Exhibit 10.4
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CREDIT AGREEMENT
dated as of April 21, 1998
among
BOGEN COMMUNICATIONS INTERNATIONAL, INC. and
BOGEN COMMUNICATIONS, INC.,
VARIOUS FINANCIAL INSTITUTIONS
and
KEYBANK NATIONAL ASSOCIATION,
as Agent
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TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS................................................................................. 1
1.1 Definitions................................................................................. 1
1.2 Other Interpretive Provisions............................................................... 10
SECTION 2 COMMITMENTS OF THE BANKS; LETTER OF CREDIT, BORROWING AND CONVERSION PROCEDURES............. 11
2.1 Commitments................................................................................. 11
2.2 Loan Procedures............................................................................. 12
2.3 Letter of Credit Procedures................................................................. 13
2.4 Commitments Several......................................................................... 14
2.5 Certain Conditions.......................................................................... 14
SECTION 3 NOTES EVIDENCING LOANS...................................................................... 15
3.1 Notes....................................................................................... 15
3.2 Recordkeeping............................................................................... 15
SECTION 4 INTEREST.................................................................................... 15
4.1 Interest Rates.............................................................................. 15
4.2 Interest Payment Dates...................................................................... 15
4.3 Interest Periods............................................................................ 16
4.4 Setting and Notice of Eurodollar Rates...................................................... 16
4.5 Computation of Interest..................................................................... 16
SECTION 5 FEES........................................................................................ 16
5.1 Facility Fee................................................................................ 16
5.2 Letter of Credit Fees....................................................................... 17
5.3 Closing Fees................................................................................ 17
SECTION 6 REDUCTION AND TERMINATION OF THE COMMITMENTS; PREPAYMENTS................................... 17
6.1 Reduction or Termination of the Commitments................................................. 17
6.2 Voluntary Prepayments....................................................................... 17
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES............................................. 18
7.1 Making of Payments.......................................................................... 18
7.2 Application of Certain Payments............................................................. 18
7.3 Due Date Extension.......................................................................... 18
7.4 Setoff...................................................................................... 18
7.5 Proration of Payments....................................................................... 18
7.6 Taxes....................................................................................... 19
Page
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS.................................... 20
8.1 Increased Costs............................................................................. 20
8.2 Basis for Determining Interest Rate Inadequate or Unfair.................................... 21
8.3 Changes in Law Rendering Eurodollar Loans Unlawful.......................................... 21
8.4 Funding Losses.............................................................................. 22
8.5 Right of Banks to Fund through Other Offices................................................ 22
8.6 Discretion of Banks as to Manner of Funding................................................. 22
8.7 Mitigation of Circumstances; Replacement of Affected Bank................................... 22
8.8 Conclusiveness of Statements; Survival of Provisions........................................ 23
SECTION 9 WARRANTIES.................................................................................. 23
9.1 Organization, etc........................................................................... 23
9.2 Authorization; No Conflict.................................................................. 23
9.3 Validity and Binding Nature................................................................. 24
9.4 Financial Condition......................................................................... 24
9.5 No Material Adverse Change.................................................................. 24
9.6 Litigation and Contingent Liabilities....................................................... 24
9.7 Ownership of Properties; Liens.............................................................. 24
9.8 Subsidiaries................................................................................ 24
9.9 Pension and Welfare Plans................................................................... 25
9.10 Investment Company Act...................................................................... 25
9.11 Public Utility Holding Company Act.......................................................... 25
9.12 Regulation U................................................................................ 25
9.13 Taxes....................................................................................... 25
9.14 Solvency, etc............................................................................... 25
9.15 Environmental Matters....................................................................... 26
9.16 Year 2000 Issue............................................................................. 27
9.17 Copyrights, Patents, Trademarks and Licenses, etc........................................... 27
9.18 Transactions with Affiliates................................................................ 27
9.19 Information................................................................................. 27
SECTION 10 COVENANTS................................................................................... 28
10.1 Reports, Certificates and Other Information................................................. 28
10.2 Books, Records and Inspections.............................................................. 30
10.3 Insurance................................................................................... 31
10.4 Compliance with Laws; Payment of Taxes and Liabilities...................................... 31
10.5 Maintenance of Existence, etc............................................................... 31
10.6 Financial Covenants......................................................................... 31
10.7 Limitations on Debt......................................................................... 32
10.8 Liens....................................................................................... 32
10.9 Restricted Payments......................................................................... 33
10.10 Mergers, Consolidations, Sales.............................................................. 33
10.11 Modification of Organizational Documents.................................................... 33
10.12 Use of Proceeds............................................................................. 34
10.13 Sale of Speech Design; Proceeds of Warrants................................................. 34
10.14 Further Assurances.......................................................................... 34
10.15 Transactions with Affiliates................................................................ 34
10.16 Employee Benefit Plans...................................................................... 34
10.17 Environmental Matters....................................................................... 34
10.18 Unconditional Purchase Obligations.......................................................... 35
10.19 Inconsistent Agreements..................................................................... 35
10.20 Business Activities......................................................................... 35
10.21 Advances and Other Investments.............................................................. 35
10.22 Maintenance of Property..................................................................... 36
10.23 Performance of Obligations.................................................................. 36
10.24 Leases...................................................................................... 36
Page
SECTION 11 EFFECTIVENESS; CONDITIONS OF LENDING, ETC................................................... 36
11.1 Initial Credit Extensions................................................................... 36
11.2 Conditions.................................................................................. 37
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.......................................................... 39
12.1 Events of Default........................................................................... 39
12.2 Effect of Event of Default.................................................................. 41
SECTION 13 THE AGENT................................................................................... 42
13.1 Appointment and Authorization............................................................... 42
13.2 Delegation of Duties........................................................................ 42
13.3 Liability of Agent.......................................................................... 42
13.4 Reliance by Agent........................................................................... 42
13.5 Notice of Default........................................................................... 43
13.6 Credit Decision............................................................................. 43
13.7 Indemnification............................................................................. 44
13.8 Agent in Individual Capacity................................................................ 44
13.9 Successor Agent; Assignment of Agency....................................................... 45
13.10 Withholding Tax............................................................................. 45
13.11 Collateral Matters.......................................................................... 46
SECTION 14 GENERAL..................................................................................... 47
14.1 Waiver; Amendments.......................................................................... 47
14.2 Confirmations............................................................................... 47
14.3 Notices..................................................................................... 47
14.4 Computations................................................................................ 48
14.5 Regulation U................................................................................ 48
14.6 Costs, Expenses and Taxes................................................................... 48
14.7 Subsidiary References....................................................................... 48
14.8 Captions.................................................................................... 49
14.9 Assignments; Participations................................................................. 49
14.10 Governing Law............................................................................... 50
14.11 Counterparts................................................................................ 51
14.12 Successors and Assigns...................................................................... 51
14.13 Indemnification by the Borrowers............................................................ 51
14.14 Forum Selection and Consent to Jurisdiction................................................. 52
14.15 Waiver of Jury Trial........................................................................ 52
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of April 21, 1998 (this "Agreement"), is
entered into among BOGEN COMMUNICATIONS INTERNATIONAL, INC. and BOGEN
COMMUNICATIONS, INC., each a Delaware corporation (singly, a "Borrower or
collectively, the "Borrowers"), the financial institutions that are or may from
time to time become parties hereto (together with their respective successors
and assigns, the "Banks") and KEYBANK NATIONAL ASSOCIATION (in its individual
capacity, "Key"), as agent for the Banks.
In consideration of the premises and the mutual agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1 DEFINITIONS.
1.1 Definitions. When used herein the following terms shall have the
following meanings:
Acquired Equipment means Equipment acquired by either of the Borrowers or
any Subsidiary as a result of an acquisition permitted by Section 10.10.
Acquisition Forecast means data prepared and submitted by the Borrowers in
connection with an acquisition including (i) forecasted financial statements
consisting of consolidated and consolidating balance sheets, income and cash
flow statements and a statement of underlying assumptions, ranges and
limitations and (ii) a pro forma computation assuming that the acquisition was
in effect during the prior year together with an opening and subsequent year
projection.
Acquisition Sublimit means up to Twenty Million and no/100 ($20,000,000.00)
Dollars to be used specifically to finance the acquisition of Persons meeting
the criteria set forth herein.
Affected Bank means any Bank that has given notice to either of the
Borrowers (which has not been rescinded) of (i) any obligation by either of the
Borrowers to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the
occurrence of any circumstances of the nature described in Section 8.2 or 8.3.
Affiliate of any Person means (i) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person and (ii) any officer or director of such Person.
Agent means Key in its capacity as agent for the Banks hereunder and any
successor thereto
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in such capacity.
Agent-Related Persons means Key and any successor agent arising under
Section 13.9, together with their respective Affiliates and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
Agreement -- see the Preamble.
Assignment Agreement -- see Section 14.9.1.
Bank -- see the Preamble.
Borrower or Borrowers -- see the Preamble.
Business Day means any day on which Key is open for commercial banking
business in Albany, New York and, in the case of a Business Day which relates to
a Eurodollar Loan, on which dealings are carried on in the interbank eurodollar
market.
Capital Expenditures means all expenditures which, in accordance with GAAP,
would be required to be capitalized and shown on the consolidated balance sheet
of the Borrowers, but excluding expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed within
three months (i) from insurance proceeds (or other similar recoveries) paid on
account of the loss of or damage to the assets being replaced or restored or
(ii) with awards of compensation arising from the taking by eminent domain or
condemnation of the assets being replaced.
Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.
Cash Equivalent Investment means, at any time, (a) any evidence of Debt,
maturing not more than one year after such time, issued or guaranteed by the
United States Government or any agency thereof, (b) commercial paper, maturing
not more than one year from the date of issue, or corporate demand notes, in
each case (unless issued by a Bank or its holding company) rated at least A-1 by
Standard & Poor's Ratings Group or P-1 by ▇▇▇▇▇'▇ Investors Service, Inc., (c)
any certificate of deposit (or time deposits represented by such certificates of
deposit) or bankers acceptance, maturing not more than one year after such time,
or overnight Federal Funds transactions that are issued or sold by a commercial
banking institution that is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than
$500,000,000, (d) any repurchase agreement entered into with any Bank (or other
commercial banking institution of the stature referred to in clause (c) which
(i) is secured by a fully perfected security interest in any obligation of the
type described in any of clauses (a) through (c) and (ii) has a market value at
the time such repurchase agreement is entered into of not less than 100% of the
repurchase obligation of such Bank (or other commercial banking institution)
thereunder or (e) investments in short-term asset management accounts offered by
any Bank for the purpose of
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investing in loans to any corporation (other than the Borrowers or an Affiliate
of either of the Borrowers), state or municipality, in each case organized under
the laws of any state of the United States or of the District of Columbia.
CERCLA -- see Section 9.15.
Code means the Internal Revenue Code of 1986, as amended.
Collateral Documents means the Pledge Agreement, the Security Agreements
and any other agreement pursuant to which the Borrowers or any Guarantor grant
collateral to the Agent for the benefit of the Banks.
Commitment Amount -- see Section 2.1.1.
Commitments means the Loan Commitment and the L/C Commitment.
Computation Period means each period of four consecutive Fiscal Quarters
ending on the last day of a Fiscal Quarter.
Consolidated Net Income means, with respect to the Borrowers and their
Subsidiaries for any period, the net income (or loss) of the Borrowers and their
Subsidiaries for such period, excluding any extraordinary gains during such
period.
Contingent Payment means any payment that has been (or is required to be)
made by either of the Borrowers or any Subsidiary in connection with the
achievement of any particular business goal (excluding (i) employee compensation
and bonuses in the ordinary course of business and (ii) periodic, variable
payments based upon performance-related criteria, such as revenues or earnings).
A Contingent Payment shall be deemed to be "outstanding" from the time that
either of the Borrowers or any Subsidiary enters into the agreement containing
the obligation to make such Contingent Payment until such time as either such
Contingent Payment has been made in full or it has become certain that such
Contingent Payment will never have to be made. If the amount of any Contingent
Payment is not determinable or is variable based on factors which are not yet
determinable, then the amount of such Contingent Payment shall be deemed to be
the maximum amount which, under any and all reasonably foreseeable
circumstances, either of the Borrowers or the applicable Subsidiary would
reasonably be expected to be required to pay in respect thereof.
Controlled Group means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with either of the Borrowers,
are treated as a single employer under Section 414 of the Code or Section 4001
of ERISA.
Debt of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money, whether or not evidenced by bonds, debentures, notes
or similar instruments,
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(b) all obligations of such Person as lessee under Capital Leases which have
been or should be recorded as liabilities on a balance sheet of such Person, (c)
all obligations of such Person to pay the deferred purchase price of property or
services (including Contingent Payments but excluding trade accounts payable in
the ordinary course of business), (d) all indebtedness secured by a Lien on the
property of such Person, whether or not such indebtedness shall have been
assumed by such Person (it being understood that if such Person has not assumed
or otherwise become personally liable for any such indebtedness, the amount of
the Debt of such Person in connection therewith shall be limited to the lesser
of the face amount of such indebtedness or the fair market value of all property
of such Person securing such indebtedness), (e) all obligations, contingent or
otherwise, with respect to the face amount of all letters of credit (whether or
not drawn) and banker's acceptances issued for the account of such Person
(including the Letters of Credit), (f) all Suretyship Liabilities of such
Person.
Disposal -- see the definition of "Release".
Dollar and the sign "$" mean lawful money of the United States of America.
EBIT means, for any period, Consolidated Net Income for such period plus to
the extent deducted in determining such Consolidated Net Income, Interest
Expense and income tax expense.
EBITDA means, for any period, Consolidated Net Income for such period plus,
to the extent deducted in determining such Consolidated Net Income, Interest
Expense, income tax expense, depreciation and amortization for such period;
provided that for purposes of calculating EBITDA for any period, the
consolidated net income of any Person acquired by either of the Borrowers or any
Subsidiary during such period (plus, to the extent deducted in determining such
consolidated net income, interest expense, income tax expense, depreciation and
amortization of such Person) shall be included on a pro forma basis for such
period (assuming the consummation of each such acquisition and the incurrence or
assumption of any Debt in connection therewith occurred on the first day of such
period) in accordance with Article 11 of Regulation S-X of the SEC.
Effective Date -- see Section 11.1.
Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
Environmental Laws means all federal, state or local laws, statutes, common
law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any governmental authority, in each case
relating to environmental matters.
Equipment has the meaning assigned to such term in the Security Agreement.
ERISA means the Employee Retirement Income Security Act of 1974. References
to
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sections of ERISA also refer to any successor sections.
Eurocurrency Reserve Percentage means, with respect to any Eurodollar Loan
for any Interest Period, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the percentage in effect on each
day of such Interest Period, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor), for determining the aggregate maximum
reserve requirements applicable to "Eurocurrency Liabilities" pursuant to
Regulation D or any other then applicable regulation of such Board of Governors
which prescribes reserve requirements applicable to "Eurocurrency Liabilities"
as presently defined in Regulation D.
Eurodollar Loan means any Loan which bears interest at a rate determined by
reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Margin -- see Schedule 1.1.
Eurodollar Office means with respect to any Bank the office or offices of
such Bank which shall be making or maintaining the Eurodollar Loans of such Bank
hereunder or such other office or offices through which such Bank determines its
Eurodollar Rate. A Eurodollar Office of any Bank may be, at the option of such
Bank, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan for any Interest
Period, the rate per annum at which Dollar deposits in immediately available
funds are offered to the Eurodollar Office of Key two Business Days prior to the
beginning of such Interest Period by major banks in the interbank eurodollar
market as at or about 10:00 A.M., Albany time, for delivery on the first day of
such Interest Period, for the number of days comprised therein and in an amount
equal or comparable to the amount of the Eurodollar Loan of Key for such
Interest Period.
Eurodollar Rate (Reserve Adjusted) means, with respect to any Eurodollar
Loan for any Interest Period, a rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) determined pursuant to the following formula:
Eurodollar Rate Eurodollar Rate
(Reserve Adjusted) = ------------------
1-Eurocurrency
Reserve Percentage
Event of Default means any of the events described in Section 12.1.
Facility Fee -- see Section 5.1.
Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor
publication, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged
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prior to 9:00 a.m. (New York City time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by the Agent.
Financial Letter of Credit means any Letter of Credit determined by the
applicable Issuing Bank to be a "financial guaranty-type Standby Letter of
Credit" as defined in footnote 13 to Appendix A to the Risk Based Capital
Guidelines issued by the Comptroller of the Currency (or in any successor
regulation, guideline or ruling by any applicable banking regulatory authority).
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
Fiscal Year means the fiscal year of the Borrowers and their Subsidiaries,
which period shall be the 12-month period ending on December 31 of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., "Fiscal Year 1997") refer to the Fiscal Year ending on December 31 of
such calendar year.
Fixed Charges means scheduled Debt payments (including payments on Capital
Leases) plus interest expense plus operating lease expense plus unfunded capital
expenditures plus dividends.
Fixed Charges Coverage Ratio means the ratio of EBITDA plus operating lease
payments minus income taxes to Fixed Charges.
Funded Debt means all Debt of the Borrowers and their Subsidiaries,
excluding Subordinated Debt.
Funded Debt to Total Capitalization Ratio means, as of the last day of any
Fiscal Quarter, the ratio of Funded Debt as of the last day of such Fiscal
Quarter to the sum of Funded Debt plus shareholders' equity plus minority
interest plus Subordinated Debt, each determined as of the last day of such
Fiscal Quarter.
GAAP means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
Guarantor means, on any day, each Subsidiary that has executed a
counterpart of the Guaranty on or prior to that day (or is required to execute a
counterpart of the Guaranty on that day).
Guaranty means a guaranty substantially in the form of Exhibit C.
Hazardous Substances -- see Section 9.15.
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Interest Coverage Ratio means the ratio of EBIT to Interest Expense.
Interest Expense means for any period the consolidated interest expense of
the Borrowers and their Subsidiaries for such period (including all imputed
interest on Capital Leases and before giving effect to any capitalization of
interest but excluding amortization of deferred financing costs).
Interest Period -- see Section 4.3.
Inventory means, at any time with respect to any Person, any goods held for
sale, or furnished or to be furnished by such Person under any contract of
service, or held by such Person as raw materials, work in process or materials
used or consumed in a business.
Investment means, relative to any Person, (a) any loan or advance made by
such Person to any other Person (excluding any commission, travel or similar
advances made to directors, officers and employees of the Borrowers or any of
their Subsidiaries), (b) any Suretyship Liability of such Person, (c) any
ownership or similar interest held by such Person in any other Person and (d)
deposits and the like relating to prospective acquisitions of businesses.
Issuing Bank means Key in its capacity as an issuer of Letters of Credit
hereunder and any other Bank which, with the written consent of the Borrowers
and the Agent, is the issuer of one or more Letters of Credit hereunder.
Key -- see the Preamble.
L/C Application means, with respect to any request for the issuance of a
Letter of Credit, a letter of credit application in the form being used by the
applicable Issuing Bank at the time of such request for the type of letter of
credit requested.
L/C Commitment means the commitment of the Issuing Bank to issue, and of
each Bank to participate in, Letters of Credit pursuant to Section 2.1.2.
Letter of Credit means a Financial Letter of Credit or a Non-Financial
Letter of Credit.
Letter of Credit Fee -- see Section 5.2.
Leverage Ratio means the ratio of Funded Debt to EBITDA.
Lien means, with respect to any Person, any interest granted by such Person
in any real or personal property, asset or other right owned or being purchased
or acquired by such Person which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.
Loan Commitment means the commitment of the Banks to make Loans pursuant to
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Section 2.1.1.
Loan Documents means this Agreement, the Notes, the Guaranty, the L/C
Applications and the Collateral Documents.
Loans -- see Section 2.1.1.
Margin Stock means any "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System.
Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of either of the Borrowers or their
Subsidiaries taken as a whole, or (b) a material adverse effect upon any
substantial portion of the collateral under the Collateral Documents or upon the
legality, validity, binding effect or enforceability against either of the
Borrowers or any Guarantor of any Loan Document.
Multiemployer Pension Plan means a multiemployer plan, as such term is
defined in Section 4001(a)(3) of ERISA, and to which either of the Borrowers or
any member of the Controlled Group may have any liability.
Net Worth means, for any Person, that Person's consolidated stockholders'
equity (including preferred stock accounts).
Non-Financial Letter of Credit means any letter of credit other than a
Financial Letter of Credit.
Note or Notes -- see Section 3.1.
Operating Lease means any lease of (or other agreement conveying the right
to use) any real or personal property by either of the Borrowers or any
Subsidiary, as lessee, other than any Capital Lease.
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Pension Plan), and to which either of the Borrowers or any member of the
Controlled Group may have any liability, including any liability by reason of
having been a substantial employer within the meaning of Section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under Section 4069 of ERISA.
Percentage means, with respect to any Bank, the percentage specified
opposite such Bank's name on Schedule 2.1 hereto, reduced (or increased) by
subsequent assignments pursuant to
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Section 14.9.1.
Person means any natural person, corporation, partnership, trust, limited
liability company, association, governmental authority or unit, or any other
entity, whether acting in an individual, fiduciary or other capacity.
Pledge Agreement means a pledge agreement between the Borrowers and the
Agent, substantially in the form of Exhibit E.
Prime Rate means, for any day, the rate of interest in effect for such day
as publicly announced from time to time by Key as its "prime rate." (The "prime
rate" is a rate set by Key based upon various factors, including Key's costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.) Any change in the reference rate announced by Key shall
take effect at the opening of business on the day specified in the public
announcement of such change.
Prime Rate Loan means any Loan which bears interest at or by reference to
the Prime Rate.
Prime Rate Margin -- see Schedule 1.1.
RCRA -- see Section 9.15.
Release has the meaning specified in CERCLA and the term "Disposal" (or
"Disposed") has the meaning specified in RCRA; provided that in the event either
CERCLA or RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply as of the effective date of such
amendment; and provided, further, that to the extent that the laws of a state
wherein any affected property lies establish a meaning for "Release" or
"Disposal" which is broader than is specified in either CERCLA or RCRA, such
broader meaning shall apply.
Rental Expense means for any period the consolidated rental expense of the
Borrowers and their Subsidiaries for such period.
Required Banks means Banks having Percentages aggregating 66-2/3% or more.
SEC means the Securities and Exchange Commission.
Security Agreement means a Security Agreement substantially in the form of
Exhibit D-1.
Security Agreement (Patents) means a Security Agreement substantially in
the form of Exhibit D-2.
Security Agreement (Trademarks) means a Security Agreement substantially in
the form of Exhibit D-3.
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Security Agreements means the Security Agreement, the Security Agreement
(Patents) and the Security Agreement (Trademarks).
Senior Debt means all Debt of the Borrowers and their Subsidiaries other
than Subordinated Debt.
Speech Design means Speech Design GmbH, a German business entity.
Standard Information Package means the Acquisition Forecasts together with
an explanation provided by Borrowers detailing how such proposed acquisition is
consistent with Borrowers' strategic plan and beneficial to their business and
three (3) years of historical financial information for the Person being
acquired.
Stated Amount means, with respect to any Letter of Credit at any date of
determination, the maximum aggregate amount available for drawing thereunder at
any time during the then ensuing term of such Letter of Credit under any and all
circumstances, plus the aggregate amount of all unreimbursed payments and
disbursements under such Letter of Credit.
Subordinated Debt means any indebtedness of the Borrowers and their
Subsidiaries which has subordination terms, covenants, pricing and other terms
applicable to such indebtedness which have been approved in writing by the
Required Banks, provided, however, that written approval of the Required Banks
shall not be required as to indebtedness among domestic Affiliates of the
Borrowers.
Subsidiary means, with respect to any Person, a corporation of which such
Person and/or its other Subsidiaries own, directly or indirectly, such number of
outstanding shares as have more than 50% of the ordinary voting power for the
election of directors. Unless the context otherwise requires, each reference to
Subsidiaries herein shall be a reference to Subsidiaries of either of the
Borrowers.
Suretyship Liability means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation in respect of any Suretyship Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability supported thereby.
Termination Date means the earlier to occur of (a) April 30, 2001, or such
later date to which the Termination Date may be extended at the request of the
Borrower and with the consent of each Bank or (b) such other date on which the
Commitments shall terminate pursuant to Section 6 or 12.
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Type of Loan or Borrowing -- see Section 2.2.1. The types of Loans or
borrowings under this Agreement are as follows: Prime Rate Loans or borrowings
and Eurodollar Loans or borrowings.
Unmatured Event of Default means any event that, if it continues uncured,
will, with lapse of time or notice or both, constitute an Event of Default.
Welfare Plan means a "welfare plan", as such term is defined in Section
3(i) of ERISA.
Working Capital Sublimit means Seven Million and no/100 ($7,000,000.00)
Dollars.
1.2 Other Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(c) (i) The term "including" is not limiting and means "including
without limitation."
(ii) In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding", and the word "through" means "to
and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such statute
or regulation.
(e) This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(f) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the
Borrowers, the Banks and the other parties thereto and are the products of all
parties. Accordingly, they shall not be construed against the Agent or the Banks
merely because of the Agent's or Banks' involvement in their preparation.
11
SECTION 2 COMMITMENTS OF THE BANKS; LETTER OF CREDIT, BORROWING AND
CONVERSION PROCEDURES.
2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each of the Banks, severally and for itself alone, agrees to make
loans to, and to issue or participate in the issuance of Non-Financial Letters
of Credit for the account of, the Borrowers as follows:
2.1.1 Loan Commitment. Each Bank will make loans on a revolving basis
("Loans") from time to time before the Termination Date in such Bank's
Percentage of such aggregate amounts as either of the Borrowers may from time to
time request from all Banks; provided that the sum of (x) the aggregate
outstanding principal amount of all Loans plus (y) the aggregate Stated Amount
of all Letters of Credit shall not at any time exceed the sum of the Acquisition
Sublimit plus the Working Capital Sublimit, as such amount may be reduced from
time to time pursuant to Section 6.1 (as so reduced, the "Commitment Amount").
2.1.2 L/C Commitment. (a) The Issuing Banks will issue Letters of Credit,
in each case containing such terms and conditions as are permitted by this
Agreement and are reasonably satisfactory to the applicable Issuing Bank, at the
request of and for the account of either of the Borrowers or any Subsidiary from
time to time before the Termination Date and (b) as more fully set forth in
Section 2.3.5, each Bank agrees to purchase a participation in each such Letter
of Credit; provided that the aggregate Stated Amount of all Letters of Credit
shall not at any time exceed the lesser of (i) $1,250,000, or (ii) the excess,
if any, of the Working Capital Sublimit over the aggregate principal amount of
all outstanding Loans made under the Working Capital Sublimit.
2.2 Loan Procedures.
2.2.1 Various Types of Loans. Each Loan shall be either a Prime Rate Loan
or a Eurodollar Loan (each a "type" of Loan), as either of the Borrowers shall
specify in the related notice of borrowing or conversion pursuant to Section
2.2.2 or 2.2.3, the form of which is annexed hereto as Exhibit F. Prime Rate
Loans and Eurodollar Loans may be outstanding at the same time, provided that
the aggregate principal amount of each Eurodollar Loan shall at all times be at
least $250,000 and an integral multiple of $100,000. All borrowings, conversions
and repayments of Loans shall be effected so that each Bank will have a pro rata
share (according to its Percentage) of all types of Loans.
2.2.2 Borrowing Procedures. The Borrowers shall give written notice or
telephonic notice (followed immediately by written confirmation thereof) to the
Agent of each proposed borrowing not later than (a) in the case of a Prime Rate
borrowing, 11:00 A.M., Albany time, on the proposed date of such borrowing, and
(b) in the case of a Eurodollar borrowing, 10:00 A.M., Albany time, at least
three Business Days prior to the proposed date of such borrowing. Each such
notice shall be effective upon receipt by the Agent, shall be irrevocable, and
shall specify the date, amount and type of borrowing and, in the case of a
Eurodollar borrowing, the initial Interest Period therefor. Promptly upon
receipt of such notice, the Agent shall advise each Bank thereof. Not later than
1:00 p.m., Albany time, on the date of a proposed borrowing, each Bank shall
provide the Agent at the office specified by the Agent with immediately
available funds covering such Bank's
12
Percentage of such borrowing and, so long as the Agent has not received written
notice that the conditions precedent set forth in Section 11 with respect to
such borrowing have not been satisfied (and does not have knowledge of any
default in the payment of any principal, interest or fees to be paid to the
Agent for the account of the Banks), the Agent shall pay over the requested
amount to the Borrowers (or a single Borrower if so specified by both Borrowers)
on the requested borrowing date. Each borrowing shall be on a Business Day.
2.2.3 Procedures for Conversion of Type of Loan. Subject to the provisions
of Section 2.2.1, the Borrower may convert all or any part of any outstanding
Loan into a Loan of a different type by giving written notice or telephonic
notice (followed immediately by written confirmation thereof) to the Agent not
later than (a) in the case of conversion into a Prime Rate Loan, 11:00 A.M.,
Albany time, on the proposed date of such conversion, and (b) in the case of a
conversion into a Eurodollar Loan, 10:00 A.M., Albany time, at least three
Business Days prior to the proposed date of such conversion. Each such notice
shall be effective upon receipt by the Agent, shall be irrevocable, and shall
specify the date and amount of such conversion, the Loan to be so converted, the
type of Loan to be converted into and, in the case of a conversion into a
Eurodollar Loan, the initial Interest Period therefor. Promptly upon receipt of
such notice, the Agent shall advise each Bank thereof. Subject to Section 2.5,
such Loan shall be so converted on the requested date of conversion. Each
conversion shall be on a Business Day. Each conversion of a Eurodollar Loan on a
day other than the last day of an Interest Period therefor shall be subject to
the provisions of Section 8.4.
2.3 Letter of Credit Procedures.
2.3.1 L/C Applications. The Borrowers shall give notice to the Agent and
the applicable Issuing Bank of the proposed issuance of each Letter of Credit on
a Business Day which is at least three Business Days (or such lesser number of
days as the Agent and such Issuing Bank shall agree in any particular instance)
prior to the proposed date of issuance of such Letter of Credit. Each such
notice shall be accompanied by an L/C Application, duly executed by the
Borrowers and in all respects satisfactory to the Agent and the applicable
Issuing Bank, together with such other documentation as the Agent or such
Issuing Bank may request in support thereof, it being understood that each L/C
Application shall specify, among other things, the date on which the proposed
Letter of Credit is to be issued, the expiration date of such Letter of Credit
(which shall not be later than the Termination Date) and whether such Letter of
Credit is to be transferable in whole or in part. So long as the applicable
Issuing Bank has not received written notice that the conditions precedent set
forth in Section 11 with respect to the issuance of such Letter of Credit have
not been satisfied, such Issuing Bank shall issue such Letter of Credit on the
requested issuance date. Each Issuing Bank shall promptly advise the Agent of
the issuance of each Letter of Credit by such Issuing Bank and of any amendment
thereto, extension thereof or event or circumstance changing the amount
available for drawing thereunder.
2.3.2 Participation in Letters of Credit. Concurrently with the issuance of
each Letter of Credit, the applicable Issuing Bank shall be deemed to have sold
and transferred to each other Bank, and each other Bank shall be deemed
irrevocably and unconditionally to have purchased and received from such Issuing
Bank, without recourse or warranty, an undivided interest and
13
participation, to the extent of such other Bank's Percentage, in such Letter of
Credit and the Borrowers' reimbursement obligations with respect thereto. For
the purposes of this Agreement, the unparticipated portion of each Letter of
Credit shall be deemed to be the applicable Issuing Bank's "participation"
therein. Each Issuing Bank hereby agrees, upon request of the Agent or any Bank,
to deliver to such Bank a list of all outstanding Letters of Credit issued by
such Issuing Bank, together with such information related thereto as such Bank
may reasonably request.
2.3.3 Reimbursement Obligations. The Borrowers hereby unconditionally and
irrevocably agree to reimburse the applicable Issuing Bank for each payment or
disbursement made by such Issuing Bank under any Letter of Credit honoring any
demand for payment made by the beneficiary thereunder, in each case on the date
that such payment or disbursement is made. Any amount not reimbursed on the date
of such payment or disbursement shall bear interest from the date of such
payment or disbursement to the date that such Issuing Bank is reimbursed by the
Borrower therefor, payable on demand, at a rate per annum equal to the Prime
Rate from time to time in effect plus the Prime Rate Margin from time to time in
effect plus, beginning on the third Business Day after receipt of notice from
the Issuing Bank of such payment or disbursement, two (2%) percent. The
applicable Issuing Bank shall notify the Borrowers and the Agent whenever any
demand for payment is made under any Letter of Credit by the beneficiary
thereunder; provided, however, that the failure of such Issuing Bank to so
notify the Borrowers shall not affect the rights of such Issuing Bank or the
Banks in any manner whatsoever.
2.3.4 Limitation on Obligations of Issuing Banks. In determining whether to
pay under any Letter of Credit, no Issuing Bank shall have any obligation to the
Borrowers or any Bank other than to confirm that any documents required to be
delivered under such Letter of Credit appear to have been delivered and appear
to comply on their face with the requirements of such Letter of Credit. Any
action taken or omitted to be taken by an Issuing Bank under or in connection
with any ▇▇▇▇▇ of Credit, if taken or omitted in the absence of gross negligence
and willful misconduct, shall not impose upon such Issuing Bank any liability to
the Borrowers or any Bank and shall not reduce or impair the Borrowers'
reimbursement obligations set forth in Section 2.3.3 or the obligations of the
Banks pursuant to Section 2.3.5.
2.3.5 Funding by Banks to Issuing Banks. If an Issuing Bank makes any
payment or disbursement under any Letter of Credit and the Borrowers have not
reimbursed such Issuing Bank in full for such payment or disbursement by 11:00
A.M., Albany time, on the date of such payment or disbursement, or if any
reimbursement received by such Issuing Bank from the Borrowers is or must be
returned or rescinded upon or during any bankruptcy or reorganization of either
of the Borrowers or otherwise, each other Bank shall be obligated to pay to the
Agent for the account of such Issuing Bank, in full or partial payment of the
purchase price of its participation in such Letter of Credit, its pro rata share
(according to its Percentage) of such payment or disbursement (but no such
payment shall diminish the obligations of the Borrowers under Section 2.3.3),
and upon notice from the applicable Issuing Bank, the Agent shall promptly
notify each other Bank thereof. Each other Bank irrevocably and unconditionally
agrees to so pay to the Agent in immediately available funds for the applicable
Issuing Bank's account the amount of such other Bank's Percentage of such
payment or disbursement. If and to the extent any Bank shall not have made such
amount available to the Agent by 2:00 P.M., Albany time, on the Business Day on
which such Bank receives notice
14
from the Agent of such payment or disbursement (it being understood that any
such notice received after noon, Albany time, on any Business Day shall be
deemed to have been received on the next following Business Day), such Bank
agrees to pay interest on such amount to the Agent for the applicable Issuing
Bank's account forthwith on demand for each day from the date such amount was to
have been delivered to the Agent to the date such amount is paid, at a rate per
annum equal to (a) for the first three days after demand, the Federal Funds Rate
from time to time in effect and (b) thereafter, the Alternate Reference Rate
from time to time in effect. Any Bank's failure to make available to the Agent
its Percentage of any such payment or disbursement shall not relieve any other
Bank of its obligation hereunder to make available to the Agent such other
Bank's Percentage of such payment, but no Bank shall be responsible for the
failure of any other Bank to make available to the Agent such other Bank's
Percentage of any such payment or disbursement.
2.4 Commitments Several. The failure of any Bank to make a requested Loan
on any date shall not relieve any other Bank of its obligation to make a Loan on
such date, but no Bank shall be responsible for the failure of any other Bank to
make any Loan to be made by such other Bank.
2.5 Certain Conditions. Notwithstanding any other provision of this
Agreement, no Bank shall have an obligation to make any Loan, or to permit the
continuation of or any conversion into any Eurodollar Loan, and no Issuing Bank
shall have any obligation to issue any Letter of Credit, if an Event of Default
or Unmatured Event of Default exists.
SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Bank shall be evidenced by a promissory note
(each a "Note" and collectively, the "Notes") substantially in the form set
forth in Exhibit A, with appropriate insertions, payable to the order of such
Bank in an amount equal to such Bank's Percentage of the Loan Commitment (or, if
less, in the aggregate unpaid principal amount of such Bank's Loans).
3.2 Recordkeeping. Each Bank shall record in its records, or at its option
on the schedule attached to its Note, the date and amount of each Loan made by
such Bank, each repayment or conversion thereof and, in the case of each
Eurodollar Loan, the dates on which each Interest Period for such Loan shall
begin and end. The aggregate unpaid principal amount so recorded shall be
rebuttable presumptive evidence of the principal amount owing and unpaid on such
Note. The failure to so record any such amount or any error in so
recording any such amount shall not, however, limit or otherwise affect the
obligations of the Borrowers hereunder or under any Note to repay the principal
amount of the Loans evidenced by such Note together with all interest accruing
thereon.
15
SECTION 4 INTEREST.
4.1 Interest Rates. The Borrowers promise to pay interest on the unpaid
principal amount of each Loan for the period commencing on the date of such Loan
until such Loan is paid in full as follows:
(a) at all times while such Loan is a Prime Rate Loan, at a rate per
annum equal to the sum of the Prime Rate from time to time in effect plus
the Prime Margin from time to time in effect; and
(b) at all times while such Loan is a Eurodollar Loan, at a rate per
annum equal to the sum of the Eurodollar Rate (Reserve Adjusted) applicable
to each Interest Period for such Loan plus the Eurodollar Margin from time
to time in effect;
provided, however, that at any time an Event of Default exists, the interest
rate applicable to each Loan (be it a Prime Rate Loan or Eurodollar Loan) may,
at the option of the Required Banks, be increased up to a rate equal to the
Prime Rate plus the Prime Rate Margin plus 2% (200 basis points) per annum.
4.2 Interest Payment Dates. Accrued interest on each Prime Rate Loan shall
be payable in arrears on the first Business Day of each calendar month and at
maturity. Accrued interest on each Eurodollar Loan shall be payable at the end
of the applicable Interest Period or on the first day of each calendar month,
whichever is earlier, and at maturity. After maturity, accrued interest on all
Loans shall be payable on demand.
4.3 Interest Periods. Each "Interest Period" for a Eurodollar Loan shall
commence on the date such Eurodollar Loan is made or converted from a Prime Rate
Loan, or on the expiration of the immediately preceding Interest Period for such
Eurodollar Loan, and shall end on the date which is one, two, three or six
months thereafter, as the Borrowers may specify:
(a) in the case of an Interest Period which commences on the date a
Eurodollar Loan is made or converted from a Prime Rate Loan, in the related
notice of borrowing or conversion pursuant to Section 2.2.2 or 2.2.3, or
(b) in the case of a succeeding Interest Period with respect to any
Eurodollar Loan, by written notice or telephonic notice (followed
immediately by written confirmation thereof) to the Agent not later than
10:00 A.M., Albany time, at least three Business Days prior to the first
day of such succeeding Interest Period, it being understood that (i) each
such notice shall be effective upon receipt by the Agent and (ii) if the
Borrowers fail to give such notice, such Loan shall automatically become a
Prime Rate Loan at the end of its then-current Interest Period.
Each Interest Period that begins on the last day of a calendar month (or on a
day for which there is
16
no numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Each Interest Period which would otherwise end on a day which is not a Business
Day shall end on the immediately succeeding Business Day (unless such
immediately succeeding Business Day is the first Business Day of a calendar
month, in which case such Interest Period shall end on the immediately preceding
Business Day). The Borrowers may not select any Interest Period for a Loan which
would end after the scheduled Termination Date.
4.4 Setting and Notice of Eurodollar Rates. The applicable Eurodollar Rate
for each Interest Period shall be determined by the Agent, and notice thereof
shall be given by the Agent promptly to the Borrowers and each Bank. Each
determination of the applicable Eurodollar Rate by the Agent shall be conclusive
and binding upon the parties hereto, in the absence of demonstrable error. The
Agent shall, upon written request of the Borrowers or any Bank, deliver to the
Borrowers or such Bank a statement showing the computations used by the Agent in
determining any applicable Eurodollar Rate hereunder.
4.5 Computation of Interest. All determinations of interest for Prime Rate
Loans shall be computed for the actual number of days elapsed on the basis of a
year of 360 days. The applicable interest rate for each Prime Rate Loan shall
change simultaneously with each change in the Prime Rate.
SECTION 5 FEES.
5.1 Facility Fee. The Borrowers agree to pay to the Agent for the account
of each Bank a facility fee (each, a "Facility Fee") in an amount not to exceed
$67,500.00 each year (a twelve (12) month period beginning on the date of this
Agreement and each twelve (12) month period thereafter) on the earlier of
December 1 or that date on which the first Loan is made under the Acquisition
Sublimit. If the Commitments are terminated prior to the Termination Date and
the Facility Fee for the year (as determined above) then in progress has not
been paid, the Borrowers shall pay the pro rata portion of the Facility Fee at
the time of termination. If the Commitments are terminated prior to the
Termination Date and the Facility Fee for the year (as determined above) then in
progress has been paid, the Banks shall refund to the Borrower the pro rata
portion of the Facility Fee at the time of termination.
5.2 Letter of Credit Fees. (a) The Borrowers agree to pay to the Agent for
the account of the Banks pro rata according to their respective Percentages a
letter of credit fee (each, a "Letter of Credit Fee") for each Letter of Credit
in an amount equal to the rate per annum in effect from time to time pursuant to
the Issuing Bank's then-current letter of credit fee schedules (computed for the
actual number of days elapsed on the basis of a year of 360 days). Such Letter
of Credit Fee shall be payable in advance on the first Business Day of each
calendar quarter and on the date of the issuance of each Letter of Credit.
(b) In addition, with respect to each Letter of Credit, the Borrowers
agree to pay to the applicable Issuing Bank, for its own account, (i) such fees
and expenses as such Issuing
17
Bank customarily requires in connection with the issuance, negotiation,
processing and/or administration of letters of credit in similar situations and
(ii) a letter of credit fee in the amount separately agreed to by the Borrowers
and such Issuing Bank.
5.3 Closing Fees. On the Effective Date, the Borrowers shall pay to the
Agent for the account of each Bank a closing fee in the amount previously agreed
with such Bank. As to Key, such closing fee shall not exceed $70,000.00.
SECTION 6 REDUCTION AND TERMINATION OF THE COMMITMENTS; PREPAYMENTS.
6.1 Reduction or Termination of the Commitments. The Borrowers may from
time to time on at least five Business Days' prior written notice received by
the Agent (which shall promptly advise each Bank thereof) permanently reduce the
Commitment Amount to an amount not less than the sum of the aggregate unpaid
principal amount of the Loans and the aggregate Stated Amount of all Letters of
Credit. Any such reduction shall be in an amount not less than $5,000,000 or a
higher integral multiple of $1,000,000. The Borrowers may at any time on like
notice terminate the Commitments upon payment in full of all Loans and all other
obligations of the Borrowers hereunder and cash collateralization in full,
pursuant to documentation in form and substance reasonably satisfactory to the
Banks, of all obligations arising with respect to the Letters of Credit. All
reductions of the Commitment Amount shall reduce the Commitments pro rata among
the Banks according to their respective Percentages.
6.2 Voluntary Prepayments. The Borrowers may from time to time prepay the
Loans in whole or in part, provided that (a) the Borrowers shall give the Agent
(which shall promptly advise each Bank) notice thereof not later than 10:00
A.M., Albany time, on the day of such prepayment (which shall be a Business Day)
specifying the Loans to be prepaid and the date and amount of prepayment, (b)
each partial prepayment shall, in the case of a Eurodollar Loan, be in a
principal amount of at least $250,000 and an integral multiple thereof, (c) any
prepayment of a Eurodollar Loan on a day other than the last day of an Interest
Period therefor shall be subject to Section 8.4, and (d) if any prepayment shall
result in the aggregate principal amount of Eurodollar Loans being less than
$250,000, such Eurodollar Loans shall be automatically converted into Prime Rate
Loans.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest on the
Notes, and of all Facility Fees and Letter of Credit Fees, shall be made by the
Borrowers to the Agent in immediately available funds at the office specified by
the Agent not later than noon, Albany time, on the date due; and funds received
after that hour shall be deemed to have been received by the Agent on the next
following Business Day. The Agent shall promptly remit to each Bank or other
holder of a Note its share of all such payments received in collected funds by
the Agent for the account of such Bank or holder.
18
All payments under Section 8.1 shall be made by the Borrowers directly to
the Bank entitled thereto.
7.2 Application of Certain Payments. Each payment of principal shall be
applied to such Loans as the Borrowers shall direct by notice to be received by
the Agent on or before the date of such payment or, in the absence of such
notice, as the Agent shall determine in its reasonable discretion. Concurrently
with each remittance to any Bank of its share of any such payment, the Agent
shall advise such Bank as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Notes, or of Facility Fees or Letter of Credit Fees, falls
due on a day which is not a Business Day, then such due date shall be extended
to the immediately following Business Day (unless, in the case of a Eurodollar
Loan, such immediately following Business Day is the first Business Day of a
calendar month, in which case such date shall be the immediately preceding
Business Day) and, in the case of principal, additional interest shall accrue
and be payable for the period of any such extension.
7.4 Setoff. The Borrowers agree that the Agent and each Bank have all
rights of set-off and bankers' lien provided by applicable law, and in addition
thereto, the Borrowers agree that at any time any Event of Default exists, the
Agent and each Bank may apply to the payment of any obligations of the Borrowers
hereunder, whether or not then due, any and all balances, credits, deposits,
accounts or moneys of the Borrowers then or thereafter with the Agent or such
Bank.
7.5 Proration of Payments. If any Bank shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset or otherwise)
on account of principal of or interest on any Note (or on account of its
participation in any Letter of Credit) in excess of its pro rata share of
payments and other recoveries obtained by all Banks on account of principal of
and interest on Notes (or such participation) then held by them, such Bank shall
purchase from the other Banks such participation in the Notes (or
sub-participation in Letters of Credit) held by them as shall be necessary to
cause such purchasing Bank to share the excess payment or other recovery ratably
with each of them; provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Bank, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery.
7.6 Taxes. All payments of principal of, and interest on, the Loans and all
other amounts payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, but excluding franchise taxes and
taxes imposed on or measured by any Bank's net income or receipts (all
non-excluded items being called " Taxes"). If any withholding or deduction from
any payment to be made by the Borrowers hereunder is required in respect of any
Taxes pursuant to any applicable law, rule or regulation, then the Borrowers
will:
(a) pay directly to the relevant authority the full amount required to
be
19
so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Banks such additional
amount or amounts as is necessary to ensure that the net amount actually
received by each Bank will equal the full amount such Bank would have
received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Agent or any Bank with
respect to any payment received by the Agent or such Bank hereunder, the Agent
or such Bank may pay such Taxes and the Borrowers will promptly pay such
additional amounts (including any penalty, interest and expense) as is necessary
in order that the net amount received by such Person after the payment of such
Taxes (including any Taxes on such additional amount) shall equal the amount
such Person would have received had such Taxes not been asserted.
If the Borrowers fail to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent, for the account of the respective
Banks, the required receipts or other required documentary evidence, the
Borrowers shall indemnify the Banks for any incremental Taxes, interest or
penalties that may become payable by any Bank as a result of any such failure.
For purposes of this Section 7.6, a distribution hereunder by the Agent or any
Bank to or for the account of any Bank shall be deemed a payment by the
Borrowers.
Upon the request from time to time of the Borrowers or the Agent, each Bank
that is organized under the laws of a jurisdiction other than the United States
of America shall execute and deliver to the Borrowers and the Agent one or more
(as the Borrowers or the Agent may reasonably request) United States Internal
Revenue Service Forms 4224 or Forms 1001 or such other forms or documents,
appropriately completed, as may be applicable to establish the extent, if any,
to which a payment to such Bank is exempt from withholding or deduction of
Taxes.
The obligations of the Borrowers under this Section 7.6 are subject to the
limitation set out in Section 14.9.1.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS.
8.1 Increased Costs. (a) If, after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any Eurodollar Office of such Bank) with
any request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency
20
(i) shall subject any Bank (or any Eurodollar Office of such Bank) to
any tax, duty or other charge with respect to its Eurodollar Loans, its
Note or its obligation to make Eurodollar Loans, or shall change the basis
of taxation of payments to any Bank of the principal of or interest on its
Eurodollar Loans or any other amounts due under this Agreement in respect
of its Eurodollar Loans or its obligation to make Eurodollar Loans (except
for changes in the rate of tax on the overall net income of such Bank or
its Eurodollar Office imposed by the jurisdiction in which such Bank's
principal executive office or Eurodollar Office is located); or
(ii) shall impose, modify or deem applicable any reserve (including any
reserve imposed by the Board of Governors of the Federal Reserve System)
special deposit or similar requirement against assets of, deposits with or
for the account of, or credit extended by any Bank (or any Eurodollar
Office of such Bank); or
(iii) shall impose on any Bank (or its Eurodollar Office) any other
condition affecting its Eurodollar Loans, its Note or its obligation to
make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D of the Board of Governors of the Federal Reserve System, to
impose a cost on) such Bank (or any Eurodollar office of such Bank) of making or
maintaining any Eurodollar Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Eurodollar Office) under this Agreement or under
its Note with respect thereto, then within 10 days after demand by such Bank
(which demand shall be accompanied by a statement setting forth the basis for
such demand and a calculation of the amount thereof in reasonable detail, a copy
of which shall be furnished to the Agent), the Borrowers shall pay directly to
such Bank such additional amount as will compensate such Bank for such increased
cost or such reduction.
(b) If any Bank shall reasonably determine that the adoption or
phase-in of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank or
any Person controlling such Bank with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Bank's or such controlling Person's capital as a consequence of
such Bank's obligations hereunder (including such Bank's obligations under the
Loan Commitment or the L/C Commitment) or under any Letter of Credit to a level
below that which such Bank or such controlling Person could have achieved but
for such adoption, change or compliance (taking into consideration such Bank's
or such controlling Person's policies with respect to capital adequacy) by an
amount deemed by such Bank or such controlling Person to be material, then from
time to time, within 10 days after demand by such Bank (which demand shall be
accompanied by a statement setting forth the basis for such demand and a
calculation of the amount thereof in reasonable detail, a copy of which shall be
furnished to the Agent), the Borrowers shall pay to such Bank such additional
amount or amounts as will
21
compensate such Bank or such controlling Person for such reduction.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:
(a) deposits in Dollars (in the applicable amounts) are not being
offered to the Agent in the interbank eurodollar market for such Interest
Period, or the Agent otherwise reasonably determines (which determination,
if made in good faith, shall be binding and conclusive on the Borrowers)
that by reason of circumstances affecting the interbank eurodollar market
adequate and reasonable means do not exist for ascertaining the applicable
Eurodollar Rate; or
(b) Banks having an aggregate Percentage of 40% or more advise the
Agent that the Eurodollar Rate (Reserve Adjusted) as determined by the
Agent will not adequately and fairly reflect the cost to such Banks of
maintaining or funding such Loans for such Interest Period (taking into
account any amount to which such Banks may be entitled under Section 8.1)
or that the making or funding of Eurodollar Loans has become impracticable
as a result of an event occurring after the date of this Agreement which in
the opinion of such Banks materially affects such Loans;
then the Agent shall promptly notify the other parties thereof and, so long as
such circumstances shall continue, (i) no Bank shall be under any obligation to
make or convert into Eurodollar Loans and (ii) on the last day of the current
Interest Period for each Eurodollar Loan, such Loan shall, unless then repaid in
full, automatically convert to a Prime Rate Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful. In the event that
any change in (including the adoption of any new) applicable laws or
regulations, or any change in the interpretation of applicable laws or
regulations by any governmental or other regulatory body charged with the
administration thereof, should make it (or in the good faith judgment of any
Bank cause a substantial question as to whether it is) unlawful for any Bank to
make, maintain or fund Eurodollar Loans, then such Bank shall promptly notify
each of the other parties hereto and, so long as such circumstances shall
continue, (a) such Bank shall have no obligation to make or convert into
Eurodollar Loans (but shall make Prime Rate Loans concurrently with the making
of or conversion into Eurodollar Loans by the Banks which are not so affected,
in each case in an amount equal to such Bank's pro rata share of all Eurodollar
Loans which would be made or converted into at such time in the absence of such
circumstances) and (b) on the last day of the current Interest Period for each
Eurodollar Loan of such Bank (or, in any event, on such earlier date as may be
required by the relevant law, regulation or interpretation), such Eurodollar
Loan shall, unless then repaid in full, automatically convert to a Prime Rate
Loan.
8.4 Funding Losses. The Borrowers hereby agree that upon demand by any Bank
(which demand shall be accompanied by a statement setting forth the basis for
the amount being claimed, a copy of which shall be furnished to the Agent), the
Borrowers will indemnify such Bank against any net loss or expense which such
Bank may sustain or incur (including any net loss or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired
22
by such Bank to fund or maintain any Eurodollar Loan), as reasonably determined
by such Bank, as a result of (a) any payment, prepayment or conversion of any
Eurodollar Loan of such Bank on a date other than the last day of an Interest
Period for such Loan (including any conversion pursuant to Section 8.3) or (b)
any failure of the Borrowers to convert any Loan on a date specified therefor in
a notice of conversion pursuant to this Agreement. For this purpose, all notices
of conversion to the Agent pursuant to this Agreement shall be deemed to be
irrevocable. Any failure of the Borrowers to borrow any Loan on a date specified
therefor in a notice of borrowing pursuant to this Agreement shall not result in
the incurrence of funding losses under this Section 8.4 unless the Loan has been
funded.
8.5 Right of Banks to Fund through Other Offices. Each Bank may, if it so
elects, fulfill its commitment as to any Eurodollar Loan by causing a foreign
branch or affiliate of such Bank to make such Loan, provided that in such event
for the purposes of this Agreement such Loan shall be deemed to have been made
by such Bank and the obligation of the Borrowers to repay such Loan shall
nevertheless be to such Bank and shall be deemed held by it, to the extent of
such Loan, for the account of such branch or affiliate.
8.6 Discretion of Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank shall be entitled to fund
and maintain its funding of all or any part of its Loans in any manner it sees
fit, it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Bank had actually funded and
maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurodollar Rate for
such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected Bank. (a) Each
Bank shall promptly notify the Borrowers and the Agent of any event of which it
has knowledge which will result in, and will use reasonable commercial efforts
available to it (and not, in such Bank's good faith judgment, otherwise
disadvantageous to such Bank) to mitigate or avoid, (i) any obligation by the
Borrowers to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the
occurrence of any circumstances of the nature described in Section 8.2 or 8.3
(and, if any Bank has given notice of any such event described in clause (i) or
(ii) above and thereafter such event ceases to exist, such Bank shall promptly
so notify the Borrowers and the Agent). Without limiting the foregoing, each
Bank will designate a different funding office if such designation will avoid
(or reduce the cost to the Borrowers of) any event described in clause (i) or
(ii) of the preceding sentence and such designation will not, in such Bank's
sole judgment, be otherwise disadvantageous to such Bank.
(b) At any time any Bank is an Affected Bank, the Borrowers may replace
such Affected Bank as a party to this Agreement with one or more other bank(s)
or financial institutions reasonably satisfactory to the Agent (and upon notice
from the Borrowers such Affected Bank shall assign pursuant to an Assignment
Agreement, and without recourse or warranty, its Commitment, its Loans, its
Note, its participation in Letters of Credit, and all of its other rights and
obligations hereunder to such replacement bank(s) or other financial
institutions) for a purchase price equal to the sum of the principal amount of
the Loans so assigned, all accrued and unpaid interest thereon, its ratable
share of all accrued and unpaid facility fees and Letter of Credit fees, any
23
amounts payable under Section 8.4 as a result of such Bank receiving payment of
any Eurodollar Loan prior to the end of an Interest Period therefor and all
other obligations owed to such Affected Bank hereunder.
8.8 Conclusiveness of Statements; Survival of Provisions. Determinations
and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or 8.4 shall be
conclusive absent demonstrable error. Banks may use reasonable averaging and
attribution methods in determining compensation under Sections 8.1 and 8.4, and
the provisions of such Sections shall survive repayment of the Loans,
cancellation of the Notes, cancellation or expiration of the Letters of Credit
and any termination of this Agreement.
SECTION 9 WARRANTIES.
To induce the Agent and the Banks to enter into this Agreement and to
induce the Banks to make Loans and issue or purchase participations in Letters
of Credit hereunder, the Borrowers warrant to the Agent and the Banks that:
9.1 Organization, etc. Each Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
each Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation; and the Borrowers and
each Subsidiary is duly qualified to do business in each jurisdiction where the
nature of its business makes such qualification necessary (except in those
instances in which the failure to be qualified or in good standing does not have
a Material Adverse Effect) and has full power and authority to own its property
and conduct its business as presently conducted by it.
9.2 Authorization; No Conflict. The execution and delivery by the Borrowers
of this Agreement and each other Loan Document to which they are a party, the
borrowings hereunder and the performance by each of the Borrowers of its
obligations under each Loan Document to which it is a party are within the
corporate powers of the Borrowers, have been duly authorized by all necessary
corporate action on the part of the Borrowers (including any necessary
shareholder action), have received all necessary governmental approval (if any
shall be required), and do not and will not (a) violate any provision of law or
any order, decree or judgment of any court or other government agency which is
binding on the Borrowers, (b) contravene or conflict with, or result in a breach
of, any provision of the Certificate of Incorporation, By-Laws or other
organizational documents of the Borrowers or of any agreement, indenture,
instrument or other document which is binding on the Borrowers or any Subsidiary
or (c) result in, or require, the creation or imposition of any Lien on any
property of the Borrowers or any Subsidiary (other than Liens arising under the
Loan Documents).
9.3 Validity and Binding Nature. Each of this Agreement and each other Loan
Document to which the Borrowers are a party is the legal, valid and binding
obligation of the Borrowers, enforceable against the Borrowers in accordance
with its terms.
9.4 Financial Condition. The financial statements of the Borrowers which
have been furnished to each Bank:
24
(i) were prepared in accordance with GAAP consistently applied
throughout the periods covered thereby, except as otherwise expressly noted
therein (subject, in the case of the unaudited financial statements, to the
absence of footnotes and to customary year-end audit adjustments); and
(ii) fairly present in all material respects the financial condition of
the Borrowers and their Subsidiaries as of the dates thereof and the
results of operations for the periods covered thereby.
9.5 No Material Adverse Change. Since the date of the statements referenced
at Section 9.4 above, there has been no material adverse change in the financial
condition, operations, assets, business or properties of the Borrowers and their
Subsidiaries taken as a whole.
9.6 Litigation and Contingent Liabilities. (a) No litigation (including
derivative actions), arbitration proceeding, labor controversy or governmental
investigation or proceeding is pending or, to the Borrowers' knowledge,
threatened against the Borrowers or any Subsidiary which might reasonably be
expected to have a Material Adverse Effect, except as set forth in Schedule
9.6(a), and other than any liability incident to such litigation or proceedings,
neither the Borrowers nor any Subsidiary has any material contingent liabilities
not listed in such Schedule 9.6(a) or 9.6(b).
(b) Schedule 9.6(b) sets out descriptions of all arrangements existing
on the Effective Date pursuant to which the Borrowers or any Subsidiary may be
required to pay any Contingent Payment.
9.7 Ownership of Properties; Liens. Each of the Borrowers and each
Subsidiary owns good and marketable title to all of its properties and assets,
real and personal, tangible and intangible, of any nature whatsoever (including
patents, trademarks, trade names, service marks and copyrights), free and clear
of all Liens, charges and material claims (including material infringement
claims with respect to patents, trademarks, copyrights and the like) except as
permitted pursuant to Section 10.8.
9.8 Subsidiaries. The Borrowers have no Subsidiaries except those listed in
Schedule 9.8.
9.9 Pension and Welfare Plans. (a) During the twelve-consecutive-month
period prior to the date of the execution and delivery of this Agreement or the
making of any Loan hereunder, (i) no steps have been taken to terminate any
Pension Plan and (ii) no contribution failure has occurred with respect to any
Pension Plan sufficient to give rise to a lien under Section 302(f) of ERISA. No
condition exists or event or transaction has occurred with respect to any
Pension Plan which could result in the incurrence by either of the Borrowers of
any material liability, fine or penalty. The Borrowers have no contingent
liability with respect to any post-retirement benefit under a Welfare Plan,
other than liability for continuation coverage described in Part 6 of Subtitle B
25
of Title I of ERISA.
(b) All contributions (if any) have been made to any Multiemployer
Pension Plan that are required to be made by the Borrowers or any other member
of the Controlled Group under the terms of the plan or of any collective
bargaining agreement or by applicable law; neither the Borrowers nor any member
of the Controlled Group has withdrawn or partially withdrawn from any
Multiemployer Pension Plan, incurred any withdrawal liability with respect to
any such plan, received notice of any claim or demand for withdrawal liability
or partial withdrawal liability from any such plan, and no condition has
occurred which, if continued, might result in a withdrawal or partial withdrawal
from any such plan; and neither the Borrowers nor any member of the Controlled
Group has received any notice that any Multiemployer Pension Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of any excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated, or that any such plan
is or may become insolvent.
9.10 Investment Company Act. Neither the Borrowers nor any Subsidiary are
an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940.
9.11 Public Utility Holding Company Act. Neither the Borrowers nor any
Subsidiary are a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935.
9.12 Regulation U. The Borrowers are not engaged principally, or as one of
their important activities, in the business of extending credit for the purpose
of purchasing or carrying Margin Stock.
9.13 Taxes. Each of the Borrowers and each Subsidiary have filed all tax
returns and reports required by law to have been filed by it and has paid all
taxes and governmental charges thereby shown to be owing, except any such taxes
or charges which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books.
9.14 Solvency, etc. On the Effective Date (or, in the case of any Person
which becomes a Guarantor after the Effective Date, on the date such Person
becomes a Guarantor), and immediately prior to and after giving effect to the
issuance of each Letter of Credit and each borrowing hereunder and the use of
the proceeds thereof, (a) each of the Borrowers' and each Guarantor's assets
will exceed its liabilities and (b) each of the Borrowers and each Guarantor
will be solvent, will be able to pay its debts as they mature, will own property
with fair saleable value greater than the amount required to pay its debts and
will have capital sufficient to carry on its business as then constituted.
26
9.15 Environmental Matters.
(a) No Violations. Except as set forth on Schedule 9.15, neither the
Borrowers nor any Subsidiary, nor any operator of the Borrowers' or any
Subsidiary's properties, is in violation, or alleged violation, of any judgment,
decree, order, law, permit, license, rule or regulation pertaining to
environmental matters, including those arising under the Resource Conservation
and Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 or any other Environmental Law which (i) in any
single case, requires expenditures in any three-year period of $500,000 or more
by either of the Borrowers and its Subsidiaries in penalties and/or for
investigative, removal or remedial actions or (ii) individually or in the
aggregate otherwise might reasonably be expected to have a Material Adverse
Effect.
(b) Notices. Except as set forth on Schedule 9.15, neither of the
Borrowers nor any Subsidiary have received notice from any third party,
including any Federal, state or local governmental authority: (a) that any one
of them has been identified by the U.S. Environmental Protection Agency as a
potentially responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇; (b) that any hazardous
waste, as defined by 42 U.S.C. ss.6903(5), any hazardous substance as defined
by 42 U.S.C. ss.9601(14), any pollutant or contaminant as defined by 42 U.S.C.
ss.9601(33) or any toxic substance, oil or hazardous material or other chemical
or substance regulated by any Environmental Law, excluding household hazardous
waste (all of the foregoing, "Hazardous Substances"), which any one of them has
generated, transported or disposed of has been found at any site at which a
Federal, state or local agency or other third party has conducted a remedial
investigation, removal or other response action pursuant to any Environmental
Law; (c) that the Borrowers or any Subsidiary must conduct a remedial
investigation, removal, response action or other activity pursuant to any
Environmental Law; or (d) of any Environmental Claim.
(c) Handling of Hazardous Substances. Except as set forth on Schedule
9.15, (i) no portion of any real property or other assets owned, leased or
operated by either of the Borrowers or any Subsidiary has been used for the
handling, processing, storage or disposal of Hazardous Substances except in
accordance in all material respects with applicable Environmental Laws; and no
underground tank or other underground storage receptacle for Hazardous
Substances is located on such properties; (ii) in the course of any activities
conducted by either of the Borrowers, any Subsidiary or the operators of any
real property owned, leased or operated by either of the Borrowers or any
Subsidiary, no Hazardous Substances have been generated or are being used on
such properties except in accordance in all material respects with applicable
Environmental Laws; (iii) there have been no Releases or threatened Releases of
Hazardous Substances on, upon, into or from any real property or other assets
owned, leased or operated by either of the Borrowers or any Subsidiary, which
Releases singly or in the aggregate might reasonably be expected to have a
material adverse effect on the value of such real property or assets; (iv) to
the Borrowers' actual knowledge, there have been no Releases on, upon, from or
into any real property in the vicinity of any real property or other assets
owned, leased or operated by either of the Borrowers or any Subsidiary which,
through soil or groundwater contamination, may have come to be located on, and
which might reasonably be expected to have a material adverse effect on the
value of, any real
27
property or other assets owned, leased or operated by either of the Borrowers or
any Subsidiary; and (v) any Hazardous Substances generated by either of the
Borrowers or their Subsidiaries have been transported offsite only by properly
licensed carriers and delivered only to treatment or disposal facilities
maintaining valid permits as required under applicable Environmental Laws, which
transporters and facilities have been and are, to the best of the Borrowers'
knowledge, operating in compliance with such permits and applicable
Environmental Laws.
(d) Investigations. Except as set forth on Schedule 9.15, the
Borrowers and their Subsidiaries have taken all reasonable steps to investigate
the past and present condition and usage of any real property owned, leased or
operated by either of the Borrowers and their Subsidiaries and the operations
conducted by either of the Borrowers and their Subsidiaries with regard to
environmental matters.
9.16 Year 2000 Issue. The Borrowers and their Subsidiaries have reviewed
the areas within their business and operations which could be adversely affected
by, and have developed or are developing a program to address on a timely basis,
the "Year 2000 Issue" (that is, the risk that computer applications used by the
Borrowers and their Subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999). Based on such review and program, the Borrowers reasonably
believes that the "Year 2000 Issue" will not have a Material Adverse Effect.
9.17 Copyrights, Patents, Trademarks and Licenses, etc. The Borrowers and
their Subsidiaries own or are licensed or otherwise have the right to use all of
the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, all as set forth on Schedule 9.17,
without conflict with the rights of any other Person. No slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Borrowers or any
Subsidiary infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or, to the knowledge of the
Borrowers, threatened, and no patent, invention, device, application, principle
or any statute, law, rule, regulation, standard or code is pending or, to the
knowledge of the Borrowers, proposed, which, in either case, could reasonably be
expected to have a Material Adverse Effect.
9.18 Transactions with Affiliates. Neither of the Borrowers nor any
Subsidiary have entered into or participated in any agreements or transactions
of any kind with any Affiliates of the Borrowers except agreements or
transactions entered into in the ordinary course of business on an arms-length
basis.
9.19 Information. All information heretofore or contemporaneously herewith
furnished in writing by the Borrowers or any Subsidiary to any Bank for purposes
of or in connection with this Agreement and the transactions contemplated hereby
is, and all written information hereafter furnished by or on behalf of the
Borrowers or any Subsidiary to any Bank pursuant hereto or in connection
herewith will be, true and accurate in every material respect on the date as of
which such information is dated or certified, and none of such information is or
will be incomplete by omitting to state any material fact necessary to make such
information not misleading in light of the
28
circumstances under which made (it being recognized by the Agent and the Banks
that (a) any projections and forecasts provided by the Borrowers are based on
good faith estimates and assumptions believed by the Borrowers to be reasonable
as of the date of the applicable projections or assumptions and that actual
results during the period or periods covered by any such projections and
forecasts may differ from projected or forecasted results and (b) any
information provided by the Borrowers or any Subsidiary with respect to any
Person or assets acquired or to be acquired by the Borrowers or any Subsidiary
shall, for all periods prior to the date of such acquisition, be limited to the
knowledge of the Borrowers or the acquiring Subsidiary after reasonable
inquiry).
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and thereafter until
all obligations of the Borrowers hereunder and under the other Loan Documents
are paid in full and all Letters of Credit have been terminated, the Borrowers
agree that, unless at any time the Required Banks shall otherwise expressly
consent in writing, they will:
10.1 Reports, Certificates and Other Information. Furnish to the Agent and
each Bank:
10.1.1 Audit Report. Promptly when available and in any event within 105
days after the close of each Fiscal Year: (a) a copy of the annual audit report
of the Borrowers and their Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets of the Borrowers and their Subsidiaries as of the
end of such Fiscal Year and consolidated statements of earnings and cash flow of
the Borrowers and their Subsidiaries for such Fiscal Year in the form of the
10-K submitted by the Borrowers to the SEC, certified without qualification by
independent auditors of recognized standing selected by the Borrowers and
reasonably acceptable to the Required Banks, together with a written statement
from such accountants to the effect that in making the examination necessary for
the signing of such annual audit report by such accountants, nothing came to
their attention that caused them to believe that the Borrowers were not in
compliance with any provision of Section 10.6, 10.7 or 10.9 of this Agreement
insofar as such provision relates to accounting matters or, if something has
come to their attention that caused them to believe that either of the Borrowers
was not in compliance with any such provision, describing such non-compliance in
reasonable detail (it being understood that any such audit is not directed
primarily toward obtaining knowledge of such non-compliance); and (b)
consolidating balance sheets of the Borrowers and their Subsidiaries as of the
end of such Fiscal Year and a consolidating statement of earnings for the
Borrowers and their Subsidiaries for such Fiscal Year, certified by the Chief
Financial Officer, the Vice President, Finance, Controller or Treasurer of the
Borrowers.
10.1.2 Quarterly Reports. Promptly when available and in any event within
60 days after the end of each Fiscal Quarter (except the last Fiscal Quarter) of
each Fiscal Year, consolidated and consolidating balance sheets of the Borrowers
and their Subsidiaries as of the end of such Fiscal Quarter in the form of the
10-Q submitted by the Borrowers to the SEC, together with consolidated and
consolidating statements of earnings and a consolidated and consolidating
statement of cash flows for such Fiscal Quarter and for the period beginning
with the first day of such Fiscal Year and ending on the last day of such Fiscal
Quarter, certified by the Chief Financial Officer, the Vice
29
President, Finance, Controller or Treasurer of the Borrowers.
10.1.3 Compliance Certificates. Contemporaneously with the furnishing of a
copy of each annual audit report pursuant to Section 10.1.1 and of each set of
quarterly statements pursuant to Section 10.1.2, a duly completed compliance
certificate in the form of Exhibit B, with appropriate insertions, dated the
date of such annual report or such quarterly statements and signed by the Chief
Financial Officer, the Vice President, Finance, Controller or Treasurer of the
Borrowers, containing a computation of each of the financial ratios and
restrictions set forth in Section 10.6 and a statement to the effect that such
officer has not become aware of any Event of Default or Unmatured Event of
Default that has occurred and is continuing or, if there is any such event,
describing it and the steps, if any, being taken to cure it.
10.1.4 Reports to SEC and to Shareholders. Promptly upon the filing or
sending thereof, copies of all regular, periodic or special reports of the
Borrowers or any Subsidiary filed with the SEC (excluding exhibits thereto,
provided that the Borrowers shall promptly deliver any such exhibit to the Agent
or any Bank upon request therefor); copies of all registration statements of the
Borrowers or any Subsidiary filed with the SEC (other than on Form S-8); and
copies of all proxy statements or other communications made to security holders
generally concerning material developments in the business of the Borrowers or
any Subsidiary.
10.1.5 Notice of Default, Litigation and ERISA Matters. Promptly upon
becoming aware of any of the following, written notice describing the same and
the steps being taken by the Borrowers or the Subsidiary affected thereby with
respect thereto:
(a) the occurrence of an Event of Default or an Unmatured Event of
Default;
(b) any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by the Borrowers to the Banks which has
been instituted or, to the knowledge of the Borrowers, is threatened
against either of the Borrowers or any Subsidiary or to which any of the
properties of any thereof is subject which, if adversely determined, might
reasonably be expected to have a Material Adverse Effect;
(c) the institution of any steps by any member of the Controlled
Group or any other Person to terminate any Pension Plan, or the failure of
any member of the Controlled Group to make a required contribution to any
Pension Plan (if such failure is sufficient to give rise to a lien under
Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or the
taking of any action with respect to a Pension Plan which could result in
the requirement that either of the Borrowers furnish a bond or other
security to the PBGC or such Pension Plan, or the occurrence of any event
with respect to any Pension Plan or Multiemployer Pension Plan which could
result in the incurrence by any member of the Controlled Group of any
material liability, fine or penalty (including any claim or demand for
withdrawal liability or partial withdrawal from any Multiemployer Pension
Plan), or any material increase
30
in the contingent liability of either of the Borrowers with respect to any
post-retirement Welfare Plan benefit, or any notice that any Multiemployer
Pension Plan is in reorganization, that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of an
excise tax, that any such plan is or has been funded at a rate less than
that required under Section 412 of the Code, that any such plan is or may
be terminated, or that any such plan is or may become insolvent;
(d) any cancellation or material change in any insurance maintained
by the Borrowers or any Subsidiary;
(e) any event (including (i) any violation of any Environmental Law
or the assertion of any Environmental Claim or (ii) the enactment or
effectiveness of any law, rule or regulation) which might reasonably be
expected to have a Material Adverse Effect; or
(f) any setoff, claims, withholdings or other defenses to which any
of the Collateral, or the Banks, rights with respect to the Collateral, are
subject.
10.1.6 Subsidiaries. Promptly upon any change in the list of its
Subsidiaries, a written report of such change.
10.1.7 Management Reports. Promptly upon the request of the Agent or any
Bank, copies of all detailed financial and management reports submitted to the
Borrowers by independent auditors in connection with each annual or interim
audit made by such auditors of the books of the Borrowers.
10.1.8 Budgets. As soon as practicable and in any event within 60 days
after the commencement of each Fiscal Year, divisional and consolidated budgets
for the Borrowers and their Subsidiaries for such Fiscal Year prepared in a
manner reasonably satisfactory to the Agent.
10.1.9 Contracts. As soon as practicable after becoming aware of the event
and in any event within 30 days of such event, written notice of any termination
by a customer of a material contract with a Subsidiary (with materiality being
measured at the Subsidiary level).
10.1.10 Other Information. From time to time such other information
concerning the Borrowers and their Subsidiaries as any Bank or the Agent may
reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP; permit, and cause each Subsidiary to permit, any Bank or the Agent or any
representative thereof to inspect the properties and operations of the Borrowers
and of such Subsidiary; and permit, and cause each Subsidiary to permit, at any
reasonable time and with reasonable notice (or at any time without notice if an
Event of Default exists), any Bank or the Agent or any representative thereof to
visit any or all of its offices, to
31
discuss its financial matters with its officers and its independent auditors
(and the Borrowers hereby authorizes such independent auditors to discuss such
financial matters with any Bank or the Agent or any representative thereof,
provided that so long as no Event of Default exists, a representative of the
Borrowers shall be present at any such discussions), and to examine (and, at the
expense of the Borrowers or the applicable Subsidiary, photocopy extracts from)
any of its books or other corporate records.
10.3 Insurance. Maintain, and cause each Subsidiary to maintain, with
responsible insurance companies, such insurance as may be required by any law or
governmental regulation or court decree or order applicable to it and such other
insurance, to such extent and against such hazards and liabilities, as is
customarily maintained by companies similarly situated and that is acceptable to
the Agent; and, on each anniversary of the Effective Date and from time to time
upon request of the Agent or any Bank, furnish to the Agent or such Bank a
certificate setting forth in reasonable detail the nature and extent of all
insurance maintained by the Borrowers and their Subsidiaries.
10.4 Compliance with Laws; Payment of Taxes and Liabilities. (a) Comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws (including Environmental Laws), rules, regulations, decrees,
orders, judgments, licenses and permits; and (b) pay, and cause each Subsidiary
to pay, prior to delinquency, all taxes and other governmental charges against
it or any of its property, as well as claims of any kind which, if unpaid, might
become a Lien on any of its property; provided, however, that the foregoing
shall not require the Borrowers or any Subsidiary to pay any such tax or charge
so long as it shall contest the validity thereof in good faith by appropriate
proceedings and shall set aside on its books adequate reserves with respect
thereto in accordance with GAAP.
10.5 Maintenance of Existence, etc. Maintain and preserve, and (subject to
Section 10.11) cause each Subsidiary to maintain and preserve, (a) its existence
and good standing in the jurisdiction of its incorporation and (b) its
qualification and good standing as a foreign corporation in each jurisdiction
where the nature of its business makes such qualification necessary (except in
those instances in which the failure to be qualified or in good standing does
not have a Material Adverse Effect).
10.6 Financial Covenants. On a consolidated basis with their Subsidiaries
(excluding Speech Design) on an annualized basis for the year ending December
31, 1997 and on a rolling four quarter basis thereafter:
10.6.1 Fixed Charges Coverage Ratio. Not permit the Fixed Charges Coverage
Ratio to be less than 1.75 to 1.00.
10.6.2 Leverage Ratio. Not permit the Leverage Ratio as of the last day of
any Fiscal Quarter to exceed 3.25 to 1.00.
10.6.3 Funded Debt to Total Capitalization Ratio. Not permit the Funded
Debt to Total Capitalization Ratio to exceed .55 to 1.00.
32
10.6.4 Interest Coverage Ratio. Not permit the Interest Coverage Ratio at
any time to be less than 3.25 to 1.00.
10.6.5 Minimum Net Income. Maintain net income of not less than $1.00 for
each Fiscal Quarter.
10.7 Limitations on Debt. Not, and not permit any Subsidiary to, create,
incur, assume or suffer to exist any Debt, except:
(a) obligations in respect of the Loans, the L/C Applications and the
Letters of Credit;
(b) Debt of Subsidiaries owed to the Borrowers, except, as to Speech
Design, the Debt shall not exceed the amount of dividends paid
contemporaneously by Speech Design to the lending Borrower;
Subordinated Debt.
10.8 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except:
(a) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested in good
faith by appropriate proceedings and, in each case, for which it maintains
adequate reserves;
(b) Liens arising in the ordinary course of business (such as (i)
Liens of carriers, warehousemen, mechanics and materialmen and other
similar Liens imposed by law and (ii) Liens incurred in connection with
worker's compensation, unemployment compensation and other types of social
security (excluding Liens arising under ERISA) or in connection with surety
bonds, bids, performance bonds and similar obligations) for sums not
overdue or being contested in good faith by appropriate proceedings and not
involving any deposits or advances or borrowed money or the deferred
purchase price of property or services, and, in each case, for which it
maintains adequate reserves;
(c) Liens identified in Schedule 10.8;
(d) Liens that constitute purchase money security interests on any
property securing debt incurred for the purpose of financing all or any
part of the cost of acquiring such property, provided that any such Lien
attaches to such property within 60 days of the acquisition thereof and
such Lien attaches solely to the property so acquired;
33
(e) attachments, appeal bonds, judgments and other similar Liens, for
sums not exceeding $250,000 arising in connection with court proceedings,
provided 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, minor defects or
irregularities in title and other similar Liens not interfering in any
material respect with the ordinary conduct of the business of the Borrowers
or any Subsidiary; and
(g) Liens in favor of the Agent arising under the Loan Documents.
10.9 Restricted Payments. Not, and not permit any Subsidiary to, (a)
declare or pay any dividends on any of its capital stock (other than stock
dividends), (b) purchase or redeem any such stock or any warrants, units,
options or other rights in respect of such stock, (c) make any other
distribution to shareholders, (d) prepay, purchase, defease or redeem any
Subordinated Debt or (e) set aside funds for any of the foregoing; provided that
either Borrower may declare and pay dividends to the other and any Subsidiary
may declare and pay dividends to the Borrowers or to any other wholly-owned
Subsidiary; and provided, further, that this Section 10.9 shall not prohibit
Bogen Communications International, Inc. from taking the enumerated actions
unless otherwise restricted by the terms of this Credit Agreement.
10.10 Mergers, Consolidations, Sales. Not, and not permit any Subsidiary
to, be a party to any merger or consolidation, or purchase or otherwise acquire
all or substantially all of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person, or sell, transfer,
convey or lease all or any substantial part of its assets, or sell or assign
with or without recourse any receivables, except for (a) any such merger or
consolidation, sale, transfer, conveyance, lease or assignment of or by any
wholly-owned Subsidiary into either of the Borrowers or into, with or to any
other wholly-owned Subsidiary; (b) any such purchase or other acquisition by
either of the Borrowers or any wholly-owned Subsidiary of the assets or stock of
any wholly-owned Subsidiary; (c) any such purchase or other acquisition by
either of the Borrowers or any wholly-owned Subsidiary of the assets or stock of
any other Person where (1) the Agent and the Banks have been provided with a
Standard Information Package, (2) such assets (in the case of an asset purchase)
are for use, or such Person (in the case of a stock purchase) is engaged, solely
in providing a business similar to that of the Person making the acquisition and
said business is conducted in the United States; (3) immediately before or after
giving effect to such purchase or acquisition, no Event of Default or Unmatured
Event of Default shall have occurred and be continuing; (4) the aggregate
consideration to be paid by either of the Borrowers and their Subsidiaries
(including any Debt assumed or issued in connection therewith, the amount
thereof to be calculated in accordance with GAAP) in connection with such
purchase or other acquisition (or any series of related acquisitions) is not
greater than five times the EBITDA for the most recent Fiscal Year of the Person
being acquired based on the information in the Standard Information Package, (5)
the Borrowers will be in pro forma compliance with all the financial ratios and
restrictions set forth in Section 10.6 on both a trailing and projected twelve
(12) month basis; (6) the Person acquired will become a Borrower; and (7) all of
the assets of the Person acquired or the
34
assets acquired (in the case of an asset purchase) shall be pledged as
collateral for the Loans.
10.11 Modification of Organizational Documents. Not permit the Certificate
of Incorporation, By-Laws or other organizational documents of the Borrowers or
any Subsidiary to be amended or modified in any way which might reasonably be
expected to materially adversely affect the interests of the Banks.
10.12 Use of Proceeds. Use the proceeds of the Loans solely to finance the
Borrowers' working capital and for acquisitions permitted by Section 10.10; and
not use or permit any proceeds of any Loan to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
"purchasing or carrying" any Margin Stock. Initially, proceeds will be used to
pay out existing Debt with Summit Bank.
10.13 Sale of Speech Design; Proceeds of Warrants. Proceeds from the sale
of Speech Design will be applied first to the payment of taxes and reasonable
and customary fees and costs attributable to the sale of Speech Design and then
to any outstanding Debt. The balance of proceeds, if any, must be used by the
Borrowers to finance acquisitions prior to utilization of any portion of the
Acquisition Sublimit. Proceeds derived from the exercise of warrants will be
applied to the reduction of amounts outstanding under the Acquisition Sublimit.
10.14 Further Assurances. Take, and cause each Subsidiary to take, such
actions as are necessary, or as the Agent or the Required Banks may reasonably
request, from time to time (including the execution and delivery of guaranties,
security agreements, pledge agreements, financing statements and other
documents, the filing or recording of any of the foregoing, and the delivery of
stock certificates and other collateral with respect to which perfection is
obtained by possession) to ensure that (i) the obligations of the Borrowers
hereunder and under the other Loan Documents are secured by substantially all of
the assets of the Borrowers and guaranteed by all of the Subsidiaries
(including, promptly upon the acquisition or creation thereof, any Subsidiary
acquired or created after the date hereof) by execution of a counterpart of the
Guaranty and (ii) the obligations of each Guarantor under the Guaranty are
secured by substantially all of the assets of such Guarantor.
10.15 Transactions with Affiliates. Not, and not permit any Subsidiary to,
enter into, or cause, suffer or permit to exist any transaction, arrangement or
contract with any of its other Affiliates (other than the Borrowers and their
Subsidiaries) which is on terms which are less favorable than are obtainable
from any Person which is not one of its Affiliates.
10.16 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in substantial compliance with all applicable
requirements of law and regulations.
10.17 Environmental Matters. (a) If any material Release or Disposal of
Hazardous Substances shall occur or shall have occurred on any real property or
any other assets owned, leased or operated by either of the Borrowers or any
Subsidiary, the Borrowers shall, and shall cause the applicable Subsidiary to,
cause the prompt containment and removal of such Hazardous Substances and the
remediation of such real property or other assets as necessary to comply in all
material
35
respects with all Environmental Laws and to preserve the value of such real
property or other assets. Without limiting the generality of the foregoing, the
Borrowers shall, and shall cause each Subsidiary to, comply in a reasonable and
cost-effective manner with any valid Federal or state judicial or administrative
order requiring the performance at any real property owned, leased or operated
by either of the Borrowers or any Subsidiary of activities in response to the
Release or threatened Release of a Hazardous Substance except for the period of
time that the Borrowers or such Subsidiary is diligently and in good faith
contesting such order.
(b) To the extent that the transportation of "hazardous waste" as
defined by RCRA is permitted by this Agreement, the Borrowers shall, and shall
cause their Subsidiaries to, dispose of such hazardous waste only at licensed
disposal facilities operating, to the best of the Borrowers' or such
Subsidiary's knowledge after reasonable inquiry, in compliance with
Environmental Laws.
10.18 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other property or services, if such contract requires
that payment be made by it regardless of whether or not delivery is ever made of
such materials, supplies or other property or services; provided that the
foregoing shall not prohibit the Borrowers or any Subsidiary from entering into
options for the purchase of particular assets or businesses.
10.19 Inconsistent Agreements. Not, and not permit any Subsidiary to, enter
into any agreement containing any provision which (a) would be violated or
breached by any borrowing by the Borrowers hereunder or by the performance by
the Borrowers or any Subsidiary of any of their obligations hereunder or under
any other Loan Document or (b) would prohibit the Borrowers or any Subsidiary
from granting to the Agent, for the benefit of the Banks, a Lien on any of their
assets.
10.20 Business Activities. Not, and not permit any Subsidiary to, engage in
any line of business other than developing, producing and selling sound and
communication equipment and telephone and telecommunications peripherals and
systems and businesses which are reasonably related thereto.
10.21 Advances and Other Investments. Not, and not permit any Subsidiary
to, make, incur, assume or suffer to exist any Investment in any other Person,
except (without duplication) the following:
(a) equity Investments existing on the Effective Date in Subsidiaries
identified in Schedule 9.8;
(b) equity Investments in Subsidiaries acquired after the Effective
Date in transactions permitted as acquisitions of stock or assets pursuant
to Section 10.10;
(c) in the ordinary course of business, contributions by the
Borrowers to the capital of any of its Subsidiaries, or by any such
Subsidiary to the capital of
36
any of its Subsidiaries;
(d) in the ordinary course of business, Investments by the Borrowers
in any Subsidiary or by any of the Subsidiaries in the Borrowers, by way of
intercompany loans, advances or guaranties, all to the extent permitted by
Section 10.7;
(e) good faith deposits made in connection with prospective
acquisitions of stock or assets permitted by Section 10.10;
(f) Cash Equivalent Investments; and
(g) bank deposits in the ordinary course of business; provided that
the aggregate amount of all such deposits (excluding amounts in payroll
accounts or for accounts payable, in each case to the extent that checks
have been issued to third parties) which are maintained with any bank other
than the Agent shall not at any time exceed (x) in the case of such
deposits with any single bank, $100,000 for three consecutive Business Days
and (y) in the case of all such deposits, $2,500,000 for three consecutive
Business Days;
provided, however, that no Investment otherwise permitted by clause (b), (c),
(d) or (e) shall be permitted to be made if, immediately before or after giving
effect thereto, any Event of Default or Unmatured Event of Default shall have
occurred and be continuing.
10.22 Maintenance of Property. The Borrowers shall, and shall cause each
Subsidiary to, maintain and preserve all its property which is used or useful in
its business in good working order and condition, ordinary wear and tear
excepted.
10.23 Performance of Obligations. The Borrowers shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets; and
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; unless, in each case, the same are being contested in
good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Borrowers or such Subsidiary.
10.24 Leases. Enter into, and cause each Subsidiary to enter into, leases
acceptable to the Agent with respect to any real property used by the Borrowers
or any Subsidiary in the conduct of its business.
37
SECTION 11 EFFECTIVENESS; CONDITIONS OF LENDING, ETC.
The obligation of each Bank to make its Loans and of any Issuing Bank to
issue Letters of Credit is subject to the following conditions precedent:
11.1 Initial Credit Extensions. The obligation of each Bank to make its
initial Loan and of any Issuing Bank to issue any Letter of Credit, whichever
first occurs, is, in addition to the conditions precedent specified in Section
11.2, subject to the conditions precedent (and the date on which all such
conditions precedent have been satisfied or waived in writing by the Banks is
called the "Effective Date") that (a) the Agent shall have received all amounts
which are then due and payable pursuant to Section 5 and (to the extent billed)
Section 14.6, (b) the Agent shall have completed its due diligence of the
Borrowers and (c) the Agent shall have received all of the following, each duly
executed and dated the Effective Date (or such other date as shall be
satisfactory to the Agent), in form and substance satisfactory to the Agent, and
each (except for the Notes, of which only the originals shall be signed) in
sufficient number of signed counterparts to provide one for each Bank:
11.1.1 Notes. The Notes.
11.1.2 Resolutions. Certified copies of resolutions of the Boards of
Directors of the Borrowers authorizing or ratifying the execution, delivery and
performance by the Borrowers of this Agreement, the Notes and the other Loan
Documents to which the Borrowers are a party; and certified copies of
resolutions of the Board of Directors of each Subsidiary which is to execute and
deliver any document pursuant to Section 11.1.5, 11.1.6 or 11.1.7 authorizing or
ratifying the execution, delivery and performance by such Subsidiary of each
Loan Document to which such Subsidiary is a party.
11.1.3 Consents, etc. Certified copies of all documents evidencing any
necessary corporate action, consents and governmental approvals (if any)
required for the execution, delivery and performance by the Borrowers and each
Subsidiary of the documents referred to in this Section 11.
11.1.4 Incumbency and Signature Certificates. A certificate of an officer
of each of the Borrowers and each Subsidiary of the Borrowers as of the
Effective Date certifying the names of the officer or officers of such entity
authorized to sign the Loan Documents to which such entity is a party, together
with a sample of the true signature of each such officer (it being understood
that the Agent and each Bank may conclusively rely on each such certificate
until formally advised by a like certificate of any changes therein).
11.1.5 Guaranty. The Guaranty executed by each Subsidiary as of the
Effective Date.
11.1.6 Security Agreement. The Security Agreements executed by the
Borrowers and each Subsidiary as of the Effective Date, together with evidence,
satisfactory to the Agent, that all filings necessary to perfect the Agent's
Lien on any collateral granted under the Security Agreements have been duly made
and are in full force and effect.
38
11.1.7 Pledge Agreements. The Pledge Agreement and, with respect to any
Subsidiary that as of the Effective Date has one or more Subsidiaries, a
Subsidiary Pledge Agreement, in each case together with all stock certificates,
stock powers and other items required to be delivered in connection therewith.
11.1.8 Opinion of Counsel for the Borrowers and the Guarantors. The opinion
of counsel to the Borrowers and the Guarantors.
11.1.9 Other. Such other documents as the Agent or any Bank may reasonably
request.
11.2 Conditions. The obligation (a) of each Bank to make each Loan and (b)
of each Issuing Bank to issue each Letter of Credit is subject to the following
further conditions precedent that:
11.2.1 Compliance with Warranties, No Default, etc. Both before and after
giving effect to any borrowing and the issuance of any Letter of Credit (but, if
any Event of Default of the nature referred to in Section 12.1.2 shall have
occurred with respect to any other Debt, without giving effect to the
application, directly or indirectly, of the proceeds thereof) the following
statements shall be true and correct:
(a) the representations and warranties of the Borrowers and the
Guarantors set forth in this Agreement (excluding Sections 9.6 and 9.8) and
the other Loan Documents shall be true and correct in all material respects
with the same effect as if then made (except to the extent stated to relate
to an earlier date, in which case such representations and warranties shall
be true and correct in all material respects as of such earlier date);
(b) except as disclosed by the Borrowers to the Agent and the Banks
pursuant to Section 9.6,
(i) no litigation (including derivative actions), arbitration
proceeding, labor controversy or governmental investigation or
proceeding shall be pending or, to the knowledge of either of the
Borrowers, threatened against either of the Borrowers or any of their
Subsidiaries which might reasonably be expected to have a Material
Adverse Effect or which purports to affect the legality, validity or
enforceability of this Agreement, the Notes or any other Loan Document;
and
(ii) no development shall have occurred in any litigation
(including derivative actions), arbitration proceeding, labor
controversy or governmental investigation or proceeding disclosed
pursuant to Section 9.6 which might reasonably be expected to have a
Material Adverse Effect; and
39
(c) no Event of Default or Unmatured Event of Default shall have
then occurred and be continuing, and neither of the Borrowers nor any of
their Subsidiaries shall be in violation of any law or governmental
regulation or court order or decree where such violation or violations
singly or in the aggregate might reasonably be expected to have a Material
Adverse Effect; and
(d) there shall have been no change in the operations or financial
condition of either of the Borrowers or their Subsidiaries or in the market
for syndicated loans that might reasonably be expected to have a Material
Adverse Effect.
11.2.2 Confirmatory Certificate. If requested by the Agent or any Bank, the
Agent shall have received (in sufficient counterparts to provide one to each
Bank) a certificate dated the date of such requested Loan or Letter of Credit
and signed by a duly authorized representative of the Borrower for whose benefit
the Loan or the Letter of Credit has been requested as to the matters set out in
Section 11.2.1 (it being understood that each request by the Borrowers for the
making of a Loan or the issuance of a Letter of Credit shall be deemed to
constitute a warranty by the Borrowers that the conditions precedent set forth
in Section 11.2.1 will be satisfied at the time of the making of such Loan or
the issuance of such Letter of Credit), together with such other documents as
the Agent or any Bank may reasonably request in support thereof.
11.2.3 Field Audit. A field examination shall be performed to the
reasonable satisfaction of Agent.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when due of
the principal of any Loan; or default, and continuance thereof for five days, in
the payment when due of any interest, fee, reimbursement obligation with respect
to any Letter of Credit or other amount payable by the Borrowers hereunder or
under any other Loan Document, or payable by the Borrowers under any other
credit arrangement with any Bank.
12.1.2 Non-Payment of Other Debt. Any default shall occur under the terms
applicable to any Debt of either of the Borrowers or any Subsidiary in an
aggregate amount (for all such Debt so affected) exceeding $250,000 and such
default shall (a) consist of the failure to pay such Debt when due (subject to
any applicable grace period), whether by acceleration or otherwise, or (b)
accelerate the maturity of such Debt or permit the holder or holders thereof, or
any trustee or agent for such holder or holders, to cause such Debt to become
due and payable prior to its expressed maturity.
12.1.3 Other Material Obligations. Default in the payment when due, or in
the performance or observance of, any material obligation of, or condition
agreed to by, either of the
40
Borrowers or any Subsidiary with respect to any material purchase or lease of
goods or services where such default, singly or in the aggregate with other such
defaults might reasonably be expected to have a Material Adverse Effect (except
only to the extent that the existence of any such default is being contested by
either of the Borrowers or such Subsidiary in good faith and by appropriate
proceedings and appropriate reserves have been made in respect of such default).
12.1.4 Bankruptcy, Insolvency, etc. Either of the Borrowers or any
Subsidiary becomes insolvent or generally fails to pay, or admits in writing its
inability or refusal to pay, debts as they become due; or either of the
Borrowers any Subsidiary applies for, consents to, or acquiesces in the
appointment of a trustee, receiver or other custodian for either of the
Borrowers or such Subsidiary or any property thereof, or makes a general
assignment for the benefit of creditors; or, in the absence of such application,
consent or acquiescence, a trustee, receiver or other custodian is appointed for
either of the Borrowers or any Subsidiary or for a substantial part of the
property of any thereof and is not discharged within 60 days; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation proceeding
(except the voluntary dissolution, not under any bankruptcy or insolvency law,
of a Subsidiary), is commenced in respect either of the Borrowers or any
Subsidiary, and if such case or proceeding is not commenced by such Borrower or
Subsidiary, it is consented to or acquiesced in by such Borrower or Subsidiary,
or remains for 60 days undismissed; or the Borrowers or any Subsidiary takes any
corporate action to authorize, or in furtherance of, any of the foregoing.
12.1.5 Non-Compliance with Provisions of This Agreement. (a) Failure by
either of the Borrowers to comply with or to perform any covenant set forth in
Sections 10.6 through 10.11, 10.14 or 10.17 through 10.20; or (b) failure by
either of the Borrowers to comply with or to perform any other provision of this
Agreement (and not constituting an Event of Default under any of the other
provisions of this Section 12) and continuance of such failure described in this
clause (b) for 30 days (or, in the case of Section 10.13, five Business Days)
after notice thereof to such Borrower from the Agent, any Bank or the holder of
any Note.
12.1.6 Warranties. Any warranty made by either of the Borrowers herein is
breached or is false or misleading in any material respect, or any schedule,
certificate, financial statement, report, notice or other writing furnished by
either of the Borrowers to the Agent or any Bank in connection herewith is false
or misleading in any material respect on the date as of which the facts therein
set forth are stated or certified.
12.1.7 Pension Plans. (i) Institution of any steps by either of the
Borrowers or any other Person to terminate a Pension Plan if as a result of such
termination either of the Borrowers could be required to make a contribution to
such Pension Plan, or could incur a liability or obligation to such Pension
Plan, in excess of $250,000; (ii) a contribution failure occurs with respect to
any Pension Plan sufficient to give rise to a Lien under section 302(f) of
ERISA; or (iii) there shall occur any withdrawal or partial withdrawal from a
Multiemployer Pension Plan and the withdrawal liability (without unaccrued
interest) to Multiemployer Pension Plans as a result of such withdrawal
(including any outstanding withdrawal liability that either of the Borrowers and
the Controlled Group have incurred on the date of such withdrawal) exceeds
$250,000.
41
12.1.8 Judgments. Final non-appealable judgments which exceed an aggregate
of $250,000 shall be rendered against either of the Borrowers, or any Subsidiary
and shall not have been paid, discharged or vacated or had execution thereof
stayed pending appeal within 30 days after entry or filing of such judgments.
12.1.9 Invalidity of Guaranty, etc. The Guaranty shall cease to be in full
force and effect with respect to any Guarantor, any Guarantor shall fail
(subject to any applicable grace period) to comply with or to perform any
applicable provision of the Guaranty, or any Guarantor (or any Person by,
through or on behalf of such Guarantor) shall contest in any manner the
validity, binding nature or enforceability of the Guaranty with respect to such
Guarantor.
12.1.10 Invalidity of Collateral Documents, etc. Any Collateral Document
shall cease to be in full force and effect with respect to either of the
Borrowers or any Guarantor, either of the Borrowers or any Guarantor shall fail
(subject to any applicable grace period) to comply with or to perform any
applicable provision of any Collateral Document to which such entity is a party,
or either of the Borrowers or any Guarantor (or any Person by, through or on
behalf of such Borrower or Guarantor) shall contest in any manner the validity,
binding nature or enforceability of any Collateral Document.
12.1.11 Change in Control. (a) Any Person or group of Persons (within the
meaning of Section 13 or 14 of the Securities Exchange Act of 1934, but
excluding the executive managers of either of the Borrowers as of the Effective
Date) shall acquire beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) of 30% or more of the outstanding shares of voting
stock of either of the Borrowers; (b) during any 24-month period, individuals
who at the beginning of such period constituted the Board of Directors of either
of the Borrowers (together with any new directors whose election by said Board
of Directors or whose nomination for election was approved by a vote of at least
two-thirds of the directors who either were directors at beginning of such
period or whose election or nomination was previously so approved) cease for any
reason to constitute a majority of said Board of Directors; (c) a period of 60
consecutive days shall have elapsed during which any of the individuals named in
Schedule 12.1.11A shall have ceased to hold executive offices with the Borrowers
at least equal in seniority to such individual's present offices, as set out in
such Schedule 12.1.11, excluding any such individual who has been replaced by
another individual or individuals reasonably satisfactory to the Required Banks
(it being understood that any such replacement individual shall be deemed added
to Schedule 12.1.11 on the date of approval thereof by the Required Banks); or
(d) a period of 60 consecutive days shall have elapsed during which all of the
individuals named in Schedule 12.1.11B shall have ceased to be members of the
Board of Directors.
12.2 Effect of Event of Default. If any Event of Default described in
Section 12.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Notes and all other obligations
hereunder shall become immediately due and payable and the Borrowers shall
become immediately obligated to deliver to the Agent cash collateral in an
amount equal to the outstanding face amount of all Letters of Credit, all
without presentment, demand, protest or notice of any kind; and, if any other
Event of Default shall occur and be
42
continuing, the Agent (upon written request of the Required Banks) shall declare
the Commitments (if they have not theretofore terminated) to be terminated
and/or declare all Notes and all other obligations hereunder to be due and
payable and/or demand that the Borrowers immediately deliver to the Agent cash
collateral in amount equal to the outstanding face amount of all Letters of
Credit, whereupon the Commitments (if they have not theretofore terminated)
shall immediately terminate and/or all Notes and all other obligations hereunder
shall become immediately due and payable and/or the Borrowers shall immediately
become obligated to deliver to the Agent cash collateral in an amount equal to
the face amount of all Letters of Credit, all without presentment, demand,
protest or notice of any kind. The Agent shall promptly advise the Borrowers of
any such declaration, but failure to do so shall not impair the effect of such
declaration. Notwithstanding the foregoing, the effect as an Event of Default of
any event described in Section 12.1.1 or Section 12.1.4 may be waived by the
written concurrence of all of the Banks, and the effect as an Event of Default
of any other event described in this Section 12 may be waived by the written
concurrence of the Required Banks. Any cash collateral delivered hereunder shall
be held by the Agent (without liability for interest thereon) and applied to
obligations arising in connection with any drawing under a Letter of Credit.
After the expiration or termination of all Letters of Credit, such cash
collateral shall be applied by the Agent to any remaining obligations hereunder
and any excess shall be delivered to the Borrowers or as a court of competent
jurisdiction may elect.
SECTION 13 THE AGENT.
13.1 Appointment and Authorization. (a) Each Bank hereby irrevocably
(subject to Section 13.9) appoints, designates and authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
(b) Each Issuing Bank shall act on behalf of the Banks with respect to
any Letters of Credit issued by it and the documents associated therewith. Each
Issuing Bank shall have all of the benefits and immunities (i) provided to the
Agent in this Section 13 with respect to any acts taken or omissions suffered by
such Issuing Bank in connection with Letters of Credit issued by it or proposed
to be issued by it and the applications and agreements for letters of credit
pertaining to such Letters of Credit as fully as if the term "Agent", as used in
this Section 13, included such Issuing Bank with respect to such acts or
omissions and (ii) as additionally provided in this Agreement with respect to
the Issuing Banks.
13.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent
43
shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
13.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by either of the Borrowers or any
Subsidiary or Affiliate of either of the Borrowers, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of either of the Borrowers or any other party to any Loan Document to perform
its obligations hereunder or thereunder. No Agent-Related Person shall be under
any obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Borrowers or any of the Borrowers' Subsidiaries or Affiliates.
13.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Borrowers), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Banks as it deems appropriate and, if it
so requests, confirmation from the Banks of their obligation to indemnify the
Agent against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
13.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Event of Default or Unmatured Event of Default
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Banks, unless the Agent
shall have received written notice from a Bank or either of the Borrowers
referring to this Agreement, describing such Event of Default or Unmatured Event
of Default and stating that such notice is a "notice of default". The Agent will
notify the Banks of its receipt of any such notice. The Agent shall take such
action with respect to such Event of Default or Unmatured Event of Default as
may be requested by the Required Banks in accordance with Section 12; provided,
however, that unless and until the Agent has received any such request, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Event of Default or Unmatured Event of
Default as it shall deem advisable or in the
44
best interest of the Banks.
13.6 Credit Decision. Each Bank acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by the
Agent hereafter taken, including any review of the affairs of the Borrowers and
their Subsidiaries, shall be deemed to constitute any representation or warranty
by any Agent-Related Person to any Bank. Each Bank represents to the Agent that
it has, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrowers
and its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrowers hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Borrowers. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial or other condition or
creditworthiness of the Borrowers which may come into the possession of any of
the Agent-Related Persons.
13.7 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Banks shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of the Borrowers and without
limiting the obligation of the Borrowers to do so), pro rata, from and against
any and all Indemnified Liabilities; provided, however, that no Bank shall be
liable for any payment to the Agent-Related Person of any portion of the
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including reasonable fees of attorneys for the Agent
(including the allocable costs of internal legal services and all disbursements
of internal counsel)) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on behalf of the
Borrowers. The undertaking in this Section shall survive repayment of the Loans,
cancellation of the Notes, any foreclosure under, or any modification, release
or discharge of, any or all of the Collateral Documents, any termination of this
Agreement and the resignation or replacement of the Agent.
For the purposes of this Section 13.7, "Indemnified Liabilities" shall
mean: any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including
reasonable fees of attorneys for the Agent (including the
45
allocable costs of internal legal services and all disbursements of internal
counsel)) of any kind or nature whatsoever which may at any time (including at
any time following repayment of the Loan and the termination, resignation or
replacement of the Agent or the replacement of any Bank) be imposed on, incurred
by or asserted against any Agent-Related Person in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including (a) any
case, action or proceeding before any court or other governmental authority
relating to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general assignment for
the benefit of creditors, composition, marshalling of assets for creditors, or
other, similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; undertaken under U.S. Federal, state or
foreign law, including the Bankruptcy Code, and including any appellate
proceeding) related to or arising out of this Agreement or the Commitments or
the use of the proceeds thereof, whether or not any Agent-Related Person, any
Bank or any of their respective officers, directors, employees, counsel, agents
or attorneys-in-fact is a party thereto.
13.8 Agent in Individual Capacity. Key and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrowers and their
Subsidiaries and Affiliates as though Key were not the Agent hereunder and
without notice to or consent of the Banks. The Banks acknowledge that, pursuant
to such activities, Key or its Affiliates may receive information regarding the
Borrowers or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Borrowers or such Subsidiary) and
acknowledge that the Agent shall be under no obligation to provide such
information to them. With respect to their Loans, Key and its Affiliates shall
have the same rights and powers under this Agreement as any other Bank and may
exercise the same as though Key were not the Agent, and the terms "Bank" and
"Banks" include Key and its Affiliates, to the extent applicable, in their
individual capacities.
13.9 Successor Agent; Assignment of Agency. The Agent may, and at the
request of the Required Banks shall, resign as Agent upon 30 days' notice to the
Banks. If the Agent resigns under this Agreement, the Required Banks shall, with
(so long as no Event of Default exists) the consent of the Borrowers (which
shall not be unreasonably withheld or delayed), appoint from among the Banks a
successor agent for the Banks. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Banks and the Borrowers, a successor agent from among the
Banks. Upon the acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent, and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 13 and Sections 14.6 and 14.13 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Banks shall perform all of the duties of the Agent
46
hereunder until such time, if any, as the Required Banks appoint a successor
agent as provided for above. Notwithstanding the foregoing, however, Key may not
be removed as the Agent at the request of the Required Banks unless Key shall
also simultaneously be replaced as an "Issuing Bank" hereunder pursuant to
documentation in form and substance reasonably satisfactory to Key.
13.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees to deliver to the Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed
Internal Revenue Service ("IRS") Forms 1001 and W-8 before the
payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this Agreement
is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Bank, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year
of such Bank and in each succeeding taxable year of such Bank during
which interest may be paid under this Agreement, and IRS Form W-9;
and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the obligations of the Borrowers to such Bank, such Bank agrees to notify the
Agent of the percentage amount in which it is no longer the beneficial owner of
such obligations of the Borrowers hereunder. To the extent of such percentage
amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the obligations of the Borrowers to
such Bank hereunder, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
47
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding
tax.
(e) If the IRS or any other governmental authority of the United
States or any other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered or was not properly executed, or because such
Bank failed to notify the Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Bank shall indemnify the Agent fully for all amounts paid, directly
or indirectly, by the Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and expenses
(including reasonable fees of attorneys for the Agent (including the allocable
costs of internal legal services and all disbursements of internal counsel)).
The obligation of the Banks under this subsection shall survive the repayment of
the Loans, cancellation of the Notes, any termination of this Agreement and the
resignation or replacement of the Agent.
13.11 Collateral Matters. The Banks irrevocably authorize the Agent, at its
option and in its reasonable discretion, to release any Lien granted to or held
by the Agent under any Collateral Document (i) upon termination of the
Commitments and payment in full of all Loans and all other obligations of the
Borrowers hereunder and the expiration or termination of all Letters of Credit;
(ii) constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; or (iii) subject to Section
14.1, if approved, authorized or ratified in writing by the Required Banks. Upon
request by the Agent at any time, the Banks will confirm in writing the Agent's
authority to release articular types or items of collateral pursuant to this
Section 13.11.
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SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of the Agent, any Bank or any
other holder of a Note in the exercise of any right, power or remedy shall
operate as a waiver thereof, nor shall any single or partial exercise by any of
them of any right, power or remedy preclude other or further exercise thereof,
or the exercise of any other right, power or remedy. No amendment, modification
or waiver of, or consent with respect to, any provision of this Agreement or the
Notes shall in any event be effective unless the same shall be in writing and
signed and delivered by Banks having an aggregate Percentage of not less than
the aggregate Percentage expressly designated herein with respect thereto or, in
the absence of such designation as to any provision of this Agreement or the
Notes, by the Required Banks, and then any such amendment, modification, waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given. No amendment, modification, waiver or consent shall
change the Percentage of any Bank without the consent of such Bank. No
amendment, modification, waiver or consent shall (i) extend or increase the
amount of the Commitments, (ii) extend the date for payment of any principal of
or interest on the Loans or any fees payable hereunder, (iii) reduce the
principal amount of any Loan, the rate of interest thereon or any fees payable
hereunder, (iv) release any Guaranty (other than with respect to a Guarantor
which ceases to be a Subsidiary as a result of a transaction permitted
hereunder) or all or substantially all of the collateral granted under the
Collateral Documents or (v) reduce the aggregate Percentage required to effect
an amendment, modification, waiver or consent without, in each case, the consent
of all Banks. No provisions of Section 13 or other provision of this Agreement
affecting the Agent in its capacity as such shall be amended, modified or waived
without the consent of the Agent. No provision of this Agreement relating to the
rights or duties of an Issuing Bank in its capacity as such shall be amended,
modified or waived without the consent of such Issuing Bank.
14.2 Confirmations. The Borrowers and each holder of a Note agree from time
to time, upon written request received by it from the other, to confirm to the
other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans then outstanding under such Note.
14.3 Notices. Except as otherwise provided in Section 2.2, all notices
hereunder shall be in writing (including facsimile transmission) and shall be
sent to the applicable party at its address shown on Schedule 14.3 or at such
other address as such party may, by written notice received by the other
parties, have designated as its address for such purpose. Notices sent by
facsimile transmission shall be deemed to have been given when sent; notices
sent by mail shall be deemed to have been given three Business Days after the
date when sent by registered or certified mail, postage prepaid; and notices
sent by hand delivery or overnight courier service shall be deemed to have been
given when received. For purposes of Section 2.2, the Agent shall be entitled to
rely on telephonic instructions from any person that the Agent in good faith
believes is an authorized officer or employee of the Borrowers, and the
Borrowers shall hold the Agent and each Bank harmless from any loss, cost or
expense resulting from any such reliance. The Agent and the Banks may give
notice to both Borrowers in the same notice.
14.4 Computations. Where the character or amount of any asset or liability
or item of
49
income or expense is required to be determined, or any consolidation or other
accounting computation is required to be made, for the purpose of this
Agreement, such determination or calculation shall, to the extent applicable and
except as otherwise specified in this Agreement, be made in accordance with
GAAP, consistently applied; provided that if the Borrowers notify the Agent that
the Borrowers wish to amend any covenant in Section 10 to eliminate or to take
into account the effect of any change in GAAP on the operation of such covenant
(or if the Agent notifies the Borrowers that the Required Banks wish to amend
Section 10 for such purpose), then the Borrowers' compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant is amended in a manner satisfactory to the Borrowers and the
Required Banks.
14.5 Regulation U. Each Bank represents that it in good faith is not
relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for in
this Agreement.
14.6 Costs, Expenses and Taxes. The Borrowers agree to pay on demand all
reasonable out-of-pocket costs and expenses of Agent-Related Persons (including
the reasonable accounting fees, appraisal fees and fees and charges of counsel
for the Agent-Related Persons and of local counsel, if any, who may be retained
by said counsel) in connection with the preparation, execution, delivery and
administration of this Agreement (which fees shall be deemed paid in full upon
receipt by Key of $70,000.00), the other Loan Documents and all other documents
provided for herein or delivered or to be delivered hereunder or in connection
herewith (including any amendments, supplements or waivers to any Loan
Documents), and all reasonable out-of-pocket costs and expenses (including
reasonable accounting fees, appraisal fees and attorneys' fees, court costs and
other legal expenses and allocated costs of staff counsel) incurred by the
Agent-Related Persons and each Bank after an Event of Default in connection with
the enforcement of this Agreement, the other Loan Documents or any such other
documents, except as otherwise determined by a court of competent jurisdiction.
Each Bank agrees to reimburse the Agent for such Bank's pro rata share (based on
its respective Percentage) of any such costs and expenses of the Agent not paid
by the Borrowers. In addition, the Borrowers agree to pay, and to save the Agent
and the Banks harmless from all liability for, (a) any stamp or other taxes
(excluding income taxes and franchise taxes based on net income) which may be
payable in connection with the execution and delivery of this Agreement, the
borrowings hereunder, the issuance of the Notes or the execution and delivery of
any other Loan Document or any other document provided for herein or delivered
or to be delivered hereunder or in connection herewith and (b) any fees of the
Borrowers' auditors in connection with any reasonable exercise by the Agent and
the Banks of their rights pursuant to Section 10.2. All obligations provided for
in this Section 14.6 shall survive repayment of the Loans, cancellation of the
Notes and any termination of this Agreement.
14.7 Subsidiary References. The provisions of this Agreement relating to
Subsidiaries shall apply only during such times as either of the Borrowers has
one or more Subsidiaries.
14.8 Captions. Section captions used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.
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14.9 Assignments; Participations.
14.9.1 Assignments. Any Bank may, with the prior written consents of the
Borrowers and the Agent (which consents shall not be unreasonably delayed or
withheld), at any time assign and delegate to one or more commercial banks or
other Persons (any Person to whom such an assignment and delegation is to be
made being herein called an "Assignee"), all or any fraction of such Bank's
Loans and Commitments (which assignment and delegation shall be of a constant,
and not a varying, percentage of all the assigning Bank's Loans and Commitments)
in a minimum aggregate amount equal to the lesser of (i) the assigning Bank's
remaining aggregate Commitments and (ii) $2,000,000; provided, however, that (a)
no assignment and delegation may be made to any Person if, at the time of such
assignment and delegation, the Borrowers would be obligated to pay any greater
amount under Section 7.6 or Section 8 to the Assignee than the Borrowers are
then obligated to pay to the assigning Bank under such Sections (and if any
assignment is made in violation of the foregoing, the Borrowers will not be
required to pay the incremental amounts) and (b) the Borrowers and the Agent
shall be entitled to continue to deal solely and directly with such Bank in
connection with the interests so assigned and delegated to an Assignee until the
date when all of the following conditions shall have been met:
(x) five Business Days (or such lesser period of time as the Agent
and the assigning Bank shall agree) shall have passed after written notice
of such assignment and delegation, together with payment instructions,
addresses and related information with respect to such Assignee, shall have
been given to the Borrowers and the Agent by such assigning Bank and the
Assignee,
(y) the assigning Bank and the Assignee shall have executed and
delivered to the Borrowers and the Agent an assignment agreement reasonably
acceptable to the Agent (an "Assignment Agreement"), together with any
documents required to be delivered thereunder, which Assignment Agreement
shall have been accepted by the Agent, and
(z) the assigning Bank or the Assignee shall have paid the Agent a
processing fee of $2,500.
From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Bank hereunder, and (y) the assigning Bank, to the
extent that rights and obligations hereunder have been assigned and delegated by
it pursuant to such Assignment Agreement, shall be released from its obligations
hereunder. Within five Business Days after effectiveness of any assignment and
delegation, the Borrowers shall execute and deliver to the Agent (for delivery
to the Assignee and the Assignor, as applicable) a new Note in the principal
amount of the Assignee's Loan Commitment and, if the assigning Bank has retained
a Loan Commitment hereunder, a replacement Note in the principal amount of the
Loan Commitment retained by the assigning Bank (such Note to be in exchange for,
51
but not in payment of, the predecessor Note held by such assigning Bank). Each
such Note shall be dated the effective date of such assignment. The assigning
Bank shall ▇▇▇▇ the predecessor Note "exchanged" and deliver it to the
Borrowers. Accrued interest on that part of the predecessor Note being assigned
shall be paid as provided in the Assignment Agreement. Accrued interest and fees
on that part of the predecessor Note not being assigned shall be paid to the
assigning Bank. Accrued interest and accrued fees shall be paid at the same time
or times provided in the predecessor Note and in this Agreement. Any attempted
assignment and delegation not made in accordance with this Section 14.9.1 shall
be null and void.
Notwithstanding the foregoing provisions of this Section 14.9.1 or any
other provision of this Agreement, any Bank may at any time assign all or any
portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Bank from any of its obligations hereunder).
14.9.2 Participations. Any Bank may at any time sell to one or more
commercial banks or other Persons participating interests in any Loan owing to
such Bank, the Note held by such Bank, the Commitments of such Bank, the direct
or participation interest of such Bank in any Letter of Credit or any other
interest of such Bank hereunder (any Person purchasing any such participating
interest being herein called a "Participant"); provided that any Bank selling
any such participating interest shall give notice thereof to the Borrowers. In
the event of a sale by a Bank of a participating interest to a Participant, (x)
such Bank shall remain the holder of its Note for all purposes of this
Agreement, (y) the Borrowers and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
hereunder and (z) all amounts payable by the Borrowers shall be determined as if
such Bank had not sold such participation and shall be paid directly to such
Bank. No Participant shall have any direct or indirect voting rights hereunder
except with respect to any of the events (excluding the events described in
clause (v) thereof) described in the penultimate sentence of Section 14.1. Each
Bank agrees to incorporate the requirements of the preceding sentence into each
participation agreement which such Bank enters into with any Participant. The
Borrowers agree that if amounts outstanding under this Agreement and the Notes
are due and payable (as a result of acceleration or otherwise), each Participant
shall be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement, any Note and with respect to any
Letter of Credit to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement or such Note;
provided that such right of setoff shall be subject to the obligation of each
Participant to share with the Banks, and the Banks agree to share with each
Participant, as provided in Section 7.5. The Borrowers also agree that each
Participant shall be entitled to the benefits of Section 7.6 and Section 8 as if
it were a Bank (provided that no Participant shall receive any greater
compensation pursuant to Section 7.6 or Section 8 than would have been paid to
the participating Bank if no participation had been sold).
14.10 Governing Law. This Agreement and each Note shall be a contract made
under and governed by the internal laws of the State of New York. Whenever
possible each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
52
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Borrowers and rights of the Agent, the Banks
and any other holder of a Note expressed herein or in any other Loan Document
shall be in addition to and not in limitation of those provided by applicable
law.
14.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. When
counterparts executed by all of the parties hereto shall have been lodged with
the Agent (or, in the case of any Bank as to which an executed counterpart shall
not have been so lodged, the Agent shall have received confirmation from such
Bank of execution of a counterpart hereof by such Bank), this Agreement shall
become effective as of the date hereof, and at such time the Agent shall notify
the Borrowers and each Bank.
14.12 Successors and Assigns. This Agreement shall be binding upon the
Borrowers, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Borrowers, the Banks and the Agent and the
successors and assigns of the Banks and the Agent.
14.13 Indemnification by the Borrowers.
(a) In consideration of the execution and delivery of this Agreement
by the Agent and the Banks and the agreement to extend the Commitments provided
hereunder, the Borrowers hereby agree to indemnify, exonerate and hold the
Agent, each Bank and each of the officers, directors, employees, Affiliates and
agents of the Agent and each Bank (each a "Bank Party") free and harmless from
and against any and all actions, causes of action, suits, losses, liabilities,
damages and expenses, including reasonable attorneys' fees and charges and
allocated costs of staff counsel (collectively, for purposes of this Section
14.13, called the "Indemnified Liabilities"), incurred by the Bank Parties or
any of them as a result of, or arising out of, or relating to (i) any tender
offer, merger, purchase of stock, purchase of assets or other similar
transaction financed or proposed to be financed in whole or in part, directly or
indirectly, with the proceeds of any of the Loans, (ii) the use, handling,
release, emission, discharge, transportation, storage, treatment or disposal of
any hazardous substance at any property owned or leased by the Borrowers or any
Subsidiary, (iii) any violation of any Environmental Laws with respect to
conditions at any property owned or leased by the Borrowers or any Subsidiary or
the operations conducted thereon, (iv) the investigation, cleanup or remediation
of offsite locations at which the Borrowers or any Subsidiary or their
respective predecessors are alleged to have directly or indirectly disposed of
hazardous substances or (v) the execution, delivery, performance or enforcement
of this Agreement or any other Loan Document by any of the Bank Parties, except
for any such Indemnified Liabilities arising on account of any such Bank Party's
gross negligence or willful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrowers hereby agree to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. Nothing set
forth above shall be construed to relieve any Bank Party from any obligation it
may have under this Agreement.
(b) All obligations provided for in this Section 14.13 shall survive
repayment
53
of the Loans, cancellation of the Notes, any foreclosure under, or any
modification, release or discharge of any or all of the Collateral Documents and
any termination of this Agreement.
14.14 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION,
IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS
SET FORTH ABOVE. THE BORROWERS FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF NEW YORK. THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH
COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWERS HAVE OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE
BORROWERS HEREBY IRREVOCABLY WAIVE SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
14.15 Waiver of Jury Trial. EACH OF THE BORROWERS, THE AGENT AND EACH BANK
HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
54
In witness whereof, the parties hereto have executed this
instrument as of the day and year first above written.
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
By:
-----------------------------
Name:
Title:
BOGEN COMMUNICATIONS, INC.
By:
-----------------------------
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
By:
-----------------------------
Name:
Title:
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ )
) ss.:
COUNTY OF )
On this ___ day of April, 1998, before me the subscriber personally
appeared ______________, who being by me duly sworn, did depose and say; that he
resides at ___________________, that he is ________________ of Bogen
Communications International, Inc., the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.
-----------------------------------
NOTARY PUBLIC
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this ___ day of April, 1998, before me the subscriber personally
appeared ______________, who being by me duly sworn, did depose and say; that he
resides at ______________________, that he is _________________ of Bogen
Communications, Inc., the corporation described in and which executed the
foregoing instrument; and that he signed his name thereto by order of the Board
of Directors of said corporation.
-----------------------------------
NOTARY PUBLIC
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this ___ day of April, 1998, before me the subscriber personally
appeared _______________, who being by me duly sworn, did depose and say; that
he resides at ____________________, that he is ______________ of KeyBank
National Association, the corporation described in and which executed the
foregoing instrument; and that he signed his name thereto by order of the Board
of Directors of said corporation.
-----------------------------------
NOTARY PUBLIC
56
SCHEDULE 1.1
PRICING SCHEDULE
The Prime Rate Margin and the Eurodollar Margin shall be determined in
accordance with the table below and the other provisions of this Schedule 1.1.
▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇
Eurodollar Margin 2.00% 1.75% 1.50% 1.25%
Prime Rate Margin 0 0 0 0
Level I applies at any time when Level II, Level III or Level IV do not
apply.
Level II applies when (a) combined revenue of the Borrowers and their
Subsidiaries over the prior 4 Fiscal Quarters exceeds $50,000,000.00, (b) the
Leverage Ratio is greater than 2.25 to 1 but equal to or less than 2.75 to 1 and
(c) the Interest Coverage Ratio is less than 4.50 to 1 but equal to or greater
than 3.50 to 1.
Level III applies when (a) combined revenue of the Borrowers and their
Subsidiaries over the prior 4 Fiscal Quarters exceeds $50,000,000.00, (b) the
Leverage Ratio is greater than 1.0 to 1 but equal to or less than 2.25 to 1.0
and (c) the Interest Coverage Ratio is less than 7.00 to 1 but equal to or
greater than 4.50 to 1.
Level IV applies when (a) combined revenue of the Borrowers and their
Subsidiaries over the prior 4 Fiscal Quarters exceeds $50,000,000.00, (b) the
Leverage Ratio is equal to or less than 1.0 to 1 and (c) the Interest Coverage
Ratio is equal to or greater than 7.00 to 1.
For the purposes of this Schedule 1.1, the Leverage Ratio and the Interest
Coverage Ratio shall be calculated without regard to Speech Design.
The applicable Level shall be adjusted, to the extent applicable, 60 days
(or, in the case of the last Fiscal Quarter of any Fiscal Year, 105 days) after
the end of each Fiscal Quarter based on the Ratios as of the last day of such
Fiscal Quarter; provided that if the Borrowers fail to deliver the financial
statements required by Section 10.1.1 or 10.1.2, as applicable, and the related
certificate required by Section 10.1.3 by the 60th day (or, if applicable, the
105th day) after any Fiscal Quarter, Level I shall apply until such financial
statements are delivered.
1.1-1
SCHEDULE 2.1
BANKS AND PERCENTAGES
Portion of
Bank Commitment Amount Percentage
---- ----------------- ----------
KeyBank National Association $27,000,000 100%
TOTALS $27,000,000 100%
2.1-1
SCHEDULE 9.6(a)
LITIGATION AND CONTINGENT LIABILITIES
The Borrowers and Subsidiaries develop and utilize technology for
substantially all of the products they offer and intend to offer and have, from
time to time, been the subject of infringement claims related thereto. It is
difficult to predict the outcome of such litigation and the amount of damages
which may be awarded in these types of cases. The Borrowers and Subsidiaries do
not believe that the results of any pending or threatened litigation related to
the Borrowers' and Subsidiaries' technology or use thereof will have a material
adverse effect on their financial position.
The Borrowers and Subsidiaries are also, from time to time, party to
litigation, which may or may not be covered by insurance, arising in the
ordinary course of business. The Borrowers and Subsidiaries do not believe the
results of such litigation, even if the outcome were unfavorable to the
Borrowers and Subsidiaries, would have a material adverse effect on their
financial position.
The Borrowers and Subsidiaries are not aware of any material pending or
threatened legal proceedings to which they are a party or of which any of their
property is subject.
9.6(a)-1
SCHEDULE 9.6(b)
CONTINGENT PAYMENTS
None
9.6(b)-1
SCHEDULE 9.8
SUBSIDIARIES
Bogen Communications International, Inc. owns 99% of Bogen Corporation.
Bogen Communications International, Inc. owns 67.85% of Speech Design GmbH.
Bogen Corporation owns 100% of Bogen Communications, Inc.
Bogen Communications, Inc. owns 100% of New England Audio Resource Corp.
Bogen Communications, Inc. owns 100% of Bogen Communications (Barbados), Inc.
9.8-1
SCHEDULE 9.15
ENVIRONMENTAL MATTERS
None
9.15-1
SCHEDULE 9.17
COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES
9.17-1
SCHEDULE 10.8
EXISTING LIENS
1. Summit Leasing Corporation
UCC-1 Financing Statement 002592
2. AT&T Capital Leasing Services, Inc.
UCC-1 Financing Statement 1815552
3. Summit Leasing Corporation
UCC-1 Financing Statement 1772735
4. Summit Leasing Corporation
UCC-1 Financing Statement 1808877
10.8-1
SCHEDULE 12.1.11A
EXECUTIVES
Name Current Office(s)
Bogen Communications International, Inc.
Bogen Corporation
Bogen Communications, Inc.
▇▇▇▇▇▇▇▇ ▇▇▇▇ Chief Executive Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ President
▇▇▇▇ ▇. ▇▇▇▇▇ Senior Vice President Finance
and Business Development,
Secretary, Chief Financial
Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Assistant Secretary
New England Audio Resource Corporation
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ President
▇▇▇▇ ▇. ▇▇▇▇▇ Treasurer, Secretary
12.1.11A-1
SCHEDULE 12.1.11B
DIRECTORS
Bogen Communications International, Inc.
▇▇▇▇ ▇▇▇▇▇: Co-chairman, Executive Committee
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇: Co-Chairman, Executive Committee
▇▇▇▇▇▇▇▇ ▇▇▇▇: Executive Committee
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Zivi Nedivi
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Bogen Corporation
Bogen Communications, Inc.
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
New England Audio Resource Corporation
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
12.1.11B-1
SCHEDULE 14.3
ADDRESSES FOR NOTICES
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
BOGEN COMMUNICATIONS INC.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
KEYBANK NATIONAL ASSOCIATION
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
14.3-1