifically addressed to Lenders prior to February 24, 1995.
"PROXY STATEMENT" means that certain Proxy Statement, dated February 10,
1995 relating to the Special Meeting of Stockholders of Nu-Kote Holding, Inc. to
be held February 23, 1995 for the purpose, among others, of approving the
Pelikan Acquisition.
"QUALIFYING BANKS" has the meaning assigned to that term in the definition
of Cash Equivalents set forth above in this subsection 1.1.
"RECALCULATION DATE" has the meaning assigned to that term in
subsection 5.11A.
"REGISTER" has the meaning assigned to that term in subsection 2.1D.
"REGULATION D" means Regulation D of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"RELEASE" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching, or migration of any Hazardous
Material in, by, from or related to any Facility into the indoor or outdoor
environment, including through the air, soil, surface water or groundwater.
"REQUISITE LENDERS" means, at any time, Lenders and Eurocurrency Lenders
having 66-2/3% or more of the combined aggregate amount at such time of (i) the
aggregate amount of the Revolving Credit Commitments or, in case the Revolving
Credit Commitments have been terminated, the outstanding principal amount of the
Revolving Credit Loans, if any, made thereunder and (ii) the aggregate of the
sum of the Commitments (as defined in the relevant Eurocurrency Credit
Agreement). For purposes of determining the Requisite Lenders, any amounts
denominated in (a) Pounds Sterling shall be translated into Dollars utilizing
the same exchange rate pursuant to which the aggregate amount as of the Closing
Date of the Commitments in such currency under the U.K. Credit Agreement was
determined and (b) Swiss Francs shall be translated into Dollars utilizing the
same exchange rate pursuant to which the aggregate amount as of the Closing Date
of the Commitments in such currency under the Swiss Credit Agreement was
determined.
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"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Holding
now or hereafter outstanding, except a dividend payable solely in shares of that
class of stock to the holders of that class, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of Holding now or hereafter
outstanding, (iii) any payment or prepayment of principal of, premium, if any,
or interest on, redemption, purchase, repurchase, retirement, defeasance,
sinking fund or similar payment or deposit for payment with respect to, any
Subordinated Debt, and (iv) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Holding, Company or any of their Subsidiaries
now or hereafter outstanding (other than any such rights held by Holding or a
Subsidiary thereof).
"REVOLVING CREDIT COMMITMENT" or "REVOLVING CREDIT COMMITMENTS" has the
meaning set forth in subsection 2.1A.
"REVOLVING CREDIT COMMITMENT TERMINATION DATE" means October 15, 2001 or
such earlier date, if any, upon which the Commitments are terminated and all
Obligations are paid in full or become immediately due and payable.
"REVOLVING CREDIT LOANS" means the Revolving Credit Loans made by Lenders
to Company pursuant to subsection 2.1A.
"REVOLVING CREDIT NOTE" means each promissory note of Company evidencing
the obligation to repay Revolving Credit Loans hereunder, substantially in the
form annexed hereto as EXHIBIT VIII, as amended, amended and restated,
supplemented, extended, renewed or otherwise modified from time to time, and any
substitution therefor.
"SALE/LEASEBACK" has the meaning assigned to that term in subsection 6.8.
"SECURITIES" means any capital stock or shares thereof, voting trust
certificates, bonds, debentures, options, warrants, notes, or other evidences of
indebtedness (other than accounts receivable), secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly
known as "securities".
"SOLVENT" means, with respect to any Person, that as of the date of
determination (i) the then fair value of the property of such Person is greater
than the total amount of liabilities (including Contingent Obligations) of such
Person and the then fair saleable value of the assets of such Person is greater
than the amount that will be required to pay the probable liabilities on such
Person's then existing debts as they become absolute and matured, considering
all financing alternatives and potential asset sales reasonably available to
such Person; (ii) such Person's capital is not unreasonably small in relation to
its business or any contemplated or undertaken transaction; and (iii) such
Person does not intend to incur, or believe or reasonably should believe that it
will incur, debts beyond its ability to pay such debts as they become due.
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"STANDBY LETTERS OF CREDIT" means a letter of credit under which Issuing
Lender agrees to make payments for the account of Company, on behalf of Company
or any Material Domestic Subsidiary, in respect of obligations of Company or any
Material Domestic Subsidiary incurred pursuant to contracts made or performances
undertaken or to be undertaken or like matters relating to contracts to which
Company or any Material Domestic Subsidiary is or proposes to become a party in
the ordinary course of its business, including, without limiting the foregoing,
for insurance purposes or in respect of advance payments or as bid or
performance bonds or for any other purpose for which a standby letter of credit
might customarily be issued.
"SUBORDINATED DEBT" means any Indebtedness of Holding or its Subsidiaries
subordinated in right of payment to the Obligations pursuant to documentation
containing maturities, amortization schedules, covenants, defaults, remedies,
subordination provisions and other material terms in form and substance
reasonably satisfactory to Agent and Requisite Lenders.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock generally entitled (other than only by reason of the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"SUBSIDIARY GUARANTY" means each Subsidiary Guaranty executed and delivered
by each Material Domestic Subsidiary as of February 24, 1995, substantially in
the form annexed to the Original Credit Agreement as EXHIBIT XIII thereto, as
such agreements may be amended, amended and restated, supplemented or otherwise
modified from time to time.
"SUBSIDIARY PATENT SECURITY AGREEMENT" means each Patent Security Agreement
executed and delivered by ICMI, Future Graphics, Nu-kote Imaging and Nu-kote
Imperial as of February 24, 1995, substantially in the form annexed to the
Original Credit Agreement as EXHIBIT XI thereto, as such agreement may be
amended, amended and restated, supplemented or otherwise modified from time to
time.
"SUBSIDIARY SECURITY AGREEMENT" means each Security Agreement executed and
delivered by ICMI, Future Graphics, Nu-kote Imaging and Nu-kote Imperial as of
February 24, 1995, substantially in the form annexed to the Original Credit
Agreement as EXHIBIT XII thereto, as such agreement may be amended, amended and
restated, supplemented or otherwise modified from time to time.
"SUBSIDIARY SECURITY DOCUMENTS" means any or all of the Subsidiary Security
Agreements, the Subsidiary Guaranties, the Subsidiary Trademark Pledges and the
Subsidiary Patent Security Agreements.
"SUBSIDIARY TRADEMARK PLEDGE" means each Trademark Security Agreement
executed and delivered by ICMI, Future Graphics, Nu-kote Imaging and Nu-kote
Imperial as of February 24, 1995, substantially in the form annexed to the
Original Credit Agreement as EXHIBIT VIII
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thereto, as such agreement may be amended, amended and restated,
supplemented or otherwise modified from time to time.
"SWISS FACILITY AGREEMENT" means that certain Amended and Restated
Revolving Credit Facility Agreement, dated as of October 11, 1996, among
Eurocurrency Administrative Agent, Eurocurrency Documentation Agent, the
Eurocurrency Collateral Agent, BZW and NationsBanc Capital Markets, Inc., as
arrangers, the lenders party thereto and Produktions and Pelikan Hardcopy, as
amended, amended and restated, supplemented or otherwise modified from time to
time.
"SWISS/U.K. TRANSFER" means any Asset Transfer involving fixtures,
machinery and equipment in which such assets are located in Switzerland
immediately before the Asset Transfer and are located in the United Kingdom
immediately after the Asset Transfer.
"TERMINATION EVENT" means (i) a "Reportable Event' described in
Section 4043 of ERISA and the regulations issued thereunder other than any such
Event with respect to which the 30-day notice requirement has been waived by
regulations of the PBGC and other than an event described in Section 4043(c)(9)
of ERISA, or (ii) the withdrawal of Company or any of its ERISA Affiliates from
a Pension Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) or 4062(e) of ERISA, or (iii) the provision to
affected parties of a notice or intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA, or (iv) the institution of proceedings to terminate a Pension Plan by the
PBGC, or (v) any other event or condition that would reasonably be expected to
constitute grounds under ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or (vi) the imposition of a lien
pursuant to Section 412(n) of the Internal Revenue Code.
"TOTAL UTILIZATION OF REVOLVING CREDIT COMMITMENTS" means, as at any date
of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Credit Loans, (ii) the aggregate Letter of Credit Usage.
"U.K. FACILITY AGREEMENT" means that certain Amended and Restated Revolving
Credit Facility Agreement, dated as of October 11, 1996, among Eurocurrency
Administrative Agent, the Eurocurrency Collateral Agent, Eurocurrency
Documentation Agent, BZW and NationsBanc Capital Markets, Inc., as arrangers,
the lenders party thereto and Pelikan Scotland, as amended, amended and
restated, supplemented or otherwise modified from time to time.
"U.K. HOLDING" means N-K International Holding Limited, a corporation
organized under the laws of England.
"U.K. SUBSIDIARIES" means U.K. Holding and N-K International.
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"U.K./SWISS TRANSFER" means any Asset Transfer involving fixtures,
machinery and equipment in which such assets are located in the United Kingdom
immediately before the Asset Transfer and are located in Switzerland immediately
after the Asset Transfer.
"UNISYS ACQUISITION AGREEMENT" means the Acquisition Agreement between
Unisys Corporation and Company, dated as of November 20, 1987, as amended by the
letter agreement, dated January 14, 1987, and the Release Agreement, dated as of
January 25, 1990.
"U.S. ASSET SALE" means any Asset Sale transaction involving assets located
in the United States described in Section 6.7B(iii)(E), and shall not include
any Asset Sale transactions described in Section 6.7B(iii)(B), (C), (D) or (F)
or in the second PROVISO to Section 6.7(B)(iii).
"U.S./FOREIGN TRANSFER" means any Asset Transfer involving fixtures,
machinery and equipment in which such assets are located in the United States
immediately before the Asset Transfer and are located outside the United States
immediately after the Asset Transfer.
"U.S./U.S. TRANSFER" means any Asset Transfer involving fixtures, machinery
and equipment in which such assets, both immediately before and after the Asset
Transfer, are and remain in the United States.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement; Calculations; Computations
For purposes of this Agreement, all accounting terms not otherwise defined
herein shall have the meanings assigned to them in conformity with GAAP.
Financial statements and other information required to be delivered by Company
to Lenders pursuant to clauses (i) and (ii) of subsection 5.1 shall be prepared
in accordance with GAAP as in effect on the date of such financial statements;
amounts used for determining compliance with the financial covenants set forth
in subsection 6.6 shall be computed in accordance with GAAP as in effect on
March 31, 1994. To the extent that the determination of compliance with any
covenant contained in subsections 6.1, 6.2, 6.3, 6.4 and 6.7B hereof requires
the conversion to Dollars of foreign currency amounts, such Dollar amount shall
be the Dollar Equivalent of the amount of such foreign currency at the time such
item is to be or originally was incurred, created or suffered or permitted to
exist or assumed or transferred or sold for purposes of this Agreement (except
if such item was incurred, created or assumed, or suffered or permitted to exist
or transferred or sold prior to the date hereof, such conversion shall be made
based on the Dollar Equivalent of the amounts of such foreign currency at the
date hereof).
1.3 Other Definitional Provisions
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference.
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SECTION 2. AMOUNTS AND TERMS OF REVOLVING CREDIT COMMITMENTS AND REVOLVING
CREDIT LOANS
2.1
A. REVOLVING CREDIT COMMITMENTS.
Subject to the terms and conditions of this Agreement and in reliance upon
the representations and warranties of Company herein set forth, each Lender
hereby severally agrees to lend to Company from time to time on or after the
Closing Date to but excluding the Revolving Credit Commitment Termination Date
such additional amounts which would not cause the outstanding principal amount
of its Revolving Credit Loans to at any time exceed its Pro Rata Share of the
aggregate Revolving Credit Commitments (as defined below) to be used for the
purposes identified in subsection 2.5A. Each Lender's commitment to make
Revolving Credit Loans to Company pursuant to this subsection 2.1A is herein
called its "REVOLVING CREDIT COMMITMENT" and such commitments of all Lenders in
the aggregate are herein called the "REVOLVING CREDIT COMMITMENTS". The
original amount of each Lender's Revolving Credit Commitment is set forth on
SCHEDULE 1.1 annexed hereto and the aggregate initial amount of the Revolving
Credit Commitments is $150,000,000. Each Lender's Revolving Credit Commitment
shall expire on the Revolving Credit Commitment Termination Date and all
Revolving Credit Loans and all other amounts owed hereunder with respect to the
Revolving Credit Loans shall be paid in full no later than that date. The
amount of the Revolving Credit Commitments shall be reduced by the amount of all
reductions thereof made pursuant to subsection 2.4E through the date of
determination. In no event shall the aggregate outstanding principal amount of
the Revolving Credit Loans from any Lender at any time exceed its Revolving
Credit Commitment then in effect.
Subject to subsection 2.6D, all Revolving Credit Loans under this Agreement
shall be made by Lenders simultaneously and proportionately to their Pro Rata
Shares of the Revolving Credit Commitments, it being understood that no Lender
shall be responsible for any default by any other Lender in that other Lender's
obligation to make Revolving Credit Loans hereunder nor shall the Revolving
Credit Commitment of any Lender be increased or decreased as a result of the
default by any other Lender in that other Lender's obligation to make Revolving
Credit Loans hereunder. Amounts borrowed by Company under this subsection 2.1A
may be repaid and, to but excluding the Revolving Credit Commitment Termination
Date, reborrowed.
Notwithstanding the foregoing provisions of this subsection 2.1A and the
provisions of subsection 2.1B, the extensions of credit under the Revolving
Credit Commitments shall be subject to the following limitations in the amounts
and during the periods indicated:
(1) The amount otherwise available for borrowing under the Revolving
Credit Commitment as of any time of determination (other than to reimburse
Issuing Lender for the amount of any drawings under any Letters of Credit
honored by Issuing Lender
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and not theretofore reimbursed by Company) shall be reduced by the
aggregate Letter of Credit Usage as of such time of determination;
(2) At no time shall the Total Utilization of Revolving Credit
Commitments exceed $150,000,000; and
(3) In no event shall any Lender's Pro Rata Share of the Total
Utilization of Revolving Credit Commitments as of any date of determination
exceed its Revolving Credit Commitment then in effect.
B. NOTICE OF BORROWING. Subject to subsection 2.1A, whenever Company
desires to borrow Revolving Credit Loans under this subsection 2.1 it shall
deliver to Agent a Notice of Borrowing no later than 12:00 noon (Dallas time)
(i) on the date of the proposed Funding Date, in the case of a requested Base
Rate Loan, and (ii) two Business Days in advance of the proposed Funding Date,
in the case of a requested Eurodollar Rate Loan. The Notice of Borrowing shall
specify (a) the proposed Funding Date (which shall be a Business Day), (b) the
amount of the proposed Revolving Credit Loan, (c) whether such Revolving Credit
Loans are initially to consist of Base Rate Loans or Eurodollar Rate Loans or a
combination thereof, (d) if such Revolving Credit Loans, or any portion thereof,
are initially to be Eurodollar Rate Loans, the amounts thereof and the initial
Interest Periods therefor, and (e) that the Total Utilization of Revolving
Credit Commitments (after giving effect to the Revolving Credit Loans then
requested) will not exceed the Revolving Credit Commitments then in effect.
Base Rate Loans shall be made in an aggregate minimum amount of $500,000 and
integral multiples of $500,000 in excess of that amount. Eurodollar Loans shall
be made in an aggregate minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess of that amount. Revolving Credit Loans may be continued as
or converted into Base Rate Loans and Eurodollar Rate Loans in the manner
provided in subsection 2.2D after the Closing Date. In lieu of delivering the
above-described Notice of Borrowing, Company may give Agent telephonic notice by
the required time of any proposed borrowing of Revolving Credit Loans under this
subsection 2.1; PROVIDED that such notice shall be promptly confirmed in writing
by delivery of a Notice of Borrowing to Agent on or prior to the Funding Date of
the requested Revolving Credit Loans.
Neither Agent nor any Lender shall incur any liability to Company in acting
upon any telephonic notice referred to above that Agent believes in good faith
to have been given by a duly authorized officer or other person authorized to
borrow on behalf of Company or for otherwise acting in good faith under this
subsection 2.1B and upon funding of Revolving Credit Loans by Lenders in
accordance with this Agreement pursuant to any such telephonic notice, Company
shall have effected Revolving Credit Loans hereunder.
Except as provided in subsection 2.6D and except in any instance in which
Company makes a payment as contemplated by subsection 2.6E, a Notice of
Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on the related Interest Rate Determination Date, and
Company shall be bound to make a borrowing in accordance therewith.
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C. DISBURSEMENT OF FUNDS. Promptly after receipt of a Notice of
Borrowing relating to a Revolving Credit Loan pursuant to subsection 2.1B (or
telephonic notice thereof), Agent shall notify each Lender of the proposed
borrowing. Each Lender shall make the amount of its Revolving Credit Loan
available to Agent, in same day funds, at the office of Agent located at
NationsBank Plaza, 901 Main Street, 67th Floor, Dallas, Texas 75202 not later
than 1:00 P.M. (Dallas time) on the Funding Date. Upon satisfaction or waiver
of the conditions precedent specified in subsection 3.1 and 3.2, Agent shall
make the proceeds of such Revolving Credit Loans available to Company on such
Funding Date by causing an amount of same day funds equal to the proceeds of all
such Revolving Credit Loans received by Agent to be credited to the account of
Company at such office of Agent, Account Number 1291369149, ABA #111000025.
Unless Agent shall have been notified by any Lender prior to any Funding
Date in respect of any Revolving Credit Loans that such Lender does not intend
to make available to Agent the amount of such Lender's Revolving Credit Loan to
be funded on such Funding Date (which such notice, if so received by Agent,
shall promptly be communicated to Company), Agent may assume that such Lender
has made such amount available to Agent on such Funding Date and Agent in its
sole discretion may, but shall not be obligated to, make available to Company a
corresponding amount on such Funding Date. If such corresponding amount is not
in fact made available to Agent by such Lender, Agent shall be entitled to
recover such corresponding amount on demand from such Lender together with
interest thereon, for each day from such Funding Date until the date such amount
is paid to Agent, at the Federal Funds Rate in effect from time to time for
three Business Days and thereafter at the Base Rate. If such Lender does not
pay such corresponding amount forthwith upon Agent's demand therefor, (i) Agent
shall promptly notify Company, and Company shall immediately pay such
corresponding amount to Agent and (ii) notwithstanding subsection 6.1, Company
may borrow a like amount on an unsecured basis from any Person for a period
ending on the date upon which such Lender does in fact make such amount of such
Lender's Revolving Credit Loan available. Nothing in this subsection 2.1C (and
no such borrowing by Company) shall be deemed to relieve any Lender from its
obligation to fulfill its Revolving Credit Commitment hereunder or to prejudice
any rights that Company may have against any Lender as a result of any default
by such Lender hereunder, and such unsecured borrowing shall not be deemed to
increase the amount of Lenders' Revolving Credit Commitments hereunder.
D. REGISTER.
(i) Agent shall maintain a register (the "REGISTER") on which it will
record the Commitments from time to time of each of the Lenders, the
Revolving Credit Loans maintained or made by each of the Lenders and each
repayment in respect of the principal amount of the Revolving Credit Loans
of each Lender. Any such recordation shall be conclusive and binding,
absent manifest error.
(ii) Each Lender will record on its internal records the amount of
each Revolving Credit Loan maintained or made by it and each payment in
respect thereof. Failure to make any such recordation, or any error in
such recordation, shall not affect
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the Obligations of Company in respect of such Revolving Credit Loans.
Any such recordation shall be conclusive and binding, absent manifest
error.
2.2 Interest on the Revolving Credit Loans
A. RATE OF INTEREST. Subject to the provisions of subsections 2.2E and
2.9, each Revolving Credit Loan shall bear interest on the unpaid principal
amount thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate or the Adjusted
Eurodollar Rate. The applicable basis for determining the rate of interest
shall be selected by Company initially at the time a Notice of Borrowing is
given pursuant to subsection 2.1B. The basis for determining the interest rate
with respect to any Revolving Credit Loan may be changed from time to time
pursuant to subsection 2.2D. If on any day a Revolving Credit Loan is
outstanding with respect to which notice has not been delivered to Agent in
accordance with the terms of this Agreement specifying the basis for determining
the rate of interest, then for that day that Revolving Credit Loan shall bear
interest determined by reference to the Base Rate.
The Revolving Credit Loans shall bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the lesser of (i) the Base Rate and
(ii) the Highest Lawful Rate; and
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate PLUS the Applicable Margin, which at no time shall exceed
the Highest Lawful Rate.
If the amount of interest payable in respect of any interest computation
pursuant to clause (i) above is reduced to Highest Lawful Rate and the amount of
interest payable in respect of any subsequent interest computation period would
be less than the Maximum Amount, then the amount of interest payable in respect
of such subsequent interest computation period shall be automatically increased
to the Maximum Amount; PROVIDED that at no time shall the aggregate amount by
which interest paid has been increased pursuant to this sentence exceed the
aggregate amount by which interest has been reduced pursuant to clause (i) above
of this subsection 2.2A.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan,
Company shall elect an interest period (each an "INTEREST PERIOD") to be
applicable to such Eurodollar Rate Loan, which Interest Period shall be either a
one, two, three or six-month period; PROVIDED that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date of such Eurodollar Rate Loan or, in the case
of any Revolving Credit Loan that is borrowed as a Base Rate Loan and
thereafter converted into a Eurodollar Rate Loan pursuant to
subsection 2.2D, on the date such Revolving Credit Loan is so converted;
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(ii) in the case of immediately successive Interest Periods, each
successive Interest Period shall commence on the day on which the next
preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; PROVIDED that if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) 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,
subject to clause (v) below, end on the last Business Day of a calendar
month;
(v) no Interest Period with respect to any Eurodollar Rate Loan shall
extend beyond the Commitment Termination Date;
(vi) the Interest Period for a Revolving Credit Loan that is converted
pursuant to subsection 2.6D shall commence on the date of such conversion
and shall expire on the date on which the Interest Period for the Revolving
Credit Loans of the other Lenders that were not converted expires; and
(vii) there shall be no more than five (5) Interest Periods
relating to Eurodollar Rate Loans outstanding at any time.
C. INTEREST PAYMENTS. Subject to subsection 2.2E, interest shall be
payable on the Revolving Credit Loans as follows:
(i) interest on each Base Rate Loan shall be payable in arrears on
and to (but not including) the last Business Day of each fiscal quarter of
each year, commencing on the first such date to occur after the Closing
Date, and at maturity; and
(ii) interest on each Eurodollar Rate Loan shall be payable in arrears
on and to (but not including) each Interest Payment Date applicable to that
Eurodollar Rate Loan, upon any prepayment of that Eurodollar Rate Loan (to
the extent accrued on the amount being prepaid) and at maturity.
D. CONVERSION OR CONTINUATION. Subject to the provisions of
subsection 2.6, Company shall have the option (i) to convert at any time all or
any part of the outstanding Revolving Credit Loans from Revolving Credit Loans
bearing interest at a rate determined by reference to one basis to Revolving
Credit Loans bearing interest at a rate determined by reference to an
alternative basis, or (ii) upon the expiration of any Interest Period applicable
to a Eurodollar Rate Loan, to continue all or any portion of such Revolving
Credit Loan equal to
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$5,000,000 and integral multiples of $1,000,000 in excess of that amount as a
Eurodollar Rate Loan and the succeeding Interest Period(s) of such continued
Revolving Credit Loan shall commence on the last day of the Interest Period
of the Revolving Credit Loan to be continued; PROVIDED, HOWEVER, Eurodollar
Rate Loans may only be converted into Revolving Credit Loans bearing interest
determined by reference to an alternative basis on the expiration date of an
Interest Period applicable thereto; PROVIDED, FURTHER, that no outstanding
Revolving Credit Loan may be continued as, or be converted into, a Eurodollar
Rate Loan when any Event of Default or Potential Event of Default has
occurred and is continuing; and PROVIDED, FURTHER, that, subject to the
provisions of subsection 2.6 and the preceding proviso, no outstanding
Revolving Credit Loan may be converted into a Base Rate Loan during the
period from December 15 of any year to, and including, January 15 of the
immediately succeeding year.
Company shall deliver a Notice of Conversion/Continuation to Agent no later
than 12:00 noon (Dallas time) at least three Business Days in advance of the
proposed conversion/continuation date. A Notice of Conversion/Continuation
shall certify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount of the Revolving Credit Loan to be
converted/continued, (iii) the nature of the proposed conversion/continuation,
(iv) in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan, the requested Interest Period, and (v) in the case of conversion of a Base
Rate Loan to a Eurodollar Rate Loan or continuation of a Eurodollar Rate Loan,
that no Potential Event of Default or Event of Default has occurred and is
continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Agent telephonic notice by the
required time of any proposed conversion/continuation under this
subsection 2.2D; PROVIDED that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to Agent on or before
the proposed conversion/continuation date; PROVIDED, FURTHER, that if Company
shall not have complied with such notice provisions, Company shall be deemed
irrevocably to have requested that such Eurodollar Rate Loan be converted to a
Base Rate Loan in the same principal amount.
Neither Agent nor any Lender shall incur any liability to Company in acting
upon any telephonic notice referred to above that Agent believes in good faith
to have been given by a duly authorized officer or other person authorized to
act on behalf of Company or for otherwise acting in good faith under this
subsection 2.2D and upon conversion/continuation by Agent in accordance with
this Agreement, pursuant to any telephonic notice, Company shall have effected
such conversion or continuation, as the case may be, hereunder.
Except as provided in subsection 2.6D and except in any instance in which
Company makes a payment as contemplated by subsection 2.6E, a Notice of
Conversion/Continuation for conversion to, or continuation of, a Eurodollar Rate
Loan (or telephonic notice in lieu thereof) shall be irrevocable after the
related Interest Rate Determination Date, and Company shall be bound to convert
or continue in accordance therewith.
E. DEFAULT RATE; POST MATURITY INTEREST. Any principal payments on the
Revolving Credit Loans not paid when due and, to the extent permitted by
Applicable Law, any interest
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payments on the Revolving Credit Loans, Commitment Fees and compensation
payable in respect of Letters of Credit pursuant to subsection 2.8E not paid
when due and any other fees and other amounts payable hereunder not paid
within 10 days of the date when due (the "DUE DATE"), in each case whether at
stated maturity, by notice of prepayment, by acceleration or otherwise, shall
upon delivery of written notice to Company from Agent bear interest from and
after the Due Date payable upon demand at a rate that is two percent (2%) per
annum in excess of the rate of interest otherwise payable under this
Agreement (or, in the case of fees and other amounts due hereunder, at the
Base Rate PLUS 2%), but in any case not in excess of the Highest Lawful Rate;
PROVIDED that, in the case of Eurodollar Rate Loans, upon the expiration of
the Interest Period in effect at the time any such increase in interest rate
is effective, such Eurodollar Rate Loans shall thereupon become Base Rate
Loans and thereafter bear interest payable upon demand at a rate which is two
percent (2%) per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans but not in excess of the Highest Lawful
Rate. The payment or acceptance of the increased rate provided by this
subsection 2.2E shall not constitute a waiver of any Event of Default or an
amendment to this Agreement or otherwise prejudice or limit any rights or
remedies of Agent or any Lender.
F. COMPUTATION OF INTEREST. Subject to subsection 10.18, interest on the
Revolving Credit Loans shall be computed on the basis of a 360-day year and the
actual number of days elapsed in the period during which it accrues. In
computing interest on any Revolving Credit Loan, the date of the making of such
Revolving Credit Loan or the first day of an Interest Period applicable to such
Revolving Credit Loan or, with respect to a Base Rate Loan being converted from
a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan to
such Base Rate Loan, shall be included; and the date of payment of such
Eurodollar Rate Loan or the expiration date of an Interest Period applicable to
such Eurodollar Rate Loan, or with respect to a Base Rate Loan being converted
to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such
Eurodollar Rate Loan, shall be excluded; PROVIDED that if a Revolving Credit
Loan is repaid on the same day on which it is made, one day's interest shall be
paid on that Revolving Credit Loan.
2.3 Fees
A. COMMITMENT FEE. Company agrees to pay to Agent for distribution to
each Lender in proportion to that Lender's Pro Rata Share of the Revolving
Credit Commitments commitment fees ("COMMITMENT FEES") for the period from and
including the Closing Date to but excluding the Revolving Credit Commitment
Termination Date equal to the average of the daily unused portion of the
Revolving Credit Commitments MULTIPLIED by the applicable Commitment Fee
Percentage, such Commitment Fees to be calculated, subject to subsection 10.18,
on the basis of a 360-day year and the actual number of days elapsed and to be
payable in arrears on and to (but not including) the last Business Day of each
fiscal quarter of each year, commencing on the first such date to occur after
the Closing Date, and upon the Revolving Credit Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding, for
purposes of calculating the Commitment Fees payable by Company pursuant to this
subsection 2.3A the "unused portion of the Revolving Credit Commitments",
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as of any date of determination, shall be an amount equal to the aggregate
amount of Revolving Credit Commitments (as the same may have been reduced
pursuant to subsection 2.4E) as of such date MINUS the aggregate principal
amount of all outstanding Revolving Credit Loans on such date, and the unused
portion of the Revolving Credit Commitments shall not be reduced by reason of
the issuance of Letters of Credit or by any limitation of the amount
available for borrowing thereunder set forth in the numbered paragraphs of
subsection 2.1A.
B. FACILITY FEE. Subject to Section 10.18, Company agrees to pay to
Agent, for the account of each Lender (other than NationsBank), a one-time
facility fee equal to the product of (i) 0.10% times (ii) the sum of (x) such
Lender's Revolving Credit Commitment plus (y) such Lender's Commitments under
the Eurocurrency Credit Agreements. Such fees shall be payable on the Closing
Date, shall be fully-earned when due, subject to Section 10.18, non-refundable
when paid, and shall be payable in Dollars. For the purposes of calculating
such fees, any amounts denominated in (a) Pounds Sterling shall be translated
into Dollars utilizing the same exchange rate pursuant to which the aggregate
amount as of the Closing Date of Commitments in such currency under the U.K.
Credit Agreement was determined and (b) Swiss Francs shall be translated into
Dollars utilizing the same exchange rate pursuant to which the aggregate amount
as of the Closing Date of Commitments in such currency under the Swiss Credit
Agreement was determined.
C. OTHER FEES. Company agrees to pay to Agent, for its own account, the
fees provided for in the Fee Letter in the amounts and on the dates as provided
therein.
2.4 Prepayments and Payments of Revolving Credit Loans; Reductions in
Revolving Credit Loan Commitments
A. PREPAYMENTS.
(i) VOLUNTARY REPAYMENTS OF REVOLVING CREDIT LOANS. Company may,
upon prior written or telephonic notice by no later than 12:00 noon (Dallas
time) on the date of repayment (in the case of Base Rate Loans) or on the
date which is not less than three Business Days prior to the date of
repayment (in the case of Eurodollar Rate Loans) confirmed in writing to
Agent (which notice Agent will promptly transmit by telegram, telex or
telephone to each Lender, any such telephonic notice to be promptly
confirmed by Agent in writing) specifying the Revolving Credit Loan or
Revolving Credit Loans to which such repayment is to be applied, at any
time and from time to time repay Revolving Credit Loans. Prepayment of
Eurodollar Rate Loans shall be in an aggregate minimum amount of $2,500,000
and integral multiples of $500,000 in excess of that amount or, if such
Eurodollar Rate Loans are less than $2,500,000, in the then remaining
amount of such Revolving Credit Loans. Repayment of Base Rate Loans shall
be in an aggregate minimum amount of $500,000 and multiples of $100,000 in
excess of that amount. If the notice of repayment does not specify how
such repayment shall be applied, it shall be applied first to Base Rate
Loans to the full extent thereof before application to Eurodollar Rate
Loans, as determined by Agent. Notice of repayment
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having been given as aforesaid, the principal amount of the Revolving
Credit Loans specified in such notice shall become due and payable on
the repayment date.
(ii) MANDATORY PREPAYMENT OF REVOLVING CREDIT LOANS. At such time, if
any, that the net book value of assets (including stock of any Subsidiary
which is not a Material Subsidiary) of Holding, Company or any Subsidiary
disposed of in a U.S. Asset Sale since February 24, 1995 exceeds $5,000,000
in the aggregate, Company shall, within 2 Business Days of the date of
receipt of any Net Cash Proceeds from any such U.S. Asset Sale thereafter
(or within 2 Business Days of the date of receipt of any portion of Net
Cash Proceeds from one such U.S. Asset Sale that results in the aggregate
net book value of all assets disposed of in such U.S. Asset Sales to exceed
$5,000,000), prepay an aggregate principal amount of the Revolving Credit
Loans in an amount equal to 50% of the amount of such Net Cash Proceeds.
(iii) APPLICATION OF REPAYMENTS. All repayments of Eurodollar
Rate Loans shall include payment of accrued interest on the principal
amount thereof so repaid and shall be applied to the payment of such
interest before application to such principal. With respect to different
Revolving Credit Loans being repaid separately, any repayment shall be
applied first to Base Rate Loans to the full extent thereof before
application to Eurodollar Rate Loans, in the order determined by Agent
unless, with respect to voluntary repayments, Company indicates otherwise
in its notice of repayment pursuant to subsection 2.4A(i).
B. MANNER AND TIME OF PAYMENT. All payments of principal, interest and
fees hereunder by Company shall be made without defense, set-off or counterclaim
and in same day funds and delivered to Agent not later than 12:00 noon (Dallas
time) on the date due at its office located at 901 Main Street, 67th Floor,
Dallas, Texas 75202 for the account of Lenders; funds received by Agent after
that time shall be deemed to have been paid by Company on the next succeeding
Business Day.
C. APPORTIONMENT OF PAYMENTS. Aggregate principal and interest payments
shall be apportioned among all outstanding Revolving Credit Loans to which such
payments relate, and such payments shall be apportioned ratably to Lenders,
proportionately to Lenders' respective Pro Rata Shares. Agent shall promptly
distribute to each Lender at its primary address set forth below its name on the
appropriate signature page hereof or such other address as any Lender may
request its share of all such payments received by Agent and the commitment fees
of such Lender when received by Agent pursuant to subsection 2.3A.
Notwithstanding the foregoing provisions of this subsection 2.4C if, pursuant to
the provisions of subsection 2.6D, any Notice of Borrowing or Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of the
Revolving Credit Commitments of Eurodollar Rate Loans, Agent shall give effect
thereto in apportioning payments received thereafter.
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D. PAYMENTS ON NON-BUSINESS DAYS. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
payment shall be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the payment of interest hereunder
or of the commitment and other fees hereunder, as the case may be; PROVIDED,
HOWEVER, that if the day on which payment relating to a Eurodollar Rate Loan is
due is not a Business Day but is a day of the month after which no further
Business Day occurs in that month, then the due date thereof shall be the next
preceding Business Day.
E. REDUCTIONS OF REVOLVING CREDIT COMMITMENTS. Company shall have the
right, at any time and from time to time, to terminate in whole or permanently
reduce in part, without premium or penalty, the Revolving Credit Commitments in
an amount up to the amount by which the Revolving Credit Commitments exceed the
Total Utilization of Revolving Credit Commitments. Company shall give not less
than three Business Days' prior written notice to Agent designating the date
(which shall be a Business Day) of such termination or reduction and the amount
of any partial reduction. Promptly after receipt of a notice of such
termination or partial reduction, Agent shall notify each Lender of the proposed
termination or reduction. Such termination or partial reduction of the
Revolving Credit Commitments shall be effective on the date specified in
Company's notice and shall reduce the Revolving Credit Commitment of each Lender
proportionately to its Pro Rata Share of the Revolving Credit Commitments. Any
such partial reduction of the Revolving Credit Commitments shall be in an
aggregate minimum amount of $5,000,000 and integral multiples of $500,000 in
excess of that amount unless the remaining amount of such Commitments is less
than $5,000,000 in which case such reduction shall be in the amount of the then
remaining Revolving Credit Commitments. The Revolving Credit Commitments shall
be permanently reduced by the amount of any mandatory prepayment of the
Revolving Credit Loans that shall be required to be made pursuant to
subsection 2.4A(ii).
2.5 Use of Proceeds
A. REVOLVING CREDIT LOANS. The proceeds of the Revolving Credit Loans
shall be applied by Company for its general corporate purposes, which may
include, without limitation, (i) working capital, (ii) the refinancing of the
term loan outstanding under the Original Credit Agreement and certain other
debt, (iii) capital expenditures and certain other expenditures permitted
hereby, (iv) Permitted Acquisitions, and (v) reimbursement to any Issuing Lender
of any amounts drawn under any Letter of Credit as provided in subsection 2.8C.
B. LETTERS OF CREDIT. The Letters of Credit shall be issued for general
corporate purposes, which may include, without limitation, supporting
(i) workers' compensation liabilities, (ii) obligations to third party insurers,
(iii) performance, payment, deposit or surety obligations under law or
governmental rule or regulation or in accordance with industry custom and
practice, or (iv) obligations incurred in connection with the purchase of goods
and services in the ordinary course of business.
C. MARGIN REGULATIONS. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company to purchase or carry any Margin Stock in
any manner that
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might cause the borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T, or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of the Board
or to violate the Exchange Act, in each case as in effect on the date or
dates of such borrowing and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans; Increased Costs
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions, to the extent they relate to Eurodollar Rate Loans, shall
govern as to the matters covered:
A. DETERMINATION OF INTEREST RATE. As soon as practicable after 10:00
A.M. (Dallas time) on each Interest Rate Determination Date, Agent shall
determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the Eurodollar Rate Loans for which an interest rate is then being determined
for the applicable Interest Period and shall promptly give notice thereof on
such date (in writing or by telephone confirmed in writing) to Company and each
Lender.
B. SUBSTITUTED RATE OF BORROWING. If on any Interest Rate Determination
Date, Agent shall have determined (which determination shall be final and
conclusive and binding upon all parties but shall be made only after
consultation with Company) that, by reason of any changes arising after the date
of this Agreement affecting the Eurodollar market or by reasons of any change
arising after the date of this Agreement affecting the position of a Lender in
such market (each such Lender an "AFFECTED LENDER"), the Eurodollar Rate shall
not represent the effective pricing to such Affected Lender for Dollar deposits
of comparable amount for the relevant period and the higher cost of such
deposits is deemed by such Lender and Agent (in their sole discretion) to be
material, then, and in any such event, Agent shall promptly (and in any event
not later than such Interest Rate Determination Date) give notice (by telephone
confirmed in writing) to Company (which notice Agent shall promptly transmit to
each other Lender) of such determination. Thereafter, Company shall pay to each
Affected Lender, upon written demand therefor, such additional amounts (in the
form of an increased rate of, or a different method of calculating, interest or
otherwise as such Affected Lender in its sole discretion shall reasonably
determine) as shall be required to cause such Affected Lender to be paid
interest with respect to its Eurodollar Rate Loans for the Interest Period
following that Interest Rate Determination Date at a rate per annum equal to the
Applicable Margin then in effect plus the effective pricing to such Affected
Lender for Dollar deposits to make or maintain its Eurodollar Rate Loans;
PROVIDED that Company may replace such Affected Lender with one or more other
banks reasonably acceptable to Agent so long as (i) the aggregate amount of the
Revolving Credit Commitments of the Affected Lender to be replaced shall equal
the aggregate amount of Revolving Credit Commitments of such other bank or banks
and (ii) such Affected Lender is replaced in the Eurocurrency Credit Agreements
to which it is a party by the same bank or banks. Upon the execution of an
assignment agreement substantially in the form of EXHIBIT VII annexed hereto,
each such other bank shall be deemed to be a "Lender" for all purposes of this
Agreement as set forth in subsection 10.2. A certificate as to additional
amounts owed an
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Affected Lender, showing in reasonable detail the basis for the calculation
thereof, submitted in good faith to Company and Agent by such Affected Lender
shall, absent manifest error, be final and conclusive and binding upon all of
the parties hereto.
C. REQUIRED TERMINATION AND PREPAYMENT. If on any date any Lender shall
have reasonably determined (which determination shall be final and conclusive
and binding upon all parties) that the making or continuation of its Eurodollar
Rate Loans has become unlawful or impossible by compliance by that Lender in
good faith with any law, governmental rule, regulation or order (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful), then, and in any such event, that Lender shall be an Affected Lender
and it shall promptly give notice (by telephone confirmed in writing) to Company
and Agent (which notice Agent shall promptly transmit to each Lender) of that
determination. Subject to the prior withdrawal of a Notice of Borrowing or a
Notice of Conversion/Continuation or prepayment of the Eurodollar Rate Loans of
the Affected Lender as contemplated by the following subsection 2.6D, the
obligation of the Affected Lender to make or maintain its Eurodollar Rate Loans
during any such period shall be terminated at the earlier of the termination of
the Interest Period then in effect or when required by law and Company shall no
later than the termination of the Interest Period in effect at the time any such
determination pursuant to this subsection 2.6C is made or, earlier, when
required by law, repay or prepay the Eurodollar Rate Loans of the Affected
Lender, together with all interest accrued thereon.
D. OPTIONS OF COMPANY. In lieu of paying an Affected Lender such
additional moneys as are required by subsection 2.6B or the prepayment of an
Affected Lender required by subsection 2.6C, Company may exercise any one of the
following options:
(i) If the determination by an Affected Lender relates only to
Eurodollar Rate Loans then being requested by Company pursuant to a Notice
of Borrowing or a Notice of Conversion/Continuation, Company may by giving
notice (by telephone confirmed in writing) to Agent (who shall promptly
give similar notice to each Lender) no later than the date immediately
prior to the date on which such Eurodollar Rate Loans are to be made,
withdraw that Notice of Borrowing or Notice of Conversion/Continuation and
the Eurodollar Rate Loans then being requested shall be made by Lenders as
Base Rate Loans; or
(ii) Upon written notice to Agent and each Lender, Company may
terminate the obligations of Lenders to make or maintain Revolving Credit
Loans as, and to convert Revolving Credit Loans into, Eurodollar Rate Loans
and in such event, Company shall, prior to the time any payment pursuant to
subsection 2.6C is required to be made or, if the provisions of
subsection 2.6B are applicable, at the end of the then current Interest
Period, convert all of the Eurodollar Rate Loans into Base Rate Loans in
the manner contemplated by subsection 2.2D but without satisfying the
advance notice requirements therein; or
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(iii) Company may give notice (by telephone confirmed in writing)
to the Affected Lender and Agent (who shall promptly give similar notice to
each Lender) and require the Affected Lender to make the Eurodollar Rate
Loan then being requested as a Base Rate Loan or to continue to maintain
its outstanding Base Rate Loan then the subject of a Notice of
Conversion/Continuation as a Base Rate Loan or to convert its Eurodollar
Rate Loans then outstanding that are so affected into Base Rate Loans at
the end of the then current Interest Period (or at such earlier time as
prepayment is otherwise required to be made pursuant to subsection 2.6C) in
the manner contemplated by subsection 2.2D but without satisfying the
advance notice requirements therein, that notice to pertain only to the
Revolving Credit Loans of the Affected Lender and to have no effect on the
obligations of the other Lenders to make or maintain Eurodollar Rate Loans
or to convert Base Rate Loans into Eurodollar Rate Loans.
E. COMPENSATION. Company shall compensate each Lender, upon written
request by that Lender (which request shall set forth in reasonable detail the
basis for requesting such amounts), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss (including interest paid)
sustained by that Lender in connection with the re-employment of such funds),
that Lender may sustain (other than through a default by that Lender): (i) if
for any reason a borrowing of any Eurodollar Rate Loan does not occur on a date
specified therefor in a Notice of Borrowing, a Notice of Conversion/Continuation
or a telephonic request for borrowing or conversion/continuation or a successive
Interest Period does not commence after notice therefor is given pursuant to
subsection 2.2D, (ii) if for any reason any prepayment of any of its Eurodollar
Rate Loans occurs on a date that is not the last day of an Interest Period
applicable to that Eurodollar Rate Loan, (iii) if any prepayment of any of its
Eurodollar Rate Loans is not made on any date specified in a notice of
prepayment given by Company, or (iv) as a consequence of any other default by
Company to repay its Eurodollar Rate Loans when required by the terms of this
Agreement.
F. QUOTATION OF EURODOLLAR RATE. Anything herein to the contrary
notwithstanding, if on any Interest Rate Determination Date NationsBank is as a
matter of general practice not quoting rates to first class banks in the
Eurodollar market for the offering of Dollars for deposit with maturities
comparable to the Interest Period and in amounts comparable to the Eurodollar
Rate Loans requested, Agent shall give Company and each Lender prompt notice
thereof and the Revolving Credit Loans requested shall be made as Base Rate
Loans. Until such notice has been withdrawn by Agent, no further Eurodollar
Rate Loan shall be made nor shall Company have the right to convert a Base Rate
Loan to a Eurodollar Rate Loan. Such notice shall be withdrawn by Agent when
Agent resumes the quotation of such rates.
G. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of, any of its branch
offices or the office of an Affiliate of that Lender, subject to
subsection 2.6K.
H. INCREASED COSTS. If, after the date hereof by reason of, (x) the
introduction of or any change (including, without limitation, any change by way
of imposition or increase of tax
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or reserve requirements) in or in the official interpretation of any law or
regulation by the authority charged with the administration or interpretation
thereof, or (y) the compliance with any guideline or request from any central
bank or other governmental authority or quasi- governmental authority
exercising control over banks or financial institutions generally (whether or
not having the force of law):
(i) any Lender (or its applicable lending office) shall be subject to
any increase in the net amount of any tax, duty or other charge with
respect to its Eurodollar Rate Loans or its obligation to make Eurodollar
Rate Loans, or shall be subject to any change in the basis of taxation of
payments to any Lender of the principal of or interest on its Eurodollar
Rate Loans or its obligation to make Eurodollar Rate Loans (except for any
increase or other change in or with respect to Excluded Taxes); or
(ii) any reserve (including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System), special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender's applicable lending office shall be
imposed or deemed applicable or any other condition affecting its
Eurodollar Rate Loans or its obligation to make Eurodollar Rate Loans shall
be imposed on any Lender or its applicable lending office or the interbank
Eurodollar market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining Eurodollar Rate Loans, or
there shall be a reduction in the amount received or receivable with respect to
Eurodollar Rate Loans by that Lender or its applicable lending office under this
Agreement, then Company shall from time to time, upon written notice from and
demand by that Lender (with a copy of such notice and demand to Agent), pay to
Agent for the account of that Lender, within five Business Days after receipt of
such notice and demand, additional amounts sufficient to indemnify that Lender
against such increased cost or reduced amount. A certificate in reasonable
detail as to the amount of such increased cost or reduced amount, submitted to
Company and Agent by that Lender, shall, except for manifest error, be final,
conclusive and binding for all purposes. Any payments to be made by Company
under subsections 2.6B, 2.6H, 2.7 or 2.9 are to be without duplication.
Company shall not be required to pay any amounts pursuant to this
subsection 2.6H to or on behalf of any Foreign Lender unless such Foreign Lender
has provided to Company, either a Certificate of Exemption or a Letter of Non-
Exemption.
I. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calculation
of all amounts payable to a Lender under subsections 2.6B, 2.6E and 2.6H shall
be made as though that Lender had actually funded its relevant Eurodollar Rate
Loan through the purchase of a Eurodollar deposit bearing interest at the
Eurodollar Rate in an amount equal to the amount of that Eurodollar Rate Loan
and having a maturity comparable to the relevant Interest Period and through the
transfer of such Eurodollar deposit from an offshore office of that Lender to a
domestic office of that Lender in the United States of America; PROVIDED,
HOWEVER, that each
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Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit
and the foregoing assumption shall be utilized only for the calculation of
amounts payable under this subsection 2.6.
J. EURODOLLAR RATE LOANS AFTER DEFAULT. Unless Agent and Requisite
Lenders shall otherwise agree, after the occurrence of and during the
continuance of a Potential Event of Default or Event of Default, Company may not
elect to have a Revolving Credit Loan be made or maintained as, or converted to,
a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Eurodollar Rate Loan.
K. AFFECTED LENDERS' OBLIGATION TO MITIGATE. Each Lender agrees that, as
promptly as practicable after it becomes aware of the occurrence of an event or
the existence of a condition that would cause it to be an Affected Lender under
subsection 2.6B or 2.6C or that would entitle such Lender to receive payments
under subsection 2.6H, 2.7 or 2.9, it will, to the extent not inconsistent with
such Lender's internal policies, use reasonable efforts to make, fund or
maintain the affected Revolving Credit Loans of such Lender through another
lending office of such Lender if as a result thereof the additional moneys which
would otherwise be required to be paid to such Lender pursuant to
subsection 2.6B, 2.6H, 2.7 or 2.9 would be materially reduced or the illegality
or other adverse circumstances which would otherwise require prepayment of such
Revolving Credit Loans pursuant to subsection 2.6C would cease to exist, and if,
as determined by such Lender in its sole discretion, the making, funding or
maintaining of such Revolving Credit Loans through such other lending office
would not otherwise materially adversely affect such Revolving Credit Loans or
such Lender. Company hereby agrees to pay all reasonable expenses incurred by
any Lender in utilizing another lending office of such Lender pursuant to this
subsection 2.6K, to the extent such expenses exceed the expenses that such
Lender would otherwise incur in utilizing the original lending office of such
Lender.
2.7 Capital Adequacy Adjustment
In the event that any Lender shall have reasonably determined that the
adoption or implementation after the date hereof of any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, including, without limitation, any change in the
regulations set forth at 12 C.F.R. Part 208 (Appendix A) and 12 C.F.R. Part 225
(Appendix A), or any change therein or in the interpretation or application
thereof, or compliance by any Lender with any request or directive regarding
capital adequacy (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) from any central bank or
governmental agency or body having jurisdiction, does or shall have the effect
of increasing the amount of capital required to be maintained by such Lender and
thereby reducing the rate of return on such Lender's capital as a consequence of
its obligations hereunder to a level below that which such Lender would have
achieved but for the occurrence of such circumstances, then Company shall from
time to time, within ten (10) Business Days of written notice and demand from
such Lender (with a copy to the Agent) claiming compensation pursuant to this
subsection 2.7, including a certificate (x) stating that one of the events
described in this subsection 2.7 has occurred and describing in reasonable
detail the nature of such event,
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(y) stating the amount of the reduction in the rate of return on such
Lender's capital reasonably determined by such Lender to be allocable to the
existence of such Lender's commitment to lend hereunder and (z) setting forth
in reasonable detail the manner of calculation of the reduction in the rate
of return on such Lender's capital and such allocated amount thereof, pay to
Agent, for the account of such Lender, additional amounts sufficient to
compensate such Lender for such allocated reduction. Such certificate as to
the amount of such compensation, submitted to Company and Agent by such
Lender, shall, absent manifest error, be final, conclusive and binding for
all purposes. In determining such amount, a Lender may use any averaging and
attribution method; PROVIDED, HOWEVER, that such method shall be reasonable.
Notwithstanding the foregoing, nothing in this subsection 2.7 is intended to
provide and this subsection 2.7 shall not provide to Holding, Company or any
Material Domestic Subsidiary entering into a Domestic Loan Document the right
to inspect the records, files or books of any Lender. For the avoidance of
doubt, no amount shall be required to be paid to any Lender or Agent under
this subsection 2.7 in respect of any increased cost or reduced return
arising from the implementation of, or compliance by any Lender with, any
rule, regulation, guideline, order or other request or directive regarding
capital adequacy which is in existence at the date hereof.
2.8 Letters of Credit
A. LETTERS OF CREDIT. In addition to Company requesting that Lenders
make Revolving Credit Loans pursuant to subsection 2.1, Company may request, in
accordance with the provisions of this subsection 2.8A, on and after the date on
which all of the conditions set forth in subsection 3.1 are satisfied to and
excluding the Revolving Credit Commitment Termination Date, that NationsBank
(or, if NationsBank is unwilling to provide such Letters of Credit, one or more
Lenders; PROVIDED that, if no other Lender is willing to provide any Letter of
Credit, NationsBank shall, if each of the conditions to issuance of such Letter
of Credit in this Agreement is met, issue such Letter of Credit) issue Letters
of Credit for the account of Company, on behalf of Company or any Material
Domestic Subsidiary; PROVIDED that (i) Company shall not request that any Lender
issue (and no Lender shall issue) any Letter of Credit if, after giving effect
to such issuance, the Total Utilization of Revolving Credit Commitments would
exceed the aggregate of all Revolving Credit Commitments, and (ii) Company shall
not request that any Lender issue any Letter of Credit if, after giving effect
to such issuance, the aggregate Letter of Credit Usage would exceed $20,000,000.
In no event shall any Lender issue any Letter of Credit having an expiration
date later than the earlier of (y) the Revolving Credit Commitment Termination
Date, as in effect on the date of issuance of such Letter of Credit, or (z) the
date which is eighteen months from the date of issuance of such Letter of
Credit; PROVIDED, that this clause (z) shall not prevent any Issuing Lender from
agreeing that a Letter of Credit will automatically be extended annually for a
period not to exceed one year unless such Issuing Lender elects not to extend
for such additional period. The issuance or extension of any Letter of Credit
in accordance with the provisions of this subsection 2.8 shall require the
satisfaction of each condition set forth in subsection 3.3; PROVIDED, HOWEVER,
the obligation of each Issuing Lender to issue or extend any Letter of Credit is
subject to the condition that (i) such Issuing Lender believed in good faith
that all conditions under subsections 2.8A and 3.3 to the issuance or extension
of such Letter of Credit were
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satisfied at the time such Letter of Credit was issued or extended or (ii)
the satisfaction of any such condition not satisfied had been waived by
Requisite Lenders prior to or at the time such Letter of Credit was issued or
extended; PROVIDED FURTHER that Issuing Lender shall be entitled to rely, and
shall be fully protected in relying, upon any communication, instrument or
document believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons, including, without limitation, an
Officer's Certificate from Company as to the satisfaction of the conditions
under subsection 3.3, in determining the satisfaction of any conditions to
the issuance or extension of any Letter of Credit or the Total Utilization of
Revolving Credit Commitments or aggregate Letter of Credit Usage then in
effect.
Immediately upon the issuance of each Letter of Credit (or with respect to
the Existing Letters of Credit, upon the Closing Date and satisfaction of the
conditions set forth in subsections 3.1 and 3.3), each Lender shall be deemed
to, and hereby agrees to, have irrevocably purchased from the Issuing Lender a
participation in such Letter of Credit and drawings thereunder in an amount
equal to such Lender's Pro Rata Share of the Revolving Credit Commitments of the
maximum amount which is or at any time may become available to be drawn
thereunder.
Each Letter of Credit supporting the payment of Indebtedness may provide
that, upon the occurrence of an Event of Default and the acceleration of the
maturity of the Revolving Credit Loans, the Issuing Lender shall pay the
beneficiary thereof if (and only if) payment is then due by the terms of such
Letter of Credit to such beneficiary, or if such payment is not then due to such
beneficiary, may provide (as and to the extent contemplated by the "THEN" clause
of Section 8) for the deposit of funds in an account of Issuing Lender to secure
payment to such beneficiary and that any funds so deposited shall be paid to
such beneficiary if all conditions to such payment under such Letter of Credit
are satisfied or returned to the Issuing Lender for distribution to Lenders (or,
if all Obligations shall have been indefeasibly paid in full, to Company) if no
payment to such beneficiary has been made and the final date available for
drawings under such Letter of Credit has passed. Each payment or deposit of
funds by the Issuing Lender as provided in this paragraph shall be treated for
all purposes of this Agreement as a drawing duly honored by the Issuing Lender
under the related Letter of Credit.
B. NOTICE OF ISSUANCE. Whenever Company desires to cause a Lender to
issue a Letter of Credit, it shall deliver to that Lender and Agent a Notice of
Issuance of Letter of Credit in the form annexed hereto as EXHIBIT IB no later
than 12:00 noon (Dallas time) at least four Business Days in advance of the
proposed date of issuance or such shorter time as may be acceptable to the
Issuing Lender. The Notice of Issuance of Letter of Credit shall specify
(i) the proposed Issuing Lender (which shall be NationsBank unless NationsBank
declines to issue such Letter of Credit), (ii) the proposed date of issuance
(which shall be a Business Day), (iii) the face amount of the Letter of Credit,
(iv) the expiration date of the Letter of Credit, (v) the name and address of
the beneficiary, and (vi) such other documents or materials as such Issuing
Lender may reasonably request; PROVIDED that the Issuing Lender, in its sole
judgment, may require changes in any such documents and materials; PROVIDED
further that the Issuing Lender shall not be required to issue any Letter of
Credit that on its terms requires payment thereunder
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prior to the third Business Day following receipt by the Issuing Lender of
such documents and materials. In determining whether to pay any Letter of
Credit, the Issuing Lender shall be responsible only to use reasonable care
to determine that the documents and materials required to be delivered under
that Letter of Credit have been delivered and that they comply on their face
with the requirements of that Letter of Credit. Promptly upon the issuance
of a Letter of Credit, the Issuing Lender shall notify each Lender of the
issuance and the amount of each such other Lender's respective participation
therein determined in accordance with subsection 2.8D.
C. PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. In the event of any
request for drawing under any Letter of Credit by the beneficiary thereof, the
Issuing Lender shall immediately notify Company and Agent, and Company shall
reimburse the Issuing Lender on the day on which such drawing is honored in an
amount in same day funds equal to the amount of such drawing, plus accrued
interest, if any, on such amount at the rate set forth in subsection 2.8E(4).
D. PAYMENT BY LENDERS. If Company shall fail to reimburse the Issuing
Lender, for any reason, as provided in subsection 2.8C in an amount equal to the
amount of any drawing honored by the Issuing Lender under a Letter of Credit
issued by it, the Issuing Lender shall promptly notify each Lender of the
unreimbursed amount of such drawing and of such Lender's respective
participation therein based on such Lender's Pro Rata Share of the Revolving
Credit Commitments. Each Lender shall make available to the Issuing Lender an
amount equal to its respective participation, in same day funds, at the office
of the Issuing Lender specified in such notice, not later than 12:00 noon
(Dallas time) on the Business Day after the date notified by the Issuing Lender.
If any Lender fails to make available to the Issuing Lender the amount of such
Lender's participation in such Letter of Credit as provided in this
subsection 2.8D, the Issuing Lender shall be entitled to recover such amount on
demand from such Lender together with interest at the customary rate set by the
Issuing Lender for the correction of errors among banks for one Business Day and
thereafter at the Base Rate. Nothing in this subsection 2.8 shall be deemed to
prejudice the right of any Lender to recover from the Issuing Lender any amounts
made available by such Lender to the Issuing Lender pursuant to this
subsection 2.8D, or any rights of Company, if it is determined in a final
judgment by a court of competent jurisdiction that the payment with respect to a
Letter of Credit by the Issuing Lender in respect of which payment was made by
such Lender constituted gross negligence or willful misconduct on the part of
the Issuing Lender. The Issuing Lender shall distribute to each other Lender
which has paid all amounts payable by it under this subsection 2.8D with respect
to any Letter of Credit issued by the Issuing Lender such other Lender's Pro
Rata Share of the Revolving Credit Commitments of all payments received by the
Issuing Lender from Company or pursuant to the last paragraph of subsection 2.8A
in reimbursement of drawings honored by the Issuing Lender under such Letter of
Credit when such payments are received.
E. COMPENSATION. Company agrees to pay the following amounts to the
Issuing Lender with respect to each Letter of Credit issued by it:
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(1) an administrative fee equal to .125% per annum of the maximum
amount available from time to time to be drawn under such Letter of Credit
payable in arrears on and to (but not including) the last Business Day of
each fiscal quarter of each year, commencing on the first such date to
occur after the Closing Date;
(2) a commission on each Documentary Letter of Credit with an initial
expiration date of less than one year equal to 0.625% per annum of the
weighted average maximum amount available from time to time to be drawn
under such Letter of Credit, payable in arrears on and to (but not
including) the last Business Day of each fiscal quarter of each year,
commencing on the first such date to occur after the Closing Date.
(3) a commission on each (A) Standby Letter of Credit and
(B) Documentary Letter of Credit with an initial expiration date of one
year or more at a per annum rate equal to the product of (y) the weighted
average Applicable Margin applicable to Eurodollar Rate Loans during the
period of calculation times (z) the weighted average maximum amount
available from time to time to be drawn during such period under such
Letter of Credit, payable in arrears on and to (but not including) the last
Business Day of each fiscal quarter of each fiscal year, commencing on the
first such date to occur after the Closing Date;
(4) with respect to drawings made under any Letter of Credit,
interest, payable on demand, on the amount paid by the Issuing Lender in
respect of each such drawing from the date of the drawing through the date
such amount is reimbursed by Company at a rate which is equal to the Base
Rate; PROVIDED that if such amount is not paid within three Business Days,
such amount shall bear interest thereafter at a rate which is equal to
2.00% per annum in excess of the Base Rate which such rate shall not
thereafter be increased pursuant to subsection 2.2E; and
(5) with respect to the issuance, amendment or transfer of each
Letter of Credit and each drawing made thereunder, reasonable documentary
and processing charges in accordance with the Issuing Lender's standard
schedule for such charges in effect at the time of such issuance,
amendment, transfer or drawing, as the case may be, or as otherwise agreed
to by the Issuing Lender.
Promptly upon receipt by Issuing Lender of any amount described in
clauses (2), (3) or (4) of this subsection 2.8E with respect to a Letter of
Credit, the Issuing Lender shall distribute to each Lender its Pro Rata Share of
the Revolving Credit Commitments of such amount.
F. OBLIGATIONS ABSOLUTE. The obligation of Company to reimburse the
Issuing Lender for drawings made under the Letters of Credit issued by it and
the obligations by Lenders under subsection 2.8D shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation, the following
circumstances:
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(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right which
Company may have at any time against a beneficiary or any transferee of any
Letter of Credit (or any persons or entities for whom any such transferee
may be acting), Agent, any Lender or any other Person, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between Company
and the beneficiary for which the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect; PROVIDED that the Issuing Lender shall
use reasonable care to determine that the documents and certificates
required to be delivered under any Letter of Credit have been delivered and
that they comply on their face with the requirements of that Letter of
Credit;
(iv) payment by the Issuing Lender under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does
not comply with the terms of such Letter of Credit; PROVIDED that the
Issuing Lender shall use reasonable care to determine that the documents
and certificates required to be delivered under any Letter of Credit have
been delivered and that they comply on their face with the requirements of
that Letter of Credit;
(v) any adverse change in the condition (financial or otherwise) of
Holding or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by
Holding or any of its Subsidiaries, Agent, or any Lender (other than the
Issuing Lender);
(vii) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
PROVIDED that Company shall not be required to pay any such amounts to the
extent they arise from the gross negligence or willful misconduct of the Issuing
Lender (as determined by a court of competent jurisdiction).
G. ADDITIONAL PAYMENTS. If, after the date hereof, by reason of (a) the
introduction of or change in the official interpretation of any applicable law
or regulation by the authority charged with the administration or interpretation
thereof or (b) compliance by the Issuing Lender or any Lender with any guideline
or request of any central bank or other governmental authority
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or quasi-governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law):
(i) the Issuing Lender or any Lender shall be subject to any increase
in the net amount of any tax, duty or other charge with respect to the
maintenance or fulfillment of its obligations under this subsection 2.8
(except for any increase or other change in or with respect to Excluded
Taxes);
(ii) any reserve, special deposit, premium, FDIC assessment, capital
adequacy or similar requirement is or shall be applicable, imposed or
modified in respect of any Letters of Credit issued by the Issuing Lender
or participations therein purchased by any Lender; or
(iii) there shall be imposed on the Issuing Lender or any Lender
any other condition regarding this subsection 2.8, any Letter of Credit or
any participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to the Issuing Lender or any Lender of , making or maintaining any Letter of
Credit or of purchasing or maintaining any participation therein, or to reduce
the amount receivable in respect thereof by the Issuing Lender or any Lender,
then and in any such case the Issuing Lender or such Lender may, at any time
within a reasonable period after the additional cost is incurred or the amount
received is reduced, notify Company and Agent, and Company shall pay within five
Business Days of the date of such notice such amounts as the Issuing Lender or
such Lender may specify to be necessary to compensate the Issuing Lender or such
Lender for such additional cost or reduced receipt, together with interest on
such amount from the date demanded until payment in full thereof at a rate equal
at all times to the Base Rate PLUS 0.50% per annum. The determination by the
Issuing Lender or any Lender, as the case may be, of any amount due pursuant to
this subsection 2.8G as set forth in a certificate setting forth the calculation
thereof in reasonable detail, shall, in the absence of manifest error, be final
and conclusive and binding on all of the parties hereto.
Company shall not be required to pay any amounts pursuant to this
subsection 2.8G to or on behalf of any Foreign Lender unless such Foreign Lender
has provided to Company either a Certificate of Exemption or a Letter of Non-
Exemption.
H. INDEMNIFICATION; NATURE OF ISSUING LENDER'S DUTIES. In addition to
amounts payable as elsewhere provided in this subsection 2.8, Company hereby
agrees to protect, indemnify, pay and save harmless the Issuing Lender from and
against any and all claims, demands, damages and losses of, and liabilities to,
third parties to which the Issuing Lender may be subject, and all reasonable
out-of-pocket costs, charges and expenses (including reasonable attorneys' fees)
relating thereto which the Issuing Lender may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any Letter of Credit,
other than as a result of fraud, gross negligence or willful misconduct of the
Issuing Lender or the Issuing Lender failing to use reasonable care to determine
that the documents and certificates required to be
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delivered under such Letter of Credit had been delivered and that they
complied on their face with the requirements of that Letter of Credit (as
determined by a court of competent jurisdiction) or (ii) the failure of the
Issuing Lender to honor a drawing under any Letter of Credit as a result of
any act or omission, whether rightful or wrongful, of any present or future
de jure or de facto government or governmental authority (all such acts or
omissions herein called "GOVERNMENT ACTS"). Each Lender, proportionately to
its Pro Rata Share of the Revolving Credit Commitments, severally agrees to
indemnify Issuing Lender to the extent Issuing Lender shall not have been
reimbursed by Holding or its Subsidiaries, for and against any of the
foregoing claims, demands, liabilities, damages, losses, costs, charges and
expenses to which Issuing Lender is entitled to reimbursement from Holding or
its Subsidiaries.
As between Company and the Issuing Lender, Company assumes all risks of the
acts and omissions of, or misuse of the Letters of Credit issued by the Issuing
Lender by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the Issuing Lender shall not
be responsible (absent fraud, gross negligence or willful misconduct (as
determined by a court of competent jurisdiction) and PROVIDED that the Issuing
Lender shall use reasonable care to determine that the documents and
certificates required to be delivered under such Letter of Credit have been
delivered and that they comply on their face with the requirements of that
Letter of Credit): (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and issuance of such Letters of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (iii) for failure of the beneficiary of any such Letter of Credit to
comply fully with conditions required in order to draw upon such Letter of
Credit; (iv) for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (v) for errors in interpretation of technical terms;
(vi) for any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any such Letter of Credit or of the
proceeds thereof; (vii) for the misapplication by the beneficiary of any such
Letter of Credit of the proceeds of any drawing under such Letter of Credit; and
(viii) for any consequences arising from causes beyond the control of the
Issuing Lender, including, without limitation, any Government Acts.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Lender under or in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in good faith and absent fraud, gross
negligence or willful misconduct of the Issuing Lender (as determined by a court
of competent jurisdiction), shall not put the Issuing Lender under any resulting
liability to Company; PROVIDED that, notwithstanding the foregoing, the Issuing
Lender shall use reasonable care to determine that the documents and
certificates required to be delivered under any such Letter of Credit have been
delivered and that they comply on their face with the requirements of that
Letter of Credit.
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Notwithstanding anything to the contrary contained in this subsection 2.8H,
Company shall have no obligation to indemnify the Issuing Lender in respect of
any claims, demands, liabilities, damages, losses, costs, charges or expenses to
which the Issuing Lender may incur or be subject, to the extent they arise out
of the fraud, gross negligence or willful misconduct of the Issuing Lender as
determined by a court of competent jurisdiction, or out of the wrongful dishonor
by the Issuing Lender of a proper demand for payment made under the Letters of
Credit, or out of the failure of the Issuing Lender to use reasonable care to
determine that the documents and certificates required to be delivered under any
Letter of Credit have been delivered and that they comply on their face with the
requirements of that Letter of Credit.
For purposes of this subsection 2.8H, the term "Issuing Lender" means the
Issuing Lender and any Lender purchasing a participation in any Letter of Credit
pursuant to subsection 2.8D.
I. COMPUTATION OF INTEREST AND FEES. Subject to subsection 10.18,
interest and fees payable pursuant to this subsection 2.8 shall be computed on
the basis of a 360-day year and the actual number of days elapsed in the period
during which it accrues.
2.9 Tax Certificates.
Each Lender that becomes a Lender pursuant to the proviso in the definition
of Lender shall deliver to each of Company and Agent either (1) a letter or
other written certification stating that it is organized under the laws of the
United States of America or a state thereof (referred to in this subsection 2.9
as a "LETTER OF DOMESTIC ORGANIZATION") or (2) if it is not a "United States
person" within the meaning of Section 7701(a)(30) of the Internal Revenue Code
of 1986, as amended (referred to in this subsection 2.9 and subsection 2.6H as a
"FOREIGN LENDER") (x) two properly completed and executed copies of United
States Internal Revenue Service Form 4224 or Form 1001 or other successor
applicable form, certificate or document prescribed by the Internal Revenue
Service of the United States certifying as to such Foreign Lender's entitlement
to an exemption from or reduced rate of United States withholding under an
applicable statute or tax treaty with respect to payments to be made to such
Foreign Lender hereunder (referred to in this subsection 2.9 as a "CERTIFICATE
OF EXEMPTION") or (y) a letter from such Foreign Lender stating that it is not
entitled to any such exemption or reduced rate (referred to in this
subsection 2.9 as a "LETTER OF NON-EXEMPTION") on the date such Lender becomes a
Lender and each Lender shall provide additional Letters of Domestic
Organization, Certificates of Exemption or Letters of Non-Exemption from time to
time thereafter if requested by Company or Agent or required because, as a
result of a change in law, or a change in circumstances, the expiration of a
previously delivered letter or certificate, or otherwise, a previously delivered
letter or certificate becomes incomplete, incorrect or ineffective in any
material respect; PROVIDED, HOWEVER, that each initial Lender executing this
Agreement certifies that it (1) is organized under the laws of the United States
of America or a state thereof and such certification constitutes such Lender's
Letter of Domestic Organization for purposes of this subsection 2.9 or (2) has
delivered a Certificate of Exemption in connection with the Original Credit
Agreement. Unless Company and Agent have received from each Lender that becomes
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a Lender pursuant to the proviso in the definition of Lender a Certificate of
Exemption or Letter of Domestic Organization when and as required pursuant to
the preceding sentence, the accuracy of which shall be reasonably
satisfactory to Company and Agent, Company and Agent shall be entitled to
withhold taxes from all payments to such Lender at the statutory rate
applicable to amounts to be paid hereunder to such Lender. If Company and
Agent have received from any Foreign Lender a Certificate of Exemption
pursuant to the Original Credit Agreement or when and as required by this
subsection 2.9, the accuracy of which shall be reasonably satisfactory to
Company and Agent, certifying as to such Foreign Lender's entitlement to a
reduced rate of withholding tax, Company and Agent shall withhold taxes from
all payments to such Foreign Lender at the rate specified in such
certificate. For the avoidance of doubt, any reference to any Lender in this
subsection 2.9 shall be deemed to refer to and include any Issuing Lender.
SECTION 3. CONDITIONS TO REVOLVING CREDIT LOANS AND LETTERS OF CREDIT
3.1 Conditions to Initial Revolving Credit Loans and Letters of Credit
The obligations of Lenders to make the initial Revolving Credit Loans, and
of any Issuing Lender to issue Letters of Credit on the Closing Date are, in
addition to the conditions precedent specified in subsections 3.2 and 3.3, as
applicable, subject to prior or concurrent satisfaction of the following
conditions:
A. HOLDING DOCUMENTS. On or before the Closing Date, Holding shall
deliver to Lenders (or to Agent for Lenders with sufficient originally executed
copies for each Lender):
1. Certified copies of any amendment to its Certificate of
Incorporation since February 24, 1995, together with good standing
certificates from the Secretary of State of the States of Delaware and each
of its principal places of business, each to be dated a recent date prior
to the Closing Date;
2. Copies of any amendments to its Bylaws since February 24, 1995,
certified as of the Closing Date by its corporate secretary or an assistant
Secretary;
3. Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other
Domestic Loan Documents to be executed in connection with this Agreement to
which it is a party, and approving and authorizing any documents,
instruments or certificates to be executed by it in connection with this
Agreement and the other Domestic Loan Documents to be executed in
connection with this Agreement to which it is a party, all in form and
substance reasonably satisfactory to Agent and its counsel, each certified
as of the Closing Date by its corporate secretary or an assistant secretary
as being in full force and effect;
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4. Signature and incumbency certificates, dated the Closing Date, of
its officers executing this Agreement, the Domestic Loan Documents to be
executed in connection with this Agreement to which it is a party and any
documents, instruments or certificates to be executed by it in connection
therewith;
5. Copies of this Agreement and the other Domestic Loan Documents to
be executed in connection with this Agreement to which it is a party,
executed by it;
6. A certificate in form and substance reasonably satisfactory to
Agent stating that as of the Closing Date, Holding, Company and the
Material Subsidiaries are Solvent;
7. Copies of any other instruments, documents and certificates
required to be executed by it in connection with the execution of this
Agreement and the other Domestic Loan Documents to be executed in
connection with this Agreement, so executed; and
8. Such other documents as Agent may reasonably request.
B. COMPANY DOCUMENTS. On or before the Closing Date, Company shall
deliver to Lenders (or to Agent for Lenders with sufficiently originally
executed copies for each Lender):
1. Certified copies of any amendments to its Certificate of
Incorporation since February 24, 1995, together with good standing
certificates from the Secretary of State of the States of Delaware and each
of its principal places of business, each to be dated as of a recent date
prior to the Closing Date;
2. Copies of any amendments to its Bylaws since February 24, 1995,
certified as of the Closing Date by its corporate Secretary or an assistant
Secretary;
3. Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other
Domestic Loan Documents to be executed in connection with this Agreement to
which it is a party and approving and authorizing any documents,
instruments or certificates required to be executed by it in connection
with this Agreement and the other Domestic Loan Documents to be executed in
connection with this Agreement to which it is a party, all in form and
substance reasonably satisfactory to Agent and its counsel, all certified
as of the Closing Date by its corporate secretary or an assistant secretary
as being in full force and effect;
4. Signature and incumbency certificates, dated the Closing Date, of
its officers executing this Agreement and the other Domestic Loan Documents
to be executed in connection with this Agreement to which it is a party and
any documents, instruments or certificates to be delivered in connection
therewith;
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5. Copies of this Agreement and the other Domestic Loan Documents to
be executed in connection with this Agreement to which it is a party,
executed by it;
6. Copies of any other instruments, documents and certificates
required to be executed by it in connection with the execution of this
Agreement and the other Domestic Loan Documents to be executed in
connection with this Agreement, so executed; and
7. Such other documents as Agent may reasonably request.
C. MATERIAL DOMESTIC SUBSIDIARY DOCUMENTS. On or before the Closing
Date, each Material Domestic Subsidiary shall deliver to Lenders (or to Agent
for Lenders with sufficiently originally executed copies for each Lender):
1. Certified copies of any amendments to its Certificate of
Incorporation or Articles of Incorporation, as applicable, since
February 24, 1995, together with good standing certificates from the
Secretary of State of the States of its incorporation and each of its
principal places of business, each to be dated as of a recent date prior to
the Closing Date;
2. Copies of any amendments to its Bylaws since February 24, 1995,
certified as of the Closing Date by its corporate secretary or an assistant
secretary;
3. Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of the Domestic Loan Documents to
be executed in connection with this Agreement to which it is a party and
approving and authorizing any documents, instruments or certificates
required to be executed by it in connection with this Agreement and the
other Domestic Loan Documents to be executed in connection with this
Agreement to which it is a party, all in form and substance satisfactory to
Agent and its counsel, all certified as of the Closing Date by its
corporate secretary or an assistant secretary as being in full force and
effect;
4. Signature and incumbency certificates, dated the Closing Date, of
its officers executing the Domestic Loan Documents to be executed in
connection with this Agreement to which it is a party and any documents,
instruments or certificates to be delivered in connection therewith;
5. Copies of the Domestic Loan Documents to be executed in
connection with this Agreement to which it is a party, executed by it;
6. Copies of any other instruments, documents and certificates
required to be executed by it in connection with the execution of the
Domestic Loan Documents to be executed in connection with this Agreement,
so executed; and
7. Such other documents as Agent may reasonably request.
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D. EUROCURRENCY CREDIT AGREEMENTS. On or before the Closing Date, all
amendments and/or supplements to the Eurocurrency Credit Agreements and to the
Eurocurrency Loan Documents, if any, shall have been executed.
E. PERFECTION OF SECURITY INTERESTS AND STOCK CERTIFICATES. Collateral
Agent shall have a valid and perfected first priority security interest in the
entire Collateral to the extent granted by the Collateral Documents (other than
deposit accounts), subject to the Liens permitted under subsection 6.2.
F. NECESSARY CONSENTS. On or before the Closing Date, each of Holding,
Company and each Material Domestic Subsidiary executing a Domestic Loan Document
shall have obtained all consents to the transactions contemplated under this
Agreement and the other Domestic Loan Documents of any Person required under any
Contractual Obligation of Holding, Company or such Material Domestic Subsidiary,
as the case may be, all of the foregoing in form and substance reasonably
satisfactory to Agent, except for any such consents the failure of which to be
obtained, individually and in the aggregate, would not reasonably be expected to
have a material adverse effect on the business or financial condition of Holding
and its Subsidiaries, taken as a whole, or on the ability of Holding, Company or
any such Material Domestic Subsidiary to perform its obligations under this
Agreement and the other Domestic Loan Documents.
G. REPRESENTATIONS OF HOLDING AND COMPANY. Each of Holding and Company
shall have delivered to Agent an Officers' Certificate in form and substance
reasonably satisfactory to Agent to the effect that (i) the representations and
warranties in Section 4 hereof pertaining to such Person are true and correct in
all material respects on and as of the Closing Date to the same extent as though
made on and as of that date, (ii) since March 31, 1996 through the Closing Date,
there has been no change in the business, operations, properties, assets,
business prospects or condition (financial or otherwise) of Holding and its
Subsidiaries, which has been or could reasonably be expected to be materially
adverse to Holding and its Subsidiaries, taken as a whole, (iii) no Event of
Default or Potential Event of Default shall have occurred and be continuing or
will result from the transactions contemplated to occur hereunder on the Closing
Date and (iv) Holding and Company shall have performed in all material respects
all agreements which this Agreement provides shall be performed on or before the
Closing Date.
H. SATISFACTION OF CONDITIONS TO FUNDING. All conditions precedent to
Revolving Credit Loans described in subsection 3.2B shall be satisfied on and as
of the Closing Date with respect to the Revolving Credit Loans to be made on
such date.
I. PERFORMANCE OF AGREEMENTS. Each of Holding, Company and each Material
Domestic Subsidiary entering into a Domestic Loan Document to be executed in
connection with this Agreement shall have performed in all material respects all
agreements which this Agreement provides shall be performed on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by Agent.
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J. PAYMENT OF FEES. On or before the Closing Date, Company shall have
paid or cause to have been paid to Agent for distribution (as appropriate) to
Lenders and Agent, the fees payable on the Closing Date referred to in
subsection 2.3 and the other fees agreed to by paid by Company pursuant to the
Fee Letter.
K. OPINIONS FROM COUNSEL. Lenders and their respective counsel shall
have received originally executed copies of one or more favorable written
opinions of counsel for Holding, Company and the Material Domestic Subsidiaries,
in form and substance reasonably satisfactory to Agent and its counsel, dated as
of the Closing Date, and setting forth substantially the matters in the opinions
designated in EXHIBIT III annexed hereto and as to such other matters as Agent
may reasonably request.
L. OPINIONS FROM COUNSEL TO AGENT. Lenders shall have received an
originally executed copy of one or more favorable written opinions of Donohoe,
Jameson & Carroll, P.C., counsel to Agent, dated as of the Closing Date,
addressed to Agent and substantially in the form of EXHIBIT IV annexed hereto
and as to such other matters as Agent may reasonably request.
M. OTHER CORPORATE ACTIONS. On or before the Closing Date, all corporate
and other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Agent, acting on behalf of Lenders, and its counsel shall be
reasonably satisfactory in form and substance to Agent and such counsel, and
Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Agent may reasonably request.
N. ACKNOWLEDGEMENT. Agent shall have received the Acknowledgement, duly
executed by each of Holding and Company and each Material Domestic Subsidiary.
O. ORIGINAL CREDIT AGREEMENT. On the Closing Date, Company shall have
paid for distribution (as appropriate) to Lenders and Agent the aggregate
principal amount of Loans (as defined in the Original Credit Agreement)
outstanding under the Original Credit Agreement and all interest and fees
accrued under the Original Credit Agreement as of the Closing Date.
3.2 Conditions to All Revolving Credit Loans
The obligations of Agent and Lenders to make all Revolving Credit Loans on
each Funding Date (including, without limitation, the making of the Revolving
Credit Loans on the Closing Date) are subject to the following further
conditions precedent:
A. NOTICE OF BORROWING. Agent shall have received, in accordance with
the provisions of subsection 2.1B, before that Funding Date, an originally
executed Notice of Borrowing in each case signed by the Chief Executive Officer,
the President, the Chief Financial Officer, the Corporate Controller or the
Treasurer of Company, or by any officer of Company designated by any of the
above-described officers on behalf of Company in writing delivered to Agent.
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B. CONDITIONS TO FUNDING. As of that Funding Date:
1. The representations and warranties contained herein shall be true
and correct in all material respects on and as of that Funding Date to the
same extent as though made on and as of that date, except to the extent
such representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been true and
correct in all material respects on and as of such earlier date;
2. No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute (a) an Event of Default or (b) a Potential
Event of Default;
3. Holding and its Subsidiaries shall have in all material respects
performed all agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by them on or before that Funding
Date;
4. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making that Revolving Credit Loan; and
5. There shall not be pending or, to the knowledge of Holding or
Company, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting Holding or Company or any
property of Holding or Company, that has not been disclosed by Holding or
Company in writing pursuant to subsection 4.6 or 5.1(v) prior to the making
of such Revolving Credit Loan (or, in the case of the initial Revolving
Credit Loans, prior to the Closing Date) and there shall have occurred no
development not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, that, in either
event, would reasonably be expected to either (i) materially and adversely
affect the business, operations, properties, assets or condition (financial
or otherwise) of Holding and its Subsidiaries taken as a whole, or the
prospects of Holding and its Subsidiaries taken as a whole or
(ii) materially and adversely impair the ability of Holding or any of its
Subsidiaries to perform or of Lenders to enforce the Obligations other
than, in either case, those matters that are adequately covered by
insurance or for which indemnification to Holding and its Subsidiaries
reasonably satisfactory to Agent has been provided. No injunction or other
restraining order shall have been issued and no hearing to cause an
injunction or other restraining order to be issued shall be pending or
noticed with respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of, or to recover any damages or obtain
relief as a result of, this Agreement or the making of Revolving Credit
Loans hereunder.
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3.3 Conditions to Letters of Credit
The obligation of any Issuing Lender to issue or extend any Letter of
Credit hereunder is subject to prior or concurrent satisfaction of all of the
following conditions:
A. On or before the date of issuance of such Letter of Credit, the
Issuing Lender with respect thereto shall have received, in accordance with the
provisions of subsection 2.8B, a notice requesting the issuance of such Letter
of Credit and all other information specified in subsection 2.8B, and such other
documents as such Issuing Lender may reasonably require in connection with the
issuance of such Letter of Credit.
B. On the date of issuance or extension of such Letter of Credit, all
conditions precedent described in subsection 3.2B shall be satisfied to the same
extent as though the issuance or extension of such Letter of Credit were the
making of a Revolving Credit Loan and the date of issuance or extension of such
Letter of Credit were a Funding Date.
SECTION 4. REPRESENTATIONS AND WARRANTIES
This Section 4 shall not be effective or in full force and effect until the
Closing Date. In order to induce Agent and Lenders to enter into this
Agreement, Holding and Company severally represent and warrant to Agent and each
Lender that the following statements are true and correct:
4.1 Organization, Powers, Good Standing, Business and Subsidiaries
A. ORGANIZATION AND POWERS. Each of Holding, Company and each Material
Subsidiary is a corporation duly organized and validly existing under the laws
of its jurisdiction of incorporation and has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted, to enter into each Loan Document to
which it is a party, and to carry out the transactions contemplated thereby.
B. GOOD STANDING. Each of Holding, Company and each Material Subsidiary
is in good standing as a qualified foreign corporation wherever necessary to
carry on its present business and operations, except in jurisdictions in which
the failure to be in good standing has not had and could not reasonably be
expected to have a material adverse effect on Holding and its Subsidiaries taken
as a whole.
C. SUBSIDIARIES. All of the Subsidiaries of Holding, as of the Closing
Date, are identified in SCHEDULE 4.1-D annexed hereto. SCHEDULE 4.1-D correctly
sets forth the ownership interest as of the Closing Date of Holding in each of
its Subsidiaries. All of the Material Subsidiaries of Company, as of the
Closing Date, are identified as such in SCHEDULE 4.1-D annexed hereto.
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4.2 Authorization of Borrowing, etc.
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance
of the Loan Documents and the transactions contemplated thereby have been duly
authorized, as appropriate, by all necessary corporate action by Holding,
Company and the Material Subsidiaries.
B. NO CONFLICT. The execution, delivery and performance by Holding,
Company and the Material Subsidiaries of the Loan Documents to which each such
Person is a party and the consummation of the transactions contemplated thereby
do not and will not (i) violate any provision of law applicable to Holding,
Company or any Material Subsidiary, the Certificate of Incorporation or Bylaws
(or equivalent documents) of Holding, Company or any Material Subsidiary, or any
order, judgment or decree of any court or other agency of government, domestic
or foreign, binding on Holding, Company or any Material Subsidiary,
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any Contractual Obligation of Holding,
Company or any Material Subsidiary, (iii) pursuant to any such Contractual
Obligation, result in or require the creation or imposition of any Lien upon any
of the properties or assets of Holding, Company or any Material Subsidiary
(other than Liens in favor of (a) the Collateral Agent for the benefit of
Lenders and the Eurocurrency Lenders or (b) any Person as agent or trustee for
the benefit of any Eurocurrency Lender and any Liens permitted by subsection 6.2
or pursuant to the terms of any Eurocurrency Loan Document), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of Holding, Company or any Material Subsidiary, except
for such approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to Lenders or which might be required in
connection with any security interest in deposit accounts, and except in the
cases of the foregoing clauses (i), (ii), (iii) and (iv) for any such
violations, conflicts, breaches and defaults the existence of which, and any
such approvals and consents the failure of which to be obtained, individually
and in the aggregate, would not reasonably be expected to have a material
adverse effect on the business or financial condition of Holding and its
Subsidiaries, taken as a whole, or on the ability of Holding, Company and the
Material Subsidiaries to perform their respective obligations under the Loan
Documents.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by
each of Holding, Company and each Material Subsidiary of the Loan Documents to
which it is a party and the consummation of the transactions contemplated hereby
and thereby do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any Federal, state or
other governmental authority or regulatory body, domestic or foreign, except for
(y) filings, registrations, consents, approvals, notices or other actions
required in connection with the granting or perfection of security interests
granted pursuant to the Loan Documents, and (z) other registrations, consents,
approvals, notices and actions that have been or will be obtained or taken on or
before the Closing Date.
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D. BINDING OBLIGATION. The Loan Documents are the legally valid and
binding obligations of Holding, Company and the Material Subsidiaries, as their
interests and obligations appear herein and therein, enforceable against
Holding, Company and the Material Subsidiaries in accordance with their
respective terms, except (i) as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability, (ii) for
limitations on enforceability of any Loan Document to the extent it grants or
purports to grant any security interest in deposit accounts or rights of set-off
or other equitable rights of combination and (iii) for limitations on
enforceability of rights to indemnification under federal securities or other
laws or regulations or public policy.
4.3 Financial Condition
Company has heretofore delivered to Lenders and Eurocurrency Lenders, at
their request, the audited consolidated balance sheets of Holding and its
Subsidiaries as at March 31, 1996 and the related consolidated statements of
operations, cash flows and changes in stockholders' equity of Holding and its
Subsidiaries for the Fiscal Year then ended and the unaudited consolidated
balance sheet of Holding and its Subsidiaries as at June 28, 1996 and the
related statements of operations and cash flows for the fiscal quarter then
ended. All such financial statements were prepared in conformity with GAAP and
fairly present, in all material respects, the consolidated financial position of
Holding and its Subsidiaries as at the date thereof and the consolidated results
of operations and cash flows of Holding and its Subsidiaries for each of the
periods covered thereby subject, in the case of such June 28, 1996 financial
statements, to changes resulting from audit and normal year-end adjustments and
the absence of notes and such financial statements may be only substantially in
conformity with GAAP. At March 31, 1996, neither Holding nor any of its
Subsidiaries had any material (i) Contingent Obligation, (ii) contingent
liability or liability for taxes, (iii) long-term lease or (iv) unusual forward
or long-term commitment out of the ordinary course of business, that is not
reflected in such financial statements or in the notes thereto.
4.4 No Material Adverse Change; No Stock Payments
Since February 24, 1995, there has been no change in the business,
operations, properties, assets or condition (financial or otherwise) of Holding
and its Subsidiaries, which has been or could reasonably be expected to be
materially adverse to Holding and its Subsidiaries, taken as a whole. Neither
Holding, Company nor any Material Subsidiary has directly or indirectly
declared, ordered, paid or made or set aside any sum or property (excluding any
foreign law requirement to maintain a statutory reserve or the like) for any
Restricted Junior Payment or agreed to do so except as permitted by
subsection 6.5.
4.5 Title to Properties; Liens
Holding, Company and the Material Subsidiaries have good, sufficient and
legal title, subject only to Liens permitted pursuant to subsection 6.2 and the
Eurocurrency Loan
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Documents, to all their respective material owned properties and assets
reflected in the financial statements referred to in subsection 4.3 or in the
most recent financial statements delivered pursuant to subsection 5.1 of this
Agreement or the Eurocurrency Guaranties, except for assets (i) not material
to the business of Holding and its Subsidiaries taken as a whole, or (ii)
acquired or disposed of (A) in the ordinary course of business or (B) as
otherwise permitted under this Agreement since the date of the consolidated
balance sheet contained in such financial statements. All real property
leased by Holding, Company or any of the Material Domestic Subsidiaries at
which Inventory is located is identified in SCHEDULE 4.5 annexed hereto.
4.6 Litigation; Adverse Facts
Except as set forth on SCHEDULE 4.6 hereto or otherwise disclosed in
writing to Lenders and Eurocurrency Lenders prior to the Closing Date, there is
no action, suit, proceeding, governmental investigation or arbitration (whether
or not purportedly on behalf of Holding or any of its Subsidiaries) at law or in
equity or before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, pending or, to the knowledge of Holding or any of its Subsidiaries,
threatened against or affecting Holding or any of its Subsidiaries or any
property of Holding or any of its Subsidiaries that would reasonably be expected
to result in any material adverse change in the business, prospects, operations,
properties, assets or condition (financial or otherwise) of Holding and its
Subsidiaries taken as a whole, or would materially adversely affect Holding's,
Company's or any Material Domestic Subsidiary's ability to perform or Lenders'
ability to enforce the Obligations or would affect Holding's, Company's or any
Material Foreign Subsidiary's ability to perform, or Eurocurrency Lenders'
ability to enforce, the obligations owing or to be owed under the Eurocurrency
Loan Documents, other than those matters that are adequately covered by
insurance or for which indemnification to Holding and its Subsidiaries
reasonably satisfactory to Agent or Eurocurrency Administrative Agent, as
appropriate, has been provided. As of the Closing Date, none of Holding,
Company or any Material Subsidiary has received any notice of termination of any
material contract, lease or other agreement or suffered any material damage,
destruction or loss (whether or not covered by insurance) or had any employee
strike, work-stoppage, slow-down or lock-out any of which remain pending, that
would or could reasonably be expected to be materially adverse to Holding and
its Subsidiaries, taken as a whole.
4.7 Payment of Taxes
Except to the extent otherwise permitted by subsection 5.3, all taxes
required to be paid by Holding, Company and each Material Subsidiary which are
due and payable and are material to the business, operations, properties, assets
or condition (financial or otherwise) of Holding and its Subsidiaries taken as a
whole have been paid. Neither Holding, Company nor any Material Subsidiary
knows of any tax assessment proposed in writing against any such Person that
would be material to the condition (financial or otherwise) of Holding and its
Subsidiaries taken as a whole, except for any such tax assessment which is being
actively contested by such Person to the extent affected thereby, in good faith
and by appropriate proceedings, and with
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respect to which reserves or other appropriate provisions, if any, as shall
be required in conformity with GAAP shall have been made or provided therefor.
4.8 Materially Adverse Agreements; Performance of Agreements
A. Neither Holding, Company nor any Material Subsidiary is a party to or
is subject to any agreement or instrument materially and adversely affecting the
financial condition of Holding and its Subsidiaries, taken as a whole, except as
otherwise disclosed in writing to Lenders prior to the Closing Date.
B. Neither Holding, Company nor any Material Subsidiary is in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any Contractual Obligation of any such Person, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, except where the consequences, direct or
indirect, of such default or defaults or the consequences of actions curing such
default or defaults, if any, would not be reasonably expected to have a material
adverse effect on the business, properties, assets, operations or condition
(financial or otherwise) of Holding and its Subsidiaries, taken as a whole.
4.9 Governmental Regulation
Neither Holding nor any of its Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940, or to any Federal
or state statute or regulation, domestic or foreign, limiting its ability to
incur Indebtedness for money borrowed or to create Liens on any of its
properties or assets to secure such Indebtedness that materially and adversely
affects its ability to perform its obligations under the Loan Documents.
4.10 Securities Activities
Neither Holding, Company or any Material Subsidiary is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
4.11 Employee Benefit Plans
A. Holding and each of its ERISA Affiliates is in compliance in all
material respects with any applicable provisions of the Internal Revenue Code,
ERISA and the regulations and published interpretations thereunder with respect
to all Employee Benefit Plans.
B. No Termination Event has occurred or is reasonably expected to occur
with respect to any Pension Plan which would have a material adverse effect on
the financial condition of Holding and its Subsidiaries, taken as a whole.
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C. Based upon the actuarial assumptions, methods and most recent
valuation date utilized in the most recent actuarial valuation report prepared
with respect to each Pension Plan, as of such valuation date, the actuarial
present value of all benefit liabilities under all Pension Plans does not exceed
the fair market value of the assets allocable to such benefit liabilities by
more than $1,500,000. For purposes of the preceding sentence, the terms
"actuarial present value" and "benefit liabilities" shall have the meanings
specified in Section 4001 of ERISA.
D. Neither Holding nor any of its ERISA Affiliates has incurred or
reasonably expects to incur any withdrawal liability under Title IV of ERISA to
any Multiemployer Plan which would have a material adverse effect on the
financial condition of Holding and its Subsidiaries, taken as a whole.
E. None of Holding or any Subsidiary thereof has engaged in any
"prohibited transaction," as such term is defined in Section 4975 of the
Internal Revenue Code or Section 406 of Title I of ERISA in connection with any
Pension Plan for which no exemption was available under ERISA or the Internal
Revenue Code, that resulted in a liability under ERISA or the Internal Revenue
Code which would have a material adverse effect on the business or financial
condition of Holding and its Subsidiaries, taken as a whole.
F. Other than the post-retirement medical plan sponsored by Holding
covering certain employees who were employees prior to January 1987, employment
or supplemented employment agreements with three executive officers of Holding
and Company, the regular severance and vacation policies of Holding and its
Subsidiaries, certain key-man insurance policies and information (including
information disclosed pursuant to FAS 106) as to which has been disclosed in the
most recent financial statements of Holding and its Subsidiaries, none of
Holding or any Subsidiary thereof maintains or has maintained any welfare
benefit plan within the meaning of Section 3(1) of ERISA which provides for
continuing benefits or coverage for any participant or any beneficiary of a
participant after such participant's termination of employment except as may be
required by Part 6 of Title I of ERISA and the regulations thereunder or except
as to plans with respect to which such participant or beneficiary pays his or
her allocable share of the premium or other material costs of providing benefits
or coverage under such plan.
4.12 Disclosure
No representation or warranty of Holding, Company or any Material
Subsidiary contained in any Loan Document or any other document, certificate or
written statement furnished to Lenders by or on behalf of Company for use in
connection with the transactions contemplated by the Loan Documents contains any
untrue statement of a material fact or omits to state a material fact (known to
Holding, Company or any Material Subsidiary in the case of any document not
furnished by it) necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the same were made
as of the time the same were made. Since February 24, 1995, there is no fact
known to Holding, Company or any Material Subsidiary (other than matters of a
general economic, political or social nature)
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that materially and adversely affects the business, operations, property,
assets or condition (financial or otherwise) of Holding and its Subsidiaries,
taken as a whole, that has not been disclosed herein or in other documents,
certificates and written statements furnished to Lenders and Eurocurrency
Lenders from time to time for use in connection with the transactions
contemplated by the Loan Documents.
4.13 Licenses, Permits and Authorizations
Holding, Company and each Material Subsidiary has all approvals, licenses
or other permits of all governmental or regulatory agencies, whether Federal,
state or local, the absence of which would or could reasonably be expected to be
materially adverse to Holding and its Subsidiaries taken as a whole.
4.14 Intangible Property
Holding, Company and each Material Subsidiary owns or possesses licenses or
other rights to use all trade names, unregistered trademarks and service marks,
brand names, patents, registered and unregistered copyrights, registered
trademarks and service marks, and all applications for any of the foregoing, and
all permits, grants and licenses or other rights with respect thereto, in each
case used in the operation of its and their businesses in the manner in which
they are currently being conducted, the absence of which would be reasonably
expected to materially adversely affect the business, operations, assets or
financial condition of Holding and its Subsidiaries taken as a whole ("MATERIAL
INTELLECTUAL PROPERTY"). SCHEDULE 4.14 sets forth a true and complete list of
all service mark and trademark registrations and applications for registration
of Holding and its Subsidiaries included in the Material Intellectual Property
as of the date of this Agreement. Except as set forth on SCHEDULE 4.6 or
otherwise disclosed in writing to Lenders prior to the Closing Date, to the
knowledge of Holding and Company as of such date, no claim of infringement
materially adverse to the business, operations, or financial condition of
Holding and its Subsidiaries taken as a whole is currently being asserted by any
other Person to the use by Holding or any of its Subsidiaries of any Material
Intellectual Property, and neither Holding, Company nor any of its Material
Subsidiaries has been notified or advised of any such claim.
4.15 Environmental Matters
Except as disclosed in writing to Lenders prior to the Closing Date,
including disclosure in Holding's Annual Report on Form 10-K for the fiscal year
ended March 31, 1996:
(i) the operations of Holding, Company and each Material Subsidiary
(including, without limitation, all operations and conditions at or in the
Facilities) comply in all material respects with all applicable
Environmental Laws;
(ii) Holding, Company and each Material Subsidiary have obtained all
material environmental, health and safety permits necessary to their
respective operations, and all
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such permits are in good standing, and Holding, Company and each Material
Subsidiary are in compliance with all material terms and conditions of
such permits;
(iii) neither Holding, Company nor any Material Subsidiary has
received any Environmental Claim that would reasonably be expected to have
a material adverse effect on the business or financial condition of Holding
and its Subsidiaries, taken as a whole;
(iv) none of the operations of Holding, Company or any Material
Subsidiary is the subject of any pending judicial or administrative
proceeding alleging the violation of or liability under any Environmental
Laws which would reasonably be expected to have a material adverse effect
on the business or financial condition of Holding and its Subsidiaries,
taken as a whole;
(v) Holding, Company and each Material Subsidiary and all of their
present Facilities or operations, as well as their past Facilities or
operations, are not subject to any outstanding written order or agreement
with any governmental authority or private party respecting (A) any
Environmental Laws or (B) any Environmental Claims that would reasonably be
expected to have a material adverse effect on the business or financial
condition of Holding and its Subsidiaries, taken as a whole;
(vi) neither Holding, Company nor any Material Subsidiary has any
Contingent Obligation in connection with any Release of any Hazardous
Materials by Holding, Company or any Material Subsidiary that would
reasonably be expected to have a material adverse effect on the business or
financial condition of Holding and its Subsidiaries, taken as a whole;
(vii) neither Holding, Company nor any Material Subsidiary nor, as
of the Closing Date and to the knowledge of Holding and Company as of such
date, any predecessor of Holding, Company or Material Subsidiary has filed
any notice under any Environmental Law indicating past or present
treatment, storage, or disposal of Hazardous Materials at any Facility
except as a lawful incident of its business operation; none of Holding's or
any of its Material Subsidiary's operations involves the generation,
transportation, treatment or disposal of hazardous waste, as defined under
40 C.F.R. Parts 260-270 or any state equivalent except as a lawful incident
of its business operation; and neither Holding, Company nor any Material
Subsidiary nor, as of the Closing Date and to the knowledge of Holding and
Company as of such date, any predecessor in title to any of them nor, as of
the Closing Date and to the knowledge of Holding and Company as of such
date, has any third party at any time occupying any Facilities at any time
used, generated, disposed of, stored, transported to or from or released
any Hazardous Materials, from, under or effecting such Facility except as a
lawful incident of its business operation, which generation,
transportation, treatment, storage, use, disposal or release in any of the
foregoing cases would reasonably be expected to have a material adverse
effect on the business or financial condition of Holding and its
Subsidiaries, taken as a whole;
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(viii) no Hazardous Materials exist on, under or about any Facility
in a manner that would reasonably be expected to give rise to an
Environmental Claim having a material adverse effect on the business or
financial condition of Holding and its Subsidiaries taken as a whole, and
neither Holding, Company nor any Material Subsidiary has filed any notice
or report of a Release of any Hazardous Materials that would reasonably be
expected give rise to an Environmental Claim having a material adverse
effect on the business or financial condition of Holding and its
Subsidiaries taken as a whole;
(ix) as of the Closing Date and to the knowledge of Holding and
Company as of such date, no underground storage tanks or surface
impoundments are on or at the Facilities; and
(x) no Lien in favor of any governmental authority for (A) any
liability under Environmental Laws, or (B) damages arising from or costs
incurred by such governmental authority in response to a Release has been
filed or attached to the Facilities, which liability, damages or costs
would reasonably be expected to have a material adverse effect on the
business or financial condition of Holding and Subsidiaries, taken as a
whole.
SECTION 5. AFFIRMATIVE COVENANTS
Holding and Company severally covenant and agree that, on and after the
Closing Date, so long as the Revolving Credit Commitments hereunder shall be in
effect and until payment in full of all of the Revolving Credit Loans and all
other amounts owing hereunder, unless Requisite Lenders shall otherwise give
prior written consent, such Person shall perform all covenants in this Section 5
to be performed by it (including, in the case of Company, covenants applicable
to it in its capacity as a Subsidiary of Holding) and cause each of its Material
Subsidiaries to comply with all covenants in this Section 5 applicable to such
Subsidiary.
5.1 Financial Statements and Other Reports
Holding will maintain, or cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Lenders and Eurocurrency Lenders:
(i) as soon as practicable and in any event within 45 days after the
end of each of the first three fiscal quarters in each Fiscal Year
(including the fiscal quarter ended September 27, 1996), (a) management's
discussion and analysis of financial condition and results of operations
contained in Holding's Quarterly Report on Form 10-Q for such fiscal
quarter, or a written discussion and analysis in form and detail
substantially similar thereto and (b) consolidated balance sheets of
Holding and its
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Subsidiaries as at the end of such period and the related consolidated
statements of income, stockholders' equity and cash flow of Holding
and its Subsidiaries for such fiscal quarter and setting forth in
each case in comparative form the consolidated figures for the
corresponding periods of the previous Fiscal Year (all of said financial
statements set forth in this clause (b) shall also include consolidating
financial information with respect to the Material Subsidiaries), all in
reasonable detail and certified by the Chief Financial Officer, Corporate
Controller or Treasurer of Holding that they fairly present, in all
material respects, the financial condition of Holding and its Subsidiaries
as at the dates indicated and the results of their operations and cash
flows for the periods indicated, subject to changes resulting from audit
and normal year-end adjustments, and except that such financial statements
need not contain notes and may be prepared substantially in conformity with
GAAP;
(ii) as soon as practicable and in any event within 90 days after the
end of each Fiscal Year, to the extent not included in management's
discussion and analysis of financial condition and results of operations
contained in Holding's Annual Report on Form 10-K for such Fiscal Year,
(a) a written discussion of the financial and operating performance for the
fourth fiscal quarter of such Fiscal Year from a profit and loss, cash flow
and balance sheet standpoint and discussions of the major factors affecting
such performance, including but not limited to changes in working capital
for such fiscal quarter and consolidated balance sheets of Holding and its
Subsidiaries as at the end of such Fiscal Year and the related consolidated
statements of income (all of said financial statements set forth in this
clause (a) shall also include consolidating financial information with
respect to the Material Subsidiaries), stockholders' equity and cash flows
of Holding and its Subsidiaries for such Fiscal Year, setting forth in each
case, in comparative form the consolidated figures for the previous year,
all in reasonable detail, including the notes thereto which shall, among
other things, indicate that Holding and its Subsidiaries are in compliance
with the financial covenants contained in this Agreement, and accompanied
by a report thereon of Coopers & Lybrand or such other independent
certified public accountants of recognized national standing selected by
Holding as shall be satisfactory to Agent which report shall be unqualified
as to going concern and scope of audit and shall state that such
consolidated financial statements present fairly, in all material respects,
the financial position of Holding and its Subsidiaries as at the dates
indicated and the results of their operations and cash flow for the periods
indicated in conformity with GAAP and that the audit by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards and (b) with respect
to the final quarter of such Fiscal Year, the schedules and financial
information set forth in clause (b) of subsection 5.1(i), certified by the
Chief Financial Officer, Corporate Controller or Treasurer of Holding as
fairly presenting the matters set forth therein as at the dates thereof;
(iii) together with (a) each delivery of financial statements of
Holding and its Subsidiaries pursuant to subdivisions (i) and (ii) of this
subsection 5.1 (other than the financial statements delivered for the
fiscal quarter ended September 27, 1996), (x) an
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Officers' Certificate of Holding stating that the signers have
reviewed the terms of this Agreement and the other Loan Documents and
have made, or caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of Holding and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during
or at the end of such accounting period, and that the signers do not
have knowledge of the existence as of the date of the Officers'
Certificate, of any condition or event that constitutes an Event of
Default or Potential Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence
thereof and what action Holding has taken, is taking and proposes to
take with respect thereto; and (y) a Compliance Certificate
demonstrating in reasonable detail compliance during and at the end of
the applicable accounting periods with the restrictions contained in
this Agreement in the manner set forth in such Compliance Certificate;
and (b) the delivery of the financial statements of Holding and its
Subsidiaries pursuant to subdivision (i) of this subsection 5.1 for
the fiscal quarter ended September 27, 1996, a Compliance Certificate
demonstrating in reasonable detail compliance during and at the end of
such fiscal quarter with the covenants set forth in Section 6 of the
Original Credit Agreement as such covenants existed on September 27,
1996, in the manner set forth in such Compliance Certificate;
(iv) promptly upon any Executive Officer of Holding, Company or any
Material Subsidiary obtaining knowledge (a) that a condition or event has
occurred and is continuing that constitutes an Event of Default or
Potential Event of Default, or becoming aware that any Lender or Agent or
any Eurocurrency Lender or Eurocurrency Administrative Agent, as
appropriate, has given any notice or taken any other action with respect to
a claimed Event of Default or Potential Event of Default under any Loan
Document, (b) that any Person has given any notice to Holding, Company or
any Material Subsidiary or taken any other action with respect to a claimed
default or event or condition of the type referred to in subsection 8.2,
(c) of any condition or event that would be required to be disclosed in a
current report filed by Company with the Securities and Exchange Commission
on Form 8-K pursuant to Items 1, 2 or 4 of such Form as in effect on the
date hereof if Company were required to file such reports under the
Exchange Act, or (d) of a material adverse change in the business,
operations, properties, assets or condition (financial or otherwise) of
Holding and its Subsidiaries taken as a whole, or of an event or condition
that would reasonably be expected to result in such a material adverse
change, an Officers' Certificate specifying the nature and period of
existence of such condition or event, or specifying the notice given or
action taken by such holder or Person and the nature of such claimed
default, Event of Default, Potential Event of Default, event or condition,
and what action Holding, or Company has taken, is taking and proposes to
take with respect thereto;
(v) upon any officer of Holding, Company or any Material Subsidiary
obtaining knowledge of (a) the institution of, or non-frivolous threat in
writing of, any action, suit, proceeding, governmental investigation or
arbitration against or affecting
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Holding or any of its Subsidiaries or any property of Holding, Company
or any Subsidiaries not previously disclosed by Holding to Lenders and
Eurocurrency Lenders and involving potential liability of Holding,
Company or a Material Subsidiary for which reserves shall be required
in conformity with GAAP in excess of $250,000 in any such case
(excluding any potential liability that is within the coverage and
policy limits of insurance policies maintained by Holding, Company and
their respective Subsidiaries issued by independent insurers), or (b)
any material development in any such action, suit, proceeding,
governmental investigation or arbitration, that, in either case, would
reasonably be expected to have a material and adverse effect on the
business, operations, properties, assets or condition (financial or
otherwise) of Holding and its Subsidiaries taken as a whole or on the
prospects of Holding and its Subsidiaries taken as a whole, Holding
shall promptly give notice thereof to Lenders and Eurocurrency Lenders
and provide such other information as may be reasonably available to
it to enable Lenders and Eurocurrency Lenders and their counsel to
evaluate such matters;
(vi) promptly upon becoming aware that one of the following has
occurred or is about to occur: (a) Termination Event (other than a
standard termination of any Pension Plan pursuant to Section 4041(b) of
ERISA), or (b) non-exempt "prohibited transaction," as such term is defined
in Section 4975 of the Internal Revenue Code or Section 406 of ERISA in
connection with any Employee Benefit Plan or any trust created thereunder,
a written notice specifying the nature thereof, what action Holding or
Company has taken, is taking or proposes to take with respect thereto, and,
when known, any action taken or threatened by the Internal Revenue Service,
the Department of Labor, or the PBGC with respect thereto;
(vii) with reasonable promptness copies of (a) all notices
received by Holding, Company or any of their respective ERISA Affiliates of
the PBGC's intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan; (b) each Schedule A (Actuarial
Information) to the annual report (Form 5500 Series) filed by Holding,
Company or any of their ERISA Affiliates with the Internal Revenue Service
with respect to each Pension Plan under which the present value of accrued
benefits under such plan exceeds the current value of the assets of such
plan as of the reporting date for such annual report; and (c) all notices
received by Holding, Company or any of their ERISA Affiliates from a
Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA;
(viii) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or made
available generally by Holding to its security holders or by Company or any
Material Subsidiary to its security holders, of all regular and periodic
reports and all registration statements and prospectuses, if any, filed by
Holding, Company or any Material Subsidiary with any securities exchange or
with the Securities and Exchange Commission or any governmental authority
succeeding to any of its functions, and of all press releases and other
statements made available generally by Holding, Company or any Material
Domestic Subsidiary to the public
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concerning material developments in the business of Holding and its
Subsidiaries, taken as a whole;
(ix) immediately prior to or coincident with the release thereof,
notice of all material press releases to Agent and Eurocurrency
Administrative Agent; and
(x) with reasonable promptness, such other information and data with
respect to Holding, Company or any Material Subsidiary as from time to time
may be reasonably requested by any Lender or Eurocurrency Lender.
5.2 Corporate Existence, etc.
Holding and Company will at all times preserve and keep in full force and
effect its respective corporate existence and all of its related rights and
franchises material to the business of Holding and its Subsidiaries, taken as a
whole, except as otherwise permitted by subsection 6.7.
5.3 Payment of Taxes and Claims; Tax Consolidation
A. Each of Holding, Company and each Material Subsidiary will pay or
cause to be paid all material taxes, assessments and other governmental charges
required to be paid by it before any material penalty accrues thereon, and all
claims (including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a material Lien upon any of its properties or assets, prior to the time
when any material penalty or fine shall be accrued with respect thereto;
PROVIDED that so long as no such property or asset (other than money for such
charge or claim and the interest or penalty accruing thereof) of Holding,
Company or any Material Subsidiary is in danger of being lost or forfeited as a
result thereof, no such tax, assessment, charge or claim need be paid if it is
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and if such reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor.
B. Each of Holding, Company and each Material Subsidiary will not file or
consent to the filing of any consolidated federal income tax return with any
Person other than (i) Holding or any of its Subsidiaries or (ii) such other
Person with whom Holding, Company or any Material Subsidiary has entered into a
tax sharing agreement reasonably satisfactory to Agent requiring such other
Person to promptly reimburse Holding, Company or such Material Subsidiary in
cash for the reasonable value of any tax benefits attributable to Holding,
Company or such Material Subsidiary and effectively utilized by such other
Person to reduce its taxes payable.
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5.4 Maintenance of Properties; Insurance
Each of Holding, Company and each Material Subsidiary will maintain or
cause to be maintained in good repair, working order and condition (ordinary
wear and tear excepted) all material properties used in the business of such
Person and from time to time will make or cause to be made all appropriate
repairs, renewals and replacements thereof. Holding, Company and the Material
Subsidiaries will maintain or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to their respective properties and
business and the properties and business of their respective Subsidiaries
against loss or damage of the kinds customarily insured against by corporations
of established reputation engaged in the same or similar businesses and
similarly situated, of such types and in such amounts as are customarily carried
under similar circumstances by such other corporations. Each such policy of
insurance shall provide for at least thirty (30) days prior written notice to
Agent of any modification or cancellation of such policies. As soon as
practicable after the Closing Date and each anniversary thereof, Company shall
submit to Agent an Officers' Certificate setting forth in reasonable detail the
type and amount of insurance maintained pursuant to this subsection.
5.5 Inspection; Lender Meeting
Holding, Company and its Material Subsidiaries shall permit any authorized
representatives designated by any Lender or Eurocurrency Lender to visit and
inspect any of the properties of Holding, Company and its Material Subsidiaries,
including its and their financial and accounting records, and to make copies and
take extracts therefrom, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants, all
upon reasonable notice and at reasonable times during normal business hours and
as often as may be reasonably requested. Without in any way limiting the
foregoing, Company will participate in an annual meeting of Agent, Lenders and
Eurocurrency Lenders to be held at such place and time as may be agreed to by
Company and Agent.
5.6 Equal Security for Obligations; No Further Negative Pledges
A. If Holding, Company or any Material Domestic Subsidiary shall create
or assume any Lien upon any of its property or assets, whether now owned or
hereafter acquired, other than Liens permitted by the provisions of
subsection 6.2, unless Agent and Requisite Lenders shall otherwise consent in
writing, it shall make or cause to be made effective provision whereby the
Obligations and the Eurocurrency Guaranty Obligations will be secured by such
Lien equally and ratably with any and all other Indebtedness thereby secured as
long as any such Indebtedness shall be secured. If any Eurocurrency Borrower
shall create or assume any Lien upon any of its property or assets, whether now
owned or hereafter acquired, other than Liens permitted by the provisions of
subsection 6.2, unless Agent and Requisite Lenders shall otherwise consent in
writing, it shall make or cause to be made effective provision whereby the
obligations of such Eurocurrency Borrower under the Eurocurrency Credit
Agreement to which such Eurocurrency Borrower is a party will be secured by such
Lien equally and ratably with any and all other Indebtedness thereby secured as
long as any such Indebtedness shall be so secured.
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Notwithstanding the foregoing, this subsection 5.6A shall not be construed as
a consent by any Lender to any creation or assumption of any such Lien not
permitted by the provisions of subsection 6.2.
B. Except with respect to specific property encumbered to secure payment
of particular Indebtedness and with respect to Indebtedness permitted under
subsection 6.1, neither Holding, Company nor any Material Subsidiary shall enter
into any agreement prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired.
5.7 Compliance with Laws, etc.
Holding, Company and the Material Subsidiaries shall comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority (including, without limitation, all Environmental Laws),
noncompliance with which would or could reasonably be expected to materially
adversely affect the business, properties, assets, operations or condition
(financial or otherwise) of Holding and its Subsidiaries, taken as a whole.
5.8 Environmental Disclosure and Inspection
(A) Except as disclosed in writing to Lenders and Eurocurrency
Lenders prior to the Closing Date, Holding shall comply, and shall cause
each of Company and the Material Subsidiaries and their Facilities to
comply, and cause (a) their respective employees, agents, contractors and
subcontractors and (b) all tenants under any lease or occupancy agreement
affecting any portion of the Facilities to comply with all applicable
Environmental Laws in all material respects. With respect to any matters
described in the environmental reports provided to Lenders under
clause (ii) of subsection 3.1(P), Holding shall cause each of its
Subsidiaries to use all commercially reasonable efforts to comply in all
material respects with all Environmental Laws applicable to such matters in
a timely manner following the Closing Date. If requested by Requisite
Lenders, Holding shall provide Lenders a current supplemental report with
respect to the properties and businesses described in the environmental
audit report referred to in clause (i) of subsection 3.1(P).
(B) Except as to matters disclosed in writing to Lenders and
Eurocurrency Lenders prior to the Closing Date, Company shall promptly
advise Lenders and Eurocurrency Lenders in writing and in reasonable detail
of (a) any material Release of any Hazardous Material required to be
reported to any federal, state or local governmental or regulatory agency,
domestic or foreign, under all applicable Environmental Laws, (b) any
remedial action taken by Holding, Company or, to the extent Holding or any
of its Subsidiaries has any such knowledge, any such Person or Material
Subsidiary in response to (1) any Hazardous Material on, under or about any
Facility, the existence of which would reasonably be expected to result in
an Environmental Claim having a material adverse effect on the business or
financial
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condition of Holding and its Subsidiaries, taken as a whole or (2) any
Environmental Claim that would reasonably be expected to have a
material adverse effect on the business or financial condition of Holding
and its Subsidiaries taken as a whole, and (c) any request for information
from any governmental agency, domestic or foreign, that indicates such
agency is investigating whether Holding, Company or any Material Subsidiary
may be potentially responsible for a material Release of Hazardous
Materials.
(C) Company shall promptly notify Lenders and Eurocurrency Lenders of
any proposed acquisition of stock, assets, or property by Holding, Company
or any Material Subsidiary, that could reasonably be expected to result in
Environmental Claims having a material adverse effect on the business or
financial condition of Holding and its Subsidiaries, taken as a whole.
(D) Company shall, at its own expense, provide copies to Agent of
such documents or information to which Holding, Company or any Material
Subsidiaries has access as Agent may reasonably request in relation to any
matters disclosed pursuant to this subsection 5.8.
(E) Company shall promptly notify Lenders and Eurocurrency Lenders of
any material change in the validity or enforceability or any termination or
notice of termination of the indemnity obligations of Unisys Corporation
owed to the Company pursuant to the Unisys Acquisition Agreement.
5.9 Hazardous Materials; Remedial Action
A. Each of Holding and Company shall, and shall cause the Material
Subsidiaries, to (i) store, use, dispose and transport any Hazardous Materials
in compliance with all applicable Environmental Laws, except to the extent that
any failure so to comply would not reasonably be expected to have a material
adverse effect on the business or financial condition of Holding and its
Subsidiaries, taken as a whole, and (ii) take promptly any and all necessary
remedial action in response to the Release of any Hazardous Materials on, under
or about any Facility, except (x) with respect to matters as to which Unisys
Corporation is obligated to indemnify Holding or a Subsidiary thereof, or as to
which Holding or a Subsidiary thereof is contesting in good faith the extent of
its liability, or (y) to the extent that any failure so to take such action
would not reasonably be expected to have a material adverse effect on the
business or financial condition of Holding and its Subsidiaries, taken as a
whole. In the event Holding, Company or any Material Subsidiary undertakes any
remedial action with respect to any Hazardous Material on, under or about any
Facility, Holding, Company or such Material Subsidiary shall conduct and
complete such remedial action in compliance with all applicable Environmental
Laws, and in a manner not inconsistent with all applicable orders and directives
of all federal, state and local governmental authorities, except (a) when the
extent of Holding's, Company's or such Material Subsidiary's liability with
respect to such Hazardous Material is being contested in good faith by Holding,
Company or such Material Subsidiary or (b) to the extent that any failure so
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to comply or be not inconsistent would not reasonably be expected to have a
material adverse effect on the business or financial condition of Holding and
its Subsidiaries, taken as a whole.
B. Company shall not and shall not permit its Material Subsidiaries to
install or permit to be installed any regulated level of asbestos in any
property owned or leased by any of them, except as appropriate for the operation
of their respective equipment. With respect to any asbestos currently present
in such property, Company shall and shall cause its Material Subsidiaries to
promptly and in accordance with all applicable Environmental Laws and prudent
industry practices, maintain such asbestos in good and safe condition.
5.10 Further Assurances; New Subsidiaries; Intellectual Property; Landlord
Waivers
A. At any time or from time to time upon the request of Agent, Holding
or Company, or both, shall and shall cause the Material Domestic Subsidiaries
to execute and deliver such further documents (including without limitation,
such financing statements, continuation statements or amendments thereto and
such other documents and certificates as may be necessary or as Agent may
reasonably request, in order to perfect and preserve the security interests
granted or purported to be granted under any of the Collateral Documents, in
the event Company, Holding and/or any Material Domestic Subsidiary changes
its name or address) and do such other acts and things as Agent may
reasonably request in order to effect fully the purposes of this Agreement
and the other Domestic Loan Documents and to provide for payment of (i) the
Obligations in accordance with the terms of this Agreement and the other
Domestic Loan Documents and (ii) the Eurocurrency Guaranty Obligations in
accordance with the terms of the Eurocurrency Guaranties; PROVIDED, HOWEVER,
with respect to actions requested by Agent in connection with Collateral
consisting of deposit accounts, Holding, Company and the Material Domestic
Subsidiaries shall only be required to take actions limited to: (i)
providing joint notification with Agent to any such Person holding such
deposit accounts, stating that such deposit accounts are subject to a
security interest granted to Collateral Agent in connection with this
Agreement and the Eurocurrency Credit Agreements and upon the occurrence of
certain events, Collateral Agent shall have certain remedies, including the
restriction of withdrawals; and (ii) amending the applicable schedules to the
Collateral Documents. Without limiting any of the foregoing, in the event
(i) a Person becomes a Material Domestic Subsidiary after the Closing Date or
(ii) Holding, Company or any Material Domestic Subsidiary described in the
preceding clause (i) registers any trademark or material patent with any
governmental authority, then, Holding and Company, upon the request of Agent
shall or shall cause such Material Domestic Subsidiary to execute and deliver
such guaranties, Collateral Documents, and such other agreements, pledges,
assignments in a mutually reasonably satisfactory fashion, documents and
certificates (including, without limitation, any amendments to the Domestic
Loan Documents) as may be necessary or as Agent may reasonably request and do
such other acts and things as Agent may reasonably request in order to have
such Material Domestic Subsidiary guaranty and/or secure the Obligations and
its Eurocurrency Guaranty Obligations with its personal property (including
without limitation fixtures) or have such trademark or patent secure the
Obligations and its Eurocurrency Guaranty Obligations, and effect fully the
purposes of this Agreement and the other Domestic Loan Documents and to
provide for payment of (i) the
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Obligations in accordance with the terms of this Agreement and the other
Domestic Loan Documents and (ii) the Eurocurrency Guaranty Obligations in
accordance with the terms of the Eurocurrency Guaranties; PROVIDED that any
actions with respect to Collateral consisting of deposit accounts shall be
limited to the proviso in the immediately preceding sentence. Company shall,
and shall cause each Material Subsidiary to, in good faith use all reasonable
efforts to obtain landlord's waivers or subordinations in form and substance
satisfactory to Agent with respect to Collateral located in Facilities leased
by Company and each Material Domestic Subsidiary.
B. At any time or from time to time upon the request of Eurocurrency
Administrative Agent, Holding or Company, or both, shall and shall cause the
Material Foreign Subsidiaries to execute and deliver such further documents
(including without limitation, such financing statements, continuation
statements or amendments thereto and such other documents and certificates as
may be necessary or as Eurocurrency Administrative Agent may reasonably request,
in order to render effective against third parties the security interests
granted or purported to be granted under any of the Eurocurrency Security
Documents, in the event Company, Holding and/or any Material Foreign Subsidiary
changes its name or address) and do such other acts and things as Eurocurrency
Administrative Agent may reasonably request in order to effect fully the
purposes of the Eurocurrency Loan Documents and to provide for payment of the
obligations under the Eurocurrency Loan Documents in accordance with the terms
thereof; PROVIDED, HOWEVER, with respect to actions requested by Eurocurrency
Administrative Agent in connection with Collateral consisting of deposit
accounts, Holding, Company and the Material Foreign Subsidiaries shall only be
required to take actions limited to: (i) providing joint notification with
Eurocurrency Administrative Agent to any such Person holding such deposit
accounts, stating that such deposit accounts are subject to a security interest
granted to Eurocurrency Administrative Agent in connection with the Eurocurrency
Loan Documents and upon the occurrence of certain events, Eurocurrency
Administrative Agent shall have certain remedies, including the restriction of
withdrawals; and (ii) amending the applicable schedules to the Eurocurrency Loan
Documents. In the event that a Person becomes a Material Foreign Subsidiary
after the Closing Date, (i) if such Material Foreign Subsidiary is held directly
by (a) Holding or a Domestic Subsidiary, Holding or such Domestic Subsidiary
shall pledge 65% of the capital stock of such Foreign Subsidiary to secure the
Obligations pursuant to a pledge agreement reasonably satisfactory to Agent or
(b) a Foreign Subsidiary which is a Eurocurrency Borrower and party to a
Eurocurrency Security Document, such Eurocurrency Borrower shall pledge 100% of
the capital stock of such Material Foreign Subsidiary to secure its obligations
under the relevant Eurocurrency Credit Agreement pursuant to a pledge agreement
reasonably satisfactory to Eurocurrency Administrative Agent and (ii) in the
event that such Material Foreign Subsidiary is itself a Eurocurrency Borrower,
such Material Foreign Subsidiary shall enter into one or more security or pledge
agreements as may be necessary or as Eurocurrency Administrative Agent may
reasonably request and do such other acts and things as Eurocurrency
Administrative Agent may reasonably request in order to have such Material
Foreign Subsidiary secure its obligations as a Eurocurrency Borrower with its
personal property (including without limitation fixtures) under the relevant
Eurocurrency Credit Agreement; PROVIDED that no security or pledge agreements or
other action contemplated by this sentence
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shall be required to be entered into or taken to the extent required to avoid
(A) any violation of applicable law, (B) liability of officers, directors or
shareholders of Holding or any of its Subsidiaries, (C) an investment of
earnings in United States property under Section 956 (or any successor
provision) of the Code resulting in an inclusion in income of Holding or any
of its Domestic Subsidiaries under Section 951 (or any successor provision)
of the Code, (D) any material risk of any of the foregoing, or (E) costs
which Holding, the Agent, and the Eurocurrency Administrative Agent shall
determine to be excessive in relation to the benefits that would be conferred
by such security or pledge agreements or action.
5.11 Notice of Asset Transfers
A. Company shall give Agent written notice of US/US Transfers (describing
the type and location of all assets transferred) at such time, if any, that the
net aggregate book value of the assets transferred in US/US Transfers since
(i) February 24, 1995 exceeds $5,000,000 and (ii) the most recent Recalculation
Date exceeds $5,000,000. Upon receipt of such written notice, Agent shall have
30 days to make the appropriate filings against such assets in order to maintain
the perfection of the Liens with respect to all such assets transferred. On the
first day following any such 30-day period (the "Recalculation Date"), Company
and its Subsidiaries may make additional US/US Transfers, subject to the
restrictions set forth in clause (A) of subsection 6.7B(xv). The requirements
of this subsection 5.11A shall not apply to any Asset Transfer pursuant to
subsection 6.7B(ix) or 6.7B(xii) or involving the Proposed Closed Facilities or
any Discontinued Operations.
B. No later than 30 days after the end of each month, Company shall give
Eurocurrency Administrative Agent a written report listing all assets
constituting fixtures, machinery and equipment transferred in any UK/Swiss
Transfer, Swiss/UK Transfer or German Asset Transfer, in one transaction or a
series of related transactions, in which the aggregate net book value of such
assets exceeds the Dollar Equivalent of $50,000. Such written report shall list
the type and location of such assets and otherwise be in a form satisfactory to
permit the Eurocurrency Administrative Agent to perfect a Lien if and to the
extent the perfection of such a Lien on said assets is required under the
Eurocurrency Security Documents or this Agreement under applicable law in such
transferred assets. The requirements of this subsection 5.11B shall not apply
to any Asset Transfer pursuant to subsection 6.7B(ix) or 6.7B(xii) or involving
the Proposed Closed Facilities or any Discontinued Operations.
SECTION 6. NEGATIVE COVENANTS
Holding and Company severally covenant and agree that, on and after the
Closing Date, so long as the Revolving Credit Commitments shall be in effect and
until payment in full of all of the Revolving Credit Loans and all other amounts
owing hereunder, unless Requisite Lenders shall otherwise give prior written
consent, such Person will perform all covenants in this Section 6 to be
performed by it (including, in the case of Company, covenants applicable to
it
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in its capacity as a Subsidiary of Holding) and cause each of its Subsidiaries
to comply with all covenants in this Section 6 applicable to such Subsidiary.
6.1 Indebtedness
Holding and Company will not, and will not permit any Subsidiary to,
directly or indirectly, create, incur, assume, guaranty, or otherwise become or
remain directly or indirectly liable with respect to, any Indebtedness, except:
(i) Holding and its Subsidiaries may become and remain liable with
respect to the Obligations;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of (y) Capital Leases if such Capital
Leases would be permitted under subsection 6.6A and (z) Indebtedness
incurred to purchase, or to finance or refinance the purchase price of,
personal property (including, without limitation, fixtures but excluding
Inventory) used in the conduct of Holding's or any of its Subsidiaries'
business; PROVIDED that in the case of clause (z) above (a) at the time of
incurrence, no Event of Default, or Potential Event of Default has occurred
and is continuing or would result therefrom, (b) the documentation pursuant
to which such Indebtedness is incurred either does not contain any
financial covenants or contains financial covenants less restrictive (to an
extent reasonably acceptable to Agent) than those contained in this
Agreement, (c) such documentation does not contain any "cross-default"
provision providing for a default on such Indebtedness solely upon the
occurrence of a default under any other Contractual Obligation of Holding
or any of its Subsidiaries (including this Agreement), other than a
Contractual Obligation between Holding or any of its Subsidiaries and the
holder of such Indebtedness or any of such holder's Affiliates, and (d) the
amount of such Indebtedness incurred is not greater than the fair market
value of (as determined in good faith by Company or the relevant Subsidiary
thereof), plus the delivered and installed cost and related expenses for,
any property so financed at the time of such acquisition;
(iii) Holding and its Subsidiaries may become and remain liable
with respect to Contingent Obligations permitted by subsection 6.4;
(iv) Company and its Subsidiaries may make and maintain intercompany
loans to or from Holding or any Subsidiary thereof permitted by
subsection 6.3;
(v) Company and its Subsidiaries may remain liable with respect to
(A) the existing Indebtedness listed on SCHEDULE 6.1 annexed to the
Original Credit Agreement and (B) any refinancings, refundings, renewals or
extensions thereof, PROVIDED that the amount of such Indebtedness is not
increased at the time of such refinancing, refunding, renewal or extension;
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(vi) Discontinued Operations may become and remain liable with respect
to (x) Indebtedness for working capital and other general corporate
purposes not exceeding $2,000,000 in aggregate principal amount outstanding
at any time and (y) up to an additional $5,000,000 in aggregate outstanding
principal amount of Indebtedness; provided, however, that the net proceeds
of such additional Indebtedness are used solely to repay to Company
intercompany loans or Investments permitted by subsection 6.3(iii);
(vii) Latin American Subsidiaries may become and remain liable
with respect to Indebtedness for working capital and other general
corporate purposes not exceeding $3,000,000 in aggregate principal amount
outstanding at any time;
(viii) Foreign Subsidiaries not in existence on February 24, 1995
may become liable with respect to Indebtedness for working capital and
other general corporate purposes not exceeding $3,000,000 in aggregate
principal amount outstanding at any time for all such Subsidiaries;
(ix) Holding and its Subsidiaries may become and remain liable with
respect to Indebtedness under any Interest Hedge Agreements entered into
with any Lender or Eurocurrency Lender;
(x) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness not exceeding $3,000,000 in aggregate principal
amount outstanding at any time, incurred for the purpose of financing the
premiums for insurance policies;
(xi) Holding and its Subsidiaries may become and remain liable with
respect to Indebtedness pursuant to the Eurocurrency Credit Agreements;
(xii) Holding and its Subsidiaries may become and remain liable
with respect to Acquisition Debt not to exceed $25,000,000 in aggregate
principal amount outstanding at any time; and
(xiii) Company and its Subsidiaries may become and remain liable to
Barclays with respect to Indebtedness in respect of cash management
facilities offered to Company and its Subsidiaries by Barclays; and
(xiv) In addition to the Indebtedness permitted by clauses (i)-
(xiii), Holding, and its Subsidiaries may become and remain liable with
respect to unsecured Indebtedness not exceeding at any one time $5,000,000
in aggregate outstanding principal amount.
6.2 Liens
Holding and Company will not, and will not permit any Subsidiary to,
directly or indirectly, create, incur, assume or permit to exist any Lien on or
with respect to any property or asset (including any document or instrument in
respect of goods or accounts receivable) of
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Holding, Company or any Subsidiary, whether now owned or hereafter acquired,
or any income or profits therefrom, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens created to secure the Indebtedness permitted pursuant
to subsection 6.1(ii); PROVIDED such Liens relate solely to the property
financed with such Indebtedness;
(iv) Liens existing on February 24, 1995 which secure the Indebtedness
permitted pursuant to subsection 6.1(v) (or are provided for on such date
under the documentation relating to such Indebtedness) and which are listed
on SCHEDULE 6.2 annexed to the Original Credit Agreement, and renewal of
such Liens in connection with any refinancing, refunding, renewal or
extension permitted by clause (B) of subsection 6.1(v), PROVIDED that no
such Lien is extended to cover any additional property or assets after
February 24, 1995 in connection with any refinancing, refunding, renewal or
extension contemplated by such clause (B) to subsection 6.1(v);
(v) Liens on assets of Discontinued Operations securing Indebtedness
permitted pursuant to subsection 6.1(vi);
(vi) Liens on assets of Latin American Subsidiaries securing
Indebtedness, permitted pursuant to subsection 6.1(vii);
(vii) Liens on assets of new Foreign Subsidiaries not in existence
on February 24, 1995 securing Indebtedness permitted by
subsection 6.1(viii);
(viii) Liens on insurance policies or the proceeds of insurance
policies to secure Indebtedness permitted by subsection 6.1(x);
(ix) Liens deemed to arise from any sale or discounting of notes or
accounts receivable permitted by subsection 6.7B(xiii) and 6.9;
(x) Liens granted to the Eurocurrency Administrative Agent pursuant
to the Eurocurrency Loan Documents; and
(xi) Liens on assets securing Indebtedness permitted by
subsection 6.1(xii), PROVIDED, in the case of Indebtedness referred to in
clause (i) of the definition of Acquisition Debt, such Liens securing such
Indebtedness were in existence prior to the date of any Permitted
Acquisition and were not placed against such assets in anticipation of such
Permitted Acquisition.
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6.3 Investments
Holding and Company will not, and will not permit any Subsidiary to,
directly or indirectly, make or own any Investment in any Person, except:
(i) Company and its Subsidiaries may make and own Investments in Cash
Equivalents;
(ii) Company may make and maintain intercompany loans to Holding to
the extent permitted by subsection 6.5;
(iii) Investments existing on February 24, 1995 and listed on
SCHEDULE 6.3 annexed to the Original Credit Agreement;
(iv) Company and its Subsidiaries may make and maintain Investments as
permitted by subsection 6.5 and by clauses (i), (ii), (v), (vi), (vii),
(viii), (ix), (x), (xi), (xii), (xiv) and (xv) of subsection 6.7B;
(v) Company and its Subsidiaries may make and maintain Investments in
(including intercompany loans to) Company and the Material Domestic
Subsidiaries for any purpose; provided, however, if any such Investments
are made in a Domestic Subsidiary which is a direct Subsidiary of Holding,
(A) such investment shall be in the form of an intercompany loan,
(B) Company or such Subsidiary making the loan, as appropriate, shall
maintain a ledger and record all such loans pursuant to this
subsection 6.3(v) and such ledger shall be available for inspection at any
Lender's request and (C) all such intercompany loans made by Company or the
Material Domestic Subsidiaries shall be evidenced by promissory notes which
shall be pledged to Agent pursuant to the Collateral Documents;
(vi) In addition to the Investments described in clause (vii) of this
subsection 6.3 below, Company may make Investments in N-K Interface
Limited, up to an amount of $500,000 outstanding at any time;
(vii) Company and its Material Domestic Subsidiaries may make and
maintain Investments of cash and cash equivalents in (including
intercompany loans to) Eurocurrency Borrowers for any purpose; PROVIDED,
HOWEVER, that (A) the aggregate principal amount of all such Investments in
all such Eurocurrency Borrowers shall not exceed $15,000,000 outstanding at
any time, (B) Company or any such Material Domestic Subsidiary, as
appropriate, shall maintain a ledger recording all such Investments in and
intercompany loans made pursuant to this subsection 6.3(vii) and such
ledger shall be available for inspection at any Lender's request and
(C) all intercompany loans made pursuant to this subsection 6.3(vii) shall
be evidenced by promissory notes;
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(viii) Company and its Material Domestic Subsidiaries may make and
maintain Investments in (including intercompany loans to) Latin American
Subsidiaries for any purpose; PROVIDED, HOWEVER, that (A) the aggregate
principal amount of all such Investments in all Latin American Subsidiaries
shall not exceed $5,000,000 outstanding at any time, (B) Company or any
such Material Domestic Subsidiary, as appropriate, shall maintain a ledger
recording all such Investments in and intercompany loans made pursuant to
this subsection 6.3(viii) and such ledger shall be available for inspection
at any Lender's request and (C) all intercompany loans made pursuant to
this subsection 6.3(viii) shall be evidenced by promissory notes;
(ix) Greif and Hardcopy Deutschland may make and maintain Investments
in (including intercompany loans to) its Subsidiaries and Chinese
operations for any purpose; PROVIDED, HOWEVER, that (A) the aggregate
principal amount of all such Investments shall not exceed $5,000,000
outstanding at any time, and (B) Greif shall maintain a ledger recording
all such Investments in and intercompany loans made pursuant to this
subsection 6.3(ix) and such ledger shall be available for inspection at any
Eurocurrency Lender's request;
(x) Produktions and Pelikan Hardcopy may make and maintain
Investments in (including intercompany loans to) its Subsidiaries for any
purpose; PROVIDED, HOWEVER, that (A) the aggregate principal amount of all
such Investments shall not exceed $20,000,000 outstanding at any time,
(B) Produktions shall maintain a ledger recording all such Investments in
and intercompany loans made pursuant to this subsection 6.3(x) and such
ledger shall be available for inspection at any Eurocurrency Lender's
request and (C) all intercompany loans made pursuant to this
subsection 6.3(x) shall be evidenced by promissory notes or other evidence
of indebtedness which shall be pledged to Eurocurrency Administrative Agent
pursuant to the appropriate Eurocurrency Security Documents;
(xi) In addition to Investments permitted by subsection 6.3(iii),
Pelikan Scotland may make and maintain Investments in (including
intercompany loans to) its Subsidiaries and the U.K. Subsidiaries for any
purpose; PROVIDED, HOWEVER, that (A) the aggregate principal amount of all
such Investments shall not exceed $5,000,000 outstanding at any time,
(B) Pelikan Scotland shall maintain a ledger recording all such Investments
in and intercompany loans made pursuant to this subsection 6.3(xi) and such
ledger shall be available for inspection at any Eurocurrency Lender's
request and (C) all intercompany loans made pursuant to this
subsection 6.3(xi) shall be evidenced by promissory notes or other evidence
of indebtedness which shall be pledged to Eurocurrency Administrative Agent
pursuant to the appropriate Eurocurrency Security Documents;
(xii) Greif and Hardcopy Deutschland may make and maintain
Investments in Produktions, Pelikan Hardcopy and Pelikan Scotland for any
purpose; PROVIDED, HOWEVER, that (A) the aggregate principal amount of all
such Investments shall not exceed
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$15,000,000 outstanding at any time, (B) Greif shall maintain a ledger
recording all such Investments made pursuant to this subsection 6.3(xii)
and such ledger shall be available for inspection at any Eurocurrency
Lender's request and (C) all Investments made pursuant to this
subsection 6.3(xii) shall be evidenced by promissory notes which shall
be on terms and conditions satisfactory to Eurocurrency Administrative
Agent and shall be subordinated to the debt evidenced by the
Eurocurrency Credit Agreement to which the Person in whom the Investment
hereunder is being made is party such that no payments shall be made on
such intercompany indebtedness after the occurrence of a Potential Event
of Default or Event of Default under such Eurocurrency Credit Agreement;
(xiii) Produktions and Pelikan Hardcopy may make and maintain
Investments in Greif, Hardcopy Deutschland and Pelikan Scotland for any
purpose; PROVIDED, HOWEVER, that (A) the aggregate principal amount of all
such Investments shall not exceed $15,000,000 outstanding at any time,
(B) Produktions shall maintain a ledger recording all such Investments made
pursuant to this subsection 6.3(xiii) and such ledger shall be available
for inspection at any Eurocurrency Lender's request and (C) all Investments
made pursuant to this subsection 6.3(xiii) shall be evidenced by promissory
notes which shall be on terms and conditions satisfactory to Eurocurrency
Administrative Agent and shall be pledged to Eurocurrency Administrative
Agent pursuant to the appropriate Eurocurrency Security Documents and, to
the extent such Investment is being made in Pelikan Scotland, shall be
subordinated to the debt evidenced by the U.K. Credit Agreement such that
no payments shall be made on such intercompany indebtedness after the
occurrence of a Potential Event of Default or Event of Default under the
U.K. Facility Agreement;
(xiv) Pelikan Scotland may make and maintain Investments in Greif,
Hardcopy Deutschland, Produktions or Pelikan Hardcopy for any purpose;
PROVIDED, HOWEVER, that (A) the aggregate principal amount of all such
Investments shall not exceed $15,000,000 outstanding at any time,
(B) Pelikan Scotland shall maintain a ledger recording all such Investments
made pursuant to this subsection 6.3(xiv) and such ledger shall be
available for inspection at any Eurocurrency Lender's request and (C) all
Investments made pursuant to this subsection 6.3(xiv) shall be evidenced by
promissory notes which shall be on terms and conditions satisfactory to
Eurocurrency Administrative Agent and shall be pledged to Eurocurrency
Administrative Agent pursuant to the appropriate Eurocurrency Security
Documents and, to the extent such Investment is being made in Produktions
or Pelikan Hardcopy, shall be subordinated to the debt evidenced by the
Swiss Facility Agreement such that no payments shall be made on such
intercompany indebtedness after the occurrence of a Potential Event of
Default or Event of Default under the Swiss Facility Agreement;
(xv) Greif, Hardcopy Deutschland, Produktions, Pelikan Hardcopy and
Pelikan Scotland may make and maintain Investments in Company for any
purpose; PROVIDED, HOWEVER, that (A) the aggregate principal amount of all
such Investments shall not exceed
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$30,000,000 outstanding at any time, (B) any Eurocurrency Borrower
making any such Investments shall maintain a ledger recording all such
Investments made pursuant to this subsection 6.3(xv) and such ledger
shall be available for inspection at any Eurocurrency Lender's request,
(C) all Investments made by Produktions, Pelikan Hardcopy or Pelikan
Scotland pursuant to this subsection 6.3(xv) shall be evidenced by
promissory notes which shall be on terms and conditions satisfactory to
Eurocurrency Administrative Agent and shall be pledged to Eurocurrency
Administrative Agent pursuant to the appropriate Eurocurrency Security
Documents and shall be subordinated to the debt evidenced by this
Agreement such that no payments shall be made on such intercompany
indebtedness after the occurrence of a Potential Event of Default or
Event of Default under this Agreement and (D) all Investments made by
Greif or Hardcopy Deutschland pursuant to this subsection 6.3(xv) shall
be evidenced by promissory notes which shall be on terms and conditions
satisfactory to Eurocurrency Administrative Agent and shall be
subordinated to the debt evidenced by this Agreement such that no
payments shall be made on such intercompany indebtedness after the
occurrence of a Potential Event of Default or Event of Default under
this Agreement;
(xvi) Other Investments in an aggregate principal amount not in
excess of $5,000,000 at any time; PROVIDED, that any violation of the
covenant contained in this subsection 6.3(xvi) by an amount not exceeding
$1,000,000 shall not constitute an Event of Default unless such violation
has not been remedied or waived within ten days after the earlier of
(y) actual knowledge of such violation by an executive officer of Company
or (z) receipt by Holding or Company of notice from Agent of any such
violation.
Notwithstanding anything in this Agreement to the contrary and other than as
permitted with respect to Permitted Acquisitions, in no event shall the
aggregate amount of Investments made after February 24, 1995 by Holding, Company
and the Domestic Subsidiaries in Foreign Subsidiaries, permitted pursuant to
this subsection 6.3 or subsection 6.7(B)(viii), exceed $30,000,000 in aggregate
principal amount outstanding at any time.
6.4 Contingent Obligations
Holding and Company will not, and will not permit any Subsidiary to,
directly or indirectly, create or become or be liable with respect to any
Contingent Obligation except:
(i) Contingent Obligations in respect of the Obligations;
(ii) guaranties resulting from endorsement of negotiable instruments
for collection in the ordinary course of business;
(iii) guaranties by Holding, Company or any Domestic Subsidiary in
the ordinary course of business of Operating Leases and Capital Leases of
Holding, Company or such Domestic Subsidiary permitted by subsection 6.6A;
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(iv) guaranties by Holding or its Subsidiaries in the ordinary course
of business of Operating Leases and Capital Leases of any Foreign
Subsidiary permitted by subsection 6.6A;
(v) Contingent Obligations in respect of Permitted Acquisitions;
(vi) guaranties by Holding and its Subsidiaries of loans or advances
to employees for moving, travel and entertainment expenses, drawing
accounts and similar expenditures made in the ordinary course of business;
(vii) Contingent Obligations in respect of interest rate or
foreign currency protection agreements or hedging arrangements permitted
pursuant to subsection 6.1(ix);
(viii) obligations to insurers in respect of workers' compensation
and other insurance coverage incurred in the ordinary course of business;
(ix) Contingent Obligations in respect of the Eurocurrency Credit
Agreements;
(x) guarantees, product warranties or indemnities issued by Company
or its Subsidiaries in the ordinary course of business in connection with
the sale of Inventory, services or assets;
(xi) Contingent Obligations in respect of existing litigation set
forth on Schedule 4.6 attached hereto;
(xii) Contingent Obligations in respect of Indebtedness permitted
pursuant to subsection 6.1(vii), (viii), (ix), (xii), (xiii) and (xiv);
(xiii) Contingent Obligations in respect of surety, appeal,
performance or return-of-money bonds not to exceed $1,000,000 in the
aggregate outstanding at any time; and
(xiv) In addition to the Contingent Obligations permitted by
clauses (i)-(xiii), Holding and its Subsidiaries may become and remain
liable with respect to Contingent Obligations not exceeding at any one time
$2,000,000; PROVIDED, that any violation of the covenant contained in this
subsection 6.4(xiv) by an amount not exceeding $1,000,000 shall not
constitute an Event of Default unless such violation has not been remedied
or waived within ten days after the earlier of (y) actual knowledge of such
violation by an executive officer of Company or (z) receipt by Holding or
Company of notice from Agent of any such violation.
6.5 Restricted Junior Payments
Holding and Company will not, and will not permit any Domestic Subsidiary
to, directly or indirectly, declare, order, pay, make or set apart any sum
(excluding any foreign law
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requirement to maintain a statutory reserve or the like) for any Restricted
Junior Payment except:
(i) Company may declare and pay dividends or otherwise make
distributions, loans or advances to Holding, and Holding may declare and
pay dividends or otherwise make distributions in respect of its stock or
repurchase any of its outstanding stock, in an aggregate amount not to
exceed $12,000,000 plus 25% of Consolidated Net Income earned from February
24, 1995; provided, however, nothing contained herein shall prohibit
Holding from paying any dividend or making any distribution in respect of
its stock required or permitted by the terms of Holding's Rights Agreement,
dated as of May 19, 1994 and amended as of November 15, 1994, between
Holding and Chemical Bank, as Rights Agent, and the Series A Junior
Participating Preferred Stock issuable upon the exercise of any preferred
share purchase right, as said Rights Agreement and Series A Junior
Participating Preferred Stock may be supplemented from time to time;
(ii) In addition to clause (i) above of this subsection 6.5, Company
may declare and pay dividends or otherwise make distributions, loans or
advances to Holding of up to an aggregate amount of $6,000,000 to permit
Holding to purchase or cancel any stock options or settle any stock
appreciation rights held by, or distribute any amounts under any deferred
compensation plan or arrangement in respect of, any employee or director of
Holding or any of its Subsidiaries upon termination of employment or other
service, or to purchase any of its stock held by any such employee or
director;
(iii) Company may declare and pay dividends or otherwise make
distributions, loans or advances to Holding in amounts sufficient to cover
reasonable and necessary expenses incurred by Holding in connection with
registration, public offerings and exchange listing of equity securities;
(iv) Company may declare and pay dividends or otherwise make
distributions, loans or advances to Holding in amounts sufficient to pay
tax liabilities of Holding;
(v) Company may declare and pay dividends or otherwise make
distributions, loans or advances to Holding in amounts sufficient to allow
Holding to pay other business and operating expenses incurred in the
ordinary course of business;
(vi) Company may make (a) payments (including prepayments) on Existing
Seller Notes and (b) payments of amounts due under the Non-Competition
Agreements; and
(vii) Company may declare and pay dividends or otherwise make
distributions, loans or advances to Holding in amounts sufficient to pay
the cash consideration of any Permitted Acquisition by Holding;
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PROVIDED, HOWEVER, that immediately prior to and immediately after giving effect
to any Restricted Junior Payment permitted by clauses (i) and (ii) of this
subsection 6.5 and clause (vi) of this subsection 6.5 relating to voluntary
prepayments on Existing Seller Notes, no Event of Default or Potential Event of
Default exists. Holding and Company will not, nor will they permit any of
Material Domestic Subsidiary to, deposit any funds for the purpose of making any
Restricted Junior Payment with a trustee, paying agent or registrar or other
payment intermediary more than three Business Days prior to the date such
payment is due.
6.6 Financial Covenants
A. CONSOLIDATED TOTAL DEBT TO CONSOLIDATED EBITDA
Holding and its Subsidiaries shall not permit the ratio of (i) Consolidated
Total Debt as of any such date of determination to (ii) Consolidated EBITDA
(calculated as of any such date of determination on a cumulative basis for the
period of four consecutive fiscal quarters ending on or before such date of
determination) to (a) exceed 3.50 to 1 at the end of the first eight consecutive
fiscal quarters immediately following the Closing Date commencing with the
fiscal quarter ending in December of 1996 and (b) 3.00 to 1 at the end of each
fiscal quarter thereafter.
B. MINIMUM INTEREST COVERAGE RATIO
Holding and its Subsidiaries will not permit the Interest Coverage Ratio as
of the last day of each fiscal quarter (calculated as of any such date of
determination on a cumulative basis for the period of four consecutive fiscal
quarters ending on or before such date of determination) to be less than 3.0 to
1.
C. MINIMUM CONSOLIDATED NET WORTH
Holding and its Subsidiaries shall not permit Consolidated Net Worth at any
time after the Closing Date to be less than the sum of (i) $80,000,000 plus
(ii) 75% of the cumulative amount of positive Consolidated Net Income (which
shall exclude the Consolidated Net Income for any fiscal quarter in which
Consolidated Net Income was a negative number) earned on or after February 24,
1995, and ending on such determination date.
D. MAXIMUM CONSOLIDATED GAAP CAPITAL EXPENDITURES
Holding and its Subsidiaries shall not permit Consolidated GAAP Capital
Expenditures (excluding Permitted Acquisitions) to exceed $20,000,000 in any
Fiscal Year (the "MAXIMUM AMOUNT"); PROVIDED that the Maximum Amount for each
Fiscal Year shall be increased by an amount equal to one half of the excess, if
any, of the Maximum Amount for the previous Fiscal Year (before making any
adjustments in accordance with this proviso) over the actual amount of
Consolidated GAAP Capital Expenditures for such previous Fiscal Year
(Consolidated GAAP Capital Expenditures permitted as a result of the foregoing
PROVISO shall first be applied to the
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Consolidated GAAP Capital Expenditures permitted for each Fiscal Year before
making any adjustments in accordance with such PROVISO).
E. AFTER TAX CASH FLOW TO FIXED CHARGES
Holding and its Subsidiaries will not permit the ratio of (i) After Tax
Cash Flow to (ii) Fixed Charges as of the last day of each fiscal quarter
(calculated as of any such date of determination for the period of four
consecutive fiscal quarters ending on or before such date of determination) to
be less than 1.75 to 1.
6.7 Restriction on Fundamental Changes
A. Other than as permitted by subsection 6.7B, neither Holding, Company
nor any Subsidiary may, without the consent of Requisite Lenders, acquire or
create any Subsidiaries or convey, sell, lease, sublease or transfer any of its
assets to any of its Subsidiaries.
B. Neither Holding, Company nor any Subsidiary will enter into any
transaction of merger or consolidation, or liquidate, wind-up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, exchange, lease,
sub-lease, transfer or otherwise dispose of, in one transaction or a series of
related transactions, all or any substantial part of its business, property or
fixed assets or all or any portion of the stock or other evidence of beneficial
ownership of, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or substantially all the business, property or fixed assets of, or
stock or other evidence of beneficial ownership of, any Person except:
(i) Holding may be merged or consolidated with or into Company, or
all or substantially all of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Company and Holding thereafter
may be liquidated, wound up or dissolved; PROVIDED that, in the case of
such a merger or consolidation, Company shall be the continuing or
surviving corporation;
(ii) Holding, Company or any Subsidiary thereof, may acquire stock or
assets of any Person; PROVIDED that in the case of the acquisition of all
or substantially all the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person, (w) Agent shall have
received at least 10 days prior to the date of such acquisition a
Compliance Certificate, setting forth the covenant calculations described
therein after giving pro forma effect to such acquisition as of the date of
Holding's most recent available quarterly consolidated financial
statements, (x) the aggregate Acquisition Value permitted by this
subsection 6.7B(ii) in connection with all such acquisitions since
January 1, 1996 shall not exceed an amount of $25,000,000, (y) in the case
of an acquisition of stock where the acquired Person will become a
Subsidiary of Holding which is not a direct or indirect Subsidiary of
Company, the cash consideration paid in respect of any such acquisition by
Holding may not exceed 20% of the Acquisition Value
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of such acquisition, and (z) in the case of an acquisition of stock, the
acquired Person will become a Subsidiary of Holding or Company;
PROVIDED, FURTHER, that if such acquired Person becomes a Material
Subsidiary, it shall comply with subsection 5.10(A) or subsection
5.10(B), as appropriate;
(iii) Company or a Subsidiary thereof may sell, lease, license,
exchange or otherwise dispose of assets or rights in Asset Sale
transactions; PROVIDED that (A) any Asset Sale is made for at least the
fair market value of such assets (as determined in good faith by Company or
such Subsidiary), (B) the aggregate Net Cash Proceeds of Asset Sale
transactions since February 24, 1995 with respect to assets located in the
United Kingdom shall not exceed 10% of the Pounds Sterling equivalent of
the net book value, determined as of February 24, 1995, of all assets of
Company and its Subsidiaries located in the United Kingdom on February 24,
1995, (C) the aggregate Net Cash Proceeds of Asset Sales transactions since
February 24, 1995 with respect to assets located in Switzerland shall not
exceed 10% of the Swiss Franc equivalent of the net book value, determined
as of February 24, 1995, of all assets of Company and its Subsidiaries
located in Switzerland on February 24, 1995, (D) the aggregate Net Cash
Proceeds of Asset Sales transactions since February 24, 1995 with respect
to assets located in Germany shall not exceed 10% of the German Mark
equivalent of the net book value, determined as of February 24, 1995, of
all assets of Company and its Subsidiaries located in Germany on
February 24, 1995, (E) Asset Sale transactions involving assets located in
the United States may be made if the Net Cash Proceeds thereof are applied
as provided in subsection 2.4(A)(ii) and (F) with respect to Asset Sale
transactions not otherwise referred to in clauses (B), (C), (D) or (E)
above or not otherwise expressly permitted by this subsection 6.7B, Company
receives the prior written consent of Requisite Lenders for any such Asset
Sale or series of related Asset Sales involving the fair market value of
assets (as determined in good faith by Company or such Subsidiary) or sales
price in excess of $250,000; PROVIDED, FURTHER, that the restrictions on
Asset Sale transactions set forth in the foregoing PROVISO shall not apply
to any Asset Sale transactions involving (1) the Proposed Closed
Facilities, (2) any Discontinued Operations or (3) any capital stock or
treasury stock of Holding, or any rights, options or warrants to acquire
same; PROVIDED, HOWEVER in no event may any stock of any Material
Subsidiary be sold;
(iv) Holding and its Subsidiaries may make Sale/leasebacks permitted
by subsection 6.8;
(v) A Domestic Subsidiary may be merged or consolidated with or into
Company or another Domestic Subsidiary, or be liquidated, wound up or
dissolved; PROVIDED, HOWEVER, that in the case of such a merger or
consolidation of a Material Domestic Subsidiary, (i) Company or another
Material Domestic Subsidiary shall be the continuing or surviving
corporation and (ii) another Subsidiary which becomes a Material Domestic
Subsidiary and complies with the requirements of subsection 5.10A shall be
the continuing or surviving corporation;
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(vi) A Foreign Subsidiary may be merged or consolidated with or into
another Foreign Subsidiary; PROVIDED, HOWEVER, that (x) if any capital
stock of either such Foreign Subsidiary shall have previously been required
to be pledged to Collateral Agent or Eurocurrency Administrative Agent,
such Foreign Subsidiary shall be the surviving corporation in such merger
or consolidation or the same proportion of the surviving corporation's
capital stock shall be similarly pledged to Collateral Agent or
Eurocurrency Administrative Agent, as applicable, and (y) a Foreign
Subsidiary not part of Discontinued Operations may not be merged or
consolidated with another Foreign Subsidiary that is part of Discontinued
Operations unless the former Subsidiary or another Subsidiary which is not
a part of Discontinued Operations is the surviving or continuing
corporation. Any Foreign Subsidiary the capital stock of which is not
required to be pledged to Collateral Agent or Eurocurrency Collateral Agent
may be liquidated, wound up or dissolved;
(vii) Holding or Company may create one or more new Domestic
Subsidiaries thereof; PROVIDED such Domestic Subsidiary, if it is or
becomes a Material Domestic Subsidiary, shall comply with
subsection 5.10(A);
(viii) Holding or a Subsidiary thereof may create one or more new
Foreign Subsidiaries of such Person; PROVIDED, subject to
subsection 5.10(B), if such Foreign Subsidiary is held directly by
(i) Holding or a Domestic Subsidiary and such Foreign Subsidiary is or
becomes a Material Subsidiary, such Person shall pledge 65% of the capital
stock of such Foreign Subsidiary to secure the Obligations pursuant to a
pledge agreement in form and substance reasonably satisfactory to Agent or
(ii) a Foreign Subsidiary which is a Eurocurrency Borrower and party to a
Eurocurrency Security Document that is a pledge of shares and such Foreign
Subsidiary is or becomes a Material Subsidiary, such Eurocurrency Borrower
shall pledge 100% of the capital stock of such Foreign Subsidiary to secure
its obligations under the relevant Eurocurrency Credit Agreement pursuant
to a pledge agreement in form and substance reasonably satisfactory to
Eurocurrency Administrative Agent;
(ix) Any of Holding and its Subsidiaries may sell, lease, consign,
transfer or otherwise dispose of Inventory to any Person in the ordinary
course of business;
(x) Any of Holding and its Subsidiaries may acquire additional
capital stock of an existing Subsidiary thereof from such Subsidiary;
PROVIDED that (i) if such Subsidiary is a Domestic Subsidiary and any
previously outstanding capital stock of such Subsidiary shall have been
pledged to Collateral Agent to secure the Obligations and the Eurocurrency
Guaranty Obligations, 100% of such additional capital stock shall be
similarly pledged to Collateral Agent, (ii) if such Subsidiary is a Foreign
Subsidiary and any previously outstanding capital stock of such Subsidiary
shall have been pledged to the Collateral Agent to secure the Obligations
and the Eurocurrency Guaranty Obligations, 65% of such additional stock
shall be similarly pledged to Collateral Agent, and (iii) if such
Subsidiary is a Foreign Subsidiary and any previously outstanding capital
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stock of such Subsidiary shall have been pledged to Eurocurrency
Administrative Agent to secure the obligations under the relevant
Eurocurrency Credit Agreement, 100% of such additional stock shall be
similarly pledged to the Eurocurrency Administrative Agent;
(xi) Investments permitted by subsection 6.3;
(xii) Any of Holding and its Subsidiaries may dispose of property
that is obsolete, worn out or otherwise no longer needed in its business,
including abandonment of trademarks, patents, copyrights and other
intellectual property no longer economically practicable to maintain;
(xiii) Any Subsidiary other than a Material Subsidiary may sell or
discount its accounts receivable to any bank or other financial institution
in the ordinary course of its business;
(xiv) Holding and its Subsidiaries may enter into, and perform,
any transactions permitted by subsection 6.10 or 6.13; and
(xv) Company or a Subsidiary thereof may engage in Asset Transfer
transactions; PROVIDED that (A) the aggregate net book value of assets
transferred in US/US Transfers, whether in one or more transactions or a
series of related transactions, since February 24, 1995 or the most recent
Recalculation Date, may not exceed $5,000,000, (B) the aggregate net book
value of the assets transferred in US/Foreign Transfers, whether in one or
more transactions or a series of related transactions or otherwise, since
February 24, 1995 may not exceed $7,500,000, (C) the aggregate net book
value of the assets transferred in UK/Swiss Transfers, whether in one or
more transactions or a series of related transactions, since February 24,
1995 may not exceed 25% of the Pounds Sterling equivalent net book value of
all assets of Company and its Subsidiaries located in the United Kingdom on
February 24, 1995, (D) the aggregate net book value of the assets
transferred in Swiss/UK Transfers, whether in one or more transactions or a
series of related transactions, since February 24, 1995 may not exceed 25%
of the Swiss Franc equivalent net book value of all assets of Company and
its Subsidiaries located in Switzerland on February 24, 1995, (E) the
aggregate net book value of the assets transferred in German Transfers,
whether in one or more transactions or a series of related transactions,
since February 24, 1995 may not exceed 25% of the German Mark equivalent
net book value of all assets of Company and its Subsidiaries located in
Germany on February 24, 1995 and (F) provided that with respect to Asset
Transfer transactions involving fixtures, machinery and equipment not
otherwise referred to in Clause (A), (B), (C), (D) or (E) above or not
otherwise expressly permitted by this subsection 6.7B, Company receives the
prior written consent of Requisite Lenders for any such Asset Transfer or
series of related Asset Transfers involving the net book value of assets in
excess of $1,000,000; PROVIDED, FURTHER, that the restrictions on Asset
Transfer transactions set forth in the foregoing PROVISO shall not apply to
any Asset
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Transfer transactions involving the Proposed Closed Facilities or
any Discontinued Operations.
Upon any disposition of property or assets in compliance with this
subsection 6.7, other than as the result of an Asset Transfer referred to in
subsection 6.7B(xv)(A), (C) or (D), Lenders will cause Collateral Agent to, and
Collateral Agent will, take such action as is necessary to evidence the release
of the Liens of Lenders, on such property or assets, including delivering to
Holding, Company or any Material Subsidiary, as appropriate, appropriate
releases and termination statements.
6.8 Sales and Leasebacks
Holding and its Subsidiaries will not directly or indirectly, become or
remain liable (unless indemnified against such liability by a Person other than
Holding or a Subsidiary thereof) as lessee or as guarantor or other surety with
respect to any lease, whether an Operating Lease or a Capital Lease, of any
property whether now owned or hereafter acquired, (i) that Holding or its
Subsidiaries has sold or transferred or is to sell or transfer to any other
Person, or (ii) that Holding or its Subsidiaries intends to use for
substantially the same purpose as any other property that has been or is to be
sold or transferred by Holding, Company or any Subsidiary to any Person in
connection with such lease (a "Sale/leaseback"); PROVIDED that Company and its
Subsidiaries may enter into sale/leaseback arrangements if permitted by
subsections 6.6A and 6.6B.
6.9 Sale or Discount of Receivables
Except as otherwise permitted by subsection 6.7B(xiii), Holding and its
Subsidiaries will not, directly or indirectly, sell or discount notes or
accounts receivable held by any such Person; provided that the foregoing shall
not be construed to restrict or prohibit compromises, settlements, waivers,
substitutions or other modifications or agreements with respect to such notes or
accounts receivable.
6.10 Transactions with Shareholders, Affiliates and Subsidiaries
Holding and its Subsidiaries will not, directly or indirectly, enter into
or permit to exist any transaction (including, without limitation, the purchase,
sale, lease or exchange of any property or inventory or the rendering of any
service) with any holder of 5% or more of any class of equity securities of
Holding or Company or with any Affiliate of Holding or Company or of any such
holder or with any Subsidiary of Holding, as the case may be, on terms that are
less favorable to Holding or that Subsidiary, as the case may be, than those
that might be obtained at the time from Persons who are not such a holder or
Affiliate or Subsidiary; PROVIDED that the foregoing restriction shall not apply
to (i) Indebtedness and Investments permitted by subsections 6.1 or 6.3,
(ii) Contingent Obligations permitted by subsection 6.4, (iii) payments
permitted under subsection 6.5, (iv) transactions with Holding or a Subsidiary
thereof permitted by subsection 6.7, (v) any consulting, management, stock
option, stock appreciation right, or
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other employment, or deferred compensation agreement or arrangement with an
employee or director of Holding or any of its Subsidiaries that is approved
by a majority of the non-employee members of the board of directors of
Holding or its stockholders, (vi) transactions permitted by subsection 6.11,
(vii) the payment of transaction expenses in connection with this Agreement
and the transactions related hereto and thereto, (viii) the payment by any
Subsidiary of royalties for the use of products, trademarks of other
intellectual property rights, guaranty fees, and fees for technical
assistance, corporate administrative support and other services, (ix) the
payment by Holding or any Subsidiary of any amount pursuant to or in respect
of any bylaw or charter provision or agreement providing for indemnification
or reimbursement of any officer, director, employee or other agent of Holding
or any of its Subsidiaries, and (x) payments of customary director fees and
out-of-pocket expense reimbursement. For purposes of this subsection 6.10,
(A) any transaction shall be deemed to have satisfied the standard set forth
in the preceding sentence if (i) such transaction is approved by a majority
of the Disinterested Directors of the Board of Directors of Holding, the
Company or the applicable Subsidiary or (ii) a nationally recognized expert
with expertise in appraising the terms and conditions of the type of
transaction for which approval is required delivers to Holding, the Company
or the applicable Subsidiary (which shall promptly forward a copy to the
Agent) a written opinion stating that such transaction is fair to Holding,
the Company or the applicable Subsidiary from a financial point of view and
(B) "DISINTERESTED DIRECTOR" shall mean, with respect to any Person and
transaction, a member of the Board of Directors of such Person who does not
have any material direct or indirect financial interest in or with respect to
such transaction.
6.11 Disposal of Subsidiary Stock
Except as permitted by subsection 6.7 or as required by the Collateral
Documents and except for Permitted Encumbrances, neither Holding, Company nor
any Subsidiary will,
(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity securities of (or
warrants, rights or options to acquire shares or other equity securities
of) any of its Subsidiaries, except to qualify directors if necessary or
appropriate under applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other securities of (or warrants, rights or options to acquire
shares or other securities of) such Subsidiary, except to Company, another
Subsidiary or to qualify directors if required by applicable law.
6.12 Conduct of Business
Holding and its Subsidiaries will not engage in any business other than the
business they were engaged in on February 24, 1995, or business similar or
related to such business, and other lines of business consented to by Agent, and
Requisite Lenders.
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6.13 Restructuring and Affiliate Reorganizations
Notwithstanding anything else contained herein to the contrary, Holding and
its Subsidiaries may merge, consolidate, or liquidate, wind-up and dissolve, or
convey, sell, exchange, assign, lease, sub-lease, transfer or otherwise dispose
of, in one transaction or series of related transactions including, without
limitation, but not with respect to capital stock of Holding, by way of dividend
or distribution on or with respect to its capital stock, all or any portion of
its business, property or assets or all or any portion of the stock or other
evidence of beneficial ownership of any Affiliate, whether now owned or
hereafter acquired, or acquire by purchase or otherwise all or substantially all
of the business, property or fixed assets of, or stock or other evidence of
beneficial ownership of, any Affiliate, and may engage in Asset Transfers, in
order to effect the restructuring or discontinuation of certain operations at
the Proposed Closed Facilities and the transfer or other disposition, in whole
or in part, of the property and assets relating thereto.
SECTION 7. GUARANTY OF HOLDING
Holding hereby consents to and confirms its guaranty of all Obligations.
In furtherance of the foregoing, Holding hereby agrees as follows:
7.1 Guaranty by Holding
As consideration for Lenders agreeing to enter into this Agreement and
extend the Revolving Credit Commitments hereunder, Holding hereby
unconditionally and irrevocably guaranties the due and punctual payment when due
(whether by required prepayment, declaration, demand or otherwise) (including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)) of all
Obligations of Company (including, without limitation, interest which, but for
the filing of a petition in bankruptcy with respect to Company, would accrue on
such Obligations). For purposes of this Section 7, Holding is referred to as a
"Guarantor" and the obligations of Holding under this subsection 7.1 are
referred to as this "Guaranty".
Notwithstanding any other provision of this Section 7, this Guaranty and
all obligations of the Guarantor in respect hereof shall irrevocably terminate
and be null and void and of no further force or effect upon any merger or
consolidation of the Guarantor with or into Company, or any other merger,
consolidation, liquidation, winding-up or dissolution of the Guarantor as
permitted by subsection 6.7.
7.2 Terms of Guaranty
The Guarantor agrees that the Obligations of Company may be extended or
renewed, and the Revolving Credit Loans repaid and reborrowed in whole or in
part, without notice or further assent from it, and that it will remain bound
upon this Guaranty notwithstanding any extension,
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renewal or other alteration of any such Obligation or repayment and
reborrowing of the Revolving Credit Loans.
The Guarantor waives presentation of, demand of, payment from and protest
of any Obligation of Company and also waives notice of protest for nonpayment.
The obligations of the Guarantor under this Guaranty shall not be affected by,
and the Guarantor hereby waives its rights (to the extent permitted by law) in
connection with:
(a) the failure of Agent, Collateral Agent or any Lender to assert
any claim or demand or to enforce any right or remedy against Holding,
Company or any Material Domestic Subsidiary under the provisions of this
Agreement or any other agreement or otherwise,
(b) any extension or renewal of any provision thereof,
(c) any increase in the amount of the Obligations,
(d) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Agreement (subject to subsection 10.7) or any
instrument executed pursuant hereto,
(e) the release of any of the security held by Collateral Agent,
Agent or any Lender for the Obligations of Holding, Company or any Material
Domestic Subsidiary,
(f) the failure of Collateral Agent, Agent or any Lender to exercise
any right or remedy against any other guarantor of the Obligations of
Company,
(g) Collateral Agent, Agent or any Lender taking and holding security
or collateral for the payment of this Guaranty, any other guaranties of the
Obligations or other liabilities of Company and the Obligations guarantied
hereby, and exchanging, enforcing, waiving and releasing any such security
or collateral,
(h) Collateral Agent, Agent or any Lender applying any such security
or collateral and directing the order or manner of sale thereof as
Collateral Agent in its discretion may determine, or
(i) Collateral Agent, Agent or any Lender settling, releasing,
compromising, collecting or otherwise liquidating the Obligations and any
security or collateral therefor in any manner determined by Collateral
Agent, Agent, or such Lender.
The Guarantor further agrees that this Guaranty constitutes a guaranty of
payment when due and not of collection and waives any right to require that any
resort be had by Collateral Agent, Agent or any other Person to any of the
security held for payment of the Obligations of
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Company or to any balance of any deposit account or credit on the books of
Collateral Agent, Agent or any other Person in favor of Company or any other
Person.
The obligations of the Guarantor under this Guaranty shall not be subject
to any reduction, limitation, impairment or termination for any reason,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Obligations, discharge of Company from the
Obligations in a bankruptcy or similar proceeding or otherwise. Without
limiting the generality of the foregoing, the obligations of the Guarantor under
this Guaranty shall not be discharged or impaired or otherwise affected by the
failure of Collateral Agent, Agent or any Lender to assert any claim or demand
or to enforce any remedy under this Agreement or any other agreement, by any
waiver or modification of any provision thereof, by any default, failure or
delay, willful or otherwise, in the performance of the Obligations of Company,
or by any other act or thing or omission or delay to do any other act or thing
that may or might in any manner or to any extent vary the risk of the Guarantor
or would otherwise operate as a discharge of the Guarantor as a matter of law or
equity.
Collateral Agent may, at its election, foreclose on any security held by
Collateral Agent by one or more judicial or nonjudicial sales, or exercise any
other right or remedy Collateral Agent may have against Holding, Company or any
Material Domestic Subsidiary or any security without affecting or impairing in
any way the liability of the Guarantor hereunder except to the extent the
Obligations have been paid. The Guarantor waives any defense arising out of
such election by Collateral Agent, even though such election operates to impair
or extinguish any right of reimbursement or subrogation or other right or remedy
of the Guarantor against Company or any security, so long as Collateral Agent
have acted in a commercially reasonable manner.
The Guarantor further agrees that this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal of or interest on any Obligation of Company is
rescinded or must otherwise be restored by Agent, Collateral Agent or any Lender
upon the bankruptcy or reorganization of Company or otherwise.
The Guarantor further agrees, in furtherance of the foregoing and not in
limitation of any other right that Agent, Collateral Agent or any Lender may
have at law or in equity against the Guarantor by virtue hereof, upon the
failure of Company to pay any of its Obligations when and as the same shall
become due (whether by required prepayment, declaration, demand or otherwise),
the Guarantor will forthwith pay, or cause to be paid, in cash, to Agent an
amount equal to the sum of the unpaid principal amount of such Obligations,
accrued and unpaid interest on such Obligations and all other Obligations of
Company to Agent, Collateral Agent or such Lender.
So long as any of the Obligations of Company shall remain outstanding
hereunder, Guarantor hereby irrevocably waives any right of subrogation,
contribution, indemnity or
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otherwise against Company that may arise out of or be caused by this
Guaranty, all rights and/or claims against Company which may arise against
Company by reason of this Guaranty, any right to enforce any remedy that
Lenders now have or may hereafter have against Company and any benefit of,
and any right to participate in, any security now or hereafter held by
Lenders.
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon any failure of Company to pay
its Obligations when due (whether by required prepayment, declaration, demand or
otherwise) and consequent acceleration of the Obligations pursuant to Section 8,
each Lender, upon the consent of Agent and Requisite Lenders, is hereby
authorized by Guarantor at any time or from time to time, without notice to
Guarantor or to any other Person, any such notice being hereby expressly waived
to the extent permitted by applicable law, to set off and to appropriate and to
apply any and all deposits (general or special, including, not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time owing
by that Lender to or for the credit or the account of Guarantor against and on
account of the obligations and liabilities of Guarantor to that Lender under
this Guaranty, including but not limited to, all such obligations and
liabilities with respect to all claims of any nature or description arising out
of or connected with this Agreement, this Guaranty or the Letters of Credit or
any of the other Domestic Loan Documents, irrespective of whether or not Lenders
or Agent, with respect to any Obligation owed under the Letters of Credit or
this Agreement, shall have made any demand hereunder. Each Lender and Agent
agrees promptly to notify Guarantor after any such set-off and application is
made by such Lender or Agent.
Notwithstanding anything contained in this Section 7 to the contrary, this
Guaranty shall not be effective or in full force and effect until the Closing
Date.
SECTION 8. EVENTS OF DEFAULT
If on or after the Closing Date, any of the following conditions or events
("Events of Default") shall occur and be continuing:
8.1 Failure to Make Payments when Due
Failure to pay any installment of principal of any Revolving Credit Loan
made hereunder or any Eurocurrency Loan made under any Eurocurrency Credit
Agreement when due, whether at stated maturity, by acceleration, by notice of
prepayment or otherwise; or failure to pay any interest on any Revolving Credit
Loan made hereunder or any Eurocurrency Loan made under any Eurocurrency Credit
Agreement or any other amount due under this Agreement (including, without
limitation, any payment with respect to reimbursement of amounts drawn under
Letters of Credit) or any Eurocurrency Credit Agreement within three (3) days
after the date due; or
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8.2 Default in Other Agreements
Failure of Holding, Company or any Material Subsidiary (excluding
Discontinued Operations) to pay when due (x) any principal or interest on any
Indebtedness (other than Indebtedness referred to in subsection 8.1) in an
individual principal amount of $1,000,000 or more or items of Indebtedness with
an aggregate principal amount of $1,000,000 or more, or (y) any Contingent
Obligation in an individual principal amount of $1,000,000 or more or Contingent
Obligations with an aggregate principal amount of $1,000,000 or more, in each
case beyond the end of any period prior to which the obligee is prohibited from
accelerating payment thereunder; or
Breach or default of Holding or Company or any Material Subsidiary
(excluding Discontinued Operations) with respect to any other material term of
(x) any evidence of any Indebtedness in an individual principal amount of
$1,000,000 or more or items of Indebtedness with an aggregate principal amount
of $1,000,000 or more or any Contingent Obligation in an individual principal
amount of $1,000,000 or more or Contingent Obligations with an aggregate
principal amount of $1,000,000 or more, or (y) any loan agreement, mortgage,
indenture or other agreement relating thereto, with respect to Indebtedness with
an aggregate principal amount of $1,000,000 or more, if, in the case of either
clause (x) or clause (y) of this paragraph, the effect of such failure, default
or breach is then to cause, or to permit the holder or holders of that
Indebtedness or Contingent Obligation (or a trustee on behalf of such holder or
holders) then to cause, that Indebtedness or Contingent Obligation to become or
be declared due prior to its stated maturity (or the stated maturity of any
underlying obligation, as the case may be); or
8.3 Breach of Certain Covenants
Failure of Holding or Company to perform or comply with any term or
condition contained in subsections 2.5, 5.2 or 5.6 or Section 6 hereunder or to
the extent such subsections are incorporated into Section 4 of the Eurocurrency
Guaranties; or
8.4 Breach of Warranty
Any representation, warranty, certification or other statement made by
Holding, Company or any Material Subsidiary in any Loan Document or in any
statement or certificate at any time given by Holding, Company or any Material
Subsidiary in writing pursuant hereto or in connection herewith shall be false
in any material respect on the date as of which made; or
8.5 Other Defaults Under Agreement or Loan Documents
Holding, Company or any Material Subsidiary shall default in the
performance of or compliance with any term contained in this Agreement or the
other Loan Documents other than those referred to above in subsections 8.1, 8.3
or 8.4 and such default shall not have been remedied or waived within 30 days
after receipt by Holding or Company or any Material
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Subsidiary, as the case may be, of notice from Agent or Requisite Lenders
with respect to Holding or Company or any Material Subsidiary, of any such
default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of Holding or Company or any of the Material
Subsidiaries (excluding Discontinued Operations) in an involuntary case
under the Bankruptcy Code or any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, which decree or order is not
stayed; or any other similar relief shall be granted under any applicable
Federal or state law; or
(ii) an involuntary case is commenced against Holding, Company or any
Material Subsidiary (excluding Discontinued Operations) under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Holding or Company or
any Material Subsidiary (excluding Discontinued Operations), or over all or
a substantial part of its property, shall have been entered; or the
involuntary appointment of an interim receiver, trustee or other custodian
of Holding or Company or any Material Subsidiary (excluding Discontinued
Operations) for all or a substantial part of its property; or the issuance
of a warrant of attachment, execution or similar process against any
substantial part of the property of Holding or Company or any Material
Subsidiary (excluding Discontinued Operations) and the continuance of any
such event in clause (ii) for 30 days unless dismissed, bonded or
discharged: or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Holding or Company or any Material Subsidiary (excluding
Discontinued Operations) shall have an order for relief entered with
respect to it or commence a voluntary case under the Bankruptcy Code or any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of
or taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Holding or any of its Material
Subsidiaries (excluding Discontinued Operations) shall make any assignment
for the benefit of creditors; or
(ii) the general inability or failure of Holding or Company or any
Material Subsidiary, or the admission by Holding or Company or any Material
Subsidiary in writing of its general inability, to pay its debts as such
debts become due; or the Board of Directors of Holding or Company or any
Material Subsidiary (or any committee thereof) adopts any resolution to
approve or otherwise authorizes any of the actions referred to in
clause (i) or this clause (ii); or
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8.8 Judgments and Attachments
Any money judgment, writ or warrant of attachment, or similar process
involving in any individual case an amount in excess of $1,000,000 (exclusive of
any amount which is fully and adequately covered by insurance and with respect
to which the insurer has not disputed in writing its coverage, it being
understood that a reservation of rights is not to be deemed a dispute) shall be
entered or filed against Holding or Company or any Material Subsidiary
(excluding Discontinued Operations) or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 60 days or
in any event later than five days prior to the date of any proposed sale
thereunder; or
8.9 Dissolution
Except as permitted by Subsection 6.7, any order, judgment or decree shall
be entered against Holding or Company or any Material Subsidiary decreeing the
dissolution or split up of Holding or Company or any Material Subsidiary
(excluding Discontinued Operations) and such order shall remain undischarged or
unstayed for a period in excess of 30 days; or
8.10 ERISA
(i) Holding or Company or any of their respective ERISA Affiliates
fails to make full payment when due of all amounts which, under the
provisions of any Pension Plan or Section 412 of the Code, Holding or
Company or any of their respective ERISA Affiliates is required to pay as
contributions thereto;
(ii) Any accumulated funding deficiency occurs or exists, whether or
not waived, with respect to any Pension Plan;
(iii) The actuarial present value of all benefit liabilities under
all Pension Plans exceeds the fair market value of the assets of such
Pension Plans by an amount which would result in a material adverse effect
on the business or financial condition of Holding and its Subsidiaries,
taken as a whole, if all such Pension Plans were terminated;
(iv) (A) Any Pension Plan maintained by Holding or Company or any of
their respective ERISA Affiliates shall be terminated within the meaning of
Title IV of ERISA, or (B) a trustee shall be appointed by an appropriate
United States district court to administer any Pension Plan, or (C) the
PBGC (or any successor thereto) shall institute proceedings to terminate
any Pension Plan or to appoint a trustee to administer any Pension Plan, or
(D) Holding or Company or any of their respective ERISA Affiliates shall
withdraw (under Section 4063 of ERISA) from a Pension Plan, or (E) any
Termination Event resulting in any liability of Company or any ERISA
Affiliate of Company or (F) Holding or Company or any of their respective
ERISA Affiliates enters into any transaction which has as its principal
purpose the evasion of liability under subtitle D of Title IV of ERISA; or
(G) Company or any of its ERISA Affiliates engages
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in any transaction in connection with which Company or any of its ERISA
Affiliates is subject to either a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the Internal
Revenue Code;
which events set forth in clauses (i), (ii) or (iv) above would have either
individually or in the aggregate, a material adverse effect on the business or
financial condition of Holding and its Subsidiaries, taken as a whole; or
8.11 Withdrawal Liability Under Multiemployer Plan
Holding or Company or any of their respective ERISA Affiliates as employer
under a Multiemployer Plan shall have made a complete or partial withdrawal from
such Multiemployer Plan and such employer shall have incurred a withdrawal
liability that is not subject to contest in an amount which would have a
material adverse effect on the business or financial condition of Holding and
its Subsidiaries taken as a whole; or
8.12 Invalidity of Guaranties
(i) Any guaranty of the Obligations, including the Holding Guaranty,
for any reason, other than the satisfaction in full of all Obligations,
ceases to be in full force and effect or is declared to be null and void,
or any guarantor, including Holding, denies that it has any further
liability, including, without limitation, with respect to future advances
by Lenders, under any such guaranty or gives notice to such effect, except
as to any guarantor that is merged, consolidated, liquidated, wound up,
dissolved, sold or otherwise disposed of as permitted by subsection 6.7; or
(ii) Any guaranty of the obligations under the Eurocurrency Loan
Documents, for any reason, other than the satisfaction in full of such
obligations, ceases to be in full force and effect or is declared to be
null and void, or any guarantor denies that it has any further liability,
including, without limitation, with respect to future advances by
Eurocurrency Lenders, under any such guaranty or gives notice to such
effect, except as to any guarantor that is merged, consolidated,
liquidated, wound up, dissolved, sold or otherwise disposed of as permitted
by subsection 6.7; or
8.13 Change of Control
(A) Except as otherwise permitted by subsection 6.7B(i), Holding shall
cease to own and control at least 100% of the common stock and 100% of the
voting power of Company entitled to vote for an election of the board of
directors of Company; or (B) individuals who on February 24, 1995 were members
of the board of directors of Holding (together with any new directors whose
election to such board of directors or whose nomination for election by the
stockholders of Holding was approved by a vote of a majority of the directors
then still in office who were either directors on February 24, 1995 or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of such board of
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directors then in office; or (C) a "person" or "group" (within the meaning of
Section 13(d) of the Exchange Act), becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of more than 30% of the total
issued and outstanding common stock of Holding; or
8.14 Impairment of Collateral
(A) A judgment creditor of Holding or Company or any Material Subsidiary
shall obtain possession of any material portion of the Collateral by any means,
including, without limitation, levy, distraint, replevin or self-help, (B) any
substantial portion of the Collateral shall be taken by eminent domain or
condemnation, (C) any of the Collateral Documents or the Eurocurrency Security
Documents shall cease for any reason to be in full force and effect, or any
party thereto shall purport in writing to disavow its obligations thereunder or
shall declare in writing that it does not have any further obligations
thereunder or shall contest the validity or enforceability thereof or Lenders
shall cease to have a valid and perfected first priority security interest (or a
comparable interest under any law governing any Eurocurrency Security Document
or Company Pledge Agreement with respect to the capital stock of any Foreign
Subsidiary) to the extent provided for therein in any material Collateral
covered thereby except as to any Collateral Document or the Eurocurrency
Security Document that is a guaranty of a guarantor that is merged,
consolidated, liquidated, wound up, dissolved, sold or otherwise disposed of as
permitted by subsection 6.7, and except as to any Collateral that is conveyed,
sold, exchanged, leased, subleased, transferred or otherwise disposed of as
permitted by this Agreement or the Collateral Document or the Eurocurrency
Security Document relating thereto, or (D) Lenders' or Eurocurrency Lenders'
security interests or liens on any material portion of the Collateral under the
Collateral Documents or the Eurocurrency Security Documents, as appropriate,
shall become otherwise impaired or unenforceable, except as to any Collateral
that is conveyed, sold, exchanged, leased, subleased, transferred or otherwise
disposed of as permitted by this Agreement or the Collateral Document or the
Eurocurrency Security Document relating thereto, and except in each case under
the foregoing clauses (A) through (D) as to any Collateral consisting of deposit
accounts; or
8.15 Eurocurrency Credit Agreement
An Event of Default shall occur and be continuing under any Eurocurrency
Credit Agreement; or
8.16 ERISA Lien
Holding or Company or any of their respective ERISA Affiliates shall fail
to make required contributions when due under Section 412 of the Internal
Revenue Code which results in the imposition of a Lien under Section 412 of the
Internal Revenue Code to secure such unpaid contributions in an aggregate amount
in excess of $1,000,000; or
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8.17 Breach of Certain Original Credit Agreement Covenants
Failure of Holding and its Subsidiaries to comply with the covenants set
forth in Section 6 of the Original Credit Agreement for the fiscal quarter of
Holding and its Subsidiaries ended September 27, 1996, as such covenants existed
as of September 27, 1996;
THEN (i) upon the occurrence of any Event of Default described in the foregoing
subsections 8.6 or 8.7(i) with respect to Holding, Company or any Material
Domestic Subsidiary, each of (a) the unpaid principal amount of and accrued
interest on the Revolving Credit Loans, (b) an amount equal to the maximum
amount that may at any time be drawn under all Letters of Credit then
outstanding (whether or not any beneficiary under any Letter of Credit shall
have presented or be entitled to present, the drafts and other documents
required to draw under the Letter of Credit), and (c) all other Obligations,
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by Holding and its Subsidiaries, and the obligation of each
Lender to make any Revolving Credit Loan or to issue any Letter of Credit shall
thereupon terminate and (ii) upon the occurrence and during the continuance of
any other Event of Default (including any Event of Default described in the
foregoing subsections 8.6 or 8.7(i) with respect to any Material Foreign
Subsidiary), Requisite Lenders may, by written notice to Company, declare all or
any portion of the amounts described in clause (a) through (c) above to be, and
the same shall forthwith become, immediately due and payable, together with
accrued interest thereon, and the obligation of each Lender to make any
Revolving Credit Loan or to issue any Letter of Credit shall thereupon
terminate. So long as any Letter of Credit shall remain outstanding, any
amounts described in clause (b) above with respect to Letters of Credit, when
received by the Issuing Lender, shall be held by the Issuing Lender, pursuant to
such documentation as the Issuing Lender shall request, as cash collateral for
the obligation of Company to reimburse the Issuing Lender in the event of any
drawing under such Letters of Credit, and so much of such funds shall at all
times remain on deposit as cash collateral as aforesaid as shall equal the
maximum amount available at any time for drawing under all Letters of Credit
(the "Maximum Available Amount"); PROVIDED that in the event of cancellation or
expiration of any Letter of Credit or any reduction in the Maximum Available
Amount, the Issuing Lender shall apply the difference between the cash
collateral held by the Issuing Lender immediately prior to such cancellation,
expiration or reduction and the Maximum Available Amount immediately after such
cancellation, expiration or reduction first to the payment of any outstanding
Obligations, and SECOND to the payment to whomsoever shall be lawfully entitled
to receive such funds.
Notwithstanding anything contained in the foregoing paragraph, if at any
time within 60 days after acceleration of the maturity of any Revolving Credit
Loan, Holding or Company shall pay all arrears of interest and all payments on
account of the principal which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Potential Events of Default (other than non-payment of principal of
and accrued interest on the
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Revolving Credit Loans and payments of amounts referred to clauses (a), (b),
and (c) above, in each case which is due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to subsection 10.7, then
Requisite Lenders, by written notice to Company, may at their option rescind
and annul the acceleration and its consequences and return to Company any
amounts held pursuant to the cash collateral arrangement referred to above as
cash collateral in respect of the amounts described in clause (b) above; but
such action shall not affect any subsequent Event of Default or Potential
Event of Default or impair any right consequent thereon.
SECTION 9. AGENT
9.1 Appointment
NationsBank is hereby appointed sole administrative Agent hereunder by each
Lender and notwithstanding anything contained herein to the contrary, any Lender
designated as "Co-Agent" or "Syndication Agent" shall not have any authority to
act as Agent hereunder or in any other agency capacity. Each Lender hereby
authorizes Agent to act hereunder and under the other instruments and agreements
referred to herein (including, without limitation, the Collateral Documents to
which Agent is party as Collateral Agent) as its agent hereunder and thereunder.
Agent agrees to act as such upon the express conditions contained in this
Section 9 and in such Collateral Documents. The provisions of this Section 9
are solely for the benefit of Agent and Lenders, and neither Holding nor any of
its Subsidiaries shall have any rights as a third party beneficiary of any of
the provisions of this Section 9, except with respect to subsections 9.2D, 9.5,
9.6 and 9.7, and provided that Holding and its Subsidiaries shall be entitled to
rely on the appointment of any Agent or Collateral Agent pursuant hereto and on
the exercise of powers and other actions by such Agent or Collateral Agent
hereunder and under the other instruments and agreements referred to herein
(including, without limitation, such Collateral Documents). In performing its
functions and duties under this Agreement, Agent shall act solely as agent of
Lenders and does not assume and shall not be deemed to have assumed any
fiduciary or similar obligation towards or relationship of agency or trust with
or for Holding or any of its Subsidiaries.
9.2 Powers; General Immunity
A. DUTIES SPECIFIED. Each Lender irrevocably authorizes Agent to take
such action on such Lender's behalf and to exercise such powers hereunder and
under the other instruments and agreements referred to herein (including,
without limitation, the Collateral Documents) as are specifically delegated to
Agent, by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. Agent shall have only those duties and
responsibilities that are expressly specified in this Agreement and the
Collateral Documents, and it may perform such duties by or through its agents or
employees. The duties of Agent shall be mechanical and administrative in
nature; Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, expressed
or implied, is
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intended to or shall be so construed as to impose upon Agent any obligations
in respect of this Agreement or the other instruments and agreements referred
to herein except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Agent shall not be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement, any other
Domestic Loan Document or Letters of Credit, or for any representations,
warranties, recitals or statements made herein or therein or made in any written
or oral statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by Agent to Lenders or by or on behalf of Holding or any of
its Subsidiaries to Agent or any Lender or be required to ascertain or inquire
as to the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Revolving Credit Loans or the Letters of Credit or of the
existence or possible existence of any Event of Default or Potential Event of
Default. Anything contained in this Agreement to the contrary notwithstanding,
Agent shall not have any liability arising from confirmations of the amount of
outstanding Revolving Credit Loans.
C. EXCULPATORY PROVISIONS. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to Lenders for any action taken
or omitted hereunder or in connection herewith (including, without limitation,
any act or omission under the Collateral Documents) unless caused by its or
their gross negligence or willful misconduct. If Agent shall request
instructions from Lenders with respect to any act or action (including the
failure to take an action) in connection with this Agreement, Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from Requisite Lenders, or unless Agent shall
be required by the terms of this Agreement or any Collateral Document so to act
or take such action. Without prejudice to the generality of the foregoing,
(i) Agent shall be entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for Holding or any of its
Subsidiaries), accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever against Agent
as a result of Agent acting or (where so instructed) refraining from acting
under this Agreement or the other instruments and agreements referred to herein
in accordance with the instructions of Requisite Lenders. Agent shall be
entitled to refrain from exercising any power, discretion or authority vested in
it under this Agreement or the other instruments and agreements referred to
herein unless and until it has obtained the instructions of Requisite Lenders.
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, Agent in its individual capacity as a Lender hereunder. With
respect to its participation in the Revolving Credit Loans, Agent shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though it were not performing the duties and functions
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delegated to it hereunder and the term "Lender" or any similar term used in
any Loan Document shall, unless the context clearly otherwise indicates,
include Agent in its individual capacity. Each of Agent and its Affiliates
may accept deposits from, lend money to and generally engage in any kind of
banking, trust, financial advisory or other business with Holding or any
Affiliate of Holding as if it were not performing the duties specified
herein, and may accept fees and other consideration from Holding or any of
its Subsidiaries for services in connection with this Agreement and otherwise
without having to account for the same to Lenders, except as required by
subsection 2.3.
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Holding and its
Subsidiaries in connection with the making of the Revolving Credit Loans
hereunder and has made and shall continue to make its own appraisal of the
creditworthiness of Holding and its Subsidiaries. Agent shall not have any duty
or responsibility either initially or on a continuing basis to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto whether coming
into their possession before the making of the Revolving Credit Loans or any
time or times thereafter, and Agent shall not have any responsibility with
respect to the accuracy of or the completeness of the information provided to
Lenders.
9.4 Right to Indemnity
Each Lender, proportionately to its Pro Rata Share of the Revolving Credit
Commitments, severally agrees to indemnify Agent to the extent Agent shall not
have been reimbursed by Holding or its Subsidiaries, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including, without limitation, disbursements and
reasonable counsel fees) or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder in its capacity as Agent, in any way relating to or arising out
of this Agreement; PROVIDED that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent's gross negligence
or willful misconduct. If any indemnity furnished to Agent for any purpose
shall, in the opinion of Agent, be insufficient or become impaired, Agent may
call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished.
9.5 Registered Persons Treated as Owner
Agent and Holding and its Subsidiaries may deem and treat the Persons
listed as Lenders in the Register as the owner of the corresponding Revolving
Credit Loan listed therein for all purposes hereof unless and until an
assignment is made pursuant to subsection 10.2 and a written
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notice of the assignment or transfer thereof shall have been filed with
Agent, and recorded in the Register, and a copy thereof shall have been
delivered to Holding. Any request, authority or consent of any person or
entity who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and
binding on any subsequent holder, transferee or assignee of the corresponding
Revolving Credit Loan.
9.6 Collateral Documents; Appointment of Collateral Agent; Successor
Collateral Agent
Each Lender and Agent hereby appoints NationsBank as Collateral Agent, and
authorizes Collateral Agent, as such agent, to act as such under the Collateral
Documents to which Collateral Agent is party or which are entered into in favor
of Collateral Agent. Each Lender and Agent hereby further authorizes Collateral
Agent to enter into such Collateral Documents on behalf of and for the benefit
of Lenders and Agent and agrees to be bound by the terms of such Collateral
Documents; PROVIDED that, subject to the third sentence of this subsection 9.6,
Collateral Agent shall not enter into or consent to any amendment, modification,
termination or waiver (x) of any Collateral Document that releases any guarantor
or Collateral not otherwise permitted under this Agreement or such Collateral
Document, without the prior written consent of Lenders required by the fifth
sentence of subsection 10.7, and (y) of any other provision contained in any
Collateral Document without the prior written consent of Agent and Requisite
Lenders. Each Lender and Agent agrees that no Lender or Agent shall have any
right individually to realize upon the security granted by such Collateral
Documents, it being understood and agreed that such rights and remedies may be
exercised by Collateral Agent for the benefit of Lenders and Agent in accordance
with the terms of such agreements. Each Lender and Agent hereby authorize
Collateral Agent, and Collateral Agent hereby agrees, to release Collateral as
permitted or required under this Agreement or such Collateral Documents and to
execute and deliver any certificate, agreement, instrument or other document
necessary or appropriate to effect or evidence such release of Collateral, and
each Lender, Agent and Collateral Agent agree that a certificate executed, by
Collateral Agent evidencing such release of Collateral shall be conclusive
evidence of such release as to any third party. Collateral Agent shall at all
times be the same Person that is Agent. Written notice of resignation by Agent
pursuant to subsection 9.7 shall also constitute notice of resignation as
Collateral Agent; removal of Agent pursuant to subsection 9.7 shall also
constitute removal as Collateral Agent; and appointment of a successor Agent
pursuant to subsection 9.7 shall also constitute appointment of a successor
Collateral Agent.
9.7 Successor Agents
Agent may resign at any time by giving written notice thereof to Lenders
and Company, and Agent may be removed at any time with or without cause by an
instrument or concurrent instruments in writing delivered to Company and Agent
and signed by Requisite Lenders. Upon any such notice of resignation or any
such removal, Requisite Lenders shall have the right, upon five days notice to
Company, to appoint a successor Agent. If no successor Agent shall have been so
appointed by Requisite Lenders, and shall have accepted such appointment, within
30
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days after the retiring Agent's giving of notice of resignation or Requisite
Lenders' removal of the retiring Agent, then upon five days' notice to Company
the retiring Agent may, on behalf of Lenders, appoint a successor Agent which
shall be a Lender, or a commercial bank organized under the laws of the United
States of America or of any State thereof, or any Affiliate of such bank, having
a combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as an Agent hereunder by a successor Agent, that successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Agent, and the retiring or
removed Agent shall be discharged from its duties and obligations as Agent under
this Agreement. After any retiring or removed Agent's resignation or removal
hereunder 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. The resignation by Collateral Agent, removal of Collateral
Agent and appointment of successor Collateral Agent shall be as provided in the
final two sentences of subsection 9.6.
SECTION 10. MISCELLANEOUS
10.1 Representation of Lenders
Each Lender hereby represents that (a) it is a commercial lender or
financial institution, (b) it will make any Revolving Credit Loan for its own
account, (c) subject to subsection 10.2, the disposition of evidence of
Indebtedness held by that Lender shall at all times be within its exclusive
control, and (d) its participation as a Lender hereunder and extension of credit
in respect hereof will not require registration or qualification under any
securities laws.
10.2 Assignments and Participations in Revolving Credit Loans; Letters of
Credit
Notwithstanding the provisions of subsection 10.1, each Lender may assign
its rights and obligations under this Agreement and further may assign, or sell
participations in, all or any part of any Revolving Credit Loan or Revolving
Credit Loans made by it or its Commitments or any other interest herein or in
its participation in the Letters of Credit to another bank or other entity;
PROVIDED that (i) no participation or assignment shall, without the consent of
Company, require Company to file a registration statement or similar document
with the Securities and Exchange Commission or any other regulatory authority or
apply to qualify the Revolving Credit Loans under the blue sky laws of any
state; (ii) in the case of an assignment, such assignment shall (a) be assigned
to (x) an Affiliate of such Lender or another Lender with the giving of notice
to Company and Agent (EXCEPT that if any such assignment, is made without the
consent of Company, Company shall not be required to pay any amounts to such
assignee pursuant to subsections 2.6, 2.7, 2.8 or 2.9 hereof in excess of the
amounts that it would have been required to pay thereunder to the assigning
Lender), or (y) a bank or other financial institution approved by Agent and
Company, which such approvals shall not be unreasonably withheld), and (b) be
assigned pursuant to an assignment agreement substantially in the form of
EXHIBIT VII annexed hereto, (c) if made to a Person other than a Lender, be in
an amount (x) such that the Dollar Equivalent of the assigning Lender's
Revolving Credit Commitment and the commitments under
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the Eurocurrency Credit Agreements being assigned is in an aggregate minimum
amount of $5,000,000 or (y) equal to 100% of the assigning Lender's Revolving
Credit Commitment and commitments under the Eurocurrency Credit Agreements if
the Dollar Equivalent of such Lender's Revolving Credit Commitment and
commitments under the Eurocurrency Credit Agreements is less than $5,000,000
in the aggregate, and (d) be on a pro rata basis with the Eurocurrency Credit
Agreements so that the Pro Rata Share of such assignee under this Agreement
shall be equal to the Proportion (as defined in the Eurocurrency Credit
Agreements) of such assignee under the Eurocurrency Credit Agreements other
than the Eurocurrency Credit Agreement referred to in clause (iii) of the
definition of Eurocurrency Credit Agreements, PROVIDED that notwithstanding
anything herein to the contrary, an assignment may be on a non-pro rata basis
with the Eurocurrency Credit Agreements with the consent of Agent and
Company, which consent by Company shall not be unreasonably withheld; and
(iii) in the case of a participation, (A) the Lender so participating out its
Revolving Credit Loan shall remain a Lender hereunder and the Person
acquiring such participation shall not become a Lender hereunder, (B) such
Lender's obligations hereunder shall remain unchanged and it shall remain
solely responsible for the performance thereof, (C) all loan parties and
Agent shall continue to deal solely with such Lender in connection with the
relevant Revolving Credit Loan and other related transactions contemplated
hereby, (D) such Lender shall be solely responsible for any withholding taxes
or any filing or reporting requirements relating to such participation and
shall hold harmless Holding, Company, each Subsidiary and Agent and their
respective successors, permitted assigns, employees, officers, directors and
representatives against the same, and (E) the holder of any such
participation, other than an Affiliate of such Lender, shall not be entitled
to require such Lender to take or omit to take any action hereunder except
action directly affecting the extension of the final maturity of the
principal amount of a Revolving Credit Loan or Revolving Credit Commitment or
a reduction of the principal amount of or the decrease in the rate of
interest payable on the Revolving Credit Loans or any fees related thereto.
Each Lender making an assignment described in clause (i)(a)(y) of the first
proviso in the immediately preceding sentence shall pay to Agent a fee in the
amount of $2,500. In the case of an assignment authorized under this
subsection 10.2, the assignee shall have, to the extent of such assignment,
the same rights, benefits and obligations as it would if it were a Lender
hereunder, including, without limitation, the right to be considered a Lender
for purposes of the definition of the "Requisite Lenders" and the obligation
to fund Revolving Credit Loans directly to Agent pursuant to subsection 2.1C,
and the assigning Lender shall be relieved of its obligations hereunder with
respect to its Revolving Credit Commitment to the extent assigned. Company
hereby acknowledges and agrees that such assignee of any Lender shall for all
purposes hereunder be considered to be such a "Lender". In the event of an
assignment hereunder the Revolving Credit Commitments hereunder shall be
modified to reflect the Revolving Credit Commitment of such assignee.
Assignments pursuant to this subsection 10.2 shall not be deemed effective
hereunder until (i) Agent shall have been paid any fee required pursuant to
this subsection in relation to such assignment and (ii) if any such
assignment occurs while any Revolving Credit Loan is outstanding, such
assignment shall have been recorded by Agent in the Register as provided in
subsection 2.1D. Agent shall no later than five Business Days following
receipt of notice thereof, record assignments pursuant to this subsection
10.2 in the Register. Each Lender may furnish any information concerning
Holding or any of its
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Subsidiaries in the possession of that Lender from time to time to assignees
and participants (including prospective assignees and participants), subject
to subsection 10.17.
Notwithstanding the preceding provisions of this subsection 10.2, any
Lender may pledge or assign all or any portion of its rights under this
Agreement to a Federal Reserve Bank as security for borrowings therefrom;
PROVIDED no such pledge or assignment shall release any such Lender from its
obligations hereunder.
Upon its receipt of an assignment agreement substantially in the form of
EXHIBIT VII annexed hereto executed by Lender making the assignment and the
assignee and the Revolving Credit Notes subject to such assignment, Company
shall, within three Business Days after its receipt of such assignment
agreement, execute and deliver to Agent in exchange for the surrendered
Revolving Credit Note a new Revolving Credit Note payable to the order of such
assignee in amount equal to the Revolving Credit Commitment assigned to such
assignee pursuant to such assignment agreement and a new Revolving Credit Note
to the assigning Lender in an amount equal to the portion of the Revolving
Credit Commitment retained by such assigning Lender hereunder, if any. Such new
Revolving Credit Notes shall be (i) in an aggregate principal amount equal to
the aggregate principal amount of such surrendered Revolving Credit Note,
(ii) dated the effective date of such assignment agreement and (iii) otherwise
be in substantially the form of EXHIBIT XV annexed hereto.
10.3 Expenses
Whether or not the transactions contemplated hereby shall be consummated,
Holding and Company jointly and severally agree to pay promptly (i) all
reasonable costs of furnishing all opinions by counsel for Holding and its
Subsidiaries (including, without limitation, any opinions reasonably requested
by Agent as to any legal matters arising hereunder), and of Holding's and its
Subsidiaries' performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with, (ii) the
reasonable fees, expenses and disbursements of counsel to Agent in connection
with the negotiation, preparation, execution and administration of this
Agreement, the other Domestic Loan Documents, the Revolving Credit Loans
hereunder, and any amendments and waivers hereto, (iii) all the actual costs and
expenses of creating and perfecting Liens in favor of Lenders contemplated by
this Agreement and the other Domestic Loan Documents, including filing and
recording fees and expenses, recording or similar taxes, reasonable fees and
expenses of counsel for providing such opinions as Agent may reasonably request
and reasonable fees and expenses of legal counsel to Agent, (iv) all reasonable
accountable out-of-pocket expenses (including travel and due diligence expenses)
incurred by Agent in connection with the negotiation and closing of this
Agreement, (v) all other actual and reasonable accountable out-of-pocket
expenses incurred by Agent in connection with the making of the Revolving Credit
Loans hereunder and the issuance of the Letters of Credit and other extensions
of credit hereunder, and (vi) all costs and expenses (including reasonable
attorneys' fees and costs of settlement) incurred by Agent and Lenders in
connection with any work-out or collection of any portion of the Obligations or
the enforcement of any Loan Documents.
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10.4 INDEMNITY
IN ADDITION TO THE PAYMENT OF EXPENSES PURSUANT TO SUBSECTION 10.3, WHETHER
OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE CONSUMMATED, HOLDING AND
COMPANY JOINTLY AND SEVERALLY AGREE TO INDEMNIFY, PAY AND HOLD AGENT AND
LENDERS, AND THE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND AFFILIATES OF
LENDERS (COLLECTIVELY CALLED THE "INDEMNITEES") HARMLESS FROM AND AGAINST, ANY
AND ALL OTHER LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, CLAIMS, AND OUT-OF-POCKET COSTS, EXPENSES AND DISBURSEMENTS OF
ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE REASONABLE
FEES AND DISBURSEMENTS OF COUNSEL FOR SUCH INDEMNITEES) IN CONNECTION WITH ANY
INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDING COMMENCED OR THREATENED,
WHETHER OR NOT SUCH INDEMNITEE SHALL BE DESIGNATED A PARTY THERETO, THAT MAY BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THAT INDEMNITEE, IN ANY MANNER
RELATING TO OR ARISING OUT OF, THIS AGREEMENT OR THE OTHER DOMESTIC LOAN
DOCUMENTS, LENDERS' AGREEMENT TO MAKE THE REVOLVING CREDIT LOANS AND OTHER
EXTENSIONS OF CREDIT AND LENDERS' AGREEMENTS TO PURCHASE PARTICIPATIONS THEREIN
AS PROVIDED HEREIN, OR THE USE OR INTENDED USE OF THE PROCEEDS OF ANY OF THE
REVOLVING CREDIT LOANS OR OTHER EXTENSIONS OF CREDIT HEREUNDER OR IN ANY WAY
RELATING TO OR RESULTING FROM THE ACTIONS OR ASSETS OF HOLDING, COMPANY OR ANY
OF THEIR RESPECTIVE SUBSIDIARIES (THE "INDEMNIFIED LIABILITIES"); PROVIDED THAT
NEITHER HOLDING NOR COMPANY SHALL HAVE ANY OBLIGATION HEREUNDER TO ANY LENDER OR
ANY OF ITS RELATED INDEMNITEES WITH RESPECT TO INDEMNIFIED LIABILITIES ARISING
FROM THE FRAUD, GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR WILLFUL BREACH OF THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OF SUCH LENDER OR ANY OF ITS RELATED
INDEMNITEES, ALL AS DETERMINED BY A FINAL JUDGMENT OF A COURT OF COMPETENT
JURISDICTION (OR A SETTLEMENT TANTAMOUNT TO SUCH A FINAL JUDGMENT). TO THE
EXTENT THAT THE UNDERTAKING TO INDEMNIFY, PAY AND HOLD HARMLESS SET FORTH IN THE
IMMEDIATELY PRECEDING SENTENCE MAY BE UNENFORCEABLE BECAUSE IT IS VIOLATIVE OF
ANY LAW OR PUBLIC POLICY, HOLDING AND COMPANY SHALL EACH CONTRIBUTE THE MAXIMUM
PORTION THAT IT IS PERMITTED TO PAY AND SATISFY UNDER APPLICABLE LAW, TO THE
PAYMENT AND SATISFACTION OF ALL INDEMNIFIED LIABILITIES INCURRED BY THE
INDEMNITEES OR ANY OF THEM.
10.5 Set Off
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the occurrence of any Event of
Default and consequent acceleration of the Obligations pursuant to Section 8,
each Lender, upon the consent of Agent and Requisite Lenders, is hereby
authorized by Company at any time or from time to time, without notice to
Company, or to any other Person, any such notice being hereby expressly waived
to the extent permitted by applicable law, to set off and to appropriate and to
apply any and all deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or unmatured
but not including trust accounts) and any other Indebtedness at any time held or
owing by that Lender to or for the credit or the account of Company, against and
on account of the obligations and liabilities of Company to that Lender under
this Agreement or with respect to the Letters of Credit, including, but not
limited to, all such obligations and liabilities with respect to all claims of
any nature or description arising out
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of or connected with this Agreement or with respect to the Letters of Credit
or any other Loan Document, irrespective of whether or not that Lender shall
have made any demand hereunder and although said obligations and liabilities,
or any of them, may be contingent or unmatured. Each Lender and Agent agrees
promptly to notify Holding and Company after any such set-off and application
is made by such Lender or Agent.
10.6 Ratable Sharing
Lenders each agree among themselves that if any of them shall, through the
exercise of any right of counterclaim, set-off, banker's lien or otherwise or as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code, receive payment or reduction of a proportion of the aggregate amount of
principal and interest then due with respect to the Revolving Credit Loans and
the amounts payable in respect of the Letters of Credit held by that Lender, or
amounts due to that Lender in respect of facility fees or commitment fees
hereunder (collectively, the "Aggregate Amounts Due" to such Lender), which is
greater than the proportion received by any other Lender in respect to the
Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (y) notify each other Lender and Agent of
such receipt and (z) purchase participations (which it shall be deemed to have
done simultaneously upon the receipt of such payment) in the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by Lenders in proportion to the Aggregate Amounts Due them;
PROVIDED that if all or part of such proportionately greater payment received by
such purchasing Lender is thereafter recovered from such Lender, those purchases
shall be rescinded and the purchase prices paid for such participations shall be
returned to that Lender to the extent of such recovery, but without interest.
Each of Holding and Company expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by Holding or Company to that holder.
10.7 Amendments and Waivers
To the extent not otherwise expressly provided, no amendment, modification,
termination or waiver of any provision of this Agreement, or consent to any
departure by Holding or any of its Subsidiaries therefrom, shall in any event be
effective without the written concurrence of Requisite Lenders, Holding and
Company; except that any amendment, modification, termination, or waiver that
(i) changes the amount of the Revolving Credit Commitments or the principal
amount of the Revolving Credit Loans or extends the scheduled maturity thereof;
(ii) changes any Lender's Pro Rata Share, the definition of "Requisite Lenders",
or any provision of this Agreement expressly requiring the approval or
concurrence of all Lenders; (iii) extends the dates on which interest is or fees
are payable hereunder, or the maximum duration of Interest Periods; (iv) changes
the provisions contained in subsections 8.1 or 10.7; or (v) reduces any interest
rates payable on the Revolving Credit Loans or any fees (other than
administrative fees) payable hereunder, each shall be effective only if
evidenced by a writing signed by or on behalf of all Lenders, Agent, Holding and
Company; PROVIDED, HOWEVER, that
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<PAGE>
(A) SCHEDULE 1.1 annexed hereto and the Revolving Credit Commitments and Pro
Rata Shares set forth therein shall be amended from time to time to give
effect to the Revolving Credit Commitment and Pro Rata Share of each new
Lender that becomes a party to this Agreement at the time such Lender becomes
a Lender and (B) any amendment, modification or waiver that changes any
administrative fees, or the times at which such fees are payable, hereunder
shall be effective only if evidenced by a writing signed by or on behalf of
Holding, Company and each Lender affected thereby. For the purposes of
subsection 2.2E, no waiver of any Event of Default and no amendment to this
Agreement shall operate as a cure of any Event of Default unless stated in
writing in such waiver or amendment. To the extent not otherwise expressly
provided, any amendment, modification, termination or waiver of any of the
provisions contained in Section 3 shall be effective only if evidenced by a
writing signed by or on behalf of Agent, Requisite Lenders, Holding and
Company. No amendment, modification, termination or waiver of any provision
of Section 9 hereof shall be effective without the written concurrence of
Agent, Requisite Lenders, Holding and Company. No amendment, modification,
termination, or waiver of any Loan Document that releases any guarantor or
releases any Collateral under a Loan Document not otherwise permitted under
this Agreement or such Loan Document (including but not limited to, as
permitted pursuant to subsection 6.7 or 9.6 of this Agreement) shall be
effective unless evidenced by a writing signed by or on behalf of Lenders
having 80% or more of the combined aggregate amount of the Revolving Credit
Commitments or, in the case of the Revolving Credit Commitments have been
terminated, the outstanding principal amount of the Revolving Credit Loans,
if any, made thereunder. Agent may, but shall have no obligation to, with
the concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given. No notice to or demand on Holding or any of its Subsidiaries shall
entitle Holding and Company to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this subsection 10.7 shall be
binding upon Holding and Company, and each of their respective Subsidiaries.
10.8 Notices
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telecopied, telexed or sent by United States mail or
courier service and shall be deemed to have been given when delivered in person,
on receipt of telecopy or telex or four Business Days after depositing it in the
United States mail, registered or certified, with postage prepaid and properly
addressed; PROVIDED that notices to Agent shall not be effective until received.
For the purposes hereof, the addresses of the parties hereto (until notice of a
change thereof is delivered as provided in this subsection 10.8) shall be as set
forth under each party's name on the signature pages hereof.
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<PAGE>
10.9 Survival of Warranties and Certain Agreements
A. All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement, and the making of the
Revolving Credit Loans and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements set forth in subsections 2.6E, 2.6H, 2.7, 2.8E, 2.8G,
2.8H, 2.9, 10.3, 10.4 and 10.5, the agreements of Holding set forth in Section 7
(to the extent set forth therein) and the agreements of Lenders set forth in
subsections 9.2C, 9.4, 10.5, 10.6 and 10.17 shall survive the payment of the
Revolving Credit Loans and the reimbursement obligations under the Letters of
Credit and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative
No failure or delay on the part of any party hereto in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
10.11 Severability
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.12 Obligations Several; Independent Nature of Lenders' Rights
The obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement and no action taken by Lenders pursuant
hereto shall be deemed to constitute Lenders to be a partnership, an
association, a joint venture or any other kind of entity. The amounts payable
at any time hereunder to each Lender shall be a separate and independent debt,
and each Lender shall be entitled to protect and enforce its rights arising out
of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
10.13 Headings
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be
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<PAGE>
given any substantive effect.
10.14 Applicable Law
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
10.15 Successors and Assigns
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and permitted assigns of Lenders. The terms and
provisions of this Agreement shall inure to the benefit of any permitted
assignee of the Revolving Credit Loans, and in the event of such assignment, the
rights and privileges herein conferred upon Lenders shall automatically extend
to and be vested in such assignee, all subject to the terms and conditions
hereof. Neither Holding's or any of its Subsidiaries' rights nor any interest
therein hereunder may be assigned without the written consent of all Lenders.
Lenders rights of assignment are subject to subsection 10.2.
10.16 Consent to Jurisdiction and Service of Process; Waiver of Jury
Trial
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY OF THE PARTIES HERETO ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OBLIGATION MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN DALLAS, TEXAS AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT EACH OF THE PARTIES HERETO ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT OR SUCH OBLIGATION; PROVIDED
THAT SUCH PARTIES RETAIN ANY RIGHTS TO APPEAL SUCH JUDGMENT. ALL PARTIES TO
THIS AGREEMENT IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OBLIGATION. Each
of Holding and Company designates and appoints Nu-kote International, Inc. with
offices at 17950 Preston Road, Suite 690, Dallas, Texas 75252, and such other
Persons as may hereafter be selected by Holding and Company irrevocably agreeing
in writing to so serve, as its agent to receive on its behalf service of all
process in any such proceedings in any such court, such service being hereby
acknowledged by Holding and Company to be effective and binding service in every
respect. A copy of any such process so served shall be mailed by registered
mail to Holding and Company at its address provided in the applicable signature
page hereto, except that unless otherwise provided by applicable law, any
failure to mail such copy shall not affect the validity of service of process.
If any agent appointed by Holding and Company refuses to accept service, Holding
and Company hereby
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<PAGE>
agree that service upon it by registered mail shall constitute sufficient
notice. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of Agent, Collateral Agent
or any Lender to bring proceedings against Holding and each of its
Subsidiaries in the courts of any other jurisdiction.
10.17 Confidentiality
Lenders shall take normal and reasonable precautions to maintain the
confidentiality of all non-public information obtained pursuant to the
requirements of this Agreement which has been identified as such by Holding or
any of its Subsidiaries but may, in any event, make disclosures reasonably
required by any bona fide assignee or participant (or prospective assignee or
participant) in connection with the contemplated assignment of any of the
Revolving Credit Commitments or Revolving Credit Loans or participations therein
or as required or requested by any governmental agency or representative thereof
or as required pursuant to legal process; PROVIDED that (a) such assignee or
participant agrees to comply with the provisions of this subsection 10.17,
(b) such prospective assignee or participant shall have executed a
confidentiality agreement substantially in the form of EXHIBIT V annexed hereto,
(c) unless specifically prohibited by applicable law or court order, each Lender
shall notify Company of any requirement or request by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of such Lender by such governmental
agency) and any requirement pursuant to legal process of or for disclosure of
such information, and (d) in no event shall any Lender be obligated or required
to return any materials furnished by Holding and its Subsidiaries.
10.18 Interest and Charges
It is not the intention of any parties to this Agreement to make an
agreement in violation of the laws of any applicable jurisdiction relating to
usury. Regardless of any provision in any Loan Documents, no Lender shall ever
be entitled to receive, collect or apply, as interest on the Obligations, any
amount in excess of the Maximum Amount. If any Lender or participant ever
receives, collects or applies, as interest, any such excess, such amount which
would be excessive interest shall be deemed a partial repayment of principal and
treated hereunder as such; and if principal is paid in full, any remaining
excess shall be paid to Company. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Maximum Amount,
Company and Lenders shall, to the maximum extent permitted under Applicable Law,
(a) characterize any nonprincipal payment as an expense, fee or premium rather
than as interest, (b) exclude voluntary prepayments and the effect thereof, and
(c) amortize, prorate, allocate and spread in equal parts, the total amount of
interest throughout the entire contemplated term of the Obligations so that the
interest rate is uniform throughout the entire term of the Obligations;
provided, however, that if the Obligations are paid and performed in full prior
to the end of the full contemplated term thereof, and if the interest received
for the actual period of existence thereof exceeds the Maximum Amount, Lenders
shall refund to Company the amount of such excess or credit the amount of such
excess against the total principal amount of the Obligations owing, and, in such
event, Lenders shall not be subject to
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<PAGE>
any penalties provided by any laws for contracting for, charging or receiving
interest in excess of the Maximum Amount. This Section shall control every
other provision of all agreements pertaining to the transactions contemplated
by or contained in the Loan Documents.
10.19 Amendment, Restatement, Extension, Renewal and Increase
This Agreement is a renewal, extension, amendment, increase and restatement
and, as such, except for the "Obligations" as defined in the Original Credit
Agreement (which shall survive and shall be renewed, extended, increased and
restated by the terms of this Agreement), all other terms and provisions of this
Agreement supersede in their entirety the Original Credit Agreement. All Liens
created under the Collateral Documents shall remain valid, binding and
enforceable Liens against the Persons which granted such Liens.
10.20 Counterparts; Effectiveness
This Agreement and any amendments, waivers, consents, or supplements may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt of
written or telephonic notification of such execution and authorization of
delivery thereof by Holding, Company and Agent.
Holding and Company hereby acknowledge and agree that on and after the
Closing Date, each reference in the Loan Documents to the "Credit Agreement",
"thereunder", "thereof' and words of like import referring to the Credit
Agreement shall mean and be a reference to this Agreement.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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<PAGE>
WITNESS the due execution hereof by the respective duly authorized officers
of the undersigned as of the date first written above.
NU-KOTE INTERNATIONAL, INC.,
as Borrower
By: /s/ STEVEN J. DIPASQUALE
---------------------------------
Name: Steven J. DiPasquale
---------------------------------
Title: Treasurer
---------------------------------
Notice Address:
Nu-kote International, Inc.
Suite 690, LB 21
17950 Preston Road
Dallas, Texas 75252
Attention: Treasurer
NU-KOTE HOLDING, INC.,
as Guarantor
By: /s/ STEVEN J. DIPASQUALE
---------------------------------
Name: Steven J. DiPasquale
---------------------------------
Title: Treasurer
---------------------------------
Notice Address:
Nu-kote Holding, Inc.
Suite 690, LB 21
17950 Preston Road
Dallas, Texas 75252
Attention: Treasurer
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<PAGE>
NATIONSBANK OF TEXAS, N.A.
as a Lender and as Administrative Agent and
Collateral Agent
By: /s/ JOSEPH G. TAYLOR
---------------------------------
Name: Joseph G. Taylor
---------------------------------
Title: Senior Vice President
---------------------------------
Notice Address:
NationsBank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Attention: Joseph G. Taylor
Senior Vice President
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<PAGE>
BARCLAYS BANK PLC,
as a Lender and as Documentation Agent
By: /s/ L. PETER YETMAN
---------------------------------
Name: L. Peter Yetman
---------------------------------
Title: Associate Director
---------------------------------
Notice Address:
Barclays Bank PLC
222 Broadway, 11th Floor
New York, New York 10038
Attention: Peter Yetman
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<PAGE>
COMMERZBANK AKTIENGESELLSCHAFT ATLANTA AGENCY
By: /s/ H. YERGEY -- E. KAGERER
---------------------------------
Name: H. Yergey--E.Kagerer
---------------------------------
Title: V.President--V.President
---------------------------------
Notice Address:
Commerzbank Aktiengesellschaft
Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Harry P. Yergey
Vice President
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<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ ROBERT IVOSEVICH
---------------------------------
Name: Robert Ivosevich
---------------------------------
Title: Senior Vice President
---------------------------------
Notice Address:
Credit Lyonnais
2200 Ross Avenue, Suite 4400W
Dallas, Texas 75201
Attention: Timothy M. O'Connor
Assistant Vice President
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<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ JENNY A. GILPIN
---------------------------------
Name: Jenny A. Gilpin
---------------------------------
Title: Vice President
---------------------------------
Notice Address:
The First National Bank of Chicago
One First National Plaza, Mail Suite 0088
Chicago, Illinois 60670-0088
Attention: Jenny Gilpin
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<PAGE>
SOCIETE GENERALE
By: /s/ RICHARD M. LEWIS
---------------------------------
Name: Richard M. Lewis
---------------------------------
Title: Vice President
---------------------------------
Notice Address:
Societe Generale
Trammell Crow Center, Suite 4800
2001 Ross Avenue
Dallas, Texas 75201
Attention: Richard M. Lewis
Vice President
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<PAGE>
DEUTSCHE BANK AG NEW YORK BRANCH AND/OR CAYMAN
ISLANDS BRANCH
By: /s/ RALF HOFFMANN
---------------------------------
Name: Ralf Hoffmann
---------------------------------
Title: Vice President
---------------------------------
By: /s/ ROBERT M. WOOD, JR.
---------------------------------
Name: Robert M. Wood, Jr.
---------------------------------
Title: Vice President
---------------------------------
Notice Address:
Deutsche Bank AG New York Branch
31 West 52nd Street, 24th Floor
New York, New York 10019
Attention: Robert M. Wood, Jr.
Vice President
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<PAGE>
ABN AMRO BANK, N.V.
By: /s/ LAURIE C. TUZO
---------------------------------
Name: Laurie C.Tuzo
---------------------------------
Title: Vice President and Director
---------------------------------
By: /s/ RONALD A. MAHLE
---------------------------------
Name: Ronald A. Mahle
---------------------------------
Title: Group Vice President and
Director
---------------------------------
Notice Address:
ABN AMRO Bank, N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Laurie C. Tuzo
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<PAGE>
EXHIBIT IA
[FORM OF NOTICE OF BORROWING]
Reference is made to that certain Amended and Restated Credit Agreement
dated as of October 11, 1996 (such agreement, as it may be amended, amended and
restated, supplemented or otherwise modified from time to time, being the
"Credit Agreement"; capitalized terms used herein without definition shall have
the meanings assigned those terms in the Credit Agreement) by and among Nu-kote
Holding, Inc., a Delaware corporation ("Holding"), Nu-kote International, Inc.,
a Delaware corporation ("Borrower"), the Lenders party thereto ("Lenders"),
Barclays Bank PLC, as Documentation Agent, and NationsBank of Texas, N.A., as
administrative agent ("Agent") and collateral agent.
Pursuant to the Credit Agreement, this represents Borrower's request to
borrow on ___________________ from Lenders on a pro rata basis $____________ as
[Base Rate/Eurodollar Rate] Loans. [The Interest Period for such Eurodollar
Rate Loans is requested to be a [one/two/three/six] month period]. The proceeds
of such Loans are to be deposited in Borrower's account at the office of Agent
located at NationsBank Plaza, 901 Main Street, 67th Floor, Dallas, Texas 75202.
The Borrower hereby certifies that (i) the representations and warranties
contained in the Credit Agreement and the other Loan Documents are true and
correct in all material respects on and as of the Funding Date to the same
extent as though made on and as of the Funding Date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties were true and correct in all material
respects on and as of such earlier date; (ii) no Event of Default or Potential
Event of Default has occurred and is continuing under the Credit Agreement or
will result from the proposed borrowing requested hereby; (iii) as of the
Funding Date Borrower and Holding will have in all material respects performed
all agreements and satisfied all conditions that under the Credit Agreement are
to be performed by either or both of them on or before the Funding Date;
(iv) after giving effect to the proposed borrowing requested hereby, the Total
Utilization of Revolving Credit Commitments will not exceed the aggregate
Revolving Credit Commitment in effect on the proposed Funding Date; and (v) each
of the other conditions to funding set forth in subsection 3.2B of the Credit
Agreement will be satisfied on the proposed Funding Date.
DATED: NU-KOTE INTERNATIONAL, INC.
-----------------------------
By:
----------------------------------
Name:
---------------------------
Title:
--------------------------
<PAGE>
EXHIBIT IB
[FORM OF NOTICE OF ISSUANCE OF
LETTER OF CREDIT]
Reference is made to that certain Amended and Restated Credit Agreement
dated as of October 11, 1996 (such agreement, as it may be amended, amended
and restated, supplemented or otherwise modified from time to time, being the
"Credit Agreement"; capitalized terms used herein without definition shall
have the meanings assigned those terms in the Credit Agreement), by and among
Nu-kote Holding, Inc., a Delaware corporation ("Holding"), Nu-kote
International, Inc., a Delaware corporation ("Borrower"), the Lenders party
thereto ("Lenders"), Barclays Bank PLC, as Documentation Agent, and
NationsBank of Texas, N.A., as administrative agent and collateral agent.
Pursuant to the Credit Agreement, this represents Borrower's request to
have [1](1) issue a Letter of Credit for the account of Borrower on [2](2) in
the face amount of $[3](3) with an expiration date of [4](4) for the benefit
of [5].
The Borrower hereby certifies that (i) the representations and
warranties contained in the Credit Agreement and the other Loan Documents are
true and correct in all material respects on and as of the date hereof to the
same extent as though made on and as of the date hereof, except to the extent
such representations and warranties specifically relate to an earlier date,
in which case such representations and warranties were true and correct in
all material respects on and as of such earlier date; (ii) no Event of
Default or Potential Event of Default has occurred and is continuing under
the Credit Agreement or will result from the proposed issuance of the Letter
of Credit requested hereby; (iii) Borrower and Holding have in all material
respects performed all agreements and satisfied all conditions that under the
Credit Agreement are to be performed by either or both of them on or before
the date hereof; (iv) after giving effect to the proposed issuance, the Total
Utilization of Revolving Credit Commitments will not exceed the
- -----------
(1) Insert name of Issuing Lender.
(2) Insert proposed date of issuance of Letter of Credit.
(3) Insert face amounts of Letter of Credit in numbers.
(4) Insert expiration date for the Letter of Credit.
(5) Insert name and address of the beneficiary of the Letter of Credit.
<PAGE>
aggregate Revolving Credit Commitments; and (v) each of the other conditions
to the issuance of a Letter of Credit set forth in subsection 3.3 of the
Credit Agreement will be satisfied on the proposed date of issuance of the
Letter of Credit requested hereby.
DATED: NU-KOTE INTERNATIONAL, INC.
--------------------------
By:
-----------------------------------
Name:
-----------------------------
Title:
----------------------------
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<PAGE>
EXHIBIT II
[FORM OF NOTICE OF CONVERSION/CONTINUATION]
Reference is made to that certain Amended and Restated Credit Agreement
dated as of October 11, 1996 (such agreement as it may be amended, amended and
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"; capitalized terms used herein without definition shall have the
meanings assigned to those terms in the Credit Agreement) by and among Nu-kote
Holding, Inc., a Delaware corporation, Nu-kote International, Inc., a Delaware
corporation ("Borrower"), the lenders party thereto, Barclays Bank PLC, as
Documentation Agent, and NationsBank of Texas, N.A., as administrative agent and
collateral agent for the lenders party thereto.
Pursuant to the Credit Agreement, this represents Borrower's request to
[convert $___________ in principal amount of [Base Rate/Eurodollar Rate] Loans
[with an Interest Period expiration date of _______________, 19___] to Base
Rate/Eurodollar Rate Loans on _________________, 19___.] [The Interest Period
for such Eurodollar Rate Loans is requested to be a _________ period.] [continue
as Eurodollar Rate Loans $_______________ in principal amount of presently
outstanding Revolving Credit Loans with an Interest Period expiration date of
____________, 19___.] [The Interest Period for such Eurodollar Rate Loans
commencing on such Interest Period expiration date is requested to be a
______________ period.] Borrower certifies that no Event of Default or
Potential Event of Default has occurred and is continuing under the Credit
Agreement or will result from the proposed [conversion/continuation].
DATED: NU-KOTE INTERNATIONAL, INC.
----------------------------
By:
----------------------------------
Name:
----------------------------
Title:
---------------------------
<PAGE>
EXHIBIT III
_____________, 1996
To the Parties named on Schedule I hereto
Dear Sirs:
Reference is made to the legal opinion rendered by this firm, addressed
to you dated February 24, 1995, a copy of which is attached hereto as Exhibit
A (the "Original Opinion"). Unless otherwise defined herein, all terms used
herein shall have the meaning given such terms in the Original Opinion.
You have advised us that the U.S. Credit Agreement is being amended and
restated in its entirety pursuant to an Amended and Restated Credit Agreement
dated _____________, 1996, by and among Holding, Company, Administrative
Agent, Collateral Agent, Documentation Agent, and the lenders party thereto
(the "Amended and Restated Credit Agreement"). You have further advised us
that in connection with the Amended and Restated Credit Agreement (a) each of
the Collateral Documents is being acknowledged, ratified, reaffirmed and
modified pursuant to an Acknowledgement dated as of ______________, 1996,
executed by the Loan Parties (the "Acknowledgement"), and (b) each of the
Term Notes and Revolving Credit Notes executed in connection with the U.S.
Credit Agreement (and as defined therein) (collectively, the "Prior Notes")
are being amended and restated in their entirety in the form of (i) a
Revolving Credit Note dated ___________, 1996, executed by Borrower payable
to NationsBank of Texas, N.A. in the amount of $_____________, (ii) a
Revolving Credit Note executed by Borrower payable to Barclays Bank PLC in
the amount of $_________________, (iii) a Revolving Credit Note dated
___________, 1996, executed by Borrower payable to COMMERZBANK
Aktiengesellschaft Atlanta Agency in the amount of $_____________, (iv) a
Revolving Credit Note executed by Borrower payable to Credit Lyonnais, New
York Branch in the amount of $_________________, (v) a Revolving Credit Note
dated ___________, 1996, executed by Borrower payable to The First National
Bank of Chicago in the amount of $_____________, (vi) a Revolving Credit Note
executed by Borrower payable to Societe Generale in the amount of
$_________________, (vii) a Revolving Credit Note dated ___________, 1996,
executed by Borrower payable to Bank of Scotland in the amount of
$_____________, (viii) a Revolving Credit Note executed by Borrower payable
to Deutsche Bank AG, New York and/or Cayman Islands Branch in the amount of
$_________________, and (ix) a Revolving Credit Note executed by Borrower
payable to ABN AMRO Bank N.V. in the amount of $_________________ (such notes
are collectively referred to herein as the "New Notes") (the
<PAGE>
To the Parties named on Schedule I hereto
Page 2
Amended and Restated Credit Agreement, the Acknowledgement and the New Notes
are collectively referred to herein as the "Restatement Documents").
You have provided to us and we have reviewed copies of the Amended and
Restated Credit Agreement, the Acknowledgement and the New Notes. You have
requested that we reaffirm our original opinion and render the additional
opinions expressed herein. In that regard, please be advised that based upon
our review of the Amended and Restated Credit Agreement, the Acknowledgement
and the New Notes and on such examinations of law as we have deemed relevant
for purposes of this letter, but subject to and based on all assumptions and
limitations set forth in the Original Opinion (which are incorporated herein
by reference for all purposes to the same extent as if set forth herein
verbatim), we are of the opinion that:
1. Each Loan Party is duly incorporated, validly existing and in good
standing under the laws of the state or commonwealth in which it was
incorporated, and has the corporate power and authority to own and
operate its property, to lease the property it operates and to conduct
the business in which it is currently engaged.
2. Each Loan Party has the corporate power and authority to execute,
deliver and perform on its behalf the Restatement Documents to which
it is a party, and has taken all necessary corporate action to
authorize the execution and delivery of the Restatement Documents to
which it is a party, and to authorize the performance by it of its
obligations under such documents.
3. No consent or authorization of, filing with, or, other act by or in
respect of, any federal, Delaware or Texas governmental authority is
required in connection with the borrowings under the Amended and
Restated Credit Agreement or with the execution, delivery, validity or
enforcement of the Restatement Documents, other than consents,
authorizations, filings and other acts made, obtained or done prior to
the date hereof.
4. Each of the Restatement Documents to which a Loan Party is a party has
been duly executed and delivered on behalf of such Loan Party, and
constitutes a valid, binding and legal obligation of such Loan Party.
5. The execution, delivery and performance of the Restatement Documents,
the borrowings contemplated by the Amended and Restated Credit
Agreement and the granting of the security interests granted by the
Collateral Documents do not and will not violate the certificate of
incorporation or by-laws of any Loan Party or any material federal or
Texas law known to us to be applicable to or binding upon the Loan
Parties.
<PAGE>
To the Parties named on Schedule I hereto
Page 3
Our Original Opinion is hereby reaffirmed effective the date hereof
after giving effect to the Amended and Restated Credit Agreement and the
Acknowledgement to the same extent as if rendered on the date hereof and is
not limited by or rendered inaccurate as a result of (a) the amendment and
restatement of the U.S. Credit Agreement in the form of the Amended and
Restated Credit Agreement, (b) the modification of the Collateral Documents
pursuant to the Acknowledgement, or (c) the amendment and restatement of the
Prior Notes pursuant to the New Notes.
Very truly yours,
[Name of Firm]
<PAGE>
Schedule I
NationsBank of Texas, N.A., as Administrative Lender, Collateral Agent and a
Lender
Barclays Bank PLC, as Documentation Agent and a Lender
COMMERZBANK Aktiengesellschaft Atlanta Agency, as a Lender
Credit Lyonnais, New York Branch, as a Lender
The First National Bank of Chicago, as a Lender
Societe Generale, as a Lender
Bank of Scotland, as a Lender
Deutsche Bank AG, New York and/or Cayman Islands Branch, as a Lender
ABN AMRO Bank N.V., as a Lender
<PAGE>
EXHIBIT IV
__________, 1996
NationsBank of Texas, N.A.,
as Administrative Agent
NationsBank Plaza
901 Main Street
Dallas, Texas 75201
Re: Loans to Nu-kote International, Inc.
------------------------------------
Ladies and Gentlemen:
We have acted as counsel to NationsBank of Texas, N.A., as agent ("Agent"),
in connection with the preparation and delivery of an Amended and Restated
Credit Agreement dated as of October 11, 1996 (the "Credit Agreement";
capitalized terms used herein without definition shall have the meanings set
forth in the Credit Agreement) by and among Nu-kote Holding, Inc., a Delaware
corporation ("Holding"), Nu-kote International, Inc., a Delaware corporation
("Borrower"), the lenders party thereto ("Lenders"), Barclays Bank PLC, as
Documentation Agent, NationsBank of Texas, N.A., as Administrative Agent and
Collateral Agent, and in connection with the preparation and delivery of certain
related documents.
We have participated in various conferences with representatives of
Holding, Borrower, and Agent and conferences and telephone calls with McGlinchey
Stafford Lang and Debevoise & Plimpton, counsel to Holding and Borrower, and
with your representatives, during which the Credit Agreement and related matters
have been discussed, and we have also participated in the meeting held on the
date hereof (the "Closing") incident to the making of the initial extensions of
credit under the Credit Agreement. We have reviewed the forms of the Credit
Agreement and the exhibits thereto, and the opinion of McGlinchey Stafford Lang
(the "Opinion") and officers' certificates and other documents delivered at the
Closing. We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals or copies, the due authority of all
persons executing the same, and we have relied as to factual matters on the
documents which we have reviewed.
Although we have not independently considered all of the matters covered by
the Opinion to the extent necessary to enable us to express the conclusions
therein stated, we believe that the Credit Agreement and the exhibits thereto
are in substantially acceptable legal form, and that the Opinion and the
certificates and other documents delivered in connection with the execution and
<PAGE>
delivery of, and as conditions to the making of the initial extensions of credit
under, the Credit Agreement are substantially responsive to the requirements of
the Credit Agreement.
Respectfully submitted,
<PAGE>
EXHIBIT V
[FORM OF CONFIDENTIALITY AGREEMENT]
The undersigned, _____________________________, a prospective
[assignee/participant] to that certain Amended and Restated Credit Agreement
dated as of October 11, 1996 (such agreement, as it may be amended, amended
and restated, supplemented or otherwise modified from time to time, being the
"Credit Agreement"; capitalized terms used herein without definition shall
have the meanings assigned those terms in the Credit Agreement) by and among
Nu-kote Holding, Inc., a Delaware corporation ("Holding"), Nu-kote
International, Inc., a Delaware corporation ("Company"), the Lenders party
thereto, Barclays Bank PLC, as Documentation Agent, and NationsBank of Texas,
N.A., as administrative agent and collateral agent, ("Prospective
[Assignee/Participant]"), hereby agrees as follows for the benefit of Holding
and Company:
Prospective [Assignee/Participant] agrees that all financial
statements, financial projections, operating or other data, tax
returns, reports and other information, that have been or may be
provided to (i) Prospective [Assignee/Participant], (ii) the employees
and agents of Prospective [Assignee/Participant], and/or
(iii) accountants, attorneys or other professionals retained by such
parties whether delivered by Holding or Company or its Subsidiaries or
otherwise shall be kept strictly confidential by such recipients, and
shall be used solely in connection with its consideration of [an
assignment/a participation] in respect of the Credit Agreement;
PROVIDED, that Prospective [Assignee/Participant] may, in any event,
make disclosures as required or requested by any governmental agency
or representative thereof or as required pursuant to legal process.
Unless specifically prohibited by applicable law or court order,
Prospective [Assignee/Participant] shall notify Company of any
requirement or request by any governmental agency or representative
thereof (other than any such request in connection with an examination
of the financial condition of such Prospective [Assignee/Participant]
by such governmental agency) and any requirement pursuant to legal
process of or for disclosure of such information. In no event shall
Prospective [Assignee/Participant] be obligated or required to return
any materials furnished by Holding and its Subsidiaries.
THIS CONFIDENTIALITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES).
- --------------------------------------------------------------------------------
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
- --------------------------------------------------------------------------------
<PAGE>
IN WITNESS WHEREOF, the Prospective [Assignee/Participant] has caused
this Agreement to be executed by its officer thereunto duly authorized, as of
_________________, 19____.
[NAME OF PROSPECTIVE ASSIGNEE/PARTICIPANT]
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
-2-
<PAGE>
EXHIBIT VI
FORM OF COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected Treasurer of Nu-kote Holding, Inc., a
Delaware corporation ("Holding").
(2) I have reviewed the terms of the Amended and Restated Credit
Agreement dated as of October 11, 1996, by and among Holding, Nu-kote
International, Inc., a Delaware corporation ("Borrower"), the lenders party
thereto, Barclays Bank PLC as documentation agent for such lenders and
NationsBank of Texas, N.A., as administrative agent and collateral agent, (as
such agreement may have been amended, amended and restated, supplemented or
otherwise modified from time to time to and including the date hereof (the
"Credit Agreement"); capitalized terms used herein without definition shall
have the meanings assigned to those terms in the Credit Agreement). I have
also reviewed the terms of the other Loan Documents. I have made, or have
caused to be made under my supervision, a review in reasonable detail of the
transactions and conditions of Holding and its Subsidiaries during the
accounting period covered by the attached financial statements.
(3) The examinations described in paragraph (2) made by me or under
my supervision did not disclose, and I have no knowledge of, the existence of
any condition or event that constitutes an Event of Default or Potential
Event of Default during or at the end of the accounting period covered by the
attached financial statements or as of the date of this Certificate, except
as set forth below; and
(4) As of the date of this Certificate, I have no knowledge of any
respect in which Holding and its Subsidiaries are in default under any
negative covenant set forth in Section 6 of the Credit Agreement, except as
set forth below.
[Describe below (or in a separate attachment to this Certificate) the
exceptions, if any, to paragraphs (3) and (4) by listing, in detail, the nature
of the condition or event, the period during which it has existed and the
action which Holding or Borrower has taken, is taking, or proposes to take with
respect to each such condition or event:]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
The foregoing certifications, together with the computations set forth
in Attachment No. 1 hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this _____ day of
______________, 19___ pursuant to subsection 5.1(iii) of the Credit Agreement.
NU-KOTE HOLDING, INC.
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
-2-
<PAGE>
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
(EXHIBIT VI)
(The Certificate attached hereto is as of ___________ and pertains to the
period from _____________________________ to ________________________________.)
Capitalized terms used herein shall have the meanings set forth in the
Amended and Restated Credit Agreement dated as of October 11, 1996, by and
among Nu-Kote Holding, Inc., a Delaware corporation, Nu-Kote International,
Inc., a Delaware corporation ("Borrower"), the lenders party thereto,
Barclays Bank PLC as Documentation Agent for such lenders ("Documentation
Agent"), and NationsBank of Texas, N.A., as Administrative Agent and
Collateral Agent. Subsection references herein relate to the subsections of
the Credit Agreement.
A. Subsection 6.1(vi) Indebtedness of Discontinued
Operations
1. For working capital and other general corporate
purposes
a. Maximum $2,000,000
b. Actual $________
2. Additional Indebtedness
a. Maximum $5,000,000
b. Actual $________
B. Subsection 6.1(vii) Indebtedness of Latin American
Subsidiaries
1. Maximum $3,000,000
2. Actual $________
C. Subsection 6.1(x) Indebtedness for financing
insurance policies premiums
1. Maximum $3,000,000
2. Actual $________
D. Subsection 6.1(xii) Indebtedness in respect of
Acquisition Debt
1. Maximum $25,000,000
2. Actual $________
E. Subsection 6.1(xiv) Other Indebtedness
1. Maximum $5,000,000
2. Actual $________
VI - Attachment 1 - 1
<PAGE>
F. Subsection 6.3(vi) Investments in N-K Interface
Limited
1. Maximum $500,000
2. Actual $________
G. Subsection 6.3(vii) Investments in Eurocurrency
Borrowers
1. Maximum $15,000,000
2. Actual $________
H. Subsection 6.3(viii) Investments in Latin American
Subsidiaries
1. Maximum $5,000,000
2. Actual $________
I. Subsection 6.3(ix) Investments by Grief and
Hardcopy Deutschland in its Subsidiaries and
Chinese questions
1. Maximum $5,000,000
2. Actual $________
J. Subsection 6.3(x) Investments by Produktions and
Pelikan Hardcopy in its Subsidiaries
1. Maximum $20,000,000
2. Actual $________
K. Subsection 6.3(xi) Investments by Pelikan in its
Subsidiaries and U.K. Subsidiaries
1. Maximum $5,000,000
2. Actual $________
L. Subsection 6.3(xii) Investments by Greif and
Hardcopy Deutschland in Produktions, Pelikan
Hardcopy and Pelikan Scotland
1. Maximum $15,000,000
2. Actual $________
M. Subsection 6.3(xiii) Investments by Produktions
and Pelikan Hardcopy in Greif, Hardcopy
Deutschland and Pelikan Scotland
1. Maximum $15,000,000
2. Actual $________
N. Subsection 6.3(xiv) Investments by Pelikan
Scotland in Greif, Hardcopy Deutschland,
Produktions or Pelikan Scotland
1. Maximum $15,000,000
2. Actual $________
VI - Attachment 1 - 2
<PAGE>
O. Subsection 6.3(xv) Investments by Greif,
Hardcopy Deutschland, Produktions, Pelikan
Hardcopy and Pelikan Scotland in the Company
1. Maximum $30,000,000
2. Actual $________
P. Subsection 6.3(xvi) Other Investments
1. Maximum $5,000,000
2. Actual $________
Q. Aggregate Investments since Closing Date
(exclusive of Permitted Acquisitions) in Foreign
Subsidiaries pursuant to subsection 6.3 and
subsection 6.7(B)(viii)
1. Maximum $30,000,000
2. Actual $________
R. Subsection 6.4(xiii) Contingent Obligations in
respect of bonds
1. Maximum $1,000,000
2. Actual $________
S. Subsection 6.4(xiv) Other Contingent Obligations
1. Maximum $2,000,000
2. Actual $________
T. Subsection 6.5(i) Restricted Junior Payments
Generally
1. Maximum
a. $12,000,000
b. 25% of Consolidated Net Income from $________
Closing Date
c. (a) + (b) $________
2. Actual $________
U. Subsection 6.5(ii) Restated Junior Payments for
Stock options
1. Maximum $6,000,000
2. Actual $________
V. Subsection 6.6A Consolidated Total Debt to
Consolidated EBITDA Ratio (commencing with the
fiscal quarter ending in December 1996)
1. Consolidated Total Debt $________
a. Total long-term debt
b. Long-term Capital Leases
VI - Attachment 1 - 3
<PAGE>
c. Current portion of long-term debt and
Capital Leases
d. Notes payable
e. Effect on (a) through (d) above resulting
from Discontinued Operations
f. Consolidated Total Debt $________
(a) + (b) + (c) + (d) - (e)
2. Consolidated EBITDA for the prior four fiscal $________
quarters ending on or before such date of
determination
a. Consolidated Net Income
(i) Net income (after provisions for $________
taxes and extraordinary items)
(ii) Income or loss of any Person merged $________
with, acquired or consolidated
with, which income or losses
accrued prior to the date of such
merger, acquisition or consolidation
(iii) Consolidated Net Income $________
(i) - (ii)
b. Provisions for taxes based on income $________
c. Consolidated Interest Expense $________
d. To the extent Consolidated Net Income has $________
been reduced thereby, amortization expense,
depreciation expense and other non-cash
expenses
e. Losses on Asset Sales $________
f. Extraordinary losses (excluding those $________
relating to environmental matters and ERISA
matters)
g. Other non-cash items reducing Consolidated $________
Net Income (excluding write-offs of
Inventory and accounts receivable)
h. Gains on Asset Sales $________
i. Consolidated Interest Income $________
j. Extraordinary gains (including those $________
relating to environmental matters and
ERISA matters)
VI - Attachment 1 - 4
<PAGE>
k. Other non-cash items increasing $________
Consolidated Net Income
(a) + (b) + (c) + (d) + (e) + (f) + (g) - $________
(h) - (i) - (j) - (k)
Effect on any of the above components resulting
from Discontinued Operations shall be excluded
from such calculations
3. Consolidated Total Debt to Consolidated EBITDA
Ratio
(Line 1 divided by Line 2)
4. Maximum Leverage Ratio permitted by subsection
6.6A
a. For the first eight fiscal quarters 3.50 : 1.00
commencing with the fiscal quarter ending
in December 1996
b. Thereafter 3.00 : 1.00
W. Subsection 6.6B Minimum Interest Coverage Ratio
(commencing with the fiscal quarter ending in
December 1996)
1. Consolidated EBITDA (see A.2. above) as of the $________
last day of each fiscal quarter (calculated on
a consolidated basis for the period comprised
of four fiscal quarters ending on the last day
of each such fiscal quarter)
2. Consolidated Interest Expense as of the last $________
day of each fiscal quarter (calculated on a
cumulative basis for the period comprised of
four fiscal quarters ending on the last day of
each such fiscal quarter)
a. Total interest expenses (paid or accrued) $________
b. Interest component of Capital Leases $________
c. All commissions, discounts and other fees $________
and charges owed with respect to any
financing or letters of credit
d. Net costs under interest rate and foreign $________
currency protection agreements
(a) + (b) + (c) + (d)
3. Interest Coverage Ratio ____ : 1.00
(Line 1 divided by Line 2)
4. Minimum Interest Coverage Ratio required by 3.00 : 1.00
subsection 6.6B
X. Subsection 6.6C Minimum Consolidated Net Worth
1. Consolidated Total Assets $________
2. Consolidated Total Liabilities $________
VI - Attachment 1 - 5
<PAGE>
3. Currency translation adjustments $________
4. Consolidated Net Worth $________
(Line 1 minus Line 2 plus/minus Line 3)
5. Base Amount $80,000.00
6. Cumulative Consolidated Net Income (excluding $________
any Fiscal Quarter in which Consolidated Net
Income was a negative number) earned on
or after February 24, 1995 and ending on such
determination date)
7. Consolidated Net Income Adjustment $________
(Line 6 multiplied by 0.75)
8. Minimum Consolidated Net Worth required by $________
subsection 6.6C
(Line 5 plus Line 7)
Y. Subsection 6.6D Maximum Consolidated GAAP Capital
Expenditures
1. Consolidated GAAP Capital Expenditures for $________
current Fiscal Year
2. Maximum amount of Consolidated GAAP Capital $________
Expenditures permitted pursuant to Section 6.6D
Z. Subsection 6.6E Minimum After Tax Cash Flow to
Fixed Charges Ratio (commencing with the fiscal
quarter ending in December 1996)
1. After Tax Cash Flow as of the last day of each $________
fiscal quarter (calculated on a cumulative
basis for the period comprised of four fiscal
quarters ending on the last day of such fiscal
quarter)
a. Consolidated Net Income (See 2.a. above) $________
b. To the extent Consolidated Net Income has $________
been reduced thereby, amortization expense,
depreciation expense, deferred taxes, and
other non-cash expenses
c. Losses on Asset Sales $________
d. Extraordinary losses (excluding $________
extraordinary items relating to
environmental and ERISA matters)
e. Other non-cash items reducing Consolidated $________
Net Income (excluding write-offs of
Inventory and accounts receivable)
f. Gains on Asset Sales $________
g. Extraordinary gains (excluding $________
extraordinary items relating to
environmental and ERISA matters)
VI - Attachment 1 - 6
<PAGE>
h. Other non-cash items increasing $________
Consolidated Net Income
(a) + (b) + (c) + (d) + (e) - (f) - (g) - (h) $________
Effect on any of the above components resulting $________
from Discontinued Operations shall be excluded
from such calculation.
2. Fixed Charges as of the last day of each fiscal $________
quarter (calculated on a cumulative basis for
the period comprised of four fiscal quarters
ending on the last day of such fiscal quarter)
a. Total scheduled principal payments $________
(including principal component of Capital
Leases) with respect to all outstanding
Indebtedness
b. Consolidated GAAP Capital Expenditures $________
c. All Restricted Junior Payments paid $________
(i) any dividend or other distribution, $________
direct or indirect, on account of
any shares of any class of stock
of Holding now or hereafter
outstanding, except a dividend
payable solely in shares of that
class of stock to the holders of
that class
(ii) any redemption, retirement, sinking $________
fund or similar payment, purchase
or other acquisition for value,
direct or indirect, of any shares
of any class of stock of Holding
now or hereafter outstanding
(iii) any payment or prepayment of $________
principal of, premium, if any, or
interest one, redemption, purchase,
repurchase, retirement, defeasance,
sinking fund or similar payment or
deposit for payment with respect to,
any Subordinated Debt
(iv) any payment made to retire, or to $________
obtain the surrender of, any
outstanding warrants, options or
other rights to acquire shares of
any class of stock of Holding,
Company or any of their Subsidiaries
now or hereafter outstanding (other
than any such rights held by Holding
or a Subsidiary thereof)
(v) (i) + (ii) + (iii) + (iv) $________
VI - Attachment 1 - 7
<PAGE>
d. Restricted Junior Payments $________
(a) + (b) + (c)
3. After Tax Cash to Fixed Changes Ratio ___ : 1.00
(Line 1 divided by Line 2)
4. Minimum After Tax Cash Flow to Fixed Charges 1.75 : 1.00
Ratio required by subsection 6.6E
AA. Subsection 6.7B(ii) Maximum Aggregate Acquisitions
1. Aggregate Acquisition Value of all Permitted $________
Acquisitions since January 1, 1996
2. Maximum Acquisition Value of Permitted $25,000,000.00
Acquisitions under subsection 6.7B(ii)
AB. Subsection 6.7B(iii) Maximum Assets Sales
1. With respect to assets located in the
United Kingdom
a. Pound Sterling equivalent of the net $________
book value of all Company and Subsidiary
assets located in the United Kingdom on
the Closing Date
b. Actual Aggregate Pound Sterling equivalent $________
of Net Cash Proceeds of Company and
Subsidiary assets located in the United
Kingdom sold since the Closing Date
c. Maximum aggregate United Kingdom Asset $________
Sales allowed under subsection 6.7B(iii)(B)
(Line (a) multiplied by 0.10)
2. With respect to assets located in Switzerland
a. Swiss Franc equivalent of the net book $________
value of all Company and Subsidiary
assets located in Switzerland on the
Closing Date
b. Actual Aggregate Swiss Franc equivalent $________
of Net Cash Proceeds of Company and
Subsidiary assets located in Switzerland
sold since the Closing Date
c. Maximum aggregate Switzerland Asset Sales $________
allowed under subsection 6.7B(iii)(C)
(Line (a) multiplied by 0.10)
3. With respect to assets located in Germany
a. German Mark equivalent of the net book $________
value of all Company and Subsidiary
assets located in Germany on the Closing
Date
b. Actual Aggregate German Mark equivalent $________
of Net Cash Proceeds of Company and
Subsidiary Assets located in Germany
sold since the Closing Date
VI - Attachment 1 - 8
<PAGE>
c. Maximum aggregate German Asset Sales $________
allowed under subsection 6.7B(iii)(D)
(Line (a) multiplied by 0.10)
AC. Subsection 6.7B(xv) Maximum Asset Transfers
1. Maximum U.S./U.S. Asset Transfers
a. Net aggregate book value of all Company $________
and Subsidiary U.S./U.S. Transfers since
the Closing Date or most recent
Recalculation Date
b. Maximum post-Closing Date or most $5,000,000.00
recent Recalculation Date U.S./
U.S. Asset Transfers allowed under
subsection 6.7B(xv)(A)
2. Maximum U.S./Foreign Asset Transfers
a. Net aggregate book value of all $________
U.S./Foreign Transfers since
Closing Date
b. Maximum post-Closing Date U.S./ $7,500,000.00
Foreign Asset Transfers allowed
under subsection 6.7B(xv)(B)
3. Maximum U.K./Swiss Transfers
a. Pound Sterling equivalent of the net $________
book value of all Company and
Subsidiary assets located in the
United Kingdom on the Closing Date
b. Aggregate Pound Sterling equivalent $________
of the net book value of U.K./Swiss
Transfers since the Closing Date
c. Maximum aggregate U.K./Swiss Transfers $________
allowed under subsection 6.7B(xv)(C)
(Line (a) multiplied by 0.25)
4. Maximum Swiss/U.K. Transfers
a. Swiss Franc equivalent of the net book $________
value of all Company and Subsidiary
assets located in Switzerland on the
Closing Date
b. Aggregate Swiss Franc equivalent of the $________
net book value of Swiss/U.K. Transfers
since the Closing Date
c. Maximum aggregate Swiss/U.K. Transfers $________
allowed under subsection 6.7B(xv)(D)
(Line (a) multiplied by 0.25)
5. Maximum German Asset Transfers
a. German Mark equivalent of net book value $________
of all Company and Subsidiary assets
located in Germany on the Closing Date
VI - Attachment 1 - 9
<PAGE>
b. Aggregate German Mark equivalent of the $________
net book value of German Asset Transfers
since the Closing Date
c. Maximum aggregate German Asset Transfers $________
allowed under subsection 6.7B(xv)(E)
(Line (a) multiplied by 0.25) $
VI - Attachment 1 - 10
<PAGE>
EXHIBIT VII
[FORM OF ASSIGNMENT AGREEMENT]
Reference is made to the Amended and Restated Credit Agreement, dated as of
October 11, 1996, by and among Nu-kote International, Inc., as borrower, Nu-Kote
Holding, Inc., as guarantor, the lenders party thereto, Barclays Bank PLC, as
documentation agent, and NationsBank of Texas, N.A., as administrative agent and
collateral agent (the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein as therein defined ____________________________ (the
"Assignor") and _________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a _____% interest in
and to all of the Assignor's rights and obligations under the Credit Agreement
as of the date hereof, including, without limitation, such percentage interest
in the Assignor's Revolving Credit Commitment and the Revolving Credit Loans
owing to the Assignor. After giving effect to such sale and assignment, the
Assignee's Revolving Credit Commitment and the amount of the Loans owing to the
Assignee will be as set forth in Item 2 of Annex I.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or the
performance or observance by the Company of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto;
(iv) represents and warrants that as of the date hereof, its Revolving Credit
Commitment (without giving effect to assignments thereof which have not yet
become effective) is $______________ and, as of the date hereof, the outstanding
principal amount of Revolving Credit Loans owing to it (without giving effect to
assignments thereof that have not become effective) is $___________; and
(v) attaches its Revolving Credit Note to exchange such Revolving Credit Note
for new Revolving Credit Notes as follows: a Revolving Credit Note dated
_______________________, _____, in the principal amount of
$______________________, payable to the order of Assignee, and a Revolving
Credit Note dated __________________, _____, in the principal amount of
$_____________ payable to the order of Assignor.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to therein
and such other documents and
<PAGE>
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement; (ii) agrees that it will,
independently and without reliance, as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) confirms that it is an eligible as an
assignee under the terms of the Credit Agreement; (iv) appoints and
authorizes each of Agent and Collateral Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement as are
delegated to the Agent and Collateral Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; (v) agrees that it
will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a
Lender; (vi) acknowledges that the Collateral Agent is authorized to receive
notices under the Credit Agreement on behalf of the Assignee in accordance
with the terms thereof; and (vii) [attaches the forms prescribed by the Internal
Revenue Service of the United States certifying as to the Assignee's status for
purposes of determining exemption from United States withholding taxes with
respect to all payments to be made to the Assignee under the Credit Agreement or
such other documents as are necessary to indicate that all such payments are
subject to such rates at a rate reduced by an applicable tax treaty] [certifies
that it is a financial institution organized under the laws of the United States
or a state thereof].
4. Following the execution of this Assignment Agreement by the Assignor
and Assignee, it will be delivered to the Agent. The effective date of this
Assignment Agreement shall be the date of execution hereof by the Assignor and
the Assignee and the receipt of any consent of the Company and the Agent, unless
otherwise specified on Item 6 of Annex I hereto (the "Settlement Date").
5. Upon such acceptance, as of the Settlement Date, (i) the Assignee
shall be a party to the Credit Agreement and, to the extent provided in this
Assignment Agreement, have the rights and obligations of a Lender thereunder and
(ii) the Assignor shall, to the extent provided in this Assignment Agreement,
relinquish its rights and be released from its obligations under the Credit
Agreement.
6. Upon such acceptance, from and after the Settlement Date, the Agent
shall make all payments under the Credit Agreement to be made by the Agent in
respect of the interests assigned hereby (including, without limitation, all
payments of principal, interest and commitment fees (if applicable) with respect
thereto) to the Assignee. Upon the Settlement Date, the Assignee shall pay to
the Assignor its Pro Rata Share of the principal amount of any outstanding
Revolving Credit Loans under the Credit Agreement. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Credit Agreement
for periods prior to the Settlement Date directly between themselves on the
Settlement Date.
7. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES).
-2-
<PAGE>
HOLDING AND COMPANY ARE INTENDED THIRD PARTY BENEFICIARIES OF THIS ASSIGNMENT
AGREEMENT.
8. In the case of any irreconcilable conflict between the provisions of
this Assignment Agreement and the Credit Agreement, the provisions of the Credit
Agreement shall control.
9. This Assignment Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall constitute but one and the same instrument.
- -------------------------------------------------------------------------------
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
- -------------------------------------------------------------------------------
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written, such execution being made on Annex I hereto.
[NAME OF ASSIGNOR]
as Assignor
By:
------------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[NAME OF ASSIGNEE]
as Assignee
By:
------------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Accepted this ____ day of
_______________, 19____
NATIONSBANK OF TEXAS, N.A.
as Agent
By:
------------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
-4-
<PAGE>
ANNEX I
1. Date of Assignment Agreement: _________________, 19____.
2. Amounts (As of Date of Item #1 above):
a. Revolving Credit Commitment $
------------
b. Revolving Credit Loan $
------------
c. Assigned Share %
-----------
3. Settlement Date:(1)
4. Notice and Payment Instructions:
===============================================================================
Payment Notice
- -------------------------------------------------------------------------------
ASSIGNOR:
------------------ ------------------
------------------ ------------------
------------------ ------------------
Attention: Attention:
Reference: Telephone:
Telecopier:
Reference:
- -------------------------------------------------------------------------------
ASSIGNEE:
------------------ ------------------
------------------ ------------------
------------------ ------------------
Attention: Attention:
Reference: Telephone:
Telecopier:
Reference:
===============================================================================
- -----------
(1) This date should be no earlier than the date of acceptance by the Agent.
<PAGE>
Accepted and Agreed:
(NAME OF ASSIGNEE) (NAME OF ASSIGNOR)
By: By:
----------------------------- -------------------------------
Name: Name:
------------------------ --------------------------
Title: Title:
----------------------- -------------------------
Consented:
NATIONSBANK OF TEXAS, N.A.,
as Agent
By:
-----------------------------
Name:
------------------------
Title:
-----------------------
Annex I - 2
<PAGE>
ANNEX II
[FORM OF COMPANY CONSENT]
Reference is made to that certain Assignment Agreement dated as of
_____________, 19____ between [LENDER] and [ASSIGNEE]. Pursuant to
subsection 10.2 of the Credit Agreement referred to therein, this represents the
consent of Nu-kote International, Inc. to the assignment described in such
Assignment Agreement.
NU-KOTE INTERNATIONAL, INC.
By:
----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
<PAGE>
EXHIBIT VIII
REVOLVING CREDIT NOTE
Dallas, Texas $______________ ____________, 1996
FOR VALUE RECEIVED, Nu-kote International, Inc., a Delaware corporation
(the "BORROWER"), promises to pay to the order of ________________________
(the "LENDER"), at the principal office of NationsBank of Texas, N.A., in
lawful money of the United States of America, the principal sum of
__________________________________ DOLLARS ($___________________), or such
lesser sum as shall be due and payable from time to time hereunder, as
hereinafter provided. All terms used but not defined herein shall have the
meanings set forth in the Credit Agreement described below.
Principal of and interest on the unpaid principal balance of Revolving
Credit Loans under this Note from time to time outstanding shall be due and
payable as set forth in the Credit Agreement.
This Note is issued pursuant to and evidences Revolving Credit Loans under
that certain Amended and Restated Credit Agreement, dated as of October 11,
1996, among the Borrower, Nu-kote Holding, Inc., NationsBank of Texas, N.A., as
Administrative Agent and Collateral Agent, Barclays Bank PLC, as Documentation
Agent, and the lenders parties thereto (as amended, restated, supplemented,
renewed, extended or otherwise modified from time to time, the "Credit
Agreement"), to which reference is made for a statement of the rights and
obligations of the Lender and the duties and obligations of the Borrower in
relation thereto.
Except as otherwise expressly provided in the Credit Agreement, the
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment for payment, protest, notice of protest,
notice of intention to accelerate the maturity of this Note, diligence in
collecting, the bringing of any suit against any party and any notice of or
defense on account of any extensions, renewals, partial payments or changes in
any manner of or in this Note or in any of its terms, provisions and covenants,
or any releases or substitutions of any security, or any delay, indulgence or
other act of any trustee or any holder hereof, whether before or after maturity.
THIS NOTE, TOGETHER WITH THE OTHER DOMESTIC LOAN DOCUMENTS, REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND
THEREIN AND MAY NOT BE
<PAGE>
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
NU-KOTE INTERNATIONAL, INC.
By:
-----------------------------------
Name:
-----------------------------
Title:
----------------------------
-2-
<PAGE>
EXHIBIT IX
ACKNOWLEDGEMENT
This Acknowledgement (this "Acknowledgement") is being executed this _____
day of ______________, 1996, by the undersigned, in favor of the Administrative
Agent, Collateral Agent, Documentation Agent, and the Lenders party to the
Credit Agreements (as hereinafter defined).
RECITALS:
1. Nu-Kote International, Inc. ("Borrower") and Nu-kote Holding, Inc.
("Holding") entered into that certain Credit Agreement dated February 24, 1995,
with NationsBank of Texas, N.A., as Administrative Agent and Collateral Agent,
Barclays Bank PLC, as Documentation Agent, and the Lenders party thereto (as
heretofore amended or modified from time to time, the "Prior US Credit
Agreement").
2. The Prior US Credit Agreement is being amended and restated in its
entirety pursuant to an Amended and Restated Credit Agreement, dated October 11,
1996, among Borrower, Holding, NationsBank of Texas, N.A., as Administrative
Agent and Collateral Agent (in such latter capacity herein referred to as
"Collateral Agent"), Barclays Bank PLC, as Documentation Agent, and the Lenders
party thereto (as hereafter amended, modified or restated from time to time, the
"US Credit Agreement"). Defined terms used herein and not otherwise defined
herein shall have the meaning given such terms in the US Credit Agreement.
3. Pelikan Produktions AG and Pelikan Hardcopy (International) AG, both
Swiss corporations (collectively "Swiss Borrowers"), have entered into that
certain Revolving Credit Facility Agreement dated as of February 24, 1995, with
Barclays de Zoete Wedd Limited and NationsBanc Capital Markets, Inc., as
arrangers, Barclays Bank PLC, as agent, NationsBank of Texas, N.A., as
documentation agent and collateral agent, and the other lenders party thereto
(said Revolving Credit Facility Agreement, as restated and amended on June 2,
1995, and as otherwise heretofore or hereafter amended, modified or restated
from time to time, being the "Swiss Credit Agreement").
4. Pelikan Scotland Limited, a limited liability company organized under
the laws of England and Wales ("Scotland Limited"), has entered into that
certain Revolving Credit Facility Agreement dated as of February 24, 1995, with
Barclays de Zoete Wedd Limited and NationsBanc Capital Markets, Inc., as
arrangers, Barclays Bank PLC, as agent, NationsBank of Texas, N.A., as
documentation agent and collateral agent, and the other lenders party thereto
(said Revolving Credit Facility Agreement, as restated and amended on June 2,
1995, and as otherwise heretofore or hereafter amended, modified or restated
from time to time, being the "UK Credit Agreement"). The Swiss Credit Agreement
and the UK Credit Agreement are
<PAGE>
collectively referred to herein as the "Foreign Credit Agreements" and the
Foreign Credit Agreements, together with the US Credit Agreement, are
collectively referred to herein as the "Credit Agreements".
5. Each of the Foreign Credit Agreements is being amended and restated
and, in connection therewith, the Termination Date of each will be extended and
the amount of the Commitment under the Swiss Credit Agreement will be increased
(collectively, the "Foreign Credit Agreement Amendments").
6. The term "Guarantors" as used herein shall mean the parties designated
as such on the signature pages hereof. The term "Grantors" as used herein shall
mean the parties designated as such on the signature pages hereof.
7. Each of the Guarantors (other than Borrower) has executed a guaranty
agreement more particularly described on SCHEDULE I hereto, pursuant to which
each Guarantor has guaranteed the obligations of Borrower under the Prior US
Credit Agreement (as heretofore or hereafter amended, modified or restated from
time to time, collectively, the "US Guaranties").
8. Each of the Guarantors has executed a guaranty agreement more
particularly described on SCHEDULE II hereto, pursuant to which each Guarantor
has guaranteed the obligations of the Swiss Borrower and Scotland Limited under
the respective Foreign Credit Agreements to which they are parties (as
heretofore or hereafter amended, modified or restated from time to time,
collectively, the "Foreign Guaranties").
9. Each of the Grantors has executed a security agreement more
particularly described on SCHEDULE III hereto, pursuant to which each Grantor
has granted a security interest in certain assets owned by it to Collateral
Agent to secure its obligations under its Guaranty and the other Loan Documents
(as heretofore or hereafter amended, modified or restated from time to time,
collectively, the "Security Agreements").
10. Holding has executed a pledge agreement dated February 24, 1995,
pursuant to which Holding has granted a security interest in the capital stock
of Borrower and of Nu-kote Imperial, Ltd. owned by it to Collateral Agent to
secure its obligations under its Guaranty and the other Loan Documents (as
heretofore or hereafter amended, modified or restated from time to time, the
"Holding Pledge Agreement").
11. Borrower has executed the pledge agreements more particularly
described on Schedule IV hereto, pursuant to which Borrower has granted a
security interest in certain of the capital stock of certain of its Subsidiaries
owned by it to Collateral Agent to secure its obligations under the Prior US
Credit Agreement and the other Loan Documents (as heretofore or hereafter
amended, modified or restated from time to time, the "Borrower Pledge
Agreements"; the Holding Pledge Agreement and the Borrower Pledge Agreements are
collectively referred to herein as the "Pledge Agreements"; Holding and Borrower
are collectively referred to herein as the "Pledgors").
-2-
<PAGE>
12. It is a condition precedent to the effectiveness of the US Credit
Agreement that each of the undersigned execute and deliver this Acknowledgement
to Collateral Agent.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and in order to induce Lenders to enter into the Credit
Agreements and to make loans thereunder, the undersigned hereby agree as
follows:
1. Each Guarantor (a) acknowledges that the US Credit Agreement
(i) amends, restructures, increases, extends and renews the indebtedness under
the Prior US Credit Agreement and (ii) extends the Commitment Termination Date,
(b) acknowledges and consents to the execution, delivery and performance by
Borrower of the US Credit Agreement, (c) agrees that its obligations in respect
of its US Guaranty are not released, modified, impaired or affected in any
manner by the US Credit Agreement, (d) acknowledges that it has no claims or
offsets against, or defenses or counterclaims to, its US Guaranty,
(e) acknowledges and agrees that the defined term "Guaranteed Indebtedness" (as
defined in each US Guaranty) includes the entire Obligations (under and as
increased by the US Credit Agreement), (f) acknowledges and agrees that the
defined term "Credit Agreement" in each US Guaranty shall mean the US Credit
Agreement (as defined herein), and (g) ratifies and reaffirms its obligations
under its US Guaranty.
2. Each Guarantor (a) acknowledges that each Foreign Credit Agreement
Amendment extends the Termination Date (under and as defined in the Foreign
Credit Agreements), (b) acknowledges and consents to the execution, delivery and
performance by the Swiss Borrowers and Scotland Limited of the Foreign Credit
Agreement Amendments to which each is party, (c) agrees that its obligations in
respect of its Foreign Guaranties are not released, modified, impaired or
affected in any manner by the Foreign Credit Agreement Amendments,
(d) acknowledges that it has no claims or offsets against, or defenses or
counterclaims to, its Foreign Guaranties, (e) acknowledges and agrees that the
defined term "US Credit Agreement" in each Foreign Guaranty shall mean the US
Credit Agreement (as defined herein), and (f) ratifies and reaffirms its
obligations under its Foreign Guaranties.
3. Each Grantor (a) acknowledges that the US Credit Agreement (i) amends,
restructures, increases, extends and renews the indebtedness under the Prior US
Credit Agreement and (ii) extends the Commitment Termination Date,
(b) acknowledges and consents to the execution, delivery and performance by
Borrower of the US Credit Agreement, (c) agrees that its obligations in respect
of its Security Agreements are not released, modified, impaired or affected in
any manner by the US Credit Agreement, (d) acknowledges that it has no claims or
offsets against, or defenses or counterclaims to, its Security Agreements,
(e) acknowledges and agrees that the defined term "Secured Obligations" (as
defined in each Security Agreement) includes the entire Obligations (under and
as increased by the US Credit Agreement),
-3-
<PAGE>
(f) acknowledges and agrees that the defined term "US Credit Agreement" in
each Security Agreement shall mean the US Credit Agreement (as defined
herein), and (g) ratifies and reaffirms its obligations under its Security
Agreements.
4. Each Pledgor (a) acknowledges that the US Credit Agreement (i) amends,
restructures, increases, extends and renews the indebtedness under the Prior US
Credit Agreement and (ii) extends the Commitment Termination Date,
(b) acknowledges and consents to the execution, delivery and performance by
Borrower of the US Credit Agreement, (c) agrees that its obligations in respect
of its Pledge Agreement[s] are not released, modified, impaired or affected in
any manner by the US Credit Agreement, (d) acknowledges that it has no claims or
offsets against, or defenses or counterclaims to, its Pledge Agreement[s],
(e) acknowledges and agrees that the defined term "Secured Obligations" (as
defined in each Pledge Agreement) includes (X) the entire Obligations (under and
as increased by the US Credit Agreement) and (Y) the entire obligations under
the Swiss Credit Agreement, as increased by the Foreign Credit Agreement
Amendment to the Swiss Credit Agreement, (f) acknowledges and agrees that the
defined term "US Facility Agreement" in each Pledge Agreement shall mean the US
Credit Agreement (as defined herein), (g) acknowledges that each Foreign Credit
Agreement Amendment extends the Termination Date (under and as defined in the
Foreign Credit Agreements), (h) acknowledges and consents to the execution,
delivery and performance by the Swiss Borrowers and Scotland Limited of the
Foreign Credit Agreement Amendments to which each is party, (i) agrees that its
obligations in respect of its Pledge Agreements are not released, modified,
impaired or affected in any manner by the Foreign Credit Agreement Amendments,
(j) acknowledges that it has no claims or offsets against, or defenses or
counterclaims to, its Foreign Guaranty, and (k) ratifies and reaffirms its
obligations under its Pledge Agreements.
5. This Acknowledgement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
6. This Acknowledgement shall be governed by and construed in accordance
with the laws of the State of Texas and shall be binding upon each Guarantor and
Grantor and their respective successors and assigns.
- -------------------------------------------------------------------------------
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
- -------------------------------------------------------------------------------
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Acknowledgement
as of the date first above written.
GUARANTORS:
NU-KOTE HOLDING, INC., a Delaware corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
NU-KOTE INTERNATIONAL, INC., a Delaware
corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
FUTURE GRAPHICS, INC., a California corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
INTERNATIONAL COMMUNICATION MATERIALS, INC., a
Pennsylvania corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-5-
<PAGE>
NU-KOTE IMPERIAL, LTD., a Delaware corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
NU-KOTE IMAGING INTERNATIONAL, INC., a Delaware
corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-6-
<PAGE>
GRANTORS:
NU-KOTE HOLDING, INC., a Delaware corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
NU-KOTE INTERNATIONAL, INC., a Delaware
corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
FUTURE GRAPHICS, INC., a California corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
INTERNATIONAL COMMUNICATION MATERIALS, INC., a
Pennsylvania corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-7-
<PAGE>
NU-KOTE IMPERIAL, LTD., a Delaware corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
NU-KOTE IMAGING INTERNATIONAL, INC., a Delaware
corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-8-
<PAGE>
PLEDGORS:
NU-KOTE HOLDING, INC., a Delaware corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
NU-KOTE INTERNATIONAL, INC., a Delaware
corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-9-
<PAGE>
- -------------------------------------------------------------------------------
CONFORMED COPY
CHF 50,000,000
AMENDED AND RESTATED REVOLVING CREDIT FACILITY AGREEMENT
DATED 15TH OCTOBER, 1996
between
PELIKAN PRODUKTIONS AG
and
PELIKAN HARDCOPY (INTERNATIONAL) AG
as borrowers
BZW
and
NATIONSBANC CAPITAL MARKETS, INC.
as arrangers
BARCLAYS BANK PLC
as agent
NATIONSBANK OF TEXAS, N.A.
as collateral agent
NATIONSBANK OF TEXAS, N.A.
as documentation agent
and
OTHERS
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
CONTENTS
CLAUSE PAGE NO.
1. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. The Facility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4. Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . . . . 9
5. Nature of Lenders' Obligations. . . . . . . . . . . . . . . . . . . . . 9
6. Utilisation of the Facility . . . . . . . . . . . . . . . . . . . . . . 9
7. Issue of Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . 12
8. Indemnity (Including Bank Indemnity for Short-Term Advances). . . . . . 12
9. Letter of Credit Commissions and Fees . . . . . . . . . . . . . . . . . 13
10. Making of Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12. Repayment of Advances . . . . . . . . . . . . . . . . . . . . . . . . . 16
13. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
14. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
15. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
16. Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
17. Mitigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
18. Market Disruption and Alternative Interest Rates. . . . . . . . . . . . 21
19. Acceleration Event. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
20. Default Interest and Indemnities. . . . . . . . . . . . . . . . . . . . 22
21. Currency of Account . . . . . . . . . . . . . . . . . . . . . . . . . . 23
22. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
23. Set-Off and Netting of Payments . . . . . . . . . . . . . . . . . . . . 24
24. Redistribution of Payments. . . . . . . . . . . . . . . . . . . . . . . 25
25. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
26. Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
27. The Agents, the Arrangers and the Lenders . . . . . . . . . . . . . . . 27
28. Benefit of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 30
29. Assignments and Transfers by the Borrowers. . . . . . . . . . . . . . . 30
30. Assignments and Transfers by Banks, Change of Overdraft Provider. . . . 30
31. Disclosure of Information . . . . . . . . . . . . . . . . . . . . . . . 32
32. Calculations and Evidence of Debt . . . . . . . . . . . . . . . . . . . 33
33. Remedies and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . 34
34. Partial Invalidity. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
35. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
36. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
37. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
38. Borrower Secession. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
39. Guarantee by Pelikan Produktions AG . . . . . . . . . . . . . . . . . . 36
40. Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
41. Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULES
1. The Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2. Form of Transfer Certificates . . . . . . . . . . . . . . . . . . . . . 41
3. Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . . . . 44
4. Utilisation Request . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5. Timetables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6. Form of Borrower Secession Memorandum . . . . . . . . . . . . . . . . . 47
7. Mandatory Liquid Asset Costs Rate Formula . . . . . . . . . . . . . . . 48
8. Form of Overdraft Provider Transfer Certificate . . . . . . . . . . . . 50
Signatories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
EXHIBIT
Form of Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . . . .57
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
THIS AGREEMENT is made the 15th day of October, 1996 BETWEEN:
(1) PELIKAN PRODUKTIONS AG and PELIKAN HARDCOPY (INTERNATIONAL) AG (together
the "BORROWERS" and individually a "BORROWER");
(2) BZW and NATIONSBANC CAPITAL MARKETS, INC. (together with the Documentation
Agent, the "ARRANGERS");
(3) BARCLAYS BANK PLC as agent (the "AGENT");
(4) NATIONSBANK OF TEXAS, N.A. as collateral agent (the "COLLATERAL AGENT", the
Agent and the Collateral Agent being hereinafter referred to collectively
as the "AGENTS");
(5) NATIONSBANK OF TEXAS, N.A. as documentation agent (the "DOCUMENTATION
AGENT");
(6) BARCLAYS BANK PLC as fronting bank (the "FRONTING BANK");
(7) BARCLAYS BANK PLC as overdraft provider (the "OVERDRAFT PROVIDER"); and
(8) THE FINANCIAL INSTITUTIONS named in the First Schedule (the "BANKS").
WHEREAS the parties hereto wish further to amend and restate the Revolving
Credit Facility dated 24th February, 1995 as previously amended and restated on
2nd June, 1995 (as so amended, the "ORIGINAL AGREEMENT").
NOW IT IS HEREBY AGREED that the Original Agreement is hereby further amended
and restated as follows:
1. INTERPRETATION
1.1 In this Agreement:
"ADVANCE" means, save as otherwise provided herein, an advance made or to
be made by a Lender pursuant to the terms hereof;
"AGENT'S SPOT RATE OF EXCHANGE" means the Agent's spot rate of exchange for
the purchase of the relevant Optional Currency in the London foreign
exchange market with Swiss francs on or about 11.00 a.m. on a particular
day;
"APPLICABLE MARGIN" has the meaning given to it in the Credit Agreement;
"AVAILABLE COMMITMENT" means, in relation to a Bank at any time and save as
otherwise provided herein, its Commitment at such time LESS (i) its share
of the Outstandings (other than any outstanding Short-Term Advance) at such
time (and for the purposes of determining a Bank's share of Outstandings
which comprise L/C Outstandings, such Bank's share shall be the amount that
it may become obliged to pay to the Fronting Bank pursuant to Clause 8.6)
and (ii) except for the purposes of Clause 25, its share of any Advance
which it is obliged, or may become obliged, to make pursuant to Clause 6.5
in respect of (a) any outstanding Short-Term Advance at close of business
on the day before the proposed Utilisation Date and (b) any Short-Term
Advance requested to be made no later than the specified time on such
proposed Utilisation Date;
- --------------------------------------------------------------------------------
<PAGE>
2
- --------------------------------------------------------------------------------
"AVAILABLE FACILITY" means, at any time, the aggregate of the Available
Commitments at such time adjusted, in the case of a proposed Utilisation
only, so as to take into account:
(i) any reduction in the Commitment of a Bank which will occur prior to
the commencement of, or during, the Term relating to the proposed
Utilisation consequent upon a cancellation of the whole or any part
of the Commitment of such Bank pursuant to the terms hereof;
(ii) the amounts of any Advances (other than any Short-Term Advances)
and/or Letters of Credit which, pursuant to any other Utilisation,
any Bank or the Fronting Bank, as the case may be, are then obliged
to make or, as the case may be, issue on or before the proposed
Utilisation Date relating to such proposed Utilisation; and
(iii) the amounts of any Advances and/or Letters of Credit which were
made or, as the case may be, issued by any Bank or the Fronting Bank,
as the case may, be pursuant hereto and which are due to be repaid
or, as the case may be, expire on or before the proposed Utilisation
Date relating to such Utilisation;
"BARCLAYS OVERDRAFT AGENT" means Barclays Bank (Schweiz) AG, a company
incorporated in Switzerland.
"BASLE PAPER" means the paper entitled International Convergence of Capital
Measurement and Capital Standards dated July 1988 prepared by the Basle
Committee on Banking Regulations and Supervisory Practices, as amended in
November 1991;
"BORROWER SECESSION MEMORANDUM" means a memorandum delivered to the Agent
by the Borrowers pursuant to Clause 38 in the form set out in the Sixth
Schedule;
"BZW" means a division of Barclays Bank PLC;
"CLOSING DATE" has the meaning given to it in the Credit Agreement;
"COLLATERAL DOCUMENTS" has the meaning given to it in the Credit Agreement;
"COMMITMENT" means, in relation to a Bank at any time and save as otherwise
provided herein, the amount set opposite its name in the First Schedule;
"COMMITMENT FEE" has the meaning given to it in Clause 25;
"COMMITMENT FEE PERCENTAGE" has the meaning given to it in the Credit
Agreement;
"CREDIT AGREEMENT" means the amended and restated credit agreement of even
date hereof between Nu-Kote Holding, Inc. as guarantor, Nu-Kote
International, Inc. as borrower, Barclays Bank PLC as documentation agent,
NationsBank of Texas, N.A. as administrative agent and collateral agent and
others;
"EVENT OF DEFAULT" means an "Event of Default" referred to in Section 5 of
the Nu-Kote Guarantees;
"EXPIRY DATE" means, in relation to any Letter of Credit, the date on which
the maximum aggregate liability thereunder is to be reduced to zero;
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"FACILITY" means the revolving cash advances and letter of credit facility
granted to the Borrowers in this Agreement;
"FACILITY OFFICE" means, in relation to any of the Agent, the Fronting Bank
or the banks, the office identified with its signature below or such other
office as it may from time to time select which is located in the same
jurisdiction as the office identified with its signature below (or, in the
case of a Transferee as the office identified in the Transfer Certificate
pursuant to which it became a party hereto) or, such other office as may be
agreed pursuant to Clause 17;
"FINANCE DOCUMENTS" means this Agreement, the Nu-Kote Guarantees, the
Collateral Documents, the Security Documents, the Hedging Documents and any
other document designated as such in writing by the Agent and the
Borrowers;
"GUARANTORS" means Nu-Kote Holding, Inc., Nu-Kote International, Inc.,
International Communication Materials, Inc., Future Graphics, Inc., Nu-Kote
Imaging International, Inc. and Nu-Kote Imperial, Ltd. and "GUARANTOR"
means any one of them;
"HEDGING DOCUMENTS" means any and all currency or interest rate swap and/or
interest cap and/or other hedging agreements entered into or to be entered
into by a Borrower with a Bank as have been heretofore (and/or as may
hereafter be) agreed in writing between a Borrower and the Agent to
constitute the Hedging Documents;
"INTELLECTUAL PROPERTY RIGHTS PLEDGE AGREEMENT" means the Intellectual
Property Rights Pledge Agreement dated 24th February, 1995 between Pelikan
Produktions AG and the Agent;
"INVENTORY PLEDGE AGREEMENT" means the Inventory Pledge Agreement dated
24th February, 1995 between Pelikan Produktions AG and the Agent;
"L/C OUTSTANDINGS" means, at any time, the amount that is the sum of (i)
the maximum aggregate amount that is or at any time thereafter may become
available for drawings under each Letter of Credit outstanding at such time
and (ii) the aggregate amount of all drawings under each Letter of Credit
honoured by the Fronting Bank and not theretofore reimbursed by the
Borrowers hereunder;
"LENDERS" means the Banks and the Overdraft Provider;
"LETTER OF CREDIT" means a documentary or standby letter of credit issued
or to be issued by the Fronting Bank pursuant to Clause 7 in each case, in
such form as may be requested by a Borrower and which is acceptable to the
Fronting Bank;
"LIBOR" means, in relation to any Advance (other than a Short-Term Advance)
or unpaid sum, the rate per annum determined by the Agent to be equal to
the arithmetic mean (rounded upwards, if necessary, to four decimal places)
of the rates (as notified to the Agent) at which each of the Reference
Banks was offering to prime banks in the London Interbank Market deposits
in the currency of the relevant Advance and for the specified period at or
about 11.00 a.m. on the Quotation Date for such specified period and, for
the purposes of this definition, "SPECIFIED PERIOD" means the Term of such
Advance or, as the case may be, the relevant period in respect of which
LIBOR fails to be determined in relation to such unpaid sum;
"MANDATORY LIQUID ASSET COSTS RATE" means in relation to any Advance or
unpaid sum
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denominated in sterling, the rate determined in accordance with
the Seventh Schedule;
"MORTGAGE TRANSFER AGREEMENT" means the Mortgage Transfer Agreement dated
24th February, 1995 between Pelikan Produktions AG and the Agent;
"NU-KOTE GUARANTEES" means the guarantees dated 24th February, 1995 given
by the Guarantors in favour of the Agent for itself and on behalf of the
Lenders;
"OBLIGORS" means the Borrowers and the Guarantors and "OBLIGOR" means any
one of them;
"OPTIONAL CURRENCY" means dollars, deutschmarks and sterling;
"ORIGINAL SWISS FRANC AMOUNT" means:
(i) the principal amount (in the case of an Advance), or the face value
(in the case of a Letter of Credit), of a Utilisation denominated in
Swiss francs; or
(ii) the principal amount (in the case of an Advance), or the face value
(in the case of a Letter of Credit), of a Utilisation denominated in
an Optional Currency, translated into Swiss francs on the basis of
the Agent's Spot Rate of Exchange on the date of receipt by the Agent
of the Utilisation Request for that Utilisation;
"OUTSTANDINGS" means, at any time, the aggregate of:
(i) the principal amount of each outstanding Advance at such time; and
(ii) the L/C Outstandings at such time;
"OVERDRAFT FACILITY TRANSFEREE" means a Lender to which the Overdraft
Provider transfers all (but not part) of its rights and obligations
hereunder as the Overdraft Provider in accordance with Clause 30.5;
"OVERDRAFT PROVIDER" means:
(i) Barclays Bank PLC in its capacity as overdraft provider hereunder
(and not, for the avoidance of doubt, Barclays Overdraft Agent
through which Barclays Bank PLC acts in connection with Short-Term
Advances) until the date, if any, that is 30 days after the date
Barclays Bank PLC notifies the Borrowers that no more Short-Term
Advances will be made by it; or
(ii) any other Lender that may, from time to time, be appointed to act as
the overdraft provider hereunder in accordance with Clause 30.5;
"OVERDRAFT PROVIDER TRANSFER CERTIFICATE" means a certificate substantially
in the form set out in the Eighth Schedule signed by the Overdraft Provider
and the Overdraft Facility Transferee whereby:
(i) the Overdraft Provider seeks to procure the transfer to the Overdraft
Facility Transferee of all (but not part) of the Overdraft Provider's
rights and obligations hereunder upon and subject to the conditions
set out in Clause 30.5; and
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(ii) the Overdraft Facility Transferee undertakes to perform all (but not
part) of the Overdraft Provider's obligations hereunder as a result
of delivery of such certificate to the Borrowers and the Agent as is
contemplated in Clause 30.5;
"OVERDRAFT RATE" means on any day the rate per annum notified by Barclays
Overdraft Agent (or if any other Lender is the Overdraft Provider, such
Overdraft Provider) to the Agent and the relevant Borrower as being the
rate per annum for or with effect from such day (including a margin of 2%
per annum);
"OVERDRAFT REPAYMENT DATE" means, in relation to any Short-Term Advance,
the earlier of (1) the date falling five business days after demand for
repayment made to the relevant Borrower by the Overdraft Provider and (2)
the Termination Date;
"PELIKAN HARDCOPY INTERNATIONAL AG ASSIGNMENT AGREEMENT" means the
Assignment Agreement dated 24th February, 1995 between Pelikan Hardcopy
(International) AG and the Agent;
"PELIKAN PRODUKTIONS AG ASSIGNMENT AGREEMENT" means the Assignment
Agreement dated 24th February, 1995 between Pelikan Produktions AG and the
Agent;
"POTENTIAL EVENT OF DEFAULT" has the meaning given to it in the Nu-Kote
Guarantees;
"PROPORTION" means, in relation to a Bank, the proportion borne by its
Commitment to the Total Commitments (or, if the Total Commitments are then
zero, by its Commitment to the Total Commitments immediately prior to their
reduction to zero);
"QUALIFYING LENDER" means a person recognized as a bank pursuant to Clause
232 of the Circular of the Swiss Federal Tax Authorities, dated 29 October
1992, regarding the tax treatment of syndicated loans, debt certificate
issues, promissory notes and subparticipations, Provided that if that
circular is amended or repealed, the Agent shall have power to amend this
definition in a manner consistent with such amendment or repeal as soon as
practically possible;
"QUOTATION DATE" means, in relation to any period for which an interest
rate is to be determined hereunder (other than a Short-Term Advance), the
day on which quotations would ordinarily be given by prime banks in the
London Interbank Market for deposits in the currency in relation to which
such rate is to be determined for delivery on the first day of that period
Provided that, if for any such period quotations would ordinarily be given
on more than one date, the Quotation Date for that period shall be the last
of those dates;
"REFERENCE BANKS" means the principal London office of Barclays Bank PLC or
the principal London offices of other bank or banks as may from time to
time be agreed between the Borrowers and the Agent acting on the
instructions of the Requisite Lenders;
"REPAYMENT DATE" means, in relation to any Advance hereunder (other than a
Short-Term Advance), the last day of the Term thereof;
"REQUISITE LENDERS" has the meaning given to it in the Credit Agreement;
"REQUESTED AMOUNT" means, in relation to any Utilisation Request, the
aggregate principal amount of the Advances or, as the case may be, face
amount of the Letter of Credit therein requested;
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"SECURITY DOCUMENTS" means the Pelikan Produktions AG Assignment Agreement,
the Pelikan Hardcopy International AG Assignment Agreement, the
Intellectual Property Rights Pledge Agreement, the Inventory Pledge
Agreement, the Mortgage Transfer Agreement and the Share Pledge Agreement;
"SHARE PLEDGE AGREEMENT" means the Share Pledge Agreement dated 24th
February, 1995 between Pelikan Produktions AG and the Agent;
"SHORT-TERM ADVANCE" means any Advance denominated in Swiss francs made by
the Overdraft Provider in that capacity pursuant to the terms hereof;
"TERM" means, save as otherwise provided herein, in relation to any Advance
hereunder (other than a Short-Term Advance), the period for which such
Advance is borrowed (as specified in the Utilisation Request relating
thereto) and, in relation to any Letter of Credit, the period from the date
on which such Letter of Credit is issued until its Expiry Date (as
specified in the Utilisation Request relating thereto);
"TERMINATION DATE" means the day which is sixty months after the Closing
Date (as defined in the Credit Agreement);
"TOTAL COMMITMENTS" means the aggregate for the time being of the Banks'
Commitments;
"TRANSFER CERTIFICATE" means a certificate substantially in the form set
out in the Second Schedule signed by a Bank and a Transferee whereby:
(i) such Bank seeks to procure the transfer to such Transferee of all or
a part of such Bank's rights and obligations hereunder upon and
subject to the terms and conditions set out in Clause 30; and
(ii) such Transferee undertakes to perform the obligations it will assume
as a result of delivery of such certificate to the Borrowers and the
Agent as is contemplated in Clause 30;
"TRANSFER DATE" means, in relation to any Transfer Certificate or Overdraft
Provider Transfer Certificate, the date for the making of the transfer as
specified in the schedule to such Transfer Certificate or Overdraft
Provider Transfer Certificate (as the case may be);
"TRANSFEREE" means a bank or other financial institution to which a Bank
transfers all or part of such Bank's rights and obligations hereunder in
accordance with Clause 30;
"UK FACILITY" means the amended and restated revolving credit, letter of
credit and contract guarantee facility made available to Pelikan Scotland
Limited by Barclays Bank PLC and NationsBank, N.A. of even date hereof;
"UTILISATION" means a utilisation of the Facility hereunder;
"UTILISATION DATE" means the date of a Utilisation, being the date on which
the Advances in respect thereof are to be made or the Letter of Credit in
respect thereof is to be issued; and
"UTILISATION REQUEST" means a notice given to the Agent pursuant to Clause
6.1 substantially in the
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7
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form set out in the Fourth Schedule.
1.2 Any reference in this Agreement to:
an "AFFILIATE" of the Agent shall be construed as a reference to a
subsidiary or holding company, or to a subsidiary of a holding company, of
the Agent;
the "AGENT", the "COLLATERAL AGENT" or any "LENDER" or any "OVERDRAFT
PROVIDER" shall be construed so as to include its and any subsequent
successors, Transferees, Overdraft Facility Transferees and permitted
assigns in accordance with their respective interests;
a "BUSINESS DAY" shall be construed as a reference to a day (other than a
Saturday or Sunday) on which banks generally are open for business in
London and Zurich and (but only in relation to a transaction involving an
Optional Currency) the principal financial centre of the country of that
Optional Currency;
a "MONTH" is a reference to a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next
succeeding calendar month save that, where any such period would otherwise
end on a day which is not a business day, it shall end on the next
succeeding business day, unless that day falls in the calendar month
succeeding that in which it would otherwise have ended, in which case it
shall end on the immediately preceding business day Provided that, if a
period starts on the last business day in a calendar month or if there is
no numerically corresponding day in the month in which that period ends,
that period shall end on the last business day in that later month (and
references to "MONTHS" shall be construed accordingly);
"TAX" shall be construed so as to include any tax, levy, impost, duty or
other charge of a similar nature (including, without limitation, any
penalty or interest payable in connection with any failure to pay or any
delay in paying any of the same); and
"VAT" shall be construed as a reference to value added tax including any
similar tax which may be imposed in place thereof from time to time.
1.3 "CHF" and "SWISS FRANCS" denote the lawful currency of Switzerland, "US$"
and "DOLLARS" denote the lawful currency of the United States of America,
"DM" and "DEUTSCHMARKS" denote the lawful currency of the Federal Republic
of Germany and "L" and "STERLING" denote the lawful currency of the United
Kingdom.
1.4 Save where the contrary is indicated, any reference in this Agreement to:
(i) this Agreement or any other agreement or document shall be construed
as a reference to this Agreement or, as the case may be, such other
agreement or document as the same may have been, or may from time to
time be, amended, restated, varied, novated or supplemented; and
(ii) a time of day shall be construed as a reference to London time.
1.5 There are set out in the Fifth Schedule timetables of certain of the
procedures provided for in this Agreement. For the purpose of construction,
any reference herein to a specified time shall be construed as a reference
to the relevant time set forth in the relevant timetable.
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2. THE FACILITY
2.1 The Lenders grant to the Borrowers, upon the terms and subject to the
conditions hereof, a revolving cash advance and letter of credit facility
in an aggregate Original Swiss Franc Amount of CHF 50,000,000.
2.2 Subject to Clause 2.1 above, the aggregate amount of all Utilisations
denominated in an Optional Currency outstanding at any time shall not:
(i) in the case of Utilisations denominated in dollars, exceed
US$20,000,000;
(ii) in the case of Utilisations denominated in deutschmarks, exceed
DM30,000,000; and
(iii) in the case of Utilisations denominated in sterling, exceed
L15,000,000.
2.3 Notwithstanding Clause 2.2 above, that part of the Facility comprising
Letters of Credit is limited to an Original Swiss Franc Amount of CHF
12,000,000.
2.4 That part of the Facility comprising Short-Term Advances will be provided
by the Overdraft Provider and is limited to CHF 6,250,000.
3. PURPOSE
3.1 The Facility is intended to be used for general corporate purposes
including, but not limited to:
(i) working capital;
(ii) capital and other expenditures and expenses including, without
limitation, Permitted Acquisitions (as defined in the Credit
Agreement); and
(iii) refinancing existing indebtedness and other indebtedness,
including reimbursement to the Fronting Bank of any amounts drawn
under any Letters of Credit,
and, accordingly, each Borrower shall apply all amounts raised by it
hereunder in or towards satisfaction of such purposes.
3.2 Without prejudice to the obligations of the Borrowers under Clause 3.1, the
Agents and the Lenders shall not be obliged to concern themselves with the
application of amounts raised by a Borrower hereunder.
3.3 During the period while Barclays Bank PLC is the Overdraft Provider,
Barclays Bank PLC shall cause Barclays Overdraft Agent to act as its agent
in relation to Short-Term Advances made to the Borrower by Barclays Bank
PLC as Overdraft Provider
4. CONDITIONS PRECEDENT
(a) Neither Borrower may utilise the Facility unless the Agent has confirmed to
the Borrowers and the Lenders that it has received all of the documents
listed in the Third Schedule and that each is, in form and substance,
satisfactory to the Agent.
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(b) By signing this Agreement, each of Pelikan Produktions AG and Pelikan
Hardcopy (International) AG, in their capacities as pledgors and assignors
under the Security Documents, acknowledge and agree that their obligations
under the Security Documents remain fully applicable and extend to cover
all of the obligations owed by each of them in their capacities as
borrowers (and, in the case of Pelikan Produktions AG, under Clause 39 as a
guarantor) under this Agreement.
5. NATURE OF LENDERS' OBLIGATIONS
5.1 The obligations of each Lender hereunder are several.
5.2 The failure by a Lender to perform its obligations hereunder shall not
affect the obligations of any other Lender or a Borrower towards any other
party hereto nor shall any other party be liable for the failure by such
Lender to perform its obligations hereunder.
6. UTILISATION OF THE FACILITY
6.1 Save as otherwise provided herein, Advances will be made by the Banks or,
as the case may be, a Letter of Credit will be issued by the Fronting Bank
or, as the case may be, Short-Term Advances will be made by the Overdraft
Provider to a Borrower if:
(i) no later than the specified time in respect of the proposed
Utilisation, the Agent or, in the case of a Short-Term Advance, the
Overdraft Provider, has received from the relevant Borrower a
Utilisation Request therefor;
(ii) the proposed Utilisation Date in respect of such Utilisation Request
is a business day;
(iii) the Requested Amount is:
(a) in the case of a Utilisation by means of Advances (other than
Short-Term Advances), an amount which does not exceed the
Available Facility at such time and which, if less than the
Available Facility at such time:
(1) if no other Advance (other than a Short-Term Advance) of
less than an Original Swiss Amount of CHF 2,000,000 is
outstanding at such time is:
(A) if the currency is Swiss Francs, a minimum amount of
CHF 1,000,000 and in additional integral multiples of
CHF 2,000,000; or
(B) if the currency is an Optional Currency, a minimum
Original Swiss Franc Amount of CHF 1,000,000 (or an
approximate amount thereof) and in additional integral
multiples of an Original Swiss Franc Amount of CHF
2,000,000 (or as approximate amount thereof); or
(2) if an Advance (other than a Short-Term Advance) of less than
CHF 2,000,000 is outstanding at such time is:
(A) if the currency is Swiss francs, a minimum amount of
CHF 2,500,000 and in additional integral multiples of
CHF 1,000,000;
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or
(B) if the currency is an Optional Currency, a minimum
Original Swiss Franc Amount of CHF 2,500,000 (or an
approximate amount thereof) and in additional integral
multiples of an Original Swiss France Amount of CHF
1,000,000 (or an approximate amount thereof); or
(b) in the case of a Utilisation by means of a Letter of Credit, an
amount which does not exceed the Available Facility at such time
and which when aggregated with the L/C Outstandings at the time
of such Utilisation does not exceed an Original Swiss Franc
Amount of CHF 12,000,000; or
(c) in the case of a Utilisation by means of Short-Term Advances, an
amount which does not exceed the Available Facility at such
time and which when aggregated with all other Short-Term
Advances then outstanding, does not exceed CHF 6,250,000;
(iv) in the case of a Utilisation to be denominated in an Optional
Currency, its principal amount (in the case of an Advance) or face
value (in the case of a Letter of Credit), when aggregated with the
aggregate principal amounts and/or face values, as the case may be,
of all outstanding Utilisations denominated in the same Optional
Currency, would not exceed the limits set out in Clause 2.2; and
(v) the Term requested by the relevant Borrower in such Utilisation
Request for any Advance (other than Short-Term Advances) will end
on a business day which is or precedes the Termination Date and
will be:
(a) in respect of any such Advance with a proposed Utilisation Date
falling during the period expiring on the earlier of the date
(1) that is two (2) months after the Closing Date or (2) on
which the Arrangers determine, in their sole discretion, that
the syndication of this Agreement is complete, a period not
exceeding 14 days;
(b) in respect of any such Advance to which Clause 6.1(v)(a) does
not apply, a period of one, three or six months;
(c) in respect of a Letter of Credit:
(1) if denominated in Swiss Francs, any period of 18 months or
less; or
(2) if denominated in an Optional Currency, any period of
twelve months or less;
(d) in respect of a Short-Term Advance, any period of one month or
less; and
(vi) the making of such Advance (other than a Short-Term Advance) will
not result in there being more than 5 outstanding Advances (other
than Short-Term Advances); and
(vii) in the case of a Utilisation by means of a Short-Term Advance,
there is an Overdraft Provider.
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6.2 If and whenever, on the occasion of a Utilisation, the Banks are required
to make Advances or the Fronting Bank is required to issue a Letter of
Credit pursuant hereto, the aggregate principal amount of the Advances to
be so made or, as the case may be, the face amount of the Letter of Credit
to be so issued shall be allocated to, and apportioned among, the Banks
rateably to their respective Available Commitments for such Utilisation
Provided that no amount shall be allocated to any Bank in respect of any
Utilisation if such Bank's Commitment will be cancelled pursuant to the
terms hereof prior to or during the Term of the proposed Advances or, as
the case may be, the Term of the proposed Letter of Credit.
6.3 Each Bank shall, subject to the terms hereof be obliged, through its
Facility Office, to make an Advance on the proposed Utilisation Date in a
principal amount equal to the amount allocated to it pursuant to this
Clause 6.
6.4 The Agent shall not later than the specified time notify each Bank by
telephone of the principal amount or, as the case may be, the amount
allocated to it pursuant to this Clause 6, such notice to be promptly
confirmed by the Agent by telex or telefax.
6.5 The Overdraft Provider may at any time request by notice to a Borrower
(through the Agent) which at such time has an outstanding Short-Term
Advance made by such Overdraft Provider that the Banks make an Advance to
such Borrower on a business day specified by the Overdraft Provider in such
notice (such date falling no earlier than five business days after receipt
of such notice) and upon receiving such notice such Borrower shall, unless
such outstanding Short-Term Advance has been repaid within three business
days of receipt of such notice, be deemed to have served a Utilisation
Request for an Advance to be made by the Banks in an amount equal to, and
in the same currency as, such outstanding Short-Term Advance on such
business date specified by the Overdraft Provider for a Term of one month
whereupon, notwithstanding the provisions of Clause 6.l(iii) or (v) or the
conditions to making an Advance contained in Clause 10 or any cancellation
of the Available Facility following the making of such Short-Term Advance,
the Banks shall make such Advance available to such Borrower rateably to
their respective Available Commitments at such time (or immediately prior
to any such cancellation) and interest on such Advance shall be determined
in accordance with Clause 11.2 and the Agent is hereby authorised to pay
the proceeds of such Advance to the Overdraft Provider on behalf of the
relevant Borrower to be applied in discharge of such outstanding Short-Term
Advance.
6.6 For the avoidance of any doubt, since the definition of Commitment only
applies to Banks and not the Overdraft Provider or the Fronting Bank, any
Bank that is also an Overdraft Provider or Fronting Bank may be obliged to
have Outstandings that, including its Advances as a Bank, its Short-Term
Advances as Overdraft Provider and its L/C Outstandings as Fronting Bank,
exceed the amount of its Commitment and any such Bank, in its capacity as
Overdraft Provider and Fronting Bank, has the benefit of the Banks'
obligations under Clauses 6.5 and 8.6 in respect of its Short-Term Advances
and L/C Outstandings as Fronting Bank.
7. ISSUE OF LETTERS OF CREDIT
7.1 Each Utilisation Request in respect of a Letter of Credit shall, in
addition to the information required pursuant to Clause 6.1, specify the
name and address of the recipient to which the relevant Letter of Credit
should be delivered and shall have the proposed form of the Letter of
Credit attached to it.
7.2 Subject to the provisions hereof, the Fronting Bank shall issue a Letter of
Credit in accordance with Clause 7.1 if:
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(i) no Event of Default or Potential Event of Default has occurred which
is continuing;
(ii) the representations and warranties set out in Section 3 of the
Nu-Kote Guarantees are true in all material respects on and as of
such Utilisation Date to the same extent as though made on and as
of such Utilisation Date, except to the extent that such
representations and warranties specifically relate to an earlier
date, in which case, such representations and warranties shall
have been true and correct in all material respects as of such
earlier date; and
(iii) the form of the Letter of Credit has been agreed between the
relevant Borrower and the Fronting Bank by no later than the
specified time.
8. INDEMNITY (INCLUDING BANK INDEMNITY FOR SHORT-TERM ADVANCES)
8.1 If, at any time, a demand for payment (the amount so demanded being herein
referred to as the "AMOUNT DEMANDED") is made under a Letter of Credit by
the beneficiary thereof, the Agent shall notify the relevant Borrower of
such demand and make demand of that Borrower for an amount equal to the
Amount Demanded.
8.2 A Borrower shall pay to the Agent an amount equal to the Amount Demanded
following receipt by it of a demand made on it by the Agent under this
Clause 8. Such payment shall be made on the second business day following
the business day on which such Borrower receives such demand from the
Agent, or, in the event that the Borrower receives such demand after 9.00
a.m. on such business day, on the third business day following.
8.3 Each Borrower hereby irrevocably and unconditionally agrees to indemnify
and keep indemnified the Fronting Bank against each and every sum paid or
payable by the Fronting Bank under any Letter of Credit issued at its
request and also undertakes to indemnify and hold harmless the Fronting
Bank on demand from and against all actions, proceedings, liabilities,
costs (including, without limitation, any costs incurred in finding any
amount which falls due from the Fronting Bank under any Letter of Credit in
connection with any such Letter of Credit as certified by the Fronting Bank
to the relevant Borrower), claims, losses, damages and expenses which the
Fronting Bank may at any time incur or sustain in connection with or
arising out of any Letter of Credit issued at its request Provided that a
Borrower shall not be obliged to pay any amount under this Clause 8.3 to
the extent that such obligation has arisen as a result of (i) the fraud,
gross negligence or wilful misconduct of the Fronting Bank or (ii) the
failure by the Fronting Bank to use reasonable care to determine that the
documents and certificates required to be delivered under any Letter of
Credit have been delivered and that they comply on their face with the
requirements of that Letter of Credit before making any payment thereunder.
8.4 The Fronting Bank shall be entitled to make any payment under any Letter of
Credit for which a demand has been made without any reference to or further
authority from the Borrower at whose request such Letter of Credit was
issued or any other investigation or enquiry, need not concern itself with
the propriety of any demand made or purported to be made under and in the
manner required by the terms of any such Letter of Credit and shall be
entitled to assume that any person expressed in any Letter of Credit or in
any notice served pursuant to any such Letter of Credit to be entitled to
make demands is so entitled and that any individual purporting to sign any
such demand or notice on behalf of such person is duly authorised to do so
unless it has actual knowledge that such person is not so entitled or not
so authorised; accordingly, it shall not (save as provided in this Clause
8) be
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a defence to any demand made of a Borrower, nor shall a Borrower's
obligations hereunder be impaired by the fact (if it be the case), that the
Fronting Bank was or might have been justified in refusing payment, in
whole or in part, of the amounts so demanded Provided that the Fronting
Bank shall use reasonable care to determine that the documents and
certificates required to be delivered under any Letter of Credit have been
delivered and that they comply on their face with the requirements of that
Letter of Credit before making any payment thereunder.
8.5 Save as otherwise provided in this Clause 8, the obligations of each
Borrower to the Fronting Bank in connection with any such Letter of Credit
shall not be discharged, lessened or impaired by any act, omission or
circumstance whatsoever which, but for this provision, might operate to
release or exonerate such Borrower from all or part of such obligations or
in any other way discharge, lessen or impair the same.
8.6 Each Bank hereby irrevocably and unconditionally agrees to indemnify and
keep indemnified the Fronting Bank and the Overdraft Provider on demand and
in its Proportion against each and every sum payable hereunder by either
Borrower to the Fronting Bank and the Overdraft Provider in respect of a
Letter of Credit or Short-Term Advance but which is not paid on the due
date therefor.
9. LETTER OF CREDIT COMMISSIONS AND FEES
Each Borrower agrees to pay the following amounts with respect to each
Letter of Credit issued by the Fronting Bank hereunder at its request:
(i) (a) in respect of each documentary Letter of Credit with a term (on
issue thereof) of less than one year, a commission of 0.625% per
annum on the weighted average maximum amount available from time
to time to be drawn under such Letter of Credit. Such commission
shall be paid to the Agent for the account of each Bank and for
distribution by the Agent to each Bank in proportion to each
Bank's allocation pursuant to Clause 6.2 in arrear on and to
(but excluding) each 31st March, 30th June, 30th September and
31st December in each year during the term thereof and on the
Expiry Date thereof, the first such payment to be made on 31st
March, 1995 in respect of any documentary Letter of Credit
issued prior to such date;
(b) in respect of each documentary Letter of Credit with a term (on
issue thereof) of one year or more and each standby Letter of
Credit, a commission equal to the product of (A) the weighted
average Applicable Margin applicable to the Advances (other
than Short-Term Advances) outstanding hereunder during the
period of calculation multiplied by (B) the weighted average
maximum amount available from time to time to be drawn during
such period under such Letter of Credit. Such commission shall
be paid to the Agent for the account of each Bank and for
distribution by the Agent to each Bank in proportion to each
Bank's allocation pursuant to Clause 6.2 in arrear on and to
(but excluding) each 31st March, 30th June, 30th September and
31st December in each year during the term thereof and on the
Expiry Date thereof, the first such payment to be made on 31st
March, 1995;
(ii) a fronting fee, for the account of the Fronting Bank, of 0.20% per
annum on the face amount of such Letter of Credit in arrear on and to
(but excluding) each 31st March, 30th June, 30th September and 31st
December in each year during the term thereof and on the Expiry Date
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thereof, the first such payment to be made on 31st March 1995 in
respect of any such Letter of Credit issued prior to such date; and
(iii) with respect to the issuance, any amendment and any transfer
thereof and each drawing thereunder, in each case reasonable
documentary and processing charges in accordance with the Fronting
Bank's standard schedule for such charges in effect at the date of
issue or the relevant amendment, transfer or drawing (as the case may
be) of the relevant Letter of Credit.
10. MAKING OF ADVANCES
10.1 If any Bank or the Overdraft Provider has been requested to make any
Advance in accordance with the provisions hereof, and if on the proposed
Utilisation Date relating to such an Advance:
(i) no Event of Default or Potential Event of Default has occurred which
is continuing; and
(ii) the representations and warranties set out in Section 3 of the
Nu-Kote Guarantees are true in all material respects on and as
of such Utilisation Date to the same extent as though made on
and as of such Utilisation Date, except to the extent that such
representations and warranties specifically relate to an earlier
date, in which case, such representations and warranties shall
have been true and correct in all material respects as of such
earlier date;
then, on such Utilisation Date, such Bank or the Overdraft Provider (as the
case may be) shall, save as otherwise provided herein, make such Advance
(through its Facility Office in the case of such Bank and if Barclays Bank
PLC is the Overdraft Provider, through Barclays Overdraft Agent in the case
of Short-Term Advances) to the relevant Borrower in accordance with the
provisions of Clause 22. Advances made hereunder shall not be represented
by notes or other instruments evidencing indebtedness.
10.2 If, before 9.00 a.m. on the Utilisation Date of an Advance to be
denominiated in an Optional Currency, the Agent receives notice from a
Lender that:
(i) it is impracticable for the affected Lender to fund its participation
in such Advance for its Term in that Optional Currency in the ordinary
course of business in the London interbank market; or
(ii) the use of the proposed Optional Currency might contravene any law or
regulation relevant to the affected Lender;
then the Agent shall promptly notify the relevant Borrower and that Advance
shall not be made.
10.3 The Agent shall notify each relevant Party of any applicable Agent's Spot
Rate of Exchange or Original Swiss Franc Amount as soon as practicable
after it is ascertained.
11. INTEREST
11.1 On the Repayment Date relating to each Advance (other than a Short-Term
Advance) made to it the relevant Borrower shall pay accrued interest on
that Advance.
11.2 On the earlier of:
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(i) the last business day of each calendar quarter; and
(ii) the Overdraft Repayment Date, the relevant Borrower shall pay accrued
interest on any Short Term Advance made to it.
11.3 The rate of interest applicable to an Advance (other than a Short-Term
Advance) made by a Bank during the Term of such Advance shall be the rate
per annum determined by the Agent to be the sum of:
(i) LIBOR on the Quotation Date for such Advance;
(ii) the Applicable Margin;and
(iii) (in the case of an Advance denominated in sterling) the Mandatory
Liquid Asset Costs Rate in respect thereof.
11.4 The rate of interest applicable to a Short-Term Advance shall be the
Overdraft Rate.
11.5 The Agent shall promptly notify the Borrowers and the relevant Banks of
each determination of an interest rate made by it pursuant to this Clause
11.
12. REPAYMENT OF ADVANCES
12.1 Each Borrower shall repay each Advance (other than a Short-Term Advance)
made to it in full on the Repayment Date relating thereto.
12.2 Each Borrower shall repay each Short-Term Advance made to it in full on or
before the Overdraft Repayment Date.
12.3 Neither Borrower shall repay all or any part of any Advance outstanding
hereunder except at the times and in the manner expressly provided herein.
13. CANCELLATION
13.1 The Borrowers may, by giving to the Agent not less than three business
days' prior notice to that effect, cancel the whole or any part (being a
minimum amount of CHF 2,500,000 and in additional integral multiples of CHF
1,000,000) of the Available Facility. Any such cancellation shall reduce
the Commitment of each Bank rateably.
13.2 Any notice of cancellation given by the Borrowers pursuant to Clause 13.1
shall be irrevocable and shall specify the date upon which such
cancellation is to be made and the amount of such cancellation.
13.3 If (i) a Borrower is required to make any additional payment to a Lender
pursuant to Clauses 14 or 18.2 or (ii) any Lender claims indemnification
under Clauses 15.1 or 15.2, the Borrowers may, within thirty days
thereafter and by not less than fifteen days' prior notice to the Agent
(which notice shall be irrevocable), cancel all or any part of such
Lender's Commitment whereupon on the date specified in such notice its
Commitment shall be reduced by the amount so cancelled.
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13.4 If the Borrowers give notice of cancellation pursuant to Clause 13.3, they
may at the same time as such notice expires repay each outstanding Advance
(or, as the case may be, the relevant proportion thereof) of the relevant
Lender together with accrued interest thereon and may procure that such
Lender's liability under all outstanding Letters of Credit (or, as the case
may be, the relevant proportion thereof) will be secured in a manner
acceptable to such Lender, it being understood that in no event shall any
Letter of Credit or the obligations of the Fronting Bank thereunder be
cancelled and security equal to, and in the same currency as, the maximum
amount that can be drawn under each outstanding Letter of Credit issued by
the Fronting Bank shall be acceptable to the Fronting Bank.
13.5 If Nu-Kote International Inc. gives notice in accordance with the Credit
Agreement to cancel the whole or any part of a Bank's commitment under the
Credit Agreement, the Borrowers shall, at the same time give notice in
accordance with Clause 13.1 to cancel the whole or a proportion equal to
the proportion to be cancelled under the Credit Agreement, of such Bank's
Commitment hereunder. If the Borrowers fail to give such a notice in
accordance with Clause 13.1, the notice given in accordance with the Credit
Agreement shall be deemed to be a notice under Clause 13.1, MUTATIS
MUTANDIS.
14. TAXES
14.1 All payments to be made by a Borrower to the Agent, any Lender or the
Fronting Bank hereunder shall be made free and clear of and without
deduction for or on account of tax unless such Borrower is required to make
such a payment subject to the deduction or withholding of tax, in which
case the relevant Borrower shall promptly upon becoming aware thereof
notify the Agent thereof and the relevant Borrower shall pay to the
relevant taxing or other governmental authority the full amount required to
be deducted or withheld (including the full amount required to be deducted
or withheld from any additional amount paid by such Borrower pursuant to
the succeeding sentence) promptly upon becoming aware of the same. If such
deduction or withholding is required, the sum payable by the relevant
Borrower in respect of which such deduction or withholding is required to
be made shall be increased to the extent necessary to ensure that, after
the making of the required deduction or withholding, the Agent, such Lender
or, as the case may be, the Fronting Bank receives and retains (free from
any liability in respect of any such deduction or withholding) a net sum
equal to the sum which it would have received and so retained had no such
deduction or withholding been made or required to be made Provided that the
relevant Borrower shall not be required to make any additional payment to
any Lender pursuant to this Clause 14.1 if:-
(i) the law, regulation or other administrative circular requiring such
deduction or withholding was in existence on 24th February, 1995;
(ii) the requirement to deduct or withhold arises as a result of such
Lender not being or having ceased to be a Qualifying Lender;
(iii) the requirement to deduct or withhold could have been avoided or
reduced as a result of such Lender complying with any obligation it
may have to provide documentation in accordance with Clause 17.1; or
(iv) the requirement to deduct or withhold would not have arisen but for a
transfer or assignment or participation in breach of Clause 30.
14.2 If a Lender shall become aware that it is eligible for a refund in respect
of any taxes actually paid by
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a Borrower pursuant to Clause 14.1 hereof, it shall promptly notify the
relevant Borrower of the availability of such refund and shall, within 30
days after receipt of a request by the relevant Borrower, apply for such
refund or shall furnish to the relevant Borrower such forms, duly
completed, as will enable that Borrower to claim such refund on its own
behalf. The relevant Borrower shall reimburse such Lender for all costs
reasonably incurred by it in applying for seeking such refund. If any
Lender determines that it has received a refund in respect of any taxes
paid by a Borrower pursuant to Clause 14.1 hereof, it shall repay such
refund within 30 days after receipt to the relevant Borrower to the extent
of amounts not in excess of the amounts actually paid by such Borrower and
not previously reimbursed in respect of the taxes giving rise to such
refund net of all out-of-pocket expenses reasonably incurred by such
Lender not previously reimbursed and without interest (other than interest
received from the relevant taxing authority with respect to such refund).
The relevant Borrower, upon request of the relevant Lender, agrees to
return to such Lender the amount paid to it by the applicable Lender
with respect to such refund (plus applicable penalties, interest or other
charges) in the event that such Lender is required to repay such refund. In
addition the Agent and each Lender shall reasonably cooperate with a
Borrower, at that Borrower's expense in contesting any taxes that such
Borrower is required to bear pursuant to Clause 14.1 hereof and shall pay
to such Borrower, on a net after tax basis, any refunds obtained as a
result of such contest, together with any interest thereon, within 30 days
of receipt. Nothing in this Clause 14.2 shall interfere with the right of
any person to arrange its tax affairs in whatever manner it thinks fit nor
oblige any person to disclose any information relating to its tax affairs
or any computations in respect thereof to any other person.
15. INCREASED COSTS
15.1 If, after 24th February, 1995 by reason of, (i) the introduction of or any
change (including, without limitation, any change by way of imposition or
increase of tax or reserve requirements) in or in the official
interpretation of any law or regulation by the authority charged with the
administration or interpretation thereof, or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
or quasi-governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law) but being a
guideline or request with which banks are generally accustomed to comply:
(i) a Lender incurs a cost as a result of such Lender's having entered
into and/or performing its obligations under this Agreement and/or
assuming or maintaining a commitment under this Agreement and/or
participating in one or more Advances and/or one or more Letters of
Credit hereunder;
(ii) there is an increase in the cost to a Lender of funding or
maintaining its participation in (a) all or any of the advances
comprised in a class of advances formed by or including the
Advances made or to be made hereunder and/or (b) all or any of
the letters of credit comprised in a class of letters of credit
formed by or including the Letters of Credit made or to be made
hereunder; or
(iii) a Lender becomes liable to make any payment on account of tax or
otherwise (not being a tax imposed on or measured by the net income
or capital of such Lender's Facility Office by the jurisdiction in
which it is incorporated or in which it or its Facility Office is
located or centrally managed or controlled) on or calculated by
reference to the amount of such Lender's participation in the
Advances made or to be made hereunder and/or any Letter of Credit
issued or to be issued hereunder and/or to any sum received or
receivable by it hereunder,
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then the relevant Lender shall, through the Agent, notify Pelikan
Produktions AG of such cost, such increased cost or, as the case may be,
such liability within 30 days of becoming aware of the same, demanding
indemnification in respect thereof and upon receipt of such notice and
demand, Pelikan Produktions AG shall pay to the Agent for the account of
that Lender, within five business days after receipt of such notice and
demand, additional amounts sufficient to indemnify that Lender against
such cost, such increased cost or such liability. A certificate in
reasonable detail as to the amount of such cost, increased cost or such
liability submitted to the Borrowers and the Agent by that Lender, shall,
except for manifest error, be final, conclusive and binding for all
purposes.
15.2 In the event that any Lender shall have reasonably determined that the
adoption or implementation after 24th February, 1995 of any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy (other than (i) the terms, proposals and
recommendations contained in the Basle Paper or (ii) any other rule,
regulation, guideline or order regarding capital adequacy in effect on
24th February, 1995 affecting such Lender), including, without
limitation, a request or requirement (but being a request or requirement
with which banks are generally accustomed to comply) which affects the
manner in which a Lender is required to or does maintain capital
resources having regard to such Lender's obligations hereunder and to
amounts owing to it hereunder or any change therein or in the
interpretation or application thereof or compliance by any Lender with
any request or directive regarding capital adequacy (whether or not
having the force of law and whether or not failure to comply therewith
would be unlawful but if not having the force of law, being a request
or directive with which banks are generally accustomed to comply and
in any event excluding the terms, proposals and recommendations
contained in the Basle Paper or any other rule, regulation, guideline or
order regarding capital adequacy in effect on 24th February, 1995
affecting such Lender) from any central bank or governmental agency
or body having jurisdiction, has the effect of increasing the amount
of capital required to be maintained by such Lender and thereby reducing
the rate of return on such Lender's overall capital as a consequence of
such Lender's obligations hereunder to a level below that which such
Lender would have achieved but for the occurrence of such circumstances,
then the relevant Lender shall, through the Agent, notify Pelikan
Produktions AG of such event within 30 days of becoming aware of the
same demanding indemnification in respect thereof and including in such
notification and demand a certificate stating (a) that one of the events
described in this Clause 15.2 has occurred and describing in reasonable
detail the nature of such event, (b) the amount of the reduction in the
rate of return on such Lender's capital reasonably determined by such
Lender to be allocable to the existence of such Lender's obligations
hereunder and (c) setting forth in reasonable detail the manner of
calculation of the reduction in the rate of return on such Lender's
capital and such allocated amount thereof and Pelikan Produktions AG shall
upon receipt of such notice and demand pay to the Agent, for the account
of such Lender, additional amounts sufficient to compensate such Lender
for such reduction. A certificate as to the amount of such compensation,
submitted to the Borrowers and the Agent by such Lender shall, in the
absence of manifest error, be final, conclusive and binding for all
purposes. In determining such amount, a Lender may use any reasonable
averaging and attribution method. Nothing in this Clause 15.2 is intended
to provide to the Borrowers the right to inspect the records, files or
books of any Lender.
15. Pelikan Produktions AG shall not be required to pay any amounts pursuant
to Clauses 15.1 or 15.2:
(i) to the extent that such amounts are recovered under Clause 14,
Clause 18 or any other sub-clause of Clause 15;
(ii) to the extent that such cost, increased cost or liability would not
have arisen but for a
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transfer or assignment in breach of Clause 30;
(iii) unless the relevant Lender has delivered a notice and demand in
the manner required by Clause 15.1 or, as the case may be, Clause
15.2 and such certificates as are referred to in Clauses 15.1 or,
as the case may be, 15.2; or
(iv) to the extent that such cost, increased cost or liability has
already been compensated for by the application of the Mandatory
Liquid Asset Costs Rate.
16 ILLEGALITY
If, at any time after 24th February, 1995 it is unlawful for a Lender to
make, fund or allow to remain outstanding all or any of the Advances made
or to be made by it hereunder then that Lender shall, promptly after
becoming aware of the same, deliver to Pelikan Produktions AG through the
Agent a certificate to that effect and, unless such illegality is avoided
in accordance with Clause 17 or Clause 38 taking into account any grace
period allowed by any such order, request or requirement:
(i) such Lender shall not thereafter be obliged to make any Advances and
the amount of its Commitment shall be immediately reduced to zero;
and
(ii) if the Agent on behalf of such Lender so requires, Pelikan
Produktions AG shall on such date as the Agent shall have specified:
(a) repay each outstanding Advance together with accrued interest
thereon and all other amounts owing to such Lender; and/or
(b) procure that such Lender's obligations under any Letters of
Credit will be secured in a manner acceptable to such Lender,
it being understood that in no event shall any Letter of
Credit or the obligations of the Fronting Bank thereunder be
cancelled and security in Swiss francs equal to the maximum
amount that can be drawn under each Letter of Credit
outstanding at such time shall be acceptable to the Fronting
Bank.
17. MITIGATION
17.1 If, in respect of any Lender, circumstances arise which would or would
upon the giving of notice result in:
(i) the reduction of its Commitment to zero pursuant to Clause 16(i);
(ii) an increase in the amount of any payment to be made to it or for its
account pursuant to Clause 14 or Clause 18.2; or
(iii) a claim for indemnification pursuant to Clause 15.1 or 15.2,
then, without in any way limiting, reducing or otherwise qualifying
the rights of such Lender or the obligations of the Borrowers under
any of the Clauses referred to in (i), (ii) or (iii) above such
Lender shall promptly upon becoming aware of the same notify the
Agent thereof and, in consultation with the Agent and the Borrowers
to the extent that it can do so without prejudice to its own
position, take such steps as it determines are available to it
(acting reasonably) to mitigate the effects of such
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circumstances at the request and expense of Pelikan Produktions AG
including (i) the transfer of its Facility Office; (ii) (subject to
Clause 30) the transfer of its rights and obligations hereunder to
another financial institution acceptable to the Borrowers and
willing to participate in the Facility; and/or (iii) within 30 days
of becoming aware of the same, the execution and delivery to the
relevant authorities (and/or the Borrowers) of any documentation
necessary to secure the benefit of any applicable double taxation
treaty or any relevant domestic law which would operate to mitigate
any of the circumstances referred to above Provided that such
Lender shall be under no obligation to take any such action if, in
the reasonable opinion of such Lender, to do so might have any
adverse effect upon its business, operations or financial condition.
17.2 The Borrowers hereby agree to pay all expenses reasonably incurred by any
Lender in taking steps to mitigate the effects of circumstances giving
rise to any of the matters referred to in Clause 17.1(i), (ii) and (iii)
by transferring its Facility Office pursuant to Clause 17.1 to the extent
that such expenses would not have occurred but for such transfer.
18. MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES
18.1 If, in relation to any Utilisation by way of Advances (other than a Short
Term Advance), the Agent determines that at or about 11.00 a.m. on the
Quotation Date for the Term in respect of such Advances none of the
Reference Banks was offering to prime banks in the London Interbank Market
deposits in the relevant currency for the proposed duration of such Term,
then, notwithstanding such failure to offer deposits in that currency:
(i) the Agent shall notify the other parties hereto of such event;
(ii) such Advances shall, nevertheless, be made and the amount of
interest payable in respect of any such Advance during its Term
shall be determined in accordance with the following provisions
of this Clause 18; and
(iii) if the Agent so requires, within five days of such notification
the Agent and the relevant Borrower shall enter into negotiations
with a view to agreeing a substitute basis for determining the rates
of interest which may be applicable to such Advances and Advances in
the future and any such substitute basis that is agreed shall take
effect in accordance with its terms and be binding on each party
hereto Provided that the Agent may not agree any such substitute
basis without the prior written consent of each Bank.
18.2 If no substitute basis is agreed within 10 business days pursuant to
Clause 18.1(iii) in respect of such Advances, any such Advance made by
a Bank pursuant to Clause 18.1(ii) shall bear interest during its Term
at the rate per annum equal to the sum of the Applicable Margin at such
time, the Mandatory Liquid Assets Costs Rate (if applicable) and the cost
to such Bank (as certified by it in good faith to the Agent with a copy
to the Borrowers and expressed as a rate per annum) of funding such
Advance from whatever sources it may reasonably select.
19. ACCELERATION EVENT
If one or more Events of Default shall have occurred then at any time
thereafter and so long as the Event of Default in question is continuing
unremedied or unwaived, the Agent (if so instructed by the Requisite
Lenders) shall:-
(i) cancel the Commitments whereupon the same shall be so cancelled and
reduced to zero;
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and/or
(ii) declare any outstanding Advances to be immediately due and payable,
whereupon the same shall become so due and payable, together with
accrued interest thereon and all other sums due hereunder forthwith;
and/or
(iii) require each Borrower to provide security in respect of each Letter
of Credit issued at its request in a manner acceptable to the
Fronting Bank in the currency of each such Letter of Credit, it
being understood that in no event shall any Letter of Credit or the
obligations of the Fronting Bank thereunder be cancelled and
security equal to, and in the same currency as, the maximum amount
that can be drawn under each Letter of Credit outstanding at such
time shall be acceptable to the Fronting Bank.
20. DEFAULT INTEREST AND INDEMNITIES
20.1 If any amount of principal, Commitment Fee, or interest due and payable by
a Borrower hereunder is not paid on the due date therefor, a Borrower does
not reimburse the Fronting Lender for any drawing under a Letter of Credit
hereunder on the due date therefor, any fees (other than the Commitment
Fee) and other amounts payable by a Borrower hereunder are not paid within
ten days of the due date therefor, or if any sum due and payable by a
Borrower under any judgment of any court in connection herewith is not
paid in accordance with the requirements of such judgment, the period
beginning on such due date or, as the case may be, the date required by
such judgment and ending on the date upon which the obligation of the
relevant Borrower to pay such sum (the balance thereof for the time being
unpaid being herein referred to as an "UNPAID SUM") is discharged shall
be divided into successive periods, each of which (other than the first)
shall start on the last day of the preceding such period and the duration
of each of which shall (except as otherwise provided in this Clause 20)
be reasonably selected by the Agent.
20.2 During each such period relating thereto as is mentioned in Clause 20.1 an
unpaid sum shall bear interest at the rate per annum which is the sum from
time to time of two per cent., the Applicable Margin at such time, the
Mandatory Liquid Asset Costs Rate Formula (if applicable) and LIBOR on the
Quotation Date therefor Provided that:
(i) if, for any such period, LIBOR cannot be determined, the rate of
interest applicable to such unpaid sum in respect of the Agent or
any Lender shall be the sum from time to time of two per cent., the
Applicable Margin at such time, the Mandatory Liquid Asset Costs
Rate Formula (if applicable) and the rate per annum notified to the
Agent by such person (as certified by it in good faith to the
relevant Borrower with a copy to the Agent) to be that which
expresses as a percentage rate per annum the cost to such person
of funding from whatever sources it may reasonably select its
portion of such unpaid sum for such period; and
(ii) if such unpaid sum is all or part of an Advance which became due and
payable on a day other than the last day of the Term thereof, the
first such period applicable thereto shall be of a duration equal
to the unexpired portion of that Term and the rate of interest
applicable thereto from time to time during such period shall be
that which exceeds by one per cent. the rate which would have been
applicable to it had it not so fallen due.
20.3 Any interest which shall have accrued under Clause 20.2 in respect of an
unpaid sum shall be due and payable and shall be paid by the relevant
Borrower at the end of the period by reference to which
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it is calculated.
20.4 If any Lender or the Agent on its behalf receives or recovers all or any
part of an Advance made by such Lender otherwise than on the last day of
the Term thereof, the Borrower to whom such Advance was made shall pay to
the Agent on demand for the account of such Lender an amount equal to the
amount (if any) by which (i) the additional interest which would have been
payable on the amount so received or recovered had it been received or
recovered on the last day of the Term thereof exceeds (ii) the amount of
interest which in the opinion of the Agent would have been payable to the
Agent on the last day of the Term thereof in respect of a deposit in the
currency of the amount so received or recovered equal to the amount so
received or recovered placed by it with a prime bank in the London
Interbank Market for a period starting on the third business day following
the date of such receipt or recovery and ending on the last day of the
Term thereof.
20.5 Any unpaid sum shall (for the purposes of this Clause 20 and Clause 15) be
treated as an advance and accordingly in this Clause 20 and Clause 15 the
term "Advance" includes any unpaid sum and "Term", in relation to an
unpaid sum, includes each such period relating thereto as is mentioned in
Clause 20.1.
20.6 If any person receives an amount in respect of a Borrower's liability
under the Finance Documents or if that liability is converted into a
claim, proof, judgment or order in a currency other than the currency
(the "CONTRACTUAL CURRENCY") in which the amount is expressed to be
payable under the relevant Finance Document:
(i) that Borrower shall indemnify that person as an independent
obligation against any loss or liability arising out of or as
a result of the conversion;
(ii) if the amount received by that person, when converted into the
contractual currency at a market rate in the usual course of its
business, is less than the amount owed in the contractual currency,
that Borrower shall forthwith on demand pay to that person an amount
in the contractual currency equal to the deficit; and
(iii) that Borrower shall pay to the person concerned on demand any
exchange costs and taxes payable in connection with any such
conversion.
Each Borrower waives any right it may have in any jurisdiction to pay any
amount under the Finance Documents in a currency other than that in which
it is expressed to be payable.
21. CURRENCY OF ACCOUNT
21.1 A repayment or prepayment of an Advance, or a payment by a Borrower under
Clause 8.2, is payable in the currency in which that Advance or relevant
Amount Demanded, as the case may be, is denominated.
21.2 Interest is payable in the currency in which the relevant amount in
respect of which it is payable is denominated.
21.3 Amounts payable in respect of costs, expenses, taxes and the like are
payable in the currency in which they are incurred.
21.4 Any other amount payable under this Agreement is, except as otherwise
provided in this Agreement,
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payable in Swiss francs.
22. PAYMENTS
22.1 On each date on which this Agreement requires an amount to be paid by a
Borrower or any of the Lenders hereunder, the relevant Borrower or, as the
case may be, such Lender shall make the same available in same day funds
to the Agent or to its account at such office or bank as it may notify to
the Borrower or Lender for this purpose.
22.2 On each date on which this Agreement requires an amount to be paid by a
Borrower or the Overdraft Provider in respect of any Short-Term Advances,
the relevant Borrower or, as the case may be, the Overdraft Provider shall
make the same available for value the same day by transfer to such account
with such bank in Zurich as the Overdraft Provider or, as the case may be,
such Borrower shall have specified for this purpose.
22.3 Save as otherwise provided herein, each payment received by the Agent for
the account of another person shall be made available by the Agent to such
other person (in the case of a Bank, for the account of its Facility
Office) for value the same day by transfer to such account of such person
with such bank in the principal financial centre of the relevant currency
as such person shall have previously notified to the Agent.
22.4 All payments required to be made by a Borrower hereunder shall be
calculated without reference to any set-of or counterclaim and shall be
made free and clear of and without any deduction for or on account of any
set-off or counterclaim.
22.5 Where a sum is to be paid hereunder to the Agent for account of another
person, the Agent shall not be obliged to make the same available to that
other person until it has been able to establish to its satisfaction that
it has actually received such sum, but if it does so and it proves to be
the case that it had not actually received such sum, then the person to
whom such sum was so made available shall on request refund the same to
the Agent together with an amount sufficient to indemnify the Agent
against any cost or loss it may have suffered or incurred by reason of
its having paid out such sum prior to its having received such sum.
23. SET-OFF AND NETTING OF PAYMENTS
23.1 Each Borrower authorises each Lender upon the occurrence of an Event of
Default and consequent acceleration of the obligations of such Borrower
hereunder pursuant to Clause 19 hereof to apply any credit balance to
which such Borrower is entitled on any account of that Borrower with that
Lender in satisfaction of any sum due and payable from such Borrower to
such Lender hereunder but unpaid; for this purpose, each Lender is
authorised to purchase with the moneys standing to the credit of any
such account such other currencies as may be necessary to effect such
application. Such Lender shall notify the relevant Borrower of any such
application. No Lender shall be obliged to exercise any right given to it
by this Clause 23.
23.2 If, on any occasion, the Agent receives a payment for the account of a
Borrower pursuant to Clause 22.1, the Agent may make available such
payment to the relevant Borrower by application:
(i) first, in or towards payment the same day of any amount then due
from such Borrower hereunder to the person from whom the amount was
so received; and
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(ii) secondly, in or towards payment the same day to the account of such
Borrower with such Lender in Zurich as such Borrower shall have
previously notified to the Agent for this purpose.
24. REDISTRIBUTION OF PAYMENTS
24.1 Subject to Clause 24.2, if, at any time, the proportion which any Bank (a
"RECOVERING BANK") has received or recovered (whether by payment, the
exercise of a right of set-off or combination of accounts or otherwise) in
respect of its portion of any payment (a "RELEVANT PAYMENT") to be made
under this Agreement by either Borrower for account of such Recovering
Bank and one or more other Banks is greater (the portion of such receipt
or recovery giving rise to such excess proportion being herein called an
"EXCESS AMOUNT") than the proportion thereof so received or recovered by
the Bank or Banks so receiving or recovering the smallest proportion
thereof, then:
(i) such Recovering Bank shall pay to the Agent an amount equal to such
excess amount;
(ii) there shall thereupon fall due from the relevant Borrower to such
Recovering Bank an amount equal to the amount paid out by such
Recovering Bank pursuant to paragraph (i) above, the amount so due
being, for the purposes hereof, treated as if it were an unpaid part
of such Recovering Bank's portion of such relevant payment; and
(iii) the Agent shall treat the amount received by it from such
Recovering Bank pursuant to paragraph (i) above as if such
amount had been received by it from the relevant Borrower
in respect of such relevant payment and shall pay the same
to the persons entitled thereto (including such Recovering
Bank) PRO RATA to their respective entitlements thereto.
24.2 If any Bank shall commence any action or proceeding in any court to
enforce its rights hereunder and, as a result thereof or in connection
therewith, shall receive any excess amount (as defined in Clause 24.1),
then such Bank shall not be required to share any portion of such excess
amount with any Bank which has the legal right to, but does not, join in
such action or proceeding or commence and diligently prosecute a separate
action or proceeding to enforce its rights in another court.
25. FEES
Pelikan Produktions AG shall pay to the Agent for account of each Bank a
Commitment Fee (the "COMMITMENT FEE") on the amount of such Bank's
Available Commitment (less, if such Bank is also the Overdraft Provider,
the Overdraft Provider's outstanding Short-Term Advances on such day) from
day to day during the period beginning on 24th February, 1995 and ending
on the Termination Date at the applicable Commitment Fee Percentage per
annum and payable in arrear on and to (but excluding) each 31st March,
30th June, 30th September and 31st December falling during the term of
this Agreement and on the Termination Date. For this purpose,
Utilisations are taken at their Original Swiss Franc Amount.
26. COSTS AND EXPENSES
26.1 Except as otherwise agreed in writing by the Agents, Arrangers and the
Borrowers, whether or not the Closing Date shall occur, Pelikan
Produktions AG shall, on demand of an Agent or an Arranger, reimburse
such Agent or, as the case may be, such Arranger, to the extent not
recovered under any other Loan Document (as defined in the Credit
Agreements) or other Finance Documents, for:
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(i) all reasonable costs of furnishing all opinions required hereunder
by counsel for the Borrowers (including, without limitation, any
opinions reasonably requested by such Agent as to any legal matters
arising hereunder or under any Security Document) and of the
Borrowers' compliance with all agreements and conditions contained
herein or in any Finance Document on its part to be performed or
complied with together with any VAT thereon;
(ii) the reasonable fees, expenses and disbursements of counsel to such
Agent together with any VAT thereon properly incurred in connection
with the negotiation, preparation, execution and administration of
this Agreement and the Finance Documents, each Advance made, and
each Letter of Credit issued, thereunder and any amendments and
waivers thereto;
(iii) all the actual costs and expenses of creating and perfecting any
encumbrance in favour of the Lenders contemplated by the Finance
Documents including filing and recording fees and expenses, stamp
duty or similar taxes, reasonable fees and expenses of legal counsel
for providing such legal opinions as such Agent may reasonably
request in connection therewith and reasonable fees and expenses
of legal counsel to such Agent;
(iv) all costs and expenses (including reasonable legal fees) incurred by
such Agent in connection with the preservation and enforcement of
any of the rights of such Agent and the Lenders in connection with
any workout or collection of any of the obligations of the Borrowers
under this Agreement and the Finance Documents or enforcement of
this Agreement or the Finance Documents;
(v) all reasonable accountable out-of-pocket expenses (including travel
and due diligence expenses) incurred by such Arranger in connection
with the negotiation, closing and syndication of the Finance
Documents Provided that the amount of all such out-of-pocket
expenses incurred by such Arranger (and the administrative
agent under the Credit Agreement and all other Loan Documents
(as defined in the Credit Agreement)) shall not in the aggregate
exceed US$50,000; and
(vi) all other actual and reasonable out-of-pocket expenses incurred by
the Agent in connection with the making of Advances and issuance of
Letters of Credit hereunder.
26.2 If Pelikan Produktions AG fails to perform any of their obligations under
Clause 26.1, each Bank shall, in its Proportion, indemnify each Agent and
Arranger against any loss incurred by it as a result of such failure and
the Borrowers shall forthwith reimburse each Bank for any payment made by
it pursuant to Clause 26.1.
26.3 In addition to the provisions of Clause 26.1 and whether or not the
Closing Date shall occur, Pelikan Produktions AG agrees to
indemnify, pay and hold each Agent and each Lender, and their
respective officers, directors, employees, agents, and affiliates
(collectively called the "INDEMNITIES") harmless from and against, any
and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, and out-of-pocket costs, expenses
and disbursements of any kind or nature whatsoever (including, without
limitation, reasonable legal fees) in connection with any
investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Indemnity shall be designated a party
thereto, that may be imposed on, incurred by, or asserted against that
Indemnity, in any manner relating to or arising out of this Agreement
or any Finance Document, or the use or intended use of the proceeds
thereof or in any way relating to or resulting from the actions
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or assets of the Borrowers or any of their respective subsidiaries
(the "INDEMNIFIED LIABILITIES") Provided that the Borrowers shall have
no obligation under this Clause 26.3 to any Indemnity arising from the
fraud, gross negligence, wilful misconduct or wilful breach of this
Agreement or any Finance Document by any party hereto and its related
Indemnities.
27. THE AGENTS, THE ARRANGERS AND THE LENDERS
27.1 The Arrangers and each Lender hereby appoints the Agent to act as its
agent in connection with this Agreement and the Finance Documents and the
Collateral Agent to act as its agent in connection with the Collateral
Documents and authorises each of the Agent and the Collateral Agent to
exercise such rights, powers, authorities and discretions as are
specifically delegated to the Agent by the terms hereof together with all
such rights, powers, authorities and discretions as are reasonably
incidental thereto.
27.2 Each of the Agent and the Collateral Agent may:
(i) assume that:
(a) any representation made by any Obligor in connection with any
Finance Document is true;
(b) no Event of Default has occurred;
(c) no Obligor is in breach of or default under its obligations
under any Finance Document; and
(d) any right, power, authority or discretion vested in a Finance
Document upon the Requisite Lenders, the Lenders or any other
person or group of persons has not been exercised,
unless it has, in its capacity as agent for the Lenders hereunder,
received notice to the contrary from any other party hereto;
(ii) assume that the Facility Office of each Bank is that identified with
its signature below (or, in the case of a Transferee, at the end of
the Transfer Certificate to which it is a party as Transferee) until
it has received from such Bank a notice designating some other
office of such Bank to replace its Facility Office and act upon any
such notice until the same is superseded by a further such notice;
(iii) engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services
may to it seem necessary, expedient or desirable and rely upon any
advice so obtained;
(iv) rely as to any matters of fact which might reasonably be expected to
be within the knowledge of the Borrowers upon a certificate signed
by or on behalf of the Borrowers;
(v) rely upon any communication or document believed by it to be
genuine;
(vi) refrain from exercising any right, power or discretion vested in
it as Agent under any Finance Document unless and until instructed
by the Requisite Lenders as to whether or not
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such right, power or discretion is to be exercised and, if it is to
be exercised, as to the manner in which it should be exercised; and
(vii) refrain from acting in accordance with any instructions of the
Requisite Lenders to begin any legal action or proceeding arising
out of or in connection with this Agreement or any other Finance
Document until it shall have received such security as it may
require (whether by way of payment in advance or otherwise) for all
costs, claims, losses, expenses (including, without limitation,
legal fees) and liabilities together with any VAT thereon which it
will or may expend or incur in complying with such instructions.
27.3 Each of the Agent and the Collateral Agent shall:
(i) promptly inform each Lender of the contents of any notice or
document received by it in its capacity as Agent or, as the case may
be, Collateral Agent from an Obligor under a Finance Document;
(ii) promptly notify each Lender of the occurrence of any Event of
Default or any default by an Obligor in the due performance of
or compliance with its obligations under a Finance Document of
which it has notice from any other party hereto;
(iii) save as otherwise provided herein, act as agent hereunder in
accordance with any instructions given to it by the Requisite
Lenders, which instructions shall be binding on all of the
Lenders; and
(iv) if so instructed by the Requisite Lenders, refrain from exercising
any right, power or discretion vested in it as agent hereunder.
27.4 Notwithstanding anything to the contrary expressed or implied herein,
neither the Agent, the Collateral Agent nor any Arranger shall:
(i) be bound to enquire as to:
(a) whether or not any representation made by an Obligor in
connection with a Finance Document is true;
(b) the occurrence or otherwise of any Event of Default;
(c) the performance by each Obligor of its obligations under each
Finance Document to which it is a party; or
(d) any breach of or default by an Obligor of or under its
obligations under any Finance Document;
(ii) be bound to account to any Lender for any sum or the profit element
of any sum received by it for its own account;
(iii) be bound to disclose to any other person any information relating
to the Borrower if such disclosure would or might in its opinion
constitute a breach of any law or regulation or be otherwise
actionable at the suit of any person; or
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(iv) be under any obligations other than those for which express
provision is made herein.
27.5 Each Lender shall, in its Proportion, from time to time on demand by the
Agent or as the case may be, the Collateral Agent, indemnify the Agent or
as the case may be, the Collateral Agent against any and all costs,
claims, losses, expenses (including, without limitation, legal fees) and
liabilities together with any VAT thereon which it may incur, otherwise
than by reason of its own gross negligence or wilful misconduct, in acting
in its capacity as agent hereunder.
27.6 The Agent, the Collateral Agent and the Arrangers do not accept any
responsibility for the accuracy and/or completeness of any information
supplied by either Borrower in connection herewith or for the legality,
validity, effectiveness, adequacy or enforceability of this Agreement or
any other Finance Document and the Agent, the Collateral Agent, and the
Arrangers shall not be under any liability as a result of taking or
omitting to take any action in relation to this Agreement or any other
Finance Document, save in the case of fraud, gross negligence or wilful
misconduct.
27.7 Each of the Lenders agrees that it will not assert or seek to assert
against any director, officer or employee of the Agent, the Collateral
Agent or any Arranger any claim it might have against any of them in
respect of the matters referred to in Clause 27.6.
27.8 The Agent, the Collateral Agent and each of the Arrangers may accept
deposits from, lend money to and generally engage in any kind of banking
or other business with either Borrower.
27.9 Each of the Agent and the Collateral Agent may resign its appointment
hereunder at any time without assigning any reason therefor by giving not
less than thirty days' prior written notice to that effect to each of the
other parties hereto and by appointing any of its affiliates in its stead,
such appointment to take effect from the date of resignation of the
resigning agent.
27.10 If a successor to the Agent or the Collateral Agent is appointed under
the provisions of Clause 27.9, then (i) the retiring Agent shall be
discharged from any further obligation hereunder but shall remain entitled
to the benefit of the provisions of this Clause 27 and (ii) its successor
and each of the other parties hereto shall have the same rights and
obligations amongst themselves as they would have had if such successor
had been a party hereto.
27.11 It is understood and agreed by each Lender that it has itself been,
and will continue to be, solely responsible for making its own
independent appraisal of and investigations into the financial condition,
creditworthiness, condition, affairs, status and nature of the Borrowers
and, accordingly, each Lender warrants to the Agent, the Collateral Agent
and the Arrangers that it has not relied on and will not hereafter rely on
the Agent, the Collateral Agent and the Arrangers or any one of them:
(i) to check or enquire on its behalf into the adequacy, accuracy or
completeness of any information provided by the Borrowers in
connection with any Finance Document or the transactions therein
contemplated (whether or not such information has been or is
hereafter circulated to such Lender by the Agent, the
Collateral Agent and the Arrangers or any one of them); or
(ii) to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or
nature of either Borrower.
27.12 In acting as agent, collateral agent and/or arrangers for the Lenders,
the agency division of each of the Agent, the Collateral Agent and each
Arranger shall be treated as a separate entity from any other
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of its divisions or departments and, notwithstanding the foregoing
provisions of this Clause 27, in the event that the Agent, the Collateral
Agent or, as the case may be, any Arranger should act for either Borrower
in any capacity in relation to any other matter, any information given by
the relevant Borrower to the Agent, the Collateral Agent or, as the case
may be, such Arranger in such other capacity may be treated as
confidential by the Agent, the Collateral Agent or, as the case may be,
such Arranger.
28. BENEFIT OF AGREEMENT
This Agreement shall be binding upon and enure to the benefit of each
party hereto and its or any subsequent successors, Transferees,
Overdraft Facility Transferees and permitted assigns.
29. ASSIGNMENTS AND TRANSFERS BY THE BORROWERS
Neither Borrower shall be entitled to assign or transfer all or any of its
rights, benefits and obligations hereunder.
30. ASSIGNMENTS AND TRANSFERS BY BANKS, CHANGE OF OVERDRAFT PROVIDER
30.1 Any Bank may, at any time, assign all or any of its rights and benefits
hereunder, sell participations in, or transfer in accordance with Clause
30.3 (but not otherwise) all or any of its rights, benefits and
obligations hereunder to any person Provided that:
(i) no such assignment or transfer may be made:
(a) unless the Bank also transfers or assigns to the same person a
pro rata share of its rights, benefits and obligations (if any)
under the Credit Agreement and the UK Facility;
(b) without the prior written consent of the Borrowers, the Fronting
Bank, the Overdraft Provider and the Agent, such consent not to
be unreasonably withheld or delayed;
(c) otherwise than to a Qualifying Lender;
(d) if the result thereof, at the time of such transfer or
assignment or immediately thereafter, would be that either
Borrower would be liable to pay an additional amount or
amounts pursuant to Clauses 14 or 15 which additional amount
or amounts would not have been payable had no such transfer
or assignment occurred unless such Transferee or assignee
agrees to waive its rights to receive such additional amount
or amounts; and
(ii) no such participation may be made unless:
(a) the relevant Bank remains the lender of record hereunder and
the proposed participant does not become the lender of record
hereunder;
(b) the relevant Bank's obligations hereunder shall remain
unchanged and it shall remain solely responsible for the
performance thereof;
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(c) all parties hereto shall be entitled to deal solely with the
relevant Bank in connection with its Commitment and other
rights and obligations of the relevant Bank under the Finance
Documents;
(d) such participant is a Qualifying Lender;
(e) such Bank shall be solely responsible for any withholding taxes
or filing or reporting requirements relating to such
participation and shall hold harmless each Borrower and the
Agent against the same; and
(f) any such participant which is not an affiliate of the relevant
Bank shall not be entitled to require the relevant Bank to take
or omit to take any action under any Finance Document except
action directly affecting the extension of the "Termination
Date" hereunder or the reduction of the principal amount or the
decrease in the rate of interest payable hereunder or any fees
related thereto.
30.2 If any Bank assigns all or any of its rights and benefits hereunder in
accordance with Clause 30.1, then, unless and until the assignee has
agreed with the Agent, the Arrangers and the other Banks that it shall be
under the same obligations towards each of them as it would have been
under if it had been an original party hereto as a Bank, the Agent, the
Arrangers and the other Banks shall not be obliged to recognise such
assignee as having the rights against each of them which it would have
had if it had been such a party hereto.
30.3 If any Bank wishes to transfer all or any of its rights, benefits and/or
obligations hereunder as contemplated in Clause 30.1, then such transfer
shall be effected by the delivery to the Borrowers and the Agent of a
duly completed and duly executed Transfer Certificate in which event,
on the later of the Transfer Date specified in such Transfer Certificate
and the fifth business day after (or such earlier business day endorsed
by the Agent on such Transfer Certificate falling on or after) the date
of delivery of such Transfer Certificate to the Agent:
(i) to the extent that in such Transfer Certificate the Bank party
thereto seeks to transfer its rights, benefits and obligations
hereunder, the Borrowers and such Bank shall be released from
further obligations towards one another hereunder and their
respective rights against one another shall be cancelled (such
rights, benefits and obligations being referred to in this Clause
30.3 as "discharged rights and obligations");
(ii) the Borrowers and the Transferee party thereto shall assume
obligations towards one another and/or acquire rights against one
another which differ from such discharged rights and obligations
only insofar as the Borrowers and such Transferee have assumed
and/or acquired the same in place of the Borrowers and such Bank;
(iii) the Agent, the Arrangers, such Transferee and the other Banks
shall acquire the same rights and benefits and assume the same
obligations between themselves as they would have acquired and
assumed had such Transferee been an original party hereto as a
Bank with the rights, benefits and/or obligations acquired or
assumed by it as a result of such transfer; and
(iv) to the extent that in such Transfer Certificate the Bank party
thereto seeks to transfer its Commitment, the Transferee shall
replace such Bank under the terms of any relevant Letter of Credit.
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30.4 On the date upon which a transfer takes effect pursuant to Clause 30.3,
the Transferee in respect of such transfer shall pay to the Agent for its
own account a transfer fee of L500.
30.5 Pelikan Produktions AG may, at any time and from time to time, upon notice
to the Agent, request that a different Lender specified by Pelikan
Produktions AG be appointed as the Overdraft Provider. Promptly upon such
other Lender agreeing to such request and repayment of all outstanding
Short-Term Advances together with accrued interest thereon to the existing
Overdraft Provider, the existing Overdraft Provider shall transfer to such
Lender all (but not part) of its rights, benefits and obligations
hereunder as the Overdraft Provider.
Any transfer contemplated by this Clause 30.5 shall be effected by the
delivery to the Borrowers and the Agent of a duly completed and duly
executed Overdraft Provider Transfer Certificate in which event, on the
later of the Transfer Date specified in such certificate and the fifth
business day after (or such earlier business day endorsed by the Agent on
such certificate falling on or after) the date of delivery of such
certificate to the Agent:
(i) the Borrowers and the Overdraft Provider shall be released from
further obligations towards one another hereunder and their
respective rights against one another shall be cancelled;
(ii) the Borrowers and the Overdraft Facility Transferee shall acquire
the same rights and benefits and assume the same obligations
towards one another as they would have acquired and assumed had the
Overdraft Facility Transferee been an original party hereto as the
Overdraft Provider; and
(iii) the Agents, the Arrangers, the Overdraft Facility Transferee and
the other parties hereto shall acquire the same rights and benefits
and assume the same obligations between themselves as they would
have acquired and assumed had the Overdraft Facility Transferee
been an original party hereto as the Overdraft Provider with the
rights, benefits and/or obligations acquired or assumed by it as
a result of such transfer.
31. DISCLOSURE OF INFORMATION
Each Lender shall take normal and reasonable precautions to
maintain the confidentiality of all information obtained pursuant to
the requirements of any Finance Document which has been identified as
such by the Borrowers (including, without limitation, the reports
delivered pursuant to the Third Schedule to the Original Agreement)
but may, in any event, make disclosures reasonably required by any
bona fide assignee, Transferee, Overdraft Facility Transferee or
participant (or prospective assignee, Transferee or participant) in
connection with the contemplated assignment or transfer of any of its
rights and obligations thereunder Provided that (a) such assignee,
Transferee, Overdraft Facility Transferee, participant or person
agrees to comply with the provisions of this Clause 31, (b) such
prospective assignee, Transferee, Overdraft Facility Transferee or
participant shall have executed a confidentiality agreement
substantially in the form of the Exhibit; and (c) no Lender shall be
obliged or required to return any written information or other
materials furnished by the Borrowers in connection with any Finance
Document. Notwithstanding the foregoing, the Agents and/or any Lender
shall be entitled to disclose any such information:
(i) if required to do so by an order of a court of competent
jurisdiction whether in pursuance of any procedure for
discovering documents or otherwise; or
(ii) if required by any law or regulation having the force of law; or
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(iii) pursuant to any requirement or request of any fiscal, monetary,
tax, governmental or other competent authority; or
(iv) to its auditors, legal or other professional advisors; or
(v) which is in the public domain,
and unless specifically prohibited by applicable law or court order, such
Lender shall notify the Borrowers of any disclosure pursuant to paragraphs
(i), (ii) and (iii).
32. CALCULATIONS AND EVIDENCE OF DEBT
32.1 Interest and Commitment Fee shall accrue from day to day and shall be
calculated on the basis of a year of 360 days or (in the case of interest
payable on an amount denominated in sterling) 365 days and the actual
number of days elapsed.
32.2 Letter of Credit commission in respect of any Letter of Credit, and any
period of the Term thereof determined pursuant to Clause 9, shall be
calculated on the basis of a year of 360 days or (in the case of a Letter
of Credit denominated in sterling) 365 days and the actual number of days
in such period (or, in any case where market practice differs, in
accordance with market practice).
32.3 If on any occasion a Reference Bank or Bank fails to supply the Agent with
a quotation required of it under the foregoing provisions of this
Agreement, the rate for which such quotation was required shall be
determined from those quotations which are supplied to the Agent.
32.4 Each Lender shall maintain in accordance with its usual practice accounts
evidencing the amounts from time to time lent by and owing to it
hereunder.
32.5 The Agent shall maintain on its books a control account or accounts in
which shall be recorded (i) the amount of any Advance made or arising
hereunder (and the name of the Lender to which such sum relates) and the
face amount of any Letter of Credit issued (and each Lender's share
therein), (ii) the amount of all principal, interest and other sums due or
to become due from either Borrower to any of the Lenders hereunder and
each Lender's share therein and (iii) the amount of any sum received or
recovered by the Agent hereunder and each Lender's share therein.
32.6 In any legal action or proceedings arising out of or in connection with
this Agreement, the entries made in the accounts maintained pursuant to
Clauses 32.4 and 32.5 shall in the absence of manifest error be conclusive
evidence of the existence and amounts of the obligations of the Borrowers
therein recorded.
32.7 A certificate of a Lender as to (i) the amount by which a sum payable to
it hereunder is to be increased under Clause 14 or (ii) the amount for the
time being required to indemnify it against any such cost, payment or
liability as is mentioned in Clause 15 shall, in the absence of manifest
error, be conclusive for the purposes of this Agreement.
32.8 Each Lender hereby represents that as at 24th February, 1995 (i) its
participation as a Lender hereunder and extension of credit in respect
hereof will not require registration or qualification under any applicable
securities laws nor is it illegal (as referred to in Clause 16), and (ii)
it is a Qualifying Lender. Barclays Bank PLC represents that as at the
date hereof Barclays Overdraft Agent is a person recognised as a bank
pursuant to Clause 232 of the Circular of Swiss Federal Tax
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33
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Authorities, dated 29th October, 1992 regarding the tax treatment of
syndicated loans, debt certificate issues, promissory notes and
subparticipations.
33. REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of the
Agent, the Arrangers and the Lenders or any of them, any right or remedy
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy prevent any further or other
exercise thereof or the exercise of any other right or remedy. The rights
and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
34. PARTIAL INVALIDITY
If, at any time, any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither
the legality, validity or enforceability of the remaining provisions
hereof nor the legality, validity or enforceability of such provision
under the law of any other jurisdiction shall in any way be affected or
impaired thereby.
35. NOTICES
35.1 Each communication to be made hereunder shall, unless otherwise stated, be
made in writing by telex, telefax or letter.
35.2 Any communication or document (unless made by telefax) to be made or
delivered by one person to another pursuant to this Agreement shall
(unless that other person has by fifteen days' written notice to the Agent
specified another address) be made or delivered to that other person at
the address identified with its signature below (or, in the case of a
Transferee, at the end of the Transfer Certificate to which it is a party
as Transferee, or in the case of an Overdraft Facility Transferee, at the
end of the Overdraft Provider Transfer Certificate to which it is a party
as the Overdraft Facility Transferee) and shall be deemed to have been
made or delivered when despatched and the appropriate answerback received
(in the case of any communication made by telex) or (in the case of any
communication made by letter) when left at that address or (as the case
may be) ten days after being deposited in the post postage prepaid in an
envelope addressed to it at that address Provided that any communication
or document to be made or delivered to the Agent shall be effective only
when received by the Agent and then only if the same is expressly marked
for the attention of the department or officer identified with the Agent's
signature below (or such other department or officer as the Agent shall
from time to time specify for this purpose).
35.3 Where any provision of this Agreement specifically contemplates
telephone or telefax communication made by one person to another, such
communication shall be made to that other person at the relevant
telephone number specified by it from time to time for the purpose and
shall be deemed to have been received when made (in the case of any
communication by telephone) or when transmission has been completed
(in the case of any telecommunication by telefax). Each such telefax
communication, if made to the Agent by a Borrower shall be signed by
the person or persons authorised by that Borrower in the certificate
delivered pursuant to the Third Schedule and shall be expressed to be
for the attention of the department or officer whose name has been
notified for the time being for that purpose by the Agent to the
Borrowers.
35.4 Each communication and document made or delivered by one party to
another pursuant to this Agreement shall be in the English language
or accompanied by a translation thereof into English
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<PAGE>
34
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certified (by an officer of the person making or delivering the same)
as being a true and accurate translation thereof.
36. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts each of which, when
executed and delivered, shall constitute an original, but all the
counterparts shall together constitute but one and the same instrument.
37. AMENDMENTS
To the extent not otherwise expressly provided in any Finance
Document, no amendment, modification, termination or waiver of any
provision of any Finance Document or consent to any departure by a
Borrower therefrom, shall in any event be effective without the
written concurrence of the Requisite Lenders and the Borrowers; except
that any amendment, modification, termination, or waiver that (i)
changes the amount of the Commitments or the principal amount of the
Advances or extends the scheduled maturity thereof or changes the
currency of any payment hereunder; (ii) changes any Proportion or the
definition of "Requisite Lenders"; (iii) extends the dates on which
interest is or fees are payable hereunder, or the maximum duration of
interest periods; or (iv) reduces any interest rates payable on the
Advances or any fees (other than administrative fees) payable
hereunder or under any other Finance Document, each shall be effective
only if evidenced by a writing signed by or on behalf of all Lenders
under this Agreement and the Borrowers; Provided, however, that (A)
the First Schedule and the Commitments and Proportions shall be
amended from time to time to give effect to the Commitments and
Proportions of each new Bank that becomes a party to this Agreement at
the time such Bank becomes a Bank and (B) any amendment, modification
or waiver that changes any administrative fees, or the times at which
such fees are payable, hereunder shall be effective only if evidenced
by a writing signed by or on behalf of the Borrowers and each Lender
affected thereby. Any amendment, modification, termination or waiver
of any of the conditions precedent to funding an Advance shall be
effective only if evidenced by a writing signed by or on behalf of the
Requisite Lenders and the Borrowers. No amendment, modification,
termination or waiver of any provision of the agency provisions of
this Agreement shall be effective without the written concurrence of
the Agents, the Requisite Lenders and the Borrowers. No amendment,
modification, termination or waiver of any Finance Document that
releases any guarantor or releases any collateral under the Security
Documents not otherwise permitted under the Credit Agreement or such
Security Document shall be effective unless evidenced by a writing
signed by or on behalf of Banks having 80% or more of the combined
aggregate amount of the Commitments under this Agreement or, in the
case of the Commitment under this Agreement that has been terminated,
the Outstandings, if any, made hereunder. The Agent may, but shall
have no obligation to, with the concurrence of any Lender, execute
amendments, modifications, waivers or consents on behalf of such
Lender. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No
notice to or demand on either Borrower shall entitle such Borrower to
any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or
consent with respect to this Agreement effected in accordance with
this Clause 37 shall be binding upon the Borrowers.
38. BORROWER SECESSION
In the event that any Borrower is required to make any
additional payment to a Lender pursuant to Clauses 14 or 18.2 or any
Lender claims indemnification under Clauses 15.1 or 15.2 or an event
referred to in Clause 16 occurs and such requirement, claim or
consequence of such event would be
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<PAGE>
35
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avoided or mitigated by that Borrower ceasing to be a Borrower hereunder
then subject to the Borrower being under no actual obligation or
contingent payment obligation under or pursuant to any Finance Document,
it may cease to be a Borrower hereunder with the prior written consent
of the Agent and upon receipt by the Agent of a Borrower Secession
Memorandum.
39. GUARANTEE BY PELIKAN PRODUKTIONS AG
39.1 As consideration for Banks and the Overdraft Provider agreeing to enter
into this Agreement and extend the Commitments and Short-Term
Advances, as applicable, hereunder, Pelikan Produktions AG hereby
unconditionally and irrevocably guarantees the due and punctual
payment when due of all Obligations of Pelikan Hardcopy
(International) AG. For purposes of this Part 15: (i) Pelikan
Produktions AG is referred to as a "Guarantor" and the obligations of
Pelikan Produktions AG under this Clause 39.1 are referred to as this
"Guarantee" and (ii) "Obligations" shall mean all obligations and
liabilities of Pelikan Hardcopy (International) AG owed to Agents,
Arrangers, the Fronting Bank, or Lenders (or any of them) under this
Agreement or any of the other Finance Documents.
39.2 The Guarantor waives presentation of, demand of, payment from and protest
of any Obligation of Pelikan Hardcopy (International) AG and also
waives notice of protest for non-payment. The obligations of the
Guarantor under this Guarantee shall not be affected by, and the
Guarantor hereby waives its rights (to the extent permitted by
applicable law) in connection with:
(a) the failure of any Agent, Arranger, the Fronting Bank or any Lender
to assert any claim or demand or to enforce any right or remedy
against Pelikan Hardcopy (International) AG under the provisions of
this Agreement or any other agreement or otherwise;
(b) any extension or renewal of any provision thereof;
(c) any increase in the amount of the Obligations;
(d) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Agreement (subject to Clause 37) or any
instrument executed pursuant hereto;
(e) the release of any of the security held by any party for the
Obligations of Borrowers;
(f) the failure of any Agent, Arranger, the Fronting Bank or any Lender
to exercise any right or remedy against any other guarantor of the
Obligations;
(g) any Agent, Arranger, the Fronting Bank or any Lender taking and
holding security or collateral for the payment of this Guarantee,
any other guarantees of the Obligations or other liabilities of
Pelikan Hardcopy (International) AG and the Obligations guaranteed
hereby, and exchanging, enforcing, waiving and releasing any such
security or collateral;
(h) any Agent, Arranger, the Fronting Bank or any Lender applying any
such security or collateral and directing the order or manner of
sale thereof as Collateral Agent and Agent in their discretion,
may determine; or
(i) any Agent, Arranger, the Fronting Bank or any Lender settling,
releasing, compromising, collecting or otherwise liquidating the
Obligations and any security or collateral therefor in any manner
determined by the applicable Agent, Arranger, the Fronting Bank or
such Lender.
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<PAGE>
36
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The obligations of the Guarantor under this Guarantee shall not be
subject to any reduction, limitation, impairment or termination for
any reason, including, without limitation, any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject
to any defence or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability
of the Obligations, discharge of Pelikan Hardcopy (International) AG
from the Obligations in a bankruptcy or similar proceeding or
otherwise. Without limiting the generality of the foregoing, the
obligations of the Guarantor under this Guarantee shall not be
discharged or impaired or otherwise affected by the failure of any
Agent, Arranger, the Fronting Bank or any Lender to assert any claim
or demand or to enforce any remedy under this Agreement or any other
agreement, by any waiver or modification of any provision thereof, by
any default, failure or delay, wilful or otherwise, in the performance
of the Obligations, or by any other act or thing or omission or delay
to do any other act or thing that may or might in any manner or to any
extent vary the risk of the Guarantor or would otherwise operate as a
discharge of the Guarantor as a matter of law or equity.
Any Agent may, at its or their election, foreclose on any security
held by them by one or more judicial or nonjudicial sales, or exercise
any other right or remedy any Agent may have against Guarantor,
Pelikan Hardcopy (International) AG or any security without affecting
or impairing in any way the liability of the Guarantor hereunder
except to the extent the Obligations have been paid. The Guarantor
waives any defense arising out of such election by an Agent, even
though such election operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of the Guarantor
against Pelikan Hardcopy (International) AG or any security, so long
as such Agent has acted in a commercially reasonable manner.
The Guarantor further agrees that this Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any of
the Obligations is rescinded or must otherwise be restored by any
Agent, Arranger, the Fronting Bank or any Lender upon the bankruptcy
or reorganization of Pelikan Hardcopy (International) AG or otherwise.
The Guarantor further agrees, in furtherance of the foregoing and not
in limitation of any other right that any Agent, Arranger, the
Fronting Bank or any Lender may have at law or in equity against the
Guarantor by virtue hereof, upon the failure of Pelikan Hardcopy
(International) AG to pay any of the Obligations when and as the same
shall become due (whether by required prepayment, declaration, demand
or otherwise), the Guarantor will forthwith pay, or cause to be paid,
in cash, to an Agent an amount equal to the sum of the unpaid
principal amount of such Obligations, accrued and unpaid interest on
such Obligations and all other Obligations of Pelikan Hardcopy
(International) AG to any Agent, Arranger, the Fronting Bank or such
Lender.
So long as any of the Obligations shall remain outstanding hereunder,
Guarantor hereby irrevocably waives any right of subrogation,
contribution, indemnity or otherwise against Pelikan Hardcopy
(International) AG that may arise out of or be caused by this
Guarantee, all rights and/or claims against Pelikan Hardcopy
(International) AG which may arise against Pelikan Hardcopy
(International) AG by reason of this Guarantee, any right to enforce
any remedy that any Lenders now have or may hereafter have against
Pelikan Hardcopy (International) AG and any benefit of, and any right
to participate in, any security now or hereafter held by or on behalf
of Lenders.
Notwithstanding anything contained in this Clause 39.2 to the
contrary, this Guarantee shall not be effective or in full force and
effect until the Closing Date.
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<PAGE>
37
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40. LAW
This Agreement shall be governed by, and shall be construed in accordance
with, English law.
41. JURISDICTION
41.1 Each Borrower hereby irrevocably agrees for the benefit of each of the
other parties hereto that the courts of England shall have jurisdiction to
hear and determine any suit, action or proceeding, and to settle any
disputes, which may arise out of or in connection with this Agreement and,
for such purposes irrevocably submits to the jurisdiction of such courts.
41.2 Each Borrower irrevocably waives any objection which it might now or
hereafter have to the courts referred to in Clause 41.1 being nominated as
the forum to hear and determine any suit, action or proceeding, and to
settle any disputes, which may arise out of or in connection with this
Agreement and agrees not to claim that any such court is not a convenient
or appropriate forum.
41.3 Each Borrower agrees that the process by which any suit, action or
proceeding is begun may be served on it by being delivered in connection
with any suit, action or proceeding in England to Pelikan Scotland Limited
at Newcastle Way, Orton, Southgate, Peterborough PE2 AUJ or other its
registered office for the time being. If the appointment of the person
mentioned in this Clause 41.3 ceases to be effective each Borrower shall
immediately appoint a further person in England to accept service of
process on its behalf in England and, failing such appointment within 15
days, the Agent shall be entitled to appoint such a person by notice to
the Borrowers. Nothing contained herein shall affect the right to serve
process in any other manner permitted by law.
41.4 The submission to the jurisdiction of the courts referred to in Clause 41
shall not (and shall not be construed so as to) limit the right of any
party to take proceedings against any other party in any other court of
competent jurisdiction nor shall the taking of proceedings in any one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction (whether concurrently or not) if and to the extent permitted
by applicable law.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
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<PAGE>
38
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THE FIRST SCHEDULE
THE BANKS
BANK COMMITMENT (CHF)
Barclays Bank PLC 7,000,000
NationsBank N.A. 16,525,000
Commerzbank AG 5,000,000
Deutsche Bank AG 5,000,000
The First National Bank of Chicago 5,000,000
Societe Generale 4,925,000
ABN AMRO Bank N.V. 3,275,000
Credit Lyonnais, S.A. 3,275,000
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<PAGE>
39
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THE SECOND SCHEDULE
FORM OF TRANSFER CERTIFICATE
To: Barclays Bank PLC
Pelikan Produktions AG
Pelikan Hardcopy (International) AG
TRANSFER CERTIFICATE
relating to the amended and restated agreement (the "FACILITY AGREEMENT") dated
15th October, 1996 whereby a revolving credit facility was made available to
Pelikan Produktions AG and Pelikan Hardcopy (International) AG as borrowers by a
group of banks on whose behalf Barclays Bank PLC acted as agent in connection
therewith.
1. Terms defined in the Facility Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Bank and Transferee
are defined in the schedule hereto.
2. The Bank (i) confirms that the details in the schedule hereto under the
heading "BANK'S COMMITMENT" or "ADVANCE(S)" accurately summarises its
Commitment and/or, as the case may be, the Term and Repayment Date of one
or more existing Advances made by it and (ii) requests the Transferee to
accept and procure the transfer to the Transferee of the portion specified
in the schedule hereto of, as the case may be, its Commitment and/or such
Advance(s) by counter-signing and delivering this Transfer Certificate to
the Agent at its address for the service of notices specified in the
Facility Agreement.
3. The Transferee hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the
purposes of Clause 30.3 of the Facility Agreement so as to take effect in
accordance with the terms thereof on the Transfer Date or on such later
date as may be determined in accordance with the terms thereof.
4. The Transferee confirms that it has received a copy of the Facility
Agreement, together with such other information as it has required in
connection with this transaction and that it has not relied and will not
hereafter rely on the Bank to check or enquire on its behalf into the
legality, validity, effectiveness, adequacy, accuracy or completeness of
any such information and further agrees that it has not relied and will not
rely on the Bank to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature of the
Borrowers.
5. The Transferee hereby undertakes with the Borrowers, the Bank and each of
the other parties to the Facility Agreement that it will perform in
accordance with their terms all those obligations which by the terms of the
Facility Agreement will be assumed by it after delivery of this Transfer
Certificate to the Agent and satisfaction of the conditions (if any)
subject to which this Transfer Certificate is expressed to take effect. The
Transferee hereby makes the representations made by each Bank in Clause
32.8 of the Facility Agreement as though made on and as of the date hereof.
6. The Bank makes no representation or warranty and assumes no responsibility
with respect to the legality, validity, effectiveness, adequacy or
enforceability of the Facility Agreement or any document relating thereto
and assumes no responsibility for the financial condition of the Borrowers
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<PAGE>
40
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or for the performance and observance by the Borrowers of any of their
respective obligations under the Facility Agreement or my document relating
thereto and any and all such conditions and warranties, whether express or
implied by law or otherwise, are hereby excluded.
7. The Bank hereby gives notice that nothing herein or in the Facility
Agreement (or any document relating thereto) shall oblige the Bank to (i)
accept a re-transfer from the Transferee of the whole or any part of its
rights, benefits and/or obligations under the Facility Agreement
transferred pursuant hereto or (ii) support any losses directly or
indirectly sustained or incurred by the Transferee for any reason
whatsoever including, without limitation, the non-performance by the
Borrowers or any other party to the Facility Agreement (or any document
relating thereto) of its obligations under any such document. The
Transferee hereby acknowledges the absence of any such obligation as is
referred to in (i) or (ii) above.
8. This Transfer Certificate and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with English
law.
THE SCHEDULE
1 Bank:
2 Transferee:
3. Transfer Date:
4 Commitment:
Bank's Commitment Portion Transferred
5. Advance(s):
Term and Repayment Date Portion Transferred
[Transferor Bank] [Transferee Bank]
By. By:
Date: Date:
ADMINISTRATIVE DETAILS OF TRANSFEREE
Address:
Contact Name:
Account for Payments:
Telex:
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41
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Telefax:
Telephone:
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<PAGE>
42
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THE THIRD SCHEDULE
CONDITIONS PRECEDENT
Each of the following:
1. A certificate of the secretary or a director of each Borrower certifying
that the copy of its constitutive documents delivered to the Agent in
connection with the Original Agreement (as amended, where applicable, by
any variation thereof which has itself been delivered to the Agent and
certified correct, complete and in full force and effect) remains correct,
complete and in full force and effect.
2. A copy of a resolution of the Board of Directors of each Borrower:
(a) approving the terms of this Agreement and all other documents to be
executed by such Borrower in connection herewith; and
(b) authorising a specified person or persons:
(i) to execute this Agreement and all other documents to be executed
by it hereunder or thereunder in connection herewith or
therewith; and
(ii) (unless previously so appointed and unchanged) to give all
notices, requests, instructions, certificates and other
documents to the Agent in connection with each of the Finance
Documents to which it is a party.
3. A certificate of a director of each Borrower certifying that the
utilisation of the Facility in full would not cause any borrowing or other
limit binding on it to be exceeded.
4. A copy of the signature of each of the persons authorised by the
resolutions referred to in paragraph 2(b) above.
5. A certificate of a director of each Borrower confirming that no Event of
Default or Potential Event of Default will be in existence immediately
after the transactions due to take place on the Closing Date (as defined in
the Credit Agreement) have taken place.
6. A legal opinion relating to this Supplemental Agreement from Allen & Overy,
English legal advisers to the Agent, in form and substance satisfactory to
the Agent.
Each copy document delivered under this part of this schedule by a Borrower
shall be certified by a director or the secretary of the relevant Borrower, as
at the date hereof (or such other date as the Agent may agree), to be correct,
complete and in full force and effect as at such date.
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43
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THE FOURTH SCHEDULE
UTILISATION REQUEST
From: Pelikan Produktions AG/Pelikan Hardcopy (International) AG
To: [Barclays Bank PLC]/[Overdraft Provider]
Dated:
Dear Sirs,
1. We refer to the amended and restated agreement (the "FACILITY AGREEMENT")
dated 15th October, 1996 and made between Pelikan Produktions AG and
Pelikan Hardcopy (International) AG as borrowers, BZW and NationsBanc
Capital Markets, Inc. as arrangers, Barclays Bank PLC as agent, NationsBank
of Texas, N.A. as collateral and documentation agent, Barclays Bank PLC as
fronting bank, Barclays Bank PLC as overdraft provider and the financial
institutions named therein as banks. Terms defined in the Facility
Agreement shall have the same meaning in this notice.
2. We hereby give you notice that, pursuant to the Facility Agreement, we wish
[the Banks/ Overdraft Provider to make Advances/the Fronting Bank to issue
a Letter of Credit] as follows:
(i) Aggregate *[principal/face] amount:
(ii) Utilisation Date:
(iii)* TERM:
(IV) CURRENCY:
(V) **[REPAYMENT DATE/EXPIRY DATE]:
3. *[THE PROCEEDS OF THIS UTILISATION SHOULD BE CREDITED TO [INSERT ACCOUNT
DETAILS]]/[THE LETTER OF CREDIT SHOULD BE ISSUED IN FAVOUR OF [NAME OF
RECIPIENT] IN THE FORM ATTACHED AND DELIVERED TO THE RECIPIENT AT [ADDRESS
OF RECIPIENT]].
YOURS FAITHFULLY
.................................
FOR AND ON BEHALF OF
PELIKAN PRODUKTIONS AG/PELIKAN HARDCOPY (INTERNATIONAL) AG
____________________
** Delete as appropriate
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44
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THE FIFTH SCHEDULE
TIMETABLES
UTILISATION BY MEANS OF ADVANCES OTHER THAN SHORT-TERM ADVANCES
"D" = Utilisation Date
"D-x" = x business days prior to Utilisation Date
"Bs" = Banks
"A" = Agent
"( )" = Clause number of Agreement
1. Utilisation Request to A (6.1) D-2 9.30 a.m.
2. A to notify Bs of allocations by (6.4) D-2 10.30 a.m.
3. LIBOR fixing(1.1) D-2 11.00 a.m.
UTILISATION BY MEANS OF SHORT-TERM ADVANCES
"D" = Utilisation Date
"OP" = Overdraft Provider
"( )" = Clause number of Agreement
Utilisation Request to OP (6.1) D 9.30 a.m.
UTILISATION BY MEANS OF LETTERS OF CREDIT
"D" = Utilisation Date
"D-x" = x business days prior to Utilisation Date
"Bs" = Banks
"A" = Agent
"( )" = Clause number of Agreement
1. Utilisation Request to A (6.1) D-3 9.30 a.m.
2. Bs to have agreed identity of
recipient of Letter of Credit (7.2(iii)) D-3 3.00 p.m.
3. where applicable, form of Letter
of Credit to be agreed (7.2(iv)) D-3 3.00 p.m.
4. A to notify Bs of allocations (6.4) D 10.00 a.m.
5. Letter of Credit to be issued (7.2) D 3.00 p.m.
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THE SIXTH SCHEDULE
FORM OF BORROWER SECESSION MEMORANDUM
To: Barclays Bank PLC
From: Pelikan Produktions AG and
Pelikan Hardcopy (International) AG
Dated:
Dear Sirs,
1. We refer to the amended and restated agreement (the "FACILITY AGREEMENT")
dated 15th October, 1996 and made between ourselves as borrowers, Barclays
Bank PLC as agent, NationsBank of Texas, N.A. as collateral and
documentation agent, the financial institutions defined therein as Banks
and others.
2 Terms defined in the Facility Agreement shall bear the same meaning herein.
3. We hereby declare that [name of Borrower] is under no actual or contingent
obligation under or pursuant to any Finance Document in its capacity as a
Borrower.
4. Accordingly, pursuant to Clause 38 of the Facility Agreement and with
effect from receipt of this notice, [name of relevant Borrower] shall cease
to be a Borrower under the Facility Agreement.
Yours faithfully
For and on behalf of
Pelikan Produktions AG and
Pelikan Hardcopy (International) AG
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THE SEVENTH SCHEDULE
MANDATORY LIQUID ASSET COSTS RATE FORMULA
The Mandatory Liquid Asset Costs Rate to compensate the Banks for the cost
attributable to an Advance or other sum denominated in sterling for any period
for which such cost is to be computed under this Agreement resulting from the
imposition from time to time by the Bank of England (or other Governmental
authorities or agencies) of a requirement to place non-interest-bearing deposits
with the Bank of England, for the payment of Special Deposits and the
maintenance of secured money with certain financial institutions (recognised for
this purpose by the Bank of England) will be the rate determined by the Agent
(rounded upwards, if necessary, to four decimal places) on the first day of the
relevant period and for the duration of such period (but in respect of such a
period of longer than three months, the average of the rates (rounded upwards as
aforesaid) computed on a three monthly basis during such period) in accordance
with the following formula:
rate = XL + B(L-C) + S(L-D)
--------------------
100 - (X + S)
Where:
"X" is the amount required to be maintained by Barclays Bank PLC on non-
interest-bearing balances with the Bank of England expressed as a
percentage of eligible liabilities fixed by the Bank of England (or other
Governmental authorities or agencies). For the purpose of this formula,
this percentage will be expressed as a number.
"L" is the average of the offered quotations by the Reference Banks for
sterling deposits for the period for which the formula is being applied in
the London Interbank Market at or about 11.00 a.m. on the day of quotation,
expressed as a number and not as a percentage rate per annum.
"B" is the average level of secured deposits expressed as a percentage of
eligible liabilities which Barclays Bank PLC is required by the Bank of
England to maintain with certain financial institutions (recognised for
this purpose by the Bank of England). For the purpose of this formula this
percentage will be expressed as a number.
"C" is the average of the rates at which certain financial institutions
(recognised for this purpose by the Bank of England) bid for sterling
deposits for the period for which the formula is being applied from the
Reference Banks at or about 11.00 a.m. on the day of quotation, expressed
as a number and not as a percentage rate per annum.
"S" is the amount of Special Deposits required to be maintained by Barclays
Bank PLC expressed as a percentage of eligible liabilities fixed by the
Bank of England (or other Governmental authorities or agencies). For the
purposes of this formula this percentage will be expressed as a number.
"D" is the rate of interest paid by the Bank of England on Special Deposits,
expressed as a number and not as a percentage rate per annum.
In the event of any change in circumstances (including the imposition of
alternative or additional official requirements) which renders the above formula
inapplicable the Agent shall notify the Borrower and the Banks in reasonable
detail of the manner (including the basis and computation) in which the
Mandatory Liquid Asset Costs Rate shall be determined thereafter and, if
appropriate, substitute a new formula for that
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47
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set out above.
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<PAGE>
48
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THE EIGHTH SCHEDULE
FORM OF OVERDRAFT PROVIDER TRANSFER CERTIFICATE
To: Barclays Bank PLC, as Agent
Pelikan Produktions AG
Pelikan Hardcopy (International) AG
OVERDRAFT PROVIDER TRANSFER CERTIFICATE
relating to the amended and restated agreement (the "FACILITY AGREEMENT") dated
15th October, 1996 whereby a revolving credit facility was made available to
Pelikan Produktions AG and Pelikan Hardcopy (International) AG as borrowers by a
group of banks on whose behalf Barclays Bank PLC acted as agent in connection
therewith.
1. Terms defined in the Facility Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Overdraft Provider and
Overdraft Facility Transferee are defined in the schedule hereto.
2. The Overdraft Provider requests the Overdraft Facility Transferee to accept
and procure the transfer to the Overdraft Facility Transferee the
obligation to make Short-Term Advances pursuant to the Facility Agreement
by counter-signing and delivering this Overdraft Provider Transfer
Certificate to the Agent at its address for the service of notices
specified in the Facility Agreement.
3. The Overdraft Facility Transferee hereby requests the Agent to accept this
Overdraft Provider Transfer Certificate as being delivered to the Agent
pursuant to and for the purposes of Clause 30.5 of the Facility Agreement
so as to take effect in accordance with the terms thereof on the Transfer
Date or on such later date as may be determined in accordance with the
terms thereof.
4. The Overdraft Facility Transferee confirms that it has received a copy of
the Facility Agreement, together with such other information as it has
required in connection with this transaction and that it has not relied and
will not hereafter rely on the Overdraft Provider to check or enquire on
its behalf into the legality, validity, effectiveness, adequacy, accuracy,
or completeness of any such information and further agrees that it has not
relied and will not rely on the Overdraft Provider to assess or keep under
review on its behalf the financial conditions, creditworthiness, condition,
affairs, status or nature of the Borrowers.
5. The Overdraft Facility Transferee hereby undertakes with the Borrowers, the
Overdraft Provider and each of the other parties to the Facility Agreement
that it will perform in accordance with their terms all the obligations of
the Overdraft Provider under the Facility Agreement after delivery of this
Overdraft Provider Transfer Certificate to the Agent and satisfaction of
the conditions (if any) subject to which this Overdraft Provider Transfer
Certificate is expressed to take effect. The Overdraft Facility Transferee
hereby makes the representations made by the Overdraft Provider in Clause
32.8 of the Facility Agreement as though made on and as of the date hereof.
6. The Overdraft Provider makes no representation or warranty and assumes no
responsibility with
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49
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respect to the legality, validity, effectiveness, adequacy or
enforceability of the Facility Agreement or any document relating
thereto and assumes no responsibility for the financial condition of
the Borrowers or for the performance and observance by the Borrowers
of any of their respective obligations under the Facility Agreement or
any document relating thereto and any and all such conditions and
warranties, whether express or implied by law or otherwise, are hereby
excluded.
7. The Overdraft Provider hereby gives notice that nothing herein or in the
Facility Agreement (or any document relating thereto) shall oblige the
Overdraft provider to (i) accept a re-transfer from the Overdraft Facility
Transferee of the whole or any part of its rights, benefits and/or
obligations under the Facility Agreement transferred pursuant hereto or
(ii) support any losses directly or indirectly sustained or incurred by the
Overdraft Facility Transferee for any reason whatsoever including, without
limitation, the non-performance by the Borrowers or any other party to the
Facility Agreement (or any documents relating thereto) of its obligations
under any such document. The Overdraft Facility Transferee hereby
acknowledges the absence of any such obligation as it referred to in (i) or
(ii) above.
8. This Overdraft Provider Transfer Certificate and the rights and obligations
of the parties hereunder shall be governed by and construed in accordance
with English law.
THE SCHEDULE
1. Overdraft Provider:
2. Overdraft Facility Transferee:
3. Transfer Date:
[TRANSFEREE OVERDRAFT [TRANSFEROR OVERDRAFT
PROVIDED] PROVIDER]
By: By:
Date: Date:
ADMINISTRATIVE DETAILS OF
OVERDRAFT FACILITY TRANSFEREE
Address: Telex:
Contact Name: Telefax:
Account for Payments: Telephone:
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50
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<PAGE>
51
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SIGNATORIES
THE BORROWERS
PELIKAN PRODUKTIONS AG
By: HANS PAFFHAUSEN
Address: Forchstrasse 100
CH-8132 Egg
Switzerland
Fax: (41-1) 9861 394
PELIKAN HARDCOPY (INTERNATIONAL) AG
By: HANS PAFFHAUSEN
Address: Forchstrasse 100
CH-8132 Egg
Switzerland
Fax: (41-1) 9861 394
THE ARRANGERS
BZW
By: PETER YETMAN
Address: Murray House
I Royal Mint Court
London EC3N 4HH
Fax: 0171 696 2908
NATIONSBANC CAPITAL MARKETS, INC.
By: JOE SIEGAL
Address: 901 Main Street
66th Floor
Dallas, Texas 75202
Fax: (214) 508-2881
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52
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THE AGENT
BARCLAYS BANK PLC
By: PETER YETMAN
Address: Murray House
1 Royal Mint Court
London EC3N 4HH
Fax: 0171 696 2908
THE COLLATERAL AGENT
NATIONSBANK OF TEXAS, N.A.
By: DAN KILLIAN
Address: 901 Main Street
67th Floor
Dallas, Texas 75202
U.S.A.
Fax: (214) 508 0980
THE DOCUMENTATION AGENT
NATIONSBANK OF TEXAS, N.A.
By: DAN KILLIAN
Address: 901 Main Street
67th Floor
Dallas, Texas 75202
U.S.A.
Fax: (214) 508 0980
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53
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THE FRONTING BANK
BARCLAYS BANK PLC
By: PETER YETMAN
Address: Murray House
I Royal Mint Court
London EC3N 4HH
Fax: 0171 696 2908
THE OVERDRAFT PROVIDER
BARCLAYS BANK PLC
By: PETER YETMAN
Address: c/o: BARCLAYS BANK (SCHWEIZ) AG
Schutzengasse 21,
Postfach 5172
CH-8022 Zurich
Switzerland
Fax: (41)(1) 211 5426
THE BANKS
BARCLAYS BANK PLC
By: PETER YETMAN
Address: Murray House
I Royal Mint Court
London EC3N 4HH
Fax: 0171 696 2908
NATIONSBANK, N.A.
By: DAN KILLIAN
Address: 901 Main Street
67th Floor
Dallas, Texas 75202
U.S.A.
Fax: (214) 5080)980
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54
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THE FIRST NATIONAL BANK OF CHICAGO
By: STEPHEN PRICE
Address: Geographical Credit
One First National Plaza, Mail Suite 0364
Chicago, Illinois 60670-0364
Fax: (312) 732 1117
COMMERZBANK AG
By: H. YERGEY D. SUTTLES
Address: Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
Fax: (404) 888 6539
DEUTSCHE BANK AG LONDON
By: ALAN RICHARDSON JOHN CAMBELL
Address: 6-8 Bishopsgate
London EC2N 4DA
Fax: (0171) 545 4735
SOCIETE GENERALE
By: MATTHEW FLANIGAN
Address: Trammell Crow Center
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Fax: (214) 979 1104
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55
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ABN AMRO BANK, N.V.
By: RONALD MAHLE DAVID ORR
Address: Three Riverway, Suite 1700
Houston, Texas 77056
Fax: (713) 629 7533
CREDIT LYONNAIS, S.A.
By: GHISLAIN CHABERT
Address: 500 North Akard, Suite 3210
Dallas, Texas 75201
Fax: (214) 220 2323
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56
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THE EXHIBIT
[FORM OF CONFIDENTIALITY AGREEMENT]
The undersigned, ______________________ a prospective [assignee/Transferee/
participant/Overdraft Facility Transferee] to that certain Revolving Credit
Facility Agreement dated as of 2 June, 1995 as amended and restated pursuant
to an amendment and restatement agreement dated 15th October, 1996 (such
agreement, as so amended and restated and as it may be amended, amended and
restated, supplemented or otherwise modified from time to time, being the
"Credit Agreement"; capitalized terms used herein without definition shall
have the meanings assigned those terms in the Credit Agreement between
Pelikan Produktions AG and Pelikan Hardcopy (International) AG as borrowers,
BZW and NationsBanc Capital Markets, Inc., as arrangers, Barclays Bank PLC,
as agent, NationsBank of Texas, N.A., as collateral agent, NationsBank of
Texas, N.A., as documentation agent, and the Lenders party thereto,
("Prospective [assignee/Transferee/participant/Overdraft Facility Transferee]"),
hereby agrees as follows for the benefit of the Borrowers:
Prospective [assignee/Transferee/participant/Overdraft Facility Transferee]
agrees that all financial statements, financial projections, operating or other
data, tax returns, reports and other information, that have been or may be
provided to (i) Prospective [assignee/Transferee/participant/Overdraft Facility
Transferee], (ii) the employees and agents of Prospective [assignee/Transferee/
participant/Overdraft Facility Transferee], and/or (iii) accountants, attorneys
or other professionals retained by such parties whether delivered by either
Borrower or otherwise shall be kept strictly confidential by such recipients,
and shall be used solely in connection with its consideration of [an assignment/
a transfer/a participation/the appointment of a new Overdraft Provider] in
respect of the Credit Agreement; PROVIDED, that Prospective [assignee/
Transferee/participant/Overdraft Facility Transferee] may, in any event,
disclose any such information:
(i) if required to do so by an order of a court of competent jurisdiction
whether in pursuance of any procedure for discovering documents or
otherwise; or
(ii) if required by any law or regulation having the force of law; or
(iii) pursuant to any requirement or request of any fiscal, monetary,
tax, governmental or other competent authority; or
(iv) to its auditors, legal or other professional advisors; or
(v) which is in the public domain,
and unless specifically prohibited by applicable law or court order, the
prospective assignee/Transferee/or participant shall notify the Borrowers of
any disclosure pursuant to paragraphs (i), (ii) and (iii). In no event shall
Prospective [assignee/Transferee/participant/Overdraft Facility Transferee] be
obligated or required to return any materials furnished by either Borrower.
This deed shall be governed by and construed and enforced in accordance with,
the laws of England.
Prospective [assignee/Transferee/participant/Overdraft Facility Transferee]
hereby irrevocably agrees for the benefit of the Borrowers that the courts of
England shall have jurisdiction to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in
connection with this deed and,
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57
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for such purposes, irrevocably submits to the jurisdiction of such courts.
Prospective [assignee/Transferee/participant/Overdraft Facility Transferee]
hereby irrevocably waives any objection which it might now or hereafter have
to the courts of England being nominated as the forum to hear and determine
any suit, action or proceeding, and to settle any disputes, which may arise
out of or in connection with this deed and agrees not to claim that any such
court is not a convenient or appropriate forum.
The submission to the jurisdiction of the courts of England shall not (and shall
not be construed so as to) limit the right of either Borrower to take
proceedings against Prospective [assignee/Transferee/participant/Overdraft
Facility Transferee] in any other court of competent jurisdiction nor shall the
taking of proceedings in any one or more jurisdiction preclude the taking of
proceedings in any other jurisdiction (whether concurrently or not) if and to
the extent permitted by applicable law.
IN WITNESS WHEREOF, this confidentiality agreement has been executed as a deed
by the Prospective [assignee/Transferee/participant/Overdraft Facility
Transferee] delivered on the date specified below.
____________________________, 19____
EXECUTED AND DELIVERED AS A DEED
BY [INSERT NAME IN BLOCK CAPITALS
OF PROSPECTIVE ASSIGNEE/
TRANSFEREE/PARTICIPANT/OVERDRAFT
FACILITY TRANSFEREE]
Name: ___________________________
Title: __________________________
Name: ___________________________
Title: __________________________
B3:72735.1
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<PAGE>
CONFORMED COPY
STERLING 6,275,000
AMENDED AND RESTATED REVOLVING CREDIT FACILITY AGREEMENT
DATED 15TH OCTOBER, 1996
between
PELIKAN SCOTLAND LIMITED
as borrower
BZW
and
NATIONSBANC CAPITAL MARKETS, INC.
as arrangers
BARCLAYS BANK PLC
as agent
NATIONSBANK OF TEXAS, N.A.
as collateral agent
NATIONSBANK OF TEXAS, N.A.
as documentation agent
and
OTHERS
<PAGE>
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CONTENTS
CLAUSE PAGE
1. Interpretation .................................................. 1
2. The Facility .................................................... 7
3. Purpose ......................................................... 8
4. Conditions Precedent ............................................ 8
5. Nature of Lenders' Obligations .................................. 8
6. Utilisation of the Facility ..................................... 9
7. Issue of Letters of Credit and Contract Guarantee ............... 11
8. Indemnity (including Bank Indemnity for Short-Term Advances) .... 12
9. Letter of Credit and Contract Guarantee Commissions and Fees .... 13
10. Making of Advances .............................................. 14
11. Interest ........................................................ 15
12. Repayment of Advances ........................................... 16
13. Cancellation .................................................... 16
14. Taxes ........................................................... 16
15. Increased Costs ................................................. 18
16. Illegality ...................................................... 19
17. Mitigation ...................................................... 20
18. Market Disruption and Alternative Interest Rates ................ 21
19. Acceleration Event .............................................. 21
20. Default Interest and Indemnities ................................ 22
21. Currency of Account ............................................. 23
22. Payments ........................................................ 24
23. Set-off and Netting of Payments ................................. 24
24. Redistribution of Payments ...................................... 24
25. Fees ............................................................ 25
26. Costs and Expenses .............................................. 25
27. The Agents, the Arrangers and the Lenders ....................... 27
28. Benefit of Agreement ............................................ 30
29. Assignments and Transfers by the Borrower ....................... 30
30. Assignments and Transfers by Banks .............................. 30
31. Disclosure of Information ....................................... 32
32. Calculations and Evidence of Debt ............................... 33
33. Remedies and Waivers ............................................ 34
34. Partial Invalidity .............................................. 34
35. Notices ......................................................... 34
36. Counterparts .................................................... 35
37. Amendments ...................................................... 35
38. Governing Law ................................................... 36
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SCHEDULES
1. The Banks .................................................... 37
2. Form of Transfer Certificate ................................. 38
3. Conditions Precedent ......................................... 41
4. Utilisation Request .......................................... 42
5. Timetables ................................................... 43
6. Mandatory Liquid Asset Costs Rate Formula .................... 45
7. Form of Overdraft Provider Transfer Certificate .............. 47
Signatories ....................................................... 49
EXHIBIT
Form of Confidentiality Agreement ................................. 54
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<PAGE>
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THIS AMENDED AND RESTATED AGREEMENT is made the 15th day of October, 1996
BETWEEN:
(1) PELIKAN SCOTLAND LIMITED (the "BORROWER");
(2) BZW and NATIONSBANC CAPITAL MARKETS, INC. (together with the Documentation
Agent, the "ARRANGERS");
(3) BARCLAYS BANK PLC, as agent (the "AGENT");
(4) NATIONSBANK OF TEXAS, N.A. as collateral agent (the "COLLATERAL AGENT", the
Agent and the Collateral Agent being hereinafter referred to collectively
as the "AGENTS");
(5) NATIONSBANK OF TEXAS, N.A. as documentation agent (the "DOCUMENTATION
AGENT");
(6) BARCLAYS BANK PLC as fronting bank (the "FRONTING BANK");
(7) BARCLAYS BANK PLC as overdraft provider (the "OVERDRAFT PROVIDER"); and
(8) THE FINANCIAL INSTITUTIONS named in the First Schedule (the "BANKS").
WHEREAS the parties hereto wish further to amend and restate the Revolving
Credit Facility dated 24th February, 1995 as previously amended and restated on
2nd June, 1995 (as so amended, the "ORIGINAL AGREEMENT")
NOW IT IS HEREBY AGREED that the Original Agreement is hereby further amended
and restated as follows:
1. INTERPRETATION
1.1 In this Agreement:
"ADVANCE" means, save as otherwise provided herein, an advance made or to
be made by a Lender pursuant to the terms hereof;
"AGENT'S SPOT RATE OF EXCHANGE" means the Agent's spot rate of exchange for
the purchase of the relevant Optional Currency in the London foreign
exchange market with sterling at or about 11.00 a.m. on a particular day;
"APPLICABLE MARGIN" has the meaning given to it in the Credit Agreement;
"AVAILABLE COMMITMENT" means, in relation to a Bank at any time and save as
otherwise provided herein, its Commitment at such time less (i) its share
of the Outstandings (other than any outstanding Short-Term Advance) at such
time (and for the purposes of determining a Bank's share of Outstandings,
such Bank's share will be the amount that it may become obliged to pay to
the Fronting Bank pursuant to Clause 8.6) and (ii) except for the purposes
of Clause 25, its share of any Advances which it is obliged, or may become
obliged, to make pursuant to Clause 6.5 in respect of (a) any outstanding
Short-Term Advances at close of business on the day before the proposed
Utilisation Date and (b) any Short-Term Advance requested to be made by no
later than the Specified Time on such Utilisation Date;
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2
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"AVAILABLE FACILITY" means, at any time, the aggregate of the Available
Commitments at such time adjusted, in the case of a proposed Utilisation
only, so as to take into account:
(i) any reduction in the Commitment of a Bank which will occur prior to
the commencement of, or during, the Term relating to the proposed
Utilisation consequent upon a cancellation of the whole or any part
of the Commitment of such Bank pursuant to the terms hereof;
(ii) the amounts of any Advances (other than any Short-Term Advances)
Letters of Credit and/or Contract Guarantees which, pursuant to any
other Utilisation, any Bank or the Fronting Bank as the case may be
are then obliged to make or, as the case may be, issue on or before
the proposed Utilisation Date relating to such proposed Utilisation;
and
(iii) the amounts of any Advances and/or Letters of Credit which were
made or, as the case may be, issued by any Bank, the Overdraft
Provider, or the Fronting Bank as the case may be, pursuant
hereto and which are due to be repaid or, as the case may be,
expire on or before the proposed Utilisation Date relating to
such Utilisation;
"BASLE PAPER" means the paper entitled International Convergence of Capital
Measurement and Capital Standards dated July 1988 prepared by the Basle
Committee on Banking Regulations and Supervisory Practices, as amended in
November 1991;
"BZW" means a division of Barclays Bank PLC;
"CLOSING DATE" has the meaning given to it in the Credit Agreement;
"COLLATERAL DOCUMENTS" has the meaning given to it in the Credit Agreement;
"COMMITMENT" means, in relation to a Bank at any time and save as otherwise
provided herein, the amount set opposite its name in the First Schedule;
"COMMITMENT FEE" has the meaning given to it in Clause 25;
"COMMITMENT FEE PERCENTAGE" has the meaning given to it in the Credit
Agreement;
"CONTRACT GUARANTEES" means guarantees, indemnities, performance bonds and
similar undertakings issued or to be issued by the Fronting Bank pursuant
to Clause 7, (in each case in such form as may be requested by the Borrower
and acceptable to the Fronting Bank) in respect of the obligations of the
Borrower or its Subsidiaries, to any third party;
"CONTACT GUARANTEE OUTSTANDINGS" means at any time, the amount that is the
sum of (i) the maximum aggregate amount that is or at any time thereafter
may be payable by the Fronting Bank under each Contract Guarantee
outstanding at such time and (ii) the aggregate amount of all claims
honoured by the Fronting Bank and not theretofore reimbursed by the
Borrower hereunder;
"CREDIT AGREEMENT" means the amended and restated credit agreement of even
date hereof between Nu-Kote Holding, Inc. as guarantor, Nu-Kote
International, Inc. as borrower,
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3
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Barclays Bank PLC as documentation agent, NationsBank of Texas, N.A. as
administrative agent and collateral agent and others;
"DEBENTURE" means the Debenture dated 24th February, 1995 between the
Company and the Agent;
"EVENT OF DEFAULT" means an "Event of Default" referred to in Section 5 of
the Nu-Kote Guarantees;
"EXPIRY DATE" means, in relation to any Letter of Credit or Contract
Guarantee, the date on which the maximum aggregate liability thereunder is
to be reduced to zero;
"FACILITY" means the revolving cash advances and letter of credit and
contract guarantee facility granted to the Borrower in this Agreement;
"FACILITY OFFICE" means, in relation to any of the Agent, the Fronting
Bank, the Overdraft Provider or the Banks, the office identified with its
signature below (or, in the case of a Transferee, at the end of the
Transfer Certificate to which it is a party as Transferee, or in the case
of an Overdraft Facility Transferee, at the end of the Overdraft Provider
Transfer Certificate to which it is a party as the Overdraft Facility
Transferee) or such other office as it may from time to time select which
is located in the same jurisdiction as the office identified with its
signature below (or, in the case of a Transferee as the office identified
in the Transfer Certificate pursuant to which it became a party hereto, or
in the case of an Overdraft Facility Transferee, at the end of the
Overdraft Provider Transfer Certificate to which it is a party as the
Overdraft Facility Transferee) or, such other office as may be agreed
pursuant to Clause 17;
"FINANCE DOCUMENTS" means this Agreement, the Nu-Kote Guarantees, the
Collateral Documents, the Debenture, the Hedging Documents and any other
document designated as such in writing by the Agent and the Borrower;
"GUARANTORS" means Nu-Kote Holding, Inc., Nu-Kote International, Inc.,
International Communication Materials, Inc., Future Graphics Inc., Nu-Kote
Imaging International, Inc. and Nu-Kote Imperial, Ltd. and "GUARANTOR"
means any one of them;
"HEDGING DOCUMENTS" means any and all currency or interest rate swap and/or
interest cap and/or other hedging agreements entered into or to be entered
into by the Borrower with a Bank as have been heretofore (and/or as may
hereafter be) agreed in writing between the Borrower and the Agent to
constitute the Hedging Documents;
"L/C OUTSTANDINGS" means, at any time, the amount that is the sum of (i)
the maximum aggregate amount that is or at any time thereafter may become
available for drawings under each Letter of Credit outstanding at such time
and (ii) the aggregate amount of all drawings under each Letter of Credit
honoured by the Fronting Bank and not theretofore reimbursed by the
Borrower hereunder;
"LENDERS" means the Banks and the Overdraft Provider;
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4
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"LETTER OF CREDIT" means a documentary or standby letter of credit issued
or to be issued by the Fronting Bank pursuant to Clause 7 in each case, in
such form as may be requested by a Borrower and which is acceptable to the
Fronting Bank;
"LIBOR" means, in relation to any Advance (other than a Short-Term Advance)
or unpaid sum, the rate per annum determined by the Agent to be equal to
the arithmetic mean (rounded upwards, if necessary, to four decimal places)
of the rates (as notified to the Agent) at which each of the Reference
Banks was offering to prime banks in the London Interbank Market deposits
in the currency of the relevant Advance and for the specified period at or
about 11.00 a. m. on the Quotation Date for such specified period and, for
the purposes of this definition, "SPECIFIED PERIOD" means the Term of such
Advance or, as the case may be, the relevant period in respect of which
LIBOR falls to be determined in relation to such unpaid sum;
"MANDATORY LIQUID ASSET COSTS RATE" means in relation to any Advance or
unpaid sum denominated in sterling, the rate determined in accordance with
the Sixth Schedule;
"NU-KOTE GUARANTEES" means the guarantees of 24th February, 1995 given by
the Guarantors in favour of the Agent for itself and on behalf of the
Lenders;
"OBLIGORS" means the Borrower and the Guarantors and "OBLIGOR" means any
one of them;
"OPTIONAL CURRENCY" means dollars, deutschmarks and Swiss francs;
"ORIGINAL STERLING AMOUNT" means:
(a) the principal amount (in the case of an Advance), or the face value
(in the case of a Letter of Credit or a Contract Guarantee), of a
Utilisation denominated in sterling; or
(b) the principal amount (in the case of an Advance), or the face value
(in the case of a Letter of Credit or a Contract Guarantee), of a
Utilisation denominated in an Optional Currency, translated into
sterling on the basis of the Agent's Spot Rate of Exchange on the date
of receipt by the Agent of the Utilisation Request for that
Utilisation.
"OUTSTANDINGS" means, at any time, the aggregate of:
(i) the principal amount of each outstanding Advance at such time;
(ii) the L/C Outstandings at such time; and
(iii) the Contract Guarantee Outstanding at such time.
"OVERDRAFT FACILITY TRANSFEREE" means a Lender to which the Overdraft
Provider transfers all (but not part) of its rights and obligations
hereunder as the Overdraft Provider in accordance with Clause 30.5;
"OVERDRAFT PROVIDER" means:
(i) Barclays Bank PLC in its capacity as overdraft provider hereunder; or
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5
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(ii) any other Lender that may, from time to time, be appointed to act as
the overdraft provider hereunder in accordance with Clause 30.5;
"OVERDRAFT PROVIDER TRANSFER CERTIFICATE" means a certificate substantially
in the form set out in the Seventh Schedule signed by the Overdraft
Provider and the Overdraft Facility Transferee whereby:
(i) the Overdraft Provider seeks to procure the transfer to the Overdraft
Facility Transferee of all (but not part) of the Overdraft Provider's
rights and obligations hereunder upon and subject to the conditions
set out in Clause 30.5; and
(ii) the Overdraft Facility Transferee undertakes to perform all (but not
part) of the Overdraft Provider's obligations hereunder as a result of
delivery of such certificate to the Borrower and the Agent as is
contemplated in Clause 30.5;
"POTENTIAL EVENT OF DEFAULT" has the meaning given to it in the Nu-Kote
Guarantees;
"PROPORTION" means, in relation to a Bank, the proportion borne by its
Commitment to the Total Commitments (or, if the Total Commitments are then
zero, by its Commitment to the Total Commitments immediately prior to their
reduction to zero);
"QUALIFYING LENDER" means a bank as defined in Section 890A of the Income
and Corporation Taxes Act 1988 and which is within the charge to U.K.
corporation tax as regards any interest received by it under this
Agreement;
"QUOTATION DATE" means, in relation to any period for which an interest
rate is to be determined hereunder (other than a Short-Term Advance), the
day on which quotations would ordinarily be given by prime banks in the
London Interbank Market for deposits in the currency in relation to which
such rate is to be determined for delivery on the first day of that period
Provided that, if for any such period quotations would ordinarily be given
on more than one date, the Quotation Date for that period shall be the last
of those dates;
"REFERENCE BANKS" means the principal London office of Barclays Bank PLC or
the principal offices of such other bank or banks as may from time to time
be agreed between the Borrower and the Agent acting on the instructions of
the Requisite Lenders;
"REPAYMENT DATE" means, in relation to any Advance, the last day of the
Term thereof;
"REQUISITE LENDERS" has the meaning given to it in the Credit Agreement;
"REQUESTED AMOUNT" means, in relation to any Utilisation Request, the
aggregate principal amount of the Advances or, as the case may be, face
amount of the Letter of Credit therein requested;
"SHORT-TERM ADVANCE" means any Advance denominated in sterling made by the
Overdraft Provider in that capacity pursuant to the terms hereof;
"SWISS FACILITY" means the amended and restated revolving credit and letter
of credit facility of even date hereof made available to Pelikan
Produktions AG and Pelikan Hardcopy (International) AG by Barclays Bank
PLC, NationsBank of Texas, N.A. and others;
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"SUBSIDIARY" has the meaning given to it in the Credit Agreement;
"TERM" means, save as otherwise provided herein, in relation to any
Advance, the period for which such Advance is borrowed (as specified in the
Utilisation Request relating thereto) and, in relation to any Letter of
Credit or Contract Guarantee, the period from the date on which such Letter
of Credit or Contract Guarantee (as the case may be) is issued until its
Expiry Date (as specified in the Utilisation Request relating thereto);
"TERMINATION DATE" means the day which is sixty months after the Closing
Date (as defined in the Credit Agreement);
"TOTAL COMMITMENTS" means the aggregate for the time being of the Banks'
Commitments;
"TRANSFER CERTIFICATE" means a certificate substantially in the form set
out in the Second Schedule signed by a Bank and a Transferee whereby:
(i) such Bank seeks to procure the transfer to such Transferee of all or a
part of such Bank's rights and obligations hereunder upon and subject
to the terms and conditions set out in Clause 30; and
(ii) such Transferee undertakes to perform the obligations it will assume
as a result of delivery of such certificate to the Borrower and the
Agent as is contemplated in Clause 30;
"TRANSFER DATE" means, in relation to any Transfer Certificate or Overdraft
Provider Transfer Certificate, the date for the making of the transfer as
specified in the schedule to such Transfer Certificate or Overdraft
Provider Transfer Certificate, as the case may be;
"TRANSFEREE" means a bank or other financial institution to which a Bank
transfers all or part of such Bank's rights and obligations hereunder in
accordance with Clause 30;
"UTILISATION" means a utilisation of the Facility hereunder;
"UTILISATION DATE" means the date of a Utilisation, being the date on which
the Advances in respect thereof are to be made or the Letter of Credit or,
as the case may be, Contract Guarantee in respect thereof is to be issued;
and
"UTILISATION REQUEST" means a notice given to the Agent pursuant to Clause
6.1 substantially in the form set out in the Fourth Schedule.
1.2 Any reference in this Agreement to:
an "AFFILIATE" of the Agent shall be construed as a reference to a
subsidiary or holding company, or to a subsidiary of a holding company, of
the Agent;
the "AGENT", the "COLLATERAL AGENT" or any "LENDER" or any "OVERDRAFT
PROVIDER" shall be construed so as to include its and any subsequent
successors, Transferees and permitted assigns in accordance with their
respective interests;
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a "BUSINESS DAY" shall be construed as a reference to a day (other than a
Saturday or Sunday) on which banks generally are open for business in
London and (but only in relation to a transaction involving an Optional
Currency) the principal financial centre of the country of that Optional
Currency;
a "MONTH" is a reference to a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next
succeeding calendar month save that, where any such period would otherwise
end on a day which is not a business day, it shall end on the next
succeeding business day, unless that day falls in the calendar month
succeeding that in which it would otherwise have ended, in which case it
shall end on the immediately preceding business day Provided that, if a
period starts on the last business day in a calendar month or if there is
no numerically corresponding day in the month in which that period ends,
that period shall end on the last business day in that later month (and
references to "MONTHS" shall be construed accordingly);
"TAX" shall be construed so as to include any tax, levy, impost, duty or
other charge of a similar nature (including, without limitation, any
penalty or interest payable in connection with any failure to pay or any
delay in paying any of the same); and
"VAT" shall be construed as a reference to value added tax including any
similar tax which may be imposed in place thereof from time to time.
1.3 "L" and "STERLING" denote the lawful currency of the United Kingdom, "US$"
and "DOLLARS" denote the lawful currency of the United States of America,
"DM" and "DEUTSCHMARKS" denote the lawful currency of the Federal Republic
of Germany and "CHF" and "SWISS FRANCS" denote the lawful currency of
Switzerland.
1.4 Save where the contrary is indicated, any reference in this Agreement to:
(i) this Agreement or any other agreement or document shall be construed
as a reference to this Agreement or, as the case may be, such other
agreement or document as the same may have been, or may from time to
time be, amended, restated, varied, novated or supplemented; and
(ii) a time of day shall be construed as a reference to London time.
1.5 There are set out in the Fifth Schedule timetables of certain of the
procedures provided for in this Agreement. For the purpose of construction,
any reference herein to a specified time shall be construed as a reference
to the relevant time set forth in the relevant timetable.
2. THE FACILITY
2.1 The Lenders grant to the Borrower, upon the terms and subject to the
conditions hereof, a revolving cash advance, letter of credit and contract
guarantee facility in an aggregate Original Sterling Amount of L6,275,000.
2.2 Subject to Clause 2.1 above, the aggregate amount of all Utilizations
denominated in an Optional Currency outstanding at any time shall not:
(i) in the case of Utilizations denominated in dollars, exceed
US$10,000,000;
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(ii) in the case of Utilizations denominated in deutschmarks, exceed
DM2,666,310; and
(iii) in the case of Utilizations denominated in Swiss francs, exceed
CHF3,260,741.
2.3 Notwithstanding Clause 2.2 above, that part of the Facility available for
Utilisation by way of Letters of Credit is limited to an Original Sterling
Amount of L3,000,000.
2.4 That part of the Facility available for Utilisation by way of Short-Term
Advances is limited to L1,882,000.
2.5 Notwithstanding Clause 2.2 above, that part of the Facility available for
utilisation by way of Contract Guarantees is limited to an Original
Sterling Amount of L1,000,000.
3. PURPOSE
3.1 The Facility is intended to be used for general corporate purposes
including, but not limited to:
(i) working capital;
(ii) capital and other expenditures and expenses including, without
limitation, Permitted Acquisitions (as defined in the Credit
Agreement);
(iii) the issue of Letters of Credit;
(iv) the issue of Contract Guarantees in relation to liabilities of the
Borrower or the Borrower's Subsidiaries, to third parties; and
(v) refinancing existing indebtedness and other indebtedness, including
reimbursement to the Fronting Bank of any amounts drawn under any
Letters of Credit or paid under any Contact Guarantees,
and, accordingly, the Borrower shall apply all amounts raised by it
hereunder in or towards satisfaction of such purposes.
3.2 APPLICATION OF AMOUNTS
Without prejudice to the obligations of the Borrower under Clause 3.1, the
Agents and the Lenders shall not be obliged to concern themselves with the
application of amounts raised by the Borrower hereunder.
4. CONDITIONS PRECEDENT
The Borrower may not utilise the Facility unless the Agent has confirmed to
the Borrower and the Lenders that it has received all of the documents
listed in the Third Schedule and that each is, in form and substance,
satisfactory to the Agent.
5. NATURE OF LENDERS' OBLIGATIONS
5.1 The obligations of each Lender hereunder are several.
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9
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5.2 The failure by a Lender to perform its obligations hereunder shall not
affect the obligations of any other Lender or the Borrower towards any
other party hereto nor shall any other party be liable for the failure by
such Lender to perform its obligations hereunder.
6. UTILISATION OF THE FACILITY
6.1 Save as otherwise provided herein, Advances will be made by the Banks or,
as the case may be, a Letter of Credit or Contract Guarantee will be issued
by the Fronting Bank or, as the case may be, Short-Term Advances will be
made by the Overdraft Provider to the Borrower if:
(i) no later than the specified time in respect of the proposed
Utilisation, the Agent or, in the case of a Short-Term Advance, the
Overdraft Provider, has received from the Borrower a Utilisation
Request therefor;
(ii) the proposed Utilisation Date in respect of such Utilisation Request
is a business day;
(iii) the Requested Amount is:
(a) in the case of a Utilisation by means of Advances (other than
Short-Term Advances), an amount which does not exceed the
Available Facility at such time and which, if less than the
Available Facility at such time:
(1) if no other Advance (other than a Short-Term Advance) of an
Original Sterling Amount of less than L1,000,000 is outstanding
at such time is:
(A) if the currency is sterling, a minimum amount of L500,000
and in additional integral multiples of L1,000,000; or
(B) if the currency is an Optional Currency, a minimum Original
Sterling Amount of L500,000 (or an appropriate amount
thereof) and in additional integral multiples of an Original
Sterling Amount of L1,000,000 (or an approximate amount
thereof); or
(2) if an Advance (other than a Short-Term Advance) of less than an
Original Sterling Amount of L1,000,000 is outstanding at such
time is:
(A) if the currency is sterling, a minimum amount of L1,000,000
and in additional integral multiples of L500,000; or
(B) if the currency is an Optional Currency, a minimum Original
Sterling Amount of L1,000,000 (or an approximate amount
thereof) and in additional integral multiples of an Original
Sterling Amount of L500,000 (or an approximate amount
thereof); or
(b) in the case of a Utilisation by means of a Letter of Credit, an
amount which does not exceed the Available Facility at such time
and which when aggregated with the L/C Outstandings at the time
of such Utilisation does not exceed an Original Sterling Amount
of L3,000,000; or
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(c) in the case of a Utilisation by means of Short-Term Advances, an
amount which does not exceed the Available Facility at such time
and which when aggregated with all other Short-Term Advances then
outstanding, does not exceed L1,882,000;
(iv) in the case of a Utilisation to be denominated in an Optional
Currency, its principal amount (in the case of an Advance) or its face
value (in the case of a Letter of Credit or a Contract Guarantee),
when aggregated with the aggregate principal amounts and/or the
aggregate face values, as the case may be, of all outstanding
Utilizations denominated in the same Optional Currency, would not
exceed the limits set out in Clause 2.2; and
(v) the Term requested by the Borrower in such Utilisation Request will
end on a business day which is or precedes the Termination Date and
which in respect of Advances will be:
(a) in respect of any Advance (other than a Short-Term Advance) with
a proposed Utilisation Date falling during the period expiring on
the earlier of the date (1) that is two (2) months after the
Closing Date or (2) on which the Arrangers determine, in their
sole discretion, that the syndication of this Agreement is
complete, a period not exceeding 14 days;
(b) in respect of an Advance (other than a Short-Term Advance) to
which Clause 6.1(v)(a) does not apply, a period of one, three or
six months;
(c) in respect of a Letter of Credit or Contract Guarantee:
(1) if denominated in sterling, any period of 18 months or less;
or
(2) if denominated in an Optional Currency, any period of twelve
months or less;
(d) in respect of a Short-Term Advance, any period of one month or
less; and
(vi) the making of such Advance (other than a Short-Term Advance) will not
result in there being more than 5 outstanding Advances (other than
Short-Term Advances).
6.2 If and whenever, on the occasion of a Utilisation, the Banks are required
to make Advances or the Fronting Bank is required to issue a Letter of
Credit or Contract Guarantee pursuant hereto, the aggregate principal
amount of the Advances to be so made or, as the case may be, the face
amount of the Letter of Credit or Contract Guarantee (as the case may be)
to be so issued shall be allocated to, and apportioned among, the Banks
rateably to their respective Available Commitments for such Utilisation
Provided that no amount shall be allocated to any Bank in respect of any
Utilisation if such Bank's Commitment will be cancelled pursuant to the
terms hereof prior to or during the Term of the proposed Advances or the
term of the proposed Letter of Credit or Contract Guarantee (as the case
may be).
6.3 Each Lender shall, subject to the terms hereof, be obliged, through its
Facility Office, to make an Advance on the proposed Utilisation Date in a
principal amount equal to the amount
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11
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allocated to, or in the case of a Short-Term Advance, requested from it
pursuant to this Clause 6.
6.4 The Agent shall not later than the specified time notify each Bank by
telephone of the principal amount or, as the case may be, the amount
allocated to it pursuant to this Clause 6, such notice to be promptly
confirmed by the Agent by telex or telefax.
6.5 The Overdraft Provider may request by notice to the Borrower (through the
Agent) at any time when the Borrower has an outstanding Short-Term Advance
made by such Overdraft Provider that the Banks make an Advance to the
Borrower on a business day specified by the Overdraft Provider in such
notice (such date falling no earlier than five business days after receipt
of such notice) and upon receiving such notice the Borrower shall, unless
such outstanding Short-Term Advance has been repaid within three business
days of receipt of such notice, be deemed to have served a Utilisation
Request for an Advance to be made by the Banks in an amount equal to, and
in the same currency as, such outstanding Short-Term Advance on such
business date specified by the Overdraft Provider for a Term of one month
whereupon, notwithstanding the provisions of Clause 6.1(iii) or (v) or the
conditions to making an Advance contained in Clause 10 or any cancellation
of the Available Facility following the making of such Short-Term Advance,
the Banks shall make such Advance available to the Borrower rateably to
their respective Available Commitments at such time (or immediately prior
to any such cancellation) and interest on such Advance shall be determined
in accordance with Clause 11.2 and the Agent is hereby authorised to pay
the proceeds of such Advance to the Overdraft Provider on behalf of the
Borrower to be applied in discharge of such outstanding Short-Term Advance.
6.6 For the avoidance of any doubt, since the definition of Commitment only
applies to Banks and not the Overdraft Provider or the Fronting Bank, any
Bank that is also an Overdraft Provider or Fronting Bank may be obliged to
have Outstandings that, including its Advances as a Bank, its Short-Term
Advances as Overdraft Provider and its L/C Outstandings and Contract
Guarantee Outstandings as Fronting Bank, exceed the amount of its
Commitment and any such Bank, in its capacity as Overdraft Provider and
Fronting Bank, has the benefit of the Banks' obligations under Clauses 6.5
and 8.6 in respect of its Short Term Advances and L/C Outstandings and
Contract Guarantee Outstandings as Fronting Bank.
7. ISSUE OF LETTERS OR CREDIT AND CONTRACT GUARANTEES
7.1 Each Utilisation Request in respect of a Letter of Credit or Contact
Guarantee shall, in addition to the information required pursuant to Clause
6.1, specify the name and address of the recipient to which the relevant
Letter of Credit or Contract Guarantee (as the case may be) should be
delivered and shall have the proposed form of the Letter of Credit or
Contract Guarantee (as the case may be) attached to it.
7.2 Subject to the provisions hereof, the Fronting Bank shall issue a Letter of
Credit or Contract Guarantee in accordance with Clause 7.1 if:
(i) no Event of Default or Potential Event of Default has occurred which
is continuing;
(ii) the representations and warranties set out in Section 3 of the Nu-Kote
Guarantees are true in all material respects on and as of such
Utilisation Date to the same extent as though made on and as of such
Utilisation Date, except to the extent that such representations and
warranties specifically relate to an earlier date, in which case, such
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representations and warranties shall have been true and correct
in all material respects as of such earlier date; and
(iii) the form of the Letter of Credit or Contract Guarantee (as the
case may be) has been agreed between the Borrower and the
Fronting Bank by no later than the specified time.
8. INDEMNITY (INCLUDING BANK INDEMNITY FOR SHORT-TERM ADVANCES)
8.1 If, at any time, a demand for payment (the amount so demanded being herein
referred to as the "AMOUNT DEMANDED") is made under a Letter of Credit or
Contract Guarantee (as the case may be) by the beneficiary thereof, the
Agent shall notify the Borrower of such demand and make demand of the
Borrower for an amount equal to the Amount Demanded.
8.2 The Borrower shall pay to the Agent an amount equal to the Amount Demanded
following receipt by it of a demand made on it by the Agent under this
Clause 8. Such payment shall be made on the business day during which the
Borrower receives such demand from the Agent, or, in the event that the
Borrower receives such demand after 9.00 a.m. on such business day, on the
business day following.
8.3 The Borrower hereby irrevocably and unconditionally agrees to indemnify and
keep indemnified the Fronting Bank against each and every sum paid or
payable by the Fronting Bank under any Letter of Credit or Contract
Guarantee issued at its request and also undertakes to indemnify and hold
harmless the Fronting Bank on demand from and against all actions,
proceedings, liabilities, costs (including, without limitation, any costs
incurred in funding any amount which falls due from the Fronting Bank under
any Letter of Credit or Contract Guarantee (as the case may be) in
connection with any such Letter of Credit or Contract Guarantee (as the
case may be) as certified by the Fronting Bank to the Borrower), claims,
losses, damages and expenses which the Fronting Bank may at any time incur
or sustain in connection with or arising out of any Letter of Credit or
Contract Guarantee (as the case may be) issued at its request Provided that
the Borrower shall not be obliged to pay any amount under this Clause 8.3
to the extent that such obligation has arisen as a result of (i) the fraud,
gross negligence or wilful misconduct of the Fronting Bank or (ii) the
failure by the Fronting Bank to use reasonable care to determine that any
documents and certificates required to be delivered under any Letter of
Credit or Contract Guarantee (as the case may be) have been delivered and
that they comply on their face with the requirements of that Letter of
Credit or Contract Guarantee (as the case may be) before making any payment
thereunder.
8.4 The Fronting Bank shall be entitled to make any payment under any Letter of
Credit or Contract Guarantee (as the case may be) for which a demand has
been made without any reference to or further authority from the Borrower
at whose request such Letter of Credit or Contract Guarantee (as the case
may be) was issued or any other investigation or enquiry, need not concern
itself with the propriety of any demand made or purported to be made under
and in the manner required by the terms of any such Letter of Credit or
Contract Guarantee (as the case may be) and shall be entitled to assume
that any person expressed in any Letter of Credit or Contract Guarantee (as
the case may be) or in any notice served pursuant to any such Letter of
Credit or Contract Guarantee (as the case may be) to be entitled to make
demands is so entitled and that any individual purporting to sign any such
demand or notice on behalf of such person is duly authorised to do so
unless it has actual knowledge that such person is not so entitled or not
so authorised; accordingly, it shall not (save as provided in this Clause
8) be a
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defence to any demand made of the Borrower, nor shall the Borrower's
obligations hereunder be impaired by the fact (if it be the case), that
the Fronting Bank was or might have been justified in refusing
payment, in whole or in part, of the amounts so demanded Provided that the
Fronting Bank shall use reasonable care to determine that any documents and
certificates required to be delivered under any Letter of Credit or
Contract Guarantee (as the case may be) have been delivered and that they
comply on their face with the requirements of that Letter of Credit or
Contract Guarantee (as the case may be) before making any payment
thereunder.
8.5 Save as otherwise provided in this Clause 8, the obligations of the
Borrower to the Fronting Bank in connection with any such Letter of Credit
or Contract Guarantee (as the case may be) shall not be discharged,
lessened or impaired by any act, omission or circumstance whatsoever which,
but for this provision, might operate to release or exonerate the Borrower
from all or part of such obligations or in any other way discharge, lessen
or impair the same.
8.6 Each Bank hereby irrevocably and unconditionally agrees to indemnify and
keep indemnified the Fronting Bank and the Overdraft Provider on demand and
in its Proportion against each and every sum payable hereunder by the
Borrower to the Fronting Bank and the Overdraft Provider in respect of a
Letter of Credit or Contract Guarantee (as the case may be) or Short-Term
Advance but which is not paid on the due date therefor.
9. LETTER OF CREDIT AND CONTRACT GUARANTEE COMMISSIONS AND FEES
9.1 The Borrower agrees to pay the following amounts with respect to each
Letter of Credit issued by the Fronting Bank hereunder at its request:
(i) in respect of each documentary Letter of Credit with a term (on issue
thereof) of less than one year, a commission of 0.625 per cent. per
annum on the weighted average maximum amount available from time to
time to be drawn under such Letter of Credit. Such commission shall be
paid to the Agent for the account of each Bank and for distribution by
the Agent to each Bank in proportion to each Bank's allocation
pursuant to Clause 6.2 in arrear on and to (but excluding) each 31st
March, 30th June, 30th September and 31st December in each year during
the term thereof and on the Expiry Date thereof, the first such
payment to be made on 31st March, 1995 in respect of any documentary
Letter of Credit issued prior to such date;
(ii) in respect of each documentary Letter of Credit with a term (on issue
thereof) of one year or more and each standby Letter of Credit, a
commission equal to the product of (A) the weighted average Applicable
Margin applicable to the Advances (other than Short-Term Advances)
outstanding hereunder during the period of calculation multiplied by
(B) the weighted average maximum amount available from time to time to
be drawn during such period under such Letter of Credit. Such
commission shall be paid to the Agent for the account of each Bank and
for distribution by the Agent to each Bank in proportion to each
Bank's allocation pursuant to Clause 6.2 in arrear on and to (but
excluding) each 31st March, 30th June, 30th September and 31st
December in each year during the term thereof and on the Expiry Date
thereof, the first such payment to be made on 31st March, 1995;
(iii) a fronting fee, for the account of the Fronting Bank, of 0.20 per
cent. per annum on the face amount of such Letter of Credit in
arrear on and to (but excluding) each
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31st March, 30th June, 30th September and 31st December in each
year during the term thereof and on the Expiry Date thereof,
the first such payment to be made on 31st March, 1995 in respect
of any such Letter of Credit issued prior to such date; and
(iv) with respect to the issuance, any amendment and any transfer thereof
and each drawing thereunder, in each case reasonable documentary and
processing charges in accordance with the Fronting Bank's standard
schedule for such charges in effect at the date of issue or the
relevant amendment, transfer or drawing (as the case may be) of the
relevant Letter of Credit.
9.2 In respect of each Contract Guarantee, a commission equal to the higher of
L100 and 0.75% per annum on the weighted average maximum amount available
from time to time to be paid under such Contract Guarantee. An amount of
such commission equal to 0.55% per annum on the weighted average maximum
amount available from time to time to be paid under such Contract Guarantee
shall be paid to the Agent for the account of each Bank for distribution by
the Agent to each Bank in proportion to each Bank's allocation pursuant to
Clause 6.2 in arrear on and to (but excluding) each 31st March, 30th June,
30th September and 31st December in each year during the term thereof and
on the Expiry Date thereof, the first such payment to be made on 30th June,
1995 in respect of any Contract Guarantee issued prior to such date. The
balance of such commission shall be paid to the Fronting Bank for its own
account in arrear on and to (but excluding) each 31st March, 30th June,
30th September and 31st December in each year during the term of such
Contract Guarantee and on the Expiry Date thereof, the first such payment
to be made on 30th June, 1995 in respect of any such Contract Guarantee
issued prior to such date.
10. MAKING OF ADVANCES
10.1 If the Agent notifies any Bank or the Overdraft Provider has been requested
to make any Advance (as the case may be) in accordance with Clause 6 that
it is to make any Advance, and if on the proposed Utilisation Date relating
to such an Advance:
(i) no Event of Default or Potential Event of Default has occurred which
is continuing; and
(ii) the representations and warranties set out in Section 3 of the Nu-Kote
Guarantees are true in all material respects on and as of such
Utilisation Date to the same extent as though made on and as of such
Utilisation Date, except to the extent that such representations and
warranties specifically relate to an earlier date, in which case, such
representations and warranties shall have been true and correct in all
material respects as of such earlier date,
then, on such Utilisation Date, such Bank or the Overdraft Provider (as the
case may be) shall, save as otherwise provided herein, make such Advance
through its Facility Office to the Borrower in accordance with the
provisions of Clause 22. Advances made hereunder shall not be represented
by notes or other instruments evidencing indebtedness.
10.2 If, before 9:00 a.m. on the Utilisation Date of an Advance to be
denominated in an Optional Currency, the Agent receives notice from a
Lender that:
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(i) it is impracticable for the affected lender to fund its participation
in such Advance for its Term in that Optional Currency in the ordinary
course of business in the London interbank market; or
(ii) the use of the proposed Optional Currency might contravene any law or
regulation relevant to the affected Lender,
then:-
(a) the Agent shall promptly and in any event before 10.00 a.m. on that
Utilisation Date notify the Borrower;
(b) if the Agent receives notice from the Borrower by 11.00 a.m. on the
relevant Utilisation Date, that Advance shall not be made; and
(c) if the Agent does not receive any notice under sub-paragraph (b)
above, then that Advance shall be denominated in sterling in an amount
equal to its Original Sterling Amount.
10.3 The Agent shall notify each relevant Party of any applicable Agent's Spot
Rate of Exchange or Original Sterling Amount as soon as practicable after
it is ascertained.
11. INTEREST
11.1 On the Repayment Date relating to each Advance made to it the Borrower
shall pay accrued interest on that Advance.
11.2 The rate of interest applicable to an Advance (other than a Short-Term
Advance) made by a Bank during the Term of such Advance shall be the rate
per annum determined by the Agent to be the sum of:
(i) LIBOR on the Quotation Date for such Advance;
(ii) the Applicable Margin; and
(iii) (in the case of an Advance denominated in sterling) the Mandatory
Liquid Asset Costs Rate in respect thereof.
11.3 The rate of interest applicable to a Short-Term Advance shall be the rate
per annum determined by the Agent to be the sum of:
(i) the base rate of the Overdraft Provider; and
(ii) the higher of (a) the Applicable Margin and (b) one per cent.
11.4 The Agent shall promptly notify the Borrower and the relevant Banks of each
determination of an interest rate made by it pursuant to this Clause 11.
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12. REPAYMENT OF ADVANCES
12.1 The Borrower shall repay each Advance made to it in full on (or, in the
case of a Short-Term Advance, if such Borrower so elects, before) the
Repayment Date relating thereto.
12.2 The Borrower shall not repay all or any part of any Advance outstanding
hereunder except at the times and in the manner expressly provided herein.
13. CANCELLATION
13.1 The Borrower may, by giving to the Agent not less than three business days'
prior notice to that effect, cancel the whole or any part (being a minimum
amount of L1,300,000 and in additional integral multiples of L1,000,000) of
the Available Facility. Any such cancellation shall reduce the Commitment
of each Bank rateably.
13.2 Any notice of cancellation given by the Borrower pursuant to Clause 13.1
shall be irrevocable and shall specify the date upon which such
cancellation is to be made and the amount of such cancellation.
13.3 If (i) the Borrower is required to make any additional payment to a Lender
pursuant to Clauses 14 or 18.2 or (ii) any Lender claims indemnification
under Clauses 15.1 or 15.2, the Borrower may, within thirty days thereafter
and by not less than fifteen days' prior notice to the Agent (which notice
shall be irrevocable), cancel all or any part of such Lender's Commitment
whereupon on the date specified in such notice its Commitment shall be
reduced by the amount so cancelled.
13.4 If the Borrower gives notice of cancellation pursuant to Clause 13.3, it
may at the same time as such notice expires repay each outstanding Advance
(or, as the case may be, the relevant proportion thereof) of the relevant
Lender together with accrued interest thereon and may procure that such
Lender's liability under all outstanding Letters of Credit and Contract
Guarantees (or, as the case may be and in each case, the relevant
proportion thereof) will be secured in a manner acceptable to such Lender,
it being understood that in no event shall any Letter of Credit or Contract
Guarantee or the obligations of the Fronting Bank thereunder be cancelled
and security equal to, and in the same currency as, the maximum amount that
can be drawn under each outstanding Letter of Credit and Contract Guarantee
issued by the Fronting Bank shall be acceptable to the Fronting Bank.
13.5 If Nu-Kote International Inc. gives notice in accordance with the Credit
Agreement to cancel the whole or any part of a Bank's commitment under the
Credit Agreement, the Borrower shall, at the same time, give notice in
accordance with Clause 13.1 to cancel the whole or a proportion equal to
the proportion to be cancelled under the Credit Agreement, of such Bank's
Commitment hereunder. If the Borrower fails to give such a notice in
accordance with Clause 13.1, the notice given in accordance with the Credit
Agreement shall be deemed to be a notice under Clause 13.1, MUTATIS
MUTANDIS.
14. TAXES
14.1 All payments to be made by the Borrower to the Agent, any Lender or the
Fronting Bank hereunder shall be made free and clear of and without
deduction for or on account of tax unless the Borrower is required to make
such a payment subject to the deduction or withholding of tax, in which
case the Borrower shall promptly upon becoming aware thereof notify the
Agent
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thereof and the Borrower shall pay to the relevant taxing or other
governmental authority the full amount required to be deducted or withheld
(including the full amount required to be deducted or withheld from any
additional amount paid by the Borrower pursuant to the succeeding sentence)
promptly upon becoming aware of the same. If such deduction or withholding
is required, the sum payable by the Borrower in respect of which such
deduction or withholding is required to be made shall be increased to the
extent necessary to ensure that, after the making of the required deduction
or withholding, the Agent, such Lender or, as the case may be, the Fronting
Bank receives and retains (free from any liability in respect of any such
deduction or withholding) a net sum equal to the sum which it would have
received and so retained had no such deduction or withholding been made or
required to be made. Provided that the Borrower shall not be required to
make any additional payment to any Lender pursuant to this Clause 14.1 if:
(i) the law, regulation or other administrative circular requiring such
deduction or withholding was in existence on 24th February, 1995;
(ii) the requirement to deduct or withhold arises as a result of such
Lender not being or having ceased to be a Qualifying Lender;
(iii) the requirement to deduct or withhold could have been avoided or
reduced as a result of such Lender complying with any obligation
it may have to provide documentation in accordance with Clause
17.1; or
(iv) the requirement to deduct or withhold would not have arisen but for a
transfer or assignment or participation in breach of Clause 30.
14.2 If a Lender shall become aware that it is eligible for a refund in respect
of any taxes actually paid by the Borrower pursuant to Clause 14.1 hereof,
it shall promptly notify the Borrower of the availability of such refund
and shall, within 30 days after receipt of a request by the Borrower, apply
for such refund or shall furnish to the Borrower such forms, duly
completed, as will enable the Borrower to claim such refund on its own
behalf. The Borrower shall reimburse such Lender for all costs reasonably
incurred by it in applying for seeking such refund. If any Lender
determines that it has received a refund in respect of any taxes paid by
the Borrower pursuant to Clause 14.1 hereof, it shall repay such refund
within 30 days after receipt to the Borrower to the extent of amounts not
in excess of the amounts actually paid by the Borrower and not previously
reimbursed in respect of the taxes giving rise to such refund net of all
out-of-pocket expenses reasonably incurred by such Lender not previously
reimbursed and without interest (other than interest received from the
relevant taxing authority with respect to such refund). The Borrower, upon
request of the relevant Lender, agrees to return to such Lender the amount
paid to it by the applicable Lender with respect to such refund (plus
applicable penalties, interest or other charges) in the event that such
Lender is required to repay such refund. In addition the Agent and each
Lender shall reasonably cooperate with the Borrower, at the Borrower's
expense in contesting any taxes that the Borrower is required to bear
pursuant to Clause 14.1 hereof and shall pay to the Borrower, on a net
after tax basis, any refunds obtained as a result of such contest, together
with any interest thereon, within 30 days of receipt. Nothing in this
Clause 14.2 shall interfere with the right of any person to arrange its tax
affairs in whatever manner it thinks fit nor oblige any person to disclose
any information relating to its tax affairs or any computations in respect
thereof to any other person.
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15. INCREASED COSTS
15.1 If after 24th February, 1995 by reason of, (i) the introduction of or any
change (including, without limitation, any change by way of imposition or
increase of tax or reserve requirements) in or in the official
interpretation of any law or regulation by the authority charged with the
administration or interpretation thereof, or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
or quasi-governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law) but being a
guideline or request with which banks are generally accustomed to comply:
(i) a Lender incurs a cost as a result of such Lender's having entered
into and/or performing its obligations under this Agreement and/or
assuming or maintaining a commitment under this Agreement and/or
participating in one or more Advances, or Letters of Credit and/or
one or more Contract Guarantees hereunder;
(ii) there is an increase in the cost to a Lender of funding or
maintaining its participation in (a) all or any of the advances
comprised in a class of advances formed by or including the Advances
made or to be made hereunder, (b) all or any of the letters of credit
comprised in a class of letters of credit formed by or including the
Letters of Credit made or to be made hereunder and/or (c) all or any
of the contract guarantees comprised in a class of contract
guarantees formed by or including the Contract Guarantee issued or to
be issued hereunder; or
(iii) a Lender becomes liable to make any payment on account of tax or
otherwise (not being a tax imposed on or measured by the net
income or capital of such Lender by the jurisdiction in which it
is incorporated or in which it or its Facility Office is located
or centrally managed or controlled) on or calculated by reference
to the amount of such Lender's participation in the Advances made
or to be made hereunder and/or any Letter of Credit issued or to
be issued hereunder and/or any Contract Guarantee issued or to be
issued hereunder and/or to any sum received or receivable by it
hereunder,
then the relevant Lender shall, through the Agent, notify the Borrower of
such cost, such increased cost or, as the case may be, such liability
within 30 days of becoming aware of the same, demanding indemnification in
respect thereof and upon receipt of such notice and demand, the Borrower
shall pay to the Agent for the account of that Lender, within five business
days after receipt of such notice and demand, additional amounts sufficient
to indemnify that Lender against such cost, such increased cost or such
liability. A certificate in reasonable detail as to the amount of such
cost, increased cost or such liability submitted to the Borrower and the
Agent by that Lender, shall, except for manifest error, be final,
conclusive and binding for all purposes.
15.2 In the event that any Lender shall have reasonably determined that the
adoption or implementation after 24th February, 1995 of any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy (other than (i) the terms, proposals and
recommendations contained in the Basle Paper or (ii) any other rule,
regulation, guideline or order regarding capital adequacy in effect on 24th
February, 1995 affecting such Lender), (including, without limitation, a
request or requirement but being a request or requirement with which banks
are generally accustomed to comply) which affects the manner in which a
Lender is required to or does maintain capital resources having regard to
such Lender's obligations hereunder and to amounts owing to it hereunder or
any change
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therein or in the interpretation or application thereof, or compliance
by any Lender with any request or directive regarding capital
adequacy (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful but if not having the force of law,
being a request or directive with which banks are generally accustomed to
comply and in any event excluding the terms, proposals and recommendations
contained in the Basle Paper or any other rule, regulation, guideline or
order regarding capital adequacy in effect on 24th February, 1995 affecting
such Lender) from any central bank or governmental agency or body having
jurisdiction, has the effect of increasing the amount of capital required
to be maintained by such Lender and thereby reducing the rate of return on
such Lender's overall capital as a consequence of such Lender's obligations
hereunder to a level below that which such Lender would have achieved but
for the occurrence of such circumstances, then the relevant Lender shall,
through the Agent, notify the Borrower of such event within 30 days of
becoming aware of the same demanding indemnification in respect thereof and
including in such notification and demand a certificate stating (a) that
one of the events described in this Clause 15.2 has occurred and describing
in reasonable detail the nature of such event, (b) the amount of the
reduction in the rate of return on such Lender's capital reasonably
determined by such Lender to be allocable to the existence of such Lender's
obligations hereunder and (c) setting forth in reasonable detail the manner
of calculation of the reduction in the rate of return on such Lender's
capital and such allocated amount thereof and the Borrower shall upon
receipt of such notice and demand pay to the Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of such compensation, submitted
to the Borrower and the Agent by such Lender shall, in the absence of
manifest error, be final, conclusive and binding for all purposes. In
determining such amount, a Lender may use any reasonable averaging and
attribution method. Nothing in this Clause 15.2 is intended to provide to
the Borrower the right to inspect the records, files or books of any
Lender.
15.3 The Borrower shall not be required to pay any amounts pursuant to Clauses
15.1 or 15.2:
(i) to the extent that such amounts are recovered under Clause 14, Clause
18 or any other sub-clause of Clause 15;
(ii) to the extent that such cost, increased cost or liability would not
have arisen but for a transfer or assignment in breach of Clause 30;
(iii) unless the relevant Lender has delivered a notice and demand in
the manner required by Clause 15.1 or, as the case may be, Clause
15.2 and such certificates as are referred to in Clauses 15.1 or,
as the case may be, 15.2; or
(iv) to the extent that such cost, increased cost or liability has already
been compensated for by application of the Mandatory Liquid Asset
Costs Rate.
16. ILLEGALITY
If, at any time after 24th February, 1995 it is unlawful for a Lender to
make, fund or allow to remain outstanding all or any of the Advances made
or to be made by it hereunder and/or all or any of the Letters of Credit or
Contract Guarantees issued or to be issued by it hereunder then that Lender
shall, promptly after becoming aware of the same, deliver to the Borrower
through the Agent a certificate to that effect and, unless such illegality
is avoided in accordance with
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Clause 17 taking into account any grace period allowed by any such
order, request or requirement:
(i) such Lender shall not thereafter be obliged to make any Advances or
issue any letters of Credit or Contract Guarantees (as the case may
be) and the amount of its Commitment shall be immediately reduced to
zero; and
(ii) if the Agent on behalf of such Lender so requires, the Borrower shall
on such date as the Agent shall have specified:
(a) repay each outstanding Advance together with accrued interest
thereon and all other amounts owing to such Lender; and/or
(b) procure that such Lender's obligations under any Letters of
Credit or Contract Guarantees (as the case may be) will be
secured in a manner acceptable to such Lender, it being
understood that in no event shall any Letter of Credit or
Contract Guarantees (as the case may be) or the obligations of
the Fronting Bank thereunder be cancelled and security in
sterling equal to the maximum amount that can be drawn under each
Letter of Credit or paid under each Contract Guarantee (as the
case may be) outstanding at such time shall be acceptable to the
Fronting Bank.
17. MITIGATION
17.1 If, in respect of any Lender, circumstances arise which would or would upon
the giving of notice result in:
(i) the reduction of its Commitment to zero pursuant to Clause 16(i);
(ii) an increase in the amount of any payment to be made to it or for its
account pursuant to Clause 14 or Clause 18.2; or
(iii) a claim for indemnification pursuant to Clause 15.1 or 15.2,
then, without in any way limiting, reducing or otherwise qualifying the
rights of such Lender or the obligations of the Borrower under any of the
Clauses referred to in (i), (ii) or (iii) above such Lender shall promptly
upon becoming aware of the same notify the Agent thereof and, in
consultation with the Agent and the Borrower to the extent that it can do
so without prejudice to its own position, take such steps as it determines
are available to it (acting reasonably) to mitigate the effects of such
circumstances at the request and expense of the Borrower including (i) the
transfer of its Facility Office (ii) (subject to Clause 30) the transfer of
its rights and obligations hereunder to another financial institution
acceptable to the Borrower and willing to participate in the Facility
and/or (iii) within 30 days of becoming aware of the same, the execution
and delivery to the relevant authorities (and/or the Borrower) of any
documentation necessary to secure the benefit of any applicable double
taxation treaty or any relevant domestic law which would operate to
mitigate any of the circumstances referred to above Provided that such
Lender shall be under no obligation to take any such action if, in the
reasonable opinion of such Lender, to do so might have any adverse effect
upon its business, operations or financial condition.
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17.2 The Borrower hereby agrees to pay all expenses reasonably incurred by any
Lender in taking steps to mitigate the effects of circumstances giving rise
to any of the matters referred to in Clause 17.1(i), (ii) and (iii) by
transferring its Facility Office pursuant to Clause 17.1 to the extent that
such expenses would not have occurred but for such transfer.
18. MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES
18.1 If, in relation to any Utilisation by way of Advances (other than a Short-
Term Advance), the Agent determines that at or about 11.00 a.m. on the
Quotation Date for the Term in respect of such Advances none of the
Reference Banks was offering to prime banks in the London Interbank Market
deposits in the relevant currency for the proposed duration of such Term,
then, notwithstanding such failure to offer deposits in that currency:
(i) the Agent shall notify the other parties hereto of such event;
(ii) such Advances shall, nevertheless, be made and the amount of interest
payable in respect of any such Advance during its Term shall be
determined in accordance with the following provisions of this Clause
18; and
(iii) if the Agent so requires, within five days of such notification
the Agent and the Borrower shall enter into negotiations with a
view to agreeing a substitute basis for determining the rates of
interest which may be applicable to such Advances and Advances in
the future and any such substitute basis that is agreed shall
take effect in accordance with its terms and be binding on each
party hereto Provided that the Agent may not agree any such
substitute basis without the prior written consent of each Bank.
18.2 If no substitute basis is agreed within 10 business days pursuant to Clause
18.1(iii) in respect of such Advances, any such Advance made by a Bank
pursuant to Clause 18.1(ii) shall bear interest during its Term at the rate
per annum equal to the sum of the Applicable Margin at such time, the
Mandatory Liquid Asset Costs Rate (if applicable) and the cost to such Bank
(as certified by it in good faith to the Agent with a copy to the Borrower
and expressed as a rate per annum) of funding such Advance from whatever
sources it may reasonably select.
19. ACCELERATION EVENT
If one or more Events of Default shall have occurred then at any time
thereafter and so long as the Event of Default in question is continuing
unremedied or unwaived, the Agent (if so instructed by the Requisite
Lenders) shall:
(i) cancel the Commitments whereupon the same shall be so cancelled and
reduced to zero; and/or
(ii) declare any outstanding Advances to be immediately due and payable,
whereupon the same shall become so due and payable, together with
accrued interest thereon and all other sums due hereunder forthwith;
and/or
(iii) require the Borrower to provide security in respect of each
Letter of Credit and Contract Guarantee issued at its request in
a manner acceptable to the Fronting Bank in the currency of each
such Letter of Credit or Contract Guarantee, it being
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understood that in no event shall any Letter of Credit or
Contract Guarantee or the obligations of the Fronting Bank
thereunder be cancelled and security equal to, and in the same
currency as, the maximum amount that can be drawn under each
Letter of Credit outstanding at such time or paid under each
Contract Guarantee at such time shall be Acceptable to the
Fronting Bank.
20. DEFAULT INTEREST AND INDEMNITIES
20.1 If any amount of principal, Commitment Fee, or interest due and payable by
the Borrower hereunder is not paid on the due date therefor, the Borrower
does not reimburse the Fronting Bank for any drawing under a Letter of
Credit hereunder on the due date therefor, the Borrower does not reimburse
the Fronting Bank for any claim under a Contract Guarantee hereunder on the
due date therefore, any fees (other than the Commitment Fee) and other
amounts payable by the Borrower hereunder are not paid within ten days of
the due date therefor, or if any sum due and payable by the Borrower under
any judgment of any court in connection herewith is not paid in accordance
with the requirements of such judgment, the period beginning on such due
date or, as the case may be, the date required by such judgment and ending
on the date upon which the obligation of the Borrower to pay such sum (the
balance thereof for the time being unpaid being herein referred to as an
"UNPAID SUM") is discharged shall be divided into successive periods, each
of which (other than the First) shall start on the last day of the
preceding such period and the duration of each of which shall (except as
otherwise provided in this Clause 20) be reasonably selected by the Agent.
20.2 During each such period relating thereto as is mentioned in Clause 20.1 an
unpaid sum shall bear interest at the rate per annum which is the sum from
time to time of two per cent., the Applicable Margin at such time, the
Mandatory Liquid Asset Costs Rate Formula (if applicable) and LIBOR on the
Quotation Date therefor Provided that:
(i) if, for any such period, LIBOR cannot be determined, the rate of
interest applicable to such unpaid sum in respect of the Agent or any
Lender shall be the sum from time to time of two per cent., the
Applicable Margin at such time, the Mandatory Liquid Asset Costs Rate
Formula (if applicable) and the rate per annum notified to the Agent
by such person (as certified by it in good faith to the Borrower with
a copy to the Agent) to be that which expresses as a percentage rate
per annum the cost to such person of funding from whatever sources it
may reasonably select its portion of such unpaid sum for such period;
and
(ii) if such unpaid sum is all or part of an Advance which became due and
payable on a day other than the last day of the Term thereof, the
first such period applicable thereto shall be of a duration equal to
the unexpired portion of that Term and the rate of interest applicable
thereto from time to time during such period shall be that which
exceeds by one per cent. the rate which would have been applicable to
it had it not so fallen due.
20.3 Any interest which shall have accrued under Clause 20.2 in respect of an
unpaid sum shall be due and payable and shall be paid by the Borrower at
the end of the period by reference to which it is calculated.
20.4 If any Lender or the Agent on its behalf receives or recovers all or any
part of an Advance made by such Lender otherwise than on the last day of
the Term thereof, the Borrower shall
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pay to the Agent on demand for the account of such Lender an amount
equal to the amount (if any) by which (i) the additional interest which
would have been payable on the amount so received or recovered had it
been received or recovered on the last day of the Term thereof exceeds
(ii) the amount of interest which in the opinion of the Agent would have
been payable to the Agent on the last day of the Term thereof in respect
of a deposit in the currency of the amount so received or recovered equal
to the amount so received or recovered placed by it with a prime bank in
the London Interbank Market for a period starting on the third business
day following the date of such receipt or recovery and ending on the last
day of the Term thereof.
20.5 Any unpaid sum shall (for the purposes of this Clause 20 and Clause 15) be
treated as an advance and accordingly in this Clause 20 and Clause 15 the
term "ADVANCE" includes any unpaid sum and "TERM", in relation to an unpaid
sum, includes each such period relating thereto as is mentioned in Clause
20.1.
20.6 If a person receives an amount in respect of the Borrower's liability under
the Finance Documents or if that liability is converted into a claim,
proof, judgment or order in a currency other than the currency (the
"CONTRACTUAL CURRENCY") in which the amount is expressed to be payable
under the relevant Finance Document:
(i) the Borrower shall indemnify that person as an independent obligation
against any loss or liability arising out of or as a result of the
conversion;
(ii) if the amount received by that person, when converted into the
contractual currency at a market rate in the usual course of its
business, is less than the amount owed in the contractual currency,
the Borrower shall forthwith on demand pay to that person an amount
in the contractual currency equal to the deficit; and
(iii) the Borrower shall pay to the person concerned on demand any exchange
costs and taxes payable in connection with any such conversion.
The Borrower waives any right it may have in any jurisdiction to pay any
amount under the Finance Documents in a currency other than that in which
it is expressed to be payable.
21. CURRENCY OF ACCOUNT
21.1 A repayment or prepayment of an Advance, or a payment by the Borrower in
accordance with Clause 8.2, is payable in the currency in which that
Advance or relevant Amount Demanded, as the case may be, is denominated.
21.2 Interest is payable in the currency in which the relevant amount in respect
of which it is payable is denominated.
21.3 Amounts payable in respect of costs, expenses, taxes and the like are
payable in the currency in which they are incurred.
21.4 Any other amount payable under this Agreement is, except as otherwise
provided in this Agreement, payable in sterling.
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22. PAYMENTS
22.1 On each date on which this Agreement requires an amount to be paid by the
Borrower or any of the Lenders hereunder, the Borrower or, as the case may
be, such Lender shall make the same available in same day funds to the
Agent or to its account at such office or bank as it may notify to the
Borrower or Lender for this purpose.
22.2 Save as otherwise provided herein, each payment received by the Agent for
the account of another person shall be made available by the Agent to such
other person (in the case of a Lender, for the account of its Facility
Office) for value the same day by transfer to such account of such person
with such bank in the principal financial centre of the relevant currency
as such person shall have previously notified to the Agent.
22.3 All payments required to be made by the Borrower hereunder shall be
calculated without reference to any set-off or counterclaim and shall be
made free and clear of and without any deduction for or on account of any
set-off or counterclaim.
22.4 Where a sum is to be paid hereunder to the Agent for account of another
person, the Agent shall not be obliged to make the same available to that
other person until it has been able to establish to its satisfaction that
it has actually received such sum, but if it does so and it proves to be
the case that it had not actually received such sum, then the person to
whom such sum was so made available shall on request refund the same to the
Agent together with an amount sufficient to indemnify the Agent against any
cost or loss it may have suffered or incurred by reason of its having paid
out such sum prior to its having received such sum.
23. SET-OFF AND NETTING OF PAYMENTS
23.1 The Borrower authorises each Lender upon the occurrence of an Event of
Default and consequent acceleration of the obligations of the Borrower
hereunder pursuant to Clause 19 hereof to apply any credit balance to which
the Borrower is entitled on any account of the Borrower with that Lender in
satisfaction of any sum due and payable from the Borrower to such Lender
hereunder but unpaid; for this purpose, each Lender is authorised to
purchase with the moneys standing to the credit of any such account such
other currencies as may be necessary to effect such application. Such
Lender shall notify the Borrower of any such application. No Lender shall
be obliged to exercise any right given to it by this Clause 23.
23.2 If, on any occasion, the Agent receives a payment for the account of the
Borrower pursuant to Clause 22.1, the Agent may make available such payment
to the Borrower by application:
(i) first, in or towards payment the same day of any amount then due from
the Borrower hereunder to the person from whom the amount was so
received; and
(ii) secondly, in or towards payment the same day to the account of the
Borrower with such Lender in London as the Borrower shall have
previously notified to the Agent for this purpose.
24. REDISTRIBUTION OF PAYMENTS
24.1 Subject to Clause 24.2, if, at any time, the proportion which any Bank (a
"RECOVERING BANK") has received or recovered (whether by payment, the
exercise of a right of set-off or combination
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of accounts or otherwise) in respect of its portion of any payment (a
"RELEVANT PAYMENT") to be made under this Agreement by the Borrower for
account of such Recovering Bank and one or more other Banks is greater
(the portion of such receipt or recovery giving rise to such excess
proportion being herein called an "EXCESS AMOUNT") than the proportion
thereof so received or recovered by the Bank or Banks so receiving or
recovering the smallest proportion thereof, then:
(i) such Recovering Bank shall pay to the Agent an amount equal to such
excess amount;
(ii) there shall thereupon fall due from the Borrower to such Recovering
Bank an amount equal to the amount paid out by such Recovering Bank
pursuant to paragraph (i) above, the amount so due being, for the
purposes hereof, treated as if it were an unpaid part of such
Recovering Bank's portion of such relevant payment; and
(iii) the Agent shall treat the amount received by it from such
Recovering Bank pursuant to paragraph (i) above as if such amount
had been received by it from the Borrower in respect of such
relevant payment and shall pay the same to the persons entitled
thereto (including such Recovering Bank) pro rata to their
respective entitlements thereto.
24.2 If any Bank shall commence any action or proceeding in any court to enforce
its rights hereunder and, as a result thereof or in connection therewith,
shall receive any excess amount (as defined in Clause 24.1), then such Bank
shall not be required to share any portion of such excess amount with any
Bank which has the legal right to, but does not, join in such action or
proceeding or commence and diligently prosecute a separate action or
proceeding to enforce its rights in another court.
25. FEES
The Borrower shall pay to the Agent for account of each Bank a Commitment
Fee (the "COMMITMENT FEE") on the amount of such Bank's Available
Commitment (less, if such Bank is also the Overdraft Provider, the
Overdraft Provider's outstanding Short-Term Advances on such day) from day
to day during the period beginning on 24th February, 1995 and ending on the
Termination Date at the applicable Commitment Fee Percentage per annum and
payable in arrear on and to (but excluding) each 31st March, 30th June,
30th September and 31st December falling during the term of this Agreement
and on the Termination Date. For this purpose, Utilisations are taken at
their Original Sterling Amount.
26. COSTS AND EXPENSES
26.1 Except as otherwise agreed in writing by the Agents, Arrangers and the
Borrower, whether or not the Closing Date shall occur, the Borrower shall,
on demand of an Agent or an Arranger, reimburse such Agent or, as the case
may be, such Arranger to the extent not recovered under any other Loan
Documents (as defined in the Credit Agreement) or other Finance Documents,
for:
(i) all reasonable costs of furnishing all opinions required hereunder by
counsel for the Borrower (including, without limitation, any opinions
reasonably requested by such Agent as to any legal matters arising
hereunder or under any Security Document) and of the Borrower's
compliance with all agreements and conditions contained herein or in
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any Finance Document on its part to be performed or complied with
together with any VAT thereon;
(ii) the reasonable fees, expenses and disbursements of counsel to such
Agent together with any VAT thereon properly incurred in connection
with the negotiation, preparation, execution and administration of
this Agreement and the Finance Documents, each Advance made, and each
Letter of Credit and Contract Guarantee issued, thereunder and any
amendments and waivers thereto;
(iii) all the actual costs and expenses of creating and perfecting any
encumbrance in favour of the Lenders contemplated by the Finance
Documents including filing and recording fees and expenses, stamp
duty or similar taxes, reasonable fees and expenses of legal
counsel for providing such legal opinions as such Agent may
reasonably request in connection therewith and reasonably fees
and expenses of legal counsel to such Agent;
(iv) all costs and expenses (including reasonable legal fees) incurred by
such Agent in connection with the preservation and enforcement of any
of the rights of such Agent and the Lenders in connection with any
work-out or collection of any of the obligations of the Borrower
under this Agreement and the Finance Documents or enforcement of this
Agreement or the Finance Documents;
(v) all reasonable accountable out-of-pocket expenses (including travel
and due diligence expenses) incurred by such Arranger in connection
with the negotiation, closing and syndication of the Finance
Documents Provided that the amount of all such out-of-pocket
expenses incurred by such Arranger (and the administrative agent
under the Credit Agreement and all other Loan Documents (as defined
in the Credit Agreement)) shall not in the aggregate exceed
US$50,000; and
(vi) all other actual and reasonable out-of-pocket expenses incurred by
the Agent in connection with the making of Advances and issuance of
Letters of Credit and Contract Guarantees hereunder.
26.2 If the Borrower fails to perform any of its obligations under Clause 26.1,
each Bank shall, in its Proportion, indemnify each Agent and Arranger
against any loss incurred by it as a result of such failure and the
Borrower shall forthwith reimburse each Bank for any payment made by it
pursuant to Clause 26.1.
26.3 In addition to the provisions of Clause 26.1 and whether or not the Closing
Date shall occur, the Borrower agrees to indemnify, pay and hold each Agent
and each Lender, and their respective officers, directors, employees,
agents, and affiliates (collectively called the "INDEMNITEES") harmless
from and against, any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, and out-of-pocket
costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, reasonable legal fees) in connection with
any investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Indemnitee shall be designated a party
thereto, that may be imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of this Agreement or
any Finance Document, or the use or intended use of the proceeds thereof or
in any way relating to or resulting from the actions or assets of the
Borrower or any of their respective subsidiaries (the "INDEMNIFIED
LIABILITIES") Provided that the Borrower shall have no obligation under
this Clause 26.3 to any Indemnitee arising from
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27
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the fraud, gross negligence, wilful misconduct or wilful breach of this
Agreement or any Finance Document by any party hereto and its related
Indemnitees.
27. THE AGENTS, THE ARRANGERS AND THE LENDERS
27.1 The Arrangers and each Lender hereby appoints the Agent to act as its agent
in connection with this Agreement and the Finance Documents and the
Collateral Agent to act as its agent in connection with the Collateral
Documents and authorises each of the Agent and the Collateral Agent to
exercise such rights, powers, authorities and discretions as are
specifically delegated to the Agent by the terms hereof together with all
such rights, powers, authorities and discretions as are reasonably
incidental thereto.
27.2 Each of the Agent and the Collateral Agent may:
(i) assume that:
(a) any representation made by any Obligor in connection with any
Finance Document is true;
(b) no Event of Default has occurred;
(c) no Obligor is in breach of or default under its obligations
under any Finance Document; and
(d) any right, power, authority or discretion vested in a Finance
Document upon the Requisite Lenders, the Lenders or any other
person or group of persons has not been exercised,
unless it has, in its capacity as agent for the Lenders hereunder,
received notice to the contrary from any other party hereto;
(ii) assume that the Facility Office of each Lender is that identified
with its signature below (or, in the case of a Transferee, at the
end of the Transfer Certificate to which it is a party as Transferee,
or in the case of an Overdraft Facility Transferee, at the end of the
Overdraft Provider Transfer Certificate to which it is a party as the
Overdraft Facility Transferee) until it has received from such Lender
a notice designating some other office of such Lender to replace its
Facility Office and act upon any such notice until the same is
superseded by a further such notice;
(iii) engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services
may to it seem necessary, expedient or desirable and rely upon
any advice so obtained;
(iv) rely as to any matters of fact which might reasonably be expected to
be within the knowledge of the Borrower upon a certificate signed by
or on behalf of the Borrower;
(v) rely upon any communication or document believed by it to be genuine;
(vi) refrain from exercising any right, power or discretion vested in it
as Agent under any Finance Document unless and until instructed by
the Requisite Lenders as to whether
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28
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or not such right, power or discretion is to be exercised and,
if it is to be exercised, as to the manner in which it should be
exercised; and
(vii) refrain from acting in accordance with any instructions of the
Requisite Lenders to begin any legal action or proceeding arising
out of or in connection with this Agreement or any other Finance
Document until it shall have received such security as it may
require (whether by way of payment in advance or otherwise) for
all costs, claims, losses, expenses (including, without
limitation, legal fees) and liabilities together with any VAT
thereon which it will or may expend or incur in complying with
such instructions.
27.3 Each of the Agent and the Collateral Agent shall:
(i) promptly inform each Lender of the contents of any notice or document
received by it in its capacity as Agent or, as the case may be,
Collateral Agent from an Obligor under a Finance Document;
(ii) promptly notify each Lender of the occurrence of any Event of Default
or any default by an Obligor in the due performance of or compliance
with its obligations under a Finance Document of which it has notice
from any other party hereto;
(iii) save as otherwise provided herein, act as agent hereunder in
accordance with any instructions given to it by the Requisite
Lenders, which instructions shall be binding on all of the
Lenders; and
(iv) if so instructed by the Requisite Lenders, refrain from exercising
any right, power or discretion vested in it as agent hereunder.
27.4 Notwithstanding anything to the contrary expressed or implied herein,
neither the Agent, the Collateral Agent nor any Arranger shall:
(i) be bound to enquire as to:
(a) whether or not any representation made by an Obligor in
connection with a Finance Document is true;
(b) the occurrence or otherwise of any Event of Default;
(c) the performance by each Obligor of its obligations under each
Finance Document to which it is a party; or
(d) any breach of or default by an Obligor of or under its
obligations under any Finance Document;
(ii) be bound to account to any Lender for any sum or the profit element
of any sum received by it for its own account;
(iii) be bound to disclose to any other person any information relating
to the Borrower if such disclosure would or might in its opinion
constitute a breach of any law or regulation or be otherwise
actionable at the suit of any person; or
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(iv) be under any obligations other than those for which express provision
is made herein.
27.5 Each Lender shall, in its Proportion, from time to time on demand by the
Agent or as the case may be, the Collateral Agent, indemnify the Agent or
as the case may be, the Collateral Agent against any and all costs,
claims, losses, expenses (including, without limitation, legal fees) and
liabilities together with any VAT thereon which it may incur, otherwise
than by reason of its own gross negligence or wilful misconduct, in
acting in its capacity as agent hereunder.
27.6 The Agent, the Collateral Agent and the Arrangers do not accept any
responsibility for the accuracy and/or completeness of any information
supplied by the Borrower in connection herewith or for the legality,
validity, effectiveness, adequacy or enforceability of this Agreement or
any other Finance Document and the Agent, the Collateral Agent, and the
Arrangers shall not be under any liability as a result of taking or
omitting to take any action in relation to this Agreement or any other
Finance Document, save in the case of fraud, gross negligence or wilful
misconduct.
27.7 Each of the Lenders agrees that it will not assert or seek to assert
against any director, officer or employee of the Agent, the Collateral
Agent or any Arranger any claim it might have against any of them in
respect of the matters referred to in Clause 27.6.
27.8 The Agent, the Collateral Agent and each of the Arrangers may accept
deposits from, lend money to and generally engage in any kind of banking
or other business with the Borrower.
27.9 Each of the Agent and the Collateral Agent may resign its appointment
hereunder at any time without assigning any reason therefor by giving not
less than thirty days' prior written notice to that effect to each of the
other parties hereto and by appointing any of its affiliates in its stead,
such appointment to take effect from the date of resignation of the
resigning agent.
27.10 If a successor to the Agent or the Collateral Agent is appointed under
the provisions of Clause 27.9, then (i) the retiring Agent shall be
discharged from any further obligation hereunder but shall remain
entitled to the benefit of the provisions of this Clause 27 and (ii)
its successor and each of the other parties hereto shall have the same
rights and obligations amongst themselves as they would have had if
such successor had been a party hereto.
27.11 It is understood and agreed by each Lender that it has itself been,
and will continue to be, solely responsible for making its own independent
appraisal of and investigations into the financial condition,
creditworthiness, condition, affairs, status and nature of the Borrower
and, accordingly, each Lender warrants to the Agent, the Collateral Agent
and the Arrangers that it has not relied on and will not hereafter rely on
the Agent, the Collateral Agent and the Arrangers or any one of them:
(i) to check or enquire on its behalf into the adequacy, accuracy or
completeness of any information provided by the Borrower in connection
with any Finance Document or the transactions therein contemplated
(whether or not such information has been or is hereafter circulated
to such Lender by the Agent, the Collateral Agent and the Arrangers or
any one of them): or
(ii) to assess or keep under review on its behalf the financial condition,
creditworthiness, condition, affairs, status or nature of the
Borrower.
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30
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27.12 In acting as agent, collateral agent and/or arrangers for the Lenders,
the agency division of each of the Agent, the Collateral Agent and each
Arranger shall be treated as a separate entity from any other of its
divisions or departments and, notwithstanding the foregoing provisions of
this Clause 27, in the event that the Agent, the Collateral Agent or, as
the case may be, any Arranger should act for the Borrower in any capacity
in relation to any other matter, any information given by the Borrower to
the Agent, the Collateral Agent or, as the case may be, such Arranger in
such other capacity may be treated as confidential by the Agent, the
Collateral Agent or, as the case may be, such Arranger.
28. BENEFIT OF AGREEMENT
This Agreement shall be binding upon and ensure to the benefit of each
party hereto and its or any subsequent successors, Transferees, Overdraft
Facility Transfees and permitted assigns.
29. ASSIGNMENTS AND TRANSFERS BY THE BORROWER
The Borrower shall not be entitled to assign or transfer all or any of its
rights, benefits and obligations hereunder.
30. ASSIGNMENTS AND TRANSFERS BY BANKS
30.1 Any Bank may, at any time, assign all or any of its rights and benefits
hereunder, sell participations in, or transfer in accordance with Clause
30.3 but not otherwise) all or any of its rights, benefits and obligations
hereunder to any person Provided that:
(i) no such assignment or transfer may be made:
(a) unless the Bank also transfers or assigns to the same person a
pro rata share of its rights, benefits and obligations (if any)
under the Credit Agreement and the Swiss Facility;
(b) without the prior written consent of the Borrower, the Fronting
Bank, the Overdraft Provider and the Agent, such consent not to
be unreasonably withheld or delayed;
(c) otherwise than to a Qualifying Lender; and
(d) if the result thereof, at the time of such transfer or
assignment or immediately thereafter, would be that the Borrower
would be liable to pay an additional amount or amounts pursuant
to Clauses 14 or 15 which additional amount or amounts would not
have been payable had no such transfer or assignment occurred
unless such Transferee or assignee agrees to waive its rights
to receive such additional amount or amounts; and
(ii) no such participation may be made unless:
(a) the relevant Bank remains the lender of record hereunder and the
proposed participant does not become the lender of record
hereunder;
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31
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(b) the relevant Bank's obligations hereunder shall remain unchanged
and it shall remain solely responsible for the performance
thereof;
(c) all parties hereto shall be entitled to deal solely with the
relevant Bank in connection with its Commitment and other rights
and obligations of the relevant Bank under the Finance
Documents;
(d) such participant is a Qualifying Lender:
(e) such Bank shall be solely responsible for any withholding taxes
or filing or reporting requirements relating to such
participation and shall hold harmless the Borrower and the Agent
against the same; and
(f) any such participant which is not an affiliate of the relevant
Bank shall not be entitled to require the relevant Bank to take
or omit to take any action under any Finance Document except
action directly affecting the extension of the "Termination
Date" hereunder or the reduction of the principal amount or the
decrease in the rate of interest payable hereunder or any fees
related thereto.
30.2 If any Bank assigns all or any of its rights and benefits hereunder in
accordance with Clause 30.1, then, unless and until the assignee has agreed
with the Agent, the Arrangers and the other Banks that it shall be under
the same obligations towards each of them as it would have been under if it
had been an original party hereto as a Bank, the Agent, the Arrangers and
the other Banks shall not be obliged to recognise such assignee as having
the rights against each of them which it would have had if it had been such
a party hereto.
30.3 If any Bank wishes to transfer all or any of its rights, benefits and/or
obligations hereunder as contemplated in Clause 30.1, then such transfer
shall be effected by the delivery to the Borrower and the Agent of a duly
completed and duly executed Transfer Certificate in which event, on the
later of the Transfer Date specified in such Transfer Certificate and the
fifth business day after (or such earlier business day endorsed by the
Agent on such Transfer Certificate falling on or after) the date of
delivery of such Transfer Certificate to the Agent:
(i) to the extent that in such Transfer Certificate the Bank party
thereto seeks to transfer its rights, benefits and obligations
hereunder, the Borrower and such Bank shall be released from
further obligations towards one another hereunder and their
respective rights against one another shall be cancelled (such
rights, benefits and obligations being referred to in this Clause
30.3 as "discharged rights and obligations");
(ii) the Borrower and the Transferee party thereto shall assume
obligations towards one another and/or acquire rights against one
another which differ from such discharged rights and obligations
only insofar as the Borrower and such Transferee have assumed and/or
acquired the same in place of the Borrower and such Bank;
(iii) the Agent, the Arrangers, such Transferee and the other Banks
shall acquire the same rights and benefits and assume the same
obligations between themselves as they would have acquired and
assumed had such Transferee been an original party hereto as a
Bank with the rights, benefits and/or obligations acquired or
assumed by it as a result of such transfer; and
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(iv) to the extent that in such Transfer Certificate the Bank party thereto
seeks to transfer its Commitment, the Transferee shall replace such
Bank under the terms of any relevant Letter of Credit or Contract
Guarantee.
30.4 On the date upon which a transfer takes effect pursuant to Clause 30.3, the
Transferee in respect of such transfer shall pay to the Agent for its own
account a transfer fee of L500.
30.5 The Borrower may, at any time and from time to time, upon notice to the
Agent, request that a different Lender specified by the Borrower be
appointed as the Overdraft Provider. Promptly upon such other Lender
agreeing to such request and repayment of all outstanding Short-Term
Advances together with accrued interest thereon to the existing Overdraft
Provider, the existing Overdraft Provider shall transfer to such Lender all
(but not part) of its rights, benefits and obligations hereunder as the
Overdraft Provider.
Any transfer contemplated by this Clause 30.5 shall be effected by the
delivery to the Borrower and the Agent of a duly completed and duly
executed Overdraft Provider Transfer Certificate in which event, on the
later of the Transfer Date specified in such certificate and the fifth
business day after (or such earlier business day endorsed by the Agent on
such certificate falling on or after) the date of delivery of such
certificate to the Agent:
(i) the Borrower and the Overdraft Provider shall be released from
further obligations towards one another hereunder and their
respective rights against one another shall be cancelled;
(ii) the Borrower and the Overdraft Facility Transferee shall acquire the
same rights and benefits and assume the same obligations towards one
another as they would have acquired and assumed had the Overdraft
Facility Transferee been an original party hereto as the Overdraft
Provider; and
(iii) the Agents, the Arrangers, the Overdraft Facility Transferee and
the other parties hereto shall acquire the same rights and
benefits and assume the same obligations between themselves as
they would have acquired and assumed had the Overdraft Facility
Transferee been an original party hereto as the Overdraft
Provider with the rights, benefits and/or obligations acquired or
assumed by it as a result of such transfer.
31. DISCLOSURE OF INFORMATION
Each Lender shall take normal and reasonable precautions to maintain the
confidentiality of all information obtained pursuant to the requirements of
any Finance Document which has been identified as such by the Borrower
(including, without limitation, the reports delivered pursuant to the Third
Schedule to the Original Agreement) but may, in any event, make disclosures
reasonably required by any bona fide assignee, Transferee, Overdraft
Facility Transferee or participant (or prospective assignee, Transferee or
participant) in connection with the contemplated assignment or transfer of
any of its rights and obligations thereunder Provided that (a) such
assignee, Transferee, Overdraft Facility Transferee, participant or person
agrees to comply with the provisions of this Clause 31, (b) such
prospective assignee, Transferee, Overdraft Facility Transferee or
participant shall have executed a confidentiality agreement substantially
in the form of the Exhibit, and (c) no Lender shall be obliged or required
to return any written information or other materials furnished by the
Borrower in connection with any
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33
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Finance Document. Notwithstanding the foregoing, the Agents and/or any
Lender shall be entitled to disclose any such information:
(i) if required to do so by an order of a court of a competent
jurisdiction whether in pursuance of any procedure for discovering
documents or otherwise; or
(ii) if required by any law or regulation having the force of law; or
(iii) pursuant to any requirement or request of any fiscal, monetary,
tax, governmental or other competent authority; or
(iv) to its auditors, legal or other professional advisors; or
(v) which is in the public domain,
and unless specifically prohibited by applicable law or court order, such
Lender shall notify the Borrower of any disclosure pursuant to paragraphs
(i), (ii) and (iii).
32. CALCULATIONS AND EVIDENCE OF DEBT
32.1 Interest and Commitment Fee shall accrue from day to day and shall be
calculated on the basis of a year of 365 days or (in the case of interest
payable on an amount denominated in an Optional Currency) 360 days and the
actual number of days elapsed.
32.2 Letter of Credit and Contract Guarantee commission in respect of any Letter
of Credit or Contract Guarantee, and any period of the Term thereof
determined pursuant to Clause 9, shall be calculated on the basis of a year
of 365 days or (in the case of a Letter of Credit or Contract Guarantee
denominated in an Optional Currency) 360 days and the actual number of days
in such period (or, in any case where market practice differs, in
accordance with market practice).
32.3 If on any occasion a Reference Bank or Bank fails to supply the Agent with
a quotation required of it under the foregoing provisions of this
Agreement, the rate for which such quotation was required shall be
determined from those quotations which are supplied to the Agent.
32.4 Each Lender shall maintain in accordance with its usual practice accounts
evidencing the amounts from time to time lent by and owing to it hereunder.
32.5 The Agent shall maintain on its books a control account or accounts in
which shall be recorded (i) the amount of any Advance made or arising
hereunder (and the name of the Lender to which such sum relates) and the
face amount of any Letter of Credit issued or Contract Guarantee (and each
Lender's share therein), (ii) the amount of all principal, interest and
other sums due or to become due from the Borrower to any of the Lenders
hereunder and each Lender's share therein and (iii) the amount of any sum
received or recovered by the Agent hereunder and each Lender's share
therein.
32.6 In any legal action or proceeding arising out of or in connection with this
Agreement, the entries made in the accounts maintained pursuant to Clauses
32.4 and 32.5 shall in the absence of manifest error be conclusive evidence
of the existence and amounts of the obligations of the Borrower therein
recorded.
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32.7 A certificate of a Lender as to (i) the amount by which a sum payable to it
hereunder is to be increased under Clause 14 or (ii) the amount for the
time being required to indemnify it against any such cost, payment or
liability as is mentioned in Clause 15 shall, in the absence of manifest
error, be conclusive for the purposes of this Agreement.
32.8 Each Lender hereby represents that as at 24th February, 1995 (i) its
participation as a Lender hereunder and extension of credit in respect
hereof will not require registration or qualification under any applicable
securities laws nor is it illegal (as referred to in Clause 16), and (ii)
it is a Qualifying Lender.
33. REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of the
Agent, the Arrangers and the Lenders or any of them, any right or remedy
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy prevent any further or other
exercise thereof or the exercise of any other right or remedy. The rights
and remedies herein provided are cumulative and not exclusive of any rights
or remedies provided by law.
34. PARTIAL INVALIDITY
If, at any time, any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions hereof nor
the legality, validity or enforceability of such provision under the law of
any other jurisdiction shall in any way be affected or impaired thereby.
35. NOTICES
35.1 Each communication to be made hereunder shall, unless otherwise stated, be
made in writing by telex, telefax or letter.
35.2 Any communication or document (unless made by telefax) to be made or
delivered by one person to another pursuant to this Agreement shall (unless
that other person has by fifteen days written notice to the Agent specified
another address) be made or delivered to that other person at the address
identified with its signature below (or, in the case of a Transferee, at
the end of the Transfer Certificate to which it is a party as Transferee,
or in the case of an Overdraft Facility Transferee, at the end of the
Overdraft Provider Transfer Certificate to which it is a party of the
Overdraft Facility Transferee) and shall be deemed to have been made or
delivered when despatched and the appropriate answerback received (in the
case of any communication made by telex) or (in the case of any
communication made by letter) when left at that address or (as the case may
be) ten days after being deposited in the post postage prepaid in an
envelope addressed to it at that address Provided that any communication or
document to be made or delivered to the Agent shall be effective only when
received by the Agent and then only if the same is expressly marked for the
attention of the department or officer identified with the Agent's
signature below (or such other department or officer as the Agent shall
from time to time specify for this purpose).
35.3 Where any provision of this Agreement specifically contemplates telephone
or telefax communication made by one person to another, such communication
shall be made to that other person at the relevant telephone number
specified by it from time to time for the purpose and shall be deemed to
have been received when made (in the case of any communication by
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35
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telephone) or when transmission has been completed (in the case of any
telecommunication by telefax). Each such telefax communication, if made to
the Agent by the Borrower shall be signed by the person or persons
authorised by the Borrower in the certificate delivered pursuant to the
Third Schedule of the Original Agreement and shall be expressed to be for
the attention of the department or officer whose name has been notified for
the time being for that purpose by the Agent to the Borrower.
35.4 Each communication and document made or delivered by one party to another
pursuant to this Agreement shall be in the English language or accompanied
by a translation thereof into English certified (by an officer of the
person making or delivering the same) as being a true and accurate
translation thereof.
36. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts each of which, when
executed and delivered, shall constitute an original, but all the
counterparts shall together constitute but one and the same instrument.
37. AMENDMENTS
To the extent not otherwise expressly provided in any Finance Document, no
amendment, modification, termination or waiver of any provision of any
Finance Document or consent to any departure by a Borrower therefrom, shall
in any event be effective without the written concurrence of the Requisite
Lenders and the Borrower; except that any amendment, modification,
termination, or waiver that (i) changes the amount of the Commitments or
the principal amount of the Advances or extends the scheduled maturity
thereof or changes the currency of any payment hereunder; (ii) changes any
Proportion or the definition of "Requisite Lenders"; (iii) extends the
dates on which interest is or fees are payable hereunder, or the maximum
duration of interest periods; or (iv) reduces any interest rates payable on
the Advances or any fees (other than administrative fees) payable hereunder
or under any Finance Document, each shall be effective only if evidenced by
a writing signed by or on behalf of all Lenders under this Agreement and
the Borrower; Provided, however, that (A) the First Schedule and the
Commitments and Proportions shall be amended from time to time to give
effect to the Commitments and Proportions of each new Bank that becomes a
party to this Agreement at the time such Bank becomes a Bank and (B) any
amendment, modification or waiver that changes any administrative fees, or
the times at which such fees are payable, hereunder shall be effective only
if evidenced by a writing signed by or on behalf of the Borrower and each
Lender affected thereby. Any amendment, modification, termination or waiver
of any of the conditions precedent to funding an Advance shall be effective
only if evidenced by a writing signed by or on behalf of the Requisite
Lenders and the Borrower. No amendment, modification, termination or waiver
of any provision of the agency provisions of this Agreement shall be
effective without the written concurrence of the Agents, the Requisite
Lenders and the Borrower. No amendment, modification, termination, or
waiver of any Finance Document that releases any guarantor or releases any
collateral under the Debenture not otherwise permitted under the Credit
Agreement or the Debenture shall be effective unless evidenced by a writing
signed by or on behalf of Banks having 80 per cent. or more of the combined
aggregate amount of the Commitments under this Agreement or, in the case of
the Commitment under this Agreement that has been terminated, the
Outstandings, if any, made hereunder. The Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of such Lender. Any waiver
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or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on the
Borrower shall entitle the Borrower to any other or further notice or
demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent with respect to this Agreement effected in
accordance with this Clause 37 shall be binding upon the Borrower.
38. GOVERNING LAW
This Agreement shall be governed by, and shall be construed in accordance
with, English law.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
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THE FIRST SCHEDULE
THE BANKS
BANK COMMITMENT (L)
Barclays Bank PLC 878,500.00
NationsBank, N.A. 2,073,887.50
Commerzbank AG 627,500.00
Deutsche Bank AG 627,500.00
The First National Bank of Chicago 627,500.00
Societe Generale 618,087.50
ABN AMRO Bank, N.V. 411,012.50
Credit Lyonnais, S.A. 411,012.50
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THE SECOND SCHEDULE
Form of Transfer Certificate
To: Barclays Bank PLC
Pelikan Scotland Limited
TRANSFER CERTIFICATE
relating to the amended and restated agreement dated 15th October, 1996 (the
"FACILITY AGREEMENT") whereby a revolving credit facility was made available to
Pelikan Scotland Limited as borrower by a group of banks on whose behalf
Barclays Bank PLC acted as agent in connection therewith.
1. Terms defined in the Facility Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Bank and Transferee
are defined in the schedule hereto.
2. The Bank (i) confirms that the details in the schedule hereto under the
heading "Bank's Commitment" or "Advance(s)" accurately summarises its
Commitment and/or, as the case may be, the Term and Repayment Date of one
or more existing Advances made by it and (ii) requests the Transferee to
accept and procure the transfer to the Transferee of the portion specified
in the schedule hereto of, as the case may be, its Commitment and/or such
Advance by counter-signing and delivering this Transfer Certificate to the
Agent at its address for the service of notices specified in the Facility
Agreement.
3. The Transferee hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the
purposes of Clause 30.3 of the Facility Agreement so as to take effect in
accordance with the terms thereof on the Transfer Date or on such later
date as may be determined in accordance with the terms thereof.
4. The Transferee confirms that it has received a copy of the Facility
Agreement together with such other information as it has required in
connection with this transaction and that it has not relied and will not
hereafter rely on the Bank to check or enquire on its behalf into the
legality, validity, effectiveness, adequacy, accuracy or completeness of
any such information and further agrees that it has not relied and will not
rely on the Bank to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature of the
Borrower.
5. The Transferee hereby undertakes with the Borrower, the Bank and each of
the other parties to the Facility Agreement that it will perform in
accordance with their terms all those obligations which by the terms of the
Facility Agreement will be assumed by it after delivery of this Transfer
Certificate to the Agent and satisfaction of the conditions (if any)
subject to which this Transfer Certificate is expressed to take effect. The
Transferee hereby makes the representations made by each Bank in Clause
32.8 of the Facility Agreement as though made on and as of the date hereof.
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<PAGE>
39
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6. The Bank makes no representation or warranty and assumes no responsibility
with respect to the legality, validity, effectiveness, adequacy or
enforceability of the Facility Agreement or any document relating thereto
and assumes no responsibility for the financial condition of the Borrower
or for the performance and observance by the Borrower of any of its
obligations under the Facility Agreement or any document relating thereto
and any and all such conditions and warranties, whether express or implied
by law or otherwise, are hereby excluded.
7. The Bank hereby gives notice that nothing herein or in the Facility
Agreement (or any document relating thereto) shall oblige the Bank to (i)
accept a re-transfer from the Transferee of the whole or any part of its
rights, benefits and/or obligations under the Facility Agreement
transferred pursuant hereto or (ii) support any losses directly or
indirectly sustained or incurred by the Transferee for any reason
whatsoever including, without limitation, the non-performance by the
Borrower or any other party to the Facility Agreement (or any document
relating thereto) of its obligations under any such document. The
Transferee hereby acknowledges the absence of any such obligation as is
referred to in (i) or (ii) above.
8. This Transfer Certificate and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with English
law.
THE SCHEDULE
1. Bank:
2. Transferee:
3. Transfer Date:
4. Commitment:
Bank's Commitment Portion Transferred
5. Advance(s):
Term and Repayment Date Portion Transferred
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
ADMINISTRATIVE DETAILS OF TRANSFEREE
Address:
Contact Name:
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<PAGE>
40
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Account for Payments:
Telex:
Telefax:
Telephone:
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<PAGE>
41
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THE THIRD SCHEDULE
CONDITIONS PRECEDENT
Each of the following:
1. A certificate of the secretary or a director of the Borrower certifying
that the copy of its constitutive documents delivered to the Agent in
connection with the Original Agreement (as amended, where applicable, by
any variation thereof which has itself been delivered to the Agent and
certified correct, complete and in full force and effect) remains correct,
complete and in full force and effect.
2. A copy of a resolution of the Board of Directors of the Borrower:
(a) approving the terms of this Agreement and all other documents to be
executed by the Borrower in connection herewith; and
(b) authorising a specified person or persons:
(i) to execute this Agreement and all other documents to be executed
by it hereunder or thereunder in connection herewith or
therewith; and
(ii) (unless previously so appointed and unchanged) to give all
notices, requests, instructions, certificates and other documents
to the Agent in connection with each of the Finance Documents to
which it is a party.
3. A certificate of a director of the Borrower certifying that the utilisation
of the Facility in full would not cause any borrowing or other limit
binding on it to be exceeded.
4. A copy of the signature of each of the persons authorised by the
resolutions referred to in paragraph 2(b) above.
5. A certificate of a director of the Borrower confirming that no Event of
Default or Potential Event of Default will be in existence immediately
after the transactions due to take place on the Closing Date (as defined in
the Credit Agreement) have taken place.
6. A legal opinion relating to this Supplemental Agreement from Allen & Overy,
English legal advisers to the Agent, in form and substance satisfactory to
the Agent.
Each copy document delivered under this part of this schedule by the Borrower
shall be certified by a director or the secretary of the Borrower, as at the
date hereof (or such other date as the Agent may agree), to be correct, complete
and in full force and effect as at such date.
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<PAGE>
42
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THE FOURTH SCHEDULE
UTILISATION REQUEST
From: Pelikan Scotland Limited
To: [Barclays Bank PLC]/[Overdraft Provider]
Dated:
Dear Sirs,
1. We refer to the amended and restated agreement dated 15th October, 1996
(the "Facility Agreement") and made between Pelikan Scotland Limited as
borrower, BZW and NationsBanc Capital Markets, Inc. as arrangers, Barclays
Bank PLC as agent, NationsBank of Texas, N.A. as collateral and
documentation agent, Barclays Bank PLC as fronting bank, Barclays Bank PLC
as overdraft provider and the financial institutions named therein as
banks. Terms defined in the Facility Agreement shall have the same meaning
in this notice.
2. We hereby give you notice that, pursuant to the Facility Agreement, we wish
[the Banks/Overdraft Provider to make Advances/the Fronting Bank to issue a
Letter of Credit/Contract Guarantee]* as follows:
(i) Aggregate *[principal/face] amount:
(ii) Utilisation Date:
(iii) Term:
(iv) Currency:
(v) *[Repayment Date/Expiry Date]:
3. *[The proceeds of this Utilisation should be credited to [insert account
details]]/[The Letter of Credit/Contract Guarantee should be issued in
favour of [name of recipient in the form attached and delivered to the
recipient at [address of recipient]].
Yours faithfully
- ------------------------------
for and on behalf of
PELIKAN SCOTLAND LIMITED
* Delete as appropriate
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<PAGE>
43
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THE FIFTH SCHEDULE
TIMETABLES
UTILISATION BY MEANS OR ADVANCES OTHER THAN SHORT-TERM ADVANCES
"D" - Utilisation Date
"Bs" - Banks
"A" - Agent
"( )" - Clause number of Agreement
1. Utilisation Request to A (6.1) D-2 9.30 a.m.
2. A to notify Bs of allocations by (6.4) D-2 10.30 a.m.
3. LIBOR fixing (1.1) D-2 11.00 a.m.
UTILISATION BY MEANS OF SHORT-TERM ADVANCES
"D" - Utilisation Date
"OP" - Overdraft Provider
"( )" - Clause number of Agreement
Utilisation Request to OP (6.1) D 9.30 a.m.
UTILISATION BY MEANS OF LETTERS OF CREDIT
"D" = Utilisation Date
"D-x" = x business days prior to Utilisation Date
"Bs" = Banks
"A" = Agent
"( )" = Clause number of Agreement
1. Utilisation Request to A (6.1) D-3 9.30 a.m.
2. Bs to have agreed identity of D-3 3.00 p.m.
recipient of Letter of Credit (7.2(iii))
3. Where applicable, form of Letter D-3 3.00 p.m.
of Credit/Contract Guarantee to be agreed (7.2(iv))
4. A to notify Bs of allocations (6.4) D 10.00 a.m.
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<PAGE>
44
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5. Letter of Credit/Contract Guarantee to be
issued (7.2) D 3.00 p.m.
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<PAGE>
45
- -------------------------------------------------------------------------------
THE SIXTH SCHEDULE
MANDATORY LIQUID ASSET COSTS RATE FORMULA
The Mandatory Liquid Asset Costs Rate to compensate the Banks for the cost
attributable to an Advance or other sum denominated in sterling for any
period for which such cost is to be computed under this Agreement resulting
from the imposition from time to time by the Bank of England (or other
Governmental authorities or agencies) of a requirement to place
non-interest-bearing deposits with the Bank of England, for the payment of
Special Deposits and the maintenance of secured money with certain financial
institutions (recognised for this purpose by the Bank of England) will be the
rate determined by the Agent (rounded upwards, if necessary, to four decimal
places) on the first day of the relevant period and for the duration of such
period (but in respect of such a period of longer than three months, the
average of the rates (rounded upwards as aforesaid) computed on a three
monthly basis during such period) in accordance with the following formula:
rate = XL+B(L-C)+S(L-D)
---------------
100-(X+S)
Where:
"X" is the amount required to be maintained by Barclays Bank PLC on non-
interest-bearing balances with the Bank of England expressed as a
percentage of eligible liabilities fixed by the Bank of England (or other
Governmental authorities or agencies). For the purpose of this formula,
this percentage will be expressed as a number.
"L" is the average of the offered quotations by the Reference Banks for
sterling deposits for the period for which the formula is being applied in
the London Interbank Market at or about 11.00 a.m. on the day of quotation,
expressed as a number and not as a percentage rate per annum.
"B" is the average level of secured deposits expressed as a percentage of
eligible liabilities which Barclays Bank PLC is required by the Bank of
England to maintain with certain financial institutions (recognised for
this purpose by the Bank of England). For the purpose of this formula this
percentage will be expressed as a number.
"C" is the average of the rates at which certain financial institutions
(recognised for this purpose by the Bank of England) bid for sterling
deposits for the period for which the formula is being applied from the
Reference Banks at or about 11.00 a.m. on the day of quotation, expressed
as a number and not as a percentage rate per annum.
"S" is the amount of Special Deposits required to be maintained by Barclays
Bank PLC expressed as a percentage of eligible liabilities fixed by the
Bank of England (or other Governmental authorities or agencies). For the
purposes of this formula this percentage will be expressed as a number.
"D" is the rate of interest paid by the Bank of England on Special Deposits,
expressed as a number and not as a percentage rate per annum.
In the event of any change in circumstances (including the imposition of
alternative or additional official requirements) which renders the above
formula inapplicable the Agent shall notify the Borrower
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<PAGE>
46
- -------------------------------------------------------------------------------
and the Banks in reasonable detail of the manner (including the basis and
computation) in which the Mandatory Liquid Asset Costs Rate shall be
determined thereafter and, if appropriate, substitute a new formula for that
set out above.
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<PAGE>
47
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THE SEVENTH SCHEDULE
FORM OF OVERDRAFT PROVIDER TRANSFER CERTIFICATE
To: Barclays Bank PLC, as Agent
Pelikan Scotland Limited
OVERDRAFT PROVIDER TRANSFER CERTIFICATE
relating to the amended and restated agreement (the "FACILITY AGREEMENT")
dated 15th October, 1996 whereby a revolving credit facility was made
available to Pelikan Scotland Limited as borrower by a group of banks on
whose behalf Barclays Bank PLC acted as agent in connection therewith.
1. Terms defined in the Facility Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Overdraft Provider and
Overdraft Facility Transferee are defined in the schedule hereto.
2. The Overdraft Provider requests the Overdraft Facility Transferee to
accept and procure the transfer to the Overdraft Facility Transferee the
obligation to make Short-Term Advances pursuant to the Facility Agreement by
counter-signing and delivering this Overdraft Provider Transfer Certificate
to the Agent at its address for the service of notices specified in the
Facility Agreement.
3. The Overdraft Facility Transferee hereby requests the Agent to accept
this Overdraft Provider Transfer Certificate as being delivered to the Agent
pursuant to and for the purposes of Clause 30.5 of the Facility Agreement so
as to take effect in accordance with the terms thereof on the Transfer Date
or on such later date as may be determined in accordance with the terms
thereof.
4. The Overdraft Facility Transferee confirms that it has received a copy of
the Facility Agreement, together with such other information as it has
required in connection with this transaction and that it has not relied and
will not hereafter rely on the Overdraft Provider to check or enquire on its
behalf into the legality, validity, effectiveness, adequacy, accuracy, or
completeness of any such information and further agrees that it has not
relied and will not rely on the Overdraft Provider to assess or keep under
review on its behalf the financial conditions, creditworthiness, condition,
affairs, status or nature of the Borrower.
5. The Overdraft Facility Transferee hereby undertakes with the Borrower,
the Overdraft Provider and each of the other parties to the Facility
Agreement that it will perform in accordance with their terms all the
obligations of the Overdraft Provider under the Facility Agreement after
delivery of this Overdraft Provider Transfer Certificate to the Agent and
satisfaction of the conditions (if any) subject to which this Overdraft
Provider Transfer Certificate is expressed to take effect. The Overdraft
Facility Transferee hereby makes the representations made by the Overdraft
Provider in Clause 32.8 of the Facility Agreement as though made on and as of
the date hereof.
6. The Overdraft Provider makes no representation or warranty and assumes no
responsibility with respect to the legality, validity, effectiveness,
adequacy or enforceability of the Facility Agreement or any document relating
thereto and assumes no responsibility for the financial condition of the
Borrower or for the performance and observance by the Borrower of any of
their respective obligations
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<PAGE>
48
- -------------------------------------------------------------------------------
under the Facility Agreement or any document relating thereto and any and all
such conditions and warranties, whether express or implied by law or
otherwise, are hereby excluded.
7. The Overdraft Provider hereby gives notice that nothing herein or in the
Facility Agreement (or any document relating thereto) shall oblige the
Overdraft provider to (i) accept a re-transfer from the Overdraft Facility
Transferee of the whole or any part of its rights, benefits and/or obligations
under the Facility Agreement transferred pursuant hereto or (ii) support any
losses directly or indirectly sustained or incurred by the Overdraft Facility
Transferee for any reason whatsoever including, without limitation, the
non-performance by the Borrower or any other party to the Facility Agreement
(or any documents relating thereto) of its obligations under any such
document. The Overdraft Facility Transferee hereby acknowledges the absence
of any such obligation as it referred to in (i) or (ii) above.
8. This Overdraft Provider Transfer Certificate and the rights and
obligations of the parties hereunder shall he governed by and construed in
accordance with English law.
THE SCHEDULE
1. Overdraft Provider:
2. Overdraft Facility Transferee:
3. Transfer Date:
[TRANSFEROR OVERDRAFT [TRANSFEREE OVERDRAFT
PROVIDER] PROVIDER]
By: By:
Date: Date:
ADMINISTRATIVE DETAILS OF
OVERDRAFT FACILITY TRANSFEREE
Address: Telex:
Contact Name: Telefax:
Account for Payments: Telephone:
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<PAGE>
49
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SIGNATORIES
THE BORROWER
PELIKAN SCOTLAND LIMITED
By: HANS PAFFHAUSEN
Address: Forchstrasse 100
CH-8132 Egg
Switzerland
Fax: (41-1)9861 394
THE ARRANGERS
BZW
By: PETER YETMAN
Address: Murray House
1 Royal Mint Court
London EC3N 4HH
Fax: 0171 696 2908
NATIONSBANC CAPITAL MARKETS, INC.
By: JOE SIEGAL
Address: 901 Main Street
66th Floor
Dallas, Texas 75202
Fax: (214) 508 2881
THE AGENT
BARCLAYS BANK PLC
By: PETER YETMAN
Address: Murray House
1 Royal Mint Court
London EC3N 4HH
Fax: 0171 696 2908
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<PAGE>
50
- -------------------------------------------------------------------------------
THE COLLATERAL AGENT
NATIONSBANK OF TEXAS, N.A.
By: DAN KILLIAN
Address: 901 Main Street
67th Floor
Dallas, Texas 75202
U.S.A.
Fax: (214) 508 0980
THE DOCUMENTATION AGENT
NATIONSBANK OF TEXAS, N.A.
By: DAN KILLIAN
Address: 901 Main Street
67th Floor
Dallas, Texas 75202
U.S.A.
Fax: (214) 508 0980
THE FRONTING BANK
BARCLAYS BANK PLC
By: PETER YETMAN
Address: Murray House
1 Royal Mint Court
London EC3N 4HH
Fax: 0171 696 2908
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<PAGE>
51
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THE OVERDRAFT PROVIDER
BARCLAYS BANK PLC
By: PETER YETMAN
Address: Murray House
1 Royal Mint Court
London EC3N 4HH
Fax: 0171 696 2908
THE BANKS
BARCLAYS BANK PLC
By: PETER YETMAN
Address: Murray Rouse
1 Royal Mint Court
London EC3N 4RR
Fax: 0171 696 2908
NATIONSBANK, N.A.
By: DAN KILLIAN
Address: 901 Main Street
67th Floor
Dallas, Texas 75202
U.S.A.
Fax: (214) 5084 0980
THE FIRST NATIONAL BANK OF CHICAGO
By: STEPHEN PRICE
Address: Geographical Credit
One First National Plaza, Mail Suite 0364
Chicago, Illinois 60670-0364
Fax: (312) 732 1117
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<PAGE>
52
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COMMERZBANK AG
By: H. YERGEY D. SUTTLES
Address: Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
Fax: (404) 888 6539
DEUTSCHE BANK AG LONDON
By: ALAN RICHARDSON JOHN CAMBELL
Address: 6-8 Bishopsgate
London EC2N 4DA
Fax: (0171) 545 4735
SOCIETE GENERALE
By: MATTHEW FLANIGAN
Address: Trammell Crow Center
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Fax: (214) 979 1104
ABN AMRO BANK, N.V.
By: RONALD MAHLE DAVID ORR
Address: Three Riverway, Suite 1700
Houston, Texas 77056
Fax: 713 629 7533
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<PAGE>
53
- -------------------------------------------------------------------------------
CREDIT LYONNAIS, S.A.
By: GHISLAIN CHABERT
Address: 500 North Akard, Suite 3210
Dallas, Texas 75201
Fax: (214) 220 2323
- -------------------------------------------------------------------------------
<PAGE>
54
- -------------------------------------------------------------------------------
THE EXHIBIT
[FORM OF CONFIDENTIALITY AGREEMENT]
The undersigned, _______________________________________ a prospective
[assignee/Transferee/participant/Overdraft Facility Transferee] to that
certain Revolving Credit Facility Agreement dated as of June 2, 1995 as
amended and restated pursuant to an amendment and restatement agreement dated
15th October, 1996 (such agreement, as so amended and restated and as it may
be amended, amended and restated, supplemented or otherwise modified from
time to time, being the "Credit Agreement"; capitalized terms used herein
without definition shall have the meanings assigned those terms in the Credit
Agreement between Pelikan Scotland Limited as borrower, BZW and NationsBanc
Capital Markets, Inc., as arrangers, Barclays Bank PLC, as agent, NationsBank
of Texas, N.A., as collateral agent, NationsBank of Texas, N.A., as
documentation agent, and the Lenders party thereto, ("Prospective
[assignee/Transferee/participant/Overdraft Facility Transferee]"), hereby
agrees as follows for the benefit of the Borrower:
Prospective [assignee/Transferee/participant/Overdraft Facility Transferee]
agrees that all financial statements, financial projections, operating or
other data, tax returns, reports and other information, that have been or may
be provided to (i) Prospective
[assignee/Transferee/participant/overdraft Facility Transferee], (ii) the
employees and agents of Prospective
[assignee/Transferee/participant/Overdraft Facility Transferee], and/or (iii)
accountants, attorneys or other professionals retained by such parties
whether delivered by either Borrower or otherwise shall be kept strictly
confidential by such recipients, and shall be used solely in connection with
its consideration of
[an assignment/a transfer/a participation/the appointment of a new Overdraft
Provider] in respect of the Credit Agreement; PROVIDED, that Prospective
[assignee/Transferee/participant/Overdraft Facility Transferee] may, in any
event, disclose any such information:
(i) if required to do so by an order of a court of competent jurisdiction
whether in pursuance of any procedure for discovering documents or
otherwise; or
(ii) if required by any law or regulation having the force of law; or
(iii) pursuant to any requirement or request of any fiscal, monetary,
tax, governmental or other competent authority; or
(iv) to its auditors, legal or other professional advisors; or
(v) which is in the public domain,
and unless specifically prohibited by applicable law or court order, the
prospective assignee/Transferee/or participant shall notify the Borrowers of
any disclosure pursuant to paragraphs (i), (ii) and (iii). In no event shall
Prospective [assignee/Transferee/participant/Overdraft Facility Transferee]
be obligated or required to return any materials furnished by either Borrower.
This deed shall be governed by and construed and enforced in accordance with,
the laws of England.
Prospective [assignee/Transferee/participant/Overdraft Facility Transferee]
hereby irrevocably agrees for the benefit of the Borrower that the courts of
England shall have jurisdiction to hear and determine
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<PAGE>
55
- -------------------------------------------------------------------------------
any suit, action or proceeding, and to settle any disputes, which may arise
out of or in connection with this deed and, for such purposes, irrevocably
submits to the jurisdiction of such courts.
Prospective [assignee/Transferee/participant/Overdraft Facility Transferee]
hereby irrevocably waives any objection which it might now or hereafter have
to the courts of England being nominated as the forum to hear and determine
any suit, action or proceeding, and to settle any disputes, which may arise
out of or in connection with this deed and agrees not to claim that any such
court is not a convenient or appropriate forum.
The submission to the jurisdiction of the courts of England shall not (and
shall not be construed so as to) limit the right of the Borrower to take
proceedings against Prospective
[assignee/Transferee/participant/Overdraft Facility Transferee] in any other
court of competent jurisdiction nor shall the taking of proceedings in any
one or more jurisdiction preclude the taking of proceedings in any other
jurisdiction (whether concurrently or not) if and to the extent permitted by
applicable law.
IN WITNESS WHEREOF, this confidentiality agreement has been executed as a
deed by the Prospective
[assignee/Transferee/participant/Overdraft Facility Transferee] delivered on
the date specified below.
, 19
- -------------------------- ----
EXECUTED AND DELIVERED AS A DEED
BY [INSERT NAME IN BLOCK CAPITALS
OF PROSPECTIVE ASSIGNEE/
TRANSFEREE/PARTICIPANT/OVERDRAFT
FACILITY TRANSFEREE]
Name:
----------------------------
Title:
---------------------------
Name:
----------------------------
Title:
---------------------------
- -------------------------------------------------------------------------------
<PAGE>
NU-KOTE HOLDING, INC.
SENIOR MANAGEMENT
STOCK APPRECIATION RIGHTS PLAN
AS AMENDED AND RESTATED
SEPTEMBER 27, 1996
<PAGE>
NU-KOTE HOLDING, INC.
SENIOR MANAGEMENT STOCK APPRECIATION RIGHTS PLAN
1. GENERAL.
(a) The purpose of this Plan is to attract and retain senior executive
officers for Nu-kote Holding, Inc., a Delaware corporation (the "Company"), and
its Subsidiaries and to provide to such persons incentives and rewards for
superior performance.
(b) This Plan shall become effective on June 22, 1995; provided it is
approved by stockholders of the Company prior to the disbursement of any amounts
payable under any Award granted hereunder.
(c) No Awards shall be made under this Plan more than 10 years after its
effective date; PROVIDED, HOWEVER, that this Plan and all Awards made hereunder
prior to such termination date shall remain in effect until such Awards have
been satisfied or terminated in accordance with this Plan and the terms of such
Awards.
2. DEFINITIONS. As used in this Plan:
"Appreciation Right" means a right granted pursuant to Paragraph 4 of this
Plan.
"Appreciation Right Notification" means the notification delivered by the
Company to a Participant embodying the terms of an Appreciation Right granted
hereunder.
"Award" means a grant of an Appreciation Right or Restricted Stock.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as in effect from time to
time.
"Committee" means the committee to which the Board has delegated its
authority to administer this Plan pursuant to Paragraph 10 of this Plan.
"Common Stock" means the Class A Common Stock, par value $.01 per share, of
the Company or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Paragraph 7 of this
Plan.
"Company Security" means any security (as that term is defined in Section
2(1) of the Securities Act of 1933) of the Company other than Common Stock.
"Date of Grant" means the date specified by the Board on which a grant of an
Appreciation Right or a grant or sale of Restricted Stock shall become effective
(which date shall not be earlier than 90 days prior to the date on which the
Board takes action with respect thereto).
"Disability" means total and permanent disability. An individual shall be
considered permanently and totally disabled if he is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months.
An individual shall not be considered to be disabled unless he furnishes proof
of the existence thereof in such form and manner, and at such times, as the
Board may require.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in
effect from time to time.
"Fair Market Value" means the value of any Company Security as determined by
the Board in its sole discretion as of the date of any such determination.
"Grant Price" means the price per share of Common Stock at which an
Appreciation Right is granted.
"Market Value Per Share" means, at any date, the closing sale price of the
Common Stock on that date (or, if there are no sales on that date, the last
preceding date on which there was a sale) in the principal market in which the
Common Stock is traded, or if no market for the Common Stock exists, the price
determined by the Board in its sole discretion at the time of any such
determination.
<PAGE>
"Participant" means a person who is selected by the Board to receive
benefits under this Plan and who is at the time a senior executive officer of
the Company or any of its Subsidiaries, or who has agreed to commence serving in
any such capacity within 90 days of the Date of Grant.
"Performance Objectives" means the objectives, if any, established by the
Board that are to be achieved with respect to an Award granted under this Plan,
which may be described in terms of stock performance, results of operations,
return on equity or assets, or in other terms, and which shall relate to the
Performance Period determined by the Board. The Board may adjust Performance
Objectives if, in the sole judgment of the Board, events or transactions have
occurred which are unrelated to the performance of the Participant and result in
a distortion of the Performance Objectives.
"Performance Period" means, in respect of an Award, a period of time
established by the Board within which the Performance Objectives relating to
such Award are to be achieved.
"Restricted Stock" means shares of Common Stock granted or sold pursuant to
Paragraph 5 of this Plan as to which neither the substantial risk of forfeiture
nor the prohibitions or restrictions on transfer referred to therein has
expired.
"Rule 16b-3" means Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, (or any successor rule to the same effect) as in effect from time to
time.
"Spread" means the excess of the Market Value Per Share on the date when an
Appreciation Right is exercised over the Grant Price provided for in the
Appreciation Right, multiplied by the number of shares of Common Stock in
respect of which the Appreciation Right is exercised.
"Subsidiary" means any corporation in which at the time the Company owns or
controls, directly or indirectly, not less than 50% of the total combined voting
power represented by all classes of stock issued by such corporation.
3. SHARES AVAILABLE UNDER PLAN. Subject to adjustment as provided in
Paragraph 7 of this Plan, (i) the aggregate number of shares of Common Stock and
any other Company Security which may be delivered upon exercise of Appreciation
Rights or granted or sold as Restricted Stock and released from substantial risk
of forfeiture and prohibitions or restrictions on transfer thereof under this
Plan shall not exceed 1,600,000, and (ii) the maximum number of shares of Common
Stock and any other Company Security which may be delivered to any Participant
under this Plan is 800,000. Such shares may be authorized but unissued shares or
treasury shares or a combination of the foregoing. Upon exercise of any
Appreciation Right, there shall be deemed to have been delivered under this Plan
for purposes of this Paragraph 3 the number of shares of Common Stock in respect
of which such Appreciation Right is exercised, regardless of whether such
Appreciation Right is paid in cash, Company Securities or shares of Common
Stock. Subject to the provisions of the preceding sentence, any shares of Common
Stock (i) which are subject to an Appreciation Right that is terminated
unexercised, or forfeited or surrendered, or that expires for any reason, or
(ii) which are granted or sold as Restricted Stock that is forfeited or
surrendered, will again be available for issuance under this Plan.
4. APPRECIATION RIGHTS. The Board may, from time to time and upon such
terms and conditions as it may determine, authorize the granting to any
Participant of Appreciation Rights. An Appreciation Right shall be a right of
the Participant who has been granted such Award to receive from the Company upon
exercise an amount which shall be determined by the Board (whether by reference
to Performance Objectives or otherwise) and shall be expressed as a percentage
(not greater than 100%) of the Spread at the time of exercise. Each grant of an
Appreciation Right may utilize any or all of the authorizations, and shall be
subject to all of the limitations, contained in the following provisions:
(a) Each grant shall state the number of shares of Common Stock in respect
of which the Award is made.
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(b) Each grant shall specify the Grant Price, which shall not be less than
50% of the Market Value Per Share on the Date of Grant.
(c) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Company in (i) cash, (ii) shares of Common
Stock having an aggregate Market Value Per Share equal to the specified
percentage of the Spread (including Restricted Stock), (iii) Company Securities
having an aggregate Fair Market Value equal to the specified percentage of the
Spread, or (iv) any combination thereof, as determined by the Board in its sole
discretion at the time of payment.
(d) Each grant shall specify that the amount payable on exercise of an
Appreciation Right (valuing shares of Common Stock for this purpose at their
Market Value Per Share at the date of exercise and valuing Company Securities
for this purpose at their Fair Market Value at the date of exercise) shall not
exceed a maximum fixed by the Board at the Date of Grant.
(e) Each grant shall specify the required period or periods of continuous
service by the Participant with the Company or any Subsidiary and/or the
Performance Period related to any Performance Objectives specified by the Board
before the Appreciation Right or installments thereof will become exercisable,
and shall provide that no Appreciation Right may be exercised except at a time
when the Spread is positive.
(f) Each grant shall be evidenced by a notification executed on behalf of
the Company by an officer and delivered to and accepted by the Participant
receiving the grant, which notification shall describe the Appreciation Right,
state that the Appreciation Right is subject to all the terms and conditions of
this Plan and contain such other terms and provisions, consistent with this
Plan, as the Board may approve.
5. RESTRICTED STOCK. The Board may also authorize the granting or sale to
Participants of Restricted Stock. Each grant or sale of Restricted Stock may
utilize any or all of the authorizations, and shall be subject to all of the
limitations, contained in the following provisions:
(a) Each grant or sale shall constitute an immediate transfer of the
ownership of shares of Common Stock to the Participant in consideration of the
performance of services, entitling such Participant to voting, dividend and
other ownership rights, but subject to the substantial risk of forfeiture and
prohibitions or restrictions on transfer hereinafter referred to.
(b) Each grant or sale may be made without additional consideration or in
consideration of a payment by the Participant that is less than the Market Value
Per Share at the Date of Grant.
(c) Each grant or sale shall provide that the shares of Restricted Stock
covered by such grant or sale shall be subject, for a period to be determined by
the Board at the Date of Grant, to a "substantial risk of forfeiture" within the
meaning of Section 83 of the Code and the regulations of the Internal Revenue
Service thereunder.
(d) Each grant or sale shall provide that during the period for which a
substantial risk of forfeiture is to continue, the transferability of the
Restricted Stock shall be prohibited or restricted in a manner and to the extent
prescribed by the Board at the Date of Grant (which restrictions may include,
without limiting the generality of the foregoing, rights of repurchase or first
refusal in the Company or provisions subjecting the Restricted Stock to a
continuing substantial risk of forfeiture in the hands of any transferee).
(e) Each grant or sale of Restricted Stock shall be evidenced by an
agreement executed on behalf of the Company by an officer and delivered to and
accepted by the Participant, and shall contain such other terms and provisions,
consistent with this Plan, as the Board may approve.
6. TRANSFERABILITY. No Appreciation Right shall be transferable by a
Participant other than (i) by will or the laws of descent and distribution, (ii)
pursuant to a qualified domestic relations order as defined by the Code or Title
I of ERISA, or the rules or regulations thereunder, (iii) by gift to members of
the Participant's immediate family (i.e., spouse, child, stepchild or
grandchild), or (iv) in trust for the benefit of the Participant or any person
included under (iii) above; PROVIDED that the Participant's beneficiary, the
representative of the Participant's estate, the trustee of any trust, or other
such person acknowledges and
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agrees in writing, in a form reasonably acceptable to the Company, to be bound
by the provisions of the Plan (including the exercise procedures described
therein) and the Appreciation Right Notification covering such Appreciation
Right as if such beneficiary, estate, trust, or other person were the
Participant. Notwithstanding the foregoing, once an Appreciation Right is
transferred, it may not be subsequently transferred by the transferee except by
will or by the laws of descent and distribution.
7. ADJUSTMENTS. The Board may make or provide for such adjustments in the
share amounts specified in Paragraph 3 of this Plan, in the number and type of
shares covered by outstanding Appreciation Rights, and/or in the Grant Price
applicable to such Appreciation Rights, as the Board in its sole discretion,
exercised in good faith, may determine is equitably required to prevent dilution
or enlargement of the rights of Participants that otherwise would result from
any stock dividend, stock split, combination of shares, recapitalization or
other change in the capital structure of the Company, merger, consolidation,
spin-off, reorganization, partial or complete liquidation, issuance of rights or
warrants to purchase securities or any other corporate transaction or event
having an effect similar to any of the foregoing.
8. FRACTIONAL SHARES. The Company shall not be required to issue any
fractional share of Common Stock or of any Company Security pursuant to this
Plan. The Board may provide for the elimination of fractions or for the
settlement of fractions in cash.
9. WITHHOLDING TAXES. To the extent that the Company is required to
withhold Federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Company for such withholding are insufficient, it
shall be a condition to the receipt of such payment or the realization of such
benefit that the Participant or such other person make arrangements satisfactory
to the Company for payment of the balance of such taxes required to be withheld,
which arrangements in the discretion of the Board may include relinquishment of
a portion of such benefit.
10. ADMINISTRATION OF THE PLAN.
(a) This Plan shall be administered by the Board, which may from time to
time delegate all or any part of its authority under this Plan to a committee of
not less than two non-employee directors appointed by the Board, each of whom
shall be a "non-employee director" within the meaning of Rule 16b-3 and an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder (the "Committee"). To the extent of such
delegation, references herein to the "Board" shall include the Committee. A
majority of the Committee shall constitute a quorum, and the action of a
majority of the members of the Committee present at any meeting at which a
quorum is present, or acts unanimously approved in writing, shall be the acts of
the Committee.
(b) The interpretation and construction by the Board of any provision of
this Plan or of any notification, agreement or document evidencing the grant of
an Award and any determination by the Board pursuant to any provision of this
Plan or of any such notification, agreement or document shall be final and
conclusive. No member of the Board or the Committee shall be liable for any such
action or determination made in good faith.
11. AMENDMENTS, ETC.
(a) This Plan may be amended from time to time by the Board, but no such
amendment shall in any manner adversely affect any Award theretofore granted
under this Plan, without the consent of the Participant holding such Award.
(b) The Board may, with the concurrence of the affected Participant, cancel
any Award granted under this Plan. In the event of such cancellation, the Board
may authorize the granting of new Awards (which may or may not cover the same
number of shares which had been the subject of the prior Award) in such manner,
at such price and subject to the same terms, conditions and discretions as would
have been applicable under this Plan had the canceled Awards not been granted.
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(c) In case of termination of employment by reason of death, Disability or
retirement at age 65, or early retirement with the consent of the Board, of a
Participant who holds an Appreciation Right not immediately exercisable in full
or any Restricted Stock as to which the substantial risk of forfeiture and the
prohibitions or restrictions on transfer have not lapsed, the Board may, in its
sole discretion, accelerate the time at which such Appreciation Right may be
exercised or the time at which such substantial risk of forfeiture and
prohibitions or restrictions on transfer will lapse.
(d) This Plan shall not confer upon any Participant any right with respect
to continuance of employment or other service with the Company or any
Subsidiary, nor shall it interfere in any way with any right the Company or any
Subsidiary would otherwise have to terminate such Participant's employment or
other service at any time.
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NU-KOTE HOLDING, INC.
APPRECIATION RIGHT NOTIFICATION
WHEREAS, ________________________ (the "Participant") is a senior executive
officer of Nu-kote Holding, Inc., a Delaware corporation (the "Company"); and
WHEREAS, the grant of an Appreciation Right to the Participant, effective
_______________________ , 199__ (the "Date of Grant"), and the execution of a
Appreciation Right Notification in the form hereof have been duly authorized by
a resolution of the Board duly adopted on _________________ , 199__ and
incorporated herein by reference.
NOW, THEREFORE, effective as of the Date of Grant, the Company hereby
grants to the Participant an Appreciation Right with respect to _______________
shares (the "Shares") of Common Stock pursuant to the Company's Senior
Management Stock Appreciation Rights Plan, as amended and/or restated from time
to time (the "Plan"), to receive upon exercise an amount (the "Payment Amount")
equal to the percentage set forth in the Certification (as hereinafter defined)
of the product of (i) the difference between the Market Value Per Share on the
date the Appreciation Right is exercised and $___________ per share (the "Grant
Price"), and (ii) the number of shares of Common Stock in respect of which this
Appreciation Right is exercised (such product being hereinafter referred to as
the "Spread"), all subject, however, to the terms and conditions hereinafter set
forth. Capitalized terms used in this Agreement that are not otherwise defined
in this Notification are used as defined in the Plan. For purposes of this
Appreciation Right, the term "Certification" shall mean the writing prepared by
the Board, or a committee thereof designated for such purpose, and delivered to
the Participant within 15 days after the expiration of the performance period
set forth in Exhibit A hereto (the "Performance Period") or such earlier period
or time otherwise required in this Notification, certifying to the performance
level achieved by the Participant pursuant to the Performance Objectives set
forth in Exhibit A hereto.
1. (A) This Appreciation Right (until terminated as hereinafter
provided) shall become exercisable only after the expiration of the Performance
Period and delivery of the Certification, and then only in equal annual
installments (which shall be cumulative) of 20% of the Shares, commencing 30
days after the expiration of the Performance Period. To the extent
exercisable, this Appreciation Right may be exercised in whole or in part from
time to time until this Appreciation Right shall terminate as provided in
paragraph 3, except that this Appreciation Right shall not be exercised with
respect to less than 1,000 shares of Common Stock unless the number of shares
with respect to which it remains exercisable is less than 1,000.
(B) Except as otherwise provided in paragraph 3, this Appreciation
Right shall be exercisable only if the Participant shall have been in
the continuous employ of the Company or a Subsidiary from the Date of Grant
until this Appreciation Right or any installment thereof shall become
exercisable. For the purposes of this paragraph, leaves of absence approved by
the Board for physical or mental illness, military or governmental service, or
other cause, shall be considered as employment.
<PAGE>
(C) Notwithstanding the provisions of subparagraph (A) of this
paragraph 1, this Appreciation Right shall be exercisable to the extent of 100%
of the Shares at the time the Participant ceases to be an employee of the
Company or a Subsidiary upon the occurrence of any event described in
subparagraph (B) or (C) of paragraph 3, whether before or after the expiration
of the Performance Period, and upon any such occurrence, the Board shall
prepare, or cause to be prepared, and deliver to the Participant a Certification
based upon the Market Value Per Share on the date of such occurrence.
(D) Notwithstanding the provisions of subparagraph (A) of this
paragraph 1, this Appreciation Right shall be exercisable to the extent, and
only to the extent, of the lesser of (i) 33 1/3% of the Shares or (ii) the
shares in respect of which this Appreciation Right may be exercised under
subparagraph (A) of this paragraph 1 at the date of termination, if the
Participant is terminated as an employee of the Company or a Subsidiary for
Cause (as hereinafter defined) after the expiration of the Performance Period.
For purposes of this paragraph, the term "Cause" shall mean (i) Participant's
willful failure to substantially perform his assigned duties with the Company or
a Subsidiary, other than any such failure resulting from his incapacity due to
physical or mental illness or Disability; (ii) the Participant's willfully
engaging in any serious misconduct which, in the good faith opinion of the
Board, is substantially injurious (monetarily or otherwise) to the Company or a
Subsidiary; or (iii) the Participant's willful performance of any act or acts of
dishonesty resulting or intended to result, directly or indirectly, in
significant gain or personal enrichment at the expense of the Company or a
Subsidiary.
(E) Notwithstanding the provisions of subparagraph (A) of this
paragraph 1, this Appreciation Right shall be exercisable to the extent of 100%
of the Shares (i) if the Participant is terminated as an employee of the Company
or a Subsidiary without Cause, or (ii) if the Participant voluntary resigns as
an employee of the Company or any Subsidiary with Good Reason (as hereinafter
defined) whether before or after the expiration of the Performance Period. If
the termination or resignation set forth in the preceding sentence occurs before
the expiration of the Performance Period, the Board shall prepare, or cause to
be prepared, and deliver to the Participant a Certification based upon the
Market Value Per Share on the date of such occurrence. For purposes of this
paragraph, the term "Good Reason" shall mean (i) a substantial reduction in the
Participant's duties and responsibilities, (ii) the assignment to the
Participant of duties and responsibilities materially inconsistent with the
Participant's position and status, (iii) a reduction of more than 25% in the
Participant's annual base salary as in effect on the Date of Grant or as the
same may be increased from time to time except for across-the-board salary
reductions similarly affecting employees having seniority, duties and
responsibilities comparable to those of the Participant, (iv) a transfer of the
Participant's office to a location more than 50 miles from the Company's
corporate headquarters, or (v) such other reason as the Board may, in its
discretion, approve at least six months before any resignation.
(F) Notwithstanding the provisions of subparagraph (A) of this
paragraph 1, this Appreciation Right shall be exercisable to the extent, and
only to the extent, of the lesser of (i) ___% of the Shares or (ii) the shares
in respect of which this Appreciation Right may be
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<PAGE>
exercised under subparagraph (A) of this paragraph 1 at the date of termination,
if the Participant voluntary resigns as an employee of the Company or a
Subsidiary without Good Reason after the expiration of the Performance Period.
(G) Notwithstanding anything in this paragraph 1 to the contrary,
(i) if at any time before the termination of the Performance Period and the
delivery of a Certification the Common Stock shall not be listed for trading on
a national securities exchange ("Delisted"), the Board shall prepare, or cause
to be prepared, and deliver to the Participant a Certification based on the
Market Value Per Share on the last trading day of the Common Stock ("Last Market
Price") and such Certification shall be effective for any subsequent exercise of
this Appreciation Right or any installment thereof, and (ii) if the Common Stock
shall be Delisted after the delivery of any Certification, the Last Market Price
shall be used to compute the Spread for any subsequent exercise of this
Appreciation Right or any installment thereof.
(H) Notwithstanding any other provision of this paragraph 1, this
Appreciation Right may be exercised only when the Spread is a positive number.
2. The Payment Amount may be paid by the Company in (i) cash, (ii) shares
of Common Stock having an aggregate Market Value Per Share equal to the Payment
Amount (including Restricted Stock), (iii) Company Securities having an
aggregate Fair Market Value equal to the Payment Amount, or (iv) any combination
of the foregoing, as determined by the Board in its sole discretion at the time
of payment. Notwithstanding anything herein to the contrary, the Payment
Amounts in respect of all exercises of this Appreciation Right shall not in any
event exceed in the aggregate $____________.
3. This Appreciation Right shall terminate on the earliest of the
following dates:
(A) 90 days after the termination of the Participant's employment
with the Company or a Subsidiary (except by reason of death, Disability, or
retirement at age 65, or early retirement with the consent of the Board) or
the voluntary resignation of the Participant as an employee of the Company
or a Subsidiary;
(B) One year after the Participant ceases to be an employee of the
Company or a Subsidiary by reason of retirement at age 65 or early
retirement with the consent of the Board;
(C) Two years after the death or Disability of the Participant if the
Participant dies or becomes disabled while an employee of the Company or a
Subsidiary; and
(D) ___ years from the Date of Grant.
Nothing contained in this Appreciation Right shall limit whatever right the
Company or a Subsidiary might otherwise have to terminate the employment of the
Participant. Except as otherwise provided in subparagraphs (C), (D), (E) and
(F) of paragraph 1, after the termination
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of the Participant's employment or the voluntary resignation of the
Participant as an employee of the Company or a Subsidiary, this Appreciation
Right shall be exercisable in respect of the same number of shares for which
it was exercisable prior to such termination or resignation until this
Appreciation Right shall terminate as provided in this paragraph 3.
4. This Appreciation Right is not transferable or exercisable except as
provided in Paragraph 6 of the Plan.
5. (A) This Appreciation Right may be exercised only by surrender to the
Company of the original copy of this Notification, along with a written request
specifying the number of shares in respect of which this Appreciation Right is
being exercised. If this Appreciation Right is not being exercised in respect
of all the Shares and the Participant may thereafter be entitled to exercise it
in respect of additional shares, the Company shall make an appropriate notation
on the Appreciation Right and return it to the Participant, along with the
Payment Amount related to the current exercise.
(B) If the Company shall be required to withhold any Federal, state,
local or foreign tax in connection with the exercise of this Appreciation Right,
it shall be a condition to such exercise that the Participant or any transferee
of the Participant pay or make provision satisfactory to the Company for payment
of all such taxes. The Participant or any transferee of the Participant may
elect that all or any part of such withholding requirement be satisfied by
retention by the Company of a portion of the Payment Amount to be received upon
exercise of this Appreciation Right in accordance with the provisions of the
Plan. If such election is made and the Board determines to pay any portion of
the Payment Amount the Participant or such transferee would have received in
shares of Common Stock or Company Securities, any shares or securities so
retained shall be credited against such withholding requirement at their
aggregate Market Value Per Share or aggregate Fair Market Value, as the case may
be, at the date of exercise.
6. Upon an exercise of this Appreciation Right, and in the event the
Board determines to deliver shares of Common Stock and/or Company Securities in
payment of any portion of the Payment Amount, the Company as promptly as
practicable shall mail or deliver to the Participant or transferee of the
Participant a stock certificate or certificates representing the shares or
instruments representing the securities then purchased, and shall pay all stamp
taxes payable in connection therewith. The issuance of such shares or
securities and delivery of the certificate or certificates representing such
shares or instruments representing such securities shall, however, be subject to
any delay necessary to complete (i) the listing of such shares or securities on
any stock exchange upon which shares or securities of the same class are then
listed, (ii) such registration or qualification of such shares or securities
under any state or federal law, rule or regulation as the Company may determine
to be necessary or advisable and (iii) the making of provision for the payment
or withholding of any taxes required to be withheld pursuant to any applicable
law in respect of the exercise of this Appreciation Right or the receipt of such
shares or securities.
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7. Notwithstanding any other provision of this Notification, the
Appreciation Right herein granted shall be subject to all the terms and
conditions of the Plan, which shall govern in the event of any conflict with the
terms and conditions hereof, and shall not be exercisable until the Plan shall
have been approved by the stockholders of the Company. This Notification shall
be void and of no effect if stockholder approval of the Plan has not been
obtained prior to the disbursement of any Payment Amount which may become
payable hereunder.
EXECUTED at Dallas, Texas this ____ day of June, 199__.
NU-KOTE HOLDING, INC.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
The undersigned Participant hereby acknowledges receipt of an executed
original of this Appreciation Right Notification and accepts the Appreciation
Right granted thereunder.
-------------------------------------
Participant:
-------------------------
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NU-KOTE HOLDING, INC.
1992 STOCK OPTION PLAN
AS AMENDED AND RESTATED
SEPTEMBER 27, 1996
<PAGE>
NU-KOTE HOLDING, INC.
1992 STOCK OPTION PLAN
SECTION 1.
PURPOSE
The purpose of this Nu-kote Holding, Inc. 1992 Stock Option Plan is to
foster and promote the long-term financial success of Holding and the Company
and to increase materially stockholder value by (a) motivating superior
performance by participants in the Plan, (b) providing participants in the Plan
with an ownership interest in Holding and (c) enabling the Company to attract
and retain the services of an outstanding management team upon whose judgment,
interest and special effort the successful conduct of its operations is largely
dependent. This Plan replaces the Nu-kote Holding, Inc. Stock Option Plan (the
"Old Plan"). As of the Effective Date, no further options shall be granted under
the Old Plan.
SECTION 2.
DEFINITIONS
2.1. DEFINITIONS. Whenever used herein, the following terms shall have the
respective meanings set forth below:
(a) "Alternative Option" has the meaning given in Section 9.2.
(b) "Board" means the Board of Directors of Holding.
(c) "Cause" means (i) the willful failure by the Participant to perform
substantially his duties as an employee of the Company or any Subsidiary
(other than any such failure due to physical or mental illness) after a
demand for substantial performance is delivered to the Participant by the
executive to which the Participant reports or by the Board, which notice
identifies the manner in which such executive or the Board, as the case may
be, believes that the Participant has not substantially performed his
duties, (ii) the Participant's engaging in willful and serious misconduct
that is injurious to Holding, the Company or any Subsidiary, (iii) the
Participant's having been convicted of, or entered a plea of NOLO CONTENDERE
to, a crime that constitutes a felony or (iv) the willful and material
breach by the Participant of any written covenant or agreement with Holding,
the Company or any Subsidiary not to disclose any information pertaining to
Holding, the Company or any Subsidiary, or not to compete or interfere with
Holding, the Company or any Subsidiary.
(d) "Change in Control" means the first to occur of the following events
after the Effective Date:
(i) the acquisition by any person, entity or "Group", as defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than Holding, the Company, the Subsidiaries, or
any employee benefit plan of Holding, the Company or the Subsidiaries, of
50% or more of the combined voting power of Holding's or the Company's
then outstanding voting securities;
(ii) the merger or consolidation of Holding or the Company, as a
result of which persons who were stockholders of Holding or the Company,
as the case may be, immediately prior to such merger or consolidation, do
not, immediately thereafter, own, directly or indirectly, more than 50%
of the combined voting power entitled to vote generally in the election
of directors of the merged or consolidated company;
(iii) the liquidation or dissolution of Holding or the Company; and
(iv) the sale of all or substantially all of the assets of Holding
or the Company to one or more persons or entities that are not,
immediately prior to such sale, affiliates of Holding or the Company.
<PAGE>
(e) "Change in Control Price" means the price per share of Common Stock
offered in conjunction with any transaction resulting in a Change in Control
(as determined in good faith by the Board if any part of the offered price
is payable other than in cash).
(f) "Committee" means the Stock Option Committee of the Board, which
shall consist of two or more members, each of whom shall be a "non-employee
director" within the meaning of Rule 16b-3, as promulgated under the
Exchange Act and an "outside director" within the meaning of Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations promulgated thereunder. If at any time a Committee meeting the
requirements of this paragraph (f) is not established by the Board, the
Board shall exercise all of the powers reserved to the Committee in this
Plan.
(g) "Common Stock" means the Class A Common Stock, par value $.01 per
share, of Holding.
(h) "Company" means Nu-kote International, Inc., a Delaware corporation,
and any successor thereto.
(i) "Director" means any member of the Board.
(j) "Early Retirement" means a termination of employment by a
Participant before a normal retirement age (as defined in the retirement
plan sponsored by Holding, the Company or any Subsidiary, whichever employs
such Participant).
(k) "Effective Date" means the latter of (i) the date on which the Plan
is approved by the stockholders of Holding and (ii) the date on which the
initial public offering of the Common Stock is completed.
(l) "Employee" means any executive or senior officer or key employee or
consultant or advisor of Holding, the Company or any Subsidiary.
(m) "Fair Market Value" means, on any date, the average of the bid and
asked for price of the Common Stock as reported by the consolidated tape of
National Association of Securities Dealers Automated Quotation System (or on
such other recognized quotation system on which the trading prices of the
Common Stock are quoted at the relevant time) on such date. In the event
that there are no Common Stock transactions reported on such tape (or such
other system) on such date, Fair Market Value shall mean the closing price
on the immediately preceding date on which stock transactions were reported.
(n) "Grant Date" means, with respect to any Option, the date on which
such Option is granted pursuant to the Plan.
(o) "Holding" means Nu-kote Holding, Inc., a Delaware corporation, and
any successor thereto.
(p) "Incentive Stock Option" means any Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422
of the Code.
(q) "Involuntary Termination" means a termination by the New Employer
for any reason or a termination by a Participant following a material
reduction in the Participant's compensation, a material reduction in the
Participant's responsibilities or the relocation of the Participant's
principal place of employment of more than 50 miles, in each case without
the Participant's written consent.
(r) "New Employer" means the Participant's employer, or the parent or a
subsidiary of such employer, immediately following a Change in Control.
(s) "Non-Qualified Stock Option" means any Option that is not an
Incentive Stock Option.
(t) "Option" means the right granted pursuant to the Plan to purchase
one share of Common Stock at a price determined in accordance with Section
7.2.
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(u) "Option Agreement" means an agreement between the Company and the
Participant embodying the terms of any Option granted hereunder.
(v) "Participant" means any Employee or Director designated by the
Committee to participate in the Plan.
(w) "Permanent Disability" means a physical or mental disability or
infirmity that prevents the performance of Participant's employment-related
duties lasting (or likely to last, based on competent medical evidence
presented to the Committee) for a period of six months or longer. The
Committee's reasoned and good faith judgment as to Permanent Disability
shall be final and shall be based on such competent medical evidence as
shall be presented to it by such Participant or any physician or group of
physicians or other competent medical expert employed by the Participant or
the Company to advise the Committee.
(x) "Plan" means this Nu-kote Holding, Inc. 1992 Stock Option Plan.
(y) "Retirement" means a Participant's retirement (at or after normal
retirement age) under the terms of the retirement plan sponsored by Holding,
the Company or any Subsidiary, whichever employs such Participant.
(z) "Special Termination" has the meaning given in Section 8.1.
(aa) "Subsidiary" means any corporation a majority of whose outstanding
voting securities is owned, directly or indirectly, by the Company or
Holding.
2.2. GENDER AND NUMBER. Except when otherwise indicated by the context,
words in the masculine gender used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.
SECTION 3.
ELIGIBILITY AND PARTICIPATION
Subject to Section 5, participants in the Plan shall be those Employees and
Directors selected by the Committee to participate in the Plan. The selection of
an Employee as a Participant shall neither entitle such Employee to nor
disqualify such Employee from participation in any other award or incentive
plan.
SECTION 4.
POWERS OF THE COMMITTEE
4.1. POWER TO GRANT. Subject to Section 5, the Committee shall determine
the Participants to whom Options shall be granted and the terms and conditions
of any and all Options granted to Participants, PROVIDED that no Option shall be
granted under the Plan prior to the Effective Date.
4.2. SUBSTITUTE OPTIONS. The Committee shall have the right to grant
Options in substitution for or upon the cancellation of previously granted
Options, and such new Options may contain terms more favorable to the recipient
than the Options they replace, including, without limitation, a lower exercise
price for Options.
4.3. ADMINISTRATION. The Committee shall be responsible for the
administration of the Plan. Any authority exercised by the Committee under the
Plan shall be exercised by the Committee in its sole discretion. Subject to the
terms of the Plan, the Committee, by majority action thereof, is authorized to
prescribe, amend and rescind rules and regulations relating to the
administration of the Plan, to provide for conditions and assurances deemed
necessary or advisable to protect the interests of Holding and the Company, and
to make all other determinations necessary or advisable for the administration
and interpretation of the Plan in order to carry out its provisions and
purposes. Determinations, interpretations
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or other actions made or taken by the Committee pursuant to the provisions of
the Plan shall be final, binding and conclusive for all purposes and upon all
persons.
SECTION 5.
GRANTS TO NON-EMPLOYEE DIRECTORS
Each person (other than an employee of Holding or its Subsidiaries) (i) who
is elected a Director on August 3, 1994, or (ii) who first becomes a Director
after that date, is hereby granted a Non-Qualified Stock Option to purchase
30,000 shares of Common Stock, at the Fair Market Value of such stock on the
Grant Date, which option shall be exercisable in five equal annual cumulative
installments, commencing one year after the Grant Date, PROVIDED that 100% of
such Option shall become exercisable under the circumstances described in
Section 8.1 of the Plan, and which Option shall expire 10 years from the Grant
Date and shall otherwise be subject to the terms and conditions included in the
Plan and the form of Option Agreement adopted for use in connection with the
foregoing grants.
SECTION 6.
OPTIONS SUBJECT TO PLAN
6.1. NUMBER. Subject to the provisions of Sections 6.2 and 6.3, (i) the
maximum number of Options (and the maximum number of shares of Common Stock
subject to Options) granted under the Plan may not exceed 2,800,000 and (ii) the
maximum number of Options (and the maximum number of shares of Common Stock that
may be delivered upon the exercise of Options) to any participant may not exceed
500,000. The shares of Common Stock to be delivered upon the exercise of Options
granted under the Plan may consist, in whole or in part, of treasury shares or
authorized but unissued shares of Common Stock.
6.2. CANCELED, TERMINATED OR FORFEITED OPTIONS. Any Option which for any
reason is canceled, terminated, or otherwise forfeited, in whole or in part,
without having been exercised, shall again be available for grant under the
Plan.
6.3. ADJUSTMENT IN CAPITALIZATION. The number and class of Options (and
the number of shares of Common Stock available for issuance upon exercise of
such Options) granted under the Plan, and the number, class and exercise price
of any outstanding Options (and the number of shares of Common Stock subject to
outstanding Options), shall be adjusted by the Committee if, in its sole
discretion, it shall deem such an adjustment to be necessary or appropriate to
reflect any Common Stock dividend, stock split or share combination or any
recapitalization, merger, consolidation, exchange of shares, liquidation or
dissolution of Holding.
SECTION 7.
TERMS OF OPTIONS
7.1. GRANT OF OPTIONS. Options may be granted to Participants at such time
or times as shall be determined by the Committee, PROVIDED that no Option shall
be granted prior to the Effective Date and PROVIDED, further, that the Committee
shall have no discretion with respect to the Options granted pursuant to Section
5. Options granted under the Plan may be Incentive Stock Options or
Non-Qualified Stock Options. The Committee shall have discretion in determining
the number of Options, if any, and the type of Options to be granted to a
Participant. Each Option granted to a Participant shall be evidenced by an
Option Agreement that shall specify the type of Option, the exercise price at
which a share of Common Stock may be purchased pursuant to such Option, the
duration of such Option and such other terms consistent with the Plan as the
Committee shall determine, including customary representations, warranties and
covenants with respect to securities law matters.
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7.2. EXERCISE PRICE. The exercise price per share of Common Stock to be
purchased upon exercise of an Option shall be determined by the Committee, but
shall not be less than the Fair Market Value on the Grant Date.
7.3. EXERCISE OF OPTIONS. Unless otherwise determined by the Committee,
20% of any Options granted to a Participant at any time shall become exercisable
on each of the first five anniversaries of the Grant Date of such Options,
PROVIDED that 100% of such Options shall become exercisable under the
circumstances described in 8.1. Notwithstanding any other provision of the Plan,
each Option shall terminate and shall not be exercisable on or after the tenth
anniversary of the Grant Date of such Option.
7.4. PAYMENT. The Committee shall establish procedures governing the
exercise of Options, which procedures shall generally require that written
notice of the exercise thereof be given and that the exercise price thereof be
paid in full in cash or cash equivalents, including by personal check, at the
time of exercise. If so determined by the Committee in its sole discretion at or
after the Grant Date, the exercise price of any Options may be paid in full or
in part in the form of shares of Common Stock already owned by the Participant,
based on the Fair Market Value of such Common Stock on the date of exercise (or
at such other time as may be determined by the Committee). As soon as
practicable after receipt of a written exercise notice and payment in full of
the exercise price of any exercisable Options, Holding shall deliver to
Participant a certificate or certificates representing the shares of Common
Stock acquired upon the exercise thereof.
7.5. INCENTIVE STOCK OPTIONS. Anything in the Plan to the contrary
notwithstanding, no provision of this Plan relating to Incentive Stock Options
shall be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify the Plan under Section
422 of the Code or, without the consent of the Participants affected, to
disqualify any Incentive Stock Option under such Section 422.
7.6. CERTAIN SALES ON COMMON STOCK. To the extent permitted by applicable
law, and in the sole discretion of the Board, Holding may offer and sell, in
lieu of granting Options under the Plan, shares of Common Stock to one or more
Participants employed and residing outside the United States, with the
consideration for such shares to be paid in cash or by delivery of a promissory
note of the Participant purchasing such shares.
7.7. BUYOUT. The Committee may at any time offer to buy out for a payment
in cash an Option previously granted, based on such terms and conditions as the
Committee shall establish and communicate to the optionee at the time that such
offer is made.
SECTION 8.
TERMINATION OF EMPLOYMENT
8.1. SPECIAL TERMINATION. Unless otherwise determined by the Committee at
the Grant Date, in the event that a Participant's employment with Holding, the
Company and the Subsidiaries terminates by reason of the Participant's death,
Permanent Disability or Retirement (each a "Special Termination") or, in the
discretion of the Committee, his Early Retirement, then 100% of any Options held
by the Participant may be exercised by the Participant or the Participant's
designated beneficiary, and if none is named, in accordance with Section 11.2,
at any time prior to the expiration date of the term of the Options or within
three (3) years (or such shorter period as the Committee shall determine)
following the Participant's termination of employment, whichever period is
shorter.
8.2. TERMINATION FOR CAUSE. Unless otherwise determined by the Committee
at or after the Grant Date, in the event that a Participant's employment with
Holding, the Company and the Subsidiaries is terminated for Cause, any Options
held by such Participant shall terminate and be canceled immediately upon such
termination of employment.
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8.3. OTHER TERMINATION OF EMPLOYMENT. Unless otherwise determined by the
Committee at or after the Grant Date, in the event that a Participant's
employment with Holding, the Company and the Subsidiaries terminates for any
reason other than (a) a Special Termination, (b) for Cause or (c) an Early
Retirement in respect of which the Committee has determined, pursuant to Section
8.1, that 100% of the Options held by such Participant shall become exercisable,
then any Options held by the Participant, which are exercisable at the date of
the Participant's termination of employment, shall be exercisable at any time
prior to the expiration of the term of the Options or the thirtieth day
following the Participant's termination of employment, whichever period is
shorter, but any Options held by the Participant that are not then exercisable
shall terminate and be canceled immediately upon such termination of employment.
SECTION 9.
CHANGE IN CONTROL
9.1. ACCELERATED VESTING AND PAYMENT. Unless the Committee shall otherwise
determine in the manner set forth in Section 9.2, in the event of a Change in
Control, each Option (regardless of whether such Options are at such time
otherwise exercisable) shall be canceled in exchange for a payment in cash of an
amount equal to the excess, if any, of the Change in Control Price over the
exercise price for such Option.
9.2. ALTERNATIVE OPTIONS. Notwithstanding Section 9.1, no cancellation,
acceleration of exercisability, vesting or cash settlement or other payment
shall occur with respect to any Option if the Committee reasonably determines in
good faith, prior to the occurrence of a Change in Control, that such Option
shall be honored or assumed, or new rights substituted therefor (such honored,
assumed or substituted Option being hereinafter referred to as an "Alternative
Option") by the New Employer, PROVIDED that any such Alternative Option must:
(a) provide the Participant that held such Option with rights and
entitlements substantially equivalent to or more advantageous than the
rights, terms and conditions applicable under such Option, including, but
not limited to, an identical or more advantageous exercise and vesting
schedule and identical or more advantageous timing and methods of payment;
(b) have substantially equivalent economic value to such Option
(determined at the time of the Change in Control); and
(c) have terms and conditions which provide that in the event that such
Participant suffers an Involuntary Termination within two years following a
Change in Control:
(i) any conditions on such Participant's rights under, or any
restrictions on transfer or exercisability applicable to, each such
Alternative Option shall be waived or shall lapse, as the case may be; or
(ii) such Participant shall have the right to surrender such
Alternative Option within 30 days following such termination in exchange
for a payment in cash equal to the excess of the fair market value of the
common stock or other security subject to the Alternative Option over the
price, if any, that such Participant would be required to pay to exercise
such Alternative Option.
SECTION 10.
AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN
The Board at any time may terminate or suspend the Plan, and from time to
time may amend or modify the Plan. No amendment, modification, termination or
suspension of the Plan shall in any manner adversely affect any Option
theretofore granted under the Plan, without the consent of the Participant
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holding such Option. Stockholder approval of any such amendment, modification,
termination or suspension shall be obtained to the extent required by applicable
law, rule or regulation, or otherwise deemed appropriate by the Committee.
SECTION 11.
MISCELLANEOUS PROVISIONS
11.1. NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No Incentive Stock Options granted
under the Plan may be sold, transferred, pledged, assigned, encumbered or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution; PROVIDED that the deceased Participant's
beneficiary or the representative of his estate acknowledges and agrees in
writing, in a form reasonably acceptable to Holding, to be bound by the
provisions of the Plan (including the exercise procedures described in
Section 7.4) and the Option Agreement covering such Options as if such
beneficiary or estate were the Participant. All rights with respect to
Incentive Stock Options granted to a Participant under the Plan shall be
exercisable during his life-time by such Participant only. Following a
Participant's death, all rights with respect to Incentive Stock Options that
were exercisable at the time of such Participant's death and have not
terminated shall be exercised by his designated beneficiary or by his
estate.
(b) NON-QUALIFIED STOCK OPTIONS. No Non-Qualified Stock Options
granted under the Plan may be sold, transferred, pledged, assigned,
encumbered or otherwise alienated or hypothecated, other than (i) by will or
by the laws of descent and distribution, (ii) pursuant to a qualified
domestic relations order as defined by the Code or Title I of ERISA, or the
rules and regulations thereunder, (iii) by gift to members of the
Participant's immediate family (i.e., spouse, child, stepchild or
grandchild), or (iv) in trust for the benefit of the Participant or any
person included under (iii) above; PROVIDED that the Participant's
beneficiary, the representative of the Participant's estate, the trustee of
any trust, or other such person acknowledges and agrees in writing, in a
form reasonably acceptable to Holding, to be bound by the provisions of the
Plan (including the exercise procedures described in Section 7.4) and the
Option Agreement covering such Options as if such beneficiary, estate,
trust, or other person were the Participant. Notwithstanding the foregoing,
once a Non-Qualified Stock Option is transferred, it may not be subsequently
transferred by the transferee except by will or by the laws of descent and
distribution. If a Participant has not transferred his Non-Qualified Stock
Options prior to his death, all rights with respect to such Non-Qualified
Stock Options that were exercisable at the time of his death and have not
terminated shall be exercised by his designated beneficiary or by his
estate.
11.2. BENEFICIARY DESIGNATION. Each Participant under the Plan may from
time to time name any beneficiary or beneficiaries (who may be named
contingently or successively) by whom any right under the Plan is to be
exercised in case of his death. Each designation will revoke all prior
designations by the same Participant, shall be in a form reasonably prescribed
by the Committee, and will be effective only when filed by the Participant in
writing with the Committee during his lifetime.
11.3. NO GUARANTEE OF EMPLOYMENT OR PARTICIPATION. Nothing in the Plan or
in any Option Agreement shall interfere with or limit in any way the right of
Holding, the Company or any Subsidiary to terminate any Participant's employment
at any time, or confer upon any Participant any right to continue in the employ
of Holding, the Company or any Subsidiary. No Employee shall have a right to be
selected as a Participant or, having been so selected, to receive any Options.
11.4. TAX WITHHOLDING. The Company shall have the power to withhold, or
require a Participant or any transferee of the Participant to remit to the
Company, an amount sufficient to satisfy Federal, state or local withholding tax
requirements on any Options granted under the Plan, and the Company may defer
payment of cash or issuance of Common Stock until such requirements are
satisfied. The Committee may, in its discretion, permit a Participant or any
transferee of the Participant to elect, subject to such conditions as the
Committee shall impose, (i) to have shares of Common Stock otherwise issuable
under the Plan
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withheld by the Company or (ii) to deliver to the Company previously acquired
shares of Common Stock having a Fair Market Value sufficient to satisfy all or
part of the Participant's or his transferee's estimated total Federal, state and
local tax obligation associated with the transaction.
11.5. INDEMNIFICATION. Each person who is or shall have been a member of
the Committee or of the Board shall be indemnified and held harmless by the
Company and Holding to the fullest extent permitted by law from and against any
and all losses, costs, liabilities and expenses (including any related
attorneys' fees) in connection with, based upon or arising or resulting from any
claim, action, suit or proceeding to which he may be made a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
and from and against any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of any judgment in any
such action, suit or proceeding against him, PROVIDED that he shall give the
Company an opportunity, at its own expense, to defend the same before he
undertakes to defend it on his behalf. The foregoing right of indemnification
shall not be exclusive and shall be independent of any other rights of
indemnification to which such persons may be entitled under Holding's or the
Company's Certificate of Incorporation or By-Laws, by contract, as a matter of
law, or otherwise.
11.6. NO LIMITATION ON COMPENSATION. Nothing in the Plan shall be
construed to limit the right of Holding, the Company or any Subsidiary to
establish other plans or to pay compensation to its employees, in cash or
property, in a manner that is not expressly authorized under the Plan.
11.7. REQUIREMENTS OF LAW. The granting of Options and the issuance of
shares of Common Stock pursuant to such Options shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required. No
Options shall be granted under the Plan, and no shares of Common Stock shall be
issued upon exercise of any Options granted under the Plan, if such grant or
exercise would result in a violation of applicable law, including the federal
securities laws and any applicable state securities laws.
11.8. FREEDOM OF ACTION. Subject to Section 10, nothing in the Plan or any
Option Agreement shall be construed as limiting or preventing Holding, the
Company or any Subsidiary from taking any action that it deems appropriate or in
its best interest.
11.9. TERM OF PLAN. The Plan shall be effective as of the Effective Date.
The Plan shall continue in effect, unless sooner terminated pursuant to Section
10, until the tenth anniversary of the Effective Date. The provisions of the
Plan, however, shall continue thereafter to govern all outstanding Options
theretofore granted.
11.10. NO VOTING RIGHTS. Except as otherwise required by law, no
Participant holding any Options granted under the Plan shall have any right, in
respect of such Options, to vote on any matter submitted to Holding's
stockholders until such time as the shares of Common Stock issuable upon
exercise of such Options have been so issued.
11.11. GOVERNING LAW. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware.
11.12. NO IMPACT ON BENEFITS. Options granted under the Plan are not
compensation for purposes of calculating an Employee's right under any employee
benefit plan.
11.13 NO FRACTIONAL SHARES. Holding shall not be required to issue any
fractional shares of Common Stock pursuant to the Plan. The Board may provide
for the elimination of fractions or for the settlement of fractions in cash.
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NU-KOTE HOLDING, INC.
DEFERRED STOCK COMPENSATION PLAN
AS AMENDED AND RESTATED SEPTEMBER 27, 1996
SECTION 1
PURPOSE
The purpose of this Deferred Stock Compensation Plan as Amended and
Restated September 27, 1996 is to provide participating directors with
additional incentives to improve the Company's performance by increasing their
stock ownership in Nu-kote Holding, Inc., to reinforce the participating
directors' role in enhancing stockholder values, and to provide an additional
means of attracting and retaining non-employee directors.
SECTION 2
DEFINITIONS
2.1 DEFINITIONS. As used herein, the following terms shall have the
following meanings:
(a) "BENEFICIARY" means the person, persons or entity designated
pursuant to Section 6 to receive payments under the Plan after the death of
a Participant.
(b) "BOARD" means the Board of Directors of Nu-kote Holding, Inc.
(c) "COMMON STOCK" means Class A Common Stock of Nu-kote Holding,
Inc., along with any Preferred Share Purchase Rights related thereto, which
shares may be authorized but unissued shares or treasury shares.
(d) "COMPANY" means Nu-kote Holding, Inc., a Delaware corporation,
and any successor thereof.
(e) "DEFERRED AMOUNT" means an amount of Fees deferred under the
Plan.
(f) "DIRECTOR" means any member of the Board who is not also an
employee of the Company.
(g) "FEES" mean payments which the Director receives or is entitled
to receive from the Company for services as a member of the Board. Such
payments shall include directors' regular and special board meeting fees
and committee meeting fees, but shall not include any reimbursement of
expenses for attending meetings of the Board or any committee thereof.
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(h) "MARKET PRICE" means, at any date, the closing sales price of the
Common Stock on that date (or, if there are no sales on that date, the last
preceding date on which there was a sale) in the principal market in which
the Common Stock is traded, or if no market for the Common Stock exists,
the price determined by the Board in its sole discretion at the time of any
determination.
(i) "PARTICIPANT" means any Director who is participating in the Plan
from time to time.
(j) "PLAN" means the Nu-kote Holding, Inc. Deferred Stock
Compensation Plan as Amended and Restated September 27, 1996, as from time
to time amended and in effect.
(k) "SPECIAL DEFERRED AMOUNT" means all amounts in a Participant's
Stock Account that are credited to such Stock Account during the six month
period immediately prior to the Termination of Service of such Participant.
(l) "STOCK ACCOUNT" means the bookkeeping account maintained by the
Company for a Participant pursuant to Section 3.3.
(m) "TERMINATION OF SERVICE" means the termination (by death,
retirement or otherwise) of a Participant's service as a member of the
Board.
SECTION 3
DEFERRAL OF FEES
3.1 DEFERRAL ELECTION. Each Director may elect to have all or a portion
of his or her Fees for any calendar year deferred under the Plan, by delivering
a completed Deferred Election Form, in the form attached hereto as Annex A.
Such election shall be filed with the Secretary of the Company prior to the
beginning of the calendar year during which such Fees are earned.
3.2 SUSPENSION OR CONTINUATION OF PARTICIPATION. A deferral election
made pursuant to Section 3.1 shall be irrevocable for the first calendar year to
which such election relates, and it shall continue in effect for subsequent
calendar years until revoked or until it is increased or decreased prospectively
by the Participant before the beginning of the calendar year for which such
increase or decrease is effective. The termination or suspension of any
deferrals under this Section 3.2 shall not affect any amount theretofore
deferred.
3.3 ACCOUNTING FOR DEFERRED AMOUNTS. The Company shall maintain a
separate bookkeeping account (hereinafter Stock Account) for each Participant to
record the Company's liability to pay all Deferred Amounts. Each Deferred
Amount shall be credited to the Stock Account on the date the Fees represented
thereby would have been paid but for the Participant's deferral election and
shall be converted into stock equivalents at the Market Price on that date,
including fractional shares rounded to the nearest one-thousandth of a share.
Thereafter, whenever a cash dividend or other distribution is paid on, or with
respect to, the Common Stock, the Stock Account shall be credited with
additional stock equivalents in an amount equal
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to the number of shares, including fractional shares, that could have been
purchased, at the Market Price on the dividend or distribution payment date,
had such dividend or other distribution been paid on the stock equivalents in
the Stock Account on such date. The value of any such other distribution on,
or with respect to, the Common Stock not paid in cash shall, at the option of
the Board, be either determined by the Board or independently established.
If the outstanding shares of Common Stock of the Company shall be split or
the Company shall pay a stock dividend on its outstanding shares of Common
Stock, the stock equivalents, including fractional shares, in the Stock
Account on the effective date or payment date of such stock split or stock
dividend shall be appropriately adjusted to reflect the effect of such event.
All distributions to a Participant in accordance with Section 4 shall be
debited to the Participant's Stock Account.
3.4 ADJUSTMENTS. If the Company is a party to any consolidation,
recapitalization, merger, share exchange or other business combination and,
in connection with such transaction, all or part of the outstanding Common
Stock shall be changed into or exchanged for stock or other securities of any
other entity or of the Company or cash or any other property, then the stock
equivalents, including fractional shares, in the Stock Account on the
effective date of such transaction shall be converted, exchanged or otherwise
modified to give full effect to the transaction.
3.5 STATEMENT OF STOCK ACCOUNT. Upon request, but no more frequently
than quarterly, the Company shall deliver to each Participant, within 30 days
after a written request, a statement in such form as the Company deems
desirable, setting forth the stock equivalents then credited to the Stock
Account, and the aggregate Market Price of those stock equivalents.
SECTION 4
DISTRIBUTIONS
Upon Termination of Service, a Participant's Stock Account shall be
distributed to the Participant, or to the Participant's Beneficiary, as the case
may be, either in one lump sum or in such number of annual installments (not
exceeding five) as the Participant shall have elected on the last Payment
Election Form, in the form attached hereto as Annex B, submitted at least six
months prior to Termination of Service. Such distribution or distributions
shall be made in Common Stock unless the Board, in its sole and absolute
discretion, shall elect to make any such distribution in cash at the Market
Price on the day preceding the date of such distribution and such distribution
or distributions of cash or Common Stock shall be made or commence within 30
days of Termination of Service; provided, however, that notwithstanding anything
to the contrary in this Section 4, in no event shall any distribution, whether
in Common Stock or in cash, that is attributable to a Special Deferred Amount be
made from any Participant's Stock Account until six months has elapsed from the
date that such Special Deferred Amount was credited to such Participant's Stock
Account. If installment payments are elected by a Participant, the first such
installment shall be paid to the Participant within the aforesaid 30-day period
and the remaining installments shall be paid on each succeeding anniversary date
of the first distribution. In the event a Participant dies prior to the final
distribution of his Stock
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Account, all amounts payable under this Section after the death of the
Participant shall be paid to the Participant's Beneficiary in the manner
elected by the Participant on the Payment Election Form. In the absence of
an election by the Participant as to the manner of payment, the payment shall
be made in one installment in the form of Common Stock. In any case in which
shares of Common Stock are to be delivered, cash shall be delivered in lieu
of any fractional shares at the Market Price of the Common Stock on the day
preceding the date of such distribution.
SECTION 5
AMENDMENT OR TERMINATION
5.1 AMENDMENT OR TERMINATION. The Board may amend or terminate the Plan
at any time; provided, however, that no amendment or termination shall adversely
affect any then existing Stock Accounts or rights under the Plan.
SECTION 6
BENEFICIARIES
Each Participant shall have the right, at any time, to designate any
person, persons or entity as a Beneficiary or Beneficiaries (both primary as
well as contingent) to whom payments under the Plan shall be made. Such
designation and any subsequent change in the Beneficiary designation shall be
made by the filing of a Designation of Beneficiary, in the form attached hereto
as Annex C, with the Secretary of the Company. Such designation shall be
effective only when received by the Secretary of the Company. A new beneficiary
form filed with the Secretary of the Company shall serve to revoke all previous
Beneficiary designations. Any final decree of divorce of a Participant entered
after the filing of a Designation of Beneficiary designating a spouse as
Beneficiary shall also revoke such prior designation. If the Participant fails
to designate a Beneficiary as provided above, or if the Beneficiary designation
is revoked by divorce without execution of a new designation, or if all
designated Beneficiaries predecease the Participant, then the Participant's
designated Beneficiary shall be deemed to be the person or persons surviving the
Participant in the first of the following classes of which there is a survivor,
share and share alike:
(a) Participant's spouse;
(b) Participant's children, except that if any of the children
predecease the Participant but leave issue surviving, then such issue shall
take per stirpes the share their parent would have taken if living; and
(c) Participant's estate.
In the event that it shall be found upon evidence satisfactory to the Board
that any Participant or Beneficiary to whom a benefit is payable under the Plan
is unable to care for their affairs because of illness or accident, any payment
due (unless prior claim therefor shall have
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been made by duly authorized guardian or other legal representative) shall be
paid, upon appropriate indemnification of the Board, to the spouse or other
person deemed by the Board to have incurred expenses for the care of such
Participant or Beneficiary. Any payment shall be a payment for the account
of the Participant or Beneficiary and shall be a complete discharge of any
liability of the Company therefor.
SECTION 7
MISCELLANEOUS
7.1 EXPENSES. The expenses of administering the Plan shall be borne by
the Company and shall not be charged against any Participant's Stock Account.
7.2 APPLICABLE LAW. The provisions of the Plan shall be construed,
administered and enforced according to the laws of the State of Delaware.
7.3 NO TRUST OR FUND. No action by the Company or the Board under the
Plan shall be construed as creating a trust, escrow or other secured or
segregated fund or other fiduciary relationship of any kind in favor of any
Participant, Beneficiary, or any other persons otherwise entitled to a Stock
Account. The status of Participants and Beneficiaries with respect to any
liabilities assumed by the Company hereunder shall be solely those of unsecured
creditors of the Company. Any asset acquired or held by the Company in
connection with liabilities assumed by it hereunder shall not be deemed to be
held under any trust, escrow or other secured or segregated fund or other
fiduciary relationship of any kind for the benefit of a Participant or
Beneficiary or to be security for the performance of the obligations of the
Company, but shall be and remain a general, unpledged, unrestricted asset of the
Company at all times subject to the claims of general creditors of the Company.
7.4 NO ASSIGNABILITY AND BINDING EFFECT. Neither the Participant nor any
other person shall acquire any right to, or interest in, any amount awarded to
the Participant, otherwise than by actual payment in accordance with the
provisions of the Plan, or have any power, voluntarily or involuntarily, to
transfer, assign, anticipate, pledge, mortgage or otherwise encumber, alienate
or transfer any rights hereunder in advance of any of the payments to be made
pursuant to the Plan, or any portion thereof. The obligations of the Company
hereunder shall be binding upon any and all successors and assigns of the
Company.
7.5 WITHHOLDING. The Company shall comply with all Federal, state and
local laws and regulations respecting the withholding, deposit and payment of
any income or employment taxes relating to Deferred Amounts under the Plan,
including without limitation the withholding of Common Stock otherwise
distributable hereunder in satisfaction of any Federal, state or local income or
employment tax obligation.
7.6 NO IMPACT ON DIRECTORSHIP. The Plan shall not be construed to confer
any right on the part of a Participant to be or remain a director of the
Company, or to receive any, or any particular rate of, Fees in such capacity.
-5-
<PAGE>
7.7 INTERPRETATIONS. Interpretations of, and determinations related to,
the Plan made by the Company in good faith, including any determinations of
Deferred Amounts, Special Deferred Amounts or a Stock Account balance, shall be
conclusive and binding upon all parties; and the Company and the members of the
Board shall not incur any liability to a Participant or his or her Beneficiary
for any such interpretation or determination so made or for any other action
taken by it in connection with the Plan.
7.8 STOCKHOLDER RIGHTS. No Participant shall be deemed for any purpose
to be or have rights as a stockholder of the Company with respect to any stock
equivalents credited to that Participant's Stock Account, until and unless a
certificate for Common Stock is issued upon distribution hereunder.
7.9 SECURITIES LAWS. Common Stock shall not be distributed to any
Participant upon distribution from his or her Stock Account unless the issuance
complies with all relevant provisions of law, including without limitation,
(a) securities laws of the State of Delaware, or any other appropriate state,
(b) restrictions, if any, imposed by the Securities Act of 1933 and the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder, and (c) until such stock has been approved for listing on any
national stock exchange on which the Common Stock is traded.
7.10 EFFECTIVE DATE. The Plan shall be effective from and after May 23,
1996.
-6-
<PAGE>
ANNEX A
TO
NU-KOTE HOLDING, INC.
DEFERRED STOCK COMPENSATION PLAN
AS AMENDED AND RESTATED SEPTEMBER 27, 1996
DEFERRAL ELECTION FORM
Pursuant to Section 3.1 of the Nu-kote Holding, Inc. Deferred Stock
Compensation Plan as Amended and Restated September 27, 1996, I hereby elect
to defer for the period commencing January 1, 199 and ending at the end of
any calendar year in which I change or revoke my election, the following
portions of Fees payable to me as a Director.
____ % (0 to 100) of my Regular and Special Board Meeting Attendance Fees
____ % (0 to 100) of my Committee Meeting Attendance Fees
I understand that the amounts deferred under the Plan are not actually
invested in Common Stock of the Company, and that such stock is merely an index
for the calculation of a bookkeeping account related to my deferrals, and that
no representation has been made to me to the contrary.
I further understand that (a) no action by the Company or the Board under
the Plan shall be construed as creating a trust, escrow or other secured or
segregated fund or other fiduciary relationship of any kind in favor of any
Participant, Beneficiary, or any other person otherwise; (b) the status of
Participants and Beneficiaries with respect to any liabilities assumed by the
Company under the Plan shall be solely those of unsecured creditors of the
Company; and (c) any asset acquired or held by the Company in connection with
liabilities assumed by it under the Plan shall not be deemed to be held under
any trust, escrow or other secured or segregated fund or other fiduciary
relationship of any kind for the benefit of a Participant or Beneficiary or to
be security for the performance of the obligations of the Company, but shall be
and remain a general, unpledged, unrestricted asset of the Company at all times
subject to the claims of general creditors of the Company.
-----------------------------------------
(Signature)
Name:
------------------------------------
(Please print)
Received:
Date:
------------------------------------
NU-KOTE HOLDING, INC.
By:
--------------------------
Title:
-----------------------
Date:
------------------------
A-1
<PAGE>
ANNEX B
TO
NU-KOTE HOLDING, INC.
DEFERRED STOCK COMPENSATION PLAN
AS AMENDED AND RESTATED SEPTEMBER 27, 1996
PAYMENT ELECTION FORM
I hereby elect the following form for distribution of all amounts due under
the Plan: (please check one)
____ One payment
____ Installments over ____ (not to exceed 5) years
I acknowledge that the method for distribution of amounts payable under the
Plan may be changed by me at any time, but that the last election submitted at
least 6 months prior to my Termination of Service shall control.
-----------------------------------------
(Signature)
Name:
------------------------------------
(Please print)
Received:
Date:
------------------------------------
NU-KOTE HOLDING, INC.
By:
--------------------------
Title:
-----------------------
Date:
------------------------
B-1
<PAGE>
ANNEX C
TO
NU-KOTE HOLDING, INC.
DEFERRED STOCK COMPENSATION PLAN
AS AMENDED AND RESTATED SEPTEMBER 27, 1996
DESIGNATION OF BENEFICIARY
I, the undersigned Participant in the Nu-kote Holding, Inc. Deferred Stock
Compensation Plan as Amended and Restated September 27, 1996, hereby designate
the following person(s) or entities as my primary and contingent beneficiaries
under the Plan, the primary beneficiary to be paid all amounts due me and not
yet paid at my death, with the contingent beneficiary receiving such amounts
should the primary beneficiary predecease me:
PRIMARY BENEFICIARY: (List name and address)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CONTINGENT BENEFICIARY: (List name and address)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Unless otherwise indicated above, more than one primary or contingent
beneficiary will share in equal amounts. Signature of the Participant's spouse
is required if such spouse is not designated the primary beneficiary.
C-1
<PAGE>
-----------------------------------------
(Signature)
Name:
------------------------------------
(Please print)
Date:
------------------------------------
NU-KOTE HOLDING, INC.
By:
--------------------------
Title:
-----------------------
Date:
------------------------
SPOUSAL CONSENT
I, the undersigned spouse of the above-named Participant in the Plan,
hereby acknowledge that I have received a copy of the Plan and the related
Deferral Election Form and Payment Election Form completed by the
Participant, and consent to the designation of Beneficiary or Beneficiaries
set forth above.
-----------------------------------------
(Signature of Spouse)
Name:
------------------------------------
(Please print)
Date:
------------------------------------
C-2
<PAGE>
EXHIBIT 11.1
NU-KOTE HOLDING, INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
----------------------------
SEPTEMBER 27, SEPTEMBER 29,
1996 1995
------------- -------------
<S> <C> <C>
PRIMARY
Shares outstanding:
Weighted average number of shares outstanding................................... 21,775 21,527
Net effect of dilutive stock options (1)........................................ 1,031
------------- -------------
21,775 22,558
------------- -------------
------------- -------------
Net income (loss)................................................................. $ (2,332) $ 1,863
------------- -------------
------------- -------------
Net income (loss) per common share................................................ $ (0.11) $ 0.08
------------- -------------
------------- -------------
FULLY DILUTED
Shares outstanding:
Weighted average number of shares outstanding................................... 21,775 21,527
Net effect of dilutive stock options (1)........................................ 1,206
------------- -------------
21,775 22,733
------------- -------------
------------- -------------
Net income (loss)................................................................. $ (2,332) $ 1,863
------------- -------------
------------- -------------
Net income (loss) per common share................................................ $ (0.11) $ 0.08
------------- -------------
------------- -------------
</TABLE>
<PAGE>
EXHIBIT 11.1 (CONTINUED)
NU-KOTE HOLDING, INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
----------------------------
SEPTEMBER 27, SEPTEMBER 29,
1996 1995
------------- -------------
<S> <C> <C>
PRIMARY
Shares outstanding:
Weighted average number of shares outstanding................................... 21,760 21,463
Net effect of dilutive stock options (1)........................................ 897
------------- -------------
21,760 22,360
------------- -------------
------------- -------------
Net income (loss)................................................................. $ (537) $ 6,736
------------- -------------
------------- -------------
Net income (loss) per common share................................................ $ (0.02) $ 0.30
------------- -------------
------------- -------------
FULLY DILUTED
Shares outstanding:
Weighted average number of shares outstanding................................... 21,760 21,463
Net effect of dilutive stock options (1)........................................ 1,071
------------- -------------
21,760 22,534
------------- -------------
------------- -------------
Net income (loss)................................................................. $ (537) $ 6,736
------------- -------------
------------- -------------
Net income (loss) per common share................................................ $ (0.02) $ 0.30
------------- -------------
------------- -------------
</TABLE>
- ------------------------
(1) The net effects for the three and six month periods ended September 29, 1995
are based upon the treasury stock method using average market price during
the periods for the primary amounts, and the higher of the average market
price or the market price at the end of the period for the fully diluted
amounts. For the three and six month periods ended September 27, 1996 stock
options are not considered as those periods resulted in net losses, making
the stock options anti-dilutive.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-27-1996
<CASH> 5256
<SECURITIES> 0
<RECEIVABLES> 91019
<ALLOWANCES> 3832
<INVENTORY> 117162
<CURRENT-ASSETS> 236604
<PP&E> 121935
<DEPRECIATION> 31071
<TOTAL-ASSETS> 363150
<CURRENT-LIABILITIES> 118615
<BONDS> 122838
0
0
<COMMON> 223
<OTHER-SE> 102525
<TOTAL-LIABILITY-AND-EQUITY> 363150
<SALES> 173698
<TOTAL-REVENUES> 173698
<CGS> 127763
<TOTAL-COSTS> 127763
<OTHER-EXPENSES> 43937
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4024
<INCOME-PRETAX> (933)
<INCOME-TAX> (396)
<INCOME-CONTINUING> (537)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (537)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
