<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 6, 1996
TOKHEIM CORPORATION
-------------------------------------
(Exact Name of Company as Specified in its Charter)
Indiana 1-6018 35-0712500
------- ------ ----------
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification Number)
10501 Corporate Drive, P.O. Box 360, Fort Wayne, IN 46801
- ----------------------------------------------------- -----
(Address of principal executive office) (Zip Code)
(219)-470-4600
-----------------------------------------------------
(Company's telephone number, including area code)
N/A
---------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 6, 1996, Tokheim Corporation (the "Company") completed
the acquisition of the petroleum dispenser business (the "Acquired Business") of
Sofitam S.A., a French corporation. The Acquired Business, headquartered in
France, is the leading manufacturer and servicer of petroleum dispensers in
France and northern Africa, and a leading manufacturer in southern Europe. The
Acquisition consummated the transactions contemplated by an Option Agreement,
dated as of May 7, 1996 (the "Option Agreement") by and between the Company and
Sofitam S.A. The following description of the Option Agreement is qualified by
reference to the complete text of the Option Agreement, which is incorporated by
reference herein and attached hereto as Exhibit 3.
Pursuant to the Option Agreement, the Company acquired the equity of
the Acquired Business from Sofitam S.A. for a purchase price equal to 540
million French francs, less the amount of debt outstanding at the closing and
certain adjustments related to the Acquisition. The equity purchase price in
U.S. dollars was approximately $48.6 million.
At the time the Acquisition was consummated, the Company repaid in
full the intercompany indebtedness of the Acquired Business (approximately $24.4
million principal amount) and certain existing indebtedness of the Company
(approximately $38.1 million principal amount as of August 31, 1996). The
transaction was financed by the private placement of $100 million principal
amount of 11-1/2% Senior Subordinated Notes due 2006 and the utilization of a
portion of an $80 million bank credit facility. The Indenture relating to the
Notes and the Credit Agreement are incorporated by reference herein and attached
hereto as Exhibits 4 and 5, respectively.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of the Acquired Business.
Attached as Exhibit 1 to this Current Report on Form 8-K are audited
combined balance sheets of the Acquired Business as of December 31, 1995 and
1994, and the related combined statements of income and cash flows for each of
the three years in the period ended December 31, 1995. It is impracticable at
this time to provide the interim historical financial statements of the Acquired
2
<PAGE>
Business required by Regulation S-X. They will be filed as soon as practicable
but no later than 60 days after this report is required to be filed.
(b) Pro Forma Financial Information.
Attached as Exhibit 2 to this Current Report on Form 8-K are the
unaudited pro forma condensed consolidated statement of operations for the year
ended November 30, 1995 and pro forma condensed consolidated balance sheet as of
November 30, 1995. It is impracticable at this time to provide the
interim pro forma financial statements of the Acquired Business required by
Regulation S-X. They will be filed as soon as practicable but no later than 60
days after this report is required to be filed.
(c) Other Exhibits.
3. Option Agreement, dated as of May 7, 1996, by and between the
Company and Sofitam S.A.
4. Indenture, dated as of August 23, 1996, by and between the Company
and Harris Trust and Savings Bank, as trustee.
5. Credit Agreement, dated as of September 3, 1996, among the Company,
certain subsidiaries of the Company, NBD Bank, N.A., as administrative agent,
First Chicago Capital Markets, Inc., as arranger, and other institutions party
thereto.
6. Consent of Salustro Reydel.
3
<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 thereto duly authorized.
TOKHEIM CORPORATION
-------------------
Registrant
Date: September 23, 1996 By: /s/ Douglas K. Pinner
-----------------------
Douglas K. Pinner
President and Chief Executive Officer
Date: September 23, 1996 By: /s/ John A. Negovetich
-----------------------
John A. Negovetich
Vice President and
Chief Financial Officer
4
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
1. Audited combined balance sheets of the Acquired Business as of
December 31, 1995 and 1994, and the related combined statements of
income and cash flows for each of the three years in the period
ended December 31, 1995.
2. Unaudited pro forma condensed consolidated statement of operations
for the year ended November 30, 1995 and pro forma condensed
consolidated balance sheet as of November 30, 1995.
3. Option Agreement, dated as of May 7, 1996, by and between the
Company and Sofitam S.A.
4. Indenture, dated as of August 23, 1996, by and between the Company
and Harris Trust and Savings Bank, as trustee.
5. Credit Agreement, dated as of September 3, 1996, among the Company,
certain subsidiaries of the Company, NBD Bank, N.A., as
administrative agent, First Chicago Capital Markets, Inc., as
arranger and other institutions party thereto.
6. Consent of Salustro Reydel.
5
<PAGE>
Exhibit Number 1
AUDITOR'S REPORT ON THE FUEL PUMP DIVISION
OF SOFITAM S.A.
To the stockholders of SOFITAM S.A.:
We have audited the accompanying combined balance sheets of the Fuel Pump
Division of SOFITAM S.A. as of December 31, 1995 and 1994 and the related
combined statements of income and cash flows for each of the three years in the
period ended December 31, 1995. These combined financial statements have been
prepared subsequent to the purchase of the Fuel Pump Division of SOFITAM S.A. by
TOKHEIM CORPORATION in accordance with the Option Agreement dated May 7, 1996,
which was exercised on July 5, 1996. These financial statements are the
responsibility of the management of SOFITAM S.A. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with International Standards on
Auditing. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the Fuel
Pump Division of SOFITAM S.A. at December 31, 1995 and 1994 and the combined
results of their operations and cash flows for each of the three years in the
period ended December 31, 1995 in conformity with accounting principles
generally accepted in France which differ in certain respects from those
followed in the United States (see Notes 21 and 22 to the combined financial
statements).
Paris, July 15, 1996
SALUSTRO REYDEL
Bernard CATTENOZ
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
COMBINED BALANCE SHEETS AS OF DECEMBER 31, 1995 AND 1994
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(IN FRF THOUSANDS) DEC 31, DEC 31,
ASSETS NOTES 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed assets
Intangible assets, net................................... 2 3 618 5 041
Property, plant and equipment, net....................... 3 45 405 42 811
Shares in non-combined companies, net.................... 4 52 995 53 002
Companies accounted for by the equity method............. 5 872 --
Other long-term assets, net.............................. 9 514 9 766
- -------------------------------------------------------------------------------
Total fixed assets................................... 112 404 110 620
- -------------------------------------------------------------------------------
Current assets
Inventories, net......................................... 6 185 097 184 977
Trade and other receivables, net......................... 7 320 099 295 351
Cash and cash equivalents................................ 22 584 22 270
- -------------------------------------------------------------------------------
Total current assets................................. 527 780 502 598
- -------------------------------------------------------------------------------
Total assets......................................... 640 184 613 218
======= =======
- -------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity..................................... 8 58 739 (32 454)
of which Group interest.................................. 55 039 (36 250)
of which Minority interests.............................. 3 700 3 796
- -------------------------------------------------------------------------------
Long-term liabilities
Provisions for contingencies and charges................. 9 14 787 15 518
Long-term borrowings and participating loans............. 10 106 958 180 524
- -------------------------------------------------------------------------------
Total long-term liabilities.......................... 121 745 196 042
- -------------------------------------------------------------------------------
Current liabilities
Trade and other payables................................. 11 243 195 247 211
Short-term borrowings.................................... 12 216 505 202 419
- -------------------------------------------------------------------------------
Total current liabilities............................ 459 700 449 630
- -------------------------------------------------------------------------------
Total liabilities and shareholders' equity........... 640 184 613 218
======= =======
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements
2
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
COMBINED INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(IN FRF THOUSANDS) NOTES 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales...................................... 13 878 896 729 739 737 155
Other revenues............................. 878 2 821 2 468
Purchases used in production............... (547 946) (455 387) (453 096)
Personnel costs............................ (246 664) (243 731) (243 908)
Depreciation and amortization.............. (12 054) (15 017) (14 013)
- -------------------------------------------------------------------------------
Income from operations................. 73 110 18 425 28 606
- -------------------------------------------------------------------------------
Interest income............................ 4 780 2 306 3 855
Interest expense........................... (23 754) (20 645) (28 672)
Other financial income/(expense)........... 34 (116) 676
- -------------------------------------------------------------------------------
Financial expense, net................. (18 940) (18 455) (24 141)
- -------------------------------------------------------------------------------
Exceptional income/(expense), net.......... 14 (24 937) 37 445 (2 692)
- -------------------------------------------------------------------------------
Income before profit sharing and income
taxes..................................... 29 233 37 415 1 773
- -------------------------------------------------------------------------------
Employee profit sharing.................... (4 278) (948) (1 818)
Income taxes............................... 15 (1 224) (3 125) (4 354)
Income from companies accounted for by the
equity method............................. 131 -- --
- -------------------------------------------------------------------------------
Combined net income/(loss)................. 23 862 33 342 (4 399)
of which Group interest.................... 22 441 37 070 (1 238)
of which Minority interests................ 1 421 (3 728) (3 161)
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
(IN FRF THOUSANDS) 1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income/(loss) from combined companies........... 23 862 33 342 (4 399)
Depreciation and provisions......................... 29 932 13 190 16 051
Income from companies accounted for by the equity
method............................................. (131) -- --
Net (increase)/decrease in working capital.......... (47 493) (11 930) (4 649)
- ------------------------------------------------------------------------------
Cash flows from operating activities............ 6 170 34 602 7 003
- ------------------------------------------------------------------------------
Acquisition of fixed assets......................... (16 746) (18 162) (15 457)
Proceeds from disposal of fixed assets.............. 553 392 778
Net increase/(decrease) in loans and long term
deposits........................................... 252 (278) 10 320
Other movements on investing activities............. 2 139 (1 255) 121
- ------------------------------------------------------------------------------
Cash flows from investing and other activities.. (13 802) (19 303) (4 238)
- ------------------------------------------------------------------------------
Proceeds from issuance of share capital............. 72 426 211 10 749
Net increase/(decrease) of short-term borrowings.... 14 086 45 994 16 214
Net repayment of long term debt..................... (73 566) (40 474) (20 773)
Payments of dividends............................... (5 000) (17 740) (6 264)
- ------------------------------------------------------------------------------
Cash flows from financing activities............ 7 946 (12 009) (74)
- ------------------------------------------------------------------------------
Increase in net cash and cash equivalents........... 314 3 290 2 691
Cash and cash equivalents at beginning of the year.. 22 270 18 980 16 289
Cash and cash equivalents at end of the year........ 22 584 22 270 18 980
- ------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31,
1995, 1994 AND 1993
NOTE 1--SUMMARY OF ACCOUNTING POLICIES
(a) Principles of combination
The combined historical financial statements include the accounts of certain
companies within the Fuel Pump Division ("the Division") of Sofitam S.A., a
French company. The Division manufactures, distributes and services petroleum
dispensing equipment.
The financial statements have been combined and prepared subsequent to the
purchase of the Fuel Pump Division of Sofitam S.A. by Tokheim Corporation in
accordance with the Option Agreement dated May 7, 1996, which was exercised on
July 5, 1996. Tokheim Corporation is purchasing Sofitam's interests in certain
companies within the Division in France, the United Kingdom, Belgium, Germany,
Switzerland, Italy, Spain and several African countries. A list of the
companies concerned is set out in Note 20 to these accounts.
The underlying financial statements included in the combination have been
prepared in accordance with accounting principles generally accepted in
France. These financial statements have been combined in accordance with the
French methodology promulgated by the Conseil National de la Comptabilite
(French National Accounting Committee) by aggregating the annual accounts of
all entities included in the combination.
Where one entity owns an interest in another entity included in the
combination, the investment carried in the balance sheet of the former entity
has been eliminated. Entities in which the combined group has a direct or
indirect controlling interest of at least 50% have been fully combined.
Minority interests in shareholders' equity and net income have been calculated
on the basis of the percentage interests held.
Entities in which the combined group holds between 20% and 50% of the voting
rights, and over which the combined group does not have full control, have
been accounted for by the equity method. This method has been applied solely
to Excelsior, acquired in 1995.
Intercompany sales and purchases between entities included in the combined
financial statements, together with intercompany debit and credit balances,
have been eliminated in combination.
(b) Scope of combination
A list of the combined companies is set out in Note 20 to these accounts.
Newly acquired companies are combined as from the date of acquisition or, for
reasons of convenience, on the basis of their last balance sheet if their
impact is not material to the Division as a whole. All companies within the
Division have a December 31 year-end, with the exception of Cocitam (September
30) and Socatam (June 30). The activities of Socatam are not significant at
the combined level. Cocitam has been included in the combination on the basis
of its accounts at September 30 and Socatam on the basis of its accounts to
December 31.
Companies included in the scope of combination for the first time in 1994
include the 60% interest in Bennett Fimac, an Italian company.
Companies included in the scope of combination for the first time in 1995
include the 20% interest in Excelsior, a French company, which is accounted
for by the equity method, and the 100% interest in Sofitam Tanktechnik, a
newly incorporated German company.
(c) Translation of financial statements denominated in foreign currencies
Exchange rates at December 31 of each year have been used to translate
financial statements denominated in foreign currencies. Differences arising
from the translation of opening net assets as of January 1 at the year-end
rate are included in shareholders' equity and therefore have no impact on net
income for the year.
5
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(d) Intangible assets
In 1995, the Division changed its accounting treatment for research and
development costs related to new products. These were previously capitalized
and depreciated over 3 years but from 1995 were expensed as incurred. Research
and development costs of FRF 1 744 thousand capitalized in prior years were
written off in full in 1995, and charged as an exceptional expense.
In 1995, the Division also changed its accounting treatment for purchased
goodwill. This was previously recognized by certain French companies for the
amount of FRF 1 568 thousand and not amortized. From 1995, this goodwill is
now amortized over a period of 20 years. The corresponding expense in 1995 of
FRF 95 thousand has been charged against operating income.
(e) Property, plant and equipment
Property, plant and equipment is carried at cost. Depreciation is determined
generally on a straight line basis over the following estimated useful lives :
<TABLE>
<S> <C>
-Buildings................................................. 15 to 20 years
-Plant and equipment....................................... 5 to 7 years
-Other..................................................... 3 to 5 years
</TABLE>
(f) Inventory valuation
Inventories are stated at lower of cost or market value. Where necessary,
provisions are recorded to take account of obsolete or slow-moving items.
(g) Cash equivalents
Cash equivalents consist of short-term investments with original maturities
of less than three months when acquired. These securities are carried at cost
which approximates market value.
(h) Deferred taxes
Deferred taxes are recorded using the liability method on all temporary
differences between the financial reporting and tax bases of the Division's
assets and liabilities. No deferred tax assets or liabilities have been
recorded in the combined financial statements as the net position for each
tax-paying entity in each tax jurisdiction would result in the recognition of
deferred tax assets. These net assets have not been recognized in accordance
with accounting principles generally accepted in France, because their
realization was not probable at each year end date.
(i) Leases
Lease payments are expensed in the period to which they relate. The Division
does not recognize, therefore, assets acquired under capital leases and the
related lease obligations in the balance sheet.
(j) Exceptional income and expense
Exceptional income and expenses comprise those items which, due to their
size, nature, or the infrequency with which they occur may be considered to be
outside the normal activity of the Division. Exceptional items are presented
before tax and minority interests.
6
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2--INTANGIBLE ASSETS
ANALYSIS OF MOVEMENTS ON INTANGIBLE ASSETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DEC DEC
31, ACQUISITIONS/ DISPOSALS/ 31,
(in FRF thousands) 1993 INCREASE DECREASE OTHER 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AT COST:
. Start-up costs............. 1 674 395 (79) -- 1 990
. R&D costs.................. 869 2 606 -- -- 3 475
. Purchased goodwill......... 1 568 3 -- (92) 1 479
. Other...................... 5 246 2 334 (58) (88) 7 434
- --------------------------------------------------------------------------------
TOTAL...................... 9 357 5 338 (137) (180) 14 378
- --------------------------------------------------------------------------------
AMORTIZATION:
. Start-up costs............. (1 672) -- -- -- (1 672)
. R&D costs.................. (869) (862) -- -- (1 731)
. Purchased goodwill......... -- -- -- -- --
. Other...................... (4 290) (1 740) 58 38 (5 934)
- --------------------------------------------------------------------------------
TOTAL...................... (6 831) (2 602) 58 38 (9 337)
- --------------------------------------------------------------------------------
INTANGIBLE ASSETS, NET..... 2 526 2 736 (79) (142) 5 041
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
DEC DEC
31, ACQUISITIONS/ DISPOSALS/ 31,
(in FRF thousands) 1994 INCREASE DECREASE OTHER 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AT COST:
. Start-up costs............. 1 990 30 -- (114) 1 906
. R&D costs.................. 3 475 919 -- (4 394) --
. Purchased goodwill......... 1 479 -- -- (8) 1 471
. Other...................... 7 434 1 334 -- (52) 8 716
- --------------------------------------------------------------------------------
TOTAL...................... 14 378 2 283 -- (4 568) 12 093
- --------------------------------------------------------------------------------
AMORTIZATION:
. Start-up costs............. (1 672) -- -- 19 (1 653)
. R&D costs.................. (1 731) -- -- 1 731 --
. Purchased goodwill......... -- (95) -- -- (95)
. Other...................... (5 934) (856) -- 63 (6 727)
- --------------------------------------------------------------------------------
TOTAL...................... (9 337) (951) -- 1 813 (8 475)
- --------------------------------------------------------------------------------
INTANGIBLE ASSETS, NET..... 5 041 1 332 -- (2 755) 3 618
- --------------------------------------------------------------------------------
</TABLE>
In 1995, the Fuel Pump Division changed its accounting treatment for
research and development costs. Research and development costs capitalized at
December 31, 1994 of FRF 3 475 thousand less accumulated amortization
FRF 1 731 thousand were written off in full in 1995. The impact of the change of
method was a charge of FRF 1 744 thousand, recorded as an exceptional item in
1995.
Other movements mainly relate to translation differences.
7
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3--PROPERTY, PLANT AND EQUIPMENT
Analysis of movements on property, plant and equipment
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DEC 31, ACQUISITIONS/ DISPOSALS/ DEC 31,
(in FRF thousands) 1993 INCREASE DECREASE OTHER 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AT COST:
. Land and buildings...... 40 618 2 533 (472) (899) 41 780
. Plant and equipment..... 47 758 3 717 (674) (701) 50 100
. Other................... 38 003 6 574 (1 852) (1 391) 41 334
- -------------------------------------------------------------------------------
TOTAL................... 126 379 12 824 (2 998) (2 991) 133 214
- -------------------------------------------------------------------------------
DEPRECIATION:
. Land and buildings...... (20 372) (2 063) 472 216 (21 747)
. Plant and equipment..... (34 506) (4 689) 666 359 (38 170)
. Other................... (27 326) (5 663) 1 547 956 (30 486)
- -------------------------------------------------------------------------------
TOTAL................... (82 204) (12 415) 2 685 1 531 (90 403)
- -------------------------------------------------------------------------------
PROPERTY, PLANT AND
EQUIPMENT, NET......... 44 175 409 (313) (1 460) 42 811
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DEC 31, ACQUISITIONS/ DISPOSALS/ DEC 31,
(in FRF thousands) 1994 INCREASE DECREASE OTHER 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AT COST:
. Land and buildings........ 41 780 2 559 (438) (49) 43 852
. Plant and equipment....... 50 100 5 995 (907) 641 55 829
. Other..................... 41 334 5 909 (2 565) (814) 43 864
- --------------------------------------------------------------------------------
TOTAL..................... 133 214 14 463 (3 910) (222) 143 545
- --------------------------------------------------------------------------------
DEPRECIATION:
. Land and buildings........ (21 747) (2 083) 151 38 (23 641)
. Plant and equipment....... (38 170) (4 611) 891 (128) (42 018)
. Other..................... (30 486) (4 409) 2 315 99 (32 481)
- --------------------------------------------------------------------------------
TOTAL..................... (90 403) (11 103) 3 357 9 (98 140)
- --------------------------------------------------------------------------------
PROPERTY, PLANT AND
EQUIPMENT, NET........... 42 811 3 360 (553) (213) 45 405
- --------------------------------------------------------------------------------
</TABLE>
Other movements mainly relate to translation differences.
NOTE 4--SHARES IN NON COMBINED COMPANIES
Shares in non combined companies principally relate to Sofitam
International's investment of FRF 52 900 thousand in the Bennett Pump Company, a
US company. The shares in Bennett Pump Company are not being acquired and are to
be disposed of in accordance with the terms of the Option Agreement. The shares
are to be transferred out of the balance sheet at a nominal value prior to the
closing of the sale of the final pump division to Tokheim Corporation as
described in Note 1. The financial statements of Bennett Pump Company have
therefore not been included in these combined financial statements.
NOTE 5--COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD
Only the investment in Excelsior, acquired in 1995, is accounted for
by the equity method.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Percent Share of net Share of 1995
(in FRF thousands) Interest Assets net income
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Excelsior................................. 20% 872 131
- --------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6--INVENTORIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DEC 31, DEC 31,
(in FRF thousands) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Raw materials and supplies.................................... 128 781 124 580
Work in process............................................... 24 991 16 556
Finished and semi-finished products........................... 31 325 43 841
- --------------------------------------------------------------------------------
TOTAL..................................................... 185 097 184 977
- --------------------------------------------------------------------------------
</TABLE>
Inventories are stated net of provisions.
NOTE 7--TRADE AND OTHER RECEIVABLES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DEC 31, DEC 31,
(in FRF thousands) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Trade receivables............................................. 311 567 283 142
Provisions.................................................... (8 340) (6 920)
- --------------------------------------------------------------------------------
Trade receivables, net........................................ 303 227 276 222
Other receivables............................................. 16 872 19 129
- --------------------------------------------------------------------------------
TOTAL TRADE AND OTHER RECEIVABLES, NET.................... 320 099 295 351
- --------------------------------------------------------------------------------
</TABLE>
NOTE 8--SHAREHOLDERS' EQUITY
Analysis of movements in shareholders' equity
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
COMMON RETAINED SHAREHOLDERS' MINORITY
(in FRF thousands) STOCK PREMIUM EARNINGS EQUITY INTERESTS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993.. 33 769 7 672 (86 862) (45 421) 8 339
- --------------------------------------------------------------------------------
1994 net income............... -- -- 33 342 33 342 (3 728)
Translation difference........ -- -- (3 212) (3 212) 255
Change in scope of
combination................... -- -- 98 98 (787)
Dividends paid................ -- -- (17 740) (17 740) --
Other movements............... -- -- 479 479 (283)
- --------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994.. 33 769 7 672 (73 895) (32 454) 3 796
- --------------------------------------------------------------------------------
1995 net income............... -- -- 23 862 23 862 1 421
Capital increase.............. 72 426 -- -- 72 426 213
Merger of SATAM and EIN....... 12 250 9 889 (22 139) -- --
Translation difference........ -- -- 500 500 317
Change in scope of
combination................... -- -- (1 254) (1 254) (1 996)
Dividends paid................ -- -- (5 000) (5 000) --
Other movements............... -- -- 659 659 (51)
- --------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995.. 118 445 17 561 (77 267) 58 739 3 700
- --------------------------------------------------------------------------------
</TABLE>
In 1994, Bennett Fimac with shareholders' equity of FRF 1 475
thousand, was included in the combined financial statements for the first time.
In addition, the Division acquired the remaining 50% minority interest in
Cottam.
In 1995, Sofitam converted its participating loan in Sofitam
International, resulting in a capital increase of FRF 72 000 thousand.
9
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8--SHAREHOLDERS' EQUITY (CONTINUED)
On November 21, 1995, EIN was merged into SATAM to form Sofitam
Equipement with retroactive effect from January 1, 1995. This transaction, based
on the net book values of the net assets of each company, resulted in the
exchange of 13 shares of SATAM for 1 share of EIN. The net book value of EIN was
FRF 26 139 thousand, remunerated by common stock of FRF 16 250 thousand and a
premium of FRF 9 889 thousand. As the common stock of Ein was FRF 4 000 thousand
before this operation, there was an increase in common stock of FRF 12 250
thousand.
In addition, in 1995, a 20% interest was acquired in Excelsior, a
French company, contributing FRF 742 thousand to the shareholders' equity. The
Division is in the process of liquidating its investment in Haarmesstechnik, a
German company.
The Division's combined common stock comprises the common stock of
those companies whose capital is not held by other companies within the
Division. At December 31, 1995, the issued and outstanding share capital of
these companies consists of the following:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
NUMBER AMOUNT
OF NOMINAL IN FRF
SHARES VALUE THOUSAND
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL COMMON STOCK 118 445
- --------------------------------------------------------------------------------
SOFITAM EQUIPEMENT................................... 228 538 100 FRF 22 854
SOFITAM INTERNATIONAL................................ 827 500 100 FRF 82 750
SOGEN................................................ 54 000 100 FRF 5 400
SOFITAM PUMP SERVICES................................ 356 750 1 GBP 3 107
Other entities....................................... (1) (1) 4 334
- --------------------------------------------------------------------------------
</TABLE>
(1) African subsidiaries in Tunisia, Morocco, Cameroon and Senegal
<TABLE>
<CAPTION>
NOTE 9--PROVISIONS FOR CONTINGENCIES AND CHARGES
- ------------------------------------------------------------------------------------
Dec. 31, Dec. 31,
(FRF thousands) 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C>
Provision for warranty............................................. 3 129 3 306
Provision for restructuring........................................ 2 028 4 304
Provision for repairs.............................................. -- 1 396
Provision for employee claims...................................... 1 180 1 799
Provision for technical claims..................................... 5 611 2 959
Provision for foreign exchange loss................................ 784 --
Other.............................................................. 2 055 1 754
- ---------------------------------------------------------------------------------
TOTAL PROVISION FOR CONTINGENCIES AND CHARGES.................. 14 787 15 518
- ---------------------------------------------------------------------------------
</TABLE>
A provision for restructuring costs was made in 1995 in respect of the
reorganization and rationalization of activities at Satam and Ein.
10
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10--LONG-TERM BORROWINGS AND PARTICIPATING LOANS
Analysis of movements in long-term borrowings and participating loans
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DEC 31, NEW DEC 31,
(in FRF thousands) 1993 LOANS REPAYMENTS OTHER 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
. Participating loans................. 3 100 -- (876) 1 637 3 861
. Long-term borrowings................ 21 734 10 596 (11 591) 2 455 23 194
. Debt to SOFITAM SA.................. 188 473 3 357 (42 000) -- 149 830
. Other long-term debt................ 7 691 274 (584) (3 742) 3 639
- --------------------------------------------------------------------------------
TOTAL............................. 220 998 14 227 (55 051) 350 180 524
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
DEC 31, NEW DEC 31,
(in FRF thousands) 1994 LOANS REPAYMENTS OTHER 1995
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
. Participating loans.................... 3 861 -- -- (961) 2 900
. Long-term borrowings................... 23 194 2 963 (414) 357 26 100
. Debt to SOFITAM SA..................... 149 830 -- (75 105) -- 74 725
. Other long-term debt................... 3 639 4 (373) (37) 3 233
- ---------------------------------------------------------------------------------
TOTAL................................ 180 524 2 967 (75 892) (641) 106 958
- ---------------------------------------------------------------------------------
</TABLE>
In 1994, SOFITAM waived a debt of FRF 42 000 thousand from SOGEN,
resulting in an exceptional profit of the same amount.
In 1995, Sofitam converted its participating loan in Sofitam
International, resulting in a capital increase of FRF 72 000 thousand.
Other movements mainly relate to translation differences.
Maturities of long-term debt
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DEC 31, DEC 31,
(in FRF thousands) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Due between 1 and 2 years....................................... 87 978 157 704
Due between 2 and 5 years....................................... 3 536 12 671
Due beyond 5 years or unlimited................................. 15 444 10 149
- --------------------------------------------------------------------------------
TOTAL....................................................... 106 958 180 524
- --------------------------------------------------------------------------------
</TABLE>
Debt due between one and two years includes debt to SOFITAM SA of FRF
74 725 thousand, and FRF 149 830 thousand in 1995 and 1994, respectively, which
is considered to be repayable in the coming year.
In 1995, these debts to SOFITAM SA include an amount of FRF 7 981
thousand due by SOFITAM PUMP SERVICES, a UK company, that does not bear
interest.
NOTE 11--TRADE AND OTHER PAYABLES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DEC 31, DEC 31,
(FRF thousands) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Trade payables.................................................. 144 375 141 687
Employee and social security liabilities........................ 43 985 21 573
VAT and other taxes............................................. 14 025 15 780
Deferred income................................................. 28 017 19 948
Other........................................................... 12 793 48 223
- --------------------------------------------------------------------------------
TOTAL AND OTHER PAYABLES.................................... 243 195 247 211
- --------------------------------------------------------------------------------
</TABLE>
Deferred income corresponds primarily to advance billings by the
French companies.
11
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 12--SHORT TERM BORROWINGS
Short term borrowings include debt to SOFITAM SA of FRF 56 326 thousand and
FRF 30 075 thousand in 1995 and 1994 respectively.
In 1995, these debts to SOFITAM SA include an amount of FRF 1 281 thousand
due by SOFITAM PUMP SERVICES, a UK company, that does not bear interest.
NOTE 13--SALES
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
(in FRF thousands) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
France............................................... 644 207 520 852 520 980
Other countries...................................... 234 689 208 887 216 175
- --------------------------------------------------------------------------------
Total............................................ 878 896 729 739 737 155
- --------------------------------------------------------------------------------
NOTE 14--EXCEPTIONAL INCOME/(EXPENSE)
- -------------------------------------------------------------------------------
<CAPTION>
(in FRF thousands) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Waiver of debt from Sofitam.......................... -- 44 300 --
Restructuring costs.................................. (1 492) (6 926) --
Inventory write-downs provisions..................... (18 609) -- (2 071)
Profit sharing....................................... (3 648) -- --
Write off of research and development costs.......... (1 744) -- --
Other................................................ 556 71 (621)
- --------------------------------------------------------------------------------
EXCEPTIONAL INCOME/(EXPENSE), NET.................... (24 937) 37 445 (2 692)
- --------------------------------------------------------------------------------
</TABLE>
In 1993, Sogen made a provision of FRF 2 071 thousand against obsolete
inventory.
In 1994, Sofitam SA waived a debt of FRF 42 000 thousand due from Sogen,
resulting in an exceptional profit of the same amount. In 1994 also, Bennett &
Sauser received a debt waiver of FRF 2 300 thousand from its shareholders.
In 1995, the Division reduced the valuation of SOGEN's and SOFITAM
EQUIPEMENT's inventories to take account of revised expectations of the value
of certain slow-moving spare parts. At the same time, certain inventories were
scrapped. As a result, inventory write-down and provisions totaled FRF 18 609
thousand which have been included as an exceptional expense.
In 1995, following the merger of EIN with SATAM, profit sharing for an
amount of FRF 3 648 thousand in excess of the statutory requirements was paid
to EIN's employees. This charge is included as an exceptional expense in the
Division's profit and loss statement.
In 1995, the Division changed its accounting treatment for research and
development costs related to new products which were previously capitalized
but are now expensed as incurred. The impact of the change in method was a
charge of KF 1 744 thousand, recorded as an exceptional expense in 1995.
12
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 15--INCOME TAXES
The provision for income taxes consists of the following:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(in FRF thousands) 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
French companies.................................... (11 019) (16 381) (5 248)
Utilization of French companies' tax loss
carryforwards...................................... 10 928 14 107 2 037
Foreign companies................................... (1 133) (851) (1 143)
- -------------------------------------------------------------------------------
TOTAL CURRENT INCOME TAX EXPENSE................ (1 224) (3 125) (4 354)
- -------------------------------------------------------------------------------
Temporary differences between the financial reporting and the tax bases of
the Division's assets and liabilities, including unused tax loss carryforwards
that could give rise to deferred tax assets, are as follows:
- -------------------------------------------------------------------------------
<CAPTION>
(in FRF thousands) 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
FRANCE.............................................. 37 407 75 078 163 925
- -------------------------------------------------------------------------------
Individual company level:
-long-term capital loss carryforwards............. 4 309 4 309 4 309
-ordinary tax loss carryforwards.................. -- -- 83 955
-evergreen tax loss carryforwards................. 10 841 52 559 56 870
-accrued expenses not currently deductible
for tax.......................................... 22 257 18 210 18 791
- -------------------------------------------------------------------------------
OUTSIDE FRANCE...................................... 37 076 45 324 43 506
- -------------------------------------------------------------------------------
TOTAL........................................... 74 483 120 402 207 431
- -------------------------------------------------------------------------------
As of December 31, 1995, the French companies of the Division had long-term
capital loss carryforwards of FRF 4 309 that can be offset against long-term
capital gains. The long-term capital loss carryforwards will expire
progressively through the year 2000 if not utilized. The current tax rate on the
long term capital loss carryforwards was increased by the French Government to
20.9% in 1995, compared with 19% in 1993 and 1994.
The French companies of the Division also had loss carryforwards of FRF 10
841 at December 31, 1995 which may be carried forward indefinitely ("evergreen
losses"). The current tax rate on these loss carryforwards was increased in 1995
by the French government to 36.66%, compared with 33.33% in 1993 and 1994.
The Division also had net ordinary loss carryforwards of FRF 33 166
thousand in the United Kingdom and FRF 3 910 thousand in Spain at December 31,
1995.
The utilization of these tax losses carryforwards is dependent on the
future profitable operation of the Division in the tax jurisdictions in which
the carryforwards arose.
NOTE 16--EMPLOYEE INFORMATION
- -------------------------------------------------------------------------------
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Average no. of employees during the year............ 1 239 1 209 1 203
No. of employees at year-end........................ 1 260 1 218 1 199
- -------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 17--COMMITMENTS UNDER CAPITAL LEASES
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
DEC 31, DEC 31, DEC 31,
(in FRF thousands) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Original value of assets................................ 30 651 31 736 35 099
Depreciation for the year............................... 2 712 2 285 2 427
Accumulated depreciation................................ 13 096 10 384 10 049
Lease payments for the year............................. 4 364 4 690 5 095
Future minimum lease payments........................... 27 925 31 055 34 909
- --------------------------------------------------------------------------------
</TABLE>
Assets acquired under capital leases relate mainly to the land and buildings
at Tremblay which are the principal place of business of Sofitam Equipement.
NOTE 18--PENSION COMMITMENTS
Provision is not made for retirement benefits payable to the employees of
the French companies, but these liabilities are disclosed as off-balance sheet
commitments.
These commitments are calculated on the basis of the age and accrued length
of service of the employees concerned, and by taking account of their expected
salary levels upon retirement and the probability that they will remain
employees of the Division until retirement. The amounts payable are also
calculated in accordance with the rules of the Collective Bargaining Agreement
for the Metallurgical Industry.
Retirement benefits payable to the employees of the foreign companies, where
appropriate, are generally covered by pension funds.
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
DEC DEC DEC
31, 31, 31,
(in FRF thousands) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Pension commitments........................................ 17 237 13 419 14 754
- --------------------------------------------------------------------------------
</TABLE>
NOTE 19--OTHER COMMITMENTS
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
DEC 31, DEC 31, DEC 31,
(in FRF thousands) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Bank guarantees......................................... -- 2 190 2 196
Factored receivables.................................... -- 2 410 11 000
Guarantees given on behalf of subsidiaries.............. -- 3 573 --
Other................................................... -- 2 837 --
- --------------------------------------------------------------------------------
TOTAL .............................................. -- 11 010 13 196
- --------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 20--LIST OF COMBINED COMPANIES
<TABLE>
<CAPTION>
PERCENTAGE
COMPANY HEAD OFFICE COUNTRY INTEREST
------- ----------- ------- ----------
<C> <S> <C> <C>
SOFITAM EQUIPEMENT.... 5, rue des Chardonnerets France 100%
93290 TREMBLAY-EN-FRANCE
SOFITAM INTERNATIONAL. 41/43, rue des Bas France 100%
92600 ASNIERES
SAM................... 5, rue des Chardonnerets France 100%
93290 TREMBLAY-EN-FRANCE
SOGEN................. 41/43, rue des Bas France 100%
92600 ASNIERES
BENNETT & SAUSER...... Fabrikstrasse n(degrees) 3, Switzerland 50%
Tankanlagen
4530 SOLOTHURN 3
SOFITAM PUMP SERVICES. Adur Boatyard, Old Shoreham United Kingdom 51%
Road
SHOREHAM-BY-SEA, West
Sussex
BN43 5TA
SOFITAM NV............ Mecheisesteenweg 313/315 Belgium 100%
1800 VILVOORDE
PARKE PENRHYN......... 1, rue Fries Switzerland 100%
1701 FRIBOURG
SOFITAM IBERICA....... Poligono Urvasa, Calle Spain 99%
Norte, Nave 27
08130 Sta. Perpetua de
Mogoda--
BARCELONE
BENNETT FIMAC......... Quattordio Km 10800 SP 26 Italy 60%
14030 SCURZOLENGO (AT)
MATAM................. 14, rue Rene Montanon Morocco 50%
CASABLANCA
COTTAM................ 116, Av. de l'Union du Tunisia 100%
Maghreb Arabe
B.P. 117--LA SOUKRA 2036
COSETAM............... B.P. 1237--DAKAR Senegal 99%
COCITAM............... Bld de Marseille, Zone 4C-- Ivorian Coast 99%
1048 ABIDJAN
SOCATAM............... B.P. 3941--DOUALA Cameroon 100%
HAARMESSTECHNIK....... Gartnerstrasse 81d--25469 Germany 40%
HALSTENBEK
EXCELSIOR............. Rue de Belfort France 20%
25220 Roche-Les-Beaupre
SOFITAM TANKTECHNIK... Am Neumarkt 30, Oslohaus Germany 100%
22041 HAMBURG
</TABLE>
15
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 21--SUMMARY OF DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE
FUEL PUMP DIVISION OF SOFITAM AND THOSE APPLICABLE UNDER US GAAP
The Division's accounting policies comply with accounting principles
generally accepted in France ("French GAAP"). Those accounting policies which
differ significantly from accounting principles generally accepted in the
United States ("US GAAP") are described below.
(a) Research and development costs
In accordance with the option provided by French GAAP, the Division
capitalized certain research and development costs in 1994. As described in
Note 1, the Division changed its accounting treatment in respect of research
and development costs in 1995. Costs of FRF 919 thousand incurred in 1995 were
expensed and the remaining net book value of costs capitalized in 1994 of FRF
1 744 thousand was written off as an exceptional expense in 1995.
Under US GAAP, these research and development costs would have been charged
to operating income as incurred throughout the prior periods.
(b) Purchased goodwill
Under French GAAP, purchased goodwill may be retained on the balance sheet
without amortization. As described in Note 1, the Division changed its
accounting treatment for purchased goodwill in 1995 and started amortization
over a 20 year period.
Under US GAAP, goodwill must be amortized against income over a period not
exceeding 40 years. In restating the combined financed statements to US GAAP,
the estimated life of purchased goodwill is also 20 years.
(c) Capital leases
There is no obligation under French GAAP to capitalize fixed assets acquired
through capital leases or long-term rental arrangements.
Under US GAAP, capital leases are recorded at the beginning of the lease
term as an asset and a liability at an amount equal to the present value of
the minimum lease payments to be made during the lease term. The asset is
amortized over its useful life.
(d) Unrealized foreign exchange gains
Under French GAAP, unrealized foreign exchange gains arising from the
translation of foreign currency denominated payables or receivables are not
recognized in the income statement.
Under US GAAP, these gains are recognized as part of income.
(e) Retirement indemnities
In accordance with French legislation, the French companies have a defined
benefit plan covering all employees at retirement. The plan provides for the
payment of a lump sum retirement benefit. These payments are made upon
retirement, but, if an employee leaves the Division prior to retirement age,
the benefit lapses.
16
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 21--SUMMARY OF DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE
FUEL PUMP DIVISION OF SOFITAM AND THOSE APPLICABLE UNDER US GAAP (CONTINUED)
Under French GAAP, there is no requirement to record any provision in
respect of the liability to pay retirement indemnities but, if not provided,
the liability must be disclosed as an off balance sheet commitment. Retirement
indemnity commitments disclosed by the Division amount to FRF 17 237 thousand,
FRF 13 419 thousand and FRF 14 754 thousand at December 31, 1995, 1994 and
1993 respectively.
For the purpose of restating the combined financial statements to US GAAP,
provision must be made for projected retirement indemnity commitments. Partial
provision has been made in accordance with the terms of SFAS 87, which allows
the required provision to be established over the period of the average
remaining working lives of the employees concerned. Part of the required
provision has been charged to equity at December 31, 1992, with a further part
charged to income in the financial statements. The remaining service period of
employees expected to receive benefits was estimated at the adoption date.
The discount rates used in determining the actuarial present value of
projected benefit obligations were 7 percent, 8 percent and 6 percent
respectively for 1995, 1994 and 1993. The assumed rate of increase in future
compensation levels used is 4 percent per annum.
The funding status of the defined benefit plan for the Division was as
follows :
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEC DEC DEC
31, 31, 31,
(in FRF thousands) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Projected benefit obligation for services rendered to
date.................................................. 17 237 13 419 14 754
Plan assets at market value............................ -- -- --
- --------------------------------------------------------------------------------
PROJECTED BENEFIT OBLIGATION IN EXCESS OF PLAN ASSETS.. 17 237 13 419 14 754
- --------------------------------------------------------------------------------
Unrecognized transition obligation..................... (5 308) (5 925) (6 542)
Unrecognized actuarial gains/(losses).................. (1 990) (132) (3 604)
- --------------------------------------------------------------------------------
NET ACCRUAL FOR RETIREMENT BENEFITS................ 9 939 7 362 4 608
- --------------------------------------------------------------------------------
The net benefit plan costs (credits) are comprised of :
- --------------------------------------------------------------------------------
<CAPTION>
(in FRF thousands) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost........................................... 886 1 116 704
Interest cost on projected benefit obligations......... 1 074 885 818
Net amortization of unrecognized transition obligation. 617 617 617
(Gain)/losses.......................................... -- 136 --
- --------------------------------------------------------------------------------
NET PERIODIC PENSION EXPENSE....................... 2 577 2 754 2 139
- --------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 21--SUMMARY OF DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE
FUEL PUMP DIVISION OF SOFITAM AND THOSE APPLICABLE UNDER US GAAP (CONTINUED)
(f) Deferred income taxes
Deferred taxes reflect the net tax effects of temporary differences
between the bases used for financial reporting and income tax purposes.
Significant components of the Division's deferred tax assets consist of the
following :
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DEC 31, DEC 31, DEC 31,
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
FRANCE (1).......................................... 16 749 27 012 55 752
- -------------------------------------------------------------------------------
Ordinary loss carryforwards....................... -- -- 27 982
Evergreen loss carryforwards...................... 3 974 17 518 18 955
Long term capital loss carryforwards.............. 901 819 819
Profit sharing, not currently deductible for tax.. 2 854 316 606
Inventory provisions, not currently deductible for
tax.............................................. 5 192 4 720 3 557
Restructuring costs, not currently deductible for
tax.............................................. 113 1 034 2 100
Deferred taxes on pensions and similar
obligations...................................... 3 644 2 454 1 536
Other............................................. 71 151 197
- -------------------------------------------------------------------------------
OUTSIDE FRANCE (2).................................. 12 977 16 473 15 227
- -------------------------------------------------------------------------------
Tax losses........................................ 12 977 15 863 15 227
Deferred taxes on research and development costs.. -- 610 --
- -------------------------------------------------------------------------------
TOTAL DEFERRED TAX ASSETS (1 + 2)............... 29 726 43 485 70 979
- -------------------------------------------------------------------------------
Less valuation allowance............................ (26 011) (40 271) (69 246)
Deferred tax assets, net of valuation allowance..... 3 715 3 214 1 733
Deferred tax liabilities............................ -- -- (643)
- -------------------------------------------------------------------------------
DEFERRED TAX ASSET, NET............................. 3 715 3 214 1 090
- -------------------------------------------------------------------------------
</TABLE>
The valuation allowance for that portion of deferred tax assets which
are not considered probable of realization has been determined based on the
information that would have been available at the end of each fiscal period
without the benefit of hindsight. Consequently, the utilization of the French
companies' tax loss carryforwards in 1995, 1994 and 1993 was not taken into
account in determining the valuation allowance at the end of each fiscal year.
(g) Presentation of combined income statements
The classification of certain items and the format of the Division's
combined income statements presented under French GAAP differ in a number of
ways from normal presentation under US GAAP. Under US GAAP income statement
classification, exceptional items detailed in Note 14 would have been classified
as a deduction from, or an addition to, income from operations. Employee profit
sharing which is presented in a separate line item below income from operations
under French GAAP, would also be classified as an operating expense under US
GAAP. In addition, the format of the combined income statements under French
GAAP is presented by nature of expense (personnel costs, depreciation, etc.).
Under US GAAP, the format of the combined income statements would be presented
by function of expense (cost of goods sold, selling, general & administration,
etc.).
18
<PAGE>
FUEL PUMP DIVISION OF SOFITAM S.A.
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONCLUDED)
NOTE 22--RECONCILIATION TO US GAAP
(a) Net income
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(in FRF thousands) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
GROUP INTEREST IN COMBINED NET INCOME................... 22 441 37 070 (1 238)
Start up costs.......................................... 74 (316) --
Research and development costs.......................... 1 744 (1 744) --
Purchased goodwill...................................... 95 -- --
CAPITAL LEASE
Interest expense...................................... (1 729) (1 848) (1 957)
Depreciation and amortization......................... (1 062) (1 062) (1 062)
Purchases used in production.......................... 3 049 3 049 3 049
Unrealized foreign exchange gains/(losses).............. 103 (285) --
Pension and similar obligations......................... (2 577) (2 754) (2 139)
Deferred tax credit..................................... 501 2 124 5 023
Effect of reconciling items on minority interest........ 109 182 (773)
- --------------------------------------------------------------------------------
NET INCOME ACCORDING TO US GAAP..................... 22 748 34 416 903
- --------------------------------------------------------------------------------
</TABLE>
US GAAP adjustments are presented before tax and minority interests.
The impact of these adjustments on deferred taxation and minority interests are
separately identified in the above table.
(b) Shareholders' equity
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DEC 31, DEC 31,
(in FRF thousands) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
GROUP INTEREST IN THE SHAREHOLDERS' COMBINED EQUITY........... 55 039 (36 250)
Start up costs................................................ (222) (316)
Research and development costs................................ -- (1 744)
Purchased goodwill............................................ (1 376) (1 479)
CAPITAL LEASE
Tangible fixed assets....................................... 17 838 18 900
Related long term debt...................................... (18 032) (19 352)
Unrealized exchange gains..................................... 273 170
Pension and similar obligations............................... (9 939) (7 362)
Deferred tax asset............................................ 3 715 3 214
Effect of reconciling items on minority interest.............. 98 (11)
SHAREHOLDERS' EQUITY ACCORDING TO US GAAP................. 47 394 (44 230)
- --------------------------------------------------------------------------------
</TABLE>
US GAAP adjustments are presented before tax and minority interests.
The impact of these adjustments on deferred taxation and minority interests are
separately identified in the above table.
19
<PAGE>
Exhibit Number 2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated financial
data (the "Pro Forma Financial Data") of the Company are derived from the
audited financial statements of Tokheim and Sofitam (included elsewhere herein)
and have been adjusted to illustrate the effects of the Transactions. The Pro
Forma Financial Data and accompanying notes should be read in conjunction with
the consolidated financial statements of Tokheim and Sofitam, including the
notes thereto, appearing elsewhere in this Offering Memorandum. The pro forma
statement of operations includes Sofitam's combined statement of operations for
the year ended December 31, 1995 and Tokheim's consolidated statement of
operations for the year ended November 30, 1995. The pro forma balance sheet
includes Sofitam's combined balance sheet as of December 31, 1995 and Tokheim's
consolidated balance sheet as of November 30, 1995. These pro forma statements
give effect to the Transactions, including the Acquisition and related purchase
accounting adjustments, as if the Transactions had taken place on December 1,
1994 for the statement of operations and November 30, 1995 for the balance
sheet. The Pro Forma Financial Data are not necessarily indicative of either
future results of operations or the results that might have occurred if the
foregoing Transactions had been consummated on the indicated dates.
The Acquisition will be accounted for using the purchase method of
accounting. The allocation of the aggregate purchase price included in the Pro
Forma Financial Data is preliminary.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SOFITAM SOFITAM TOKHEIM
FRENCH ADJUSTMENTS(1) AND U.S. U.S. PRO FORMA PRO FORMA
GAAP(1) RECLASSIFICATIONS(2) GAAP GAAP ADJUSTMENTS CONSOLIDATED
-------- -------------------- -------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales............... $177,450 $ -- $177,450 $221,573 $ -- $399,023
Operating expenses...... 160,273 1,483 161,756 210,591 -- 372,347
Special charges......... -- 4,294(2) 4,294 -- -- 4,294
Depreciation and
amortization........... 2,431 (172) 2,259 4,857 1,594(3) 8,710
-------- ------ -------- -------- -------- --------
Operating income........ 14,746 (5,605) 9,141 6,125 (1,594) 13,672
Interest expense, net... 3,820 349 4,169 2,815 9,182(4) 16,166
Other expense, net...... 5,290 (5,052) 238 395 (162)(5) 471
Profit sharing.......... 863 (863) -- -- -- --
-------- ------ -------- -------- -------- --------
Earnings (loss) before
income taxes.......... 4,773 (39) 4,734 2,915 (10,614) (2,965)
Income taxes........... 247 (101) 146 39 -- 185
-------- ------ -------- -------- -------- --------
Net earnings (loss)... $ 4,526 $ 62 $ 4,588 $ 2,876 $(10,614) $ (3,150)
======== ====== ======== ======== ======== ========
Preferred stock
dividends(6)........... -- -- -- $ 1,580 -- $ 1,580
======== ========
</TABLE>
- --------
(1) Sofitam's financial information contained in the pro forma condensed
consolidated statement of operations has been derived from the audited
combined financial statements of Sofitam prepared in accordance with
French GAAP. Such financial information has been adjusted to comply with
U.S. GAAP. Differences between French GAAP and U.S. GAAP are discussed in
Note 21 to Sofitam's historical financial statements included elsewhere in
this Offering Memorandum. The amount of $4,294 included under "special
charges" above is reflected as exceptional expense under French GAAP and
has been reclassified to special charges for purposes of the pro forma
presentation under U.S. GAAP. The composition of this amount is discussed
at Note (2) below. Certain classification assumptions have been made to
allocate the adjustments discussed above among the various income
statement captions. Amounts are converted into U.S. dollars based on an
average rate of 4.958 French francs per U.S. dollar.
1
<PAGE>
(2) Special charges consist of: (i) inventory provisions of $3,753, (ii) write
off of capitalized research and development expenses of $352 and (iii)
other charges of $189.
(3) The pro forma adjustment represents the amortization of deferred costs and
purchased goodwill associated with the Acquisition as follows:
<TABLE>
<CAPTION>
ANTICIPATED
GROSS AMORTIZATION YEARLY
AMOUNT PERIOD AMOUNT
------- ------------ ------
<S> <C> <C> <C>
Purchased goodwill........................... $49,057 40 years $1,227
Legal and advisory fees...................... 4,339 40 years 108
Other acquisition costs...................... 10,359 40 years 259
------- ------
$63,755 $1,594
======= ======
(4) The pro forma adjustments to interest expense, net, were calculated as
follows:
Historical interest expense, net:
Tokheim.................................... $ 2,815
Sofitam.................................... 4,169
-------
Total.................................... 6,984
Plus: Interest expense on borrowings under:
Bank Credit Agreement...................... 3,720
Senior Subordinated Notes.................. 11,500
-------
Total.................................... 15,220
Less: Interest expense on:
Tokheim debt being refinanced.............. (2,264)
Sofitam debt being refinanced.............. (4,791)
-------
Total.................................... (7,055)
-------
Sub total................................... 15,149
Amortization of deferred financing costs:
Bank Credit Agreement...................... 617
Senior Subordinated Notes.................. 400
-------
Pro forma interest expense, net............. $16,166
=======
</TABLE>
Interest expense, net, includes that portion of interest with respect to the
Guaranteed ESOP Obligation which is not paid through dividends on, or
redemptions of, the ESOP Preferred Stock.
(5) The pro forma adjustment for "Other expense, net" eliminates Tokheim's
unamortized deferred financing costs of $162 on the debt of Tokheim being
refinanced as part of the Transactions.
(6) Dividends are payable on the Company's ESOP Preferred Stock, the proceeds
of which are used to service the Guaranteed ESOP Obligation.
2
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
SOFITAM SOFITAM TOKHEIM CONSOLIDATED
FRENCH U.S. U.S. PRO FORMA TOKHEIM &
GAAP(1) ADJUSTMENTS(1) GAAP GAAP ADJUSTMENTS SOFITAM
-------- -------------- -------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash
equivalents........... $ 4,524 $ -- $ 4,524 $ 2,966 $(4,524) $ 2,966
Accounts receivable,
net................... 64,116 55 64,171 45,649 -- 109,820
Inventory, net......... 37,075 -- 37,075 34,995 -- 72,070
Other current assets... -- -- -- 3,188 -- 3,188
-------- ------- -------- -------- ------- --------
Total current assets. 105,715 55 105,770 86,798 (4,524) 188,044
Property, plant &
equipment, net......... 9,095 3,573 12,668 28,558 -- 41,226
Other noncurrent assets
and deferred charges... 13,420 (10,190) 3,230 5,876 (283)(2) 8,823
Purchased goodwill and
other intangibles...... -- -- -- -- 71,455 (3) 71,455
-------- ------- -------- -------- ------- --------
Total assets......... $128,230 $(6,562) $121,668 $121,232 $66,648 $309,548
======== ======= ======== ======== ======= ========
LIABILITIES &
STOCKHOLDERS' EQUITY:
Liabilities:
Current liabilities:
Current portion of
long-term debt....... $ -- $ -- $ -- $ 351 $ (351)(4) $ --
Notes payable bank.... 43,366 -- 43,366 2,364 (45,730)(4) --
Accounts payable...... 31,481 -- 31,481 18,689 -- 50,170
Accrued expenses...... 17,231 -- 17,231 18,141 -- 35,372
Purchase accounting
reserve.............. 10,359 (5) 10,359
-------- ------- -------- -------- ------- --------
Total current
liabilities......... 92,078 -- 92,078 39,545 (35,722) 95,901
Long-term debt(5)....... 21,424 -- 21,424 35,897 101,492 (4) 158,813
Capital lease
obligations............ -- 3,612 3,612 -- -- 3,612
Postretirement benefits
liability.............. -- -- -- 13,882 -- 13,882
Minimum pension
liability.............. -- -- -- 3,868 -- 3,868
Minority interest....... 741 20 761 -- -- 761
Other long-term
liabilities............ 2,963 1,991 4,954 917 -- 5,871
-------- ------- -------- -------- ------- --------
Total liabilities.... 117,206 5,623 122,829 94,109 65,770 282,708
ESOP Preferred Stock,
net(7)................. -- -- -- 6,426 -- 6,426
Common stockholders'
equity,
net(7)................. (11,024) (12,185) (1,161) 20,697 878 (6) 20,414
-------- ------- -------- -------- ------- --------
Total liabilities &
stockholders'
equity.............. $128,230 $(6,562) $121,668 $121,232 $66,648 $309,548
======== ======= ======== ======== ======= ========
</TABLE>
3
<PAGE>
Notes to Pro Forma Condensed Consolidated Balance Sheet
(dollars in thousands)
(1) Sofitam's financial information contained in the pro forma condensed
consolidated balance sheet has been derived from the audited combined
financial statements of Sofitam prepared in accordance with French GAAP.
Such financial information has been adjusted to comply with U.S. GAAP and
to exclude the investment in Bennett Pump Company which is not being
purchased by Tokheim as discussed in note 4 to Sofitam's historical
financial statements included elsewhere in this Offering Memorandum.
Differences between French GAAP and U.S. GAAP are discussed in Note 21 to
Sofitam's historical financial statements included elsewhere in this
Offering Memorandum. Certain classification assumptions have been made to
allocate the adjustments discussed above among the various income statement
captions. Amounts were converted into U.S. dollars based on exchange rate
of 4.993 French francs per U.S. dollar.
(2) This amount reflects the write-off of Tokheim's unamortized deferred
financing costs of $283 related to previous debt being refinanced as part
of the Transactions.
(3) This amount reflects the excess of costs over the fair value of the net
assets of Sofitam acquired pursuant to the Acquisition and the deferred
costs associated with the Acquisition.
<TABLE>
<S> <C>
Total purchase price of Sofitam.................................. $108,162
Refinance Sofitam debt, net of cash............................ 60,266
--------
Fair value of net assets acquired................................ 47,896
Book value of Sofitam net assets............................... (1,161)
--------
Excess of cost over fair value of assets acquired................ 49,057
Deferred costs associated with the Acquisition:
Deferred financing costs....................................... 7,700
Legal and financial advisory fees.............................. 4,339
Estimated other Acquisition related costs...................... 10,359
--------
Total goodwill and other intangibles............................. $ 71,455
========
</TABLE>
(4) This amount reflects the repayment of existing Tokheim and Sofitam debt
with the proceeds of the Offering and borrowings under the Bank Credit
Facility.
<TABLE>
<S> <C>
Borrowings under the Bank Credit Facility....................... $ 58,813
Issuance of the Notes........................................... 100,000
Repay:
Tokheim current portion of long-term debt..................... 351
Tokheim and Sofitam notes payable............................. 45,730
Tokheim and Sofitam long-term debt............................ 57,321
Sofitam excess cash........................................... (4,524)
--------
Net adjustment to reflect the financing transaction and the
application of proceeds to repay existing debt................. $ 59,935
========
</TABLE>
(5) This amount reflects the estimated other long-term liability associated
with future costs of the Acquisition of $10,359, principally the amounts
required to be expended in connection with the cost savings described in
"Summary--Summary Unaudited Pro Forma Consolidated Financial Data."
(6) This amount reflects the elimination of Sofitam's existing net book value
of $(1,161) and Tokheim's historical deferred financing costs of $283.
(7) See consolidated financial statements for information as to the components
of ESOP Preferred Stock, net, and common stockholders' equity, net.
4
<PAGE>
Exhibit Number 3
OPTION AGREEMENT
----------------
BY AND BETWEEN
--------------
TOKHEIM CORPORATION
-------------------
AND
---
SOFITAM S.A.
------------
DATED AS OF MAY 7, 1996
<PAGE>
OPTION AGREEMENT
----------------
This OPTION AGREEMENT ("Agreement") is made as of May 7, 1996, by and
among:
TOKHEIM CORPORATION, a corporation organized under the laws of the state of
Indiana, whose head office is located at 10501 Corporate Drive, Fort Wayne,
Indiana 46845, U.S.A, ("Buyer"), represented by Douglas K. Pinner, President and
Chief Executive Officer of Buyer,
and
SOFITAM S.A., a societe anonyme organized under the laws of France, with a share
capital of FF 314,806,500, whose head office is located at 41/43, rue des Bas,
92600 Asnieres, registered with the Trade Register of Commerce and Companies of
Nanterre under the number B 572 079 101 ("Sofitam" or "Seller"), represented by
Jean-Pierre Quinio, president-directeur general of Seller.
Certain capitalized terms are defined in Section 8.12.
W I T N E S S E T H :
-------------------
WHEREAS, Seller, through certain of its Affiliates, conducts a
business ("Fuel Pump Business") engaged in the production, sale and service of
fuel pumps and site controllers in France and internationally in, among other
places, Europe, North America and Africa comprising, among others, manufactured
products including primarily those set forth at Schedule 0.1 attached hereto
(collectively "Fuel Pump Products") and conducted through those companies listed
in Schedule 0.4;
WHEREAS, in France, the Fuel Pump Business is owned and operated,
indirectly through Seller's Affiliates, at six different sites consisting of its
group headquarters, three subsidiary locations and two plants: i.e., at Sofitam
International group location in Asnieres, at Sofitam Equipement subsidiary
location in Tremblay and Sofitam Equipement's plant in Falaise,
2
<PAGE>
at Sofitam Equipement subsidiary location in Grentheville and Sofitam
Equipement's plant in Grentheville and at Sogen subsidiary location in Asnieres;
the Sofitam Equipement plant in Falaise specializes in the manufacture of the
Fuel Pump Products set forth at Schedule 0.2 attached hereto ("Satam Products");
and the Sofitam Equipement plant in Grentheville specializes in the manufacture
of the Fuel Pump Products set forth at Schedule 0.3 attached hereto ("Ein
Products");
WHEREAS, in other parts of Europe the Fuel Pump Business is owned and
operated indirectly through Seller's Affiliates at six subsidiary locations:
i.e., at Bennett & Sauser subsidiary location in Solothurn, Switzerland, at
Sofitam Pump Services subsidiary location in West Sussex, United Kingdom, at
Sofitam Tanktechnik subsidiary location in Hamburg, Germany, at Sofitam N.V.
subsidiary location in Vilvoord, Belgium, at Bennett Fimac subsidiary location
in Scurzolengo, Italy and Sofitam Iberica subsidiary located in Barcelona,
Spain;
WHEREAS, in Africa, the Fuel Pump Business is owned and operated
indirectly by Seller through Seller's Affiliates at five subsidiary locations:
i.e., at Matam subsidiary location in Casablanca, Morocco, at Cottam subsidiary
location in Tunis, Tunisia, at Cocitam subsidiary location in Abidjan, Ivory
Coast, at Cosetam subsidiary location in Dakar, Senegal and at Socatam
subsidiary location in Douala, Cameroon;
WHEREAS, Schedule 0.4 sets forth those companies in which Seller owns
equity interests, directly or indirectly, with respect to which the Buyer
desires to obtain an option to purchase, directly or indirectly (all such equity
interests listed on Schedule 0.4 are referred to herein as the "Shares"),
Schedule 0.4 also sets forth the amounts of such equity interests;
WHEREAS, Buyer does not desire to obtain the equity interests owned by
Seller, directly or indirectly, in Inotec S.A., Bennett Pump & Co., Satoll and
Samya;
WHEREAS, Buyer desires to obtain from Seller, and Seller desires to
grant to Buyer, an option to purchase from Seller, the Shares, for the purchase
price and upon the terms and subject to the conditions set forth in this
Agreement;
3
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises and the
respective covenants and agreements contained herein, the parties hereto agree
as follows:
ARTICLE I - OPTION TO PURCHASE SHARES -
---------------------------------------
PURCHASE AND SALE OF SHARES
---------------------------
1.1 Grant of the Option.
-------------------
1.1.1 Option. Upon the terms and subject to the conditions hereof,
Seller hereby grants to Buyer an irrevocable and exclusive option (the "Option")
to purchase, directly or indirectly, all (but not less than all) the Shares.
1.1.2 Option Period. The Option shall be exercisable from the date of
signature of this Agreement until forty-five (45) calendar days from the date
hereof (the "First Option Period") at which time the Option shall automatically
expire unless it has been duly exercised by Buyer prior thereto or unless the
Second Option Period enters into effect pursuant to the immediately following
sentence. The Option Period shall be automatically extended by Seller for
another twenty five (25) calendar days (the "Second Option Period"), provided
that, before the end of the First Option Period, Buyer has provided to Seller a
firm commitment letter in the form ordinarily given by first class United
States, Canadian or French financial institutions in connection with the
financing of transactions such as those contemplated herein (the "Financing
Commitment Letter") from the financial institutions (which shall be first class
financial institutions) granting financing to Buyer for the transactions
contemplated herein (in an amount of approximately THREE HUNDRED SEVENTY EIGHT
MILLION French francs (FF 378,000,000)) (the "Financed Amount"). The amount
reflected in the Financing Commitment Letter may be less than the Financed
Amount to the extent Buyer delivers to Seller written commitments from a
substantial investor or investors for an equity investment in Buyer, the funds
from which equity investment, when aggregated with the amount reflected in the
Financing Commitment Letter, will enable Buyer to pay the Financed Amount (such
written commitment letters for equity investments and the Financing Commitment
Letter are collectively referred to herein as the "Commitment Letter"). In the
event that the Second Option Period enters into effect as provided in this
4
<PAGE>
Section 1.1.2, the Option shall automatically expire at the end of such Second
Option Period unless the Option has been duly exercised by Buyer prior thereto.
1.1.3 Exercise of the Option. Buyer may exercise the Option, but only
after the Commitment Letter has been provided, at any time during the First
Option Period or the Second Option Period (the "Option Exercise Date"), by
giving written notice of such exercise to Seller seven (7) business days (the
"Pre-Exercise Period") in advance of the Option Exercise Date (for the avoidance
of doubt such written notice shall specifically set forth the date of the Option
Exercise Date), in which case the Closing of the transaction shall take place
pursuant to Section 5.1, but in no event later than twenty (20) business days
after the Option Exercise Date (the "Closing"), unless the parties hereto
otherwise agree in writing upon a different date for the Closing upon the
reasonable request of one of such parties. During the Pre-Exercise Period and
before the Option Exercise Date, Seller covenants and agrees that it shall cause
all relevant workers council meetings (Comites d'Entreprises or equivalent) of
the Companies and the Subsidiaries to be validly called and duly convened for
the purpose of notifying the workers' representatives of the transfer of control
of the Companies and the Subsidiaries.
1.1.4 Consideration for the Option.
----------------------------
(a) In consideration for Seller granting the Option, Buyer shall
deposit with Credit Lyonnais, acting as escrow agent ("Escrow Agent"), pursuant
to the terms of the Escrow Agreement attached hereto as Exhibit A (the "Escrow
Agreement"), THREE MILLION U.S. DOLLARS (USD 3,000,000), of which Buyer shall
pay to Escrow Agent (x) ONE MILLION FIVE HUNDRED THOUSAND U.S. DOLLARS (USD
1,500,000) within three (3) business days of the date of this Agreement (with
Buyer providing to Seller immediately an irrevocable payment instruction in such
amount provided by Buyer to Seller on the date of this Agreement) and (y) ONE
MILLION FIVE HUNDRED THOUSAND U.S. DOLLARS (USD 1,500,000) no later than eleven
(11) business days from the date of this Agreement, provided that if Buyer shall
fail to make the payment required by sub-clause (y), the Option, which may not
be exercised unless such payment has been duly made, shall automatically and
immediately expire. On the day of such expiration, Buyer agrees to duly execute
with Seller
5
<PAGE>
and deliver to the Escrow Agent the Joint Instructions to Release Escrow Funds
from the Escrow Account, attached as Exhibit A to the Escrow Agreement (the
"Joint Instructions") instructing the Escrow Agent to immediately pay the
amounts in Escrow (the "Escrow Amount") to Seller(it being indicated for the
avoidance of doubt that Sections 1.1.4(b), (c) and (d) shall not be applicable
in such a case). Upon such payment, this Agreement shall immediately terminate
with the consequences of such termination as set forth in Section 6.2(b).
(b) Upon presentation of the Commitment Letter by Buyer to Seller,
which Commitment Letter shall be reasonably acceptable to Seller, on or prior to
the day the First Option Period expires, Seller agrees to duly execute with
Buyer and deliver to the Escrow Agent the Joint Instructions instructing the
Escrow Agent to pay to Buyer ONE MILLION FIVE HUNDRED THOUSAND U.S. DOLLARS (USD
1,500,000) two (2) business days after such presentation, provided that if
Seller notifies Buyer in writing on the date of such presentation that the
Commitment Letter is not reasonably acceptable to Seller, Buyer and Seller agree
to use their best efforts to promptly resolve any differences with respect
thereto and, upon any such resolution, Seller agrees to duly execute, if so
requested by and with Buyer, the Joint Instructions providing for the aforesaid
payment. For the avoidance of doubt, the Second Option Period shall come into
effect upon presentation by Buyer to Seller of the Commitment Letter
notwithstanding it not being reasonably acceptable to Seller.
(c) If Buyer: (i)(A) does not provide the Commitment Letter on or
prior to the day the First Option Period expires and (B) the conditions set
forth in Section 1.1.4(d)(i) and (ii) below are not both satisfied, or (ii)(A)
does so provide the Commitment Letter, (B) does not duly exercise the Option by
the end of the Second Option Period and (C) the conditions set forth in Section
1.1.4(e)(i) or (ii) are not satisfied, the Escrow Agent shall, in the event
Buyer does not duly exercise the Option by the end of the First Option Period
or, if the Second Option Period enters into effect, then by the end of the
Second Option Period, on the day immediately after the last day of such relevant
Option Period, pay the Escrow Amount immediately to Seller as an agreed
forfeitary amount on account of Seller having granted the Option to Buyer. Buyer
agrees to duly execute with Seller
6
<PAGE>
the Joint Instructions to instruct the Escrow Agent to make such payment. Upon
such payment, this Agreement shall immediately terminate with the consequences
of such termination as set forth in Section 6.2(b). It being confirmed for the
avoidance of doubt that, in the event that Buyer duly exercises the Option prior
to the expiration of the Second Option Period, the Escrow Amount shall become
due to Seller in accordance with Section 1.3.8 or, if the Agreement is
terminated in accordance with Section 6.1, in accordance with Section 6.2(a).
(d) Notwithstanding anything to the contrary in Section 1.1.4(a)
above, the Escrow Amount shall not be paid to Seller (and Buyer shall not be
required to duly execute with Seller the Joint Instructions) in the case where
Buyer has not provided the Commitment Letter on or prior to the day on which the
First Option Period expires (such that the Second Option Period does not enter
into effect) and (i) a Material Adverse Change (as defined in Section 4.1.2) has
occurred prior to the date on which the First Option Period expires and (ii)
Buyer sets forth in a notice delivered to Seller in writing no later than on the
day on which the First Option Period expires a reasonably detailed explanation
(with numbers) of Buyer's view that such a Material Adverse Change has occurred.
(e) Notwithstanding anything to the contrary in Section 1.1.4(a)
above, the Escrow Amount shall not be paid to Seller (and Buyer shall not be
required to duly execute with Seller the Joint Instructions) in the case where
the Second Option Period enters into effect and Buyer has not exercised the
Option on or prior to the day on which the Second Option Period expires and (i)
the conditions set forth in sub-clauses (d)(i) and (ii) above have occurred
(modified so as to be related in time to the day on which the Second Option
Period (rather than the First Option Period) expires) or (ii) Buyer has been
denied (conclusively) any of the approvals or authorizations set forth on
Schedule 2.3.4 and has set forth in a notice delivered to Seller no later than
the day on which the Second Option Period expires an explanation of which
approval or authorization has been so denied, with supporting evidence from the
relevant Governmental Entity.
(f) In the event that the Option has not been duly exercised by Buyer
and the conditions
7
<PAGE>
set forth in Sections 1.1.4(d)(i) and (ii) or 1.1.4(e)(i) or (ii), as the case
may be, are satisfied, Seller agrees to duly execute with Buyer the Joint
Instructions within three (3) business day of receipt of the written
notifications set forth in Sections 1.1.4(d)(ii) or (e)(i) or (ii) instructing
the Escrow Agent to immediately pay the Escrow Amount to Buyer. Upon such
payment, this Agreement shall immediately terminate with the consequences of
such termination set forth in Section 6.2(b). In the event Seller disputes the
satisfaction of any such conditions by written notification to Buyer within
three (3) business day of receipt of the written notifications set forth in
Sections 1.1.4(d)(ii) or (e)(i) or (ii), the Escrow Amount shall remain in
escrow and such dispute shall be resolved in accordance with Section 8.4. Buyer
and Seller each agree to execute the Joint Instructions in accordance with any
final arbitral award issued pursuant to Section 8.4.
(g) In the event the Buyer duly exercises the Option, the Escrow
Amount shall remain in escrow until the earlier of (i) the termination of this
Agreement pursuant to Section 6.1, after which the Escrow Amount shall be
released as provided for in Section 6.2(a) and (ii) payment of the Escrow Amount
to the Seller pursuant to Section 1.3.8(a)(ii).
1.1.5 Time. Time shall be of the essence for purposes of this
Article I.
1.1.6 Interest. Any interest or other amounts earned or accrued on
the Escrow Amount (net of any fees of the Escrow Agent pursuant to the terms of
the Escrow Agreement) shall be included within such definition.
1.2 Sale of Shares. If Buyer shall have duly exercised the Option in
accordance with Section 1.1.3, at the Closing provided for in Section 5.1,
Seller will sell, assign and transfer, or cause to be sold, assigned and
transferred to Buyer and Buyer will purchase from Seller, the Shares, free and
clear of all Liens.
1.3 Purchase Price and Payment.
1.3.1 Share Purchase Price. Upon the terms and subject to the
conditions of this Agreement, in consideration of the aforesaid sale, assignment
and transfer of the Shares, Buyer agrees to pay and shall
8
<PAGE>
pay, subject to the terms and conditions of this Agreement, to Seller at the
Closing for the Shares an amount equal to (A) FIVE HUNDRED FORTY MILLION French
francs (FF 540,000,000) minus (B) Existing Indebtedness (as defined in Section
2.1.11) at December 31, 1995 minus (C) Intercompany Debt (as defined in Section
2.1.11) at December 31, 1995 minus (D) any amounts received by Seller as payment
in connection with the exercise by any person of any preemptive rights relating
to the Shares (the resulting amount is hereinafter referred to as the "Share
Purchase Price").
1.3.2 General Method of Payment and Late Payment. The payment of the
Share Purchase Price and the Post-Closing Adjustment (as defined in Section
1.3.7), if any, and all other cash payments under this Agreement, shall be made
to the receiving party by depositing, by bank wire transfer, the required amount
(in immediately available funds) in an account of the receiving party designated
by it for such purpose, which designation shall be made in writing no later than
three (3) calendar days before the date such payment is due. All sums payable
hereunder which are not paid in a timely fashion shall (without excusing such
late payment) bear interest, in French francs and net of withholding tax, at the
rate per annum equal to PIBOR (Paris Interbank Offered Rate) for deposits of
three months duration plus three hundred (300) basis points (the "Interest
Rate") from and including the date payment was due through and including the
date payment is made.
1.3.3 Base Balance Sheet; Closing Balance Sheet.
(a) Attached hereto as Schedule 1.3.3 is a combined balance sheet,
prepared in accordance with the Accounting Principles (as defined in Section
2.1.5(a)), of the Fuel Pump Business as at December 31, 1995, which reflects a
combined Net Worth ("situation nette combinee") of SEVENTY ONE MILLION TWO
HUNDRED FIFTY EIGHT THOUSAND French francs (FF 71,258,000) and includes the
related schedules and notes, if any (the "Base Balance Sheet").
(b) Within forty five (45) days from the Closing, Buyer shall deliver
to Seller a combined balance sheet of the Fuel Pump Business as at the Closing
Date (the "Closing Balance Sheet"). The Closing Balance Sheet shall be prepared
in accordance with
9
<PAGE>
the Accounting Principles (as defined in Section 2.1.5(a)).
1.3.4 Joint Audit.
(a) Buyer and Seller agree that the Paris office of Coopers & Lybrand
(designated by the Buyer) and Salustro Reydel (designated by the Seller) (the
"Auditors") shall promptly jointly carry out an audit of the Closing Balance
Sheet. The Auditors shall apply the Accounting Principles (as defined in
Section 2.1.5(a)) and shall use their best efforts to deliver their joint
report, which must, in order to be valid, be signed by both Auditors (the "Joint
Audit Report"), to the Buyer and the Seller at the latest sixty (60) days after
the delivery by Buyer to Seller of the Closing Balance Sheet. The Joint Audit
Report shall indicate the amount of the Audited Net Worth ("situation nette") as
calculated on the basis of the Closing Balance Sheet in a manner consistent with
the calculation of Net Worth on the Base Balance Sheet, provided that (A) the
reserves and provisions in the Base Balance Sheet may not have been reversed
unless an event justifying the reversal has occurred, (B) no effect or
consequence on Net Worth arising from the transfer of Bennett Pump & Company
("Bennett") by Sofitam International S.A. to Seller or its Affiliates (excluding
the Companies or the Subsidiaries) shall be taken into the calculation of
Audited Net Worth on the Closing Balance Sheet and (C) no equity investments
made by any Company or Subsidiary from and including January 1, 1996 through and
including the Closing shall be taken into such calculation.
(b) In the event the Auditors are not in agreement and consequently
the Joint Audit Report is not issued, the Auditors shall nonetheless use their
best efforts to issue another report (the "Partial Report") within the same
period and signed by them, which shall indicate (with figures) the items on
which they have (i) agreed, but which agreement is different than the position
reflected in the Closing Balance Sheet and (ii) disagreed. All items included
within the Partial Report as having been agreed (sub-section (i) above) shall be
final and binding on the parties and on the Independent Auditor (as defined in
Section 1.3.5) and all items not included within the Partial Report as having as
aforesaid been agreed (sub-section (i) above) or disagreed (sub-section (ii)
above) shall be deemed to have been agreed in the manner and amounts reflected
in the Closing Balance
10
<PAGE>
Sheet (such latter items being called herein the "Implied Agreements"), such
Implied Agreements being also final and binding on the Parties and the
Independent Auditor.
(c) In the event that the determination by each of the Auditors of
the Audited Net Worth is different but within FIVE MILLION French francs (FF
5,000,000) of each other, then the Auditors shall each issue a signed statement
so indicating and, provided that such signed statements (the "Signed
Statements") are issued by both Auditors within the aforesaid sixty (60) day
period, for all purposes hereunder, the Audited Net Worth shall be the average
of the Net Worth determinations by each such Auditor. In such case the
Independent Auditor shall not pursue its mission.
(d) Each party shall pay the fees of the Auditor designated by it.
In the event of the intervention of the Independent Auditor, its fees shall be
borne in equal parts by Buyer and Seller.
1.3.5 Failure to establish the Joint Audit Report.
(a) In the event the Auditors do not submit to the parties the Joint
Audit Report signed by both Auditors or the Signed Statements signed by each
Auditor within sixty (60) days after the delivery by Buyer to Seller of the
Closing Balance Sheet, the Paris office of Ernst & Young shall be appointed as
independent auditor (the "Independent Auditor").
If Ernst & Young does not accept its appointment or is in the
impossibility of carrying out its mission in accordance with the terms of this
Section 1.3.5, each party may via a refere proceeding request the President of
the Commercial Court of Paris to appoint the Paris office of another
internationally recognized accounting firm as Independent Auditor.
(b) The Independent Auditor appointed pursuant to (a) above shall:
(i) have as its mission to perform an audit of the Closing
Balance Sheet, review and resolve the disagreements between the Auditors
and thereby determine the final amount of the aforesaid Audited Net Worth.
For the purposes of determining
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the aforesaid Audited Net Worth, the Independent Auditor shall accept and
give effect to the items (and computations) on which the Auditors are in
agreement, as noted in the Partial Report if such is issued by the Auditors
within the above stated time limit and in such case shall further accept
and give effect to the Implied Agreements. In the event the Auditors shall
not have submitted a Partial Report within the above time limit, the
Independent Auditor shall determine the aforesaid Audited Net Worth without
taking into account, as the case may be, any items on which the Auditors
may have agreed and no Implied Agreements shall exist.
(ii) deliver to the parties, within a period of sixty (60) days
as of the date of its appointment, a final report which shall indicate its
determination of the aforesaid Audited Net Worth (the "Contradictory
Report").
(iii) act as an expert in accordance with the provisions of
Article 1592 of the French Civil Code and the Contradictory Report shall be
conclusive, final and binding on the parties, which expressly renounce any
right to contest the Contradictory Report or any part thereof.
(c) In the event the Auditors submit to the parties the Joint Audit
Report signed by each of them within the period of sixty (60) days specified in
Section 1.3.4, the Audited Net Worth shall be the amount certified by the
Auditors in their Joint Audit Report. Such determinations or, in the event that
the Partial Report is issued, any agreement therein and/or Implied Agreements
stemming therefrom, shall be considered as final and binding on the parties, and
the Auditors shall be deemed to have acted in accordance with Article 1592 of
the Civil Code. The parties expressly renounce any right to contest the Joint
Audit Report, the Partial Report or any part thereof.
(d) Each party shall ensure that the Auditor designated by it shall
fully cooperate with the other Auditor and with the Independent Auditor,
including granting access to all working papers and files.
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1.3.6 Principles to be applied by the Auditors and the Independent
Auditor. For the purposes of their respective reports, the Auditors and the
Independent Auditor shall be bound by and shall apply:
(i) the terms and conditions of this Agreement; and
(ii) the Accounting Principles, and, for areas not covered by
the Accounting Principles, generally accepted accounting principles in the
jurisdiction of incorporation of each Company or Subsidiary ("GAAP").
1.3.7 Post-Closing Adjustments.
(a) Buyer and Seller agree that five (5) days from the Joint
Audit Report's or Signed Statements' delivery to Buyer and Seller within
the sixty (60) day time period mentioned above, or, if the Joint Audit
Report is not or the Signed Statements are not so issued, then five (5)
calendar days from the delivery of the Contradictory Report, to the extent
that (i) the Audited Net Worth is less than FF 71,258,000 (the
"Shortfall"), Seller shall make a payment to Buyer equivalent to (x) the
amount of such Shortfall less (y) FIVE MILLION French francs (FF
5,000,000)or (ii) if the Audited Net Worth is greater than FF 71,258,000
(the "Surplus"), Buyer shall make a payment to Seller equivalent to (x) the
amount of the Surplus less (y) FIVE MILLION FRENCH FRANCS (FF 5,000,000),
provided that in no event shall the amounts calculated pursuant to sub-
clauses (i) or (ii) above be less than zero (any such amount calculated
pursuant to sub-clauses (i) or (ii) above is hereinafter referred to as the
"Post Closing Adjustment").
Any payments to be made pursuant to sub-clauses (i) or (ii) above
shall be made with interest on the amount of such payment at the Interest
Rate from and including the Closing Date (as defined in Section 5.1)
through and including the date payment is actually made, net of withholding
taxes.
(b) As used in this Agreement "Net Worth" ("situation nette") as
of any date shall mean an amount equal to (i) the aggregate book value of
the assets of the Fuel Pump Business reflected on a balance sheet prepared
as at such date (and in accordance with the Accounting Principles) minus
(ii) the aggre-
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gate book value of the liabilities of the Fuel Pump Business reflected on a
balance sheet prepared at such date (and in accordance with the Accounting
Principles).
1.3.8 Payment of Share Purchase Price; Payment of the Post-Closing
Adjustment. The Share Purchase Price shall be paid as follows:
(a) At the Closing, (i) Buyer shall deliver to Seller an amount equal
to the Share Purchase Price minus any Escrow Amount and (ii) the Escrow
Agent shall deliver to Seller the Escrow Amount pursuant to the Joint
Instructions duly executed by Buyer and Seller.
(b) The Post Closing Adjustment (a) calculated and payable pursuant
to Section 1.3.7, if any, shall be paid by Buyer to Seller or by Seller to
Buyer, as the case may be, at the time set forth in Section 1.3.7.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Seller. Seller represents and
warrants, as of the date of signature of this Agreement, that:
2.1.1 Corporate Status.
(a) Seller. Seller is a societe anonyme duly organized and
validly existing under the laws of France and has all material requisite
corporate power to own its properties and carry on its business as now
being conducted.
(b) The Companies and the Subsidiaries. Each of the companies
set forth in Schedule 2.1.1(b) (the "Companies") and the Subsidiaries (as
defined in Section 2.1.2(d) is duly organized and validly existing under
the laws of its jurisdiction of incorporation and has, and at the Closing
will have, the corporate power and authority to own its respective
properties and carry on its respective business as currently conducted.
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2.1.2 Share Capital; Subsidiaries.
(a) The Shares are all the outstanding capital stock and equity
interests of the Companies (including Outelec S.A. and Excelsior S.A.)
owned by Seller and all of the outstanding shares of capital stock of each
Company have been duly authorized and are validly issued, fully paid and
non-assessable and, except as set forth in Schedule 2.1.2(a), are owned by
the Seller or one of the Companies, free and clear of all Liens.
(b) Set forth in Schedule 2.1.2(b) is a list and a brief description
of all outstanding subscriptions, options, conversion rights, warrants,
preemptive rights or other agreements of any kind providing for the
purchase, issuance or sale or restriction on transfer of any interests in
the capital stock of any of the Companies or the Subsidiaries ("Rights on
the Shares").
(c) Except as set forth in Schedule 2.1.2(c), none of the by-laws of
the Companies or the Subsidiaries contain a "clause d'agrement" or other
similar restriction or requirement, and all necessary corporate consents
with respect to the transactions contemplated in this Agreement will have
been, at the Closing Date, duly obtained and will be in full force and
effect. No right to receive dividends relating to any Shares has been
transferred, assigned or mortgaged in any manner. No Subsidiary which is
not 100% owned by a Company, has issued any preference share of whatever
nature (e.g., "part de fondateur"), share with double voting rights
("action a droit de vote double"), or any "certificats d'investissement" or
other equity interests, and no limitation has been placed on the voting
rights of any Shares, in particular pursuant to article 177 of the law of
24 July 1966. No issuance of any of the above type of securities by any
such Subsidiary, nor any limitation on voting rights, is in process.
(d) Schedule 2.1.2(d) sets forth an accurate and complete list of
each entity (including, but not limited to, any company, partnership, joint
venture or groupe d'interet economique) of which outstanding share capital
or other equity interest a majority of the voting rights is owned, directly
or indirectly, by any Company, indicating the percentage of share capital
or other equity interest or voting rights, directly or indirectly, by the
relevant Compa-
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ny (and identifying the Company). Schedule 2.1.2(d) also sets forth with
respect to each entity (including, but not limited to, any company,
partnership, joint venture or groupe d'interet economique) of which any
Company owns a minority of the outstanding share capital or other equity
interest or voting right (other than shares of entities held by a Company
as part of a liquid investment portfolio), the number and percentage of
shares or other equity interests and voting rights owned or controlled by
any other Person and the identity of such Person. The term "Subsidiary"
shall include only those companies or other entities set forth in Schedule
2.1.2(d) under the heading "Subsidiary".
(e) Except as set forth on Schedule 2.1.2(e), all of the outstanding
shares of capital stock of each Subsidiary have been duly authorized and
are validly issued, fully paid and non-assessable and are owned by those
Affiliates of Seller, and to the best knowledge of Seller, those other
Persons set forth in Schedule 2.1.2(e), free and clear of all Liens. No
right to receive dividends relating to any share or share of a Subsidiary
has been transferred, assigned or mortgaged in any manner.
2.1.3 Title to Shares. Seller has, or immediately prior to the
Closing will have, good and marketable title to the Shares and to all of
the rights afforded thereby, free and clear of all Liens, other than those
Liens disclosed in Schedules 2.1.2(a) and (b).
2.1.4 Authority. The Seller has the full corporate power and
authority to enter into this Agreement and the other documents contemplated
hereby, and to transfer, assign and deliver the Shares as provided in this
Agreement, and such delivery will convey to Buyer good and marketable title
to the Shares and to all of the rights afforded thereby, free and clear of
all Liens. This Agreement is a legal, valid and binding obligation of
Seller, enforceable against it in accordance with its terms. The execution
and delivery of this Agreement and the other documents contemplated hereby
and the consummation of the transactions contemplated hereby have been, or
at the Closing Date will be, duly authorized by all necessary corporate
actions of Seller.
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2.1.5 Financial Statements; Undisclosed Liabilities.
(a) Attached as Schedule 2.1.5(a) hereto are true and complete copies
of the individual (comptes sociaux) balance sheets as at December 31, 1995 (or
at the most recently ended fiscal year), and individual statements of income of
each Company and each of its Subsidiaries for the twelve (12) month period then
ended (the "1995 Financial Statements") each, together with all notes and
annexes thereto, if any, and, in the case of (i) Bennett & Sauser AG, with an
unqualified opinion, certified by its commissaires aux comptes (or foreign
equivalent) and (ii) Sofitam Iberica, Socatam S.A., Cosetam S.A. and Cocitam
S.A., the 1995 Financial Statements have been reviewed by an independent outside
accountant. Unqualified opinions, certified by the respective commissaires aux
comptes (or foreign equivalent) relating to the financial statements of Sofitam
Equipement S.A., Sogen S.A., Sofitam N.V., Sofitam International S.A. and
Sofitam Pump Services Limited shall be delivered by Seller to Buyer within ten
(10) calendar days of the date of this Agreement. Included on the Base Balance
Sheet is also a list of all combining adjustments to the 1995 Financial
Statements of the Companies and the Subsidiaries. Notwithstanding the foregoing,
none of the representations and warranties with respect to the 1995 Financial
Statements shall be deemed to have been breached if the specific item in
question is covered by the combining adjustments attached to the Base Balance
Sheet.
The 1995 Financial Statements have been prepared on a basis consistent
with past practice using the specific principles, methods and procedures and
rules set forth in Schedule 2.1.5(a) ("Accounting Principles") and, for areas
not covered by the Accounting Principles, then in accordance with GAAP and
present fairly (d'une maniere sincere) the financial condition of the Companies
and Subsidiaries at the date thereof and the results of their operations and
changes in financial condition for the period then ended.
(b) The Companies and the Subsidiaries have no liabilities
(including, but not limited to, absolute, accrued, fixed, unliquidated,
contingent) which, pursuant to the Accounting Principles, and for areas not
covered by the Accounting Principles, GAAP, should have been but were not
reflected in the 1995
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Financial Statements except (i) as set forth in Schedule 2.1.5(b) or (ii)
incurred in the ordinary course of business since December 31, 1995.
2.1.6 Accounts Receivable. The accounts receivable shown on the 1995
Financial Statements (subject to reserves for non-collectability as shown
therein), and all accounts receivable acquired or generated by each Company and
each Subsidiary since December 31, 1995 (the "Receivables"), are bona fide
receivables and represent amounts due with respect to actual, arm's length
transactions entered into in the ordinary course of business and are collectible
at their recorded amounts within 360 days from the date of the Closing and are
legal, valid and binding obligations of their account obligors; provided,
however, that Seller makes no representation as to the collectability of any
Receivable should the account obligor be declared, voluntarily or involuntarily,
bankrupt or be involved in a bankruptcy or similar type proceeding or be subject
to any judicially imposed stay of payments after the Closing. Those Receivables
reflected on the 1995 Financial Statements have been so reflected in accordance
with the Accounting Principles and, secondarily, as aforesaid, GAAP. Except
pursuant to the agreements or arrangements set forth in Schedule 2.1.6, no
account has been assigned or pledged to any other Person and except as set forth
in Schedule 2.1.6 no defense or setoff to any such account has been asserted in
writing by an account obligor.
2.1.7 Inventory. The inventories reflected on the 1995 Financial
Statements are stated in accordance with the Accounting Principles and,
secondarily, as aforesaid, GAAP. All inventories used in or relating to the
conduct of the Fuel Pump Business are usable or able to be sold (but with no
guarantee of such sale) in the ordinary course of business consistent with past
practice (subject to reserves for obsolescence as reflected in the 1995
Financial Statements) and are owned by the Companies and the Subsidiaries, free
and clear of all Liens. Such reserves have been reflected on the 1995 Financial
Statements in accordance with the Accounting Principles and, secondarily, as
aforesaid, French GAAP.
2.1.8 Transactions with Affiliates. Except as reflected on the
Financial Statements, none of the Companies or the Subsidiaries have any
outstanding liabilities or obligations for amounts owing
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to or from, or leases, contracts or other commitments or arrangements or
understandings of a legally binding nature of any kind with Seller or any
Affiliate thereof (excluding from Affiliates, the Companies and the
Subsidiaries).
2.1.9 Transactions with Directors and Officers. Except as set forth
on Schedule 2.1.9, none of the directors or officers of any of the Companies or
Subsidiaries has any contracts or other commitments, arrangements or
understandings of any kind with the Seller or any of its Affiliates (excluding
from Affiliates, the Companies and the Subsidiaries, and excluding any contracts
or other commitments, arrangements or understandings relating to any such
director's employment with the Seller or any Affiliate thereof).
2.1.10 Product Liability. Except as set forth in Schedule 2.1.10:
(a) since January 1, 1994, (i) there have been no civil, criminal or
administrative actions, suits, notices of violation, notices of investigation or
notices of proceedings which were or are pending or, to Seller's knowledge
threatened, and (ii) there have not been any written demands or claims (and
since January 1, 1994, to the best knowledge of Seller, there have been no oral
demands or claims), against Seller, any Company or Subsidiary with respect to
the Fuel Pump Business or relating to any Product, and, to the best knowledge of
Seller, since January 1, 1994, there have been no oral demands or claims made to
agents acting on behalf of Seller or any Company or Subsidiary with respect to
the Fuel Pump Business or any Product, relating (as to both Subsection
2.1.10(a)(i) and (ii)) to any alleged material hazard or alleged material defect
in design, manufacture, materials or workmanship, including, without limitation,
any alleged material failure to warn or alleged breach of express or implied
warranties or representations, relating to any product manufactured,
distributed, or sold by Seller with respect to the Fuel Pump Business or the
Products; provided, however, that the foregoing shall not include written or
oral demands or claims for repairs or written or oral demands or claims pursuant
to any such warranties or representations of the type made in the ordinary
course of business; and
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(b) since January 1, 1994, there have not been any product recalls,
reworks, or post-sale warnings ("Recalls") issued by Seller or any Company or
Subsidiary and to the best knowledge of Seller, since January 1, 1994, there
have been no oral Recalls issued by agents acting on behalf of Seller, any
Company or Subsidiary with respect to the Fuel Pump Business, relating to any
Product, or to the best knowledge of Seller, any investigation or consideration
of or decision concerning whether or not to undertake any Recall.
2.1.11 Existing Indebtedness. Set forth on Schedule 2.1.11 is a list
of (i) all agreements including, but not limited to, any mortgage, indenture,
debenture, bond, note, installment obligation, accounts receivable based
financing or factoring arrangement or other instrument of any kind constituting
financial indebtedness of any of the Companies and/or Subsidiaries ("Existing
Indebtedness") as of December 31, 1995, including the amount of principal and,
if applicable, interest accrued and payable, outstanding as of December 31, 1995
with respect to each item of Existing Indebtedness and (ii) all intercompany
debt, with amounts as of December 31, 1995 (which, for the avoidance of doubt,
includes all amounts due and payable (including interest accrued and payable) by
the Companies and the Subsidiaries to the Seller and its Affiliates (excluding
the Companies and the Subsidiaries) except for those amounts so due and payable
by the Companies and their Subsidiaries for goods sold and services rendered in
the ordinary course of business) ("Intercompany Debt"), (iii) all outstanding
letters of credit ("Letters of Credit") issued on behalf of any of the Companies
and/or Subsidiaries and (iv) guarantees, cautions, comfort letters and similar
instruments ("Guarantees") issued by Seller or its Affiliates on behalf of any
of the Companies or the Subsidiaries. Except as set forth in Schedule 2.1.11,
all of the Existing Indebtedness, pursuant to its terms, can be prepaid without
penalty of any kind and all Letters of Credit and Guarantees can be replaced or
assumed, as applicable, without penalty of any kind pursuant to their respective
terms.
2.1.12 Pending Acquisitions/Dispositions. Except as set forth in
Schedule 2.1.12, neither any of the Companies nor any of the Subsidiaries has
(A) pending, or is currently negotiating towards, any acquisitions or
dispositions (other than the
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transactions contemplated by this Agreement) with respect to any business,
material assets, company or other form of entity or any form of equity or
equity-related interest in any company or other form of entity or (B) any
obligation to negotiate for the purchase or disposition of, or create, any
business, assets, company or other form of entity or any form of equity or
equity-related interest in any company or other form of entity.
2.1.13 Absence of Certain Events. Since December 31, 1995 and through
the Option Exercise Date neither any Company nor any Subsidiary has, nor will
have:
(a) Incurred any obligations or liabilities (fixed or contingent),
except obligations or liabilities incurred in the ordinary course of business on
an arm's length basis and consistent with past practices;
(b) Mortgaged, pledged or subjected to any Lien or any other
encumbrance, any of its assets, tangible or intangible;
(c) Sold, transferred, alienated or suffered any damage, destruction
or loss (whether or not covered by insurance) affecting any of its tangible or
intangible assets or property, in the aggregate, in excess of Two Million Five
Hundred Thousand French francs (FF 2,500,000) (or the local currency equivalent
thereof) other than the sale of inventory in the ordinary course of business on
an arm's length basis;
(d) Made changes in the accounting methods or practices followed by it
or with respect to its business, or any changes in depreciation or amortization
policies or rates therefor adopted;
(e) Entered into any purchase commitments in excess of normal
operating inventories or at prices higher than current market prices;
(f) Entered into any sales commitments in excess of its ability to
fulfill the same at a normal profit as anticipated when such commitment was
made;
(g) With respect to the Companies and the Subsidiaries in the
aggregate, made, committed or
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paid for any capital expenditures other than (A) payment for any capital
expenditures subject to binding contracts made prior to the date hereof (all of
which are listed in Schedule 2.1.13(g)), and (B) capital expenditures, in the
aggregate, less than Ten Million French francs (FF 10,000,000), and
individually, less than One Hundred Thousand French francs (FF 100,000) (or the
local currency equivalent thereof);
(h) Made or suffered any termination of employment of any of the key
employees, or received notice of any expression of intention by any of the key
employees to terminate his or her employment;
(i) Amended its articles of incorporation or by-laws, entered into
any agreement of merger, consolidation or reorganization, dissolved or entered
into any plan of liquidation or dissolution, purchased or issued any shares or
other securities, or entered into any commitments or arrangements for the
voting, purchase, redemption or issuance of shares of capital stock or other
securities, made any change in the number of issued shares of its capital stock,
granted any right or option or made any commitment or agreement relating to its
capital stock, or acquired or created any subsidiary;
(j) Made or suffered any cancellation or termination of any insurance
policy;
(k) Materially increased its debt or entered into any arrangement
changing the material terms of such debt;
(l) Taken any action not in the ordinary course of business
consistent with past practices;
(m) Purchased, redeemed or made any dividend or other distributions
with respect to any Shares, as the case may be;
(n) Lent any amounts or waived or cancelled any receivables or debts
owed to it other than in the ordinary course of business consistent with past
practice;
(o) Entered into or amended any contract material to the business of
the Companies or the Subsidiaries, other than in the ordinary course of business
consistent with past practice and not in
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violation of any of the representations and warranties herein;
(p) Entered into or amended arrangements for any compensation
benefits provided to its officers, directors or employees;
(q) Granted any increase in compensation or benefits except to the
extent required by collective labor negotiations in the ordinary course of
business or as required by law other than in the ordinary course of business
consistent with past practices; or
(r) Authorized or agreed or otherwise become committed to do any of
the foregoing.
2.1.14 Intellectual Property.
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(a) The Companies and the Subsidiaries are the sole and exclusive
owners of record of all Intellectual Property, except as set forth in Schedule
2.1.14(b), currently used in the Fuel Pump Business or necessary to the Fuel
Pump Business as currently conducted, free and clear of any Liens. All such
Intellectual Property is valid and enforceable. None of such Intellectual
Property is infringing or violating any third party rights except for
infringements or violations which do not have, and are not reasonably likely to
have, a Material Adverse Effect.
(b) The Companies and the Subsidiaries are entitled to use, pursuant
to valid license agreements or other contracts, the Intellectual Property listed
on Schedule 2.1.14(b). All such license agreements or other contracts relating
to Intellectual Property are valid and enforceable and none of them are
infringing or violating any third party rights except for infringements or
violations which do not have, and are not reasonably likely to have, a Material
Adverse Effect.
2.1.15 Assets Necessary for Business; Insurance.
----------------------------------------
(a) All assets of any kind and nature (tangible or intangible, but
excluding the names, brand names or trademarks relating to "Sofitam", "Bennett",
"Satam" and "Ein" and any assets of Bennett) (each, a "Fuel Pump Business
Asset," and collectively, the "Fuel Pump Business Assets") which are
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part of the Fuel Pump Business or necessary for the conduct of the Fuel Pump
Business as currently conducted or used in or necessary for the production
and/or sale of the Satam Products, the Ein Products, including those Fuel Pump
Business Assets that may be currently owned by Seller and its Affiliates will be
at Closing either (i) owned by the Companies or the Subsidiaries, who will have
good and marketable title to such owned Fuel Pump Business Assets free and clear
of all Liens (except any Liens which do not have and are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect) or (ii)
leased by the Companies or the Subsidiaries pursuant to valid and enforceable
leases. Immediately after the Closing, none of the Seller or its Affiliates will
own or lease any Fuel Pump Business Assets (or if such were the case, Seller
will use its best efforts to promptly transfer such Fuel Pump Business Assets to
Buyer or its designee without cost). Without limiting the generality of the
foregoing, Fuel Pump Business Assets includes all applicable weight and control
certificates currently required by any country in which the Companies or the
Subsidiaries does business or required with respect to the sale of any Product,
and all other permits of any kind currently required for the operation of the
Fuel Pump Business as currently conducted. All tangible Fuel Pump Business
Assets owned by the Companies and Subsidiaries are structurally sound with no
material defects and (subject to the items below) are in good operating
condition and repair so as to permit in all material respects the operation of
the Fuel Pump Business as currently conducted and no such asset is in need of
maintenance or repair except for ordinary wear and tear, routine maintenance or
repairs which, given the type of asset in question, are not material in nature
or cost.
(b) Except as disclosed in Schedule 2.1.15(b), the Companies and the
Subsidiaries maintain insurance insuring all property and assets owned by them
of an insurable nature, such insurance being in at least such amounts and
covering loss or damage from such risks and hazards on all property and assets
as would be customarily maintained by other similar businesses. Except as
disclosed in Schedule 2.1.15(b), neither Seller nor its Affiliates (excluding
the Companies and the Subsidiaries) maintains any insurance policies covering
the Companies or the Subsidiaries or any of their respective assets. All current
premiums have been paid and the Companies and the Subsidiaries are not in breach
in any material respect under any of
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the terms of any insurance policies. The insurance policies currently maintained
by each Company and each Subsidiary are valid and in full force as of the date
hereof, shall remain in effect after the Closing and until their expiration
dates, and shall not be affected by this Agreement or the consummation of the
transactions contemplated herein (except those insurance policies set forth in
Schedule 2.1.15(b) as having been subscribed by Seller or its Affiliates (other
than the Companies and the Subsidiaries).
2.1.16 Material Contracts. Except as set forth on Schedule 2.1.16,
all contracts entered into by any of the Seller, the Companies or any of the
Subsidiaries which are material to the operation of the Fuel Pump Business
("Material Contracts") are in full force and effect. Except as set forth in
Schedule 2.1.16, none of the customer contracts between Sogen or Sofitam
Equipment S.A. (the successor company to Ein S.A. and Satam S.A.) with Mobil,
Total, Shell, Fina, Elf and Esso have a term which expires within twelve (12)
months from the date of this Agreement. No party to any of the Material
Contracts is in default thereunder in any material manner.
2.1.17 Suppliers and Customers.
-----------------------
(a) None of Seller, the Companies or the Subsidiaries has received
any written notice or has any knowledge or reason to believe that any current
material supplier to any Company or Subsidiary will not continue to supply any
Company or Subsidiary on substantially the same basis as it currently supplies
any such Company or Subsidiary except for price increases in accordance with any
such supplier's ordinary course of business, except for the Supply Agreement to
be entered into pursuant to Section 3.3.4(a).
(b) None of Seller, the Companies or the Subsidiaries has received
any notice or has any knowledge that any current customer of any Company or
Subsidiary (i) will cease, to purchase the products, goods or services of such
Company or Subsidiary except to the extent not materially adverse to such
Company or Subsidiary (considered individually and not collectively), (ii) will
materially reduce, the purchase of such products, goods or services, or (iii) is
seeking, to materially reduce the price it will pay for such products, goods or
services other than in the ordinary course of business. No customer of any
Company or any Subsidiary has, to the knowledge of Seller, threatened
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to take any action described in the preceding sentence as a result of the
consummation of the transactions contemplated by this Agreement. There are no
contracts with customers which call for systematic reductions in the price of
goods or services or which require improvements in productivity.
2.1.18 Litigation. Except as set forth on Schedule 2.1.18, there is
no lawsuit, arbitration or governmental or regulatory proceeding pending or, to
the knowledge of Seller, threatened, against any Company or Subsidiary which
would, if adversely determined, have or be reasonably likely to have a Material
Adverse Effect.
2.1.19 No Broker. Except for M.M Lazard Freres & Cie, the fees and
expenses of which will be paid by Seller or by any of its Affiliates, there is
no broker, finder or financial advisor who is acting or has acted on its or any
of the Companies' or Subsidiaries' behalf in connection with the transactions
contemplated herein, or of any Person, firm or corporation entitled to receive
any brokerage or finder's or financial advisory fee as a result of actions taken
by or on behalf of Seller or any of the Companies in connection with the
transactions contemplated by this Agreement.
2.1.20 Governmental Permits; Compliance with Laws. Except for
Environmental Permits and other environmental matters, each of the material
permits and authorizations necessary to the conduct of the Fuel Pump Business is
in full force and effect; at the Closing, each Company and Subsidiary will hold
all material governmental or regulatory permits and authorizations which are
required for the conduct of the Fuel Pump Business as currently being conducted.
Except for Environmental Permits and other environmental matters, no notices
have been received by Seller or any Company or Subsidiary relating to
termination or cancellation of, and neither the Seller nor any Company or
Subsidiary is in violation of the material terms and conditions of, any such
permits or authorizations. Except for Environmental Permits and other
environmental matters, since January 1, 1994, none of Seller, the Companies or
Subsidiaries has received any complaint, citation or notice of violation from
any Governmental Entity and, to the knowledge of Seller, none is threatened,
alleging that Seller or any Company or Subsidiary has violated any laws or
regulations of Governmental Entities, except for any such com-
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plaints, notices or violations which would not have or be reasonably likely to
have a Material Adverse Effect.
2.1.21 Environmental Matters.
---------------------
(a) Except as set forth in Schedule 2.1.21(a)(i), the Companies and
the Subsidiaries are in material compliance with all applicable Environmental
Laws and Environmental Permits. The Companies and the Subsidiaries have all
permits required to conduct their respective business and operations (as
currently conducted) under applicable Environmental Laws ("Environmental
Permits"). There is no claim, notice or proceeding pending to terminate any
Environmental Permit nor will the transactions contemplated by this Agreement
cause such termination. The Companies and the Subsidiaries have received no
communication that alleges that any Company or Subsidiary is not in such
compliance. All Environmental Permits currently held by the Companies and the
Subsidiaries are identified in Schedule 2.1.21(a)(ii).
(b) There is no claim of a violation of, or liability (including for
the avoidance of doubt, any penalties or fines) under, any Environmental Laws
("Environmental Claim") pending or, to the knowledge of Seller, threatened for
which any Company or Subsidiary may be liable which would have a Material
Adverse Effect. Neither any Company nor any Subsidiary has received since
January 1, 1994 a written notice of, or inquiry with respect to, any
Environmental Claim against any Company or Subsidiary.
(c) Without in any way limiting the generality of the foregoing and
except as disclosed in Schedule 2.1.21(c), there are no past or present actions,
conditions or occurrences, including without limitation, the Release of any
Hazardous Substances into the environment or work place, that will give rise to
a violation under Environmental Laws by any Company or Subsidiary or would make
it necessary to investigate, prevent or abate a significant risk to human
health.
(d) No Company or Subsidiary has transported (directly or on their
behalf) Hazardous Substances for treatment, storage or disposal to any off-site
location.
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(e) Except as set forth in Schedule 2.1.21(e), to the knowledge of
Seller, no Company or Subsidiary has any liability under any Environmental Laws
with respect to any real property relating to any company or other entity
formerly owned, leased or operated by any Company or any Subsidiary.
2.1.22 Employees; Employee Benefits; Health and Safety.
-----------------------------------------------
Schedule 2.1.22(i) hereto contains (i) a list identifying by
classification and remuneration, each Company's and Subsidiary's employees, and
(ii) a summary of all important modifications since December 31, 1994, in the
general level of compensation paid to such employees. Except as set forth in
Schedule 2.1.22 (ii), there are no pension or retirement benefits, bonus, profit
sharing, stock purchase or stock option plans, company savings plans or employee
funds of the Fuel Pump Business or any Company or Subsidiary beyond mandatory
French and foreign statutory or regulatory obligations (including conventions
collectives) (collectively, "Benefit Plans"). Except as set forth on Schedule
2.1.22(ii), all such Benefits Plans are fully funded, insured for or reflected
in the Financial Statements. There are no benefits to employees, officers or
directors that shall become due on account of the change in control in the
capital of any Company or Subsidiary contemplated by this Agreement. Seller and
each Company and Subsidiary are, and, as of the Closing, will be, in compliance
in all material respects with all statutory or regulatory requirements with
respect to its employees, and each Company and Subsidiary is in substantial
compliance with all material health and safety laws and regulations issued by
any and all Governmental Entities.
2.1.23 Taxes.
-----
(a) The Companies and the Subsidiaries have filed on a timely basis
all required Tax Returns and all information provided in such Tax Returns was,
when filed or amended, complete and accurate in all material respects.
(b) All the Taxes required to be paid by the Companies and the
Subsidiaries and due and payable prior to the date hereof have been paid.
(c) There are no contingent tax liabilities not reflected on the 1995
Financial State-
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ments, except those which may have arisen since the date of such Financial
Statements in the ordinary course of business.
(d) Except as set forth in Schedule 2.1.23(d), there are no pending
investigations or notices of assessment or deficiency relating to Taxes for
which the Companies and Subsidiaries are or may become liable.
(e) The Companies and the Subsidiaries have withheld from their
employees and paid in due time to the appropriate authority proper and accurate
amounts for all the periods through the date hereof in compliance with all the
Tax withholding provisions of all applicable Laws.
(f) Except as set forth in Schedule 2.1.23(f), the Companies and the
Subsidiaries are not party to any written agreement providing for the allocation
or sharing of Taxes, and the Companies and the Subsidiaries shall not have any
continuing obligations or liabilities under any such agreement after the Closing
Date.
(g) Except as set forth in Schedule 2.1.23(g), no payments pursuant
to the tax sharing agreement between Seller and the Companies (and Subsidiaries)
have been made by the Companies or Subsidiaries on account of those Taxes
covered by such tax sharing agreement and which relate to 1996.
2.1.24 Restrictions and Authorizations. Except for such breaches and
terminations which would not have, and such permits and authorizations the
absence of which would not have a Material Adverse Effect, and, except as set
forth in Schedule 2.1.24, the consummation of the transactions contemplated by
this Agreement and the other documents contemplated hereby will not result in a
breach, or give rise to a right of termination, of any Material Contract,
license, lease, material permit or authorization to which Seller, any Company or
Subsidiary is subject or a party, or violate any of the provisions of the
statuts or other governing documents of Seller, any Company or Subsidiary.
Except as set forth in Schedule 2.1.24, and except for any of same which may be
required due solely to the identity or nature of Buyer (including its own market
share in any territory), no approval or authorization of or notice or filing
with any Governmental Entity, or of any third
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party, is required on the date of this Agreement or will be required on the
Closing Date, on the part of Seller or any Company or Subsidiary in connection
with the execution, delivery and performance of this Agreement and the other
documents contemplated hereby.
2.1.25 Services provided by Seller and its Affiliates. Except as
listed in Schedule 2.1.25, neither Seller nor its Affiliates (excluding the
Companies and the Subsidiaries) provide to, or receive from, any Company or
Subsidiary any services in connection with the operation by the Companies and
the Subsidiaries of the Fuel Pump Business.
2.1.26 No Other Representations and Warranties. Except as expressly
set forth in this Article II, Seller makes no representation or warranty,
express or implied, at law or otherwise, and any such other representations and
warranties are hereby expressly disclaimed.
2.1.27 Funding Obligations. None of Seller, the Companies (excluding
Bennett & Sauser) or the Subsidiaries has any current or future obligation, to
provide funds, guarantees, letters of comfort or any type of financial
consideration to Bennett & Sauser AG in connection with any current plans of
Bennett & Sauser AG to establish any subsidiaries, partnerships or joint
ventures.
2.2 Representations and Warranties of the Seller as of the Option
Exercise Date; Buyer's Consent. Provided that Buyer delivers to Seller written
notice of the date of its exercise of the Option at least seven (7) business
days prior to the Option Exercise Date, Seller represents that the
representations and warranties made in Section 2.1 will be true and correct in
all material respects on the Option Exercise Date, except as to any matters to
be disclosed on a schedule (the "Update Schedule") to be provided to Buyer on
the business day preceding the Option Exercise Date. The Update Schedule shall
disclose only those matters occurring between the date of this Agreement and the
Option Exercise Date which are required to be disclosed pursuant to the
Schedules described in Section 2.1 and such disclosed matters shall be deemed to
qualify, supplement and amend Seller's representations and warranties contained
in Section 2.1. Seller shall not be deemed to be in breach of any
representations and warranties with
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respect to any matters so disclosed in the Update Schedule and shall have no
indemnification liability with respect thereto.
2.3 Representations and Warranties of Buyer.
---------------------------------------
2.3.1 Corporate Status. Buyer is a corporation duly organized and
validly existing under the laws of the state of Indiana, and has all requisite
corporate power to own its properties and carry on its business as now being
conducted.
2.3.2 No Broker. Except for the fees of Paine Webber Incorporated
and Banque Arjil & Cie which will be paid by Buyer, there is no broker, finder
or financial advisor acting or who has acted on its behalf, or of any Person,
firm or corporation entitled to receive any brokerage or finder's or financial
advisory fee from any party other than Buyer in connection with the transactions
contemplated by this Agreement.
2.3.3 Restrictions. The consummation of the transactions
contemplated hereby will not result in a breach of, or give rise to a right of
termination of, any agreement, permit or authorization to which Buyer is subject
or a party, or violate any of the provisions of the charter documents of Buyer,
except for any such breaches or rights of termination which will not prohibit or
restrain Buyer from consummating the transactions contemplated by this
Agreement.
2.3.4 No Lawsuits; Consents. There is no lawsuit, arbitration or
governmental or regulatory proceeding pending or, to the knowledge of Buyer,
threatened against Buyer which might prevent the consummation of any of the
transactions contemplated by this Agreement, and except as set forth in a
Schedule to be delivered to Seller within two days of Seller providing all
information requested by Buyer, no approval or authorization of any Governmental
Entity or of any third party is required on the part of Buyer in connection with
the execution, delivery and performance of this Agreement and the other
documents contemplated hereby (any approvals or authorizations disclosed on such
Schedule shall be hereinafter referred to as "Governmental Consents").
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2.3.5 Execution and Effect of Agreement. Buyer has the full corporate
power and authority to enter into this Agreement and the other documents
contemplated hereby. The execution and delivery of this Agreement and the
other documents contemplated hereby and the consummation of the
transactions contemplated hereby (in the event of exercise by Buyer of the
Option) have been duly authorized by the necessary corporate action of
Buyer, and this Agreement constitutes the valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. The Board of
Directors of Buyer approved the transactions contemplated herein on April
29, 1996.
ARTICLE III - COVENANTS
3.1 Covenants of Seller. Seller hereby covenants and agrees that:
3.1.1 Business in Ordinary Course.
(a) From the Option Exercise Date through and including the
Closing Date, Seller will not take, nor will Seller permit any Company or
any Subsidiary to take, any action which shall cause Seller to be in breach
of any representation, warranty, covenant or agreement contained in this
Agreement, and each shall use its best efforts to perform and satisfy and
to cause any Company and any Subsidiary to perform and satisfy all
conditions to Closing to be performed or satisfied by Seller, any Company
or any Subsidiary under this Agreement as soon as reasonably possible, but
in no event later than the Closing Date except for those covenants which,
by their terms, are intended to be performed, in whole or in part, after
the Closing Date.
(b) From the Option Exercise Date through and including the
Closing Date, unless otherwise agreed in writing by Buyer or as required or
expressly permitted by this Agreement, Seller shall cause the Companies and
the Subsidiaries to (i) continue to maintain its books, accounts and
records in accordance with French legal requirements; (ii) continue to
conduct the Fuel Pump Business including, without limitation, the
operation, maintenance, purchase and sale of assets and the incurring of
liabilities, in the ordinary course of business consistent with past
practice, but subject to the specific restrictions in Section 3.1.1(c);
(iii) confer with
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Buyer on a regular basis as to significant operational matters and material
decisions affecting the Fuel Pump Business; and (iv) report to Buyer any
occurrence or event which had or is expected to have a material effect on
the financial condition of the Companies or the Subsidiaries or which
constitutes a breach of any representation, warranty or covenant contained
in this Agreement.
(c) Without limiting the generality of the foregoing, from the Option
Exercise Date through and including the Closing Date, unless otherwise
agreed in writing by Buyer, the Company and the Subsidiaries, shall not,
and Seller shall not cause or permit the Companies or the Subsidiaries to
(i) take any action not in the ordinary course of business consistent with
past practices; (ii) make changes in the accounting methods or practices
followed by it or relating to its business, or make any changes in
depreciation or amortization policies or rates; (iii) with respect to the
Companies and the Subsidiaries in the aggregate, make, commit or pay for
any individual capital expenditure in excess of One Hundred Thousand French
francs (FF 100,000); (iv) terminate any employment of or increase out of
the ordinary course of business the compensation of any key employee; (v)
purchase, redeem or make any dividend or other distributions with respect
to any Shares, as the case may be; (vi) amend its articles of
incorporation, by-laws or similar constitutive document, enter into any
agreement of merger, consolidation, or (except for Haar Menstenik and Parke
Penrhyn) reorganization, dissolve or enter into any plan or liquidation or
dissolution, purchase or issue any shares or other securities, or enter
into any commitments or arrangement for the voting, purchase, redemption or
issuance of shares of capital stock or other securities, make any change in
the number of issued shares of its capital stock, grant any right or option
or make any commitment or agreement relating to its capital stock, or
acquire or create any subsidiary (except for those transactions set forth
on Schedule 2.1.12); (vii) sell, transfer, lease or pledge any assets,
tangible or intangible (other than inventory in the ordinary course of
business consistent with past practices) and except for any assets which
prior to the date hereof are subject to an agreement to be sold and
disclosed on Schedule 2.1.12 or are of an individual value of equal to or
less than Fifty Thousand French francs (FF 50,000); (viii) cancel or
terminate any insurance policy, except if replaced by an new insurance
policy providing
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for at least the same coverage at premiums not materially higher (given the
new coverage) than the insurance policy being replaced; (ix) lend any
amounts or waive or cancel any receivables or debts owed to it other than
in the ordinary course of business consistent with past practice; (x)
except if otherwise authorized herein, enter into or amend any Material
Contract, other than in the ordinary course of business consistent with
past practice and not in violation of any of the representations and
warranties herein; (xi) enter into any contracts not in the ordinary course
of business or consistent with past practice involving obligations of more
than One Hundred Thousand French francs (FF 100,000) or having a duration
or termination provision of longer than one year; or (xiii) authorize or
agree or otherwise become committed to do any of the foregoing.
(d) Seller agrees and covenants that should the transactions
contemplated by this Agreement not be consummated, for any reason, Buyer
shall have no liability whatsoever to Seller, the Companies or the
Subsidiaries, or any of their Affiliates as a result of the existence or
exercise of Buyer's rights or Seller's compliance with their respective
obligations, under this Section 3.1.1., subject to Buyer respecting its
confidentiality obligation.
3.1.2 Perform Contracts. Between the date hereof and the Closing
Date, except to the extent performance would prove commercially
unreasonable or in the event of force majeure, and in such event after
prior consultation with Buyer, Seller shall, and shall cause each Company
and each Subsidiary to, perform in all material respects all obligations to
be performed under all their respective agreements.
3.1.3 Non-Competition. For a period of three (3) years from the
Closing Date, Seller shall not, and shall cause its Affiliates (excluding
Bennett Pump & Company) not to, directly or indirectly, engage in (i)
developing, producing, selling, marketing or distributing Products; (ii)
soliciting any senior employee, customer or prospective customer of any of
the Companies or the Subsidiaries for the purposes of sale of Products; and
(iii) assisting any Person in any way to do, or attempt to do, anything
prohibited by (i) or (ii) above. Buyer agrees that such restrictions shall
not be applicable to the acquisition by Seller or its Affiliates, directly
or indirectly, of any equity or ownership interest in any competing
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enterprise which is part of a group acquired by Seller or its Affiliates
when the acquisition of such competing enterprise is incidental to and not
the primary purpose of such acquisition; provided that the foregoing
restrictions shall not apply to Bennett Pump & Company and its
subsidiaries.
3.1.4 Taxes. With regard to Taxes, Buyer and Seller agree as follows:
(a) Seller shall prepare and timely file, or cause to be prepared and
timely filed, all required Tax Returns of the Companies and the
Subsidiaries for any taxable period prior to January 1, 1996.
(b) Buyer shall promptly notify Seller in writing upon receipt by
Buyer, of notice of any pending or threatened audits or assessments of
Taxes regarding the Companies or the Subsidiaries for any tax periods
preceding January 1, 1996; and Seller shall similarly notify Buyer with
respect to tax periods from January 1, 1996. Seller shall have the sole
right to represent the taxpayer's interest in any tax audit or
administrative or court proceeding (a "Proceeding") insofar as such
Proceeding relates solely to taxable periods ending on or before December
31, 1995 and Buyer shall have the sole right to represent such interests in
any such Proceeding insofar as it relates solely to taxable periods
beginning on or after January 1, 1996. In connection therewith, Buyer and
Seller each may employ counsel of their choice at their own expense. In any
case in which a Proceeding relates to a taxable period beginning before and
ending after January 1, 1996 or involves claims or items which affect
periods for which Seller is responsible and periods for which Buyer is
responsible, Buyer and Seller agree to cooperate with one another in good
faith in jointly representing the taxpayer's interests. If Buyer and Seller
cannot agree as to any aspect of such a Proceeding, as to which they shall
act jointly, such aspect shall be submitted to an impartial certified
public accounting firm of national standing reasonably acceptable to Buyer
and Seller.
(c) With respect to any payments disclosed in Schedule 2.1.23(g),
Seller shall (i) on or prior to Closing refund to a Company or a Subsidiary
any advance payment made by any such Company or Subsidiary to Seller under
any tax sharing agreement and (ii) shall pay Buyer for any amount paid or
payable by
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any Company or any Subsidiary in connection with any tax audit and any amount
due in respect thereof prior to Closing.
3.1.5 Indemnification for Taxes. Seller shall be responsible for,
and agrees to indemnify and hold Buyer harmless from and against, all Taxes
relating to any tax periods prior to January 1, 1996 and for any Taxes which may
be asserted against the Companies and the Subsidiaries relating to any tax
periods prior to January 1, 1996, including, but not limited to, any Taxes
imposed on any Company or Subsidiary by any tax authority in connection with any
intercompany or intergroup transactions or any corporate actions occurring in
any tax period prior to January 1, 1996, provided that this indemnity shall not
apply to (i) any "precompte" levied as a result of the deconsolidation of
Seller's tax consolidated group against a Company or Subsidiary on dividends
distributed by such Company or Subsidiary or (ii) the inability of any Company
or Subsidiary to set off future profits against any tax loss carry forwards
retained by Sofitam S.A. in connection with the deconsolidation of Seller's tax
consolidated group.
3.1.6 Ordinary Shareholders Meeting. Provided that Buyer gives
Seller sufficient written notice of the Closing Date to permit such meetings to
be duly called (plus a reasonable time to prepare the formalities), Seller
shall, where necessary, cause an ordinary meeting of the shareholders of the
Companies to be validly called for the Closing Date for the purpose of electing
nominees of Buyer as new directors of the Companies to replace those persons
Buyer so identifies to Seller in such written notice, provided that Buyer shall
have provided on a timely basis to Seller any other information required in such
connection to be included in the notices to shareholders.
3.1.7 Further Assurances. From time to time after the Closing, at
the request of Buyer and without further consideration, and at its own expense,
Seller and its Affiliates will execute and deliver to Buyer such other
documents, and take such other action, as Buyer may reasonably request to vest
in Buyer good, valid and marketable title to the Shares. In addition, if Buyer
or its Affiliates, or Seller or its Affiliates, at any time become aware of the
existence of any Fuel Pump Business Asset which has not been indirectly
transferred to Buyer in connection with the consummation of the transactions
contemplated by this
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Agreement, then without further consideration from Buyer, and at Seller's own
expense, Seller and Buyer will execute and deliver such other documents, and
take such other action, as it may reasonably be requested to transfer good and
marketable title to such asset to Buyer, free and clear of all Liens.
3.1.8 Exclusivity. During the Option Period, Seller will not (i)
sell, transfer, pledge or otherwise dispose of, (ii) enter into any contract,
option or other arrangement or understanding or (iii) carry on any negotiations
with any other party or make any contact with any other person with respect to
the sale, transfer, pledge or other disposition of, any Shares.
3.1.9 Coteba Contract. Seller agrees that for up to ninety (90)
days after the Closing, if Buyer so requests, Seller shall use reasonable
efforts to introduce Buyer to Coteba, and if Buyer and Coteba so agree, to
formalize the current sub-contracting relationship between Sogen and Coteba.
3.1.10 Existing Indebtedness, etc. Four (4) business days prior
to the Closing, Seller shall deliver to Buyer a schedule reflecting changes in
Schedule 2.1.11 with respect to outstanding amounts of Existing Indebtedness as
of the last day of the month preceding the month of the Closing and Intercompany
Debt, Letters of Credit and Guarantees, each as of the business day of such
update.
3.1.11 Abandons de Creance. No later than ten (10) business days
prior to Closing, Seller shall deliver to Buyer a list of all abandons de
creance ("Abandons de creance") granted to the Companies and/or the Subsidiaries
which include a "retour a meilleure fortune" clause. Seller agrees to
irrevocably and unconditionally waive, or cause to be so waived by the
beneficiaries thereof all such "retour a meilleure fortune" clause on or prior
to the Closing.
3.1.12 Intellectual Property. On or prior to Closing, Seller
shall transfer to Buyer for no additional cost, ownership of the brand names and
trademarks, if any, relating to "Satam" and "Ein" and the rights to the
"Sofitam" name. For the avoidance of doubt, Seller shall not transfer to Buyer
the ownership of the name "Bennett".
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3.1.13 Transfer of Bennett. Prior to the Closing, Seller shall
cause Sofitam International S.A. to transfer all of the outstanding capital
stock and other equity interests in Bennett owned by it to Seller or its
Affiliates (excluding the Companies or the Subsidiaries). In connection with
such transfer, Seller shall pay all transfer taxes.
3.1.14 Financial Statements for fiscal years 1994 and 1993.
Within seven (7) business days of signing this agreement, Seller shall deliver
to Buyer the individual (comptes sociaux) balance sheets as at December 31, 1994
and December 31, 1993 (or the equivalent fiscal year ending in 1994 or 1993) and
individual statements of income for the twelve month period ended December 31,
1994 and December 31, 1993 (or the equivalent fiscal year ending in 1994 or
1993) of each of the Companies and the Subsidiaries, each together with all
notes and annexes thereto, if any, and in the case of Sofitam Equipment S.A.,
Sogen S.A., Sofitam N.V., Sofitam International S.A., Sofitam Pump Services
Limited and Bennett & Sauser AG and for any other Company or Subsidiary for
which the following clause applies, with an unqualified opinion, certified by
the respective commissiares aux comptes (or foreign equivalent).
3.1.15 Insurance. Seller shall continue until December 31, 1996
at no cost to Buyer the insurance policy set forth in Schedule 2.1.15(b)
relating to coverage for "responsibilite civile". Seller shall not be
responsible for the continuation from and after the Closing Date of the
insurance policy set forth in Schedule 2.1.15(b) carried by Compagnie Generale
des Eaux relating to certain environmental matters.
3.1.16 Funding Obligations. None of Seller, the Companies
(excluding Bennett & Sauser AG) or the Subsidiaries will undertake any
obligation to provide funds, guarantees, letters of comfort or any type of
financial consideration to Bennett & Sauser AG in connection with any current
plans of Bennett & Sauser AG to establish any subsidiaries, partnerships or
joint ventures.
3.2 Covenants of Buyer.
3.2.1 Regulatory Filings. No later than fifteen (15) calendar
days from the date of this
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Agreement, Buyer shall file with any applicable foreign or domestic antitrust or
competition authority or any other Governmental Entity the notification and
report form, if any, filings or authorization request required for the
transactions contemplated hereby and any supplemental information requested in
connection therewith. Any such notification and report form, filings or
authorization requests and supplemental information shall be in compliance with
the applicable legal requirements. Buyer shall promptly sent to Seller a written
confirmation that such notification and report form, filings and authorization
requests have been submitted.
3.2.2 Reimbursement of Intercompany Debt. On the Closing Date,
Buyer shall cause the Companies and the Subsidiaries to reimburse to Seller all
outstanding amounts, as adjusted up to the Closing Date, due under the
Intercompany Debt set forth on Schedule 2.1.11 as updated pursuant to Section
3.1.10, provided, however, that no amount shall be required to be so repaid in
respect to any Intercompany Debt which shall have been the object of any Abandon
de Creance.
3.2.3 Guarantees of Seller. At the Closing, Buyer shall use its
best efforts (but without being required to make any payments or deposit any
money) to cause Seller to be released from any Guarantees, or (if such releases
have not been obtained) shall counter-guaranty, indemnify and hold harmless
Seller from all Losses (as defined in Section 7.1(a)) arising under those
guarantees of Seller set forth on Schedule 2.1.11 as updated pursuant to Section
3.1.10.
3.2.4 Certain Employee Matters. Buyer will use its reasonable
best efforts to enter into reasonably satisfactory employment arrangements with
Martine Chaillou, Marc Frustie, Nicole Leroy, Guillaume Reynal and Monique
Vendalt if any of such individuals desires to do so.
3.2.5 Collectability of Receivables. Buyer shall cause the
Companies and the Subsidiaries (excluding Outelec S.A., Excelsior S.A. and Serip
S.A.) to pursue the collectability of receivables in a manner no less diligent
than the current practice of the Companies and the Subsidiaries.
3.2.6 Further Assurances. From time to time after the Closing,
at the request of Seller and without further consideration and at Seller's
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expense, Buyer and its Affiliates will execute and deliver to Seller such other
documents and take such other action, as Seller may reasonably request to vest
in Buyer good valid and marketable title to the Shares and for Buyer or its
designee to assume all liabilities and obligations of the Fuel Pump Business
which was included in the Base Balance Sheet which was not indirectly
transferred to Buyer in connection with the consummation of the transactions
contemplated by this Agreement.
3.3 Mutual Covenants. Each of Seller and Buyer covenants and agrees
as follows:
3.3.1 Publicity. Seller and Buyer agree that, from the date
hereof through the Option Exercise Date, no public release or announcement
concerning the transactions contemplated hereby shall be issued by either party
without the prior consent of the other party (which consent shall not be
unreasonably withheld), except that Seller and Buyer agree that the press
release attached hereto as Exhibit B shall be released by Buyer, and any release
of Seller which has received the prior approval of Buyer shall be released by
Seller, if such release is required by law or the rules and regulations of any
Governmental Entity or stock exchange authority on which the capital stock or
other securities of Buyer or Seller are quoted. In connection with any such
required released, both parties agree to use their best efforts to delay any
such release until the party being required to make such release has contacted
the other party to inform it of such release; provided that no party which is
required to make such a release shall be required to contact the other party if
such a delay would cause the violation of any law or regulation or cause either
party to act inconsistent with any demand by or order of any Governmental Entity
or stock exchange authority. For purposes of this covenant the contact for Buyer
is John A. Negovetich (office: 1.219.470.4677) (home: 1.219.486.4077) and for
Seller is Pierre Trotot (office: 33.1.49.24.32.68) (home: 33.1.39.76.36.86).
3.3.2 Commercially Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each party shall use its commercially reasonable
efforts to cause each of the conditions to Closing to be fulfilled and the
Closing to occur.
3.3.3 Access; Cooperation.
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(a) Seller shall reasonably cooperate with Buyer's due diligence
review of the Companies and the Subsidiaries and Fuel Pump Business and afford
Buyer access to all available information and personnel reasonably requested by
Buyer including, without limitation, all available financial information
required in connection with refinancing the Existing Indebtedness. In addition,
Buyer may contact and communicate with certain designated senior employees of
the Companies and Subsidiaries to be agreed in good faith prior to the Option
Exercise Date by Buyer and Seller and the Companies and Subsidiaries' lending
institutions in connection with the transactions contemplated hereunder provided
that a representative of the Seller is present during such contact or
communication and Seller will use its reasonable efforts to make such person
available at such times and dates as Buyer may reasonably request, provided that
it is feasible to do so and does not unduly disrupt operations.
(b) Each of Buyer and Seller shall furnish or cause to be
furnished after the Closing, upon reasonable written notice, to the other and
its employees, counsel, auditors and representatives access, during normal
business hours, such documents, information and assistance relating to the
Companies and the Subsidiaries as is reasonably necessary for financial
reporting and accounting matters, the preparation and filing of any tax returns,
reports or forms or the defense of any tax or other claim or assessment as well
as the preparation of any filing or submission which is necessary under any
applicable legislation, rules or regulations.
(c) Seller and Buyer shall keep each other apprised of the
status of any communication with, and any inquiries or requests for additional
information from, any foreign or domestic antitrust or competition authority or
Governmental Entity, and shall comply promptly with any such inquiries or
requests. Buyer shall use its best efforts to obtain any clearance under any
applicable legislation, rules or regulations for the purchase and sale of the
Shares, and to the extent requested, Seller shall furnish any information
requested by or required for any filing by Buyer with or notice by Buyer to any
foreign or domestic antitrust or competition authority or Governmental Entity.
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3.3.4 Bennett Agreements. By no later than Closing, Seller
shall cause Bennett Pump & Co. and its subsidiaries ("Bennett") to enter into a
supply agreement (the "Supply Agreement"), a distribution agreement (the
"Distribution Agreement") and an option agreement (the "Option Agreement") with
Buyer and/or certain members of Buyer Group, and Buyer shall enter into such
Agreements with Bennett, the principal terms of which are outlined below:
(a) Supply Agreement. The Supply Agreement shall arrange for the
supply by Bennett to Buyer or any member of Buyer Group of certain products
today manufactured and supplied by Bennett to the Companies or the Subsidiaries,
including but not limited to, high speed pumping units, normal speed rotary
pumping units, hydraulics, meters, replacement parts and components,
electronics, retail pumps and Point of Sale systems ("Bennett Products"). The
Supply Agreement shall be non-exclusive and have an original term of five years,
with automatic renewal for successive one year periods unless terminated by
either party on 180 days written notice. Terms and conditions of purchase of the
Bennett Products shall be those terms and conditions in place on December 31,
1995, as since modified in the ordinary course of business for intercompany
sales from Bennett to the Companies or the Subsidiaries, as adjusted with
respect to price in accordance with average price increases implemented from
time to time by Bennett in the ordinary course of Business. Buyer Group shall
furnish Bennett every six (6) months Buyer Group's forecast for such Bennett
Products for the following twelve (12) month period. In addition, Buyer agrees
that the annual minimum quantity of hydraulics and hydraulic components which
Buyer shall commit to purchase pursuant to such Supply Agreement for any
calendar year will be agreed in the Supply Agreement on the basis of a rolling
average of such products sold to the Companies and Subsidiaries or the Buyer
Group, as applicable, over the three calendar years preceding such calendar
year.
(b) Distribution Agreement. The Distribution Agreement shall
arrange for the exclusive distribution by Buyer or any member of the Buyer Group
of Bennett Products in France, Italy and Switzerland. In addition, the
Distribution Agreement shall provide for the non-exclusive distribution of
Bennett Products outside the United States. All such distribution rights of
Buyer shall be subject to the rights of Hockman Lewis existing on the date
hereof. In the
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Distribution Agreement or pursuant to a separate license, Bennett will grant
Buyer and its Affiliates the exclusive use of the "Bennett" name in France,
Italy and Switzerland for three years, after which Buyer shall no longer have
the right to use the "Bennett" name. The Distribution Agreement shall have an
initial term of three years, with automatic renewal for successive one-year
periods unless terminated by either party on 180 days written notice
(c) Option Agreement. In the event that there is a closure of
the manufacturing sites or a liquidation or winding up of Bennett, or in the
event that there is an unauthorized termination by Bennett of the Supply
Agreement for reasons within the control of Bennett (excluding such
circumstances as strikes and force majeure) for a period in excess of 180 days,
or a termination of the Supply Agreement by Bennett (or any successor company)
for a reason other than a material breach by Buyer. Buyer shall have an option
to purchase all or certain of the equipment, machinery, tools and Intellectual
Property owned by Bennett which is related to the production of the Bennett
Products. The purchase price for such equipment, machinery and tools shall be
the depreciated net book value at the time of purchase and the purchase price
for the Intellectual Property shall be evaluated by an expert jointly designated
by Buyer and Bennett or in any other manner jointly agreed to by Buyer and
Bennett.
(d) Buyer agrees that during the term of the Supply Agreement,
it shall not disclose to any customers of Bennett identified to Buyer by Bennett
or Seller any information relating to Bennett, including any possible future
plans for Bennett of which Buyer has become, or shall become aware, as a result
of the transactions contemplated by this Agreement.
3.3.5 Records. After the Closing Date, Seller (for so long as
it is controlled by Compagnie Generale des Eaux) and Buyer shall give each other
reasonable access to all agreements, documents, books, records and files,
including records and files stored on computer disks or tapes or any other
storage medium (collectively, "Records"), if any, reasonably requested by the
other party, in the possession of Buyer or Seller, as the case may be, directly
relating to the business and operation of the Fuel Pump Business, provided that
such Records do not include confidential information pertaining to matters other
than
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the Fuel Pump Business. Buyer and Seller shall be entitled to make copies of
such Records, provided that such Records shall in all events be kept
confidential.
3.3.6 Resignation of Auditors. After the Option Exercise Date,
Seller shall, if requested by Buyer, cooperate with Buyer to request the
resignation of the auditors for each Company and Subsidiary.
3.3.7 Bennett & Sauser AG.
(a) In connection with the acquisition of Seller's direct and
indirect interest in Bennett & Sauser, Seller agrees to promptly arrange a
meeting among Seller, Buyer and the other shareholders of Bennett & Sauser AG in
order to discuss future plans of Bennett & Sauser AG, including, but not limited
to, the interest of such other shareholders to purchase Seller's direct and
indirect interest in Bennett & Sauser AG on or before the Closing.
(b) Seller agrees that if Seller, Buyer and the other
shareholders of Bennett & Sauser AG have failed to agree on a course of action
acceptable to Buyer with respect to Bennett & Sauser AG's current plans to
establish a joint venture by Closing, Buyer shall have the right to require
Seller to purchase any Shares of Bennett Sauser AG owned by Buyer or any Company
or Subsidiary pursuant to the transactions contemplated by this Agreement. The
Buyer shall exercise such right by notifying the Seller in writing within twenty
(20) days after the Closing, after which period such right shall terminate.
Buyer and Seller agree that the purchase price for such Shares of Bennett &
Sauser AG shall be equal to Four Hundred Fifty Thousand Swiss francs (SF
450,000).
3.3.8 Confidentiality. From the date hereof through and
including three (3) years from the date of termination of this Agreement, Buyer
and Seller and their respective Affiliates shall keep in strict confidence and
will not disclose any of the past, current or future matters discussed or
information exchanged concerning the transactions contemplated herein except (a)
with the prior written consent of the other party, (b) in connection with any
arbitration or other Proceeding commenced between the parties and the party so
requesting such arbitration shall have requested confidential treatment of any
matter or information to be disclosed from the relevant govern-
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mental, administrative, judicial or other authority or (c) of any party should
be required to disclose such matter or information by any Governmental Entity or
stock exchange authority. In connection with any disclosure pursuant to sub-
clause (c) above, the disclosing party shall immediately give the other party
prior written notice thereof and shall also provide the other party with copies
or a complete description of the information being sought and a copy of the
narrative of the proposed disclosure. For the avoidance of doubt, this Section
3.3.8 shall not apply to the agreement between Buyer and Seller regarding
publicity set forth in Section 3.3.1.
3.3.9 Services provided by Seller and its Affiliates. With
respect to the services listed in Schedule 2.1.25, Seller and Buyer agree to
discuss, and implement by Closing, if so agreed, the continuation of any such
services for a transition period for up to twelve (12) months following Closing
on terms similar to those currently in place; provided that, Buyer and Seller
agree that no financial, accounting or cash management services will be
continued after the Closing and Seller will cause any related agreements with
any Company or Subsidiary to be terminated on the Closing without further
obligations or liability to either party to such agreements.
3.3.10 Assumption of Contracts. Seller and Buyer agree that at
Closing Sofitam Equipement S.A. shall assume the obligations of Seller relating
to promises to purchase the shares of minority shareholders held in Serip S.A.
and Excelsior S.A. and that Sofitam International S.A. shall assume the
obligations of Seller to purchase the shares of the minority shareholders in
Sofitam Pump Services Limited. Buyer and Seller agree that each shall take all
reasonable steps to cause such assumptions to occur on Closing.
ARTICLE IV - CONDITIONS
4.1 Conditions to Obligations of Buyer. The obligations of Buyer to
complete the purchase of the Shares on the Closing Date are subject to
satisfaction (or waiver by Buyer) of the following conditions on or before the
Closing Date:
4.1.1 Representations and Warranties True and Correct. Each of
Seller's representations and warranties made in Sections 2.1.1, 2.1.2, 2.1.3
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and 2.1.4 shall be true and correct as of the Closing Date in all material
respects.
4.1.2 No Material Adverse Change. Since December 31, 1995, no
change, event, development or combination of developments (herein collectively
"Situations") shall have occurred which, individually or in the aggregate (but
excluding Situations which result from global macro-economic events or, in
connection with any strikes or labor disturbances of employees at the Companies
or Subsidiaries, directly caused by the specific identity of the Buyer), has
resulted in or results in a material adverse effect on the properties, assets,
liabilities, sales or income, of the Fuel Pump Business which would result in
liabilities or losses of at least THIRTY FIVE MILLION French francs (FF
35,000,000) ("Material Adverse Change").
4.1.3 Consents. At the Closing, Buyer shall have received
executed counterparts reasonably satisfactory to Buyer of all consents listed in
Schedule 2.1.24.
4.1.4 Work Councils. Any and all consultation shall have
occurred with the relevant work councils applicable to Seller and the Fuel Pump
Business.
4.1.5 Caution Solidaire. At the Closing, Seller shall have
delivered to Buyer a caution solidaire of Compagnie Generale des Eaux
substantially in the form of the caution solidaire attached hereto as Schedule
4.1.5.
4.1.6 Existing Indebtedness. Seller shall have delivered to
Buyer the schedule of Existing Indebtedness in accordance with Section 3.2.2.
4.2 Conditions to Obligations of Seller. The obligations of
Seller to complete the sale of the Shares on the Closing Date are subject to the
satisfaction (or waived by Seller) of the following conditions:
4.2.1 CBV Confirmation. Seller has received written
confirmation from the French Conseil des Bourses des Valeurs ("CBV"), in form
and substance reasonably acceptable to the applying party, that no "offre
publique de retrait" or other offer to shareholders is required to be made by
Seller unless and
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until, after completion of the transactions contemplated herein, Seller also
disposes of its refrigeration division.
4.3 Mutual Conditions.
4.3.1 Governmental Consents. All Governmental Consents listed
on a schedule to be provided pursuant to Section 2.3.4, shall have been
obtained, including without limitation, consents and approvals from foreign or
domestic antitrust or competition authority in form and substance reasonably
satisfactory to Buyer and Seller.
ARTICLE V - CLOSING
5.1 Closing. The Closing hereunder shall take place at the offices
of Skadden, Arps, Slate, Meagher & Flom, 105, rue du Faubourg Saint-Honore,
75008 Paris on the date set forth in Buyer's notice of its exercise of the
Option, but no later than twenty (20) days after the Option Exercise Date,
provided that if all of the conditions set forth in Article IV hereof shall not
have been fulfilled by the end of such twenty day period, at such other place
and at such other time and date as may be mutually agreed upon in writing by
Buyer and Seller (the "Closing Date").
5.2 Deliveries. At the Closing:
5.2.1 Seller's Deliveries. Seller shall deliver, or shall cause
to be delivered, to Buyer the following:
(a) Duly signed and completed stock powers (ordres de mouvement
or equivalent) in favor of Buyer or its designee(s) for all of the Shares.
(b) A letter of resignation (with an irrevocable waiver of all
claims as directors against the Companies and the Subsidiaries) signed by each
of the directors of the Companies and the Subsidiaries (identified in a list to
be provided by Buyer to Seller pursuant to Section 3.1.6) effective upon the
appointment of the new board of directors.
(c) The stock transfer register (registre des mouvements de
titres or equivalent) and the stockholder register (registre des comptes
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d'actionnaires or equivalent) of each of the Companies and Subsidiaries.
(d) Evidence, in form and substance reasonably satisfactory to
Buyer, that the tax sharing payments, if any, made by any Company or Subsidiary
in 1996 have been returned thereto by Sofitam as required by Section 3.1.4(c).
(e) A caution solidaire executed by Compagnie Generale des Eaux
for the benefit of Buyer, as provided in Section 4.1.5.
5.2.2 Buyer's Deliveries. Buyer shall deliver, or shall cause
to be delivered, to Seller the following:
(a) The payment by Buyer and the Escrow Agent, as the case may
be, by bank wire transfer in immediately available funds of the payments set
forth in Section 1.3.8(a).
(b) Payment, or evidence of payment, in form and substance
reasonably satisfactory to Seller, of the Intercompany Debt as set forth in
Section 3.2.2.
(c) Evidence, in form and substance satisfactory to Seller, that
Seller has been released from those Guarantees set forth on Schedule 2.1.11 and
updated pursuant to Section 3.1.10, or a counter-guaranty letter from Buyer to
Seller, in form and substance satisfactory to Seller, as contemplated by Section
3.2.3.
ARTICLE VI - TERMINATION
6.1 Termination. This Agreement may only be terminated (a) by mutual
written consent of the parties hereto; (b) by Buyer, if any of the conditions
provided for in Sections 4.1 or 4.3 of this Agreement has not been met within
one hundred and twenty (120) days from the date of this Agreement and has not
been waived by Buyer by such date; or (c) by Seller, if any of the conditions
provided for in Sections 4.2 or 4.3 of this Agreement has not been met within
one hundred and twenty (120) days from the date of this Agreement and has not
been waived by Seller by such date.
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6.2 Consequences. If this Agreement is terminated and the transactions
contemplated hereby are abandoned in accordance with Section 6.1:
(a) In the event that (x) this Agreement is terminated pursuant to
Sections 6.1(a), (b) or (c), the Escrow Amount shall be immediately released by
the Escrow Agent to Buyer or (y) the conditions set forth in Sections 4.1, 4.2
and 4.3 are satisfied, but Seller refuses to proceed to Closing by the time
period set forth in Section 6.1, the Escrow Amount shall be immediately released
by the Escrow Agent to Buyer or (z) the conditions set forth in Sections 4.1,
4.2 and 4.3 are satisfied, but Buyer refuses to proceed to Closing by the time
period set forth in Section 6.1, the Escrow Amount shall be immediately released
by the Escrow Agent to Seller; provided, however, that if Buyer or Seller shall
dispute the satisfaction or non-satisfaction of any condition set forth in
Sections 4.1, 4.2 or 4.3, the Escrow Amount shall remain in escrow and such
dispute shall be resolved in accordance with Section 8.4. In connection with any
such release, Buyer and Seller agree to duly execute the Joint Instructions.
(b) This Agreement shall become void and of no further force or effect,
except for the provisions of (i) Section 8.5 relating to certain expenses, (ii)
Section 8.4 in connection with any disputes relating to the Escrow Amounts,
(iii) Section 3.3.1 relating to publicity, (iv) Sections 2.1.19 and 2.2.2
relating to brokers' fees (v) Section 3.3.8 relating to confidentiality and (vi)
this Section 6.2.
(c) All confidential information provided by either party to the other
shall be returned to such first party or, upon such first party's instruction,
destroyed. Notwithstanding the foregoing, and save as otherwise expressly
provided, nothing in this Section 6.2 shall be deemed to release either party
from any liability for any breach by such party of the terms and provisions of
this Agreement.
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ARTICLE VII - INDEMNIFICATION -
SURVIVAL OF REPRESENTATIONS
7.1 Indemnification by Seller.
(a) Subject to the conditions and provisions set forth in this
Article VII, from and after the Closing, Seller hereby agrees to indemnify and
hold harmless Buyer and its Affiliates (the "Buyer Group"), from and against all
demands, claims, actions, losses, damages, liabilities, out of pocket costs and
expenses, including, without limitation, reasonable attorney's fees, approved
settlements, interest and penalties (collectively, the "Losses" or singularly a
"Loss" which, for the avoidance of doubt, do not include consequential Losses)
asserted against, resulting to, incurred by or imposed upon any member of the
Buyer Group resulting from or relating to any (x) breach of any representation
or warranty made by Seller or (y) failure to perform any covenant or agreement,
made by Seller.
(b) Without limiting the generality of Section 7.1.(a), the term
Losses, subject to the conditions and provisions set forth in Article VII, shall
include any penalty, late payment interest, increase or fine which becomes due
as a result of any Tax audit as well as of any audit or other action or
administrative proceeding by any Governmental Entity, as well as any penalty,
late payment interest, surcharge or fine or cost or expense of compliance with
any order, decree, directive or judgement which may become due as a result of
any claim, proceeding, order, directive or judgment relating to the domestic or
international operations or activities of the Companies and the Subsidiaries.
(c) Without limiting the generality of Section 7.1(a) or (b), the
parties hereto agree that the term Losses shall, subject to the conditions and
provisions set forth in Article VII, include losses resulting from third parties
claiming, on the basis of Articles 1382, 1383, 1384, 544 and from 1146 to 1156
of the French Civil Code, civil and contractual responsibility ("responsabilite
civile") of the Companies or any of the Subsidiaries arising from activities of
the Companies or any of the Subsidiaries prior to the Closing or the treatment,
handling, storage or disposition of any Hazardous Substances that occurred prior
to the Closing Date.
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(d) Notwithstanding anything disclosed in the Schedules with respect
to environmental matters, Seller agrees that the Buyer Group shall have the
right to indemnification pursuant to and subject to the provisions of this
Article VII for any matters so disclosed and for any breach of the
representation and warranty in Section 2.1.21, provided that any indemnification
claimed by the Buyer Group against Seller pursuant to this sub-clause (d) shall
not be subject to the Buyer's Threshold Amount and the Buyer Group shall be
entitled to indemnification for the full amount of any such Losses; and provided
however, that any Losses claimed pursuant to this sub-clause (d) shall not be
counted in calculating the Buyer's Threshold Amount.
(e) Losses shall be calculated on the basis of (i) the Losses to
Buyer in connection with the representations and warranties set forth in Section
2.1.1 through 2.1.4 and (ii) as to all other representations and warranties on
the basis of the Losses to the Company or Subsidiary in question, plus any
Losses directly incurred by Buyer (i) in any legal, administrative or regulatory
proceeding in which Buyer is held liable for any actions or liabilities of any
Company or Subsidiary, (ii) in connection with any settlement of any Third Party
Claim or Direct Claim (each as defined herein) approved by Seller against any
Company or Subsidiary which settlement imposes any Losses on Buyer or (iii) in
defending itself in connection with any Third Party Claim or Direct Claim
against any Company or Subsidiary which Claim also names Buyer, whether or not
Buyer is ultimately held liable.
7.2 Limitations of Liability of Seller.
(a) Except for claims relating to any of Section 2.1.1, 2.1.2, 2.1.3,
2.1.4, (i) no Loss incurred by any member of the Buyer Group in respect of any
individual breach of the representations or warranties or covenants contained in
this Agreement shall give rise to indemnification by Seller unless and until
such Loss exceeds ONE HUNDRED AND TEN THOUSAND French francs (FF 110,000) (it
being understood that individual breaches of representations or warranties or
covenants of a substantially similar nature that arise out of a single or
directly related origins, facts or circumstances shall be aggregated for
purposes hereof as a single Loss), in which event, subject to clause (ii) below,
Buyer may assert its
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right to indemnification hereunder to the full extent of its Loss in respect
thereof; and (ii) no claim for indemnification may be made under Section 7.1(a)
of this Agreement unless the aggregate amount of all Losses exceeds FIVE MILLION
French francs (FF 5,000,000) (such amount, the "Buyer's Threshold Amount");
provided, however, that (i) once the Buyer's Threshold Amount is reached, the
members of the Buyer Group shall be entitled to indemnity for the full amount of
all such Losses including the amount of the Buyer's Threshold Amount and (ii)
the aggregate amount of indemnification actually payable to members of the Buyer
Group shall in no event and in no circumstances exceed EIGHTY MILLION French
francs (FF 80,000,000) ("Maximum Indemnification Amount"), except as set forth
in Section 7.2(b).
(b) In the event that, following a breach of the representations and
warranties contained in Section 2.1.21, the aggregate amount of indemnification
actually paid the Seller rises above the Maximum Indemnification Amount, such
amount shall be increased to cover up to an additional TWENTY MILLION French
Francs (FF 20,000,000) of indemnification which may be due hereunder by Seller
on account of (and solely on account of) (i) any breach of the representations
and warranties contained in Section 2.1.21 and (ii) any environmental matters
disclosed on the Schedules, provided, however, that Seller shall have control of
all actions to be taken by Buyer to remedy any breaches under Section 2.1.21 and
that Seller shall only be liable for indemnification pursuant to this sub-clause
(b) on account of any Breach if the Buyer participates in the expenses incurred
in carrying out such remedy in the proportion of 80% for Seller and 20% for
Buyer.
(c) In connection with any claim for indemnification by Buyer Group
for Losses relating to any breach of the representation and warranty contained
in Section 2.1.6 relating to the collectability of Receivables, the aggregate
amount of Losses for which claims may be made by Buyer or any Company or
Subsidiary shall in no event and in no circumstances exceed FIVE MILLION French
francs (FF 5,000,000) (the "Receivables Collectability Cap"), provided that
(within the Receivables Collectability Cap) Seller shall bear only 50% of any
such Losses. For the avoidance of doubt (i) no indemnification shall be due
pursuant to sub-clause (c) unless and until the Buyer's Threshold Amount is
(including all other in-
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demnification) exceeded and (ii) the full amount of any indemnification paid on
account of such Losses covered by this sub-section (c) shall be counted for
determining the Buyer's Threshold Amount and any indemnity paid by Seller to the
Buyer Group pursuant to the terms of this sub-clause (c) shall also be counted
as indemnification for purposes of the Maximum Indemnification Cap. In
addition, any Losses covered by this sub-clause (c) shall be reduced by the
amount of any over reserved Receivables calculated at the end of the 360 day
period provided for in Section 2.1.6. Upon payment of any indemnification by
Seller to Buyer Group pursuant to this sub-clause (c), Seller shall have the
option to require Buyer Group to assign the Receivable or Receivables in
question to Seller. All other provisions of Article VII shall apply to any
claim for indemnification made pursuant to this sub-clause (c), except that any
actual monetary recoveries (after indemnification has been actually paid)
related to the Receivable or Receivable forming the basis of the claim for
indemnification shall be shared between the Buyer and Seller on a 50/50 basis.
(d) Claims for indemnification by Buyer Group for Losses relating to
any breach of a representation and warranty relating to Serip S.A. shall in no
event and in no circumstances exceed an amount equal to the sum of (a) the
actual monetary amount of the equity investment in Serip S.A. by Seller prior to
the Closing Date and by Buyer after the Closing Date and (b) the amount of
Losses directly incurred by the Buyer Group as a shareholder in Serip S.A. For
the avoidance of doubt (i) no indemnification shall be due pursuant to sub-
clause (d) unless and until the Buyer's Threshold Amount is (including all other
indemnification) exceeded and (ii) any such indemnification paid on account of
Losses shall be counted for determining the Buyer's Threshold Amount and any
indemnity paid by Seller to the Buyer Group for such Losses shall be counted as
indemnification Losses for purposes of the Maximum Indemnification Cap.
(e) In the event a member of the Buyer Group is indemnified for its
Losses pursuant to one provision of this Agreement, it shall not be entitled to
indemnification again for the same Losses in the event another provision or
provisions of this Agreement are also breached. Buyer agrees that it will take
reasonable steps to mitigate Losses of the Buyer Group. If any such monetary
recovery occurs after the
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Seller has already paid the indemnification to Buyer (and even if such recovery
occurs after the expiration of the time limits set forth in Section 7.6), Buyer
shall make a refund to Seller as provided for in sub-clause (h) below.
(f) Any amounts required to be paid to the Buyer Group with respect
to a specific claim for indemnification pursuant to this Section 7.2 shall be
reduced by any actual monetary recovery paid to the Buyer Group with respect to
such claim, whether pursuant to insurance, tax refunds or otherwise. Buyer
shall, and shall cause the Companies and Subsidiaries to pursue such potential
recoveries consistent with reasonable commercial practices.
(g) Buyer or Seller, as the case may be, shall be obligated to
prosecute in good faith any claim for Losses with any applicable insurer.
(h) In the case where Buyer recovers from third parties all or any
part of any amount previously paid to it by Seller pursuant to this Article VII,
Buyer shall promptly pay over to Seller the amount so recovered (net of any out-
of-pocket expenses actually incurred by it in procuring such recovery), but not
in excess of any amount previously so paid by the Seller.
(i) No member of the Buyer Group shall be entitled to make a claim
for indemnification for Losses against Seller in respect of any tax audit or
claim which merely modifies the tax period during which a deductible charge or
amortization may be taken or in respect of any VAT assessment (except if such
VAT is not recoverable); provided, however, that the Buyer Group may make claims
for indemnification against Seller in respect of any penalties or interest
arising from or related to any such tax claim, tax audit or VAT assessment.
(j) Any indemnity due by Seller for Losses shall be calculated after
taking into account any reduction of taxes or an increase in a tax loss carry
forward or carry back for the Buyer Group (which for avoidance of doubt, shall
include from the Closing Date, the Companies and the Subsidiaries) resulting
from the existence of the fact or event which forms the basis of the Losses in
question; provided, however, that the Buyer Group actually benefits from such
reduction of tax or increase in a tax loss carry for-
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<PAGE>
ward or carry back prior to the expiration date of the relevant representation
and warranty, the breach of which is the basis for such indemnity due; and
provided further that the Seller shall not have the right to withhold or delay
payment of any indemnification otherwise due hereunder pending the receipt of
such tax benefit. Upon receipt of such tax benefit, if any, the Buyer Group
shall reimburse Seller therefor.
(k) For the avoidance of doubt, any indemnity due by Seller to Buyer
Group with respect to a specific claim for indemnification made by Buyer Group
may only be made by the amount by which such Losses exceed any reserve for such
specific item which is the subject of the claim reflected in the Closing Balance
Sheet.
(l) Seller shall not be liable for Losses asserted against, resulting
to, incurred by or imposed upon any member of the Buyer Group in respect of a
breach of a representation and warranty which would not have occurred but for
the passing of, or any change in, after the Closing Date, any law or any
increase in tax rates in effect on the Closing Date or any imposition of any tax
not in effect on the Closing Date, even if such law or change has retroactive
effect or requires actions at some future date.
(m) At the time when, pursuant to Section 7.8, representations and
warranties made by any party to this Agreement shall terminate ("Expiring
Representations"), any claims related to the Expiring Representations for which
no indemnification has been made because the Buyer's Threshold Amount has not
been reached, shall remain outstanding and shall become part of any claims that
may arise for breach of any representations and warranties which survive after
the Expiring Representations pursuant to Section 7.8.
7.3 Indemnification by Buyer. Subject to the conditions and
provisions set forth below in this Article VII, Buyer hereby agrees to
indemnify, defend and hold harmless Seller and its Affiliates (the "Seller
Group") from and against all Losses asserted against, resulting to, incurred by
or imposed upon Seller resulting from or relating to any (x) breach of any
representation or warranty or (y) failure to perform any covenant or agreement
made by Buyer.
55
<PAGE>
7.4 Limitations of Liability of Buyer.
(a) Except with respect to claims relating to Sections 2.3.1 and
2.3.5, no claim for indemnification may be made under Section 7.3 of this
Agreement unless the aggregate amount of all Losses asserted thereunder exceeds
the sum of FIVE MILLION French francs (FF 5,000,000) (such amount, the "Seller's
Threshold Amount"); provided, however, that (i) once the Seller's Threshold
Amount is reached, the members of the Seller Group shall be entitled to
indemnity for the full amount of all such Losses including the amount of the
Seller's Threshold Amount and (ii) the aggregate amount of indemnification
actually payable to members of the Seller Group shall in no event and in no
circumstances exceed FIFTY MILLION French francs (FF 50,000,000).
(b) In the event a member of the Seller Group is indemnified from its
Losses pursuant to one provision of this Agreement, it shall not be entitled to
indemnification again for the same Losses in the event another provision or
other provisions of this Agreement are also breached. The Seller agrees that it
will take reasonable steps to mitigate Losses of the Seller Group.
7.5 Method of Asserting Claims, etc. The party or parties making a
claim for indemnification under this Article VII shall, for the purposes of this
Agreement, be referred to as the "Indemnified Party" and the party or parties
against whom such claims are asserted under this Article VII shall, for the
purposes of this Agreement, be referred to as the "Indemnifying Party". All
claims by any Indemnified Party under this Article VII shall be asserted and
resolved as follows:
(a) In the event that (A) any claim, demand or Proceeding is asserted
or instituted by any party other than the parties hereto and their Affiliates
which could give rise to Losses for which an Indemnifying Party would be liable
to an Indemnified Party hereunder (any such claim, demand or Proceeding, a
"Third Party Claim"), or (B) any Indemnified Party hereunder shall have a claim
to be indemnified by any Indemnifying Party hereunder which does not involve a
Third Party Claim (any such claim, a "Direct Claim"), the Indemnified Party
shall, as soon as reasonably practicable, send to the Indemnifying Party a
written notice specifying the nature of such claim or demand
56
<PAGE>
and, if known, the amount or if not known but possible, an estimated amount
(which estimate shall not be conclusive of the final amount of such claim or
demand)(a "Claim Notice").
(b) In the event of a Direct Claim, the Indemnifying Party shall have
thirty (30) days following its receipt of the relevant Claim Notice (the "Review
Period") to make such investigation of the underlying claim as it considers
necessary or desirable and the Indemnifying Party shall cooperate therewith. If
the parties agree, on or prior to the expiration of the Review Period, upon the
validity and amount of such claim, the Indemnifying Party shall pay to the
Indemnified Party, within three (3) business days following the date of such
agreement, the full agreed amount of the indemnification due on account of such
claim. If the parties are unable to reach agreement prior to the expiration of
the Review Period, the parties may then refer the matter to arbitration as
provided pursuant to Section 8.4 of this Agreement.
(c) As to Third Party Claims, and always subject to Seller's rights
pursuant to Section 7.2(b),
(i) If a Third Party Claim which is a Monetary Claim is made
against an Indemnified Party, the Indemnifying Party shall be entitled to
participate in the defense thereof and, if it so chooses and acknowledges
its obligation to indemnify the Indemnified Party therefor, to assume the
defense thereof with counsel selected by the Indemnifying Party. Should
the Indemnifying Party so elect to assume the defense of a Third Party
Claim which is a Monetary Claim, the Indemnifying Party shall not be liable
for legal expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof. If the Indemnifying Party assumes
such defense, the Indemnified Party shall have the right to participate in
the defense thereof and to employ counsel, at its own expense, separate
from the counsel employed by the Indemnifying Party, it being understood
that the reasonable fees and expenses of counsel employed by the
Indemnified Party for any period during which the Indemnifying Party has
failed to assume the defense thereof (other
57
<PAGE>
than during the period prior to the time the Indemnified Party shall have
given notice of the Third Party Claim) shall be included as Losses. For
these purposes, "Monetary Claim" shall mean a claim involving the payment
of monetary damages, which claim could not be reasonably deemed to have a
material impact on the future operations of a Company or Subsidiary or the
future sales of a Fuel Pump Product, provided that in the event any
Monetary Claim is made which is greater than the remaining amounts under
the Maximum Indemnification Cap, such Monetary Claim shall be administered
pursuant to sub-clause (ii) below.
(ii) If the Third Party Claim which is not a Monetary Claim is
made against an Indemnified Party, the Indemnified Party shall have the
right to conduct the defense of the claim and may retain counsel of its
choice to represent the Indemnified Party and any others the Indemnifying
Party may reasonably designate in connection with such claim or demand. If
requested by the Indemnified Party, the Indemnifying Party agrees to
cooperate with the Indemnified Party and its counsel in contesting any such
Third Party Claim. The Indemnifying Party may assist, at its expense, in
the defense against any Third Party Claim with counsel of its choice, and
shall pay the fees and disbursements of such counsel with regard thereto.
The Indemnified Party shall keep the Indemnifying Party reasonably informed
of the development of the underlying claim.
(iii) No Third Party Claim may be settled without the prior
written consent of the Indemnifying Party.
(iv) The Indemnified Party shall be required at the expense of
the Indemnifying Party to diligently pursue all appeals when there is a
reasonable chance of success based on an opinion of external counsel to the
Indemnifying Party.
7.6 Survival. All representations and warranties made by any party
to this Agreement shall
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<PAGE>
survive the Closing and continue for a period of two years after the Closing
(except Section 2.1.21 which shall survive for a period of five years after the
Closing and Section 2.1.23 which shall survive for the applicable statute of
limitations period including any waivers thereof). In addition all
representations and warranties hereunder shall survive any investigation at any
time made by or on behalf of any party hereto, subject, however, to the time
limitation set forth above. All covenants and other agreements set forth in this
Agreement shall survive in accordance with their terms, and shall survive any
investigation at any time made by or on behalf of any party hereto.
Notwithstanding anything to the contrary in this Section 7.6, the Buyer Group
and Seller Group shall have the right to send Claim Notices "a titre
conservatoire", even if all facts are not known at the time or if the amount of
the Losses cannot yet be established. Such Claim Notices constitute a valid
notice of a Loss or a potential Loss if sent in good faith prior to the end of
the relevant survival period regardless of whether the final liability for, and
amount of, such Loss is ascertained after the end of such relevant survival
period. The Buyer Group and Seller Group shall be entitled to give in good faith
a Claim Notice for possible claims of which it becomes aware even though no
actual claim may have been formerly asserted.
7.7 Indemnification for Haar Menstenik and Parke Penrhyn. In
consideration for Buyer purchasing Haar Menstenik and Parke Penrhyn
(collectively, the "Liquidated Companies"), Seller agrees to indemnify and
hold Buyer Group harmless from any and all out of pocket Losses related to
the Liquidated Companies, including their respective liquidation. Any claim
for indemnification for Losses by Buyer Group pursuant to this Section 7.7
shall not be subject to any limitations set forth in Article VII, except
that any claim made for indemnification shall be made pursuant to Section
7.5. For the avoidance of doubt, such Losses shall not be subject to the
Buyer's Threshold Amount or included in any calculation of the Maximum
Indemnification Amount. Further, for the avoidance of doubt, the parties
confirm that even though Buyer is also acquiring Excelsior S.A., Outelec
S.A., CKD and Instronics, it gives no representations and warranties with
respect thereto and can be subjected to no liability or indemnification in
connection therewith.
59
<PAGE>
ARTICLE VIII - MISCELLANEOUS
----------------------------
8.1 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing and personally
delivered or sent by registered or certified mail, return receipt requested,
postage prepaid, or if sent by facsimile transmission with confirmation of
receipt addressed as follows or to such other address as the parties shall have
given notice of pursuant hereto:
Buyer: Tokheim Corporation
P.O. Box 360
Fort Wayne, Indiana 46801, USA
Attn: John A. Negovetich, Chief Financial Officer
Telecopy: (1)219-484-1110
With copy to: Skadden, Arps, Slate, Meagher and Flom
105, rue du Faubourg Saint-Honore
75008 Paris, France
Attn: Christopher L. Baker
Telecopy: (33-1)49-53-09-99
Seller: Sofitam S.A.
41/43, rue des Bas
92600 Asnieres, France
Attn: Jean-Pierre Quinio
Telecopy: (33-1)47-90-51-30
With copy to: Bredin, Prat & Associes
130, rue du Faubourg Saint-Honore
75008 Paris, France
Attn: Jean-Francois Prat,
Richard Schepard and
Maria Ruegg
Telecopy: (33-1)45-63-14-07
8.2 Entire Agreement. This Agreement, the Schedules and the Exhibits
hereto and the certificates or other documents delivered hereunder represent the
entire understanding and agreement of the parties and supersede all prior
agreements, understandings or arrangements among the parties hereto with respect
to the subject matter hereof and can be amended, supplemented or changed, and
any provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of such
amendment, supplement, modification or waiver is sought. No prior
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<PAGE>
drafts of this Agreement may be used in any Proceeding to indicate or establish
the intent of the parties.
8.3 Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
8.4 Applicable Law/Disputes. This Agreement shall be governed by and
construed and enforced in accordance with the laws of France, without reference
to its conflict of law principles.
(a) All disputes which may arise in connection with this
Agreement, including without limitation its validity, interpretation,
performance and an ad-hoc non-performance termination and/or post-termination
rights will be submitted to arbitration under the conditions set forth
hereunder.
The party deciding to commence arbitration proceedings will
notify the other, indicating the name of the arbitrator it has appointed. The
other party will, within the following thirty (30) days, notify the former of
the name of the arbitrator it has chosen. If such party abstains from notifying
such appointment for at least eight (8) days following a formal notice from the
party commencing the arbitration proceeding, the arbitrator will be appointed by
court order in a refere proceeding of the President of the Paris Tribunal of
Commerce (each arbitrator, an "Arbitrator").
Within fifteen (15) days of their appointment, the Arbitrators
appointed by the parties will appoint in writing a President of the Arbitral
Tribunal, who shall also be an Arbitrator. Absent such appointment, the
President of the Arbitral Tribunal will be appointed, upon application of either
party in a refere proceeding, by the President of the Paris Tribunal of
Commerce.
The Arbitral Tribunal will use its best efforts to decide the
matter within a period of three (3) months running from the date of the terms of
reference.
Unless otherwise decided by the President of the Arbitral
Tribunal, the terms of reference shall be finalized at the first meeting of the
Arbitral Tribunal which shall be held within thirty (30)
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<PAGE>
days following the appointment of the third Arbitrator.
The Arbitrators may request from the parties, and the parties may not
refuse, all the time extensions which they deem necessary or useful.
The arbitration shall be held in Paris, France. The arbitration
proceedings, including, but not limited to, all arguments, shall be conducted,
and the award shall be rendered, in the English language. The parties shall be
entitled to produce pleadings, briefs and written evidence in the English
languages and no translations of any documents in French shall be required.
The expenses and fees of the arbitration will be shared between the
parties in a proportion which will be determined by the Arbitral Tribunal in an
award containing a provision to this effect.
Any deposit with respect to expenses and fees which will be determined
by the Arbitral Tribunal will be apportioned and paid equally by the parties,
unless the Arbitrators decide otherwise.
The Arbitrators will not be required to observe the rules as to form
and time limits of the French Civil Procedure Code but they must put the parties
in a position to present their arguments and comments in a manner so as to
respect the principle of contradictoire.
The arbitral award will not be subject to appeal or opposition.
The party who refuses to accept the award will bear all costs and
duties relating to or resulting from the enforcement of the award.
The Buyer and any authorized assignee(s) pursuant to Section 8.10
shall be deemed to be one single party for purposes of designation of an
arbitrator.
(b) Notwithstanding the foregoing, the parties agree that no action
or Proceeding arising out of or with respect to this Agreement shall be brought
before any arbitral tribunal unless and until:
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<PAGE>
(i) one party has given notice to the other of its intention to
commence such an action or Proceeding, such notice to describe the grounds
on which such action or Proceeding would be based;
(ii) twenty (20) Business Days shall have passed after such notice
has been given, without such dispute having been amicably settled by and
between Seller's Chief Financial Officer and Buyer's Chief Financial
Officer who are hereby designated as the respective party's officers'
nominees to pursue such settlement discussions.
8.5 Expenses. Whether or not the transactions contemplated hereby
are consummated, the parties hereto shall pay their own respective expenses
provided, however, that all transfer taxes in connection with the purchase of
the Shares shall be paid by Buyer.
8.6 Waiver. Any party may, by written notice to another party: (a)
extend the time for the performance of any of the obligations or other actions
of such other party; (b) waive any inaccuracies in the representations of such
other party contained in this Agreement; or (c) waive compliance with any of the
agreements of such other party contained in this Agreement or waive or consent
to the modification of performance of any of the obligations of such other
party. No other action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, condition, or agreement contained herein.
8.7 Severability. If at any time subsequent to the date hereof, any
provisions of this Agreement shall be held by any arbitration tribunal or court
of competent jurisdiction to be illegal, void or unenforceable, such provision
shall be of no force and effect, but the illegality or unenforceability of such
provision shall have no effect upon and shall not impair the enforceability of
any other provision of this Agreement and the parties will negotiate in good
faith to replace the illegal, void or unenforceable provision with another one
which is as close as possible to such illegal, void or unenforceable provision.
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8.8 Incorporation by Reference; Disclosure Schedules. The Schedules
and Exhibits to this Agreement and any certificate delivered hereunder
constitute integral parts of this Agreement and are hereby incorporated into
this Agreement by this reference.
8.9 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
8.10 Assignment. The rights and obligations under this Agreement may
not be assigned or delegated by any party hereto, in whole or in part, to any
third party without the prior written consent of the other party hereto;
provided, however, that Buyer may assign all or any portion of its rights
hereunder without the prior written consent of Seller (i) to any wholly owned,
direct or indirect, subsidiary of Buyer located in the United States, Canada or
any country member of the European Union, provided that if at any time after
assignment to any such subsidiary of any rights of Buyer hereunder to
indemnification pursuant to Article VII such subsidiary is no longer majority
owned and controlled by Buyer, all of Buyer's and such assigned rights to any
indemnification on account of breaches of any representations and warranties by
Seller shall immediately end or (ii) to any financial institution (without right
of further assignment) in connection with obtaining any of the financing and
refinancing contemplated by this Agreement, but no such permitted assignment
shall relieve Buyer of its obligations hereunder if such assignee does not
perform such obligations and Buyer shall remain jointly and severally liable
with its assignee for the due and proper performance of all of Buyer's
obligations hereunder.
8.11 Rescission. Seller and Buyer each irrevocably waives all rights
to rescind this Agreement, except in the case of fraud or "dol".
8.12 Certain Definitions. For purposes of this Agreement, the term:
-------------------
(a) "Accounting Principles" means the specific principles, methods
and procedures and rules as set forth in Schedule 2.1.5(a).
(b) "Affiliate" of any Person means any other Person that directly or
indirectly, through
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one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned Person. A Person shall be deemed to control
another Person if such first mentioned Person owns, directly or indirectly, 50%
or more of the voting rights of the second mentioned Person.
(c) "Business Day" means any day other than a Saturday, Sunday or a
public bank holiday in France.
(d) "Closing" has the meaning specified in Section 5.1.
(e) "Closing Date" means the date on which the Closing occurs.
(f) "Company" or "Companies" means the entities listed on Schedule
0.4.
(g) "Ein Products" means the products manufactured at Sofitam
Equipement's plant in Grentheville and identified in Schedule 0.3.
(h) "Environmental Claim" means any inquiry, notice or claim by any
third Person or entity alleging potential liability of the Companies and/or the
Subsidiaries arising out of, based on or resulting from any circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Laws.
(i) "Environmental Laws" means any and all applicable treaties, laws,
regulations, orders, decrees, judgments, injunctions, permits, approvals,
authorizations, permissions, notices or binding agreements relating to the
protection of the environment.
(j) "Fuel Pump Business" means the production, sale and service of
fuel pumps and site controllers in France and internationally.
(k) "Fuel Pump Products" means the products listed in Schedule
------------------ --------
0.1.
- ---
(l) "Governmental Entity" means any state authority or any court of
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, including any
court, administrative agency, commission or other organ of the European Union.
65
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(m) "Hazardous Substances" shall mean all hazardous substances,
hazardous wastes, solid wastes, radioactive materials, contaminants, pollutants,
toxic substances, chemicals or other substances defined under or regulated by
Environmental Law, including, but not limited to, petroleum or petroleum
products or asbestos.
(n) "Intellectual Property" means all registered and unregistered:
trademarks, service marks, trade names, corporate names, company names,
fictitious business names, logos, and other source or business identifiers;
software (including source and object code); patents, copyrights, proprietary
formulas, recipes, technology, know-how and other trade secrets, and all
registrations and recordings thereof, all applications and renewals thereof, all
pending therefor, all extensions and renewals thereof, all goodwill associated
therewith, and all proprietary rights therein, in any jurisdiction in which any
Company or Subsidiary operates or does business; provided, however, that the
term "Intellectual Property" shall not include any Intellectual Property related
to any "off-the-shelf" products currently used in or necessary to the Fuel Pump
Business.
(o) "Knowledge of the Seller" or phrases of like meaning when used in
this agreement include the knowledge of Seller's senior executives after due
inquiry.
(p) "Liens" means all mortgages, pledges, security interests, liens,
options (including, without limitation, any options to purchase or sell Shares),
conditional sales agreements, covenants, material easements, material rights of
way, title defects (and in the case of any Fuel Pump Assets, material title
defects) or other encumbrances.
(q) "Material Adverse Effect" means a material adverse effect on the
properties, assets, results of operations, financial condition or prospects of
the Fuel Pump Business which involves a loss or liability of Two Hundred
Thousand French francs (FF 200,000) or more with respect to any single item,
case or occurrence, provided that multiple claims (regardless of amount) arising
out of the same set of facts or circumstances shall be deemed to be a single
occurrence.
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(r) "Person" means an individual, corporation, partnership,
association, trust or any unincorporated organization.
(s) "PIBOR" means the three-month Paris interbank offered rate
(t) "Proceeding" means any action, suit, legal, administrative,
arbitration or other alternative dispute resolution proceeding or administrative
investigation.
(u) "Products" means all Fuel Pump Products including without
limitation, Satam Products and Ein Products.
(v) "Release" means any spill, emission, disposal, migration or
abandonment of any Hazardous Substance in, into, onto, or through the
environment.
(w) "Satam Products" means the products manufactured at Sofitam
Equipement's plant in Falaise and identified in Schedule 0.2.
(x) "Shares" means equity interests listed on Schedule 0.4.
------ ------------
(y) "Tax" or "Taxes" means all direct or indirect taxes, charges,
fees, levies or other assessments, including, without limitation, all net
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, social security, unemployment,
excise, estimated, severance, property or other taxes, duties, fees, assessments
or charges of any kind whatsoever, including any interest, penalties or
additional amounts attributable thereto imposed by any national, local or
foreign governmental tax, social security or customs authority.
(z) "Tax Return" means any mandatory return, report, information
return, statement, declaration or other document (including any related or
supporting information) filed or required to be filed with any national, local
or foreign governmental tax, social security or customs authority in connection
with any determination, assessment or collection of any Tax.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the day and year first above written.
TOKHEIM CORPORATION
By: _________________________
Title: President and Chief Executive Officer
SOFITAM S.A.
By: _________________________
Title: president-directeur general
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Exhibit Number 4
TOKHEIM CORPORATION,
as Issuer
and
HARRIS TRUST AND SAVINGS BANK
as Trustee
--------------------
INDENTURE
Dated as of August 23, 1996
--------------------
$100,000,000
11-1/2% Senior Subordinated Notes due 2006
and
Series B 11-1/2% Senior Subordinated Notes due 2006
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1)........................................................ 7.10
(a)(2)........................................................ 7.10
(a)(3)........................................................ N.A.
(a)(4)........................................................ N.A.
(a)(5)........................................................ 7.08; 7.10
(b)........................................................... 7.08; 7.10;
11.02
(c)........................................................... N.A.
311(a)........................................................... 7.11
(b)........................................................... 7.11
(c)........................................................... N.A.
312(a)........................................................... 2.05
(b)........................................................... 11.03
(c)........................................................... 11.03
313(a)........................................................... 7.06
(b)(1)........................................................ N.A.
(b)(2)........................................................ 7.06
(c)........................................................... 7.06; 11.02
(d)........................................................... 7.06
314(a)........................................................... 4.07; 4.08;
11.02
(b)........................................................... N.A.
(c)(1)........................................................ 11.04
(c)(2)........................................................ 11.04
(c)(3)........................................................ N.A.
(d)........................................................... N.A.
(e)........................................................... 11.05
(f)........................................................... N.A.
315(a)........................................................... 7.01(b)
(b)........................................................... 7.05; 11.02
(c)........................................................... 7.01(a)
(d)........................................................... 7.01(c)
(e)........................................................... 6.11
316(a)(last sentence)............................................ 2.09
(a)(1)(A)..................................................... 6.05
(a)(1)(B)..................................................... 6.04
(a)(2)........................................................ N.A.
(b)........................................................... 6.07
(c)........................................................... 9.05
317(a)(1)........................................................ 6.08
(a)(2)........................................................ 6.09
(b)........................................................... 2.04
318(a)........................................................... 11.01
(c)........................................................... 11.01
</TABLE>
- -----------------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
-i-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
<S> <C>
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions........................................... 1
Section 1.02 Incorporation by Reference of TIA..................... 27
Section 1.03 Rules of Construction................................. 28
ARTICLE TWO
THE NOTES
Section 2.01 Form and Dating....................................... 28
Section 2.02 Execution and Authentication; Aggregate
Principal Amount.................................... 30
Section 2.03 Registrar and Paying Agent............................ 31
Section 2.04 Paying Agent To Hold Assets in Trust.................. 32
Section 2.05 Noteholder Lists...................................... 32
Section 2.06 Transfer and Exchange................................. 32
Section 2.07 Replacement Notes..................................... 33
Section 2.08 Outstanding Notes..................................... 34
Section 2.09 Treasury Notes........................................ 34
Section 2.10 Temporary Notes....................................... 34
Section 2.11 Cancellation.......................................... 35
Section 2.12 Defaulted Interest.................................... 35
Section 2.13 CUSIP Number.......................................... 36
Section 2.14 Deposit of Moneys..................................... 36
Section 2.15 Restrictive Legends................................... 36
Section 2.16 Book-Entry Provisions for Global
Security............................................ 38
Section 2.17 Special Transfer Provisions........................... 40
ARTICLE THREE
REDEMPTION
Section 3.01 Notices to Trustee.................................... 42
Section 3.02 Selection of Notes To Be Redeemed..................... 42
Section 3.03 Notice of Redemption.................................. 43
Section 3.04 Effect of Notice of Redemption........................ 44
Section 3.05 Deposit of Redemption Price........................... 44
Section 3.06 Notes Redeemed in Part................................ 44
</TABLE>
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ARTICLE FOUR
COVENANTS
Section 4.01 Payment of Notes...................................... 45
Section 4.02 Maintenance of Office or Agency....................... 45
Section 4.03 Corporate Existence................................... 46
Section 4.04 Payment of Taxes and Other Claims..................... 46
Section 4.05 Maintenance of Properties and Insurance............... 46
Section 4.06 Compliance Certificate; Notice of
Default............................................. 47
Section 4.07 Compliance with Laws.................................. 48
Section 4.08 SEC Reports........................................... 48
Section 4.09 Waiver of Stay, Extension or Usury Laws............... 49
Section 4.10 Limitation on Restricted Payments..................... 49
Section 4.11 Limitation on Transactions with
Affiliates.......................................... 51
Section 4.12 Limitation on Incurrence of Additional
Indebtedness........................................ 52
Section 4.13 Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries
Section 4.14 Prohibition on Incurrence of Senior
Subordinated Debt................................... 54
Section 4.15 Change of Control..................................... 54
Section 4.16 Limitation on Asset Sales............................. 56
Section 4.17 Limitation on Preferred Stock of
Subsidiaries........................................ 60
Section 4.18 Limitation on Liens................................... 60
Section 4.19 Deposit of Proceeds With Escrow Agent
Pending Consummation of Acquisition................. 61
ARTICLE FIVE
SUCCESSOR CORPORATION
Section 5.01 Merger, Consolidation and Sale of
Assets.............................................. 64
Section 5.02 Successor Corporation Substituted..................... 65
ARTICLE SIX
DEFAULT AND REMEDIES
Section 6.01 Events of Default..................................... 65
Section 6.02 Acceleration.......................................... 67
Section 6.03 Other Remedies........................................ 68
Section 6.04 Waiver of Past Defaults............................... 69
Section 6.05 Control by Majority................................... 69
Section 6.06 Limitation on Suits................................... 69
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Section 6.07 Rights of Holders To Receive Payment.................. 70
Section 6.08 Collection Suit by Trustee............................ 70
Section 6.09 Trustee May File Proofs of Claim...................... 70
Section 6.10 Priorities............................................ 71
Section 6.11 Undertaking for Costs................................. 72
ARTICLE SEVEN
TRUSTEE
Section 7.01 Duties of Trustee..................................... 72
Section 7.02 Rights of Trustee..................................... 73
Section 7.03 Individual Rights of Trustee.......................... 75
Section 7.04 Trustee's Disclaimer.................................. 75
Section 7.05 Notice of Default..................................... 75
Section 7.06 Reports by Trustee to Holders......................... 76
Section 7.07 Compensation and Indemnity............................ 76
Section 7.08 Replacement of Trustee................................ 77
Section 7.09 Successor Trustee by Merger, Etc...................... 78
Section 7.10 Eligibility; Disqualification......................... 79
Section 7.11 Preferential Collection of Claims
Against Company..................................... 79
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.01 Termination of the Company's
Obligations......................................... 79
Section 8.02 Legal Defeasance and Covenant
Defeasance.......................................... 81
Section 8.03 Conditions to Legal Defeasance or
Covenant Defeasance................................. 82
Section 8.04 Application of Trust Money............................ 84
Section 8.05 Repayment to the Company.............................. 85
Section 8.06 Reinstatement......................................... 86
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01 Without Consent of Holders............................ 86
Section 9.02 With Consent of Holders............................... 87
Section 9.03 Effect on Senior Debt................................. 89
Section 9.04 Compliance with TIA................................... 89
Section 9.05 Revocation and Effect of Consents..................... 89
Section 9.06 Notation on or Exchange of Notes...................... 90
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Section 9.07 Trustee To Sign Amendments, Etc....................... 90
ARTICLE TEN
SUBORDINATION
Section 10.01 Notes Subordinated to Senior Debt..................... 91
Section 10.02 No Payment on Notes in Certain
Circumstances....................................... 91
Section 10.03 Payment Over of Proceeds upon
Dissolution, Etc...... ............................ 93
Section 10.04 Payments May Be Paid Prior to
Dissolution......................................... 94
Section 10.05 Subrogation........................................... 95
Section 10.06 Obligations of the Company
Unconditional....................................... 95
Section 10.07 Notice to Trustee..................................... 95
Section 10.08 Reliance on Judicial Order or
Certificate of Liquidating Agent.................... 96
Section 10.09 Trustee's Relation to Senior Debt..................... 97
Section 10.10 Subordination Rights Not Impaired by
Acts or Omissions of the Company
or Holders of Senior Debt........................... 97
Section 10.11 Noteholders Authorize Trustee To
Effectuate Subordination of Notes................... 98
Section 10.12 This Article Ten Not To Prevent Events
of Default.......................................... 98
Section 10.13 Trustee's Compensation Not Prejudiced................. 99
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01 TIA Controls.......................................... 99
Section 11.02 Notices............................................... 99
Section 11.03 Communications by Holders with Other
Holders............................................. 100
Section 11.04 Certificate and Opinion as to
Conditions Precedent................................ 100
Section 11.05 Statements Required in Certificate or
Opinion............................................. 101
Section 11.06 Rules by Trustee, Paying Agent,
Registrar........................................... 101
Section 11.07 Legal Holidays........................................ 101
Section 11.08 Governing Law......................................... 102
Section 11.09 No Adverse Interpretation of Other
Agreements.......................................... 102
Section 11.10 No Recourse Against Others............................ 102
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Section 6.07 Rights of Holders To Receive Payment.................. 70
Section 11.11 Successors............................................ 102
Section 11.12 Duplicate Originals................................... 103
Section 11.13 Severability.......................................... 104
Signatures............................................................
Exhibit A - Form of Initial Note...................................... A-1
Exhibit B - Form of Exchange Note..................................... B-1
Exhibit C - Form of Certificate To Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors.................................... C-1
Exhibit D - Form of Certificate To Be Delivered in
Connection with Transfers Pursuant to
Regulation S............................................ D-1
</TABLE>
Note: This Table of Contents shall not, for any purpose, be deemed to be part of
the Indenture.
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<PAGE>
INDENTURE, dated as of August 23, 1996, between Tokheim Corporation,
an Indiana corporation (the "Company"), and Harris Trust and Savings Bank, an
Illinois banking corporation, as Trustee (the "Trustee").
The Company has duly authorized the creation of an issue of 11-1/2%
Senior Subordinated Notes due 2006 (the "Initial Notes") and Series B 11-1/2%
Senior Subordinated Notes due 2006 (the "Exchange Notes," and together with the
Initial Notes, the "Notes") and, to provide therefor, the Company has duly
authorized the execution and delivery of this Indenture. All things necessary to
make the Notes, when duly issued and executed by the Company, and authenticated
and delivered hereunder, the valid obligations of the Company, and to make this
Indenture a valid and binding agreement of the Company, have been done.
Each party hereto agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acceleration Notice" has the meaning provided in Section 6.02(a).
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary of the
Company or such acquisition, merger or consolidation.
"Affiliate" means, with respect to any specified Person, any other
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing.
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"Affiliate Transaction" has the meaning provided in Section 4.11.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Members" has the meaning provided in Section 2.16.
"all or substantially all" shall have the meaning given such phrase in
the Revised Model Business Corporation Act.
"Acquisition" means the acquisition by the Company of the petroleum
dispensing business of Sofitam S.A.
"Asset Acquisition" means (a) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or any Subsidiary of the Company, or
shall be merged with or into the Company or any Subsidiary of the Company, or
(b) the acquisition by the Company or any Subsidiary of the Company of the
assets of any Person (other than a Subsidiary of the Company) which constitute
all or substantially all of the assets of such Person or comprise any division
or line of business of such Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Subsidiaries (including any Sale and Leaseback Transaction) to any Person
other than the Company or a Wholly Owned Subsidiary of the Company of (a) any
Capital Stock of any Subsidiary of the Company; or (b) any other property or
assets of the Company or any Subsidiary of the Company other than in the
ordinary course of business; provided, however, that Asset Sales shall not
include (i) a transaction or series of related transactions for which the
Company or its Subsidiaries receive aggregate consideration of less than
$500,000 and (ii) the sale, lease, conveyance, disposition or other transfer (w)
of all or substantially all of the assets of the Company as permitted under
Section 5.01, (x) pursuant to any foreclosure of assets or other remedy provided
by applicable law to a creditor of the Company or any Subsidiary of the Company
with a Lien on such assets, which Lien is permitted under this Indenture;
provided that such foreclosure or other remedy is conducted in a commercially
reasonable manner or in accordance with any Bankruptcy Law, (y) involving only
Cash Equivalents or inventory in the ordinary course of business or obsolete
equipment in the ordinary course of business consistent with past practices of
the Company or (z)
<PAGE>
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involving only the lease or sublease of any real or personal property in the
ordinary course of business.
"Authenticating Agent" has the meaning provided in Section 2.02.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Blockage Period" has the meaning provided in Section 10.02.
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means a day that is not a Legal Holiday.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Cash Equivalents" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition,
<PAGE>
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having one of the two highest ratings obtainable from either Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"); (iii)
commercial paper maturing no more than one year from the date of creation
thereof and, at the time of acquisition, having a rating of at least A-1 from
S&P or at least P-1 from Moody's; (iv) certificates of deposit or bankers'
acceptances maturing within one year from the date of acquisition thereof issued
by any bank organized under the laws of the United States of America or any
state thereof or the District of Columbia or any U.S. branch of a foreign bank
having at the date of acquisition thereof combined capital and surplus of not
less than $250,000,000; (v) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (iv)
above; and (vi) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (i) through (v)
above.
"Change of Control" means the occurrence of one or more of the
following events: (i) the approval by the holders of Capital Stock of the
Company of any plan or proposal for the liquidation or dissolution of the
Company (whether or not otherwise in compliance with the provisions of this
Indenture); (ii) any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act shall become the owner, directly or indirectly,
beneficially or of record, of shares representing either more than 40% of the
aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Company or more than 40% of the aggregate issued and
outstanding Common Stock of the Company; or (iii) the replacement of a majority
of the Board of Directors of the Company over a two-year period from the
directors who constituted the Board of Directors of the Company at the beginning
of such period, and such replacement shall not have been approved by a vote of
at least a majority of the Board of Directors of the Company then still in
office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved.
"Change of Control Date" has the meaning provided in Section 4.15.
"Change of Control Offer" has the meaning provided in Section 4.15.
"Change of Control Payment Date" has the meaning provided in Section
4.15.
<PAGE>
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"Closing Date" means the date on which the Acquisition is consummated.
"Collateral" means (i) the Collateral Account, (ii) the Special
Redemption Amount and all other cash deposited in the Collateral Account from
time to time and the Eligible Investments made pursuant to Section 4.19 hereof,
(iii) all rights and privileges of the Company with respect to the Collateral
Account and the Eligible Investments, (iv) all dividends, interest and other
payments and distributions made on or with respect to the Eligible Investments
or the Collateral Account and (v) all proceeds of any of the foregoing.
"Collateral Account" shall have the meaning set forth in Section 4.19.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Earnings and (ii)
to the extent Consolidated Net Earnings has been reduced thereby, (A) all income
taxes of such Person and its Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary,
unusual or nonrecurring gains or losses or taxes attributable to sales or
dispositions outside the ordinary course of business or other transactions the
effect of which has been excluded from Consolidated Net Earnings), (B)
Consolidated Interest Expense and (C) Consolidated Non-cash Charges less any
non-cash items increasing Consolidated Net Earnings for such period, all as
determined on a consolidated basis for such Person and its Subsidiaries in
accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four most
recent full fiscal quarters for which financial information is available (the
"Four Quarter Period") ending on or prior to the date of the transaction giving
rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio
<PAGE>
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(the "Transaction Date") to Consolidated Fixed Charges of such Person for the
Four Quarter Period. In addition to and without limitation of the foregoing, for
purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis for the
period of such calculation to (i) the incurrence or repayment of any
Indebtedness of such Person or any of its Subsidiaries (and the application of
the proceeds thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), other than the incurrence or repayment of Indebtedness in the
ordinary course of business for working capital purposes pursuant to working
capital or revolving credit facilities, occurring during the Four Quarter Period
or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first day
of the Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of such Person or one of its Subsidiaries
(including any Person who becomes a Subsidiary as a result of the Asset
Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (provided that such
Consolidated EBITDA shall be included only to the extent includable pursuant to
the definition of "Consolidated Net Earnings") attributable to the assets which
are the subject of the Asset Acquisition or Asset Sale during the Four Quarter
Period) occurring during the Four Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to the Transaction Date,
as if such Asset Sale or Asset Acquisition (including the incurrence, assumption
or liability for any such Acquired Indebtedness) occurred on the first day of
the Four Quarter Period. If such Person or any of its Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if such
Person or any Subsidiary of such Person had directly incurred or otherwise
assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated
Fixed Charges" for purposes of determining the denominator (but not the
numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1) interest on
outstanding Indebtedness determined on a fluctuating basis as of the Transaction
Date and which will continue to be so determined thereafter shall be deemed to
have accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of
<PAGE>
-7-
a prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the Transaction Date will be deemed to have
been in effect during the Four Quarter Period; and (3) notwithstanding clause
(1) above, interest on Indebtedness determined on a fluctuating basis, to the
extent such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense, plus
(ii) the product of (x) the amount of all dividend payments on any series of
Preferred Stock of such Person and its Subsidiaries (other than dividends paid
in Qualified Capital Stock of the Company or dividends to the extent payable to
the Company or its Subsidiaries) paid, accrued or scheduled to be paid or
accrued during such period times (other than in the case of Preferred Stock of
such Person and its Subsidiaries for which the dividends are tax deductible for
Federal income tax purposes) (y) a fraction, the numerator of which is one and
the denominator of which is one minus the then current effective consolidated
federal, state and local tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including without limitation, (a)
any amortization of debt discount (but excluding the amortization of debt
issuance costs), (b) the net costs under Interest Swap Obligations, (c) all
capitalized interest and (d) the interest portion of any deferred payment
obligation; and (ii) the interest component of Capitalized Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person and its
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Earnings" means, with respect to any Person, for any
period, the aggregate net earnings (or loss) of such Person and its Subsidiaries
for such period on a consolidated basis (before preferred stock dividend
requirements), determined in accordance with GAAP; provided that there shall be
excluded therefrom (a) after-tax gains or losses from Asset Sales or
abandonments or reserves relating thereto, (b) after-tax items classified as
extraordinary or nonrecurring gains or losses, (c) the net earnings of any
Person acquired in a "pooling of interests" transaction accrued prior to the
date it becomes a Subsidiary of
<PAGE>
-8-
the referent Person or is merged or consolidated with the referent Person or any
Subsidiary of the referent Person, (d) the net earnings (but not loss) of any
Subsidiary of the referent Person to the extent that the declaration of
dividends or similar distributions by that Subsidiary of that income is
restricted by a contract, operation of law or otherwise, (e) the net earnings of
any Person, other than a Subsidiary of the referent Person, except to the extent
of cash dividends or distributions paid to the referent Person or to a Wholly
Owned Subsidiary of the referent Person by such Person, (f) any restoration to
income of any contingency reserve, except to the extent that provision for such
reserve was made out of Consolidated Net Earnings accrued at any time following
the Issue Date, (g) income or loss attributable to discontinued operations
(including, without limitation, operations disposed of during such period
whether or not such operations were classified as discontinued), (h) in the case
of a successor to the referent Person by consolidation or merger or as a
transferee of the referent Person's assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets and (i)
all gains or losses from the cumulative effect of any change in accounting
principles.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for
any period, the aggregate depreciation, amortization and other non-cash expenses
of such Person and its Subsidiaries reducing Consolidated Net Earnings of such
Person and its Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP (excluding any such charges constituting an
extraordinary item or loss or any such charge which requires an accrual of or a
reserve relating to possible cash charges or expenditures for any future or past
period).
"Covenant Defeasance" has the meaning provided in Section 8.02.
"Credit Agreement" means the Credit Agreement among the Company,
certain of its Subsidiaries, the lenders party thereto in their capacities as
lenders thereunder and NBD Bank, N.A., as administrative agent, together with
the related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
<PAGE>
-9-
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder (provided that such
increase in borrowings is permitted by Section 4.12)) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company or any Subsidiary against fluctuations in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Default Notice" has the meaning provided in Section 10.02.
"Depository" means The Depository Trust Company, its nominees and
successors.
"Designated Senior Debt" means (i) Indebtedness under or in respect of
the Credit Agreement and the ESOP Credit Agreement and (ii) any other
Indebtedness constituting Senior Debt which, at the time of determination, has
an aggregate principal amount of at least $25,000,000 and is specifically
designated in the instrument evidencing such Senior Debt as "Designated Senior
Debt" by the Company.
"Disqualified Capital Stock" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the final maturity date of the Notes.
"Eligible Investments" shall have the meaning set forth in Section
4.19.
"Escrow Agent" means Bankers Trust Company.
<PAGE>
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"ESOP Credit Agreement" means that certain credit agreement among the
Company, the Tokheim Employee Stock Ownership Plan, NBD Bank, N.A., and certain
other banks, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder (provided that such increase in borrowings is permitted by Section
4.12)) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Exchange Notes" has the meaning provided in the preamble to this
Indenture.
"Exchange Offer" means the registration by the Company under the
Securities Act pursuant to a registration statement of the offer by the Company
to each Holder of the Initial Notes to exchange all the Initial Notes held by
such Holder for the Exchange Notes in an aggregate principal amount equal to the
aggregate principal amount of the Initial Notes held by such Holder, all in
accordance with the terms and conditions of the Registration Rights Agreement.
"fair market value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial
<PAGE>
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Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession of the
United States, which are in effect as of the Issue Date.
"Global Note" has the meaning provided in Section 2.01.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"incur" has the meaning provided Section 4.12.
"Indebtedness" means with respect to any Person, without duplication,
(i) all indebtedness of such Person for borrowed money, (ii) all indebtedness of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all Capitalized Lease Obligations of such Person, (iv) all indebtedness or
other obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations and all Obligations under
any title retention agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business that are not
overdue by 90 days or more or are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted), (v) all indebtedness
for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction, (vi) guarantees and other contingent
obligations in respect of Indebtedness referred to in clauses (i) through (v)
above and clause (viii) below, (vii) all indebtedness of any other Person of the
type referred to in clauses (i) through (vi) which are secured by any lien on
any property or asset of such Person, the amount of such Obligation being deemed
to be the lesser of the fair market value of such property or asset or the
amount of the Obligation so secured, (viii) all indebtedness under Currency
Agreements and Interest Swap Agreements of such Person and (ix) all Disqualified
Capital Stock issued by such Person with the amount of Indebtedness represented
by such Disqualified Capital Stock being equal to the greater of its voluntary
or involuntary liquidation preference and its maximum fixed repurchase price,
but excluding accrued dividends, if any. For purposes hereof, the "maximum
fixed repurchase price" of any Disqualified Capital Stock which does not have a
fixed repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
this Indenture, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined reasonably and in good faith by
<PAGE>
-12-
the Board of Directors of the issuer of such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Independent Financial Advisor" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Initial Notes" has the meaning provided in the preamble to this
Indenture.
"Initial Purchasers" means BT Securities Corporation and First Chicago
Capital Markets, Inc.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.
"Interest Swap Obligations" means the obligations of any Person,
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit (including, without limitation, a guarantee)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" shall exclude
<PAGE>
-13-
extensions of trade credit by the Company and its Subsidiaries on commercially
reasonable terms in accordance with normal trade practices of the Company or
such Subsidiary, as the case may be. For the purposes of Section 4.10, the
amount of any Investment shall be the original cost of such Investment plus the
cost of all additional Investments by the Company or any of its Subsidiaries,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment, reduced by the
payment of dividends or distributions in connection with such Investment or any
other amounts received in respect of such Investment; provided that no such
payment of dividends or distributions or receipt of any such other amounts shall
reduce the amount of any Investment if such payment of dividends or
distributions or receipt of any such amounts would be included in Consolidated
Net Earnings.
"Issue Date" means the date of original issuance of the Notes.
"Legal Defeasance" has the meaning provided in Section 8.02.
"Legal Holiday" has the meaning provided in Section 11.07.
"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).
"Liquidated Damages" means all liquidated damages owing pursuant to
the Registration Rights Agreement.
"Maturity Date" means August 1, 2006.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Subsidiaries from such Asset
Sale net of (a) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting, brokerage and
investment banking fees and sales
<PAGE>
-14-
commissions), (b) taxes paid or payable after taking into account any reduction
in consolidated tax liability due to available tax credits or deductions and any
tax sharing arrangements, (c) repayment of Indebtedness that is required to be
repaid in connection with such Asset Sale and (d) appropriate amounts to be
provided by the Company or any Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any liabilities associated with such Asset Sale
and retained by the Company or any Subsidiary, as the case may be, after such
Asset Sale, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale.
"Net Proceeds Offer" has the meaning provided in Section 4.16.
"Net Proceeds Offer Amount" has the meaning provided in Section 4.16.
"Net Proceeds Offer Payment Date" has the meaning provided in Section
4.16.
"Net Proceeds Offer Trigger Date" has the meaning provided in Section
4.16.
"Non-U.S. Person" means a person who is not a U.S. person, as defined
in Regulation S.
"Notes" means the Initial Notes and the Exchange Notes treated as a
single class of securities, as amended or supplemented from time to time in
accordance with the terms hereof, that are issued pursuant to this Indenture.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated August 16,
1996, pursuant to which the Initial Notes were offered, and any supplement
thereto.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary of such
Person, or any other officer designated by the Board of Directors serving in a
similar capacity.
<PAGE>
-15-
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person and otherwise complying with
the requirements of Sections 11.04 and 11.05, as they relate to the making of an
Officers' Certificate.
"Offshore Physical Notes" has the meaning provided in Section 2.01.
"Opinion of Counsel" means a written opinion from legal counsel, who
may be counsel for the Company, and who is reasonably acceptable to the Trustee
complying with the requirements of Sections 11.04 and 11.05, as they relate to
the giving of an Opinion of Counsel.
"Paying Agent" has the meaning provided in Section 2.03.
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness under the Notes and this Indenture;
(ii) Indebtedness incurred pursuant to the ESOP Credit Agreement
and the Credit Agreement in an aggregate principal amount at any time
outstanding not to exceed (A) $12,671,000 with respect to the Indebtedness
under the ESOP Credit Agreement, less the amount of all mandatory principal
payments, if any (excluding any such payments to the extent refinanced at
the time of payment under a replaced ESOP Credit Agreement) and (B)
$67,239,000 in the aggregate with respect to Indebtedness under the Credit
Agreement, reduced by any required permanent repayments, if any, (which are
accompanied by a corresponding permanent commitment reduction) thereunder;
(iii) Other Indebtedness of the Company and its Subsidiaries
outstanding on the Closing Date (after giving effect to the Acquisition)
reduced by the amount of any scheduled amortization payments or mandatory
prepayments when actually paid or permanent reductions thereon;
(iv) Interest Swap Obligations of the Company covering Indebtedness
of the Company or any of its Subsidiaries and Interest Swap Obligations of
any Subsidiary of the Company covering Indebtedness of such Subsidiary;
provided, however, that (x) such Interest Swap Obligations are designed to
protect the Company and its Subsidiaries from fluctuations in interest
rates on Indebtedness incurred in accordance with
<PAGE>
-16-
this Indenture (and are used for bona fide hedging, and not speculative,
purposes); and (y) the notional principal amount of such Interest Swap
Obligation does not exceed the principal amount of the Indebtedness to
which such Interest Swap Obligation relates;
(v) Indebtedness under Currency Agreements; provided that in the
case of Currency Agreements which relate to Indebtedness, such Currency
Agreements (i) are designed to protect against fluctuations in currency
value (and are used for bona fide hedging, and not speculative, purposes)
and (ii) do not increase the Indebtedness of the Company and its
Subsidiaries outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder;
(vi) Indebtedness of a Wholly Owned Subsidiary of the Company to
the Company or to a Wholly Owned Subsidiary of the Company for so long as
such Indebtedness is held by the Company or a Wholly Owned Subsidiary of
the Company, in each case subject to no Lien held by a Person other than
the Company or a Wholly Owned Subsidiary of the Company; provided that if
as of any date any Person other than the Company or a Wholly Owned
Subsidiary of the Company owns or holds any such Indebtedness or holds a
Lien in respect of such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness by the
issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly Owned Subsidiary of
the Company for so long as such Indebtedness is held by a Wholly Owned
Subsidiary of the Company, in each case subject to no Lien; provided that
(a) any Indebtedness of the Company to any Wholly Owned Subsidiary of the
Company is unsecured and subordinated, pursuant to a written agreement, to
the Company's obligations under this Indenture and the Notes and (b) if as
of any date any Person other than a Wholly Owned Subsidiary of the Company
owns or holds any such Indebtedness or any Person holds a Lien in respect
of such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary
<PAGE>
-17-
course of business; provided, however, that such Indebtedness is
extinguished within ten business days of incurrence;
(ix) Indebtedness of the Company or any of its Subsidiaries
represented by letters of credit for the account of the Company or such
Subsidiary, as the case may be, in order to provide security for workers'
compensation claims, payment obligations in connection with self-insurance
or similar requirements in the ordinary course of business;
(x) Refinancing Indebtedness;
(xi) Indebtedness incurred by the Company or any Subsidiary of the
Company in connection with the purchase or improvement of property (real or
personal) or equipment or other capital expenditures in the ordinary course
of business or consisting of Capitalized Lease Obligations, provided that
(i) at the time of the incurrence thereof, such Indebtedness, together with
any other Indebtedness incurred during the most recently completed four
fiscal quarter period in reliance upon this clause (xi) does not exceed, in
the aggregate, 3% of the net sales of the Company and the Subsidiaries
during the most recently completed four fiscal quarter period on a
consolidated basis (calculated on a pro forma basis if the date of
incurrence is prior to the end of the fourth fiscal quarter following the
Issue Date) and (ii) such Indebtedness, together with all then outstanding
Indebtedness incurred in reliance upon this clause (xi) does not exceed, in
the aggregate, 3% of the aggregate net sales of the Company and its
Subsidiaries during the most recently completed twelve fiscal quarter
period on a consolidated basis (calculated on a pro forma basis if the
date of incurrence is prior to the end of the twelfth fiscal quarter
following the Issue Date);
(xii) Indebtedness arising from agreements of the Company or a
Subsidiary of the Company providing for indemnification, adjustment of
purchase price or similar obligations, in each case, incurred in connection
with the disposition of any business, assets or Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or Subsidiary for the purpose of financing
such acquisition; provided that the maximum aggregate liability in respect
of all such Indebtedness shall at no time exceed the gross proceeds
actually received by the Company and the Subsidiary in connection with such
disposition;
<PAGE>
-18-
(xiii) Obligations in respect of performance bonds and completion
guarantees provided by the Company or any Subsidiary of the Company in the
ordinary course of business;
(xiv) Guarantees by the Company or a Subsidiary of the Company of
Indebtedness incurred by the Company or a Subsidiary of the Company so long
as the incurrence of such Indebtedness by the Company or any such
Subsidiary is otherwise permitted by the terms of this Indenture; and
(xv) $10 million of other indebtedness of the Company or any of its
Subsidiaries (which amount may, but need not, be incurred in whole or in
part under the Credit Agreement).
"Permitted Investments" means (i) Investments by the Company or any
Subsidiary of the Company in any Person that is or will become immediately after
such Investment a Wholly Owned Subsidiary of the Company or that will merge or
consolidate into the Company or a Wholly Owned Subsidiary of the Company; (ii)
Investments in the Company by any Subsidiary of the Company; provided that any
Indebtedness evidencing such Investment is unsecured and subordinated, pursuant
to a written agreement and to the same extent that the Notes are subordinated to
Senior Debt, to the Company's obligations under the Notes and this Indenture;
(iii) Investments in cash and Cash Equivalents; (iv) loans and advances to
employees and officers of the Company and its Subsidiaries in the ordinary
course of business for bona fide business purposes; (v) Currency Agreements and
Interest Swap Obligations entered into in the ordinary course of the Company's
or its Subsidiaries' businesses and otherwise in compliance with this Indenture;
(vi) Investments in securities of trade creditors or customers received pursuant
to any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers; (vii) Investments made by the
Company or its Subsidiaries as a result of consideration received in connection
with an Asset Sale made in compliance with Section 4.16; (viii) Investments
existing on the Closing Date; (ix) Investments in an African Subsidiary in an
aggregate amount not to exceed $2 million for which the Company is committed on
the Closing Date; and (x) additional Investments in an aggregate amount not
exceeding $5 million.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Subsidiaries shall have set
aside on its books such reserves as may be required pursuant to GAAP;
<PAGE>
-19-
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law 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 in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security;
(iv) Liens securing letters of credit issued in the ordinary course
of business consistent with past practice in connection with the items
referred to in clause (iii), or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(v) judgment Liens not giving rise to an Event of Default so long
as such Lien is adequately bonded and any appropriate legal proceedings
which may have been duly initiated for the review of such judgment shall
not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired;
(vi) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not interfering
in any material respect with the ordinary conduct of the business of the
Company or any of its Subsidiaries;
(vii) any interest or title of a lessor under any Capitalized
Lease Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(viii) purchase money Liens to finance property or assets of the
Company or any Subsidiary of the Company acquired in the ordinary course of
business; provided, however, that (A) the related purchase money
Indebtedness shall not exceed the cost of such property or assets and shall
not be secured by any property or assets of the Company or any Subsidiary
of the Company other than the property and assets so acquired and (B) the
Lien securing such Indebtedness shall be created within 90 days of such
acquisition;
<PAGE>
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(ix) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(x) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(xi) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of the
Company or any of its Subsidiaries, including rights of offset and set-off;
(xii) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under this
Indenture;
(xiii) Liens securing Indebtedness under Currency Agreements;
(xiv) Liens securing Acquired Indebtedness incurred in accordance
with Section 4.12; provided that (A) such Liens secured such Acquired
Indebtedness at the time of and prior to the incurrence of such Acquired
Indebtedness by the Company or a Subsidiary of the Company and were not
granted in connection with, or in anticipation of, the incurrence of such
Acquired Indebtedness by the Company or a Subsidiary of the Company and (B)
such Liens do not extend to or cover any property or assets of the Company
or of any of its Subsidiaries other than the property or assets that
secured the Acquired Indebtedness prior to the time such Indebtedness
became Acquired Indebtedness of the Company or a Subsidiary of the Company
and are no more favorable to the lienholders than those securing the
Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness
by the Company or a Subsidiary of the Company;
(xv) Leases or subleases granted to others not interfering in any
material respect with the business of the Company or any of its
Subsidiaries;
(xvi) Any interest or title of a lessor in the property subject to
any lease, whether characterized as capitalized or operating other than any
such interest or title resulting from
<PAGE>
-21-
or arising out of a default by the Company or any of its Subsidiaries of
its obligations under such lease;
(xvii) Liens arising from filing UCC financing statements for
precautionary purposes in connection with true leases of personal property
that are otherwise permitted under this Indenture and under which the
Company or any of its Subsidiaries is lessee; and
(xviii) Liens in favor of the Trustee and any substantially
equivalent Lien granted to any trustee or similar institution under any
indenture governing Indebtedness permitted to be Incurred or outstanding
under this Indenture.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Placement Legend" means the legend initially set forth on
the Notes in the form set forth in Section 2.15.
"pro forma" means, with respect to any calculation made or required to
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act, as determined by the
Board of Directors of the Company in consultation with its independent public
accountants.
"Public Equity Offering" means an underwritten public offering of
Qualified Capital Stock of the Company by the Company pursuant to a registration
statement filed with the Commission in accordance with the Securities Act.
"Qualified Capital Stock" means any Capital Stock of the Company that
is not Disqualified Capital Stock.
<PAGE>
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"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Record Date" means the Record Dates specified in the Notes, whether
or not a Legal Holiday.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture and the
Notes.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price fixed for such redemption pursuant to this Indenture and the
Notes.
"Reference Date" has the meaning provided in Section 4.10.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Subsidiary of the Company of Indebtedness incurred in accordance with Section
4.12 (other than pursuant to clause (iv), (v), (vi), (vii), (viii), (ix), (x) or
(xi) of the definition of Permitted Indebtedness), in each case that does not
(1) result in an increase in the aggregate principal amount of Indebtedness of
such Person as of the date of such proposed Refinancing (plus the amount of any
premium or penalty required to be paid under the terms of the instrument
governing such Indebtedness and plus the amount of reasonable fees and expenses
incurred by the Company in connection with such Refinancing) or (2) create
Indebtedness with (A) a Weighted Average Life to Maturity that is less than the
Weighted Average Life to Maturity of the Indebtedness being Refinanced or (B) a
final maturity earlier than the final maturity of the Indebtedness being
Refinanced; provided that (x) if such Indebtedness being Refinanced is
Indebtedness of the Company, then such Refinancing Indebtedness shall be
Indebtedness solely of the Company and (y) if such Indebtedness being Refinanced
is subordinate or junior to the Notes, then such Refinancing Indebtedness shall
be subordinate to the Notes at least to the same extent and in the same manner
as the Indebtedness being Refinanced.
"Registrar" has the meaning provided in Section 2.03.
<PAGE>
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"Registration Rights Agreement" means the Registration Rights
Agreement dated August 23, 1996 among the Company and the Initial Purchasers for
the benefit of themselves and the Holders, as the same may be amended or
modified from time to time in accordance with the terms thereof.
"Regulation S" means Regulation S under the Securities Act.
"Representative" means the indenture trustee or other trustee, agent
or representative in respect of any Designated Senior Debt; provided that if,
and for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times constitute
the holders of a majority in outstanding principal amount of such Designated
Senior Debt in respect of any Designated Senior Debt.
"Restricted Payment" has the meaning provided in Section 4.10.
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; provided that the Trustee shall be entitled
to request and conclusively rely on an Opinion of Counsel with respect to
whether any Note constitutes a Restricted Security.
"Revolving Credit Facility" means one or more revolving credit
facilities under the Credit Agreement.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Corporation and its successors.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Subsidiary of any property, whether owned by
the Company or any Subsidiary at the Issue Date or later acquired, which has
been or is to be sold or transferred by the Company or such Subsidiary to such
Person or to any other Person from whom funds have been or are to be advanced by
such Person on the security of such Property.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means, the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
<PAGE>
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"Senior Debt" means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on, and
all other Obligations with respect to, any Indebtedness of the Company, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Notes. Without limiting the generality of the foregoing, "Senior Debt" shall
also include the principal of, premium, if any, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on, and all other monetary
obligations of the Company owing in respect of, (x) the ESOP Credit Agreement
and the Credit Agreement, including, without limitation, obligations to pay
principal and interest, reimbursement obligations under letters of credit, fees,
expenses and indemnities, (y) all Interest Swap Obligations and (z) Currency
Agreements, in each case whether outstanding on the Issue Date or thereafter
incurred. Notwithstanding the foregoing, "Senior Debt" shall not include (i) any
Indebtedness of the Company to a Subsidiary of the Company, (ii) Indebtedness
to, or guaranteed on behalf of, any shareholder, director, officer or employee
of the Company or any Subsidiary of the Company (including, without limitation,
amounts owed for compensation), (iii) Indebtedness to trade creditors and other
amounts incurred in connection with obtaining goods, materials or services, (iv)
Indebtedness represented by Disqualified Capital Stock, (v) any liability for
federal, state, local or other taxes owed or owing by the Company, (vi)
Indebtedness incurred in violation of this Indenture provisions set forth under
Section 4.12, (vii) Indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Company and (viii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of the
Company.
"Significant Subsidiary" shall have the meaning set forth in Rule
1.02(v) of Regulation S-X under the Securities Act.
"Special Redemption" shall have the meaning set forth in the Notes.
"Special Redemption Date" means October 16, 1996.
<PAGE>
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"Special Redemption Notice Date" means October 1, 1996.
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb), as amended, as in effect on the date of this Indenture, except as
otherwise provided in Section 9.04.
"Trust Officer" means any officer of the Trustee assigned by the
Trustee to administer this Indenture, or in the case of a successor trustee, an
officer assigned to the department, division or group performing the corporation
trust work of such successor and assigned to administer this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"U.S. Government Obligations" means direct obligations of, and
obligations guaranteed by, the United States of America for the payment of which
the full faith and credit of the United States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"U.S. Physical Notes" has the meaning provided in Section 2.01.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
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"Wholly Owned Subsidiary" of any Person means any Subsidiary of such
Person of which all the outstanding voting securities (other than in the case of
a foreign Subsidiary, directors' qualifying shares or an immaterial amount of
shares required to be owned by other Persons pursuant to applicable law) are
owned by such Person or any Wholly Owned Subsidiary of such Person.
SECTION 1.02. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP as in effect on the date hereof;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular; and
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(5) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Exchange Notes and
the Trustee's certificate of authentication shall be substantially in the form
of Exhibit B hereto. The Notes may have notations, legends or endorsements
required by law, stock exchange rule or depository rule or usage. The Company
and the Trustee shall approve the form of the Notes and any notation, legend or
endorsement on them. Each Note shall be dated the date of its issuance and
shall show the date of its authentication.
The terms and provisions contained in the Notes, annexed hereto as
Exhibits A and B, shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A (the "Global Note"), deposited
with the Trustee, as custodian for the Depository, duly executed by the Company
and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A (the "Offshore
Physical Notes"). Notes offered and sold in reliance on any other exemption
from registration under the Securities Act other than as described in the
preceding paragraph shall be issued, and Notes offered and sold in reliance on
Rule 144A may be issued, in the form of permanent certificated
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Notes in registered form, in substantially the form set forth in Exhibit A (the
"U.S. Physical Notes"). The Offshore Physical Notes and the U.S. Physical Notes
are sometimes collectively herein referred to as the "Physical Notes." Physical
Notes shall initially be registered in the name of the Depository or the nominee
of such Depository and be delivered to the Trustee as custodian for such
Depository. Beneficial owners of Physical Notes, however, may request
registration of such Physical Notes in their names or the names of their
nominees.
SECTION 2.02. Execution and Authentication;
Aggregate Principal Amount.
Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Notes for the Company by manual or facsimile
signature. The Company's seal shall also be reproduced on the Notes.
If an Officer or Assistant Secretary whose signature is on a Note was
an Officer or Assistant Secretary at the time of such execution but no longer
holds that office or position at the time the Trustee authenticates the Note,
the Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue in
the aggregate principal amount not to exceed $100,000,000, and (ii) Exchange
Notes from time to time for issue only in exchange for a like principal amount
of Initial Notes, in each case upon written orders of the Company in the form of
an Officers' Certificate. The Officers' Certificate shall specify the amount of
Notes to be authenticated, the date on which the Notes are to be authenticated
and the aggregate principal amount of Notes outstanding on the date of
authentication, whether the Notes are to be Initial Notes or Exchange Notes, and
shall further specify the amount of such Notes to be issued as the Global Note,
Offshore Physical Notes or U.S. Physical Notes. The aggregate principal amount
of Notes outstanding at any time may not exceed $100,000,000, except as provided
in Section 2.07.
The Trustee shall not be required to authenticate Notes if the
issuance of such Notes pursuant to this Indenture will
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affect the Trustee's own rights, duties or immunities under the Notes and this
Indenture in a manner which is not reasonably acceptable to the Trustee.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be located
in the Borough of Manhattan in the City of New York, State of New York, which
initially shall be the office of the Trustee's agent, Harris Trust Company of
New York, 77 Water Street, New York, New York 10005) where (a) Notes may be
presented or surrendered for registration of transfer or for exchange
("Registrar"), (b) Notes may be presented or surrendered for payment ("Paying
Agent") and (c) notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Registrar shall keep a register of
the Notes and of their transfer and exchange. The Company, upon prior written
notice to the Trustee, may have one or more co-Registrars and one or more
additional paying agents reasonably acceptable to the Trustee. The term "Paying
Agent" includes any additional Paying Agent. Neither the Company nor any
Affiliate of the Company may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of the name
and address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of demands and notices in connection with the Notes, until
such time as the Trustee has
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resigned or a successor has been appointed. The Paying Agent or Registrar may
resign upon 30 days notice to the Company.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, or interest on, the Notes (whether such assets have been
distributed to it by the Company or any other obligor on the Notes), and the
Company and the Paying Agent shall notify the Trustee of any Default by the
Company (or any other obligor on the Notes) in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent shall have no further liability for such assets.
SECTION 2.05. Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Trustee is not the Registrar, the Company shall furnish or
cause the Registrar to furnish to the Trustee before each Record Date and at
such other times as the Trustee may request in writing a list as of such date
and in such form as the Trustee may reasonably require of the names and
addresses of the Holders, which list may be conclusively relied upon by the
Trustee.
SECTION 2.06. Transfer and Exchange.
Subject to the provisions of Sections 2.16 and 2.17, when Notes are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Notes or to exchange such Notes for an equal principal amount
of Notes of other authorized denominations, the Registrar or co-Registrar shall
register the transfer or make the exchange as requested if its requirements for
such transaction are met; provided, however, that the Notes presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar or co-Registrar, duly executed by the Holder thereof
or his attorney
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duly authorized in writing. To permit registrations of transfer and exchanges,
the Company shall execute and the Trustee shall authenticate Notes at the
Registrar's or co-Registrar's request. No service charge shall be made for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchanges or transfers pursuant to Sections
2.10, 3.06, 4.15, 4.16 or 9.06, in which event the Company shall be responsible
for the payment of such taxes).
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three, except the unredeemed
portion of any Note being redeemed in part.
Any Holder of the Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Notes may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry.
SECTION 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the Holder of
a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Note if the
Trustee's requirements are met. If required by the Trustee or the Company, such
Holder must provide an affidavit of lost certificate and an indemnity bond or
other indemnity, sufficient in the judgment of both the Company and the Trustee,
to protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Note is replaced. The Company may charge such Holder for its
reasonable, out-of-pocket expenses in replacing a Note, including reasonable
fees and expenses of counsel. Every replacement Note shall constitute an
additional obligation of the Company.
SECTION 2.08. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section as not outstanding.
Subject to the provisions of Section
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2.09, a Note does not cease to be outstanding because the Company or any of its
Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives an Opinion of Counsel that the replaced Note is held by a bona
fide purchaser. A mutilated Note ceases to be outstanding upon surrender of such
Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Notes payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Company or any of its Affiliates shall be considered as though they are not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which a Trust Officer of the Trustee actually knows are so owned shall be
so considered. The Company shall notify the Trustee, in writing, when it or any
of its Affiliates repurchases or otherwise acquires Notes, of the aggregate
principal amount of such Notes so repurchased or otherwise acquired.
SECTION 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon receipt of a written
order of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company considers appropriate for temporary Notes. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
upon receipt of a written order of the Company pursuant to Section 2.02
definitive Notes in exchange for temporary Notes.
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SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel and, at the written direction of the Company, shall dispose
of all Notes surrendered for transfer, exchange, payment or cancellation.
Subject to Section 2.07, the Company may not issue new Notes to replace Notes
that it has paid or delivered to the Trustee for cancellation. If the Company
shall acquire any of the Notes, such acquisition shall not operate as a
redemption or satisfaction of the Indebtedness represented by such Notes unless
and until the same are surrendered to the Trustee for cancellation pursuant to
this Section 2.11.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day next preceding the
date fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, as of a recent date selected by the Company, with a copy to the Trustee,
a notice that states the subsequent special record date, the payment date and
the amount of defaulted interest, and interest payable on such defaulted
interest, if any, to be paid.
SECTION 2.13. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and if so,
the Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided that no representation is hereby deemed to be
made by the Trustee as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
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SECTION 2.14. Deposit of Moneys.
Prior to 11:00 a.m. New York City time on each Interest Payment Date
and on the Maturity Date, the Company shall have deposited with the Paying Agent
in immediately available funds money sufficient to make cash payments, if any,
due on such Interest Payment Date or Maturity Date, as the case may be, in a
timely manner which permits the Paying Agent to remit payment to the Holders on
such Interest Payment Date or Maturity Date, as the case may be.
SECTION 2.15. Restrictive Legends.
Each Global Note and Physical Note that constitutes a Restricted
Security shall bear the following legend (the "Private Placement Legend") on the
face thereof until August 23, 1999, unless otherwise agreed by the Company and
the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS
NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
(OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE OR REGISTRAR), (D) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
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THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE OF THE SECURITY, IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
Each Global Note shall also bear the following legend on the face
thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF
THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 2.17 OF THE INDENTURE.
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SECTION 2.16. Book-Entry Provisions
for Global Security.
(a) The Global Note initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Section 2.15.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Note may be transferred
or exchanged for Physical Notes in accordance with the rules and procedures of
the Depository and the provisions of Section 2.17. In addition, Physical Notes
shall be transferred to all beneficial owners in exchange for their beneficial
interests in the Global Note if (i) the Depository notifies the Company that it
is unwilling or unable to continue as Depository for the Global Note and a
successor depositary is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a written request from the Depository to issue Physical
Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
Physical Notes of like tenor and amount.
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(d) In connection with the transfer of the entire Global Note to
beneficial owners pursuant to paragraph (b), the Global Note shall be deemed to
be surrendered to the Trustee for cancellation, and the Company shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depository in exchange for its beneficial interest in the
Global Note, an equal aggregate principal amount of Physical Notes of authorized
denominations.
(e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in the Global Note pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.17, bear the legend regarding transfer restrictions applicable to the Physical
Notes set forth in Section 2.15.
(f) The Holder of the Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors and Non-
U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after August 23,
1999 or (y) (1) in the case of a transfer to an Institutional Accredited
Investor which is not a QIB (excluding Non-U.S. Persons), the proposed
transferee has delivered to the Registrar a certificate substantially in
the form of Exhibit C hereto or (2) in the case of a transfer to a Non-U.S.
Person, the proposed transferor has delivered to the Registrar a
certificate substantially in the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the Registrar's
procedures,
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whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (b) the Company shall execute and the Trustee shall
authenticate and deliver one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Note for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Notes
to be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the Global Note, upon receipt by the Registrar
of instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the Global Note
in an amount equal to the principal amount of the Physical Notes to be
transferred, and the Trustee shall cancel the Physical Notes so
transferred.
(c) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or
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replacement of Notes bearing the Private Placement Legend, the Registrar shall
deliver only Notes that bear the Private Placement Legend unless (i) the
circumstance contemplated by paragraph (a)(i)(x) of this Section 2.17 exist or
(ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.16 or this Section 2.17.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to Paragraph 6 of the
Notes, it shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the principal amount of the Notes to be redeemed.
The Company shall give each notice provided for in this Section 3.01
at least 60 days before the Redemption Date (unless a shorter notice period
shall be satisfactory to the Trustee, as evidenced in a writing signed on behalf
of the Trustee), together with an Officers' Certificate stating that such
redemption shall comply with the conditions contained herein and in the Notes.
SECTION 3.02. Selection of Notes To Be Redeemed.
If fewer than all of the Notes are to be redeemed, the Trustee shall
select the Notes to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed
or, if such Notes are not then listed on a national securities exchange, on a
pro rata basis, by
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lot or in such other fair and reasonable manner chosen at the discretion of the
Trustee; provided, however, that if a partial redemption is made with the
proceeds of a Public Equity Offering, selection of the Notes or portion thereof
for redemption shall be made by the Trustee only on a pro rata basis or on as
nearly a pro rata basis as is practicable (subject to the procedures of the
Depository), unless such method is otherwise prohibited. The Trustee shall make
the selection from the Notes outstanding and not previously called for
redemption and shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes in denominations
of $1,000 may be redeemed only in whole. The Trustee may select for redemption
portions (equal to $1,000 or any integral multiple thereof) of the principal of
Notes that have denominations larger than $1,000. Provisions of this Indenture
that apply to Notes called for redemption also apply to portions of Notes called
for redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of redemption by first
class mail, postage prepaid, to each Holder whose Notes are to be redeemed, with
a copy to the Trustee and any Paying Agent. At the Company's written request,
the Trustee shall give the notice of redemption in the Company's name and at the
Company's expense.
Each notice for redemption shall identify the Notes to be redeemed
and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if any,
to be paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such redemption is
being made;
(5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price plus accrued interest, if any;
(6) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption
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ceases to accrue on and after the Redemption Date, and the only remaining
right of the Holders of such Notes is to receive payment of the Redemption
Price plus accrued interest, if any, upon surrender to the Paying Agent of
the Notes redeemed;
(7) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the Redemption
Date, and upon surrender of such Note, a new Note or Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be issued;
and
(8) if fewer than all the Notes are to be redeemed, the identification
of the particular Notes (or portion thereof) to be redeemed, as well as the
aggregate principal amount of Notes to be redeemed and the aggregate
principal amount of Notes to be outstanding after such partial redemption.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price plus accrued interest, if any. Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption shall be paid at the
Redemption Price (which shall include accrued interest thereon to the Redemption
Date), but installments of interest, the maturity of which is on or prior to the
Redemption Date, shall be payable to Holders of record at the close of business
on the relevant record dates referred to in the Notes.
SECTION 3.05. Deposit of Redemption Price.
On or before the Redemption Date, the Company shall deposit with the
Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price plus
accrued interest, if any, of all Notes to be redeemed on that date. The Paying
Agent shall promptly return to the Company any U.S. Legal Tender so deposited
which is not required for that purpose, except with respect to monies owed as
obligations to the Trustee pursuant to Article Seven.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, interest on the Notes to be redeemed will cease to accrue on and after
the applicable Redemption Date, whether or not such Notes are presented for
payment.
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SECTION 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in part, the Company
shall execute and the Trustee shall authenticate for the Holder a new Note or
Notes equal in principal amount to the unredeemed portion of the Note
surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
The Company shall pay the principal of and interest on the Notes on
the dates and in the manner provided in the Notes and in this Indenture. An
installment of principal of or interest on the Notes shall be considered paid on
the date it is due if the Trustee or Paying Agent (other than the Company or an
Affiliate of the Company) holds on that date U.S. Legal Tender designated for
and sufficient to pay the installment in full and is not prohibited from paying
such money to the Holders pursuant to the terms of this Indenture.
The Company shall pay, to the extent such payments are lawful,
interest on overdue principal and on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
borne by the Notes plus 2% per annum. Interest will be computed on the basis of
a 360-day year comprised of twelve 30-day months.
Notwithstanding anything to the contrary contained in this Indenture,
the Company may, to the extent it is required to do so by law, deduct or
withhold income or other similar taxes imposed by the United States of America
from principal or interest payments hereunder.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain the office or agency required under Section
2.03. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 11.02.
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SECTION 4.03. Corporate Existence.
Except as otherwise permitted by Article Five and Section 4.16, the
Company shall do or cause to be done, at its own cost and expense, all things
necessary to preserve and keep in full force and effect its corporate existence
and the corporate existence of each of its Subsidiaries in accordance with the
respective organizational documents of each such Subsidiary and the material
rights (charter and statutory) and franchises of the Company and each such
Subsidiary; provided, however, that the Company shall not be required to
preserve, with respect to itself, any material right or franchise and, with
respect to any of its Subsidiaries, any such existence, material right or
franchise, if the Board of Directors of the Company shall determine in good
faith that the preservation thereof is no longer desirable in the conduct of the
business of the Company and the Subsidiaries, taken as a whole.
SECTION 4.04. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments
and governmental charges (including withholding taxes and any penalties,
interest and additions to taxes) levied or imposed upon it or any of its
Subsidiaries or properties of it or any of its Subsidiaries and (ii) all lawful
claims for labor, materials and supplies that, if unpaid, might by law become a
Lien upon the property of it or any of its Subsidiaries; provided, however, that
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings properly
instituted and diligently conducted for which adequate reserves, to the extent
required under GAAP, have been taken.
SECTION 4.05. Maintenance of Properties
and Insurance.
(a) The Company shall, and shall cause each of its Subsidiaries to,
maintain its material properties in good working order and condition (subject to
ordinary wear and tear) and make all necessary repairs, renewals, replacements,
additions, betterments and improvements thereto and actively conduct and carry
on its business; provided, however, that nothing in this Section 4.05 shall
prevent the Company or any of its Subsidiaries from discontinuing the operation
and maintenance of any of its properties, if such discontinuance is, in the good
faith judgment of the Board of Directors or senior management of the Company or
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the Subsidiary, as the case may be, desirable in the conduct of their respective
businesses.
(b) The Company shall provide or cause to be provided, for itself and
each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the good faith judgment of the
Board of Directors of the Company, are adequate and appropriate for the conduct
of the business of the Company and such Subsidiaries in a prudent manner, with
reputable insurers or with the government of the United States of America or an
agency or instrumentality thereof, in such amounts, with such deductibles, and
by such methods as shall be customary, in the good faith judgment of the Board
of Directors of the Company, for companies similarly situated in the industry.
SECTION 4.06. Compliance Certificate;
Notice of Default.
(a) The Company shall deliver to the Trustee, within 90 days after the
end of the Company's fiscal year, an Officers' Certificate stating that a review
of its activities and the activities of its Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture and further stating, as to each
such Officer signing such certificate, that to the best of such Officer's
knowledge the Company during such preceding fiscal year has kept, observed,
performed and fulfilled each and every such covenant and no Default or Event of
Default occurred during such year and at the date of such certificate there is
no Default or Event of Default that has occurred and is continuing or, if such
signers do know of such Default or Event of Default, the certificate shall
describe the Default or Event of Default and its status with particularity. The
Officers' Certificate shall also notify the Trustee should the Company elect to
change the manner in which it fixes its fiscal year end.
(b) The annual financial statements delivered pursuant to Section 4.08
shall be accompanied by a written report of the Company's independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit of such financial statements nothing has come to their
attention that would lead them to believe that a Default or Event of Default
under this Indenture has occurred insofar as they relate to accounting matters
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of any
such violation.
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(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, the Company
shall deliver to the Trustee, at its address set forth in Section 11.02 hereof,
by registered or certified mail or by telegram, telex or facsimile transmission
followed by hard copy by registered or certified mail an Officers' Certificate
specifying such event, notice or other action and the status thereof within five
Business Days of its becoming aware of such occurrence.
SECTION 4.07. Compliance with Laws.
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as are not in the aggregate
reasonably likely to have a material adverse effect on the financial condition
or results of operations of the Company and its Subsidiaries, taken as a whole.
SECTION 4.08. SEC Reports.
(a) The Company (at its own expense) shall file with the SEC and shall
file with the Trustee within 15 days after it files them with the SEC copies of
the quarterly and annual reports and of the information, documents, and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) to be filed pursuant to Section 13 or 15(d) of
the Exchange Act (without regard to whether the Company is subject to the
requirements of such Section 13 or 15(d) of the Exchange Act). Upon
qualification of this Indenture under the TIA, the Company shall also comply
with the provisions of TIA (S) 314(a).
(b) At the Company's expense, the Company shall cause an annual report
if furnished by it to stockholders generally and each quarterly or other
financial report if furnished by it to stockholders generally to be filed with
the Trustee and mailed to the Holders at their addresses appearing in the
register of Notes maintained by the Registrar at the time of such mailing or
furnishing to stockholders.
(c) The Company shall provide to any Holder any information reasonably
requested by such Holder concerning the
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Company (including financial statements) necessary in order to permit such
Holder to sell or transfer Notes in compliance with Rule 144A under the
Securities Act.
SECTION 4.09. Waiver of Stay, Extension
or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 4.10. Limitation on Restricted Payments.
The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make
any distribution (other than dividends or distributions payable in Qualified
Capital Stock of the Company) on or in respect of shares of the Company's
Capital Stock, (b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any warrants, rights or options to purchase or
acquire shares of any class of such Capital Stock or (c) make any Investment
(other than Permitted Investments) (each of the foregoing actions set forth in
clauses (a), (b) and (c) being referred to as a "Restricted Payment"), if at the
time of such Restricted Payment or immediately after giving effect thereto, (i)
a Default or an Event of Default shall have occurred and be continuing or (ii)
the Company is not able to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with Section 4.12 or (iii) the
aggregate amount of Restricted Payments (including such proposed Restricted
Payment) made subsequent to the Issue Date (the amount expended for such
purposes, if other than in cash, being the fair market value of such property as
determined reasonably and in good faith by the Board of Directors of the
Company) shall exceed the sum of: (w) 50% of the cumulative Consolidated Net
Earnings (or if cumulative Consolidated Net Earnings shall be a loss, minus 100%
of such loss) of the Company earned subsequent to the Issue Date and on or prior
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to the date the Restricted Payment occurs (the "Reference Date") (treating such
period as a single accounting period); plus (x) 100% of the aggregate net cash
proceeds received by the Company from any Person (other than a Subsidiary of the
Company) from the issuance and sale subsequent to the Issue Date and on or prior
to the Reference Date of Qualified Capital Stock of the Company; plus (y) 100%
of the net cash proceeds from the sale of Investments by the Company (other than
Permitted Investments) provided that such Investment was made after the Issue
Date; plus (z) without duplication of any amounts included in clause (iii)(x)
above, 100% of the aggregate net cash proceeds of any equity contribution
received by the Company from a holder of the Company's Capital Stock (excluding,
in the case of clauses (iii)(x) and (z), any net cash proceeds from a Public
Equity Offering to the extent used to redeem the Notes or utilized as provided
in clause (ii) of the next succeeding paragraph).
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (1) the payment of any dividend
within 60 days after the date of declaration of such dividend if the dividend
would have been permitted on the date of declaration; or (2) the acquisition of
any shares of Capital Stock of the Company, either (i) solely in exchange for
shares of Qualified Capital Stock of the Company or (ii) through the application
of the net cash proceeds of a substantially concurrent sale for cash (other than
to a Subsidiary of the Company) of shares of Qualified Capital Stock of the
Company (excluding, in the case of clause 2(ii), any net cash proceeds from a
Public Equity Offering to the extent used to redeem the Notes); or (3) dividends
on, and redemptions of, the shares of the Company's preferred stock held by the
trust of the Company's retirement savings plan in accordance with the terms
thereof on the date of this Indenture; or (4) payments to redeem or repurchase
stock or similar rights from management of the Company in connection with the
repurchase provisions under employee stock option or stock purchase agreements
or other agreements to compensate management employees upon the termination of
employment, death or disability of any such person; provided that such
redemptions or repurchases shall not exceed $1,000,000. In determining the
aggregate amount of Restricted Payments made subsequent to the Issue Date in
accordance with clause (iii) of the immediately preceding paragraph, amounts
expended pursuant to clauses (1) and (4) shall be included in such calculation.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment complies with this Indenture and setting forth in reasonable
detail the basis upon which the
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required calculations were computed, which calculations may be based upon the
Company's latest available internal quarterly financial statements.
SECTION 4.11. Limitation on Transactions
with Affiliates.
(a) The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, enter into or permit to exist any transaction or
series of related transactions (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any service) with,
or for the benefit of, any of its Affiliates (each an "Affiliate Transaction"),
other than (x) Affiliate Transactions permitted under paragraph (b) below and
(y) Affiliate Transactions on terms that are no less favorable to the Company or
such Subsidiary than those that could reasonably have been obtained in a
comparable transaction at such time on an arm's-length basis from a Person that
is not an Affiliate of the Company or such Subsidiary. All Affiliate
Transactions (and each series of related Affiliate Transactions which are
similar or part of a common plan) involving aggregate payments or other property
with a fair market value in excess of $1,000,000 shall be approved by the Board
of Directors of the Company or such Subsidiary, as the case may be, such
approval to be evidenced by a Board Resolution stating that such Board of
Directors has determined that such transaction complies with the foregoing
provisions. If the Company or any Subsidiary of the Company enters into an
Affiliate Transaction (or a series of related Affiliate Transactions related to
a common plan) that involves aggregate payments or other property with a fair
market value of more than $5,000,000, the Company or such Subsidiary, as the
case may be, shall, prior to the consummation thereof, obtain a favorable
opinion as to the fairness of such transaction or series of related transactions
to the Company or the relevant Subsidiary, as the case may be, from a financial
point of view, from an Independent Financial Advisor and file the same with the
Trustee.
(b) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to, and indemnity provided on behalf of,
officers, directors or employees of the Company or any Subsidiary of the Company
as determined in good faith by the Company's Board of Directors; (ii)
transactions exclusively between or among the Company and any of its Wholly
Owned Subsidiaries or exclusively between or among such Wholly Owned
Subsidiaries, provided such transactions are not otherwise prohibited by this
Indenture; (iii) Restricted Payments permitted by this Indenture; (iv)
transactions permitted by, and complying with, the provisions of Section 5.01;
(v) transactions with
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distributors or other purchases or sales of goods or services, in each case in
the ordinary course of business and otherwise in compliance with the terms of
this Indenture which are fair to the Company, in the reasonable determination of
the Board of Directors of the Company or the senior management thereof, or are
on terms at least as favorable as might reasonably have been obtained at such
time from an unaffiliated party; (vi) any management agreement as in effect as
of the Closing Date or any amendment thereto or any replacement agreement
thereto so long as any such amendment or replacement agreement is not more
disadvantageous to the Holders in any material respect than the original
agreement as in effect on the Closing Date and any similar agreements entered
into after the Closing Date; and (vii) intercompany loans from the Company to
any of its Wholly Owned Subsidiaries; provided such loans are otherwise in
compliance with the terms of this Indenture.
SECTION 4.12. Limitation on Incurrence
of Additional Indebtedness.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume, guarantee, acquire, become
liable, contingently or otherwise, with respect to, or otherwise become
responsible for payment of (collectively, "incur") any Indebtedness (other than
Permitted Indebtedness); provided, however, that if no Default or Event of
Default shall have occurred and be continuing at the time of or as a consequence
of the incurrence of any such Indebtedness, the Company may incur Indebtedness
(including, without limitation, Acquired Indebtedness) and Subsidiaries of the
Company may incur Acquired Indebtedness, in each case if on the date of the
incurrence of such Indebtedness, after giving effect to the incurrence thereof,
the Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.00
to 1.00 if incurred on or prior to the first anniversary of the Issue Date or
greater than 2.25 to 1.00 if incurred thereafter.
SECTION 4.13. Limitation on Dividend and
Other Payment Restrictions
Affecting Subsidiaries.
The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary of the Company to (a) pay dividends or make any other distributions
on or in respect of its Capital Stock; (b) make loans or advances or to pay or
guarantee any Indebtedness or other obligation owed to the Company or any other
Subsidiary of the Company; provided that the terms of
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the Credit Agreement may restrict loans or advances from the Company and those
of its Subsidiaries that are borrowers under the Credit Agreement to any of the
Company's Subsidiaries that are not borrowers under the Credit Agreement or
guarantees by the Company or Subsidiaries of the Company that are borrowers
under the Credit Agreement of any Indebtedness or other obligation owed by any
of the Company's Subsidiaries that are not borrowers under the Credit Agreement;
or (c) transfer any of its property or assets to the Company or any other
Subsidiary of the Company, except for such encumbrances or restrictions existing
under or by reason of: (1) applicable law; (2) this Indenture; (3) customary
non-assignment provisions of any contract or any lease governing a leasehold
interest of any Subsidiary of the Company; (4) any instrument governing Acquired
Indebtedness, which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person or the
properties or assets of the Person so acquired; (5) agreements existing on the
Closing Date to the extent and in the manner such agreements are in effect on
the Closing Date; or (6) an agreement governing Indebtedness incurred to
Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement
referred to in clause (2), (4) or (5) above; provided, however, that the
provisions relating to such encumbrance or restriction contained in any such
Refinancing Indebtedness are no less favorable to the Company in any material
respect as determined by the Board of Directors of the Company in their
reasonable and good faith judgment than the provisions relating to such
encumbrance or restriction contained in agreements referred to in such clause
(2), (4) or (5).
SECTION 4.14. Prohibition on Incurrence of
Senior Subordinated Debt.
The Company shall not incur or suffer to exist Indebtedness that is
senior in right of payment to the Notes and subordinate in right of payment to
any other Indebtedness of the Company.
SECTION 4.15. Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall make
an offer to purchase all outstanding Notes pursuant to the offer described in
paragraph (b) below (the "Change of Control Offer") at a purchase price equal to
101% of the principal amount thereof plus accrued and unpaid interest, if any,
to the date of purchase. Prior to the mailing of the notice referred to below,
but in any event within 30 days following any Change of Control, the Company
shall (i) repay in full all Indebtedness and terminate all commitments under the
Credit
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Agreement, and all other Senior Debt the terms of which require repayment upon a
Change of Control, or offer to repay in full and terminate all commitments under
all Indebtedness under the Credit Agreement and all other such Senior Debt and
to repay the Indebtedness owed to each lender which has accepted such offer, or
(ii) obtain the requisite consents under the Credit Agreement and all other
Senior Debt to permit the repurchase of the Notes as provided below. The Company
shall first comply with the covenant in the immediately preceding sentence
before it shall be required to repurchase Notes pursuant to the provisions
described in this Section 4.15.
(b) Within 30 days following the date upon which the Change of Control
occurred (the "Change of Control Date"), the Company shall send, by first class
mail, a notice to each Holder, with a copy to the Trustee, which notice shall
govern the terms of the Change of Control Offer. The notice to the Holders shall
contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Change of Control Offer. Such notice shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Notes tendered and not withdrawn will be accepted
for payment;
(2) the purchase price (including the amount of accrued interest) and
the purchase date (which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed, other than as may be required by
law) (the "Change of Control Payment Date"); provided that the Change of
Control Payment Date for the Notes shall be a date subsequent to any
payment dates for the purchase or other repayment of Senior Debt having
similar provisions;
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor, any
Note accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Paying Agent at the address specified in the notice
prior
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to the close of business on the third Business Day prior to the Change of
Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Notes the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased;
(7) that Holders whose Notes are purchased only in part will be issued
new Notes in a principal amount equal to the unpurchased portion of the
Notes surrendered; provided that each Note purchased and each new Note
issued shall be in an original principal amount of $1,000 or integral
multiples thereof; and
(8) the circumstances and relevant facts regarding such Change of
Control.
On or before the Change of Control Payment Date, the Company shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient
to pay the purchase price plus accrued interest, if any, of all Notes so
tendered and (iii) deliver to the Trustee Notes so accepted together with an
Officers' Certificate stating the Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted payment in an amount equal to the purchase price plus accrued interest,
if any, and the Trustee shall promptly authenticate and mail to such Holders new
Notes equal in principal amount to any unpurchased portion of the Notes
surrendered. Any Notes not so accepted shall be promptly mailed by the Company
to the Holder thereof. For purposes of this Section 4.15, the Trustee shall act
as the Paying Agent.
Any amounts remaining after the purchase of Notes pursuant to a Change
of Control Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent the
provisions of any securities laws or regulations conflict with the provisions
under
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this Section 4.15, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
this Section 4.15 by virtue thereof.
SECTION 4.16. Limitation on Asset Sales.
(a) The Company will not, and will not permit any of its Subsidiaries
to, consummate an Asset Sale unless (i) the Company or the applicable
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value of the assets sold or otherwise
disposed of (as determined in good faith by the Company's Board of Directors),
(ii) with respect to Asset Sales by the Company or any Wholly Owned Subsidiary
of the Company, at least 80% of the consideration received by the Company or
such Subsidiary, as the case may be, from such Asset Sale shall be in the form
of cash or Cash Equivalents and is received at the time of such disposition; and
(iii) upon the consummation of an Asset Sale, the Company shall apply, or cause
such Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale
within 365 days of receipt thereof either (A) to prepay any Senior Debt or
Indebtedness of any Subsidiary of the Company and, in the case of any Senior
Debt under any Revolving Credit Facility, effect a permanent reduction in the
availability under such Revolving Credit Facility, (B) to make an investment in
properties and assets that replace the properties and assets that were the
subject of such Asset Sale or in properties and assets that will be used in the
business of the Company and its Subsidiaries as existing on the Closing Date or
in businesses reasonably related thereto ("Replacement Assets"), or (C) a
combination of prepayment and investment permitted by the foregoing clauses
(iii)(A) and (iii)(B). On the 366th day after an Asset Sale or such earlier
date, if any, as the Board of Directors of the Company or of such Subsidiary
determines not to apply the Net Cash Proceeds relating to such Asset Sale as set
forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence
(each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash
Proceeds which have not been applied on or before such Net Proceeds Offer
Trigger Date as permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of the next
preceding sentence (each a "Net Proceeds Offer Amount") shall be applied by the
Company or such Subsidiary to make an offer to purchase (the "Net Proceeds
Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor
more than 45 days following the applicable Net Proceeds Offer Trigger Date, from
all Holders on a pro rata basis, that amount of Notes equal to the Net Proceeds
Offer Amount at a price equal to 100% of the principal amount of the Notes to be
purchased, plus accrued and unpaid interest thereon, if any, to the date of
purchase. The Company may defer the Net Proceeds Offer until there
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is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of
$5,000,000 resulting from one or more Asset Sales (at which time, the entire
unutilized Net Proceeds Offer Amount, and not just the amount in excess of
$5,000,000, shall be applied as required pursuant to this paragraph).
Notwithstanding the immediately preceding paragraph, the Company and
its Subsidiaries will be permitted to consummate an Asset Sale without complying
with such paragraph to the extent (i) at least 80% of the consideration for such
Asset Sale constitutes Replacement Assets and the remainder in cash or Cash
Equivalents and (ii) such Asset Sale is for fair market value; provided that any
consideration not constituting Replacement Assets received by the Company or any
of its Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Cash Proceeds subject to
the provisions of the immediately preceding paragraph.
Each Net Proceeds Offer will be mailed to the record Holders as shown
on the register of Holders within 25 days following the Net Proceeds Offer
Trigger Date, with a copy to the Trustee, and shall comply with the procedures
set forth in this Indenture. Upon receiving notice of the Net Proceeds Offer,
Holders may elect to tender their Notes in whole or in part in integral
multiples of $1,000 in exchange for cash. To the extent Holders properly tender
Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering
Holders will be purchased on a pro rata basis (based on amounts tendered). A
Net Proceeds Offer shall remain open for a period of 20 business days or such
longer period as may be required by law.
(b) Each notice of a Net Proceeds Offer pursuant to this Section 4.16
shall be mailed or caused to be mailed, by first class mail, by the Company not
more than 25 days after the Net Proceeds Offer Trigger Date to all Holders at
their last registered addresses as of a date within 15 days of the mailing of
such notice, with a copy to the Trustee. The notice shall contain all
instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Net Proceeds Offer and shall state the following terms:
(1) that the Net Proceeds Offer is being made pursuant to Section 4.16
and that all Notes tendered will be accepted for payment; provided,
however, that if the aggregate principal amount of Notes tendered in a Net
Proceeds Offer plus accrued interest at the expiration of such offer
exceeds the aggregate amount of the Net Proceeds Offer, the Company shall
select the Notes to be purchased on a pro rata basis
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(with such adjustments as may be deemed appropriate by the Company so that
only Notes in denominations of $1,000 or multiples thereof shall be
purchased);
(2) the purchase price (including the amount of accrued interest) and
the Net Proceeds Offer Payment Date; provided that the Net Proceeds Offer
Payment Date for the Notes shall be a date subsequent to any payment dates
for the purchase or other repayment of Senior Debt having similar
provisions;
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor, any
Note accepted for payment pursuant to the Net Proceeds Offer shall cease to
accrue interest after the Net Proceeds Offer Payment Date;
(5) that Holders electing to have a Note purchased pursuant to a Net
Proceeds Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in the notice prior
to the close of business on the third Business Day prior to the Net
Proceeds Offer Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the Net
Proceeds Offer Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Notes the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased; and
(7) that Holders whose Notes are purchased only in part will be issued
new Notes in a principal amount equal to the unpurchased portion of the
Notes surrendered; provided that each Note purchased and each new Note
issued shall be in an original principal amount of $1,000 or integral
multiples thereof;
On or before the Net Proceeds Offer Payment Date, the Company shall
(i) accept for payment Notes or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with item (b)(1) above,
(ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay the
purchase price plus accrued interest, if any, of all Notes to be purchased
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and (iii) deliver to the Trustee Notes so accepted together with an Officers'
Certificate stating the Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted payment in an amount equal to the purchase price plus accrued interest,
if any. For purposes of this Section 4.16, the Trustee shall act as the Paying
Agent.
Any amounts remaining after the purchase of Notes pursuant to a Net
Proceeds Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes pursuant to a Net Proceeds Offer. To the extent the provisions of any
securities laws or regulations conflict with the provisions of this Indenture
relating to a Net Proceeds Offer, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations relating to such Net Proceeds Offer by virtue thereof.
SECTION 4.17. Limitation on Preferred
Stock of Subsidiaries.
The Company shall not permit any of its Subsidiaries to issue any
Preferred Stock (other than to the Company or to a Wholly Owned Subsidiary of
the Company) or permit any Person (other than the Company or a Wholly Owned
Subsidiary of the Company) to own any Preferred Stock of any Subsidiary of the
Company.
SECTION 4.18. Limitation on Liens.
The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Liens of any kind against or upon any property or assets of
the Company or any of its Subsidiaries whether owned on the Issue Date or
acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise
convey any right to receive income or profits therefrom unless (i) in the case
of Liens securing Indebtedness that is expressly subordinate or junior in right
of payment to the Notes, the Notes are secured by a Lien on such property,
assets or proceeds that is senior in priority to such Liens and (ii) in all
other cases, the Notes are equally and ratably secured, except for (A) Liens
existing as of the Closing Date to the extent and in the manner such Liens are
in effect on the Closing Date; (B) Liens securing Senior Debt; (C) Liens
securing the Notes; (D) Liens of the Company or a Wholly Owned
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Subsidiary of the Company on assets of any Subsidiary of the Company; (E) Liens
securing Refinancing Indebtedness which is incurred to Refinance any
Indebtedness which has been secured by a Lien permitted under this Indenture and
which has been incurred in accordance with the provisions of this Indenture;
provided, however, that such Liens (x) are no less favorable to the Holders and
are not more favorable to the lienholders with respect to such Liens than the
Liens in respect of the Indebtedness being Refinanced and (y) do not extend to
or cover any property or assets of the Company or any of its Subsidiaries not
securing the Indebtedness so Refinanced; and (F) Permitted Liens.
SECTION 4.19. Deposit of Proceeds with Escrow Agent
Pending Consummation of Acquisition.
(a) On the Closing Date, the Company shall deposit with the Escrow
Agent as hereinafter provided the net proceeds from the issuance of the Notes
(the "Net Offering Proceeds").
(b) In order to secure the full and punctual payment and performance
of the Company's obligation to redeem the Notes upon a Special Redemption, if
any, the Company hereby grants to the Escrow Agent, for the benefit of the
holders, a continuing security interest in and to the Collateral, whether now
owned or existing or hereafter acquired or arising. The Company shall be
required to effect the Special Redemption upon the occurrence of an event
specified in subsection (c)(ii) below at a redemption price equal to 100% of the
principal amount of the Notes to be redeemed plus accrued and unpaid interest
thereon to the date of redemption.
(c) At all times until the earlier to occur of (i) receipt by the
Escrow Agent of an Officers' Certificate stating that the Acquisition is to be
consummated (the "Notice") on a date specified therein which shall be on or
before the next succeeding Business Day on the terms and conditions described in
the Offering Memorandum in all material respects and requesting the Escrow Agent
to release the Collateral to the order of the Company for application in
connection with the Acquisition (any such Officers' Certificate the Company may
withdraw if the Closing Date is postponed, in which event the Company may from
time to time deliver one or more such Officers' Certificates) or (ii) the
earlier of (A) the Special Redemption Notice Date, if the Escrow Agent has not
received the Notice, or (B) receipt by the Escrow Agent of notice from the
Company to effect a Special Redemption of the Notes (the "Non-Occurrence
Certificate"), there shall be maintained with the Escrow Agent an account (the
"Collateral Account") designated "Tokheim Corporation Account Pledged to Bankers
Trust Company as Escrow Agent under the Indenture dated as of August 23, 1996 by
and
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between Tokheim Corporation and Harris Trust and Savings Bank as Trustee," which
account shall be under the sole dominion and control of the Escrow Agent. On the
Issue Date, the Company shall cause the net proceeds from the sale of the Notes
to be deposited in the Collateral Account. Amounts on deposit in the Collateral
Account shall be invested and reinvested from time to time in (i) marketable
direct obligations issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within 30 days from the
date of acquisition thereof; (ii) marketable direct obligations issued by any
state of the United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within 30 days from the
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either S&P or Moody's; (iii) commercial paper
maturing no more than 30 days from the date of creation thereof and, at the time
of acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within 30
days from the date of acquisition thereof issued by any bank (including the
Escrow Agent) organized under the laws of the United States of America or any
state thereof or the District of Columbia or any U.S. branch of a foreign bank
having at the date of acquisition thereof combined capital and surplus of not
less than $250,000,000; (v) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (iv)
above; (vi) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (i) through (v)
above; provided, in each case that no such investment shall have a maturity
after October 1, 1996 ("Eligible Investments"), which Eligible Investments shall
be held in the Collateral Account. Any income, including any interest or capital
gains received with respect to the balance from time to time standing to the
credit of the Collateral Account, shall remain, or be deposited, in the
Collateral Account. The Escrow Agent shall in no event have any liability for
any tax, fee, loss or other charge incurred in connection with the Company's
written instructions to the Escrow Agent regarding any investment, reinvestment
or liquidation of any investment hereunder.
(d) Upon notice from the Company to the Escrow Agent pursuant to
subsection (c)(i) above, the security interests in the Collateral shall
terminate as of the Closing Date and all funds in the Collateral Account shall
be released as of the Closing Date in immediately available funds to the order
of the Company.
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(e) Upon notice from the Company to the Escrow Agent pursuant to
subsection (c)(ii) above:
(i) The Escrow Agent shall notify the Trustee (and in the case of
clause (A), the Company) in writing that the conditions of either clause
(A) or (B) have occurred and that the Trustee is to redeem the Notes in
accordance with clause (ii) below and the terms of this Indenture;
(ii) Within five days after receiving the notice referred to in clause
(i) above, the Trustee shall mail a notice (the "Special Redemption
Notice") to the holders of the Notes stating that the Notes shall be
redeemed on the tenth day following the date of such notice (or, if such
day is not a Business Day, the first Business Day thereafter) (the "Special
Redemption Date"), at an aggregate redemption price equal to 100% of the
principal amount of the Notes to be redeemed plus accrued and unpaid
interest on the Notes to the date of redemption, and shall state that Notes
must be surrendered to the Trustee as paying agent in order to collect the
redemption price, it being acknowledged and agreed that the failure of the
Company to deliver the Notice by October 1, 1996 or the delivery of a Non-
Occurrence Certificate shall be a request for the Trustee to give the
Special Redemption Notice to the holders of the Notes;
(iii) On the Special Redemption Date, the Escrow Agent shall disburse
all Collateral to the Trustee as paying agent in connection with the
redemption of the Notes as specified in the Indenture and the Trustee shall
pay any amount of the Collateral in excess of the amount needed to fund the
Special Redemption to the Company; and
(iv) The Company shall, on or prior to the Special Redemption Date,
deposit with the Trustee as paying agent an amount of funds such that on
the Special Redemption Date the Trustee shall have money (including the
Collateral disbursed pursuant to clause (iii) above) in immediately
available funds to pay the redemption price for all outstanding Notes to be
redeemed.
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ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation
and Sale of Assets.
The Company shall not, in a single transaction or a series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any
Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise
dispose of) all or substantially all of the Company's assets (determined on a
consolidated basis for the Company and the Company's Subsidiaries) whether as an
entirety or substantially as an entirety to any Person unless:
(i) either (1) the Company shall be the surviving or continuing
corporation or (2) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which
acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company and of the Company's
Subsidiaries substantially as an entirety (the "Surviving Entity") (x)
shall be a corporation organized and validly existing under the laws of the
United States or any State thereof or the District of Columbia and (y)
shall expressly assume, by supplemental indenture (in form and substance
satisfactory to the Trustee), executed and delivered to the Trustee, the
due and punctual payment of the principal of, and premium, if any, and
interest on all of the Notes and the performance of every covenant of the
Notes, this Indenture and the Registration Rights Agreement on the part of
the Company to be performed or observed;
(ii) immediately after giving effect to such transaction and the
assumption contemplated by clause (i)(2)(y) above (including giving effect
to any Indebtedness and Acquired Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction), the Company
or such Surviving Entity, as the case may be, shall have a Consolidated Net
Worth equal to or greater than the Consolidated Net Worth of the Company
immediately prior to such transaction;
(iii) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving
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effect to any Indebtedness and Acquired Indebtedness incurred or
anticipated to be incurred and any Lien granted in connection with or in
respect of the transaction), no Default or Event of Default shall have
occurred or be continuing; and
(iv) the Company or the Surviving Entity shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture
comply with the applicable provisions of this Indenture and that all
conditions precedent in this Indenture relating to such transaction have
been satisfied.
SECTION 5.02. Successor Corporation Substituted.
Upon any consolidation, combination or merger or any transfer of all
or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the surviving
entity shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture and the Notes with the same
effect as if such surviving entity had been named as such.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company fails to pay interest on, or Liquidated Damages (if
any) with respect to, any Notes when the same becomes due and payable and
the default continues for a period of 30 days (whether or not such payment
shall be prohibited by Article Ten of this Indenture); or
(2) the Company fails to pay the principal on any Notes when such
principal becomes due and payable, at maturity, upon redemption or
otherwise (including the failure to make a payment to purchase Notes
tendered pursuant to a Change of Control Offer or a Net Proceeds Offer)
(whether or not such payment shall be prohibited by Article Ten of this
Indenture); or
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(3) the Company defaults in the observance or performance of any other
covenant or agreement contained in this Indenture and which default
continues for a period of 30 days after the Company receives written notice
specifying the default (and demanding that such default be remedied) from
the Trustee or the Holders of at least 25% of the outstanding principal
amount of the Notes (except in the case of a default with respect to
Section 5.01, which will constitute an Event of Default with such notice
requirement but without such passage of time requirement); or
(4) there shall be a default under any Indebtedness of the Company or
any Subsidiary, whether such Indebtedness now exists or shall hereinafter
be created, if both (A) such default either (1) results from the failure to
pay any such Indebtedness at its stated final maturity or (2) relates to an
obligation other than the obligation to pay such Indebtedness at its stated
final maturity and results in the holder or holders of such Indebtedness
causing such Indebtedness to become due prior to its stated final maturity
and (B) the amount of such Indebtedness, together with the principal amount
of any other such Indebtedness in default for failure to pay principal at
stated final maturity or the maturity of which has been so accelerated,
aggregates $10 million or more at any one time outstanding; or
(5) one or more judgments in an aggregate amount in excess of $5
million (which are not covered by third party insurance as to which the
insurer has not disclaimed coverage) shall have been rendered against the
Company or any of its Subsidiaries and such judgments remain undischarged,
unpaid or unstayed for a period of 60 days after such judgment or judgments
become final and non- appealable; or
(6) the Company or any Significant Subsidiary (A) commences a
voluntary case or proceeding under any Bankruptcy Law with respect to
itself, (B) consents to the entry of a judgment, decree or order for relief
against it in an involuntary case or proceeding under any Bankruptcy Law,
(C) consents to the appointment of a Custodian of it or for substantially
all of its property, (D) consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it, (E) makes a general
assignment for the benefit of its creditors, or (F) takes any corporate
action to authorize or effect any of the foregoing; or
(7) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any
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Significant Subsidiary in an involuntary case or proceeding under any
Bankruptcy Law, which shall (A) approve as properly filed a petition
seeking reorganization, arrangement, adjustment or composition in respect
of the Company or any Significant Subsidiary, (B) appoint a Custodian of
the Company or any Significant Subsidiary or for substantially all of its
property or (C) order the winding-up or liquidation of its affairs; and
such judgment, decree or order shall remain unstayed and in effect for a
period of 60 consecutive days.
SECTION 6.02. Acceleration.
(a) If an Event of Default (other than an Event of Default specified
in Section 6.01(6) or (7) with respect to the Company) occurs and is continuing
and has not been waived pursuant to Section 6.04, then the Trustee or the
Holders of at least 25% in principal amount of outstanding Notes may declare the
principal of and accrued interest on all the Notes to be due and payable by
notice in writing to the Company and the Trustee specifying the respective Event
of Default and that it is a "notice of acceleration" (the "Acceleration
Notice"), and the same (i) shall become immediately due and payable or (ii) if
there are any amounts outstanding under the Credit Agreement or the ESOP Credit
Agreement, shall become due and payable upon the first to occur of an
acceleration under the Credit Agreement or the ESOP Credit Agreement or 5
business days after receipt by the Company and the Representative under the
Credit Agreement or the ESOP Credit Agreement of such Acceleration Notice but
only if such Event of Default is then continuing. Upon any such declaration, but
subject to the immediately preceding sentence, such amount shall be immediately
due and payable.
(b) If an Event of Default specified in Section 6.01(6) or (7) occurs
with respect to the Company, all unpaid principal and accrued interest on the
Notes then outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Noteholder.
(c) At any time after a declaration of acceleration with respect to
the Notes in accordance with Section 6.02(a), the Holders of a majority in
principal amount of the Notes may rescind and cancel such declaration and its
consequences (i) if the rescission would not conflict with any judgment or
decree, (ii) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than
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by such declaration of acceleration, has been paid, (iv) if the Company has paid
the Trustee its reasonable compensation and reimbursed the Trustee for its
expenses, disbursements and advances and (v) in the event of the cure or waiver
of an Event of Default of the type described in Section 6.01(6) or (7), the
Trustee shall have received an Officers' Certificate and an Opinion of Counsel
that such Event of Default has been cured or waived. The holders of a majority
in principal amount of the Notes may waive any existing Default or Event of
Default under this Indenture, and its consequences, except a default in the
payment of the principal of or interest on any Notes.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority in
principal amount of the outstanding Notes by notice to the Trustee may waive an
existing Default or Event of Default and its consequences, except a Default in
the payment of principal of or interest on any Note as specified in clauses (1)
and (2) of Section 6.01. When a Default or Event of Default is waived, it is
cured and ceases.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in principal amount
of the outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it, including, without limitation, any remedies provided for
in Section 6.03. Subject to Section 7.01, however, the Trustee may refuse to
follow any direction that the Trustee reasonably believes
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conflicts with any law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of another Noteholder (it being understood that
the Trustee shall have no duty to ascertain whether or not such actions or
forbearances are unduly prejudicial to such Holders), or that may involve the
Trustee in personal liability; provided that the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction; and provided further that this provision shall not affect the rights
of the Trustee set forth in Section 7.01(d).
SECTION 6.06. Limitation on Suits.
A Noteholder may not pursue any remedy with respect to this Indenture
or the Notes unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) Holders of at least 25% in principal amount of the outstanding
Notes make a written request to the Trustee to pursue the remedy;
(3) such Holders offer to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense to be
incurred in compliance with such request;
(4) the Trustee does not comply with the request within 45 days after
receipt of the request and the offer of satisfactory indemnity; and
(5) during such 45-day period the Holders of a majority in principal
amount of the outstanding Notes do not give the Trustee a direction which,
in the opinion of the Trustee, is inconsistent with the request.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over such other
Noteholder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Note, on or
after the respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
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SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest specified
in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Notes for the whole amount of principal and
accrued interest remaining unpaid, together with interest on overdue principal
and, to the extent that payment of such interest is lawful, interest on overdue
installments of interest at the rate set forth in Section 4.01 and such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Noteholders allowed in any judicial proceedings relating to the Company or any
other obligor upon the Notes, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Noteholder to make such payments to the Trustee and,
in the event that the Trustee shall consent to the making of such payments
directly to the Noteholders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agent and counsel, and any other amounts due the Trustee under Section 7.07.
The Company's payment obligations under this Section 6.09 shall be secured in
accordance with the provisions of Section 7.07 hereunder. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Noteholder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of the claim of
any Noteholder in any such proceeding; provided, however, that the Trustee may,
on behalf of the Noteholders, vote for the election of a trustee in bankruptcy
or similar official and may be a member of a creditors' committee.
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SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: if the Holders are forced to proceed against the Company directly
without the Trustee, to Holders for their collection costs;
Third: to Holders for amounts due and unpaid on the Notes for principal
and interest, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes for principal and interest,
respectively; and
Fourth: to the Company or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Noteholders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Notes.
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ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of a Default or an Event of Default:
(1) The Trustee need perform only those duties as are specifically set
forth in this Indenture and no covenants or obligations shall be implied in
this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.02, 6.04 or 6.05.
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(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not herein expressly provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any resolution, certificate, Officer's
Certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note or other paper or document believed
by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate, an Opinion of
Counsel or both, which shall conform to Sections 11.04 and 11.05. The
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or indirectly or by or through
agents or attorneys and the Trustee shall not be responsible for the
misconduct or negligence of any agent or attorney appointed with due care.
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(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it reasonably believes to be authorized
or within its rights or powers.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled, upon reasonable notice to
the Company, to examine the books, records, and premises of the Company,
personally or by agent or attorney and to consult with the officers and
representatives of the Company, including the Company's accountants and
attorneys.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee security
or indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities which may be incurred by it in compliance with
such request, order or direction.
(g) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary of the Company, or their respective Affiliates with the same rights
it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The recitals contained herein and in the Notes shall be taken as
statements of the Company and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Notes, and it shall not be accountable for the
Company's use of the proceeds from the Notes, and it shall not be responsible
for
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any statement of the Company in this Indenture or the Notes other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and if
the Trustee has actual knowledge of such Default or Event of Default, the
Trustee shall mail to each Noteholder notice of the uncured Default or Event of
Default within 90 days after such Default or Event of Default occurs. Except in
the case of a Default or an Event of Default in payment of principal of, or
interest on, any Note, including an accelerated payment and the failure to make
payment on the Change of Control Payment Date pursuant to a Change of Control
Offer or on the Proceeds Purchase Date pursuant to a Net Proceeds Offer and,
except in the case of a failure to comply with Article Five hereof, the Trustee
may withhold the notice if and so long as its Board of Directors, the executive
committee of its Board of Directors or a committee of its directors and/or Trust
Officers in good faith determines that withholding the notice is in the interest
of the Noteholders.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after each August 15, the Trustee shall, to the extent
that any of the events described in TIA (S) 313(a) occurred within the previous
twelve months, but not otherwise, mail to each Noteholder a brief report dated
as of such date that complies with TIA (S) 313(a). The Trustee also shall comply
with TIA (S)(S) 313(b), (c) and (d).
A copy of each report at the time of its mailing to Noteholders shall
be mailed to the Company and filed with the SEC and each stock exchange, if any,
on which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become
listed on any stock exchange and the Trustee shall comply with TIA (S) 313(d).
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable fees and expenses,
including out-of-pocket expenses incurred or made by it in connection with the
performance of its duties under this Indenture or in connection with the
collection of any funds. Such expenses
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shall include the reasonable fees and expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee and its agents, employees,
stockholders and directors and officers for, and hold them harmless against, any
loss, liability or expense incurred by them except for such actions to the
extent caused by any negligence, bad faith or willful misconduct on their part,
arising out of or in connection with the administration of this trust including
the reasonable costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of their rights,
powers or duties hereunder. The Trustee shall notify the Company promptly of any
claim asserted against the Trustee for which it may seek indemnity. At the
Trustee's sole discretion, the Company shall defend the claim and the Trustee
shall cooperate and may participate in the defense; provided that any settlement
of a claim shall be approved in writing by the Trustee. Alternatively, the
Trustee may at its option have separate counsel of its own choosing and the
Company shall pay the reasonable fees and expenses of such counsel; provided
that the Company will not be required to pay such fees and expenses if it
assumes the Trustee's defense and there is no conflict of interest between the
Company and the Trustee in connection with such defense as reasonably determined
by the Trustee. The Company need not pay for any settlement made without its
written consent, which consent shall not be unreasonably withheld. The Company
need not reimburse any expense or indemnify against any loss or liability to the
extent incurred by the Trustee through its negligence, bad faith or willful
misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Notes. The Trustee's
right to receive payment of any amounts due under this Section 7.07 shall not be
subordinate to any other liability or indebtedness of the Company (even though
the Notes may be subordinate to such other liability or indebtedness).
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law; provided, however, that this shall not
affect the Trustee's rights as set forth in the preceding paragraph or Section
6.10.
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SECTION 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the outstanding Notes may remove the Trustee by
so notifying the Company and the Trustee and may appoint a successor Trustee.
The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Notes may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Noteholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
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SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided that such
corporation shall be otherwise qualified and eligible under this Article Seven.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA (S)(S) 310(a)(1), (2) and (5). The Trustee (or, in the case
of a corporation included in a bank holding company system, the related bank
holding company) shall have a combined capital and surplus of at least $50
million as set forth in its most recent published annual report of condition. In
addition, if the Trustee is a corporation included in a bank holding company
system, the Trustee, independently of such bank holding company, shall meet the
capital requirements of TIA (S) 310(a)(2). The Trustee shall comply with TIA (S)
310(b); provided, however, that there shall be excluded from the operation of
TIA (S) 310(b)(1) any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met. The provisions of TIA (S) 310 shall apply to the Company, as
obligor of the Notes.
SECTION 7.11. Preferential Collection of
Claims Against Company.
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein. The
provisions of TIA (S) 311 shall apply to the Company, as obligor on the Notes.
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ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the
Company's Obligations.
The Company may terminate its obligations under the Notes and this
Indenture, except those obligations referred to in the penultimate paragraph of
this Section 8.01, if all Notes previously authenticated and delivered (other
than destroyed, lost or stolen Notes which have been replaced or paid or Notes
for whose payment U.S. Legal Tender has theretofore been deposited with the
Trustee or the Paying Agent in trust or segregated and held in trust by the
Company and thereafter repaid to the Company, as provided in Section 8.05) have
been delivered to the Trustee for cancellation and the Company has paid all sums
payable by it hereunder, or if:
(a) either (i) pursuant to Article Three, the Company shall have given
notice to the Trustee and mailed a notice of redemption to each Holder of
the redemption of all of the Notes under arrangements satisfactory to the
Trustee for the giving of such notice or (ii) all Notes have otherwise
become due and payable hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee, under
the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the benefit
of the Holders for that purpose, U.S. Legal Tender in such amount as is
sufficient without consideration of reinvestment of such interest, to pay
principal of, premium, if any, and interest on the outstanding Notes to
maturity or redemption; provided that the Trustee shall have been
irrevocably instructed to apply such U.S. Legal Tender to the payment of
said principal, premium, if any, and interest with respect to the Notes
and, provided, further, that from and after the time of deposit, the money
deposited shall not be subject to the rights of holders of Senior Debt
pursuant to the provisions of Article Ten;
(c) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such deposit
or shall occur as a result of such deposit and such deposit will not result
in a breach or violation of, or constitute a default under, any other
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instrument to which the Company is a party or by which it is bound;
(d) the Company shall have paid all other sums payable by it
hereunder; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent relating to the satisfaction and discharge of this Indenture have
been complied with. Such Opinion of Counsel shall also state that such
satisfaction and discharge does not result in a default under the Credit
Agreement (if then in effect) or any other agreement or instrument then
known to such counsel that binds or affects the Company.
Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 8.05 and 8.06 shall survive
until the Notes are no longer outstanding pursuant to the last paragraph of
Section 2.08. After the Notes are no longer outstanding, the Company's
obligations in Sections 7.07, 8.05 and 8.06 shall survive.
After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Notes and this Indenture except for those surviving obligations specified
above.
SECTION 8.02. Legal Defeasance and
Covenant Defeasance.
(a) The Company may, at its option by Board Resolution of the Board of
Directors of the Company, at any time, elect to have either paragraph (b) or (c)
below be applied to all outstanding Notes upon compliance with the conditions
set forth in Section 8.03.
(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.03, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.04 hereof and the other Sections of this Indenture
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referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), and Holders of the Notes and any amounts deposited
under Section 8.03 hereof shall cease to be subject to any obligations to, or
the rights of, any holder of Senior Debt under Article Ten or otherwise, except
for the following provisions, which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04 hereof, and as more fully
set forth in such Section, payments in respect of the principal of and interest
on such Notes when such payments are due, (ii) the Company's obligations with
respect to such Notes under Article Two and Section 4.02 hereof, (iii) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Company's obligations in connection therewith and (iv) this Article Eight.
Subject to compliance with this Article Eight, the Company may exercise its
option under this paragraph (b) notwithstanding the prior exercise of its option
under paragraph (c) hereof.
(c) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.03 hereof, be released
from its obligations under the covenants contained in Sections 4.10 through 4.19
and Article Five hereof with respect to the outstanding Notes on and after the
date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes) and Holders of the Notes and any amounts deposited under Section 8.03
hereof shall cease to be subject to any obligations to, or the rights of, any
holder of Senior Debt under Article Ten or otherwise. For this purpose, such
Covenant Defeasance means that, with respect to the outstanding Notes, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether directly
or indirectly, by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event or Default under Section 6.01(3) hereof, but, except as
specified above, the remainder of this Indenture and such Notes shall be
unaffected thereby. In addition, upon the Company's
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exercise under paragraph (a) hereof of the option applicable to this paragraph
(c), subject to the satisfaction of the conditions set forth in Section 8.03
hereof, Sections 6.01(3), 6.01(4) and 6.01(5) shall not constitute Events of
Default.
SECTION 8.03. Conditions to Legal Defeasance
or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02(b) or 8.02(c) hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, U.S. Legal Tender or U.S. Government
Obligations, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of and interest on the Notes on
the stated date for payment thereof or on the applicable redemption date,
as the case may be, of such principal or installment of principal of or
interest on the Notes; provided that the Trustee shall have received an
irrevocable written order from the Company instructing the Trustee to apply
such U.S. Legal Tender or the proceeds of such U.S. Government Obligations
to said payments with respect to the Notes;
(b) in the case of an election under Section 8.02(b) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this Indenture, there has
been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such Opinion of Counsel shall confirm
that, the Holders of the Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will
be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal Defeasance
had not occurred;
(c) in the case of an election under Section 8.02(c) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that the
Holders of the Notes will
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not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would
have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Notes pursuant to this
Article Eight concurrently with such incurrence) or insofar as Sections
6.01(6) and 6.01(7) hereof are concerned, at any time in the period ending
on the 91st day after the date of such deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of or constitute a default under this Indenture or any
other material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with; and
(h) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) the trust funds will not be subject to any
rights of any holders of Senior Debt of the Company other than the Notes,
and (ii) assuming no intervening bankruptcy or insolvency of the Company
between the date of deposit and the 91st day following the deposit and that
no Holder is an insider of the Company, after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable Bankruptcy Law.
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SECTION 8.04. Application of Trust Money.
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to Article Eight, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of principal of and
interest on the Notes. The Trustee shall be under no obligation to invest said
U.S. Legal Tender or U.S. Government Obligations except as it may agree with the
Company.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.03 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any U.S. Legal Tender or U.S. Government Obligations held by it as
provided in Section 8.03 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof that would
then be required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
SECTION 8.05. Repayment to the Company.
Subject to Article Eight, the Trustee and the Paying Agent shall
promptly pay to the Company upon request any excess U.S. Legal Tender or U.S.
Government Obligations held by them at any time and thereupon shall be relieved
from all liability with respect to such money. The Trustee and the Paying Agent
shall pay to the Company upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years; provided that the
Trustee or such Paying Agent, before being required to make any payment, may at
the expense of the Company cause to be published once in a newspaper of general
circulation in the City of New York or mail to each Holder entitled to such
money notice that such money remains unclaimed and that after a date specified
therein which shall be at least 30 days from the date of such publication or
mailing any unclaimed balance of such money then remaining will be repaid to the
Company. After payment to the Company, Noteholders entitled to such money must
look to the
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Company for payment as general creditors unless an applicable law designates
another Person.
SECTION 8.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Article Eight by reason
of any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Article
Eight until such time as the Trustee or Paying Agent is permitted to apply all
such U.S. Legal Tender or U.S. Government Obligations in accordance with Article
Eight; provided that if the Company has made any payment of interest on or
principal of any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the U.S. Legal Tender or U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture or the Notes without notice to
or consent of any Noteholder:
(1) to cure any ambiguity, defect or inconsistency; provided that such
amendment or supplement does not, in the opinion of the Trustee, adversely
affect the rights of any Holder in any material respect;
(2) to comply with Article Five;
(3) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(4) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
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(5) to make any change that would provide any additional benefit or
rights to the Noteholders or that does not adversely affect the rights of
any Noteholder;
(6) to provide for issuance of the Exchange Notes, which will have
terms substantially identical in all material respects to the Initial Notes
(except that the transfer restrictions contained in the Initial Notes will
be modified or eliminated, as appropriate), and which will be treated
together with any outstanding Initial Notes, as a single issue of
securities; or
(7) to make any other change that does not, in the opinion of the
Trustee, adversely affect in any material respect the rights of any
Noteholders hereunder;
provided that the Company has delivered to the Trustee an Opinion of Counsel
stating that such amendment or supplement complies with the provisions of this
Section 9.01.
SECTION 9.02. With Consent of Holders.
(a) Subject to Section 6.07, the Company, when authorized by a Board
Resolution, and the Trustee, together, with the written consent of the Holder or
Holders of at least a majority in aggregate principal amount of the outstanding
Notes, may amend or supplement this Indenture or the Notes, without notice to
any other Noteholders. Subject to Section 6.07, the Holder or Holders of a
majority in aggregate principal amount of the outstanding Notes may waive
compliance by the Company with any provision of this Indenture or the Notes
without notice to any other Noteholder. No amendment, supplement or waiver,
including a waiver pursuant to Section 6.04, shall, without the consent of each
Holder of each Note affected thereby:
(1) reduce the amount of Notes whose Holders must consent to an
amendment;
(2) reduce the rate of or change or have the effect of changing the
time for payment of interest, including defaulted interest, on any Notes;
(3) reduce the principal of or change or have the effect of changing
the fixed maturity of any Notes, or change the date on which any Notes may
be subject to redemption or repurchase, or reduce the redemption or
repurchase price therefor;
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(4) make any Notes payable in money other than that stated in the
Notes;
(5) make any change in provisions of this Indenture protecting the
right of each Holder to receive payment of principal of and interest on
such Note on or after the due date thereof or to bring suit to enforce such
payment, permitting Holders of a majority in principal amount of Notes to
waive Defaults or Events of Default, other than ones with respect to the
payment of principal of or interest on the Notes;
(6) modify Article Ten or the definitions used in Article Ten to
adversely affect the Holders of the Notes in any material respect; or
(7) modify the provisions of Section 4.19 or, on or prior to the
Special Redemption Date, any of the provisions or definitions related
thereto herein or in the Notes in a manner adverse to any Noteholder.
provided, however, that any amendment the purpose of which is to permit the
incurrence of additional Indebtedness under this Indenture shall not be
construed as adversely affecting the ranking of the Notes.
(b) Without the consent of Holders of not less than 66 2/3% in
aggregate principal amount of Notes then outstanding, no such amendment,
supplement or waiver may amend, change or modify in any material respect the
obligation of the Company to make and consummate a Change of Control Offer in
the event of a Change of Control or make and consummate a Net Proceeds Offer
with respect to any Asset Sale that has been consummated or modify any of the
provisions or definitions with respect thereto.
(c) It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
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SECTION 9.03. Effect on Senior Debt.
No amendment of this Indenture shall adversely affect the rights of
any holder of Senior Debt under Article Ten of this Indenture, without the
consent of such holder.
SECTION 9.04. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect.
SECTION 9.05. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Company received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be at least 30 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 90 days after
such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Noteholder, unless it makes a change described in any of clauses (1)
through (7) of Section 9.02(a), in which case, the amendment, supplement or
waiver shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; provided that any such waiver shall not impair or
affect the right of any Holder to receive payment of principal of and interest
on a Note, on or after the respective due dates expressed in such Note, or to
bring suit for
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the enforcement of any such payment on or after such respective dates without
the consent of such Holder.
SECTION 9.06. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of the Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Any such notation
or exchange shall be made at the sole cost and expense of the Company.
SECTION 9.07. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture. Such Opinion of Counsel shall not be an expense of the Trustee.
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Notes Subordinated to Senior Debt.
The Company covenants and agrees, and the Trustee and each Holder of
the Notes, by its acceptance thereof, likewise covenants and agrees, that all
Notes shall be issued subject to the provisions of this Article Ten; and the
Trustee and each Person holding any Note, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees that the payment of
all Obligations on the Notes by the Company shall, to the extent and in the
manner herein set forth, be subordinated and junior in right of payment to the
prior payment in full in cash or Cash Equivalents of all Obligations on the
Senior Debt, whether outstanding on the Issue Date or thereafter incurred; that
the subordination is for the benefit of, and shall be enforceable
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directly by, the holders of Senior Debt, and that each holder of Senior Debt
whether now outstanding or hereafter created, incurred, assumed or guaranteed
shall be deemed to have acquired Senior Debt in reliance upon the covenants and
provisions contained in this Indenture and the Notes.
SECTION 10.02. No Payment on Notes in
Certain Circumstances.
(a) If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Senior Debt, no
payment of any kind or character (other than payments by a trust previously
established pursuant to the provisions of Article Eight) shall be made by, or on
behalf of, the Company or any of its Subsidiaries with respect to any
Obligations on the Notes, or to acquire any of the Notes for cash or property.
In addition, if any other event of default occurs and is continuing with respect
to any Designated Senior Debt, as such event of default is defined in the
instrument creating or evidencing such Designated Senior Debt, permitting the
holders of such Designated Senior Debt then outstanding to accelerate the
maturity thereof and if the Representative for the respective issue of
Designated Senior Debt gives written notice of the event of default to the
Trustee (a "Default Notice"), then, unless and until all events of default have
been cured or waived or have ceased to exist or the Trustee receives notice from
the Representative for the respective issue of Designated Senior Debt
terminating the Blockage Period (as defined below), during the 180 days after
the delivery of such Default Notice (the "Blockage Period"), neither the Company
nor any of its Subsidiaries shall (x) make any payment of any kind or character
(other than payments by a trust previously established pursuant to the
provisions of Article Eight) with respect to any Obligations on the Notes or (y)
acquire any of the Notes for cash or property. Notwithstanding anything herein
to the contrary, in no event will a Blockage Period extend beyond 180 days from
the date of the commencement of the Blockage Period and only one such Blockage
Period may be commenced within any 365 consecutive days. No event of default
which existed or was continuing on the date of the commencement of any Blockage
Period with respect to the Designated Senior Debt shall be, or be made, the
basis for the commencement of a second Blockage Period by the Representative of
such Designated Senior Debt whether or not within a period of 365 consecutive
days, unless such event of default shall have been cured or waived for a period
of not less than 90 consecutive days (it being acknowledged that any subsequent
action, or any breach of any financial covenants for a period
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commencing after the date of commencement of such Blockage Period that, in
either case, would give rise to an event of default pursuant to any provisions
under which an event of default previously existed or was continuing shall
constitute a new event of default for this purpose).
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 10.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Debt (pro rata to such
holders on the basis of the respective amount of Senior Debt held by such
holders) or their respective Representatives, as their respective interests may
appear. The Trustee shall be entitled to rely on information regarding amounts
then due and owing on the Senior Debt, if any, received from the holders of
Senior Debt (or their Representatives) or, if such information is not received
from such holders or their Representatives, from the Company and only amounts
included in the information provided to the Trustee shall be paid to the holders
of Senior Debt.
Nothing contained in this Article Ten shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Section 6.02 or to pursue any rights or remedies
hereunder.
SECTION 10.03. Payment Over of Proceeds
upon Dissolution, Etc.
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any total or partial liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors or marshaling of assets of the Company
or in a bankruptcy, reorganization, insolvency, receivership or other similar
proceeding relating to the Company or its property, whether voluntary or
involuntary, all Obligations due upon all Senior Debt shall first be paid in
full in cash or Cash Equivalents, or such payment duly provided for to the
satisfaction of the holders of Senior Debt, before any payment or distribution
of any kind or character is made on account of any Obligations on the Notes, or
for the acquisition of any of the Notes for cash or property or otherwise. Upon
any such dissolution, winding-up, liquidation, reorganization, receivership or
similar proceeding, any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to which the Holders
of the Notes or the Trustee under this Indenture would be entitled, except for
the provisions hereof, shall be paid by the Company or
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by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, or by the Holders or by the Trustee
under this Indenture if received by them, directly to the holders of Senior Debt
(pro rata to such holders on the basis of the respective amounts of Senior Debt
held by such holders) or their respective Representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of Senior Debt remaining unpaid until all Obligations on Senior Debt
then due has been paid in full in cash or Cash Equivalents after giving effect
to any concurrent payment, distribution or provision therefor to or for the
holders of Senior Debt.
(b) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by any Holder when such payment or
distribution is prohibited by Section 10.03(a), such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Debt (pro rata to such holders on the basis of the
respective amount of Senior Debt held by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt then due
remaining unpaid until all such Senior Debt has been paid in full in cash or
Cash Equivalents, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Debt.
(c) The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article Five hereof and as long as permitted under the terms of the Senior Debt
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, assume the Company's obligations
hereunder in accordance with Article Five hereof.
SECTION 10.04. Payments May Be Paid Prior
to Dissolution.
Nothing contained in this Article Ten or elsewhere in this Indenture
shall prevent (i) the Company, except under the
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conditions described in Sections 10.02 and 10.03, from making payments at any
time for the purpose of making payments of principal of and interest on the
Notes, or from depositing with the Trustee any moneys for such payments, or (ii)
in the absence of actual knowledge by the Trustee that a given payment would be
prohibited by Section 10.02 or 10.03, the application by the Trustee of any
moneys deposited with it for the purpose of making such payments of principal
of, and interest on, the Notes to the Holders entitled thereto unless at least
two Business Days prior to the date upon which such payment would otherwise
become due and payable a Trust Officer shall have actually received the written
notice provided for in the second sentence of Section 10.02(a) or in Section
10.07 (provided that, notwithstanding the foregoing, such application shall
otherwise be subject to the provisions of the first sentence of Section 10.02(a)
and Section 10.03). The Company shall give prompt written notice to the Trustee
of any dissolution, winding-up, liquidation or reorganization of the Company.
SECTION 10.05. Subrogation.
Subject to the payment in full in cash or Cash Equivalents of all
Senior Debt, the Holders of the Notes shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Debt until the Notes shall be
paid in full; and, for the purposes of such subrogation, no such payments or
distributions to the holders of the Senior Debt by or on behalf of the Company
or by or on behalf of the Holders by virtue of this Article Ten which otherwise
would have been made to the Holders shall, as between the Company and the
Holders of the Notes, be deemed to be a payment by the Company to or on account
of the Senior Debt, it being understood that the provisions of this Article Ten
are and are intended solely for the purpose of defining the relative rights of
the Holders of the Notes, on the one hand, and the holders of the Senior Debt,
on the other hand.
SECTION 10.06. Obligations of the Company
Unconditional.
Nothing contained in this Article Ten or elsewhere in this Indenture
or in the Notes is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Debt, and the Holders, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders the
principal of and any interest on the Notes as and when the same shall become due
and payable in accordance with their terms, or is intended to or shall affect
the relative rights of the Holders and creditors of
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the Company other than the holders of the Senior Debt, nor shall anything herein
or therein prevent the Holder of any Note or the Trustee on its behalf from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
SECTION 10.07. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Notes pursuant to the provisions of this
Article Ten. Regardless of anything to the contrary contained in this Article
Ten or elsewhere in this Indenture, the Trustee shall not be charged with
knowledge of the existence of any default or event of default with respect to
any Senior Debt or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trustee shall have received
notice in writing from the Company, or from a holder of Senior Debt or a
Representative therefor, together with proof satisfactory to the Trustee of such
holding of Senior Debt or of the authority of such Representative, and, prior to
the receipt of any such written notice, the Trustee shall be entitled to assume
(in the absence of actual knowledge to the contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article Ten, and if such evidence is not furnished the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 10.08. Reliance on Judicial Order or
Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to
in this Article Ten, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders of the Notes shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which any insolvency,
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bankruptcy, receivership, dissolution, winding-up, liquidation, reorganization
or similar case or proceeding is pending, or upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, receiver, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or the Holders of the Notes, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Ten.
SECTION 10.09. Trustee's Relation to Senior Debt.
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article Ten with respect to any
Senior Debt which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Debt and nothing in
this Indenture shall deprive the Trustee or any such agent of any of its rights
as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt.
Whenever a distribution is to be made or a notice given to holders or
owners of Senior Debt, the distribution may be made and the notice may be given
to their Representative, if any.
SECTION 10.10. Subordination Rights Not Impaired
by Acts or Omissions of the Company
or Holders of Senior Debt.
No right of any present or future holders of any Senior Debt to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
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Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee, without incurring responsibility to the
Trustee or the Holders of the Notes and without impairing or releasing the
subordination provided in this Article Ten or the obligations hereunder of the
Holders of the Notes to the holders of the Senior Debt, do any one or more of
the following: (i) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Senior Debt, or otherwise amend or
supplement in any manner Senior Debt, or any instrument evidencing the same or
any agreement under which Senior Debt is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Debt; (iii) release any Person liable in any manner for the
payment or collection of Senior Debt; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION 10.11. Noteholders Authorize Trustee To
Effectuate Subordination of Notes.
Each Holder of Notes by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior Debt
and the Holders of Notes, the subordination provided in this Article Ten, and
appoints the Trustee its attorney-in-fact for such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of the
Company, the filing of a claim for the unpaid balance of its Notes and accrued
interest in the form required in those proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Debt or their
Representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Notes. Nothing herein contained shall be deemed to authorize
the Trustee or the holders of Senior Debt or their Representative to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the holders of
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Senior Debt or their Representative to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 10.12. This Article Ten Not To
Prevent Events of Default.
The failure to make a payment on account of principal of or interest
on the Notes by reason of any provision of this Article Ten will not be
construed as preventing the occurrence of an Event of Default.
SECTION 10.13. Trustee's Compensation
Not Prejudiced.
Nothing in this Article Ten will apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.
SECTION 11.02. Notices.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Company:
Tokheim Corporation
10501 Corporate Drive
Fort Wayne, Indiana
Facsimile No.: (219) 484-1110
Attn: Chief Financial Officer
if to the Trustee:
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Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Facsimile No.: (312) 461-3525
Attention: Indenture Trust Division
Each of the Company and the Trustee by written notice to each other
such Person may designate additional or different addresses for notices to such
Person. Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
faxed; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registration books of the Registrar and shall be sufficiently given to
him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.03. Communications by Holders
with Other Holders.
Noteholders may communicate pursuant to TIA (S) 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA (S) 312(c).
SECTION 11.04. Certificate and Opinion as
to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent to be performed by the
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Company, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company, if
any, provided for in this Indenture relating to the proposed action have
been complied with.
SECTION 11.05. Statements Required in
Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06, shall include:
(1) a statement that the Person making such certificate or opinion has
read such covenant or condition and the definitions relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is reasonably necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with.
SECTION 11.06. Rules by Trustee, Paying
Agent, Registrar.
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Noteholders. The Paying
Agent or Registrar may make reasonable rules for its functions.
SECTION 11.07. Legal Holidays.
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York or Chicago, Illinois or at such
<PAGE>
-96-
place of payment are not required to be open. If a payment date is a Legal
Holiday at such place, payment may be made at such place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 11.08. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE.
SECTION 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as such,
of the Company or of the Trustee shall not have any liability for any
obligations of the Company under the Notes or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creations.
Each Noteholder by accepting a Note waives and releases all such liability.
Such waiver and release are part of the consideration for the issuance of the
Notes.
SECTION 11.11. Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 11.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
<PAGE>
-97-
SECTION 11.13. Severability.
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions shall not in any way be affected
or impaired thereby, it being intended that all of the provisions hereof shall
be enforceable to the full extent permitted by law.
<PAGE>
-98-
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
Issuer:
TOKHEIM CORPORATION
By: __________________________________________
Name:
Title:
Trustee:
HARRIS TRUST AND SAVINGS BANK
as Trustee
By: __________________________________________
Name:
Title:
<PAGE>
EXHIBIT A
---------
CUSIP No.:
TOKHEIM CORPORATION
11-1/2% SENIOR SUBORDINATED NOTE DUE 2006
No. $
TOKHEIM CORPORATION, an Indiana corporation (the "Company," which term
includes any successor entity), for value received promises to pay to
or registered assigns, the principal sum of Dollars,
on August 1, 2006.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
TOKHEIM CORPORATION
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Dated: August 23, 1996 Title:
Certificate of Authentication
This is one of the 11-1/2% Senior Subordinated Notes due 2006 referred
to in the within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
Dated: August 23, 1996 By:
--------------------------------
Authorized Signatory
A-1
<PAGE>
(REVERSE OF SECURITY)
11-1/2% SENIOR SUBORDINATED NOTE DUE 2006
1. Interest. TOKHEIM CORPORATION, an Indiana corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from August 23, 1996. The Company will pay interest semi-annually in arrears on
each Interest Payment Date, commencing February 1, 1997. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful from time to time on demand at the rate borne by the Notes plus 2%
per annum.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, Harris Trust and Savings
Bank, an Illinois banking corporation (the "Trustee"), will act as Paying Agent
and Registrar. The Company may change any Paying Agent, Registrar or co-
Registrar without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture, dated
as of August 23, 1996 (the "Indenture"), between the Company and the Trustee.
This Note is one of a duly authorized issue of Initial Notes of the Company
designated as its 11-1/2% Senior Subordinated Notes due 2006 (the "Initial
Notes"). The Notes are limited in aggregate principal amount to $100,000,000.
The Notes include the Initial Notes and the Exchange Notes, as defined below,
issued in exchange for the Initial Notes pursuant to the Indenture. The Initial
Notes and the Exchange Notes are treated as a single class of securities under
the Indenture. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. The terms of the Notes include
A-2
<PAGE>
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb) (the
"TIA"), as in effect on the date of the Indenture. Notwithstanding anything to
the contrary herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and said Act for a statement of them. The
Notes are general unsecured obligations of the Company.
5. Subordination. The Notes are subordinated in right of payment, in
the manner and to the extent set forth in the Indenture, to the prior payment in
full in cash or Cash Equivalents of all Senior Debt of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. Each Holder by his acceptance hereof agrees to be bound
by such provisions and authorizes and expressly directs the Trustee, on his
behalf, to take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purposes.
6. Redemption.
(a) Optional Redemption. The Notes will be redeemable, at the
Company's option, in whole at any time or in part from time to time, on and
after August 1, 2001, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on August
1 of the year set forth below, plus, in each case, accrued and unpaid interest
thereon, if any, to the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
2001 .................................................................. 105.750%
2002 .................................................................. 103.833%
2003 .................................................................. 101.917%
2004 and thereafter ................................................... 100.000%
</TABLE>
(b) Optional Redemption Upon Public Equity Offerings. At any time, or
from time to time, on or prior to August 1, 1999, the Company may, at its
option, use the net cash proceeds of one or more Public Equity Offerings (as
defined in the Indenture) to redeem up to an aggregate of 35% of the principal
amount of the Notes originally issued at the following redemption prices
(expressed as percentages of the principal amount thereof) if redeemed during
the twelve-month period ending on August 1 of the year set forth below, plus, in
each case, accrued and unpaid interest thereon, if any, to the date of
redemption:
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
1997 .................................................................. 111.500%
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
1998 .................................................................. 109.857%
1999 .................................................................. 108.214%
</TABLE>
In order to effect the foregoing redemption with the proceeds of any
Public Equity Offering, the Company shall make such redemption not more than 120
days after the consummation of any such Public Equity Offering.
(c) Special Redemption. On the Special Redemption Date, the Notes will
be subject to mandatory redemption at a redemption price equal to 100% of the
principal amount of the Notes originally issued plus accrued and unpaid interest
thereon to the date of redemption, if the Acquisition has not been consummated
prior to the Special Redemption Notice Date and the Notes have not theretofore
been redeemed.
7. Notice of Redemption. Notice of redemption under paragraphs 6(a)
and 6(b) of this Note will be mailed at least 30 days but not more than 60 days
before the Redemption Date to each Holder of Notes to be redeemed at such
Holder's registered address. Notes in denominations larger than $1,000 may be
redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
8. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide
that, after certain Asset Sales (as defined in the Indenture) and upon the
occurrence of a Change of Control (as defined in the Indenture), and subject to
further limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
9. Registration Rights. Pursuant to the Registration Rights Agreement
among the Company and the Holders of the Initial Notes, the Company will be
obligated to consummate an exchange offer pursuant to which the Holder of this
Note shall have the right to exchange this Note for the Company's Series B 11-
1/2% Senior Subordinated Notes due 2006 (the "Exchange Notes"), which have been
registered under the Securities Act, in like principal amount and having terms
identical in all material respects to the Initial Notes. The Holders of the
Initial Notes shall be entitled to receive certain additional interest payments
in the event such exchange offer is not consummated and upon certain other
A-4
<PAGE>
conditions, all pursuant to and in accordance with the terms of the Registration
Rights Agreement.
10. Denominations; Transfer; Exchange. The Notes are in registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
11. Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company. After that, all liability of the Trustee and such
Paying Agent with respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity. If the Company at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
14. Amendment; Supplement; Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the written consent
of the Holders of at least a majority in aggregate principal amount of the Notes
then outstanding, and any existing Default or Event of Default or noncompliance
with any provision may be waived with the written consent of the Holders of a
majority in aggregate principal amount of the Notes then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture or the Notes to, among other things, cure any ambiguity, defect or
inconsistency, provide for uncertificated Notes in addition to or in place of
certificated Notes, or comply with Article Five of the Indenture or make any
other change that does not adversely affect in any material respect the rights
of any Holder of a Note.
15. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, make payments in respect of its Capital Stock, enter
into transactions with Affiliates, create dividend or other payment
A-5
<PAGE>
restrictions affecting Subsidiaries, merge or consolidate with any other Person,
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets or adopt a plan of liquidation. Such limitations
are subject to a number of important qualifications and exceptions. The Company
must annually report to the Trustee on compliance with such limitations.
16. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
17. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest) if it determines that withholding
notice is in their interest.
18. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
19. No Recourse Against Others. No stockholder, director, officer,
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
20. Authentication. This Note shall not be valid until the Trustee
or Authenticating Agent manually signs the certificate of authentication on this
Note.
21. Governing Law. The Laws of the State of New York shall govern
this Note and the Indenture, without regard to principles of conflict of laws.
A-6
<PAGE>
22. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
23. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
24. Indenture. Each Holder, by accepting a Note, agrees to be bound
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: Tokheim Corporation, 10501 Corporate
Drive, Fort Wayne, Indiana, Attn: Chief Financial Officer.
A-7
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________________________, agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date: Signed:
-------------------- ----------------------------------------------
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:
----------------------------
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) August 23, 1999, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
A-8
<PAGE>
[Check One]
---------
(1) -- to the Company or a subsidiary thereof; or
(2) -- pursuant to and in compliance with Rule 144A under the Securities Act;
or
(3) -- to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(4) -- outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act; or
(5) -- pursuant to the exemption from registration provided by Rule 144 under
the Securities Act; or
(6) -- pursuant to an effective registration statement under the Securities
Act; or
(7) -- pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided that if box (3), (4), (5) or (7) is checked,
the Company or the Trustee may require, prior to registering any such transfer
of the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3) or (4)) and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
A-9
<PAGE>
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.17 of the Indenture shall have been satisfied.
Dated: ____________________________ Signed: _________________________________
(Sign exactly as name
appears on the other side
of this Security)
Signature Guarantee:
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: ___________________________ _________________________________________
NOTICE: To be executed by
an executive officer
A-10
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$___________________
Dated: ___________________________ _________________________________________
NOTICE: The signature on this assignment
must correspond with the name as it
appears upon the face of the within Note
in every particular without alteration or
enlargement or any change whatsoever and
be guaranteed by the endorser's bank or
broker.
Signature Guarantee:
A-11
<PAGE>
EXHIBIT B
---------
CUSIP No.:
TOKHEIM CORPORATION
SERIES B 11-1/2% SENIOR SUBORDINATED NOTE DUE 2006
No. $
TOKHEIM CORPORATION, an Indiana corporation (the "Company," which term
includes any successor entity), for value received promises to pay to
or registered assigns, the principal sum of Dollars, on August 1, 2006.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
TOKHEIM CORPORATION
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Dated: Title:
Certificate of Authentication
This is one of the Series B 11-1/2% Senior Subordinated Notes due 2006
referred to in the within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
Dated: By:
--------------------------------------
Authorized Signatory
B-1
<PAGE>
(REVERSE OF SECURITY)
11-1/2% SENIOR SUBORDINATED NOTE DUE 2006
1. Interest. TOKHEIM CORPORATION, an Indiana corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from August 23, 1996. The Company will pay interest semi-annually in arrears on
each Interest Payment Date, commencing February 1, 1997. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful from time to time on demand at the rate borne by the Notes plus 2%
per annum.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, Harris Trust and Savings
Bank, an Illinois banking corporation (the "Trustee"), will act as Paying Agent
and Registrar. The Company may change any Paying Agent, Registrar or co-
Registrar without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture,
dated as of August 23, 1996 (the "Indenture"), between the Company and the
Trustee. This Note is one of a duly authorized issue of Initial Notes of the
Company designated as its 11-1/2% Senior Subordinated Notes due 2006 (the
"Initial Notes"). The Notes are limited in aggregate principal amount to
$100,000,000. The Notes include the Initial Notes and the Exchange Notes, as
defined below, issued in exchange for the Initial Notes pursuant to the
Indenture. The Initial Notes and the Exchange Notes are treated as a single
class of securities under the Indenture. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the
Notes include
B-2
<PAGE>
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb) (the
"TIA"), as in effect on the date of the Indenture. Notwithstanding anything to
the contrary herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and said Act for a statement of them. The
Notes are general unsecured obligations of the Company.
5. Subordination. The Notes are subordinated in right of payment,
in the manner and to the extent set forth in the Indenture, to the prior payment
in full in cash or Cash Equivalents of all Senior Debt of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. Each Holder by his acceptance hereof agrees to be bound
by such provisions and authorizes and expressly directs the Trustee, on his
behalf, to take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purposes.
6. Redemption.
----------
(a) Optional Redemption. The Notes will be redeemable, at the
Company's option, in whole at any time or in part from time to time, on and
after August 1, 2001, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on August
1 of the year set forth below, plus, in each case, accrued and unpaid interest
thereon, if any, to the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
2001................................................................ 105.750%
2002................................................................ 103.833%
2003................................................................ 101.917%
2004 and thereafter................................................. 100.000%
</TABLE>
(b) Optional Redemption Upon Public Equity Offerings. At any time, or
from time to time, on or prior to August 1, 1999, the Company may, at its
option, use the net cash proceeds of one or more Public Equity Offerings (as
defined in the Indenture) to redeem up to an aggregate of 35% of the principal
amount of the Notes originally issued at the following redemption prices
(expressed as percentages of the principal amount thereof) if redeemed during
the twelve-month period ending on August 1 of the year set forth below, plus, in
each case, accrued and unpaid interest thereon, if any, to the date of
redemption:
B-3
<PAGE>
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
1997.................................................. 111.500%
1998.................................................. 109.857%
1999.................................................. 108.214%
</TABLE>
In order to effect the foregoing redemption with the proceeds of any
Public Equity Offering, the Company shall make such redemption not more than 120
days after the consummation of any such Public Equity Offering.
(c) Special Redemption. On the Special Redemption Date, the Notes
will be subject to mandatory redemption at a redemption price equal to 100% of
the principal amount of the Notes originally issued plus accrued and unpaid
interest thereon to the date of redemption, if the Acquisition has not been
consummated prior to the Special Redemption Notice Date and the Notes have not
theretofore been redeemed.
7. Notice of Redemption. Notice of redemption under paragraphs 6(a)
and 6(b) of this Note will be mailed at least 30 days but not more than 60 days
before the Redemption Date to each Holder of Notes to be redeemed at such
Holder's registered address. Notes in denominations larger than $1,000 may be
redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
8. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture
provide that, after certain Asset Sales (as defined in the Indenture) and upon
the occurrence of a Change of Control (as defined in the Indenture), and subject
to further limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
9. Registration Rights. Pursuant to the Registration Rights
Agreement among the Company and the Holders of the Initial Notes, the Company
will be obligated to consummate an exchange offer pursuant to which the Holder
of this Note shall have the right to exchange this Note for the Company's Series
B 11-1/2% Senior Subordinated Notes due 2006 (the "Exchange Notes"), which have
been registered under the Securities Act, in like principal amount and having
terms identical in all material respects to the Initial Notes. The Holders of
the Initial Notes shall be entitled
B-4
<PAGE>
to receive certain additional interest payments in the event such exchange offer
is not consummated and upon certain other conditions, all pursuant to and in
accordance with the terms of the Registration Rights Agreement.
10. Denominations; Transfer; Exchange. The Notes are in registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
11. Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity. If the Company at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
14. Amendment; Supplement; Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the Notes then outstanding, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the Notes then
outstanding. Without notice to or consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes to, among other things, cure
any ambiguity, defect or inconsistency, provide for uncertificated Notes in
addition to or in place of certificated Notes, or comply with Article Five of
the Indenture or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Note.
15. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness,
B-5
<PAGE>
make payments in respect of its Capital Stock, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a number
of important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
16. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
17. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold
from Holders of Notes notice of any continuing Default or Event of Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in their interest.
18. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
19. No Recourse Against Others. No stockholder, director, officer,
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
20. Authentication. This Note shall not be valid until the Trustee
or Authenticating Agent manually signs the certificate of authentication on this
Note.
B-6
<PAGE>
21. Governing Law. The Laws of the State of New York shall govern
this Note and the Indenture, without regard to principles of conflict of laws.
22. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST
(= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
23. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
24. Indenture. Each Holder, by accepting a Note, agrees to be bound
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: Tokheim Corporation, 10501 Corporate
Drive, Fort Wayne, Indiana, Attn: Chief Financial Officer.
B-7
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________________________, agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Dated: __________________ Signed: ___________________________
(Sign exactly as name
appears on the other side
of this Note)
Signature Guarantee:___________________________________________________________
B-8
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$___________________
Dated: _________________ _________________________________________________
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the
face of the within Note in every particular
without alteration or enlargement or any change
whatsoever and be guaranteed by the endorser's
bank or broker.
Signature Guarantee: __________________________________________________________
B-9
<PAGE>
Exhibit C
---------
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
___________, ____
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Attention: Indenture Trust Division
Re: Tokheim Corporation 11-1/2% Senior
Subordinated Notes due 2006
----------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of 11-1/2% Senior
Subordinated Notes due 2006 (the "Notes") of Tokheim Corporation (the
"Company"), we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated August 16, 1996 relating to the Notes and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated on pages (i)-(ii)
of the Offering Memorandum and in the section entitled "Transfer Restrictions"
of the Offering Memorandum, including the restrictions on duplication and
circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is subject
to certain restrictions and conditions set forth in the Indenture relating to
the Notes (as described in the Offering Memorandum) and the undersigned agrees
to be bound by, and not to resell, pledge or otherwise transfer the Notes except
in compliance with, such restrictions and conditions and the Securities Act of
1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold except as permitted in the following sentence. We agree, on our own behalf
and on behalf of any accounts for which we are acting as hereinafter stated,
that if we should sell or otherwise transfer any Notes prior to the date which
is three years after the original issuance of the Notes, we will do so only (i)
to the Company or any of its subsidiaries, (ii) inside the United States in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined
C-1
<PAGE>
in Rule 144A under the Securities Act), (iii) inside the United States to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to
the Trustee (as defined in the Indenture relating to the Notes), a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the Notes, (iv) outside the United States in accordance with Rule
904 of Regulation S under the Securities Act, (v) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act (if available), or
(vi) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing any of the Notes from
us a notice advising such purchaser that resales of the Notes are restricted as
stated herein.
4. We are not acquiring the Notes for or on behalf of, and will not
transfer the Notes to, any pension or welfare plan (as defined in Section 3 of
the Employee Retirement Income Security Act of 1974), except as permitted in the
section entitled "Transfer Restrictions" of the Offering Memorandum.
5. We understand that, on any proposed resale of any Notes, we will
be required to furnish to the Trustee and the Company such certification, legal
opinions and other information as the Trustee and the Company may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or their investment, as the case may be.
7. We are acquiring the Notes purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
C-2
<PAGE>
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
By: -----------------------------------------
Name:
Title:
C-3
<PAGE>
Exhibit D
---------
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
- -----------------------------------
______________, ____
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Attention: Indenture Trust Division
Re: Tokheim Corporation (the "Company")
11-1/2% Senior Subordinated Notes due 2006
(the "Notes")
------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $___________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been pre-
arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
D-1
<PAGE>
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: ---------------------------------------------
Authorized Signature
D-2
<PAGE>
Exhibit Number 5
EXECUTION COPY
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of September 3, 1996
among
TOKHEIM CORPORATION,
THE BORROWING SUBSIDIARIES,
THE LENDERS
and
NBD BANK, N.A.,
as Agent
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I: DEFINITIONS...................................................... 1
1.1. DEFINITIONS...................................................... 1
1.2. Accounting Terms and Determinations.............................. 24
1.3. References to Subsidiaries....................................... 24
ARTICLE II: THE FACILITIES................................................... 24
2.1. The Facilities................................................... 24
2.1.1. Loans.................................................... 24
2.1.2 Swing Loans.............................................. 25
2.2. Types and Interest Periods....................................... 28
2.2.1. Types of Advances........................................ 28
2.2.2. Method of Selecting Types and Interest Periods for
New Advances............................................. 28
2.2.3. Conversion and Continuation of Outstanding Advances...... 29
2.3. Applicable Margin................................................ 29
2.4. Fees............................................................. 31
2.4.1. Commitment Fee........................................... 31
2.4.2. Agent Fees............................................... 31
2.5. General Facility Terms........................................... 31
2.5.1. Method of Borrowing...................................... 31
2.5.2. Minimum Amount of Each Advance........................... 32
2.5.3. Prepayments.............................................. 32
2.5.4. Interest Rates; Interest Periods......................... 32
2.5.5. Default Rate............................................. 33
2.5.6. Interest Payment Dates; Interest Basis................... 33
2.5.7. Method of Payment........................................ 33
2.5.8. Notes; Telephonic Notices................................ 34
2.5.9. Notification of Advances, Interest Rates and
Prepayments.............................................. 34
2.5.10. Non-Receipt of Funds by the Agent........................ 34
2.5.11. Termination or Reduction in the Aggregate Commitment..... 35
2.5.12. Market Disruption........................................ 35
2.5.13. Lending Installations.................................... 36
2.5.14. Borrowing Subsidiaries................................... 36
2.5.15. Withholding Tax Exemption................................ 37
2.5.16. Judgment Currency........................................ 37
2.5.17. Overall effective rate................................... 38
2.6. Letter of Credit Facility........................................ 38
2.6.1. Letters of Credit........................................ 38
2.6.2. Letter of Credit Participation........................... 39
2.6.3. Reimbursement Obligation................................. 39
2.6.4. Cash Collateral.......................................... 40
2.6.5. Letter of Credit Fees.................................... 41
2.6.6. Indemnification; Exoneration............................. 41
<PAGE>
Section Page
- ------- ----
ARTICLE III: CHANGE IN CIRCUMSTANCES......................................... 42
3.1. Taxes........................................................... 42
3.1.1. Payments to be Free and Clear........................... 42
3.1.2. Grossing-up of Payments................................. 43
3.1.3. Certification of Withholding Tax Exemption.............. 43
3.2. Increased Costs................................................. 44
3.3. Changes in Capital Adequacy Regulations......................... 45
3.4. Availability of Types of Advances............................... 45
3.5. Funding Indemnification......................................... 45
3.6. Mitigation of Additional Costs or Adverse Circumstances......... 46
3.7. Lender Statements; Survival of Indemnity........................ 47
ARTICLE IV: CONDITIONS PRECEDENT............................................ 47
4.1. Initial Advance................................................. 47
4.2. Initial Advance to Each Borrowing Subsidiary.................... 50
4.3. Each Advance and Letter of Credit.............................. 52
ARTICLE V: REPRESENTATIONS AND WARRANTIES.................................. 52
5.1. Corporate Existence and Standing................................ 52
5.2. Authorization and Validity...................................... 52
5.3. No Conflict; Government Consent................................. 53
5.4. Financial Statements............................................ 53
5.5. Material Adverse Change......................................... 53
5.6. Taxes........................................................... 54
5.7. Litigation...................................................... 54
5.8. Subsidiaries.................................................... 54
5.9. ERISA........................................................... 54
5.10. Full Disclosure................................................. 56
5.11. Assets and Properties........................................... 56
5.12. Patents and Trademarks.......................................... 56
5.13. No Defaults..................................................... 56
5.14. Investment Company Act.......................................... 56
5.15. Compliance with Environmental Laws.............................. 57
5.16. Regulations G, T, U and X....................................... 57
5.17. Filing.......................................................... 57
5.18. No Immunity..................................................... 58
5.19. Contingent Obligations.......................................... 58
5.20. Foreign Employee Benefit Matters................................ 58
5.21. French Withholding.............................................. 58
<PAGE>
Section Page
- ------- ----
ARTICLE V-A REPRESENTATIONS AND WARRANTIES OF ADDITIONAL
FRENCH BORROWING SUBSIDIARIES.......................................... 59
5A.1. Corporate Existence and Standing................................ 59
5A.2. Authorization and Validity...................................... 59
5A.3. No Conflict; Government Consent................................. 59
5A.4. Filing.......................................................... 59
5A.5. No Immunity..................................................... 60
5A.6. Investment Company Act.......................................... 60
5A.7. Public Utility Holding Company Act.............................. 60
5A.8. Regulation U.................................................... 60
ARTICLE VI: COVENANTS....................................................... 60
6.1. Financial Reporting............................................. 61
6.2. Use of Proceeds................................................. 62
6.3. Notice of Default............................................... 62
6.4. Corporate Existence............................................. 62
6.5. Taxes........................................................... 62
6.6. Insurance....................................................... 63
6.7. Compliance with Laws............................................ 63
6.8. Inspection...................................................... 63
6.9. Sale of Assets.................................................. 63
6.10. Liens........................................................... 64
6.11. Rentals......................................................... 65
6.12. Consolidated Net Worth.......................................... 66
6.13. Dividends....................................................... 66
6.14 Guaranties...................................................... 66
6.15 Sale and Leaseback Transactions or other Off Balance Sheet
Liabilities..................................................... 67
6.16 Merger and Consolidation........................................ 67
6.17 Investments and Acquisitions.................................... 67
6.18. Capital Expenditures............................................ 67
6.19. Indebtedness.................................................... 68
6.20. ERISA........................................................... 69
6.21. Affiliates...................................................... 70
6.22. Conduct of Business............................................. 71
6.23. Rate Hedging Obligations........................................ 71
6.24. Leverage Ratio.................................................. 71
6.25. Interest Expense Coverage Ratio................................. 72
6.26. Fixed Charge Coverage Ratio..................................... 72
6.27. Minimum EBITDA.................................................. 73
6.28. Foreign Employee Benefit Compliance............................. 73
<PAGE>
Section Page
- ------- ----
6.29 Subordinated Indebtedness...................................... 73
6.30 Payments and Prepayments....................................... 74
6.31 ERISA.......................................................... 74
ARTICLE VII: DEFAULTS....................................................... 75
ARTICLE VIII: ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES................. 77
8.1. Acceleration................................................... 77
8.2. Amendments..................................................... 78
8.3. Preservation of Rights......................................... 78
ARTICLE IX: GUARANTY....................................................... 79
9.1. Guaranty....................................................... 79
9.2. Waivers........................................................ 79
9.3. Guaranty Absolute.............................................. 79
9.4. Acceleration................................................... 80
9.5. Marshaling; Reinstatement...................................... 81
9.6. Termination Date............................................... 81
ARTICLE X: GENERAL PROVISIONS............................................. 81
10.1. Governmental Regulation........................................ 81
10.2. Taxes.......................................................... 81
10.3. Headings....................................................... 81
10.4. Entire Agreement............................................... 81
10.5. Several Obligations............................................ 82
10.6. Expenses; Indemnification...................................... 82
10.7. Numbers of Documents........................................... 83
10.8. Severability of Provisions..................................... 83
10.9. Nonliability of Lenders........................................ 83
10.10. CHOICE OF LAW............................................ 83
10.11 CONSENT TO JURISDICTION........................................ 83
10.12. Confidentiality................................................ 84
10.13. Performance of Obligations..................................... 84
10.14. English Language............................................... 85
ARTICLE XI: THE AGENT...................................................... 85
11.1. Appointment.................................................... 85
11.2. Powers......................................................... 85
11.3. General Immunity............................................... 86
11.4. No Responsibility for Loans, Collateral, Recitals, etc......... 86
<PAGE>
<TABLE>
Section Page
- ------- ----
<S> <C> <C>
11.5. Action on Instructions of Lenders....................... 86
11.6. Employment of Agents and Counsel........................ 87
11.7. Reliance on Documents; Counsel.......................... 87
11.8. Agent's Reimbursement and Indemnification............... 87
11.9. Rights as a Lender and Issuing Lender................... 87
11.10. Lender Credit Decision.................................. 88
11.11. Successor Agent......................................... 88
11.12 Collateral Documents.................................... 88
ARTICLE XII: SETOFF; RATABLE PAYMENTS............................. 88
12.1. Setoff.................................................. 89
12.2. Ratable Payments........................................ 89
ARTICLE XIII: BENEFIT OF AGREEMENT; PARTICIPATIONS; ASSIGNMENTS... 89
13.1. Successors and Assigns.................................. 89
13.2. Participations.......................................... 89
13.2.1. Permitted Participants; Effect................. 90
13.2.2. Voting Rights.................................. 90
13.2.3. Benefit of Setoff.............................. 90
13.3. Assignments................................................. 90
13.3.1. Permitted Assignments.......................... 90
13.3.2. Effect; Effective Date......................... 91
13.4. Dissemination of Information............................ 91
13.5. Tax Treatment........................................... 91
ARTICLE XIV: NOTICES.............................................. 91
14.1. Giving Notice............................................... 91
14.2. Change of Address........................................... 92
ARTICLE XV: COUNTERPARTS.......................................... 92
</TABLE>
<PAGE>
SCHEDULES AND EXHIBITS
----------------------
<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C> <C>
Exhibit A -- Form of Assumption Letter
Exhibit B -- Form of Assignment Agreement
Exhibit C -- Form of Domestic Borrowing Base Certificate
Exhibit D -- Form of French Borrowing Base Certificate
Exhibit E -- Opinion (U.S. law)
Exhibit F -- Opinion (French law)
Exhibit G -- List of Closing Documents
Exhibit H -- Opinion for New Borrowing Subsidiaries
Exhibit I -- Compliance Certificate
SCHEDULES
- ---------
Schedule I -- Lenders, Eurocurrency Payment Offices, Commitments,
Maximum Swing Loan Obligations
Schedule II -- Lending Installations
Schedule 1.1.1 -- Existing Letters of Credit
Schedule 5.8 -- Subsidiaries
Schedule 5.9 -- ERISA Matters
Schedule 5.11 -- Assets and Properties
Schedule 6.10 -- Liens
Schedule 6.17 -- Existing Investments
Schedule 6.19 -- Existing Indebtedness
</TABLE>
<PAGE>
CREDIT AGREEMENT
This Credit Agreement (this "AGREEMENT"), dated as of September 3, 1996, is
among Tokheim Corporation, an Indiana Corporation, (the "COMPANY"), any
Borrowing Subsidiaries which are now or may hereafter become a party hereto from
time to time, the Lenders and NBD Bank, N.A., as Agent.
The parties hereto agree as follows:
ARTICLE I: DEFINITIONS
-----------
1.1. DEFINITIONS.
-----------
As used in this Agreement:
"ACQUISITION" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Company or any
Subsidiary (a) acquires any going business or all or substantially all of the
assets of any firm, corporation or division thereof, whether through purchase of
assets, merger or otherwise, or (b) directly or indirectly acquires (in one
transaction or in a series of transactions) at least 25% (in number of votes) of
the Capital Stock of a corporation, partnership, or limited liability company
which have ordinary voting power for the election of directors (other than
securities having such power only by reason of the happening of a contingency).
"ADVANCE" means a borrowing hereunder consisting of the aggregate amount of
the several Loans (other than Swing Loans) made by some or all of the Lenders to
the Borrowers of the same Type and, in the case of Eurocurrency Advances,
denominated in the same currency and for the same Interest Period.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of Capital Stock, by contract or otherwise.
"AGENT" means NBD Bank, N.A. in its capacity as contractual representative
for the Lenders, the Issuing Lenders and the Swing Loan Lenders pursuant to
Article XI, and not in its individual capacity as a Lender, Swing Loan Lender or
Issuing Lender, and any successor Agent appointed pursuant to Article XI.
"AGGREGATE COMMITMENT" means the aggregate of the Commitments of all the
Lenders.
<PAGE>
"AGREED CURRENCY" shall mean Dollars, Deutsche marks, French Francs, and
pounds sterling, and any other currency which is freely available and
convertible into Dollars in which deposits are customarily offered to banks in
the London interbank market, which the applicable Borrower requests the Agent to
include as an Agreed Currency hereunder and which is acceptable to each Lender;
provided that the Agent shall promptly notify each Lender of each such request
and each Lender shall be deemed to have agreed to each such request if its
objection thereto has not been received by the Agent within five Business Days
from the date of such notification by the Agent to such Lender.
"AGREEMENT" means this Credit Agreement, as it may be amended, modified,
supplemented or restated and in effect from time to time.
"ALTERNATE BASE RATE" means the sum of (a) the greater of (x) the Prime
Rate or (y) the Federal Funds Effective Rate plus .50% per annum and (b) the
percentage indicated as the Applicable Margin in connection with Alternate Base
Rate Loans.
"ALTERNATE BASE RATE ADVANCE" means an Advance which bears interest at the
Alternate Base Rate.
"ALTERNATE BASE RATE LOAN" means a Loan which bears interest at the
Alternate Base Rate.
"APPLICABLE LETTER OF CREDIT FEE RATE" means a per annum rate determined
from time to time pursuant to Section 2.3.
"APPLICABLE MARGIN" means, at any date of determination thereof with
respect to any Advance, the commitment fees payable pursuant to Section 2.4 and
Letter of Credit fees, the respective rates per annum for such Advance,
commitment fees and Letter of Credit fees calculated in accordance with the
terms of Section 2.3.
"APPROXIMATE EQUIVALENT AMOUNT" of any currency with respect to any amount
of Dollars shall mean the Equivalent Amount of such currency with respect to
such amount of Dollars at such date (i) if such currency is Deutsche marks,
French francs or pounds sterling, rounded up to the nearest 100,000 of such
currency and (ii) if such currency is any other Agreed Currency, rounded up to
the nearest amount of such currency as determined by the Agent from time to
time.
"ARRANGER" means First Chicago Capital Markets, Inc.
"ARTICLE" means an article of this Agreement unless another document is
specifically referenced.
"ASSUMPTION LETTER" means a letter of a Subsidiary of the Company addressed
to the Lenders in substantially the form of Exhibit A hereto pursuant to which
such Subsidiary
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agrees to become a "BORROWING SUBSIDIARY" and agrees to be bound by the terms
and conditions hereof.
"BENEFIT PLAN" means a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) subject to Title IV of ERISA in
respect of which the Company or any ERISA Affiliate is an "employer" as defined
in Section 3(5) of ERISA or with respect to which the Company or any ERISA
Affiliate has any potential liability.
"BORROWER" means, as applicable, the Company, Sogen S.A. and Sofitam
International S.A., Sofitam Equipement S.A. and any other Borrowing Subsidiary.
"BORROWING BASE" means, the Domestic Borrowing Base or the French
Borrowing Base, as applicable. The Agent shall give the Company commercially
reasonable notice, taking into account all facts and circumstances known by the
Agent at such time, of any change in the criteria to determine the eligibility
of any Receivables or Inventory of the Company or any Borrowing Subsidiaries or
of the establishment by the Agent of any reserves which, in any such case, might
reasonably be expected to materially decrease the amount of the Borrowing Base,
it being expressly understood and agreed that any such change in criteria or
establishment of reserves shall be made based upon the Agent's reasonable credit
judgment (which credit judgment shall be exercised in a manner that is not
arbitrary or capricious).
"BORROWING BASE CERTIFICATE" means a Domestic Borrowing Base
Certificate or a French Borrowing Base Certificate, as applicable.
"BORROWING DATE" means a date on which an Advance or a Swing Loan is
made hereunder.
"BORROWING NOTICE" means a notice as provided in Section 2.1.1(ii) or
Section 2.1.2(ii).
"BORROWING SUBSIDIARY" means any domestic or French Borrowing
Subsidiary duly designated by the Company pursuant to Section 2.5.14 hereof to
request Advances hereunder, including without limitation the French
Subsidiaries, which Subsidiary shall have delivered to the Agent an Assumption
Letter in accordance with Section 2.5.14 and such other documents, instruments
and agreements as may be required pursuant to the terms of this Agreement.
"BUSINESS DAY" means (i) with respect to any borrowing, payment or
rate selection of or any currency conversion with respect to Eurocurrency
Advances, a day other than Saturday or Sunday on which banks are open for
business in Indianapolis, Indiana and New York, New York, on which dealings in
United States dollars are carried on in the London interbank market and, where
funds are to be paid or made available in a currency other than Dollars, on
which commercial banks are open for domestic and international business
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(including dealings in deposits in such currency) in both London and the place
where such funds are to be paid or made available and (ii) for all other
purposes, a day other than Saturday or Sunday on which banks are open for
business in Indianapolis, Indiana and New York, New York.
"CAPITAL EXPENDITURES" means, without duplication, any expenditures
for any purchase or other acquisition of any asset which would be classified as
a fixed or capital asset on a consolidated balance sheet of the Company and its
Subsidiaries prepared in accordance with U. S. GAAP, excluding (i) expenditures
of insurance proceeds to rebuild or replace any asset after a casualty loss,
(ii) leasehold improvement expenditures for which the Company or a Subsidiary is
reimbursed within a reasonable period of time by the lessor and (iii)
expenditures of proceeds received in connection with any condemnation or eminent
domain proceeding to replace any asset taken from the Company or a Subsidiary in
such proceeding.
"CAPITAL STOCK" means the equity securities of a corporation or
societe anonyme, the voting partnership interests of a partnership and the
voting membership interests of a limited liability company.
"CAPITALIZED LEASE" means any lease the obligation for Rentals with
respect to which is required to be capitalized on a balance sheet of the lessee
in accordance with U.S. GAAP.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government or by the French
government and backed by the full faith and credit of the United States
government or that of the French government; (ii) domestic, French Francs and
Eurocurrency certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States of America, any state thereof or the
District of Columbia or France, or its branches or agencies; (iii) shares of
money market, mutual or similar funds having assets in excess of $100,000,000 or
the equivalent amount in French francs and the investments of which are limited
to investment grade securities (i.e., securities rated at least Baa by Moody's
or at least BBB by S&P); (iv) commercial paper of United States of America or
French banks and bank holding companies and their subsidiaries and United States
of America or French finance, commercial, industrial or utility companies which,
at the time of acquisition, are rated A-1 (or better) by S&P or P-1 (or better)
by Moody's; and (v) at the reasonable discretion of the Agent or the Required
Lenders, short term obligations, deposits, certificates, bankers' acceptances,
shares or commercial paper denominated in currency other than Dollars or French
Francs which are easily transferrable into cash; provided that the maturities of
all such Cash Equivalents shall not exceed 365 days.
"CHANGE IN CONTROL" means the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 25% or more of the outstanding shares of voting stock
of the Company.
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"CODE" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
"COLLATERAL" means all property and interests in property now owned or
hereafter acquired by the Company or any of its Subsidiaries upon which a
security interest, lien or mortgage is granted to the Agent, for the benefit of
the Holders of Secured Obligations, or to the Agent, for the benefit of the
Lenders, whether under the Security Agreement, under the Collateral Documents or
under any of the other Loan Documents.
"COLLATERAL DOCUMENTS" means all agreements, instruments and documents
executed in connection with this Agreement, including, without limitation the
Security Agreement, Trademark Security Agreement, Patent Security Agreement,
Subsidiary Guaranty, the Subsidiary Security Agreement, the Pledge Agreements,
the Mortgages, the Sofitam Equipement Charge, the Sofitam Equipement Receivables
Assignment, the Sogen Charge, the Sogen Receivables Assignment, and the
Contribution Agreement, together with all agreements and documents referred to
therein or contemplated thereby for the purpose of securing or guaranteeing the
Obligations.
"COMMITMENT" means, for each Lender, the obligation of the Lender to
make Loans to the Borrowers, to purchase participations in Letters of Credit and
to participate in Swing Loans not exceeding the amount set forth opposite the
name of such Lender under the heading "Commitment" on Schedule I hereof or as
set forth in an applicable Assignment Agreement in the form of Exhibit B hereto
received by the Agent under the terms of Section 13.3, as such amount may be
modified from time to time pursuant to the terms of this Agreement.
"COMPANY" means Tokheim Corporation, an Indiana corporation, and its
successors and assigns, including a debtor-in-possession on behalf of the
Company.
"COMPANY PLEDGE AGREEMENT" means that certain Pledge Agreement dated
as of September 6, 1996 executed by the Company in favor of the Agent for the
benefit of the Holders of Secured Obligations, as amended, restated or otherwise
modified from time to time.
"COMPANY'S STATUS" is defined in Section 2.3.
"CONSOLIDATED NET INCOME" means for any period the amount of net
income (or deficit) of the Company and its Consolidated Subsidiaries for such
period, determined on a consolidated basis in accordance with U.S. GAAP,
excluding any net income (or net loss) of a Consolidated Subsidiary for any
period during which it was not a Consolidated Subsidiary, or any net income (or
net loss) of any business, properties or assets acquired (by way of merger,
consolidation, purchase or otherwise) by the Company or any Consolidated
Subsidiary for any period prior to the date of acquisition thereof.
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"CONSOLIDATED NET WORTH" means, at any date as of which the same is to
be determined, the consolidated stockholders' equity of the Company and its
Consolidated Subsidiaries, determined in accordance with U.S. GAAP (excluding
the Company's minimum funding liability under ERISA with respect to Plans
maintained by the Company and excluding foreign currency translation
adjustments).
"CONSOLIDATED SUBSIDIARY" means, at any date as of which the same is
to be determined, any Subsidiary or other entity the accounts of which would be
consolidated with those of the Company in its consolidated financial statements
if such statements were prepared as of such date in accordance with U.S. GAAP.
"CONTRIBUTION AGREEMENT" means the Contribution Agreement dated as of
September 6, 1996 by and among the Company and the Guarantor Subsidiaries.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"CONVERSION/CONTINUATION NOTICE" is defined in Section 2.2.3.
"DEFAULT" means an event described in Article VII.
"DOL" means the United States Department of Labor and any successor
department or agency.
"DOLLAR AMOUNT" of any currency at any date shall mean (i) the amount
of such currency if such currency is Dollars or (ii) the Equivalent Amount of
Dollars if such currency is any currency other than Dollars, calculated on the
basis of the arithmetical mean of the buy and sell spot rates of exchange of the
Agent for such currency on the London market at 11:00 a.m., London time, two
Business Days prior to the date on which such amount is to be determined.
"DOLLARS" and "$" shall mean lawful money of the United States of
America.
"DOMESTIC BORROWING BASE" means, as of any date of calculation, an
amount, as set forth on the most current Domestic Borrowing Base Certificate
delivered to the Agent, for the Company and its domestic Consolidated
Subsidiaries equal to: (i) eighty-five percent (85%) of the Gross Amount of
Eligible Receivables owed to the Company or any of its domestic Consolidated
Subsidiaries; plus (ii) the lesser of (A) $20,000,000 and (B) sixty percent
(60%) of the Gross Amount of Eligible Inventory owned by the Company or any of
its domestic Consolidated Subsidiaries.
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"DOMESTIC BORROWING BASE CERTIFICATE" means a certificate, in
substantially the form of Exhibit C attached hereto and made a part hereof,
setting forth the Domestic Borrowing Base and the component calculations
thereof.
"EBITDA" means, for any period, on a consolidated basis for the
Company and its Consolidated Subsidiaries, the sum of: (i) Consolidated Net
Income; plus (ii) the portion of consolidated net income attributable to
minority interests in the Company's Consolidated Subsidiaries not included in
the calculation of Consolidated Net Income; plus (iii) to the extent deducted in
determining Consolidated Net Income, income taxes paid or accrued; minus (iv)
extraordinary gains; plus (v) extraordinary losses; plus (vi) Interest Expense;
plus (vii) depreciation; plus (viii) non-cash amortization expense, including,
without limitation, amortization of goodwill and other intangible assets; minus
(ix) interest income; plus (x) any non-recurring expenses related to the
reorganization, restructuring and rationalization of the Company and its
Subsidiaries (including the businesses purchased pursuant to the Sofitam
Acquisition) which are charged to operating expenses when and as charged during
the first two fiscal quarters following the Effective Date up to an aggregate
amount not to exceed $5,000,000.
"EFFECTIVE DATE" means the date of this Agreement.
"ELIGIBLE INVENTORY" means inventory owned by any of the Borrowers or
Domestic Guarantors which is held for sale or lease or furnished under any
contract of service by the applicable Borrower or Domestic Guarantors, and which
is not: (i) inventory subject to a loss reserve to be determined by the Agent in
its reasonable credit judgment (which judgment shall be exercised in a manner
that is not arbitrary or capricious); (ii) engineering inventory and (iii)
inventory which (a) is consigned to a third party for sale or (b) is on
consignment from a third party to the applicable Borrower or Domestic Guarantor
for sale. Standards of eligibility may be fixed and revised from time to time by
the Agent in the Agent's reasonable credit judgment (which judgment shall be
exercised in a manner that is not arbitrary or capricious).
"ELIGIBLE RECEIVABLES" means receivables created by any of the
Borrowers or Domestic Guarantors in the ordinary course of its business arising
out of the sale of goods or rendition of services by any such Borrower or
Domestic Guarantor, and which are not:
(i) receivables of Borrowers (other than the French Borrowing
Subsidiaries) or Domestic Guarantors which remain unpaid ninety (90)
days after the date of the original applicable invoice;
(ii) from the Effective Date until June 30, 1997, receivables of
any of the French Borrowing Subsidiaries which remain unpaid sixty
(60) days after the date such receivables are due;
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(iii) at any time after June 30, 1997, receivables of any of the
French Borrowing Subsidiaries which remain unpaid one hundred twenty (120)
days after the date of the original applicable invoice;
(iv) receivables with respect to which the account debtor is a
director, officer, employee, Subsidiary or Affiliate of any of the
Borrowers or Domestic Guarantors;
(v) receivables with respect to which the account debtor is any
governmental authority, including, without limitation, the United States of
America or the Republic of France, or, in each case, any department, agency
or instrumentality thereof;
(vi) receivables with respect to which the account debtor has (a)
asserted a counterclaim, (b) a right of setoff or (c) a receivable owing
from the applicable Borrower but only to the extent of such counterclaim,
setoff or receivable; and
(vii) receivables evidenced by a note.
Standards of eligibility may be fixed and revised from time to time by the
Agent in the Agent's reasonable credit judgment (which judgment shall be
exercised in a manner that is not arbitrary or capricious).
"EQUIVALENT AMOUNT" of any currency with respect to any amount of Dollars
at any date shall mean the equivalent in such currency of such amount of
Dollars, calculated on the basis of the arithmetical mean of the buy and sell
spot rates of exchange of the Agent for such other currency at 11:00 a.m.,
London time, two Business Days prior to the date on which such amount is to be
determined.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.
"ERISA AFFILIATE" means any (i) corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Internal Revenue Code) as the Company, (ii) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Internal Revenue Code) with the Company, and (iii)
member of the same affiliated service group (within the meaning of Section
414(m) of the Internal Revenue Code) as the Company, any corporation described
in clause (i) above or any partnership or trade or business described in clause
(ii) above.
"ESOP AGREEMENTS" means (a) the Assignment Agreement dated as of September
6, 1996 by and among the Agent, on behalf of the Lenders, NBD Bank, and the
Trust with Fort Wayne National Bank for Retirement Savings Plan for Employees by
Tokheim and Subsidiaries and the Agent, (b) Amendment No. 3 dated as of
September 6, 1996 by and between the Agent, on behalf of the Lenders, and the
Trust with Fort Wayne National Bank
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for Retirement Savings Plan for Employees of Tokheim and Subsidiaries, (c) the
Assignment Agreement dated as of September 6, 1996 by and among the Agent, on
behalf of the Lenders, NBD Bank, and the Trust with Fort Wayne National Bank for
Retirement Savings Plan for Employees of Tokheim Corporation and Subsidiaries,
and (d) Amendment No. 3 dated as of September 6, 1996 by and between the Agent,
on behalf of the Lenders, and the Trust with Fort Wayne National Bank for
Retirement Savings Plan for Employees of Tokheim Corporation and Subsidiaries.
"ESOP GUARANTY OBLIGATIONS" means the obligations of the Company as
guarantor pursuant to the ESOP Loan Agreements.
"ESOP LENDERS" means, upon consummation of the ESOP Agreements, the
lenders under the ESOP Loan Agreements.
"ESOP LOAN AGREEMENTS" means the Loan and Guarantee Agreements
pursuant to which the ESOP Loans were made.
"ESOP LOANS" means those loans made pursuant to loan agreements
amended pursuant to the ESOP Agreements.
"EUROCURRENCY ADVANCE" means an Advance which bears interest at a
Eurocurrency Rate requested by the applicable Borrower pursuant to Section 2.2.
"EUROCURRENCY LOAN" means a Loan which bears interest at a
Eurocurrency Rate requested by the applicable Borrower pursuant to Section 2.2.
"EUROCURRENCY PAYMENT OFFICE" of the Agent or any Swing Loan Lender,
as applicable, shall mean, for each of the Agreed Currencies, the office, branch
or affiliate of the Agent or such Swing Loan Lender, as applicable, specified as
the "EUROCURRENCY PAYMENT OFFICE" for such currency in Schedule I hereto or such
other office, branch, affiliate or correspondent bank of the Agent or such Swing
Loan Lender as it may from time to time specify to the Company and each Lender
as its Eurocurrency Payment Office.
"EUROCURRENCY RATE" means, with respect to a Eurocurrency Advance for
the relevant Interest Period, the sum of (a) the Eurocurrency Base Rate and (b)
the percentage indicated as the Applicable Margin in connection with
Eurocurrency Loans.
"EUROCURRENCY BASE RATE" means, with respect to any Eurocurrency
Advance for any specified Interest Period, either (i) the rate of interest per
annum equal to the rate for deposits in the applicable Agreed Currency in the
approximate amount of the pro rata share of the Agent (in its capacity as a
Lender) of such Eurocurrency Advance with a maturity approximately equal to such
Interest Period which appears on Telerate Page 3740 or Telerate Page 3750, as
applicable, or, if there is more than one such rate, the average of such rates
rounded to the nearest 1/100 of 1%, as of 11 a.m. (London time) two Business
Days prior to
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the first day of such Interest Period or (ii) if no such rate of interest
appears on Telerate Page 3740 or Telerate Page 3750, as applicable, for any
specified Interest Period, the rate at which deposits in the applicable Agreed
Currency are offered by the Agent to first-class banks in the London interbank
market at approximately 11 a.m. (London time) two Business Days prior to the
first day of such Interest Period, in the approximate amount of the pro rata
share of the Agent (in its capacity as a Lender) of such Eurocurrency Advance
and having a maturity approximately equal to such Interest Period. The terms
"Telerate Page 3740" and "Telerate Page 3750" mean the display designated as
"Page 3740" and "Page 3750", as applicable, on the Associated Press-Dow Jones
Telerate Service (or such other page as may replace Page 3740 or Page 3750, as
applicable, on the Associated Press-Dow Jones Telerate Service or such other
service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers' Association
interest rate settlement rates for the relevant Agreed Currency). Any
Eurocurrency Base Rate determined on the basis of the rate displayed on Telerate
Page 3740 or Telerate Page 3750 in accordance with the foregoing provisions of
this subparagraph shall be subject to corrections, if any, made in such rate and
displayed by the Associated Press-Dow Jones Telerate Service within one hour of
the time when such rate is first displayed by such service.
"EXISTING LETTERS OF CREDIT" means those letters of credit issued for
the account of the Company and listed on Schedule 1.1.1.
"FAIR MARKET VALUE" means, with respect to any asset, the value of the
consideration obtainable in a sale of such asset in the open market, assuming a
sale by a willing seller to a willing purchaser dealing at arm's length and
arranged in an orderly manner over a reasonable period of time, each having
reasonable knowledge of the nature and characteristics of such asset, neither
being under any compulsion to act, determined (i) in good faith by the board of
directors of the Company or (ii) in an appraisal of such asset, provided that
such appraisal was performed relatively contemporaneously with such sale by an
independent third party appraiser and the basic assumptions underlying such
appraisal have not materially changed since the date thereof.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to (i) 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 for such day (or, if such day is not a Business Day, for the preceding
Business Day) by the Federal Reserve Bank of New York; or (ii) if such rate is
not so published for any day which is a Business Day, the average of the
quotations at approximately 10:00 a.m. (Indianapolis time) for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by the Agent.
"FEE LETTER" is defined in Section 2.4.2.
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"FINANCIAL OFFICER" means the Vice President and Chief Financial
Officer, the Corporate Controller or such other officer of the Company as may be
designated by the Company from time to time.
"FIRREA" means the Financial Institutions Reform, Recovery, and
Enforcement Act of 1983, as amended, modified or supplemented from time to time.
"FIXED CHARGE COVERAGE RATIO" means the ratio of: (i) the sum, without
duplication, of the amounts of (a) EBITDA, minus (b) Capital Expenditures to
(ii) the sum, without duplication of the amounts of (a) Interest Expense, plus
(b) scheduled amortization of the principal portion of all Indebtedness of the
Company and its Subsidiaries during such period, plus (c) any cash payments with
respect to income taxes of the Company and its Consolidated Subsidiaries, plus
(d) all payments consisting of dividends, redemptions, repurchases, acquisitions
or other retirements of the Company's Capital Stock (excluding (to avoid
duplication) dividends used to fund payments included in clauses (ii)(a) and (b)
above required to be paid on the Capital Stock owned by the Company's Employee
Stock Ownership Plan and, after the ESOP Loans are repaid, excluding dividends
used to fund the Company's obligations to the Company's Employee Stock Ownership
Plan, to the extent previously deducted in determining Consolidated Net Income),
plus (e) any minimum funding requirement for any Plan that provides for defined
benefits. In each case, the Fixed Charge Coverage Ratio shall be determined as
of the last day of each fiscal quarter for the four-quarter period ending such
day (provided, however, for the first four of such calculations made after the
date of this Agreement, such calculations shall be done based upon the period
commencing with the Effective Date and ending with the quarterly period then
ended). The deduction of Capital Expenditures set forth in subsection (i)(b)
hereof shall not be made for Capital Expenditures made during the fiscal year
ending November 30, 1996 or, to the extent such Capital Expenditures do not
exceed $5,000,000, Capital Expenditures made between December 1, 1996 and May
31, 1997. The addition of minimum funding requirements for certain Plans in
subsection (ii)(e) shall not apply to such funding requirements in the Company's
fiscal years ending November 30, 1996 and November 30, 1997, respectively.
"FOREIGN EMPLOYEE BENEFIT PLAN" means any employee benefit plan as
defined in Section 3(3) of ERISA which is maintained or contributed to for the
benefit of the employees of the Company, any of its Subsidiaries or any members
of its Controlled Group and is not covered by ERISA pursuant to ERISA Section
4(b)(4).
"FOREIGN GAAP" means, in connection with any Person organized outside
the United States of America, accounting principles generally accepted in the
jurisdiction of organization of such Person as in effect as of the Effective
Date, as applied on a consistent basis with those applied in preparing the
financial statements referred to in Section 5.4.
"FOREIGN PENSION PLAN" means any employee benefit plan as described in
Section 3(3) of ERISA which (i) is maintained or contributed to for the benefit
of employees of the Company, any of its Subsidiaries or any of its ERISA
Affiliates, (ii) is not covered by
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ERISA pursuant to Section 4(b)(4) of ERISA, and (iii) under applicable local
law, is required to be funded through a trust or other funding vehicle.
"FRENCH BORROWING BASE" means, as of any date of calculation, an
amount, as set forth on the most current French Borrowing Base Certificate
delivered to the Agent, for the French Borrowing Subsidiaries equal to: (i)
eighty-five percent (85%) of the Gross Amount of Eligible Receivables owed to
any of the French Borrowing Subsidiaries; plus (ii) the lesser of (A)
$15,000,000 and (B) fifty percent (50%) of the Gross Amount of Eligible
Inventory owned by any of the French Borrowing Subsidiaries.
"FRENCH BORROWING BASE CERTIFICATE" means a certificate, in
substantially the form of Exhibit D attached hereto and made a part hereof,
setting forth the French Borrowing Base and the component calculations thereof.
"FRENCH BORROWING SUBSIDIARIES" means (i) the French Subsidiaries and
(ii) each other Wholly-Owned Subsidiary of the Company organized under the laws
of the Republic of France and added as a Borrowing Subsidiary pursuant to the
terms of Section 2.5.14 of this Agreement, and, in each case, their permitted
successors and assigns, including a debtor-in-possession on behalf of such
French Subsidiary.
"FRENCH LENDING INSTALLATIONS" shall mean the Lending Installations
identified as the French Lending Installations on Schedule II and which are
acting as Lenders with respect to Loans to the French Borrowing Subsidiaries.
"FRENCH LOAN DOCUMENTS" means the Notes executed by Sofitam
Equipement, Sogen and Sofitam International, the Sofitam Equipement Charge, the
Sofitam Equipement Pledge Agreement, the Sofitam Equipement Receivables
Assignment, the Sogen Charge, the Sogen Receivables Assignment, the Sofitam-
Tokheim Pledge Agreement and the Mortgage executed by Sofitam Equipement with
respect to its owned real estate in Falaise, France.
"FRENCH SUBSIDIARIES" means Sofitam Equipement, S.A., Sogen S.A., and
Sofitam International, S.A., and their permitted successors and assigns, on
behalf of such French Subsidiary.
"GASBOY PLEDGE AGREEMENT" means that certain Pledge Agreement dated as
of September 6, 1996 executed by Gasboy International, Inc. in favor of the
Agent for the benefit of the Holders of Secured Obligations, as amended,
restated or otherwise modified from time to time.
"GROSS AMOUNT OF ELIGIBLE INVENTORY" means, (a) with respect to the
Domestic Borrowing Base, Eligible Inventory of the Company and its domestic
Consolidated Subsidiaries, valued at the lower of cost determined on a first-in-
first-out basis (determined in accordance with U.S. GAAP, consistently applied)
or market value less such reserves as
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the Agent elects to establish in accordance with its reasonable credit judgment
(which credit judgment shall be exercised in a manner that is not arbitrary or
capricious) and (b) with respect to the French Borrowing Base, Eligible
Inventory of the French Borrowing Subsidiaries valued at the lower of cost or
market value (determined in accordance with U.S. GAAP, consistently applied)
less such reserves as the Agent elects to establish in accordance with its
reasonable credit judgment (which credit judgment shall be exercised in a manner
that is not arbitrary or capricious).
"GROSS AMOUNT OF ELIGIBLE RECEIVABLES" means, (a) with respect to the
Domestic Borrowing Base, the outstanding face amount of Eligible Receivables of
the Company and its domestic Consolidated Subsidiaries, determined in accordance
with U.S. GAAP, consistently applied, less such reserves as the Agent elects to
establish in accordance with its reasonable credit judgment (which credit
judgment shall be exercised in a manner that is not arbitrary or capricious) and
(b) with respect to the French Borrowing Base, the outstanding face amount of
Eligible Receivables of the French Borrowing Subsidiaries, determined in
accordance with U.S. GAAP, consistently applied, less such reserves as the Agent
elects to establish in accordance with its reasonable credit judgment (which
credit judgment shall be exercised in a manner that is not arbitrary or
capricious).
"GROSS NEGLIGENCE" means either recklessness or actions taken or
omitted with conscious indifference to or the complete disregard of
consequences. Gross Negligence does not mean the absence of ordinary care or
diligence, or an inadvertent act or inadvertent failure to act. If the term
"gross negligence" is used with respect to the Agent or any Lender, Issuing
Lender or Swing Loan Lender or any indemnitee in any of the other Loan
Documents, it shall have the meaning set forth herein.
"GUARANTEED OBLIGATIONS" is defined in Section 9.1.
"GUARANTOR SUBSIDIARY" means a Subsidiary party to the Subsidiary
Security Agreement.
"GUARANTY" of any Person means any agreement by which such person
assumes, guarantees, endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise becomes liable upon, the obligation of any
other Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person or otherwise assures any creditor of
such other Person against loss, and shall include, without limitation, the
contingent liability of such Person under or in relation to any Letter of Credit
and disclosed support agreements, but shall exclude endorsements for collection
or deposit in the ordinary course of business.
"HOLDERS OF SECURED OBLIGATIONS" means the holders of the Secured
Obligations from time to time and shall include their respective successors,
transferees and assigns.
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"INDEBTEDNESS" means, with respect to any Person, such Person's (i)
obligations for borrowed money, (ii) obligations representing the deferred
purchase price of Property or services (other than accounts payable arising in
the ordinary course of such Person's business payable on terms customary in the
trade), (iii) obligations, whether or not assumed, secured by Liens or payable
out of the proceeds or production from property now or hereafter owned or
acquired by such Person, (iv) obligations which are evidenced by notes,
acceptances, or other instruments, (v) the principal component of obligations
pursuant to Capitalized Leases, and (vi) obligations for which such person is
obligated pursuant to a Guaranty (excluding any Guaranties of obligations
included in (i) through (v) above).
"INTEREST EXPENSE" means, for any period, the total gross interest expense
of the Company and its Consolidated Subsidiaries, whether paid or accrued
(including the interest component of Capitalized Leases), but excluding interest
expense not payable in cash (including amortization of discount), all as
determined in conformity with U.S. GAAP.
"INTEREST EXPENSE COVERAGE RATIO" means the ratio of (i) EBITDA to (ii)
Interest Expense. In each case, the Interest Expense Coverage Ratio shall be
determined as of the last day of each fiscal quarter for the four-quarter period
ending such day (provided, however, for the first four of such calculations made
after the date of this Agreement, such calculations shall be done based upon the
period commencing with the Effective Date and ending with the quarterly period
then ended).
"INTEREST PERIOD" means, with respect to a Eurocurrency Advance or a
Eurocurrency Loan, a period of one, two, three or six months commencing on a
Business Day selected by the applicable Borrower pursuant to this Agreement.
Such Interest Period shall end on (but exclude) the day which corresponds
numerically to such date of commencement one, two, three or six months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new month, such Interest Period shall end on the
immediately preceding Business Day.
"INTEREST RATE AGREEMENTS" is defined in Section 6.23.
"INVESTMENT" means, with respect to any Person, (i) any purchase or other
acquisition by that Person of stock, partnership interest, limited liability
company membership interest, notes, debentures or other securities, or of a
beneficial interest in stock, partnership interest, limited liability company
membership interest, notes, debentures or other securities, issued by any other
Person, (ii) any purchase by that Person of all or substantially all of the
assets of a business conducted by another Person, and (iii) any loan, advance
(other than deposits with financial institutions available for withdrawal on
demand, prepaid expenses, accounts receivable, advances to employees and similar
items made or incurred in the ordinary course
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<PAGE>
of business) or capital contribution by that Person to any other Person,
including all Indebtedness to such Person arising from a sale of property by
such Person other than in the ordinary course of its business.
"IRS" means the Internal Revenue Service and any Person succeeding to the
functions thereof.
"ISSUING LENDER" is defined in Section 2.6.1.
"L/C DRAFT" means a draft drawn on any Issuing Lender pursuant to any of
the Letters of Credit.
"L/C INTEREST" has the meaning specified in Section 2.6.2.
"L/C OBLIGATIONS" means an amount equal to the sum (without duplication) of
(i) the aggregate of the amount then available for drawing under each of the
Letters of Credit, (ii) the face amounts of all outstanding L/C Drafts
corresponding to the Letters of Credit, which L/C Drafts have been accepted by
the applicable Issuing Lender and (iii) the aggregate outstanding amount of
Reimbursement Obligations at such time.
"LENDERS" means the financial institutions listed on the signature pages of
this Agreement and their respective successors and assigns including, without
limitation, any Lender which becomes party to this Agreement pursuant to Section
13.3.
"LENDING INSTALLATION" means any office, branch, subsidiary or affiliate of
any Lender or the Agent.
"LETTER OF CREDIT" means any of the Existing Letters of Credit or any
standby letter of credit issued pursuant to Section 2.6 hereof.
"LETTER OF CREDIT FEE" is defined in Section 2.6.5.
"LEVEL I STATUS" is defined in Section 2.3.
"LEVEL II STATUS" is defined in Section 2.3.
"LEVEL III STATUS" is defined in Section 2.3.
"LEVEL IV STATUS" is defined in Section 2.3.
"LEVEL V STATUS" is defined in Section 2.3.
"LEVEL VI STATUS" is defined in Section 2.3.
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"LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, encumbrance or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, the interest of a vendor or lessor under any
conditional sale, Capitalized Lease or other title retention agreement).
"LOAN" means, (i) with respect to a Lender, such Lender's portion, if any,
of any Advance, (ii) with respect to a Swing Loan Lender, such Swing Loan
Lender's Swing Loans and (iii) collectively, with respect to all Lenders, all
Loans and Swing Loans.
"LOAN DOCUMENTS" means this Agreement, the Notes, the French Loan
Documents, the Assumption Letters, the applications, reimbursement agreements,
the other instruments and agreements related to the Letters of Credit and L/C
Interests, and the Collateral Documents.
"MATERIAL ADVERSE CHANGE" means any change in the business, Property,
condition (financial or otherwise) or results of operations or prospects of (i)
the Company, (ii) the Company and its domestic Subsidiaries taken as a whole or
(iii) the French Subsidiaries acquired pursuant to the Sofitam Acquisition taken
as a whole which could reasonably be expected to have a Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise) or results of operations
or prospects of (a) the Company, (b) the Company and its domestic Subsidiaries
taken as a whole or (c) the French Subsidiaries acquired pursuant to the Sofitam
Acquisition taken as a whole, (ii) the ability of any of the Borrowers to
perform their obligations under the Loan Documents, or (iii) the validity or
enforceability of any of the Loan Documents or the rights or remedies of the
Agent, the Lenders, the Issuing Lenders or the Swing Loan Lenders thereunder.
"MATERIAL SUBSIDIARY" means, at any time, any Subsidiary which as of such
time has assets in excess of $10,000,000.
"MOODY'S" means Moody's Investors Service, Inc or any rating agency which
is generally recognized as a successor thereto.
"MORTGAGES" means those mortgages dated as of September 6, 1996 executed by
(i) the Company with respect to its owned real estate in Allen County, Steuben
County and Daviess County, Indiana and Montgomery County, Pennsylvania and (ii)
Sofitam Equipement with respect to its owned real estate in Falaise, France,
each as amended, restated or otherwise modified from time to time.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA subject to Title IV of ERISA and which is contributed to by
either the
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Company or any ERISA Affiliate or with respect to which the Company or any ERISA
Affiliate has potential liability.
"NEW CURRENCY" is defined in Section 2.5.7.
"NOTES" means the Notes executed by the Company, Sofitam Equipement, S.A.,
Sogen, S.A. and Sofitam International, S.A., and any other Borrowing
Subsidiaries, in favor of the Lenders evidencing the Loans and the Commitment.
"NOTE PLEDGE AGREEMENT" means that certain Note Pledge Agreement dated as
of September 6, 1996 executed by the Company in favor of the Agent for the
benefit of the Holders of Secured Obligations, as amended, restated or otherwise
modified from time to time.
"NOTICE OF ASSIGNMENT" is defined in Section 13.3.2.
"OBLIGATIONS" means all Loans, Advances, debts, liabilities, obligations,
covenants and duties owing by the Company or any of its Subsidiaries to the
Agent, any Lender, any Issuing Lender, any Swing Loan Lender, any Affiliate of
the Agent, any Lender, any Issuing Lender or any Swing Loan Lender, or any
indemnitee, of any kind or nature, present or future, arising under this
Agreement, the Notes, the Letters of Credit, the ESOP Guaranty Obligations, the
Collateral Documents, any other Loan Document, whether or not evidenced by any
note, guaranty or other instrument, whether or not for the payment of money,
whether arising by reason of an extension of credit, loan, guaranty,
indemnification, or in any other manner, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired. The term includes, without
limitation, all interest charges, expenses, fees, attorneys' fees and
disbursements, paralegals' fees, and any other sum chargeable to the Company or
any of its Subsidiaries under this Agreement or any other Loan Document.
"OFF BALANCE SHEET LIABILITIES" of a Person means (a) any repurchase
obligation or liability of such Person or any of its Subsidiaries with respect
to accounts or notes receivable sold by such Person or any of its Subsidiaries,
(b) any liability under any Sale and Leaseback Transactions which do not create
a liability on the consolidated balance sheet of such Person (c) any liability
under any financing lease or so-called "synthetic" lease transaction, or (d) any
obligations arising with respect to any other transaction which is the
functional equivalent of or takes the place of borrowing but which does not
constitute a liability on the consolidated balance sheets of such Person and its
Subsidiaries excluding leases that are not Capitalized Leases.
"OPTION AGREEMENT" means the Option Agreement dated as of May 7, 1996 by
and between the Company and Sofitam.
"ORIGINAL CURRENCY" is defined in Section 2.5.7.
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"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to the function thereof.
"PAYMENT DATE" means the last Business Day of each calendar quarter.
"PERCENTAGE" means, with respect to any Lender, the percentage
obtained by dividing (A) such Lender's Commitment (excluding, to avoid
duplication, the Commitment of any French Lending Installation that is an
affiliate of such Lender) at such time (in each case, as adjusted from time to
time in accordance with the provisions of this Agreement) by (B) the Aggregate
Commitment at such time; provided, however, if all of the Commitments are
terminated pursuant to the terms of this Agreement, then "Percentage" means the
percentage obtained by dividing (i) the sum of (a) the principal amount of such
Lender's outstanding Loans (including Swing Loans) plus (b) the outstanding
amount of such Lender's Letters of Credit by (ii) the sum of (a) the aggregate
principal amount of all Loans (including Swing Loans) plus (b) the aggregate
outstanding amount of all Letters of Credit.
"PERMITTED INDEBTEDNESS" means the ESOP Loans and the Permitted
Subordinated Debt.
"PERMITTED SUBORDINATED DEBT" means Indebtedness evidenced by the
Senior Subordinated Notes and Indebtedness with a maturity greater than the
maturity of the Obligations hereunder which have a stated maturity, which
Indebtedness is subordinated in right of payment to Obligations and to the ESOP
Guaranty Obligations, and the terms and conditions of which Indebtedness are
acceptable to the Agent and the Lenders.
"PERSON" means any corporation, limited liability company, natural
person, firm, joint venture, partnership, trust, unincorporated organization,
enterprise, government or any department or agency of any government.
"PLAN" means any employee benefit plan defined in Section 3(3) of
ERISA in respect of which the Company or any ERISA Affiliate is an "employer" as
defined in Section 3(5) of ERISA or with respect to which the Company or any
ERISA Affiliate has any potential liability.
"PLEDGE AGREEMENTS" means the Company Pledge Agreement, the Note
Pledge Agreement, the TIC Pledge Agreement, the Gasboy Pledge Agreement, the
Sofitam-Tokheim Pledge Agreement and the Sofitam Equipement Pledge Agreement.
"PRIME RATE" means, on any day, the highest "prime rate" of interest
quoted by The Wall Street Journal as the "base rate on corporate loans at large
U.S. money center commercial banks" on such day or, if The Wall Street Journal
is not published on such day, the then most recent day of publication);
provided, however, that in the event that The Wall Street Journal ceases quoting
a "prime rate" of the type described, "Prime Rate" means, on any day, the
highest per annum rate of interest then most recently quoted as the "Bank Prime
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Loan" rate for "This week" in Statistical Release H.15 (519) published from time
to time by the Federal Reserve Board or any successor publication of the Board
of Governors of the Federal Reserve System.
"PROPERTY" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"PURCHASERS" is defined in Section 13.3.1.
"RATE HEDGING OBLIGATIONS" of a Person means any and all net
obligations of such Person, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under (i) any
and all agreements, devices or arrangements designed to protect at least one of
the parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or cross-
currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, or any similar derivative
transactions and (ii) any and all cancellations, buy backs, reversals,
terminations or assignments of any of the foregoing.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of the
Federal Reserve System.
"REGULATION G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by nonbank, nonbroker lenders for the purpose of purchasing
or carrying margin stock (as defined therein).
"REGULATION T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by and to brokers and dealers of Securities for the purpose
of purchasing or carrying margin stock (as defined therein).
"REGULATIONS U AND X" means Regulations U and X of the Board of
Governors of the Federal Reserve System from time to time in effect and shall
include any successor or other regulations or official interpretations of said
Board of Governors relating to the extension of credit by banks for the purpose
of purchasing or carrying margin stocks applicable to member banks of the
Federal Reserve System.
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"REIMBURSEMENT OBLIGATION" is defined in Section 2.6.3.
"RENTALS" means and includes all fixed rents (including as such all
payments which the lessee is obligated to make to the lessor on termination of
the lease or surrender of the property) payable by the Company or a Subsidiary,
as lessee or sublessee under a lease of real or personal property which is not a
Capitalized Lease, but shall be exclusive of any amounts required to be paid by
the Company or a Subsidiary (whether or not designated as rents or additional
rents) on account of maintenance, repairs, insurance, taxes and similar charges.
Fixed rents under any so-called, "percentage leases" shall be computed solely on
the basis of the minimum rents, if any, required to be paid by the lessee
regardless of sales volume or gross revenues.
"REPORTABLE EVENT" means any of the events described in Section 4043
of ERISA for which the 30-day notice requirement has been waived by regulation
(other than events described in ERISA (S)4043(c)(1) or (5)).
"REQUIRED LENDERS" means Lenders having, in the aggregate, Percentages
equal to or greater than sixty-six and two-thirds percent (66-2/3%); provided,
however, that in the event any of the Lenders shall have failed to fund its
Percentage of any Advance requested by any Borrower, any participation in any
Letter of Credit or any refunding of or participation in any Swing Loan which
such Lenders are obligated to fund under the terms of this Agreement and any
such failure has not been cured, then for so long as such failure continues,
"REQUIRED LENDERS" means Lenders (excluding all such defaulting Lenders) whose
Percentages equal or exceed sixty-six and two-thirds percent (66-2/3%) of the
aggregate Percentages of such non-defaulting Lenders; provided, further,
however, that, if the Commitments have been terminated pursuant to the terms of
this Agreement, "REQUIRED LENDERS" means Lenders (without regard to such
Lenders' performance of their respective obligations hereunder) whose
Percentages equal or are greater than sixty-six and two-thirds percent
(66-2/3%).
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any rating agency which is generally recognized
as a successor thereto.
"SALE AND LEASEBACK TRANSACTION" means any sale or other transfer of
Property by any Person with intent to lease such Property as lessee pursuant to
a Capitalized Lease .
"SECTION" means a numbered section of this Agreement, unless another
document is specifically referenced.
"SECURED OBLIGATIONS" means, collectively, (i) the Obligations and
(ii) all Rate Hedging Obligations, if any, payable by the Company or any of its
Subsidiaries to one or more of the Lenders or an Affiliate of a Lender.
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"SECURITY" shall have the same meaning as in Section 2(1) of the Securities
Act of 1933, as amended.
"SECURITY AGREEMENT" means the Security Agreement dated as of September 6,
1996 by and between the Company and the Agent.
"SENIOR LEVERAGE RATIO" means the ratio of (i) Indebtedness of the Company
and its Consolidated Subsidiaries (including letters of credit and guaranties
but excluding all Permitted Subordinated Debt) on a consolidated basis to (ii)
EBITDA. The Senior Leverage Ratio shall be calculated, in each case, determined
as of the last day of each fiscal quarter based upon (A) for Indebtedness, as of
the last day of each such fiscal quarter; and (B) for EBITDA, the actual amount
for the four-quarter period ending on such day; provided, however, that for the
first three of such fiscal quarters, the computation of EBITDA will be
calculated on an annualized year-to-date basis for the period commencing with
the Effective Date through the end of such fiscal quarter using the following
formula: (x) for the first such fiscal quarter, EBITDA shall be multiplied by a
factor of four (4); (y) for the second such fiscal quarter, EBITDA for two
quarters shall be multiplied by a factor of two (2); and (y) for the third such
fiscal quarter, EBITDA for the three quarters shall be multiplied by a factor of
one and one-third (1.333).
"SENIOR SUBORDINATED NOTES" means the Senior Subordinated Notes due 2006 in
the aggregate principal amount $100,000,000 issued by the Company pursuant to an
Indenture dated as of August 23, 1996 between the Company and Harris Trust and
Savings Bank, as Trustee.
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Company or any member
of the Controlled Group for employees of the Company or any member of the
Controlled Group.
"SOFITAM" means Sofitam S.A., a societe anonyme organized under the laws of
the Republic of France and its successors and permitted assigns.
"SOFITAM ACQUISITION" means the Acquisition of certain subsidiaries of
Sofitam by the Company or its Subsidiaries pursuant to the Option Agreement.
"SOFITAM EQUIPEMENT" means Sofitam Equipement S.A., a societe anonyme
organized pursuant to the Republic of France.
"SOFITAM EQUIPEMENT CHARGE" means that certain Agreement for Charge over
the going concern of Sofitam Equipement executed by Sofitam Equipement in favor
of the Agent for the benefit of the Holders of Secured Obligations, as amended,
restated or otherwise modified from time to time.
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"SOFITAM EQUIPEMENT PLEDGE AGREEMENT" means that certain Pledge Agreement
executed by Sofitam Equipement in favor of the Agent for the benefit of the
Holders of Secured Obligations, as amended, restated or otherwise modified from
time to time.
"SOFITAM EQUIPEMENT RECEIVABLE ASSIGNMENT" means that certain Master
Assignment for trade receivables of Sofitam Equipement executed by Sofitam
Equipement in favor of the Agent for the benefit of the Holders of Secured
Obligations, as amended, restated or otherwise modified from time to time.
"SOFITAM-TOKHEIM" means Sofitam-Tokheim S.A., a societe anonyme organized
pursuant to the laws of the Republic of France.
"SOFITAM-TOKHEIM PLEDGE AGREEMENT" means that certain Pledge Agreement
executed by Sofitam-Tokheim in favor of the Agent for the benefit of the Holders
of Secured Obligations, as amended, restated or otherwise modified from time to
time.
"SOGEN" means Sogen S.A., a societe anonyme organized pursuant to the
Republic of France.
"SOGEN CHARGE" means that certain Agreement for Charge over the going
concern of Sogen executed by Sogen in favor of the Agent for the benefit of the
Holders of Secured Obligations, as amended, restated or otherwise modified from
time to time.
"SOGEN RECEIVABLE ASSIGNMENT" means that certain Master Assignment for
trade receivables of Sogen of executed by Sogen in favor of the Agent for the
benefit of the Holders of Secured Obligations, as amended, restated or otherwise
modified from time to time.
"SUBJECT COUNTRY" is defined in Section 5.17.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "SUBSIDIARY"
shall mean a Subsidiary of the Company.
"SUBSIDIARY GUARANTY" means the Guaranty executed by each of the direct and
indirect Wholly-Owned domestic Subsidiaries of the Company in favor of the Agent
for the benefit of the Lenders and the Holders of Secured Obligations dated as
of September 6, 1996, as amended, restated or otherwise modified from time to
time.
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"SUBSIDIARY SECURITY AGREEMENT" means the Subsidiary Security Agreement
executed by each of the direct and indirect Wholly-Owned domestic Subsidiaries
of the Company in favor of the Agent for the benefit of the Lenders and the
Holders of Secured Obligations dated as of September 6, 1996, as amended,
restated or otherwise modified from time to time.
"SUBSTANTIAL PORTION" means, with respect to the Property of the Company
and its Subsidiaries, Property which represents more than 10% of the
consolidated assets of the Company and its Subsidiaries as would be shown in the
consolidated financial statements of the Company and its Subsidiaries as at the
beginning of the twelve-month period ending with the month in which such
determination is made.
"SWING LOAN" is defined in Section 2.1.2(i).
"SWING LOAN LENDER" means, with respect to Swing Loans made in Dollars, NBD
Bank, N.A. and with respect to Swing Loans made in French Francs, a bank to be
agreed upon by the Company and the Agent.
"SWING LOAN OBLIGATIONS" means, at any time, the outstanding Obligations in
connection with the Swing Loans.
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"TERMINATION DATE" means September 3, 2002 or such earlier date as the
Loans may be accelerated in accordance with this Agreement.
"TERMINATION EVENT" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of the Company or any ERISA Affiliate from a
Benefit Plan during a plan year in which the Company or such ERISA Affiliate was
a "substantial employer" as defined in Section 4001(a)(2) of ERISA or the
cessation of operations which results in the termination of employment of 20% of
Benefit Plan participants who are employees of the Company or any ERISA
Affiliate; (iii) the imposition of an obligation on the Company or any ERISA
Affiliate under Section 4041 of ERISA to provide affected parties written notice
of intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC or any similar
foreign governmental authority of proceedings to terminate a Benefit Plan or a
Foreign Pension Plan; (v) any event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Benefit Plan; (vi) a foreign governmental authority
shall appoint or institute proceedings to appoint a trustee to administer any
Foreign Pension Plan; or (vii) the partial or complete withdrawal of the Company
or any ERISA Affiliate from a Multiemployer Plan or a Foreign Pension Plan.
"TIC" means Tokheim Investment Corp., a Texas corporation, and its
successors and assigns.
"TIC PLEDGE AGREEMENT" means that certain Pledge Agreement dated as of
September 6, 1996 executed by TIC in favor of the Agent for the benefit of the
Holders of Secured Obligations, as amended, restated or otherwise modified from
time to time.
"TOTAL LEVERAGE RATIO" means the ratio of (i) Indebtedness of the Company
and its Consolidated Subsidiaries (including letters of credit and guaranties)
on a consolidated basis to (ii) EBITDA. The Total Leverage Ratio shall be
calculated, in each case, determined as of the last day of each fiscal quarter
based upon (A) for Indebtedness, as of the last day of each such fiscal quarter;
and (B) for EBITDA, the actual amount for the four-quarter period ending on such
day.
"TYPE" means, with respect to any Loan or Advance, its nature as an
Alternate Base Rate Advance or Loan or Eurocurrency Advance or Loan.
"UNFUNDED LIABILITIES" means the amount (if any) by which the present value
of all currently accrued vested nonforfeitable benefits under all Single
Employer Plans exceeds the fair market value of all such Plan assets allocable
to such benefits, all determined on an ongoing Plan basis as set forth in the
then most recent actuarial valuation for such Plans.
"UNMATURED DEFAULT" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
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"U.S. GAAP" means accounting principles generally accepted in the United
States of America as recommended by the Financial Accounting Standards Board as
in effect as of the Effective Date.
"WHOLLY-OWNED," when used in connection with any Subsidiary, means (i) any
Subsidiary all of the outstanding voting securities of which shall at the time
be owned or controlled, directly or indirectly, by such Person or one or more
Wholly-Owned Subsidiaries of such Person, or by such Person and one or more
Wholly-Owned Subsidiaries of such Person, or (ii) any partnership, limited
liability company, association, joint venture or similar business organization
100% of the ownership interests having ordinary voting power of which shall at
the time be so owned or controlled.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
1.2. Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with U.S. GAAP. Unless
otherwise set forth in this Agreement, all financial covenant calculations (and
the components thereof) shall be calculated after the elimination of minority
interests in Consolidated Subsidiaries which are not Wholly-Owned Subsidiaries.
1.3. References to Subsidiaries. Unless otherwise specified herein, all
references to the Subsidiaries herein shall include the French Subsidiaries and
each of their Subsidiaries.
ARTICLE II: THE FACILITIES
--------------
2.1. The Facilities.
--------------
2.1.1. Loans. (i) From and including the date of this Agreement and prior
to the Termination Date, each Lender severally agrees, on the terms and
conditions set forth in this Agreement (including, without limitation, the terms
and conditions of Section 2.5.11 and Section 8.1 relating to the reduction,
suspension or termination of the Aggregate Commitment), to make revolving loans
(each individually, a " Loan" and, collectively, the " Loans") to the applicable
Borrower from time to time provided no such Loans shall be required if after
making any such Loan the sum of (i) the Dollar Amount of the aggregate unpaid
principal balance of the Advances made by or otherwise owed to such Lender then
outstanding plus (ii) such Lender's Percentage of the L/C Obligations then
outstanding plus (iii) such Lender's Percentage of the Swing Loan Obligations
then outstanding would exceed such Lender's Commitment. Nothing herein shall
obligate any Lender other than the Swing Loan Lenders to make Swing Loans.
Subject to the terms of this Agreement (including, without limitation, the terms
and conditions of Section 2.5.11 and 8.1 relating to the
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reduction, suspension or termination of the Aggregate Commitment), a Borrower
may borrow, repay and reborrow Loans at any time prior to the Termination
Date. Unless earlier terminated in accordance with the terms and conditions of
this Agreement, the Commitments of the Lenders to lend hereunder shall expire
on the Termination Date. The proceeds of all Loans made under this Section
2.1.1 shall be used first to repay principal of and accrued and unpaid interest
on any outstanding Swing Loans advanced to any Borrower, and thereafter in
accordance with the terms of Section 6.2. All outstanding Loans shall be paid
in full by the applicable Borrower on the Termination Date.
(ii) Borrowing Notice. When the applicable Borrower desires to borrow
under this Section 2.1.1, a Financial Officer shall deliver to the Agent a
Borrowing Notice, signed by it, specifying that the Borrower is requesting a
Loan pursuant to this Section 2.1.1. Any Borrowing Notice given pursuant to
this Section 2.1.1 shall be irrevocable.
(iii) Borrowing Base. The aggregate amount of all outstanding Loans and
Swing Loans made to the Company and any domestic Borrowing Subsidiary together
with all outstanding L/C Obligations of the Company and its domestic Borrowing
Subsidiaries (calculated without duplication) shall at no time exceed the
Domestic Borrowing Base, plus, at any time prior to October 6, 1996, the French
Borrowing Base. The aggregate amount of all outstanding Loans and Swing Loans
made to the French Borrowing Subsidiaries together with all outstanding L/C
Obligations to the French Borrowing Subsidiaries (calculated without
duplication) shall at no time exceed the French Borrowing Base.
2.1.2 Swing Loans. (i) Subject to the terms and conditions set forth in
this Agreement, the Swing Loan Lenders shall make loans (the "Swing Loans") to
the Company in Dollars or to any of the French Borrowing Subsidiaries in French
Francs, from time to time prior to the Termination Date, up to an aggregate
principal amount at any one time outstanding which shall not exceed the least of
(i) $5,000,000 for all Swing Loans by all Swing Loan Lenders, (ii) the amount
by which the Aggregate Commitment exceeds the sum of the outstanding principal
amount of the Loans made pursuant to Section 2.1.1 plus the L/C Obligations and
(iii) as to each Swing Loan Lender, the amount set forth opposite the name of
such Lender under the heading "Maximum Swing Loan Obligation" on Schedule I.
All Swing Loans shall be subject to all the terms and conditions applicable to
Loans, except that (x) each Swing Loan shall be in a minimum amount of $500,000
or the Approximate Equivalent Amount of French Francs and integral multiples of
$500,000 or the Approximate Equivalent Amount of French Francs in excess of that
amount and (y) all interest on the Swing Loans made by a Swing Loan Lender shall
be payable to the Agent for the account of such Swing Loan Lender. The Swing
Loan Lenders shall not make any Swing Loan in the period commencing on the first
Business Day after receipt of written notice from any Lender (I) that one or
more of the applicable conditions precedent contained in Article IV will not on
such date be satisfied until such Lender confirms that such condition precedent
has been met, or (II) that a Default or Unmatured Default has occurred, and
ending when such Default or Unmatured Default no longer exists and the Swing
Loan Lenders shall not otherwise be required to determine that, or take notice
whether, (x) the applicable conditions precedent set
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<PAGE>
forth in Article IV hereof have been satisfied or (y) a Default or Unmatured
Default has occurred and is continuing. In no event shall the number of Swing
Loans made in Dollars outstanding at any time be greater than three. In no
event shall the number of Swing Loans made in French Francs outstanding at any
time be greater than three.
(ii) Borrowing Notice. When a Borrower desires to borrow under this
Section 2.1.2, a Financial Officer shall deliver to the applicable Swing Loan
Lender and the Agent a Borrowing Notice, signed by it, no later than 11:00 a.m.
(Indianapolis time) if such Swing Loan is to be denominated in Dollars and no
later than 12:00 noon local time in the city of the applicable Swing Loan
Lender's applicable Eurocurrency Payment Office if such Swing Loan is to be
denominated in French Francs on the applicable Borrowing Date which Borrowing
Notice shall indicate that the Borrower is requesting a Swing Loan pursuant to
this Section 2.1.2. Such Borrowing Notice shall specify (i) the date of the
proposed Swing Loan (which shall be a Business Day, and with respect to Swing
Loans denominated in Dollars may be the same Business Day as the date of such
Borrowing Notice and with respect to Swing Loans denominated in French Francs
will be three Business Days' following the date of such Borrowing Notice, or
such shorter period as may be agreed to by the applicable Swing Loan Lender),
(ii) the amount of the proposed Swing Loan, (iii) the Swing Loan Lender or Swing
Loan Lenders requested to make such Swing Loan and (iv) instructions for the
disbursement of the proceeds of the proposed Swing Loan. Any Borrowing Notice
given pursuant to this Section 2.1.2 shall be irrevocable.
(iii) Making of Swing Loans. If a Swing Loan is to be denominated in
Dollars, the applicable Swing Loan Lender shall promptly deposit the amount of
the Swing Loan requested by the applicable Borrower from it with the Agent in
immediately available funds on the date of the proposed Swing Loan applicable
thereto. Subject to the fulfillment of the applicable conditions precedent set
forth in Article IV, the Agent will promptly make the proceeds of such amounts
received by it available to the applicable Borrower at the Agent's office in
Indianapolis, Indiana. If such Swing Loan is denominated in French Francs, the
applicable Swing Loan Lender shall notify the Agent of the Borrower's request
and, subject to the fulfillment of the applicable conditions precedent set forth
in Article IV, deposit the amount of the Swing Loan requested in such account as
the applicable Borrower shall designate in the Swing Loan Lender's Eurocurrency
Payment Office, provided, however, that with respect to any Swing Loan to be
made available to any of the French Borrowing Subsidiares, such funds shall be
made available by the applicable Swing Loan Lender's French Lending
Installation. Subject to the terms of this Agreement (including, without
limitation, the terms and conditions of Section 2.5.11 and Section 8.1 relating
to the reduction, suspension or termination of the Aggregate Commitment), the
Borrowers may borrow, repay and reborrow Swing Loans at any time prior to the
Termination Date. Unless earlier terminated in accordance with the terms and
conditions of this Agreement, the obligations of the Swing Loan Lenders to make
Swing Loans hereunder shall expire on the Termination Date.
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<PAGE>
(iv) Repayment of Swing Loans. The applicable Borrower shall repay each
Swing Loan on the earlier to occur of (a) the date that is the Termination Date
and (b) the date that is seven (7) days after the making of such Swing Loan and
if, for any reason the Dollar Amount of the Swing Loans exceed $5,000,000 in the
aggregate, the applicable Borrowers or the Company on behalf of such Borrowers
shall immediately make a repayment of the Swing Loans (allocated to all of the
outstanding Swing Loans in the order of their maturity beginning with the Swing
Loan which has been outstanding longest) such that the aggregate Dollar Amount
of the Swing Loans does not exceed $5,000,000; provided, however, that nothing
in this Section 2.1.2 shall be construed as limiting or modifying the obligation
of any Borrower to repay any or all of the outstanding Swing Loans at any
earlier time in accordance with the terms of this Agreement. Outstanding Swing
Loans may be repaid from the proceeds of Loans or from the proceeds of Swing
Loans. Any repayment of the Swing Loans shall be accompanied by accrued
interest thereon and shall be in the minimum Dollar Amount of $250,000 and
increments of $50,000 in excess thereof. If a Borrower at any time fails to
repay a Swing Loan on the applicable date when due, such Borrower shall be
deemed to have elected to borrow an Alternate Base Rate Advance consisting of
Loans from the Lenders, as of such due date equal in amount to the unpaid amount
of the Swing Loans, and interest thereon, due on such due date. Such Advance
shall be made (notwithstanding the minimum amount of Advances as provided in
Section 2.5.2) as of such due date, automatically, without further notice and
without any requirement to satisfy the conditions precedent otherwise applicable
to an Alternate Base Rate Advance if such Borrower shall have failed to make
such payment to the Agent for the account of the applicable Swing Loan Lender
prior to such time. The proceeds of any such Alternate Base Rate Advance shall
be used to repay the Swing Loans and interest thereon. If, for any reason, a
Borrower fails to repay a Swing Loan on the applicable due date and, for any
reason, the Lenders are unable to make or have no obligation to make an Advance,
then such Swing Loans shall bear interest from and after such day, until paid in
full, at the interest rate then applicable to Alternate Base Rate Advances.
(v) Participation in Swing Loans. Immediately upon the making of each
Swing Loan, each Lender shall be deemed to have automatically, irrevocably and
unconditionally purchased and received from the applicable Swing Loan Lender an
undivided interest and participation in and to such Swing Loan and the
obligations of Borrower in respect thereof in an amount equal to the amount of
such Swing Loan multiplied by a fraction having as its numerator such Lender's
Commitment and as its denominator, the Aggregate Commitment. The Agent will
notify each Lender promptly if any Borrower fails to pay the Agent for the
account of the applicable Swing Loan Lender amounts required to be paid by it
under this Section 2.1.2 with respect to any Swing Loan and each Lender shall
promptly and unconditionally pay to the Agent for the account of the applicable
Swing Loan Lender, in immediately available funds an amount equal to such
Lender's percentage (as described above) of the amount due from the Borrower
with respect thereto (without duplication as to amounts funded as Loans under
clause (d) used to repay such Swing Loans). The obligation of each Lender to
pay the Agent for the account of the Swing Loan Lenders under this Section 2.1.2
shall be unconditional, continuing, irrevocable and absolute. In the event that
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<PAGE>
any Lender fails to make payment to the Agent of any amount due under this
Section 2.1.2, the Agent shall be entitled to receive, retain and apply against
such obligation the principal and interest otherwise payable to such Lender
hereunder until the Agent on behalf of the Swing Loan Lenders receives such
payment from such Lender or such obligation is otherwise fully satisfied;
provided, however, that nothing contained in this sentence shall relieve such
Lender of its obligation to reimburse the Agent such amount in accordance with
this Section 2.1.2. If any amount required to paid under this Section is not in
fact made available to the Agent for remittance to the Swing Loan Lenders as
described above by any Lender, such Swing Loan Lenders shall be entitled to
recover such amount on demand from such Lender, together with accrued interest
thereon from the date of demand therefor on any Business Day until the date such
amount is paid to the Agent by such Lender, for one (1) Business Day at the
Federal Funds Effective Rate and thereafter at the interest rate applicable to
such Swing Loans. The failure of any Lender to pay such amount to the Agent
shall not relieve any other Lender of its obligation to make the payment to be
made by it. Upon the purchase by each Lender of a participation in any Swing
Loans pursuant to this Section 2.1.2, such Lender shall be deemed to have made
an Alternate Base Rate Loan under Section 2.1.2 in the amount of such
participation, and such Swing Loans shall be deemed to have been repaid in such
amount.
2.2. Types and Interest Periods.
--------------------------
2.2.1. Types of Advances. The Advances may be Alternate Base Rate
Advances or Eurocurrency Advances, or a combination thereof, selected by the
applicable Borrower in accordance with Sections 2.2.2 and 2.2.3. The Swing Loans
shall be Alternate Base Rate Loans. Notwithstanding anything herein to the
contrary, without the Agent's consent, no Borrower may select a Eurocurrency
Rate until the earlier of (i) the completion of the syndication of the
facilities hereunder (as determined by the Arranger) and (ii) ninety (90) days
following the initial funding hereunder unless such Borrower agrees to pay any
breakage costs as prescribed in Section 3.5 with respect to Loans assigned in
connection with such syndication on a date which is not the last day of an
applicable Interest Period.
2.2.2. Method of Selecting Types and Interest Periods for New Advances.
The applicable Borrower shall select the Type of Advance and, in the case of
each Eurocurrency Advance, the Interest Period applicable to each Advance from
time to time. The applicable Borrower shall give the Agent irrevocable notice
(a "Borrowing Notice"), or, if such Borrower is a Borrowing Subsidiary, the
Company may on behalf of such Borrowing Subsidiary give a Borrowing Notice, not
later than 11:00 a.m. (Indianapolis time) on the Borrowing Date of each
Alternate Base Rate Advance, three Business Days before the Borrowing Date for
each Eurocurrency Advance in Dollars or each Alternate Base Rate Advance in an
Agreed Currency other than Dollars, and four Business Days before the Borrowing
Date for each Eurocurrency Advance in an Agreed Currency other than Dollars,
provided that there shall be no more than twelve (12) Interest Periods in effect
with respect to all of the Loans at any time. A Borrowing Notice shall specify:
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<PAGE>
(i) the Borrowing Date, which shall be a Business Day, of such
Advance;
(ii) the aggregate amount and the currency of such Advance;
(iii) the Type of Advance selected and the currency thereof;
(iv) in the case of each Eurocurrency Advance, the Interest Period
applicable thereto; and
(v) whether such Advance is to be made to the Company or to a
specified Borrowing Subsidiary.
2.2.3. Conversion and Continuation of Outstanding Advances. Alternate
Base Rate Advances shall continue as Alternate Base Rate Advances unless and
until such Alternate Base Rate Advances are converted into Eurocurrency
Advances. Each Eurocurrency Advance shall continue as a Eurocurrency Advance
until the end of the then applicable Interest Period therefor, at which time
such Eurocurrency Advance shall be automatically converted into a Alternate Base
Rate Advance unless the applicable Borrower shall have given the Agent an
irrevocable notice (a "Conversion/Continuation Notice") requesting that, at the
end of such Interest Period, such Eurocurrency Advance either continue as a
Eurocurrency Advance for the same or another Interest Period or be converted
into an Alternate Base Rate Advance. Subject to the terms of Sections 2.2.1 and
2.5.2, such Borrower may elect from time to time to convert all or any part of
an Advance of any Type (other than Swing Loans) into any other Type or Types of
Advances (other than Swing Loans); provided that any conversion of any
Eurocurrency Advance shall be made on, and only on, the last day of the Interest
Period applicable thereto. The applicable Borrower shall give the Agent the
Conversion/Continuation Notice of each conversion of an Advance or continuation
of a Eurocurrency Advance not later than 10:00 a.m. (Indianapolis time) at least
one Business Day, in the case of a conversion into a Alternate Base Rate
Advance, or three Business Days, in the case of a conversion into or
continuation of a Eurocurrency Advance, prior to the date of the requested
conversion or continuation, specifying:
(i) the requested date which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of the Advance which is to be
converted or continued; and
(iii) the amount and Type(s) of Advance(s) into which such Advance is
to be converted or continued and, in the case of a conversion
into or continuation of a Eurocurrency Advance, the duration of
the Interest Period applicable thereto.
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2.3. Applicable Margin. The Applicable Margin set forth below, with
respect to each Advance and for commitment fees and Letter of Credit Fees
payable hereunder, shall be subject to adjustment (upwards or downwards, as
appropriate) based on the Company's status (the "Company's Status") as at the
end of each fiscal quarter in accordance with the table set forth below. The
Company's Status as at the last day of each fiscal quarter shall be determined
from the annual or quarterly financial statements of the Company which first
included such fiscal quarter delivered by the Company to the Lenders pursuant to
Section 6.1. The adjustments, if any, to the Applicable Margin shall be
effective five days after the Agent has received such annual or quarterly
financial statements, as the case may be. In the event that the Company shall
at any time fail to furnish to the Lenders such financial statements within the
time limitations specified by Section 6.1, then the Company's Status shall be
Level I Status from the date of such failure until the fifth day after such
financial statements are so delivered.
<TABLE>
<CAPTION>
Applicable Margin Level I Level II Level III Level IV Level V Level
Status Status Status Status Status VI
Status
<S> <C> <C> <C> <C> <C> <C>
Alternate Base Rate 1.75% 1.50% 1.25% 1.00% 0.75% 0.50%
Eurocurrency Rate 2.75% 2.50% 2.25% 2.00% 1.75% 1.50%
Commitment Fee 0.50% 0.50% 0.50% 0.375% 0.375% 0.375%
Applicable Letter of Credit Fee 2.75% 2.50% 2.25% 2.00% 1.75% 1.50%
Rate
- -------------------------------------------------------------------------------------------------
</TABLE>
For the purposes of this Agreement, the Company's Status will be determined
based on the following definitions:
"Level I Status" exists at any date if, as of the last day of the then most
recently ended fiscal quarter of the Company, the Senior Leverage Ratio is
greater than or equal to 4.0 to 1.0.
"Level II Status" exists at any date if, as of the last day of the then
most recently ended fiscal quarter of the Company, the Senior Leverage Ratio is
greater than or equal to 3.5 to 1.0 but less than 4.0 to 1.0.
"Level III Status" exists at any date if, as of the last day of the then
most recently ended fiscal quarter of the Company, the Senior Leverage Ratio is
greater than or equal to 3.0 to 1.0 but less than 3.50 to 1.0.
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<PAGE>
"Level IV Status" exists at any date if, as of the last day of the then
most recently ended fiscal quarter of the Company, the Senior Leverage Ratio is
greater than or equal to 2.5 to 1.0 but less than 3.0 to 1.0.
"Level V Status" exists at any date if, as of the last day of the then most
recently ended fiscal quarter of the Company, the Senior Leverage Ratio is
greater than or equal to 2.0 to 1.0 but less than 2.5 to 1.0.
"Level VI Status" exists at any date if, as of the last day of the then
most recently ended fiscal quarter of the Company, the Senior Leverage Ratio is
less than 2.0 to 1.0.
Notwithstanding the foregoing, the Applicable Margin for the period from the
date hereof until March 3, 1997 shall be the Applicable Margin assuming the
Company's Status is Level I Status. On March 4, 1997, the Applicable Margin
shall be based upon the Company's Status as at the end of the fiscal quarter
most recently ended prior to such date and for which the Agent has received
financial statements pursuant to Section 6.1, which Applicable Margin shall
remain in effect until adjusted pursuant to the provisions of this Section 2.5
set forth above.
2.4. Fees. In addition to the Letter of Credit Fees and issuance fees
identified in Section 2.6.5, the Company and the Borrowing Subsidiaries agree to
pay the following fees:
2.4.1. Commitment Fee. The Company and the Borrowing Subsidiaries hereby
jointly and severally agree to pay to the Agent for the ratable account of each
Lender, for the period from the date hereof to and including the Termination
Date, a commitment fee at a rate per annum equal to the annual percentage rate
indicated as the Applicable Margin for the commitment fee on the average daily
amount by which such Lender's Commitment exceeds the sum of the outstanding
principal balance of such Lender's Loans (other than Swing Loans) plus such
Lender's Percentage of the L/C Obligations, the accrued but unpaid portion of
which shall be payable on each Payment Date hereafter and on the Termination
Date. All accrued commitment fees shall be payable on the effective date of any
termination of the obligations of the Lenders to make Loans and issue or
participate in Letters of Credit hereunder, and commitment fees shall cease to
accrue thereafter. For purposes of calculating the commitment fee hereunder,
the principal amount of each Advance or Swing Loan made in a currency other than
Dollars shall be the Dollar Amount of such Advance as determined under clause
(ii) of the definition herein of "Dollar Amount".
2.4.2. Agent Fees. The Company agrees to pay certain fees to the Agent
and the Arranger, for its sole account, on the dates and in the amounts set
forth in the fee letter between the Borrower, the Arranger and the Agent dated
June 24, 1996, as it may be amended from time to time (the "Fee Letter").
2.5. General Facility Terms.
----------------------
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2.5.1. Method of Borrowing. Promptly after receipt of a Borrowing
Notice, the Agent shall notify each Lender by telex or telecopy, or other
similar form of transmission, of the proposed Advance. On each Borrowing Date,
each Lender shall make available its Loan or Loans, if any, (i) if such Loan is
denominated in Dollars, not later than 2:00 p.m., Indianapolis time, in Federal
or other funds immediately available to the Agent, in Indianapolis, Indiana at
its address specified in or pursuant to Article XIV and, (ii) if such Loan is
denominated in another currency, not later than 12:00 noon, local time in the
city of the Agent's Eurocurrency Payment Office for such currency, in such funds
as may then be customary for the settlement of international transactions in
such currency in the city of and at the address of the Agent's Eurocurrency
Payment Office for such currency, provided, however, that with respect to any
Loans to be made to any of the French Borrowing Subsidiaries, such funds shall
be made available to the Agent's French Lending Installation by such Lender's
French Lending Installation. Unless the Agent determines that any applicable
condition specified in Article IV has not been satisfied, the Agent will make
the funds so received from the Lenders available to the applicable Borrower at
the Agent's aforesaid address not later than 3:00 p.m. local time.
Notwithstanding the foregoing provisions of this Section 2.5.1, to the extent
that a Loan made by a Lender matures on the Borrowing Date of a requested Loan,
such Lender shall apply the proceeds of the Loan it is then making to the
repayment of principal of the maturing Loan.
2.5.2. Minimum Amount of Each Advance. Each Advance shall be in the
minimum amount of $2,000,000 and in integral multiples of $500,000 if in excess
thereof (or the Approximate Equivalent Amount if denominated in an Agreed
Currency other than Dollars); provided, however, that any Alternate Base Rate
Advance may be in the amount of (i) the aggregate applicable unused Aggregate
Commitment and (ii) any Alternate Base Rate Advance required to be made in
connection with the required repayment of a Swing Loan under Section 2.1.2(iv).
2.5.3. Prepayments. (a) Optional Principal Payments. Any Borrower may
from time to time prepay, without penalty or premium, all or any portion of all
outstanding Swing Loans. Payments in respect of the Swing Loans shall be
applied to each of the outstanding Swing Loans in the order of their maturity
beginning with the Swing Loan which has been outstanding longest.
(b) Mandatory Prepayments. In the event that at any time (a) the
aggregate amount of all outstanding Loans, Swing Loans and L/C Obligations of
the Company and the domestic Borrowing Subsidiaries shall exceed the Domestic
Borrowing Base or (b) the aggregate amount of all outstanding Loans, Swing
Loans and L/C Obligations of the French Borrowing Subsidiaries shall exceed the
French Borrowing Base, the applicable Borrowers shall make or cause to be made a
mandatory prepayment of first, the Swing Loans and next, Loans in the amount
necessary to repay such excess and satisfy the requirement set forth in Section
2.1.1(iii); provided, however, that such prepayment shall not reduce the
Commitment.
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2.5.4. Interest Rates; Interest Periods. Each Alternate Base Rate Loan
shall bear interest on the outstanding principal amount thereof, for each day
from the date such loan is made until it becomes due at a rate per annum equal
to the Alternate Base Rate for such day. Each Eurocurrency Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the Eurocurrency Rate
applicable thereto. Subject to the provisions of Section 2.5.5, each Advance
shall bear interest from and including the first day of the Interest Period
applicable thereto to (but not including) the earlier of (i) the last day of
such Interest Period or (ii) the date of any earlier prepayment as permitted by
Section 2.5.3, at the interest rate determined as applicable to such Advance.
2.5.5. Default Rate. After the occurrence and during the continuance of a
Default, at the option of the Agent or at the direction of the Required Lenders,
the interest rate(s) applicable to the Obligations and the fees payable under
Section 2.4 shall be increased by two percent (2.0%) per annum above the
Alternate Base Rate, Eurocurrency Rate or the rate established for such fees, as
applicable.
2.5.6. Interest Payment Dates; Interest Basis. Interest accrued on each
Alternate Base Rate Advance and each Swing Loan shall be payable on each Payment
Date and with respect to any Swing Loan, on any date on which such Swing Loan is
repaid or prepaid, whether due to acceleration or otherwise and at maturity.
Interest accrued on each Eurocurrency Advance shall be payable on the last day
of its applicable Interest Period, on any date on which such Eurocurrency
Advance is prepaid, whether by acceleration or otherwise, and at maturity.
Interest accrued on each Eurocurrency Advance having an Interest Period longer
than three months shall also be payable on the last day of each three-month
interval during such Interest Period. Interest on all Loans and fees hereunder
shall be calculated for actual days elapsed on the basis of a 360-day year (or a
365-day year for actual days elapsed if that is deemed by the Agent to be
consistent with market practices for the applicable currency). Interest shall
be payable for the day an Advance is made but not for the day of any payment on
the amount paid if payment is received prior to noon (local time) at the place
of payment. If any payment of principal of or interest on an Advance or a Swing
Loan shall become due on a day which is not a Business Day, such payment shall
be made on the next succeeding Business Day and, in the case of a principal
payment, such extension of time shall be included in computing interest in
connection with such payment.
2.5.7. Method of Payment. Each Advance shall be repaid or prepaid in the
currency in which it was made in the amount borrowed and interest payable
thereon shall be paid in such currency. Subject to the last sentence of Section
2.5.1, all payments of principal, interest, and fees in Dollars hereunder shall
be made by noon (Indianapolis time) on the date when due in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article XIV, or at any other Lending Installation of the Agent specified in
writing by the Agent to the Company and shall be made ratably among all Lenders
in the case of fees and payments in respect of Advances. After the occurrence
of a Default, all
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<PAGE>
payments of principal shall be applied ratably among all outstanding Advances.
Each payment delivered to the Agent for the account of any Lender shall be
delivered promptly by the Agent to such Lender in the same type of funds which
the Agent received at its address specified pursuant to Article XIV or at any
Lending Installation specified in a notice received by the Agent from such
Lender. All payments to be made by the Borrowers hereunder or under the Notes
in any currency other than Dollars shall be made in such currency on the date
due in such funds as may then be customary for the settlement of international
transactions in such currency for the account of the Agent, at its Eurocurrency
Payment Office for such currency, provided, however, that with respect to any
such payments by any of the French Borrowing Subsidiaries, such payments shall
be made at the Agent's French Lending Installation. The Agent will promptly
cause such payments to be distributed to each Lender in like funds and currency.
Notwithstanding the foregoing provisions of this Section, if, after the making
of any Advance in any currency other than Dollars, currency control or exchange
regulations are imposed in the country which issues such currency with the
result that different types of such currency (the "New Currency") are introduced
and the type of currency in which the Advance was made (the "Original Currency")
no longer exists or the applicable Borrower is not able to make payment to the
Agent for the account of the Lenders in such Original Currency, then all
payments to be made by the applicable Borrower hereunder or under the Notes in
such currency shall be made in such amount and such type of the New Currency or
Dollars as shall be equivalent to the amount of such payment otherwise due
hereunder or under the Notes in the Original Currency, it being the intention of
the parties hereto that the Borrowers take all risks of the imposition of any
such currency control or exchange regulations. In addition, notwithstanding the
foregoing provisions of this Section, if, after the making of any Advance in any
currency other than Dollars, the applicable Borrower is not able to make payment
to the Agent for the account of the Lenders in the type of currency in which
such Advance was made because of the imposition of any such currency control or
exchange regulation, then such Advance shall instead be repaid when due in
Dollars in a principal amount equal to the Dollar Amount (as of the date of
repayment) of such Advance.
2.5.8. Notes; Telephonic Notices. Each Lender is hereby authorized to
record on the schedule attached to each of its Notes, or otherwise record in
accordance with its usual practice, the date, the currency, the amount and the
maturity of each of its Loans of the type evidenced by such Note; provided,
however, that any failure to so record shall not affect the Company's or any
Subsidiary's obligations under any Loan Document. The Company and each Borrower
hereby authorize the Lenders, the Agent, the Issuing Lenders and the Swing Loan
Lenders to extend or continue Advances, effect selections of Types of Advances
and transfer funds based on telephonic notices made by any person or persons the
Agent or such Lender, Issuing Lender or Swing Loan Lender in good faith believes
to be a Financial Officer or an officer, employee or agent of the Company
designated by a Financial Officer. The Company agrees to deliver or to cause to
deliver promptly to the Agent a written confirmation of each telephonic notice
given by the Company or any Subsidiary, signed by a Financial Officer. If the
written confirmation differs in any material respect from the action taken by
the Agent, the Lenders, the Issuing Lenders, or the Swing Loan Lenders, the
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records of the Agent, the Lenders, the Issuing Lenders and the Swing Loan
Lenders shall govern absent manifest error.
2.5.9. Notification of Advances, Interest Rates and Prepayments. Promptly
after receipt thereof, the Agent will notify each Lender of the contents of each
Aggregate Commitment reduction notice, Borrowing Notice, Conversion/Continuation
Notice, and repayment notice received by it hereunder. The Agent will notify
each Lender of the interest rate applicable to each Eurocurrency Advance
promptly upon determination of such interest rate and will give each Lender
prompt notice of each change in the Alternate Base Rate.
2.5.10. Non-Receipt of Funds by the Agent. Unless the Company, a
Borrowing Subsidiary, a Lender or a Swing Loan Lender, as the case may be,
notifies the Agent prior to the date on which it is scheduled to make payment to
the Agent of (i) in the case of a Lender or Swing Loan Lender, the proceeds of a
Loan or (ii) in the case of the Company or a Borrowing Subsidiary, a payment of
principal, interest or fees to the Agent for the account of the Lenders or Swing
Loan Lenders, that it does not intend to make such scheduled payment, the Agent
may assume that such scheduled payment has been made. The Agent may, but shall
not be obligated to, make the amount of such scheduled payment available to the
intended recipient in reliance upon such assumption. If such Lender, Swing Loan
Lender, Borrowing Subsidiary or the Company, as the case may be, has not in fact
made such scheduled payment to the Agent, the recipient of such scheduled
payment shall, on demand by the Agent, repay to the Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to (x)
in the case of scheduled payment by a Lender or a Swing Loan Lender, the Federal
Funds Effective Rate for such day or (y) in the case of scheduled payment by the
Company or a Borrowing Subsidiary, the interest rate applicable to the relevant
Loan.
2.5.11. Termination or Reduction in the Aggregate Commitment. The
Company may at any time after the date hereof permanently reduce the Aggregate
Commitment, in whole, or in a minimum aggregate amount of $2,000,000 and in
integral multiples of $1,000,000 if in excess thereof, ratably among the Lenders
upon at least one Business Day's prior written notice to the Agent, which notice
shall specify the amount of such reduction; provided, however, no such notice of
reduction shall be effective to the extent that it would reduce the Aggregate
Commitment to an amount which would be less than the outstanding principal
amount of the Loans, the Swing Loans, and the Reimbursement Obligations
outstanding at the time such reduction is to take effect. The Aggregate
Commitment once reduced as provided in this Section 2.5.11 may not be
reinstated. If (y) any Lender notifies the Company in accordance with Section
2.5.15 or (z) a Borrower reasonably determines that it is or will be required to
make any additional payment to any Lender under Section 3.1, 3.2 or 3.3 the
Company may, at any time thereafter (provided that no Default or Unmatured
Default then exists and no satisfactory solution has been reached pursuant to
Section 3.6) and by not less than five Business Days' prior written notice to
the Agent, cancel such Lender's Commitment, whereupon such Lender shall cease
to be obliged to make further Loans
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hereunder and its Commitment shall be reduced to zero. Upon termination of such
Lender's Commitment, each applicable Borrower shall, subject to the last
sentence of this subparagraph (i), pay all outstanding Obligations owing to such
Lender. Any notice of cancellation given pursuant to this Section 2.5.11 shall
be irrevocable and shall specify the date upon which such cancellation is to
take effect. Notwithstanding any such cancellation, the obligations of the
Company and the Borrowing Subsidiaries under Sections 3.1, 3.2, 3.3 and 10.6
shall survive any such cancellation and be enforceable by such Lender. In any
case described in clauses (i)(y) or (i)(z) above in which the Company has the
right to cancel a Lender's Commitment, the Company may, in connection with such
cancellation arrange for a sale (at par) of such Commitment and all outstanding
Loans held by such Lender pursuant to the terms of Section 13.3 and such Lender
will promptly enter into any such sale arranged by the Company.
2.5.12. Market Disruption. Notwithstanding the satisfaction of all
conditions referred to in Article II with respect to any Advance in any currency
other than Dollars, if there shall occur on or prior to the date of such Advance
any change in national or international financial, political or economic
conditions or currency exchange rates or exchange controls which would in the
reasonable opinion of the Agent or the Required Lenders make it impracticable
for the Eurocurrency Loans comprising such Advance to be denominated in the
currency specified by the applicable Borrower, then the Agent shall forthwith
give notice thereof to the Company and the Lenders, and such Loans shall not be
denominated in such currency but shall be made on such Borrowing Date in
Dollars, in an aggregate principal amount equal to the Dollar Amount of the
aggregate principal amount specified in the related Borrowing Notice, as
Alternate Base Rate Loans, unless the applicable Borrower notifies the Agent at
least one Business Day before such date that (i) it elects not to borrow on such
date or (ii) it elects to borrow on such date in a different Agreed Currency, as
the case may be, in which the denomination of such Loans would in the opinion of
the Agent and the Required Lenders be practicable and in an aggregate principal
amount equal to the Dollar Amount of the aggregate principal amount specified in
the related Borrowing Notice.
2.5.13. Lending Installations. Subject to Section 3.6, each Lender may,
by written, telex or telecopy notice to the Agent and the Company, book its
Loans at any Lending Installation selected by such Lender and may from time to
time, change its Lending Installation and for whose account Loan payments are to
be made, provided that no Lender (other than a Lender organized under the laws
of the Republic of France) may designate a French Lending Installation located
outside the European Community with respect to the French Borrowing
Subsidiaries. Each Lender will notify the Agent and the Company on or prior to
the date of this Agreement of the Lending Installation which it intends to
utilize for each type of Loan hereunder. Each Lender's Lending Installation for
Loans to any of the French Borrowing Subsidiaries (the "French Lending
Installations") is specified on Schedule II.
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2.5.14. Borrowing Subsidiaries. The Company may at any time or from time
to time, with the consent of the Agent, which consent shall not be unreasonably
withheld, add as a party to this Agreement any French or domestic Subsidiary to
be a "Borrowing Subsidiary" hereunder by (a) the execution and delivery to the
Agent of a duly completed Assumption Letter by such Subsidiary, with the written
consent of the Company at the foot thereof and (b) the execution and delivery to
the Agent of such other guaranty and security documents as may be reasonably
required by the Agent, such documents with respect to any additional French
Subsidiaries to be substantially similar in form and substance to the Loan
Documents executed on or about the date hereof by the French Subsidiaries
parties hereto as of the Effective Date. Upon such execution, delivery and
consent such Subsidiary shall for all purposes be a party hereto as a Borrowing
Subsidiary as fully as if it had executed and delivered this Agreement. So long
as the principal of and interest on any Advances made to any Borrowing
Subsidiary under this Agreement shall have been repaid or paid in full, all
Letters of Credit issued for the account of such Borrowing Subsidiary have
expired or been returned and terminated and all other obligations of such
Borrowing Subsidiary under this Agreement shall have been fully performed, the
Company may, by not less than five Business Days' prior notice to the Agent
(which shall promptly notify the Lenders thereof), terminate such Borrowing
Subsidiary's status as a "Borrowing Subsidiary".
2.5.15. Withholding Tax Exemption. On or prior to the date of its
execution and delivery of this Agreement in the case of any Lender, Swing Loan
Lender or Issuing Lender (and on or prior to the effective date specified in the
Notice of Assignment pursuant to which a Purchaser became a Lender in the case
of each other Lender), each Lender, Swing Loan Lender or Issuing Lender that is
not incorporated under the laws of the United States of America, or a state
thereof, agrees that it will deliver to the Company and the Agent two duly
completed copies of United States Internal Revenue Service Form 1001 or 4224 (or
other appropriate form), certifying in either case that such Lender, Swing Loan
Lender or Issuing Lender is entitled to receive payments under the Loan
Documents without deduction or withholding of any United States federal income
taxes. Each Lender, Swing Loan Lender or Issuing Lender which so delivers a
Form 1001 or 4224 further undertakes to deliver to the Company and the Agent two
additional copies of such form (or a successor form) on or before the date that
such form (or a replacement of an expired form) expires (currently, three
successive calendar years for Form 1001 and one calendar year for Form 4224) or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent forms so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably requested by the Company or the Agent,
in each case certifying that such Lender, Swing Loan Lender or Issuing Lender is
entitled to receive payments under the Loan Documents without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender, Swing Loan Lender or Issuing Lender from duly completing and delivering
any such form with respect to it and such Lender, Swing Loan Lender or Issuing
Lender promptly advises the Company and the Agent that it is not capable of
receiving payments without any deduction or withholding of
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United States federal income tax. If any Lender, Swing Loan Lender or Issuing
Lender so advises the Company and the Agent of such fact, the Company shall be
entitled to exercise its rights under Section 2.5.11.
2.5.16. Judgment Currency. If for the purposes of obtaining judgment in
any court it is necessary to convert a sum due from a Borrower hereunder or
under any of the Notes in the currency expressed to be payable herein or under
the Notes (the "specified currency") into another currency, the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Agent could purchase the specified currency with such other
currency at the Agent's main office in Indianapolis, Indiana on the Business Day
preceding that on which final, non-appealable judgment is given. The
obligations of the applicable Borrower in respect of any sum due to any Lender
or the Agent hereunder or under any Note shall, notwithstanding any judgment in
a currency other than the specified currency, be discharged only to the extent
that on the Business Day following receipt by such Lender or the Agent (as the
case may be) of any sum adjudged to be so due in such other currency such Lender
or the Agent (as the case may be) may in accordance with normal, reasonable
banking procedures purchase the specified currency with such other currency. If
the amount of the specified currency so purchased is less than the sum
originally due to such Lender or the Agent, as the case may be, in the specified
currency, the applicable Borrower agrees, to the fullest extent that it may
effectively do so, as a separate obligation and notwithstanding any such
judgment, to indemnify such Lender or the Agent, as the case may be, against
such loss, and if the amount of the specified currency so purchased exceeds (a)
the sum originally due to any Lender or the Agent, as the case may be, in the
specified currency and (b) any amounts shared with other Lenders as a result of
allocations of such excess as a disproportionate payment to such Lender under
Section 12.2, such Lender or the Agent, as the case may be, agrees to remit such
excess to the applicable Borrower.
2.5.17 Overall effective rate.
(a) For the purposes of Articles L 313.1 and L 313.2 of the French consumer
code (Code de la Consommation) only, the Lenders represent to the Borrowers, who
accept such representation, that the "overall effective rate" (taux effectif
global, within the meaning of French law) calculated in accordance with the
above articles on the basis of a three hundred and sixty-five (365) day year, is
[___]% ([___] percent per annum).
(b) The above overall effective rate was calculated on the assumptions of
(i) an existing Level I Status, (ii) an Advance to the Borrowers in an amount of
$49,000,000 (Forty-Nine Million Dollars), (iii) a Borrowing Date on September 6,
1996 and (iv) an Alternate Base Rate at 8.25% plus the Applicable Margin at
1.75%.
2.6. Letter of Credit Facility.
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2.6.1. Letters of Credit. (a) Upon receipt of duly executed
applications therefor, and such other documents, instruments and agreements as
an Issuing Lender may reasonably require, and subject to the provisions of
Article IV, the Agent or one of its affiliates that is a Lender shall, or any
other Lender, in its sole discretion, may, issue Letters of Credit for the
account of the applicable Borrower (the Agent and each such other Lender in such
capacity being referred to as an "Issuing Lender"), on terms as are satisfactory
to such Issuing Lender; provided, however, that no Letter of Credit will be
issued for the account of any Borrower by an Issuing Lender if on the date of
issuance, before or after taking such Letter of Credit into account (i) the
Dollar Amount of the aggregate unpaid principal balance of the Advances, the
Swing Loan Obligations and the L/C Obligations at such time would exceed the
Aggregate Commitment or (ii) the aggregate outstanding amount of the L/C
Obligations would exceed $12,000,000; and provided, further, that no Letter of
Credit shall be issued unless (A) it is denominated in Dollars or Agreed
Currency and (B) it has an expiration date that is (1) no more than one year
after the date of issuance of such Letter of Credit (provided that a Letter of
Credit may provide for an annual renewal if such renewal is consented to by the
Issuing Lender and the conditions precedent to the issuance of such Letter of
Credit are met at the time of such renewal) and (2) no later than the
Termination Date. If any Borrower applies for a Letter of Credit from any Lender
other than the Agent, such Borrower or the Company on behalf of such Borrower
shall simultaneously notify the Agent of the proposed amount and expiration date
of such Letter of Credit. The Agent shall promptly notify the applicable
Borrower and the Lender to which such application has been made whether the
issuance of such Letter of Credit would comply with the terms of this Section
2.6.1. Upon the effectiveness of this Agreement, the Existing Letters of Credit
shall be deemed to constitute Letters of Credit hereunder having as their
issuance date the effective date of this Agreement. Fees shall accrue in respect
of the Existing Letters of Credit as provided in Section 2.6.5 of this Agreement
beginning as of the effective date of this Agreement but the Company shall
receive full credit for fees paid in advance with respect to such Existing
Letters of Credit.
2.6.2. Letter of Credit Participation. Immediately upon the
Effective Date with respect to the Existing Letters of Credit and immediately
upon the issuance of each other Letter of Credit hereunder, each Lender shall be
deemed to have automatically, irrevocably and unconditionally purchased and
received from the applicable Issuing Lender an undivided interest and
participation in and to such Letter of Credit, the obligations of the applicable
Borrower in respect thereof, and the liability of the applicable Issuing Lender
thereunder (collectively, an "L/C Interest") in an amount equal to the amount
available for drawing under such Letters of Credit multiplied by a fraction
having as its numerator such Lender's Commitment and as its denominator, the
Aggregate Commitment. The Agent will notify each Lender (or in the case of an
Issuing Lender other than the Agent, such Issuing Lender shall notify the Agent
who in turn will notify each Lender) promptly upon presentation to it of an L/C
Draft or upon any other draw under any Letter of Credit. On or before the
Business Day on which any Issuing Lender makes payment of each such L/C Draft
or, in the case of any other draw on the Letter of Credit, on demand of such
Issuing Lender, each Lender shall make payment to the Agent for the account of
the applicable
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Issuing Lender, in immediately available funds in an amount equal to such
Lender's ratable share (determined in accordance with the fraction described
above) of the amount of such payment or draw. The obligation of each Lender to
pay the Agent for the account of the applicable Issuing Lender under this
Section 2.6.2 shall be unconditional, continuing, irrevocable and absolute and
shall not be affected or impaired by, among other things, the reduction,
suspension or termination of the Aggregate Commitment pursuant to this
Agreement. In the event that any Lender fails to make payment to the Agent of
any amount due under this Section 2.6.2, the Agent shall be entitled to receive,
retain and apply against such obligation the principal and interest otherwise
payable to such Lender hereunder until the Agent receives such payment from such
Lender or such obligation is otherwise fully satisfied; provided, however, that
nothing contained in this sentence shall relieve such Lender of its obligation
to reimburse the Agent for such amount in accordance with this Section 2.6.2.
2.6.3. Reimbursement Obligation. Each Borrower agrees
unconditionally, irrevocably and absolutely upon receipt of notice from the
Agent or the applicable Issuing Lender to pay immediately to the Agent, for the
account of the applicable Issuing Lenders or the account of the Lenders, as the
case may be, the amount of each advance which may be drawn under or pursuant to
a Letter of Credit or an L/C Draft related thereto issued at such Borrower's
request (such obligation of any Borrower to reimburse the Issuing Lender or the
Agent for an advance made under a Letter of Credit or L/C Draft being
hereinafter referred to as a "Reimbursement Obligation" with respect to a
Letter of Credit or L/C Draft). If any Borrower at any time fails to repay a
Reimbursement Obligation pursuant to this Section 2.6.3, such Borrower shall be
deemed to have elected to borrow an Alternate Base Rate Advance from the
Lenders, as of the date of the advance giving rise to the Reimbursement
Obligation, equal in amount to the amount of the unpaid Reimbursement
Obligation, the proceeds of which Advance shall be used to repay such
Reimbursement Obligation and such an Advance shall be available from the Lenders
notwithstanding the fact that the Aggregate Commitment may have been reduced,
suspended or terminated pursuant to this Agreement (notwithstanding the minimum
amount of Advances as provided in Section 2.5.2). If, for any reason, the
Borrower fails to repay a Reimbursement Obligation on the day such Reimbursement
Obligation arises, then such Reimbursement Obligation shall bear interest from
and after such day, until paid in full, at the interest rate applicable to
Alternate Base Rate Advances.
2.6.4. Cash Collateral. Notwithstanding anything to the contrary
herein or in any application for any Letter of Credit, (a) after the occurrence
and during the continuance of a Default or (b) to the extent necessary in
connection with any mandatory reduction of the Aggregate Commitment pursuant to
Section 2.5.11, each Borrower with outstanding L/C Obligations shall, upon the
Agent's demand or if earlier, at the time of the applicable mandatory reduction
of the Aggregate Commitment pursuant to Section 2.5.11 or mandatory prepayment
or repayment of Loans pursuant to Section 2.5.3, as the case may be, deliver to
the Agent for the benefit of the Lenders, cash collateral in an amount equal to
the aggregate outstanding L/C Obligations of such Borrower, or in connection
with a deposit
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made pursuant to the foregoing clause (b), such lesser amount of the outstanding
L/C Obligations of such Borrower as shall satisfy the requirements of Section
2.5.11 or Section 2.5.3, as applicable. Any such collateral shall be held by
the Agent in a separate account appropriately designated as a cash collateral
account in relation to this Agreement and the Letters of Credit and retained by
the Agent for the benefit of the Lenders as collateral security for the
applicable Borrower's obligations in respect of this Agreement and the Letters
of Credit and L/C Drafts. Such amounts shall be applied to reimburse the Agent
or each Issuing Lender for drawings or payments under or pursuant to the
Letters of Credit or L/C Drafts, or if no such reimbursement is required, to
payment of any other due and unpaid costs, fees, expenses and other Obligations
related to the Letters of Credit, any L/C Drafts and such cash collateral
account, as the Agent shall determine. If no Default shall be continuing,
amounts remaining in any cash collateral account established pursuant to this
Section 2.6.4 pursuant to clause (a) above which are not to be applied to
reimburse the Agent for amounts drawn under the Letters of Credit or L/C Drafts
or to the payment of related costs, fees, expenses and other Obligations then
due and payable as described above, shall be returned to the Borrower. In
addition, if the conditions giving rise to a deposit of cash collateral pursuant
to clause (b) above cease to exist, any amounts remaining in any cash collateral
account established pursuant to this Section 2.6.4 pursuant to such clause (b)
which are not to be applied to reimburse the Agent for amounts drawn under the
Letters of Credit or L/C Drafts or to the payment of related costs, fees,
expenses and other Obligations then due and payable as described above, shall be
returned to the applicable Borrower. Investment earnings (net of any unpaid
costs, fees, expenses and other Obligations related to the Letters of Credit,
any L/C Drafts and such cash collateral account) on amounts on deposit in the
cash collateral account shall be for the account of the Borrower, and the Agent
shall remit any such accrued earnings to the Borrower no less frequently than
quarterly.
2.6.5. Letter of Credit Fees. The Borrowers agree to pay (a) to
the Agent for the ratable benefit of the Lenders, a letter of credit fee (the
"Letter of Credit Fee") equal to the Applicable Letter of Credit Fee Rate in
effect from time to time (such rate to change as and when prescribed in Section
2.3) on the maximum aggregate daily amount expected to be available for drawing
under the outstanding Letters of Credit, such fee to be paid to the Agent for
the account of the Lenders quarterly in advance on each Payment Date and on the
Termination Date; provided, however, that in the event that the actual amount
available for drawing under the outstanding Letters of Credit is less than
expected during any quarter, the Borrowers shall receive a rebate equal to the
Letter of Credit Fee paid in connection with such reduced amount and (b) to the
Issuing Lenders, such fronting fees as may be agreed upon between the applicable
Borrower and each such Issuing Lender (not to exceed .25% on the face amount of
such Letter of Credit) and all customary fees and other issuance, amendment,
negotiation and presentment expenses and related charges in connection with the
issuance, amendment, presentation of L/C Drafts, and the like customarily
charged by each such Issuing Lender with respect to standby letters of credit,
payable at the time of invoice of such amounts.
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2.6.6. Indemnification; Exoneration. (a) In addition to amounts
payable as elsewhere provided in this Agreement, the Company and each Borrowing
Subsidiary hereby agree to protect, indemnify, pay and save harmless the Agent,
each Issuing Lender, each Swing Loan Lender and each Lender from and against any
and all liabilities and costs which the Agent, any Issuing Lender, any Swing
Loan Lender or any Lender may incur or be subject to as a consequence, direct or
indirect, of (i) the issuance of any Letter of Credit other than, in the case
of the issuer thereof, as a result of its Gross Negligence or willful
misconduct, as determined by the final judgment of a court of competent
jurisdiction, or (ii) the failure of the issuer thereof 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 governmental authority
(all such acts or omissions herein called "Governmental Acts").
(b) As among the Borrowers, the Issuing Lenders, the Swing Loan
Lenders, the Lenders and the Agent, the Borrowers assume all risks of the acts
and omissions of, or misuse of a Letter of Credit by, the beneficiary of any
Letter of Credit. In furtherance and not in limitation of the foregoing,
subject to the provisions of the letter of credit application and the letter of
credit reimbursement agreement executed by the applicable Borrower in connection
with any Letter of Credit, the issuer of any Letter of Credit, the Agent, the
Swing Loan Lenders and the Lenders shall not be responsible (in the absence of
Gross Negligence or willful misconduct in connection therewith, as determined by
the final judgment of a court of competent jurisdiction): (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
any Letter 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 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 Letter of Credit to comply duly with conditions required in order to draw
upon any Letter of Credit provided that all documents required to be presented
in connection with any such drawing appear on their face to have been presented
and to be in proper form; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telecopy,
telex, or other similar form of teletransmission or otherwise; (v) for errors in
interpretation of technical trade terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any Letter of Credit of the proceeds of
any drawing under any Letter of Credit; and (viii) for any consequences arising
from causes beyond the control of the Agent, the issuer of any Letter of
Credit, and the Lenders including, without limitation, any Governmental Acts.
None of the above shall affect, impair, or prevent the vesting of any rights or
powers of the issuer of any Letter of Credit under this Section 2.6.6.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by the
issuer of any Letter of Credit under or in connection with a Letter of Credit
issued on behalf of any Borrower or
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any related certificates shall not, in the absence of Gross Negligence or
willful misconduct, as determined by the final judgment of a court of competent
jurisdiction, put such issuer, the Agent, any Issuing Lender, any Swing Loan
Lender or any Lender under any resulting liability to the Company or any
Guarantor or relieve the Borrower or any Guarantor of any of its obligations
hereunder or under the relevant Guaranty to any such Person.
(d) Without prejudice to the survival of any other agreement of any
Borrower hereunder, the agreements and obligations of the Borrowers contained in
this Section 2.6.6 shall survive the payment in full of principal and interest
hereunder, the termination of the Letters of Credit and the termination of this
Agreement.
(e) Notwithstanding anything therein to the contrary, in the event
any of the provisions of any application submitted by any Borrower in connection
with any Letter of Credit conflict with the provisions of this Agreement, the
terms of this Agreement shall govern.
ARTICLE III: CHANGE IN CIRCUMSTANCES
3.1. Taxes.
3.1.1. Payments to be Free and Clear. All sums payable by each Borrower
under the Loan Documents, whether in respect of principal, interest, fees or
otherwise, shall be paid without deduction for any present and future taxes,
levies, imposts, deductions, charges or withholdings imposed by any government
or any political subdivision or taxing authority thereof (but excluding any tax
on or measured by the net income, profits or gains of any Lender) and all
interest, penalties or similar liabilities with respect thereto (collectively,
"taxes"), which amounts shall be paid by the applicable Borrower as provided in
Section 3.1.2 below.
3.1.2. Grossing-up of Payments. If: (a) any Borrower or any other Person
is required by law to make any deduction or withholding on account of any such
taxes from any sum paid or expressed to be payable by the applicable Borrower to
any Lender under this Agreement; or (b) any party to this Agreement (or any
Person on its behalf) other than any Borrower is required by law to make any
deduction or withholding from, or any payment on or calculated by reference to
the amount of, any such sum received or receivable by any Lender, Swing Loan
Lender or Issuing Lender under this Agreement:
(i) the applicable party shall notify the Agent and, if such party is
not the applicable Borrower, the Agent will notify the applicable Borrower
of any such requirement or any change in any such requirement as soon as
such party becomes aware of it;
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(ii) the applicable Borrower shall pay any such taxes before the later
of (i) the date on which penalties attached thereto become due and payable
or (ii) 15 days after the date of receipt by the applicable Borrower of
such written notification provided by the Agent in accordance with
paragraph (i) if such applicable party is not the applicable Borrower, such
payment to be made (if the liability to pay is imposed on such Borrower)
for its own account or (if that liability is imposed on any party to this
Agreement) on behalf of and in the name of that party;
(iii) the sum payable by the applicable Borrower in respect of which
the relevant deduction, withholding or payment is required shall (except,
in the case of any such payment, to the extent that the amount thereof is
not ascertainable when that sum is paid) be increased to the extent
necessary to ensure that, after the making of that deduction, withholding
or payment, that party receives on the due date and retains (free from any
liability in respect of any such deduction, withholding or payment) a sum
equal to that which it would have received and so retained had no such
deduction, withholding or payment been required or made; and
(iv) within thirty (30) days after payment of any sum from which the
applicable Borrower is required by law to make any deduction or
withholding, and within thirty (30) days after the due date of payment of
any tax or other amount which it is required by paragraph (ii) to pay, it
shall deliver to the Agent all such certified documents and other evidence
as to the making of such deduction, withholding or payment as (a) are
satisfactory to the affected parties as proof of such deduction,
withholding or payment and of the remittance thereof to the relevant taxing
or other authority and (b) are required by any such party to enable it to
claim a tax credit with respect to such deduction, withholding or payment.
3.1.3 Certification of Withholding Tax Exemption. For any period with
respect to which a Lender has failed to provide the Borrower with an appropriate
form described in Section 2.5.15 (other than if such failure is due to a change
in law occurring after the date on which such Lender, Swing Loan Lender, or
Issuing Lender became a party hereunder), such Lender shall not be entitled to
indemnification under this Agreement with respect to taxes imposed by the United
States; provided, however, that should a Lender become subject to taxes because
of its failure to deliver a form required hereunder, the Borrower shall take
such steps as such Lender shall reasonably request to assist such Lender to
recover such taxes. If at the time a Lender, Swing Loan Lender, or Issuing
Lender first becomes a party to this Agreement such party does not deliver to
the Company and the Agent a form in accordance with Section 2.5.15 that
indicates a complete exemption from (or a complete reduction in rate of) United
States withholding tax, withholding tax at such rate shall be considered
excluded from Taxes for purposes of Section 3.1 unless and until such Lender
provides an appropriate form certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from taxes
for purposes of Section 3.1 for periods governed by such form.
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3.2. Increased Costs. If, at any time after the date of this Agreement,
the adoption of any law or the application of any governmental or quasi-
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law), or any change therein, or any change in the
interpretation or administration thereof,
(i) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender, any
Swing Loan Lender or any Issuing Lender or any applicable Lending
Installation (other than reserves and assessments taken into account in
determining the interest rate applicable to Advances bearing interest at
the Eurocurrency Rate), or
(ii) imposes any other condition (not being a tax imposed, levied,
collected, withheld or assessed by any taxing authority), the result of
which is to increase the cost to any Lender, any Swing Loan Lender or any
Issuing Lender or any applicable Lending Installation of making, funding or
maintaining such Loans or issuing or participating in Letters of Credit or
reduces any amount receivable by any Lender, Swing Loan Lender or Issuing
Lender or any applicable Lending Installation in connection with such Loans
or Letters of Credit, or requires any Lender, Swing Loan Lender or Issuing
Lender or any applicable Lending Installation to make any payment
calculated by reference to the amount of such Loans or Letters of Credit
held or interest received by it, by an amount deemed material by such
Lender, Swing Loan Lender or Issuing Lender,
then, within 15 days of written demand by such Lender, Swing Loan Lender or
Issuing Lender, the applicable Borrower shall pay such Lender, Swing Loan Lender
or Issuing Lender that portion of such increased expense incurred or reduction
in an amount received which such Lender, Swing Loan Lender or Issuing Lender
determines (as evidenced by its written demand) is attributable to making,
funding and maintaining its Loans, its L/C Interests, the Letters of Credit and
its Commitment.
3.3. Changes in Capital Adequacy Regulations. If a Lender, Swing Loan
Lender or Issuing Lender reasonably determines that the amount of capital
required or expected to be maintained by such Lender, Swing Loan Lender or
Issuing Lender, any Lending Installation of such Lender, Swing Loan Lender or
Issuing Lender or any corporation controlling such Lender, Swing Loan Lender or
Issuing Lender attributable to this Agreement, the Loans, the L/C Interests, the
Letters of Credit or its obligation to make Loans or participate in Letters of
Credit hereunder is increased as a result of a Change (as hereafter defined),
then, within 15 days of written demand by such Lender, Swing Loan Lender or
Issuing Lender (with a copy of such demand to the Agent), the Company shall pay
such Lender, Swing Loan Lender or Issuing Lender the amount which such Lender,
Swing Loan Lender or Issuing Lender determines is necessary to compensate it for
any reduction in the rate of return on capital to an amount below that which
such Lender, Swing Loan Lender or Issuing Lender could have achieved but for
such Change and is attributable to this Agreement, the Loans, its L/C
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Interests, the Letters of Credit or its obligation to make Loans or participate
in Letters of Credit hereunder. "Change" means (i) any change after the date
of this Agreement in the Risk-Based Capital Guidelines (as hereafter defined) or
(ii) any adoption of or change in any other law, governmental or quasi-
governmental rule, regulation, policy, guideline, interpretation, or directive
(whether or not having the force of law) after the date of this Agreement which
affects the amount of capital required or expected to be maintained by any
Lender, Swing Loan Lender or Issuing Lender or any Lending Installation or any
corporation controlling any Lender, Swing Loan Lender or Issuing Lender. "Risk-
Based Capital Guidelines" means (i) the risk-based capital guidelines in effect
in the United States of America on the date of this Agreement, including
transition rules, and (ii) the corresponding capital regulations promulgated by
regulatory authorities outside the United States of America implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
3.4. Availability of Types of Advances. If the Required Lenders
reasonably determine that (i) deposits of a type and maturity appropriate to
match fund Advances bearing interest at the Eurocurrency Rate are not available
or (ii) the interest applicable to a Type of Advance does not accurately reflect
the cost of making or maintaining such Advance, then the Agent shall suspend the
availability of the affected Type of Advance. If any Lender determines that
maintenance of its Eurocurrency Loans would violate any applicable law, rule,
regulation or directive, whether or not having the force of law, then such
Lender may by notice to the applicable Borrower, through the Agent, require that
any of its Eurocurrency Loans be promptly converted to an unaffected Type of
Loan until such illegality shall cease; and thereafter, any request for a
Eurocurrency Loan shall, with respect to such Lender, be deemed a request for a
Alternate Base Rate Loan.
3.5. Funding Indemnification. If any payment of a Eurocurrency Advance or
a Swing Loan occurs on a date which is not the last day of the applicable
Interest Period, whether because of acceleration, prepayment or otherwise
(including, without limitation, any receipt by a Lender of all or a portion of
the principal of a Loan prior to the last day of the applicable Interest Period
as a result of a sale arranged by the Company pursuant to Section 2.5.11) or a
Eurocurrency Advance or Swing Loan is not made on the date specified by the
applicable Borrower for any reason other than default by the Lenders or
applicable Swing Loan Lenders, such Borrower will indemnify each Lender or Swing
Loan Lender, as applicable for any loss or cost incurred by it resulting
therefrom, including, without limitation, any loss or cost in liquidating or
employing deposits acquired to fund or maintain the Eurocurrency Advance or
Swing Loan. In connection with any assignment by any Lender pursuant to Section
13.3 of any portion of the Loans made prior to the earlier of (i) the completion
of the syndication of the facilities hereunder (as determined by the
Arranger) and (ii) ninety (90) days following the initial funding hereunder, if
any Borrower has Eurocurrency Loans outstanding an interest in which is being
assigned, then, unless the assigning Lender in its discretion agrees otherwise,
such Borrower shall be deemed to have
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repaid all outstanding Eurocurrency Advances as of such date and reborrowed such
amount as a Alternate Base Rate Advance and/or Eurocurrency Advance (chosen in
accordance with the provisions of Article II) and the indemnification provisions
under this Section 3.5 shall apply.
3.6. Mitigation of Additional Costs or Adverse Circumstances. If, in
respect of any Lender, Swing Loan Lender and Issuing Lender, circumstances arise
which would or would upon the giving of notice result in:
(a) an increase in the liability of a Borrower to such Lender under
Section 3.1, 3.2 or 3.3 or
(b) the unavailability of a Type of Loan under Section 3.4;
then, without in any way limiting, reducing or otherwise qualifying the
applicable Borrower's obligations under any of the clauses referred to above in
this Section 3.6, such Lender shall promptly upon becoming aware of the same
notify the Agent thereof and shall, in consultation with the Agent and the
Company and to the extent that it can do so without prejudice to its own
position, take such reasonable steps as may be reasonably open to it to mitigate
the effects of such circumstances (including, without limitation, (i) the
transfer of its Loans to a Lending Installation in another jurisdiction, (ii)
the assignment of its rights and obligations hereunder to a financial
institution willing to participate in this facility or (iii) the restructure of
its participation in this facility in a manner which will avoid the event in
question and on terms mutually acceptable to such Lender, the Agent and the
Company). If and so long as a Lender has been unable to take, or has not taken,
steps acceptable to the Company to mitigate the effect of the circumstances in
question, such Lender shall be obliged, at the request of the Company, to assign
all its rights and obligations hereunder to a financial institution nominated by
the Company with the approval of the Agent and willing to participate in the
facility in place of such Lender; provided that such financial institution
satisfies all of the requirements of this Agreement including, but not limited
to, providing the forms required by Sections 2.5.15 and 13.3.2. Notwithstanding
any such assignment, the obligations of the Company under Sections 3.1, 3.2, 3.3
and 10.6 shall survive any such assignment and be enforceable by such Lender.
3.7. Lender Statements; Survival of Indemnity. Each Lender, Swing Loan
Lender and Issuing Lender shall deliver a written statement of such Lender,
Swing Loan Lender or Issuing Lender as to the amount due, if any, under Section
3.1, 3.2, 3.3 or 3.5. Such written statement shall set forth in reasonable
detail the event by reason of which such Lender, Swing Loan Lender or Issuing
Lender is entitled to make a claim for such amount and the calculations upon
which such Lender, Swing Loan Lender or Issuing Lender determined such amount,
which shall be final, conclusive and binding on the applicable Borrower in the
absence of manifest error. Determination of amounts payable under such Sections
in connection with a Eurocurrency Loan shall be calculated as though each Lender
funded its Eurocurrency Loan through the purchase of a deposit of the type and
maturity
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corresponding to the deposit used as a reference in determining the Eurocurrency
applicable to such Loan, whether in fact that is the case or not. Unless
otherwise provided herein, the amount specified in the written statement shall
be payable within three (3) Business Days of demand after receipt by the
applicable Borrower of the written statement. Notwithstanding any contrary
provision of this Article III, no Borrower shall be required to make any
payments to any Lender, Swing Loan Lender or Issuing Lender pursuant to Sections
3.2 or 3.3 with respect to periods of time more than 60 days prior to date upon
which such Lender's, Swing Loan Lender's or Issuing Lender's written statement
in accordance with the terms of this Section 3.7 is first delivered to the
applicable Borrower. The obligations of such Borrower under Sections 3.1, 3.2,
3.3 and 3.5 shall survive payment of any other of such Borrower's Obligations
and the termination of this Agreement.
ARTICLE IV: CONDITIONS PRECEDENT
--------------------
4.1. Initial Advance. The initial Advance hereunder shall occur no later
than October 15, 1996. No Lender shall be required to make the initial Advance
or purchase participations in the Letters of Credit or Swing Loans hereunder,
no Issuing Lender shall be required to issue the initial Letter of Credit
hereunder, and no Swing Loan Lender shall be required to make any Swing Loans
hereunder unless (a) the Company has furnished or caused to be furnished to the
Agent with sufficient copies for the Lenders:
(i) Copies of the articles of incorporation of the Company and each
Guarantor Subsidiary, together with all amendments, and a
certificate of good standing, both certified by the appropriate
governmental officer in its jurisdiction of incorporation, along
with copies, certified as a true up to date copy, dated not more
than fifteen (15) days prior to the date of this Agreement, by a
duly authorized officer of each of the French Subsidiaries, of
the constitutional documents of the French Subsidiaries, as filed
with the Registry of Commerce and Companies and a K-bis record,
dated not more than fifteen (15) days prior to the date of this
Agreement.
(ii) Copies, certified by the Secretary or Assistant Secretary of the
Company, each Guarantor Subsidiary and each French Subsidiary, of
its by-laws ("statuts") and of its Board of Directors'
resolutions (and resolutions of other bodies, if any are deemed
necessary by counsel for any Lender) authorizing the execution of
the Loan Documents.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Company, and of each Guarantor
Subsidiary and each French Subsidiary, which shall identify by
name and title and bear the
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signature of the officers of the Company, or such Guarantor
Subsidiary or French Subsidiary, as applicable, authorized to
sign the Loan Documents and, if applicable, to make borrowings
hereunder, upon which certificate the Agent, the Lenders, the
Swing Loan Lenders and the Issuing Lenders shall be entitled to
rely until informed of any change in writing by the Company.
(iv) A certificate, signed by a Financial Officer of the Company,
stating that on the initial Borrowing Date no Default or
Unmatured Default has occurred and is continuing.
(v) A certificate, signed by a Financial Officer of the Company,
stating that on the initial Borrowing Date the representations
and warranties contained in the Loan Documents are true and
correct in all material respects.
(vi) A written opinion of the counsel to the Company and the Guarantor
Subsidiaries with respect to U.S. law addressed to each of the
Lenders, in substantially the form of Exhibit E hereto and a
written opinion of the counsel to the Company and the French
Subsidiaries addressed to each of the Lenders in substantially
the form of Exhibit F hereto.
(vii) The Notes payable to the order of each of the Lenders.
(viii) Evidence satisfactory to the Agent and the Required Lenders
that the Company's and Sofitam's respective directors and
shareholders (and, to the extent required under applicable law,
the directors and shareholders of Companie Generale des Eaux)
shall have approved the Sofitam Acquisition.
(ix) Evidence of regulatory and legal approval, if any, for the
Sofitam Acquisition and the financing described herein, including
without limitation any French or European Community regulatory
approvals.
(x) A Certificate signed by either the chief executive officer or the
chief financial officer, or both, or their French equivalents, of
Sofitam S.A. that since December 31, 1995, no change, event,
development or combination of developments shall have occurred
which, individually or in the aggregate has resulted in a
material adverse effect on the business acquired pursuant to the
Sofitam Acquisition which would result in liabilities or losses
of more than Thirty-five Million French francs.
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(xi) Unqualified audited balance sheets for the last two fiscal years
and unqualified audited income statements for the last three
fiscal years with respect to the French Subsidiaries, certified
by Salustro & Reydel, including balance sheets, related profit
and loss and reconciliation of surplus statements and a statement
of cash flows, together with copies of such financial statements
which have been translated into English and converted into Dollar
Amounts as of and for the periods stated by Coopers & Lybrand.
(xii) An Officer's Certificate from a Financial Officer of the
Company with respect to value, solvency, and other appropriate
factual information regarding the Company and its Subsidiaries,
including without limitation the French Subsidiaries, that after
giving effect to the Sofitam Acquisition, the Company and its
Subsidiaries, including the French Subsidiaries, on a
consolidated basis, are solvent and will be solvent subsequent to
incurring the Indebtedness to be incurred in connection with the
Sofitam Acquisition, will be able to pay their debts and
liabilities as they become due, and will not be left with
unreasonably small capital with which to engage in their
businesses.
(xiii) Appraisals for real estate located in the United States of
America to the extent required by and in compliance with FIRREA
and appraisals for equipment as reasonably requested by the
Agent.
(xiv) Such other documents as any Lender or its counsel may have
reasonably requested including without limitation those documents
set forth on the List of Closing Documents attached hereto as
Exhibit G.
and (b)
(i) There shall be no injunction or temporary restraining order
which, in the judgment of the Agent or the Required Lenders,
would prohibit the making of the Advance or the consummation of
the Sofitam Acquisition.
(ii) There shall be no litigation which would reasonably be expected
to result in a Material Adverse Effect.
(iii) The Agent and the Lenders shall be satisfied with the results
of the due diligence investigation of the French Subsidiaries
including, without limitation, contingent liabilities and
contractual obligations.
(iv) All financial, accounting and tax aspects of the Sofitam
Acquisition shall be acceptable to the Agent and the Lenders.
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(v) The consideration paid by the Company for the shares of stock
of the French Subsidiaries shall not exceed the lesser of (i)
FF 540,000,000 or (ii) the Equivalent Amount in French Francs
of $120,000,000.
(vi) The representations and warranties contained in the Option
Agreement shall be accurate in all material respects as of the
date of the Sofitam Acquisition; and the material conditions to
the consummation of the Sofitam Acquisition set forth in the
Option Agreement, other than the transfer of funds, shall have
been satisfied or, with the prior written consent of the Agent,
waived.
(vii) All obligations of the Company or the French Subsidiaries under
existing loan facilities shall have been prepaid (other than
Indebtedness scheduled on Schedule 6.19).
(viii) Liens creating a first priority security interest in the
Collateral in favor of the Agent on behalf of the Lenders shall
have been granted pursuant to the Loan Documents and
appropriate financing statements shall have been signed by the
Borrowers in proper form for filing in the appropriate
jurisdictions to perfect such security interests.
(ix) No Material Adverse Change shall have occurred since (i)
November 30, 1995 in the case of the Company and its
Subsidiaries (not including the French Subsidiaries) and (ii)
December 31, 1995 in the case of the French Subsidiaries.
(x) Each of the Loan Documents shall have been duly executed.
(xi) The Company shall have received the proceeds of the Permitted
Subordinated Debt.
4.2. Initial Advance to Each Borrowing Subsidiary. No Lender shall be
required to make an Advance hereunder or purchase participations in Letters of
Credit or Swing Loans hereunder, no Issuing Lender shall be required to issue a
Letter of Credit hereunder and no Swing Loan Lender shall be required to make
any Swing Loans hereunder to a new Borrowing Subsidiary unless (a) Liens
creating a first priority security interest in substantially all of the Property
of such new Borrowing Subsidiary (other than inventory to the extent such new
Borrowing Subsidiary is located in France or the inventory of such Borrowing
Subsidiary is located in France and limited, in the case of a domestic
Subsidiary pledging the Capital Stock of a foreign subsidiary, to 65% of such
issued and outstanding Capital Stock) in favor of the Agent on behalf of the
Lenders and the Holders of Secured Obligations shall have been perfected in the
appropriate jurisdictions pursuant to such documents, instruments and agreements
as required by the Agent and (b) the Company has furnished or caused to be
furnished to the Agent with sufficient copies for the Lenders:
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(i) The Assumption Letter executed and delivered by such Borrowing
Subsidiary and containing the written consent of the Company
at the foot thereof, as contemplated by Section 2.5.14.
(ii) Copies, certified by the Secretary or Assistant Secretary of
the Borrowing Subsidiary, of its Board of Directors'
resolutions (and resolutions of other bodies, if any are
deemed necessary by counsel for any Lender) approving the
Assumption Letter.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrowing Subsidiary, which shall
identify by name and title and bear the signature of the
officers of such Borrowing Subsidiary authorized to sign the
Assumption Letter and the other documents to be executed and
delivered by such Borrowing Subsidiary hereunder, upon which
certificate the Agent and the Lenders shall be entitled to
rely until informed of any change in writing by the Company.
(iv) An opinion of counsel to such Borrowing Subsidiary,
substantially in the form of Exhibit H hereto or, in the case
of a new French Borrowing Subsidiary, in a form reasonably
acceptable to the Agent.
(v) The Notes payable to the order of each of the Lenders.
(vi) A pledge agreement in form and substance acceptable to the
Agent pursuant to which all of the outstanding Capital Stock
of such Borrowing Subsidiary is pledged to the Agent for the
benefit of itself and the Holders of Secured Obligations
limited, in the case of a domestic Subsidiary pledging Capital
Stock of a foreign subsidiary to 65% of such issued and
outstanding Capital Stock.
(vii) Guaranty documentation and contribution agreement
documentation from such Borrowing Subsidiary in form and
substance acceptable to the Agent.
(viii) Collateral Documents with respect to such Borrowing
Subsidiary's Property in form and substance reasonably
acceptable to the Agent.
4.3. Each Advance and Letter of Credit. No Lender shall be required to make
any Advance or Swing Loan (including, without limitation, the initial Advance
hereunder) or purchase participations in Letters of Credit or Swing Loans and no
Issuing Lender shall be required to issue Letters of Credit hereunder, unless on
the applicable Borrowing Date:
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(i) Prior to and after giving effect to such Advance, Swing Loan or
Letter of Credit there exists no Default or Unmatured Default.
(ii) The representations and warranties contained in the Loan
Documents are true and correct in all material respects as of
such Borrowing Date or date for issuance of such Letter of
Credit (except such representations and warranties which
expressly relate solely to, and were true and correct in all
material respects as of, an earlier date).
(iii) All legal and regulatory matters incident to the making of such
Advance or Swing Loan or issuing such Letter of Credit shall be
reasonably satisfactory to the Lenders and their counsel,
including, without limitation, the compliance by the Company and
its Subsidiaries with Regulations G, T, U and X.
Each borrowing or Letter of Credit shall constitute a representation
and warranty by the applicable Borrower that the conditions contained in Section
4.3(i) and (ii) have been satisfied.
ARTICLE V: REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Lenders that:
5.1. Corporate Existence and Standing. Each of the Company and its
domestic Borrowing Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted except to the extent that the
failure to be have such authority would not reasonably be expected to result in
a Material Adverse Effect. Each of the French Borrowing Subsidiaries is duly
incorporated and validly existing under the laws of France as a societe anonyme
and has power to carry on its business as it is now being conducted and to own
its property and other assets.
5.2. Authorization and Validity. The Company and each of the
Borrowing Subsidiaries has the corporate power and authority and legal right to
execute and deliver the Loan Documents and to perform its obligations
thereunder. The execution and delivery by the Company and each of the Borrowing
Subsidiaries of the Loan Documents and the performance of its obligations
thereunder have been duly authorized by proper corporate proceedings, and the
Loan Documents constitute legal, valid and binding obligations of the Company
and each of the Borrowing Subsidiaries enforceable against them in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and general equitable principles. It is not necessary to ensure
the legality, validity, enforceability or admissibility in evidence of this
Agreement that it or any other instrument be filed, recorded, registered or
enrolled in any court, public office or elsewhere in France or that any stamp,
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registration or similar tax be paid in France or in relation to this Agreement,
except for the stamp duty known as "timbre de dimension" which is due if this
Agreement is signed in France. This Agreement, once translated into French by a
sworn translator before the French courts, is in proper form for its enforcement
in the courts of France.
5.3. No Conflict; Government Consent. Neither the execution and
delivery by the Company and the Borrowing Subsidiaries of the Loan Documents,
nor the consummation of the transactions therein contemplated, nor compliance
with the provisions thereof will violate any law (including, without limitation,
any law of the United States of America, the Republic of France or the European
Community), rule, regulation, order, writ, judgment, injunction, decree or award
binding on the Company or any of its Borrowing Subsidiaries or the Company's or
any Borrowing Subsidiary's articles of incorporation or by-laws or the
provisions of any indenture, instrument or agreement to which the Company or any
of its Borrowing Subsidiaries is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the Property of
the Company or a Borrowing Subsidiary pursuant to the terms of any such
indenture, instrument or agreement, in any such case which violation, conflict,
default, creation or imposition could reasonably be expected to have a Material
Adverse Effect. No order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with the execution, delivery
and performance of, or the legality, validity, binding effect or enforceability
of, any of the Loan Documents except filings necessary to create or perfect
security interests in the Collateral.
5.4. Financial Statements. The November 30, 1995 financial statements
of the Company and its Consolidated Subsidiaries heretofore delivered to the
Lenders were prepared in accordance with U.S. GAAP in effect on the date such
statements were prepared and fairly present the financial condition of the
Company and its Consolidated Subsidiaries at such date and the results of their
operations for the period then ended. The December 31, 1995 financial statements
of the French Subsidiaries heretofore delivered to the Lenders were prepared in
accordance with Foreign GAAP in effect on the date such statements were prepared
and fairly present the financial condition of the French Subsidiaries at such
date and the results of their operations for the period then ended.
5.5. Material Adverse Change. Since November 30, 1995, in the case of
the Company and its Subsidiaries and since December 31, 1995 in the case of the
Subsidiaries acquired pursuant to the Sofitam Acquisition there has occurred no
Material Adverse Change which have not been previously disclosed to the Agent.
5.6. Taxes. The Company and its Consolidated Subsidiaries have filed
all United States federal income tax returns and all other material tax returns
which are required to be filed and have paid all material taxes due pursuant to
said returns or pursuant to any assessment received by the Company or any of its
Consolidated Subsidiaries, except such
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taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided. The United States consolidated income tax returns
of the Company and its Consolidated Subsidiaries have been audited by the
Internal Revenue Service through the fiscal year ended November 30, 1990. To the
best of the Company's knowledge, the French Subsidiaries have filed all income
tax returns and all other material tax returns which are required to be filed
pursuant to the laws of the Republic of France and any division thereof and have
paid all material taxes due pursuant to said returns or pursuant to any
assessment received by any of the French Subsidiaries, except such taxes, if
any, as are being contested in good faith and as to which adequate reserves have
been provided. The charges, accruals and reserves on the books of the Company
and its Consolidated Subsidiaries in respect of any taxes or other governmental
charges are adequate. Provided that payments by the Borrowers are made in
accordance with this Agreement, no Taxes are imposed by withholding or otherwise
by the Republic of France on any payment to be made by the Borrowers under this
Agreement or are imposed on or by virtue of the execution or delivery by the
Borrowers of this Agreement or any document or instrument to be executed or
delivered under this Agreement, except for the stamp duty known as "timbre de
dimension" and the stamp duty known as "timbre d'enregistrement" each of which
is due if the Agreement is signed in France.
5.7. Litigation. There is no litigation, arbitration, governmental
investigation, proceeding or inquiry pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
which could reasonably be expected to have a Material Adverse Effect.
5.8. Subsidiaries. Schedule 5.8 hereto contains an accurate list of
all of the presently existing Subsidiaries of the Company as of the Effective
Date, setting forth their respective jurisdictions of incorporation and the
percentage of their respective Capital Stock owned by the Company or other
Subsidiaries. All of the issued and outstanding shares of Capital Stock of the
Material Subsidiaries have been duly authorized and issued and are fully paid
and non-assessable.
5.9. ERISA. Neither the Company nor any ERISA Affiliate maintains or
contributes to any Plan as of the Effective Date other than those listed on
Schedule 5.9 hereto. Each Plan which is intended to be qualified under Section
401(a) of the Internal Revenue Code as currently in effect has been determined
by the IRS to be so qualified, and each trust related to any such Plan has been
determined to be exempt from federal income tax under Section 501(a) of the
Internal Revenue Code as currently in effect. Except as disclosed in Schedule
5.9, neither the Company nor any Subsidiary maintains or contributes to any
employee welfare benefit plan within the meaning of Section 3(1) of ERISA which
provides benefits to employees after termination of employment other than as
required by Section 601 of ERISA. The Company and all its ERISA Affiliates are
in compliance in all material respects with the responsibilities, obligations or
duties imposed on them by ERISA, the Internal Revenue Code and regulations
promulgated thereunder with respect to all Plans. No Benefit Plan has incurred
any accumulated funding deficiency (as defined in Sections
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302(a)(2) of ERISA and 412(a) of the Internal Revenue Code) whether or not
waived. Neither the Company nor any ERISA Affiliates nor any fiduciary of any
Plan which is not a Multiemployer Plan (i) has engaged in a nonexempt prohibited
transaction described in Sections 406 of ERISA or 4975 of the Internal Revenue
Code or (ii) has taken or failed to take any action which would constitute or
result in a Termination Event that could result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has any material liability of any
kind whatsoever, whether direct, indirect, contingent or otherwise, (i) on
account of any violation of the health care requirements of Part 6 of Title I of
ERISA or Section 4980B of the Code, (ii) under Section 502(i) or Section 502(l)
of ERISA or Section 4975 of the Code, (iii) under Section 302 of ERISA or
Section 412 of the Code or (iv) under Title IV of ERISA. Neither the Company
nor any ERISA Affiliate has incurred any liability to the PBGC which remains
outstanding other than the payment of premiums, and there are no premium
payments which have become due which are unpaid. Schedule B to the most recent
annual report filed with the IRS with respect to each Benefit Plan and furnished
to the Lender is complete and accurate. Since the date of each such Schedule B,
there has been no material adverse change in the funding status or financial
condition of the Benefit Plan relating to such Schedule B. Neither the Company
nor any ERISA Affiliate has (i) failed to make a required contribution or
payment to a Multiemployer Plan or (ii) suffered a complete or partial
withdrawal under Sections 4203 or 4205 of ERISA from a Multiemployer Plan.
Neither the Company nor any ERISA Affiliate has failed to make a required
installment or any other required payment under Section 412 of the Internal
Revenue Code on or before the due date for such installment or other payment.
Neither the Company nor any ERISA Affiliate is required to provide security to a
Benefit Plan under Section 401(a)(29) of the Internal Revenue Code due to a Plan
amendment that results in an increase in current liability for the plan year.
Except as disclosed on Schedule 5.9, the Company does not have, by reason of the
transactions contemplated hereby any obligation to make any payment to the
employee pursuant to any Plan or existing contract or arrangement. The Company
has given to the Agent copies of all of the following: each Benefit Plan and
related trust agreement (including all amendments to such Plan and trust) in
existence or committed to as of the Closing Date and in respect to which the
Company or any ERISA Affiliate is currently an "employer" as defined in Section
3(5) of ERISA, and the most recent actuarial report, determination letter issued
by the IRS and Form 5500 filed in respect of each such Benefit Plan in
existence; a listing of all of the Multiemployer Plans currently contributed to
by the Company or any ERISA Affiliate with the aggregate amount of the most
recent annual contributions required to be made by the Company and all ERISA
Affiliates to each such Multiemployer Plan, any information which has been
provided to the Company or an ERISA Affiliate regarding withdrawal liability
under any Multiemployer Plan and the collective bargaining agreement pursuant to
which such contribution is required to be made.
For purposes of this Section 5.9 and Section 6.20 below, the Company and any
ERISA Affiliate shall be deemed to know all facts known by the Administrator of
any Plan of which the Company or any ERISA Affiliate is the plan sponsor.
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5.10. Full Disclosure. The financial statements referred to in Section
5.4 do not, nor do any other written statements furnished by the Company to the
Agent or the Lenders in connection with the negotiation of the Loan Documents
taken as a whole, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained therein, in
light of the circumstances in which they were made, not misleading as of the
dates thereof.
5.11. Assets and Properties. The Borrower and each of its Subsidiaries
has good and marketable title to all of its assets and properties (tangible and
intangible, real or personal) owned by it or a valid leasehold interest in all
of its leased assets (except insofar as marketability may be limited by any laws
or regulations of any Governmental Authority affecting such assets) (in each
case necessary for the conduct of its business), and all such assets and
property are free and clear of all Liens, except Liens securing the Obligations
and Liens permitted under Section 6.10. On the Effective Date, except as
specified on Schedule 5.11, substantially all of the assets and properties owned
by, leased to or used by the Borrower and/or each such Subsidiary of the
Borrower (in each case necessary for the conduct of its business) are in
adequate operating condition and repair, ordinary wear and tear excepted.
Except for Liens granted to the Agent for the benefit of the Agent and the
Lenders, neither this Agreement nor any other Loan Document, nor any transaction
contemplated under any such agreement, will affect any right, title or interest
of the Borrower or such Subsidiary in and to any of such assets in a manner that
would have or is reasonably likely to have a Material Adverse Effect.
5.12. Patents and Trademarks. The Company and each Material Subsidiary
owns or possesses all material patents, trademarks, trade names, service marks,
copyright, licenses and rights with respect to the foregoing necessary for the
future conduct of its business, without any known material conflict with the
rights of others.
5.13. No Defaults. No Default or Unmatured Default has occurred and is
continuing. Neither the Company nor any Borrowing Subsidiary is in default in
the payment of principal or interest on any Indebtedness in excess of $3,000,000
(or the Equivalent Amount of Indebtedness if denominated in a currency other
than Dollars) in the aggregate, is not in default under any instrument or
instruments or agreements under and subject to which such Indebtedness has been
issued, no event has occurred and is continuing under the provisions of any such
instrument or agreement which with the lapse of time or the giving of notice, or
both, would constitute an event of default thereunder and the Company is not in
violation of any term of its articles of incorporation.
5.14. Investment Company Act. Neither the Company nor any Subsidiary is
an "investment company" or an "affiliated person" thereof or an "affiliated
person" of such affiliated person as such terms are defined in the Investment
Company Act of 1940, as amended.
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5.15. Compliance with Environmental Laws. Neither the Company nor any
Subsidiary has notice or knowledge of any violation of any applicable Federal,
state, regional, departmental or local laws, statutes, rules, regulations or
ordinances relating to public health, safety or the environment, including,
without limitation, relating to releases, discharges, emissions or disposals to
air, water, land or ground water, to the withdrawal or use of ground water, to
the use, handling or disposal of polychlorinated biphenyls (PCB's), asbestos or
urea formaldehyde, to the treatment, storage, disposal or management of
hazardous or dangerous substances (including, without limitation, petroleum,
crude oil or any fraction thereof, or other hydrocarbons), pollutants or
contaminants, to exposure to toxic, hazardous or other controlled, prohibited or
regulated substances or emissions which violation could reasonably be expected
to have a Material Adverse Effect. The total liability arising out of any
environmental matters, if adversely determined, would not reasonably be expected
to exceed a Substantial Portion.
5.16. Regulations G, T, U and X. The Company and its Subsidiaries,
including the French Borrowing Subsidiaries, are in compliance with Regulations
G, T, U and X. Margin stock (as defined in Regulations U and X) constitutes
less than 25% of those assets of the Company and its Subsidiaries which are
subject to any limitation on sale, pledge, or other restriction hereunder.
5.17. Filing. To ensure the enforceability or admissibility in evidence
of this Agreement and the Notes executed by any French Borrowing Subsidiary in
such French Borrowing Subsidiary's country of organization or incorporation and
country which is its principal place of business (each, a "Subject Country"), it
is not necessary that this Agreement or the Notes of such French Borrowing
Subsidiary or any other document be filed or recorded with any court or other
authority in any Subject Country or that any stamp or similar tax be paid to or
in respect of this Agreement, except for the stamp duty known as "timbre de
dimension" which is due if this Agreement is signed in France, or the Notes of
such French Borrowing Subsidiary except as specified in Section 5.2. The
qualification by any Lender or the Agent for admission to do business under the
laws of any Subject Country does not constitute a condition to, and the failure
to so qualify does not affect, the exercise by any Lender or the Agent of any
right, privilege, or remedy afforded to any Lender or the Agent in connection
with the Loan Documents to which such French Borrowing Subsidiary is a party or
the enforcement of any such right, privilege, or remedy against such French
Borrowing Subsidiary. The performance by any Lender or the Agent of any action
required or permitted under the Loan Documents will not (i) violate any law or
regulation of any Subject Country or any political subdivision thereof, (ii)
result in any tax or other monetary liability to such party pursuant to the laws
of any such Subject Country or political subdivision or taxing authority thereof
(provided that, should any such action result in any such tax or other monetary
liability to the Lender or the Agent, the Company hereby agrees to indemnify
such Lender or the Agent, as the case may be, against (x) any such tax or other
monetary liability and (y) any increase in any tax or other monetary liability
which results from such action by such Lender or the Agent and, to the extent
the Company makes such indemnification, the incurrence of such liability by the
Agent or any Lender will not
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constitute a Default) or (iii) violate any rule or regulation of any federation
or organization or similar entity of which such Subject Country is a member.
5.18. No Immunity. No French Borrowing Subsidiary nor any of its assets
is entitled to immunity from suit, execution, attachment or other legal process.
Such French Borrowing Subsidiary's execution and delivery of the Loan Documents
to which it is a party constitute, and the exercise of its rights and
performance of and compliance with its obligations under such Loan Documents
will constitute, private and commercial acts done and performed for private and
commercial purposes.
5.19. Contingent Obligations. Other than any liability incident to any
pending litigation, arbitration or proceedings, neither the Company nor any
Borrowing Subsidiary has material contingent obligations as of the Effective
Date not provided for or disclosed in the financial statements referred to in
Section 5.4.
5.20. Foreign Employee Benefit Matters. Each Foreign Employee Benefit
Plan is in compliance in all respects with all laws, regulations and rules
applicable thereto and the respective requirements of the governing documents
for such Plan, except for any non-compliance the consequences of which, in the
aggregate, would not result in a material obligation to pay money. The
aggregate of the accumulated benefit obligations under all Foreign Pension Plans
does not exceed the current Fair Market Value of the assets held in the trusts
or similar funding vehicles for such Plans or reasonable reserves have been
established in accordance with prudent business practices or as required by U.S.
GAAP with respect to any shortfall. With respect to any Foreign Employee
Benefit Plan maintained or contributed to by the Company or any Subsidiary or
any member of its Controlled Group (other than a Foreign Pension Plan),
reasonable reserves have been established in accordance with prudent business
practice or where required by ordinary accounting practices in the jurisdiction
in which such Plan is maintained. There are no actions, suits or claims (other
than routine claims for benefits) pending or, to the knowledge of the Borrowers,
threatened against the Company or any Subsidiary or any ERISA Affiliate with
respect to any Foreign Employee Benefit Plan.
5.21. French Withholding. As at the date of this Agreement, with respect
to any portion of the Aggregate Commitment, the interest referred to in Article
II is not subject to withholding in France if the initial Lender in respect of
such portion of the Aggregate Commitment is (x) a non-French Bank and the debt
claim in respect of which such interest or commission or utilization commissions
is not effectively connected with the French branch (if any) of such non-French
Bank, or (y) the foreign branch of a French Bank, and the income of such branch
is taxed in the country in which it is situated. If any interest referred to in
Article II due to a French Bank or to the French branch of a non-French Bank are
paid to the Agent in accordance with the provisions of Article XI, then, as at
the date of this Agreement, such interest or commitment and utilization
commission is not subject to any withholding in France. For the purposes of
this Section, a "French Bank" shall mean a Bank
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incorporated in France, and a "non-French Bank" shall mean a Bank incorporated
in a country other than France.
ARTICLE V-A
REPRESENTATIONS AND WARRANTIES OF ADDITIONAL
---------------------------------------------
FRENCH BORROWING SUBSIDIARIES
-----------------------------
Each French Borrowing Subsidiary which becomes a party hereto after the
Effective Date represents and warrants to the Lenders as provided in this
Article V-A that:
5A.1. Corporate Existence and Standing. Such French Borrowing Subsidiary
is a societe anonyme duly incorporated, validly existing and in good standing
under the laws of France and has all requisite authority to conduct its business
as it is now being conducted except where the failure to have such requisite
authority would not have a Material Adverse Effect.
5A.2. Authorization and Validity. Such French Borrowing Subsidiary has
the corporate power and authority and legal right to execute and deliver the
Loan Documents to which it is a party and to perform its obligations thereunder.
The execution and delivery by such French Borrowing Subsidiary of the Loan
Documents to which it is a party and the performance by it of its obligations
thereunder have been duly authorized by proper corporate proceedings, and such
Loan Documents constitute legal, valid and binding obligations of such French
Borrowing Subsidiary enforceable against such French Borrowing Subsidiary in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles.
5A.3. No Conflict; Government Consent. Neither the execution and delivery
by such French Borrowing Subsidiary of the Loan Documents to which it is a
party, nor the consummation by it of the transactions therein contemplated to be
consummated by it, nor compliance by such French Borrowing Subsidiary with the
provisions thereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on such French Borrowing
Subsidiary or any of its Subsidiaries or such French Borrowing Subsidiary's or
any of its Subsidiaries' certificates or articles of incorporation or by-laws
(statuts) or the provisions of any indenture, instrument or agreement to which
such French Borrowing Subsidiary or any of its Subsidiaries is a party or is
subject, or by which it, or its Property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition of any
Lien in, of or on the Property of such French Borrowing Subsidiary or any of its
Subsidiaries pursuant to the terms of any such indenture, instrument or
agreement in any such case which violation, conflict, default, creation or
imposition could reasonably be expected to have a Material Adverse Effect. No
order, consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption
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by, any governmental agency is required to authorize, or is required in
connection with the execution, delivery and performance of, or the legality,
validity, binding effect or enforceability of, any of the Loan Documents other
than the mandatory filings with the relevant French Companies Register and the
French tax authorities, as the case may be.
5A.4. Filing. To ensure the enforceability or admissibility in evidence
of this Agreement and the Notes of such French Borrowing Subsidiary in France,
it is not necessary that this Agreement or the Notes of such French Borrowing
Subsidiary or any other document be filed or recorded with any court or other
authority in France or that any stamp or similar tax be paid to or in respect of
this Agreement or the Notes of such French Borrowing Subsidiary other than taxes
paid or payable in connection with any real property lien filings with respect
to the real property collateral and the stamp duty known as "timbre de
dimension" which is due if this Agreement is signed in France. The
qualification by any Lender or the Agent for admission to do business under the
laws of France does not constitute a condition to, and the failure to so qualify
does not affect, the exercise by any Lender or the Agent of any right,
privilege, or remedy afforded to any Lender or the Agent in connection with the
Loan Documents to which such French Borrowing Subsidiary is a party or the
enforcement of any such right, privilege, or remedy against such French
Borrowing Subsidiary. The performance by any Lender or the Agent of any action
required or permitted under the Loan Documents will not (i) violate any law or
regulation of France or any political subdivision thereof, (ii) result in any
tax or other monetary liability to such party pursuant to the laws of France or
political subdivision or taxing authority thereof (provided that, should any
such action result in any such tax or other monetary liability to the Lender or
the Agent, the Borrower hereby agrees to indemnify such Lender or the Agent, as
the case may be, against (x) any such tax or other monetary liability and (y)
any increase in any tax or other monetary liability which results from such
action by such Lender or the Agent and, to the extent the Borrower makes such
indemnification, the incurrence of such liability by the Agent or any Lender
will not constitute a Default) or (iii) violate any rule or regulation of any
federation or organization or similar entity of which France is a member.
5A.5. No Immunity. Neither such French Borrowing Subsidiary nor any of
its assets is entitled to immunity from suit, execution, attachment or other
legal process. Such French Borrowing Subsidiary's execution and delivery of the
Loan Documents to which it is a party constitute, and the exercise of its rights
and performance of and compliance with its obligations under such Loan Documents
will constitute, private and commercial acts done and performed for private and
commercial purposes.
5A.6. Investment Company Act. Neither such French Borrowing Subsidiary
nor any Subsidiary thereof is an "investment company" or a company "controlled"
by an "investment company", within the meaning of the Investment Company Act of
1940, as amended.
5A.7. Public Utility Holding Company Act. Neither such French Borrowing
Subsidiary nor any Subsidiary thereof is a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company"
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of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
5A.8. Regulation U. Margin stock (as defined in Regulation U) constitutes
less than 25% of those assets of such French Borrowing Subsidiary and its
Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder.
ARTICLE VI: COVENANTS
---------
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. Financial Reporting. The Company will maintain, for itself and each
Consolidated Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Agent, for distribution to the Lenders:
(i) Within 90 days after the close of each of its fiscal years, an
unqualified audit report (with all amounts stated in Dollars)
certified by independent certified public accountants acceptable
to the Required Lenders, prepared in accordance with U.S. GAAP
on a consolidated basis for itself and the Consolidated
Subsidiaries, including balance sheets as of the end of such
period, related profit and loss and reconciliation of surplus
statements, and a statement of cash flows, accompanied by a
certificate of said accountants that, in the course of their
examination necessary for their certification of the foregoing,
they have obtained no knowledge of any Default or Unmatured
Default, or if, in the opinion of such accountants, any Default
or Unmatured Default shall exist, stating the nature and status
thereof.
(ii) Within 60 days after the close of the first three quarterly
periods of each of its fiscal years, for itself and the
Consolidated Subsidiaries, unaudited balance sheets as at the
close of each such period and consolidated and consolidating
profit and loss and reconciliation of surplus statements and a
statement of cash flows for the period from the beginning of
such fiscal year to the end of such quarter, all certified by
its Financial Officer.
(iii) Together with the financial statements required hereunder, a
compliance certificate in substantially the form of Exhibit I
hereto signed by its Financial Officer showing the calculations
necessary to determine compliance with this Agreement and
stating that no Default or
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Unmatured Default exists, or if any Default or Unmatured Default
exists, stating the nature and status thereof.
(iv) Promptly upon the furnishing thereof to the shareholders of the
Company, copies of all financial statements, reports and proxy
statements so furnished.
(v) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular
reports which the Company or any of its Subsidiaries files with
the Securities and Exchange Commission.
(vi) As soon as practicable, and in any event within thirty (30) days
after the close of each calendar month, the Company shall provide
the Agent and the Lenders with a Domestic Borrowing Base
Certificate and the French Borrowing Subsidiaries or the Company
on behalf of the French Borrowing Subsidiaries shall provide the
Agent and the Lenders with a French Borrowing Base Certificate,
together with such supporting documents as the Agent may
reasonably request, all certified as being true and correct by a
Financial Officer. The Company or the French Borrowing
Subsidiaries, as the case may be, may update the Borrowing Base
Certificates and supporting documents more frequently than
monthly and the most recently delivered Borrowing Base
Certificates shall be the applicable Borrowing Base Certificates
for purposes of determining the Borrowing Base at any time.
(vii) Such other information (including non-financial information) as
the Agent or any Lender may from time to time reasonably request.
6.2. Use of Proceeds. The Company will use the proceeds of the Advances
for general corporate purposes and to pay a portion of the purchase price in
connection with the purchase of the outstanding Capital Stock of certain
Subsidiaries of Sofitam pursuant to the Option Agreement. The French
Subsidiaries will use the proceeds of the initial Advance made to them solely to
provide for the refinancing of existing credit facilities of the French
Subsidiaries, and the French Subsidiaries will use the proceeds of each
subsequent Advance, to the extent a portion of such Advance is lent to any one
of them, solely for general corporate purposes, excluding the purchase of the
Capital Stock of any of the French Subsidiaries. None of the proceeds of the
Advances shall be used in any manner which would violate or cause any Lender to
be in violation of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System.
6.3. Notice of Default. The Company will, and will cause each of its
Material Subsidiaries to, give prompt notice in writing to the Agent of the
occurrence of any Default or Unmatured Default.
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6.4. Corporate Existence. The Company will, and will cause each domestic
Material Subsidiary to, do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in its
jurisdiction of incorporation and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted except to
the extent that the failure to maintain such authority would not reasonably be
expected to result in a Material Adverse Effect. The Company will cause each
non-domestic Material Subsidiary to do all things necessary to remain duly
organized, validly existing and in good standing in its jurisdiction of
organization and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted except to the extent that
the failure to maintain such authority would not reasonably be expected to
result in a Material Adverse Effect.
6.5. Taxes. The Company will, and will cause each Material Subsidiary to,
pay when due all material taxes, assessments and governmental charges and levies
upon it or its income, profits or Property, except those which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been set aside.
6.6. Insurance. The Company will, and will cause each Material Subsidiary
to, maintain with financially sound and reputable insurance companies insurance
on all their Property in such amounts and covering such risks as is consistent
with sound business practice.
6.7. Compliance with Laws. The Company will, and will cause each Material
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject, including,
without limitation, laws relating to pension funds and environmental
liabilities, which, if violated, could reasonably be expected to have a Material
Adverse Effect.
6.8. Inspection. The Company will, and will cause each Material and
Borrowing Subsidiary to, permit the Lenders, by their respective representatives
and agents, to inspect any of the Properties, corporate books and financial
records of the Company and each such Subsidiary, to examine and make copies of
the books of accounts and other financial records of the Company and each such
Subsidiary, and to discuss the affairs, finances and accounts of the Company and
each such Subsidiary with, and to be advised as to the same by, their respective
officers at such reasonable times and intervals as the Lenders may designate,
provided that, after the occurrence and during the continuance of a Default, the
preceding references to "each Material and Borrowing Subsidiary" and "such
Subsidiary" shall be deemed to refer to each Subsidiary of the Company, whether
or not such Subsidiary is a Borrowing Subsidiary or a Material Subsidiary. The
expenses incurred by the Lenders in connection with the first two such
inspections (including the field audit provided for in the following sentence)
in any fiscal year, and all inspections which occur after the occurrence and
during the continuance of a Default, shall be reimbursed by the Company promptly
following the Agent's demand. In addition, the Agent shall, in each fiscal
year, conduct one field audit of the Borrowers, including an audit of each
Borrower's financial condition
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(including each such Borrower's accounts receivable, accounts payable, and
inventory), business operations and Properties, and the Company shall pay the
Agent's customary field audit charges and expenses in connection with such field
audits.
6.9. Sale of Assets. The Company will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its Property, to any other
Person, except:
(i) Sales of inventory in the ordinary course of business.
(ii) Leases, sales or other dispositions of its Property for not less than
Fair Market Value and for consideration consisting of at least eighty
percent (80%) cash and Cash Equivalents, that, together with all other
Property of the Company and its Subsidiaries previously leased, sold
or disposed of (other than inventory in the ordinary course of
business) as permitted by this Section during the twelve-month period
ending with the month in which any such lease, sale or other
disposition occurs, do not constitute a Substantial Portion of the
Property of the Company and its Subsidiaries.
(iii) Sales of obsolete, surplus or worn-out equipment.
(iv) Sales or other transfers of assets from a Borrower or Subsidiary
Guarantor to another Borrower or Subsidiary Guarantor.
(v) Sales of accounts receivables which the Company has classified as
uncollectible.
(vi) Sales or other dispositions of Cash Equivalents.
(vii) Sales or leases of real property described on Schedule 6.9.
(viii) Leases, sales or other dispositions not otherwise permitted by the
foregoing clauses of this Section in an aggregate amount not to exceed
$500,000 in any fiscal year.
6.10. Liens. The Company will not, nor will it permit any Consolidated
Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the
Property of the Company or any Consolidated Subsidiary, except:
(i) Liens existing on the date of this Agreement securing
Indebtedness outstanding on the date of this Agreement as set
forth on Schedule 6.10 attached hereto;
(ii) any Lien existing on any Property of any corporation at the time
such corporation becomes a Consolidated Subsidiary and not
created in
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contemplation of such event, provided that such Lien does not
extend to or cover any Property of the Company or any other
Consolidated Subsidiary;
(iii) any Lien on any Property securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost
of acquiring such Property, provided that such Lien attaches to
such Property concurrently with or within 120 days after the
acquisition thereof and such Lien does not extend to or cover any
Property of the Company or any Consolidated Subsidiary other than
the Property then being acquired;
(iv) any Lien on any Property of any other corporation existing at the
time such corporation is merged or consolidated with or into the
Company or a Consolidated Subsidiary and not created in
contemplation of such event, provided that such Lien does not
extend to or cover any Property of the Company or any
Consolidated Subsidiary other than the Property of such other
corporation;
(v) any Lien existing on any Property prior to the acquisition
thereof by the Company or a Consolidated Subsidiary and not
created in contemplation of such acquisition, provided that such
Lien does not extend to or cover any Property of the Company or
any Consolidated Subsidiary other than the Property then being
acquired;
(vi) any Lien arising out of the refinancing, extension, renewal or
refunding of any Indebtedness secured by any Lien permitted by
any of the foregoing clauses of this Section, provided that such
Indebtedness is not increased and is not secured by any
additional Property;
(vii) Liens incidental to the conduct of its business or the
ownership of its Property which (i) do not secure Indebtedness
and (ii) do not in the aggregate materially detract from the
value of its Property or materially impair the use thereof in the
operation of its business;
(viii) Statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and
other similar Liens imposed by law created in the ordinary course
of business for amounts not yet due or which are being contested
in good faith by appropriate proceedings and with respect to
which adequate reserves or other appropriate provisions are being
maintained in accordance with U.S. GAAP.
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(ix) Liens in favor of the Agent for the benefit of itself and the
Holders of Secured Obligations to secure the Secured
Obligations.
(x) Liens not otherwise permitted by the foregoing clauses of this
Section securing Indebtedness in an aggregate principal amount
at any time outstanding not to exceed $10,000,000.
(xi) Liens on assets of Subsidiaries that are not Wholly-Owned to
secure Indebtedness permitted under Section 6.19(ix).
6.11. Rentals. Neither the Company nor any Subsidiary shall create, incur
or suffer to exist obligations for Rentals in excess of the amounts set forth
below during the fiscal years set forth below on a non-cumulative basis in the
aggregate for the Company and its Subsidiaries:
Fiscal Year Ending On or About
the Dates Set Forth Below Maximum Amount
<TABLE>
<CAPTION>
<S> <C>
November 30, 1996 $ 6,000,000
November 30, 1997 $ 8,000,000
November 30, 1998 $ 9,000,000
November 30, 1999 $10,000,000
November 30, 2000 $11,000,000
November 30, 2001 $12,000,000
Thereafter $13,000,000
</TABLE>
6.12. Consolidated Net Worth. The Company shall maintain, as of the end of
each fiscal quarter, Consolidated Net Worth of not less than the sum of
(i)$13,000,000 plus (ii) 60% of Consolidated Net Income (if positive) for each
fiscal year of the Company commencing with the fiscal year ending on or about
November 30, 1997 and concluding with the fiscal year ending most recently prior
to the date of determination but without deduction for any fiscal year in which
there is a loss plus (iii) 100% of net cash proceeds received after the
Effective Date from the issuance of Capital Stock of the Company or any of its
Subsidiaries to any Person other than the Company or its Subsidiaries.
6.13. Dividends. The Company will not, nor will it permit any Subsidiary
to, declare or pay any dividends or make any distributions on its Capital Stock
(other than dividends payable in its own Capital Stock) or redeem, repurchase or
otherwise acquire or retire any of its Capital Stock at any time outstanding,
except that (a) any Subsidiary may declare and pay dividends or make
distributions to the Company or to a Wholly-Owned Subsidiary and (b) the Company
may declare and pay dividends the proceeds of which are used to make required
payments on the ESOP Loans, and, after the ESOP Loans are repaid, to fulfill the
Company's obligations in connection with the Company's agreements with its
Employee Stock Ownership Plan.
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6.14 Guaranties. The Company will cause each Person that becomes a
material (as defined in Section 1-02(w)(1), (2) or (3) of Regulation S-X under
the Securities Act of 1933, as amended) direct or indirect domestic Subsidiary
of the Company after the date of this Agreement (whether as the result of an
Acquisition, creation or otherwise) to (a) execute and deliver a Subsidiary
Guaranty and Subsidiary Security Agreement to and in favor of the Agent for the
benefit of itself and the Holders of Secured Obligations and (b) execute and
deliver a supplement to the Contribution Agreement, in each case together with
an opinion of counsel, corporate resolutions and such other corporate
documentation as the Agent may reasonably request, all in form and substance
reasonably satisfactory to the Agent and in each case within 30 days after
becoming a direct or indirect material Subsidiary of the Company. Subject to
applicable French law, the Company will cause each Person that becomes a
material (as defined in Section 1-02(w)(1), (2) or (3) of Regulation S-X under
the Securities Act of 1933, as amended) direct or indirect Subsidiary of the
Company after the date of this Agreement (whether as the result of an
Acquisition, creation or otherwise) which Subsidiary is organized under the laws
of the Republic of France to (a) execute and deliver a guaranty and security
documentation to and in favor of the Agent for the benefit of itself and the
Holders of Secured Obligations and (b) execute and deliver a supplement to the
Contribution Agreement, in each case together with an opinion of counsel,
corporate resolutions and such other corporate documentation as the Agent may
reasonably request, all in form and substance reasonably satisfactory to the
Agent and in each case within 30 days after becoming a material direct or
indirect French Subsidiary of the Company.
6.15 Sale and Leaseback Transactions or other Off Balance Sheet
Liabilities. The Company will not, nor will it permit any Subsidiary to, enter
into or suffer to exist any (i) Sale and Leaseback Transaction or (ii) any other
transaction pursuant to which it incurs or has incurred Off Balance Sheet
Liabilities (other than Rate Hedging Obligations permitted to be incurred under
the terms of Section 6.23 below).
6.16 Merger and Consolidation. The Company will not, nor will it permit
any Subsidiary to, merge or consolidate with or into any other Person, except
that a Subsidiary may merge into the Company or a Wholly-Owned Subsidiary.
6.17 Investments and Acquisitions. The Company will not, nor will it
permit any Subsidiary to, make or suffer to exist any Investments (including
without limitation, loans and advances to, and other Investments in,
Subsidiaries), or commitments therefor, or to create any Subsidiary or to become
or remain a partner or member in any partnership, limited liability company or
joint venture, or to make any Acquisition of any Person, except Investments
consisting of:
(i) Cash Equivalents.
(ii) Demand deposit accounts maintained in the ordinary course of business.
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(iii) Existing Investments in Subsidiaries and other Investments in
existence on the date hereof and described in Schedule 6.17 hereto.
(iv) Loans permitted under Section 6.19(iv), (v), (vi), (vii), (viii) and
(x).
(v) The acquisition by Sofitam-Tokheim of shares in Bennett Sauser AG
from Sofitam S.A. pursuant to the terms of the Option Agreement upon
the expiration of the three month pre-emption period applicable
thereto.
(vi) Investments received in connection with the sale or other disposition
of assets or received in connection with the collection or compromise
of accounts receivable.
6.18. Capital Expenditures. The Company will not, nor will it permit any
Subsidiary to, expend Capital Expenditures in each case determined in the
aggregate for the Company and its Subsidiaries, in excess of (a) $10,000,000
during the period from the Effective Date through the end of the fiscal year
ending November 30, 1996, (b) during any fiscal year during the period beginning
December 1, 1996 and ending November 30, 1999, $10,000,000 plus the difference,
if positive, between the maximum aggregate amount of Capital Expenditures
permitted to be expended in the immediately preceding fiscal year, provided,
however, that such carryover amount shall not exceed fifty percent (50%) of the
maximum aggregate amount of Capital Expenditures permitted for the immediately
preceding fiscal year (the "Carryover Amount"), (c) during the fiscal year
beginning December 1, 1999 and ending November 30, 2000, $13,000,000 plus the
Carryover Amount, (d) during the fiscal year beginning December 1, 2000 and
ending November 30, 2001, $14,000,000 plus the Carryover Amount and (e) during
any fiscal year thereafter,$15,000,000 plus the Carryover Amount.
6.19. Indebtedness. The Company will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(i) The Loans, Reimbursement Obligations, ESOP Loans, other Indebtedness
under the Loan Documents and Permitted Subordinated Debt.
(ii) Indebtedness existing on the date hereof and described in Schedule
6.19 hereto.
(iii) Indebtedness arising under Rate Hedging Agreements permitted by
Section 6.23.
(iv) Indebtedness of Sofitam-Tokheim or a Borrowing Subsidiary to the
Company arising from loans made on the Effective Date by the Company
to such Subsidiary on terms and with interest rates reasonably
acceptable to the Agent
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and evidenced by notes pledged to the Agent to secure the Secured
Obligations.
(v) Indebtedness of any Subsidiary to the Company or Sofitam-Tokheim
pursuant to management agreements or other similar agreements
acceptable to the Agent.
(vi) Indebtedness of the Company to any Subsidiary in connection with
loans made by any such Subsidiary to the Company.
(vii) Indebtedness of any of the Borrowers or Guarantor Subsidiaries to
any of the Borrowers or Guarantor Subsidiaries evidenced by notes
pledged to the Agent to secure the Secured Obligations.
(viii) Indebtedness of Subsidiaries that are neither Borrowers nor
Guarantor Subsidiaries not otherwise permitted by the foregoing
clauses of this Section provided the aggregate outstanding
principal amount of all such Indebtedness does not at any time
exceed $5,000,000.
(ix) Indebtedness secured by Liens permitted pursuant to Section
6.10(iii), (iv) and (v), Indebtedness in connection with overdraft
facilities and other Indebtedness not otherwise permitted by the
foregoing clauses of this Section provided the aggregate
outstanding principal amount for all such Indebtedness described in
this Section 6.19(ix) does not at any time exceed $10,000,000.
(x) Indebtedness of any Subsidiary in connection with sales made to
such Subsidiary on normal trade terms.
6.20. ERISA.
(a) ERISA Information. The Company shall deliver or cause to be delivered
to the Agent, at the Company's expense, the following information and notices
as soon as reasonably possible, and in any event:
(i) within ten (10) Business Days after the Company or any ERISA
Affiliate knows or has reason to know that a Termination Event has
occurred, a written statement of the chief financial officer of the Company
describing such Termination Event and the action, if any, which the Company
or any ERISA Affiliate has taken, is taking or proposes to take with
respect thereto, and when known, any action taken or threatened by the IRS,
DOL or PBGC with respect thereto;
(ii) within ten (10) Business Days after the Company or any ERISA
Affiliate knows or has reason to know that a non-exempt prohibited
transaction (defined in Sections 406 of ERISA and 4975 of the Internal
Revenue Code) with
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respect to any Plan has occurred, a statement of the chief financial
officer of the Company describing such transaction and the action which the
Company or any ERISA Affiliate has taken, is taking or proposes to take
with respect thereto;
(iii) within ten (10) Business Days after the request by the Agent or
the Required Lenders therefor, copies of each annual report (Form 5500
Series), including Schedule B thereto, filed with respect to each Benefit
Plan.
(iv) within ten (10) Business Days after request therefor by the Agent
or the Required Lenders, each actuarial report for any Benefit Plan or
Multiemployer Plan and each annual report for any Multiemployer Plan,
copies of each such report;
(v) within ten (10) Business Days after the filing thereof with the
IRS, a copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by the Company or any ERISA
Affiliate with respect to such request;
(vi) within ten (10) Business Days upon the occurrence thereof,
notification of any material increase in the benefits of any existing Plan
or the establishment of any new Plan or the commencement of contributions
to any Plan to which the Company or any ERISA Affiliate was not previously
contributing;
(vii) within ten (10) Business Days after receipt by the Company or
any ERISA Affiliate of the PBGC's intention to terminate a Benefit Plan or
to have a trustee appointed to administer a Benefit Plan, copies of each
such notice;
(viii) within ten (10) Business Days after receipt by the Company or
any ERISA Affiliate of any unfavorable determination letter from the IRS
regarding the qualification of a Plan under Section 401(a) of the Internal
Revenue Code, copies of each such letter;
(ix) within ten (10) Business Days after receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan regarding the
imposition of withdrawal liability, copies of each such notice;
(x) within ten (10) Business Days after the Company or any ERISA
Affiliate fails to make a required installment or any other required
payment under Section 412 of the Internal Revenue Code on or before the due
date for such installment or payment, a notification of such failure;
(xi) within ten (10) Business Days after the Company or any ERISA
Affiliate knows or has reason to know (a) a Multiemployer Plan has been
terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a
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Multiemployer Plan, or (c) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan;
and
(xii) within ten (10) Business Days after receipt by the Company of a
written notice from the Agent or the Required Lenders, copies of any
Foreign Employee Benefit Plan and related documents, reports and
correspondence as requested by the Lenders in such notice.
(b) The Company shall, and shall cause each of its Subsidiaries and ERISA
Affiliates to, establish, maintain and operate all Plans to comply in all
material respects with the provisions of ERISA, the Internal Revenue Code, all
other applicable laws, and the regulations and interpretations thereunder and
the respective requirements of the governing documents for such Plans.
6.21. Affiliates. Except as otherwise specifically permitted in the other
provisions of this Agreement, the Company will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Company's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to the Company or
such Subsidiary than the Company or such Subsidiary would obtain in a comparable
arms-length transaction; provided, however, that nothing in this Section shall
prevent the Company and its Subsidiaries from entering into any management
agreement as in effect on the Effective Date or as amended or replaced
thereafter provided such amendment or replacement agreement is on terms and
conditions reasonably acceptable to the Agent and the Required Lenders or any
intercompany loan agreements from the Company to any of its Wholly-owned
Subsidiaries on terms and conditions reasonably acceptable to the Agent and the
Required Lenders.
6.22. Conduct of Business. The Company will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted.
6.23. Rate Hedging Obligations. The Company shall not and shall not
permit any of its Subsidiaries to enter into any interest rate, commodity or
foreign currency exchange, swap, collar, cap, leveraged derivative or similar
agreements other than interest rate, foreign currency or commodity exchange,
swap, collar, cap or similar agreements pursuant to which the Company or its
Subsidiaries have hedged its or its Subsidiaries' actual interest rate, foreign
currency or commodity exposure (such hedging agreements are sometimes referred
to herein as "Interest Rate Agreements").
6.24. Leverage Ratio to exceed the amounts set forth below during the
fiscal periods set forth Leverage Ratio. At any and all times, the Company shall
not permit the Total below:
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<PAGE>
Fiscal Quarter Ending On or About
the Dates Set Forth Below: Maximum Ratio
- -------------------------- -------------
February 28, 1998 5.00 to 1.00
May 31, 1998 4.75 to 1.00
August 31, 1998 4.50 to 1.00
November 30, 1998 4.00 to 1.00
February 28, 1999 4.00 to 1.00
May 31, 1999 4.00 to 1.00
August 31, 1999 4.00 to 1.00
November 30, 1999 3.50 to 1.00
February 29, 2000 3.50 to 1.00
May 31, 2000 3.50 to 1.00
August 31, 2000 3.50 to 1.00
November 30, 2000 3.00 to 1.00
February 28, 2001 3.00 to 1.00
May 31, 2001 3.00 to 1.00
August 31, 2001 3.00 to 1.00
And at all times
during each fiscal quarter thereafter 2.50 to 1.00
6.25. Interest Expense Coverage Ratio. The Company shall not permit
the Interest Expense Coverage Ratio to be less than the amounts set forth below
for the fiscal periods set forth below:
Fiscal Quarter Ending On or About
the Dates Set Forth Below: Minimum Ratio
- -------------------------- -------------
November 30, 1996 1.15 to 1.00
February 28, 1997 1.15 to 1.00
May 31, 1997 1.15 to 1.00
August 31, 1997 1.15 to 1.00
November 30, 1997 1.50 to 1.00
February 28, 1998 1.50 to 1.00
May 31, 1998 1.50 to 1.00
August 31, 1998 1.50 to 1.00
November 30, 1998 2.00 to 1.00
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<PAGE>
And for each fiscal quarter ending thereafter
6.26. Fixed Charge Coverage Ratio. The Company shall not permit the
Fixed Charge Coverage Ratio to be less than the amounts set forth below for
the fiscal periods set forth below:
Fiscal Quarter Ending On or About
the Dates Set Forth Below: Minimum Ratio
- -------------------------- -------------
November 30, 1996 1.10 to 1.00
February 28, 1997 1.00 to 1.00
May 31, 1997 1.00 to 1.00
August 31, 1997 1.00 to 1.00
November 30, 1997 1.10 to 1.00
February 28, 1998 1.05 to 1.00
May 31, 1998 1.05 to 1.00
August 31, 1998 1.05 to 1.00
November 30, 1998 1.10 to 1.00
February 28, 1999 1.10 to 1.00
May 31, 1999 1.10 to 1.00
August 31, 1999 1.10 to 1.00
November 30, 1999 1.15 to 1.00
February 29, 2000 1.15 to 1.00
May 31, 2000 1.15 to 1.00
August 31, 2000 1.15 to 1.00
And for each fiscal quarter ending thereafter 1.25 to 1.00
6.27. Minimum EBITDA. The Company shall not permit EBITDA to be less
than the amounts set forth below for the fiscal periods ending on the dates
set forth below:
Fiscal Quarter Ending on or About
the Dates Set Forth Below: Minimum EBITDA
- -------------------------- --------------
November 30, 1996 $ 9,000,000
February 28, 1997 $10,000,000
May 31, 1997 $18,000,000
August 31, 1997 $22,000,000
November 30, 1997 $32,000,000
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In each case (excluding the fiscal period ending on or about November 30, 1997),
EBITDA shall be determined as of the last day of each fiscal quarter for the
period beginning September 1, 1996 and ending on such date. In the case of the
fiscal period ending on or about November 30, 1997, EBITDA shall be determined
as of the last day of the fiscal quarter then ended for the four fiscal quarter
period ending on such date.
6.28. Foreign Employee Benefit Compliance. The Company shall, and shall
cause each of the other Material Subsidiaries and ERISA Affiliates to,
establish, maintain and operate all Foreign Employee Benefit Plans to comply in
all material respects with all laws, regulations and rules applicable thereto
and the respective requirements of the governing documents for such Plans,
except for failures to comply which, in the aggregate, would not result in a
material obligation to pay money.
6.29 Subordinated Indebtedness. The Company shall not amend, supplement
or modify the terms of the Permitted Subordinated Debt, or make any payment
required as a result of an amendment or change thereto other than amendments,
supplements or modifications which (i) decrease the rate of interest payable on
such Permitted Subordinated Debt, (ii) provide for the payment in kind in lieu
of cash of any portion of the interest on such Permitted Subordinated Debt,
(iii) provide for the extension of the maturity date with respect to any
principal or interest payment to be made under the instruments evidencing the
Permitted Subordinated Debt, (iv) provide more flexibility to the Company in
connection with any financial or other covenants, and (v) waive any defaults
existing in connection with the Permitted Subordinated Debt.
6.30 Payments and Prepayments. Neither the Company nor any of its
Subsidiaries shall make any payment or prepayment of principal, fees or other
charges (other than interest) on or with respect to, or any redemption,
purchase, retirement, defeasance, sinking fund or payment on any claim for
damages or rescission with respect to the Permitted Subordinated Debt.
6.31 ERISA. The Company shall not:
(i) engage, or permit any ERISA Affiliate to engage, in any
prohibited transaction described in Sections 406 of ERISA or 4975 of the
Internal Revenue Code for which a statutory or class exemption is not
available or a private exemption has not been previously obtained from the
Department of Labor;
(ii) permit to exist any accumulated funding deficiency (as defined
in Sections 302 of ERISA and 412 of the Internal Revenue Code) with respect
to any Benefit Plan, whether or not waived;
(iii) fail, or permit any ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
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(iv) terminate, or permit any ERISA Affiliate to terminate, any
Benefit Plan which would result in any liability of Borrower or any ERISA
Affiliate under Title IV of ERISA in excess of $5,000,000;
(v) fail to make any contribution or payment to any Multiemployer
Plan which Borrower or any ERISA Affiliate may be required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining
thereto;
(vi) fail, or permit any ERISA Affiliate to fail, to pay any required
installment or any other payment required under Section 412 of the Internal
Revenue Code on or before the due date for such installment or other
payment;
(vii) amend, or permit any ERISA Affiliate to amend, a Plan resulting
in an increase in current liability for the plan year such that the Company
or any ERISA Affiliate is required to provide security to such Plan under
Section 401(a)(29) of the Internal Revenue Code;
(viii) permit any unfunded liabilities with respect to any Foreign
Pension Plan which are not liabilities on the Company's financial
statements referred to in Section 6.1(i) and (ii) in excess of $500,000; or
(ix) fail, or permit any Subsidiary or ERISA Affiliate to fail, to
pay any required contributions or payments to a Foreign Pension Plan on or
before the due date for such required installment or payment.
ARTICLE VII: DEFAULTS
The occurrence and continuance of any one or more of the following events
shall constitute a Default:
7.1. Any material representation or warranty made or deemed made under
Article V by the Company or any Subsidiary to the Lenders or the Agent under or
in connection with this Agreement or any certificate or other document delivered
in connection with this Agreement or any other Loan Document shall be materially
false on the date as of which made or deemed made.
7.2. Nonpayment of principal of any Note, Swing Loan or Reimbursement
Obligation when due, or nonpayment of interest upon any Note, Swing Loan or
Reimbursement Obligation or of any facility fee or other obligations under any
of the Loan Documents within five days after the same becomes due.
7.3. The breach by the Company of any of the terms or provisions of
Sections 6.2, 6.9, 6.10, 6.12, 6.13, 6.15, 6.16, 6.18, 6.19, 6.24, 6.25, 6.26,
6.27, 6.29 and 6.30.
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7.4. The breach by the Company of any of the terms or provisions of
Section 6.1 which is not remedied within fifteen days of the initial occurrence
of such breach.
7.5. The breach by the Company (other than a breach which constitutes a
Default under Section 7.1, 7.2, 7.3 or 7.4) of any of the terms or provisions of
this Agreement which is not remedied within thirty days after written notice
from the Agent or any Lender.
7.6. Failure of the Company or any of its Subsidiaries to pay Indebtedness
in an aggregate amount equal to or greater than $3,000,000 (or the Equivalent
Amount of Indebtedness denominated in a currency other than Dollars) when due;
or the default by the Company or any of its Subsidiaries in the performance of
any term, provision or condition contained in any agreement under which any such
Indebtedness was created or is governed, or any other event shall occur or
condition exist, the effect of which is to cause, or to permit the holder or
holders of such Indebtedness to cause, Indebtedness in such aggregate amount to
become due prior to its stated maturity; or Indebtedness in such aggregate
amount of the Company or any of its Subsidiaries shall be declared to be due and
payable or required to be prepaid (other than by a regularly scheduled payment
or as a result of the sale of an asset securing such Indebtedness) prior to the
stated maturity thereof.
7.7. Any Borrower or any Material Subsidiary shall (i) commence a
voluntary case under any bankruptcy, insolvency or other similar law as now or
hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii)
fail to pay, or admit in writing its inability to pay, its debts generally as
they become due, (iv) apply for, seek, consent to, or acquiesce in, the
appointment of a receiver, custodian, trustee, examiner, liquidator or similar
official for it or any Substantial Portion of its Property, (v) institute any
proceeding seeking an order for relief under any bankruptcy, insolvency or other
similar law as now or hereafter in effect or seeking to adjudicate it a bankrupt
or insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, (vi) take any corporate action to authorize or
effect any of the foregoing actions set forth in this Section 7.7 or (vii) fail
to contest in good faith any appointment or proceeding described in Section 7.8.
7.8. Without the application, approval or consent of any Borrower or any
Material Subsidiary, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for any Borrower or any Material Subsidiary or any
Substantial Portion of the Property of any such Person, or a proceeding
described in Section 7.7(iv) shall be instituted against any Borrower or any
Material Subsidiary and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of 60 consecutive
days.
7.9. Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of (each a "Condemnation"),
all or any portion of the Property of any Borrower or any Material Subsidiary
which, when taken
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together with all other Property of any Borrower and the Material Subsidiaries
so condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such Condemnation occurs,
constitutes a Substantial Portion.
7.10. The Company or any of its Subsidiaries shall fail within 30 days to
pay, bond or otherwise discharge any judgment or order for the payment of money
in excess of $3,000,000 (or the Equivalent Amount if denominated in a currency
other than Dollars), which is not stayed on appeal or otherwise being
appropriately contested in good faith.
7.11. The Unfunded Liabilities of all Single Employer Plans shall exceed
in the aggregate $5,500,000, or any Reportable Event shall occur in connection
with any Plan which could reasonably be expected to have a Material Adverse
Effect.
7.12. The Company or any of its Subsidiaries shall be the subject of any
proceeding or proceedings pertaining to the spill, release or disposal by the
Company or any of its Subsidiaries, or any other Person of any toxic, dangerous
or hazardous waste or substance into the environment, or to any violation of any
federal, state, regional, departmental or local environmental, health or safety
law or regulation, which could reasonably be expected to result in total
liability to the Company or any of its Subsidiaries, in the aggregate, in excess
of a Substantial Portion.
7.13. The obligations of the Company under Article IX hereof shall fail to
remain in full force or effect or any action shall be taken to discontinue or to
assert the invalidity or unenforceability of any of such obligations, or the
Company shall deny that it has any further liability under such Article IX, or
shall give notice to such effect.
7.14. Any Change in Control shall occur.
7.15. At any time, for any reason, (i) any Loan Document as a whole that
materially affects the ability of the Agent, or any of the Lenders to enforce
the Obligations or enforce their rights against the Collateral ceases to be in
full force and effect or the Company or any of its Subsidiaries party thereto
seeks to repudiate its obligations thereunder and the Liens intended to be
created thereby are, or the Company or any such Subsidiary seeks to render such
Liens, invalid and unperfected, or (ii) Liens on Collateral with a Fair Market
Value in excess of $100,000 in favor of the Agent contemplated by the Loan
Documents shall, at any time, for any reason, be invalidated or otherwise cease
to be in full force and effect, or such Liens shall not have the priority
contemplated by this Agreement or the Loan Documents and such situation
contemplated by this subclause (ii) shall continue for five (5) Business Days..
7.16 Any Termination Event occurs which could reasonably be expected to
subject either the Company or any ERISA Affiliate to liability individually or
in the aggregate in excess of $3,000,000.
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7.17 The plan administrator of any Plan applies under Section 412(d) of
the Code for a waiver of the minimum funding standards of Section 412(a) of the
Code.
ARTICLE VIII: ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------
8.1. Acceleration. If any Default described in Section 7.7 or 7.8 occurs
with respect to the Company or any of its Material Subsidiaries, the obligations
of the Lenders to make Loans or purchase participations in Letters of Credit
hereunder, the obligations of the Swing Loan Lenders to make Swing Loans
hereunder and the obligation of the Issuing Lenders to issue Letters of Credit
hereunder shall automatically terminate and the Obligations of the Company and
each Borrowing Subsidiary shall immediately become due and payable without
presentment, demand, protest or notice of any kind (all of which the Company
hereby expressly waives) or any other election or action on the part of the
Agent, any Lender, any Swing Loan Lender or any Issuing Lender. If any other
Default occurs and is continuing, the Required Lenders may terminate or suspend
the obligations of the Lenders to make Loans or purchase participations in Swing
Loans and Letters of Credit hereunder, whereupon the obligation of the Swing
Loan Lenders to make Swing Loans and the Issuing Lenders to issue Letters of
Credit hereunder shall also terminate or be suspended or declare the Obligations
of the Company and each Borrowing Subsidiary to be due and payable, or both, in
either case upon written notice to the Company and the applicable Borrower,
whereupon the Obligations shall become immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which each
Borrower hereby expressly waives.
8.2. Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Company may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Company hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Lender affected thereby:
(i) Extend the maturity of any Loan, Note or Reimbursement
Obligation or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of Required
Lenders.
(iii) Extend the Termination Date or increase the amount of the
Commitment of any Lender hereunder (except with respect to an
increase in the amount, or other modification to the terms or
components, of the Borrowing Base), or permit the Company to
assign its rights under this Agreement.
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(iv) Amend or modify Section 8.1 or this Section 8.2.
(v) Amend, modify or waive Article IX or release the Company from its
obligations thereunder.
(vi) Release any guarantor of the Obligations (except in connection
with a sale or other disposition of all of the Capital Stock of
such guarantor that is permitted hereunder or consented to be the
Required Lenders) or all or substantially all of the Collateral.
No amendment of any provision of this Agreement relating in any way to the
Agent, any Swing Loan Lender or any Issuing Lender shall be effective without
the written consent of the Agent, the Swing Loan Lenders or the Issuing Lenders,
as the case may be. The Agent may waive payment of the fees required under
Section 2.4.2 or Section 13.3.2 without obtaining the consent of any of the
Lenders.
8.3. Preservation of Rights. No delay or omission of the Lenders, the
Swing Loan Lenders, the Issuing Lenders or the Agent to exercise any right under
the Loan Documents shall impair such right or be construed to be a waiver of any
Default or an acquiescence therein, and the making of a Loan or issuance of a
Letter of Credit notwithstanding the existence of a Default or the inability of
the Company or a Borrowing Subsidiary to satisfy the conditions precedent to
such Loan or such issuance shall not constitute any waiver or acquiescence. Any
single or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment or
other variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the Lenders required
pursuant to Section 8.2, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan Documents or by law
afforded shall be cumulative and all shall be available to the Agent and the
Lenders until the Obligations have been paid in full and the Agent shall be
entitled to retain its security interest in and to all existing and future
Collateral for the benefit of itself and the Holders of Secured Obligations.
ARTICLE IX: GUARANTY
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9.1. Guaranty. For valuable consideration, the receipt of which is hereby
acknowledged, and to induce the Lenders to make advances to each Borrowing
Subsidiary and to issue and participate in Letters of Credit and Swing Loans,
the Company hereby absolutely and unconditionally guarantees prompt payment when
due, whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of any and all existing and future obligations including
without limitation the Secured Obligations, of each Borrowing Subsidiary to the
Agent, the Lenders, the Issuing Lenders, the Swing Loan Lenders and any holder
of a Note, or any of them, under or with respect to the Loan
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Documents, whether for principal, interest, fees, expenses or otherwise
(collectively, the "Guaranteed Obligations").
9.2. Waivers. The Company waives notice of the acceptance of this
guaranty and of the extension or continuation of the Guaranteed Obligations or
any part thereof. The Company further waives presentment, protest, notice of
notices delivered or demand made on any Borrowing Subsidiary or action or
delinquency in respect of the Guaranteed Obligations or any part thereof,
including any right to require the Agent and the Lenders to sue the Borrowing
Subsidiary, any other guarantor or any other Person obligated with respect to
the Guaranteed Obligations or any part thereof, or otherwise to enforce payment
thereof against any collateral securing the Guaranteed Obligations or any part
thereof, and provided further that if at any time any payment of any portion of
the Guaranteed Obligations is rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy or reorganization of any of the
Borrowing Subsidiaries or otherwise, the Company's obligations hereunder with
respect to such payment shall be reinstated at such time as though such payment
had not been made and whether or not the Agent or the Lenders are in possession
of this guaranty. The Agent and the Lenders shall have no obligation to
disclose or discuss with the Company their assessments of the financial
condition of the Borrowing Subsidiaries.
9.3. Guaranty Absolute. This guaranty is a guaranty of payment and not of
collection, is a primary obligation of the Company and not one of surety, and
the validity and enforceability of this guaranty shall be absolute and
unconditional irrespective of, and shall not be impaired or affected by any of
the following: (a) any extension, modification or renewal of, or indulgence with
respect to, or substitutions for, the Guaranteed Obligations or any part thereof
or any agreement relating thereto at any time; (b) any failure or omission to
enforce any right, power or remedy with respect to the Guaranteed Obligations or
any part thereof or any agreement relating thereto, or any collateral; (c) any
waiver of any right, power or remedy with respect to the Guaranteed Obligations
or any part thereof or any agreement relating thereto or with respect to any
collateral; (d) any release, surrender, compromise, settlement, waiver,
subordination or modification, with or without consideration, of any collateral,
any other guaranties with respect to the Guaranteed Obligations or any part
thereof, or any other obligation of any Person with respect to the Guaranteed
Obligations or any part thereof; (e) the enforceability or validity of the
Guaranteed Obligations or any part thereof or the genuineness, enforceability or
validity of any agreement relating thereto or with respect to any collateral;
(f) the application of payments received from any source to the payment of
obligations other than the Guaranteed Obligations, any part thereof or amounts
which are not covered by this guaranty even though the Agent and the Lenders
might lawfully have elected to apply such payments to any part or all of the
Guaranteed Obligations or to amounts which are not covered by this guaranty; (g)
any change in the ownership of any Borrowing Subsidiary or the insolvency,
bankruptcy or any other change in the legal status of any Borrowing Subsidiary;
(h) the change in or the imposition of any law, decree, regulation or other
governmental act which does or might impair, delay or in any way affect the
validity, enforceability or the payment when due of the Guaranteed Obligations;
(i) the failure of the Company or any Borrowing Subsidiary to
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maintain in full force, validity or effect or to obtain or renew when required
all governmental and other approvals, licenses or consents required in
connection with the Guaranteed Obligations or this guaranty, or to take any
other action required in connection with the performance of all obligations
pursuant to the Guaranteed Obligations or this guaranty; (j) the existence of
any claim, setoff or other rights which the Company may have at any time against
any Borrowing Subsidiary, or any other Person in connection herewith or an
unrelated transaction; or (k) any other circumstances, whether or not similar to
any of the foregoing, which could constitute a defense to a guarantor; all
whether or not the Company shall have had notice or knowledge of any act or
omission referred to in the foregoing clauses (a) through (k) of this paragraph.
It is agreed that the Company's liability hereunder is several and independent
of any other guaranties or other obligations at any time in effect with respect
to the Guaranteed Obligations or any part thereof and that the Company's
liability hereunder may be enforced regardless of the existence, validity,
enforcement or non-enforcement of any such other guaranties or other obligations
or any provision of any applicable law or regulation purporting to prohibit
payment by any Borrowing Subsidiary of the Guaranteed Obligations in the manner
agreed upon between the Borrowing Subsidiary and the Agent and the Lenders.
9.4. Acceleration. The Company agrees that, as between the Company on the
one hand, and the Lenders and the Agent, on the other hand, the obligations of
each Borrowing Subsidiary guaranteed under this Article IX may be declared to be
forthwith due and payable, or may be deemed automatically to have been
accelerated, as provided in Section 8.1 hereof for purposes of this Article IX,
notwithstanding any stay, injunction or other prohibition (whether in a
bankruptcy proceeding affecting such Borrowing Subsidiary or otherwise)
preventing such declaration as against such Borrowing Subsidiary and that, in
the event of such declaration or automatic acceleration, such obligations
(whether or not due and payable by such Borrowing Subsidiary) shall forthwith
become due and payable by the Company for purposes of this Article IX.
9.5. Marshaling; Reinstatement. None of the Lenders nor the Agent nor any
Person acting for or on behalf of the Lenders or the Agent shall have any
obligation to marshall any assets in favor of the Company or against or in
payment of any or all of the Guaranteed Obligations. If the Company, any
Borrower or any other guarantor of all or any part of the Guaranteed Obligations
makes a payment or payments to any Lender or the Agent, or any Lender or the
Agent receives any proceeds of Collateral, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to such Borrower, the Company, such other
guarantor or any other Person, or their respective estates, trustees, receivers
or any other party, including, without limitation, the Company, under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or repayment, the part of the Guaranteed Obligations
which has been paid, reduced or satisfied by such amount shall be reinstated and
continued in full force and effect as of the time immediately preceding such
initial payment, reduction or satisfaction.
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9.6. Termination Date. This guaranty shall continue in effect until the
date the Aggregate Commitment shall have been terminated or otherwise expired in
accordance with its terms and all of the Guaranteed Obligations have been
indefeasibly paid in full in cash.
ARTICLE X: GENERAL PROVISIONS
------------------
10.1. Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Company or a Borrowing Subsidiary in violation of any limitation or
prohibition provided by any applicable statute or regulation.
10.2. Taxes. Any recording or documentary taxes or other similar
assessments or charges payable or ruled payable by any governmental authority in
respect of the Loan Documents shall be paid by the Company.
10.3. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
10.4. Entire Agreement. The Loan Documents embody the entire agreement
and understanding among the Borrowers, the Agent and the Lenders and supersede
all prior agreements and understandings among the Borrowers, the Agent and the
Lenders relating to the subject matter thereof except as contemplated in Section
2.4.2.
10.5. Several Obligations. The respective obligations of the Lenders
hereunder are several and not joint and no Lender shall be the partner or agent
of any other (except to the extent to which the Agent is authorized to act as
such). The failure of any Lender to perform any of its obligations hereunder
shall not relieve any other Lender from any of its obligations hereunder. No
Lender shall have any liability for the failure of any other Lender to perform
its obligations hereunder. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.
10.6. Expenses; Indemnification. The Company and each Borrowing
Subsidiary, jointly and severally, shall reimburse (i) the Agent and the
Arranger for any reasonable costs, internal charges and out-of-pocket expenses
(including reasonable attorneys' fees and, in connection with the preparation,
execution and delivery of the Loan Documents, time charges of attorneys for the
Agent and/or the Arranger, which attorneys may be employees of the Agent and/or
the Arranger) including title insurance premiums, lien search charges, recording
taxes, filing charges and other similar expenses paid or incurred by the Agent
or the Arranger in connection with the preparation, review, execution, delivery,
amendment, modification and administration of the Loan Documents, and (ii) the
Agent, the Arranger, the Lenders, Swing Loan Lenders and Issuing Lenders for any
costs, internal charges and
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out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for the Agent, the Arranger, the Lenders, the Swing Loan Lenders or the Issuing
Lenders) paid or incurred by the Agent, the Arranger, any Lender, any Swing Loan
Lender or any Issuing Lender in connection with the collection and enforcement
of the Loan Documents (except to the extent that a court of competent
jurisdiction rules against the Agent, the Arranger, the Lenders, the Swing Loan
Lenders or the Issuing Lenders in a final judgment in any such collection or
enforcement action), any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or any insolvency or
bankruptcy proceedings in respect of the Company or any Borrowing Subsidiary.
The Company and each Borrowing Subsidiary, jointly and severally, further agree
to indemnify the Agent, the Arranger and each Lender, Swing Loan Lender and
Issuing Lender, their respective directors, officers and employees (the
"Indemnitees") against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent, the Arranger or any
Lender, Swing Loan Lender or Issuing Lender is a party thereto) (collectively,
the "Indemnified Amounts") which any of them may pay or incur arising out of or
relating to the direct or indirect application or proposed application of the
proceeds of any Loan or Letter of Credit hereunder; provided, however, that
neither the Company nor any Borrowing Subsidiary shall be liable to any
Indemnitee for any Indemnified Amounts to the extent that a court of competent
jurisdiction has determined in a final non-appealable judgment that the
foregoing resulted solely from such Indemnitee's Gross Negligence or willful
misconduct. The Company and each Borrowing Subsidiary further agree (y) to
assert no claims for consequential damages on any theory of liability in
connection in any way with the Loan Documents or the transactions evidenced
thereby and (z) not to settle any claim, litigation or proceeding relating to
the Loan Documents or the transactions evidenced thereby unless such settlement
releases all Indemnitees from any and all liability in respect of such
transaction or unless each Indemnitee approves such settlement. The obligations
of the Company and each Borrowing Subsidiary under this Section 10.6 shall
survive the termination of this Agreement.
10.7. Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
10.8. Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
10.9. Nonliability of Lenders. The relationship between the Borrowers and
the Lenders, Swing Loan Lenders, Issuing Lenders and the Agent shall be solely
that of borrower and lender. Neither the Agent nor any Lender, Swing Loan
Lender or Issuing
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Lender shall have any fiduciary responsibilities to the Borrowers. Neither the
Agent nor any Lender, Swing Loan Lender or Issuing Lender undertakes any
responsibility to the Borrowers to review or inform the Borrowers of any matter
in connection with any phase of the Borrowers' business or operations.
10.10. CHOICE OF LAW. THIS AGREEMENT AND, UNLESS OTHERWISE SET FORTH
THEREIN, THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. IN THE EVENT THAT A
COURT DETERMINED THAT THE PARTIES' CHOICE OF ILLINOIS LAW AS SET FORTH ABOVE IS
NOT ENFORCEABLE, THIS AGREEMENT AND, UNLESS OTHERWISE SET FORTH THEREIN, THE
OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
(AND NOT THE LAW OF CONFLICTS) OF THE STATE OF INDIANA, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
10.11 CONSENT TO JURISDICTION. EACH OF THE PARTIES HERETO AGREES THAT ALL
DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, MAY BE RESOLVED BY STATE OR FEDERAL COURTS LOCATED IN CHICAGO,
ILLINOIS, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. TO THE
EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES
BROUGHT PURSUANT TO THIS SECTION ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION
OF THE COURT CONSIDERING THE DISPUTE.
10.12. Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Company or any Subsidiary pursuant to
this Agreement in confidence, except for disclosure (i) to other Lenders and
their respective affiliates, (ii) to legal counsel, accountants, and other
professional advisors to that Lender, (iii) to regulatory officials, (iv) as
requested pursuant to or as required by law, regulation, or legal process, (v)
in connection with any legal proceeding to which that Lender is a party, and
(vi) permitted by Section 13.4. The restrictions in this Section 10.12 shall
not apply to any information which is or becomes generally available to the
public other than as a result of disclosure by a Lender or a Lender's
representatives.
10.13. Performance of Obligations. The Company and each of the Borrowing
Subsidiaries agree that the Agent may, but shall have no obligation to (i) at
any time, pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against any Collateral and (ii)
after the occurrence and during the continuance of a
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Default make any other payment or perform any act required of the Company or any
of the Borrowing Subsidiaries under any Loan Document or take any other action
which the Agent in its discretion deems necessary or desirable to protect or
preserve the Collateral, including, without limitation, any action to (y) effect
any repairs or obtain any insurance called for by the terms of any of the Loan
Documents and to pay all or any part of the premiums therefor and the costs
thereof and (z) pay any rents payable by the Company which are more than 60 days
past due, or as to which the landlord has given notice of termination, under any
lease. The Agent shall use its best efforts to give the Company notice of any
action taken under this Section 10.13 prior to the taking of such action or
promptly thereafter provided the failure to give such notice shall not affect
the Company's obligations in respect thereof. The Company agrees to pay the
Agent, upon demand, the principal amount of all funds advanced by the Agent
under this Section 10.13, together with interest thereon at the rate from time
to time applicable to Alternate Base Rate Loans from the date of such advance
until the outstanding principal balance thereof is paid in full. If the
Borrower fails to make payment in respect of any such advance under this Section
10.13 within one (1) Business Day after the date the Company receives written
demand therefor from the Agent, the Agent shall promptly notify each Lender and
each Lender agrees that it shall thereupon make available to the Agent, in
Dollars in immediately available funds, the amount equal to such Lender's pro
rata share of such advance. If such funds are not made available to the Agent
by such Lender within one (1) Business Day after the Agent's demand therefor,
the Agent will be entitled to recover any such amount from such Lender together
with interest thereon at the Federal Funds Effective Rate for each day during
the period commencing on the date of such demand and ending on the date such
amount is received. The failure of any Lender to make available to the Agent
its pro rata share of any such unreimbursed advance under this Section 10.13
shall neither relieve any other Lender of its obligation hereunder to make
available to the Agent such other Lender's pro rata share of such advance on the
date such payment is to be made nor increase the obligation of any other Lender
to make such payment to the Agent. All outstanding principal of, and interest
on, advances made under this Section 10.13 shall constitute Obligations secured
by the Collateral until paid in full by the Company.
10.14. English Language. With the exception of the French Collateral
Documents, all certificates, instruments and other documents to be delivered
under or supplied in connection with this Agreement shall be in the English
language or shall attach a certified English translation thereof, which
translation shall be the governing version. Within one month of the delivery of
any financial statements written in French pursuant to the Loan Documents the
Company shall deliver to the Agent, for distribution to the Lenders, sufficient
copies for all the Lenders of an English translation of such financial
statements.
ARTICLE XI: THE AGENT
11.1. Appointment. NBD Bank, N.A. is hereby appointed Agent hereunder and
under each other Loan Document and under the ESOP Loan Agreements, and each of
the Lenders, Swing Loan Lenders, Issuing Lenders and ESOP Lenders irrevocably
authorizes the
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Agent to act as the contractual representative of such Lender, Swing Loan
Lender, Issuing Lender or ESOP Lender. The Agent agrees to act as such upon the
express conditions contained in this Article XI. The Agent shall not have a
fiduciary relationship in respect of the Company, any Borrowing Subsidiary, any
Lender, any Swing Loan Lender, any Issuing Lender or any ESOP Lender by reason
of this Agreement or the ESOP Loan Agreements. Notwithstanding the use of the
defined term "Agent," it is expressly understood and agreed that the Agent shall
not have any fiduciary responsibilities to any Lender, Swing Loan Lender,
Issuing Lender or any ESOP Lender by reason of this Agreement and that the Agent
is merely acting as the representative of the Lenders, Swing Loan Lenders,
Issuing Lenders and ESOP Lenders with only those duties as are expressly set
forth in this Agreement and the other Loan Documents. In its capacity as the
Lenders', Swing Loan Lenders', Issuing Lenders' and ESOP Lenders' contractual
representative, the Agent (i) does not assume any fiduciary duties to any of the
Lenders, Swing Loan Lenders, Issuing Lenders or ESOP Lenders, (ii) is a
"representative" of the Lenders, Swing Loan Lenders, Issuing Lenders and ESOP
Lenders within the meaning of Section 9-105 of the Uniform Commercial Code or
"mandataire" within the meaning of Articles 1984 et seq. of the French Civil
Code and (iii) is acting as an independent contractor, the rights and duties of
which are limited to those expressly set forth in this Agreement and the other
Loan Documents. Each of the Lenders, Swing Loan Lenders, Issuing Lenders and
ESOP Lenders agrees to assert no claim against the Agent on any agency theory or
any other theory of liability for breach of fiduciary duty, all of which claims
each Lender, Swing Loan Lender, Issuing Lender and ESOP Lender waives.
11.2. Powers. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties to the Lenders, Swing Loan Lenders, Issuing
Lenders or ESOP Lenders or any obligation to the Lenders, Swing Loan Lenders,
Issuing Lenders or ESOP Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Agent.
11.3. General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Company or to any Borrowing
Subsidiary, Lender, Swing Loan Lender, Issuing Lender or ESOP Lender for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Loan Document except to the extent such action or
inaction is found in a final judgment by a court of competent jurisdiction to
have arisen solely from (i) the Gross Negligence or willful misconduct of such
Person or an Affiliate thereof or (ii) breach of contract by such Person with
respect to the Loan Documents.
11.4. No Responsibility for Loans, Collateral, Recitals, etc. Neither the
Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify (i) any
statement, warranty or representation made in
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connection with any Loan Document or any borrowing hereunder, including
statements made in any offering memorandum or "Bank Book"; (ii) the performance
or observance of any of the covenants or agreements of any obligor under any
Loan Document; (iii) the satisfaction of any condition specified in Article IV,
except receipt of items required to be delivered to the Agent; or (iv) the
validity, effectiveness or genuineness of any Loan Document or any other
instrument or writing furnished in connection therewith, except for the
authority of the Agent's signatory to this Agreement. The Agent shall not be
responsible to any Lender, Swing Loan Lender, Issuing Lender or ESOP Lender for
any recitals, statements, representations or warranties herein or in any of the
other Loan Documents, for the perfection or priority of any of the Liens on any
of the Collateral, or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any of the
other Loan Documents or the transactions contemplated thereby, or for the
financial condition of any guarantor of any or all of the Obligations, the
Company or any of its Subsidiaries.
11.5. Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders or all the Lenders, Swing Loan Lenders or Issuing Lenders, as
applicable, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders, Swing Loan Lenders,
Issuing Lenders and ESOP Lenders and on all holders of Notes. The Agent shall
be fully justified in failing or refusing to take any action hereunder and under
any other Loan Document unless it shall first be indemnified to its satisfaction
by the Lenders and ESOP Lenders pro rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to take any such
action, provided that, such indemnity need not include liability, costs and
expenses which a court of competent jurisdiction has determined in a final non-
appealable judgment arose solely from the Gross Negligence or willful misconduct
of the Agent.
11.6. Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, Swing Loan Lenders, Issuing Lenders or ESOP Lenders except as to money
or securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. The Agent shall be entitled to advice of counsel concerning
all matters pertaining to the agency hereby created and its duties hereunder and
under any other Loan Document.
11.7. Reliance on Documents; Counsel. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
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11.8. Agent's Reimbursement and Indemnification. The Lenders and ESOP
Lenders agree to reimburse and indemnify the Agent ratably in proportion to
their respective Commitments and the outstanding balance of the ESOP Loans held
by the ESOP Lenders (i) for any amounts not reimbursed by the Company or any
Borrowing Subsidiary for which the Agent is entitled to reimbursement by the
Company or any Borrowing Subsidiary under the Loan Documents, (ii) for any other
expenses not reimbursed by the Company or any Borrowing Subsidiary incurred by
the Agent on behalf of the Lenders, Swing Loan Lenders, Issuing Lenders or ESOP
Lenders in connection with the preparation, execution, delivery, administration
and enforcement of the Loan Documents or the ESOP Loan Agreements (including
reasonable attorneys' fees) and (iii) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever and not reimbursed by the Company or any
Borrowing Subsidiary which may be imposed on, incurred by or asserted against
the Agent in any way relating to or arising out of the Loan Documents or the
ESOP Loan Agreements or any other document delivered in connection therewith or
the transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent any of the foregoing is found in a final
non-appealable judgment by a court of competent jurisdiction to have arisen
solely from the Gross Negligence or willful misconduct of the Agent.
11.9. Rights as a Lender and Issuing Lender. With respect to its
Commitment, Loans made by it (including without limitation Swing Loans),
participations in Letters of Credit and Swing Loans, Letters of Credit issued by
it, the Notes issued to it and the ESOP Loans held by it, the Agent shall have
the same rights and powers hereunder and under any other Loan Document or the
ESOP Loan Agreements as any Lender, Swing Loan Lender, Issuing Lender or ESOP
Lender, as applicable, and may exercise the same as though it were not the
Agent, and the term "Lender," "Lenders", "Swing Loan Lender," "Issuing Lender"
or "ESOP Lender" shall, unless the context otherwise indicates, include the
Agent in its individual capacity. The Agent may accept deposits from, lend
money to, and generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with the Company or any of its Subsidiaries.
11.10. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender, Swing
Loan Lender, Issuing Lender or ESOP Lender and based on the financial statements
prepared by the Company and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and the other Loan Documents. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender,
Swing Loan Lender, Issuing Lender or ESOP Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
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11.11. Successor Agent. The Agent may resign at any time by giving at
least 30 days' prior written notice thereof to the Lenders and the Company and
such resignation shall be effective at the end of such 30-day period or upon the
earlier appointment of a successor agent, and the Agent may be removed at any
time with or without cause by written notice received by the Agent from the
Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right to appoint, on behalf of the Company, the Borrowing
Subsidiaries, the Lenders, Swing Loan Lenders, Issuing Lenders and ESOP Lenders,
a successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within thirty days
after the retiring Agent's removal or giving notice of resignation, then the
retiring Agent may appoint, on behalf of the Company and the Lenders, Swing Loan
Lenders, Issuing Lenders and ESOP Lenders, a successor Agent. Such successor
Agent shall be a commercial bank having capital and retained earnings of at
least $500,000,000. The retiring Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents and the ESOP Loan
Agreements upon the effectiveness of its removal or resignation hereunder.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article XI shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent hereunder and under the other Loan Documents and the ESOP Loan
Agreements.
11.12 Collateral Documents. Each Lender, Swing Loan Lender, Issuing
Lender and ESOP Lender authorizes the Agent to enter into each of the Collateral
Documents to which it is a party and to take all action contemplated by such
documents. Each Lender, Swing Loan Lender, Issuing Lender and ESOP Lender
agrees that no Lender, Swing Loan Lender, Issuing Lender or ESOP Lender shall
have the right individually to seek to realize upon the security granted by any
Collateral Document, it being understood and agreed that such rights and
remedies may be exercised solely by the Agent for the benefit of the Holders of
Secured Obligations, upon the terms of the Collateral Documents.
ARTICLE XII: SETOFF; RATABLE PAYMENTS
------------------------
12.1. Setoff. In addition to, and without limitation of, any rights of
the Lenders, Swing Loan Lenders and Issuing Lenders under applicable law, if any
Borrower becomes insolvent, however evidenced, or any Default occurs, any
indebtedness from any Lender, Swing Loan Lender or Issuing Lender to such
Borrower (including all account balances, whether provisional or final and
whether or not collected or available) may be offset and applied toward the
payment of the Obligations owing to such Lender, Swing Loan Lender or Issuing
Lender whether or not the Obligations, or any part thereof, shall then be due.
12.2. Ratable Payments. If, after the occurrence of a Default, any
Lender, whether by setoff or otherwise, has payment made to it upon its share of
any Advance (other than payments received which are for the account of the
Agent, any Swing Loan Lender or any Issuing Lender or pursuant to Article III)
in a greater proportion than that received by any
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other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans comprising that Advance held by the other Lenders so that after such
purchase each Lender will hold its ratable proportion of Loans comprising that
Advance. If any Lender, whether in connection with setoff or amounts which
might be subject to setoff or otherwise, receives collateral or other protection
for its Obligations or such amounts which may be subject to setoff, such Lender
agrees, promptly upon demand, to take such action necessary such that all
Lenders share in the benefits of such collateral ratably in proportion to their
Loans. In case any such payment is disturbed by legal process, or otherwise,
appropriate further adjustments shall be made.
ARTICLE XIII: BENEFIT OF AGREEMENT; PARTICIPATIONS; ASSIGNMENTS
13.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrowers, the
Lenders, the Swing Loan Lenders and the Issuing Lenders and their respective
successors and assigns, except that (i) no Borrower shall have the right to
assign its rights or obligations under the Loan Documents and (ii) any
assignment by any Lender must be made in compliance with Section 13.3.
Notwithstanding clause (ii) of this Section, any Lender may at any time, without
the consent of any Borrower, the Agent, any Swing Loan Lender or any Issuing
Lender, assign all or any portion of its rights under this Agreement and its
Notes to a Federal Reserve Bank; provided, however, that no such assignment
shall release the transferor Lender from its obligations hereunder. The Agent
may treat the payee of any Note as the owner thereof for all purposes hereof
unless and until such payee complies with Section 13.3 in the case of an
assignment thereof or, in the case of any other transfer, a written notice of
the transfer is filed with the Agent. Any assignee or transferee of a Note
agrees by acceptance thereof to be bound by all the terms and provisions of the
Loan Documents. Any request, authority or consent of any Person, who at the
time of making such request or giving such authority or consent is the holder of
any Note, shall be conclusive and binding on any subsequent holder, transferee
or assignee of such Note or of any Note or Notes issued in exchange therefor.
13.2. Participations.
13.2.1. Permitted Participants; Effect. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time sell
to one or more financial institutions ("Participants") participating interests
in any Loan owing to such Lender, any Note held by such Lender, the Commitment
of such Lender, or any other interest of such Lender under the Loan Documents.
In the event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, such Lender shall remain the
holder of any such Note for all purposes under the Loan Documents, all amounts
payable by the Borrowers under this Agreement shall be determined as if such
Lender had not sold such participating interests, and the Borrowers and the
Agent, Lenders, Swing Loan Lenders and
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Issuing Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under the Loan Documents.
13.2.2. Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
modification or waiver with respect to any Loan or Commitment in which such
Participant has an interest which forgives principal, interest or fees or
reduces the interest rate or fees payable with respect to any such Loan or
Commitment, postpones any date fixed for any regularly-scheduled payment (but
not prepayments) of principal of, or interest or fees on, any such Loan or
Commitment, releases any guarantor of any such Loan (other than as contemplated
hereunder or under any other Loan Document), if any, or releases all or
substantially all of the Collateral, if any, securing any such Loan.
13.2.3. Benefit of Setoff. The Borrowers agree that each Participant
shall be deemed to have the right of setoff provided in Section 12.1 in respect
of its participating interest in amounts owing under the Loan Documents to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under the Loan Documents, provided that each Lender shall
retain the right of setoff provided in Section 12.1 with respect to the amount
of participating interests sold to each Participant. The Lenders agree to share
with each Participant, and each Participant, by exercising the right of setoff
provided in Section 12.1, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 12.2 as if each Participant were a Lender.
13.3. Assignments.
13.3.1. Permitted Assignments. Any Lender may, in the ordinary course of
its business and in accordance with applicable law, at any time assign to one or
more financial institutions ("Purchasers") all or a portion of its rights and
obligations under the Loan Documents, which assignment shall be in amounts equal
to or greater than $5,000,000 (or the Equivalent Amount thereof if denominated
in an Agreed Currency other than Dollars) or, if less, all of such assigning
Lender's remaining Loans, Commitments and participations in Letters of Credit
and Swing Loans hereunder, provided, however, that any such Purchaser must agree
to designate a French Lending Installation in compliance with Section 2.5.13 and
if such French Lending Installation is an affiliate of such Purchaser, the
Commitment shall be a Commitment of the Purchaser and (with respect to Loans to
be made to the French Borrower Subsidiaries) such affiliate which will not in
the aggregate exceed the amount of the Commitment assigned. Such assignment
shall be substantially in the form of Exhibit B hereto.
13.3.2. Effect; Effective Date. Upon (i) delivery to the Agent of a
notice of assignment, substantially in the form attached as Exhibit I to Exhibit
B hereto (a "Notice of Assignment"), together with any consent required by
Section 13.3.1 (provided however, that
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no consent shall be required for an assignment from a Lender to an Affiliate of
the Lender), and (ii) payment of a $4,500 fee to the Agent by the assigning
Lender for processing such assignment, such assignment shall become effective on
the effective date specified in such Notice of Assignment. On and after the
effective date of such assignment, such Purchaser shall for all purposes be a
Lender party to this Agreement and any other Loan Document executed by the
Lenders and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party hereto, and no
further consent or action by any Borrower, the Lenders, the Swing Loan Lenders,
the Issuing Lenders or the Agent shall be required to release the transferor
Lender with respect to the percentage of the Aggregate Commitment and Loans
assigned to such Purchaser. Upon the consummation of any assignment to a
Purchaser pursuant to this Section 13.3.2, the transferor Lender, the Agent and
the Borrowers shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Purchaser, in each case in principal amounts
reflecting their respective Commitments, as adjusted pursuant to such
assignment.
13.4. Dissemination of Information. Each Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Company and its Subsidiaries; provided
that each Transferee and prospective Transferee agrees to be bound by Section
10.12 of this Agreement.
13.5. Tax Treatment. If any interest in any Loan Document is transferred
to any Purchaser which is organized under the laws of any jurisdiction other
than the United States of America or any State thereof, the transferor Lender
shall cause such Purchaser, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.5.15.
ARTICLE XIV: NOTICES
14.1. Giving Notice. Except as otherwise permitted by Section 2.5.8, all
notices and other communications provided to any party hereto under this
Agreement or any other Loan Document shall be in writing or by telex or by
facsimile and addressed or delivered to such party at its address set forth
below its signature hereto or at such other address as may be designated by such
party in a notice to the other parties. Any notice, if mailed and properly
addressed with postage prepaid, shall be deemed given when received; any notice,
if transmitted by telex or facsimile, shall be deemed given when transmitted
(answerback confirmed in the case of telexes).
14.2. Change of Address. The Company, each Borrowing Subsidiary, the
Agent and each Lender may change the address for service of notice upon it by a
notice in writing to the other parties hereto.
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ARTICLE XV: COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Company, the Agent, the Lenders, the
Swing Loan Lenders and the Issuing Lenders and each party has notified the Agent
by telex or telephone, that it has taken such action.
ARTICLE XVI: WAIVER OF JURY TRIAL
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY
AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
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IN WITNESS WHEREOF, the Company, the Lenders, the Swing Loan Lenders, the
Issuing Lenders and the Agent have executed this Agreement as of the date first
above written.
TOKHEIM CORPORATION
By:
-------------------------------
Title:
----------------------------
By:
-------------------------------
Title:
----------------------------
Address:
Attention:
Title:
Telephone:
Facsimile:
Signature Page to Tokheim Corporation
Credit Agreement September, 1996
<PAGE>
NBD BANK, N.A., individually and as Agent
By:
------------------------------------
Title:
---------------------------------
Address:
Attention:
Title:
Telephone:
Facsimile:
Signature Page to Tokheim Corporation
Credit Agreement September, 1996
<PAGE>
CREDIT LYONNAIS, CHICAGO BRANCH
By:
-----------------------------------
Title:
---------------------------------
Address:
Attention:
Title:
Telephone:
Facsimile:
Signature Page to Tokheim Corporation
Credit Agreement September, 1996
<PAGE>
HARRIS TRUST AND SAVINGS BANK
By:
-------------------------------
Title:
----------------------------
Address:
Attention:
Title:
Telephone:
Facsimile:
Signature Page to Tokheim Corporation
Credit Agreement September, 1996
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO, LONDON BRANCH, as
Lender with respect to the French Borrowing
Subsidiaries
By:
----------------------------------------
Title:
-------------------------------------
Address:
Attention:
Title:
Telephone:
Facsimile:
Signature Page to Tokheim Corporation
Credit Agreement September, 1996
<PAGE>
Exhibit Number 6
[LETTERHEAD OF SALUSTRO REYDEL]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion of our report dated July 15, 1996, on our audits of
the combined financial statements of the Fuel Pump Division of SOFITAM S.A. in
this Form 8-K.
Paris, September 23, 1996
SALUSTRO REYDEL
/s/ Bernard Cattenoz
--------------------------
Bernard Cattenoz
