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CREDIT AGREEMENT
Dated as of August 29, 1996
among
TRANSACT TECHNOLOGIES INCORPORATED,
MAGNETEC CORPORATION
and
FLEET NATIONAL BANK
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CREDIT AGREEMENT dated as of August 29, 1996 among TRANSACT
TECHNOLOGIES INCORPORATED, a Delaware corporation ("TransAct"), MAGNETEC
CORPORATION, a Connecticut corporation ("Magnetec") (collectively, the
"Borrowers" and each, individually a "Borrower"), and FLEET NATIONAL BANK, a
national banking association organized under the laws of the United States of
America (the "Bank").
Background
Pursuant to the Credit Agreement dated June 17, 1994 among Tridex
Corporation, a Connecticut corporation ("Tridex"), Ithaca Peripherals
Incorporated, a Delaware corporation ("Ithaca"), Ultimate Technology
Corporation, a New York corporation, Cash Bases Incorporated, a Delaware
corporation, Magnetec and the Bank, the Bank extended a $5,500,000 term loan
facility (the "Term Loan") and a $5,000,000 revolving loan facility (the
"Revolver").
On July 28, 1996, Tridex caused Ithaca to be merged into Magnetec, with
Magnetec being the surviving entity. Tridex then created a new wholly-owned
subsidiary, TransAct, to which it contributed all of Magnetec's stock.
On or about the date hereof, TransAct intends to conduct an initial
public offering (the "Initial Public Offering") of approximately twenty percent
(20%) of its equity securities. TransAct intends to utilize a portion of the net
proceeds realized from the Initial Public Offering to satisfy the indebtedness
of TransAct to Tridex under the Tridex Loan, and, simultaneously therewith,
Tridex intends to satisfy in full the indebtedness outstanding under the Term
Loan and the Revolver.
To effect the Initial Public Offering and to obtain funds for working
capital, the Borrowers have requested that the Bank extend to them a $5,000,000
revolving credit facility. The Bank has agreed to the Borrowers' request subject
to the terms and conditions of this Agreement.
Agreement
In consideration of the Background, which is incorporated by reference,
and other valuable consideration, receipt of which is acknowledged, the parties,
intending to be legally bound, agree as follows:
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ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS
Section 1.1 Definitions. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular to have a
correlative meaning when used in the plural and vice versa):
"Affiliate" means any Person: (a) which directly or indirectly
controls, or is controlled by, or is under common control with, any Borrower or
any of their respective Subsidiaries; (b) which directly or indirectly
beneficially owns or holds five percent or more of any class of voting stock of
any Borrower or any of their respective Subsidiaries; (c) five percent or more
of the voting stock of which is directly or indirectly beneficially owned or
held by any Borrower or any of their respective Subsidiaries; or (d) which is a
partnership in which any Borrower or any of their respective Subsidiaries is a
general partner. 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.
"Agreement" means this Credit Agreement, as amended or
supplemented from time to time. References to Articles, Sections, Exhibits,
Schedules and the like refer to the Articles, Sections, Exhibits, Schedules and
the like of this Agreement unless otherwise indicated.
"Banking Day" means any day on which commercial banks are not
authorized or required to close in Hartford, Connecticut, and whenever such day
relates to a LIBOR Loan or notice with respect to any principal amounts bearing
interest at the LIBO Rate, a day on which dealings in Dollar deposits are also
carried out in the London interbank market..
"Borrowing" means any Revolving Loan requested by any Borrower
hereunder.
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Change of Control" means any one or more of the following
events:
(a) the failure by Xxxx Xxxxxxxx or Xxxxxxx Xxxx to
remain active in the day to day senior management of TransAct; or
(b) the stockholders of any Borrower shall approve a
plan or proposal for the acquisition of, merger, liquidation or dissolution of
such Borrower, or a sale of more than 25% of its assets in one or a series of
related transactions; or
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(c) a Person or group of Persons acting in concert
(other than the direct or indirect beneficial owners of the capital stock of any
Borrower as of the date of this Agreement) shall, as a result of a tender or
exchange offer, open market purchases, privately negotiated purchases or
otherwise, have become the direct or indirect beneficial owner (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended from
time to time ) of securities of such Borrower representing 15% or more of the
combined voting power of the outstanding voting securities for the election of
directors or shall have the right to elect a majority of the board of directors
of such Borrower.
"Clean-Down Period" shall mean any 30-day period of each one
year period commencing on the Closing Date, or fraction thereof, provided that
no such period shall commence sooner than 30 days after the first Borrowing or
later than 30 days prior to the Revolving Credit Termination Date, during which
the aggregate outstanding principal amount of Revolving Loans must be reduced to
$0.
"Closing Date" means the date this Agreement has been executed
by the Borrowers and the Bank.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Commitment" means the obligation of the Bank to make the
Revolving Loans under this Agreement up to the aggregate principal amount of
$5,000,000, and as such amount may be reduced or otherwise modified from time to
time pursuant to Section 2.7 or otherwise.
"Consolidated Subsidiary" means any Subsidiary whose accounts
are or are required to be consolidated with the accounts of a Person in
accordance with GAAP.
"Current Assets" of any Person at any time means all cash,
Receivables and Inventory of such Person.
"Current Liabilities" means all liabilities of a Person
treated as current liabilities in accordance with GAAP, including without
limitation (a) all obligations payable on demand or within one year after the
date in which the determination is made and (b) installment and sinking fund
payments required to be made within one year after the date on which
determination is made, but excluding all such liabilities or obligations which
are renewable or extendible at the option of such Person to a date more than
one year from the date of determination.
"Debt" means, with respect to any Person: (a) indebtedness of
such Person for borrowed money; (b) indebtedness for the deferred purchase price
of property or services (except trade payables in the ordinary course of
business); (c) Unfunded Benefit Liabilities of such Person; (d) the face amount
of any outstanding letters of credit issued
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for the account of such person; (e) obligations arising under acceptance
facilities; (f) guaranties, endorsements (other than for collection in the
ordinary course of business) and other contingent obligations to purchase, to
provide funds for payment, to supply funds to invest in any Person, or otherwise
to assure a creditor against loss, including any contingent obligations under
swaps, derivatives, currency exchanges and similar transactions; (g) obligations
secured by any Lien on property of such Person; and (h) obligations of such
Person as lessee under Capital Leases.
"Default" means any event which with the giving of notice or
lapse of time, or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of any
Revolving Loan and, to the extent permitted by law, any other amount payable by
the Borrowers under this Agreement or the Note that is not paid when due
(whether at stated maturity, by acceleration or otherwise), a rate per annum
during the period from and including the due date, to, but excluding the date on
which such amount is paid in full equal to two percent above the Prime Rate as
in effect from time to time plus the applicable Margin (provided that, if the
amount so in default is principal of a LIBOR Loan and the due date thereof is a
day other than the last day of the Interest Period therefor, the "Default Rate"
for such principal shall be, for the period from and including the due date and
to but excluding the last day of the Interest Period therefor, 2% above the
interest rate for such Revolving Loan as provided in Section 2.10 hereof and,
thereafter, the rate provided for above in this definition).
"Dollars" and the sign "$" mean lawful money of the United
States of America.
"EBITDA" means, for any Person, for any period, earnings
before Interest Expense, taxes, depreciation, amortization and extraordinary
items for such Person determined in accordance with GAAP.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, conces sions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, including any rules and regulations
promulgated thereunder.
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"ERISA Affiliate" means any corporation or trade or business
which is a member of any group of organizations (i) described in section 414(b)
or (c) of the Code of which any Borrower is a member, or (ii) solely for
purposes of potential liability under section 302(c)(11) of ERISA and section
412(c)(11) of the Code and the lien created under section 302(f) of ERISA and
section 412(n) of the Code, described in section 414(m) or (o) of the Code of
which any Borrower is a member.
"Event of Default" has the meaning given such term in Section
9.1.
"Facility Documents" means this Agreement, the Note, the
Subordination Agreement, the Security Agreement and each of the documents,
certificates or other instruments referred to in Article 4 hereof as well as any
other document, instrument or certificate to be delivered by the Borrowers in
connection with this Agreement or in connection with the documents, certificates
or instruments referred to in Article 4, including documents delivered in
connection with any Borrowing.
"Forfeiture Proceeding" means any action, proceeding or
investigation affecting the Parent or any of its Subsidiaries or Affiliates
before any court, governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or the receipt of notice by any such party
that any of them is a suspect in or a target of any governmental inquiry or
investigation, which may result in an indictment of any of them or the seizure
or forfeiture of any of their property.
"Funded Debt" means, with respect to any Person, all Debt of
such Person for money borrowed.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time, applied on a basis
consistent with those used in the preparation of the financial statements
referred to in Section 5.5 (except for changes concurred in by the Borrowers'
independent public accountants).
"Interest Coverage Ratio" means, with respect to any Person,
for any period, the ratio of (i) EBITDA to (ii) Interest Expense for such
period.
"Interest Expense" shall mean, with respect to any Person, for
any period, the sum, for such Person in accordance with GAAP, of (a) all
interest on Debt that is accrued as an expense during such period (including,
without limitation, imputed interest on Capital Lease obligations), plus (b) all
amounts paid, accrued or amortized as an expense during such period in respect
of interest rate protection agreements, minus (c) all amounts received or
accrued as income during such period in respect of interest rate protection
agreements.
"Interest Period" means with respect to any LIBOR Loan, on the
numerically corresponding day in the first, second or third calendar month
thereafter,
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provided that each such Interest Period which commences on the last Banking Day
of a calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall end on the
last Banking Day of the appropriate calendar month.
"Inventory" means all inventory, now or hereafter owned and
wherever located, of the Borrowers, including (without limitation) raw
materials, work-in-process, finished goods, supplies and packaging materials.
"Lending Office" means the lending office of the Bank set
forth on the signature page.
"LIBO Rate" means with respect to any Interest Period for
LIBOR Loans, a rate per annum (rounded upwards, if necessary, to the nearest
1/100 of one percent) determined by the Bank to be equal to the quotient of (i)
the rate per annum (rounded upwards, if necessary, to the nearest 1/16 of one
percent) quoted at approximately 11:00 a.m. London time by the principal London
branch of the Bank two Banking Days prior to the first day of such Interest
Period for the offering to leading banks in the London interbank market of
Dollar deposits in immediately available funds, for a period, and in an amount,
comparable to the Interest Period and principal amount of the LIBOR Loan out
standing during such Interest Period, divided by (ii) one minus the Reserve
Requirement for such LIBOR Loan for such Interest Period.
"LIBOR Loan" means any Revolving Loan when and to the extent
the interest rate therefor is determined on the basis of the definition "LIBO
Rate."
"Lien" means any lien (statutory or otherwise), security
interest, mortgage, deed of trust, priority, pledge, negative pledge, charge,
conditional sale, title retention agreement, financing lease or other
encumbrance or similar right of others, or any agreement to give any of the
foregoing.
"Margin" means (a) for Prime Rate Loans, 0 basis points (0%)
and (b) for LIBOR Loans, 150 basis points (1.50%).
"Multiemployer Plan" means a Plan defined as such in section
3(37) of ERISA to which contributions have been made by the Borrowers or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Income (Loss)" of any Person for any period means the net
income (loss) of such Person for such period determined in accordance with GAAP.
"Net Income Increase" means the aggregate of fifty percent
(50%) of the Borrowers' Net Income, on a consolidated basis, from the Closing
Date through and including December 31, 1996, and for each fiscal year
thereafter.
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"Note" means the promissory note of the Borrowers, in
substantially the form of Exhibit A hereto, evidencing the indebtedness of the
Borrowers to the Bank resulting from the Revolving Loans.
"Notice of Borrowing" shall mean the notice of each Borrowing
required by Section 4.2.
"Opening Balance Sheet" means the balance sheet of the
Borrowers, after giving effect to the receipt by TransAct of the net proceeds of
the Initial Public Offering and the satisfaction in full by TransAct of the
Tridex Loan.
"Over-allotment Sale" means the sale by TransAct, subsequent
to the Initial Public Offering, of the over-alloted 172,500 shares still
available to the public at $8.50 per share.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by any Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA, other than a
Multiemployer Plan.
"Prime Rate" means that rate of interest from time to time
announced by the Bank at its office located at 0 Xxxxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxxxxxxx, which rate may not be the Bank's lowest or best rate.
"Prime Rate Loan" means any Revolving Loan when and to the
extent the interest rate therefor is determined in relation to the Prime Rate.
"Receivable" means all accounts owing to a Person arising out
of or in connection with the bona fide sale or lease of goods or services in the
ordinary course of business.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented from time
to time.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented from time
to time.
"Regulatory Change" means any change after the date of this
Agreement in United States federal, state, municipal or foreign laws or
regulations (including without
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limitation Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks including
the Bank of or under any United States, federal, state, municipal or foreign
laws or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Reserve Requirement" means, for any Interest Period for any
LIBOR Loan, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in Boston with deposits exceeding $1,000,000,000 against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks by reason of any Regulatory
Change against (i) any category of liabilities which includes deposits by
reference to which the LIBO Rate for LIBOR Loans is to be determined as provided
in the definition of "LIBO Rate" in this Section 1.1 or (ii) any category of
extensions of credit or other assets which include LIBOR Loans.
"Revolving Credit Termination Date" means June 30, 1998;
provided that if such date is not a Banking Day, the Revolving Credit
Termination Date shall be the next succeeding Banking Day (or, if such next
succeeding Banking Day falls in the next calendar month, the next preceding
Banking Day) or (b) the earlier date of termination of the Commitment pursuant
to Section 9.2.
"Revolving Loan" means any loan made by the Bank pursuant to
Section 2.1.
"Security Agreement" means the security agreement dated as of
the Closing Date by the Borrowers in favor of the Bank, in substantially the
form of Exhibit C.
"Senior Liabilities" means for any Person at any time, all
Debt, other than contingent liabilities and Subordinated Debt.
"Subordinated Debt" means Funded Debt of a Person subordinated
to the Revolving Loans on terms satisfactory to the Bank.
"Subordination Agreement" means the subordination agreement
dated as of the Closing Date, among one or both of the Borrowers, Tridex and the
Bank, in substantially the form of Exhibit B.
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which at least a majority of the securities or
other ownership interests having ordinary voting power (absolutely or
contingently) for the election of directors or other
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persons performing similar functions are at the time owned directly or
indirectly by such Person.
"Tangible Net Worth" means, at any date of determination
thereof, the excess of total assets of a Person over total liabilities of such
Person, excluding, however, from the determination of total assets: goodwill,
trademarks, patents, organizational costs, unamortized debt discounts and
expenses and other like intangible assets as defined by GAAP.
"Tridex Loan" means the aggregate indebtedness in the amount
of $8,500,000 as of the Closing Date, owed by TransAct to Tridex as reflected on
the books and records of Tridex.
"Total Liabilities" means all liabilities of a Person which
would be classified as such on a balance sheet in accordance with GAAP.
"Unfunded Benefit Liabilities" means, with respect to any
Plan, the amount (if any) by which the present value of all benefit liabilities
(within the meaning of section 4001(a)(16) of ERISA) under the Plan exceeds the
fair market value of all Plan assets allocable to such benefit liabilities, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of the Borrowers
or any ERISA Affiliate under Title IV of ERISA.
Section 1.2 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP, and all
financial data required to be delivered hereunder shall be prepared in
accordance with GAAP.
Section 1.3 Currency Equivalents. For all purposes of this
Agreement, all amounts denominated in a currency other than Dollars shall be
converted into the Dollar equivalent of such amounts. The equivalent in another
currency of an amount in Dollars shall be determined at the rate of exchange
quoted by Fleet National Bank in Boston at 9:00 a.m. (Boston time) on the date
of determination, to prime banks in Boston for the spot purchase in the Boston
foreign exchange market of such amount of Dollars with such other currency.
ARTICLE 2. THE CREDIT
Section 2.1 The Revolving Loans.
a. Subject to the terms and conditions of this Agreement,
the Bank agrees to make loans (the "Revolving Loans") to the Borrowers from time
to time from and including the date hereof to and including the Revolving Credit
Termination Date, up to but not exceeding in the aggregate principal amount
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outstanding shall not exceed $2,500,000 prior to the delivery of the Projection
Scenario in accordance with Section 6.10. Revolving Loans may be outstanding as
Prime Rate Loans or LIBOR Loans (each a "type" of Revolving Loan).
(b) The Revolving Loans shall be due and payable on the
Revolving Credit Termination Date.
Section 2.2. The Note. The Revolving Loans shall be evidenced
by a single promissory note in favor of the Bank in the form of Exhibit A, dated
the Closing Date, duly completed and executed by the Borrowers.
Section 2.3. Purpose. The Borrowers shall use the proceeds of
the Revolving Loans for working capital of the Borrowers . No proceeds of the
Revolving Loans shall be used to directly or indirectly fund the needs of any
Subsidiary of any Borrower if such Subsidiary is not also a Borrower hereunder.
No proceeds of the Revolving Loans shall be used for the purpose, whether
immediate, incidental or ultimate, of buying or carrying "margin stock" within
the meaning of Regulation U.
Section 2.4. Borrowing Procedures. The Borrowers shall give
the Bank notice of each Borrowing to be made hereunder as provided in Section
2.8. Not later than 1:00 p.m. Hartford, Connecticut time on the date of such
Borrowing, the Bank shall, subject to the conditions of this Agreement, make the
amount of the Revolving Loan to be made by it on such day available to the
Borrowers, in immediately available funds, by the Bank crediting an account of
the Borrowers designated by the Borrowers and maintained with the Bank at the
Lending Office.
Section 2.5. Prepayments and Conversions.
(a) Optional Prepayments and Conversions. The Borrowers
shall have the right to make prepayments of principal, or to convert one type of
Revolving Loan into another type of Revolving Loan, at any time or from time to
time; provided that: (i) the Borrowers shall give the Bank notice of each such
prepayment or conversion as provided in Section 2.8; and (ii) LIBOR Loans may be
prepaid or converted only on the last day of an Interest Period for such
Revolving Loans.
(b) Mandatory Prepayments.
(i) The Borrowers shall immediately repay the excess
by which the aggregate principal amount of all outstanding Revolving Loans
exceeds the Commitment.
(ii) During each Clean-Down Period the Borrowers
shall satisfy in full all amounts then outstanding with the Revolving Loans.
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(iii) Each such prepayment in accordance with
subsection (i) and (ii) above shall be applied first to any expenses incurred by
the Bank, second to any interest due on the amount prepaid, and last to the
outstanding principal amount of the Revolving Loans prepaid, in each case in
such manner as the Bank in its discretion shall determine.
Section 2.6. Late Charges. Payments not received within 10
days of the due date therefor will be subject to a one-time charge equal to 5%
of the amount overdue.
Section 2.7 Changes of Commitment. The Borrowers shall have
the right to reduce or terminate the amount of the unused portion of the
Commitment at any time or from time to time, provided that: (i) the Borrowers
shall give notice of each such reduction or termination to the Bank as provided
in Section 2.8; and (ii) each partial reduction shall be in an aggregate amount
at least equal to $500,000. Once reduced or terminated, the Commitment may not
be reinstated.
Section 2.8. Certain Notices. Notices by the Borrowers to the
Bank of each Borrowing pursuant to Section 2.4, and each prepayment or
conversion pursuant to Section 2.5(a), and each reduction or termination of the
Commitment pursuant to Section 2.7 shall be irrevocable and shall be effective
only if received by the Bank not later than 12:00 noon Hartford, Connecticut
time, and (a) in the case of Borrowings and prepayments of, conversions into and
(in the case of LIBOR Loans) renewals of (i) Prime Rate Loans, given one Banking
Day prior thereto; and (ii) LIBOR Loans, given two Banking Days prior thereto;
and (b) in the case of reductions or termination of the Commitment, given three
Banking Days prior thereto. Each such notice shall specify the Revolving Loans
to be bor rowed, prepaid, converted or renewed and the amount (subject to
Section 2.9) and type of the Revolving Loans to be borrowed, or converted, or
renewed or prepaid and the date of the Borrowing or prepayment, or conversion or
renewal (which shall be a Banking Day). Each such notice of reduction or
termination shall specify the amount of the Commitment to be reduced or
terminated.
Section 2.9. Minimum Amounts. Except for Borrowings which
exhaust the full remaining amount of the unused portion of the Commitment or
prepayments or conversions which result in the prepayment or conversion of all
Revolving Loans, as the case may be, of a particular type, each Borrowing,
optional prepayment, conversion and renewal of principal of Revolving Loans of a
particular type shall be in an amount at least equal to (a) $25,000 with respect
to Prime Rate Loans, and (b) $500,000 and integral multiples of $100,000 in
excess thereof with respect to LIBOR Loans (borrowings, prepayments, conversions
or renewals of or into Revolving Loans of different types or, in the case of
LIBOR Loans, having different Interest Periods at the same time hereunder to be
deemed separate borrowings, prepayments, conversions and renewals for the
purposes of the foregoing, one for each type of Interest Period).
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Section 2.10. Interest.
(a) Interest shall accrue on the outstanding and unpaid
principal amount of each Revolving Loan for the period from and including the
date of such Revolving Loan to but excluding the date such Revolving Loan is due
at the following rates per annum: (i) for Prime Rate Loans, at a variable rate
per annum equal to the Prime Rate plus the Margin and; (ii) for LIBOR Loans, at
a fixed rate equal to the LIBO Rate plus the Margin, for the period from and
including the first day of the Interest Period therefor to but excluding the
last day of such Interest Period If the principal amount of any Revolving Loan
and any other amount payable by the Borrowers hereunder or under the Note shall
not be paid when due (at stated maturity, by acceleration or otherwise),
interest shall accrue on such amount to the fullest extent permitted by law from
and including such due date to but excluding the date such amount is paid in
full at the Default Rate for such type of Revolving Loan.
(b) The interest rate on Prime Rate Loans shall change
when the Prime Rate changes and interest on each such Revolving Loan shall be
calculated on the basis of a year of 360 days for the actual number of days
elapsed. Interest on each LIBOR Loan shall be calculated on the basis of a year
of 360 days for the actual number of days elapsed.
(c) Accrued interest on all types of Revolving Loans
shall be due and payable in arrears upon any payment of principal and on the
last day of each calendar month, commencing August 31, 1996, and on the
Revolving Credit Termination Date ; provided that interest accruing at the
Default Rate shall be due and payable from time to time on demand of the Bank.
Section 2.11. Fees.
(a) Commitment Fee. The Borrowers shall pay to the Bank a
commitment fee on the daily average unused Commitment for the period from and
including the date hereof to the Revolving Credit Termination Date at a rate per
annum equal to one-quarter of one percent (1/4 of 1%), calculated on the basis
of a year of 360 days for the actual number of days elapsed. The accrued
commitment fee shall be due and payable in arrears upon any reduction or
termination of the Commitment and on the last day of each March, June, September
and December, commencing on the first such date after the Closing Date.
(b) Closing Fee. The Borrowers shall pay to the Bank, on
the Closing Date, a closing fee in the amount of $18,750.
Section 2.12. Payments Generally. All payments under this
Agreement or the Note shall be made in Dollars in immediately available funds
not later than 1:00 p.m. Hartford, Connecticut, time on the relevant dates
specified above (each such payment made
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after such time on such due date to be deemed to have been made on the next
succeeding Banking Day) at the Lending Office of the Bank. The Bank may (but
shall not be obligated to) debit the amount of any such payment which is not
made by such time to any ordinary deposit account of the Borrowers with the
Bank. Until the Bank and the Borrowers otherwise agree, the Bank shall debit the
Borrowers' account number 9368994710 with the Bank for the amount of any payment
required hereunder, but the Bank may also debit any ordinary deposit account of
the Borrowers if the amount in account number 9368994710 is insufficient to make
any required payment. The Borrowers shall, at the time of making each payment
under this Agreement or the Note, specify to the Bank the principal or other
amount payable by the Borrowers under this Agreement or the Note to which such
payment is to be applied (and in the event that it fails to so specify, or if a
Default or Event of Default has occurred and is continuing, the Bank may apply
such payment as it may elect in its sole discretion). If the due date of any
payment under this Agreement or the Note would otherwise fall on a day which is
not a Banking Day, such date shall be extended to the next succeeding Banking
Day and interest shall be payable for any principal so extended for the period
of such extension.
Section 2.13. Interest Periods; Renewals.
(a) In the case of each LIBOR Loan, the Borrowers shall
select an Interest Period of any duration in accordance with the definition of
Interest Period in Section 1.1, subject to the following limitations: (i) no
Interest Period shall have a duration less than one month; and if any such
proposed Interest Period would otherwise be for a shorter period, such Interest
Period shall not be available; (ii) if an Interest Period would end on a day
which is not a Banking Day, such Interest Period shall be extended to the next
Banking Day, unless, in the case of a LIBOR Loan, such Banking Day would fall in
the next calendar month in which event such Interest Period shall end on the
immediately preceding Banking Day; (iii) no more than five Interest Periods may
be outstanding at any one time.
(b) Upon notice to the Bank as provided in Section 2.8,
the Borrowers may renew any LIBOR Loan on the last day of the Interest Period
therefor as the same type of Revolving Loan with an Interest Period of the same
or different duration in accordance with the limitations provided above. If the
Borrowers shall fail to give notice to the Bank of such a renewal, such LIBOR
Loan shall automatically become a Prime Rate Loan on the last day of the current
Interest Period; provided that the foregoing shall not prevent the conversion of
any type of LIBOR Loan into another type of Revolving Loan in accordance with
Section 2.5.
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ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.1. Additional Costs.
(a) The Borrowers shall pay to the Bank from time to time
on demand such amounts as the Bank may determine to be necessary to compensate
it for any costs which the Bank determines are attributable to its making or
maintaining any LIBOR Loans under this Agreement or the Note or its obligation
to make any such Revolving Loans hereunder, or any reduction in any amount
receivable by the Bank hereunder in respect of any such Revolving Loans or such
obligation (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to the Bank under this
Agreement or the Note in respect of any of such Revolving Loans (other than
taxes imposed on the overall net income of the Bank or of its Lending Office for
any of such Revolving Loans by the jurisdiction in which the Principal Office or
such Lending Office is located); or (ii) imposes or modifies any reserve,
special deposit, deposit insurance or assessment, minimum capital, capital ratio
or similar requirements relating to any exten sions of credit or other assets
of, or any deposits with or other liabilities of, the Bank (including any of
such Revolving Loans or any deposits referred to in the definition of "LIBO
Rate" in Section 1.1); or (iii) imposes any other condition affecting this
Agreement or the Note (or any of such extensions of credit or liabilities). The
Bank will notify the Borrowers of any event occurring after the date of this
Agreement which will entitle the Bank to compensation pursuant to this Section
3.1(a) as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation.
(b) Without limiting the effect of the foregoing
provisions of this Section 3.1, in the event that, by reason of any Regulatory
Change, the Bank either (i) incurs Additional Costs based on or measured by the
excess above a specified level of the amount of a category of deposits or other
liabilities of the Bank which includes deposits by reference to which the
interest rate on LIBOR Loans is determined as provided in this Agreement or a
category of extensions of credit or other assets of the Bank which includes
LIBOR Loans or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if the Bank so elects
by notice to the Borrowers, the obligation of the Bank to make or renew, and to
convert Revolving Loans of any other type into, Revolving Loans of such type
hereunder shall be suspended until the date such Regulatory Change ceases to be
in effect, and the Borrowers shall on the last day(s) of the then current
Interest Period(s) for the outstanding Revolving Loans of such type, either
prepay such Revolving Loans or convert such Revolving Loans into another type of
Revolving Loan in accordance with Section 2.5.
(c) Without limiting the effect of the foregoing
provisions of this Section 3.1 (but without duplication), the Borrowers shall
pay to the Bank from time to time on request such amounts as the Bank may
determine to be necessary to compensate
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the Bank for any costs which it determines are attributable to the maintenance
by it or any of its affiliates pursuant to any law or regulation of any
jurisdiction or any interpretation, directive or request (whether or not having
the force of law and whether in effect on the date of this Agreement or
thereafter) of any court or governmental or monetary authority of capital in
respect of its Revolving Loans hereunder or its obligation to make Revolving
Loans hereunder (such compensation to include, without limitation, an amount
equal to any reduction in return on assets or equity of the Bank to a level
below that which it could have achieved but for such law, regulation,
interpretation, directive or request). The Bank will notify the Borrowers if it
is entitled to compensation pursuant to this Section 3.1(c) as promptly as
practicable after it determines to request such compensation.
(d) Determinations and allocations by the Bank for
purposes of this Section 3.1 of the effect of any Regulatory Change pursuant to
subsections (a) or (b), or of the effect of capital maintained pursuant to
subsection (c), on its costs of making or maintaining Revolving Loans or its
obligation to make Revolving Loans, or on amounts receivable by, or the rate of
return to, it in respect of Revolving Loans or such obligation, and of the
additional amounts required to compensate the Bank under this Section 3.1, shall
be conclusive, provided that such determinations and allocations are made on a
reasonable basis; provided, however, that the Bank shall provide ninety days'
notice of any additional amounts required to compensate the Bank under this
Section 3.1 (the "Adjustment"), and the Borrowers may thereafter attempt to
negotiate the amount of the Adjustment in good faith with the Bank within ninety
days of the day on which the Borrowers are so notified. If the Borrowers and the
Bank are unable to agree on the amount of the Adjustment within such ninety-day
period, then the amount of the Adjustment shall be the amount set forth in the
aforementioned notice from the Bank to the Borrowers. Whatever the final
Adjustment may be, if the Bank shall still have any Revolving Loans outstanding
to the Borrowers upon the expiration of such ninety-day period, then the
Adjustment shall be effective retroactive to the date on which the Borrowers
first received notice of the Adjustment. The Bank shall not be obligated to
offer LIBO Rates with respect to Interest Periods commencing during the period
following any such notice and prior to agreement by the Bank and the Borrowers
as to the amount of the Adjustment.
Section 3.2. Limitation on Types of Revolving Loans. Anything
herein to the contrary notwithstanding, if the Bank determines (which
determination shall be conclusive) that:
(a) quotations of interest rates for the relevant
deposits referred to in the definition of "LIBO Rate" in Section 1.1 are not
being provided in the relevant amounts or for the relevant maturities for
purposes of determining the rate of interest for any LIBOR Loans as provided in
this Agreement; or
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(b) the relevant rates of interest referred to in the
definition of "LIBO Rate" in Section 1.1 upon the basis of which the rate of
interest for any LIBOR Loans is to be determined do not adequately cover the
cost to the Bank of making or maintaining such Revolving Loans; then the Bank
shall give the Borrowers prompt notice thereof, and so long as such condition
remains in effect, the Bank shall be under no obligation to make or renew
Revolving Loans of such type or to convert Revolving Loans of any other type
into Revolving Loans of such type and the Borrowers shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Revolving Loans of the
affected type, either prepay such Revolving Loans or convert such Revolving
Loans into another type of Revolving Loans in accordance with Section 2.5.
Section 3.3. Illegality. Notwithstanding any other provision
in this Agreement, in the event that it becomes unlawful for the Bank or its
Lending Office to (a) honor its obligation to make or renew LIBOR Loans
hereunder or convert Revolving Loans of any type into Revolving Loans of such
type, or (b) maintain LIBOR Loans hereunder, then the Bank shall promptly notify
the Borrowers thereof and the Bank's obligation to make or renew LIBOR Loans and
to convert other types of Revolving Loans into Revolving Loans of such type
hereunder shall be suspended until such time as the Bank may again make, renew
or convert and maintain such affected Revolving Loans and the Borrowers shall,
on the last day(s) of the then current Interest Period for the outstanding LIBOR
Loans, as the case may be (or on such earlier date as the Bank may specify to
the Borrowers), either prepay such Revolving Loans or convert such Revolving
Loans into another type of Revolving Loans in accordance with Section 2.5.
Section 3.4. Certain Compensation. The Borrowers shall pay to
the Bank, upon the request of the Bank, such amount or amounts as shall be
sufficient (in the reasonable opinion of the Bank) to compensate it for any
loss, cost or expense which the Bank determines is attributable to:
(a) any payment, prepayment, conversion or renewal of a
LIBOR Loan on a date other than the last day of an Interest Period for such
Revolving Loan (whether by reason of acceleration or otherwise); or
(b) any failure by the Borrowers to borrow, convert into
or renew a LIBOR Loan to be made, converted into or renewed by the Bank on the
date specified therefor in the relevant notice under Section 2.4, 2.5 or 2.13,
as the case may be.
Without limiting the foregoing, such compensation shall include an
amount equal to the excess, if any, of: (i) the amount of interest which
otherwise would have accrued on the principal amount so paid, prepaid, converted
or renewed or not borrowed, converted or renewed for the period from and
including the date of such payment, prepayment or conversion or failure to
borrow, convert or renew to but excluding the last day of the then current
Interest Period for such Revolving Loan (or, in the case of a failure to borrow,
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convert or renew, to but excluding the last day of the Interest Period for such
Revolving Loan which would have commenced on the date specified therefor in the
relevant notice) at the applicable rate of interest for such Revolving Loan
provided for herein; over (ii) with respect to a LIBOR Loan, the amount of
interest (as reasonably determined by the Bank) the Bank would have bid in the
London interbank market for Dollar deposits for amounts comparable to such
principal amount and maturities comparable to such period. A determination of
the Bank as to the amounts payable pursuant to this Section 3.4 shall be
conclusive absent manifest error.
ARTICLE 4. CONDITIONS PRECEDENT
Section 4.1. Documentary Conditions Precedent. The obligation
of the Bank to make the Revolving Loans is subject to the conditions precedent
that the Bank shall have received on or before the date of such Borrowing each
of the following, in form and substance satisfactory to the Bank and its
counsel:
(a) the Note duly executed by the Borrowers;
(b) the Security Agreement duly executed by the
Borrowers, together with (i) acknowledgment copies of the financing statements
(UCC-1) duly filed under the Uniform Commercial Code of all jurisdictions
necessary or, in the opinion of the Bank, desirable to perfect the security
interest created by the Security Agreement; (ii) certified copies of requests
for information (Form UCC-11) identifying all of the financing statements on
file with respect to the Borrowers in all jurisdictions referred to under (i),
including the financing statements filed by the Bank against the Borrowers,
indicating that no party claims an interest in any of the Collateral (as defined
in the Security Agreement);
(c) evidence that TransAct has concluded the Initial
Public Offering at an offering price of not less than $8.50 per share for
1,150,000 shares of its Common Stock;
(d) the Opening Balance Sheet;
(e) a certificate of the Secretary or Assistant Secretary
of each Borrower, dated the Closing Date, attesting to all corporate action
taken by such Borrower, including resolutions of its Board of Directors
authorizing the execution, delivery and performance of the Facility Documents to
which it is a party and each other document to be delivered pursuant to this
Agreement and certifying copies of the Certificate of Incorporation and by-laws
of such Borrower;
(f) a certificate of the Secretary or Assistant Secretary
of each Borrower, dated the Closing Date, certifying the names and true
signatures of the officers of such Borrower authorized to sign the Facility
Documents to which it is a party and the other documents to be delivered by such
Borrower under this Agreement;
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(g) a certificate of a duly authorized officer of each
Borrower, dated the Closing Date, stating that the representations and
warranties in Article 5 of this Agreement, and Article 2 of the Security
Agreement, and in each other Facility Document, are true and correct on such
date as though made on and as of such date and that no event has occurred and is
continuing which constitutes a Default or Event of Default;
(h) an Environmental Indemnification Agreement duly
signed by the Borrowers in form and substance satisfactory to the Bank;
(i) a certificate of good standing for each Borrower from
the Secretary of the State of the state in which such Borrower is incorporated
and each other jurisdiction in which such Borrower is qualified to do business;
(j) evidence of satisfaction by the TransAct of the
Tridex Loan;
(k) evidence of satisfaction by Tridex of the
indebtedness outstanding under the Term Loan and under the Revolver;
(l) payment by the Borrowers to the Bank of the Closing
Fee and all other expenses and fees incurred by the Bank;
(m) a favorable opinion of counsel for the Borrowers,
dated the Closing Date, in substantially the form of Exhibit D and as to such
other matters as the Bank may reasonably request;
(n) a copy of the final prospectus on Form S-1;
(o) copies of all instruments evidencing any Subordinated
Debt of any Borrower and a satisfactory review of the same;
(p) the Subordination Agreement duly executed by the
parties thereto;
(q) evidence of no material adverse change in the
business, management, operations, properties, prospects or condition (financial
or otherwise) of any Borrower or any of their respective Subsidiaries since the
date of the commitment letter; and
(r) evidence of the absence of any change in market
conditions which, in the Bank's opinion, would materially impair a financial
institution's ability to fund Revolving Loans of this type.
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Section 4.2. Additional Conditions Precedent. The obligation
of the Bank to make the Revolving Loans pursuant to a Borrowing which increases
the amount outstanding hereunder (including the initial Borrowing) shall be
subject to the further conditions precedent that on the date of such Borrowing:
(a) the following statements shall be true:
(i) the representations and warranties contained in
Article 5 herein, and in Article 2 of the Security Agreement, and in each other
Facility Document, are true and correct on and as of the date of such Revolving
Loan as though made on and as of such date; and
(ii) no Default or Event of Default has occurred and
is continuing, or would result from such Revolving Loan; and
(iii) there has been no material adverse change in
the business, management, operations, properties, prospects or condition
(financial or otherwise) of any Borrower or any of their respective Subsidiaries
since the Closing Date;
(b) the Bank shall have received such approvals, opinions
or documents as the Bank may reasonably request.
Section 4.3. Deemed Representations. Each Notice of Borrowing
hereunder and acceptance by any Borrower of the proceeds of such Borrowing shall
constitute a representation and warranty that the statements contained in
Section 4.2(a) are true and correct both on the date of such notice and, unless
any Borrower otherwise notifies the Bank prior to such Borrowing, as of the date
of such Borrowing.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
Each Borrower hereby represents and warrants that:
Section 5.1. Incorporation, Good Standing and Due
Qualification. Each of such Borrowers and its Subsidiaries is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its assets and to
transact the business in which it is now engaged or proposed to be engaged, and
is duly qualified as a foreign corporation and in good standing under the laws
of each other jurisdiction in which such qualification is required.
Section 5.2 Corporate Power and Authority; No Conflicts. The
execution, delivery and performance by such Borrower of the Facility Documents
to which it is a party have been duly authorized by all necessary corporate
action and do not and will not: (a) require any consent or approval of its
stockholders; (b) contravene its charter or by-laws; (c) violate any provision
of, or require any filing (other than the filing of the
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financing statements contemplated by the Security Agreement), registration,
consent or approval under, any law, rule, regulation (including, without
limitation, Regulation U), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to such Borrower
or any of its Subsidiaries or Affiliates; (d) result in a breach of or
constitute a default or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which such
Borrower is a party or by which it or its properties may be bound or affected;
(e) result in, or require, the creation or imposition of any Lien (other than as
created under the Security Agreement), upon or with respect to any of the
properties now owned or hereafter acquired by such Borrower; or (f) cause such
Borrower (or any Subsidiary or Affiliate, as the case may be) to be in default
under any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, agreement, lease or instrument.
Section 5.3. Legally Enforceable Agreements. Each Facility
Document to which such Borrower is a party is, or when delivered under this
Agreement will be, a legal, valid and binding obligation of such Borrower
enforceable against such Borrower in accordance with its terms, except to the
extent that such enforcement may be limited by applicable bankruptcy, insolvency
and other similar laws affecting creditors' rights generally.
Section 5.4. Litigation. There are no actions, suits or
proceedings pending or, to the knowledge of such Borrower, threatened, against
or affecting such Borrower or any of its Subsidiaries before any court,
governmental agency or arbitrator, which may, in any one case or in the
aggregate, materially adversely affect the financial condition, operations,
properties or business of such Borrower or any such Subsidiary or of or the
ability of such Borrower to perform its obligation under the Facility Documents
to which it is a party.
Section 5.5. Financial Statements. The consolidated and
consolidating balance sheet of such Borrower and its Consolidated Subsidiaries
as at December 31, 1995, and the related consolidated and consolidating income
statement and statements of cash flows and changes in stockholders' equity of
such Borrower and its Consolidated Subsidiaries for the fiscal year then ended,
and the accompanying footnotes, together with the opinion thereon as to the
consolidated statements, of Price Waterhouse, independent certified public
accountants, and the interim consolidated and consolidating balance sheet of
such Borrower and its Consolidated Subsidiaries as at June 29, 1996, and the
related consolidated and consolidating income statement and statements of cash
flows and changes in stockholders' equity for the six-month period then ended,
copies of which have been furnished to the Bank, are complete and correct and
fairly present the financial condition of such Borrower and its Consolidated
Subsidiaries as at such dates and the results of the operations of such Borrower
and its Consolidated Subsidiaries for the periods covered by such statements,
all in accordance with GAAP consistently applied (subject to year-end
adjustments in the case of the interim financial statements). There are no
liabilities of such
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Borrower or any of its Consolidated Subsidiaries, fixed or contingent, which are
material but are not reflected in the financial statements or in the notes
thereto, other than liabilities arising in the ordinary course of business since
December 31, 1995. No information, exhibit or report furnished by such Borrower
to the Bank in connection with the negotiation of this Agreement contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statement contained therein not materially misleading.
Since December 31, 1995, there has been no material adverse change in the
condition (financial or otherwise), business, operations or prospects of such
Borrower or any of its Subsidiaries.
Section 5.6. Ownership and Liens. Such Borrower and each of
its Consolidated Subsidiaries has title to, or valid leasehold interests in, all
of its properties and assets, real and personal, including the properties and
assets, and leasehold interests reflected in the financial statements referred
to in Section 5.5 (other than any properties or assets disposed of in the
ordinary course of business), and none of the properties and assets owned by
such Borrower or any of its Subsidiaries and none of its leasehold interests is
subject to any Lien, except as disclosed in such financial statements or as may
be permitted hereunder and except for the Lien created by the Security
Agreement.
Section 5.7. Taxes. Such Borrower and each of its Subsidiaries
has filed all tax returns (federal, state and local) required to be filed and
has paid all taxes, assess ments and governmental charges and levies thereon to
be due, including interests and penalties.
Section 5.8. ERISA. Each Plan, and, to the best knowledge of
such Borrower, each Multiemployer Plan, is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, the applicable provisions of ERISA, the Code and any other applicable
federal or state law, and no event or condition is occurring or exists
concerning which such Borrower would be under an obligation to furnish a report
to the Bank in accordance with Section 6.8(k) hereof. As of the most recent
valuation date for each Plan, each Plan was "fully funded," which for purposes
of this Section 5.8 shall mean that the fair market value of the assets of the
Plan is not less than the present value of the accrued benefits of all
participants in the Plan, computed on a Plan termination basis. To the best
knowledge of such Borrower, no Plan has ceased being fully funded as of the date
these representations are made with respect to any Revolving Loan under this
Agreement.
Section 5.9. Subsidiaries and Ownership of Stock. Schedule 5.9
is a complete and accurate list of the Subsidiaries of such Borrower, showing
the jurisdiction of incorporation or organization of each Subsidiary and showing
the percentage of such Borrower's ownership of the outstanding stock or other
interest of each such Subsidiary. All of the outstanding capital stock or other
interest of each such Subsidiary has been
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validly issued, is fully paid and nonassessable and is owned by such Borrower
free and clear of all Liens.
Section 5.10. Credit Arrangements. Schedule 5.10 is a complete
and correct list of all credit agreements, indentures, purchase agreements,
guaranties, Capital Leases and other investments, agreements and arrangements
presently in effect providing for or relating to extensions of credit (including
agreements and arrangements for the issuance of letters of credit or for
acceptance financing) in respect of which such Borrower or any of its
Subsidiaries is in any manner directly or contingently obligated; and the
maximum principal or face amounts of the credit in question, outstanding and
which can be outstanding, are correctly stated, and all Liens of any nature
given or agreed to be given as security therefor are correctly described or
indicated in such Schedule.
Section 5.11. Operation of Business. Such Borrower and each of
its Subsidiaries possesses all licenses, permits, franchises, patents,
copyrights, trademarks and trade names, or rights thereto, to conduct its
business substantially as now conducted and as presently proposed to be
conducted, and neither such Borrower nor any of its Subsidiaries is in violation
of any valid rights of others with respect to any of the foregoing.
Section 5.12. Hazardous Materials. Such Borrower and each of
its Subsidiaries have obtained all permits, licenses and other authorizations
which are required under all Environmental Laws, except to the extent failure to
have any such permit, license or authorization would not have a material adverse
effect on the consolidated financial condition, operations, business or
prospects of such Borrower and its Consolidated Subsidiaries. Such Borrower and
each of its Subsidiaries are in compliance with the terms and conditions of all
such permits, licenses and authorizations, and are also in compliance with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply would not have a material
adverse effect on the consolidated financial condition, operations, business or
prospects of such Borrower and its Consolidated Subsidiaries.
In addition, except as set forth in Schedule 5.12 hereto:
(a) No notice, notification, demand, request for
information, citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by such Borrower or any of its Subsidiaries to have any permit, license
or authorization required in connection with the conduct of the business of such
Borrower or any of its Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation, release or disposal, or any
release
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as defined in 42 U.S.C. s/s 9601(22) ("Release") of any substance regulated
under Environmental Laws ("Hazardous Materials") generated by such Borrower or
any of its Subsidiaries.
(b) Neither such Borrower nor any of its Subsidiaries has
handled any Hazardous Material, other than as a generator, on any property now
or previously owned or leased by such Borrower or any of its Subsidiaries to an
extent that it has, or may reasonably be expected to have, a material adverse
effect on the consolidated financial condition, operations, business or
prospects taken as a whole of the Borrowers and their Consolidated Subsidiaries;
and
(i) to the best of its knowledge, no PCB is or has
been present at any property now or previously owned or leased by such Borrower
or any of its Subsidiaries;
(ii) to the best of its knowledge, no asbestos is or
has been present at any property now or previously owned or leased by such
Borrower or any of its Subsidiaries;
(iii) there are no underground storage tanks for
Hazardous Materials, active or abandoned, at any property now or previously
owned or leased by such Borrower or any of its Subsidiaries;
(iv) no Hazardous Materials have been Released, in a
reportable quantity, where such a quantity has been established by statute,
ordinance, rule, regulation or order, at, on or under any property now or
previously owned by such Borrower or any of its Subsidiaries.
(c) Neither such Borrower nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Material to any
location which is listed on the National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), listed for possible inclusion on the National Priorities List by the
Environmental Protection Agency in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLIS") or on any similar state or
foreign list or which is the subject of federal, state, foreign or local
enforcement actions or other investigations which may lead to claims against
such Borrower or any of its Subsidiaries for clean-up costs, remedial work,
damages to natural resources or for personal injury claims, including, but not
limited to, claims under CERCLA.
(d) No Hazardous Material generated by such Borrower or
any of its Subsidiaries has been recycled, treated, stored, disposed of or
Released by such Borrower or any of its Subsidiaries at any location other than
those listed in Schedule 5.12 hereto.
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(e) No oral or written notification of a Release of a
Hazardous Material has been filed by or on behalf of such Borrower or any of its
Subsidiaries and no property now or previously owned or leased by such Borrower
or any of its Subsidiaries is listed or proposed for listing on the National
Priority List promulgated pursuant to CERCLA, on CERCLIS or on any similar state
or foreign list of sites requiring investigation or clean-up.
(f) There are no Liens arising under or pursuant to any
Environmental Laws on any of the real property or properties owned or leased by
such Borrower or any of its Subsidiaries, and no government actions have been
taken or are in process which could subject any of such properties to such Liens
and neither such Borrower nor any of its Subsidiaries would be required to place
any notice or restriction relating to the presence of Hazardous Materials at any
property owned by it in any deed to such property.
(g) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by or which are in
the possession of such Borrower or any of its Subsidiaries in relation to any
property or facility now or previously owned or leased by such Borrower or any
of its Subsidiaries which have not been made available to the Bank.
Section 5.13. No Default on Outstanding Judgments or Orders.
Such Borrower and each of its Subsidiaries has satisfied all judgments and
neither such Borrower nor any of its Subsidiaries is in default with respect to
any judgment, writ, injunction, decree, rule or regulation of any court,
arbitrator or federal, state, municipal or other governmental authority,
commission, board, bureau, agency or instrumentality, domestic or foreign.
Section 5.14. No Defaults on Other Agreements. Neither such
Borrower nor any of its Subsidiaries is a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter or corporate restriction which could have a material adverse effect on
the business, properties, assets, operations or conditions, financial or
otherwise, of such Borrower or any of its Subsidiaries, or the ability of such
Borrower to carry out its obligations under the Facility Documents to which it
is a party. Neither such Borrower nor any of its Subsidiaries is in default in
any respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument
material to its business to which it is a party.
Section 5.15. Labor Disputes and Acts of God. Neither the
business nor the properties of such Borrower or of any of its Subsidiaries are
affected by any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy or other casualty (whether or not covered by
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insurance), materially and adversely affecting such business or properties or
the operation of such Borrower or such Subsidiary.
Section 5.16. Governmental Regulation. Neither such Borrower
nor any of its Subsidiaries is subject to regulation under the Public Utility
Holding Company Act of 1935, the Investment Company Act of 1940, the Interstate
Commerce Act, the Federal Power Act or any statute or regulation limiting its
ability to incur indebtedness for money borrowed as contemplated hereby.
Section 5.17. Partnerships. Neither such Borrower nor any of
its Subsidiaries is a partner in any partnership.
Section 5.18. No Forfeiture. Neither such Borrower nor any of
its Subsidiaries or Affiliates is engaged in or proposes to be engaged in the
conduct of any business or activity which could result in a Forfeiture
Proceeding and no Forfeiture Proceeding against any of them is pending or
threatened.
Section 5.19. Solvency.
(a) The present fair salable value of the assets of such
Borrower after giving effect to all the transactions contemplated by the
Facility Documents and the funding of all Commitment hereunder exceeds the
amount that will be required to be paid on or in respect of the existing debts
and other liabilities (including contingent liabilities) of such Borrower and
its Subsidiaries as they mature.
(b) The property of such Borrower does not constitute
unreasonably small capital for such Borrower to carry out its business as now
conducted and as proposed to be conducted, including the capital needs of such
Borrower.
(c) Such Borrower does not intend to, nor does it believe
that it will, incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be received by such
Borrower, and of amounts to be payable on or in respect of debt of such
Borrower). The cash available to such Borrower, after taking into account all
other anticipated uses of the cash of such Borrower, is anticipated to be
sufficient to pay all such amounts on or in respect of debt of such Borrower
when such amounts are required to be paid.
(d) Such Borrower does not believe that final judgments
against it in actions for money damages will be rendered at a time when, or in
an amount such that, such Borrower will be unable to satisfy any such judgments
promptly in accordance with their terms (taking into account the maximum
reasonable amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered). The cash available
to such Borrower after taking into account all other anticipated uses of the
cash of such Borrower (including the payments on or in respect of debt referred
to in
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paragraph (c) of this Section 5.19), is anticipated to be sufficient to pay all
such judgments promptly in accordance with their terms.
Section 5.20. Subordinated Debt. The Subordinated Debt of such
Borrower now outstanding, true and complete copies of instruments evidencing
which have been furnished to the Bank, has been duly authorized by such
Borrower, has not been amended or otherwise modified, and constitutes the legal,
valid and binding obligation of such Borrower enforceable against such Borrower
in accordance with its terms. There exists no default in respect of any such
Subordinated Debt.
ARTICLE 6. AFFIRMATIVE COVENANTS
So long as the Note shall remain unpaid or the Bank shall have
the Commitment under this Agreement, the Borrowers shall:
Section 6.1. Maintenance of Existence. Preserve and maintain,
and cause each of their respective Subsidiaries to preserve and maintain, their
corporate existence and good standing in the jurisdiction of their
incorporation, and qualify and remain qualified, and cause each of their
respective Subsidiaries to qualify and remain qualified, as a foreign
corporation in each jurisdiction in which such qualification is required.
Section 6.2. Conduct of Business. Continue, and cause each of
their respective Subsidiaries to continue, to engage in an efficient and
economical manner in a business of the same general type as conducted by it on
the date of this Agreement.
Section 6.3. Maintenance of Properties. Maintain, keep and
preserve, and cause each of their respective Subsidiaries to maintain, keep and
preserve, all of their properties (tangible and intangible), necessary or useful
in the proper conduct of their business in good working order and condition,
ordinary wear and tear excepted.
Section 6.4. Maintenance of Records. Keep, and cause each of
their respective Subsidiaries to keep, adequate records and books of account, in
which complete entries will be made in accordance with GAAP, reflecting all
financial transactions of the Borrowers and their respective Subsidiaries.
Section 6.5. Maintenance of Insurance. Maintain, and cause
each of their respective Subsidiaries to maintain, insurance with financially
sound and reputable insurance companies or associations in such amounts and
covering such risks as are usually carried by companies engaged in the same or
similar business and similarly situated, which insurance may provide for
reasonable deductibility from coverage thereof.
Section 6.6. Compliance with Laws. Comply, and cause each of
their respective Subsidiaries to comply, in all respects with all applicable
laws, rules, regulations and orders, such compliance to include, without
limitation, paying before the same become
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delinquent all taxes, assessments and governmental charges imposed upon it or
upon its property.
Section 6.7. Right of Inspection. At any reasonable time and
from time to time, permit the Bank or any agent or representative thereof, to
examine and make copies and abstracts from the records and books of account of,
and visit the properties of, the Borrowers and any of their respective
Subsidiaries, and to discuss the affairs, finances and accounts of the Borrowers
and any such Subsidiary with any of its officers and directors and the
Borrowers' independent accountants. The Bank shall perform an annual field audit
of the Borrowers at the Borrowers' expense; provided that such expenses shall
not exceed $4,000 per annum.
Section 6.8. Reporting Requirements. Furnish to the Bank:
(a) as soon as available and in any event within 90 days
after the end of each fiscal year of the Borrowers, a consolidated and
consolidating balance sheet of the Borrowers and their respective Consolidated
Subsidiaries as of the end of such fiscal year and a consolidated and
consolidating income statement and statements of cash flows and changes in
stockholders' equity and working capital of the Borrowers and their respective
Consolidated Subsidiaries for such fiscal year and computations of Excess Cash
Flow for such fiscal year, all in reasonable detail and stating in comparative
form the respective consolidated and consolidating figures for the corresponding
date and period in the prior fiscal year and all prepared in accordance with
GAAP and as to the consolidated statements accompanied by an opinion thereon
acceptable to the Bank by Price Waterhouse or other independent accountants of
national standing selected by the Borrowers;
(b) as soon as available and in any event within 45 days
after the end of each fiscal quarter of the Borrowers, a true and complete copy
of TransAct's Report on Form 10-Q;
(c) as soon as available and in any event within 45 days
after the end of each fiscal quarter, a consolidating balance sheet of the
Borrowers and their respective Consolidated Subsidiaries as of the end of such
month and a consolidating income statement and statements of cash flows and
changes in stockholders' equity and working capital, of the Borrowers and their
respective Consolidated Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such month, all in reasonable
detail and stating in comparative form the consolidating figures for the
corresponding date and period in the previous fiscal year and all prepared in
accordance with GAAP and certified by the Chairman or Chief Financial Officer of
each Borrower (subject to year-end adjustments);
(d) promptly upon receipt thereof, copies of any reports,
inclusive of any management letters, submitted to any Borrower or any of its
Subsidiaries by
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independent certified public accountants in connection with examination of the
financial statements of such Borrower or any such Subsidiary made by such
accountants;
(e) promptly at the end of each fiscal quarter, a
certificate of the Chairman or Chief Financial Officer of each Borrower (i)
certifying that to the best of his knowledge no Default or Event of Default has
occurred and is continuing or, if a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto, and (ii) with computations
demonstrating compliance with the covenants contained in Articles 7 and 8;
(f) as soon as available and in any event within 90 days
after the end of each fiscal year of TransAct, a true and complete copy of
TransAct's Report on Form 10-K;
(g) within 30 days after the Closing Date, and
thereafter, as soon as available and in any event within 90 days after the end
of each fiscal year of the Borrowers, management's projected financial
statements inclusive of a balance sheet, an income statement and a statement of
cash flow (supported by key assumptions) for each upcoming fiscal year, prepared
on a quarter-by-quarter basis;
(h) simultaneously with the delivery of the projected
financial statements referred to in Section 6.8(g), a copy of the Borrowers'
business plan for each upcoming fiscal year;
(i) simultaneously with the delivery of the annual
financial statements referred to in Section 6.8(a), a certificate of the
independent public accountants who audited such statements to the effect that,
in making the examination necessary for the audit of such statements, they have
obtained no knowledge of any condition or event which constitutes a Default or
Event of Default, or if such accountants shall have obtained knowledge of any
such condition or event, specifying in such certificate each such condition or
event of which they have knowledge and the nature and status thereof;
(j) promptly after the commencement thereof, notice of
all actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting any Borrower or any of its Subsidiaries which, if determined adversely
to such Borrower or such Subsidiary, could have a material adverse effect on the
financial condition, properties or operations of such Borrower or such
Subsidiary;
(k) as soon as possible and in any event within five days
after the occurrence of each Default or Event of Default a written notice
setting forth the details of such Default or Event of Default and the action
which is proposed to be taken by any Borrower with respect thereto;
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(l) as soon as possible, and in any event within ten days
after any Borrower knows or has reason to know that any of the events or
conditions specified below with respect to any Plan or Multiemployer Plan have
occurred or exist, a statement signed by a senior financial officer of such
Borrower setting forth details respecting such event or condition and the
action, if any, which such Borrower or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed with or
given to PBGC by such Borrower or an ERISA Affiliate with respect to such event
or condition):
(i) any reportable event, as defined in section
4043(b) of ERISA, with respect to a Plan, as to which PBGC has not by regulation
waived the requirement of section 4043(a) of ERISA that it be notified within 30
days of the occurrence of such event (provided that a failure to meet the
minimum funding standard of section 412 of the Code or section 302 of ERISA
including, without limitation, the failure to make on or before its due date a
required installment under section 412(m) of the Code or section 302(e) of
ERISA, shall be a reportable event regardless of the issuance of any waivers in
accordance with section 412(d) of the Code) and any request for a waiver under
section 412(d) of the Code for any Plan;
(ii) the distribution under section 4041 of ERISA of
a notice of intent to terminate any Plan or any action taken by such Borrower or
an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under
section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by such Borrower or any ERISA Affiliate of
a notice from a Multiemployer Plan that such action has been taken by PBGC with
respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by such Borrower or any ERISA Affiliate that results in
liability under section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default) or the receipt
of such Borrower or any ERISA Affiliate of notice from a Multiemployer Plan that
it is in reorganization or insolvency pursuant to section 4241 or 4245 of ERISA
or that it intends to terminate or has terminated under section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against such Borrower or any ERISA Affiliate to enforce
section 515 of ERISA, which proceeding is not dismissed within 30 days;
(vi) the adoption of an amendment to any Plan that
pursuant to section 401(a)(29) of the Code or section 307 of ERISA would result
in the loss of tax-exempt status of the trust of which such Plan is a part if
such Borrower or an
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ERISA Affiliate fails to timely provide security to the Plan in accordance with
the provisions of said Sections;
(vii) any event or circumstance exists which may
reasonably be expected to constitute grounds for such Borrower or any ERISA
Affiliate to incur liability under Title IV of ERISA or under sections
412(c)(11) or 412(n) of the Code with respect to any Plan; and
(viii) the Unfunded Benefit Liabilities of one or
more Plans increase after the date of this Agreement in an amount which is
material in relation to the financial condition of such Borrower and its
Subsidiaries, on a consolidated basis; provided, however, that such increase
shall not be deemed to be material so long as it does not exceed during any
consecutive 2-year period $200,000;
(m) promptly after the request of the Bank, copies of
each annual report filed pursuant to section 104 of ERISA with respect to each
Plan (including, to the extent required by section 104 of ERISA, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information referred to in section 103) and each
annual report filed with respect to each Plan under section 4065 of ERISA;
provided, however, that in the case of a Multiemployer Plan, such annual reports
shall be furnished only if they are available to such Borrower or an ERISA
Affiliate;
(n) promptly after the furnishing thereof, copies of any
statement or report furnished to any other party pursuant to the terms of any
indenture, loan or credit or similar agreement and not otherwise required to be
furnished to the Bank pursuant to any other clause of this Section 6.8;
(o) promptly after the sending or filing thereof, copies
of all proxy statements, financial statements and reports which any Borrower or
any of its Subsidiaries sends to its stockholders, and copies of all regular,
periodic and special reports, and all registration statements which any Borrower
or any of its Subsidiary files with the Securities and Exchange Commission or
any governmental authority which may be substituted therefor, or with any
national securities exchange;
(p) as soon as available, and in any event within 10 days
of the end of each fiscal month, an aging schedule with respect to Receivables
with names of all account debtors, as of the end of such calendar month and
certified by the Chairman or Chief Financial Officer of each Borrower;
(q) promptly after the commencement thereof or promptly
after any Borrower knows of the commencement or threat thereof, notice of any
Forfeiture Proceeding; and
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(r) such other information respecting the condition or
operations, financial or otherwise, of any Borrower or any of its Subsidiaries
as the Bank may from time to time reasonably request.
Section 6.9. Operating Accounts. Maintain, and cause each of
their respective Subsidiaries to maintain, all United States operating accounts
at the Bank.
Section 6.10. Delivery of Projection Scenario. Deliver within
30 days of the Initial Public Offering, a two year projection scenario (the
"Projection Scenario") in form and substance satisfactory to the Bank, setting
forth the Borrowers' conclusion based upon the projections, that the proceeds of
the Revolving Loans will be used solely for working capital purposes as set
forth in Section 2.3.
ARTICLE 7. NEGATIVE COVENANTS
So long as the Note shall remain unpaid or the Bank shall have
any Commitment under this Agreement, the Borrowers shall not:
Section 7.1. Debt. Create, incur, assume or suffer to exist,
or permit any of its Subsidiaries to create, incur, assume or suffer to exist
any Debt, except:
(a) Debt of the Borrowers under this Agreement or the
Note;
(b) Debt described in Schedule 5.10, including renewals,
extensions or refinancings thereof, provided that the principal amount thereof
does not increase; and
(c) Debt of the Borrowers or any of their respective
Subsidiaries secured by purchase money Liens permitted by Section 7.3.
Section 7.2. Guaranties, Etc. Assume, guaranty, endorse or
otherwise be or become directly or contingently responsible or liable, or permit
any of their respective Subsidiaries to assume, guarantee, endorse or otherwise
be or become directly or indirectly responsible or liable (including, but not
limited to, an agreement to purchase any obligation, stock, assets, goods or
services or to supply or advance any funds, assets, goods or services, or an
agreement to maintain or cause such Person to maintain a minimum working capital
or net worth or otherwise to assure the creditors of any Person against loss)
for the obligations of any Person, except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business.
Section 7.3. Liens. Create, incur, assume or suffer to exist,
or permit any of their respective Subsidiaries to create, incur, assume or
suffer to exist, any Lien, upon or with respect to any of its properties, now
owned or hereafter acquired, except:
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(a) Liens for taxes or assessments or other government
charges or levies if not yet due and payable or if due and payable if they are
being contested in good faith by appropriate proceedings and for which
appropriate reserves are maintained;
(b) Liens imposed by law, such as mechanic's,
materialmen's, landlord's, warehousemen's and carrier's Liens, and other similar
Liens, securing obligations incurred in the ordinary course of business which
are not past due for more than 30 days, or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established;
(c) Liens under workers' compensation, unemployment
insurance, social security or similar legislation (other than ERISA);
(d) Liens, deposits or pledges to secure the performance
of bids, tenders, contracts (other than contracts for the payment of money),
leases (permitted under the terms of this Agreement), public or statutory
obligations, surety, stay, appeal, indemnity, performance or other similar
bonds, or other similar obligations arising in the ordinary course of business;
(e) judgment and other similar Liens arising in
connection with court proceedings; provided that the execution or other
enforcement of such Liens is effectively stayed and the claims secured thereby
are being actively contested in good faith and by appropriate proceedings;
(f) easements, rights-of-way, restrictions and other
similar encumbrances which, in the aggregate, do not materially interfere with
the occupation, use and enjoyment by any Borrower or any such Subsidiary of the
property or assets encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto;
(g) Liens securing obligations of such a Subsidiary to a
Borrower or another such Subsidiary;
(h) Liens set forth on Schedule 7.3, provided the Debt
secured by such Liens is permitted by Section 7.1;
(i) purchase money Liens on any property hereafter
acquired or the assumption of any Lien on property existing at the time of such
acquisition, or a Lien incurred in connection with any conditional sale or other
title retention agreement or a Capital Lease; provided that:
(i) any property subject to any of the foregoing is
acquired by a Borrower or any such Subsidiary in the ordinary course of its
business and the Lien on any such property is created contemporaneously with
such acquisition;
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(ii) the obligation secured by any Lien so created,
assumed or existing shall not exceed 80 percent of the lesser of cost or fair
market value as of the time of acquisition of the property covered thereby to a
Borrower or any such Subsidiary acquiring the same;
(iii) each such Lien shall attach only to the
property so acquired and fixed improvements thereon; and
(iv) the obligations secured by such Lien are
permitted by the provisions of Section 7.1; and
Section 7.4. Leases. Create, incur, assume or suffer to exist,
or permit their respective Subsidiaries to create, incur, assume or suffer to
exist, any obligation as lessee for the rental or hire of any real or personal
property, except: (a) leases existing on the date of this Agreement and any
extensions or renewals thereof; (b) leases (other than Capital Leases) which do
not in the aggregate require the Borrowers and their respective Subsidiaries on
a consolidated basis to make payments (including taxes, insurance, maintenance
and similar expense which any Borrower or any Subsidiary is required to pay
under the terms of any lease) in any fiscal year of the Borrowers in excess of
$250,000; (c) Capital Leases permitted by Section 7.3.
Section 7.5. Investments. Make, or permit any of their
respective Subsidiaries to make, any loan or advance to any Person or purchase
or otherwise acquire, or permit any such Subsidiary to purchase or otherwise
acquire, any capital stock, assets, obligations or other securities of, make any
capital contribution to, or otherwise invest in, or acquire any interest in, any
Person, except: (a) direct obligations of the United States of America or any
agency thereof with maturities of one year or less from the date of acquisition;
(b) commercial paper of a domestic issuer rated at least "A-1" by Standard &
Poor's Corporation or "P-1" by Xxxxx'x Investors Service, Inc.; (c) certificates
of deposit with maturities of one year or less from the date of acquisition
issued by any commercial bank operating within the United States of America
having capital and surplus in excess of $500,000,000; and (d) for stock,
obligations or securities received in settlement of debts (created in the
ordinary course of business) owing to a Borrower or any such Subsidiary.
Section 7.6. Dividends. Declare or pay any dividends,
purchase, redeem, retire or otherwise acquire for value any of its capital stock
now or hereafter outstanding, or make any distribution of assets to its
stockholders as such whether in cash, assets or in obligations of any Borrower,
or allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption or retirement of any shares of
its capital stock, or make any other distribution by reduction of capital or
otherwise in respect of any shares of its capital stock or permit any of their
respective Subsidiaries to purchase or otherwise acquire for value any stock of
any Borrower or another such Subsidiary, except that: (a) any Borrower may
declare and deliver dividends and make
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distributions payable solely in common stock of such Borrower; (b) any Borrower
may purchase or otherwise acquire shares of its capital stock by exchange for or
out of the proceeds received from a substantially concurrent issue of new shares
of its capital stock; (c) TransAct may make the payments to Tridex as permitted
under the Subordination Agreement; and (d) any Subsidiary may declare and
deliver dividends and make distributions to the Parent.
Section 7.7. Sale of Assets. Sell, lease, assign, transfer or
otherwise dispose of, or permit any of their respective Subsidiaries to sell,
lease, assign, transfer or otherwise dispose of, any of its now owned or
hereafter acquired assets (including, without limitation, shares of stock and
indebtedness of such Subsidiaries, receivables and leasehold interests); except:
(a) for inventory disposed of in the ordinary course of business; (b) the sale
or other disposition of assets no longer used or useful in the conduct of its
business; and (c) that any such Subsidiary may sell, lease, assign or otherwise
transfer its assets to the Parent.
Section 7.8. Stock of Subsidiaries, Etc. Sell or otherwise
dispose of any shares of capital stock of any of their respective Subsidiaries
or permit any such Subsidiary to issue any additional shares of its capital
stock, except directors' qualifying shares.
Section 7.9. Transactions with Affiliates. Enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate or permit any of
their respective Subsidiaries to enter into any transaction, including, without
limitation, the purchase, sale or exchange of property or the rendering of any
service, with any Affiliate, except in the ordinary course of and pursuant to
the reasonable requirements of such Borrower's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to such Borrower or such
Subsidiary than it would obtain in a comparable arms' length transaction with a
Person not an Affiliate, and except as set forth on Schedule 7.9.
Section 7.10. Mergers, Etc. Merge or consolidate with, or
sell, assign, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, any Person, or acquire all or substantially all
of the assets or the business of any Person (or enter into any agreement to do
any of the foregoing), or permit any of their respective Subsidiaries to do so
except that any such Subsidiary may merge into or transfer assets to a Borrower.
Section 7.11. No Activities Leading to Forfeiture. Neither the
Borrowers nor any of their respective Subsidiaries or Affiliates shall engage in
or propose to be engaged in the conduct of any business or activity which could
result in a Forfeiture Proceeding.
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ARTICLE 8. FINANCIAL COVENANTS
So long as the Note shall remain unpaid or the Bank shall have
the Commitment under this Agreement:
Section 8.1. Minimum Tangible Net Worth. The Borrowers, on a
consolidated basis, shall maintain at all times, as measured at the end of each
fiscal quarter, Tangible Net Worth of not less than the greater of (a)
$10,500,000 plus the Net Income Increase and (b) Tangible Net Worth as reflected
on the Opening Balance Sheet less $250,000 plus the Net Income Increase; except,
if the Over-allotment Sale does not occur, in which case, the Borrower's, on a
consolidated basis, shall maintain at all times, as measured at the end of each
fiscal quarter, Tangible Net Worth of not less than the greater of (a)
$9,700,000 plus the Net Income Increase and (b) Tangible Net Worth as reflected
on the Opening Balance Sheet less $250,000 plus the Net Income Increase.
Section 8.2. Maximum Leverage Ratio. The Borrowers, on a
consolidated basis, shall maintain at all times, as measured at the end of each
fiscal quarter, a ratio of Total Liabilities to Tangible Net Worth of not
greater than 1.5 to 1.0.
Section 8.3. Minimum Current Ratio. The Borrower, on a
consolidated basis, shall maintain at all times, as measured at the end of each
fiscal quarter, a ratio of Current Assets to Current Liabilities of not less
than 2.0 to 1.0.
Section 8.4. Minimum Interest Coverage Ratio. The Borrowers,
on a consolidated basis, shall maintain at all times, as measured at the end of
each fiscal quarter, an Interest Coverage Ratio of not less than 3.0 to 1.0.
Section 8.5. Consecutive Losses. The Borrowers, on a
consolidated basis, shall not suffer a Net Loss in any two (2) consecutive
fiscal quarters..
Section 8.6. Annual Loss. The Borrowers shall not suffer an
annual loss, as determined on a consolidated basis in accordance with GAAP.
ARTICLE 9. EVENTS OF DEFAULT
Section 9.1. Events of Default. Any of the following events
shall be an "Event of Default":
(a) the Borrowers shall: (i) fail to pay the principal of
any Note as and when due and payable; or (ii) fail to pay interest on the Note
or any fee or other amount due hereunder as and when due and payable;
(b) any representation or warranty made or deemed made by
any Borrower in this Agreement or in any other Facility Document or which is
contained in
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any certificate, document, opinion, financial or other statement furnished at
any time under or in connection with any Facility Document shall prove to have
been incorrect in any material respect on or as of the date made or deemed made;
(c) any Borrower shall: (i) fail to perform or observe
any term, covenant or agreement contained in Section 2.3 or Articles 7 or 8; or
(ii) fail to perform or observe any term, covenant or agreement on its part to
be performed or observed (other than the obligations specifically referred to
elsewhere in this Section 9.1) in any Facility Document and such failure shall
continue for 20 consecutive days;
(d) any Borrower, or any of its respective Subsidiaries:
(i) shall generally not, or be unable to, or shall admit in writing its
inability to, pay its debts as such debts become due; or (ii) shall make an
assignment for the benefit of creditors, petition or apply to any tribunal for
the appointment of a custodian, receiver or trustee for it or a substantial part
of its assets; or (iii) shall commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect; or (iv)
shall have had any such peti tion or application filed or any such proceeding
shall have been commenced against it, in which an adjudication or appointment is
made or order for relief is entered, or which petition, application or
proceeding remains undismissed for a period of 30 days or more; or shall be the
subject of any proceeding under which its assets may be subject to seizure,
forfeiture or divestiture (other than a proceeding in respect of a Lien
permitted under Section 7.3(b)); or (v) by any act or omission shall indicate
its consent to, approval of or acquiescence in any such petition, application or
proceeding or order for relief or the appointment of a custodian, receiver or
trustee for all or any substantial part of its property; or (vi) shall suffer
any such custodianship, receivership or trusteeship to continue undischarged for
a period of 30 days or more;
(e) one or more judgments, decrees or orders for the
payment of money in excess of $250,000 in the aggregate shall be rendered
against any Borrower, or any of its respective Subsidiaries and such judgments,
decrees or orders shall continue unsatisfied and in effect for a period of 30
consecutive days without being vacated, discharged, satisfied or stayed or
bonded pending appeal;
(f) any event or condition shall occur or exist with
respect to any Plan or Multiemployer Plan concerning which any Borrower is under
an obligation to furnish a report to the Bank in accordance with Section 6.8(h)
hereof and as a result of such event or condition, together with all other such
events or conditions, such Borrower or any ERISA Affiliate has incurred or in
the opinion of the Bank is reasonably likely to incur a liability to a Plan, a
Multiemployer Plan, the PBGC or a section 4042 Trustee (or any combination of
the foregoing) which is material in relation to the financial position of such
Borrower and its Subsidiaries, on a consolidated basis; provided, however, that
any such
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amount shall not be deemed to be material so long as all such amounts do not
exceed in the aggregate during any consecutive 2-year period $200,000;
(g) the Unfunded Benefit Liabilities of one or more Plans
have increased after the date of this Agreement in an amount which is material
(as specified in Section 9.1(g) hereof);
(h) a Change of Control shall occur;
(i) (A) any Forfeiture Proceeding shall have been
commenced or any Borrower shall have given the Bank written notice of the
commencement of any Forfeiture Proceeding as provided in Section 6.8 or (B) the
Bank has a good faith basis to believe that a Forfeiture Proceeding has been
threatened or commenced;
(j) there shall be any material adverse change in the
condition (financial or otherwise), business, management, operations, properties
or prospects of the Borrowers and their respective Subsidiaries since the
Closing Date; or
(k) the Security Agreement or the Pledge Agreement shall
at any time after its execution and delivery and for any reason cease: (A) to
create a valid and perfected first priority security interest in and to the
property purported to be subject to such agreement; or (B) to be in full force
and effect or shall be declared null and void, or the validity or enforceability
thereof shall be contested by the party thereto, or such party shall deny it has
further liability or obligation thereunder or such party shall fail to perform
any of its obligations thereunder.
Section 9.2. Remedies. If any Event of Default shall occur and
be continuing, the Bank may, by notice to the Borrowers, (a) declare the
Commitment to be terminated, whereupon the same shall forthwith terminate, and
(b) declare the outstanding principal of the Note, all interest thereon and all
other amounts payable under this Agreement and the Note or any one of them to be
forthwith due and payable, whereupon the Note, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrowers; provided that, in the case of an Event of Default
referred to in Section 9.1(e) or Section 9.1(i)(A) above, the Commitment shall
be immediately terminated, and the Note, all interest thereon and all other
amounts payable under this Agreement shall be immediately due and payable
without notice, presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by the Borrowers.
ARTICLE 10. MISCELLANEOUS
Section 10.1 Amendments and Waivers. Except as otherwise
expressly provided in this Agreement, any provision of this Agreement may be
amended or modified
39
38
only by an instrument in writing signed by the Borrowers and the Bank, and any
provision of this Agreement may be waived by the Borrowers and the Bank. No
failure on the part of the Bank to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof or preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 10.2. Usury. Anything herein to the contrary
notwithstanding, the obligations of the Borrowers under this Agreement and the
Note shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt thereof would be contrary to provisions of
law applicable to the Bank limiting rates of interest which may be charged or
collected by the Bank.
Section 10.3 Expenses. The Borrowers shall reimburse the Bank
on demand for all reasonable costs, expenses and charges (including, without
limitation, telephone, telex, courier expenses, printing costs, reasonable fees
and charges of external legal counsel for the Bank and reasonable costs
allocated after the Closing Date by its internal legal department) incurred by
the Bank in connection with the preparation, negotiation, execution, delivery,
filing, recording, performance, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement, the Note or any Facility Document. The Borrowers agree to
indemnify the Bank and its directors, officers, employees and agents from, and
hold each of them harmless against, any and all losses, liabilities, claims,
damages or expenses incurred by any of them arising out of or by reason of any
investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to any actual or
proposed use by the Borrowers or any of their respective Subsidiaries of the
proceeds of the Revolving Loans, including, without limitation, the reasonable
fees and disbursements of counsel incurred in connection with any such
investigation or litigation or other proceedings (but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified).
Section 10.4. Survival. The obligations of the Borrowers under
Section 10.3 shall survive the repayment of the Revolving Loans and the
termination of the Commitment.
Section 10.5. Assignment; Participations. This Agreement shall
be binding upon, and shall inure to the benefit of, the Borrowers, the Bank and
their respective succes sors and assigns, except that no Borrower may assign or
transfer its rights or obligations hereunder. The Bank may assign, or sell
participations in, all or any part of any Revolving Loan to another bank or
other entity, in which event (a) in the case of an assignment, upon notice
thereof by the Bank to the Borrowers, the assignee shall have, to the extent of
such assignment (unless otherwise provided therein), the same rights, benefits
40
39
and obligations as it would have if it were the Bank hereunder; and (b) in the
case of a participation, the participant shall have no rights under the Facility
Documents. The agreement executed by the Bank in favor of the participant shall
not give the participant the right to require the Bank to take or omit to take
any action hereunder except action directly relating to (i) the extension of a
payment date with respect to any portion of the principal of or interest on any
amount outstanding hereunder allocated to such participant, (ii) the reduction
of the principal amount outstanding hereunder or (iii) the reduction of the rate
of interest payable on such amount or any amount of fees payable hereunder to a
rate or amount, as the case may be, below that which the participant is entitled
to receive under its agreement with the Bank. The Bank may furnish any
information concerning the Borrowers in the possession of the Bank from time to
time to assignees and participants (including prospective assignees and
participants); provided that the Bank shall require any such prospective
assignee or such participant (prospective or otherwise) to agree in writing to
maintain the confidentiality of such information.
Section 10.6. Notices. Unless the party to be notified
otherwise notifies the other party in writing as provided in this Section, and
except as otherwise provided in this Agreement, notices shall be delivered in
person or sent by overnight courier, facsimile, ordinary mail, cable or telex
addressed to such party at its "Address for Notices" on the signature page of
this Agreement. Notices shall be effective: (a) on the day on which delivered to
such party in person, (b) on the first Banking Day after the day on which sent
to such party by overnight courier, (c) if given by mail, 48 hours after deposit
in the mails with first-class postage prepaid, addressed as aforesaid, and (d)
if given by facsimile, cable or telex, when the facsimile, cable or telex is
transmitted to the facsimile, cable or telex number as aforesaid; provided that
notices to the Bank shall be effective upon receipt.
Section 10.7. Setoff. The Borrowers agree that, in addition to
(and without limitation of) any right of setoff, banker's lien or counterclaim
the Bank may otherwise have, the Bank shall be entitled, at its option, to
offset balances (general or special, time or demand, provisional or final) held
by it for the account of any Borrower at any of the Bank's offices, in Dollars
or in any other currency, against any amount payable by any Borrower under this
Agreement or the Note which is not paid when due (regardless of whether such
balances are then due to such Borrower), in which case it shall promptly notify
the Borrowers thereof; provided that the Bank's failure to give such notice
shall not affect the validity thereof.
SECTION 10.8. JURISDICTION; IMMUNITIES. EACH BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY CONNECTICUT STATE OR UNITED
STATES FEDERAL COURT SITTING IN CONNECTICUT OVER ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTE, AND EACH BORROWER
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
41
40
CONNECTICUT STATE OR FEDERAL COURT. EACH BORROWER IRREVOCABLY CONSENT TO THE
SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES OF SUCH PROCESS TO EACH BORROWER AT ITS ADDRESS SPECIFIED IN SECTION
10.6. EACH BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH BORROWER
FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN
ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. EACH
BORROWER FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE BANK
SHALL BE BROUGHT ONLY IN CONNECTICUT STATE OR UNITED STATES FEDERAL COURT
SITTING IN CONNECTICUT. EACH BORROWER WAIVES ANY RIGHT IT MAY HAVE TO JURY
TRIAL.
(a) Nothing in this Section 10.8 shall affect the right
of the Bank to serve legal process in any other manner permitted by law or
affect the right of the Bank to bring any action or proceeding against any
Borrower or its property in the courts of any other jurisdictions.
(b) To the extent that any Borrower has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether from service or notice, attachment prior to judgment, attachment in aid
of execution, execution or otherwise) with respect to itself or its property,
such Borrower hereby irrevocably waives such immunity in respect of its
obligations under this Agreement and the Note.
Section 10.9. Table of Contents; Headings. Any table of
contents and the headings and captions hereunder are for convenience only and
shall not affect the interpretation or construction of this Agreement.
Section 10.10. Severability. The provisions of this Agreement
are intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 10.11. Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any party hereto may execute this Agreement by signing
any such counterpart.
Section 10.12. Integration. The Facility Documents set forth
the entire agreement between the parties hereto relating to the transactions
contemplated thereby and
42
41
supersede any prior oral or written statements or agreements with respect to
such transactions.
SECTION 10.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CONNECTICUT.
Section 10.14. Confidentiality. The Bank agrees (on behalf of
itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with safe and sound banking practices, any nonpublic information
supplied to it by the Borrowers pursuant to this Agreement which is identified
by the Borrowers as being confidential at the time the same is delivered to the
Bank, provided that nothing herein shall limit the disclosure of any such
information (i) to the extent required by statute, rule, regulation or judicial
process, (ii) to counsel for the Bank, (iii) to bank examiners, auditors or
accountants, (iv) in connection with any litigation to which the Bank is a party
or (v) to any assignee or participant (or prospective assignee or participant)
so long as such assignee or participant (or prospective assignee or participant)
agrees to maintain the confidentiality of such information; and provided finally
that in no event shall the Bank be obligated or required to return any materials
furnished by the Borrowers.
Section 10.15. Treatment of Certain Information. Each Borrower
(a) acknowledges that services may be offered or provided to it (in connection
with this Agreement or otherwise) by the Bank or by one or more of its
subsidiaries or affiliates and (b) acknowledges that information delivered to
the Bank by any Borrower may be provided to each such subsidiary and affiliate.
SECTION 10.16. COMMERCIAL WAIVER. EACH BORROWER ACKNOWLEDGES
THAT THE REVOLVING LOANS EVIDENCED BY THE NOTE ARE FOR COMMERCIAL PURPOSES AND
WAIVES ANY RIGHT TO NOTICE AND HEARING UNDER SECTIONS 52-278a THROUGH 52-278n OF
THE CONNECTICUT GENERAL STATUTES AS NOW OR HEREAFTER AMENDED AND AUTHORIZES THE
ATTORNEY OF THE BANK, OR ANY SUCCESSOR THERETO, TO ISSUE A WRIT OF PREJUDGMENT
REMEDY WITHOUT COURT ORDER. FURTHER, EACH BORROWER HEREBY WAIVES, TO THE EXTENT
PERMITTED BY LAW, THE BENEFITS OF ALL VALUATION, APPRAISEMENTS, HOMESTEAD, EXEMP
TION, STAY, REDEMPTION AND MORATORIUM LAWS NOW IN FORCE OR WHICH MAY HEREAFTER
BECOME LAWS. EACH BORROWER ACKNOWL EDGES THAT IT MAKES THESE WAIVERS AND THE
WAIVERS CONTAINED IN SECTION 10.8 KNOWINGLY, VOLUNTARILY AND ONLY AFTER
EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THESE WAIVERS WITH ITS
ATTORNEYS.
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42
SECTION 10.17. WAIVER OF JURY TRIAL BECAUSE DISPUTES ARISING
IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE BORROWERS AND
THE BANK WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE BORROWERS AND THE BANK DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
BORROWERS AND THE BANK HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO, THIS
AGREEMENT OR ANY OF THE OTHER FACILITY DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
Section 10.18. Multiple Borrowers.
(a) It is understood and agreed by each Borrower that the
handling of this credit facility on a joint borrowing basis as set forth in this
Agreement is solely as an accommodation to the Borrowers and at their request,
and that the Bank shall not incur liability to the Borrowers as a result
thereof. To induce the Bank to do so and in consideration thereof, each Borrower
hereby agrees to indemnify the Bank and to hold the Bank harmless from and
against any and all liabilities, expenses, losses, damages and claims of damage
or injury asserted against the Bank by any Borrower or by any other Person
arising from or incurred by reason of the Bank's handling of the financing
arrangements of the Borrowers as provided herein, reliance by the Bank on any
request or instruction from any other Borrower or any other action taken by the
Bank with respect to this Section 10.18.
(b) Each Borrower represents and warrants to the Bank
that the request for joint handling of the Revolving Loans to be made by the
Bank hereunder was made because the Borrowers are engaged in an integrated
operation which required financing on a basis permitting the availability of
credit from time to time to each Borrower as required for the continued
successful operation of each Borrower of the integrated operation of the
Borrowers. Each Borrower expects to derive benefit, directly or indirectly, from
such availability because the successful operation of the Borrowers is dependent
on the continued successful performance of the functions of the integrated
group.
(c) Each Borrower hereby irrevocably designates TransAct
as its attorney to borrow, sign and endorse notes, and execute and deliver all
instruments, documents, writings and further assurances now or hereafter
required hereunder, on behalf
44
43
of each Borrower, and does hereby authorize the Bank to pay over or credit all
Revolving Loan proceeds hereunder to TransAct as the Borrowers' attorney in
fact, recognizing, however, that Lender is not bound by such authorization and
may elect either to disburse loan proceeds to each Borrower directly for its
use, to TransAct as attorney for any Borrower or to TransAct for its own
account, in which case TransAct may advance or lend such proceeds to the other
Borrowers. Each Borrower further agrees that all obligations hereunder or
referred to herein or under any other Facility Document shall be joint and sev
eral, and that each Borrower shall make payment upon any notes issued pursuant
hereto and any and all other obligations hereunder or referred to herein or
under any other Facility Document upon their maturity by acceleration or
otherwise, and that such obligation and liability on the part of each Borrower
shall in no way be affected by any extensions, renewals and forbearances granted
by the Bank to any Borrower, failure of the Bank to give any Borrower notice of
borrowing or any other notice, any failure of the Bank to pursue or preserve its
rights against any other Borrower, the release by the Bank of any collateral now
or hereafter acquired from any Borrower, failure of the Bank to realize upon
such collateral in a commercially reasonable manner, and that such agreement by
each Borrower to pay upon any notice issued pursuant hereto is unconditional and
unaffected by prior recourse by the Bank to the other Borrowers or any
collateral for such Borrowers' obligations or the lack thereof.
(d) Each Borrower hereby grants a right of contribution
to each other Borrower for any amount paid by such other Borrower in
satisfaction of any obligations under this Agreement, the Note or any other
Facility Document; provided, however, that the aggregate of the rights of
contribution against any Borrower hereunder shall not exceed such Borrower's net
worth. In calculating the net worth of any Borrower for purposes of this
paragraph, such Borrower's obligations under the Facility Documents will not be
included in its liabilities and such Borrower's rights of contribution against
other Borrowers for amounts paid under the Facility Documents will not be
included in its assets.
(e) All notices to, or other communications with, the
Borrowers or any one of them shall be sufficient if given to any of the
Borrowers. Although the Bank may require that all of the Borrowers or a
particular Borrower execute any document (including any Notice of Borrowing) in
any matter pertaining to this Agreement or any of the other Facility Documents,
any one of the Borrowers may bind all of the Borrowers and any document
(including any Notice of Borrowing) signed by any Borrower, and any and all
action taken by any Borrower, is sufficient to represent all of the Borrowers.
Without limiting the foregoing, any single Borrower may make representations and
warranties on behalf of all the Borrowers or any other Borrower, and such
representations and warranties shall be of the same force and effect as if made
directly by such other Borrowers.
Section 10.19. Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by
45
44
any of such covenants, the fact that it would be permitted by an exception to,
or be otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or Event of Default if such action is taken or condition
exists.
Section 10.20. Time of the Essence. Time and punctuality shall
be of the essence with respect to this instrument, but no delay or failure of
the Bank to enforce any of the provisions herein contained and no conduct or
statement of the Bank shall waive or affect any of the Bank's rights hereunder.
Section 10.21. Reference to and Effect on the Facility
Documents.
(a) Upon the effectiveness of this Agreement, on and
after the date hereof each reference in the Facility Documents to the Credit
Agreement or the Note, shall mean and be a reference to this Credit Agreement as
amended and restated hereby or the Note as amended and restated in connection
with the execution and delivery of this Agreement.
(b) The execution, delivery and effectiveness of this
Agreement shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of the Bank under any of the Facility Documents, nor
constitute a waiver of any provision of any of the Facility Documents.
46
45
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
TRANSACT TECHNOLOGIES INCORPORATED
By /s/ XXXXXXX X. XXXX
-------------------------------------
Xxxxxxx X. Xxxx
Title: Executive Vice President and
Chief Financial Officer
MAGNETEC CORPORATION
By /s/ XXXXXXX X. XXXX
-------------------------------------
Xxxxxxx X. Xxxx
Title: Vice President
Address for Notices to Borrowers:
0 Xxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxxxx 00000
FLEET NATIONAL BANK
By /s/ XXXXXXXXX X. XXXXXXX
-------------------------------------
Xxxxxxxxx X. Xxxxxxx
Vice President
Address for Notices and Lending Office:
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxxx
Vice President
Facsimile No.: 203.964.4836
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46
EXHIBITS
Exhibit A - Note
Exhibit B - Subordination Agreement
Exhibit C - Security Agreement
Exhibit D - Opinion of Counsel for Borrowers
Exhibit E - Notice of Borrowing
SCHEDULES
Schedule 5.9 - Subsidiaries of Borrowers
Schedule 5.10 - Credit Arrangements
Schedule 5.12 - Hazardous Materials
Schedule 7.3 - Liens
Schedule 7.9 - Transactions with Affiliates Outside the Ordinary Course of
Business
48
EXHIBIT A
PROMISSORY NOTE
$5,000,000 Stamford, Connecticut
August 29, 1996
For value received, TRANSACT TECHNOLOGIES INCORPORATED. and
MAGNETEC CORPORATION (the "Borrowers"), hereby promise, to pay to the order of
FLEET NATIONAL BANK, (the "Bank") at the office of the Bank at Xxx Xxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, for the account of the appropriate Lending
Office of the Bank, the principal sum of FIVE MILLION DOLLARS ($5,000,000) or,
if less, the amount of RevolvingLoans made by the Bank to the Borrowers pursuant
to the Credit Agreement referred to below, in lawful money of the United States
of America and in immediately available funds, on the date(s) and in the manner
provided in said Credit Agreement. The Borrowers also promise to pay interest on
the unpaid principal balance hereof, for the period such balance is outstanding,
at said principal office for the account of said Lending Office, in like money,
at the rates of interest as provided in the Credit Agreement referred to below,
on the date(s) and in the manner provided in said Credit Agreement.
The date and amount of each Revolving Loan made by the Bank to
the Borrowers under the Credit Agreement referred to below, and each payment of
principal thereof, shall be recorded by the Bank on its books and, prior to any
transfer of this Note (or, at the discretion of the Bank, at any other time),
endorsed by the Bank on the schedule attached hereto or any continuation
thereof.
This is the Revolving Note referred to in that certain Credit
Agreement (as amended from time to time the "Credit Agreement") dated of even
date herewith among the Borrowers and the Bank and evidences the Revolving Loans
made by the Bank thereunder. All terms not defined herein shall have the
meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of this Note upon the occurrence of certain Events of Default and for
prepayments on the terms and conditions specified therein.
The Borrowers waive presentment, notice of dishonor, protest
and any other notice or formality with respect to this Note.
49
2
This Note shall be governed by, and interpreted and construed
in accordance with, the laws of the State of Connecticut.
TRANSACT TECHNOLOGIES INCORPORATED
By_____________________________________
Xxxxxxx X. Xxxx
Title: Executive Vice President and
Chief Financial Officer
MAGNETEC CORPORATION
By_____________________________________
Xxxxxxx X. Xxxx
Title: Vice President
50
Amount Amount of Balance Notation
Date of Revolving Loan Payment Outstanding By
51
EXHIBIT E
NOTICE OF BORROWING
[DATE]
Fleet National Bank
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
ATTN: Xxxxxxxxx X. Xxxxxxx
Ladies and Gentlemen:
The undersigned, a duly authorized officer of [TransAct
Technologies Incorporated] [Magnetec Corporation] refers to the Credit Agreement
dated as of August 29, 1996 among TransAct Technologies Incorporated, Magnetec
Corporation and Fleet National Bank (as amended, modified or supplemented from
time to time the "Credit Agreement") and hereby gives you notice pursuant to
Section 4.2 of the Credit Agreement that the undersigned hereby requests a
Revolving Loan, and in that connection sets forth below the information relating
to such Borrowing (the "Proposed Borrowing") as required by the Credit
Agreement. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement.
(i) The Banking Day of the Proposed Borrowing is
____________________________.
(ii) The aggregate amount of the Proposed Borrowing is
U.S.$ ____________________________.
(iii) The interest rate for the Proposed Borrowing is
(check one):
_____ Prime Rate
_____ LIBO Rate (Complete Section v)
(iv) (LIBOR Loans Only) The initial Interest Period for
the Proposed Borrowing is (check one):
_____ one (1) month
_____ two (2) months
52
2
_____ three (3) months
In accordance with Section 4.2 of the Credit Agreement, the
undersigned hereby certifies that all representations and warranties of the
Borrowers contained in each Facility Document, including Article 5 of the Credit
Agreement and Article 2 of the Security Agreement, are true and correct on the
date hereof, and unless we otherwise notify you in writing, you may rely on the
fact that such statements are true and correct on the day of the Proposed
Borrowing before and after giving effect to such Proposed Borrowing and the
application of the proceeds thereof, as though made on and as of such date. The
undersigned also certifies that there has been no material adverse change in the
business, management operations, properties, prospects or condition (financial
or otherwise) of any Borrowers since the Closing Date.
The undersigned further certifies and warrants that no Default
or Event of Default is existing as of the date of this Certificate and, unless
we notify you in writing, as of the day of the Proposed Borrowing.
Very truly yours,
[TRANSACT TECHNOLOGIES INCORPORATED]
[MAGNETEC CORPORATION]
By_____________________________________
Name:
Title:
53
SCHEDULE 5.9
to
CREDIT AGREEMENT
Dated as of August 29, 1996
SUBSIDIARIES OF BORROWER
Magnetec Corporation, a Connecticut corporation (survivor of
merger between Magnetec Corporation, a Connecticut corporation, and Ithaca
Peripherals Incorporated, a Delaware corporation).
SUBSIDIARIES OF MAGNETEC
Ithaca Peripherals Ltd, a UK corporation.
54
SCHEDULE 5.10
to
CREDIT AGREEMENT
Dated as of August 29, 1996
CREDIT ARRANGEMENTS
Lessee Lessor Security
------ ------ --------
Magnetec Xerox Corporation Photocopy equipment
Magnetec NTFC Capital Corp. Telecommunications
equipment
Magnetec Pitney Xxxxx Mailing equipment
Ithaca Xerox Corporation Photocopy equipment
Ithaca Xxxxxx Industrial Handling Forklift equipment
Corp.
Ithaca Xxxxxxxx County Trust Telecommunications
Company equipment
Ithaca Pitney Xxxxx Mailing equipment
55
SCHEDULE 5.12
to
CREDIT AGREEMENT
Dated as of August 29, 1996
HAZARDOUS MATERIALS
Oily Solids
One of the Borrower's subsidiaries regularly uses two types of lubricants
in performing certain machining processes. As a result of these processes, the
lubricant combines with metal shavings and eventually produces liquid sludge and
"oily solids". The liquid sludge and oily solids are contained in clearly marked
drums which are periodically transported off-site by General Chemical, a
Framingham, Massachusetts hazardous waste disposal company.
56
SCHEDULE 7.3
to
CREDIT AGREEMENT
Dated as of August 29, 1996
LIENS
1. UCC-1 Financing Statement filed 12/9/94 with the Connecticut
Secretary of State, File No. 1591536, Debtor = Magnetec,
Secured Party = State of Connecticut Department of Economic
Development
2. UCC-1 Financing Statement filed 6/19/95 with the Connecticut
Secretary of State, File No. 1627702, Debtor = Magnetec,
Secured Party = NTFC Capital Corporation
3. UCC-1 Financing Statement filed 7/11/96 with the Xxxxxxxxxxx
Xxxx Xxxxx, Xxxx Xx. 0000, Xxxxxx = Magnetec, Secured Party =
OCE' XXXXXXX
4. UCC-1 Financing Statement filed 1/06/92 with the Connecticut
Secretary of Xxxxx, Xxxx Xx. 000000, Xxxxxx = Magnetec,
Secured Party = Pitney Xxxxx Credit Corporation
5. UCC-1 Financing Statement filed 7/27/94 with the New York
Secretary of Xxxxx, Xxxx Xx. 000000, Xxxxxx = Ithaca
Peripherals Incorporated, Secured Party = Citicorp Dealer
Finance (assigned by Xxxxxx Industrial Handling)
6. UCC-1 Financing Statement filed 3/4/92 with the New York
Secretary of Xxxxx, Xxxx Xx. 000000, Xxxxxx = Ithaca
Peripherals Incorporated, Secured Party = World Omni Leasing,
Inc.
57
SCHEDULE 7.9
to
CREDIT AGREEMENT
Dated as of August 29, 1996
TRANSACTIONS WITH AFFILIATES OUTSIDE THE
ORDINARY COURSE OF BUSINESS
Borrower has entered into the following contracts which may be
considered outside the ordinary course of business:
1. Plan of Reorganization dated as of June 24, 1996 among Tridex
Corporation ("Tridex"), Magnetec Corporation ("Magnetec"),
TransAct Technologies Incorporated ("TransAct") and Ithaca
Peripherals Incorporated ("Ithaca").
2. Agreement and Plan of Merger dated as of July 16, 1996 between
Magnetec and Ithaca.
3. Asset Transfer Agreement dated as of July 31, 1996 between
Magnetec and Tridex.
4. Form of Manufacturing Support Services Agreement between
Magnetec and Tridex.
3. Corporate Services Agreement dated as of July 30, 1996 between
Tridex and TransAct.
4. Printer Supply Agreement dated as of July 31, 1996 between
Magnetec and Ultimate Technology Corporation.
5. Tax Sharing Agreement dated as of July 31, 1996 between Tridex
and TransAct.
