1
LOAN AGREEMENT
$40,000,000 REVOLVING LINE OF CREDIT
FROM
BANK ONE, COLORADO, NA,
COBANK, ACB,
AND
INTRUST BANK, NA
TO
T-NETIX, INC.
SEPTEMBER 9, 1999
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TABLE OF CONTENTS
Page
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ARTICLE 1. INTERPRETATIONS 1
1.1 Definitions 1
1.2 Accounting Terms and Determinations 9
ARTICLE 2. THE LOAN 10
2.1 The Loan 10
2.2 Repayments by Borrower 12
2.3 Automatic Repayment 13
2.4 Payments to the Lenders 13
2.5 Fees 13
2.6 Letters of Credit 14
ARTICLE 3. CONDITIONS OF LENDING 16
3.1 Advance 16
ARTICLE 4. SECURITY 18
ARTICLE 5. REPRESENTATIONS AND WARRANTIES 18
5.1 Existence 18
5.2 Collateral 19
5.3 Pledged Stock 19
5.4 Noncontravention 19
5.5 Third-Party Authorization 20
5.6 Authorization; Binding Effect 20
5.7 Litigation 20
5.8 Taxes 20
5.9 Liens 20
5.10 Use of Proceeds 20
5.11 Other Obligations 20
5.12 Full Disclosure 21
5.13 Margin Stock 21
5.14 ERISA Compliance 21
5.15 Compliance with Laws 22
5.16 Financial Condition 22
5.17 Environmental Matters 23
5.18 Investment Company Act; Etc 23
5.19 Labor Matters 23
5.20 No Burdensome Agreements 23
5.21 Licenses 23
5.22 Patents, Copyrights, Etc 24
5.23 Subsidiaries and Affiliates 24
5.24 Partnerships and Joint Ventures 24
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ARTICLE 6. AFFIRMATIVE COVENANTS 24
6.1 Payment and Performance of Loan 24
6.2 Financial Statements 24
6.3 Preservation of Existence, Etc 25
6.4 Maintenance of Property 25
6.5 Payment of Other Obligations 25
6.6 Insurance 26
6.7 Inspection of Property, Books and Records; Meeting
with the Lenders 27
6.8 Notices 27
6.9 Compliance with Laws 28
6.10 Further Assurances 28
6.11 Financial Covenants 29
6.12 Principal Bank Accounts 30
6.13 Loan Expenses 30
6.14 Additional Security 30
6.15 Interest Rate Risk Hedge 30
6.16 SpeakEZ Expenditure 30
6.17 Federal and Other Governmental Contracts 30
ARTICLE 7. NEGATIVE COVENANTS 30
7.1 Indebtedness 31
7.2 Loans and Advances 31
7.3 Investments and New Business 31
7.4 Liens 31
7.5 Stock, Mergers and Consolidations 32
7.6 Dividends and Distributions 32
7.7 Burdensome Undertakings 32
7.8 Disposition of Assets 32
7.9 Use of Proceeds 32
7.10 Transactions with Affiliates 32
7.11 ERISA 33
7.12 Amendments to Organizational Documents 33
ARTICLE 8. EVENTS OF DEFAULT 33
8.1 Nonpayment 34
8.2 Other Defaults 34
8.3 Representation or Warranty 34
8.4 Other Nonpayment 34
8.5 Bankruptcy. Etc 34
8.6 ERISA 34
8.7 Loan Documents 35
8.8 Judgments 35
8.9 Insolvency 35
8.10 Loan Documents 35
8.11 Change in Control 35
8.12 Material Adverse Change 36
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ARTICLE 9. REMEDIES 36
9.1 Automatic Acceleration of Loans 36
9.2 Optional Acceleration of Loans 36
9.3 Setoff 37
9.4 Expenses 37
ARTICLE 10. THE AGENT 38
10.1 Appointment 38
10.2 Delegation of Duties 38
10.3 Exculpatory Provisions 38
10.4 Reliance by Agent 39
10.5 Notice of Default 39
10.6 Nonreliance on Agent and Other Lenders 39
10.7 Indemnification 40
10.8 Agent and Lenders in Their Individual Capacity 40
10.9 Successor Agent 40
10.10 Lender's Percentage Interest in the Loans 41
10.11 Sharing of Payments 41
10.12 Agreement of Lenders 41
ARTICLE 11. RIGHTS AND DUTIES OF LENDERS 42
11.1 Assignments and Participations 42
11.2 Reliance Upon Attorneys 42
11.3 Acceptance and Consent by the Lenders 43
ARTICLE 12. MISCELLANEOUS 43
12.1 No Waiver; Cumulative Remedies 43
12.2 Notices 43
12.3 Counterpart Execution 44
12.4 Governing Law; Entire Agreement 44
12.5 Amendments and Waivers 45
12.6 Costs, Expenses and Indemnity 45
12.7 Inconsistent Provisions; Severability 46
12.8 Incorporation of Exhibits and Schedules 46
12.9 Amendment of Defined Instruments 46
12.10 References and Titles 46
12.11 Usury 46
12.12 Waiver of Right to Trial by Jury 46
12.13 Successors and Assigns 47
12.14 Term of Agreement 47
12.15 Jurisdiction 47
LIST OF EXHIBITS 52
EXHIBIT A -- REQUEST FOR ADVANCE FORM 53
EXHIBIT B -- ORGANIZATIONAL CHART 55
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement"), dated as of September 9, 1999, is
by and among, T-NETIX, INC. a Colorado corporation, ("Borrower"), Lenders (as
defined below) and BANK ONE, COLORADO, NA, a national banking association, as
agent for the Lenders (in such capacity, the "Agent").
In consideration of the mutual covenants set forth in this Agreement and
the other Loan Documents, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Borrower, Lenders, and Agent
agree as follows:
ARTICLE 1.
INTERPRETATIONS
1.1 Definitions. As used herein, each of the following capitalized terms shall
have the meaning given it in this Section 1.1:
"Accommodation Obligation" means as applied to any Person any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") or to hold harmless the
owner of such primary obligation against loss in respect thereof, whether direct
or indirect in respect of Indebtedness of others, including any obligation to
supply finds to or in any manner to invest in, directly or indirectly, the
debtor, to purchase indebtedness, or to assure the owner of indebtedness against
loss, through an agreement to purchase goods, supplies or services for the
purpose of enabling the debtor to make payment of the indebtedness held by such
owner or otherwise, and the obligations to reimburse the issuer in respect of
any letters of credit. The amount of any Accommodation Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Accommodation Obligation is made or, if not
stated or determinable, the maximum anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by the
Agent.
"Adjusted LIBOR Rate" means the LIBOR Rate, plus the LIBOR Spread.
"Advance" means any advance of the Loan and any funds expended with respect
to the Loan which are reimbursable or otherwise payable by Borrower under this
Agreement or any other Loan Document.
"Advance Date" means the date that any Advance is advanced to Borrower.
"Affiliate" means as to any Person, each other Person which, directly or
indirectly (through one or more intermediaries or otherwise), is in control of,
is controlled by, or is under common control with, such Person. For purposes of
this definition, "control," when used with respect to any specified Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise.
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"Agent" means Bank One, Colorado, NA in its capacity as agent for the
Lenders, or any successor agent appointed pursuant to the provisions of Section
10.9.
"Agreement Concerning Year 2000 Compliance" means the Agreement Concerning
Year 2000 Compliance executed in connection with the Loan.
"Authorized Officer" means the chief executive officer, the president, any
vice president, the chief financial officer, or the treasurer, or any other
officer having substantially the same authority and responsibility.
"Base Rate" means a per-annum interest rate equal to the Prime Rate. The
Base Rate is adjustable the day of any change in the Prime Rate, regardless of
whether Borrower has notice of such change.
"Base Rate Advance" means any Advance which bears interest at the Base
Rate.
"Business Day" means a day other than Saturdays or Sundays (a) on which all
of the Lenders are open for business and (b) in connection with any request for
a LIBOR Advance, a day on which commercial banks are open for business with the
public in Denver, Colorado, or New York, New York, and on which commercial banks
in the City of London, England, are open for dealings in U.S. dollar deposits in
the London Interbank Market.
"Closing Date" means September 9, 1999.
"Code" means the Internal Revenue Code, as amended, together with the
regulations promulgated thereunder.
"Collateral" means all tangible or intangible, real or personal property
now or at any time hereafter pledged pursuant to the Security Documents.
"Consolidated" means the consolidation of any Person, in accordance with
GAAP, with its properly consolidated Subsidiaries. References herein to
Borrower's financial statements, financial position, financial condition,
liabilities, etc. refer to the consolidated financial statements, position,
condition, liabilities, etc. of Borrower and their properly consolidated
Subsidiaries.
"Controlled Group" means the Borrower and all Persons (whether or not
incorporated) under common control or treated as a single employer with Borrower
pursuant to Section 414(b),(c), (m) or (o) of the Code.
"Default Rate"means the otherwise applicable interest rate (determined in
accordance with the Notes), p1j five percent (5%).
"EBITDA" for a period means, the sum for Borrower and Subsidiaries of (i)
pretax earnings from continuing operations, (ii) Interest Expense and (iii)
depreciation, depletion, and amortization of tangible and intangible assets,
before (a) special extraordinary gains, and (b) miscellaneous gains for such
period, computed and calculated on a Consolidated basis in accordance with GAAP.
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"Environmental Laws" has the meaning set forth in Section 5.17.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with the regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with Borrower within the meaning of Section 414(b), 414(c)
or 414(m) of the Code.
"ERISA Event" means (a) a Reportable Event with respect to a Qualified Plan
or a Multiemployer Plan; (b) a withdrawal by Borrower or any ERISA Affiliate
from a Qualified Plan subject to Section 4063 of ERISA during a plan year in
which it was a substantial employer (as defined in Section 400 l(a)(2) of
ERISA); (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate
from a Multiemployer Plan; (d) the filing of a notice of intent to terminate,
the treatment of a plan amendment as a termination under Section 4041 or 4041A
of ERISA or the commencement of proceedings by the PBGC to terminate a Qualified
Plan or Multiemployer Plan subject to Title IV of ERISA; (e) a failure by
Borrower or any member of the Controlled Group to make required contributions to
a Qualified Plan or Multiemployer Plan; (f) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Qualified
Plan or Multiemployer Plan; (g) the imposition of any liability under Title IV
of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon Borrower or any ERISA Affiliate; (h) an application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the
Code with respect to any Plan; (i) a non-exempt prohibited transaction occurs
with respect to any Plan for which Borrower or any Subsidiary of Borrower may be
directly or indirectly liable; or a violation of the applicable requirements of
Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a)
of the Code by any fiduciary or disqualified person with respect to any Plan for
which Borrower or any Subsidiary may be directly or indirectly liable.
"ERISA Plan" means any pension benefit plan subject to Section 302 of ERISA
or Title IV of ERISA maintained by Borrower or any member of a controlled group
(as defined in Section 4001 (a)(14) of ERISA).
"Event of Default" shall have the meaning set forth in Article 8.
"Existing Letter of Credit" shall have the meaning set forth in Section
2.6(a) below.
"Federal Funds Rate" means, on any day, a per-annum interest rate equal to
the effective closing rate (rounded upwards, if necessary, to the next higher
1/100 of 1%) for the previous Business Day as reported by Federal Reserve Bank
of New York as the "federal funds rate" for such previous Business Day, or if
such rate is not so published or reported, the average of the quotations
(rounded upwards, if necessary, to the next higher 1/100 of 1%) for such
Business Day received by Agent from three federal funds brokers of recognized
standing selected by it. The Federal Funds Rate for any day that is not a
Business Day will be equal to the Federal Funds
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Rate for the nearest preceding Business Day. The Federal Funds Rate is
adjustable the day of any change in such rate, regardless of whether Borrower
has notice of such change.
"Fixed Charges" means interest expense for Borrower and Subsidiaries,
calculated on a Consolidated basis in accordance with GAAP; plus long-term debt
(including capital leases) principal payments, earn out payments, and redemption
payments; plus all other payments of principal, interest and other amounts if
the failure to pay such amounts would have a material adverse impact on any
Borrower or its operations, as reasonably determined by Agent -- calculated in
each case on the basis of the four Quarters immediately preceding the date of
calculation.
"Fixed Charge Coverage Ratio" means the ratio of (a) Unadjusted EBITDA, to
(b) Fixed Charges.
"GAAP" means generally accepted accounting principles and practices as
consistently applied (except as otherwise required due to changes in GAAP) by
Borrower and certified to by the firm of independent certified public
accountants regularly employed as Borrower's auditors, such principles and
practices at all times being consistent with requirements of the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants in effect from time to time, as applicable to the nature of the
business conducted by Borrower.
"Guaranties" means each and all guaranty agreements executed by
Subsidiaries in connection with the Loan.
"Indebtedness" of any Person means, without duplication, all obligations,
contingent or otherwise, that should in accordance with GAAP be classified upon
such Person's balance sheet as liabilities, or to which reference should be made
by footnotes thereto, including in any event and whether or not so classified:
(a) all debt or similar monetary obligations, whether direct or indirect; (b)
all liabilities secured by any mortgage, pledge, security interest, lien, charge
or other encumbrance existing on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed; (c) all
Accommodation Obligations, and (d) all obligations of any nature whatsoever
arising out of or in connection with any Interest Rate Agreement.
"Initial Financial Statements" means the financial statements of Borrower
for the period ending December 31, 1998.
"Interest Expense" means the Borrower's and Subsidiaries total gross
interest expense as calculated on a Consolidated basis and in accordance with
GAAP (excluding interest income), and shall in any event include, without
limitation, (i) interest expensed (whether or not paid) on all Indebtedness,
(ii) the amortization of debt discounts, (iii) the amortization of all fees
payable in connection with the incurrence of Indebtedness to the extent included
in interest expense, and (iv) the portion of any capital lease obligation
allocable to interest expense.
"Interest Period" has the meaning set forth in the Notes.
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"JMS Acquisition" means the pending asset purchase of a jail management
system by T-NETIX JMS Corporation ("T-NETIX JMS").
"Letters of Credit" means those certain irrevocable stand-by letters of
credit issued by Agent pursuant to Section 2.6 below, including, without
limitation, the existing Letter of Credit.
"Letters of Credit Liability" means the maximum amount available to be
drawn under the Letters of Credit, plus the amount of any unreimbursed
obligation for a draw on any Letter of Credit under Section 2.6 below.
"Lenders" means Bank One, Colorado, NA, CoBank, ACB ("CoBank"), and Intrust
Bank, NA ("Intrust"), together with any other party that acquires an interest in
the Loan and is designated as a Lender pursuant to an amendment to this
Agreement.
"LIBOR Rate" has the meaning set forth in the Notes.
"LIBOR Rate Advance" means an Advance of the Loan which initially bears
interest at the LIBOR Rate.
"LIBOR Spread" means a percentage, which shall be adjusted five Business
Days after each receipt by Agent of the Quarterly Compliance Certificate for the
applicable Quarter as required by Section 6.2 below, determined by reference to
the following table based on ratio of Total Debt to Unadjusted EBITDA:
Ratio of Total Debt
to Unadjusted EBITDA LIBOR Spread
3.51 and 5.00 2.75%
3.01 and 3.50 2.50%
2.51 and 3.00 2.25%
1.51 and 2.50 2.00%
1.50 1.75%
"Liens" means any assignment, mortgage, pledge, security interest, lien or
other encumbrance.
"Loan" means all commitments or obligations of Lenders to extend credit to
Borrower pursuant to the terms of this Agreement and all other Loan Documents
and all amounts evidenced at any time and from time to time by the Notes,
including without limitation, all Advances.
"Loan Documents" means this Agreement, the Notes, the Security Documents,
and all other documents executed and delivered by or on behalf of Borrower to
the Agent or the Lenders in connection herewith or therewith, as any such
documents have been or may be expanded, renewed, restated, modified, or amended
at any time and from time to time.
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"Loan Expenses" means all charges, costs, fees and expenses of any nature
whatsoever of or incurred by the Agent (or after an Event of Default, the
Lenders) at any time in connection with the making, administration,
modification, amendment, repayment or enforcement of the Loan or the Loan
Documents, including, but not limited to, all recording and filing fees, charges
and taxes (other than income taxes on the income of Lenders), appraisal fees,
environmental audits, environmental audit review, fees for consultants retained
by the Agent in connection with the administration of the Loan or the Loan
Documents, title insurance charges, endorsements and premiums, document
preparation fees, fees and disbursements of the Agent's attorneys and their
staff, search fees and credit reporting and investigation fees; including,
without limitation, all of the foregoing whether paid to third parties or
incurred by the Agent's own staff or employees, in which event the foregoing
shall be reimbursed to the Agent at rates comparable to rates that would have
been paid to third parties for rendering the same services to the Agent.
"Loan Fee" means an amount equal to $80,000, payable on or before the
Closing Date.
"Loan Period" means the period from the date of this Agreement to and
including the Maturity Date, or such earlier date on which the Notes become due
and payable.
"Maturity Date" means the earlier of (i) acceleration of the Loan, or (ii)
September 9, 2001, subject to extension as provided in Section 2.1(h) below.
"Maximum Loan Amount" means $40,000,000, minus the Letters of Credit
Liability.
"Multiemployer Plan" means a "multiemployer plan" (within the meaning of
Section 400 1(a)(3) of ERISA) and to which any member of the Controlled Group
makes, is making or is obligated to make contributions or, during the preceding
three calendar years, has made, or been obligated to make, contributions.
"Notes" means the promissory notes made by Borrower and evidencing the
Loan, as they may be amended, restated, extended or supplemented from time to
time and all notes given in substitution therefor.
"Obligations" means all indebtedness, obligations and liabilities of
Borrower or its Subsidiaries to any of the Lenders or the Agent existing on the
date of this Agreement or arising hereafter, direct or indirect, joint or
several, absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract, operation of law or
otherwise, arising or incurred under this Agreement or any of the other Loan
Documents or in respect of any of the Loans made or any of the Notes or other
instruments at any time evidencing any of the foregoing.
"Ordinary Course of Business" means, in respect of any transaction, the
ordinary course of such Person's business, substantially as conducted by such
Person prior to or as of the date hereof, and undertaken by such Person in good
faith and not for purposes of evading any covenant or restriction in any Loan
Document.
"Percentage Interest" means, with respect to each of the Lenders, subject
to the provisions of Section 10.10 below, the percentage interest set forth
below:
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Percentage
Lender Interest
Agent 62.5%
CoBank 25.0%
Intrust 12.5%
Notwithstanding anything to the contrary contained in this Agreement, the
Percentage Interest of a Lender that sells a participation in the Loan shall be
deemed to include the Percentage Interest of the participating bank (and the
participating bank shall be deemed to have no Percentage Interest) for all
purposes under this Agreement.
"Person" means an individual, partnership, corporation, association,
limited liability company, business trust, joint stock company, trust or trustee
thereof, unincorporated association, joint venture, governmental unit or any
agency or subdivision thereof, or any other legally recognizable entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which Borrower or any member of the Controlled Group sponsors or maintains or to
which Borrower or any member of the Controlled Group makes, is making or is
obligated to make contributions currently or during the past five calendar
years, and includes any Multiemployer Plan or Qualified Plan.
"Pledge Agreements" means all pledges given by Borrower to Agent, as agent
for Lenders, in form and substance satisfactory to Agent, as security for the
Loan, whether now existing or hereafter given, including without limitation, all
pledges of the capital stock of Subsidiaries and Affiliates of Borrower, as all
such pledges have been or may be renewed, modified, extended, restated or
amended at any time and from time to time.
"Pledged Stock" means the stock certificates pledged under the Pledge
Agreements.
"Prime Rate" has the meaning set forth in the Notes.
"Primary States" means Colorado, Texas, New Jersey, Maryland,
Massachusetts, Washington, Virginia, Pennsylvania, Oklahoma and Florida.
"Qualified Plan" means a pension plan (as defined in Section 3(2) of ERISA)
intended to be tax-qualified under Section 401(a) of the Code and which any
member of the Controlled Group sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding period covering at least five plan
years, but excluding any Multiemployer Plan.
"Quarter" means, and "Quarterly" refers to, each of the following periods
in any given year: January 1 through March 31, April 1 through June 30, July 1
through September 30, and October 1 through December 31.
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"Reportable Event" means, as to any Plan, (a) any of the events set forth
in Section 4043(b) of ERISA or the regulations thereunder, other than any such
event for which the thirty-day notice requirement under ERISA has been waived in
regulations issued by the PBGC, (b) a withdrawal from a Plan described in
Section 4063 of ERISA, or (c) a cessation of operations described in Section
4062(e) of ERISA.
"Request for Advance" means a request from Borrower for an Advance of the
Loan in the form of Exhibit A attached hereto.
"Required Lenders" means, at any time, one or more Lenders holding at least
60 percent of the outstanding principal balance of Loan, determined based on the
Lenders' respective Percentage Interests from time to time, subject to the
provisions set forth in the definition "Percentage Interest" with respect to the
treatment of loan participations permitted pursuant to Section 11.1.
"Security Agreements" means security agreements, chattel mortgages, pledges
or similar documents given by Subsidiaries in favor of the Agent as agent for
the Lenders, whether now existing or hereafter given, in form and substance
acceptable to Agent covering, among other things, all personal property of the
Subsidiaries, including, without limitation, all accounts, equipment, fixtures,
inventory, general intangibles, contract rights and all other personal property
of Subsidiaries and all other collateral described therein, as they may be
expanded, restated, modified or amended at any time and from time to time.
"Security Documents" means the Security Agreements, the Guaranties, the
Pledge Agreements and all other security agreements, deeds of trust, mortgages,
chattel mortgages, assignments, pledges, guaranties, financing statements,
continuation statements, extension agreements and other agreements or
instruments now or hereafter delivered by Borrower or any Subsidiary or any
Subsidiary of Borrower to the Agent on behalf of the Lenders or to the Lenders
in connection with this Agreement or any transaction contemplated hereby to
secure or guarantee the payment of any part of the Obligations or the
performance of any other duties and obligations of Borrower or Subsidiaries
under the Loan Documents, as any such documents may be expanded, renewed,
restated, modified, or amended at any time and from time to time.
"Subsidiary" means any corporation, association, partnership, joint
venture, or other business or corporate entity, enterprise or organization which
is directly or indirectly controlled by or owned 51% or more by Borrower,
including, without limitation, Gateway Technologies, Inc. ("Gateway"), T-NETIX
Monitoring Corporation ("Monitoring"), SpeakEZ, Inc. ("SpeakEZ"), and T-NETIX
JMS.
"Total Debt" means all Indebtedness of Borrower and Subsidiaries,
including, but not limited to the Loan.
"Unadjusted EBITDA" means for any of the following dates:
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(i) June 30, 1999, the product of (x) EBITDA for the period of two
consecutive fiscal quarters ending on, or most recently ended prior to,
such date times (y) two,
(ii) September 30, 1999, the product of (x) EBITDA for the period of
three fiscal quarters ending on, or most recently ended prior to, such date
times (y) 1.33, and
(iii) any date after September 30, 1999, EBITDA for the period of four
consecutive fiscal quarters ending on, or most recently ended prior to,
such date.
"Unfunded Pension Liabilities" means the excess of a Plan's benefit
liabilities under Section 400 1(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used by the Plan's
actuaries for finding the Plan pursuant to Section 412 of the Code for the
applicable plan year.
"Unmatured Event of Default" means any event that with the passage of time
or giving of notice, or both, would constitute an Event of Default.
1.2 Accounting Terms and Determinations. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared, in accordance with GAAP, applied on a
basis consistent (except for changes concurred in by the Borrower' independent
public accountants) with the most recent audited consolidated financial
statements of the Borrower delivered to the Lenders. The parties hereto further
agree that in the event that any change in accounting principles from those used
in the preparation of the financial statements of the Borrower to be delivered
to the Agent or the Lenders pursuant to the terms of this Agreement hereafter
occasioned by the promulgation of rules, regulations, pronouncements and
opinions by or required by the Financial Accounting Standards Board or
Accounting Principles Board of the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions) results
in any change in the method of calculation of Financial Covenants, standards or
terms found in this Agreement, the parties hereto agree to likewise enter into
negotiations to amend the covenants, terms or standards contained in this
Agreement to equitably reflect such change in accounting principles with the
desired result that the criteria for evaluating the Borrower's financial
condition shall be the same after such change as if such change had not been
made. If the parties cannot agree on such an amendment as contemplated under the
immediately preceding sentence, then the covenants shall be computed without
giving effect to such change in accounting principles.
ARTICLE 2.
THE LOAN
2.1 The Loan.
(a) Subject to the terms and conditions of this Agreement, each Lender,
severally but not jointly, agrees to make future Advances to Borrower from
time to time
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prior to the Maturity Date, in an aggregate principal amount not to exceed
its Percentage Interest of the Maximum Loan Amount; on the condition that
at no time shall the outstanding amount of the Loan ever exceed the Maximum
Loan Amount. So long as no Event of Default or Unmatured Event of Default
has occurred, Borrower may borrow, repay and reborrow under the Notes prior
to the Maturity Date in accordance with the terms of this Agreement.
(b) Purpose. The Loan shall be used for working capital and to
refinance existing debt.
(c) The Notes. The Loan is evidenced by the Notes.
(d) Maturity. The Loan will mature and is due and payable in full on
the Maturity Date.
(e) Interest. The Loan bears interest at the rates as set forth in and
determined pursuant to the Notes. Upon the occurrence of an Event of
Default, the Loan will bear interest at the Default Rate.
(f) Payments of Principal and Interest. Principal and interest under
the Loan is payable as follows:
(i) Accrued but unpaid interest on the Loan is payable in
accordance with the Notes.
(ii) The entire principal balance of the Loan together with
all accrued but unpaid interest thereon and all other amounts due the
Lenders pursuant to the Loan Documents is due and payable in full on
the Maturity Date.
(g) Advance under the Loan. Subject to the terms and conditions hereof,
Advances will be made either (x) upon request of Borrower or (y)
automatically by Agent on behalf of Borrower.
(i) Requested Advances.
(A) Each request for an Advance under the Loan must be
substantially in the form of the Request for Advance (subject
to modifications approved by Agent) and submitted to the Agent
on or before 11:00 a.m. Denver, Colorado time on (1) the
Business Day preceding the day such Advance is requested to be
made if such Advance is a Base Rate Advance, or (2) three
Business Days preceding the date such Advance is requested to
be made if such Advance is a LIBOR Rate Advance. Upon receipt
of a Request for Advance, the Agent shall promptly provide a
notice thereof to each Lender. If all conditions precedent to
each Advance have been met, not later than 11:00 a.m. Denver
time on the next Business Day with respect to each Base Rate
Advance and the third Business Day with respect to each LIBOR
Rate Advance, each Lender shall make available to the Agent in
immediately available funds the amount of such Lender's
Percentage Interest of the amount specified in the Request for
Advance; provided, however, that the Lenders shall not be
obligated to make any Advance to Borrower that
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would result in the aggregate unpaid principal balance
outstanding under the Loan exceeding the Maximum Loan
Amount.
(B) If all conditions precedent to such Advance have
been met and the Agent has received from each Lender its
Percentage Interest of the Advance, the Agent will, on the
date requested, make such Advance available to Borrower in
immediately available funds at the Agent's office in Denver,
Colorado. Each Lender shall make its own determination as to
whether the conditions precedent to the Advance have been
complied with and each Lender's making available to Agent its
Percentage Interest of the Advance shall constitute
confirmation from such Lender that all conditions precedent to
the Advance have been satisfied in a manner acceptable to such
Lender. The obligation of each Lender to fund its Percentage
Interest of an Advance shall be a separate obligation of each
Lender, and neither the Agent nor any other Lender shall have
any liability to the Borrower for the failure of any Lender to
fund its Percentage Interest of any Advance. The failure of
any Lender to make the Advance shall not relieve any other
Lender of the obligation to make an Advance.
(C) Each request for a Base Rate Advance under the Loan
must be in an amount of at least $250,000 or such lesser
amount equal to the unadvanced portion of the Loan, and each
request for a LIBOR Rate Advance must be in an amount of at
least $1,000,000 or such lesser amount equal to the unadvanced
portion of the Loan.
(D) Each request for an Advance under the Loan shall be
irrevocable and binding upon the Borrower from and after the
time that a Request for Advance is received by the Agent and
the submission of a Request for Advance to the Agent shall
obligate Borrower to accept such Advance.
(ii) Automatic Advances.
(A) At 2:30 p.m. Denver time on each Business Day,
Agent will review the net activity of Borrower's account(s) at
Agent. To the extent that the balance in Borrower's account(s)
(taking into account such net activity) is less than $10,000
and provided that no Event of Default or Unmatured Event of
Default shall have occurred, Agent shall automatically make a
Base Rate Advance of the Loan (an "Automatic Advance") in an
amount sufficient to increase the balance in Borrower's
account(s) to $10,000 and Borrower hereby authorizes Agent to
make such Automatic Advance; provided however that under no
circumstances shall Agent make any Automatic Advance which
would increase the outstanding principal balance of the Loan
to an amount greater than the Maximum Loan Amount. Advances
pursuant to this Section 2.1(g)(ii) shall be made
automatically by Agent and each Lender hereby acknowledges
that there are no conditions precedent to any such Automatic
Advance.
(B) On a weekly basis, Agent shall notify Lenders of
the aggregate amount of Automatic Advances made during the
preceding week. Provided that such notice is received prior to
11:00 am Denver time, each Lender shall make available to the
Agent in immediately available funds on the same Business Day
(the next Business Day, if such notice is received after 11:00
am Denver time) the amount of such Lender's Percentage
Interest of the aggregate amount of Automatic Advances
specified by Agent. If any Lender fails to make available to
the Agent its Percentage Interest of Automatic Advances as
required pursuant to this
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Section (B), such Lender shall be obligated to pay to the
Agent interest at the Default Rate from the date due until
the date paid.
(C) Agent shall be entitled to retain all interest on
Automatic Advances from the date Advanced by Agent until the
date each Lender advances its percentage interest of such
Automatic Advances.
(h) Extension of the Maturity Date. Upon request of the Borrower, which
request shall be made no less than 90 days and no more than 150 days prior
to each December 31, commencing with December 31, 2000, the Lenders may,
but shall be under no obligation to, extend the Maturity Date by
consecutive, and successive one year periods (each, an "Extension"). An
Extension shall be in the sole and absolute discretion of the Lenders and
shall require the unanimous approval of all Lenders. Without limiting the
generality of the foregoing, an Extension shall be subject to the following
terms and conditions and such other terms and conditions as the Agent may
reasonably require: (i) Borrower shall provide Agent a written notice
requesting the Extension; (ii) there shall not exist, either on the date
the Extension is requested by the Borrower or on the date the Extension
becomes effective any Event of Default or Unmatured Event of Default; (iii)
all of the representations and warranties contained in the Loan Documents
shall be true and correct on the date the Borrower requests the Extension
and on the date the Extension becomes effective; (iv) there has been no
significant material adverse change in the financial condition of Borrower
or any Subsidiary; (v) Borrower shall execute all documents reasonably
requested by Agent in connection with the Extension; (vi) Borrower shall
pay to Agent, for the benefit of each Lender in accordance with its
Percentage Interest, concurrent with the Extension, an extension fee of
$40,000 together with all reasonable fees and expenses incurred by Agent in
connection with the Extension, and (vii) the Agent and the Lenders shall
have agreed in writing to the Extension. The foregoing list of conditions
to the Extension is illustrative only and shall not in any way restrict the
right of the Lenders to impose additional conditions nor shall the Lenders
be under any obligation to agree to the Extension even if all of the
foregoing conditions have been complied with. Borrower specifically
acknowledges and agrees that the Extension shall be in the sole and
absolute discretion of the Lenders and that the Lenders are under no
obligation to grant the Extension. In the event that the Lenders agree to
the Extension, the Maturity Date shall be extended by a period of one year.
2.2 Repayments by Borrower. All payments of principal and interest
hereunder or under the Notes shall be made at the Agent's offices at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (or at such other place as the Agent
designates to Borrower in writing at least one Business Day prior to the due
date or payment date, as the case may be) by 11:00 am Denver time on the date
due or the date of payment (as the case may be) in immediately available funds
free and clear of any and all taxes and without setoff or counterclaim or
deduction of any kind. If any payment to be made by Borrower hereunder or under
the Notes is due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day and such extension of time shall be included
in computing any interest and fees in respect of such payment. All payments
received from Borrower hereunder (or an automatic repayment under Section 2.3
below) or under any of the Notes must be applied first to pay any fees or
expenses due to the Agent hereunder, second to pay any fees or expenses due to
the Lenders hereunder on a pro rata basis, third to pay accrued but unpaid
interest on the Loan, and lastly, to repay the principal amount of the Loan.
Borrower authorizes Agent to make any and all payments due
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under the Loan Documents (including without limitation, all interest payments)
by debiting Borrower's account(s) at Agent. Borrower's failure to maintain funds
in such account(s) sufficient to make payment(s) shall not relieve Borrower of
its obligations hereunder.
2.3 Automatic Repayment To the extent that the Agent's review of the net
activity in Borrower's account(s) as described in Section 2.1 (g)(ii)(A) above
reveals a balance greater than $10,000 (taking into account such net activity),
Agent shall automatically make a repayment of amounts outstanding under the Loan
which are accruing interest at the Base Rate (an "Automatic Repayment") in an
amount equal to the lesser of (a) the outstanding principal amount of the Loan
accruing interest at the Base Rate, and (b) an amount equal to the difference
between the balance in Borrower's account(s) and $10,000. Borrower hereby
authorizes Automatic Repayments and acknowledges that there are no conditions
precedent to any such Automatic Repayment.
2.4 Payments to the Lenders. Automatic repayments shall be distributed by
the Agent to the Lenders in like funds on a weekly basis, pro rata according to
the Percentage Interest of each Lender. Agent shall pay to the Lenders the
Federal Funds Rate for each night that funds remain in the Agent's possession
after receipt by Agent (if received by 11:00 am Denver time) but prior to
distribution to the Lenders. In the event the Agent receives less than the
aggregate amount due to all Lenders, the Agent shall distribute ratably to each
Lender, in the case of any payment, the portion of the aggregate amount received
by the Agent on such day multiplied by the Percentage Interest of such Lender.
Payments (other than Automatic Repayments) by Borrower to the Agent on account
of principal of and interest on the Loan or otherwise hereunder shall be
distributed by the Agent to the Lenders on the same day such funds are received
from Borrower in like funds, provided that the Agent receives such finds by
11:00 a.m. Denver time and on the next Business Day if the Agent receives such
funds after 11:00 a.m. Denver time, pro rata according to the Percentage
Interest of each Lender in like funds; provided that in the event the Agent
receives immediately available finds from Borrower before 11:00 a.m. on any
Business Day but does not remit such payments to the Lenders until the next
Business Day, the Agent shall pay to the Lenders the Federal Funds Rate for each
night that funds remain in the Agent's possession. In the event the Agent
receives less than the aggregate amount due to all Lenders on any day, the Agent
shall distribute ratably to each Lender, in the case of any payment, the portion
of the aggregate amount received by the Agent on such day multiplied by the
Percentage Interest of such Lender. Each Lender hereby agrees that Agent may
offset any amounts due and owing to such Lender against any amounts due and
owing from such Lender to Agent.
2.5 Fees.
(a) Loan Fee On or prior to the Closing Date, Borrower shall pay to
Agent on behalf of Lenders the Loan Fee.
(b) Unused Fee. Borrower shall pay to the Agent on behalf of the
Lenders a Quarterly unused fee equal to the product obtained by multiplying
the Unused Availability by the Unused Fee Percentage, which fee is payable
in arrears within thirty days of the end of each Quarter. The Unused Fee
will be divided among the Lenders pro rata in accordance with each Lender's
Percentage Interest. "Unused Availability" shall be calculated within
thirty days after the end of each Quarter (and on a pro-rata basis for any
partial Quarter)
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and means the amount by which (i) the Maximum Loan Amount exceeds (ii) the
average daily outstanding balance of the Loan during such Quarter as
reasonably determined by the Agent. The "Unused Fee Percentage" shall be
determined within five days of the end of the applicable Quarter by
reference to the following table based on the ratio of Total Debt to
Unadjusted EBITDA:
Ratio of Total Debt Unused Fee Percentage
to Unadjusted EBITDA (on an annual basis)
3.51 .30%
3.01 and 3.50 .25%
2.51 and 3.00 .20%
1.51 and 2.50 .15%
1.50 .10%
(c) Agent's Fee. $10,000 annually, due and payable on or before
September 30 of each year, commencing September 30, 1999.
2.6 Letters of Credit.
(a) Agent has previously issued or will issue a Letter of Credit in
favor of ▇▇▇▇-▇▇▇▇ Realty Corporation in the amount of $225,000 (the
"Existing Letter of Credit").
(b) Agent agrees that upon request of Borrower and subject to the
satisfaction of the terms and conditions described below, it will issue
Letters of Credit on behalf of Borrower; provided, however, that the Letter
of Credit Liability shall never exceed $1,000,000. Agents obligation to
issue Letters of Credit shall be subject to the following conditions:
(i) Borrower shall deliver to the Agent a letter of credit
application at least five (5) Business Days in advance of the proposed
date of issuance;
(ii) Borrower shall pay to Agent all letter of credit fees
required by Agent, including, without limitation, Agent's standard
letter of credit fee, documentary fees and processing charges;
(iii) The maturity date of the Letter of Credit to be issued
shall not extend beyond the Maturity Date;
(iv) There shall exist no Event of Default, and no event that
with notice, the passage of time or both, would result in an Event of
Default;
(v) All of Borrower's representations and warranties continue
to remain true and correct in all material respects;
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(vi) The outstanding principal amount of the Loan shall not
exceed the Maximum Loan Amount (taking into account the face amount of
the Letter of Credit to be issued); and
(vi) Such other conditions as Agent may reasonably require.
(c) Participations. Immediately upon execution of this Agreement, Agent
shall be deemed to have sold and transferred to each other Lender, and each
other such Lender shall be deemed irrevocably and unconditionally to have
purchased and received from Agent, without recourse or warranty, an
undivided interest and participation, to the extent of such Lender's
Percentage Interest in the Existing Letter of Credit and all rights of
Agent in respect thereof In addition, immediately upon the issuance by
Agent of any Letter of Credit, Administrative Agent shall be deemed to have
sold and transferred to each other Lender, and each other such Lender shall
be deemed irrevocably and unconditionally to have purchased and received
from Agent, without recourse or warranty, an undivided interest and
participation, to the extent of such Lender's Percentage Interest in such
Letter of Credit and all rights of Agent in respect thereof.
(d) Reimbursement Obligation. To induce Agent to issue and maintain
Letters of Credit and to induce Lenders to participate in issued Letters of
Credit, Borrower agrees to pay or reimburse Agent (i) one Business day
after the date on which any draft is presented under any Letter of Credit,
the amount of any draft paid or to be paid by Agent and (ii) promptly, upon
demand, the amount of any fees which Agent customarily charges for honoring
drafts under letters of credit, and taking similar action in connection
with letters of credit. If Borrower has not reimbursed Agent for any draft
paid or to be paid within one Business Day after such draft is presented
under any Letter of Credit, Agent is hereby irrevocably authorized to fund
such reimbursement obligations as a Base Rate Advance to the extent of
availability and if the conditions precedent in this Agreement for such an
Advance (other than any notice requirements or minimum funding amounts)
have, to Agent's knowledge, been satisfied. The proceeds of such Borrowing
shall be advanced directly to Agent in payment of Borrower's unpaid
reimbursement obligations. If for any reason, finds cannot be advanced
under the Loan, then Borrower's reimbursement obligation shall constitute a
demand obligation. Borrower's obligations under this Section 2.6(d) are
absolute and unconditional under any and all circumstances and irrespective
of any setoff, counterclaim, or defense to payment which Borrower may have
at any time against Agent or any other Person. From the date that Agent
pays a draft under a Letter of Credit until the related reimbursement
obligation of Borrower is paid or funded by proceeds of an Advance, unpaid
reimbursement obligations shall accrue interest at the Default Rate, which
accrued interest shall be payable on demand.
(e) Obligation of Lenders. If Borrower fails to reimburse Agent as
provided in this Section 2.6 within 24 hours of the demand therefor by
Agent and funds cannot be advanced under the Loan to satisfy the
reimbursement obligations, then Agent shall promptly notify each Lender of
Borrower's failure, of the date and amount of the draft paid, and of such
Lender's Percentage Interest thereof Each Lender shall promptly and
unconditionally make available to Agent in immediately available funds such
Lender's Percentage Interest of the unpaid reimbursement obligation. Funds
are due and payable to Agent on or before the close of business on the
Business Day when Agent gives notice to each Lender of Borrower's
reimbursement
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failure (if given prior to 1:00 p.m., Denver, Colorado time) or on the next
succeeding Business Day (if notice was given after 1:00 p.m., Denver,
Colorado time). All amounts payable by any Lender shall accrue interest at
the Federal Funds Rate from the day the applicable draft is paid by Agent
to (but not including) the date the amount is paid by the Lender to Agent.
To the extent any Lender has funded its ratable share of any draft under an
Letter of Credit, then Agent shall promptly distribute reimbursement
payments received from Borrower to such Lender according to its ratable
share. In the event any payment by Borrower received by Agent with respect
to an Letter of Credit and distributed to Lenders on account of their
participations therein is thereafter set aside, avoided, or recovered from
Agent in connection with any receivership, liquidation, or bankruptcy
proceeding, each Lender which received such distribution shall, upon demand
by Agent, contribute such Lender's ratable portion of the amount set aside,
avoided, or recovered, together with interest at the rate required to be
paid by Agent upon the amount required to be repaid by it.
(f) Cash Collateral. Upon any demand by Agent upon the occurrence an
Event of Default, Borrower shall provide to Agent, for the benefit of
Lenders, (i) cash collateral in an amount equal to the Letter of Credit
Liability existing on such date, such cash and all interest thereon shall
constitute cash collateral for all Letters of Credit, and (ii) such
additional cash collateral as Agent may from time to time require, so that
the cash collateral amount shall at all times equal or exceeds the Letter
of Credit Liability. Any cash collateral deposited under this Section 2.6,
and all interest earned thereon, shall be held by Agent and invested and
reinvested at the expense and the written direction of Borrower, in U.S.
Treasury Bills with maturities of no more than ninety (90) days from the
date of investment.
ARTICLE 3.
CONDITIONS OF LENDING
3.1 Advance. The Lenders shall have no obligation to make Advances under
the Loan unless the Agent shall have received all of the following, at the
Agent's office in Denver, Colorado, duly executed and delivered and in form and
substance satisfactory to the Agent, the Lenders and their counsel and unless
all of the following shall have been satisfied in a manner acceptable to the
Agent, the Lenders and their counsel:
(a) with respect to the first Advance after the date hereof, this
Agreement, executed by Borrower, the Agent and the Lenders;
(b) with respect to the first Advance, the Notes;
(c) with respect to the first Advance, the Security Documents;
(d) with respect to the first Advance, to the extent requested by
Agent, financing statements in appropriate form for filing with the filing
jurisdictions necessary to cover all of the Collateral;
(e) with respect to the first Advance, results of UCC lien searches
(which have been ordered by Agent) as to Borrower and Subsidiaries for the
State of Colorado and all other states required by Agent which search
results shall be acceptable to the Agent;
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(f) with respect to the first Advance, the Pledge Agreement from
Borrower pledging the Pledged Stock, together with delivery to the Agent of
(1) original stock certificates evidencing the pledged stock, (2) stock
powers (executed in blank) in connection with the pledged stock, and (3)
certified copies of stock ledgers of each Subsidiary;
(g) with respect to the first Advance, the other Loan Documents;
(h) with respect to the first Advance, a certificate dated as of the
Closing Date executed on behalf of Borrower and each Subsidiary by the
Secretary or an Authorized Officer of Borrower and each Subsidiary,
certifying to the correctness and completeness of the following: (A)
Articles of Incorporation, (B) Bylaws, (C) the Certificate of Good Standing
for Borrower and each Subsidiary from such jurisdictions as Agent may
reasonably require and (D) Resolutions adopted-by Borrower's and each
Subsidiary's Board of Directors authorizing the Loan, the pledge of
Collateral and the Guaranties;
(i) with respect to the first Advance, a certificate, dated the Closing
Date and executed by the Secretary or assistant Secretary of the Borrower
and each Subsidiary, which shall contain the names, titles and signatures
of the Authorized Officers of Borrower and each Subsidiary authorized to
execute this Agreement, the Security Documents and the other Loan Documents
on behalf of the Borrower and the Subsidiaries;
(j) with respect to the first Advance, the Loan Fee required to be paid
on the Closing Date under Section 2.5 (a) above;
(k) with respect to the first Advance, Landlord Waivers in form and
substance satisfactory to Agent, from the lessor of Borrower's Colorado
headquarters;
(l) all other documents and assurances which Agent reasonably requires
or which Agent may reasonably request in connection with the transactions
contemplated by this Agreement, and such documents shall be certified, when
appropriate, by proper authorities;
(m) all legal matters incident to the Loan, this Agreement, the Note,
the Security Documents and any other Loan Documents shall be satisfactory
to counsel to the Agent, and with respect to the first Advance after the
date hereof, the Agent shall have received addressed to the Agent and the
Lenders: (1) the opinion of Rothgerber ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, Counsel to
Borrower in the form previously provided by Lender, and (2) opinions of
such other counsel as Agent may request in its discretion, in each case
containing such exceptions and qualifications as are customary in similar
opinions;
(n) all representations and warranties contained in this Agreement and
in the Loan Documents shall be true on the Closing Date and each Advance
Date as if then given, and Borrower shall have performed or observed all
terms, agreements, conditions and obligations hereunder and under the Loan
Documents to be performed or observed on or prior to the Advance Date;
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(o) no Event of Default or Unmatured Event of Default shall have
occurred and be continuing or would result from the making of the requested
Advance;
(p) since the Initial Financial Statements, or the date of the most
recent Advance, whichever is later, there has been no material adverse
change in the business, financial position or results of operations of
Borrower;
(q) as of the Closing Date and each Advance Date, Borrower and each
Subsidiary shall be solvent and Borrower's and each Subsidiary's property
shall be greater than Borrower's or such Subsidiary's debts, at fair
valuation, giving due consideration to identified contingent liabilities;
(r) as of the Closing Date and each Advance Date, Borrower and each
Subsidiary shall have sufficient capital to carry on its business as it is
now conducted and as it is proposed to be conducted following the Closing
Date or Advance;
(s) as of the Closing Date and each Advance Date, Borrower and each
Subsidiary shall be able to pay their debts as they mature, taking into
account the Advance;
(t) a Request for Advance or certificate, dated the Advance Date and
executed on behalf of Borrower by an Authorized Officer, stating the
substance of Subsections 3.1(m) through (r) above as of the requested
Advance Date;
(u) such Advance shall not be prohibited by any laws or any regulation
or order of any court or governmental authority or agency and shall not
subject any Lender to any penalty or other onerous condition under or
pursuant to any such law, regulation or order; and
(v) The amount of such Advance together with the outstanding principal
amount of the Loan shall not exceed the Maximum Loan Amount.
ARTICLE 4.
SECURITY
The repayment of the Loan and all extensions and renewals thereof, and the
performance of all obligations of the Borrower hereunder and under the other
Loan Documents, shall be secured by the Security Documents encumbering the
Collateral.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Agent and each Lender that as of
the date hereof and as of the date of any Advance:
5.1 Existence.
(a) Each of Borrower, Monitoring, T-NETIX JMS and SpeakEZ is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado;
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(b) Gateway is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas;
(c) The principal place of business for Borrower, Monitoring, T-NETIX
JMS, and SpeakEZ is the State of Colorado, and the principal place of
business for Gateway is the State of Texas. Borrower and each Subsidiary is
qualified to do business in Colorado, and in every other jurisdiction in
which the nature of its business or the ownership of its assets requires
such qualification;
(d) Borrower and each Subsidiary has the power and authority to own the
property which it owns and to carry on its business as such business is now
conducted; and
(e) Borrower and each Subsidiary has all franchises, permits, licenses
and similar agreements necessary to carry on its business as now conducted
and has not received any notices of default or termination under any of
such agreements.
5.2 Collateral. No more than 10% of the collateral consisting of equipment
or inventory (based on net book value as reported on Borrower's quarterly FAS
121 report, which report shall be sent by Borrower to Agent within 30 days after
the end of each calendar quarter) is held in any state other than a Primary
State, and neither Borrower or any Subsidiary will permit more than 10% of the
Collateral consisting of equipment and inventory to be held in any state other
than a Primary State without Agent's prior written consent, such consent not to
be unreasonably withheld. Agent's consent shall be conditioned upon, among other
things, Borrower and each Subsidiary taking all steps requested by Agent to
provide Agent, as agent for Lenders, a perfected, first lien security interest
in all Collateral held in any state other than a Primary State.
5.3 Pledged Stock. The Pledged Stock represents 100% of the outstanding
stock of each of the Subsidiaries, and is owned 100% by the Borrower. Borrower
will not transfer any of the Pledged Stock without the prior written consent of
Agent, which consent shall be in Agent's sole and absolute discretion.
5.4 Noncontravention. The execution, delivery and performance by Borrower
and each Subsidiary of this Agreement and the other Loan Documents and the
borrowings hereunder, and the consummation of the transactions contemplated
herein and therein will not conflict with the Articles of Incorporation, Bylaws
or other organizational or governing documents of Borrower or any Subsidiary, or
conflict with or result in any breach of any mortgage, lien, lease, agreement,
instrument, order, judgment, decree, law, rule, regulation or any other
restriction of any kind or character to which Borrower or any Subsidiary is a
party or is subject or by which Borrower or any Subsidiary or Borrower's or any
Subsidiary's properties are bound or affected or result in the creation or
imposition of any lien, charge or encumbrance upon any property of Borrower or
any Subsidiary.
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5.5 Third-Party Authorization. No consent, approval, exemption,
authorization or order of or other action by, and no notice to or filing with,
any court or governmental authority or third party (other than creditors under
Obligations that will be discharged with the proceeds of the first Advance) is
required by Borrower or any Subsidiary in connection with the execution,
delivery or performance by Borrower and Subsidiaries of this Agreement, or any
other Loan Document or to consummate any transactions contemplated hereby or
thereby.
5.6 Authorization; Binding Effect. Borrower and each Subsidiary has full
power and authority to enter into this Agreement and the other Loan Documents.
The execution and delivery of this Agreement, and the other Loan Documents, and
the performance and observance of their terms, conditions and obligations, have
been duly authorized by all necessary action by Borrower and each Subsidiary.
This Agreement and the other Loan Documents are legal, valid and binding
obligations of Borrower and each Subsidiary, enforceable in accordance with
their respective terms, except as such enforcement may be limited by bankruptcy,
insolvency or similar laws of general application relating to the enforcement of
creditors' rights.
5.7 Litigation. There are no actions, suits, proceedings or claims against
Borrower or any Subsidiary or any of their respective properties pending or, to
the knowledge of Borrower or any Subsidiary, threatened before any court or by
or before any governmental instrumentality, which could have a material adverse
effect on the business, operations, property, prospects or condition (financial
or otherwise) of Borrower or any Subsidiary (taken as a whole) or the ability of
Borrower or any Subsidiary to perform its obligations under this Agreement or
any of the other Loan Documents. There exists no default or breach by Borrower
or any Subsidiary with respect to any order, writ, injunction, decree or demand
of any court or governmental instrumentality, nor will the execution, delivery
or performance by Borrower or any Subsidiary of this Agreement or any of the
other Loan Documents result in any such default or breach.
5.8 Taxes. Borrower and each Subsidiary has filed all required tax returns
and paid all taxes and other governmental charges or levies imposed upon or
against it or its properties (including the Collateral) or profits before the
same became in default, except those being contested in good faith and by
appropriate proceedings, for which adequate reserves have been set up by such
Borrower or Subsidiary and for which there is no imminent risk of loss of any of
the Collateral.
5.9 Liens. All property and assets of Borrower and Subsidiaries are free
and clear of all liens and encumbrances, except for the Liens permitted pursuant
to Section 7.4 and Liens to be discharged with the proceeds of the first
Advance.
5.10 Use of Proceeds. The proceeds of the Loan shall be used solely for the
purposes set forth in Article 2 above. In no event shall funds from the Loan or
any Advance be used directly or indirectly by any Person for personal, family,
household or agricultural purposes.
5.11 Other Obligations. Other than Obligations to be discharged with the
proceeds of the first Advance, neither Borrower nor any Subsidiary has any
outstanding Indebtedness of any kind that is, in the aggregate, material to such
Borrower or Subsidiary or
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material with respect to Borrower's Consolidated financial condition and not
shown in the Initial Financial Statements (or in the context of future Advances,
financial statements subsequently provided to Agent pursuant to this Agreement).
5.12 Full Disclosure. No certificate, statement, report or other
information delivered herewith or heretofore by-Borrower or any Subsidiary to
the Agent or the Lenders in connection with the negotiation of this Agreement or
in connection with any transaction contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact known to such
Person necessary to make the statements contained herein or therein not
materially misleading as of the date made or deemed made. There is no fact known
to Borrower or any Subsidiary that has not been disclosed to the Agent or the
Lenders in writing that could materially and adversely affect Borrower's or
Subsidiary's properties, business, prospects or condition (financial or
otherwise).
5.13 Margin Stock. Neither Borrower nor any Subsidiary owns "margin stock"
or "margin securities" (as such terms are defined respectively in Regulation U
and Regulation G promulgated by the Board of Governors of the Federal Reserve
System) and no proceeds of any Advance will be used for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any "margin stock" or
"margin securities."
5.14 ERISA Compliance. Except as disclosed to Agent in writing:
(a) Each Plan and Multiemployer Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other
federal or state law, including all requirements under the Code or ERISA
for filing reports (which are true and correct in all material respects as
of the date filed), and benefits have been paid in accordance with the
provisions of the Plan.
(b) Each Qualified Plan and Multiemployer Plans has been determined by
the IRS to qualify under section 401 of the Code, and the trusts created
thereunder have been determined to be exempt from tax under the provisions
of section 501 of the Code, and to the best knowledge of Borrower, except
as otherwise disclosed to the Agent or the Lenders in writing, nothing has
occurred that would cause the loss of such qualification or tax-exempt
status.
(c) There are no outstanding material liabilities under Title IV of
ERISA with respect to any Plan maintained or sponsored by Borrower or any
ERISA Affiliate, nor with respect to any Plan to which Borrower or any
ERISA Affiliate contributes or is obligated to contribute.
(d) No Plan subject to Title IV of ERISA has any Unfunded Pension
Liability.
(e) No member of the Controlled Group has ever represented, promised or
contracted (whether in oral or written form) to or with any current or
former employee (either individually or to employees as a group) that such
current or former employee(s) would be provided, at any cost to any member
of the Controlled Group, with life
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insurance or employee welfare plan benefits (within the meaning of section
3(1) of ERISA) following retirement or termination of employment. To the
extent that any member of the Controlled Group has made any such
representation, promise, or contract, such member has expressly reserved
the right to amend or terminate such life insurance or employee welfare
plan benefits with respect to claims not yet incurred.
(f) Members of the Controlled Group have complied in all material
respects with the notice and continuation coverage requirements of section
4980B of the Code.
(g) No ERISA Events have occurred or are reasonably expected to occur
with respect to any Plan(s).
(h) There are no pending or, to the best knowledge of Borrower,
threatened claims, actions or lawsuits, other than routine claims for
benefits in the usual and ordinary course, asserted or instituted against
(i) any Plan maintained or sponsored by Borrower or its assets, (ii) any
member of the Controlled Group with respect to any Qualified Plan, or (iii)
any fiduciary with respect to any Plan for which Borrower may be directly
or indirectly liable, through indemnification obligations or otherwise.
(i) Neither Borrower nor any ERISA Affiliate has incurred nor
reasonably expects to incur (i) any liability (and no event has occurred
which, with the giving of notice under section 4219 of ERISA, would result
in such liability) under section 4201 or 4243 of ERISA, or secondary
liability under Section 4204 of ERISA, with respect to a Multiemployer Plan
or (ii) any liability under Title IV of ERISA (other than premiums due and
not delinquent under section 4007 of ERISA) with respect to a Plan.
(j) Neither Borrower nor any ERISA Affiliate has transferred any
Unfunded Pension Liability to a Person other than Borrower or an ERISA
Affiliate or otherwise engaged in a transaction that could be subject to
section 4069 or 4212(c) of ERISA.
(k) No member of the Controlled Group has engaged, directly or
indirectly, in a nonexempt prohibited transaction (as defined in section
4975 of the Code or section 406 of ERISA) in connection with any Plan that
would reasonably be expected to have a material adverse effect on the
properties, business, operations, prospects or condition (financial or
otherwise) of Borrower.
5.15 Compliance with Laws. Borrower and each Subsidiary is in compliance
with all laws, rules and regulations and any determination of any arbitrator or
governmental authority applicable to or binding upon it or any of its property
or to which it or any of its property is subject.
5.16 Financial Condition. The Initial Financial Statements (and, with
respect to Advances, financial statements provided to Agent pursuant to this
Agreement prior to such Advance) fairly present Borrower's financial position at
the date thereof and the results of Borrower's operations and cash flows for the
period thereof Since the date of the Initial Financial Statements (and, with
respect to Advances, financial statements provided to Agent pursuant to
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this Agreement prior to such Advance), there has been no material adverse change
in the business, financial position or results of operations of Borrower.
5.17 Environmental Matters. (a) The operations of Borrower and each
Subsidiary comply in all material respects with all federal, state or local
laws, statutes, rules, regulations, and all administrative orders, licenses,
authorizations and permits of any governmental authority, relating to
environmental or public health and safety ("Environmental Laws"); (b) none of
the operations of Borrower or any Subsidiary is the subject of federal, state or
local investigation evaluating whether any material remedial action is needed to
respond to a release of any hazardous or toxic waste, substance or constituent
into the environment; (c) Neither Borrower nor any Subsidiary has (and to the
best knowledge of Borrower and each Subsidiary, nor has any other Person) filed
any notice under any federal, state or local law indicating that Borrower or
such Subsidiary is responsible for the release into the environment, or the
improper storage, of any material amount of any hazardous or toxic waste,
substance or constituent or that any such waste, substance or constituent has
been released, or is improperly stored, upon any property of such Person; and
(d) Neither Borrower nor any Subsidiary otherwise has any known material
contingent liability in connection with the release into the environment, or the
improper storage, of any such waste, substance or constituent. The provisions of
this Section 5.17 are in addition to any representations and warranties set
forth by Borrower or Subsidiaries in any environmental indemnity or other
agreement.
5.18 Investment Company Act; Etc. Neither Borrower nor any Subsidiary is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended. Neither
Borrower nor any Subsidiary is 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, as amended.
5.19 Labor Matters. (a) Neither Borrower nor any Subsidiary has experienced
within the four-year period ended on the date hereof any strike, labor dispute,
slowdown or work stoppage due to labor disagreements that would have a material
adverse effect on the business, operations, assets, property, prospects or
condition (financial or otherwise) of Borrower or Subsidiaries; and (b) to the
best knowledge of Borrower and each Subsidiary, there is no such strike,
dispute, slowdown or work stoppage threatened against Borrower or any Subsidiary
that would have a material adverse effect on the business, operations, assets,
property, prospects or condition (financial or otherwise) of Borrower or any
Subsidiary.
5.20 No Burdensome Agreements. Neither Borrower nor any Subsidiary is a
party to or in any manner bound by, any contract or agreement that would
materially adversely affect such Borrower or Subsidiary or its ability to
perform its obligations under the Loan Documents, except as disclosed in the
Initial Financial Statements (and, with respect to Advances, financial
statements provided to Agent pursuant to this Agreement prior to such Advance).
5.21 Licenses. Borrower and each Subsidiary has the right to use all
trademarks, trademark rights, trade names, trade name rights, copyrights,
licenses, permits, authorizations and other rights as are necessary for the
present and planned future conduct by
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Borrower and each Subsidiary of its present businesses to be operated by it on
and after the date hereof All of the foregoing are and will be in full force and
effect, and Borrower and each Subsidiary is and will be in substantial
compliance with the foregoing, without any known conflict with the valid rights
of others that could have or cause a material adverse effect on Borrower's or
any Subsidiary's business, operations, assets, property, prospects or condition
(financial or otherwise). No event has occurred that permits, or after notice or
lapse of time or both would permit, the revocation or termination of any such
license or other right or affects or would affect the rights of the Borrower or
Subsidiary thereunder so as to have a material adverse effect on such Borrower's
or Subsidiary's business, operations, assets, property, prospects or condition
(financial or otherwise).
5.22 Patents, Copyrights, Etc. Other than as set forth in the Loan
Documents, neither Borrower nor any Subsidiary has any rights in any patent,
trademark, copyright, trade name or other or similar intellectual property right
(collectively "Intellectual Property Rights") that is material to the operation
of Borrower's or any Subsidiary's business as now operated (other than any right
to any name under which Borrower or any Subsidiary now does business) and no
such Intellectual Property Rights are required for the conduct or operation of
such Borrower's or Subsidiary's business.
5.23 Subsidiaries and Affiliates. The organizational chart attached to and
made a part of this Agreement as Exhibit B is a complete and accurate
representation of the interrelationship of the Borrower and Subsidiaries and
their respective Subsidiaries and Affiliates, and no Borrower or Subsidiary has
any Affiliate or Subsidiary other than as depicted on such organizational chart.
5.24 Partnerships and Joint Ventures. Neither Borrower nor any Subsidiary
is a partner in any partnership, a member of any limited liability company or a
partner or a party to any joint venture except as disclosed in writing to the
Agent.
ARTICLE 6.
AFFIRMATIVE COVENANTS
Until payment in full of the Loans and termination of all the Obligations
hereunder, without the prior written consent of the Required Lenders:
6.1 Payment and Performance of Loan. Borrower shall duly and punctually pay
or cause to be paid in lawful money of the United States the principal and
interest on the Loan upon the dates, at the place and in the manner set forth in
the Notes and in Article II hereof, and perform and observe all other
obligations of Borrower under this Agreement and the other Loan Documents.
6.2 Financial Statements. Borrower shall and shall cause each Subsidiary to
keep proper books of record and account in which full, true and correct entries
shall be made of all business, dealings and affairs in accordance with GAAP, and
Borrower shall, at Borrower's expense, deliver directly to each Lender and in an
acceptable format:
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(a) Within ninety calendar days after the end of each fiscal year of
Borrower, complete audited annual Consolidated financial statements of
Borrower, together with all notes thereto, prepared in reasonable detail in
accordance with GAAP, together with an unqualified opinion, based on an
audit conducted by independent certified public accountants selected by
Borrower and acceptable to the Agent, stating that such financial
statements present fairly the financial position for the periods indicated
in conformity with GAAP applied on a basis consistent with prior years
(except as otherwise required due to changes in GAAP) and an annual
certificate of the type described in Section 6.2(b) below signed by an
Authorized Officer of Borrower;
(b) Quarterly, within forty-five days after the end of each Quarter,
(i) an internally prepared quarterly Consolidated and consolidating
financial statement including an income statement and balance sheet for
Borrower for the subject Quarter, prepared in reasonable detail and in
accordance with GAAP, and certified by an Authorized Officer of Borrower as
being true and correct and fairly presenting in accordance with GAAP the
financial position and results of operations of Borrower, which document
may be in the form of Borrower's quarterly report on form 10-Q filed with
the Securities and Exchange Commission; and (ii) a certificate signed by an
Authorized Officer of Borrower, showing the calculation of and compliance
with the financial covenants contained in this Agreement, and stating that
there does not exist any condition or event at the time of such certificate
which constitutes an Event of Default or an Unmatured Event of Default, or,
if such condition or event existed, specifying the nature and period of
existence of any such condition or event, generally in form and substance
acceptable to Agent;
(c) Within forty-five days after the end of each Quarter, an accounts
receivable aging report, in form and substance acceptable to Agent;
(d) Within ninety days after the end of each fiscal year, an annual
budget, in form and substance acceptable to Agent; and
(e) Such additional financial and other information as the Agent or the
Lenders may from time to time reasonably request.
6.3 Preservation of Existence, Etc. Borrower and all Subsidiaries of
Borrower shall maintain in full force and effect such Borrower's or Subsidiary's
existence as a corporation or limited liability company and its good standing
under the laws of its state of incorporation or formation and its right to
transact business in all states where its activities and ownership of assets are
such that qualification to transact business is necessary under the laws of such
states.
6.4 Maintenance of Property. Borrower shall and shall cause all
Subsidiaries of Borrower to maintain, preserve, protect and keep (a) in good
repair and in good working order and condition the Collateral and all other
properties, real or personal, used or useful in its business, and (b) in full
force and effect all licenses, permits, authorizations and approvals required,
necessary or desirable for the conduct of its' and the Subsidiaries' business.
6.5. Payment of Other Obligations. Borrower shall and shall cause each
Subsidiary to duly and punctually pay and discharge (i) all taxes, assessments
and other
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governmental charges assessed against or imposed upon or with respect to such
Borrower or such Subsidiary or its properties or assets prior to the date when
they shall become delinquent unless the same are being contested in good faith
and by appropriate proceedings and appropriate reserves have been established in
accordance with GAAP and there is no risk of loss of any of the Collateral; (ii)
all charges for labor, materials and supplies which if unpaid might become a
lien against any part of the property of such Borrower or Subsidiary, unless the
same are being contested in good faith and by appropriate proceedings and
appropriate reserves have been established in accordance with GAAP and there is
no risk of loss of any of the Collateral; and (iii) all federal and state social
security, worker's compensation and similar taxes, payments and contributions
for which such Borrower or Subsidiary may be liable, before the same become
delinquent unless the same are being contested in good faith and by appropriate
proceedings and appropriate reserves have been established in accordance with
GAAP and there is no risk of loss of any of the Collateral.
6.6 Insurance.
(a) In addition to any insurance requirements set forth in the Security
Documents, Borrower shall and shall cause each Subsidiary to keep all of
its insurable property, real and personal, adequately insured at all times
with financially sound and reputable independent insurance companies
against fire and against such other risks as are customarily insured
against by the same or similar businesses of a comparable size, and fully
insure against its employer's and public liability risks, all in such
amounts and upon such terms and conditions, including deductibles, as the
Agent may reasonably require.
(b) Each insurance policy covering the Collateral shall be endorsed:
(i) to provide for payment of losses to the Agent, as agent
for the Lenders, as its interest may appear;
(ii) to provide that such policies may not be canceled,
reduced or affected in any manner for any reason without thirty days
prior written notice to the Agent;
(iii) to provide for any other matters specified in any
applicable Security Document or which the Agent may reasonably require;
and
(iv) to provide for insurance against fire, casualty and any
other hazards normally insured against, in the amount of the full value
(less a reasonable deductible not to exceed amounts customary in the
industry for similarly situated businesses and properties) of the
property insured.
(c) Borrower shall and shall cause each Subsidiary to maintain at all
times adequate insurance against its liability for injury to persons or
property, which insurance shall be by financially sound and reputable
independent insurers, in an amount not less than $10,000,000 for each
occurrence. Upon the request of the Agent, Borrower and each Subsidiary
shall furnish the Agent a certificate of an Authorized Officer of Borrower
or such Subsidiary (and, if requested by the Agent, any insurance broker of
Borrower or any Subsidiary) setting forth
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the nature and extent of all insurance maintained by the Borrower and
Subsidiaries in accordance with this Section 6.6.
6.7 Inspection of Property, Books and Records; Meeting with the Lenders.
(a) Borrower shall and shall cause Subsidiaries to permit the Agent's
and any Lender's duly authorized officers, employees and agents to inspect
(and make copies of or abstracts therefrom) the Collateral and the other
property, books and records of Borrower and Subsidiaries and to discuss
Borrower's and Subsidiaries' affairs, finances and accounts with Borrower's
and Subsidiaries' officers and its independent accountants, and furnish any
other data which the Agent or any Lender may reasonably request, all at the
expense of Borrower and Subsidiaries and at any reasonable time and as
often as the Agent or any Lender may reasonably request.
(b) Promptly upon request by the Agent, such Authorized Officers of
Borrower or Subsidiaries as the Agent shall require, shall meet with the
Agent or the Lenders at any time and from time to time at a place
determined by the Agent.
6.8 Notices. Borrower shall and shall cause each Subsidiary to give written
notice to the Agent within three days after Borrower or any Subsidiary becomes
aware of any of the following:
(a) Any material adverse change in the business, property, prospects,
assets, operations or condition (financial or otherwise) of Borrower or any
Subsidiary;
(b) Any Event of Default or Unmatured Event of Default;
(c) The institution of any litigation or other proceeding before any
governmental body or official against Borrower or any Subsidiary or any of
their respective assets and any developments in any pending litigation or
other proceeding before any governmental body or official that could
materially affect Borrower or any Subsidiary, its business, property,
prospects, assets, operations or condition (financial or otherwise);
(d) Any existing or pending investigation or inquiry by any
governmental authority in connection with any applicable Environmental
Laws;
(e) The institution of, or material development in, any litigation
affecting any of the Collateral, or any other dispute or claim that could
have a material adverse effect on any of the Collateral;
(f) Any fact that causes or may cause the Agent, on behalf of the
Lenders, or the Lenders to fail to have a valid, enforceable and perfected
first priority lien on or security interest in any of the Collateral;
(g) Any of the following events affecting Borrower or any member of its
Controlled Group (but in no event more than ten days after becoming aware
of such event), together with a copy of any notice with respect to such
event that may be required to be filed with any governmental authority and
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any notice delivered by any governmental authority to Borrower or any
member or its Controlled Group with respect to such event:
(i) an ERISA Event;
(ii) the adoption of any new Plan that is subject to Title IV
of ERISA or section 412 of the Code by any member of the Controlled
Group;
(iii) the adoption of any amendment to a Plan that is subject
to Title IV of ERISA or section 412 of the Code, if such amendment
results in a material increase in benefits or unfunded liabilities;
(iv) the commencement of contributions by any member of the
Controlled Group to any Plan that is subject to Title IV of ERISA or
section 412 of the Code;
(h) Any event that with the passage of time or giving of notice, or
both, would permit the holder or holders of any Indebtedness of Borrower to
declare such Indebtedness to be due and payable prior to its stated
maturity;
(i) Any change in the executive management of Borrower;
(j) The name and address of any Person acquiring or selling 20 percent
or more of the capital stock of Borrower, or of any smaller percentage of
such stock that would allow the acquiring Person to appoint or control the
appointment of one or more directors of Borrower;
(k) The name and address of any Person (not previously disclosed by
Borrower pursuant to this Section 6.8) that owns or controls so mach of the
capital stock of Borrower that such Person, and the Affiliates of such
Person, directly or indirectly, have the power to influence the management
or operation of Borrower;
(l) The name and address of any Person (not previously disclosed by
Borrower pursuant to this Section 6.8) that together with the Affiliates of
such Person, owns or controls, directly or indirectly, 20 percent or more
of the capital stock of Borrower; or
(m) The creation or acquisition of any new Subsidiary by Borrower or
any Subsidiary. Notwithstanding the foregoing, Lenders hereby approve of
the JMS Acquisitions, provided that T-NETIX JMS provide to Lenders the
additional security described in Section 6.14 herein.
6.9 Compliance with Laws. Borrower shall and shall cause each Subsidiary to
comply with all applicable laws, statutes, rules and regulations of the United
States and of any state or municipality, and of any official, arbitrator or
governmental authority, in respect of the conduct of business and ownership of
property by such Borrower or Subsidiary.
6.10 Further Assurances. Borrower shall and shall cause each Subsidiary to
promptly at Borrower's and Subsidiary's expense, (a) file and refile in such
offices, at such times
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and as often as may be reasonably necessary, every instrument and every
amendment thereto, and take such other action, as may be reasonably necessary or
desirable to create, perfect, maintain and preserve all liens and security
interests intended to be created by Borrower and Subsidiaries under the Security
Documents in favor of the Agent as agent for the Lenders or in favor of the
Lenders and to protect and preserve the rights and remedies of the Agent and the
Lenders thereunder, (b) furnish to the Agent evidence reasonably satisfactory to
the Agent of all such filings and refilings, (c) otherwise do all things
necessary or expedient to be done to effectively create, perfect, maintain and
preserve the liens and security interests intended to be created by the Security
Documents as a lien on real property and fixtures and a security interest in
personal property and to carry out to the Agent's and the Lender's satisfaction
the transactions contemplated by this Agreement and the other Loan Documents.
6.11 Financial Covenants. Borrower shall comply with the following
financial covenants:
(a) Total Debt to Unadjusted EBITDA. Borrower shall maintain a ratio of
Total Debt to Unadjusted EBITDA less than or equal to the ratio set forth
below for the period in which the applicable Quarter ends, calculated at
the end of each Quarter and unless otherwise specified based on such
Quarter and the three immediately preceding Quarters:
Period Ratio
------ -----
Closing 5.00
9/30/99 4.35
12/31/99 3.625
3/31/00 3.00
6/30/00 2.50
9/30/00, and at the end of
each Quarter Thereafter 2.25
(b) Fixed Charge Coverage Ratio. Borrower shall maintain a Fixed Charge
Coverage Ratio not less than the ratio set forth below for the period in
which the applicable Quarter ends, calculated at the end of each Quarter
and unless otherwise specified based on such Quarter and the three
immediately preceding Quarters:
Period Ratio
------ -----
Closing 3.00
9/30/99 3.00
12/31/99 3.75
3/31/00, and at the end of
each Quarter Thereafter 4.00
(c) Minimum EBITDA. Borrower shall maintain a minimum EBITDA at the end
of the Quarter identified below in the amount set forth below for such
Quarter (as shown in the applicable financial statements):
Quarter ending 9/30/99 $2,350,000
Quarter ending 12/31/99 $3,100,000
Quarter ending 3/31/00 $3,875,000
Quarter ending 6/30/99 $4,125,000
Quarter ending 9/30/00 $4,250,000
Quarter ending 12/31/00 and
each Quarter Thereafter $4,375,000
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6.12 Principal Bank Accounts. Within 30 days after closing, Borrower shall
establish and at all times thereafter shall maintain its principal deposit
accounts with the Agent during the term of this Agreement.
6.13 Loan Expenses. Within three days after demand by the Agent, Borrower
shall pay any and all Loan Expenses incurred by the Agent at any time and from
time to time.
6.14 Additional Security. If Borrower or any Subsidiary shall create or
acquire any new Subsidiary, such Borrower or Subsidiary shall (unless otherwise
requested in writing by the Required Lenders), within ten days after the
creation or acquisition of such new Subsidiary and solely at Borrower's or
Subsidiaries' expense: (a) provide a guaranty to Lenders by execution of a
Guaranty in form and content acceptable to Lender; (b) pledge the stock or other
ownership interest in such Subsidiary to the Agent, for the benefit of the
Lenders, as additional Collateral; and (c) encumber the assets of such
Subsidiary in favor of the Agent, for the benefit of the Lenders, as additional
Collateral, in the case of subsection (b) and (c) above, by execution and
delivery of Security Documents in form and content acceptable to the Agent.
6.15 Interest Rate Risk Hedge. Within 10 days after the Closing Date,
Borrower shall choose the Adjusted LIBOR Rate interest option for a one year
Interest Period pursuant to and in accordance with the terms of the Notes, which
shall apply to a minimum of $15,000,000 of the outstanding principal balance of
the Notes.
6.16 SpeakEZ Expenditure. Neither SpeakEZ, Inc. nor any affiliate thereof
shall permit total expenses and expenditures (cash and non-cash) for SpeakEZ to
exceed $2,000,000 in any fiscal year, which amount shall be calculated net of
any SpeakEZ revenues or other SpeakEZ income received during such fiscal year.
6.17 Federal and Other Governmental Contracts. Upon entering into any
federal or governmental contract subject to the Federal Assignment of Claims Act
or any similar act, Borrower shall immediately notify Agent that it has entered
into such contract and shall immediately take and cause each Subsidiary to do
all acts necessary to comply with the Federal Assignment of Claims Act or any
other such similar act as is applicable to the relevant contract in order to
give Agent, as agent for Lenders, a valid first priority security interest in
such contracts, or otherwise provide evidence satisfactory to Agent that no such
compliance is necessary.
ARTICLE 7.
NEGATIVE COVENANTS
Until payment in full of the Loans and termination of all the Obligations
hereunder, Borrower and Subsidiaries shall not, and shall not cause, permit or
suffer any Subsidiary of Borrower or Subsidiaries to, without the prior written
consent of the Required Lenders:
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7.1 Indebtedness. Create, incur, assume or permit to exist any Indebtedness
(including, without limitation, any and all loans to Subsidiaries and Affiliates
and any and all guarantees of indebtedness), except:
(a) The Loan;
(b) Current trade payables to Persons incurred for good furnished or
services rendered, in either case in the Ordinary Course of Business;
(c) Indebtedness (other than Accommodation Obligations); including
capital leases, not exceeding $500,000 in the aggregate outstanding at
anyone time (but excluding trade payables permitted under subsection (b)
above and the Loan); and
(d) Loans from (i) any one or more Borrower, Subsidiaries, Subsidiaries
or Affiliates, to (ii) any one or more Borrower, Subsidiaries, Subsidiaries
or Affiliates.
7.2 Loans and Advances. Make any loans or advances to any Person, except
for the following loans and advances which may be made at any time prior to the
occurrence or existence of an Event of Default or Unmatured Event of Default,
but not thereafter: (a) accounts receivable arising from the sale or lease of
goods or services in the Ordinary Course of Business; or (b) loans or advances
that do not exceed $100,000 in the aggregate outstanding at any one time.
7.3 Investments and New Business. (a) Make any acquisitions of or capital
contributions to or other investments in any Person on or after the Closing
Date, or (b) make any investments other than (1) investments in open market
commercial paper, maturing within 365 days after acquisition thereof, with a
credit rating of at least A-1 or P-1 by either Standard & Poor's Corporation or
▇▇▇▇▇'▇ Investors Service, Inc., (2) marketable obligations issued or
unconditionally guaranteed by the United States of America or an instrumentality
or agency thereof and entitled to the full faith and credit of the United States
of America, (3) municipal bonds with a credit rating of at least A by either
Standard & Poor's or Moody's, and (4) demand deposits, time deposits (including
certificates of deposit), and money market accounts. Notwithstanding the
foregoing, Lenders hereby approve of the JMS Acquisition, provided that T-NETIX
JMS provide to Lenders the additional security described in Section 6.14 herein.
7.4 Liens. Create, assume or permit to exist any Lien upon any properties
(including licenses) or assets, whether now owned or hereafter acquired, real or
personal, except:
(a) The Security Documents;
(b) Liens for taxes not delinquent or being contested in good faith and
by appropriate proceedings and for which adequate reserves have been set
aside in accordance with GAAP and for which there is no risk of loss to the
Collateral;
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(c) Operator's, mechanic's, workmen's, materialmen's and other like
liens arising in the Ordinary Course of Business in respect of obligations
not overdue or which are being contested in good faith and by appropriate
proceedings and for which adequate reserves have been set aside on such
Person's books and for which there is no risk of loss of any of the
Collateral;
(d) Liens or encumbrances, if any, permitted by the Security Documents
or in favor of Agent.
7.5 Stock, Mergers and Consolidations. Merge or consolidate into or with
any Person, which shall mean the combination of two or more entities in such
fashion that only one of such entities shall survive such transaction or in such
fashion that none of such entities shall survive such transaction, but instead
shall be combined into a new entity or entities.
7.6 Dividends and Distributions. Make any dividends or distributions of
assets, or declare or pay any cash or liquidating distribution or dividends, or
make any other distribution to any of their shareholders. Notwithstanding the
forgoing, the Borrower shall be permitted to re-purchase up to $2,000,000 in the
aggregate of treasury stock provided that no Event of Default or Unmatured Event
of Default shall have occurred either before such transaction takes place or as
a result of such transaction.
7.7 Burdensome Undertakings. Undertake, or become contractually bound to
undertake, any action not in the Ordinary Course of Business that could
materially adversely affect Borrower or any Subsidiary or its business,
properties, prospects, assets, operations or condition (financial or otherwise).
7.8 Disposition of Assets. Sell, transfer, convey, assign, lease, exchange
or otherwise dispose (whether in one or a series of transactions) of any of its
assets (including licenses), real or personal, except sales, transfers, leases,
exchanges or other dispositions of assets by Borrower in the Ordinary Course of
Business; and
(a) sales, transfers, leases, exchanges or other dispositions of assets
by Borrower in the Ordinary Course of Business; and
(b) in the Ordinary Course of Business, so long as such transaction is
on fair and reasonable terms and the proceeds from all such transactions do
not exceed $100,000 in the aggregate.
7.9 Use of Proceeds. Use any funds from the Loan directly or indirectly for
the purpose, whether immediate, incidental or ultimate, of purchasing, acquiring
or carrying any "margin stock" or any "margin securities" (as such terms are
defined respectively in Regulation U and Regulation G promulgated by the Board
of Governors of the Federal Reserve System) or to extend credit to others
directly or indirectly for the purpose of purchasing or carrying any such margin
stock or margin securities.
7.10 Transactions with Affiliates. Enter into any transaction with any
Affiliate, except (a) guarantees of indebtedness within the limitations provided
for in Section 7.1 above,
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and (b) any transaction that is in the Ordinary Course of Business and that is
upon fair and reasonable terms comparable in all material respects to terms that
would be obtained in an arm's-length transaction with a Person not an Affiliate
of Borrower.
7.11 ERISA.
(a) Terminate any Plan subject to Title IV of ERISA that might
reasonably be expected to result in liability to the Borrower or any ERISA
Affiliate in an aggregate amount exceeding $2,000,000;
(b) Permit to exist any ERISA Event or any other event or condition
that might reasonably be expected to result in liability to any member of
the Controlled Group in an aggregate amount exceeding $2,000,000;
(c) Make a complete or partial withdrawal (within the meaning of ERISA
section 4201) from any ERISA Plan that might reasonably be expected to
result in liability to the Borrower or any ERISA Affiliate in an aggregate
amount exceeding $2,000,000;
(d) Enter into any new ERISA Plan or modify any existing ERISA Plan so
as to increase its obligations thereunder which could result in liability
to any member of the Controlled Group in the aggregate amount of $2,000,000
or more;
(e) Permit the present value of all nonforfeitable accrued benefits
under any ERISA Plan (using the actuarial assumptions used by the ERISA
Plan's actuaries for purposes of determining the finding for the ERISA Plan
pursuant to section 412 of the Code) to exceed the fair market value of
ERISA Plan assets allocable to such benefits by $2,000,000 or more;
(f) Cause or permit the occurrence of any combination of events listed
in clauses (a) through (e) that involves a potential liability, excess of
accrued benefits over fair market value, or any combination thereof, in
excess of $5,000,000; or
(g) Establish, maintain or contribute to any ERISA Plans or incur any
obligation to contribute to any "multiemployer plan" as defined in Section
4001 of ERISA or represent, promise, or contract (in oral or written form)
to any current or former employee (individually or as a group) that such
current or former employee(s) would be provided, at any cost to any member
of the Controlled Group, with any employee welfare benefits (as defined in
Section 3(1) of ERISA) following retirement or termination of employment.
7.12 Amendments to Organizational Documents. Amend Borrower's or any
Subsidiary's articles of incorporation, bylaws, or other governing documents.
ARTICLE 8.
EVENTS OF DEFAULT
The occurrence of any of the following shall constitute an event of default
("Event of Default") hereunder:
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8.1 Nonpayment. Failure by Borrower to pay, when due, any installment of
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder or under the Notes or any other Loan Document.
8.2 Other Defaults. Any failure by Borrower to perform or observe any
covenant, agreement, condition or provision contained in this Agreement or the
Notes (except those dealt with specifically in this Article 8), if such failure
continues unremedied for a period of fifteen days following written notice of
default from Agent.
8.3 Representation or Warranty. Any representation or warranty of Borrower
or any Subsidiary, whether contained in this Agreement or in any certificate or
other writing required or contemplated by this Agreement or in any Loan Document
shall be false or misleading in any material respect as of the date made or
deemed made.
8.4 Other Nonpayment. Failure by Borrower or any Subsidiary to pay, when
due, any installment of principal of, or interest on, any Indebtedness having an
aggregate principal amount in excess of $250,000. Any default or event of
default shall occur under any other agreement now or hereafter existing relating
to any Indebtedness of Borrower or any Subsidiary to any Person, having an
aggregate principal amount in excess of $250,000.
8.5 Bankruptcy. Etc. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any
other law for the relief of debtors shall be instituted by or against Borrower
or any Subsidiary (except for an involuntary petition against Borrower or any
Subsidiary, which shall not constitute an Event of Default if such petition is
vacated or dismissed within fifteen days after the filing thereof), or any
order, judgment or decree shall be entered against Borrower or any Subsidiary
decreeing its dissolution or division.
8.6 ERISA. (i) A member of the Controlled Group shall fail to pay when due,
after the expiration of any applicable grace period, any installment payment
with respect to its withdrawal liability under a Multiemployer Plan; (ii)
Borrower or an ERISA Affiliate shall fail to satisfy its contribution
requirements under section 412(c)(11) of the Code, whether or not it has sought
a waiver under section 412(d) of the Code; (iii) in the case of an ERISA Event
involving the withdrawal from a Plan of a "substantial employer" (as defined in
section 4001(a)(2) or Section 4062(e) of ERISA), the withdrawing employer's
proportionate share of that-Plan's Unfunded Pension Liabilities is more than
$2,000,000; (iv) in the case of an ERISA Event involving the complete or partial
withdrawal from a Multiemployer Plan, the withdrawing employer has incurred a
withdrawal liability in an aggregate amount exceeding $2,000,000; (v) in the
case of an ERISA Event not described in clause (iii) or (iv), the Unfunded
Pension Liabilities of the relevant Plan or Plans exceed $2,000,000; (vi) a Plan
that is intended to be qualified under section 401(a) of the Code shall lose its
qualification, and the loss can reasonably be expected to impose on members of
the Controlled Group liability (for additional taxes, to Plan participants, or
otherwise) in the aggregate amount of $2,000,000; or more; (vii) the
commencement or increase of contributions to, or the adoption of or the
amendment of a Plan by, a member of the Controlled Group shall result in a net
increase in unfunded liabilities to the Controlled Group in excess of
$2,000,000; (viii) any member of the Controlled Group engages in or otherwise
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becomes liable for a nonexempt prohibited transaction and the initial tax or
additional tax under section 4975 of the Code relating thereto might reasonably
be expected to exceed $2,000,000; (ix) a violation of section 404 or 405 of
ERISA or the exclusive benefit rule under section 401(a) of the Code if such
violation might reasonably be expected to expose a member or members of the
Controlled Group to monetary liability in excess of $2,000,000; (x) any member
of the Controlled Group is assessed a tax under section 4980B of the Code in
excess of $2,000,000; (xi) any member of the Controlled Group is subject to a
payment in excess of $2,000,000 in connection with any agreement with the
Internal Revenue Service to prevent the disqualification of a Plan; or (xii) the
occurrence of any combination of events listed in clauses (iii) through (xi)
that involves a potential liability, net increase in aggregate Unfunded Pension
Liabilities, unfunded liabilities, or any combination thereof, in excess of
$2,000,000.
8.7 Loan Documents.
(a) Occurrence of any of the events of default defined in any of the
Loan Documents (other than an event of default that is also a default under
this Agreement).
(b) Any of the Security Documents shall for any reason cease to create
a valid security interest in the collateral purported to be covered thereby
or such security interest shall for any reason cease to be a perfected and
first priority lien and security interest, subject only to those matters
expressly permitted by Section 7.2 hereof or by any applicable Security
Document, if a valid, perfected and first priority lien and security
interest in such collateral is not reinstated or recreated, to the
satisfaction of Agent, within 30 days of written notice from Agent.
8.8 Judgments. Any final judgment, writ or warrant of attachment, or
similar process in an amount of $250,000 (in the aggregate) or more shall be
entered or filed against Borrower, any Subsidiary, any Subsidiary or any
Affiliate, or any of its assets and shall remain unvacated, unbonded or unstayed
for a period of thirty calendar days.
8.9 Insolvency. Borrower or any Subsidiary shall become insolvent, admit in
writing its inability to pay its debts as they mature, or make an assignment for
the benefit of creditors; or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business; or such a receiver or trustee otherwise shall be appointed and shall
not be discharged within thirty calendar days after such appointment.
8.10 Loan Documents. This Agreement, the Note or any of the other Loan
Documents shall for any reason be revoked or invalidated, or otherwise cease to
be in full force and effect.
8.11 Change in Control.
(a) Borrower shall cease to own, directly or indirectly, 100 percent of
the capital stock of each of the Subsidiaries.
(b) A change in the ownership of more than 50 percent of the capital
stock of Borrower.
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(c) Ownership, directly or indirectly, by any Person and the Affiliates
of such Person of so much of the capital stock of Borrower that such
Person, and the Affiliates of such Person, directly or indirectly, control
the election or appointment of a material number of Borrower's board of
directors, where such Person or any of the Affiliates of such Person is not
satisfactory to the Lenders.
(d) Ownership or control, directly or indirectly, by any Person and the
Affiliates of such Person of so much of the capital stock of Borrower that
such Person, and the Affiliates of such Person, directly or indirectly,
have the power to influence the management or operation of Borrower, where
such Person or any of the Affiliates of such Person is not satisfactory to
the Lenders.
(e) Any change in the control, directly or indirectly, by any Person
and the Affiliates of such Person of 20 percent or more of the capital
stock of Borrower which is owned by such Person and the Affiliates of such
Person after the date hereof, or any change in the ownership or control,
directly or indirectly, by any Person and the Affiliates of such Person of
20 percent or more of the capital stock of Borrower which is acquired after
the date hereof by any Person and the Affiliates of such Person who does
not own 10% or more of Borrower's capital stock on the date hereof, where
such Person or any of the Affiliates of such Person is not satisfactory to
the Lenders.
(f) Change in the executive management of Borrower, if such change is
not satisfactory to Lenders in Lenders' sole and absolute discretion.
8.12 Material Adverse Change. Any material adverse change occurs in
Borrower's or any Subsidiary's financial condition or business or operations
(including, without limitation, any material adverse change caused by Borrower
or any Subsidiary becoming subject to any statute, regulation or order of any
governmental authority after the date hereof).
ARTICLE 9.
REMEDIES
9.1 Automatic Acceleration of Loans. Upon the occurrence of any Event of
Default specified in Section 8.5 or 8.9, the obligation of the Lenders to make
Advances under the Loan shall automatically terminate and the unpaid principal
amount of the Loan and all interest and other amounts payable hereunder, under
the Notes or any of the Loan Documents, shall automatically become due and
payable without further act of the Agent or the Lenders.
9.2 Optional Acceleration of Loans. Upon the occurrence of any Event of
Default (other than those specified in Sections 8.5 and 8.9 above), the
obligation of the Lenders to make Advances under the Loan shall automatically
terminate and the Agent shall, at the direction of the Required Lenders from
time to time, do any or all of the following:
(a) Declare all or any part of the Loan to be forthwith due and
payable, together with all accrued and unpaid interest thereon and all
other amounts payable hereunder or under any of the other Loan Documents,
without presentment, demand, protest or other notice of any kind, all of
which are expressly waived by Borrower;
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(b) With respect to any and all contingent, unmatured or unliquidated
obligations of Borrower hereunder, declare such obligations to be
immediately due and payable and require that cash in an amount equal to the
aggregate outstanding amount of all such obligations be immediately paid
over, pledged and delivered to the Agent on behalf of the Lenders to be
held as cash collateral for such obligations; and
(c) Proceed with every remedy provided for herein or in the Notes, the
Security Documents or any contract, agreement or undertaking supplemental
hereto and the Lenders shall have, without limitation, all of the rights of
a secured party under the Uniform Commercial Codes as then in effect with
respect to any security then held for the Loans.
The enforcement of any rights of the Agent and the Lenders as to the
security for the Loans shall not affect the rights of the Agent or the Lenders
to enforce payment of the Loans against Borrower and to recover judgment against
Borrower for any portion thereof remaining unpaid.
9.3 Setoff. Upon the occurrence of any Event of Default, each Lender shall
have the right at any time and from time to time, without prior notice to
Borrower (which notice is hereby waived by Borrower to the fullest extent
permitted by law), to set off and apply any debt owing to Borrower by such
Lender, including, without limitation, any deposits (general or special, time or
demand, provisional or final) now or hereafter maintained by Borrower with such
Lender, against any and all obligations of Borrower now or hereafter existing
under this Agreement or any of the other Loan Documents, although such
obligations may be contingent or unmatured, and for such purpose Borrower hereby
grant a security interest in and assigns to each Lender all such deposit
accounts.
9.4 Expenses. Upon the occurrence of any Event of Default, Borrower shall,
on demand, pay to Agent and each Lender any Loan Expenses incurred by Agent and
Lenders in connection with such Event of Default or the enforcement of its
rights under or with respect to the Loan, this Agreement, the Notes and the
other Loan Documents. This obligation is in addition to any other obligation of
Borrower to reimburse the Agent or the Lenders for the Loan Expenses incurred by
them.
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ARTICLE 10.
THE AGENT
10.1 Appointment. Each Lender hereby irrevocably designates and appoints
the Agent as the continuing agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes the Agent as
the agent for such Lender, to take such action on its behalf under the
provisions of this Agreement and the other Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to the Agent by the
terms of this Agreement and the other Loan Documents, together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
10.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to rely on advice of counsel concerning
all matters pertaining to such duties. The Agent shall not be responsible to the
Lenders for the negligence or misconduct of any agents or attorneys-in-fact
selected by it, provided that Agent selects such agent or attorney-in-fact with
reasonable care. Each Lender hereby authorizes Agent, as agent for such Lender
to: (i) to act as nominee for and on behalf of such Lender in and under all Loan
Documents; (ii) to arrange the means whereby the funds of Lenders are to be made
available to Borrower under the Loan Documents; (iii) to take such action as may
be requested by any Lender under the Loan Documents (when such Lender is
entitled to make such request under the Loan Documents and after such requesting
Lender has obtained the concurrence of such other Lenders as may be required
under the Loan Documents); (iv) to receive all documents and items to be
furnished to Lenders under the Loan Documents; (v) to timely distribute, and
Agent agrees to so distribute, to each Lender all material information,
requests, documents, and items received from Borrower under the Loan Documents;
(vi) to distribute to each Lender its ratable part of each payment or prepayment
(whether voluntary, as proceeds of collateral upon or after foreclosure, as
proceeds of insurance thereon, or otherwise) in accordance with the terms of the
Loan Documents; (vii) to deliver to the appropriate Persons requests, demands,
approvals, and consents received from Lenders; and (viii) to execute, on behalf
of Lenders, such releases or other documents or instruments as are permitted by
the Loan Documents or as directed by Required Lenders from time to time;
provided, however, Agent shall not be required to take any action which exposes
Administrative Agent to personal liability or which is contrary to the Loan
Documents or applicable Law.
10.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
or entity under or in connection with this Agreement or any other Loan Document
(except for its or such Person's or entity's own gross negligence or willful
misconduct), or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by Borrower,
Subsidiaries, or any representative thereof or any other Person contained in
this Agreement or any other Loan Document or in any certificate, report,
statement or other document referred to or provided for in,
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or received by the Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the Notes or any other Loan
Document or for any failure of Borrower to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of Borrower.
10.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon (a) any writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy or telex message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, (b)advice and
statements of legal counsel (including, without limitation, counsel to
Borrower), (c) independent accountants and (d) other experts selected by the
Agent. The Agent may deem and treat the payee of any Note as the owner thereof
for all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Agent and such assignment shall have been
made in accordance with Section 11.1 hereunder. 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 Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the Notes and the other Loan Documents in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.
10.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Unmatured Event of Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Unmatured Event of Default or Event
of Default and stating that such notice is a "notice of default." In the event
that the Agent receives such a notice, the Agent shall give notice thereof to
the Lenders.
10.6 Nonreliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon the Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of
Borrower and made its own decision to make the Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the
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business, operations, property, financial and other condition and
creditworthiness of Borrower. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of Borrower
which may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates. In addition, the
Agent and the Lenders agree that each Lender shall be responsible for its own
determination with respect to all matters related to this Agreement and the Loan
Documents, including, without limitation, all matters related to the compliance
by Borrower with the terms and conditions of this Agreement and the Loan
Documents, except that Agent shall act as collateral agent subject to and in
accordance with the terms and conditions of the Security Documents.
10.7 Indemnification. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by Borrower and without limiting
the obligation of Borrower to do so), ratably according to each Lender's
Percentage Interest in the Loans, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of this Agreement, any of the other Loan Documents or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Agent's gross negligence or
willful misconduct. The agreements in this subsection shall survive the payment
of the Notes and all other amounts payable hereunder.
10.8 Agent and Lenders in Their Individual Capacity. Each of the Agent, the
Lenders and their respective Affiliates may enter into agreements with, make
loans to, accept deposits from and generally engage in any kind of business with
Borrower, Subsidiaries, and Affiliates and related parties as though such Person
was not the Agent and/or a Lender, as the case may be, hereunder and under the
other Loan Documents. With respect to Advances made by it and any Note issued to
it, the Agent shall have the same rights and powers under this Agreement and the
other Loan Documents as any Lender and may exercise the same as though it were
not the Agent, and the terms "Lender" and "Lenders" shall include the Agent in
its individual capacity.
10.9 Successor Agent. The Agent may resign as Agent upon ten days' notice
to the Lenders. If the Agent shall resign as Agent under this Agreement and the
other Loan Documents, then the Required Lenders shall appoint from among the
Lenders a successor agent for the Lenders, which successor agent shall be
approved by Borrower (unless there is then an Event of Default or Unmatured
Event of Default, in which event Borrower shall have no approval right),
whereupon such successor agent shall succeed to the rights, powers and duties of
the Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent or any of the parties to this Agreement or any holders of the
Notes, other than to give notice of the appointment of such successor agent to
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Borrower. Borrower is entitled to rely upon the existing Agent until Borrower
has received notice of the appointment of a successor agent. After any retiring
Agent's resignation as Agent, the provisions of this subsection shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement and the other Loan Documents. If no successor Agent
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within thirty days after the retiring Agent's giving of notice
of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a financial institution having a rating of not
less than A or its equivalent by Standard & Poor's Corporation. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation, the provision of this Agreement and the other Loan
Documents shall continue to be in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
10.10 Lender's Percentage Interest in the Loans. Notwithstanding anything
to the contrary herein, the Percentage Interest of each Lender in the Loans at
any time shall be a percentage determined by dividing the aggregate amount
advanced, and still outstanding at such time, by such Lender under this
Agreement by the total aggregate amount advanced, and still outstanding at such
time, in connection with the Loans. Each party's Percentage Interest of the
Loans shall be pan passu, without priority of one over the other, except as may
be explicitly set forth herein.
10.11 Sharing of Payments. Each Lender agrees with the other Lenders that
in the event that such Lender shall receive and retain any payment, whether
derived from Borrower, any Subsidiary, setoff or application of deposit balances
or otherwise, on any Note or other amount outstanding (excluding fees and
reimbursements for expenses) in excess of its Percentage Interest in payments on
all then outstanding Notes and other amounts then outstanding to the Lenders,
then such Lender shall purchase for cash at face value, but without recourse,
ratably from the other Lenders such amount of the amounts outstanding under the
Notes held by each such other Lender (or an interest therein) as shall be
necessary to cause such Lender to share such excess payment ratably with the
other Lenders in accord with their respective Percentage Interests. Without
limiting the generality of the foregoing, each Lender agrees that any amounts
that any Lender receives by setoff or application of deposit balances or similar
proceeding shall be applied only to the Obligations and each Lender shall pay to
each other Lender its Percentage Interest of any amounts that such Lender
obtains by setoff or application of deposits or similar proceedings.
10.12 Agreement of Lenders. Notwithstanding anything to the contrary in
this Agreement, all Lenders must consent and agree to any of the following: (i)
any extension or increase of the Loan or any commitment issued with respect to
the Loan, (ii) any extension of the Maturity Date or the due date of any
scheduled payments of principal, (iii) any reduction in the fees or the rate of
interest payable with respect to the Loan under this Agreement and the Notes
(other than reductions in fluctuating rates that are based on fluctuations in
such rates), (iv) any amendment or waiver of any default for which a cure period
is not provided or contemplated under this Agreement, and (v) any amendment of
the provisions of this Section 10.12. Except as specifically set forth above in
this Section 10.12, all other actions to be taken by the Lenders or
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all other decisions to be made or consents to be given by the Lenders shall be
based on the decision or consent of the Required Lenders unless the provision of
the Loan Document requiring such consent or decision specifically provides to
the contrary. The parties hereto specifically agree that participants shall have
no right to take part in any decision to be made or any consent required.
ARTICLE 11.
RIGHTS AND DUTIES OF LENDERS
11.1 Assignments and Participations.
(a) Each Lender shall be entitled at any time, and from time to time,
with the prior written approval of the Agent, to grant a participation
interest in its interest in the Loans to up to two participants provided
that (i) no Lender shall grant a participation interest in the Loans to
more than two participants, (ii) no Lender may transfer a participatory
interest of less than $5,000,000, or have an interest of less than
$5,000,000 following transfer of a participation to another lender, and
(iii) the Lender granting such participation shall continue to act on
behalf of itself and all participants hereunder and such participants'
interests in the Loans and the Loan Documents shall be confined solely to
the contractual relationship between the Lender and its participants and
such participants shall not be deemed a direct Lender hereunder.
(b) In addition, each Lender shall have the right at any time, with the
consent of the Borrower, which consent shall not be unreasonably withheld,
and the consent of Agent, to sell all, or a portion not less than
$5,000,000, of such Lender's interest in the Loan to a single purchaser
that is an Eligible Institution. For purposes of this Agreement, an
"Eligible Institution" means (i) a commercial bank organized under the laws
of the United States, or any state thereof, and having a combined capital
surplus of at least $100 million, (ii) any commercial bank organized under
the laws of the United States, or any state thereof, which is an Affiliate
of any of the Lenders, or (iii) any other financial institution reasonably
acceptable to Agent. In the case of any such sale and assignment, Borrower
shall accord full recognition thereto and hereby agree that all rights and
remedies of the selling Lender in connection with the interest so assigned
shall be enforceable against Borrower by the assignee thereof Borrower, the
selling Lender and the assignee shall execute and deliver all amendments to
the Loan Documents and other documents requested by the Agent or the other
Lenders in order to effect such assignment and sale and the selling Lender
or the assignee shall reimburse the Agent and the other Lenders for all
reasonable out-of-pocket expenses incurred by the Agent or other Lenders in
connection therewith, including, but not limited to, all legal fees and
expenses. The assignee institution in any such assignment shall pay to
Agent, as a condition of such assignment, an assignment fee to be
determined and retained solely by Agent. Notwithstanding the foregoing,
upon the occurrence of an Event of Default, the consent of the Borrower
shall not be required to any assignment permitted pursuant to this Section
11.1(b).
11.2 Reliance Upon Attorneys. The Agent ani the Lenders may rely upon
advice received from time to time from attorneys experienced as bank counsel,
and any action taken by the Agent or the Lenders upon the basis of any such
advice shall be deemed to be reasonable.
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11.3 Acceptance and Consent by the Lenders. Unless otherwise indicated
herein, the phrases "acceptable to the Lenders," "acceptable to the Agent" and
"as the Lenders may require" or "as the Agent may require" or other similar
phrases used in this Agreement shall mean acceptable to the Lenders or the Agent
in the Lenders' or the Agent's sole and absolute discretion and as the Lenders
or the Agent may require in the Lenders' or the Agent's sole and absolute
discretion. In addition, any consent by or other action required by the Lenders
or the Agent hereunder or under any other Loan Document or any discretion to be
rendered by the Lenders or the Agent hereunder or under any other Loan Document
shall be in the Lenders' or the Agent's sole and absolute discretion unless
otherwise indicated.
ARTICLE 12.
MISCELLANEOUS
12.1 No Waiver; Cumulative Remedies. No delay on the part of the Agent or
any Lender in exercising any right, power, privilege or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise or waiver
of any right, power, privilege, or remedy hereunder preclude any other or
further exercise of such right, power, privilege, or remedy hereunder or the
exercise of any other right, power or privilege or remedy. The rights and
remedies of the Agent and the Lenders contained herein are cumulative and not
exclusive of any right or remedy which the Agent and the Lenders shall otherwise
have pursuant to the Loan Documents or applicable law. The obligations of
Borrower contained herein are cumulative, and compliance by Borrower with any
covenant shall not excuse compliance by Borrower with any other covenant.
12.2 Notices. All notices given hereunder shall be in writing, shall be
given by certified mail, return receipt requested, nationally recognized
overnight courier service, telecopy, facsimile or copy delivered by hand, and,
(i) if mailed, shall be deemed received three Business Days after having been
deposited in a receptacle for United States mail, postage prepaid, (ii) if
delivered by nationally recognized overnight air courier service, shall be
deemed received one Business Day after having been deposited with such overnight
air courier service, postage prepaid, and (iii) if delivered by telex, telecopy
or hand delivery, shall be deemed received on the day the notice is sent
provided that the sender receives confirmation thereof), in each case addressed
as follows (other than a notice of advance, which shall be sent to the Agent
only):
If to Borrower, or any Subsidiary to:
T-NETIX, INC.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Rothgerber, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ LLP
One ▇▇▇▇▇ Center, Suite 3000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Lenders, to:
Bank One, Colorado, NA
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇ 8
Attention: ▇. ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Agent, to:
Bank One, Colorado, NA
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇. ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may, by written notice so delivered to the others, change the address
or facsimile number to which delivery shall thereafter be made.
12.3 Counterpart Execution. This Agreement may be executed in any number of
counterparts which together will be one and the same instrument. This Agreement
shall become effective whenever each party shall have signed at least one
counterpart.
12.4 Governing Law; Entire Agreement. THIS AGREEMENT AND THE NOTES SHALL BE
DEEMED TO BE CONTRACTS UNDER THE LAWS OF COLORADO AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE. Such documents and any
other Loan Documents, together with the
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Security Documents, constitute and incorporate the entire agreement between the
Agent, the Lenders the Subsidiaries and Borrower concerning the subject matter
hereof and thereof, and supersede and cancel any prior or contemporaneous
agreements, verbal or written, between the Agent, the Lenders the Subsidiaries
and Borrower concerning the subject matter hereof and thereof
12.5 Amendments and Waivers. No waiver of any provision of this Agreement,
the Notes or any of the Loan Documents, and no consent with respect to any
departure by Borrower or any Subsidiary therefrom shall be effective unless the
same shall be in writing and signed by the Agent, at the direction of the
Required Lenders or, to the extent required under Section 10.12, all Lenders and
participants. No amendment of any provision of this Agreement or the Loan
Documents shall be effective unless the same shall be in writing and signed by
the Agent and (a) with respect to those matters set forth in Section 10.12
above, all of the Lenders and participants, or (b) such lesser number of Lenders
as may approve an amendment as provided for in this Agreement. Any waiver shall
be effective only in the specific instance and for the specific purpose for
which given. Any consent or approval contemplated herein by the Required Lenders
or the Lenders may be granted or withheld in the sole discretion of such
Persons. Agent and Lenders agree that any permanent change in the terms of any
Loan Document must be effected by an amendment and not by a waiver. Without
limiting the generality of the foregoing, the Lenders and the Agent agree that
any change in the interest rate, maturity date, amortization schedule or other
matters set forth in Section 10.12 must be effected by an amendment and not by a
waiver, and shall be subject to the restrictions contained in Section 10.12.
12.6 Costs, Expenses and Indemnity. Borrower and each Subsidiary shall
indemnify, defend and hold harmless the Agent and each Lender and persons or
entities owned or controlled by or affiliated with such Persons and their
respective directors, officers, shareholders, partners, employees, consultants
and agents (herein individually called an "Indemnified Party," and collectively
called "Indemnified Parties") from and against, and reimburse and pay
Indemnified Parties with respect to, any and all claims, demands, liabilities,
losses, damages (including, without limitation, actual, consequential, exemplary
and punitive damages), causes of action, judgments, penalties, fees, costs and
expenses (including, without limitation, attorneys' fees, court costs and legal
expenses and consultants' and experts' fees and expenses), of any and every kind
or character, known or unknown, fixed or contingent, that may be imposed upon,
asserted against or incurred or paid by or on behalf of any Indemnified Party on
account of, in connection with, or arising out of (a) any bodily injury or death
or property damage occurring in or upon or in the vicinity of the Collateral
through any cause whatsoever, (b) any act performed or omitted to be performed
hereunder or the breach of or failure to perform any warranty, representation,
indemnity, covenant, agreement or condition contained in this Agreement, the
Security Documents or any other Loan Documents, (c) any transaction, act,
omission, event or circumstance arising out of or in any way connected with the
Collateral or with this Agreement, the Security Documents or any other Loan
Documents (other than fees and expenses related to the closing or modification
of the transactions contemplated herein), and (d) the violation of or failure to
comply with any statute, law, rule, regulation or order now existing or
hereafter occurring. The foregoing indemnities shall not apply to any
Indemnified Party to the extent the subject of the indemnification is caused by
or arises out of the gross negligence or willful misconduct of that or another
Indemnified Party. If Borrower or Subsidiary and the Indemnified Party are
jointly named in any action covered by this Section 12.6, the Indemnified Party
shall
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cooperate in the defense of such action to the extent its own rights or defenses
are not compromised thereby. The foregoing indemnities shall not terminate upon
release, foreclosure or other termination of this Agreement, the Security
Documents or the other Loan Documents, but shall survive such release,
foreclosure or termination and the repayment of the Loans. Any amount to be paid
hereunder by Borrower or any Subsidiary to the Agent or any Lender or for which
Borrower or any Subsidiary has indemnified an Indemnified Party shall be a
demand obligation owing by Borrower to the Agent or such Lender and shall bear
interest at the Default Rate until paid, and shall constitute a part of the
Loans and be Obligations secured by the Loan Documents.
12.7 Inconsistent Provisions; Severability. In case of any irreconcilable
conflict between the provisions of this Agreement and those of the Loan
Documents and the Notes, the provisions of this Agreement shall govern. The
invalidity, illegality or unenforceability of any provision of any of the Loan
Documents shall not in any way affect or impair the legality or enforceability
of the remaining provisions of each of the Loan Documents.
12.8 Incorporation of Exhibits and Schedules. All Exhibits and Schedules
attached to this Agreement are a part hereof and are incorporated herein for all
purposes.
12.9 Amendment of Defined Instruments. Unless the context otherwise
requires or unless otherwise provided herein, the terms defined in this
Agreement which refer to a particular agreement, instrument or document also
refer to and include all renewals, extensions and modifications of such
agreement, instrument or document, provided that nothing contained in this
section shall be construed to authorize any such renewal, extension or
modification.
12.10 References and Titles. All references in this Agreement to Exhibits,
Schedules, sections and subsections and other subdivisions refer to the
Exhibits, Schedules, sections and subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Headings are for convenience only
and do not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement," "this instrument," "herein," "hereof," "hereby," "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. Pronouns in masculine,
feminine and neuter genders shall be construed to include any other gender, and
words in the singular form shall be construed to include the plural and vice
versa, unless the context otherwise requires.
12.11 Usury. It is not intended hereby to charge interest at a rate in
excess of the maximum rate of interest that the Agent and the Lenders may charge
to Borrower under applicable usury and other laws, but if, notwithstanding,
interest in excess of such rate shall be paid hereunder, the interest rates
provided for herein shall be adjusted to the maximum permitted under applicable
law during the period or periods that any of the interest rates otherwise
provided herein would exceed such rate and any excess amount applied at the
Lenders' option to reduce the outstanding principal balance of the Loans or to
be returned to Borrower.
12.12 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (a) ARISING UNDER THIS
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AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR (b) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS
AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
12.13 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
12.14 Term of Agreement. This Agreement shall continue in full force and
effect so long as any Indebtedness or other Obligation of Borrower to the
Lenders remains unpaid or outstanding or Borrower has any right to Advances
hereunder.
12.15 Jurisdiction. At the option of the Agent or the Lenders, an action
may be brought to enforce this Agreement in the District Court in and for the
City and County of Denver, State of Colorado, in the United States District
Court for the District of Colorado or in any other court in which venue and
jurisdiction are proper. Borrower and all Subsidiaries hereof consent to venue
and jurisdiction in the District Court in and for the City and County of Denver,
State of Colorado and in the United States District Court for the District of
Colorado and to jurisdiction and service of process under Sections
13-l-124(1)(a) and 13-1-125, Colorado Revised Statutes (1973), as amended, in
any action commenced to enforce this Agreement. BORROWER EXPRESSLY AGREES THAT
ANY SUIT OR ACTION INSTITUTED BY BORROWER AGAINST THE AGENT OR THE LENDERS IN
ANY WAY RELATED TO OR ARISING OUT OF THIS LOAN AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED THEREBY SHALL BE BROUGHT BY BORROWER
IN A COURT OF COMPETENT JURISDICTION IN THE STATE OF COLORADO. IN NO
CIRCUMSTANCE SHALL BORROWER COMMENCE ANY SUCH SUIT OR ACTION AGAINST THE AGENT
OR THE LENDERS IN ANY COURT IN THE STATE OF CALIFORNIA.
REMAINDER OF PAGE INTENTIONALLY BLANK
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EXECUTED to be effective as of the day and year first above written.
BORROWER:
T-NETIX, INC., a Colorado corporation
By:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
SUBSIDIARIES:
GATEWAY TECHNOLOGIES, INC., a Texas
corporation
By:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
T-NETIX MONITORING CORPORATION, a
Colorado corporation
By:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Treasurer
SPEAKEZ, INC., a Colorado corporation
By:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
T-NETIX JMS CORPORATION, a Colorado
corporation
By:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
LENDERS:
BANK ONE, COLORADO, NA, a national
banking association
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By:
▇. ▇. ▇▇▇▇, Vice President
COBANK, ACB
By:
▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
INTRUST BANK, NA, a national banking
association
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
AGENT:
BANK ONE, COLORADO, NA, a national
banking association
By:
▇. ▇. ▇▇▇▇, Vice President
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LIST OF EXHIBITS
Exhibit A Request for Advance Form
Exhibit B Organizational Chart
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EXHIBIT A
REQUEST FOR ADVANCE FORM
To Bank One, Colorado, NA:
This Request for Advance is given pursuant to Article 2 of that certain Loan
Agreement, dated as of September 9, 1999, as the same may have been amended to
the date hereof (the "Loan Agreement"), between T-NETIX, Inc. ("Borrower"), Bank
One, Colorado, NA ("Agent"), and Bank One, Colorado, NA and Intrust Bank, NA
(collectively, "Lenders"). Terms defined in the Loan Agreement are used herein
with the same meanings.
The undersigned hereby gives Lender irrevocable notice that Borrower requests an
Advance of the Loan under the Loan Agreement as follows:
1. Date of Loan. The requested date of the proposed Advance is ________,
which is a Business Day.
2. Details of Loan.
(a) Amount of Advance. The requested aggregate amount of the proposed
Advance is: $__________.
(b) Type of Advance and Interest Period. The requested type of Advance
and Interest Period (if applicable) for the proposed Advance is (check (A)
or (B) as applicable):
[ ] (A) A LIBOR Advance for an Interest Period of (check one,
as applicable):
[ ] One month
[ ] Three months
[ ] Six months
[ ] Twelve months
[ ] (B) A Floating Rate Advance.
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the proposed Advance, before and
after giving effect the proposed Advance.
(a) All conditions precedent under Article 3 of the Loan Agreement to
the making of the proposed Advance are satisfied;
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(b) All representations and warranties contained in Article 5 of the
Loan Agreement and in the Security Documents are true on the date of such
requested Advance as if then given, and the Borrower has performed or
observed all terms, agreements, conditions and obligations under the Loan
Agreement and under the Security Documents to be performed or observed by
such Person on or prior to the date of such requested Advance.
(c) Borrower is in compliance with all financial covenants contained in
Section 6.11 of the Loan Agreement as of the date of such requested
Advance.
(d) No Event of Default or Unmatured Event of Default shall have
occurred and be continuing or would result from the making of the requested
Advance.
Dated: .
------------------
T-NETIX, INC., a Colorado corporation
By:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
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EXHIBIT B
ORGANIZATIONAL CHART
T-NETIX Inc. owns the following wholly owned subsidiaries:
Gateway Technologies, Inc.
T-NETIX Monitoring Corporation
SpeakEZ, Inc.
T-NETIX JMS Corporation
In addition, T-NETIX Inc. owns a 20% interest in the following entity:
Sentry Systems, Inc.