SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported): May 20, 1998
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 0-22046 38-3114641
- --------------- ------------------------ -------------------
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
50 Spring Street, Ramsey, New Jersey 07446
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(201) 934-8500
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed since
last report.)
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Item 2. Acquisitions and Dispositions
On May 20, 1998, Bogen Communications International, Inc., a Delaware
corporation (the "Company"), consummated the acquisition of the 33% equity
interest in Speech Design GmbH, a German corporation ("Speech Design"), held by
Mr. Kasimir Arciszewski and Mr. Hans Meiler, the founders and managing directors
of Speech Design. Pursuant to the Share Transfer Agreement, dated May 20, 1998
(the "Share Transfer Agreement"), by and among the Company and Messrs.
Arciszewski and Meiler, the aggregate consideration paid by the Company for the
33% equity interest approximated $8 million before acquisition cost, consisting
of DM 7,570,000 (approximately U.S. $4.3 million) in cash and 458,000 restricted
shares of the Company's common stock, par value $.001 per share (the "Common
Stock"). The sellers obtained certain registration rights with respect to such
restricted shares. As a result of such acquisition, Speech Design became a
wholly-owned subsidiary of the Company.
In connection with the acquisition, each of Messrs. Arciszewski and
Meiler entered into three-year management agreements with Speech Design (the
"Management Agreements"). Under the terms of these management agreements,
Messrs. Arciszewski and Meiler will continue to serve as the managing directors
of Speech Design. In addition, each of Messrs. Arciszewski and Meiler were
issued an option pursuant to the Company's 1996 Stock Option Plan, dated June
1, 1998, to purchase 100,000 shares of Common Stock, which options have an
exercise price of $8.50 per share and vest in equal annual installments on the
first five anniversary dates of the date of the issuance of the options.
The cash portion of the purchase price was financed by drawing against
the Company's $20 million revolving line for acquisitions, which is part of the
$27 million bank credit facility (the "New Credit Facility") with KeyBank
National Association. See "Item 5. Other Events" for a description of the New
Credit Facility.
Pursuant to the Mergers & Acquisition Engagement Agreement, dated
August, 1997, as amended on November 28, 1997, between the Company and Helix
Capital Services, Inc. ("Helix"), the Company paid Helix approximately $164,000
for services rendered in connection with the Speech Design Acquisition. Messrs.
Yoav Stern and Zivi R. Nedivi, directors of the Company, are principals of
Helix.
The descriptions of the Share Transfer Agreement and the Management
Agreements contained herein are qualified in their entirety by reference to the
Share Transfer Agreement and Management Agreements which are attached hereto as
Exhibits 10.1, 10.2 and 10.3, respectively, and which are incorporated herein by
reference.
Item 5. Other Events
On April 21, 1998, the Company entered into the New Credit Facility,
which matures on April 30, 2001. The New Credit Facility provides, subject to
certain criteria, a $20 million revolving line for acquisition financing and a
$7 million working capital line. with a
2
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$1 million sub-limit for letters of credit, unreimbursed time drafts and/or
bankers acceptances. The New Credit Facility bears interest at either the bank's
prime rate or, at the option of the Company at LIBOR plus 125 to 200 basis
points, based upon certain financial conditions. The New Credit Facility
replaced the Company's prior $7 million credit facility which was scheduled to
mature on February 5, 1999. All amounts outstanding under such credit facility
were refinanced with the proceeds from the New Credit Facility.
On May 19, 1998, all of the holders of the Company's Series A
Convertible Preferred Stock (the "Preferred Stock") notified the Company of
their election to convert their shares of Preferred Stock into Common Stock
effective July 1, 1998. The Board of Directors of the Company elected to pay the
semi-annual dividend payable on the Preferred Stock for the period commencing on
November 26, 1997, the date of issuance of the Preferred Stock, and ending on
June 30, 1998, in additional shares of Preferred Stock in lieu of cash.
Accordingly, the dividend will be paid in the number of shares of Common Stock
into which such additional shares of Preferred Stock would have been converted.
In connection with the conversion of the Preferred Stock and the shares issued
in connection with the dividend payment, the Company will issue an additional
3,921,562 shares of Common Stock.
The description of the New Credit Facility contained herein is
qualified in its entirety by reference to the Credit Agreement which is attached
hereto as Exhibit 10.4 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
Prior to the acquisition, the Company held a 67% interest in Speech
Design. Accordingly, the results of operations of Speech Design have been
included in the consolidated financial statements of the Company previously
filed with the Securities and Exchange Commission.
(b) Pro Forma Financial Statements
Pro forma financial statements relating to the Speech Design
acquisition will be filed by amendment within 60 days of the initial date of
this report.
(c) Exhibits
Exhibit
Number Description
- ------- -----------
10.1 Share Transfer Agreement, dated May 20, 1998, by and among Bogen
Communications International, Inc., Kasimir Arciszewski and Hans Meiler.
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3
10.2 Management Agreement, dated May 20, 1998, between Speech Design GmbH and
Kasimir Arciszewski.
10.3 Management Agreement, dated May 20, 1998, between Speech Design GmbH and
Hans Meiler.
10.4 Credit Agreement, dated as of April 21, 1998, among Bogen Communications
International, Inc., Bogen Communications, Inc., various financial
institutions and KeyBank National Association.
10.5 Guaranty of Payment and Performance, dated April 21, 1998, by Bogen
Corporation.
10.6 Guaranty of Payment and Performance, dated April 21, 1998, by New England
Audio Resource Corp.
10.7 Security Agreement, dated April 21, 1998, by Bogen Communications
International, Inc. in favor of KeyBank National Association.
10.8 Security Agreement, dated April 21, 1998, by Bogen Communications, Inc.
in favor of KeyBank National Association.
10.9 Security Agreement, dated April 21, 1998, by Bogen Corporation in favor
of KeyBank National Association.
10.10 Security Agreement, dated April 21, 1998, by New England Audio Resource
Corp. in favor of KeyBank National Association.
10.11 Borrower Pledge Agreement, dated April 21, 1998, by and between Bogen
Communications International, Inc. and KeyBank National Association.
10.12 Borrower Pledge Agreement, dated April 21, 1998, by and between Bogen
Communications International, Inc. and KeyBank National Association.
10.13 Guarantor Pledge Agreement, dated April 21, 1998, by and between Bogen
Corporation and KeyBank National Association.
10.14 Borrower Pledge Agreement, dated April 21, 1998, by and between Bogen
Communications, Inc. and KeyBank National Association.
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4
99.1 Press release, dated May 21, 1998, issued by Bogen Communications
International, Inc. regarding Speech Design GmbH.
99.2 Press release, dated May 21, 1998, issued by Bogen Communications
International, Inc. regarding conversion of the Series A Convertible
Preferred Stock.
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5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
(Registrant)
/s/ Michael P. Fleischer
----------------------------
Name: Michael P. Fleischer
Date: June 3, 1998 Title: President
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Index to Exhibits
Exhibit
Number Description
- ------- -----------
10.1 Stock Purchase Agreement, dated May 21, 1998, by and among
Bogen Communications International, Inc., Kasimir Arciszewski
and Hans Meiler.
10.2 Employment Agreement, dated May 21, 1998, between Speech
Design GmbH and Kasimir Arciszewski.
10.3 Employment Agreement, dated May 21, 1998, between Speech
Design GmbH and Hans Meiler.
10.4 Credit Agreement, dated as of April 21, 1998, among Bogen
Communications International, Inc., Bogen Communications,
Inc., various financial institutions and KeyBank National
Association.
10.5 Guaranty of Payment and Performance, dated April 21, 1998, by
Bogen Corporation.
10.6 Guaranty of Payment and Performance, dated April 21, 1998, by
New England Audio Resource Corp.
10.7 Security Agreement, dated April 21, 1998, by Bogen
Communications International, Inc. in favor of KeyBank
National Association.
10.8 Security Agreement, dated April 21, 1998, by Bogen
Communications, Inc. in favor of KeyBank National Association.
10.9 Security Agreement, dated April 21, 1998, by Bogen Corporation
in favor of KeyBank National Association.
10.10 Security Agreement, dated April 21, 1998, by New England Audio
Resource Corp. in favor of KeyBank National Association.
10.11 Borrower Pledge Agreement, dated April 21, 1998, by and
between Bogen Communications International, Inc. and KeyBank
National Association.
10.12 Borrower Pledge Agreement, dated April 21, 1998, by and Bogen
Communications International, Inc. and KeyBank National
Association.
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10.13 Guarantor Pledge Agreement, dated April 21, 1998, by and
between Bogen Corporation and KeyBank National Association.
10.14 Borrower Pledge Agreement, dated April 21, 1998, by and
between Bogen Communications, Inc. and KeyBank National
Association.
99.1 Press release, dated May 21, 1998, issued by Bogen
Communications International, Inc. regarding Speech Design
GmbH.
99.2 Press release, dated May 21, 1998, issued by Bogen
Communications International, Inc. regarding conversion of the
Series A Convertible Preferred Stock.
EXHIBIT 10.1
File No. /1998
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Share Transfer Agreement
------------------------
Today, the 20th day of May
nineteen hundred and ninety eight
appeared before me
Dr. Gerrit Brachvogel
---------------------
notary in Munich
at my office in Elisenstra(beta)e 3, 80335 Munich
1. Mr. Kasimir Arciszewski, born on August 19th, 1950
with his residence Schellingstra(beta)e 78, 80799 Munich
identified by his identity card
-hereinafter referred to as "the Seller No. 1"-
2. Mr. Hans Meiler, born on August 1st, 1947
with his residence Wastelbauerstra(beta)e 12, 81247 Munich
identified by his identity card
-hereinafter referred to as "the Seller No. 2"-
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2
3. Mr.
identified by his identity card
acting not in his own name, but rather for the company
BOGEN Communications International, Inc., a corporation incorporated and
existing under the laws of the State of Delaware, with its principal
office at 50, Spring Street, P.O. Box 575, Ramsey, New Jersey, 07446 USA,
-hereinafter referred to as "the Buyer"-
on the basis of the written authority attached to this document
The Sellers and the Buyer requested the notarization of the following
declarations in the English language and declared to be in full command of the
English language. After having been advised by the notary public of their right
to an interpreter and/or to a written translation of the present notary deed,
they waived such rights.
Thereupon, the persons appearing requested that the notary records the following
Share Transfer Agreement
------------------------
I. Preliminary Statements
-------------------------
The Sellers and the Buyer are the sole shareholders of the company SPEECH DESIGN
Gesellschaft fur elektronische Sprachverarbeitung mbH, with its legal seat in
Germering, entered in the Commercial Register of Munich Local Court under HRB
69353 with a stated capital in the nominal value of DM 1,960,000.--(hereinafter
referred to as the "Company").
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3
The Seller No. 1 and the Seller No. 2 participate in the stated capital of the
company of in total DM 1,960,000,--with several shares as follows:
Shareholder Share in the
nominal value of
------------------------------------------------------
- Seller No. 1 DM 107,000.--
DM 52,000.--
DM 145,000.--
DM 74,000.--
-------------------
in total DM378,000.--
- Seller No. 2 DM 107,000.--
DM 145,000.--
-------------------
in total DM252,000.--
------------
together DM630,000.--
============
The Seller No. 1 and the Seller No. 2 are the sole managing directors of the
Company.
II. Purchase and Sale
---------------------
1. The Sellers hereby sell, assign and transfer all their shares in the
Company in the nominal value of in total DM 630,000.-- as outlined in
section I. above to Buyer, including all ancillary rights. The Buyer
purchases and accepts the transfer of said shares for the hereinafter
stated purchase price and to the conditions set out in the present
agreement.
2. The assignment of shares herewith agreed becomes effective upon receipt
of the cash portion of the purchase price and the delivery of the shares
of Bogen Stock acquired by the Sellers hereunder to Mr. Dr. Cornelius
Gotze, attorney-at-law, Frankfurt/Main as interim escrow agent.
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4
3. The profit of the current fiscal year as well as the profit of previous
fiscal years which has not been distributed to shareholders shall be
exclusively for the account of the Buyer.
4. The purchase price payable to the Sellers will be
4.1. for the Seller No. 1)
- DM 4,542,000.-- (four million five hundred forty-two
thousand Deutsch Marks),
- 274,800 shares of the common stock of the Buyer in the
nominal value of each US$.001 (herein referred to as
"shares of Bogen Stock")
4.2. for the Seller No. 2)
- DM 3,028,000.-- (three million twenty-eight thousand
Deutsch Marks),
- 183,200 shares of Bogen Stock.
The cash portion of the purchase price is payable in cash upon signature
of the present agreement. The shares of Bogen Stock are to be transferred
upon signature of the present agreement to Mr. Dr. Cornelius Gotze,
attorney-at-law in Frankfurt/Main, until transferred to an independent
escrow agent chosen by the Buyer after the parties have entered into an
escrow agreement based on the restrictions on the transfer of shares of
Bogen Stock set forth in the present agreement and the provisions of
Schedule 1.12. hereto, such Escrow Agreement not providing further
restrictions on the transfer of shares, other than the restrictions
provided under the present agreement and the Schedules hereto. The
transfer to the Escrow Agent will be executed upon written instruction to
Mr. Gotze, such written instruction to be mutually agreed and supplied by
the Sellers and the Buyer. The parties agree to enter in such escrow
agreement within ten days after the date of signature of the present
agreement. The transfer of the shares of Bogen Stock to the Sellers will
be carried out according to section III. of this contract and is subject
to the restrictions hereunder.
<PAGE>
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III. Transfer of Bogen Stock
----------------------------
1. The disposition of the shares of Bogen Stock which constitute a part of
the purchase price will be carried out according to the laws of the
applicable State of the United States and the US Securities Laws. The
Buyer hereby transfers the said shares of Bogen Stock to the Sellers. The
rights in the shares of Bogen Stock are embodied by certificates that
will be delivered to the Sellers upon signature of the present agreement.
The Sellers hereby accept the transfer of the said shares to the
conditions set out in the present agreement.
2. The Buyer shall be obliged to have the shares of Bogen Stock transferred
hereunder registered at own expenses within their next offering or on
demand of one of the Sellers whichever will occur first; provided,
however, that the Sellers shall pay for their portion of any underwriting
discounts and commissions attributable to the sale of securities. With a
view to making available the benefits of certain rules and regulations of
the Securities and Exchange Commission that may permit the sale of
restricted securities, as such term is used in the Securities Act of
1933, as amended, to the public without registration, the Buyer agrees to
use its best efforts to furnish to the Sellers forthwith upon written
request a copy of the most recent annual or quarterly report of the
Buyer, and such other reports and documents filed with the Securities and
Exchange Commission as may be reasonably requested by the Sellers in
order to avail itself of any rule or regulation of the Securities and
Exchange Commission allowing the sale of certain shares of Bogen Stock
without registration.
3. The transfer of the shares of Bogen Stock is subject to the restrictions
hereunder and to the restrictions set forth in Schedule 1.12. hereto.
<PAGE>
6
3.1. During a period of twelve months beginning on the date of
signature of the present agreement (hereinafter referred to as
"Twelve-Month Ban") the Sellers are not entitled to dispose
whether by selling, leasing or pledging of the shares of Bogen
Stock. After the expiration of the Twelve-Month Ban the Sellers
are entitled to dispose of up to but not exceeding 152,000 shares
of Bogen Stock. For the remaining 306,000 shares of Bogen Stock
the limitation of the right of disposal remains in force for an
additional period of twelve months after expiration of the
Twelve-Month Ban.
3.2. The Buyer has issued 3,400,000 warrants to purchase common stock
of the Buyer in 1993 (hereinafter referred to as "Warrants").
These Warrants expire at the latest in October 2000, provided that
they were not exercised before this date.
Notwithstanding the foregoing in section 3.1. above the Sellers
are free to dispose of up to but not exceeding 92,000 shares of
Bogen Stock, when and as far as 80% (eighty percent) of these
Warrants have either been exercised or have expired. The amount of
shares of Bogen Stock transferable after the expiration of the
Twelve-Month Ban is increased accordingly and the amount of shares
of Bogen Stock remaining under the limitation provided above is
reduced accordingly.
3.3. All restrictions set out in this section 3. expire effective
immediately for one or both Sellers if the respective Seller
terminates his Management Contract with the Company for cause, in
particular in the event that
3.3.1. the appointment of the Managing Director as Managing
Director of the Company is revoked without cause,
3.3.2. an additional Managing Director (except of replacement of
the other Managing Director to the extent permitted under
the Management Contract) or a permanent representative is
appointed by the Buyer with the right to instruct the
Managing Director in the normal course of business,
<PAGE>
7
3.3.3. the sphere of activities or the power to represent the
Company is materially restricted,
3.3.4. the Buyer sells all or substantially all of the tangible
or intangible assets or properties of the Company,
3.3.5. the Buyer sells a majority participation in the Company.
3.4. Each Seller agrees to the placement of a legend on each
certificate evidencing the ownership in the shares of Bogen Stock
which provides that the transfer of such shares of Bogen Stock is
restricted hereunder. Such legend shall be in form and content
satisfactory to the Buyer and its counsel, subject to the consent
of the Sellers.
3.5. To secure the compliance with the restrictions hereunder the
Sellers agree that the shares of Bogen Stock acquired by the
Sellers hereunder will be deposited with an independent
escrow agent to be named by the Buyer. All rights of each Seller
in the shares, including but not limited to the voting rights,
remain unaffected. The rights of the distribution of profits will
be delivered into the Escrow Fund to the benefit of each Seller
(except such distributions may be applied for the benefit of the
Buyer in the event certain set-off rights are applicable).
As far as the release of the deposited shares under this section
3.5. does not conflict with the restrictions set forth in Schedule
1.12. known to and binding upon the Escrow Agent, the Escrow Agent
shall release the deposited shares in Bogen Stock to the Sellers
as soon as and to the extent that one of the following occurs
3.5.1. the Escrow Agent receives a common instruction in writing
by the Buyer and the respective Sellers to release the
shares of Bogen Stock in whole or in part, or
3.5.2. upon written notice of the respective Seller to the
Escrow Agent and limited to the respective number of
shares, in the event that the Twelve-Month-Ban or the
additional restriction period pursuant to section 3.1.
above has expired,
<PAGE>
8
3.5.3. upon written notice of the respective Seller to the
Escrow Agent, that the Managing Directors Contract has
been terminated for cause according to Section 3.3.
above,
3.5.4. the Escrow Agent is presented a final legal judgment
stating that the Buyer is obligated to consent to release
of the shares in whole or in part. In particular the
Buyer is obligated to consent to the release of the
deposited shares in Bogen Stock in the event that the
respective Seller is entitled to transfer an additional
number of shares of Bogen Stock within the
Twelve-Month-Ban or the additional limited period
according to section 3.2.
4. As long as the Sellers own together not less than 300,000 shares of Bogen
Stock as adjusted for stock splits, stock dividends, reorganizations and
the like, the Sellers are entitled to nominate one director to the Board
of Directors of the Buyer. The Buyer will make all declarations that
might be necessary to grant the right above to the Sellers.
According to the internal arrangement between the Sellers the first
director nominated by the Sellers shall be the Seller No. 1.
IV. Warranties and Representations
----------------------------------
1. Each Seller warrants to the exclusion of all further liability for
whatever legal reason, respectively, that
1.1. that the statements set out in section I. above are correct,
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9
1.2. the Company is a Gesellschaft mit beschrankter Haftung duly
organized, validly existing and in good standing under the
German Laws and has the corporate power and lawful authority to
own, lease and operate its assets, properties and business and
to carry on its business as now conducted,
1.3. the Company has at present only the following subsidiaries:
SATELCO AG, Switzerland, SPEECH DESIGN U.K. Ltd., United
Kingdom, SPEECH DESIGN ISRAEL, Ltd., Israel. To the best
knowledge of the Sellers and as verified by the Company's
auditors the subsidiaries are duly organized, validly existing
and in good standing under the respective laws and have the
corporate power and lawful authority to own, lease and operate
their assets, properties and carry on their business as
currently conducted.
1.4. the respective Seller has the full legal right and power and all
authority and approval required to enter into, execute and
deliver the present agreement and to perform fully his
obligations hereunder, which shall be a valid and legally
binding agreement,
1.5. As of the date of signature of the present agreement, each
Seller owns the number of shares in the company as is the sum of
the numbers and with a nominal value as is set forth in section
I Preliminary statements and the capital contributions in
connection with these shares are fully paid. Such shares are
owned by each Seller free and clear of all liens and other
restrictions. The transfer of the shares in the Company pursuant
to the terms of the present agreement shall vest in the Buyer
full legal and beneficial title to such shares free and clear of
all liens and other restrictions. The shares of each Seller
transferred hereunder are all of the shares held by the
respective Seller. To the best knowledge of the Sellers the
remaining shares in the share capital which were not transferred
hereunder are owned by the Buyer, assuming that no agreement on
the transfer of shares between the Buyer and a third party
exists.
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10
1.7. Financial statements
--------------------
1.7.1. The unaudited March 31, 1998 financial statements as
enclosed as Schedule 1.7.1. have been prepared from the
books and records of the Company and its subsidiaries in
accordance with the applicable laws and generally
accepted accounting principles, applied on a consistent
basis. To the best of the Sellers' knowledge the March
31, 1998 financial statements present fairly the
financial condition of the Company and its subsidiaries.
1.7.2. The accounts receivable of the Company and its
subsidiaries as set forth on the March 31, 1998 financial
statements or arising thereafter are valid and genuine,
have arisen solely out of bona fide sales and performance
of services or other business transactions in the
ordinary course of business consistent with past practice
and are not subject to valid defenses, set-offs or
counterclaims, and to the best knowledge of the Sellers,
are collectible in the ordinary course of business.
1.7.3. The accounts payable of the Company and its subsidiaries
as set forth on the March 31, 1998 financial statements
or arising thereafter are valid and genuine.
1.7.4. All inventory of the Company and its subsidiaries
reflected on the March 31, 1998 financial statements or
acquired thereafter, was acquired and has been maintained
in the ordinary course of the business consistent with
past practice and is of good and merchantable quality
(subject to the recorded reserve for obsolescence).
1.7.5. All material liabilities and obligations of the Company
and its subsidiaries, whether absolute or accrued, which
existed at the date of the March 31, 1998 financial
statements have been disclosed in the balance sheets
included in the Financial Statements to the extent such
liabilities were required to be disclosed under the
applicable laws.
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1.8. Taxes
-----
To the best knowledge of each Seller,
1.8.1. the Company and its subsidiaries have each timely filed
all returns required to be filed by it with respect to
all taxes and paid all taxes required to be paid by it,
or have had such taxes paid on its behalf;
1.8.2. all taxes that are required to be collected or withheld
by the Company or its subsidiaries have been duly
collected or withheld and any such amounts that are
required to be remitted to any taxing authority have been
duly remitted by the Company or its subsidiaries,
1.8.3. the accruals for taxes in the March 31, 1998 financial
statements are adequate to the amount of all unpaid
liability for taxes, with the exception of the tax
liabilities disclosed in Schedule 1.8.3. hereto,
1.8.4. there is no challenge, dispute or current audit regarding
taxes by governmental authorities.
1.9. Loans. Neither the Company nor any of its subsidiaries is in
default under any loan. No loan agreement of the Company contains
a provision on the termination of the loan agreement as a result
of the transaction contemplated hereby.
1.10. Property. The Company does not own real property. All personal
property included on the March 31, 1998 financial statements is
held by the Company and, to the best knowledge of the Sellers, by
its subsidiaries and is free and clear of all liens and other
encumbrances, except for immaterial assets.
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12
1.11. Contracts. All existing Bank contracts are enclosed in Schedule
1.11. hereto. Other material contracts are, to the best knowledge
of the Sellers, in full force and enforceable in accordance with
their terms and, to the best knowledge of the Sellers, neither the
Company nor any other party hereto has breached any material
provision of such contract. No Bank contract and, to the best
knowledge of the Sellers, no other material contract contains a
provision on the termination of such contract by reason of the
transactions contemplated under the present agreement and no
party's consent to such transactions is required.
1.12. Litigation and Claims. The Sellers have no knowledge of pending or
threatening litigation, arbitration, government action or audit,
with the exception of the issues stated in Schedule 1.12. hereto
and with the exception of litigation relating to the collection of
accounts receivable in the normal course of business. There is
presently no outstanding judgment of any court of justice, court
of arbitration or governmental authority against the Company
affecting the company or its assets.
1.13. Insurances. To the best knowledge of the Sellers there have been
no changes in insurance policies since December 31, 1997 and the
Company has received no notice that it is in default with respect
to any provision of any such policies.
1.14. Employment Matters. Listed on Schedule 1.14. hereto are all
contracts of the Company and its subsidiaries regarding employment
of an employee who earned more than US$ 100,000. The Company does
not provide any Pension or retirement stock option, severance,
life, health, medical or disability benefits other than benefits
required under and provided in compliance with applicable law. No
strikes or significant slow downs, work stoppages or other similar
labor actions by any group of employees of the Company or any of
its subsidiaries have occurred or have been threatened.
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13
1.15. Absence of certain changes. Since March 31, 1998 no material
adverse changes of the financial situation of the Company or its
subsidiaries presented by the March 31, 1998 financial statements
have occurred, with exception for such changes caused by the
proper and customary business or disclosed herein or in other
filings or releases made after the date thereof. Since December
31, 1997, the Company has conducted the business only in the
ordinary and usual course in accordance with past practices, in
particular there have occurred
1.15.1. no increases in the salaries or other compensation or
fringe benefits or any advance or loan to officers,
directors, employees or shareholders of the Company or
its subsidiaries (except normal merit increases made in
the ordinary course of business and consistent with the
past practice),
1.15.2. no material adverse change or threat of such change in
the Company's relations with suppliers or customers,
with the exclusion of such threatening changes disclosed
in Schedule 1.14.2. hereto,
1.15.3. no write-offs as uncollectible of any accounts receivable
of the Company or write-downs of the value of any assets,
other than immaterial amounts or in the ordinary course
of business consistent with the past practice.
2. The Buyer warrants to the exclusion of all further liability for
whatever legal reason, that
2.1. the Buyer is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware and has
the corporate power and lawful authority to own, lease and
operate its assets, properties and business and to carry on its
business as now conducted,
2.2. the Buyer has the full legal right and power and all authority
and approval required to enter into, execute and deliver the
present agreement and to perform fully his obligations
hereunder,
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14
2.3. the Buyer has an authorized capital stock consisting of
Preferred Stock and of 50,000,000 shares of common stock (herein
referred to as "Bogen Stock").
2.4. the Buyer is fully authorized to issue the 458,000 shares of
Bogen Stock to the Sellers,
2.5. the shares of Bogen Stock to be issued in connection with this
transaction have been duly authorized by the Buyer and, when
delivered in accordance with this agreement shall be validly
issued and fully paid and nonassessable and the Sellers will
receive 458,000 shares of Bogen Stock free and clear of any
lien, option or other encumbrances, other than the restrictions
on transferability imposed by the applicable securities laws on
any transfer of shares of common stock of any corporation quoted
on the stock exchange or the restrictions set forth in the
present agreement or the Escrow Agreement to be entered into
between the parties hereto, such Escrow Agreement not providing
further restrictions on the transfer of shares, others than the
restrictions provided under the present agreement and the
Schedules hereto.
2.6. all contingently necessary consents and agreements necessary for
the nomination of the person named by the Sellers to be
nominated as a member of the Board of Directors are at the
disposal of the Buyer's management or directors.
2.7. to the best knowledge of the Buyer, its 1997 Annual Report on
Form 10-K as delivered to the Sellers did not contain any untrue
statement of material fact, or fail to state any material fact
required to be stated herein or necessary to make the statements
made therein not materially misleading as of the date thereof.
Since such date no material adverse changes of such financial
situation has occurred, with exception for such changes caused
by the proper and customary business or disclosed in other
filings (including the form 10-Q for the quarter ended March 31,
1998) or releases made after the date thereof.
<PAGE>
15
3. Apart from these warranties, no other warranties or liabilities whether
factual or legal are given by the parties. The parties have such
knowledge and experience in financial and business matters that they are
able of evaluating the merits and risks of the transactions contemplated
hereunder.
4. The Sellers shall jointly indemnify and hold harmless the Buyer from any
losses or damages arising out of or due to a breach of any representation
or warranty contained in this agreement up to but not exceeding one third
of the indemnifiable losses and damages.
5. The Buyer shall indemnify and hold harmless each Seller from any losses
or damages arising out of or due to a breach of any representation or
warranty contained in this agreement.
6. No party shall be liable to any other party for indemnification of any
losses under section 4. or section 5. above unless such indemnifiable
loss or damage in the individual case exceeds DM 75,000.--(seventy-five
thousand Deutsch Marks) or unless and until the aggregate amount of all
such indemnifiable losses or damages exceeds DM 300,000.--(three
hundred thousand Deutsch Marks) in which event, the indemnification of
the respective party shall apply to the aggregate amount of all such
losses and damages.
7. Any action or claims arising under this section IV. shall be
statute-barred two years after the signature of the present agreement.
Notwithstanding the foregoing any claim arising out of any breach or
inaccuracy of any representation or warranty made by any Seller under
Section 1.7. Financial statements shall be statute-barred at the latest
60 days after the audited financial statements of the Company for the
fiscal year 1998 have been finalized.
8. The Sellers hereby accept the provisions of this section 8. as far as
required by the U.S. securities laws relating to private placement of
securities:
<PAGE>
16
8.1. Accredited Investor Status. Each of the Sellers has received a
copy of the 1997 Annual Report on Form 10-K of the Buyer and has
had an opportunity to review the document and ask questions
regarding such document, the Buyer and its business plans and
prospects of the officers and management employees of the Buyer.
Each seller has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and
risks of the transactions contemplated hereby and his acquisition
of shares of Bogen Stock in connection therewith. Each Seller
confirms that the Buyer has made available to him the opportunity
to ask questions of the officers and management employees of the
Buyer and to acquire additional information about the business and
financial condition of the Buyer. Each Seller is financially able
to bear the economic risk of an investment in such shares of Bogen
Stock and has no need for liquidity in this investment.
Furthermore, the financial capacity of each Seller is of such a
proportion that the total costs of each Seller's investment in the
shares of Bogen Stock is not material when compared with such
Seller's total financial capacity. Each Seller is an "accredited
investor" as defined in Rule 501.
8.2. Acquisition of Bogen Stock for Investment. Each Seller is
acquiring the shares of Bogen Stock to be acquired by him for his
own account, for investment and not with a view toward of for sale
in connection with any distribution thereof in violation of any
federal or state securities or "blue sky" laws. Each Seller
acknowledges and agrees that any shares of Bogen Stock to be
delivered in connection herewith will not have been registered
under the U.S. Securities Act of 1933, as amended (the "Securities
Act") or any United States state securities laws and are being
sold hereunder without registration pursuant to a claimed
exemption under the provisions of the Securities Act which
depends, in part, upon his investment intention. Accordingly, each
Seller acknowledges and agrees that he must bear the economic risk
of an investment in the Buyer for an indefinite period of time.
Each Seller acknowledges and agrees that his shares of Bogen Stock
may not be sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of without registration under
the Securities Act, except pursuant to an exemption from such
<PAGE>
17
registration available under the Securities Act, and without
compliance with state, local and foreign securities laws, in each
case, to the extent applicable. Each Seller acknowledges that he
is the position of the Securities and Exchange Commission (the
"SEC") that the statutory basis for such exemption would not be
present if his representation merely meant that his present
intention was to hold such securities for a short period, such as
the capital gains period of tax statutes, for a deferred sale, for
a market rise, assuming that the market develops, or for any other
fixed period. Each Seller acknowledges and agrees that, in the
view of the SEC, a purchase now with an intent to resell would
represent a purchase with an intent inconsistent with his
representation to the Buyer and the SEC might regard such a sale
or disposition as a deferred sale to which such exemptions are not
available.
Each Seller understands and acknowledges that the shares of Bogen
Stock are being offered and sold pursuant to an exemption from
registration under the Securities Act that depends on the
representations made by each Seller in this Agreement and that the
Buyer is relying on such representations as an condition precedent
to its issuing the Bogen Stock to each Seller. Each Seller
acknowledges and agrees that Rule 144 requires, among other
conditions, a one-year holding period prior to the resale (in
limited amounts and only pursuant to the terms and conditions of
Rule 144) of securities acquired in a non public offering without
having to satisfy the registration requirements of the Securities
Act. Each Seller acknowledges and agrees that the Buyer may, if it
desires, permit the transfer of the shares of Bogen Stock out of
his name only when his request for transfer is accompanied by any
opinion of counsel, in form and content satisfactory to the Buyer
and its counsel, that the sale or the proposed transfer complies
with an applicable exemption from the registration requirements of
the Securities Act, together with such other documentation as
counsel for the Buyer may in its sole discretion require as a
condition precedent in order to make a determination that the
proposed sale of transfer will not be a violation of the
Securities Act or any applicable state "blue sky" laws
(collectively, the "Securities Law") and consents to such
restrictions.
<PAGE>
18
V. Non-Competition Clause
-------------------------
1. During a period of five years upon signature of the present agreement
(hereinafter referred to as "Non-Competition Period") each of the
Sellers shall not whether directly or indirectly
1.1. hire, solicit or encourage any employee of the Company or any of
its affiliates to leave the employment of the Buyer or any of its
affiliates, or
1.2. hire, solicit or encourage any consultant under contract with the
Company or any of its affiliates to cease to work with the Company
or any of its affiliates, or
1.3. actively engage in competing business transactions, by way of
employment or self-employment, occasionally or commercially, or
own an interest in any such business as a partner, shareholder,
director, officer, principal, agent, employee, trustee,
consultant, or in any other relationship or capacity, other than
owning shares of the Company or shareholders of the Company or
less than 1% of the outstanding stock of any publicly traded
company.
Competing business transactions in terms of section 1.3. shall be
considered the development, production and/or distribution of
supplementary electronical equipment for telephone facilities
and/or services, such as PABX peripherals and unified messaging
systems, including, without limitation, any voicemail via voice or
e-mail, computer telephony integration and the like. The
geographic scope of application is limited to Europe.
2. During the Non-Competition Period as defined above no additional
compensation for the abstention from acts of competition is to be paid to
the Sellers, such contingent compensations to be regarded as fully
compensated by the purchase price.
<PAGE>
19
VI. Company Consents, Waiver of Preemption Rights
-------------------------------------------------
1. The Buyer and the Sellers are the sole shareholders of the Company. The
Buyer and the Sellers herewith grant the consent to the assignment of all
shares owned by the Sellers to the Buyer hereunder.
2. The Sellers herewith waive all preemption rights in the shares of the
Company according to section 12. of the company statutes of Speech Design
Gesellschaft fur elektronische Sprachverarbeitung mbH and all options
rights granted in the Transfer and Option agreement dated August 21, 1995
(Notary deed No. 204/1995 of notary Eckart Wilcke, Frankfurt am Main) and
the amendment hereto dated July 28, 1997 (Notary deed No. 2136K/1997 of
notary Franz Kelch, Munich) for the sale of the shares in the Company to
the Buyer hereunder.
VII. Close Cooperation
----------------------
1. The parties herewith agree to cooperate closely. Namely the Buyer agrees
to consult the Sellers in all matters relating the international
expansion of the business of the Company, as long as the respective
Seller is a Managing Director of the Company.
2. The parties agree, that all notices to third parties and all other
publicity concerning the transactions contemplated by this agreement
shall be agreed between them before the initial release. This provision
does not apply to announcements or filings necessary under applicable
securities laws. The Buyer will inform the Sellers on all such
announcements or filings by the way of providing a copy thereof.
VIII. General Provisions
------------------------
1. All notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing by registered mail or
telefax to the address of the addressee first above stated or such other
address as the party in question may have substituted therefor by notice
in accordance with this provision.
<PAGE>
20
2. There are no subsidiary verbal agreements in respect to the subject
matter contained herein. The present agreement may be amended only by
notary deed.
3. This agreement, including all obligations arising out of warranties and
representations given hereunder, shall be governed by the laws of the
Federal Republic of Germany, except as otherwise provided in this
agreement. As provided in section III. hereunder the disposition of the
shares in Bogen Stock is carried out according to the Laws of the State
of Delaware and the applicable US security laws. The Munich Law Courts
shall have exclusive jurisdiction.
4. Should any provision of the present agreement be or become invalid, this
shall not affect the validity of the remaining provisions. The parties
shall replace the invalid provision by mutual agreement by a regulation
which comes closest to the economic purpose of the invalid provision. The
same shall apply in the event that this agreement is incomplete. This
provision applies also if the invalidity or unenforceability of a
provision is due to the extent of a time limit or period or of a
geographic area. In this case the legally permitted time limit or period
or geographic area shall be applicable.
IX. Costs, executed copies
--------------------------
1. Each party agrees to bear the fees and costs of all agents, consultants,
brokers and lawyers employed by it in connection with the transactions
contemplated by this agreement. The costs of this notary deed shall be
borne by the Buyer.
2. This notary deed is made
- in triplicate - for the Buyer (1)
- for the Seller No. 1 (1)
- for the Seller No. 2 (1)
- with certified copies - for the Company (1)
- for Mr. RA/WP/StB Walter
L. Grosse (1)
<PAGE>
21
The notary instructed the appeared persons, that
- in case of a transfer of shares in a GmbH a party will be
recognized by the company as the transferee and shareholder only
if his or her acquisition has been notified to the company
together with the submission of evidence of the transfer,
- that the transferee is bound by acts taken before such
notification by the company vis-a-vis seller or by the seller
vis-a-vis the company with respect to the shareholding
relationship,
- that the transferee is together with the seller liable for
contributions on the shares which are still outstanding at the
time of such notification.
The notary is asked to notify to the Company the acquisition of the shares by
the Buyer according to ss.16 GmbHG by means of submitting a certified copy of
this notary deed.
MANAGEMENT CONTRACT
entered into by and between
SPEECH DESIGN Gesellschaft fur elektronische Sprachverarbeitung mbH
Industriestra(beta)e 1, 82110 Germering
- hereinafter referred to as "the Company"
and
Mr. Kasimir Arciszewski
Schellingstra(beta)e 78,
80799 Munchen
- hereinafter referred to as "the Managing Director"
ss. 1
Sphere of Activities
1. The Managing Director (Geschaftsfuhrer) was appointed by the Company.
This appointment shall not exclude the additional appointment of Mr. Hans
Meiler. It is agreed, that the Managing Director and Mr. Hans Meiler will
be the sole managing directors of the Company during the Contract Term.
However, it is agreed by the parties that the Company shall be entitled
to appoint another Managing Director in any case of termination of the
Management Contract of Mr. Hans Meiler for whatever reason, such Managing
Director's sphere of activities to be limited to the sphere of activities
of Mr. Hans Meiler.
2. It shall be incumbent on the Managing Director to scrupulously conduct
the business of the Company and to perform the obligations assigned to
him by law, by the Company statutes as in effect from time to time and
the present contract with the appropriate responsibility.
<PAGE>
2
3. The Managing Director's principal function shall consist in the
management and supervision of the fields of sales and marketing, product
planning, finances as well as it includes the taking, coordination and
execution of all measures.
4. The Managing Director's activities shall be subject to the reciprocal
coordination with the other Managing Director.
5. The Managing Director will freely organize his sphere of activities and
is not bound by the observance of specific working hours or a specific
place of office.
ss. 2
Power of Representation
1. The Managing Director shall represent the company jointly with Mr. Hans
Meiler in and out of court as defined by his appointment and the actual
company statutes.
2. The Managing Director is released from the restrictions of section 181
German Civil Code ("prohibition of self contracting") for all
transactions between the Company on the one hand and majority-owned
enterprises of the Company on the other hand, namely at present SATELCO
AG, Switzerland, SPEECH DESIGN U.K. Ltd., United Kingdom, SPEECH DESIGN
ISRAEL, Ltd., Israel. Such release from the restrictions of section 181
German Civil Code applies also to the legal transactions undertaken in
the past by the Managing Director acting as representative of the Company
on the one hand and as representative of the above listed enterprises on
the other hand. This consent does not include any other consent or
approval, that might be necessary in relation with such transactions for
whatever other legal reason.
3. The Managing Director shall be bound to the resolutions and instructions
of the Shareholders' Meeting. The Shareholders' Meeting may in particular
establish general policies with regard to the way the business is to be
conducted.
<PAGE>
3
ss. 3
Contract Term, Termination
1. This agreement enters into force on July 1st, 1998 (hereinafter referred
to as "Effective Date") and will end after three years on June 30th,
2001 (hereinafter referred to as "Contract Term") without notice. During
the Contract Term the right to terminate this agreement without cause is
excluded. At the latest six months before the end of contract the parties
may enter into negotiations on the renewal of this contract.
2. Either party shall have the right to terminate this agreement with cause
for important reasons by written notice effective immediately. Important
reasons in the meaning of the sentence above are in particular
2.1. for the Company, if the Managing Director:
2.1.1. is convicted of any relevant crime or felony, or
2.1.2. refuses to comply with material oral or written decisions
or instructions of the Company's shareholders, provided the
Managing Director is given written notice and an adequate
cure period of at least ten days, and such failure is not
cured within such cure period, or
2.1.3. is grossly negligent or dishonest in connection with the
performance of his duties hereunder, or
2.1.4. materially breaches affirmative or negative covenants or
undertakings hereunder.
<PAGE>
4
2.2. for the Managing Director, if
2.2.1. the appointment of the Managing Director as Managing
Director of the Company is revoked without cause,
2.2.2. contrary to Section 1 hereunder an additional Managing
Director or a permanent representative is appointed by the
shareholders of the Company with the right to instruct the
Managing Director in the normal course of business,
2.2.3. the sphere of activities or the power to represent the
Company is materially restricted.
3. In addition the Managing Director shall have the right to terminate this
agreement with six months prior written notice, which notice will be
effective by the end of the calendar month in which it is given, in the
event that
3.1. the shareholders of the Company sell all or substantially all of
the tangible or intangible assets or properties of the Company,
3.2. the shareholders of the Company sell a majority participation in
the Company.
Notwithstanding ss.1 section 1 above the Company shall be entitled to
appoint additional managing directors if the Managing Director terminates
the Management Contract pursuant to section 3.1. or 3.2. above.
ss. 4
Compensation
1. The Managing Director shall receive for his services a yearly gross
salary amounting to 120.000,-- Deutsch Marks, payable in twelve equal
monthly installments of 10.000,-- Deutsch Marks each at the end of each
calendar month reduced by the statutory deductions. At the latest three
months prior to the end of every contract year, the aforesaid
remuneration will be subject to an upward revision, as may be agreed by
the parties.
<PAGE>
5
2. In addition the Managing Director shall receive an annual
performance-based bonus (hereinafter referred to as "the Bonus"). The
parties agree that the guaranteed Bonus for the calendar year 1998 will
be at DM 54.000,--. Starting with the calendar year 1999 the parties will
determine the conditions of the Bonus upon a formula to be negotiated
between the parties in separate arrangements at the beginning of each
calendar year. The parties agree, that the Bonus will be targeted at
DM 54.000,-- if the trend of business meets the expectations reflected in
the company plans for the respective calendar year. The annual Bonus is
payable on or before the later of a) March 31 of the following fiscal
year, or b) ten days after the audited financial statements for the prior
fiscal year of the Company have been finalized.
This agreement replaces all other arrangements on bonuses to be paid to
the Managing Director for the year 1998.
3. In addition the Managing Director is entitled to participate in the Stock
option plan of Bogen Communications International, Inc., as defined in
Exhibit A.
4. In addition to the social security contributions payable by employer by
act of law the Company will also bear the employee's contributions to the
statutory unemployment insurance and to the statutory social security
pension insurance and will therefore pay the Managing Director a monthly
amount corresponding to the employee's contributions.
ss. 5
Fringe Benefits
1. During the contract term the Company shall provide the Managing Director
with a Company car of the upper middle class, the leasing rates for which
shall not exceed DM 21.000,-- p.a., which the Managing Director may also
use for private travel. Possibly accruing wage tax shall be borne by the
Managing Director.
2. Contingent existing personal accident insurances and direct life
insurances remain maintained during the Contract Term at current premium
levels subject to ordinary premium increases.
<PAGE>
6
ss. 6
Expenses
The Company is under the obligation to reimburse the Managing Director for the
expenses incurred by him to the extent that such expenses are necessary and
appropriate. These expenses shall in the individual case be documented in
compliance with the applicable tax regulations unless these expenses are
accounted for at a flat rate in accordance with the said tax regulations.
ss. 7
Vacation
1. The Managing Director shall be entitled to a vacation of six weeks per
annum.
2. Safeguarding the interests of the Company, the proposed time of the
vacation shall be subject to the coordination with the other Managing
Director and with the shareholders.
ss. 8
Continued payment of Salary in the Event of Illness
1. If the Managing Director is prevented from performing his duties by
illness or by other circumstances beyond his control, he shall receive
the remuneration as set out in ss.4 and ss.5 up to a period of 6 (six)
months beginning with the month succeeding the month in which the
prevention begins.
2. Any compensation for wages paid by third parties, e.g. arising from
disability income insurance or otherwise in respect of salary, shall be
deducted from the continued payment of the salary owed by the Company in
such a way that the amount of the aforesaid compensation together with
the Company's continued payment of the salary amounts to the net base
salary the Managing Director would receive if he were able to work.
<PAGE>
7
ss. 9
Non-Competition Clause
1. During the Contract Term and for three years after the expiration of the
Management Contract (hereinafter referred to as "the Non-Competition
period") the Managing Director shall not whether directly or indirectly
1.1. hire, solicit or encourage any employee of the Company or any of
its affiliates to leave the employment of the Buyer or any of
its affiliates, or
1.2. hire, solicit or encourage any consultant under contract with
the Company or any of its affiliates to cease to work with the
Company or any of its affiliates, or
1.3. actively engage in competing business transactions, by way of
employment or self-employment, occasionally or commercially, or
own an interest in any such business as a partner, shareholder,
director, officer, principal, agent, employee, trustee,
consultant, or in any other relationship or capacity, other than
owning shares of the Company, Bogen Communications
International, Inc., or shareholders of the Company or less than
1% of the outstanding stock of any publicly traded company.
Competing business transactions in terms of section 1.3. shall
be considered a) the development, production and/or distribution
of supplementary electronic equipment for telephone facilities
and/or services, such as PABX peripherals and unified messaging
systems, including, without limitation, any voice mail via voice
or e-mail, computer telephony integration and the like b) and
any other business in which the Company significantly
participates during the Contract Term by development, production
and/or distribution. The geographic scope of application is
limited to Europe and any other area in which the Company or its
affiliates do business during the Contract Term.
2. During the Non-Competition Period a compensation for the abstention from
acts of competition is to be paid by the Company. The yearly compensation
will amount to 50% of the average fixed remuneration of the Managing
Director paid to the Managing Director in the last twelve months before
the expiration of the
<PAGE>
8
Management Contract (DM 60.000,-- p.a.). The compensation is payable in
equal monthly installments at the end of each calendar month.
3. The Company may waive the prohibition of competition in whole or for
individual transactions at any time during the Contract Term or during
the Non-Competition Period with six months prior written notice. The
obligation to pay the compensation to the Managing Director remains in
full force if the waiver relates only to individual transactions and
expires upon the expiration of such notice period if the Company fully
waives its prohibition rights hereunder.
4. In each case of violation of his obligations under this ss.9, the
Managing Director shall pay a penalty of DM 50.000,--. In case of
permanent violation of his obligations hereunder such penalty is to be
paid for each month during such violation period. The right of the
Company to claim for damages and/or injunctive relief remains unaffected.
ss. 10
Business and Trade Secrets
The Managing Director shall be under the obligation to observe unrestricted and
complete secrecy of any and all Business and Trade Secrets as well as of all
other confidential information or details regarding the Company or its business
enterprise. The foregoing secrecy obligations will be effective even after
termination of this contract.
<PAGE>
9
ss. 11
Delivery of Documents
Upon termination of this contract the Managing Director shall be under the
obligation to return all documents, records, all existing electronic files and
other material relating to his activities as Managing Director to the Company
without being asked.
ss. 12
Inventions, Copyright
1. Any rights in inventions or technical improvements made or worked out by
the Managing Director in the course of his service for the Company, in
relation with his activities for the Company, owing to his experience
resulting from his service for the Company or owing to works carried out
by the latter, may be exclusively used by the Company. Already at the
present time, the Managing Director shall assign all respective rights to
the Company. Regarding this matter the Company shall be under no
obligation to pay any additional remuneration. For lack of the Managing
Director's status as employee, the Act on Employee Inventions shall not
apply.
2. Where, related to any of his duties or to the experience resulting from
his service for the Company or to the performance rendered by the
Company, copyrights for works are vested in the person of the Managing
Director, it is agreed herewith that he shall already at the present time
assign the exclusive and gratuitous right of use therein to the Company.
ss. 13
Absence of Subsidiary Oral Agreements,
Amendments, Written Form
1. There are no subsidiary oral agreements. Any contractual amendments
require written form.
<PAGE>
10
2. The former contract of employment as Managing Director, including all
amendments and possible provisions as to the payment of bonuses, shall
cease to be in force upon the Effective Date.
ss. 14
Severability Clause
Should any provision of this contract be or become invalid or unenforceable,
this shall not affect the validity of the remaining provisions. The invalid or
unenforceable provision shall be replaced by a regulation which comes closest to
the economic purpose of the invalid provision. The same shall apply in the event
that this contract is incomplete. This provision applies also if the invalidity
or unenforceability of a provision is due to the extent of a time limit or
period or of a geographic area. In this case the legally permitted time limit or
period or geographic area shall be applicable.
ss. 15
Place of Performance and Legal Venue
Place of performance and legal venue for all legal disputes possibly arising out
of this contract shall be the legal seat of the Company.
ss. 16
Declaration of Intention
All declarations of intention made by the Managing Director concerning the
present contract shall be addressed to the CEO (Chief Executive Officer) or the
President of the sole shareholder.
This agreement is made in duplicate each copy being original, this day of
- ------------------------------- --------------------------
- the company - - the Managing Director -
represented by the shareholders
<PAGE>
11
5. The Managing Director's entire range of services including, if
appropriate, possible services performed for subsidiary corporations,
holding corporations or other companies as well as services rendered on
Sundays and holidays etc. shall be deemed to be compensated by the
remunerations payable by the Company under this contract. As far as the
respective companies pay the Managing Director a direct compensation for
such services these remunerations shall be set off against his
compensation under this contract, first of all against his participation
in yield, unless expressly otherwise agreed upon.
1. During the Contract Term the Managing Director shall be barred from
engaging in competing business transactions or acting on behalf of a
competing enterprise or establishing a competing enterprise or
participating in any such enterprise, whether directly or indirectly, by
way of employment or self-employment, occasionally or commercially, or to
render advice to such an enterprise.
2. Competition in terms of ss.1 shall be considered the development,
production and/or distribution of supplementary electronic equipment
for telephone facilities and/or services which belong to the respective
development, production and/or distribution program of the Company or of
supplementary electronic equipment for telephone facilities and/or
services the development, production and/or distribution of which is
definitely intended by the Company.
3. The Company may waive the prohibition of competition in whole or for
individual transactions.
MANAGEMENT CONTRACT
entered into by and between
SPEECH DESIGN Gesellschaft fur elektronische Sprachverarbeitung mbH
Industriestra(beta)e 1, 82110 Germering
- hereinafter referred to as "the Company"
and
Mr. Hans Meiler
Wastelbauerstra(beta)e 12
81247 Munchen
- hereinafter referred to as "the Managing Director"
ss. 1
Sphere of Activities
1. The Managing Director (Geschaftsfuhrer) was appointed by the Company.
This appointment shall not exclude the additional appointment of Mr.
Kasimir Arciszewski. It is agreed, that the Managing Director and Mr.
Kasimir Arciszewski will be the sole managing directors of the Company
during the Contract Term. However, it is agreed by the parties that the
Company shall be entitled to appoint another Managing Director in any
case of termination of the Management Contract of Mr. Kasimir Arciszewski
for whatever reason, such Managing Director's sphere of activities to be
limited to the sphere of activities of Mr. Kasimir Arciszewski.
2. It shall be incumbent on the Managing Director to scrupulously conduct
the business of the Company and to perform the obligations assigned to
him by law, by the Company statutes as in effect from time to time and
the present contract with the appropriate responsibility.
<PAGE>
2
3. The Managing Director's principal function shall consist in the
management and supervision of the fields of production and administration
as well as it includes the taking, coordination and execution of all
measures.
4. The Managing Director's activities shall be subject to the reciprocal
coordination with the other Managing Director.
5. The Managing Director will freely organize his sphere of activities and
is not bound by the observance of specific working hours or a specific
place of office.
ss. 2
Power of Representation
1. The Managing Director shall represent the company jointly with Mr.
Kasimir Arciszewski in and out of court as defined by his appointment and
the actual company statutes.
2. The Managing Director is released from the restrictions of section 181
German Civil Code ("prohibition of self contracting") for all
transactions between the Company on the one hand and majority-owned
enterprises of the Company on the other hand, namely at present SATELCO
AG, Switzerland, SPEECH DESIGN U.K. Ltd., United Kingdom, SPEECH DESIGN
ISRAEL, Ltd., Israel. Such release from the restrictions of section 181
German Civil Code applies also to the legal transactions undertaken in
the past by the Managing Director acting as representative of the Company
on the one hand and as representative of the above listed enterprises on
the other hand. This consent does not include any other consent or
approval, that might be necessary in relation with such transactions for
whatever other legal reason.
3. The Managing Director shall be bound to the resolutions and instructions
of the Shareholders' Meeting. The Shareholders' Meeting may in particular
establish general policies with regard to the way the business is to be
conducted.
<PAGE>
3
ss. 3
Contract Term, Termination
1. This agreement enters into force on July 1st, 1998 (hereinafter referred
to as "Effective Date") and will end after three years on June 30th,
2001 (hereinafter referred to as "Contract Term") without notice. During
the Contract Term the right to terminate this agreement without cause is
excluded. At the latest six months before the end of contract the parties
may enter into negotiations on the renewal of this contract.
2. Either party shall have the right to terminate this agreement with cause
for important reasons by written notice effective immediately. Important
reasons in the meaning of the sentence above are in particular
2.1. for the Company, if the Managing Director:
2.1.1. is convicted of any relevant crime or felony, or
2.1.2. refuses to comply with material oral or written decisions
or instructions of the Company's shareholders, provided the
Managing Director is given written notice and an adequate
cure period of at least ten days, and such failure is not
cured within such cure period, or
2.1.3. is grossly negligent or dishonest in connection with the
performance of his duties hereunder, or
2.1.4. materially breaches affirmative or negative covenants or
undertakings hereunder.
<PAGE>
4
2.2. for the Managing Director, if
2.2.1. the appointment of the Managing Director as Managing
Director of the Company is revoked without cause,
2.2.2. contrary to Section 1 hereunder an additional Managing
Director or a permanent representative is appointed by the
shareholders of the Company with the right to instruct the
Managing Director in the normal course of business,
2.2.3. the sphere of activities or the power to represent the
Company is materially restricted.
3. In addition the Managing Director shall have the right to terminate this
agreement with six months prior written notice, which notice will be
effective by the end of the calendar month in which it is given, in the
event that
3.1. the shareholders of the Company sell all or substantially all of
the tangible or intangible assets or properties of the Company,
3.2. the shareholders of the Company sell a majority participation in
the Company.
Notwithstanding ss.1 section 1 above the Company shall be entitled to
appoint additional managing directors if the Managing Director terminates
the Management Contract pursuant to section 3.1. or 3.2. above.
ss. 4
Compensation
1. The Managing Director shall receive for his services a yearly gross
salary amounting to 120.000,-- Deutsch Marks, payable in twelve equal
monthly installments of 10.000,-- Deutsch Marks each at the end of each
calendar month reduced by the statutory deductions. At the latest three
months prior to the end of every contract year, the aforesaid
remuneration will be subject to an upward revision, as may be agreed by
the parties.
<PAGE>
5
2. In addition the Managing Director shall receive an annual
performance-based bonus (hereinafter referred to as "the Bonus"). The
parties agree that the guaranteed Bonus for the calendar year 1998 will
be at DM 54.000,--. Starting with the calendar year 1999 the parties will
determine the conditions of the Bonus upon a formula to be negotiated
between the parties in separate arrangements at the beginning of each
calendar year. The parties agree, that the Bonus will be targeted at
DM 54.000,-- if the trend of business meets the expectations reflected in
the company plans for the respective calendar year. The annual Bonus is
payable on or before the later of a) March 31 of the following fiscal
year, or b) ten days after the audited financial statements for the prior
fiscal year of the Company have been finalized.
This agreement replaces all other arrangements on bonuses to be paid to
the Managing Director for the year 1998.
3. In addition the Managing Director is entitled to participate in the Stock
option plan of Bogen Communications International, Inc., as defined in
Exhibit A.
4. In addition to the social security contributions payable by employer by
act of law the Company will also bear the employee's contributions to the
statutory unemployment insurance and to the statutory social security
pension insurance and will therefore pay the Managing Director a monthly
amount corresponding to the employee's contributions.
ss. 5
Fringe Benefits
1. During the contract term the Company shall provide the Managing Director
with a Company car of the upper middle class, the leasing rates for which
shall not exceed DM 21.000,-- p.a., which the Managing Director may also
use for private travel. Possibly accruing wage tax shall be borne by the
Managing Director.
2. Contingent existing personal accident insurances and direct life
insurances remain maintained during the Contract Term at current premium
levels subject to ordinary premium increases.
<PAGE>
6
ss. 6
Expenses
The Company is under the obligation to reimburse the Managing Director for the
expenses incurred by him to the extent that such expenses are necessary and
appropriate. These expenses shall in the individual case be documented in
compliance with the applicable tax regulations unless these expenses are
accounted for at a flat rate in accordance with the said tax regulations.
ss. 7
Vacation
1. The Managing Director shall be entitled to a vacation of six weeks per
annum.
2. Safeguarding the interests of the Company, the proposed time of the
vacation shall be subject to the coordination with the other Managing
Director and with the shareholders.
ss. 8
Continued payment of Salary in the Event of Illness
1. If the Managing Director is prevented from performing his duties by
illness or by other circumstances beyond his control, he shall receive
the remuneration as set out in ss.4 and ss.5 up to a period of 6 (six)
months beginning with the month succeeding the month in which the
prevention begins.
2. Any compensation for wages paid by third parties, e.g. arising from
disability income insurance or otherwise in respect of salary, shall be
deducted from the continued payment of the salary owed by the Company in
such a way that the amount of the aforesaid compensation together with
the Company's continued payment of the salary amounts to the net base
salary the Managing Director would receive if he were able to work.
<PAGE>
7
ss. 9
Non-Competition Clause
1. During the Contract Term and for three years after the expiration of the
Management Contract (hereinafter referred to as "the Non-Competition
period") the Managing Director shall not whether directly or indirectly
1.1. hire, solicit or encourage any employee of the Company or any of
its affiliates to leave the employment of the Buyer or any of its
affiliates, or
1.2. hire, solicit or encourage any consultant under contract with the
Company or any of its affiliates to cease to work with the Company
or any of its affiliates, or
1.3. actively engage in competing business transactions, by way of
employment or self-employment, occasionally or commercially, or own
an interest in any such business as a partner, shareholder,
director, officer, principal, agent, employee, trustee, consultant,
or in any other relationship or capacity, other than owning shares
of the Company, Bogen Communications International, Inc., or
shareholders of the Company or less than 1% of the outstanding
stock of any publicly traded company.
Competing business transactions in terms of section 1.3. shall be
considered a) the development, production and/or distribution of
supplementary electronic equipment for telephone facilities
and/or services, such as PABX peripherals and unified messaging
systems, including, without limitation, any voicemail via voice or
e-mail, computer telephony integration and the like b) and any
other business in which the Company significantly participates
during the Contract Term by development, production and/or
distribution. The geographic scope of application is limited to
Europe and any other area in which the Company or its affiliates do
business during the Contract Term.
<PAGE>
8
2. During the Non-Competition Period a compensation for the abstention from
acts of competition is to be paid by the Company. The yearly compensation
will amount to 50% of the average fixed remuneration of the Managing
Director paid to the Managing Director in the last twelve months before
the expiration of the Management Contract (DM 60.000,-- p.a.). The
compensation is payable in equal monthly installments at the end of each
calendar month.
3. The Company may waive the prohibition of competition in whole or for
individual transactions at any time during the Contract Term or during
the Non-Competition Period with six months prior written notice. The
obligation to pay the compensation to the Managing Director remains in
full force if the waiver relates only to individual transactions and
expires upon the expiration of such notice period if the Company fully
waives its prohibition rights hereunder.
4. In each case of violation of his obligations under this ss.9, the
Managing Director shall pay a penalty of DM 50.000,--. In case of
permanent violation of his obligations hereunder such penalty is to be
paid for each month during such violation period. The right of the
Company to claim for damages and/or injunctive relief remains unaffected.
ss. 10
Business and Trade Secrets
The Managing Director shall be under the obligation to observe unrestricted and
complete secrecy of any and all Business and Trade Secrets as well as of all
other confidential information or details regarding the Company or its business
enterprise. The foregoing secrecy obligations will be effective even after
termination of this contract.
<PAGE>
9
ss. 11
Delivery of Documents
Upon termination of this contract the Managing Director shall be under the
obligation to return all documents, records, all existing electronic files and
other material relating to his activities as Managing Director to the Company
without being asked.
ss. 12
Inventions, Copyright
1. Any rights in inventions or technical improvements made or worked out by
the Managing Director in the course of his service for the Company, in
relation with his activities for the Company, owing to his experience
resulting from his service for the Company or owing to works carried out
by the latter, may be exclusively used by the Company. Already at the
present time, the Managing Director shall assign all respective rights to
the Company. Regarding this matter the Company shall be under no
obligation to pay any additional remuneration. For lack of the Managing
Director's status as employee, the Act on Employee Inventions shall not
apply.
2. Where, related to any of his duties or to the experience resulting from
his service for the Company or to the performance rendered by the
Company, copyrights for works are vested in the person of the Managing
Director, it is agreed herewith that he shall already at the present time
assign the exclusive and gratuitous right of use therein to the Company.
ss. 13
Absence of Subsidiary Oral Agreements,
Amendments, Written Form
1. There are no subsidiary oral agreements. Any contractual amendments
require written form.
<PAGE>
10
2. The former contract of employment as Managing Director, including all
amendments and possible provisions as to the payment of bonuses, shall
cease to be in force upon the Effective Date.
ss. 14
Severability Clause
Should any provision of this contract be or become invalid or unenforceable,
this shall not affect the validity of the remaining provisions. The invalid or
unenforceable provision shall be replaced by a regulation which comes closest to
the economic purpose of the invalid provision. The same shall apply in the event
that this contract is incomplete. This provision applies also if the invalidity
or unenforceability of a provision is due to the extent of a time limit or
period or of a geographic area. In this case the legally permitted time limit or
period or geographic area shall be applicable.
ss. 15
Place of Performance and Legal Venue
Place of performance and legal venue for all legal disputes possibly arising out
of this contract shall be the legal seat of the Company.
ss. 16
Declaration of Intention
All declarations of intention made by the Managing Director concerning the
present contract shall be addressed to the CEO (Chief Executive Officer) or the
President of the sole shareholder.
This agreement is made in duplicate each copy being original, this day of
- ------------------------------- -------------------------
- the company - - the Managing Director -
represented by the shareholders
<PAGE>
11
5. The Managing Director's entire range of services including, if
appropriate, possible services performed for subsidiary corporations,
holding corporations or other companies as well as services rendered on
Sundays and holidays etc. shall be deemed to be compensated by the
remunerations payable by the Company under this contract. As far as the
respective companies pay the Managing Director a direct compensation for
such services these remunerations shall be set off against his
compensation under this contract, first of all against his participation
in yield, unless expressly otherwise agreed upon.
1. During the Contract Term the Managing Director shall be barred from
engaging in competing business transactions or acting on behalf of a
competing enterprise or establishing a competing enterprise or
participating in any such enterprise, whether directly or indirectly, by
way of employment or self-employment, occasionally or commercially, or to
render advice to such an enterprise.
2. Competition in terms of ss.9 section 1 shall be considered the
development, production and/or distribution of supplementary electronic
equipment for telephone facilities and/or services which belong to the
respective development, production and/or distribution program of the
Company or of supplementary electronic equipment for telephone
facilities and/or services the development, production and/or
distribution of which is definitely intended by the Company.
3. The Company may waive the prohibition of competition in whole or for
individual transactions.
Exhibit 10.4
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of April 21, 1998
among
BOGEN COMMUNICATIONS INTERNATIONAL, INC. and
BOGEN COMMUNICATIONS, INC.,
VARIOUS FINANCIAL INSTITUTIONS
and
KEYBANK NATIONAL ASSOCIATION,
as Agent
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
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SECTION 1 DEFINITIONS................................................................................. 1
1.1 Definitions................................................................................. 1
1.2 Other Interpretive Provisions............................................................... 10
SECTION 2 COMMITMENTS OF THE BANKS; LETTER OF CREDIT, BORROWING AND CONVERSION PROCEDURES............. 11
2.1 Commitments................................................................................. 11
2.2 Loan Procedures............................................................................. 12
2.3 Letter of Credit Procedures................................................................. 13
2.4 Commitments Several......................................................................... 14
2.5 Certain Conditions.......................................................................... 14
SECTION 3 NOTES EVIDENCING LOANS...................................................................... 15
3.1 Notes....................................................................................... 15
3.2 Recordkeeping............................................................................... 15
SECTION 4 INTEREST.................................................................................... 15
4.1 Interest Rates.............................................................................. 15
4.2 Interest Payment Dates...................................................................... 15
4.3 Interest Periods............................................................................ 16
4.4 Setting and Notice of Eurodollar Rates...................................................... 16
4.5 Computation of Interest..................................................................... 16
SECTION 5 FEES........................................................................................ 16
5.1 Facility Fee................................................................................ 16
5.2 Letter of Credit Fees....................................................................... 17
5.3 Closing Fees................................................................................ 17
SECTION 6 REDUCTION AND TERMINATION OF THE COMMITMENTS; PREPAYMENTS................................... 17
6.1 Reduction or Termination of the Commitments................................................. 17
6.2 Voluntary Prepayments....................................................................... 17
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES............................................. 18
7.1 Making of Payments.......................................................................... 18
7.2 Application of Certain Payments............................................................. 18
7.3 Due Date Extension.......................................................................... 18
7.4 Setoff...................................................................................... 18
7.5 Proration of Payments....................................................................... 18
7.6 Taxes....................................................................................... 19
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SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS.................................... 20
8.1 Increased Costs............................................................................. 20
8.2 Basis for Determining Interest Rate Inadequate or Unfair.................................... 21
8.3 Changes in Law Rendering Eurodollar Loans Unlawful.......................................... 21
8.4 Funding Losses.............................................................................. 22
8.5 Right of Banks to Fund through Other Offices................................................ 22
8.6 Discretion of Banks as to Manner of Funding................................................. 22
8.7 Mitigation of Circumstances; Replacement of Affected Bank................................... 22
8.8 Conclusiveness of Statements; Survival of Provisions........................................ 23
SECTION 9 WARRANTIES.................................................................................. 23
9.1 Organization, etc........................................................................... 23
9.2 Authorization; No Conflict.................................................................. 23
9.3 Validity and Binding Nature................................................................. 24
9.4 Financial Condition......................................................................... 24
9.5 No Material Adverse Change.................................................................. 24
9.6 Litigation and Contingent Liabilities....................................................... 24
9.7 Ownership of Properties; Liens.............................................................. 24
9.8 Subsidiaries................................................................................ 24
9.9 Pension and Welfare Plans................................................................... 25
9.10 Investment Company Act...................................................................... 25
9.11 Public Utility Holding Company Act.......................................................... 25
9.12 Regulation U................................................................................ 25
9.13 Taxes....................................................................................... 25
9.14 Solvency, etc............................................................................... 25
9.15 Environmental Matters....................................................................... 26
9.16 Year 2000 Issue............................................................................. 27
9.17 Copyrights, Patents, Trademarks and Licenses, etc........................................... 27
9.18 Transactions with Affiliates................................................................ 27
9.19 Information................................................................................. 27
SECTION 10 COVENANTS................................................................................... 28
10.1 Reports, Certificates and Other Information................................................. 28
10.2 Books, Records and Inspections.............................................................. 30
10.3 Insurance................................................................................... 31
10.4 Compliance with Laws; Payment of Taxes and Liabilities...................................... 31
10.5 Maintenance of Existence, etc............................................................... 31
10.6 Financial Covenants......................................................................... 31
10.7 Limitations on Debt......................................................................... 32
10.8 Liens....................................................................................... 32
10.9 Restricted Payments......................................................................... 33
10.10 Mergers, Consolidations, Sales.............................................................. 33
10.11 Modification of Organizational Documents.................................................... 33
10.12 Use of Proceeds............................................................................. 34
10.13 Sale of Speech Design; Proceeds of Warrants................................................. 34
10.14 Further Assurances.......................................................................... 34
10.15 Transactions with Affiliates................................................................ 34
10.16 Employee Benefit Plans...................................................................... 34
10.17 Environmental Matters....................................................................... 34
10.18 Unconditional Purchase Obligations.......................................................... 35
10.19 Inconsistent Agreements..................................................................... 35
10.20 Business Activities......................................................................... 35
10.21 Advances and Other Investments.............................................................. 35
10.22 Maintenance of Property..................................................................... 36
10.23 Performance of Obligations.................................................................. 36
10.24 Leases...................................................................................... 36
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SECTION 11 EFFECTIVENESS; CONDITIONS OF LENDING, ETC................................................... 36
11.1 Initial Credit Extensions................................................................... 36
11.2 Conditions.................................................................................. 37
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.......................................................... 39
12.1 Events of Default........................................................................... 39
12.2 Effect of Event of Default.................................................................. 41
SECTION 13 THE AGENT................................................................................... 42
13.1 Appointment and Authorization............................................................... 42
13.2 Delegation of Duties........................................................................ 42
13.3 Liability of Agent.......................................................................... 42
13.4 Reliance by Agent........................................................................... 42
13.5 Notice of Default........................................................................... 43
13.6 Credit Decision............................................................................. 43
13.7 Indemnification............................................................................. 44
13.8 Agent in Individual Capacity................................................................ 44
13.9 Successor Agent; Assignment of Agency....................................................... 45
13.10 Withholding Tax............................................................................. 45
13.11 Collateral Matters.......................................................................... 46
SECTION 14 GENERAL..................................................................................... 47
14.1 Waiver; Amendments.......................................................................... 47
14.2 Confirmations............................................................................... 47
14.3 Notices..................................................................................... 47
14.4 Computations................................................................................ 48
14.5 Regulation U................................................................................ 48
14.6 Costs, Expenses and Taxes................................................................... 48
14.7 Subsidiary References....................................................................... 48
14.8 Captions.................................................................................... 49
14.9 Assignments; Participations................................................................. 49
14.10 Governing Law............................................................................... 50
14.11 Counterparts................................................................................ 51
14.12 Successors and Assigns...................................................................... 51
14.13 Indemnification by the Borrowers............................................................ 51
14.14 Forum Selection and Consent to Jurisdiction................................................. 52
14.15 Waiver of Jury Trial........................................................................ 52
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<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of April 21, 1998 (this "Agreement"), is
entered into among BOGEN COMMUNICATIONS INTERNATIONAL, INC. and BOGEN
COMMUNICATIONS, INC., each a Delaware corporation (singly, a "Borrower or
collectively, the "Borrowers"), the financial institutions that are or may from
time to time become parties hereto (together with their respective successors
and assigns, the "Banks") and KEYBANK NATIONAL ASSOCIATION (in its individual
capacity, "Key"), as agent for the Banks.
In consideration of the premises and the mutual agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1 DEFINITIONS.
1.1 Definitions. When used herein the following terms shall have the
following meanings:
Acquired Equipment means Equipment acquired by either of the Borrowers or
any Subsidiary as a result of an acquisition permitted by Section 10.10.
Acquisition Forecast means data prepared and submitted by the Borrowers in
connection with an acquisition including (i) forecasted financial statements
consisting of consolidated and consolidating balance sheets, income and cash
flow statements and a statement of underlying assumptions, ranges and
limitations and (ii) a pro forma computation assuming that the acquisition was
in effect during the prior year together with an opening and subsequent year
projection.
Acquisition Sublimit means up to Twenty Million and no/100 ($20,000,000.00)
Dollars to be used specifically to finance the acquisition of Persons meeting
the criteria set forth herein.
Affected Bank means any Bank that has given notice to either of the
Borrowers (which has not been rescinded) of (i) any obligation by either of the
Borrowers to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the
occurrence of any circumstances of the nature described in Section 8.2 or 8.3.
Affiliate of any Person means (i) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person and (ii) any officer or director of such Person.
Agent means Key in its capacity as agent for the Banks hereunder and any
successor thereto
1
<PAGE>
in such capacity.
Agent-Related Persons means Key and any successor agent arising under
Section 13.9, together with their respective Affiliates and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
Agreement -- see the Preamble.
Assignment Agreement -- see Section 14.9.1.
Bank -- see the Preamble.
Borrower or Borrowers -- see the Preamble.
Business Day means any day on which Key is open for commercial banking
business in Albany, New York and, in the case of a Business Day which relates to
a Eurodollar Loan, on which dealings are carried on in the interbank eurodollar
market.
Capital Expenditures means all expenditures which, in accordance with GAAP,
would be required to be capitalized and shown on the consolidated balance sheet
of the Borrowers, but excluding expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed within
three months (i) from insurance proceeds (or other similar recoveries) paid on
account of the loss of or damage to the assets being replaced or restored or
(ii) with awards of compensation arising from the taking by eminent domain or
condemnation of the assets being replaced.
Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.
Cash Equivalent Investment means, at any time, (a) any evidence of Debt,
maturing not more than one year after such time, issued or guaranteed by the
United States Government or any agency thereof, (b) commercial paper, maturing
not more than one year from the date of issue, or corporate demand notes, in
each case (unless issued by a Bank or its holding company) rated at least A-1 by
Standard & Poor's Ratings Group or P-1 by Moody's Investors Service, Inc., (c)
any certificate of deposit (or time deposits represented by such certificates of
deposit) or bankers acceptance, maturing not more than one year after such time,
or overnight Federal Funds transactions that are issued or sold by a commercial
banking institution that is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than
$500,000,000, (d) any repurchase agreement entered into with any Bank (or other
commercial banking institution of the stature referred to in clause (c) which
(i) is secured by a fully perfected security interest in any obligation of the
type described in any of clauses (a) through (c) and (ii) has a market value at
the time such repurchase agreement is entered into of not less than 100% of the
repurchase obligation of such Bank (or other commercial banking institution)
thereunder or (e) investments in short-term asset management accounts offered by
any Bank for the purpose of
2
<PAGE>
investing in loans to any corporation (other than the Borrowers or an Affiliate
of either of the Borrowers), state or municipality, in each case organized under
the laws of any state of the United States or of the District of Columbia.
CERCLA -- see Section 9.15.
Code means the Internal Revenue Code of 1986, as amended.
Collateral Documents means the Pledge Agreement, the Security Agreements
and any other agreement pursuant to which the Borrowers or any Guarantor grant
collateral to the Agent for the benefit of the Banks.
Commitment Amount -- see Section 2.1.1.
Commitments means the Loan Commitment and the L/C Commitment.
Computation Period means each period of four consecutive Fiscal Quarters
ending on the last day of a Fiscal Quarter.
Consolidated Net Income means, with respect to the Borrowers and their
Subsidiaries for any period, the net income (or loss) of the Borrowers and their
Subsidiaries for such period, excluding any extraordinary gains during such
period.
Contingent Payment means any payment that has been (or is required to be)
made by either of the Borrowers or any Subsidiary in connection with the
achievement of any particular business goal (excluding (i) employee compensation
and bonuses in the ordinary course of business and (ii) periodic, variable
payments based upon performance-related criteria, such as revenues or earnings).
A Contingent Payment shall be deemed to be "outstanding" from the time that
either of the Borrowers or any Subsidiary enters into the agreement containing
the obligation to make such Contingent Payment until such time as either such
Contingent Payment has been made in full or it has become certain that such
Contingent Payment will never have to be made. If the amount of any Contingent
Payment is not determinable or is variable based on factors which are not yet
determinable, then the amount of such Contingent Payment shall be deemed to be
the maximum amount which, under any and all reasonably foreseeable
circumstances, either of the Borrowers or the applicable Subsidiary would
reasonably be expected to be required to pay in respect thereof.
Controlled Group means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with either of the Borrowers,
are treated as a single employer under Section 414 of the Code or Section 4001
of ERISA.
Debt of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money, whether or not evidenced by bonds, debentures, notes
or similar instruments,
3
<PAGE>
(b) all obligations of such Person as lessee under Capital Leases which have
been or should be recorded as liabilities on a balance sheet of such Person, (c)
all obligations of such Person to pay the deferred purchase price of property or
services (including Contingent Payments but excluding trade accounts payable in
the ordinary course of business), (d) all indebtedness secured by a Lien on the
property of such Person, whether or not such indebtedness shall have been
assumed by such Person (it being understood that if such Person has not assumed
or otherwise become personally liable for any such indebtedness, the amount of
the Debt of such Person in connection therewith shall be limited to the lesser
of the face amount of such indebtedness or the fair market value of all property
of such Person securing such indebtedness), (e) all obligations, contingent or
otherwise, with respect to the face amount of all letters of credit (whether or
not drawn) and banker's acceptances issued for the account of such Person
(including the Letters of Credit), (f) all Suretyship Liabilities of such
Person.
Disposal -- see the definition of "Release".
Dollar and the sign "$" mean lawful money of the United States of America.
EBIT means, for any period, Consolidated Net Income for such period plus to
the extent deducted in determining such Consolidated Net Income, Interest
Expense and income tax expense.
EBITDA means, for any period, Consolidated Net Income for such period plus,
to the extent deducted in determining such Consolidated Net Income, Interest
Expense, income tax expense, depreciation and amortization for such period;
provided that for purposes of calculating EBITDA for any period, the
consolidated net income of any Person acquired by either of the Borrowers or any
Subsidiary during such period (plus, to the extent deducted in determining such
consolidated net income, interest expense, income tax expense, depreciation and
amortization of such Person) shall be included on a pro forma basis for such
period (assuming the consummation of each such acquisition and the incurrence or
assumption of any Debt in connection therewith occurred on the first day of such
period) in accordance with Article 11 of Regulation S-X of the SEC.
Effective Date -- see Section 11.1.
Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
Environmental Laws means all federal, state or local laws, statutes, common
law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any governmental authority, in each case
relating to environmental matters.
Equipment has the meaning assigned to such term in the Security Agreement.
ERISA means the Employee Retirement Income Security Act of 1974. References
to
4
<PAGE>
sections of ERISA also refer to any successor sections.
Eurocurrency Reserve Percentage means, with respect to any Eurodollar Loan
for any Interest Period, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the percentage in effect on each
day of such Interest Period, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor), for determining the aggregate maximum
reserve requirements applicable to "Eurocurrency Liabilities" pursuant to
Regulation D or any other then applicable regulation of such Board of Governors
which prescribes reserve requirements applicable to "Eurocurrency Liabilities"
as presently defined in Regulation D.
Eurodollar Loan means any Loan which bears interest at a rate determined by
reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Margin -- see Schedule 1.1.
Eurodollar Office means with respect to any Bank the office or offices of
such Bank which shall be making or maintaining the Eurodollar Loans of such Bank
hereunder or such other office or offices through which such Bank determines its
Eurodollar Rate. A Eurodollar Office of any Bank may be, at the option of such
Bank, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan for any Interest
Period, the rate per annum at which Dollar deposits in immediately available
funds are offered to the Eurodollar Office of Key two Business Days prior to the
beginning of such Interest Period by major banks in the interbank eurodollar
market as at or about 10:00 A.M., Albany time, for delivery on the first day of
such Interest Period, for the number of days comprised therein and in an amount
equal or comparable to the amount of the Eurodollar Loan of Key for such
Interest Period.
Eurodollar Rate (Reserve Adjusted) means, with respect to any Eurodollar
Loan for any Interest Period, a rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) determined pursuant to the following formula:
Eurodollar Rate Eurodollar Rate
(Reserve Adjusted) = ------------------
1-Eurocurrency
Reserve Percentage
Event of Default means any of the events described in Section 12.1.
Facility Fee -- see Section 5.1.
Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor
publication, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged
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prior to 9:00 a.m. (New York City time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by the Agent.
Financial Letter of Credit means any Letter of Credit determined by the
applicable Issuing Bank to be a "financial guaranty-type Standby Letter of
Credit" as defined in footnote 13 to Appendix A to the Risk Based Capital
Guidelines issued by the Comptroller of the Currency (or in any successor
regulation, guideline or ruling by any applicable banking regulatory authority).
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
Fiscal Year means the fiscal year of the Borrowers and their Subsidiaries,
which period shall be the 12-month period ending on December 31 of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., "Fiscal Year 1997") refer to the Fiscal Year ending on December 31 of
such calendar year.
Fixed Charges means scheduled Debt payments (including payments on Capital
Leases) plus interest expense plus operating lease expense plus unfunded capital
expenditures plus dividends.
Fixed Charges Coverage Ratio means the ratio of EBITDA plus operating lease
payments minus income taxes to Fixed Charges.
Funded Debt means all Debt of the Borrowers and their Subsidiaries,
excluding Subordinated Debt.
Funded Debt to Total Capitalization Ratio means, as of the last day of any
Fiscal Quarter, the ratio of Funded Debt as of the last day of such Fiscal
Quarter to the sum of Funded Debt plus shareholders' equity plus minority
interest plus Subordinated Debt, each determined as of the last day of such
Fiscal Quarter.
GAAP means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
Guarantor means, on any day, each Subsidiary that has executed a
counterpart of the Guaranty on or prior to that day (or is required to execute a
counterpart of the Guaranty on that day).
Guaranty means a guaranty substantially in the form of Exhibit C.
Hazardous Substances -- see Section 9.15.
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Interest Coverage Ratio means the ratio of EBIT to Interest Expense.
Interest Expense means for any period the consolidated interest expense of
the Borrowers and their Subsidiaries for such period (including all imputed
interest on Capital Leases and before giving effect to any capitalization of
interest but excluding amortization of deferred financing costs).
Interest Period -- see Section 4.3.
Inventory means, at any time with respect to any Person, any goods held for
sale, or furnished or to be furnished by such Person under any contract of
service, or held by such Person as raw materials, work in process or materials
used or consumed in a business.
Investment means, relative to any Person, (a) any loan or advance made by
such Person to any other Person (excluding any commission, travel or similar
advances made to directors, officers and employees of the Borrowers or any of
their Subsidiaries), (b) any Suretyship Liability of such Person, (c) any
ownership or similar interest held by such Person in any other Person and (d)
deposits and the like relating to prospective acquisitions of businesses.
Issuing Bank means Key in its capacity as an issuer of Letters of Credit
hereunder and any other Bank which, with the written consent of the Borrowers
and the Agent, is the issuer of one or more Letters of Credit hereunder.
Key -- see the Preamble.
L/C Application means, with respect to any request for the issuance of a
Letter of Credit, a letter of credit application in the form being used by the
applicable Issuing Bank at the time of such request for the type of letter of
credit requested.
L/C Commitment means the commitment of the Issuing Bank to issue, and of
each Bank to participate in, Letters of Credit pursuant to Section 2.1.2.
Letter of Credit means a Financial Letter of Credit or a Non-Financial
Letter of Credit.
Letter of Credit Fee -- see Section 5.2.
Leverage Ratio means the ratio of Funded Debt to EBITDA.
Lien means, with respect to any Person, any interest granted by such Person
in any real or personal property, asset or other right owned or being purchased
or acquired by such Person which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.
Loan Commitment means the commitment of the Banks to make Loans pursuant to
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Section 2.1.1.
Loan Documents means this Agreement, the Notes, the Guaranty, the L/C
Applications and the Collateral Documents.
Loans -- see Section 2.1.1.
Margin Stock means any "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System.
Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of either of the Borrowers or their
Subsidiaries taken as a whole, or (b) a material adverse effect upon any
substantial portion of the collateral under the Collateral Documents or upon the
legality, validity, binding effect or enforceability against either of the
Borrowers or any Guarantor of any Loan Document.
Multiemployer Pension Plan means a multiemployer plan, as such term is
defined in Section 4001(a)(3) of ERISA, and to which either of the Borrowers or
any member of the Controlled Group may have any liability.
Net Worth means, for any Person, that Person's consolidated stockholders'
equity (including preferred stock accounts).
Non-Financial Letter of Credit means any letter of credit other than a
Financial Letter of Credit.
Note or Notes -- see Section 3.1.
Operating Lease means any lease of (or other agreement conveying the right
to use) any real or personal property by either of the Borrowers or any
Subsidiary, as lessee, other than any Capital Lease.
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Pension Plan), and to which either of the Borrowers or any member of the
Controlled Group may have any liability, including any liability by reason of
having been a substantial employer within the meaning of Section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under Section 4069 of ERISA.
Percentage means, with respect to any Bank, the percentage specified
opposite such Bank's name on Schedule 2.1 hereto, reduced (or increased) by
subsequent assignments pursuant to
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Section 14.9.1.
Person means any natural person, corporation, partnership, trust, limited
liability company, association, governmental authority or unit, or any other
entity, whether acting in an individual, fiduciary or other capacity.
Pledge Agreement means a pledge agreement between the Borrowers and the
Agent, substantially in the form of Exhibit E.
Prime Rate means, for any day, the rate of interest in effect for such day
as publicly announced from time to time by Key as its "prime rate." (The "prime
rate" is a rate set by Key based upon various factors, including Key's costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.) Any change in the reference rate announced by Key shall
take effect at the opening of business on the day specified in the public
announcement of such change.
Prime Rate Loan means any Loan which bears interest at or by reference to
the Prime Rate.
Prime Rate Margin -- see Schedule 1.1.
RCRA -- see Section 9.15.
Release has the meaning specified in CERCLA and the term "Disposal" (or
"Disposed") has the meaning specified in RCRA; provided that in the event either
CERCLA or RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply as of the effective date of such
amendment; and provided, further, that to the extent that the laws of a state
wherein any affected property lies establish a meaning for "Release" or
"Disposal" which is broader than is specified in either CERCLA or RCRA, such
broader meaning shall apply.
Rental Expense means for any period the consolidated rental expense of the
Borrowers and their Subsidiaries for such period.
Required Banks means Banks having Percentages aggregating 66-2/3% or more.
SEC means the Securities and Exchange Commission.
Security Agreement means a Security Agreement substantially in the form of
Exhibit D-1.
Security Agreement (Patents) means a Security Agreement substantially in
the form of Exhibit D-2.
Security Agreement (Trademarks) means a Security Agreement substantially in
the form of Exhibit D-3.
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Security Agreements means the Security Agreement, the Security Agreement
(Patents) and the Security Agreement (Trademarks).
Senior Debt means all Debt of the Borrowers and their Subsidiaries other
than Subordinated Debt.
Speech Design means Speech Design GmbH, a German business entity.
Standard Information Package means the Acquisition Forecasts together with
an explanation provided by Borrowers detailing how such proposed acquisition is
consistent with Borrowers' strategic plan and beneficial to their business and
three (3) years of historical financial information for the Person being
acquired.
Stated Amount means, with respect to any Letter of Credit at any date of
determination, the maximum aggregate amount available for drawing thereunder at
any time during the then ensuing term of such Letter of Credit under any and all
circumstances, plus the aggregate amount of all unreimbursed payments and
disbursements under such Letter of Credit.
Subordinated Debt means any indebtedness of the Borrowers and their
Subsidiaries which has subordination terms, covenants, pricing and other terms
applicable to such indebtedness which have been approved in writing by the
Required Banks, provided, however, that written approval of the Required Banks
shall not be required as to indebtedness among domestic Affiliates of the
Borrowers.
Subsidiary means, with respect to any Person, a corporation of which such
Person and/or its other Subsidiaries own, directly or indirectly, such number of
outstanding shares as have more than 50% of the ordinary voting power for the
election of directors. Unless the context otherwise requires, each reference to
Subsidiaries herein shall be a reference to Subsidiaries of either of the
Borrowers.
Suretyship Liability means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation in respect of any Suretyship Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability supported thereby.
Termination Date means the earlier to occur of (a) April 30, 2001, or such
later date to which the Termination Date may be extended at the request of the
Borrower and with the consent of each Bank or (b) such other date on which the
Commitments shall terminate pursuant to Section 6 or 12.
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Type of Loan or Borrowing -- see Section 2.2.1. The types of Loans or
borrowings under this Agreement are as follows: Prime Rate Loans or borrowings
and Eurodollar Loans or borrowings.
Unmatured Event of Default means any event that, if it continues uncured,
will, with lapse of time or notice or both, constitute an Event of Default.
Welfare Plan means a "welfare plan", as such term is defined in Section
3(i) of ERISA.
Working Capital Sublimit means Seven Million and no/100 ($7,000,000.00)
Dollars.
1.2 Other Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(c) (i) The term "including" is not limiting and means "including
without limitation."
(ii) In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding", and the word "through" means "to
and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such statute
or regulation.
(e) This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(f) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the
Borrowers, the Banks and the other parties thereto and are the products of all
parties. Accordingly, they shall not be construed against the Agent or the Banks
merely because of the Agent's or Banks' involvement in their preparation.
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SECTION 2 COMMITMENTS OF THE BANKS; LETTER OF CREDIT, BORROWING AND
CONVERSION PROCEDURES.
2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each of the Banks, severally and for itself alone, agrees to make
loans to, and to issue or participate in the issuance of Non-Financial Letters
of Credit for the account of, the Borrowers as follows:
2.1.1 Loan Commitment. Each Bank will make loans on a revolving basis
("Loans") from time to time before the Termination Date in such Bank's
Percentage of such aggregate amounts as either of the Borrowers may from time to
time request from all Banks; provided that the sum of (x) the aggregate
outstanding principal amount of all Loans plus (y) the aggregate Stated Amount
of all Letters of Credit shall not at any time exceed the sum of the Acquisition
Sublimit plus the Working Capital Sublimit, as such amount may be reduced from
time to time pursuant to Section 6.1 (as so reduced, the "Commitment Amount").
2.1.2 L/C Commitment. (a) The Issuing Banks will issue Letters of Credit,
in each case containing such terms and conditions as are permitted by this
Agreement and are reasonably satisfactory to the applicable Issuing Bank, at the
request of and for the account of either of the Borrowers or any Subsidiary from
time to time before the Termination Date and (b) as more fully set forth in
Section 2.3.5, each Bank agrees to purchase a participation in each such Letter
of Credit; provided that the aggregate Stated Amount of all Letters of Credit
shall not at any time exceed the lesser of (i) $1,250,000, or (ii) the excess,
if any, of the Working Capital Sublimit over the aggregate principal amount of
all outstanding Loans made under the Working Capital Sublimit.
2.2 Loan Procedures.
2.2.1 Various Types of Loans. Each Loan shall be either a Prime Rate Loan
or a Eurodollar Loan (each a "type" of Loan), as either of the Borrowers shall
specify in the related notice of borrowing or conversion pursuant to Section
2.2.2 or 2.2.3, the form of which is annexed hereto as Exhibit F. Prime Rate
Loans and Eurodollar Loans may be outstanding at the same time, provided that
the aggregate principal amount of each Eurodollar Loan shall at all times be at
least $250,000 and an integral multiple of $100,000. All borrowings, conversions
and repayments of Loans shall be effected so that each Bank will have a pro rata
share (according to its Percentage) of all types of Loans.
2.2.2 Borrowing Procedures. The Borrowers shall give written notice or
telephonic notice (followed immediately by written confirmation thereof) to the
Agent of each proposed borrowing not later than (a) in the case of a Prime Rate
borrowing, 11:00 A.M., Albany time, on the proposed date of such borrowing, and
(b) in the case of a Eurodollar borrowing, 10:00 A.M., Albany time, at least
three Business Days prior to the proposed date of such borrowing. Each such
notice shall be effective upon receipt by the Agent, shall be irrevocable, and
shall specify the date, amount and type of borrowing and, in the case of a
Eurodollar borrowing, the initial Interest Period therefor. Promptly upon
receipt of such notice, the Agent shall advise each Bank thereof. Not later than
1:00 p.m., Albany time, on the date of a proposed borrowing, each Bank shall
provide the Agent at the office specified by the Agent with immediately
available funds covering such Bank's
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Percentage of such borrowing and, so long as the Agent has not received written
notice that the conditions precedent set forth in Section 11 with respect to
such borrowing have not been satisfied (and does not have knowledge of any
default in the payment of any principal, interest or fees to be paid to the
Agent for the account of the Banks), the Agent shall pay over the requested
amount to the Borrowers (or a single Borrower if so specified by both Borrowers)
on the requested borrowing date. Each borrowing shall be on a Business Day.
2.2.3 Procedures for Conversion of Type of Loan. Subject to the provisions
of Section 2.2.1, the Borrower may convert all or any part of any outstanding
Loan into a Loan of a different type by giving written notice or telephonic
notice (followed immediately by written confirmation thereof) to the Agent not
later than (a) in the case of conversion into a Prime Rate Loan, 11:00 A.M.,
Albany time, on the proposed date of such conversion, and (b) in the case of a
conversion into a Eurodollar Loan, 10:00 A.M., Albany time, at least three
Business Days prior to the proposed date of such conversion. Each such notice
shall be effective upon receipt by the Agent, shall be irrevocable, and shall
specify the date and amount of such conversion, the Loan to be so converted, the
type of Loan to be converted into and, in the case of a conversion into a
Eurodollar Loan, the initial Interest Period therefor. Promptly upon receipt of
such notice, the Agent shall advise each Bank thereof. Subject to Section 2.5,
such Loan shall be so converted on the requested date of conversion. Each
conversion shall be on a Business Day. Each conversion of a Eurodollar Loan on a
day other than the last day of an Interest Period therefor shall be subject to
the provisions of Section 8.4.
2.3 Letter of Credit Procedures.
2.3.1 L/C Applications. The Borrowers shall give notice to the Agent and
the applicable Issuing Bank of the proposed issuance of each Letter of Credit on
a Business Day which is at least three Business Days (or such lesser number of
days as the Agent and such Issuing Bank shall agree in any particular instance)
prior to the proposed date of issuance of such Letter of Credit. Each such
notice shall be accompanied by an L/C Application, duly executed by the
Borrowers and in all respects satisfactory to the Agent and the applicable
Issuing Bank, together with such other documentation as the Agent or such
Issuing Bank may request in support thereof, it being understood that each L/C
Application shall specify, among other things, the date on which the proposed
Letter of Credit is to be issued, the expiration date of such Letter of Credit
(which shall not be later than the Termination Date) and whether such Letter of
Credit is to be transferable in whole or in part. So long as the applicable
Issuing Bank has not received written notice that the conditions precedent set
forth in Section 11 with respect to the issuance of such Letter of Credit have
not been satisfied, such Issuing Bank shall issue such Letter of Credit on the
requested issuance date. Each Issuing Bank shall promptly advise the Agent of
the issuance of each Letter of Credit by such Issuing Bank and of any amendment
thereto, extension thereof or event or circumstance changing the amount
available for drawing thereunder.
2.3.2 Participation in Letters of Credit. Concurrently with the issuance of
each Letter of Credit, the applicable Issuing Bank shall be deemed to have sold
and transferred to each other Bank, and each other Bank shall be deemed
irrevocably and unconditionally to have purchased and received from such Issuing
Bank, without recourse or warranty, an undivided interest and
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participation, to the extent of such other Bank's Percentage, in such Letter of
Credit and the Borrowers' reimbursement obligations with respect thereto. For
the purposes of this Agreement, the unparticipated portion of each Letter of
Credit shall be deemed to be the applicable Issuing Bank's "participation"
therein. Each Issuing Bank hereby agrees, upon request of the Agent or any Bank,
to deliver to such Bank a list of all outstanding Letters of Credit issued by
such Issuing Bank, together with such information related thereto as such Bank
may reasonably request.
2.3.3 Reimbursement Obligations. The Borrowers hereby unconditionally and
irrevocably agree to reimburse the applicable Issuing Bank for each payment or
disbursement made by such Issuing Bank under any Letter of Credit honoring any
demand for payment made by the beneficiary thereunder, in each case on the date
that such payment or disbursement is made. Any amount not reimbursed on the date
of such payment or disbursement shall bear interest from the date of such
payment or disbursement to the date that such Issuing Bank is reimbursed by the
Borrower therefor, payable on demand, at a rate per annum equal to the Prime
Rate from time to time in effect plus the Prime Rate Margin from time to time in
effect plus, beginning on the third Business Day after receipt of notice from
the Issuing Bank of such payment or disbursement, two (2%) percent. The
applicable Issuing Bank shall notify the Borrowers and the Agent whenever any
demand for payment is made under any Letter of Credit by the beneficiary
thereunder; provided, however, that the failure of such Issuing Bank to so
notify the Borrowers shall not affect the rights of such Issuing Bank or the
Banks in any manner whatsoever.
2.3.4 Limitation on Obligations of Issuing Banks. In determining whether to
pay under any Letter of Credit, no Issuing Bank shall have any obligation to the
Borrowers or any Bank other than to confirm that any documents required to be
delivered under such Letter of Credit appear to have been delivered and appear
to comply on their face with the requirements of such Letter of Credit. Any
action taken or omitted to be taken by an Issuing Bank under or in connection
with any etter of Credit, if taken or omitted in the absence of gross negligence
and willful misconduct, shall not impose upon such Issuing Bank any liability to
the Borrowers or any Bank and shall not reduce or impair the Borrowers'
reimbursement obligations set forth in Section 2.3.3 or the obligations of the
Banks pursuant to Section 2.3.5.
2.3.5 Funding by Banks to Issuing Banks. If an Issuing Bank makes any
payment or disbursement under any Letter of Credit and the Borrowers have not
reimbursed such Issuing Bank in full for such payment or disbursement by 11:00
A.M., Albany time, on the date of such payment or disbursement, or if any
reimbursement received by such Issuing Bank from the Borrowers is or must be
returned or rescinded upon or during any bankruptcy or reorganization of either
of the Borrowers or otherwise, each other Bank shall be obligated to pay to the
Agent for the account of such Issuing Bank, in full or partial payment of the
purchase price of its participation in such Letter of Credit, its pro rata share
(according to its Percentage) of such payment or disbursement (but no such
payment shall diminish the obligations of the Borrowers under Section 2.3.3),
and upon notice from the applicable Issuing Bank, the Agent shall promptly
notify each other Bank thereof. Each other Bank irrevocably and unconditionally
agrees to so pay to the Agent in immediately available funds for the applicable
Issuing Bank's account the amount of such other Bank's Percentage of such
payment or disbursement. If and to the extent any Bank shall not have made such
amount available to the Agent by 2:00 P.M., Albany time, on the Business Day on
which such Bank receives notice
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from the Agent of such payment or disbursement (it being understood that any
such notice received after noon, Albany time, on any Business Day shall be
deemed to have been received on the next following Business Day), such Bank
agrees to pay interest on such amount to the Agent for the applicable Issuing
Bank's account forthwith on demand for each day from the date such amount was to
have been delivered to the Agent to the date such amount is paid, at a rate per
annum equal to (a) for the first three days after demand, the Federal Funds Rate
from time to time in effect and (b) thereafter, the Alternate Reference Rate
from time to time in effect. Any Bank's failure to make available to the Agent
its Percentage of any such payment or disbursement shall not relieve any other
Bank of its obligation hereunder to make available to the Agent such other
Bank's Percentage of such payment, but no Bank shall be responsible for the
failure of any other Bank to make available to the Agent such other Bank's
Percentage of any such payment or disbursement.
2.4 Commitments Several. The failure of any Bank to make a requested Loan
on any date shall not relieve any other Bank of its obligation to make a Loan on
such date, but no Bank shall be responsible for the failure of any other Bank to
make any Loan to be made by such other Bank.
2.5 Certain Conditions. Notwithstanding any other provision of this
Agreement, no Bank shall have an obligation to make any Loan, or to permit the
continuation of or any conversion into any Eurodollar Loan, and no Issuing Bank
shall have any obligation to issue any Letter of Credit, if an Event of Default
or Unmatured Event of Default exists.
SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Bank shall be evidenced by a promissory note
(each a "Note" and collectively, the "Notes") substantially in the form set
forth in Exhibit A, with appropriate insertions, payable to the order of such
Bank in an amount equal to such Bank's Percentage of the Loan Commitment (or, if
less, in the aggregate unpaid principal amount of such Bank's Loans).
3.2 Recordkeeping. Each Bank shall record in its records, or at its option
on the schedule attached to its Note, the date and amount of each Loan made by
such Bank, each repayment or conversion thereof and, in the case of each
Eurodollar Loan, the dates on which each Interest Period for such Loan shall
begin and end. The aggregate unpaid principal amount so recorded shall be
rebuttable presumptive evidence of the principal amount owing and unpaid on such
Note. The failure to so record any such amount or any error in so
recording any such amount shall not, however, limit or otherwise affect the
obligations of the Borrowers hereunder or under any Note to repay the principal
amount of the Loans evidenced by such Note together with all interest accruing
thereon.
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SECTION 4 INTEREST.
4.1 Interest Rates. The Borrowers promise to pay interest on the unpaid
principal amount of each Loan for the period commencing on the date of such Loan
until such Loan is paid in full as follows:
(a) at all times while such Loan is a Prime Rate Loan, at a rate per
annum equal to the sum of the Prime Rate from time to time in effect plus
the Prime Margin from time to time in effect; and
(b) at all times while such Loan is a Eurodollar Loan, at a rate per
annum equal to the sum of the Eurodollar Rate (Reserve Adjusted) applicable
to each Interest Period for such Loan plus the Eurodollar Margin from time
to time in effect;
provided, however, that at any time an Event of Default exists, the interest
rate applicable to each Loan (be it a Prime Rate Loan or Eurodollar Loan) may,
at the option of the Required Banks, be increased up to a rate equal to the
Prime Rate plus the Prime Rate Margin plus 2% (200 basis points) per annum.
4.2 Interest Payment Dates. Accrued interest on each Prime Rate Loan shall
be payable in arrears on the first Business Day of each calendar month and at
maturity. Accrued interest on each Eurodollar Loan shall be payable at the end
of the applicable Interest Period or on the first day of each calendar month,
whichever is earlier, and at maturity. After maturity, accrued interest on all
Loans shall be payable on demand.
4.3 Interest Periods. Each "Interest Period" for a Eurodollar Loan shall
commence on the date such Eurodollar Loan is made or converted from a Prime Rate
Loan, or on the expiration of the immediately preceding Interest Period for such
Eurodollar Loan, and shall end on the date which is one, two, three or six
months thereafter, as the Borrowers may specify:
(a) in the case of an Interest Period which commences on the date a
Eurodollar Loan is made or converted from a Prime Rate Loan, in the related
notice of borrowing or conversion pursuant to Section 2.2.2 or 2.2.3, or
(b) in the case of a succeeding Interest Period with respect to any
Eurodollar Loan, by written notice or telephonic notice (followed
immediately by written confirmation thereof) to the Agent not later than
10:00 A.M., Albany time, at least three Business Days prior to the first
day of such succeeding Interest Period, it being understood that (i) each
such notice shall be effective upon receipt by the Agent and (ii) if the
Borrowers fail to give such notice, such Loan shall automatically become a
Prime Rate Loan at the end of its then-current Interest Period.
Each Interest Period that begins on the last day of a calendar month (or on a
day for which there is
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no numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Each Interest Period which would otherwise end on a day which is not a Business
Day shall end on the immediately succeeding Business Day (unless such
immediately succeeding Business Day is the first Business Day of a calendar
month, in which case such Interest Period shall end on the immediately preceding
Business Day). The Borrowers may not select any Interest Period for a Loan which
would end after the scheduled Termination Date.
4.4 Setting and Notice of Eurodollar Rates. The applicable Eurodollar Rate
for each Interest Period shall be determined by the Agent, and notice thereof
shall be given by the Agent promptly to the Borrowers and each Bank. Each
determination of the applicable Eurodollar Rate by the Agent shall be conclusive
and binding upon the parties hereto, in the absence of demonstrable error. The
Agent shall, upon written request of the Borrowers or any Bank, deliver to the
Borrowers or such Bank a statement showing the computations used by the Agent in
determining any applicable Eurodollar Rate hereunder.
4.5 Computation of Interest. All determinations of interest for Prime Rate
Loans shall be computed for the actual number of days elapsed on the basis of a
year of 360 days. The applicable interest rate for each Prime Rate Loan shall
change simultaneously with each change in the Prime Rate.
SECTION 5 FEES.
5.1 Facility Fee. The Borrowers agree to pay to the Agent for the account
of each Bank a facility fee (each, a "Facility Fee") in an amount not to exceed
$67,500.00 each year (a twelve (12) month period beginning on the date of this
Agreement and each twelve (12) month period thereafter) on the earlier of
December 1 or that date on which the first Loan is made under the Acquisition
Sublimit. If the Commitments are terminated prior to the Termination Date and
the Facility Fee for the year (as determined above) then in progress has not
been paid, the Borrowers shall pay the pro rata portion of the Facility Fee at
the time of termination. If the Commitments are terminated prior to the
Termination Date and the Facility Fee for the year (as determined above) then in
progress has been paid, the Banks shall refund to the Borrower the pro rata
portion of the Facility Fee at the time of termination.
5.2 Letter of Credit Fees. (a) The Borrowers agree to pay to the Agent for
the account of the Banks pro rata according to their respective Percentages a
letter of credit fee (each, a "Letter of Credit Fee") for each Letter of Credit
in an amount equal to the rate per annum in effect from time to time pursuant to
the Issuing Bank's then-current letter of credit fee schedules (computed for the
actual number of days elapsed on the basis of a year of 360 days). Such Letter
of Credit Fee shall be payable in advance on the first Business Day of each
calendar quarter and on the date of the issuance of each Letter of Credit.
(b) In addition, with respect to each Letter of Credit, the Borrowers
agree to pay to the applicable Issuing Bank, for its own account, (i) such fees
and expenses as such Issuing
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Bank customarily requires in connection with the issuance, negotiation,
processing and/or administration of letters of credit in similar situations and
(ii) a letter of credit fee in the amount separately agreed to by the Borrowers
and such Issuing Bank.
5.3 Closing Fees. On the Effective Date, the Borrowers shall pay to the
Agent for the account of each Bank a closing fee in the amount previously agreed
with such Bank. As to Key, such closing fee shall not exceed $70,000.00.
SECTION 6 REDUCTION AND TERMINATION OF THE COMMITMENTS; PREPAYMENTS.
6.1 Reduction or Termination of the Commitments. The Borrowers may from
time to time on at least five Business Days' prior written notice received by
the Agent (which shall promptly advise each Bank thereof) permanently reduce the
Commitment Amount to an amount not less than the sum of the aggregate unpaid
principal amount of the Loans and the aggregate Stated Amount of all Letters of
Credit. Any such reduction shall be in an amount not less than $5,000,000 or a
higher integral multiple of $1,000,000. The Borrowers may at any time on like
notice terminate the Commitments upon payment in full of all Loans and all other
obligations of the Borrowers hereunder and cash collateralization in full,
pursuant to documentation in form and substance reasonably satisfactory to the
Banks, of all obligations arising with respect to the Letters of Credit. All
reductions of the Commitment Amount shall reduce the Commitments pro rata among
the Banks according to their respective Percentages.
6.2 Voluntary Prepayments. The Borrowers may from time to time prepay the
Loans in whole or in part, provided that (a) the Borrowers shall give the Agent
(which shall promptly advise each Bank) notice thereof not later than 10:00
A.M., Albany time, on the day of such prepayment (which shall be a Business Day)
specifying the Loans to be prepaid and the date and amount of prepayment, (b)
each partial prepayment shall, in the case of a Eurodollar Loan, be in a
principal amount of at least $250,000 and an integral multiple thereof, (c) any
prepayment of a Eurodollar Loan on a day other than the last day of an Interest
Period therefor shall be subject to Section 8.4, and (d) if any prepayment shall
result in the aggregate principal amount of Eurodollar Loans being less than
$250,000, such Eurodollar Loans shall be automatically converted into Prime Rate
Loans.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest on the
Notes, and of all Facility Fees and Letter of Credit Fees, shall be made by the
Borrowers to the Agent in immediately available funds at the office specified by
the Agent not later than noon, Albany time, on the date due; and funds received
after that hour shall be deemed to have been received by the Agent on the next
following Business Day. The Agent shall promptly remit to each Bank or other
holder of a Note its share of all such payments received in collected funds by
the Agent for the account of such Bank or holder.
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All payments under Section 8.1 shall be made by the Borrowers directly to
the Bank entitled thereto.
7.2 Application of Certain Payments. Each payment of principal shall be
applied to such Loans as the Borrowers shall direct by notice to be received by
the Agent on or before the date of such payment or, in the absence of such
notice, as the Agent shall determine in its reasonable discretion. Concurrently
with each remittance to any Bank of its share of any such payment, the Agent
shall advise such Bank as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Notes, or of Facility Fees or Letter of Credit Fees, falls
due on a day which is not a Business Day, then such due date shall be extended
to the immediately following Business Day (unless, in the case of a Eurodollar
Loan, such immediately following Business Day is the first Business Day of a
calendar month, in which case such date shall be the immediately preceding
Business Day) and, in the case of principal, additional interest shall accrue
and be payable for the period of any such extension.
7.4 Setoff. The Borrowers agree that the Agent and each Bank have all
rights of set-off and bankers' lien provided by applicable law, and in addition
thereto, the Borrowers agree that at any time any Event of Default exists, the
Agent and each Bank may apply to the payment of any obligations of the Borrowers
hereunder, whether or not then due, any and all balances, credits, deposits,
accounts or moneys of the Borrowers then or thereafter with the Agent or such
Bank.
7.5 Proration of Payments. If any Bank shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset or otherwise)
on account of principal of or interest on any Note (or on account of its
participation in any Letter of Credit) in excess of its pro rata share of
payments and other recoveries obtained by all Banks on account of principal of
and interest on Notes (or such participation) then held by them, such Bank shall
purchase from the other Banks such participation in the Notes (or
sub-participation in Letters of Credit) held by them as shall be necessary to
cause such purchasing Bank to share the excess payment or other recovery ratably
with each of them; provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Bank, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery.
7.6 Taxes. All payments of principal of, and interest on, the Loans and all
other amounts payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, but excluding franchise taxes and
taxes imposed on or measured by any Bank's net income or receipts (all
non-excluded items being called " Taxes"). If any withholding or deduction from
any payment to be made by the Borrowers hereunder is required in respect of any
Taxes pursuant to any applicable law, rule or regulation, then the Borrowers
will:
(a) pay directly to the relevant authority the full amount required to
be
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so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Banks such additional
amount or amounts as is necessary to ensure that the net amount actually
received by each Bank will equal the full amount such Bank would have
received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Agent or any Bank with
respect to any payment received by the Agent or such Bank hereunder, the Agent
or such Bank may pay such Taxes and the Borrowers will promptly pay such
additional amounts (including any penalty, interest and expense) as is necessary
in order that the net amount received by such Person after the payment of such
Taxes (including any Taxes on such additional amount) shall equal the amount
such Person would have received had such Taxes not been asserted.
If the Borrowers fail to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent, for the account of the respective
Banks, the required receipts or other required documentary evidence, the
Borrowers shall indemnify the Banks for any incremental Taxes, interest or
penalties that may become payable by any Bank as a result of any such failure.
For purposes of this Section 7.6, a distribution hereunder by the Agent or any
Bank to or for the account of any Bank shall be deemed a payment by the
Borrowers.
Upon the request from time to time of the Borrowers or the Agent, each Bank
that is organized under the laws of a jurisdiction other than the United States
of America shall execute and deliver to the Borrowers and the Agent one or more
(as the Borrowers or the Agent may reasonably request) United States Internal
Revenue Service Forms 4224 or Forms 1001 or such other forms or documents,
appropriately completed, as may be applicable to establish the extent, if any,
to which a payment to such Bank is exempt from withholding or deduction of
Taxes.
The obligations of the Borrowers under this Section 7.6 are subject to the
limitation set out in Section 14.9.1.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS.
8.1 Increased Costs. (a) If, after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any Eurodollar Office of such Bank) with
any request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency
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(i) shall subject any Bank (or any Eurodollar Office of such Bank) to
any tax, duty or other charge with respect to its Eurodollar Loans, its
Note or its obligation to make Eurodollar Loans, or shall change the basis
of taxation of payments to any Bank of the principal of or interest on its
Eurodollar Loans or any other amounts due under this Agreement in respect
of its Eurodollar Loans or its obligation to make Eurodollar Loans (except
for changes in the rate of tax on the overall net income of such Bank or
its Eurodollar Office imposed by the jurisdiction in which such Bank's
principal executive office or Eurodollar Office is located); or
(ii) shall impose, modify or deem applicable any reserve (including any
reserve imposed by the Board of Governors of the Federal Reserve System)
special deposit or similar requirement against assets of, deposits with or
for the account of, or credit extended by any Bank (or any Eurodollar
Office of such Bank); or
(iii) shall impose on any Bank (or its Eurodollar Office) any other
condition affecting its Eurodollar Loans, its Note or its obligation to
make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D of the Board of Governors of the Federal Reserve System, to
impose a cost on) such Bank (or any Eurodollar office of such Bank) of making or
maintaining any Eurodollar Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Eurodollar Office) under this Agreement or under
its Note with respect thereto, then within 10 days after demand by such Bank
(which demand shall be accompanied by a statement setting forth the basis for
such demand and a calculation of the amount thereof in reasonable detail, a copy
of which shall be furnished to the Agent), the Borrowers shall pay directly to
such Bank such additional amount as will compensate such Bank for such increased
cost or such reduction.
(b) If any Bank shall reasonably determine that the adoption or
phase-in of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank or
any Person controlling such Bank with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Bank's or such controlling Person's capital as a consequence of
such Bank's obligations hereunder (including such Bank's obligations under the
Loan Commitment or the L/C Commitment) or under any Letter of Credit to a level
below that which such Bank or such controlling Person could have achieved but
for such adoption, change or compliance (taking into consideration such Bank's
or such controlling Person's policies with respect to capital adequacy) by an
amount deemed by such Bank or such controlling Person to be material, then from
time to time, within 10 days after demand by such Bank (which demand shall be
accompanied by a statement setting forth the basis for such demand and a
calculation of the amount thereof in reasonable detail, a copy of which shall be
furnished to the Agent), the Borrowers shall pay to such Bank such additional
amount or amounts as will
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compensate such Bank or such controlling Person for such reduction.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:
(a) deposits in Dollars (in the applicable amounts) are not being
offered to the Agent in the interbank eurodollar market for such Interest
Period, or the Agent otherwise reasonably determines (which determination,
if made in good faith, shall be binding and conclusive on the Borrowers)
that by reason of circumstances affecting the interbank eurodollar market
adequate and reasonable means do not exist for ascertaining the applicable
Eurodollar Rate; or
(b) Banks having an aggregate Percentage of 40% or more advise the
Agent that the Eurodollar Rate (Reserve Adjusted) as determined by the
Agent will not adequately and fairly reflect the cost to such Banks of
maintaining or funding such Loans for such Interest Period (taking into
account any amount to which such Banks may be entitled under Section 8.1)
or that the making or funding of Eurodollar Loans has become impracticable
as a result of an event occurring after the date of this Agreement which in
the opinion of such Banks materially affects such Loans;
then the Agent shall promptly notify the other parties thereof and, so long as
such circumstances shall continue, (i) no Bank shall be under any obligation to
make or convert into Eurodollar Loans and (ii) on the last day of the current
Interest Period for each Eurodollar Loan, such Loan shall, unless then repaid in
full, automatically convert to a Prime Rate Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful. In the event that
any change in (including the adoption of any new) applicable laws or
regulations, or any change in the interpretation of applicable laws or
regulations by any governmental or other regulatory body charged with the
administration thereof, should make it (or in the good faith judgment of any
Bank cause a substantial question as to whether it is) unlawful for any Bank to
make, maintain or fund Eurodollar Loans, then such Bank shall promptly notify
each of the other parties hereto and, so long as such circumstances shall
continue, (a) such Bank shall have no obligation to make or convert into
Eurodollar Loans (but shall make Prime Rate Loans concurrently with the making
of or conversion into Eurodollar Loans by the Banks which are not so affected,
in each case in an amount equal to such Bank's pro rata share of all Eurodollar
Loans which would be made or converted into at such time in the absence of such
circumstances) and (b) on the last day of the current Interest Period for each
Eurodollar Loan of such Bank (or, in any event, on such earlier date as may be
required by the relevant law, regulation or interpretation), such Eurodollar
Loan shall, unless then repaid in full, automatically convert to a Prime Rate
Loan.
8.4 Funding Losses. The Borrowers hereby agree that upon demand by any Bank
(which demand shall be accompanied by a statement setting forth the basis for
the amount being claimed, a copy of which shall be furnished to the Agent), the
Borrowers will indemnify such Bank against any net loss or expense which such
Bank may sustain or incur (including any net loss or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired
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by such Bank to fund or maintain any Eurodollar Loan), as reasonably determined
by such Bank, as a result of (a) any payment, prepayment or conversion of any
Eurodollar Loan of such Bank on a date other than the last day of an Interest
Period for such Loan (including any conversion pursuant to Section 8.3) or (b)
any failure of the Borrowers to convert any Loan on a date specified therefor in
a notice of conversion pursuant to this Agreement. For this purpose, all notices
of conversion to the Agent pursuant to this Agreement shall be deemed to be
irrevocable. Any failure of the Borrowers to borrow any Loan on a date specified
therefor in a notice of borrowing pursuant to this Agreement shall not result in
the incurrence of funding losses under this Section 8.4 unless the Loan has been
funded.
8.5 Right of Banks to Fund through Other Offices. Each Bank may, if it so
elects, fulfill its commitment as to any Eurodollar Loan by causing a foreign
branch or affiliate of such Bank to make such Loan, provided that in such event
for the purposes of this Agreement such Loan shall be deemed to have been made
by such Bank and the obligation of the Borrowers to repay such Loan shall
nevertheless be to such Bank and shall be deemed held by it, to the extent of
such Loan, for the account of such branch or affiliate.
8.6 Discretion of Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank shall be entitled to fund
and maintain its funding of all or any part of its Loans in any manner it sees
fit, it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Bank had actually funded and
maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurodollar Rate for
such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected Bank. (a) Each
Bank shall promptly notify the Borrowers and the Agent of any event of which it
has knowledge which will result in, and will use reasonable commercial efforts
available to it (and not, in such Bank's good faith judgment, otherwise
disadvantageous to such Bank) to mitigate or avoid, (i) any obligation by the
Borrowers to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the
occurrence of any circumstances of the nature described in Section 8.2 or 8.3
(and, if any Bank has given notice of any such event described in clause (i) or
(ii) above and thereafter such event ceases to exist, such Bank shall promptly
so notify the Borrowers and the Agent). Without limiting the foregoing, each
Bank will designate a different funding office if such designation will avoid
(or reduce the cost to the Borrowers of) any event described in clause (i) or
(ii) of the preceding sentence and such designation will not, in such Bank's
sole judgment, be otherwise disadvantageous to such Bank.
(b) At any time any Bank is an Affected Bank, the Borrowers may replace
such Affected Bank as a party to this Agreement with one or more other bank(s)
or financial institutions reasonably satisfactory to the Agent (and upon notice
from the Borrowers such Affected Bank shall assign pursuant to an Assignment
Agreement, and without recourse or warranty, its Commitment, its Loans, its
Note, its participation in Letters of Credit, and all of its other rights and
obligations hereunder to such replacement bank(s) or other financial
institutions) for a purchase price equal to the sum of the principal amount of
the Loans so assigned, all accrued and unpaid interest thereon, its ratable
share of all accrued and unpaid facility fees and Letter of Credit fees, any
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amounts payable under Section 8.4 as a result of such Bank receiving payment of
any Eurodollar Loan prior to the end of an Interest Period therefor and all
other obligations owed to such Affected Bank hereunder.
8.8 Conclusiveness of Statements; Survival of Provisions. Determinations
and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or 8.4 shall be
conclusive absent demonstrable error. Banks may use reasonable averaging and
attribution methods in determining compensation under Sections 8.1 and 8.4, and
the provisions of such Sections shall survive repayment of the Loans,
cancellation of the Notes, cancellation or expiration of the Letters of Credit
and any termination of this Agreement.
SECTION 9 WARRANTIES.
To induce the Agent and the Banks to enter into this Agreement and to
induce the Banks to make Loans and issue or purchase participations in Letters
of Credit hereunder, the Borrowers warrant to the Agent and the Banks that:
9.1 Organization, etc. Each Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
each Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation; and the Borrowers and
each Subsidiary is duly qualified to do business in each jurisdiction where the
nature of its business makes such qualification necessary (except in those
instances in which the failure to be qualified or in good standing does not have
a Material Adverse Effect) and has full power and authority to own its property
and conduct its business as presently conducted by it.
9.2 Authorization; No Conflict. The execution and delivery by the Borrowers
of this Agreement and each other Loan Document to which they are a party, the
borrowings hereunder and the performance by each of the Borrowers of its
obligations under each Loan Document to which it is a party are within the
corporate powers of the Borrowers, have been duly authorized by all necessary
corporate action on the part of the Borrowers (including any necessary
shareholder action), have received all necessary governmental approval (if any
shall be required), and do not and will not (a) violate any provision of law or
any order, decree or judgment of any court or other government agency which is
binding on the Borrowers, (b) contravene or conflict with, or result in a breach
of, any provision of the Certificate of Incorporation, By-Laws or other
organizational documents of the Borrowers or of any agreement, indenture,
instrument or other document which is binding on the Borrowers or any Subsidiary
or (c) result in, or require, the creation or imposition of any Lien on any
property of the Borrowers or any Subsidiary (other than Liens arising under the
Loan Documents).
9.3 Validity and Binding Nature. Each of this Agreement and each other Loan
Document to which the Borrowers are a party is the legal, valid and binding
obligation of the Borrowers, enforceable against the Borrowers in accordance
with its terms.
9.4 Financial Condition. The financial statements of the Borrowers which
have been furnished to each Bank:
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(i) were prepared in accordance with GAAP consistently applied
throughout the periods covered thereby, except as otherwise expressly noted
therein (subject, in the case of the unaudited financial statements, to the
absence of footnotes and to customary year-end audit adjustments); and
(ii) fairly present in all material respects the financial condition of
the Borrowers and their Subsidiaries as of the dates thereof and the
results of operations for the periods covered thereby.
9.5 No Material Adverse Change. Since the date of the statements referenced
at Section 9.4 above, there has been no material adverse change in the financial
condition, operations, assets, business or properties of the Borrowers and their
Subsidiaries taken as a whole.
9.6 Litigation and Contingent Liabilities. (a) No litigation (including
derivative actions), arbitration proceeding, labor controversy or governmental
investigation or proceeding is pending or, to the Borrowers' knowledge,
threatened against the Borrowers or any Subsidiary which might reasonably be
expected to have a Material Adverse Effect, except as set forth in Schedule
9.6(a), and other than any liability incident to such litigation or proceedings,
neither the Borrowers nor any Subsidiary has any material contingent liabilities
not listed in such Schedule 9.6(a) or 9.6(b).
(b) Schedule 9.6(b) sets out descriptions of all arrangements existing
on the Effective Date pursuant to which the Borrowers or any Subsidiary may be
required to pay any Contingent Payment.
9.7 Ownership of Properties; Liens. Each of the Borrowers and each
Subsidiary owns good and marketable title to all of its properties and assets,
real and personal, tangible and intangible, of any nature whatsoever (including
patents, trademarks, trade names, service marks and copyrights), free and clear
of all Liens, charges and material claims (including material infringement
claims with respect to patents, trademarks, copyrights and the like) except as
permitted pursuant to Section 10.8.
9.8 Subsidiaries. The Borrowers have no Subsidiaries except those listed in
Schedule 9.8.
9.9 Pension and Welfare Plans. (a) During the twelve-consecutive-month
period prior to the date of the execution and delivery of this Agreement or the
making of any Loan hereunder, (i) no steps have been taken to terminate any
Pension Plan and (ii) no contribution failure has occurred with respect to any
Pension Plan sufficient to give rise to a lien under Section 302(f) of ERISA. No
condition exists or event or transaction has occurred with respect to any
Pension Plan which could result in the incurrence by either of the Borrowers of
any material liability, fine or penalty. The Borrowers have no contingent
liability with respect to any post-retirement benefit under a Welfare Plan,
other than liability for continuation coverage described in Part 6 of Subtitle B
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of Title I of ERISA.
(b) All contributions (if any) have been made to any Multiemployer
Pension Plan that are required to be made by the Borrowers or any other member
of the Controlled Group under the terms of the plan or of any collective
bargaining agreement or by applicable law; neither the Borrowers nor any member
of the Controlled Group has withdrawn or partially withdrawn from any
Multiemployer Pension Plan, incurred any withdrawal liability with respect to
any such plan, received notice of any claim or demand for withdrawal liability
or partial withdrawal liability from any such plan, and no condition has
occurred which, if continued, might result in a withdrawal or partial withdrawal
from any such plan; and neither the Borrowers nor any member of the Controlled
Group has received any notice that any Multiemployer Pension Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of any excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated, or that any such plan
is or may become insolvent.
9.10 Investment Company Act. Neither the Borrowers nor any Subsidiary are
an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940.
9.11 Public Utility Holding Company Act. Neither the Borrowers nor any
Subsidiary are a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935.
9.12 Regulation U. The Borrowers are not engaged principally, or as one of
their important activities, in the business of extending credit for the purpose
of purchasing or carrying Margin Stock.
9.13 Taxes. Each of the Borrowers and each Subsidiary have filed all tax
returns and reports required by law to have been filed by it and has paid all
taxes and governmental charges thereby shown to be owing, except any such taxes
or charges which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books.
9.14 Solvency, etc. On the Effective Date (or, in the case of any Person
which becomes a Guarantor after the Effective Date, on the date such Person
becomes a Guarantor), and immediately prior to and after giving effect to the
issuance of each Letter of Credit and each borrowing hereunder and the use of
the proceeds thereof, (a) each of the Borrowers' and each Guarantor's assets
will exceed its liabilities and (b) each of the Borrowers and each Guarantor
will be solvent, will be able to pay its debts as they mature, will own property
with fair saleable value greater than the amount required to pay its debts and
will have capital sufficient to carry on its business as then constituted.
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9.15 Environmental Matters.
(a) No Violations. Except as set forth on Schedule 9.15, neither the
Borrowers nor any Subsidiary, nor any operator of the Borrowers' or any
Subsidiary's properties, is in violation, or alleged violation, of any judgment,
decree, order, law, permit, license, rule or regulation pertaining to
environmental matters, including those arising under the Resource Conservation
and Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 or any other Environmental Law which (i) in any
single case, requires expenditures in any three-year period of $500,000 or more
by either of the Borrowers and its Subsidiaries in penalties and/or for
investigative, removal or remedial actions or (ii) individually or in the
aggregate otherwise might reasonably be expected to have a Material Adverse
Effect.
(b) Notices. Except as set forth on Schedule 9.15, neither of the
Borrowers nor any Subsidiary have received notice from any third party,
including any Federal, state or local governmental authority: (a) that any one
of them has been identified by the U.S. Environmental Protection Agency as a
potentially responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 300 Appendix B; (b) that any hazardous
waste, as defined by 42 U.S.C. ss.6903(5), any hazardous substance as defined
by 42 U.S.C. ss.9601(14), any pollutant or contaminant as defined by 42 U.S.C.
ss.9601(33) or any toxic substance, oil or hazardous material or other chemical
or substance regulated by any Environmental Law, excluding household hazardous
waste (all of the foregoing, "Hazardous Substances"), which any one of them has
generated, transported or disposed of has been found at any site at which a
Federal, state or local agency or other third party has conducted a remedial
investigation, removal or other response action pursuant to any Environmental
Law; (c) that the Borrowers or any Subsidiary must conduct a remedial
investigation, removal, response action or other activity pursuant to any
Environmental Law; or (d) of any Environmental Claim.
(c) Handling of Hazardous Substances. Except as set forth on Schedule
9.15, (i) no portion of any real property or other assets owned, leased or
operated by either of the Borrowers or any Subsidiary has been used for the
handling, processing, storage or disposal of Hazardous Substances except in
accordance in all material respects with applicable Environmental Laws; and no
underground tank or other underground storage receptacle for Hazardous
Substances is located on such properties; (ii) in the course of any activities
conducted by either of the Borrowers, any Subsidiary or the operators of any
real property owned, leased or operated by either of the Borrowers or any
Subsidiary, no Hazardous Substances have been generated or are being used on
such properties except in accordance in all material respects with applicable
Environmental Laws; (iii) there have been no Releases or threatened Releases of
Hazardous Substances on, upon, into or from any real property or other assets
owned, leased or operated by either of the Borrowers or any Subsidiary, which
Releases singly or in the aggregate might reasonably be expected to have a
material adverse effect on the value of such real property or assets; (iv) to
the Borrowers' actual knowledge, there have been no Releases on, upon, from or
into any real property in the vicinity of any real property or other assets
owned, leased or operated by either of the Borrowers or any Subsidiary which,
through soil or groundwater contamination, may have come to be located on, and
which might reasonably be expected to have a material adverse effect on the
value of, any real
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property or other assets owned, leased or operated by either of the Borrowers or
any Subsidiary; and (v) any Hazardous Substances generated by either of the
Borrowers or their Subsidiaries have been transported offsite only by properly
licensed carriers and delivered only to treatment or disposal facilities
maintaining valid permits as required under applicable Environmental Laws, which
transporters and facilities have been and are, to the best of the Borrowers'
knowledge, operating in compliance with such permits and applicable
Environmental Laws.
(d) Investigations. Except as set forth on Schedule 9.15, the
Borrowers and their Subsidiaries have taken all reasonable steps to investigate
the past and present condition and usage of any real property owned, leased or
operated by either of the Borrowers and their Subsidiaries and the operations
conducted by either of the Borrowers and their Subsidiaries with regard to
environmental matters.
9.16 Year 2000 Issue. The Borrowers and their Subsidiaries have reviewed
the areas within their business and operations which could be adversely affected
by, and have developed or are developing a program to address on a timely basis,
the "Year 2000 Issue" (that is, the risk that computer applications used by the
Borrowers and their Subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999). Based on such review and program, the Borrowers reasonably
believes that the "Year 2000 Issue" will not have a Material Adverse Effect.
9.17 Copyrights, Patents, Trademarks and Licenses, etc. The Borrowers and
their Subsidiaries own or are licensed or otherwise have the right to use all of
the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, all as set forth on Schedule 9.17,
without conflict with the rights of any other Person. No slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Borrowers or any
Subsidiary infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or, to the knowledge of the
Borrowers, threatened, and no patent, invention, device, application, principle
or any statute, law, rule, regulation, standard or code is pending or, to the
knowledge of the Borrowers, proposed, which, in either case, could reasonably be
expected to have a Material Adverse Effect.
9.18 Transactions with Affiliates. Neither of the Borrowers nor any
Subsidiary have entered into or participated in any agreements or transactions
of any kind with any Affiliates of the Borrowers except agreements or
transactions entered into in the ordinary course of business on an arms-length
basis.
9.19 Information. All information heretofore or contemporaneously herewith
furnished in writing by the Borrowers or any Subsidiary to any Bank for purposes
of or in connection with this Agreement and the transactions contemplated hereby
is, and all written information hereafter furnished by or on behalf of the
Borrowers or any Subsidiary to any Bank pursuant hereto or in connection
herewith will be, true and accurate in every material respect on the date as of
which such information is dated or certified, and none of such information is or
will be incomplete by omitting to state any material fact necessary to make such
information not misleading in light of the
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circumstances under which made (it being recognized by the Agent and the Banks
that (a) any projections and forecasts provided by the Borrowers are based on
good faith estimates and assumptions believed by the Borrowers to be reasonable
as of the date of the applicable projections or assumptions and that actual
results during the period or periods covered by any such projections and
forecasts may differ from projected or forecasted results and (b) any
information provided by the Borrowers or any Subsidiary with respect to any
Person or assets acquired or to be acquired by the Borrowers or any Subsidiary
shall, for all periods prior to the date of such acquisition, be limited to the
knowledge of the Borrowers or the acquiring Subsidiary after reasonable
inquiry).
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and thereafter until
all obligations of the Borrowers hereunder and under the other Loan Documents
are paid in full and all Letters of Credit have been terminated, the Borrowers
agree that, unless at any time the Required Banks shall otherwise expressly
consent in writing, they will:
10.1 Reports, Certificates and Other Information. Furnish to the Agent and
each Bank:
10.1.1 Audit Report. Promptly when available and in any event within 105
days after the close of each Fiscal Year: (a) a copy of the annual audit report
of the Borrowers and their Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets of the Borrowers and their Subsidiaries as of the
end of such Fiscal Year and consolidated statements of earnings and cash flow of
the Borrowers and their Subsidiaries for such Fiscal Year in the form of the
10-K submitted by the Borrowers to the SEC, certified without qualification by
independent auditors of recognized standing selected by the Borrowers and
reasonably acceptable to the Required Banks, together with a written statement
from such accountants to the effect that in making the examination necessary for
the signing of such annual audit report by such accountants, nothing came to
their attention that caused them to believe that the Borrowers were not in
compliance with any provision of Section 10.6, 10.7 or 10.9 of this Agreement
insofar as such provision relates to accounting matters or, if something has
come to their attention that caused them to believe that either of the Borrowers
was not in compliance with any such provision, describing such non-compliance in
reasonable detail (it being understood that any such audit is not directed
primarily toward obtaining knowledge of such non-compliance); and (b)
consolidating balance sheets of the Borrowers and their Subsidiaries as of the
end of such Fiscal Year and a consolidating statement of earnings for the
Borrowers and their Subsidiaries for such Fiscal Year, certified by the Chief
Financial Officer, the Vice President, Finance, Controller or Treasurer of the
Borrowers.
10.1.2 Quarterly Reports. Promptly when available and in any event within
60 days after the end of each Fiscal Quarter (except the last Fiscal Quarter) of
each Fiscal Year, consolidated and consolidating balance sheets of the Borrowers
and their Subsidiaries as of the end of such Fiscal Quarter in the form of the
10-Q submitted by the Borrowers to the SEC, together with consolidated and
consolidating statements of earnings and a consolidated and consolidating
statement of cash flows for such Fiscal Quarter and for the period beginning
with the first day of such Fiscal Year and ending on the last day of such Fiscal
Quarter, certified by the Chief Financial Officer, the Vice
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President, Finance, Controller or Treasurer of the Borrowers.
10.1.3 Compliance Certificates. Contemporaneously with the furnishing of a
copy of each annual audit report pursuant to Section 10.1.1 and of each set of
quarterly statements pursuant to Section 10.1.2, a duly completed compliance
certificate in the form of Exhibit B, with appropriate insertions, dated the
date of such annual report or such quarterly statements and signed by the Chief
Financial Officer, the Vice President, Finance, Controller or Treasurer of the
Borrowers, containing a computation of each of the financial ratios and
restrictions set forth in Section 10.6 and a statement to the effect that such
officer has not become aware of any Event of Default or Unmatured Event of
Default that has occurred and is continuing or, if there is any such event,
describing it and the steps, if any, being taken to cure it.
10.1.4 Reports to SEC and to Shareholders. Promptly upon the filing or
sending thereof, copies of all regular, periodic or special reports of the
Borrowers or any Subsidiary filed with the SEC (excluding exhibits thereto,
provided that the Borrowers shall promptly deliver any such exhibit to the Agent
or any Bank upon request therefor); copies of all registration statements of the
Borrowers or any Subsidiary filed with the SEC (other than on Form S-8); and
copies of all proxy statements or other communications made to security holders
generally concerning material developments in the business of the Borrowers or
any Subsidiary.
10.1.5 Notice of Default, Litigation and ERISA Matters. Promptly upon
becoming aware of any of the following, written notice describing the same and
the steps being taken by the Borrowers or the Subsidiary affected thereby with
respect thereto:
(a) the occurrence of an Event of Default or an Unmatured Event of
Default;
(b) any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by the Borrowers to the Banks which has
been instituted or, to the knowledge of the Borrowers, is threatened
against either of the Borrowers or any Subsidiary or to which any of the
properties of any thereof is subject which, if adversely determined, might
reasonably be expected to have a Material Adverse Effect;
(c) the institution of any steps by any member of the Controlled
Group or any other Person to terminate any Pension Plan, or the failure of
any member of the Controlled Group to make a required contribution to any
Pension Plan (if such failure is sufficient to give rise to a lien under
Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or the
taking of any action with respect to a Pension Plan which could result in
the requirement that either of the Borrowers furnish a bond or other
security to the PBGC or such Pension Plan, or the occurrence of any event
with respect to any Pension Plan or Multiemployer Pension Plan which could
result in the incurrence by any member of the Controlled Group of any
material liability, fine or penalty (including any claim or demand for
withdrawal liability or partial withdrawal from any Multiemployer Pension
Plan), or any material increase
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in the contingent liability of either of the Borrowers with respect to any
post-retirement Welfare Plan benefit, or any notice that any Multiemployer
Pension Plan is in reorganization, that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of an
excise tax, that any such plan is or has been funded at a rate less than
that required under Section 412 of the Code, that any such plan is or may
be terminated, or that any such plan is or may become insolvent;
(d) any cancellation or material change in any insurance maintained
by the Borrowers or any Subsidiary;
(e) any event (including (i) any violation of any Environmental Law
or the assertion of any Environmental Claim or (ii) the enactment or
effectiveness of any law, rule or regulation) which might reasonably be
expected to have a Material Adverse Effect; or
(f) any setoff, claims, withholdings or other defenses to which any
of the Collateral, or the Banks, rights with respect to the Collateral, are
subject.
10.1.6 Subsidiaries. Promptly upon any change in the list of its
Subsidiaries, a written report of such change.
10.1.7 Management Reports. Promptly upon the request of the Agent or any
Bank, copies of all detailed financial and management reports submitted to the
Borrowers by independent auditors in connection with each annual or interim
audit made by such auditors of the books of the Borrowers.
10.1.8 Budgets. As soon as practicable and in any event within 60 days
after the commencement of each Fiscal Year, divisional and consolidated budgets
for the Borrowers and their Subsidiaries for such Fiscal Year prepared in a
manner reasonably satisfactory to the Agent.
10.1.9 Contracts. As soon as practicable after becoming aware of the event
and in any event within 30 days of such event, written notice of any termination
by a customer of a material contract with a Subsidiary (with materiality being
measured at the Subsidiary level).
10.1.10 Other Information. From time to time such other information
concerning the Borrowers and their Subsidiaries as any Bank or the Agent may
reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP; permit, and cause each Subsidiary to permit, any Bank or the Agent or any
representative thereof to inspect the properties and operations of the Borrowers
and of such Subsidiary; and permit, and cause each Subsidiary to permit, at any
reasonable time and with reasonable notice (or at any time without notice if an
Event of Default exists), any Bank or the Agent or any representative thereof to
visit any or all of its offices, to
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discuss its financial matters with its officers and its independent auditors
(and the Borrowers hereby authorizes such independent auditors to discuss such
financial matters with any Bank or the Agent or any representative thereof,
provided that so long as no Event of Default exists, a representative of the
Borrowers shall be present at any such discussions), and to examine (and, at the
expense of the Borrowers or the applicable Subsidiary, photocopy extracts from)
any of its books or other corporate records.
10.3 Insurance. Maintain, and cause each Subsidiary to maintain, with
responsible insurance companies, such insurance as may be required by any law or
governmental regulation or court decree or order applicable to it and such other
insurance, to such extent and against such hazards and liabilities, as is
customarily maintained by companies similarly situated and that is acceptable to
the Agent; and, on each anniversary of the Effective Date and from time to time
upon request of the Agent or any Bank, furnish to the Agent or such Bank a
certificate setting forth in reasonable detail the nature and extent of all
insurance maintained by the Borrowers and their Subsidiaries.
10.4 Compliance with Laws; Payment of Taxes and Liabilities. (a) Comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws (including Environmental Laws), rules, regulations, decrees,
orders, judgments, licenses and permits; and (b) pay, and cause each Subsidiary
to pay, prior to delinquency, all taxes and other governmental charges against
it or any of its property, as well as claims of any kind which, if unpaid, might
become a Lien on any of its property; provided, however, that the foregoing
shall not require the Borrowers or any Subsidiary to pay any such tax or charge
so long as it shall contest the validity thereof in good faith by appropriate
proceedings and shall set aside on its books adequate reserves with respect
thereto in accordance with GAAP.
10.5 Maintenance of Existence, etc. Maintain and preserve, and (subject to
Section 10.11) cause each Subsidiary to maintain and preserve, (a) its existence
and good standing in the jurisdiction of its incorporation and (b) its
qualification and good standing as a foreign corporation in each jurisdiction
where the nature of its business makes such qualification necessary (except in
those instances in which the failure to be qualified or in good standing does
not have a Material Adverse Effect).
10.6 Financial Covenants. On a consolidated basis with their Subsidiaries
(excluding Speech Design) on an annualized basis for the year ending December
31, 1997 and on a rolling four quarter basis thereafter:
10.6.1 Fixed Charges Coverage Ratio. Not permit the Fixed Charges Coverage
Ratio to be less than 1.75 to 1.00.
10.6.2 Leverage Ratio. Not permit the Leverage Ratio as of the last day of
any Fiscal Quarter to exceed 3.25 to 1.00.
10.6.3 Funded Debt to Total Capitalization Ratio. Not permit the Funded
Debt to Total Capitalization Ratio to exceed .55 to 1.00.
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10.6.4 Interest Coverage Ratio. Not permit the Interest Coverage Ratio at
any time to be less than 3.25 to 1.00.
10.6.5 Minimum Net Income. Maintain net income of not less than $1.00 for
each Fiscal Quarter.
10.7 Limitations on Debt. Not, and not permit any Subsidiary to, create,
incur, assume or suffer to exist any Debt, except:
(a) obligations in respect of the Loans, the L/C Applications and the
Letters of Credit;
(b) Debt of Subsidiaries owed to the Borrowers, except, as to Speech
Design, the Debt shall not exceed the amount of dividends paid
contemporaneously by Speech Design to the lending Borrower;
Subordinated Debt.
10.8 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except:
(a) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested in good
faith by appropriate proceedings and, in each case, for which it maintains
adequate reserves;
(b) Liens arising in the ordinary course of business (such as (i)
Liens of carriers, warehousemen, mechanics and materialmen and other
similar Liens imposed by law and (ii) Liens incurred in connection with
worker's compensation, unemployment compensation and other types of social
security (excluding Liens arising under ERISA) or in connection with surety
bonds, bids, performance bonds and similar obligations) for sums not
overdue or being contested in good faith by appropriate proceedings and not
involving any deposits or advances or borrowed money or the deferred
purchase price of property or services, and, in each case, for which it
maintains adequate reserves;
(c) Liens identified in Schedule 10.8;
(d) Liens that constitute purchase money security interests on any
property securing debt incurred for the purpose of financing all or any
part of the cost of acquiring such property, provided that any such Lien
attaches to such property within 60 days of the acquisition thereof and
such Lien attaches solely to the property so acquired;
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(e) attachments, appeal bonds, judgments and other similar Liens, for
sums not exceeding $250,000 arising in connection with court proceedings,
provided the execution or other enforcement of such Liens is effectively
stayed and the claims secured thereby are being actively contested in good
faith and by appropriate proceedings;
(f) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any
material respect with the ordinary conduct of the business of the Borrowers
or any Subsidiary; and
(g) Liens in favor of the Agent arising under the Loan Documents.
10.9 Restricted Payments. Not, and not permit any Subsidiary to, (a)
declare or pay any dividends on any of its capital stock (other than stock
dividends), (b) purchase or redeem any such stock or any warrants, units,
options or other rights in respect of such stock, (c) make any other
distribution to shareholders, (d) prepay, purchase, defease or redeem any
Subordinated Debt or (e) set aside funds for any of the foregoing; provided that
either Borrower may declare and pay dividends to the other and any Subsidiary
may declare and pay dividends to the Borrowers or to any other wholly-owned
Subsidiary; and provided, further, that this Section 10.9 shall not prohibit
Bogen Communications International, Inc. from taking the enumerated actions
unless otherwise restricted by the terms of this Credit Agreement.
10.10 Mergers, Consolidations, Sales. Not, and not permit any Subsidiary
to, be a party to any merger or consolidation, or purchase or otherwise acquire
all or substantially all of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person, or sell, transfer,
convey or lease all or any substantial part of its assets, or sell or assign
with or without recourse any receivables, except for (a) any such merger or
consolidation, sale, transfer, conveyance, lease or assignment of or by any
wholly-owned Subsidiary into either of the Borrowers or into, with or to any
other wholly-owned Subsidiary; (b) any such purchase or other acquisition by
either of the Borrowers or any wholly-owned Subsidiary of the assets or stock of
any wholly-owned Subsidiary; (c) any such purchase or other acquisition by
either of the Borrowers or any wholly-owned Subsidiary of the assets or stock of
any other Person where (1) the Agent and the Banks have been provided with a
Standard Information Package, (2) such assets (in the case of an asset purchase)
are for use, or such Person (in the case of a stock purchase) is engaged, solely
in providing a business similar to that of the Person making the acquisition and
said business is conducted in the United States; (3) immediately before or after
giving effect to such purchase or acquisition, no Event of Default or Unmatured
Event of Default shall have occurred and be continuing; (4) the aggregate
consideration to be paid by either of the Borrowers and their Subsidiaries
(including any Debt assumed or issued in connection therewith, the amount
thereof to be calculated in accordance with GAAP) in connection with such
purchase or other acquisition (or any series of related acquisitions) is not
greater than five times the EBITDA for the most recent Fiscal Year of the Person
being acquired based on the information in the Standard Information Package, (5)
the Borrowers will be in pro forma compliance with all the financial ratios and
restrictions set forth in Section 10.6 on both a trailing and projected twelve
(12) month basis; (6) the Person acquired will become a Borrower; and (7) all of
the assets of the Person acquired or the
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assets acquired (in the case of an asset purchase) shall be pledged as
collateral for the Loans.
10.11 Modification of Organizational Documents. Not permit the Certificate
of Incorporation, By-Laws or other organizational documents of the Borrowers or
any Subsidiary to be amended or modified in any way which might reasonably be
expected to materially adversely affect the interests of the Banks.
10.12 Use of Proceeds. Use the proceeds of the Loans solely to finance the
Borrowers' working capital and for acquisitions permitted by Section 10.10; and
not use or permit any proceeds of any Loan to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
"purchasing or carrying" any Margin Stock. Initially, proceeds will be used to
pay out existing Debt with Summit Bank.
10.13 Sale of Speech Design; Proceeds of Warrants. Proceeds from the sale
of Speech Design will be applied first to the payment of taxes and reasonable
and customary fees and costs attributable to the sale of Speech Design and then
to any outstanding Debt. The balance of proceeds, if any, must be used by the
Borrowers to finance acquisitions prior to utilization of any portion of the
Acquisition Sublimit. Proceeds derived from the exercise of warrants will be
applied to the reduction of amounts outstanding under the Acquisition Sublimit.
10.14 Further Assurances. Take, and cause each Subsidiary to take, such
actions as are necessary, or as the Agent or the Required Banks may reasonably
request, from time to time (including the execution and delivery of guaranties,
security agreements, pledge agreements, financing statements and other
documents, the filing or recording of any of the foregoing, and the delivery of
stock certificates and other collateral with respect to which perfection is
obtained by possession) to ensure that (i) the obligations of the Borrowers
hereunder and under the other Loan Documents are secured by substantially all of
the assets of the Borrowers and guaranteed by all of the Subsidiaries
(including, promptly upon the acquisition or creation thereof, any Subsidiary
acquired or created after the date hereof) by execution of a counterpart of the
Guaranty and (ii) the obligations of each Guarantor under the Guaranty are
secured by substantially all of the assets of such Guarantor.
10.15 Transactions with Affiliates. Not, and not permit any Subsidiary to,
enter into, or cause, suffer or permit to exist any transaction, arrangement or
contract with any of its other Affiliates (other than the Borrowers and their
Subsidiaries) which is on terms which are less favorable than are obtainable
from any Person which is not one of its Affiliates.
10.16 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in substantial compliance with all applicable
requirements of law and regulations.
10.17 Environmental Matters. (a) If any material Release or Disposal of
Hazardous Substances shall occur or shall have occurred on any real property or
any other assets owned, leased or operated by either of the Borrowers or any
Subsidiary, the Borrowers shall, and shall cause the applicable Subsidiary to,
cause the prompt containment and removal of such Hazardous Substances and the
remediation of such real property or other assets as necessary to comply in all
material
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respects with all Environmental Laws and to preserve the value of such real
property or other assets. Without limiting the generality of the foregoing, the
Borrowers shall, and shall cause each Subsidiary to, comply in a reasonable and
cost-effective manner with any valid Federal or state judicial or administrative
order requiring the performance at any real property owned, leased or operated
by either of the Borrowers or any Subsidiary of activities in response to the
Release or threatened Release of a Hazardous Substance except for the period of
time that the Borrowers or such Subsidiary is diligently and in good faith
contesting such order.
(b) To the extent that the transportation of "hazardous waste" as
defined by RCRA is permitted by this Agreement, the Borrowers shall, and shall
cause their Subsidiaries to, dispose of such hazardous waste only at licensed
disposal facilities operating, to the best of the Borrowers' or such
Subsidiary's knowledge after reasonable inquiry, in compliance with
Environmental Laws.
10.18 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other property or services, if such contract requires
that payment be made by it regardless of whether or not delivery is ever made of
such materials, supplies or other property or services; provided that the
foregoing shall not prohibit the Borrowers or any Subsidiary from entering into
options for the purchase of particular assets or businesses.
10.19 Inconsistent Agreements. Not, and not permit any Subsidiary to, enter
into any agreement containing any provision which (a) would be violated or
breached by any borrowing by the Borrowers hereunder or by the performance by
the Borrowers or any Subsidiary of any of their obligations hereunder or under
any other Loan Document or (b) would prohibit the Borrowers or any Subsidiary
from granting to the Agent, for the benefit of the Banks, a Lien on any of their
assets.
10.20 Business Activities. Not, and not permit any Subsidiary to, engage in
any line of business other than developing, producing and selling sound and
communication equipment and telephone and telecommunications peripherals and
systems and businesses which are reasonably related thereto.
10.21 Advances and Other Investments. Not, and not permit any Subsidiary
to, make, incur, assume or suffer to exist any Investment in any other Person,
except (without duplication) the following:
(a) equity Investments existing on the Effective Date in Subsidiaries
identified in Schedule 9.8;
(b) equity Investments in Subsidiaries acquired after the Effective
Date in transactions permitted as acquisitions of stock or assets pursuant
to Section 10.10;
(c) in the ordinary course of business, contributions by the
Borrowers to the capital of any of its Subsidiaries, or by any such
Subsidiary to the capital of
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any of its Subsidiaries;
(d) in the ordinary course of business, Investments by the Borrowers
in any Subsidiary or by any of the Subsidiaries in the Borrowers, by way of
intercompany loans, advances or guaranties, all to the extent permitted by
Section 10.7;
(e) good faith deposits made in connection with prospective
acquisitions of stock or assets permitted by Section 10.10;
(f) Cash Equivalent Investments; and
(g) bank deposits in the ordinary course of business; provided that
the aggregate amount of all such deposits (excluding amounts in payroll
accounts or for accounts payable, in each case to the extent that checks
have been issued to third parties) which are maintained with any bank other
than the Agent shall not at any time exceed (x) in the case of such
deposits with any single bank, $100,000 for three consecutive Business Days
and (y) in the case of all such deposits, $2,500,000 for three consecutive
Business Days;
provided, however, that no Investment otherwise permitted by clause (b), (c),
(d) or (e) shall be permitted to be made if, immediately before or after giving
effect thereto, any Event of Default or Unmatured Event of Default shall have
occurred and be continuing.
10.22 Maintenance of Property. The Borrowers shall, and shall cause each
Subsidiary to, maintain and preserve all its property which is used or useful in
its business in good working order and condition, ordinary wear and tear
excepted.
10.23 Performance of Obligations. The Borrowers shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets; and
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; unless, in each case, the same are being contested in
good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Borrowers or such Subsidiary.
10.24 Leases. Enter into, and cause each Subsidiary to enter into, leases
acceptable to the Agent with respect to any real property used by the Borrowers
or any Subsidiary in the conduct of its business.
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SECTION 11 EFFECTIVENESS; CONDITIONS OF LENDING, ETC.
The obligation of each Bank to make its Loans and of any Issuing Bank to
issue Letters of Credit is subject to the following conditions precedent:
11.1 Initial Credit Extensions. The obligation of each Bank to make its
initial Loan and of any Issuing Bank to issue any Letter of Credit, whichever
first occurs, is, in addition to the conditions precedent specified in Section
11.2, subject to the conditions precedent (and the date on which all such
conditions precedent have been satisfied or waived in writing by the Banks is
called the "Effective Date") that (a) the Agent shall have received all amounts
which are then due and payable pursuant to Section 5 and (to the extent billed)
Section 14.6, (b) the Agent shall have completed its due diligence of the
Borrowers and (c) the Agent shall have received all of the following, each duly
executed and dated the Effective Date (or such other date as shall be
satisfactory to the Agent), in form and substance satisfactory to the Agent, and
each (except for the Notes, of which only the originals shall be signed) in
sufficient number of signed counterparts to provide one for each Bank:
11.1.1 Notes. The Notes.
11.1.2 Resolutions. Certified copies of resolutions of the Boards of
Directors of the Borrowers authorizing or ratifying the execution, delivery and
performance by the Borrowers of this Agreement, the Notes and the other Loan
Documents to which the Borrowers are a party; and certified copies of
resolutions of the Board of Directors of each Subsidiary which is to execute and
deliver any document pursuant to Section 11.1.5, 11.1.6 or 11.1.7 authorizing or
ratifying the execution, delivery and performance by such Subsidiary of each
Loan Document to which such Subsidiary is a party.
11.1.3 Consents, etc. Certified copies of all documents evidencing any
necessary corporate action, consents and governmental approvals (if any)
required for the execution, delivery and performance by the Borrowers and each
Subsidiary of the documents referred to in this Section 11.
11.1.4 Incumbency and Signature Certificates. A certificate of an officer
of each of the Borrowers and each Subsidiary of the Borrowers as of the
Effective Date certifying the names of the officer or officers of such entity
authorized to sign the Loan Documents to which such entity is a party, together
with a sample of the true signature of each such officer (it being understood
that the Agent and each Bank may conclusively rely on each such certificate
until formally advised by a like certificate of any changes therein).
11.1.5 Guaranty. The Guaranty executed by each Subsidiary as of the
Effective Date.
11.1.6 Security Agreement. The Security Agreements executed by the
Borrowers and each Subsidiary as of the Effective Date, together with evidence,
satisfactory to the Agent, that all filings necessary to perfect the Agent's
Lien on any collateral granted under the Security Agreements have been duly made
and are in full force and effect.
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11.1.7 Pledge Agreements. The Pledge Agreement and, with respect to any
Subsidiary that as of the Effective Date has one or more Subsidiaries, a
Subsidiary Pledge Agreement, in each case together with all stock certificates,
stock powers and other items required to be delivered in connection therewith.
11.1.8 Opinion of Counsel for the Borrowers and the Guarantors. The opinion
of counsel to the Borrowers and the Guarantors.
11.1.9 Other. Such other documents as the Agent or any Bank may reasonably
request.
11.2 Conditions. The obligation (a) of each Bank to make each Loan and (b)
of each Issuing Bank to issue each Letter of Credit is subject to the following
further conditions precedent that:
11.2.1 Compliance with Warranties, No Default, etc. Both before and after
giving effect to any borrowing and the issuance of any Letter of Credit (but, if
any Event of Default of the nature referred to in Section 12.1.2 shall have
occurred with respect to any other Debt, without giving effect to the
application, directly or indirectly, of the proceeds thereof) the following
statements shall be true and correct:
(a) the representations and warranties of the Borrowers and the
Guarantors set forth in this Agreement (excluding Sections 9.6 and 9.8) and
the other Loan Documents shall be true and correct in all material respects
with the same effect as if then made (except to the extent stated to relate
to an earlier date, in which case such representations and warranties shall
be true and correct in all material respects as of such earlier date);
(b) except as disclosed by the Borrowers to the Agent and the Banks
pursuant to Section 9.6,
(i) no litigation (including derivative actions), arbitration
proceeding, labor controversy or governmental investigation or
proceeding shall be pending or, to the knowledge of either of the
Borrowers, threatened against either of the Borrowers or any of their
Subsidiaries which might reasonably be expected to have a Material
Adverse Effect or which purports to affect the legality, validity or
enforceability of this Agreement, the Notes or any other Loan Document;
and
(ii) no development shall have occurred in any litigation
(including derivative actions), arbitration proceeding, labor
controversy or governmental investigation or proceeding disclosed
pursuant to Section 9.6 which might reasonably be expected to have a
Material Adverse Effect; and
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(c) no Event of Default or Unmatured Event of Default shall have
then occurred and be continuing, and neither of the Borrowers nor any of
their Subsidiaries shall be in violation of any law or governmental
regulation or court order or decree where such violation or violations
singly or in the aggregate might reasonably be expected to have a Material
Adverse Effect; and
(d) there shall have been no change in the operations or financial
condition of either of the Borrowers or their Subsidiaries or in the market
for syndicated loans that might reasonably be expected to have a Material
Adverse Effect.
11.2.2 Confirmatory Certificate. If requested by the Agent or any Bank, the
Agent shall have received (in sufficient counterparts to provide one to each
Bank) a certificate dated the date of such requested Loan or Letter of Credit
and signed by a duly authorized representative of the Borrower for whose benefit
the Loan or the Letter of Credit has been requested as to the matters set out in
Section 11.2.1 (it being understood that each request by the Borrowers for the
making of a Loan or the issuance of a Letter of Credit shall be deemed to
constitute a warranty by the Borrowers that the conditions precedent set forth
in Section 11.2.1 will be satisfied at the time of the making of such Loan or
the issuance of such Letter of Credit), together with such other documents as
the Agent or any Bank may reasonably request in support thereof.
11.2.3 Field Audit. A field examination shall be performed to the
reasonable satisfaction of Agent.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when due of
the principal of any Loan; or default, and continuance thereof for five days, in
the payment when due of any interest, fee, reimbursement obligation with respect
to any Letter of Credit or other amount payable by the Borrowers hereunder or
under any other Loan Document, or payable by the Borrowers under any other
credit arrangement with any Bank.
12.1.2 Non-Payment of Other Debt. Any default shall occur under the terms
applicable to any Debt of either of the Borrowers or any Subsidiary in an
aggregate amount (for all such Debt so affected) exceeding $250,000 and such
default shall (a) consist of the failure to pay such Debt when due (subject to
any applicable grace period), whether by acceleration or otherwise, or (b)
accelerate the maturity of such Debt or permit the holder or holders thereof, or
any trustee or agent for such holder or holders, to cause such Debt to become
due and payable prior to its expressed maturity.
12.1.3 Other Material Obligations. Default in the payment when due, or in
the performance or observance of, any material obligation of, or condition
agreed to by, either of the
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Borrowers or any Subsidiary with respect to any material purchase or lease of
goods or services where such default, singly or in the aggregate with other such
defaults might reasonably be expected to have a Material Adverse Effect (except
only to the extent that the existence of any such default is being contested by
either of the Borrowers or such Subsidiary in good faith and by appropriate
proceedings and appropriate reserves have been made in respect of such default).
12.1.4 Bankruptcy, Insolvency, etc. Either of the Borrowers or any
Subsidiary becomes insolvent or generally fails to pay, or admits in writing its
inability or refusal to pay, debts as they become due; or either of the
Borrowers any Subsidiary applies for, consents to, or acquiesces in the
appointment of a trustee, receiver or other custodian for either of the
Borrowers or such Subsidiary or any property thereof, or makes a general
assignment for the benefit of creditors; or, in the absence of such application,
consent or acquiescence, a trustee, receiver or other custodian is appointed for
either of the Borrowers or any Subsidiary or for a substantial part of the
property of any thereof and is not discharged within 60 days; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation proceeding
(except the voluntary dissolution, not under any bankruptcy or insolvency law,
of a Subsidiary), is commenced in respect either of the Borrowers or any
Subsidiary, and if such case or proceeding is not commenced by such Borrower or
Subsidiary, it is consented to or acquiesced in by such Borrower or Subsidiary,
or remains for 60 days undismissed; or the Borrowers or any Subsidiary takes any
corporate action to authorize, or in furtherance of, any of the foregoing.
12.1.5 Non-Compliance with Provisions of This Agreement. (a) Failure by
either of the Borrowers to comply with or to perform any covenant set forth in
Sections 10.6 through 10.11, 10.14 or 10.17 through 10.20; or (b) failure by
either of the Borrowers to comply with or to perform any other provision of this
Agreement (and not constituting an Event of Default under any of the other
provisions of this Section 12) and continuance of such failure described in this
clause (b) for 30 days (or, in the case of Section 10.13, five Business Days)
after notice thereof to such Borrower from the Agent, any Bank or the holder of
any Note.
12.1.6 Warranties. Any warranty made by either of the Borrowers herein is
breached or is false or misleading in any material respect, or any schedule,
certificate, financial statement, report, notice or other writing furnished by
either of the Borrowers to the Agent or any Bank in connection herewith is false
or misleading in any material respect on the date as of which the facts therein
set forth are stated or certified.
12.1.7 Pension Plans. (i) Institution of any steps by either of the
Borrowers or any other Person to terminate a Pension Plan if as a result of such
termination either of the Borrowers could be required to make a contribution to
such Pension Plan, or could incur a liability or obligation to such Pension
Plan, in excess of $250,000; (ii) a contribution failure occurs with respect to
any Pension Plan sufficient to give rise to a Lien under section 302(f) of
ERISA; or (iii) there shall occur any withdrawal or partial withdrawal from a
Multiemployer Pension Plan and the withdrawal liability (without unaccrued
interest) to Multiemployer Pension Plans as a result of such withdrawal
(including any outstanding withdrawal liability that either of the Borrowers and
the Controlled Group have incurred on the date of such withdrawal) exceeds
$250,000.
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12.1.8 Judgments. Final non-appealable judgments which exceed an aggregate
of $250,000 shall be rendered against either of the Borrowers, or any Subsidiary
and shall not have been paid, discharged or vacated or had execution thereof
stayed pending appeal within 30 days after entry or filing of such judgments.
12.1.9 Invalidity of Guaranty, etc. The Guaranty shall cease to be in full
force and effect with respect to any Guarantor, any Guarantor shall fail
(subject to any applicable grace period) to comply with or to perform any
applicable provision of the Guaranty, or any Guarantor (or any Person by,
through or on behalf of such Guarantor) shall contest in any manner the
validity, binding nature or enforceability of the Guaranty with respect to such
Guarantor.
12.1.10 Invalidity of Collateral Documents, etc. Any Collateral Document
shall cease to be in full force and effect with respect to either of the
Borrowers or any Guarantor, either of the Borrowers or any Guarantor shall fail
(subject to any applicable grace period) to comply with or to perform any
applicable provision of any Collateral Document to which such entity is a party,
or either of the Borrowers or any Guarantor (or any Person by, through or on
behalf of such Borrower or Guarantor) shall contest in any manner the validity,
binding nature or enforceability of any Collateral Document.
12.1.11 Change in Control. (a) Any Person or group of Persons (within the
meaning of Section 13 or 14 of the Securities Exchange Act of 1934, but
excluding the executive managers of either of the Borrowers as of the Effective
Date) shall acquire beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) of 30% or more of the outstanding shares of voting
stock of either of the Borrowers; (b) during any 24-month period, individuals
who at the beginning of such period constituted the Board of Directors of either
of the Borrowers (together with any new directors whose election by said Board
of Directors or whose nomination for election was approved by a vote of at least
two-thirds of the directors who either were directors at beginning of such
period or whose election or nomination was previously so approved) cease for any
reason to constitute a majority of said Board of Directors; (c) a period of 60
consecutive days shall have elapsed during which any of the individuals named in
Schedule 12.1.11A shall have ceased to hold executive offices with the Borrowers
at least equal in seniority to such individual's present offices, as set out in
such Schedule 12.1.11, excluding any such individual who has been replaced by
another individual or individuals reasonably satisfactory to the Required Banks
(it being understood that any such replacement individual shall be deemed added
to Schedule 12.1.11 on the date of approval thereof by the Required Banks); or
(d) a period of 60 consecutive days shall have elapsed during which all of the
individuals named in Schedule 12.1.11B shall have ceased to be members of the
Board of Directors.
12.2 Effect of Event of Default. If any Event of Default described in
Section 12.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Notes and all other obligations
hereunder shall become immediately due and payable and the Borrowers shall
become immediately obligated to deliver to the Agent cash collateral in an
amount equal to the outstanding face amount of all Letters of Credit, all
without presentment, demand, protest or notice of any kind; and, if any other
Event of Default shall occur and be
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continuing, the Agent (upon written request of the Required Banks) shall declare
the Commitments (if they have not theretofore terminated) to be terminated
and/or declare all Notes and all other obligations hereunder to be due and
payable and/or demand that the Borrowers immediately deliver to the Agent cash
collateral in amount equal to the outstanding face amount of all Letters of
Credit, whereupon the Commitments (if they have not theretofore terminated)
shall immediately terminate and/or all Notes and all other obligations hereunder
shall become immediately due and payable and/or the Borrowers shall immediately
become obligated to deliver to the Agent cash collateral in an amount equal to
the face amount of all Letters of Credit, all without presentment, demand,
protest or notice of any kind. The Agent shall promptly advise the Borrowers of
any such declaration, but failure to do so shall not impair the effect of such
declaration. Notwithstanding the foregoing, the effect as an Event of Default of
any event described in Section 12.1.1 or Section 12.1.4 may be waived by the
written concurrence of all of the Banks, and the effect as an Event of Default
of any other event described in this Section 12 may be waived by the written
concurrence of the Required Banks. Any cash collateral delivered hereunder shall
be held by the Agent (without liability for interest thereon) and applied to
obligations arising in connection with any drawing under a Letter of Credit.
After the expiration or termination of all Letters of Credit, such cash
collateral shall be applied by the Agent to any remaining obligations hereunder
and any excess shall be delivered to the Borrowers or as a court of competent
jurisdiction may elect.
SECTION 13 THE AGENT.
13.1 Appointment and Authorization. (a) Each Bank hereby irrevocably
(subject to Section 13.9) appoints, designates and authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
(b) Each Issuing Bank shall act on behalf of the Banks with respect to
any Letters of Credit issued by it and the documents associated therewith. Each
Issuing Bank shall have all of the benefits and immunities (i) provided to the
Agent in this Section 13 with respect to any acts taken or omissions suffered by
such Issuing Bank in connection with Letters of Credit issued by it or proposed
to be issued by it and the applications and agreements for letters of credit
pertaining to such Letters of Credit as fully as if the term "Agent", as used in
this Section 13, included such Issuing Bank with respect to such acts or
omissions and (ii) as additionally provided in this Agreement with respect to
the Issuing Banks.
13.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent
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shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
13.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by either of the Borrowers or any
Subsidiary or Affiliate of either of the Borrowers, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of either of the Borrowers or any other party to any Loan Document to perform
its obligations hereunder or thereunder. No Agent-Related Person shall be under
any obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Borrowers or any of the Borrowers' Subsidiaries or Affiliates.
13.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Borrowers), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Banks as it deems appropriate and, if it
so requests, confirmation from the Banks of their obligation to indemnify the
Agent against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
13.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Event of Default or Unmatured Event of Default
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Banks, unless the Agent
shall have received written notice from a Bank or either of the Borrowers
referring to this Agreement, describing such Event of Default or Unmatured Event
of Default and stating that such notice is a "notice of default". The Agent will
notify the Banks of its receipt of any such notice. The Agent shall take such
action with respect to such Event of Default or Unmatured Event of Default as
may be requested by the Required Banks in accordance with Section 12; provided,
however, that unless and until the Agent has received any such request, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Event of Default or Unmatured Event of
Default as it shall deem advisable or in the
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best interest of the Banks.
13.6 Credit Decision. Each Bank acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by the
Agent hereafter taken, including any review of the affairs of the Borrowers and
their Subsidiaries, shall be deemed to constitute any representation or warranty
by any Agent-Related Person to any Bank. Each Bank represents to the Agent that
it has, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrowers
and its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrowers hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Borrowers. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial or other condition or
creditworthiness of the Borrowers which may come into the possession of any of
the Agent-Related Persons.
13.7 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Banks shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of the Borrowers and without
limiting the obligation of the Borrowers to do so), pro rata, from and against
any and all Indemnified Liabilities; provided, however, that no Bank shall be
liable for any payment to the Agent-Related Person of any portion of the
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including reasonable fees of attorneys for the Agent
(including the allocable costs of internal legal services and all disbursements
of internal counsel)) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on behalf of the
Borrowers. The undertaking in this Section shall survive repayment of the Loans,
cancellation of the Notes, any foreclosure under, or any modification, release
or discharge of, any or all of the Collateral Documents, any termination of this
Agreement and the resignation or replacement of the Agent.
For the purposes of this Section 13.7, "Indemnified Liabilities" shall
mean: any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including
reasonable fees of attorneys for the Agent (including the
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allocable costs of internal legal services and all disbursements of internal
counsel)) of any kind or nature whatsoever which may at any time (including at
any time following repayment of the Loan and the termination, resignation or
replacement of the Agent or the replacement of any Bank) be imposed on, incurred
by or asserted against any Agent-Related Person in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including (a) any
case, action or proceeding before any court or other governmental authority
relating to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general assignment for
the benefit of creditors, composition, marshalling of assets for creditors, or
other, similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; undertaken under U.S. Federal, state or
foreign law, including the Bankruptcy Code, and including any appellate
proceeding) related to or arising out of this Agreement or the Commitments or
the use of the proceeds thereof, whether or not any Agent-Related Person, any
Bank or any of their respective officers, directors, employees, counsel, agents
or attorneys-in-fact is a party thereto.
13.8 Agent in Individual Capacity. Key and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrowers and their
Subsidiaries and Affiliates as though Key were not the Agent hereunder and
without notice to or consent of the Banks. The Banks acknowledge that, pursuant
to such activities, Key or its Affiliates may receive information regarding the
Borrowers or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Borrowers or such Subsidiary) and
acknowledge that the Agent shall be under no obligation to provide such
information to them. With respect to their Loans, Key and its Affiliates shall
have the same rights and powers under this Agreement as any other Bank and may
exercise the same as though Key were not the Agent, and the terms "Bank" and
"Banks" include Key and its Affiliates, to the extent applicable, in their
individual capacities.
13.9 Successor Agent; Assignment of Agency. The Agent may, and at the
request of the Required Banks shall, resign as Agent upon 30 days' notice to the
Banks. If the Agent resigns under this Agreement, the Required Banks shall, with
(so long as no Event of Default exists) the consent of the Borrowers (which
shall not be unreasonably withheld or delayed), appoint from among the Banks a
successor agent for the Banks. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Banks and the Borrowers, a successor agent from among the
Banks. Upon the acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent, and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 13 and Sections 14.6 and 14.13 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Banks shall perform all of the duties of the Agent
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hereunder until such time, if any, as the Required Banks appoint a successor
agent as provided for above. Notwithstanding the foregoing, however, Key may not
be removed as the Agent at the request of the Required Banks unless Key shall
also simultaneously be replaced as an "Issuing Bank" hereunder pursuant to
documentation in form and substance reasonably satisfactory to Key.
13.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees to deliver to the Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed
Internal Revenue Service ("IRS") Forms 1001 and W-8 before the
payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this Agreement
is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Bank, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year
of such Bank and in each succeeding taxable year of such Bank during
which interest may be paid under this Agreement, and IRS Form W-9;
and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the obligations of the Borrowers to such Bank, such Bank agrees to notify the
Agent of the percentage amount in which it is no longer the beneficial owner of
such obligations of the Borrowers hereunder. To the extent of such percentage
amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the obligations of the Borrowers to
such Bank hereunder, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
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<PAGE>
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding
tax.
(e) If the IRS or any other governmental authority of the United
States or any other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered or was not properly executed, or because such
Bank failed to notify the Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Bank shall indemnify the Agent fully for all amounts paid, directly
or indirectly, by the Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and expenses
(including reasonable fees of attorneys for the Agent (including the allocable
costs of internal legal services and all disbursements of internal counsel)).
The obligation of the Banks under this subsection shall survive the repayment of
the Loans, cancellation of the Notes, any termination of this Agreement and the
resignation or replacement of the Agent.
13.11 Collateral Matters. The Banks irrevocably authorize the Agent, at its
option and in its reasonable discretion, to release any Lien granted to or held
by the Agent under any Collateral Document (i) upon termination of the
Commitments and payment in full of all Loans and all other obligations of the
Borrowers hereunder and the expiration or termination of all Letters of Credit;
(ii) constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; or (iii) subject to Section
14.1, if approved, authorized or ratified in writing by the Required Banks. Upon
request by the Agent at any time, the Banks will confirm in writing the Agent's
authority to release articular types or items of collateral pursuant to this
Section 13.11.
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<PAGE>
SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of the Agent, any Bank or any
other holder of a Note in the exercise of any right, power or remedy shall
operate as a waiver thereof, nor shall any single or partial exercise by any of
them of any right, power or remedy preclude other or further exercise thereof,
or the exercise of any other right, power or remedy. No amendment, modification
or waiver of, or consent with respect to, any provision of this Agreement or the
Notes shall in any event be effective unless the same shall be in writing and
signed and delivered by Banks having an aggregate Percentage of not less than
the aggregate Percentage expressly designated herein with respect thereto or, in
the absence of such designation as to any provision of this Agreement or the
Notes, by the Required Banks, and then any such amendment, modification, waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given. No amendment, modification, waiver or consent shall
change the Percentage of any Bank without the consent of such Bank. No
amendment, modification, waiver or consent shall (i) extend or increase the
amount of the Commitments, (ii) extend the date for payment of any principal of
or interest on the Loans or any fees payable hereunder, (iii) reduce the
principal amount of any Loan, the rate of interest thereon or any fees payable
hereunder, (iv) release any Guaranty (other than with respect to a Guarantor
which ceases to be a Subsidiary as a result of a transaction permitted
hereunder) or all or substantially all of the collateral granted under the
Collateral Documents or (v) reduce the aggregate Percentage required to effect
an amendment, modification, waiver or consent without, in each case, the consent
of all Banks. No provisions of Section 13 or other provision of this Agreement
affecting the Agent in its capacity as such shall be amended, modified or waived
without the consent of the Agent. No provision of this Agreement relating to the
rights or duties of an Issuing Bank in its capacity as such shall be amended,
modified or waived without the consent of such Issuing Bank.
14.2 Confirmations. The Borrowers and each holder of a Note agree from time
to time, upon written request received by it from the other, to confirm to the
other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans then outstanding under such Note.
14.3 Notices. Except as otherwise provided in Section 2.2, all notices
hereunder shall be in writing (including facsimile transmission) and shall be
sent to the applicable party at its address shown on Schedule 14.3 or at such
other address as such party may, by written notice received by the other
parties, have designated as its address for such purpose. Notices sent by
facsimile transmission shall be deemed to have been given when sent; notices
sent by mail shall be deemed to have been given three Business Days after the
date when sent by registered or certified mail, postage prepaid; and notices
sent by hand delivery or overnight courier service shall be deemed to have been
given when received. For purposes of Section 2.2, the Agent shall be entitled to
rely on telephonic instructions from any person that the Agent in good faith
believes is an authorized officer or employee of the Borrowers, and the
Borrowers shall hold the Agent and each Bank harmless from any loss, cost or
expense resulting from any such reliance. The Agent and the Banks may give
notice to both Borrowers in the same notice.
14.4 Computations. Where the character or amount of any asset or liability
or item of
49
<PAGE>
income or expense is required to be determined, or any consolidation or other
accounting computation is required to be made, for the purpose of this
Agreement, such determination or calculation shall, to the extent applicable and
except as otherwise specified in this Agreement, be made in accordance with
GAAP, consistently applied; provided that if the Borrowers notify the Agent that
the Borrowers wish to amend any covenant in Section 10 to eliminate or to take
into account the effect of any change in GAAP on the operation of such covenant
(or if the Agent notifies the Borrowers that the Required Banks wish to amend
Section 10 for such purpose), then the Borrowers' compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant is amended in a manner satisfactory to the Borrowers and the
Required Banks.
14.5 Regulation U. Each Bank represents that it in good faith is not
relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for in
this Agreement.
14.6 Costs, Expenses and Taxes. The Borrowers agree to pay on demand all
reasonable out-of-pocket costs and expenses of Agent-Related Persons (including
the reasonable accounting fees, appraisal fees and fees and charges of counsel
for the Agent-Related Persons and of local counsel, if any, who may be retained
by said counsel) in connection with the preparation, execution, delivery and
administration of this Agreement (which fees shall be deemed paid in full upon
receipt by Key of $70,000.00), the other Loan Documents and all other documents
provided for herein or delivered or to be delivered hereunder or in connection
herewith (including any amendments, supplements or waivers to any Loan
Documents), and all reasonable out-of-pocket costs and expenses (including
reasonable accounting fees, appraisal fees and attorneys' fees, court costs and
other legal expenses and allocated costs of staff counsel) incurred by the
Agent-Related Persons and each Bank after an Event of Default in connection with
the enforcement of this Agreement, the other Loan Documents or any such other
documents, except as otherwise determined by a court of competent jurisdiction.
Each Bank agrees to reimburse the Agent for such Bank's pro rata share (based on
its respective Percentage) of any such costs and expenses of the Agent not paid
by the Borrowers. In addition, the Borrowers agree to pay, and to save the Agent
and the Banks harmless from all liability for, (a) any stamp or other taxes
(excluding income taxes and franchise taxes based on net income) which may be
payable in connection with the execution and delivery of this Agreement, the
borrowings hereunder, the issuance of the Notes or the execution and delivery of
any other Loan Document or any other document provided for herein or delivered
or to be delivered hereunder or in connection herewith and (b) any fees of the
Borrowers' auditors in connection with any reasonable exercise by the Agent and
the Banks of their rights pursuant to Section 10.2. All obligations provided for
in this Section 14.6 shall survive repayment of the Loans, cancellation of the
Notes and any termination of this Agreement.
14.7 Subsidiary References. The provisions of this Agreement relating to
Subsidiaries shall apply only during such times as either of the Borrowers has
one or more Subsidiaries.
14.8 Captions. Section captions used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.
50
<PAGE>
14.9 Assignments; Participations.
14.9.1 Assignments. Any Bank may, with the prior written consents of the
Borrowers and the Agent (which consents shall not be unreasonably delayed or
withheld), at any time assign and delegate to one or more commercial banks or
other Persons (any Person to whom such an assignment and delegation is to be
made being herein called an "Assignee"), all or any fraction of such Bank's
Loans and Commitments (which assignment and delegation shall be of a constant,
and not a varying, percentage of all the assigning Bank's Loans and Commitments)
in a minimum aggregate amount equal to the lesser of (i) the assigning Bank's
remaining aggregate Commitments and (ii) $2,000,000; provided, however, that (a)
no assignment and delegation may be made to any Person if, at the time of such
assignment and delegation, the Borrowers would be obligated to pay any greater
amount under Section 7.6 or Section 8 to the Assignee than the Borrowers are
then obligated to pay to the assigning Bank under such Sections (and if any
assignment is made in violation of the foregoing, the Borrowers will not be
required to pay the incremental amounts) and (b) the Borrowers and the Agent
shall be entitled to continue to deal solely and directly with such Bank in
connection with the interests so assigned and delegated to an Assignee until the
date when all of the following conditions shall have been met:
(x) five Business Days (or such lesser period of time as the Agent
and the assigning Bank shall agree) shall have passed after written notice
of such assignment and delegation, together with payment instructions,
addresses and related information with respect to such Assignee, shall have
been given to the Borrowers and the Agent by such assigning Bank and the
Assignee,
(y) the assigning Bank and the Assignee shall have executed and
delivered to the Borrowers and the Agent an assignment agreement reasonably
acceptable to the Agent (an "Assignment Agreement"), together with any
documents required to be delivered thereunder, which Assignment Agreement
shall have been accepted by the Agent, and
(z) the assigning Bank or the Assignee shall have paid the Agent a
processing fee of $2,500.
From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Bank hereunder, and (y) the assigning Bank, to the
extent that rights and obligations hereunder have been assigned and delegated by
it pursuant to such Assignment Agreement, shall be released from its obligations
hereunder. Within five Business Days after effectiveness of any assignment and
delegation, the Borrowers shall execute and deliver to the Agent (for delivery
to the Assignee and the Assignor, as applicable) a new Note in the principal
amount of the Assignee's Loan Commitment and, if the assigning Bank has retained
a Loan Commitment hereunder, a replacement Note in the principal amount of the
Loan Commitment retained by the assigning Bank (such Note to be in exchange for,
51
<PAGE>
but not in payment of, the predecessor Note held by such assigning Bank). Each
such Note shall be dated the effective date of such assignment. The assigning
Bank shall mark the predecessor Note "exchanged" and deliver it to the
Borrowers. Accrued interest on that part of the predecessor Note being assigned
shall be paid as provided in the Assignment Agreement. Accrued interest and fees
on that part of the predecessor Note not being assigned shall be paid to the
assigning Bank. Accrued interest and accrued fees shall be paid at the same time
or times provided in the predecessor Note and in this Agreement. Any attempted
assignment and delegation not made in accordance with this Section 14.9.1 shall
be null and void.
Notwithstanding the foregoing provisions of this Section 14.9.1 or any
other provision of this Agreement, any Bank may at any time assign all or any
portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Bank from any of its obligations hereunder).
14.9.2 Participations. Any Bank may at any time sell to one or more
commercial banks or other Persons participating interests in any Loan owing to
such Bank, the Note held by such Bank, the Commitments of such Bank, the direct
or participation interest of such Bank in any Letter of Credit or any other
interest of such Bank hereunder (any Person purchasing any such participating
interest being herein called a "Participant"); provided that any Bank selling
any such participating interest shall give notice thereof to the Borrowers. In
the event of a sale by a Bank of a participating interest to a Participant, (x)
such Bank shall remain the holder of its Note for all purposes of this
Agreement, (y) the Borrowers and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
hereunder and (z) all amounts payable by the Borrowers shall be determined as if
such Bank had not sold such participation and shall be paid directly to such
Bank. No Participant shall have any direct or indirect voting rights hereunder
except with respect to any of the events (excluding the events described in
clause (v) thereof) described in the penultimate sentence of Section 14.1. Each
Bank agrees to incorporate the requirements of the preceding sentence into each
participation agreement which such Bank enters into with any Participant. The
Borrowers agree that if amounts outstanding under this Agreement and the Notes
are due and payable (as a result of acceleration or otherwise), each Participant
shall be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement, any Note and with respect to any
Letter of Credit to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement or such Note;
provided that such right of setoff shall be subject to the obligation of each
Participant to share with the Banks, and the Banks agree to share with each
Participant, as provided in Section 7.5. The Borrowers also agree that each
Participant shall be entitled to the benefits of Section 7.6 and Section 8 as if
it were a Bank (provided that no Participant shall receive any greater
compensation pursuant to Section 7.6 or Section 8 than would have been paid to
the participating Bank if no participation had been sold).
14.10 Governing Law. This Agreement and each Note shall be a contract made
under and governed by the internal laws of the State of New York. Whenever
possible each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
52
<PAGE>
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Borrowers and rights of the Agent, the Banks
and any other holder of a Note expressed herein or in any other Loan Document
shall be in addition to and not in limitation of those provided by applicable
law.
14.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. When
counterparts executed by all of the parties hereto shall have been lodged with
the Agent (or, in the case of any Bank as to which an executed counterpart shall
not have been so lodged, the Agent shall have received confirmation from such
Bank of execution of a counterpart hereof by such Bank), this Agreement shall
become effective as of the date hereof, and at such time the Agent shall notify
the Borrowers and each Bank.
14.12 Successors and Assigns. This Agreement shall be binding upon the
Borrowers, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Borrowers, the Banks and the Agent and the
successors and assigns of the Banks and the Agent.
14.13 Indemnification by the Borrowers.
(a) In consideration of the execution and delivery of this Agreement
by the Agent and the Banks and the agreement to extend the Commitments provided
hereunder, the Borrowers hereby agree to indemnify, exonerate and hold the
Agent, each Bank and each of the officers, directors, employees, Affiliates and
agents of the Agent and each Bank (each a "Bank Party") free and harmless from
and against any and all actions, causes of action, suits, losses, liabilities,
damages and expenses, including reasonable attorneys' fees and charges and
allocated costs of staff counsel (collectively, for purposes of this Section
14.13, called the "Indemnified Liabilities"), incurred by the Bank Parties or
any of them as a result of, or arising out of, or relating to (i) any tender
offer, merger, purchase of stock, purchase of assets or other similar
transaction financed or proposed to be financed in whole or in part, directly or
indirectly, with the proceeds of any of the Loans, (ii) the use, handling,
release, emission, discharge, transportation, storage, treatment or disposal of
any hazardous substance at any property owned or leased by the Borrowers or any
Subsidiary, (iii) any violation of any Environmental Laws with respect to
conditions at any property owned or leased by the Borrowers or any Subsidiary or
the operations conducted thereon, (iv) the investigation, cleanup or remediation
of offsite locations at which the Borrowers or any Subsidiary or their
respective predecessors are alleged to have directly or indirectly disposed of
hazardous substances or (v) the execution, delivery, performance or enforcement
of this Agreement or any other Loan Document by any of the Bank Parties, except
for any such Indemnified Liabilities arising on account of any such Bank Party's
gross negligence or willful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrowers hereby agree to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. Nothing set
forth above shall be construed to relieve any Bank Party from any obligation it
may have under this Agreement.
(b) All obligations provided for in this Section 14.13 shall survive
repayment
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<PAGE>
of the Loans, cancellation of the Notes, any foreclosure under, or any
modification, release or discharge of any or all of the Collateral Documents and
any termination of this Agreement.
14.14 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION,
IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS
SET FORTH ABOVE. THE BORROWERS FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF NEW YORK. THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH
COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWERS HAVE OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE
BORROWERS HEREBY IRREVOCABLY WAIVE SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
14.15 Waiver of Jury Trial. EACH OF THE BORROWERS, THE AGENT AND EACH BANK
HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
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<PAGE>
In witness whereof, the parties hereto have executed this
instrument as of the day and year first above written.
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
By:
-----------------------------
Name:
Title:
BOGEN COMMUNICATIONS, INC.
By:
-----------------------------
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
By:
-----------------------------
Name:
Title:
55
<PAGE>
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this ___ day of April, 1998, before me the subscriber personally
appeared ______________, who being by me duly sworn, did depose and say; that he
resides at ___________________, that he is ________________ of Bogen
Communications International, Inc., the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.
-----------------------------------
NOTARY PUBLIC
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this ___ day of April, 1998, before me the subscriber personally
appeared ______________, who being by me duly sworn, did depose and say; that he
resides at ______________________, that he is _________________ of Bogen
Communications, Inc., the corporation described in and which executed the
foregoing instrument; and that he signed his name thereto by order of the Board
of Directors of said corporation.
-----------------------------------
NOTARY PUBLIC
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this ___ day of April, 1998, before me the subscriber personally
appeared _______________, who being by me duly sworn, did depose and say; that
he resides at ____________________, that he is ______________ of KeyBank
National Association, the corporation described in and which executed the
foregoing instrument; and that he signed his name thereto by order of the Board
of Directors of said corporation.
-----------------------------------
NOTARY PUBLIC
56
<PAGE>
SCHEDULE 1.1
PRICING SCHEDULE
The Prime Rate Margin and the Eurodollar Margin shall be determined in
accordance with the table below and the other provisions of this Schedule 1.1.
Level I Level II Level III Level IV
Eurodollar Margin 2.00% 1.75% 1.50% 1.25%
Prime Rate Margin 0 0 0 0
Level I applies at any time when Level II, Level III or Level IV do not
apply.
Level II applies when (a) combined revenue of the Borrowers and their
Subsidiaries over the prior 4 Fiscal Quarters exceeds $50,000,000.00, (b) the
Leverage Ratio is greater than 2.25 to 1 but equal to or less than 2.75 to 1 and
(c) the Interest Coverage Ratio is less than 4.50 to 1 but equal to or greater
than 3.50 to 1.
Level III applies when (a) combined revenue of the Borrowers and their
Subsidiaries over the prior 4 Fiscal Quarters exceeds $50,000,000.00, (b) the
Leverage Ratio is greater than 1.0 to 1 but equal to or less than 2.25 to 1.0
and (c) the Interest Coverage Ratio is less than 7.00 to 1 but equal to or
greater than 4.50 to 1.
Level IV applies when (a) combined revenue of the Borrowers and their
Subsidiaries over the prior 4 Fiscal Quarters exceeds $50,000,000.00, (b) the
Leverage Ratio is equal to or less than 1.0 to 1 and (c) the Interest Coverage
Ratio is equal to or greater than 7.00 to 1.
For the purposes of this Schedule 1.1, the Leverage Ratio and the Interest
Coverage Ratio shall be calculated without regard to Speech Design.
The applicable Level shall be adjusted, to the extent applicable, 60 days
(or, in the case of the last Fiscal Quarter of any Fiscal Year, 105 days) after
the end of each Fiscal Quarter based on the Ratios as of the last day of such
Fiscal Quarter; provided that if the Borrowers fail to deliver the financial
statements required by Section 10.1.1 or 10.1.2, as applicable, and the related
certificate required by Section 10.1.3 by the 60th day (or, if applicable, the
105th day) after any Fiscal Quarter, Level I shall apply until such financial
statements are delivered.
1.1-1
<PAGE>
SCHEDULE 2.1
BANKS AND PERCENTAGES
Portion of
Bank Commitment Amount Percentage
- ---- ----------------- ----------
KeyBank National Association $27,000,000 100%
TOTALS $27,000,000 100%
2.1-1
<PAGE>
SCHEDULE 9.6(a)
LITIGATION AND CONTINGENT LIABILITIES
The Borrowers and Subsidiaries develop and utilize technology for
substantially all of the products they offer and intend to offer and have, from
time to time, been the subject of infringement claims related thereto. It is
difficult to predict the outcome of such litigation and the amount of damages
which may be awarded in these types of cases. The Borrowers and Subsidiaries do
not believe that the results of any pending or threatened litigation related to
the Borrowers' and Subsidiaries' technology or use thereof will have a material
adverse effect on their financial position.
The Borrowers and Subsidiaries are also, from time to time, party to
litigation, which may or may not be covered by insurance, arising in the
ordinary course of business. The Borrowers and Subsidiaries do not believe the
results of such litigation, even if the outcome were unfavorable to the
Borrowers and Subsidiaries, would have a material adverse effect on their
financial position.
The Borrowers and Subsidiaries are not aware of any material pending or
threatened legal proceedings to which they are a party or of which any of their
property is subject.
9.6(a)-1
<PAGE>
SCHEDULE 9.6(b)
CONTINGENT PAYMENTS
None
9.6(b)-1
<PAGE>
SCHEDULE 9.8
SUBSIDIARIES
Bogen Communications International, Inc. owns 99% of Bogen Corporation.
Bogen Communications International, Inc. owns 67.85% of Speech Design GmbH.
Bogen Corporation owns 100% of Bogen Communications, Inc.
Bogen Communications, Inc. owns 100% of New England Audio Resource Corp.
Bogen Communications, Inc. owns 100% of Bogen Communications (Barbados), Inc.
9.8-1
<PAGE>
SCHEDULE 9.15
ENVIRONMENTAL MATTERS
None
9.15-1
<PAGE>
SCHEDULE 9.17
COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES
9.17-1
<PAGE>
SCHEDULE 10.8
EXISTING LIENS
1. Summit Leasing Corporation
UCC-1 Financing Statement 002592
2. AT&T Capital Leasing Services, Inc.
UCC-1 Financing Statement 1815552
3. Summit Leasing Corporation
UCC-1 Financing Statement 1772735
4. Summit Leasing Corporation
UCC-1 Financing Statement 1808877
10.8-1
<PAGE>
SCHEDULE 12.1.11A
EXECUTIVES
Name Current Office(s)
Bogen Communications International, Inc.
Bogen Corporation
Bogen Communications, Inc.
Jonathan Guss Chief Executive Officer
Michael P. Fleischer President
Yoav M. Cohen Senior Vice President Finance
and Business Development,
Secretary, Chief Financial
Officer
Francis J. Elenio Assistant Secretary
New England Audio Resource Corporation
William Kieltyka President
Yoav M. Cohen Treasurer, Secretary
12.1.11A-1
<PAGE>
SCHEDULE 12.1.11B
DIRECTORS
Bogen Communications International, Inc.
Yoav Stern: Co-chairman, Executive Committee
Jeffrey Schwarz: Co-Chairman, Executive Committee
Jonathan Guss: Executive Committee
David Mitchell
Zivi Nedivi
Daniel Schwartz
Michael P. Fleischer
Bogen Corporation
Bogen Communications, Inc.
Yoav Stern
Jeffrey Schwarz
Jonathan Guss
New England Audio Resource Corporation
Jonathan Guss
Michael P. Fleischer
Yoav M. Cohen
12.1.11B-1
<PAGE>
SCHEDULE 14.3
ADDRESSES FOR NOTICES
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
50 Spring Street
Ramsey, New Jersey 07446
BOGEN COMMUNICATIONS INC.
50 Spring Street
Ramsey, New Jersey 07446
KEYBANK NATIONAL ASSOCIATION
66 South Pearl Street
Albany, New York 12207
14.3-1
EXHIBIT 10.5
GUARANTY OF PAYMENT AND PERFORMANCE
BOGEN CORPORATION
THIS Guaranty dated April 21, 1998 (the "Guaranty") from BOGEN
CORPORATION, a Delaware corporation with an office for the transaction of
business at 50 Spring Street, Ramsey, New Jersey 07446 (whether individually or
if more than one, collectively, the "Guarantor") to KEYBANK NATIONAL
ASSOCIATION, a national banking association with an office for the transaction
of business located at 66 South Pearl Street, Albany, New York 12207 (in its
individual capacity, "Key"), as agent for the Banks.
W I T N E S S E T H :
WHEREAS, BOGEN COMMUNICATIONS INTERNATIONAL, INC. and BOGEN
COMMUNICATIONS, INC. (herein collectively called the "Borrower"), is about to
borrow from the Banks the sum of up to Twenty Seven Million and no/100
($27,000,000.00) Dollars, (the "Loan") in accordance with a certain Credit
Agreement of even date herewith (hereinafter, together with all exhibits
thereto, as it may from time to time be amended, modified or supplemented,
referred to as the "Credit Agreement") by and between the Borrower, the Banks
and Key as agent for the Banks; and
WHEREAS, the Banks are unwilling to make the Loan to the Borrower
unless it receives this Guaranty; and
WHEREAS, the Guarantor is willing to enter into this Guaranty in order
to induce the Banks to make the Loan and the Guarantor has approved the form and
substance of any documents executed or delivered by Borrower in connection with
the Loan (the "Loan Documents"); and
WHEREAS, all capitalized terms used herein which are defined in the
Credit Agreement shall have the respective meanings provided therefor in the
Credit Agreement, unless otherwise defined herein or unless the context
otherwise requires;
NOW, THEREFORE, in order to induce the Banks to make the Loan to the
Borrower and in consideration of the premises and of other good and valuable
consideration, the Guarantor intends to guarantee absolutely and unconditionally
(and jointly and severally if there be more than one Guarantor) to the Banks,
the punctual payment of the Loan and all notes or other evidences of
indebtedness given by the Borrower to the Banks in connection therewith and all
extensions, modifications or renewals thereof (collectively, the "Note") and all
interest and other sums due under the Note or any Loan Document and such further
payment and performance as may be set forth in Article 2 hereof.
<PAGE>
ARTICLE 1
REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS
The Guarantor hereby represents and warrants to the Banks (if the
Guarantor is more than one party, said representations and warranties are made
only with respect to the particular party) that:
Section 1.1 Capacity of the Guarantor. Each Guarantor:
(A) Has the capacity to enter into this Guaranty.
(B) Has an office for the transaction of business at the
address set forth at the head of this Guaranty.
Section 1.2 No Violation of Restrictions. Neither the execution and
delivery of this Guaranty, the consummation of the transactions contemplated
hereby nor the fulfillment of or compliance with the provisions of this Guaranty
will conflict with or result in a breach of any of the terms, covenants,
conditions or provisions of any agreement, judgment or order to which any party
named as a Guarantor is a party or by which the Guarantor is bound, or will
constitute a default under any of the foregoing, or result in the creation or
imposition of any lien of any nature whatsoever.
Section 1.3 Compliance with Law. Each party named as a Guarantor (A) is
not in violation of any law, ordinance, governmental rule, regulation, order or
judgment to which the Guarantor may be subject or which would materially affect
the business of the Guarantor and (B) has not failed to obtain any license,
permit, franchise or other governmental authorization necessary to the conduct
of their present business.
Section 1.4 Financial Statements. The financial statements submitted by
each party named as Guarantor, including balance sheets, statement of income,
retained earnings and other related schedules, to the Banks fairly represent the
financial condition as of the date of each statement and there has been no
adverse change in the financial condition of any Guarantor since the date of the
respective statements submitted to the Banks.
Section 1.5 Solvency of Guarantor and Borrower. Each party named as a
Guarantor is solvent and each Guarantor has made an appropriate financial
investigation of the Borrower and has determined that the Borrower is solvent at
the time of execution of this Guaranty.
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ARTICLE 2
COVENANTS AND AGREEMENTS
Section 2.1 Guaranty of Payment. The Guarantor (jointly and severally,
if there be more than one Guarantor) irrevocably, absolutely and unconditionally
guarantees to the Banks:
(A) The punctual payment of the Loan, the Note, all principal
and interest due thereunder and any other sums due under the Note or any Loan
Document.
(B) The full and prompt payment and performance of any and all
obligations of Borrower to the Banks under the Loan Documents including, without
limitation, the obligations of Borrower concerning hazardous materials and other
environmental matters contained in any of the Loan Documents.
Section 2.2 Obligations Unconditional. This Guaranty shall remain in
full force and effect until the Loan, the Note and all sums due thereunder or
under any Loan Document are paid in full, irrespective of any interruptions in
the business relationships of the Borrower and the Guarantor with the Banks, and
shall not be affected, modified or impaired by any state of facts or the
happening from time to time of any event, including, without limitation, any of
the following, whether or not with notice to or the consent of the Guarantor:
(A) The invalidity, irregularity, illegality or
unenforceability of, or any defect in, the Note or any Loan Document or
any collateral security for the Loan (the "Collateral").
(B) Any present or future law or order of any government (de
jure or de facto) or of any agency thereof purporting to reduce, amend
or otherwise affect the Note or any other obligation of the Borrower or
any other obligor or to any other terms of payment.
(C) The waiver, compromise, settlement, release or termination
of any or all of the obligations, covenants or agreements of the
Borrower under the Note or any Loan Documents or of any party named as
a Guarantor under this Guaranty.
(D) The loss, release, sale, exchange, surrender or other
change in any Collateral.
(E) The extension of the time for payment of any principal of
or interest on the Note or of the time for performance of any other
obligations, covenants or agreements under or arising out of the Note
or any Loan Document or the extension or the renewal of any thereof.
(F) The modification or amendment (whether material or
otherwise) of any obligation, covenant or agreement set forth in the
Note or any Loan Document.
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(G) The taking of, or the omission to take, any of the actions
referred to in the Note or any Loan Document.
(H) Any failure, omission or delay on the part of the Banks to
enforce, assert or exercise any right, power or remedy conferred on the
Banks in the Note or any Loan Document.
(I) The voluntary or involuntary liquidation, dissolution,
sale or other disposition of all or substantially all the assets,
marshalling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition with creditors or readjustment of, or other
similar proceedings affecting the Guarantor or the Borrower or any of
their assets, or any allegation or contest of the validity of the Note
or any Loan Document.
(J) The default or failure of the Guarantor to fully perform
any obligations set forth in this Guaranty.
(K) Any event or action that would, in the absence of this
paragraph, result in the release or discharge of the Guarantor from the
performance or observance of any obligation, covenant or agreement
contained in this Guaranty.
(L) Any other circumstances which might otherwise constitute a
legal or equitable discharge or defense of a surety or a guarantor.
Section 2.3 Waiver by Guarantor. The Guarantor hereby waives:
(A) Notice of acceptance of this Guaranty.
(B) Diligence, presentment and demand for payment of the Loan
and/or the Note.
(C) Protest and notice of protest, dishonor or default to the
Guarantor or to any other party with respect to the Loan.
(D) Any and all notices to which the Guarantor might otherwise
be entitled.
(E) Any demand for payment under this Guaranty.
(F) Any and all defenses to payment including, without
limitation, any defenses and counterclaims of the Guarantor or the
Borrower based upon fraud, negligence or the failure of any condition
precedent or claims of offset or defenses involving the invalidity,
irregularity or unenforceability of all or any part of the liabilities
herein guaranteed or any defense otherwise available to the Guarantor
or the Borrower.
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(G) Any and all rights of subrogation, reimbursement,
indemnity, exoneration, contribution or any other claim which the
Guarantor may now or hereafter have against the Borrower or any other
person directly or contingently liable for the Loan guaranteed
hereunder, or against or with respect to the Borrower's property
(including, without limitation, property collateralizing the Loan),
arising from the existence or performance of this Guaranty and whether
or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise.
Section 2.4 Nature of Guaranty. This Guaranty is a guaranty of payment
and not of collection and the Guarantor hereby waives the right to require that
any action be brought first against the Borrower or any other Guarantor, or any
security, or to require that resort be made to any security or to any balance of
any deposit account on credit on the books of the Banks in favor of the Borrower
or of any Guarantor.
Section 2.5 Continuation of Guaranty. The Guarantor further agrees that
the obligations hereunder shall continue to be effective or reinstated, as the
case may be, if at any time payment or any part thereof of the Loan or the Note
is rescinded or must otherwise be restored by the Banks upon the bankruptcy or
reorganization of the Borrower, the Guarantor or otherwise.
Section 2.6 Subordination of Debt. The Guarantor hereby subordinates
any and all indebtedness of Borrower now or hereafter owed to Guarantor to all
indebtedness of Borrower to the Banks and agrees with the Banks that Guarantor
shall not demand or accept any payment from Borrower, shall not claim any offset
or other reduction of Guarantor's obligations hereunder because of any such
indebtedness and shall not take any action to obtain any interest in any of the
security described in and encumbered by the Loan Documents; provided, however,
that, if the Banks so request, such indebtedness shall be collected, enforced
and received by Guarantor as trustee for the Banks and paid over to the Banks on
account of the indebtedness of Borrower to the Banks, but without reducing or
affecting in any manner the liability of Guarantor under the other provisions of
this Guaranty except to the extent the principal amount of such outstanding
indebtedness shall have been reduced by such payment.
Section 2.7 Financial Statements. Guarantor will advise the Banks in
writing if Guarantor operates on other than a calendar year basis. Guarantor
will at all times keep proper books of record and account in which full, true
and correct entries shall be made in accordance with generally accepted
accounting principles and will deliver to the Banks the reports, certificates
and other information described in Section 10.1 of the Credit Agreement.
Section 2.8 Transfer of Interest. Guarantor agrees not to make or
permit to be made, by a voluntary or involuntary means, any transfer of the
interest of Guarantor in the Borrower, without first obtaining the prior written
consent of the Banks.
Section 2.9 Financial Covenants. Guarantor will comply with the
financial covenants
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described in Section 10.6 of the Credit Agreement.
ARTICLE 3
EVENTS OF DEFAULT
Section 3.1 Events of Default Defined. An "Event of Default" shall
exist if any of the following occurs:
(A) Any party named as a Guarantor fails to perform or observe
any covenant contained herein.
(B) Any warranty, representation or other statement by or on
behalf of any party named as a Guarantor contained in this Guaranty is
false or misleading in any material respect when made.
(C) A receiver, liquidator or trustee of any party named as a
Guarantor or any of his or its property is appointed by court order, or
any party named as a Guarantor is adjudicated bankrupt or insolvent or
any of his or its property is sequestered by court order and such order
remains in effect for more than thirty (30) days, or a petition is
filed against any party named as a Guarantor under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, and is not dismissed within thirty (30) days of
such filing.
(D) Any party named as a Guarantor files a petition in
voluntary bankruptcy or seeks relief under any provision of any
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, or consents to the filing of any petition against
it under any such law.
(E) Any party named as a Guarantor makes an assignment for the
benefit of creditors or admits in writing inability to pay debts
generally as they become due, or consents to the appointment of a
receiver, trustee or liquidator of all or any part of his or its
property.
(F) The occurrence of an event of default under any other Loan
Document.
Section 3.2 Remedies on Default. If an event of default exists, the
Banks may proceed to enforce the provisions hereof and to exercise any other
rights, powers and remedies available to the Banks.
Section 3.3 Waiver and Notice.
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(A) No remedy herein conferred upon or reserved to the Banks
is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Guaranty now or
hereafter existing at law or in equity or by statute.
(B) No delay or omission to exercise any right or power
accruing upon the occurrence of any Event of Default shall impair any
such right or power or shall be construed to be a waiver thereof, but
any such right or power may be exercised from time to time and as often
as may be deemed expedient.
(C) In order to entitle the Banks to exercise any remedy
reserved to it in this Guaranty, it shall not be necessary to give any
notice, other than such notice as may be expressly required in this
Guaranty.
(D) No waiver, amendment, release or modification of this
Guaranty shall be established by conduct, custom or course of dealing.
ARTICLE 4
MISCELLANEOUS
Section 4.1 Construction. If this Guaranty is executed by two or more
parties, they shall be jointly and severally liable hereunder and the phrase
Guarantor whenever used herein shall be construed to refer to each of the
parties in the same manner and with the same effect as if each party had signed
a separate guaranty.
Section 4.2 Governing Law. This Guaranty shall be governed by and
construed in accordance with the laws of the State of New York.
Section 4.3 Submission to Jurisdiction. The Guarantor hereby
irrevocably and unconditionally agrees that any suit, action or proceeding
arising out of or relating to this Guaranty shall be brought in the state courts
of the State of New York or federal district court for the Northern District of
New York and waives any right to object to jurisdiction within either of the
foregoing forums by the Banks. Nothing contained herein shall prevent the Banks
from bringing any suit, action or proceeding or exercising any rights against
any security and against any Guarantor personally, and against any property of
any Guarantor, within any other jurisdiction and the initiation of such suit,
action or proceeding or taking of such action in any such other jurisdiction
shall in no event constitute a waiver of the agreements contained herein with
respect to the laws of the State of New York governing the rights and
obligations of the parties hereto or the agreement of the Guarantor to submit to
personal jurisdiction within the State of New York.
Section 4.4 Waiver of Jury Trial. The Guarantor and the Banks agree
that any suit,
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action or proceeding arising under or in connection with this Guaranty shall be
before a court without a jury.
Section 4.5 Successors and Assigns. This Guaranty shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto.
Section 4.6 Notices. Any notices required or permitted to be given
hereunder shall be: (i) personally delivered or (ii) given by registered or
certified mail, postage prepaid, return receipt requested, or (iii) forwarded by
overnight courier service, in each instance addressed to the addresses set forth
at the head of this Guaranty, or such other addresses as the parties may for
themselves designate in writing as provided herein for the purpose of receiving
notices hereunder. All notices shall be in writing and shall be deemed given, in
the case of notice by personal delivery, upon actual delivery, and in the case
of appropriate mail or courier service, upon deposit with the U.S. Postal
Service or delivery to the courier service.
Section 4.7 Entire Agreement. This Guaranty and the Note and other Loan
Documents constitute the entire understanding between Borrower, the Guarantor
and the Banks and to the extent that any writings not signed by the Banks or
oral statements or conversations at any time made or had are inconsistent with
the provisions of this Guaranty, the Note or the other Loan Documents, the same
shall be null and void.
Section 4.8 Amendments. No amendment, change, modification, alteration
or termination of this Guaranty shall be made except upon the written consent of
the parties hereto.
Section 4.9 Assignment. This Guaranty is assignable by the Banks in
whole or in part in conjunction with an assignment of the Note and any
assignment hereof or any transfer or assignment of the Note or portions thereof
shall operate to vest in any such assignee the rights and powers, in whole or in
part, as appropriate, herein conferred upon and granted to the Banks.
Section 4.10 Partial Invalidity. The invalidity or unenforceability of
any one or more phrases, sentences, clauses or sections in this Guaranty shall
not affect the validity or enforceability of the remaining portions of the
Guaranty or any part thereof.
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IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the
day and year first above written.
BOGEN CORPORATION
By:______________________________________________
Name:
Title:
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this __ day of April, 1998, before me the subscriber personally
appeared __________, who being by me duly sworn, did depose and say; that he
resides at __________, that he is __________ of Bogen Corporation, the
corporation described in and which executed the foregoing instrument; and that
he signed his name thereto by order of the Board of Directors of said
corporation.
_________________________________________________
NOTARY PUBLIC
EXHIBIT 10.6
GUARANTY OF PAYMENT AND PERFORMANCE
NEW ENGLAND AUDIO RESOURCE CORP.
THIS Guaranty dated April 21, 1998 (the "Guaranty") from NEW ENGLAND
AUDIO RESOURCE CORP., a Delaware corporation with an office for the transaction
of business at 12 Foss Road, Lewiston, Maine 04241 (whether individually or if
more than one, collectively, the "Guarantor") to KEYBANK NATIONAL ASSOCIATION, a
national banking association with an office for the transaction of business
located at 66 South Pearl Street, Albany, New York 12207 (in its individual
capacity, "Key"), as agent for the Banks.
W I T N E S S E T H :
WHEREAS, BOGEN COMMUNICATIONS INTERNATIONAL, INC. and BOGEN
COMMUNICATIONS, INC. (herein collectively called the "Borrower"), is about to
borrow from the Banks the sum of up to Twenty Seven Million and no/100
($27,000,000.00) Dollars, (the "Loan") in accordance with a certain Credit
Agreement of even date herewith (hereinafter, together with all exhibits
thereto, as it may from time to time be amended, modified or supplemented,
referred to as the "Credit Agreement") by and between the Borrower, the Banks
and Key as agent for the Banks; and
WHEREAS, the Banks are unwilling to make the Loan to the Borrower
unless it receives this Guaranty; and
WHEREAS, the Guarantor is willing to enter into this Guaranty in order
to induce the Banks to make the Loan and the Guarantor has approved the form and
substance of any documents executed or delivered by Borrower in connection with
the Loan (the "Loan Documents"); and
WHEREAS, all capitalized terms used herein which are defined in the
Credit Agreement shall have the respective meanings provided therefor in the
Credit Agreement, unless otherwise defined herein or unless the context
otherwise requires;
NOW, THEREFORE, in order to induce the Banks to make the Loan to the
Borrower and in consideration of the premises and of other good and valuable
consideration, the Guarantor intends to guarantee absolutely and unconditionally
(and jointly and severally if there be more than one Guarantor) to the Banks,
the punctual payment of the Loan and all notes or other evidences of
indebtedness given by the Borrower to the Banks in connection therewith and all
extensions, modifications or renewals thereof (collectively, the "Note") and all
interest and other sums due under the Note or any Loan Document and such further
payment and performance as may be set forth in Article 2 hereof.
<PAGE>
ARTICLE 1
REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS
The Guarantor hereby represents and warrants to the Banks (if the
Guarantor is more than one party, said representations and warranties are made
only with respect to the particular party) that:
Section 1.1 Capacity of the Guarantor. Each Guarantor:
(A) Has the capacity to enter into this Guaranty.
(B) Has an office for the transaction of business at the
address set forth at the head of this Guaranty.
Section 1.2 No Violation of Restrictions. Neither the execution and
delivery of this Guaranty, the consummation of the transactions contemplated
hereby nor the fulfillment of or compliance with the provisions of this Guaranty
will conflict with or result in a breach of any of the terms, covenants,
conditions or provisions of any agreement, judgment or order to which any party
named as a Guarantor is a party or by which the Guarantor is bound, or will
constitute a default under any of the foregoing, or result in the creation or
imposition of any lien of any nature whatsoever.
Section 1.3 Compliance with Law. Each party named as a Guarantor (A) is
not in violation of any law, ordinance, governmental rule, regulation, order or
judgment to which the Guarantor may be subject or which would materially affect
the business of the Guarantor and (B) has not failed to obtain any license,
permit, franchise or other governmental authorization necessary to the conduct
of their present business.
Section 1.4 Financial Statements. The financial statements submitted by
each party named as Guarantor, including balance sheets, statement of income,
retained earnings and other related schedules, to the Banks fairly represent the
financial condition as of the date of each statement and there has been no
adverse change in the financial condition of any Guarantor since the date of the
respective statements submitted to the Banks.
Section 1.5 Solvency of Guarantor and Borrower. Each party named as a
Guarantor is solvent and each Guarantor has made an appropriate financial
investigation of the Borrower and has determined that the Borrower is solvent at
the time of execution of this Guaranty.
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ARTICLE 2
COVENANTS AND AGREEMENTS
Section 2.1 Guaranty of Payment. The Guarantor (jointly and severally,
if there be more than one Guarantor) irrevocably, absolutely and unconditionally
guarantees to the Banks:
(A) The punctual payment of the Loan, the Note, all
principal and interest due thereunder and any other sums due under the Note or
any Loan Document.
(B) The full and prompt payment and performance of any and all
obligations of Borrower to the Banks under the Loan Documents including, without
limitation, the obligations of Borrower concerning hazardous materials and other
environmental matters contained in any of the Loan Documents.
Section 2.2 Obligations Unconditional. This Guaranty shall remain in
full force and effect until the Loan, the Note and all sums due thereunder or
under any Loan Document are paid in full, irrespective of any interruptions in
the business relationships of the Borrower and the Guarantor with the Banks, and
shall not be affected, modified or impaired by any state of facts or the
happening from time to time of any event, including, without limitation, any of
the following, whether or not with notice to or the consent of the Guarantor:
(A) The invalidity, irregularity, illegality or
unenforceability of, or any defect in, the Note or any Loan Document or
any collateral security for the Loan (the "Collateral").
(B) Any present or future law or order of any government (de
jure or de facto) or of any agency thereof purporting to reduce, amend
or otherwise affect the Note or any other obligation of the Borrower or
any other obligor or to any other terms of payment.
(C) The waiver, compromise, settlement, release or termination
of any or all of the obligations, covenants or agreements of the
Borrower under the Note or any Loan Documents or of any party named as
a Guarantor under this Guaranty.
(D) The loss, release, sale, exchange, surrender or other
change in any Collateral.
(E) The extension of the time for payment of any principal of
or interest on the Note or of the time for performance of any other
obligations, covenants or agreements under or arising out of the Note
or any Loan Document or the extension or the renewal of any thereof.
(F) The modification or amendment (whether material or
otherwise) of any obligation, covenant or agreement set forth in the
Note or any Loan Document.
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(G) The taking of, or the omission to take, any of the actions
referred to in the Note or any Loan Document.
(H) Any failure, omission or delay on the part of the Banks
to enforce, assert or exercise any right, power or remedy conferred on
the Banks in the Note or any Loan Document.
(I) The voluntary or involuntary liquidation, dissolution,
sale or other disposition of all or substantially all the assets,
marshalling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition with creditors or readjustment of, or other
similar proceedings affecting the Guarantor or the Borrower or any of
their assets, or any allegation or contest of the validity of the Note
or any Loan Document.
(J) The default or failure of the Guarantor to fully perform
any obligations set forth in this Guaranty.
(K) Any event or action that would, in the absence of this
paragraph, result in the release or discharge of the Guarantor from the
performance or observance of any obligation, covenant or agreement
contained in this Guaranty.
(L) Any other circumstances which might otherwise constitute a
legal or equitable discharge or defense of a surety or a guarantor.
Section 2.3 Waiver by Guarantor. The Guarantor hereby waives:
(A) Notice of acceptance of this Guaranty.
(B) Diligence, presentment and demand for payment of the Loan
and/or the Note.
(C) Protest and notice of protest, dishonor or default to the
Guarantor or to any other party with respect to the Loan.
(D) Any and all notices to which the Guarantor might otherwise
be entitled.
(E) Any demand for payment under this Guaranty.
(F) Any and all defenses to payment including, without
limitation, any defenses and counterclaims of the Guarantor or the
Borrower based upon fraud, negligence or the failure of any condition
precedent or claims of offset or defenses involving the invalidity,
irregularity or unenforceability of all or any part of the liabilities
herein guaranteed or any defense otherwise available to the Guarantor
or the Borrower.
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(G) Any and all rights of subrogation, reimbursement,
indemnity, exoneration, contribution or any other claim which the
Guarantor may now or hereafter have against the Borrower or any other
person directly or contingently liable for the Loan guaranteed
hereunder, or against or with respect to the Borrower's property
(including, without limitation, property collateralizing the Loan),
arising from the existence or performance of this Guaranty and whether
or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise.
Section 2.4 Nature of Guaranty. This Guaranty is a guaranty of payment
and not of collection and the Guarantor hereby waives the right to require that
any action be brought first against the Borrower or any other Guarantor, or any
security, or to require that resort be made to any security or to any balance of
any deposit account on credit on the books of the Banks in favor of the Borrower
or of any Guarantor.
Section 2.5 Continuation of Guaranty. The Guarantor further agrees that
the obligations hereunder shall continue to be effective or reinstated, as the
case may be, if at any time payment or any part thereof of the Loan or the Note
is rescinded or must otherwise be restored by the Banks upon the bankruptcy or
reorganization of the Borrower, the Guarantor or otherwise.
Section 2.6 Subordination of Debt. The Guarantor hereby subordinates
any and all indebtedness of Borrower now or hereafter owed to Guarantor to all
indebtedness of Borrower to the Banks and agrees with the Banks that Guarantor
shall not demand or accept any payment from Borrower, shall not claim any offset
or other reduction of Guarantor's obligations hereunder because of any such
indebtedness and shall not take any action to obtain any interest in any of the
security described in and encumbered by the Loan Documents; provided, however,
that, if the Banks so request, such indebtedness shall be collected, enforced
and received by Guarantor as trustee for the Banks and paid over to the Banks on
account of the indebtedness of Borrower to the Banks, but without reducing or
affecting in any manner the liability of Guarantor under the other provisions of
this Guaranty except to the extent the principal amount of such outstanding
indebtedness shall have been reduced by such payment.
Section 2.7 Financial Statements. Guarantor will advise the Banks in
writing if Guarantor operates on other than a calendar year basis. Guarantor
will at all times keep proper books of record and account in which full, true
and correct entries shall be made in accordance with generally accepted
accounting principles and will deliver to the Banks the reports, certificates
and other information described in Section 10.1 of the Credit Agreement.
Section 2.8 Transfer of Interest. Guarantor agrees not to make or
permit to be made, by a voluntary or involuntary means, any transfer of the
interest of Guarantor in the Borrower, without first obtaining the prior written
consent of the Banks.
Section 2.9 Financial Covenants. Guarantor will comply with the
financial covenants described in Section 10.6 of the Credit Agreement.
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ARTICLE 3
EVENTS OF DEFAULT
Section 3.1 Events of Default Defined. An "Event of Default" shall
exist if any of the following occurs:
(A) Any party named as a Guarantor fails to perform or observe
any covenant contained herein.
(B) Any warranty, representation or other statement by or on
behalf of any party named as a Guarantor contained in this Guaranty is
false or misleading in any material respect when made.
(C) A receiver, liquidator or trustee of any party named as a
Guarantor or any of his or its property is appointed by court order, or
any party named as a Guarantor is adjudicated bankrupt or insolvent or
any of his or its property is sequestered by court order and such order
remains in effect for more than thirty (30) days, or a petition is
filed against any party named as a Guarantor under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, and is not dismissed within thirty (30) days of
such filing.
(D) Any party named as a Guarantor files a petition in
voluntary bankruptcy or seeks relief under any provision of any
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, or consents to the filing of any petition against
it under any such law.
(E) Any party named as a Guarantor makes an assignment for the
benefit of creditors or admits in writing inability to pay debts
generally as they become due, or consents to the appointment of a
receiver, trustee or liquidator of all or any part of his or its
property.
(F) The occurrence of an event of default under any other Loan
Document.
Section 3.2 Remedies on Default. If an event of default exists, the
Banks may proceed to enforce the provisions hereof and to exercise any other
rights, powers and remedies available to the Banks.
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<PAGE>
Section 3.3 Waiver and Notice.
(A) No remedy herein conferred upon or reserved to the Banks
is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Guaranty now or
hereafter existing at law or in equity or by statute.
(B) No delay or omission to exercise any right or power
accruing upon the occurrence of any Event of Default shall impair any
such right or power or shall be construed to be a waiver thereof, but
any such right or power may be exercised from time to time and as often
as may be deemed expedient.
(C) In order to entitle the Banks to exercise any remedy
reserved to it in this Guaranty, it shall not be necessary to give any
notice, other than such notice as may be expressly required in this
Guaranty.
(D) No waiver, amendment, release or modification of this
Guaranty shall be established by conduct, custom or course of dealing.
ARTICLE 4
MISCELLANEOUS
Section 4.1 Construction. If this Guaranty is executed by two or more
parties, they shall be jointly and severally liable hereunder and the phrase
Guarantor whenever used herein shall be construed to refer to each of the
parties in the same manner and with the same effect as if each party had signed
a separate guaranty.
Section 4.2 Governing Law. This Guaranty shall be governed by and
construed in accordance with the laws of the State of New York.
Section 4.3 Submission to Jurisdiction. The Guarantor hereby
irrevocably and unconditionally agrees that any suit, action or proceeding
arising out of or relating to this Guaranty shall be brought in the state courts
of the State of New York or federal district court for the Northern District of
New York and waives any right to object to jurisdiction within either of the
foregoing forums by the Banks. Nothing contained herein shall prevent the Banks
from bringing any suit, action or proceeding or exercising any rights against
any security and against any Guarantor personally, and against any property of
any Guarantor, within any other jurisdiction and the initiation of such suit,
action or proceeding or taking of such action in any such other jurisdiction
shall in no event constitute a waiver of the agreements contained herein with
respect to the laws of the State of New York governing the rights and
obligations of the parties hereto or the agreement of the Guarantor to submit to
personal jurisdiction within the State of New York.
7
<PAGE>
Section 4.4 Waiver of Jury Trial. The Guarantor and the Banks agree
that any suit, action or proceeding arising under or in connection with this
Guaranty shall be before a court without a jury.
Section 4.5 Successors and Assigns. This Guaranty shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties hereto.
Section 4.6 Notices. Any notices required or permitted to be given
hereunder shall be: (i) personally delivered or (ii) given by registered or
certified mail, postage prepaid, return receipt requested, or (iii) forwarded by
overnight courier service, in each instance addressed to the addresses set forth
at the head of this Guaranty, or such other addresses as the parties may for
themselves designate in writing as provided herein for the purpose of receiving
notices hereunder. All notices shall be in writing and shall be deemed given, in
the case of notice by personal delivery, upon actual delivery, and in the case
of appropriate mail or courier service, upon deposit with the U.S. Postal
Service or delivery to the courier service.
Section 4.7 Entire Agreement. This Guaranty and the Note and other Loan
Documents constitute the entire understanding between Borrower, the Guarantor
and the Banks and to the extent that any writings not signed by the Banks or
oral statements or conversations at any time made or had are inconsistent with
the provisions of this Guaranty, the Note or the other Loan Documents, the same
shall be null and void.
Section 4.8 Amendments. No amendment, change, modification, alteration
or termination of this Guaranty shall be made except upon the written consent of
the parties hereto.
Section 4.9 Assignment. This Guaranty is assignable by the Banks in
whole or in part in conjunction with an assignment of the Note and any
assignment hereof or any transfer or assignment of the Note or portions thereof
shall operate to vest in any such assignee the rights and powers, in whole or in
part, as appropriate, herein conferred upon and granted to the Banks.
Section 4.10 Partial Invalidity. The invalidity or unenforceability of
any one or more phrases, sentences, clauses or sections in this Guaranty shall
not affect the validity or enforceability of the remaining portions of the
Guaranty or any part thereof.
8
<PAGE>
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the
day and year first above written.
NEW ENGLAND AUDIO RESOURCE CORP.
By:
---------------------------------
Name:
Title:
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this day of April, 1998, before me the subscriber personally
appeared ____________________, who being by me duly sworn, did depose and say;
that he resides at __________________________, that he is ______________________
of New England Audio Resource Corp., the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.
-------------------------------------
NOTARY PUBLIC
EXHIBIT 10.7
SECURITY AGREEMENT
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
Date: April 21, 1998
The undersigned, BOGEN COMMUNICATIONS INTERNATIONAL, INC., a Delaware
corporation with an office for the transaction of business at 50 Spring Street,
Ramsey, New Jersey 07446 (herein referred to as "Borrower"), hereby agrees in
favor of KEYBANK NATIONAL ASSOCIATION, a national banking association with an
office for the transaction of business at 66 South Pearl Street, Albany, New
York 12207 (in its individual capacity, "Key"), as agent for the Banks, as
follows:
1. DEFINITIONS. All capitalized terms used herein which are defined in
the Credit Agreement of even date herewith (hereinafter, together with all
exhibits thereto, as it may from time to time be amended, modified or
supplemented, referred to as the "Credit Agreement") by and between the
Borrower, Bogen Communications, Inc., various financial institutions and Key as
agent, shall have the respective meanings provided therefor in the Credit
Agreement, unless otherwise defined herein or unless the context otherwise
requires.
2. THE INDEBTEDNESS. In consideration of one or more loans, advances,
or other financial accommodations at any time before, at or after the date
hereof made or extended by the Banks to or for the account of Borrower, directly
or indirectly, as principal, guarantor or otherwise (the "Indebtedness")
Borrower hereby grants to the Banks a continuing security interest in and a
right of set-off against, and Borrower hereby assigns to the Banks, the
Collateral described in Paragraph 3, to secure the payment, performance and
observance of (i) all indebtedness, obligations, liabilities and agreements of
any kind of Borrower to the Banks, now existing or hereafter arising, direct or
indirect, absolute or contingent, secured or unsecured, due or not, arising out
of or relating to the Indebtedness and (ii) all agreements, documents and
instruments evidencing any of the foregoing or under which any of the foregoing
may have been issued, created, assumed or guaranteed (all of the foregoing being
herein referred to as the "Obligations").
3. THE COLLATERAL. The Collateral is described on Schedule "A" annexed
hereto as part hereof and also includes all attachments, accessions and
equipment now or hereafter affixed to the Collateral or used in connection
therewith, substitutions and replacements therefor (unless the description of
Collateral expressly excludes after-acquired Collateral), all items of
Collateral now owned or existing and hereafter acquired, created or arising, and
all proceeds thereof (including, without limitation, claims of Borrower against
third parties for loss or damage to or destruction of any Collateral).
4. WARRANTIES, REPRESENTATIONS AND COVENANTS. Borrower warrants,
represents and covenants that:
(a) The chief executive office and other places of business of
Borrower, the Collateral and the books and records relating to the
Collateral and the Collateral are, and have been during the four month
period prior to the date hereof (or in the case of a new business, from
the date of commencement of said business), located at the address(es)
set
<PAGE>
forth below and Borrower will not change the same, or merge or
consolidate with any person or change its name, without prior written
notice to and consent of the Agent:
Addresses: 50 Spring Street, Ramsey, New Jersey 07446;
(b) Borrower will use the Collateral for lawful and business
purposes only, with all reasonable care and caution and in conformity
with all applicable laws, ordinances and regulations;
(c) Borrower will keep the Collateral in first-class order,
repair, running and marketable condition, at Borrower's sole cost and
expense;
(d) The Banks shall at all times have free access to and right
of inspection of the Collateral and any records pertaining thereto, and
the right to make extracts from and to receive from Borrower originals
or true copies of such records and any papers and instruments relating
to any Collateral upon request therefor (which rights shall, except
after the occurrence of an Event of Default, be exercised only upon
reasonable notice during regular business hours), and Borrower hereby
grants to the Banks a security interest in all such records, papers and
instruments to secure the payment, performance and observance of the
Obligations;
(e) The Collateral is now and shall remain personal property,
is not now a fixture and Borrower will not permit any Collateral which
is not now a fixture to become a fixture without prior written notice
to and consent of the Banks and without first making all arrangements,
and delivering, or causing to be delivered, to the Agent all
instruments and documents, including, without limitation, waivers and
subordination agreements by any landlords or mortgagees, requested by
and satisfactory to the Banks to preserve and protect the primary
security interest granted herein against all persons;
(f) Borrower, at its sole cost and expense, will insure the
Collateral in the name of and with loss or damage payable solely to the
Agent, as its interest may appear, against such risks, with such
companies and in such amounts, as may be required by the Banks from
time to time (all such policies providing ten (10) days minimum written
notice of cancellation to the Agent) and Borrower will deliver to the
Agent the original or duplicate policies, or certificates or other
evidence satisfactory to the Agent attesting thereto, and Borrower will
promptly notify the Agent of any loss or damage to any Collateral or
arising from its use;
(g) Borrower will, at its sole cost and expense, and at all
times, pay and discharge all taxes and assessments and keep the
Collateral free and clear of any and all liens, security interests or
encumbrances (other than in favor of the Banks), perform all acts and
execute all documents requested by the Banks from time to time to
evidence, perfect, maintain or enforce the Banks' primary security
interest granted herein or otherwise in
2
<PAGE>
furtherance of the provisions of this Security Agreement;
(h) At any time and from time to time, Borrower shall, at its
sole cost and expense, execute and deliver to the Banks such financing
statements pursuant to the Uniform Commercial Code ("UCC"),
applications for certificate of title and other papers, documents or
instruments as may be requested by the Banks in connection with this
Security Agreement, and Borrower hereby authorizes the Banks to execute
and file at any time and from time to time one or more financing
statements or copies thereof or of this Security Agreement with respect
to the Collateral signed only by the Banks;
(i) In its discretion, the Agent may, at any time and from
time to time, after a Default (as hereinafter defined) has occurred and
is continuing, in its name or Borrower's or otherwise, notify any
account debtor or obligor of any account, contract, document,
instrument, chattel paper or general intangible included in the
Collateral to make payment to the Banks;
(j) In their discretion, the Banks may, at any time and from
time to time, after a Default has occurred and is continuing, demand,
sue for, collect or receive any money or property at any time payable
or receivable on account of or in exchange for, or make any compromise
or settlement deemed desirable by the Banks with respect to, any
Collateral, and/or extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release, any
Collateral or Obligations, all without notice to or consent by Borrower
and without otherwise discharging or affecting the Obligations, the
Collateral or the security interest granted herein;
(k) In their discretion, the Banks may, at any time and from
time to time, for the account of Borrower, pay any amount or do any act
required of Borrower hereunder and which Borrower fails to do or pay,
and any such payment shall be deemed an advance by the Banks to
Borrower payable on demand together with interest at the highest rate
then payable on any of the Obligations;
(l) Borrower will pay the Banks for any sums, costs, and
expenses which the Banks may pay or incur pursuant to the provisions of
this Security Agreement or in negotiating, executing, perfecting,
defending, or protecting the security interest granted herein or in
enforcing payment of the Obligations or otherwise in connection with
the provisions hereof, including but not limited to court costs,
collection charges, travel expenses, and reasonable attorneys' fees,
all of which, together with interest at the highest rate then payable
on any of the Obligations, shall be part of the Obligations and be
payable on demand;
(m) All proceeds of any other Collateral received by Borrower
after the occurrence of a Default shall not be commingled with other
property of Borrower, but shall be segregated, held by Borrower in
trust for the Banks, and immediately delivered to the
3
<PAGE>
Agent in the form received, duly endorsed in blank where appropriate to
effectuate the provisions hereof, the same to be held by the Agent as
additional Collateral hereunder or, at the Banks' option, to be applied
to payment of the Obligations, whether or not due and in any order; and
(n) In their sole discretion, the Banks may, subject to the
terms of the Credit Agreement, at any time and from time to time,
assign, transfer or deliver to any transferee of any Obligations, any
Collateral, whereupon the Banks shall be fully discharged from all
responsibility and the transferee shall be vested with all powers and
rights of the Banks hereunder with respect thereto, but the Banks shall
retain all rights and powers with respect to any Collateral not
assigned, transferred or delivered.
5. DEFAULT. It shall constitute an event of default ("Default") under
this Security Agreement if an Event of Default shall have occurred under any of
the Loan Documents or if any one or more of the following shall occur:
(a) Borrower shall fail to perform any covenant, agreement or
obligation contained in this Security Agreement; or
(b) the Collateral shall be subjected to waste, sale, transfer
or other disposition or any lien, encumbrance or other imposition is
placed upon said Collateral; or
(c) any levy, seizure, attachment, condemnation, forfeiture or
other proceeding shall be brought against or with respect to the
Collateral; or
(d) the occurrence of a material and adverse change in the
condition or affairs (financial or otherwise) of the Borrower which the
Banks reasonably believe substantially impairs their security or
substantially increases the risk of failure of payment or performance
under any of the Loan Documents.
6. REMEDIES. Upon the occurrence and continuation of any Default and at
any time thereafter, the Banks shall have the following rights and remedies (to
the extent permitted by applicable law) in addition to all rights and remedies
of a secured party under the UCC or of the Banks under the Obligations, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively or concurrently:
(a) the Banks may at any time and from time to time, with or
without judicial process or the aid and assistance of others, enter
upon any premises in which any Collateral may be located and, without
resistance or interference by Borrower, take possession of the
Collateral; and/or dispose of any Collateral on any such premises;
and/or require Borrower to assemble and make available to the Banks at
the expense of Borrower any Collateral at any place and time designated
by the Banks which is reasonably convenient to both parties; and/or
remove any Collateral from any such premises for the purpose of
effecting sale or
4
<PAGE>
other disposition thereof (and if any of the Collateral consists of
motor vehicles, the Banks may use Borrower's license plates); and/or
sell, resell, lease, assign and deliver, grant options for or otherwise
dispose of any Collateral in its then condition or following any
commercially reasonable preparation or processing, at public or private
sale or proceedings or otherwise, by one or more contracts, in one or
more parcels, at the same or different times, with or without having
the Collateral at the place of sale or other disposition, for cash
and/or credit, and upon any terms, at such place(s) and time(s) and to
such person(s) as the Banks deem best, all without demand, notice or
advertisement whatsoever except that where an applicable statute
requires reasonable notice of sale or other disposition Borrower hereby
agrees that the sending of five days' notice by registered or certified
mail, return receipt requested, to any address of Borrower set forth in
this Security Agreement shall be deemed reasonable notice thereof. If
any Collateral is sold by the Banks upon credit or for future delivery,
the Banks shall not be liable for the failure of the purchaser to pay
for same and in such event the Banks may resell such Collateral. The
Banks may buy any Collateral at any public sale and, if any Collateral
is of a type customarily sold in a recognized market or is of the type
which is the subject of widely distributed standard price quotations,
the Banks may buy such Collateral at private sale and in each case may
make payment therefor by any means. The Banks may apply the sale
proceeds actually received from any sale or other disposition to the
reasonable expenses of retaking, holding, preparing for sale, selling,
leasing and the like, to reasonable attorneys' fees and all legal,
travel and other expenses which may be incurred by the Banks in
attempting to collect the Obligations or enforce this Security
Agreement or in the prosecution or defense of any action or proceeding
related to the subject matter of this Security Agreement; and then to
the Obligations in such order and as to principal or interest as the
Banks may desire; and Borrower shall remain liable and will pay the
Banks on demand any deficiency remaining, together with interest
thereon at the highest rate then payable on the Obligations and the
balance of any expenses unpaid, with any surplus to be paid to
Borrower, subject to any duty of the Banks imposed by law to the holder
of any subordinate security interest in the Collateral known to the
Banks;
(b) The Banks may appropriate, set off and apply to the
payment of the Obligations, any Collateral in or coming into the
possession of the Banks or their agents, without notice to Borrower and
in such manner as the Banks may in their discretion determine.
7. DESIGNATION AND AUTHORIZATION. To effectuate the terms and
provisions hereof, Borrower hereby designates and appoints the Agent and each of
its designees or agents as attorney-in-fact of Borrower, irrevocably and with
power of substitution, with authority, after the occurrence of a Default, to:
receive, open and dispose of all mail addressed to Borrower and notify the Post
Office authorities to change the address for delivery of mail addressed to
Borrower to such address as the Agent may designate; endorse the name of
Borrower on any notes, acceptances, checks, drafts, money orders, instruments or
other evidences of Collateral that may come into the Agent's possession; sign
the name of Borrower on any invoices, documents, drafts against and notices to
account debtors or obligors of Borrower, assignments and requests for
5
<PAGE>
verification of accounts; execute proofs of claim and loss; execute
endorsements, assignments of other instruments of conveyance or transfer; adjust
and compromise any claims under insurance policies or otherwise; execute
releases; and do all other acts and things necessary or advisable in the sole
discretion of the Agent to carry out and enforce this Security Agreement or the
Obligations. All acts done under the foregoing authorization are hereby ratified
and approved and neither the Agent nor any designee or agent thereof shall be
liable for any acts of commission or omission, for any error of judgment or for
any mistake of fact or law. This power of attorney being coupled with an
interest is irrevocable while any Obligations shall remain unpaid.
8. PRESERVATION AND DISPOSITION OF COLLATERAL; MISCELLANEOUS. The Agent
shall have the duty to exercise reasonable care in the custody and preservation
of any Collateral in its possession, which duty shall be fully satisfied if the
Agent maintains safe custody of such Collateral. Except as hereinabove
specifically set forth, the Agent shall not be deemed to assume any other
responsibility for, or obligation or duty with respect to, any Collateral, or
its use, of any nature or kind, or any matter or proceedings arising out of or
relating thereto, including, without limitation, any obligation or duty to take
any action to collect, preserve or protect its or Borrower's rights in the
Collateral or against any prior parties thereto, but the same shall be at
Borrower's sole risk and responsibility at all times. Borrower hereby releases
the Banks from any claims, causes of action and demands at any time arising out
of or with respect to this Security Agreement, the Obligations, the Collateral
and its use and/or any actions taken or omitted to be taken by the Banks with
respect thereto, and Borrower hereby agrees to hold the Banks harmless from and
with respect to any and all such claims, causes of action and demands. The
Banks' prior recourse to any Collateral shall not constitute a condition of any
demand, suit or proceeding for payment or collection of the Obligations. No act,
omission or delay by any Bank shall constitute a waiver of its rights and
remedies hereunder or otherwise. No single or partial waiver by any Bank of any
Default or right or remedy which it may have shall operate as a waiver of any
other Default, right or remedy or of the same Default, right or remedy on a
future occasion. Borrower hereby waives presentment, notice of dishonor and
protest of all instruments included in or evidencing any Obligations or
Collateral, and all other notices and demands whatsoever (except as expressly
provided herein). In the event of any litigation with respect to any matter
connected with this Security Agreement, the Obligations or the Collateral,
Borrower hereby waives the right to a trial by jury. Borrower hereby irrevocably
consents to the jurisdiction of the Courts of the State of New York and of any
Federal Court located in such State in connection with any action or proceeding
arising out of or relating to the Obligations, this Security Agreement or the
Collateral, or any document or instrument delivered with respect to any of the
Obligations. Borrower hereby waives personal service of any process in
connection with any such action or proceeding and agrees that the service
thereof may be made by certified or registered mail directed to Borrower at any
address of Borrower set forth in this Security Agreement. Borrower so served
shall appear or answer to such process within thirty (30) days after the mailing
thereof. Should Borrower so served fail to appear or answer within said thirty
(30) day period, Borrower shall be deemed in default and judgment may be entered
by any Bank against Borrower for the amount or such other relief as may be
demanded in any process so served. In the alternative, in its discretion, any
Bank may effect service upon Borrower in any other form or manner permitted by
law. All capitalized terms used
6
<PAGE>
and not otherwise defined shall have the meanings set forth in the Credit
Agreement and other terms herein shall have the meanings as defined in the UCC,
unless the context otherwise requires. No provision hereof shall be modified,
altered or limited except by a written instrument expressly referring to this
Security Agreement and to such provision, and executed by the party to be
charged. This Security Agreement and all Obligations shall be binding upon the
successors, or assigns of Borrower and shall, together with the rights and
remedies of the Banks hereunder, inure to the benefit of the Banks and their
successors, endorsees and assigns. This Security Agreement and the Obligations
shall be governed in all respects by the laws of the State of New York
applicable to contracts executed and to be performed in such State. If any term
of this Security Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby. The Banks are authorized to annex hereto any schedules
referred to herein. Borrower acknowledges receipt of a copy of this Security
Agreement.
7
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed or caused this
Security Agreement to be executed in the State of New York as of the date first
above set forth.
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By:___________________________________
Name:
Title:
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this __ day of April, 1998, before me the subscriber personally
appeared __________, who being by me duly sworn, did depose and say; that he
resides at __________, that he is _______________________________ of Bogen
Communications International, Inc., the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.
______________________________________
NOTARY PUBLIC
8
<PAGE>
Schedule "A"
All personal property and fixtures of the Borrower, whether now or
hereafter existing or now owned or hereafter acquired and wherever located, of
every kind and description, tangible or intangible, and all goods, equipment,
inventory, accounts, chattel paper, general intangibles, credits, claims,
demands and any other property, rights and interests of the Borrower, and any
and all additions and accessions thereto, all substitutions and replacements
therefor and all products and proceeds thereof and proceeds of insurance
thereon.
EXHIBIT 10.8
SECURITY AGREEMENT
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
Date: April 21, 1998
The undersigned, BOGEN COMMUNICATIONS INTERNATIONAL, INC., a Delaware
corporation with an office for the transaction of business at 50 Spring Street,
Ramsey, New Jersey 07446 (herein referred to as "Borrower"), hereby agrees in
favor of KEYBANK NATIONAL ASSOCIATION, a national banking association with an
office for the transaction of business at 66 South Pearl Street, Albany, New
York 12207 (in its individual capacity, "Key"), as agent for the Banks, as
follows:
1. DEFINITIONS. All capitalized terms used herein which are defined in
the Credit Agreement of even date herewith (hereinafter, together with all
exhibits thereto, as it may from time to time be amended, modified or
supplemented, referred to as the "Credit Agreement") by and between the
Borrower, Bogen Communications, Inc., various financial institutions and Key as
agent, shall have the respective meanings provided therefor in the Credit
Agreement, unless otherwise defined herein or unless the context otherwise
requires.
2. THE INDEBTEDNESS. In consideration of one or more loans, advances,
or other financial accommodations at any time before, at or after the date
hereof made or extended by the Banks to or for the account of Borrower, directly
or indirectly, as principal, guarantor or otherwise (the "Indebtedness")
Borrower hereby grants to the Banks a continuing security interest in and a
right of set-off against, and Borrower hereby assigns to the Banks, the
Collateral described in Paragraph 3, to secure the payment, performance and
observance of (i) all indebtedness, obligations, liabilities and agreements of
any kind of Borrower to the Banks, now existing or hereafter arising, direct or
indirect, absolute or contingent, secured or unsecured, due or not, arising out
of or relating to the Indebtedness and (ii) all agreements, documents and
instruments evidencing any of the foregoing or under which any of the foregoing
may have been issued, created, assumed or guaranteed (all of the foregoing being
herein referred to as the "Obligations").
3. THE COLLATERAL. The Collateral is described on Schedule "A" annexed
hereto as part hereof and also includes all attachments, accessions and
equipment now or hereafter affixed to the Collateral or used in connection
therewith, substitutions and replacements therefor (unless the description of
Collateral expressly excludes after-acquired Collateral), all items of
Collateral now owned or existing and hereafter acquired, created or arising, and
all proceeds thereof (including, without limitation, claims of Borrower against
third parties for loss or damage to or destruction of any Collateral).
4. WARRANTIES, REPRESENTATIONS AND COVENANTS. Borrower warrants,
represents and covenants that:
(a) The chief executive office and other places of business of
Borrower, the Collateral and the books and records relating to the
Collateral and the Collateral are, and have been during the four month
period prior to the date hereof (or in the case of a new business, from
the date of commencement of said business), located at the address(es)
set
<PAGE>
forth below and Borrower will not change the same, or merge or
consolidate with any person or change its name, without prior written
notice to and consent of the Agent:
Addresses: 50 Spring Street, Ramsey, New Jersey 07446;
(b) Borrower will use the Collateral for lawful and business
purposes only, with all reasonable care and caution and in conformity
with all applicable laws, ordinances and regulations;
(c) Borrower will keep the Collateral in first-class order,
repair, running and marketable condition, at Borrower's sole cost and
expense;
(d) The Banks shall at all times have free access to and right
of inspection of the Collateral and any records pertaining thereto, and
the right to make extracts from and to receive from Borrower originals
or true copies of such records and any papers and instruments relating
to any Collateral upon request therefor (which rights shall, except
after the occurrence of an Event of Default, be exercised only upon
reasonable notice during regular business hours), and Borrower hereby
grants to the Banks a security interest in all such records, papers and
instruments to secure the payment, performance and observance of the
Obligations;
(e) The Collateral is now and shall remain personal property,
is not now a fixture and Borrower will not permit any Collateral which
is not now a fixture to become a fixture without prior written notice
to and consent of the Banks and without first making all arrangements,
and delivering, or causing to be delivered, to the Agent all
instruments and documents, including, without limitation, waivers and
subordination agreements by any landlords or mortgagees, requested by
and satisfactory to the Banks to preserve and protect the primary
security interest granted herein against all persons;
(f) Borrower, at its sole cost and expense, will insure the
Collateral in the name of and with loss or damage payable solely to the
Agent, as its interest may appear, against such risks, with such
companies and in such amounts, as may be required by the Banks from
time to time (all such policies providing ten (10) days minimum written
notice of cancellation to the Agent) and Borrower will deliver to the
Agent the original or duplicate policies, or certificates or other
evidence satisfactory to the Agent attesting thereto, and Borrower will
promptly notify the Agent of any loss or damage to any Collateral or
arising from its use;
(g) Borrower will, at its sole cost and expense, and at all
times, pay and discharge all taxes and assessments and keep the
Collateral free and clear of any and all liens, security interests or
encumbrances (other than in favor of the Banks), perform all acts and
execute all documents requested by the Banks from time to time to
evidence, perfect, maintain or enforce the Banks' primary security
interest granted herein or otherwise in
2
<PAGE>
furtherance of the provisions of this Security Agreement;
(h) At any time and from time to time, Borrower shall, at its
sole cost and expense, execute and deliver to the Banks such financing
statements pursuant to the Uniform Commercial Code ("UCC"),
applications for certificate of title and other papers, documents or
instruments as may be requested by the Banks in connection with this
Security Agreement, and Borrower hereby authorizes the Banks to execute
and file at any time and from time to time one or more financing
statements or copies thereof or of this Security Agreement with respect
to the Collateral signed only by the Banks;
(i) In its discretion, the Agent may, at any time and from
time to time, after a Default (as hereinafter defined) has occurred and
is continuing, in its name or Borrower's or otherwise, notify any
account debtor or obligor of any account, contract, document,
instrument, chattel paper or general intangible included in the
Collateral to make payment to the Banks;
(j) In their discretion, the Banks may, at any time and from
time to time, after a Default has occurred and is continuing, demand,
sue for, collect or receive any money or property at any time payable
or receivable on account of or in exchange for, or make any compromise
or settlement deemed desirable by the Banks with respect to, any
Collateral, and/or extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release, any
Collateral or Obligations, all without notice to or consent by Borrower
and without otherwise discharging or affecting the Obligations, the
Collateral or the security interest granted herein;
(k) In their discretion, the Banks may, at any time and from
time to time, for the account of Borrower, pay any amount or do any act
required of Borrower hereunder and which Borrower fails to do or pay,
and any such payment shall be deemed an advance by the Banks to
Borrower payable on demand together with interest at the highest rate
then payable on any of the Obligations;
(l) Borrower will pay the Banks for any sums, costs, and
expenses which the Banks may pay or incur pursuant to the provisions of
this Security Agreement or in negotiating, executing, perfecting,
defending, or protecting the security interest granted herein or in
enforcing payment of the Obligations or otherwise in connection with
the provisions hereof, including but not limited to court costs,
collection charges, travel expenses, and reasonable attorneys' fees,
all of which, together with interest at the highest rate then payable
on any of the Obligations, shall be part of the Obligations and be
payable on demand;
(m) All proceeds of any other Collateral received by Borrower
after the occurrence of a Default shall not be commingled with other
property of Borrower, but shall be segregated, held by Borrower in
trust for the Banks, and immediately delivered to the
3
<PAGE>
Agent in the form received, duly endorsed in blank where appropriate to
effectuate the provisions hereof, the same to be held by the Agent as
additional Collateral hereunder or, at the Banks' option, to be applied
to payment of the Obligations, whether or not due and in any order; and
(n) In their sole discretion, the Banks may, subject to the
terms of the Credit Agreement, at any time and from time to time,
assign, transfer or deliver to any transferee of any Obligations, any
Collateral, whereupon the Banks shall be fully discharged from all
responsibility and the transferee shall be vested with all powers and
rights of the Banks hereunder with respect thereto, but the Banks shall
retain all rights and powers with respect to any Collateral not
assigned, transferred or delivered.
5. DEFAULT. It shall constitute an event of default ("Default") under
this Security Agreement if an Event of Default shall have occurred under any of
the Loan Documents or if any one or more of the following shall occur:
(a) Borrower shall fail to perform any covenant, agreement or
obligation contained in this Security Agreement; or
(b) the Collateral shall be subjected to waste, sale, transfer
or other disposition or any lien, encumbrance or other imposition is
placed upon said Collateral; or
(c) any levy, seizure, attachment, condemnation, forfeiture or
other proceeding shall be brought against or with respect to the
Collateral; or
(d) the occurrence of a material and adverse change in the
condition or affairs (financial or otherwise) of the Borrower which the
Banks reasonably believe substantially impairs their security or
substantially increases the risk of failure of payment or performance
under any of the Loan Documents.
6. REMEDIES. Upon the occurrence and continuation of any Default and at
any time thereafter, the Banks shall have the following rights and remedies (to
the extent permitted by applicable law) in addition to all rights and remedies
of a secured party under the UCC or of the Banks under the Obligations, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively or concurrently:
(a) the Banks may at any time and from time to time, with or
without judicial process or the aid and assistance of others, enter
upon any premises in which any Collateral may be located and, without
resistance or interference by Borrower, take possession of the
Collateral; and/or dispose of any Collateral on any such premises;
and/or require Borrower to assemble and make available to the Banks at
the expense of Borrower any Collateral at any place and time designated
by the Banks which is reasonably convenient to both parties; and/or
remove any Collateral from any such premises for the purpose of
effecting sale or
4
<PAGE>
other disposition thereof (and if any of the Collateral consists of
motor vehicles, the Banks may use Borrower's license plates); and/or
sell, resell, lease, assign and deliver, grant options for or otherwise
dispose of any Collateral in its then condition or following any
commercially reasonable preparation or processing, at public or private
sale or proceedings or otherwise, by one or more contracts, in one or
more parcels, at the same or different times, with or without having
the Collateral at the place of sale or other disposition, for cash
and/or credit, and upon any terms, at such place(s) and time(s) and to
such person(s) as the Banks deem best, all without demand, notice or
advertisement whatsoever except that where an applicable statute
requires reasonable notice of sale or other disposition Borrower hereby
agrees that the sending of five days' notice by registered or certified
mail, return receipt requested, to any address of Borrower set forth in
this Security Agreement shall be deemed reasonable notice thereof. If
any Collateral is sold by the Banks upon credit or for future delivery,
the Banks shall not be liable for the failure of the purchaser to pay
for same and in such event the Banks may resell such Collateral. The
Banks may buy any Collateral at any public sale and, if any Collateral
is of a type customarily sold in a recognized market or is of the type
which is the subject of widely distributed standard price quotations,
the Banks may buy such Collateral at private sale and in each case may
make payment therefor by any means. The Banks may apply the sale
proceeds actually received from any sale or other disposition to the
reasonable expenses of retaking, holding, preparing for sale, selling,
leasing and the like, to reasonable attorneys' fees and all legal,
travel and other expenses which may be incurred by the Banks in
attempting to collect the Obligations or enforce this Security
Agreement or in the prosecution or defense of any action or proceeding
related to the subject matter of this Security Agreement; and then to
the Obligations in such order and as to principal or interest as the
Banks may desire; and Borrower shall remain liable and will pay the
Banks on demand any deficiency remaining, together with interest
thereon at the highest rate then payable on the Obligations and the
balance of any expenses unpaid, with any surplus to be paid to
Borrower, subject to any duty of the Banks imposed by law to the holder
of any subordinate security interest in the Collateral known to the
Banks;
(b) The Banks may appropriate, set off and apply to the
payment of the Obligations, any Collateral in or coming into the
possession of the Banks or their agents, without notice to Borrower and
in such manner as the Banks may in their discretion determine.
7. DESIGNATION AND AUTHORIZATION. To effectuate the terms and
provisions hereof, Borrower hereby designates and appoints the Agent and each of
its designees or agents as attorney-in-fact of Borrower, irrevocably and with
power of substitution, with authority, after the occurrence of a Default, to:
receive, open and dispose of all mail addressed to Borrower and notify the Post
Office authorities to change the address for delivery of mail addressed to
Borrower to such address as the Agent may designate; endorse the name of
Borrower on any notes, acceptances, checks, drafts, money orders, instruments or
other evidences of Collateral that may come into the Agent's possession; sign
the name of Borrower on any invoices, documents, drafts against and notices to
account debtors or obligors of Borrower, assignments and requests for
5
<PAGE>
verification of accounts; execute proofs of claim and loss; execute
endorsements, assignments of other instruments of conveyance or transfer; adjust
and compromise any claims under insurance policies or otherwise; execute
releases; and do all other acts and things necessary or advisable in the sole
discretion of the Agent to carry out and enforce this Security Agreement or the
Obligations. All acts done under the foregoing authorization are hereby ratified
and approved and neither the Agent nor any designee or agent thereof shall be
liable for any acts of commission or omission, for any error of judgment or for
any mistake of fact or law. This power of attorney being coupled with an
interest is irrevocable while any Obligations shall remain unpaid.
8. PRESERVATION AND DISPOSITION OF COLLATERAL; MISCELLANEOUS. The Agent
shall have the duty to exercise reasonable care in the custody and preservation
of any Collateral in its possession, which duty shall be fully satisfied if the
Agent maintains safe custody of such Collateral. Except as hereinabove
specifically set forth, the Agent shall not be deemed to assume any other
responsibility for, or obligation or duty with respect to, any Collateral, or
its use, of any nature or kind, or any matter or proceedings arising out of or
relating thereto, including, without limitation, any obligation or duty to take
any action to collect, preserve or protect its or Borrower's rights in the
Collateral or against any prior parties thereto, but the same shall be at
Borrower's sole risk and responsibility at all times. Borrower hereby releases
the Banks from any claims, causes of action and demands at any time arising out
of or with respect to this Security Agreement, the Obligations, the Collateral
and its use and/or any actions taken or omitted to be taken by the Banks with
respect thereto, and Borrower hereby agrees to hold the Banks harmless from and
with respect to any and all such claims, causes of action and demands. The
Banks' prior recourse to any Collateral shall not constitute a condition of any
demand, suit or proceeding for payment or collection of the Obligations. No act,
omission or delay by any Bank shall constitute a waiver of its rights and
remedies hereunder or otherwise. No single or partial waiver by any Bank of any
Default or right or remedy which it may have shall operate as a waiver of any
other Default, right or remedy or of the same Default, right or remedy on a
future occasion. Borrower hereby waives presentment, notice of dishonor and
protest of all instruments included in or evidencing any Obligations or
Collateral, and all other notices and demands whatsoever (except as expressly
provided herein). In the event of any litigation with respect to any matter
connected with this Security Agreement, the Obligations or the Collateral,
Borrower hereby waives the right to a trial by jury. Borrower hereby irrevocably
consents to the jurisdiction of the Courts of the State of New York and of any
Federal Court located in such State in connection with any action or proceeding
arising out of or relating to the Obligations, this Security Agreement or the
Collateral, or any document or instrument delivered with respect to any of the
Obligations. Borrower hereby waives personal service of any process in
connection with any such action or proceeding and agrees that the service
thereof may be made by certified or registered mail directed to Borrower at any
address of Borrower set forth in this Security Agreement. Borrower so served
shall appear or answer to such process within thirty (30) days after the mailing
thereof. Should Borrower so served fail to appear or answer within said thirty
(30) day period, Borrower shall be deemed in default and judgment may be entered
by any Bank against Borrower for the amount or such other relief as may be
demanded in any process so served. In the alternative, in its discretion, any
Bank may effect service upon Borrower in any other form or manner permitted by
law. All capitalized terms used
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<PAGE>
and not otherwise defined shall have the meanings set forth in the Credit
Agreement and other terms herein shall have the meanings as defined in the UCC,
unless the context otherwise requires. No provision hereof shall be modified,
altered or limited except by a written instrument expressly referring to this
Security Agreement and to such provision, and executed by the party to be
charged. This Security Agreement and all Obligations shall be binding upon the
successors, or assigns of Borrower and shall, together with the rights and
remedies of the Banks hereunder, inure to the benefit of the Banks and their
successors, endorsees and assigns. This Security Agreement and the Obligations
shall be governed in all respects by the laws of the State of New York
applicable to contracts executed and to be performed in such State. If any term
of this Security Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby. The Banks are authorized to annex hereto any schedules
referred to herein. Borrower acknowledges receipt of a copy of this Security
Agreement.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed or caused this
Security Agreement to be executed in the State of New York as of the date first
above set forth.
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By:___________________________________
Name:
Title:
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this ___ day of April, 1998, before me the subscriber personally
appeared ______________, who being by me duly sworn, did depose and say; that he
resides at ___________________, that he is _______________________________ of
Bogen Communications International, Inc., the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.
______________________________________
NOTARY PUBLIC
<PAGE>
Schedule "A"
All personal property and fixtures of the Borrower, whether now or
hereafter existing or now owned or hereafter acquired and wherever located, of
every kind and description, tangible or intangible, and all goods, equipment,
inventory, accounts, chattel paper, general intangibles, credits, claims,
demands and any other property, rights and interests of the Borrower, and any
and all additions and accessions thereto, all substitutions and replacements
therefor and all products and proceeds thereof and proceeds of insurance
thereon.
SECURITY AGREEMENT
BOGEN CORPORATION
Date: April 21, 1998
The undersigned, BOGEN CORPORATION, a Delaware corporation with an
office for the transaction of business at 50 Spring Street, Ramsey, New Jersey
07446 (herein referred to as "Guarantor"), hereby agrees in favor of KEYBANK
NATIONAL ASSOCIATION, a national banking association with an office for the
transaction of business at 66 South Pearl Street, Albany, New York 12207 (in its
individual capacity, "Key"), as agent for the Banks, as follows:
1. DEFINITIONS. All capitalized terms used herein which are defined in
the Credit Agreement of even date herewith (hereinafter, together with all
exhibits thereto, as it may from time to time be amended, modified or
supplemented, referred to as the "Credit Agreement") by and between Bogen
Communications International, Inc., Bogen Communications, Inc., various
financial institutions and Key as agent, shall have the respective meanings
provided therefor in the Credit Agreement, unless otherwise defined herein or
unless the context otherwise requires.
2. THE INDEBTEDNESS. In consideration of one or more loans, advances,
or other financial accommodations at any time before, at or after the date
hereof made or extended by the Banks to or for the account of Borrowers,
directly or indirectly, as principal, guarantor or otherwise, and guaranteed by
Guarantor (the "Indebtedness"), Guarantor hereby grants to the Banks a
continuing security interest in and a right of set-off against, and Guarantor
hereby assigns to the Banks, the Collateral described in Paragraph 3, to secure
the payment, performance and observance of (i) all indebtedness, obligations,
liabilities and agreements of any kind of Borrowers and/or Guarantor to the
Banks, now existing or hereafter arising, direct or indirect, absolute or
contingent, secured or unsecured, due or not, arising out of or relating to the
Indebtedness and (ii) all agreements, documents and instruments evidencing any
of the foregoing or under which any of the foregoing may have been issued,
created, assumed or guaranteed (all of the foregoing being herein referred to as
the "Obligations").
3. THE COLLATERAL. The Collateral is described on Schedule "A" annexed
hereto as part hereof and also includes all attachments, accessions and
equipment now or hereafter affixed to the Collateral or used in connection
therewith, substitutions and replacements therefor (unless the description of
Collateral expressly excludes after-acquired Collateral), all items of
Collateral now owned or existing and hereafter acquired, created or arising, and
all proceeds thereof (including, without limitation, claims of Guarantor against
third parties for loss or damage to or destruction of any Collateral).
4. WARRANTIES, REPRESENTATIONS AND COVENANTS. Guarantor warrants,
represents and covenants that:
(a) The chief executive office and other places of business of
Guarantor, the Collateral and the books and records relating to the
Collateral and the Collateral are, and have been during the four month
<PAGE>
period prior to the date hereof (or in the case of a new business, from
the date of commencement of said business), located at the address(es)
set forth below and Guarantor will not change the same, or merge or
consolidate with any person or change its name, without prior written
notice to and consent of the Agent:
Addresses: 50 Spring Street, Ramsey, New Jersey 07446;
(b) Guarantor will use the Collateral for lawful and business
purposes only, with all reasonable care and caution and in conformity
with all applicable laws, ordinances and regulations;
(c) Guarantor will keep the Collateral in first-class order,
repair, running and marketable condition, at Guarantor's sole cost and
expense;
(d) The Banks shall at all times have free access to and right
of inspection of the Collateral and any records pertaining thereto, and
the right to make extracts from and to receive from Guarantor originals
or true copies of such records and any papers and instruments relating
to any Collateral upon request therefor (which rights shall, except
after the occurrence of an Event of Default, be exercised only upon
reasonable notice during regular business hours), and Guarantor hereby
grants to the Banks a security interest in all such records, papers and
instruments to secure the payment, performance and observance of the
Obligations;
(e) The Collateral is now and shall remain personal property,
is not now a fixture and Guarantor will not permit any Collateral which
is not now a fixture to become a fixture without prior written notice
to and consent of the Banks and without first making all arrangements,
and delivering, or causing to be delivered, to the Agent all
instruments and documents, including, without limitation, waivers and
subordination agreements by any landlords or mortgagees, requested by
and satisfactory to the Banks to preserve and protect the primary
security interest granted herein against all persons;
(f) Guarantor, at its sole cost and expense, will insure the
Collateral in the name of and with loss or damage payable solely to the
Agent, as its interest may appear, against such risks, with such
companies and in such amounts, as may be required by the Banks from
time to time (all such policies providing ten (10) days minimum written
notice of cancellation to the Agent) and Guarantor will deliver to the
Agent the original or duplicate policies, or certificates or other
evidence satisfactory to the Agent attesting thereto, and Guarantor
will promptly notify the Agent of any loss or damage to any Collateral
or arising from its use;
(g) Guarantor will, at its sole cost and expense, and at all
times, pay and discharge all taxes and assessments and keep the
Collateral free and clear of any and all liens, security interests or
encumbrances (other than in favor of the Banks), perform all acts and
execute all documents requested by the Banks from time to time to
evidence, perfect, maintain or enforce the Banks' primary security
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<PAGE>
interest granted herein or otherwise in furtherance of the provisions
of this Security Agreement;
(h) At any time and from time to time, Guarantor shall, at its
sole cost and expense, execute and deliver to the Banks such financing
statements pursuant to the Uniform Commercial Code ("UCC"),
applications for certificate of title and other papers, documents or
instruments as may be requested by the Banks in connection with this
Security Agreement, and Guarantor hereby authorizes the Banks to
execute and file at any time and from time to time one or more
financing statements or copies thereof or of this Security Agreement
with respect to the Collateral signed only by the Banks;
(i) In its discretion, the Agent may, at any time and from
time to time, after a Default (as hereinafter defined) has occurred and
is continuing, in its name or Guarantor's or otherwise, notify any
account debtor or obligor of any account, contract, document,
instrument, chattel paper or general intangible included in the
Collateral to make payment to the Banks;
(j) In their discretion, the Banks may, at any time and from
time to time, after a Default has occurred and is continuing, demand,
sue for, collect or receive any money or property at any time payable
or receivable on account of or in exchange for, or make any compromise
or settlement deemed desirable by the Banks with respect to, any
Collateral, and/or extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release, any
Collateral or Obligations, all without notice to or consent by
Guarantor and without otherwise discharging or affecting the
Obligations, the Collateral or the security interest granted herein;
(k) In their discretion, the Banks may, at any time and from
time to time, for the account of Guarantor, pay any amount or do any
act required of Guarantor hereunder and which Guarantor fails to do or
pay, and any such payment shall be deemed an advance by the Banks to
Guarantor payable on demand together with interest at the highest rate
then payable on any of the Obligations;
(l) Guarantor will pay the Banks for any sums, costs, and
expenses which the Banks may pay or incur pursuant to the provisions of
this Security Agreement or in negotiating, executing, perfecting,
defending, or protecting the security interest granted herein or in
enforcing payment of the Obligations or otherwise in connection with
the provisions hereof, including but not limited to court costs,
collection charges, travel expenses, and reasonable attorneys' fees,
all of which, together with interest at the highest rate then payable
on any of the Obligations, shall be part of the Obligations and be
payable on demand;
(m) All proceeds of any other Collateral received by Guarantor
after the occurrence of a Default shall not be commingled with other
property of Guarantor, but shall be segregated, held by Guarantor in
trust for the Banks, and immediately delivered to the Agent in the form
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<PAGE>
received, duly endorsed in blank where appropriate to effectuate the
provisions hereof, the same to be held by the Agent as additional
Collateral hereunder or, at the Banks' option, to be applied to payment
of the Obligations, whether or not due and in any order; and
(n) In their sole discretion, the Banks may, subject to the
terms of the Credit Agreement, at any time and from time to time,
assign, transfer or deliver to any transferee of any Obligations, any
Collateral, whereupon the Banks shall be fully discharged from all
responsibility and the transferee shall be vested with all powers and
rights of the Banks hereunder with respect thereto, but the Banks shall
retain all rights and powers with respect to any Collateral not
assigned, transferred or delivered.
5. DEFAULT. It shall constitute an event of default ("Default") under
this Security Agreement if an Event of Default shall have occurred under any of
the Loan Documents or if any one or more of the following shall occur:
(a) Guarantor shall fail to perform any covenant, agreement
or obligation contained in this Security Agreement; or
(b) the Collateral shall be subjected to waste, sale, transfer
or other disposition or any lien, encumbrance or other imposition is
placed upon said Collateral; or
(c) any levy, seizure, attachment, condemnation, forfeiture or
other proceeding shall be brought against or with respect to the
Collateral; or
(d) the occurrence of a material and adverse change in the
condition or affairs (financial or otherwise) of the Guarantor which
the Banks reasonably believe substantially impairs their security or
substantially increases the risk of failure of payment or performance
under any of the Loan Documents.
6. REMEDIES. Upon the occurrence and continuation of any Default and at
any time thereafter, the Banks shall have the following rights and remedies (to
the extent permitted by applicable law) in addition to all rights and remedies
of a secured party under the UCC or of the Banks under the Obligations, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively or concurrently:
(a) the Banks may at any time and from time to time, with or
without judicial process or the aid and assistance of others, enter
upon any premises in which any Collateral may be located and, without
resistance or interference by Guarantor, take possession of the
Collateral; and/or dispose of any Collateral on any such premises;
and/or require Guarantor to assemble and make available to the Banks at
the expense of Guarantor any Collateral at any place and time
4
<PAGE>
designated by the Banks which is reasonably convenient to both parties;
and/or remove any Collateral from any such premises for the purpose of
effecting sale or other disposition thereof (and if any of the
Collateral consists of motor vehicles, the Banks may use Guarantor's
license plates); and/or sell, resell, lease, assign and deliver, grant
options for or otherwise dispose of any Collateral in its then
condition or following any commercially reasonable preparation or
processing, at public or private sale or proceedings or otherwise, by
one or more contracts, in one or more parcels, at the same or different
times, with or without having the Collateral at the place of sale or
other disposition, for cash and/or credit, and upon any terms, at such
place(s) and time(s) and to such person(s) as the Banks deem best, all
without demand, notice or advertisement whatsoever except that where an
applicable statute requires reasonable notice of sale or other
disposition Guarantor hereby agrees that the sending of five days'
notice by registered or certified mail, return receipt requested, to
any address of Guarantor set forth in this Security Agreement shall be
deemed reasonable notice thereof. If any Collateral is sold by the
Banks upon credit or for future delivery, the Banks shall not be liable
for the failure of the purchaser to pay for same and in such event the
Banks may resell such Collateral. The Banks may buy any Collateral at
any public sale and, if any Collateral is of a type customarily sold in
a recognized market or is of the type which is the subject of widely
distributed standard price quotations, the Banks may buy such
Collateral at private sale and in each case may make payment therefor
by any means. The Banks may apply the sale proceeds actually received
from any sale or other disposition to the reasonable expenses of
retaking, holding, preparing for sale, selling, leasing and the like,
to reasonable attorneys' fees and all legal, travel and other expenses
which may be incurred by the Banks in attempting to collect the
Obligations or enforce this Security Agreement or in the prosecution or
defense of any action or proceeding related to the subject matter of
this Security Agreement; and then to the Obligations in such order and
as to principal or interest as the Banks may desire; and Guarantor
shall remain liable and will pay the Banks on demand any deficiency
remaining, together with interest thereon at the highest rate then
payable on the Obligations and the balance of any expenses unpaid, with
any surplus to be paid to Guarantor, subject to any duty of the Banks
imposed by law to the holder of any subordinate security interest in
the Collateral known to the Banks;
(b) The Banks may appropriate, set off and apply to the
payment of the Obligations, any Collateral in or coming into the
possession of the Banks or their agents, without notice to Guarantor
and in such manner as the Banks may in their discretion determine.
7. DESIGNATION AND AUTHORIZATION. To effectuate the terms and
provisions hereof, Guarantor hereby designates and appoints the Agent and each
of its designees or agents as attorney-in-fact of Guarantor, irrevocably and
with power of substitution, with authority, after the occurrence of a Default,
to: receive, open and dispose of all mail addressed to Guarantor and notify the
Post Office authorities to change the address for delivery of mail addressed to
Guarantor to such address as the Agent may designate; endorse the name of
Guarantor on any notes, acceptances, checks, drafts, money orders, instruments
or other evidences of Collateral that may come into the Agent's possession; sign
the name of Guarantor on any invoices, documents, drafts against and notices to
account debtors or obligors of Guarantor, assignments and requests for
5
<PAGE>
verification of accounts; execute proofs of claim and loss; execute
endorsements, assignments of other instruments of conveyance or transfer; adjust
and compromise any claims under insurance policies or otherwise; execute
releases; and do all other acts and things necessary or advisable in the sole
discretion of the Agent to carry out and enforce this Security Agreement or the
Obligations. All acts done under the foregoing authorization are hereby ratified
and approved and neither the Agent nor any designee or agent thereof shall be
liable for any acts of commission or omission, for any error of judgment or for
any mistake of fact or law. This power of attorney being coupled with an
interest is irrevocable while any Obligations shall remain unpaid.
8. PRESERVATION AND DISPOSITION OF COLLATERAL; MISCELLANEOUS. The Agent
shall have the duty to exercise reasonable care in the custody and preservation
of any Collateral in its possession, which duty shall be fully satisfied if the
Agent maintains safe custody of such Collateral. Except as hereinabove
specifically set forth, the Agent shall not be deemed to assume any other
responsibility for, or obligation or duty with respect to, any Collateral, or
its use, of any nature or kind, or any matter or proceedings arising out of or
relating thereto, including, without limitation, any obligation or duty to take
any action to collect, preserve or protect its or Guarantor's rights in the
Collateral or against any prior parties thereto, but the same shall be at
Guarantor's sole risk and responsibility at all times. Guarantor hereby releases
the Banks from any claims, causes of action and demands at any time arising out
of or with respect to this Security Agreement, the Obligations, the Collateral
and its use and/or any actions taken or omitted to be taken by the Banks with
respect thereto, and Guarantor hereby agrees to hold the Banks harmless from and
with respect to any and all such claims, causes of action and demands. The
Banks' prior recourse to any Collateral shall not constitute a condition of any
demand, suit or proceeding for payment or collection of the Obligations. No act,
omission or delay by any Bank shall constitute a waiver of its rights and
remedies hereunder or otherwise. No single or partial waiver by any Bank of any
Default or right or remedy which it may have shall operate as a waiver of any
other Default, right or remedy or of the same Default, right or remedy on a
future occasion. Guarantor hereby waives presentment, notice of dishonor and
protest of all instruments included in or evidencing any Obligations or
Collateral, and all other notices and demands whatsoever (except as expressly
provided herein). In the event of any litigation with respect to any matter
connected with this Security Agreement, the Obligations or the Collateral,
Guarantor hereby waives the right to a trial by jury. Guarantor hereby
irrevocably consents to the jurisdiction of the Courts of the State of New York
and of any Federal Court located in such State in connection with any action or
proceeding arising out of or relating to the Obligations, this Security
Agreement or the Collateral, or any document or instrument delivered with
respect to any of the Obligations. Guarantor hereby waives personal service of
any process in connection with any such action or proceeding and agrees that the
service thereof may be made by certified or registered mail directed to
Guarantor at any address of Guarantor set forth in this Security Agreement.
Guarantor so served shall appear or answer to such process within thirty (30)
days after the mailing thereof. Should Guarantor so served fail to appear or
answer within said thirty (30) day period, Guarantor shall be deemed in default
and judgment may be entered by any Bank against Guarantor for the amount or such
other relief as may be demanded in any process so served. In the alternative, in
its discretion, any Bank may effect service upon Guarantor in any other form or
manner permitted by law. All capitalized terms used and not otherwise defined
shall have the meanings set forth in the Credit Agreement and other terms herein
shall have the meanings as defined in the UCC, unless the context otherwise
6
<PAGE>
requires. No provision hereof shall be modified, altered or limited except by a
written instrument expressly referring to this Security Agreement and to such
provision, and executed by the party to be charged. This Security Agreement and
all Obligations shall be binding upon the successors, or assigns of Guarantor
and shall, together with the rights and remedies of the Banks hereunder, inure
to the benefit of the Banks and their successors, endorsees and assigns. This
Security Agreement and the Obligations shall be governed in all respects by the
laws of the State of New York applicable to contracts executed and to be
performed in such State. If any term of this Security Agreement shall be held to
be invalid, illegal or unenforceable, the validity of all other terms hereof
shall in no way be affected thereby. The Banks are authorized to annex hereto
any schedules referred to herein. Guarantor acknowledges receipt of a copy of
this Security Agreement.
7
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed or caused this
Security Agreement to be executed in the State of New York as of the date first
above set forth.
BOGEN CORPORATION
By:
-------------------------------
Name:
Title:
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On _______ this day of April, 1998, before me the subscriber personally
appeared _________________________, who being by me duly sworn, did depose and
say; that he resides at _________________________________, that he is
_______________________________ of Bogen Corporation, the corporation described
in and which executed the foregoing instrument; and that he signed his name
thereto by order of the Board of Directors of said corporation.
-----------------------------------
NOTARY PUBLIC
<PAGE>
Schedule "A"
All personal property and fixtures of the Guarantor, whether now or
hereafter existing or now owned or hereafter acquired and wherever located, of
every kind and description, tangible or intangible, and all goods, equipment,
inventory, accounts, chattel paper, general intangibles, credits, claims,
demands and any other property, rights and interests of the Guarantor, and any
and all additions and accessions thereto, all substitutions and replacements
therefor and all products and proceeds thereof and proceeds of insurance
thereon.
EXHIBIT 10.10
SECURITY AGREEMENT
NEW ENGLAND AUDIO RESOURCE CORP.
Date: April 21, 1998
The undersigned, NEW ENGLAND AUDIO RESOURCE CORP., a Delaware
corporation with an office for the transaction of business at 12 Foss Road,
Lewiston, Maine, 04241 (herein referred to as "Guarantor"), hereby agrees in
favor of KEYBANK NATIONAL ASSOCIATION, a national banking association with an
office for the transaction of business at 66 South Pearl Street, Albany, New
York 12207 (in its individual capacity, "Key"), as agent for the Banks, as
follows:
1. DEFINITIONS. All capitalized terms used herein which are defined in
the Credit Agreement of even date herewith (hereinafter, together with all
exhibits thereto, as it may from time to time be amended, modified or
supplemented, referred to as the "Credit Agreement") by and between Bogen
Communications International, Inc., Bogen Communications, Inc., various
financial institutions and Key as agent, shall have the respective meanings
provided therefor in the Credit Agreement, unless otherwise defined herein or
unless the context otherwise requires.
2. THE INDEBTEDNESS. In consideration of one or more loans, advances,
or other financial accommodations at any time before, at or after the date
hereof made or extended by the Banks to or for the account of Borrowers,
directly or indirectly, as principal, guarantor or otherwise, and guaranteed by
Guarantor (the "Indebtedness"), Guarantor hereby grants to the Banks a
continuing security interest in and a right of set-off against, and Guarantor
hereby assigns to the Banks, the Collateral described in Paragraph 3, to secure
the payment, performance and observance of (i) all indebtedness, obligations,
liabilities and agreements of any kind of Borrowers and/or Guarantor to the
Banks, now existing or hereafter arising, direct or indirect, absolute or
contingent, secured or unsecured, due or not, arising out of or relating to the
Indebtedness and (ii) all agreements, documents and instruments evidencing any
of the foregoing or under which any of the foregoing may have been issued,
created, assumed or guaranteed (all of the foregoing being herein referred to as
the "Obligations").
3. THE COLLATERAL. The Collateral is described on Schedule "A" annexed
hereto as part hereof and also includes all attachments, accessions and
equipment now or hereafter affixed to the Collateral or used in connection
therewith, substitutions and replacements therefor (unless the description of
Collateral expressly excludes after-acquired Collateral), all items of
Collateral now owned or existing and hereafter acquired, created or arising, and
all proceeds thereof (including, without limitation, claims of Guarantor against
third parties for loss or damage to or destruction of any Collateral).
4. WARRANTIES, REPRESENTATIONS AND COVENANTS. Guarantor warrants,
represents and covenants that:
(a) The chief executive office and other places of business of
Guarantor, the Collateral and the books and records relating to the
Collateral and the Collateral are, and have been during the four month
period prior to the date hereof (or in the case of a new
<PAGE>
business, from the date of commencement of said business), located at
the address(es) set forth below and Guarantor will not change the same,
or merge or consolidate with any person or change its name, without
prior written notice to and consent of the Agent:
Addresses: 12 Foss Road, Lewiston, Maine, 04241;
(b) Guarantor will use the Collateral for lawful and business
purposes only, with all reasonable care and caution and in conformity
with all applicable laws, ordinances and regulations;
(c) Guarantor will keep the Collateral in first-class order,
repair, running and marketable condition, at Guarantor's sole cost and
expense;
(d) The Banks shall at all times have free access to and right
of inspection of the Collateral and any records pertaining thereto, and
the right to make extracts from and to receive from Guarantor originals
or true copies of such records and any papers and instruments relating
to any Collateral upon request therefor (which rights shall, except
after the occurrence of an Event of Default, be exercised only upon
reasonable notice during regular business hours), and Guarantor hereby
grants to the Banks a security interest in all such records, papers and
instruments to secure the payment, performance and observance of the
Obligations;
(e) The Collateral is now and shall remain personal property,
is not now a fixture and Guarantor will not permit any Collateral which
is not now a fixture to become a fixture without prior written notice
to and consent of the Banks and without first making all arrangements,
and delivering, or causing to be delivered, to the Agent all
instruments and documents, including, without limitation, waivers and
subordination agreements by any landlords or mortgagees, requested by
and satisfactory to the Banks to preserve and protect the primary
security interest granted herein against all persons;
(f) Guarantor, at its sole cost and expense, will insure the
Collateral in the name of and with loss or damage payable solely to the
Agent, as its interest may appear, against such risks, with such
companies and in such amounts, as may be required by the Banks from
time to time (all such policies providing ten (10) days minimum written
notice of cancellation to the Agent) and Guarantor will deliver to the
Agent the original or duplicate policies, or certificates or other
evidence satisfactory to the Agent attesting thereto, and Guarantor
will promptly notify the Agent of any loss or damage to any Collateral
or arising from its use;
(g) Guarantor will, at its sole cost and expense, and at all
times, pay and discharge all taxes and assessments and keep the
Collateral free and clear of any and all liens, security interests or
encumbrances (other than in favor of the Banks), perform all acts and
execute all documents requested by the Banks from time to time to
evidence, perfect,
2
<PAGE>
maintain or enforce the Banks' primary security interest granted herein
or otherwise in furtherance of the provisions of this Security
Agreement;
(h) At any time and from time to time, Guarantor shall, at its
sole cost and expense, execute and deliver to the Banks such financing
statements pursuant to the Uniform Commercial Code ("UCC"),
applications for certificate of title and other papers, documents or
instruments as may be requested by the Banks in connection with this
Security Agreement, and Guarantor hereby authorizes the Banks to
execute and file at any time and from time to time one or more
financing statements or copies thereof or of this Security Agreement
with respect to the Collateral signed only by the Banks;
(i) In its discretion, the Agent may, at any time and from
time to time, after a Default (as hereinafter defined) has occurred and
is continuing, in its name or Guarantor's or otherwise, notify any
account debtor or obligor of any account, contract, document,
instrument, chattel paper or general intangible included in the
Collateral to make payment to the Banks;
(j) In their discretion, the Banks may, at any time and from
time to time, after a Default has occurred and is continuing, demand,
sue for, collect or receive any money or property at any time payable
or receivable on account of or in exchange for, or make any compromise
or settlement deemed desirable by the Banks with respect to, any
Collateral, and/or extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release, any
Collateral or Obligations, all without notice to or consent by
Guarantor and without otherwise discharging or affecting the
Obligations, the Collateral or the security interest granted herein;
(k) In their discretion, the Banks may, at any time and from
time to time, for the account of Guarantor, pay any amount or do any
act required of Guarantor hereunder and which Guarantor fails to do or
pay, and any such payment shall be deemed an advance by the Banks to
Guarantor payable on demand together with interest at the highest rate
then payable on any of the Obligations;
(l) Guarantor will pay the Banks for any sums, costs, and
expenses which the Banks may pay or incur pursuant to the provisions of
this Security Agreement or in negotiating, executing, perfecting,
defending, or protecting the security interest granted herein or in
enforcing payment of the Obligations or otherwise in connection with
the provisions hereof, including but not limited to court costs,
collection charges, travel expenses, and reasonable attorneys' fees,
all of which, together with interest at the highest rate then payable
on any of the Obligations, shall be part of the Obligations and be
payable on demand;
(m) All proceeds of any other Collateral received by Guarantor
after the occurrence of a Default shall not be commingled with other
property of Guarantor, but shall
3
<PAGE>
be segregated, held by Guarantor in trust for the Banks, and
immediately delivered to the Agent in the form received, duly endorsed
in blank where appropriate to effectuate the provisions hereof, the
same to be held by the Agent as additional Collateral hereunder or, at
the Banks' option, to be applied to payment of the Obligations, whether
or not due and in any order; and
(n) In their sole discretion, the Banks may, subject to the
terms of the Credit Agreement, at any time and from time to time,
assign, transfer or deliver to any transferee of any Obligations, any
Collateral, whereupon the Banks shall be fully discharged from all
responsibility and the transferee shall be vested with all powers and
rights of the Banks hereunder with respect thereto, but the Banks shall
retain all rights and powers with respect to any Collateral not
assigned, transferred or delivered.
5. DEFAULT. It shall constitute an event of default ("Default") under
this Security Agreement if an Event of Default shall have occurred under any of
the Loan Documents or if any one or more of the following shall occur:
(a) Guarantor shall fail to perform any covenant, agreement or
obligation contained in this Security Agreement; or
(b) the Collateral shall be subjected to waste, sale, transfer
or other disposition or any lien, encumbrance or other imposition is
placed upon said Collateral; or
(c) any levy, seizure, attachment, condemnation, forfeiture or
other proceeding shall be brought against or with respect to the
Collateral; or
(d) the occurrence of a material and adverse change in the
condition or affairs (financial or otherwise) of the Guarantor which
the Banks reasonably believe substantially impairs their security or
substantially increases the risk of failure of payment or performance
under any of the Loan Documents.
6. REMEDIES. Upon the occurrence and continuation of any Default and at
any time thereafter, the Banks shall have the following rights and remedies (to
the extent permitted by applicable law) in addition to all rights and remedies
of a secured party under the UCC or of the Banks under the Obligations, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively or concurrently:
(a) the Banks may at any time and from time to time, with or
without judicial process or the aid and assistance of others, enter
upon any premises in which any Collateral may be located and, without
resistance or interference by Guarantor, take possession of the
Collateral; and/or dispose of any Collateral on any such premises;
and/or require Guarantor to assemble and make available to the Banks at
the expense of Guarantor any Collateral at any place and time
designated by the Banks which is reasonably convenient to both parties;
4
<PAGE>
and/or remove any Collateral from any such premises for the purpose of
effecting sale or other disposition thereof (and if any of the
Collateral consists of motor vehicles, the Banks may use Guarantor's
license plates); and/or sell, resell, lease, assign and deliver, grant
options for or otherwise dispose of any Collateral in its then
condition or following any commercially reasonable preparation or
processing, at public or private sale or proceedings or otherwise, by
one or more contracts, in one or more parcels, at the same or different
times, with or without having the Collateral at the place of sale or
other disposition, for cash and/or credit, and upon any terms, at such
place(s) and time(s) and to such person(s) as the Banks deem best, all
without demand, notice or advertisement whatsoever except that where an
applicable statute requires reasonable notice of sale or other
disposition Guarantor hereby agrees that the sending of five days'
notice by registered or certified mail, return receipt requested, to
any address of Guarantor set forth in this Security Agreement shall be
deemed reasonable notice thereof. If any Collateral is sold by the
Banks upon credit or for future delivery, the Banks shall not be liable
for the failure of the purchaser to pay for same and in such event the
Banks may resell such Collateral. The Banks may buy any Collateral at
any public sale and, if any Collateral is of a type customarily sold in
a recognized market or is of the type which is the subject of widely
distributed standard price quotations, the Banks may buy such
Collateral at private sale and in each case may make payment therefor
by any means. The Banks may apply the sale proceeds actually received
from any sale or other disposition to the reasonable expenses of
retaking, holding, preparing for sale, selling, leasing and the like,
to reasonable attorneys' fees and all legal, travel and other expenses
which may be incurred by the Banks in attempting to collect the
Obligations or enforce this Security Agreement or in the prosecution or
defense of any action or proceeding related to the subject matter of
this Security Agreement; and then to the Obligations in such order and
as to principal or interest as the Banks may desire; and Guarantor
shall remain liable and will pay the Banks on demand any deficiency
remaining, together with interest thereon at the highest rate then
payable on the Obligations and the balance of any expenses unpaid, with
any surplus to be paid to Guarantor, subject to any duty of the Banks
imposed by law to the holder of any subordinate security interest in
the Collateral known to the Banks;
(b) The Banks may appropriate, set off and apply to the
payment of the Obligations, any Collateral in or coming into the
possession of the Banks or their agents, without notice to Guarantor
and in such manner as the Banks may in their discretion determine.
7. DESIGNATION AND AUTHORIZATION. To effectuate the terms and
provisions hereof, Guarantor hereby designates and appoints the Agent and each
of its designees or agents as attorney-in-fact of Guarantor, irrevocably and
with power of substitution, with authority, after the occurrence of a Default,
to: receive, open and dispose of all mail addressed to Guarantor and notify the
Post Office authorities to change the address for delivery of mail addressed to
Guarantor to such address as the Agent may designate; endorse the name of
Guarantor on any notes, acceptances, checks, drafts, money orders, instruments
or other evidences of Collateral that may come into the Agent's possession; sign
the name of Guarantor on any invoices, documents, drafts
5
<PAGE>
against and notices to account debtors or obligors of Guarantor, assignments and
requests for verification of accounts; execute proofs of claim and loss; execute
endorsements, assignments of other instruments of conveyance or transfer; adjust
and compromise any claims under insurance policies or otherwise; execute
releases; and do all other acts and things necessary or advisable in the sole
discretion of the Agent to carry out and enforce this Security Agreement or the
Obligations. All acts done under the foregoing authorization are hereby ratified
and approved and neither the Agent nor any designee or agent thereof shall be
liable for any acts of commission or omission, for any error of judgment or for
any mistake of fact or law. This power of attorney being coupled with an
interest is irrevocable while any Obligations shall remain unpaid.
8. PRESERVATION AND DISPOSITION OF COLLATERAL; MISCELLANEOUS. The Agent
shall have the duty to exercise reasonable care in the custody and preservation
of any Collateral in its possession, which duty shall be fully satisfied if the
Agent maintains safe custody of such Collateral. Except as hereinabove
specifically set forth, the Agent shall not be deemed to assume any other
responsibility for, or obligation or duty with respect to, any Collateral, or
its use, of any nature or kind, or any matter or proceedings arising out of or
relating thereto, including, without limitation, any obligation or duty to take
any action to collect, preserve or protect its or Guarantor's rights in the
Collateral or against any prior parties thereto, but the same shall be at
Guarantor's sole risk and responsibility at all times. Guarantor hereby releases
the Banks from any claims, causes of action and demands at any time arising out
of or with respect to this Security Agreement, the Obligations, the Collateral
and its use and/or any actions taken or omitted to be taken by the Banks with
respect thereto, and Guarantor hereby agrees to hold the Banks harmless from and
with respect to any and all such claims, causes of action and demands. The
Banks' prior recourse to any Collateral shall not constitute a condition of any
demand, suit or proceeding for payment or collection of the Obligations. No act,
omission or delay by any Bank shall constitute a waiver of its rights and
remedies hereunder or otherwise. No single or partial waiver by any Bank of any
Default or right or remedy which it may have shall operate as a waiver of any
other Default, right or remedy or of the same Default, right or remedy on a
future occasion. Guarantor hereby waives presentment, notice of dishonor and
protest of all instruments included in or evidencing any Obligations or
Collateral, and all other notices and demands whatsoever (except as expressly
provided herein). In the event of any litigation with respect to any matter
connected with this Security Agreement, the Obligations or the Collateral,
Guarantor hereby waives the right to a trial by jury. Guarantor hereby
irrevocably consents to the jurisdiction of the Courts of the State of New York
and of any Federal Court located in such State in connection with any action or
proceeding arising out of or relating to the Obligations, this Security
Agreement or the Collateral, or any document or instrument delivered with
respect to any of the Obligations. Guarantor hereby waives personal service of
any process in connection with any such action or proceeding and agrees that the
service thereof may be made by certified or registered mail directed to
Guarantor at any address of Guarantor set forth in this Security Agreement.
Guarantor so served shall appear or answer to such process within thirty (30)
days after the mailing thereof. Should Guarantor so served fail to appear or
answer within said thirty (30) day period, Guarantor shall be deemed in default
and judgment may be entered by any Bank against Guarantor for the amount or such
other relief as may be demanded in any process so served. In the alternative, in
its discretion, any Bank
6
<PAGE>
may effect service upon Guarantor in any other form or manner permitted by law.
All capitalized terms used and not otherwise defined shall have the meanings set
forth in the Credit Agreement and other terms herein shall have the meanings as
defined in the UCC, unless the context otherwise requires. No provision hereof
shall be modified, altered or limited except by a written instrument expressly
referring to this Security Agreement and to such provision, and executed by the
party to be charged. This Security Agreement and all Obligations shall be
binding upon the successors, or assigns of Guarantor and shall, together with
the rights and remedies of the Banks hereunder, inure to the benefit of the
Banks and their successors, endorsees and assigns. This Security Agreement and
the Obligations shall be governed in all respects by the laws of the State of
New York applicable to contracts executed and to be performed in such State. If
any term of this Security Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby. The Banks are authorized to annex hereto any schedules
referred to herein. Guarantor acknowledges receipt of a copy of this Security
Agreement.
7
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed or caused this
Security Agreement to be executed in the State of New York as of the date first
above set forth.
NEW ENGLAND AUDIO RESOURCE CORP.
By:
---------------------------------
Name:
Title:
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this __ day of April, 1998, before me the subscriber personally
appeared __________, who being by me duly sworn, did depose and say; that he
resides at __________, that he is __________ of New England Audio Resource
Corp., the corporation described in and which executed the foregoing instrument;
and that he signed his name thereto by order of the Board of Directors of said
corporation.
______________________________________
NOTARY PUBLIC
8
<PAGE>
Schedule "A"
All personal property and fixtures of the Guarantor, whether now or
hereafter existing or now owned or hereafter acquired and wherever located, of
every kind and description, tangible or intangible, and all goods, equipment,
inventory, accounts, chattel paper, general intangibles, credits, claims,
demands and any other property, rights and interests of the Guarantor, and any
and all additions and accessions thereto, all substitutions and replacements
therefor and all products and proceeds thereof and proceeds of insurance
thereon.
BORROWER PLEDGE AGREEMENT
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
shares of
BOGEN CORPORATION
AGREEMENT, made this 21st day of April, 1998, by and between:
BOGEN COMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation having
an office at 50 Spring Street, Ramsey, New Jersey 07446 (hereinafter referred to
as the "Pledgor"); and
KEYBANK NATIONAL ASSOCIATION, a national banking association having an
office at 66 South Pearl Street, Albany, New York 12207 (hereinafter referred to
in its individual capacity as "Key"), as agent for the Banks.
W I T N E S S E T H :
WHEREAS:
A. BOGEN COMMUNICATIONS, INC., and Pledgor, each a Delaware corporation
(collectively "the Borrowers") have entered into a certain Credit Agreement of
even date herewith (hereinafter, together with all exhibits thereto, as it may
from time to time be amended, modified or supplemented, referred to as the
"Credit Agreement") by and between the Borrowers, various financial institutions
and Key as agent pursuant to which the Banks have agreed to lend to the
Borrowers the aggregate principal sum of up to Twenty Seven Million and no/100
($27,000,000.00) Dollars, upon and subject to the terms and conditions of the
Credit Agreement;
B. In order to induce the Banks to execute and deliver the Credit
Agreement, the Pledgor has agreed to pledge all of the issued and outstanding
shares of capital stock of Bogen Corporation owned by it as security for the
performance of all of the Borrowers' indebtedness, liabilities and obligations
to the Banks, including, without limitation, those arising under the Credit
Agreement and any and all promissory notes from time to time issued pursuant to
the Credit Agreement (collectively, the "Note"), and as collateral security for
the performance of all of the indebtedness, liabilities and obligations of the
Pledgor under the Guaranty;
C. It is a condition precedent to the obligations of the Banks under
the Credit Agreement that the Pledgor shall execute and deliver this Pledge
Agreement; and
D. All capitalized terms used herein which are defined in the Credit
Agreement shall have the respective meanings provided therefor in the Credit
Agreement, unless otherwise defined herein or unless the context otherwise
requires;
1
<PAGE>
NOW, THEREFORE, in consideration of the foregoing, the Pledgor hereby
agrees with the Banks as follows:
1. The term "Pledged Stock" as used herein shall mean and include all
of the issued and outstanding shares, whether now owned or hereafter acquired by
the Pledgor, of the capital stock of Bogen Corporation, including, without
limitation, all of the issued and outstanding stock of Bogen Corporation listed
on Schedule A annexed hereto, and, also, any shares, stock certificates, options
or rights issued by Bogen Corporation as an addition to, in substitution of, or
in exchange for any such shares, and any and all proceeds thereof, now or
hereafter owned or acquired by the Pledgor.
2. (a) As security for the due payment and performance of all
indebtedness and other liabilities and obligations of the Borrowers to the
Banks, whether now existing or hereafter arising, and whether or not currently
contemplated, including, without limitation, all indebtedness, liabilities and
obligations under, arising out of, or in any way connected with the Guaranty,
the Credit Agreement and the Note and all agreements, instruments and documents
executed, issued and delivered pursuant thereto, including, without limitation,
this Pledge Agreement and to secure any other obligations of the Borrowers to
the Banks (all of the foregoing indebtedness, liabilities and obligations are
hereinafter referred to collectively as the "Obligations"), the Pledgor hereby
pledges, assigns, hypothecates, delivers and sets over to the Agent on behalf of
the Banks, all the Pledged Stock, and hereby grants to the Banks a first
security interest in all the Pledged Stock and in any and all proceeds thereof
and substitutions therefor.
(b) If the Pledgor shall become entitled to receive or shall receive
any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital), option or rights, whether
as an addition to, in substitution of, or in exchange for any shares of the
Pledged Stock, or otherwise, the Pledgor shall accept any such instruments as
the Banks' agent, shall hold them in trust for the Banks, and shall deliver them
forthwith to the Agent in the exact form received, with the Pledgor's
endorsement when necessary and/or appropriate stock powers duly executed in
blank, to be held by the Agent, subject to the terms hereof, as further security
for the Obligations.
(c) Any or all shares of the Pledged Stock held by the Agent
hereunder may, at the option of the Agent or its nominee, be registered in the
name of the Agent or its nominee, and the Agent or its nominee may thereafter,
without notice, and after the occurrence and during the continuation of any
Event of Default, exercise all voting and corporate rights at any meeting of any
corporation issuing any of the shares included in the Pledged Stock and exercise
any and all rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any shares of the Pledged Stock as if it
were the absolute owner thereof, including, without limitation, the right to
receive dividends payable thereon, and the right to exchange, at its discretion,
any and all of the Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other
2
<PAGE>
readjustment of any corporation issuing any of such shares or upon the exercise
by any such issuer of any right, privilege or option pertaining to any shares of
the Pledged Stock, and in connection therewith, to deposit and deliver any and
all of the Pledged Stock with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as it may
determine, all without liability except to account for property actually
received by it, but the Agent shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be responsible for any
failure to do so or delay in so doing.
(d) In the event of the occurrence and during the continuation of
any Event of Default, the Banks shall have the right to require that all cash
dividends payable with respect to any part of the Pledged Stock be paid to the
Agent to be held by the Agent as additional security hereunder until applied to
the Obligations.
(e) In the event of the occurrence and during the continuation of
any Event of Default, the Agent without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Pledgor or any other Person
(all and each of which demands, advertisements and/or notices are, to the extent
permitted by law, hereby expressly waived), may forthwith collect, receive,
appropriate and realize upon the Pledged Stock, or any part thereof, and/or may
forthwith sell, assign, give an option or options to purchase, contract to sell
or otherwise dispose of and deliver the Pledged Stock, or any part thereof, in
one or more parcels at public or private sale or sales, at any exchange,
broker's board or at any of the Agent's offices or elsewhere at such prices and
on such terms (including, without limitation, a requirement that any purchaser
of all or any part of the Pledged Stock shall be required to purchase the shares
constituting the Pledged Stock for investment and without any intention to make
a distribution thereof) as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk, with the right to the Agent or
any purchaser upon any such sale or sales, whether public or private, to
purchase the whole or any part of the Pledged Stock so sold, free of any right
or equity of redemption in the Pledgor, which right or equity is hereby
expressly waived and released.
(f) The proceeds of any collection, recovery, receipt,
appropriation, realization or sale as aforesaid, shall be applied as follows:
(i) First, to the costs and expenses of every kind incurred in
connection therewith or incidental to the care, safekeeping or otherwise of any
and all of the Pledged Stock or in any way relating to the rights of the Banks
hereunder, including reasonable attorneys' fees and legal expenses;
(ii) Second, to the satisfaction of the Obligations;
(iii) Third, to the payment of any other amounts required by
applicable law (including, without limitation, Section 9-504(l)(c) of the
Uniform Commercial Code); and
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<PAGE>
(iv) Fourth, to the Pledgor to the extent of the surplus
proceeds, if any.
(g) The Agent need not give more than five (5) days' notice of the
time and place of any public sale or of the time after which a private sale may
take place and such notice shall be deemed to be reasonable notification of such
matters.
(h) In the event that the proceeds of any collection, recovery,
receipt, appropriation, realization, or sale as aforesaid are insufficient to
pay all amounts to which the Banks are legally entitled, the Pledgor will be
liable for the deficiency, together with interest thereon, at the Post-Default
Rate, and the reasonable fees of any attorneys employed by the Agent to collect
such deficiency, pursuant to the Credit Agreement.
(i) The Agent shall deliver to the Pledgor the Pledged Stock,
including any certificates for new shares issued in respect of Pledged Stock,
upon satisfaction in full of the Obligations.
3. The Pledgor represents and warrants that:
(a) The Pledged Stock is owned directly and beneficially and of
record by the Pledgor in the amount set forth on Schedule A annexed hereto;
(b) The shares of the Pledged Stock constitute 99% of all of the
issued and outstanding shares of capital stock of Bogen Corporation;
(c) All of the shares of the Pledged Stock have been duly and
validly issued, are fully paid and non-assessable and are owned by the Pledgor
free and clear of any pledge, mortgage, hypothecation, Lien, charge, encumbrance
or any security interest in such shares or the proceeds thereof except for the
security interest granted to the Banks hereunder; and
(d) Upon delivery of the Pledged Stock to the Agent or its designee,
this Pledge Agreement creates and grants a valid first Lien on and perfected
security interest in the shares of the Pledged Stock and the proceeds thereof,
subject to no prior security interest, Lien, charge or encumbrance or to any
agreement purporting to grant to any third party a security interest in the
property or assets of the Pledgor which would include the Pledged Stock.
4. (a) The Pledgor hereby covenants that so long as the Obligations
shall be outstanding and unpaid, in whole or in part, the Pledgor will not:
(i) sell, convey or otherwise dispose of any shares of the
Pledged Stock or any interest therein, nor will the Pledgor create, incur or
permit to exist any pledge, mortgage, Lien, charge, encumbrance or any security
interest whatsoever with respect to any of the Pledged Stock or the proceeds
thereof other than that created hereby; or
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<PAGE>
(ii) consent to or approve the issuance of any additional shares
of any class of the issuer of the Pledged Stock.
(b) The Pledgor warrants and will defend the Banks' right, title,
special property and security interest in and to the Pledged Stock against the
claims of any Person, firm, corporation or other entity.
5. (a) If the Agent shall determine to exercise its right to sell all
or any part of the Pledged Stock, and if in the opinion of counsel for the Agent
it is necessary to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act of l933, as amended (the
"Securities Act"), the Pledgor will use its best efforts to cause each issuer of
shares included in the Pledged Stock contemplated to be sold to execute and
deliver, and cause the directors and officers of each such issuer to execute and
deliver, all at the Pledgor's expense, all such instruments and documents, and
to do or cause to be done all such other acts and things as may be necessary to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act and to cause the registration statement
relating thereto to become effective and to remain effective for a period of one
year from the date of the first public offering of the Pledged Stock, or that
portion thereof so to be sold, and to make all amendments thereto and/or to the
related prospectus which, in the opinion of the Agent or its counsel, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto; to cause each such issuer to comply with the
provisions of the "Blue Sky" law of any jurisdiction which the Agent shall
designate; and to cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) covering a period of twelve months, but not more than eighteen months,
beginning with the first month after the effective date of any such registration
statement, which earnings statement will satisfy the provisions of Section 11(a)
of the Securities Act.
(b) The Pledgor acknowledges that a breach of any of the covenants
contained in subparagraph 5(a) above will cause irreparable injury to the Banks,
that the Banks shall have no adequate remedy at law in respect of such breach
and, as a consequence, the covenants of the Pledgor contained in subparagraph
5(a) above shall be specifically enforceable against the Pledgor, and the
Pledgor hereby waives, and shall not assert, any defenses against an action for
specific performance of such covenants, except for a defense that no Event of
Default has occurred.
(c) Notwithstanding the foregoing, the Pledgor recognizes that the
Agent may be unable to effect a public sale of all or a part of the Pledged
Stock, and may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges that
any such private sales may be at places and on terms less favorable to the
seller than if sold at public sales and agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner, and that the Agent
has no obligation to delay sale of any such securities for the period of time
necessary to
5
<PAGE>
permit the issuer of such securities to register such securities for public sale
under the Securities Act.
6. The Pledgor shall at any time and from time to time upon the written
request of the Banks, execute and deliver such further documents and do such
further acts and things as the Banks may reasonably request in order to effect
the purposes of this Pledge Agreement, including, without limitation, delivering
to the Agent on the date hereof or at any time hereafter irrevocable proxies in
respect of the Pledged Stock in the form of Exhibit A annexed hereto.
7. (a) Beyond the exercise of reasonable care to assure the safe
custody of the Pledged Stock while held hereunder, the Agent shall have no duty
or liability to preserve rights pertaining thereto, and shall be relieved of all
responsibility for the Pledged Stock upon surrendering it to the Pledgor or in
accordance with the Pledgor's instructions.
(b) No course of dealing between the Pledgor and the Banks, nor any
failure to exercise, nor any delay in exercising, on the part of the Banks, any
right, power or privilege hereunder or under the Guaranty, the Credit Agreement
or the Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
(c) The rights and remedies herein provided, and provided in the
Guaranty, the Credit Agreement and the Note and in all other agreements,
instruments and documents delivered pursuant to the Credit Agreement, are
cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by law including, without limitation, the rights and remedies of a
secured party under the Uniform Commercial Code.
(d) The provisions of this Pledge Agreement are severable, and if
any clause or provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision in this Pledge Agreement in any jurisdiction.
8. All notices and other communications pursuant to this Pledge
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger service or sent by registered or certified mail, return receipt
requested) or telegram or telecopy, addressed as follows:
(a) If to the Pledgor:
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
50 Spring Street
Ramsey, New Jersey 07446
Attention:
Telecopier No.:
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<PAGE>
with a copy to:
Fox & Fox
70 South Orange Avenue
Livingston, New Jersey 07039
Attention: Nancy C. McDonald, Esq.
Telecopier No.: (973) 597-0884
(b) If to the Agent:
KEYBANK NATIONAL ASSOCIATION
66 South Pearl Street
Albany, New York 12207
Attention: William B. Palmer, Vice President
Telecopier No.: (518) 487-4285
with a copy to:
Hiscock & Barclay, LLP
30 South Pearl Street
Albany, New York 12207
Attention: Edward J. Trombly, Esq.
Telecopier No.: (518) 434-2621
Any notice or other communication hereunder shall be deemed to have been given
on the day on which it is telecopied to such party at its telecopier number
specified above or delivered by hand or such commercial messenger service to
such party at its address specified above, or, if sent by mail, on the third
Business Day after the day deposited in the mail, postage prepaid, or in the
case of telegraphic notice, when delivered to the telegraph company, addressed
as aforesaid. Any party hereto may change the Person, address or telecopier
number to whom or which notices are to be given hereunder, by notice duly given
hereunder; provided, however, that any such notice shall be deemed to have been
given hereunder only when actually received by the party to which it is
addressed.
9. This Pledge Agreement shall be binding upon the Pledgor and its
successors and assigns and shall inure to the benefit of the Banks and their
successors and assigns.
10. This Pledge Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be
duly executed and delivered the day and year first above written.
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By:_________________________________
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
By__________________________________
Name:
Title:
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this __ day of April, 1998, before me the subscriber personally
appeared __________, who being by me duly sworn, did depose and say; that he
resides at __________, that he is __________ of Bogen Communications
International, Inc., the corporation described in and which executed the
foregoing instrument; and that he signed his name thereto by order of the Board
of Directors of said corporation.
____________________________________
NOTARY PUBLIC
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this day __ of April, 1998, before me the subscriber personally
appeared __________, who being by me duly sworn, did depose and say; that he
resides at __________, that he is __________ of KeyBank National Association,
the corporation described in and which executed the foregoing instrument; and
that he signed his name thereto by order of the Board of Directors of said
corporation.
____________________________________
NOTARY PUBLIC
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<PAGE>
EXHIBIT A
TO
PLEDGE AGREEMENT
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS that the undersigned does
hereby make, constitute and appoint KEYBANK NATIONAL ASSOCIATION (the "Agent")
and each of the Agent's officers and employees, its true and lawful attorneys,
for it and in its name, place and stead, to act as its proxy in respect of all
of the shares of capital stock of BOGEN CORPORATION, a Delaware corporation
(hereinafter referred to as the "Corporation"), which it now or hereafter may
own or hold, including, without limitation, the right, on its behalf, to demand
the call by any proper officer of the Corporation pursuant to the provisions of
its Certificate of Incorporation or By-Laws and as permitted by law of a meeting
of its shareholders and at any such meeting of shareholders, annual, general or
special, to vote for the transaction of any and all business that may come
before such meeting, or at any adjournment thereof, including, without
limitation, the right to vote for the sale of all or any part of the assets of
the Corporation and/or the liquidation and dissolution of the Corporation;
giving and granting to its said attorneys full power and authority to do and
perform each and every act and thing whether necessary or desirable to be done
in and about the premises, as fully as it might or could do if personally
present with full power of substitution, appointment and revocation, hereby
ratifying and confirming all that its said attorneys shall do or cause to be
done by virtue hereof.
This Proxy is given to the Agent and to its officers and
employees in consideration of the loans to be made by the Banks to the
Corporation and in order to carry out the covenant of the undersigned contained
in a certain Pledge Agreement of even date herewith between it, the Banks and
the Agent and this Proxy shall not be revocable or revoked by the undersigned,
shall be binding upon the undersigned and its successors and assigns until the
payment in full of all of the Obligations (as defined in the aforesaid Pledge
Agreement) and may be exercised only after an Event of Default under the Credit
Agreement (as such terms are defined in the aforesaid Pledge Agreement).
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this
Irrevocable Proxy this ___ day of April, 1998.
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By:_________________________________
Name:
Title:
<PAGE>
SCHEDULE A
TO PLEDGE AGREEMENT
PLEDGED STOCK OF
BOGEN CORPORATION
Number of Number of Shares Number of
Shares Issued and Shares Owned Certificate
Authorized Outstanding by Pledgor Number
- ---------- ---------------- ------------ -----------
EXHIBIT 10.12
BORROWER PLEDGE AGREEMENT
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
shares of
SPEECH DESIGN GmbH
AGREEMENT, made this 21st day of April, 1998, by and between:
BOGEN COMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation having
an office at 50 Spring Street, Ramsey, New Jersey 07446, formerly known as
European Gateway Acquisition Corp. (hereinafter referred to as the "Pledgor");
and
KEYBANK NATIONAL ASSOCIATION, a national banking association having an
office at 66 South Pearl Street, Albany, New York 12207 (hereinafter referred to
in its individual capacity as "Key"), as agent for the Banks.
W I T N E S S E T H :
WHEREAS:
A. BOGEN COMMUNICATIONS, INC., and Pledgor, each a Delaware corporation
(collectively "the Borrower") have entered into a certain Credit Agreement of
even date herewith (hereinafter, together with all exhibits thereto, as it may
from time to time be amended, modified or supplemented, referred to as the
"Credit Agreement") by and between the Borrower, various financial institutions
and Key as agent pursuant to which the Banks have agreed to lend to the Borrower
the aggregate principal sum of up to Twenty Seven Million and no/100
($27,000,000.00) Dollars, upon and subject to the terms and conditions of the
Credit Agreement;
B. The Pledgor is a shareholder of Speech Design GmbH ("Speech Design")
pursuant to a Share Transfer and Option Agreement dated August 21, 1995 and
recorded at Frankfurt Am Main on that date as No. 204 of the Roll of Deeds for
1995 (the "Speech Design Agreement") and by virtue thereof, and otherwise, will
derive benefits as a result of the loans to be made by the Banks to the
Borrowers pursuant to the Credit Agreement;
C. In order to induce the Banks to execute and deliver the Credit
Agreement, the Pledgor has agreed to pledge all of its interest in Speech Design
owned by it as security for the performance of all of the Borrowers'
indebtedness, liabilities and obligations to the Banks, including, without
limitation, those arising under the Credit Agreement and any and all promissory
notes from time to time issued pursuant to the Credit Agreement (collectively,
the "Note"), and as collateral security for the performance of all of the
indebtedness, liabilities and obligations of the Pledgor under the Guaranty;
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<PAGE>
D. It is a condition precedent to the obligations of the Banks under
the Credit Agreement that the Pledgor shall execute and deliver this Pledge
Agreement; and
E. All capitalized terms used herein which are defined in the Credit
Agreement shall have the respective meanings provided therefor in the Credit
Agreement, unless otherwise defined herein or unless the context otherwise
requires;
NOW, THEREFORE, in consideration of the foregoing, the Pledgor hereby
agrees with the Banks as follows:
1. The term "Pledged Interest" as used herein shall mean and include
all of the issued and outstanding shares, whether now owned or hereafter
acquired by the Pledgor, of Pledgor's interest in Speech Design, including,
without limitation, all of the interest described and acquired through the
Speech Design Agreement, and, also, any shares, stock certificates, options or
rights issued by Speech Design as an addition to, in substitution of, or in
exchange for any such shares, and any and all proceeds thereof, now or hereafter
owned or acquired by the Pledgor.
2. (a) As security for the due payment and performance of all
indebtedness and other liabilities and obligations of the Borrowers to the
Banks, whether now existing or hereafter arising, and whether or not currently
contemplated, including, without limitation, all indebtedness, liabilities and
obligations under, arising out of, or in any way connected with the Guaranty,
the Credit Agreement and the Note and all agreements, instruments and documents
executed, issued and delivered pursuant thereto, including, without limitation,
this Pledge Agreement and to secure any other obligations of the Borrowers to
the Banks (all of the foregoing indebtedness, liabilities and obligations are
hereinafter referred to collectively as the "Obligations"), the Pledgor hereby
pledges, assigns, hypothecates, delivers and sets over to the Agent on behalf of
the Banks, all the Pledged Stock, and hereby grants to the Banks a first
security interest in all the Pledged Stock and in any and all proceeds thereof
and substitutions therefor.
(b) If the Pledgor shall become entitled to receive or shall receive
any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital), option or rights, whether
as an addition to, in substitution of, or in exchange for any shares of the
Pledged Stock, or otherwise, the Pledgor shall accept any such instruments as
the Banks' agent, shall hold them in trust for the Banks, and shall deliver them
forthwith to the Agent in the exact form received, with the Pledgor's
endorsement when necessary and/or appropriate stock powers duly executed in
blank, to be held by the Agent, subject to the terms hereof, as further security
for the Obligations.
(c) Any or all shares of the Pledged Stock held by the Agent
hereunder may, at the option of the Agent or its nominee, be registered in the
name of the Agent or its nominee, and the Agent or its nominee may thereafter,
without notice, and after the occurrence and during the continuation of any
Event of Default, exercise all voting and corporate rights at any meeting of any
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<PAGE>
corporation issuing any of the shares included in the Pledged Stock and exercise
any and all rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any shares of the Pledged Stock as if it
were the absolute owner thereof, including, without limitation, the right to
receive dividends payable thereon, and the right to exchange, at its discretion,
any and all of the Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any corporation issuing any of such
shares or upon the exercise by any such issuer of any right, privilege or option
pertaining to any shares of the Pledged Stock, and in connection therewith, to
deposit and deliver any and all of the Pledged Stock with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it, but the Agent shall have no duty to exercise
any of the aforesaid rights, privileges or options and shall not be responsible
for any failure to do so or delay in so doing.
(d) In the event of the occurrence and during the continuation of
any Event of Default, the Banks shall have the right to require that all cash
dividends payable with respect to any part of the Pledged Stock be paid to the
Agent to be held by the Agent as additional security hereunder until applied to
the Obligations.
(e) In the event of the occurrence and during the continuation of
any Event of Default, the Agent without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Pledgor or any other Person
(all and each of which demands, advertisements and/or notices are, to the extent
permitted by law, hereby expressly waived), may forthwith collect, receive,
appropriate and realize upon the Pledged Stock, or any part thereof, and/or may
forthwith sell, assign, give an option or options to purchase, contract to sell
or otherwise dispose of and deliver the Pledged Stock, or any part thereof, in
one or more parcels at public or private sale or sales, at any exchange,
broker's board or at any of the Agent's offices or elsewhere at such prices and
on such terms (including, without limitation, a requirement that any purchaser
of all or any part of the Pledged Stock shall be required to purchase the shares
constituting the Pledged Stock for investment and without any intention to make
a distribution thereof) as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk, with the right to the Agent or
any purchaser upon any such sale or sales, whether public or private, to
purchase the whole or any part of the Pledged Stock so sold, free of any right
or equity of redemption in the Pledgor, which right or equity is hereby
expressly waived and released.
(f) The proceeds of any collection, recovery, receipt,
appropriation, realization or sale as aforesaid, shall be applied as follows:
(i) First, to the costs and expenses of every kind incurred in
connection therewith or incidental to the care, safekeeping or otherwise of any
and all of the Pledged Stock or in any way relating to the rights of the Banks
hereunder, including reasonable attorneys' fees and legal expenses;
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<PAGE>
(ii) Second, to the satisfaction of the Obligations;
(iii) Third, to the payment of any other amounts required by
applicable law (including, without limitation, Section 9-504(l)(c) of the
Uniform Commercial Code); and
(iv) Fourth, to the Pledgor to the extent of the surplus
proceeds, if any.
(g) The Agent need not give more than five (5) days' notice of the
time and place of any public sale or of the time after which a private sale may
take place and such notice shall be deemed to be reasonable notification of such
matters.
(h) In the event that the proceeds of any collection, recovery,
receipt, appropriation, realization, or sale as aforesaid are insufficient to
pay all amounts to which the Banks are legally entitled, the Pledgor will be
liable for the deficiency, together with interest thereon, at the Post-Default
Rate, and the reasonable fees of any attorneys employed by the Agent to collect
such deficiency, pursuant to the Credit Agreement.
(i) The Agent shall deliver to the Pledgor the Pledged Stock,
including any certificates for new shares issued in respect of Pledged Stock,
upon satisfaction in full of the Obligations.
3. The Pledgor represents and warrants that:
(a) The Pledged Stock is owned directly and beneficially and of
record by the Pledgor;
(b) The Pledged Stock constitutes 67.85% of all of the issued and
outstanding shares of capital stock of the Borrower;
(c) The Pledged Stock has been duly and validly issued, is fully
paid and non-assessable and owned by the Pledgor free and clear of any pledge,
mortgage, hypothecation, Lien, charge, encumbrance or any security interest in
such shares or the proceeds thereof except for the security interest granted to
the Banks hereunder; and
(d) Upon delivery of the Pledged Stock to the Agent or its designee,
this Pledge Agreement creates and grants a valid first Lien on and perfected
security interest in the shares of the Pledged Stock and the proceeds thereof,
subject to no prior security interest, Lien, charge or encumbrance or to any
agreement purporting to grant to any third party a security interest in the
property or assets of the Pledgor which would include the Pledged Stock.
4. (a) The Pledgor hereby covenants that so long as the Obligations
shall be outstanding and unpaid, in whole or in part, the Pledgor will not:
4
<PAGE>
(i) sell, convey or otherwise dispose of any of the Pledged
Stock or any interest therein, nor will the Pledgor create, incur or permit to
exist any pledge, mortgage, Lien, charge, encumbrance or any security interest
whatsoever with respect to the Pledged Stock or the proceeds thereof other than
that created hereby; or
(ii) consent to or approve the issuance of any additional
ownership interests in Speech Design, including without limitation any issuance
of shares of ownership interest.
(b) The Pledgor warrants and will defend the Banks' right, title,
special property and security interest in and to the Pledged Stock against the
claims of any Person, firm, corporation or other entity.
5. (a) If the Agent shall determine to exercise its right to sell all
or any part of the Pledged Stock, and if in the opinion of counsel for the Agent
it is necessary to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act of l933, as amended (the
"Securities Act"), the Pledgor will use its best efforts to cause the Pledged
Stock contemplated to be sold to be sold, under the provisions of the Securities
Act and to cause the registration statement relating thereto to become effective
and to remain effective for a period of one year from the date of the first
public offering of the Pledged Stock, or that portion thereof so to be sold, and
to make all amendments thereto and/or to the related prospectus which, in the
opinion of the Agent or its counsel, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto; to
cause each such issuer to comply with the provisions of the "Blue Sky" law of
any jurisdiction which the Agent shall designate; and to cause each such issuer
to make available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) covering a period of twelve months, but
not more than eighteen months, beginning with the first month after the
effective date of any such registration statement, which earnings statement will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) The Pledgor acknowledges that a breach of any of the covenants
contained in subparagraph 5(a) above will cause irreparable injury to the Banks,
that the Banks shall have no adequate remedy at law in respect of such breach
and, as a consequence, the covenants of the Pledgor contained in subparagraph
5(a) above shall be specifically enforceable against the Pledgor, and the
Pledgor hereby waives, and shall not assert, any defenses against an action for
specific performance of such covenants, except for a defense that no Event of
Default has occurred.
(c) Notwithstanding the foregoing, the Pledgor recognizes that the
Agent may be unable to effect a public sale of all or a part of the Pledged
Stock, and may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges that
any such private sales may be at places and on terms less favorable to the
seller than if sold at public sales and agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner, and that the
5
<PAGE>
Agent has no obligation to delay sale of any such securities for the period of
time necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act.
6. The Pledgor shall at any time and from time to time upon the written
request of the Banks, execute and deliver such further documents and do such
further acts and things as the Banks may reasonably request in order to effect
the purposes of this Pledge Agreement, including, without limitation, delivering
to the Agent on the date hereof or at any time hereafter irrevocable proxies in
respect of the Pledged Stock.
7. (a) The Agent shall have no duty or liability to preserve rights
pertaining thereto, and shall be relieved of all responsibility for the Pledged
Stock upon surrendering it to the Pledgor or in accordance with the Pledgor's
instructions.
(b) No course of dealing between the Pledgor and the Banks, nor any
failure to exercise, nor any delay in exercising, on the part of the Banks, any
right, power or privilege hereunder or under the Guaranty, the Credit Agreement
or the Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
(c) The rights and remedies herein provided, and provided in the
Guaranty, the Credit Agreement and the Note and in all other agreements,
instruments and documents delivered pursuant to the Credit Agreement, are
cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by law including, without limitation, the rights and remedies of a
secured party under the Uniform Commercial Code.
(d) The provisions of this Pledge Agreement are severable, and if
any clause or provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision in this Pledge Agreement in any jurisdiction.
8. All notices and other communications pursuant to this Pledge
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger service or sent by registered or certified mail, return receipt
requested) or telegram or telecopy, addressed as follows:
(a) If to the Pledgor:
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
50 Spring Street
Ramsey, New Jersey 07446
Attention:
Telecopier No.:
6
<PAGE>
with a copy to:
Fox & Fox
70 South Orange Avenue
Livingston, New Jersey 07039
Attention: Nancy C. McDonald, Esq.
Telecopier No.: (973) 597-0884
(b) If to the Agent:
KEYBANK NATIONAL ASSOCIATION
66 South Pearl Street
Albany, New York 12207
Attention: William B. Palmer, Vice President
Telecopier No.: (518) 487-4285
with a copy to:
Hiscock & Barclay, LLP
30 South Pearl Street
Albany, New York 12207
Attention: Edward J. Trombly, Esq.
Telecopier No.: (518) 434-2621
Any notice or other communication hereunder shall be deemed to have been given
on the day on which it is telecopied to such party at its telecopier number
specified above or delivered by hand or such commercial messenger service to
such party at its address specified above, or, if sent by mail, on the third
Business Day after the day deposited in the mail, postage prepaid, or in the
case of telegraphic notice, when delivered to the telegraph company, addressed
as aforesaid. Any party hereto may change the Person, address or telecopier
number to whom or which notices are to be given hereunder, by notice duly given
hereunder; provided, however, that any such notice shall be deemed to have been
given hereunder only when actually received by the party to which it is
addressed.
9. This Pledge Agreement shall be binding upon the Pledgor and its
successors and assigns and shall inure to the benefit of the Banks and their
successors and assigns.
10. This Pledge Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be
duly executed and delivered the day and year first above written.
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By:___________________________________
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
By____________________________________
Name: William B. Palmer
Title: Vice President
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this __ day of April, 1998, before me the subscriber personally
appeared __________, who being by me duly sworn, did depose and say; that he
resides at __________, that he is __________ of Bogen Communications
International, Inc., the corporation described in and which executed the
foregoing instrument; and that he signed his name thereto by order of the Board
of Directors of said corporation.
______________________________________
NOTARY PUBLIC
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this __ day of April, 1998, before me the subscriber personally
appeared __________, who being by me duly sworn, did depose and say; that he
resides at __________, that he is __________ of KeyBank National Association,
the corporation described in and which executed the foregoing instrument; and
that he signed his name thereto by order of the Board of Directors of said
corporation.
______________________________________
NOTARY PUBLIC
EXHIBIT 10.13
GUARANTOR PLEDGE AGREEMENT
BOGEN CORPORATION
shares of
BOGEN COMMUNICATIONS, INC.
AGREEMENT, made this 21st day of April, 1998, by and between:
BOGEN CORPORATION, a Delaware corporation having an office at 50 Spring
Street, Ramsey, New Jersey 07446 (hereinafter referred to as the "Pledgor"); and
KEYBANK NATIONAL ASSOCIATION, a national banking association having an
office at 66 South Pearl Street, Albany, New York 12207 (hereinafter referred to
in its individual capacity as "Key"), as agent for the Banks.
W I T N E S S E T H :
WHEREAS:
A. BOGEN COMMUNICATIONS INTERNATIONAL, INC. and BOGEN COMMUNICATIONS,
INC., each a Delaware corporation (collectively "the Borrowers") have entered
into a certain Credit Agreement of even date herewith (hereinafter, together
with all exhibits thereto, as it may from time to time be amended, modified or
supplemented, referred to as the "Credit Agreement") by and between the
Borrowers, various financial institutions and Key as agent pursuant to which the
Banks have agreed to lend to the Borrowers the aggregate principal sum of up to
Twenty Seven Million and no/100 ($27,000,000.00) Dollars, upon and subject to
the terms and conditions of the Credit Agreement;
B. The Pledgor is a shareholder of Bogen Communications, Inc. and by
virtue thereof, and otherwise, will derive benefits as a result of the loans to
be made by the Banks to the Borrowers pursuant to the Credit Agreement;
C. The Pledgor has guaranteed to the Banks the full payment and
performance by the Borrowers of all of the Borrowers' indebtedness, liabilities
and obligations under the Credit Agreement by the execution and delivery to the
Agent on behalf of the Banks of a Guaranty of even date herewith (hereinafter,
as it may from time to time be amended, modified or supplemented, referred to as
the "Guaranty");
1
<PAGE>
D. In order to induce the Banks to execute and deliver the Credit
Agreement, the Pledgor has agreed to pledge all of the issued and outstanding
shares of capital stock of Bogen Communications, Inc. owned by it as security
for the performance of all of the Borrowers' indebtedness, liabilities and
obligations to the Banks, including, without limitation, those arising under the
Credit Agreement and any and all promissory notes from time to time issued
pursuant to the Credit Agreement (collectively, the "Note"), and as collateral
security for the performance of all of the indebtedness, liabilities and
obligations of the Pledgor under the Guaranty;
E. It is a condition precedent to the obligations of the Banks under
the Credit Agreement that the Pledgor shall execute and deliver this Pledge
Agreement; and
F. All capitalized terms used herein which are defined in the Credit
Agreement shall have the respective meanings provided therefor in the Credit
Agreement, unless otherwise defined herein or unless the context otherwise
requires;
NOW, THEREFORE, in consideration of the foregoing, the Pledgor hereby
agrees with the Banks as follows:
1. The term "Pledged Stock" as used herein shall mean and include all
of the issued and outstanding shares, whether now owned or hereafter acquired by
the Pledgor, of the capital stock of Bogen Communications, Inc., including,
without limitation, all of the issued and outstanding stock of Bogen
Communications, Inc. listed on Schedule A annexed hereto, and, also, any shares,
stock certificates, options or rights issued by Bogen Communications, Inc. as an
addition to, in substitution of, or in exchange for any such shares, and any and
all proceeds thereof, now or hereafter owned or acquired by the Pledgor.
2. (a) As security for the due payment and performance of all
indebtedness and other liabilities and obligations of the Borrowers to the
Banks, whether now existing or hereafter arising, and whether or not currently
contemplated, including, without limitation, all indebtedness, liabilities and
obligations under, arising out of, or in any way connected with the Guaranty,
the Credit Agreement and the Note and all agreements, instruments and documents
executed, issued and delivered pursuant thereto, including, without limitation,
this Pledge Agreement and to secure any other obligations of the Borrowers to
the Banks (all of the foregoing indebtedness, liabilities and obligations are
hereinafter referred to collectively as the "Obligations"), the Pledgor hereby
pledges, assigns, hypothecates, delivers and sets over to the Agent on behalf of
the Banks, all the Pledged Stock, and hereby grants to the Banks a first
security interest in all the Pledged Stock and in any and all proceeds thereof
and substitutions therefor.
(b) If the Pledgor shall become entitled to receive or shall
receive any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital), option or rights, whether
as an addition to, in substitution of, or in exchange for any shares of the
2
<PAGE>
Pledged Stock, or otherwise, the Pledgor shall accept any such instruments as
the Banks' agent, shall hold them in trust for the Banks, and shall deliver them
forthwith to the Agent in the exact form received, with the Pledgor's
endorsement when necessary and/or appropriate stock powers duly executed in
blank, to be held by the Agent, subject to the terms hereof, as further security
for the Obligations.
(c) Any or all shares of the Pledged Stock held by the Agent
hereunder may, at the option of the Agent or its nominee, be registered in the
name of the Agent or its nominee, and the Agent or its nominee may thereafter,
without notice, and after the occurrence and during the continuation of any
Event of Default, exercise all voting and corporate rights at any meeting of any
corporation issuing any of the shares included in the Pledged Stock and exercise
any and all rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any shares of the Pledged Stock as if it
were the absolute owner thereof, including, without limitation, the right to
receive dividends payable thereon, and the right to exchange, at its discretion,
any and all of the Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any corporation issuing any of such
shares or upon the exercise by any such issuer of any right, privilege or option
pertaining to any shares of the Pledged Stock, and in connection therewith, to
deposit and deliver any and all of the Pledged Stock with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it, but the Agent shall have no duty to exercise
any of the aforesaid rights, privileges or options and shall not be responsible
for any failure to do so or delay in so doing.
(d) In the event of the occurrence and during the continuation
of any Event of Default, the Banks shall have the right to require that all cash
dividends payable with respect to any part of the Pledged Stock be paid to the
Agent to be held by the Agent as additional security hereunder until applied to
the Obligations.
(e) In the event of the occurrence and during the continuation
of any Event of Default, the Agent without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon the Pledgor or any other
Person (all and each of which demands, advertisements and/or notices are, to the
extent permitted by law, hereby expressly waived), may forthwith collect,
receive, appropriate and realize upon the Pledged Stock, or any part thereof,
and/or may forthwith sell, assign, give an option or options to purchase,
contract to sell or otherwise dispose of and deliver the Pledged Stock, or any
part thereof, in one or more parcels at public or private sale or sales, at any
exchange, broker's board or at any of the Agent's offices or elsewhere at such
prices and on such terms (including, without limitation, a requirement that any
purchaser of all or any part of the Pledged Stock shall be required to purchase
the shares constituting the Pledged Stock for investment and without any
intention to make a distribution thereof) as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk, with the
right to the Agent or any purchaser upon any such sale or sales, whether public
or private, to purchase the whole or any part of the Pledged Stock so sold, free
of any right or equity of redemption in the Pledgor, which right or equity is
hereby expressly waived and released.
3
<PAGE>
(f) The proceeds of any collection, recovery, receipt,
appropriation, realization or sale as aforesaid, shall be applied as follows:
(i) First, to the costs and expenses of every kind
incurred in connection therewith or incidental to the care, safekeeping or
otherwise of any and all of the Pledged Stock or in any way relating to the
rights of the Banks hereunder, including reasonable attorneys' fees and legal
expenses;
(ii) Second, to the satisfaction of the Obligations;
(iii) Third, to the payment of any other amounts required
by applicable law (including, without limitation, Section 9-504(l)(c) of the
Uniform Commercial Code); and
(iv) Fourth, to the Pledgor to the extent of the surplus
proceeds, if any.
(g) The Agent need not give more than five (5) days' notice of
the time and place of any public sale or of the time after which a private sale
may take place and such notice shall be deemed to be reasonable notification of
such matters.
(h) In the event that the proceeds of any collection,
recovery, receipt, appropriation, realization, or sale as aforesaid are
insufficient to pay all amounts to which the Banks are legally entitled, the
Pledgor will be liable for the deficiency, together with interest thereon, at
the Post-Default Rate, and the reasonable fees of any attorneys employed by the
Agent to collect such deficiency, pursuant to the Credit Agreement.
(i) The Agent shall deliver to the Pledgor the Pledged Stock,
including any certificates for new shares issued in respect of Pledged Stock,
upon satisfaction in full of the Obligations.
3. The Pledgor represents and warrants that:
(a) The Pledged Stock is owned directly and beneficially and
of record by the Pledgor in the amount set forth on Schedule A annexed hereto;
(b) The shares of the Pledged Stock constitute 100% of all of
the issued and outstanding shares of capital stock of Bogen Communications,
Inc.;
(c) All of the shares of the Pledged Stock have been duly and
validly issued, are fully paid and non-assessable and are owned by the Pledgor
free and clear of any pledge, mortgage, hypothecation, Lien, charge, encumbrance
or any security interest in such shares or the proceeds thereof except for the
security interest granted to the Banks hereunder; and
4
<PAGE>
(d) Upon delivery of the Pledged Stock to the Agent or its
designee, this Pledge Agreement creates and grants a valid first Lien on and
perfected security interest in the shares of the Pledged Stock and the proceeds
thereof, subject to no prior security interest, Lien, charge or encumbrance or
to any agreement purporting to grant to any third party a security interest in
the property or assets of the Pledgor which would include the Pledged Stock.
4. (a) The Pledgor hereby covenants that so long as the Obligations
shall be outstanding and unpaid, in whole or in part, the Pledgor will not:
(i) sell, convey or otherwise dispose of any shares of
the Pledged Stock or any interest therein, nor will the Pledgor create, incur or
permit to exist any pledge, mortgage, Lien, charge, encumbrance or any security
interest whatsoever with respect to any of the Pledged Stock or the proceeds
thereof other than that created hereby; or
(ii) consent to or approve the issuance of any additional
shares of any class of the issuer of the Pledged Stock.
(b) The Pledgor warrants and will defend the Banks' right,
title, special property and security interest in and to the Pledged Stock
against the claims of any Person, firm, corporation or other entity.
5. (a) If the Agent shall determine to exercise its right to sell all
or any part of the Pledged Stock, and if in the opinion of counsel for the Agent
it is necessary to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act of l933, as amended (the
"Securities Act"), the Pledgor will use its best efforts to cause each issuer of
shares included in the Pledged Stock contemplated to be sold to execute and
deliver, and cause the directors and officers of each such issuer to execute and
deliver, all at the Pledgor's expense, all such instruments and documents, and
to do or cause to be done all such other acts and things as may be necessary to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act and to cause the registration statement
relating thereto to become effective and to remain effective for a period of one
year from the date of the first public offering of the Pledged Stock, or that
portion thereof so to be sold, and to make all amendments thereto and/or to the
related prospectus which, in the opinion of the Agent or its counsel, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto; to cause each such issuer to comply with the
provisions of the "Blue Sky" law of any jurisdiction which the Agent shall
designate; and to cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) covering a period of twelve months, but not more than eighteen months,
beginning with the first month after the effective date of any such registration
statement, which earnings statement will satisfy the provisions of Section 11(a)
of the Securities Act.
5
<PAGE>
(b) The Pledgor acknowledges that a breach of any of the
covenants contained in subparagraph 5(a) above will cause irreparable injury to
the Banks, that the Banks shall have no adequate remedy at law in respect of
such breach and, as a consequence, the covenants of the Pledgor contained in
subparagraph 5(a) above shall be specifically enforceable against the Pledgor,
and the Pledgor hereby waives, and shall not assert, any defenses against an
action for specific performance of such covenants, except for a defense that no
Event of Default has occurred.
(c) Notwithstanding the foregoing, the Pledgor recognizes that
the Agent may be unable to effect a public sale of all or a part of the Pledged
Stock, and may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges that
any such private sales may be at places and on terms less favorable to the
seller than if sold at public sales and agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner, and that the Agent
has no obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under the Securities Act.
6. The Pledgor shall at any time and from time to time upon the written
request of the Banks, execute and deliver such further documents and do such
further acts and things as the Banks may reasonably request in order to effect
the purposes of this Pledge Agreement, including, without limitation, delivering
to the Agent on the date hereof or at any time hereafter irrevocable proxies in
respect of the Pledged Stock in the form of Exhibit A annexed hereto.
7. (a) Beyond the exercise of reasonable care to assure the safe
custody of the Pledged Stock while held hereunder, the Agent shall have no duty
or liability to preserve rights pertaining thereto, and shall be relieved of all
responsibility for the Pledged Stock upon surrendering it to the Pledgor or in
accordance with the Pledgor's instructions.
(b) No course of dealing between the Pledgor and the Banks,
nor any failure to exercise, nor any delay in exercising, on the part of the
Banks, any right, power or privilege hereunder or under the Guaranty, the Credit
Agreement or the Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or thereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
(c) The rights and remedies herein provided, and provided in
the Guaranty, the Credit Agreement and the Note and in all other agreements,
instruments and documents delivered pursuant to the Credit Agreement, are
cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by law including, without limitation, the rights and remedies of a
secured party under the Uniform Commercial Code.
(d) The provisions of this Pledge Agreement are severable, and
if any clause or provision shall be held invalid or unenforceable in whole or in
6
<PAGE>
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision in this Pledge Agreement in any jurisdiction.
8. All notices and other communications pursuant to this Pledge
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger service or sent by registered or certified mail, return receipt
requested) or telegram or telecopy, addressed as follows:
(a) If to the Pledgor:
BOGEN CORPORATION
50 Spring Street
Ramsey, New Jersey 07446
Attention: _______________________
Telecopier No.: __________________
with a copy to:
Fox & Fox
70 South Orange Avenue
Livingston, New Jersey 07039
Attention: Nancy C. McDonald, Esq.
Telecopier No.: (973) 597-0884
(b) If to the Agent:
KEYBANK NATIONAL ASSOCIATION
66 South Pearl Street
Albany, New York 12207
Attention: William B. Palmer, Vice President
Telecopier No.: (518) 487-4285
with a copy to:
Hiscock & Barclay, LLP
30 South Pearl Street
Albany, New York 12207
Attention: Edward J. Trombly, Esq.
Telecopier No.: (518) 434-2621
Any notice or other communication hereunder shall be deemed to have been given
on the day on which it is telecopied to such party at its telecopier number
specified above or delivered by hand or such commercial messenger service to
7
<PAGE>
such party at its address specified above, or, if sent by mail, on the third
Business Day after the day deposited in the mail, postage prepaid, or in the
case of telegraphic notice, when delivered to the telegraph company, addressed
as aforesaid. Any party hereto may change the Person, address or telecopier
number to whom or which notices are to be given hereunder, by notice duly given
hereunder; provided, however, that any such notice shall be deemed to have been
given hereunder only when actually received by the party to which it is
addressed.
9. This Pledge Agreement shall be binding upon the Pledgor and its
successors and assigns and shall inure to the benefit of the Banks and their
successors and assigns.
10. This Pledge Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
8
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be
duly executed and delivered the day and year first above written.
BOGEN CORPORATION
By:
-----------------------------
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
By:
-------------------------------
Name:
Title:
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this day of April, 1998, before me the subscriber personally
appeared _______________________, who being by me duly sworn, did depose and
say; that he resides at ____________________________________________, that he
is _________________________ of Bogen Corporation, the corporation described in
and which executed the foregoing instrument; and that he signed his name
thereto by order of the Board of Directors of said corporation.
----------------------------------
NOTARY PUBLIC
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this day of April, 1998, before me the subscriber personally
appeared ________________________, who being by me duly sworn, did depose and
say; that he resides at __________________________________________, that he is
of KeyBank National Association, the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.
-----------------------------------
NOTARY PUBLIC
<PAGE>
EXHIBIT A
TO
PLEDGE AGREEMENT
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby make,
constitute and appoint KEYBANK NATIONAL ASSOCIATION (the "Agent") and each of
the Agent's officers and employees, its true and lawful attorneys, for it and in
its name, place and stead, to act as its proxy in respect of all of the shares
of capital stock of BOGEN COMMUNICATIONS, INC., a Delaware corporation
(hereinafter referred to as the "Corporation"), which it now or hereafter may
own or hold, including, without limitation, the right, on its behalf, to demand
the call by any proper officer of the Corporation pursuant to the provisions of
its Certificate of Incorporation or By-Laws and as permitted by law of a meeting
of its shareholders and at any such meeting of shareholders, annual, general or
special, to vote for the transaction of any and all business that may come
before such meeting, or at any adjournment thereof, including, without
limitation, the right to vote for the sale of all or any part of the assets of
the Corporation and/or the liquidation and dissolution of the Corporation;
giving and granting to its said attorneys full power and authority to do and
perform each and every act and thing whether necessary or desirable to be done
in and about the premises, as fully as it might or could do if personally
present with full power of substitution, appointment and revocation, hereby
ratifying and confirming all that its said attorneys shall do or cause to be
done by virtue hereof.
This Proxy is given to the Agent and to its officers and employees in
consideration of the loans to be made by the Banks to the Corporation and in
order to carry out the covenant of the undersigned contained in a certain Pledge
Agreement of even date herewith between it, the Banks and the Agent and this
Proxy shall not be revocable or revoked by the undersigned, shall be binding
upon the undersigned and its successors and assigns until the payment in full of
all of the Obligations (as defined in the aforesaid Pledge Agreement) and may be
exercised only after an Event of Default under the Credit Agreement (as such
terms are defined in the aforesaid Pledge Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy
this ___ day of April, 1998.
BOGEN CORPORATION
By:
--------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
TO PLEDGE AGREEMENT
PLEDGED STOCK OF
BOGEN COMMUNICATIONS, INC.
Number of Number of Shares Number of
Shares Issued and Shares Owned Certificate
Authorized Outstanding by Pledgor Number
- ---------- ---------------- ------------- -----------
EXHIBIT 10.14
BORROWER PLEDGE AGREEMENT
-------------------------
BOGEN COMMUNICATIONS, INC.
shares of
NEW ENGLAND AUDIO RESOURCE CORP.
AGREEMENT, made this 21st day of April, 1998, by and between:
BOGEN COMMUNICATIONS, INC., a Delaware corporation having an office at
50 Spring Street, Ramsey, New Jersey 07446 (hereinafter referred to as the
"Pledgor"); and
KEYBANK NATIONAL ASSOCIATION, a national banking association having an
office at 66 South Pearl Street, Albany, New York 12207 (hereinafter referred to
in its individual capacity as "Key"), as agent for the Banks.
W I T N E S S E T H :
---------------------
WHEREAS:
A. BOGEN COMMUNICATIONS INTERNATIONAL, INC., and Pledgor, each a
Delaware corporation (collectively "the Borrowers") have entered into a certain
Credit Agreement of even date herewith (hereinafter, together with all exhibits
thereto, as it may from time to time be amended, modified or supplemented,
referred to as the "Credit Agreement") by and between the Borrowers, various
financial institutions and Key as agent pursuant to which the Banks have agreed
to lend to the Borrowers the aggregate principal sum of up to Twenty Seven
Million and no/100 ($27,000,000.00) Dollars, upon and subject to the terms and
conditions of the Credit Agreement;
B. In order to induce the Banks to execute and deliver the Credit
Agreement, the Pledgor has agreed to pledge all of the issued and outstanding
shares of capital stock of New England Audio Resource Corp. owned by it as
security for the performance of all of the Borrowers' indebtedness, liabilities
and obligations to the Banks, including, without limitation, those arising under
the Credit Agreement and any and all promissory notes from time to time issued
pursuant to the Credit Agreement (collectively, the "Note"), and as collateral
security for the performance of all of the indebtedness, liabilities and
obligations of the Pledgor under the Guaranty;
C. It is a condition precedent to the obligations of the Banks under the
Credit Agreement that the Pledgor shall execute and deliver this Pledge
Agreement; and
D. All capitalized terms used herein which are defined in the Credit
Agreement shall have the respective meanings provided therefor in the Credit
Agreement, unless otherwise defined herein or unless the context otherwise
requires;
1
<PAGE>
NOW, THEREFORE, in consideration of the foregoing, the Pledgor hereby
agrees with the Banks as follows:
1. The term "Pledged Stock" as used herein shall mean and include all of
the issued and outstanding shares, whether now owned or hereafter acquired by
the Pledgor, of the capital stock of New England Audio Resource Corp.,
including, without limitation, all of the issued and outstanding stock of New
England Audio Resource Corp. listed on Schedule A annexed hereto, and, also, any
shares, stock certificates, options or rights issued by New England Audio
Resource Corp. as an addition to, in substitution of, or in exchange for any
such shares, and any and all proceeds thereof, now or hereafter owned or
acquired by the Pledgor.
2. (a) As security for the due payment and performance of all
indebtedness and other liabilities and obligations of the Borrowers to the
Banks, whether now existing or hereafter arising, and whether or not currently
contemplated, including, without limitation, all indebtedness, liabilities and
obligations under, arising out of, or in any way connected with the Guaranty,
the Credit Agreement and the Note and all agreements, instruments and documents
executed, issued and delivered pursuant thereto, including, without limitation,
this Pledge Agreement and to secure any other obligations of the Borrowers to
the Banks (all of the foregoing indebtedness, liabilities and obligations are
hereinafter referred to collectively as the "Obligations"), the Pledgor hereby
pledges, assigns, hypothecates, delivers and sets over to the Agent on behalf of
the Banks, all the Pledged Stock, and hereby grants to the Banks a first
security interest in all the Pledged Stock and in any and all proceeds thereof
and substitutions therefor.
(b) If the Pledgor shall become entitled to receive or shall receive
any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital), option or rights, whether
as an addition to, in substitution of, or in exchange for any shares of the
Pledged Stock, or otherwise, the Pledgor shall accept any such instruments as
the Banks' agent, shall hold them in trust for the Banks, and shall deliver them
forthwith to the Agent in the exact form received, with the Pledgor's
endorsement when necessary and/or appropriate stock powers duly executed in
blank, to be held by the Agent, subject to the terms hereof, as further security
for the Obligations.
(c) Any or all shares of the Pledged Stock held by the Agent
hereunder may, at the option of the Agent or its nominee, be registered in the
name of the Agent or its nominee, and the Agent or its nominee may thereafter,
without notice, and after the occurrence and during the continuation of any
Event of Default, exercise all voting and corporate rights at any meeting of any
corporation issuing any of the shares included in the Pledged Stock and exercise
any and all rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any shares of the Pledged Stock as if it
were the absolute owner thereof, including, without limitation, the right to
receive dividends payable thereon, and the right to exchange, at its discretion,
any and all of the Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any corporation issuing any of such
2
<PAGE>
shares or upon the exercise by any such issuer of any right, privilege or option
pertaining to any shares of the Pledged Stock, and in connection therewith, to
deposit and deliver any and all of the Pledged Stock with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it, but the Agent shall have no duty to exercise
any of the aforesaid rights, privileges or options and shall not be responsible
for any failure to do so or delay in so doing.
(d) In the event of the occurrence and during the continuation of any
Event of Default, the Banks shall have the right to require that all cash
dividends payable with respect to any part of the Pledged Stock be paid to the
Agent to be held by the Agent as additional security hereunder until applied to
the Obligations.
(e) In the event of the occurrence and during the continuation of any
Event of Default, the Agent without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Pledgor or any other Person
(all and each of which demands, advertisements and/or notices are, to the extent
permitted by law, hereby expressly waived), may forthwith collect, receive,
appropriate and realize upon the Pledged Stock, or any part thereof, and/or may
forthwith sell, assign, give an option or options to purchase, contract to sell
or otherwise dispose of and deliver the Pledged Stock, or any part thereof, in
one or more parcels at public or private sale or sales, at any exchange,
broker's board or at any of the Agent's offices or elsewhere at such prices and
on such terms (including, without limitation, a requirement that any purchaser
of all or any part of the Pledged Stock shall be required to purchase the shares
constituting the Pledged Stock for investment and without any intention to make
a distribution thereof) as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk, with the right to the Agent or
any purchaser upon any such sale or sales, whether public or private, to
purchase the whole or any part of the Pledged Stock so sold, free of any right
or equity of redemption in the Pledgor, which right or equity is hereby
expressly waived and released.
(f) The proceeds of any collection, recovery, receipt, appropriation,
realization or sale as aforesaid, shall be applied as follows:
(i) First, to the costs and expenses of every kind incurred in
connection therewith or incidental to the care, safekeeping or otherwise of any
and all of the Pledged Stock or in any way relating to the rights of the Banks
hereunder, including reasonable attorneys' fees and legal expenses;
(ii) Second, to the satisfaction of the Obligations;
(iii) Third, to the payment of any other amounts required by
applicable law (including, without limitation, Section 9-504(l)(c) of the
Uniform Commercial Code); and
(iv) Fourth, to the Pledgor to the extent of the surplus
proceeds, if any.
3
<PAGE>
(g) The Agent need not give more than five (5) days' notice of the
time and place of any public sale or of the time after which a private sale may
take place and such notice shall be deemed to be reasonable notification of such
matters.
(h) In the event that the proceeds of any collection, recovery,
receipt, appropriation, realization, or sale as aforesaid are insufficient to
pay all amounts to which the Banks are legally entitled, the Pledgor will be
liable for the deficiency, together with interest thereon, at the Post-Default
Rate, and the reasonable fees of any attorneys employed by the Agent to collect
such deficiency, pursuant to the Credit Agreement.
(i) The Agent shall deliver to the Pledgor the Pledged Stock,
including any certificates for new shares issued in respect of Pledged Stock,
upon satisfaction in full of the Obligations.
3. The Pledgor represents and warrants that:
(a) The Pledged Stock is owned directly and beneficially and of
record by the Pledgor in the amount set forth on Schedule A annexed hereto;
(b) The shares of the Pledged Stock constitute 100% of all of the
issued and outstanding shares of capital stock of New England Audio Resource
Corp.;
(c) All of the shares of the Pledged Stock have been duly and validly
issued, are fully paid and non-assessable and are owned by the Pledgor free and
clear of any pledge, mortgage, hypothecation, Lien, charge, encumbrance or any
security interest in such shares or the proceeds thereof except for the security
interest granted to the Banks hereunder; and
(d) Upon delivery of the Pledged Stock to the Agent or its designee,
this Pledge Agreement creates and grants a valid first Lien on and perfected
security interest in the shares of the Pledged Stock and the proceeds thereof,
subject to no prior security interest, Lien, charge or encumbrance or to any
agreement purporting to grant to any third party a security interest in the
property or assets of the Pledgor which would include the Pledged Stock.
4. (a) The Pledgor hereby covenants that so long as the Obligations
shall be outstanding and unpaid, in whole or in part, the Pledgor will not:
(i) sell, convey or otherwise dispose of any shares of the
Pledged Stock or any interest therein, nor will the Pledgor create, incur or
permit to exist any pledge, mortgage, Lien, charge, encumbrance or any security
interest whatsoever with respect to any of the Pledged Stock or the proceeds
thereof other than that created hereby; or
(ii) consent to or approve the issuance of any additional shares
of any class of the issuer of the Pledged Stock.
4
<PAGE>
(b) The Pledgor warrants and will defend the Banks' right, title,
special property and security interest in and to the Pledged Stock against the
claims of any Person, firm, corporation or other entity.
5. (a) If the Agent shall determine to exercise its right to sell all
or any part of the Pledged Stock, and if in the opinion of counsel for the Agent
it is necessary to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act of l933, as amended (the
"Securities Act"), the Pledgor will use its best efforts to cause each issuer of
shares included in the Pledged Stock contemplated to be sold to execute and
deliver, and cause the directors and officers of each such issuer to execute and
deliver, all at the Pledgor's expense, all such instruments and documents, and
to do or cause to be done all such other acts and things as may be necessary to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act and to cause the registration statement
relating thereto to become effective and to remain effective for a period of one
year from the date of the first public offering of the Pledged Stock, or that
portion thereof so to be sold, and to make all amendments thereto and/or to the
related prospectus which, in the opinion of the Agent or its counsel, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto; to cause each such issuer to comply with the
provisions of the "Blue Sky" law of any jurisdiction which the Agent shall
designate; and to cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) covering a period of twelve months, but not more than eighteen months,
beginning with the first month after the effective date of any such registration
statement, which earnings statement will satisfy the provisions of Section 11(a)
of the Securities Act.
(b) The Pledgor acknowledges that a breach of any of the covenants
contained in subparagraph 5(a) above will cause irreparable injury to the Banks,
that the Banks shall have no adequate remedy at law in respect of such breach
and, as a consequence, the covenants of the Pledgor contained in subparagraph
5(a) above shall be specifically enforceable against the Pledgor, and the
Pledgor hereby waives, and shall not assert, any defenses against an action for
specific performance of such covenants, except for a defense that no Event of
Default has occurred.
(c) Notwithstanding the foregoing, the Pledgor recognizes that the
Agent may be unable to effect a public sale of all or a part of the Pledged
Stock, and may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges that
any such private sales may be at places and on terms less favorable to the
seller than if sold at public sales and agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner, and that the Agent
has no obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under the Securities Act.
5
<PAGE>
6. The Pledgor shall at any time and from time to time upon the written
request of the Banks, execute and deliver such further documents and do such
further acts and things as the Banks may reasonably request in order to effect
the purposes of this Pledge Agreement, including, without limitation, delivering
to the Agent on the date hereof or at any time hereafter irrevocable proxies in
respect of the Pledged Stock in the form of Exhibit A annexed hereto.
7. (a) Beyond the exercise of reasonable care to assure the safe custody
of the Pledged Stock while held hereunder, the Agent shall have no duty or
liability to preserve rights pertaining thereto, and shall be relieved of all
responsibility for the Pledged Stock upon surrendering it to the Pledgor or in
accordance with the Pledgor's instructions.
(b) No course of dealing between the Pledgor and the Banks, nor any
failure to exercise, nor any delay in exercising, on the part of the Banks, any
right, power or privilege hereunder or under the Guaranty, the Credit Agreement
or the Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
(c) The rights and remedies herein provided, and provided in the
Guaranty, the Credit Agreement and the Note and in all other agreements,
instruments and documents delivered pursuant to the Credit Agreement, are
cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by law including, without limitation, the rights and remedies of a
secured party under the Uniform Commercial Code.
(d) The provisions of this Pledge Agreement are severable, and if any
clause or provision shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision in this Pledge Agreement in any jurisdiction.
8. All notices and other communications pursuant to this Pledge
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger service or sent by registered or certified mail, return receipt
requested) or telegram or telecopy, addressed as follows:
(a) If to the Pledgor:
BOGEN COMMUNICATIONS, INC.
50 Spring Street
Ramsey, New Jersey 07446
Attention: ________________
Telecopier No.: ___________
6
<PAGE>
with a copy to:
Fox & Fox
70 South Orange Avenue
Livingston, New Jersey 07039
Attention: Nancy C. McDonald, Esq.
Telecopier No.: (973) 597-0884
(b) If to the Agent:
KEYBANK NATIONAL ASSOCIATION
66 South Pearl Street
Albany, New York 12207
Attention: William B. Palmer, Vice President
Telecopier No.: (518) 487-4285
with a copy to:
Hiscock & Barclay, LLP
30 South Pearl Street
Albany, New York 12207
Attention: Edward J. Trombly, Esq.
Telecopier No.: (518) 434-2621
Any notice or other communication hereunder shall be deemed to have been given
on the day on which it is telecopied to such party at its telecopier number
specified above or delivered by hand or such commercial messenger service to
such party at its address specified above, or, if sent by mail, on the third
Business Day after the day deposited in the mail, postage prepaid, or in the
case of telegraphic notice, when delivered to the telegraph company, addressed
as aforesaid. Any party hereto may change the Person, address or telecopier
number to whom or which notices are to be given hereunder, by notice duly given
hereunder; provided, however, that any such notice shall be deemed to have been
given hereunder only when actually received by the party to which it is
addressed.
9. This Pledge Agreement shall be binding upon the Pledgor and its
successors and assigns and shall inure to the benefit of the Banks and their
successors and assigns.
10. This Pledge Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be
duly executed and delivered the day and year first above written.
BOGEN COMMUNICATIONS, INC.
By:
-----------------------------
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
By:
-----------------------------
Name:
Title:
STATE OF NEW JERSEY )
)ss.:
COUNTY OF )
On this day of April, 1998, before me the subscriber personally appeared
__________, who being by me duly sworn, did depose and say; that he resides at
______________, that he is ________________ of Bogen Corporation, the
corporation described in and which executed the foregoing instrument; and that
he signed his name thereto by order of the Board of Directors of said
corporation.
------------------------
NOTARY PUBLIC
STATE OF NEW JERSEY )
)ss.:
COUNTY OF )
On this day of April, 1998, before me the subscriber personally appeared
__________, who being by me duly sworn, did depose and say; that he resides at
______________, that he is ________________ of KeyBank National Association, the
corporation described in and which executed the foregoing instrument; and that
he signed his name thereto by order of the Board of Directors of said
corporation.
------------------------
NOTARY PUBLIC
8
<PAGE>
EXHIBIT A
TO
PLEDGE AGREEMENT
----------------
IRREVOCABLE PROXY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
make, constitute and appoint KEYBANK NATIONAL ASSOCIATION (the "Agent") and each
of the Agent's officers and employees, its true and lawful attorneys, for it and
in its name, place and stead, to act as its proxy in respect of all of the
shares of capital stock of NEW ENGLAND AUDIO RESOURCE CORP., a Delaware
corporation (hereinafter referred to as the "Corporation"), which it now or
hereafter may own or hold, including, without limitation, the right, on its
behalf, to demand the call by any proper officer of the Corporation pursuant to
the provisions of its Certificate of Incorporation or By-Laws and as permitted
by law of a meeting of its shareholders and at any such meeting of shareholders,
annual, general or special, to vote for the transaction of any and all business
that may come before such meeting, or at any adjournment thereof, including,
without limitation, the right to vote for the sale of all or any part of the
assets of the Corporation and/or the liquidation and dissolution of the
Corporation; giving and granting to its said attorneys full power and authority
to do and perform each and every act and thing whether necessary or desirable to
be done in and about the premises, as fully as it might or could do if
personally present with full power of substitution, appointment and revocation,
hereby ratifying and confirming all that its said attorneys shall do or cause to
be done by virtue hereof.
This Proxy is given to the Agent and to its officers and
employees in consideration of the loans to be made by the Banks to the
Corporation and in order to carry out the covenant of the undersigned contained
in a certain Pledge Agreement of even date herewith between it, the Banks and
the Agent and this Proxy shall not be revocable or revoked by the undersigned,
shall be binding upon the undersigned and its successors and assigns until the
payment in full of all of the Obligations (as defined in the aforesaid Pledge
Agreement) and may be exercised only after an Event of Default under the Credit
Agreement (as such terms are defined in the aforesaid Pledge Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable
Proxy this ___ day of April, 1998.
BOGEN COMMUNICATIONS, INC.
By:
-----------------------------
Name:
Title:
<PAGE>
SCHEDULE A
TO PLEDGE AGREEMENT
-------------------
PLEDGED STOCK OF
NEW ENGLAND AUDIO RESOURCE CORP.
Number of Number of Shares Number of
Shares Issued and Shares Owned Certificate
Authorized Outstanding by Pledgor Number
- ------------- ------------- ------------ --------
BOGEN COMMUNICATIONS INTERNATIONAL INC. ACQUIRES ADDITIONAL 33% OF SPEECH
DESIGN GmbH
Speech Design Becomes a Wholly-Owned Subsidiary of Bogen
Ramsey, NJ, May, 20 1998--Bogen Communications International, Inc. (AMEX:BGN)
("Bogen") today announced that it has completed the acquisition of the 33%
equity interest of Speech Design GmbH ("SD") held by the current managing
directors. Bogen paid approximately $4.4 million in cash and 458,000 in
restricted common shares of Bogen. As a result of the transaction Speech Design
becomes a wholly-owned subsidiary of Bogen. The minority shareholders, Kasimir
Arciszewski and Hans Meiler, who are the co-founders and co-managing directors
of the Company, will remain as the co-managing directors under long-term
employment contracts, and will also be significant shareholders of Bogen. Mr.
Arciszewski will join Bogen's Board of Directors. The transaction is expected to
be accretive to Bogen's earnings per share.
Speech Design is headquartered in Munich, Germany, and is a leading European
manufacturer of small to mid-size voice-mail and related systems. As a result of
this transaction, Bogen will consolidate all the results of SD, including the
net profit and gain from added cash flow and joint tax planning.
Following are the financial results of Speech Design for the fiscal years 1996
and 1997:
Dec 31, 1996 Dec 31, 1997
------------ ------------
Revenue $15,582,000 $18,045,000
Gross Profit $ 8,309,000 $ 9,446,000
EBITDA $ 1,930,000 $ 3,313,000
Profit before Tax $ 1,154,000 $ 2,677,000
<PAGE>
Jonathan Guss, Chief Executive Officer of Bogen, commented: "Raising our
ownership in Speech Design from 67% to 100% is a terrific opportunity for Bogen,
enabling the Company to work with SD to take advantage of the opportunities
arising from the integration of the two businesses. We also believe that Speech
Design's management team will now bring substantial strengths to Bogen as a
whole. Over the last few years, SD has been the fastest growing division of
Bogen, and this transaction reinforces our commitment to capitalize on further
growth opportunities presented by the ongoing economic unification of Europe. By
virtue of its strong position in the rapidly growing European voice-mail market,
Speech Design provides Bogen with a second major platform for future internal
and acquisition-related growth."
<PAGE>
Mr. Kasimir Arciszewski added: "Hans and I are very excited to become full
partners of Bogen's senior management team, and to join forces for Bogen/Speech
Design's growth. Speech Design has rapidly become a European market leader in
small-to-medium size voice-mail and related systems, with a marketing presence
in 11 countries and strong relationships with major PBX (telephone switch)
vendors. We see many potential opportunities in the Computer Telephony fields
that should enable Bogen and Speech Design to accelerate their growth. On a
personal note, I am very happy to join Bogen's Board of Directors and to provide
my experience in the European telecommunications market."
Bogen Communications International, Inc., based in Ramsey, New Jersey, and in
Munich, Germany, develops, manufactures, and markets telecommunications
peripherals and sound processing equipment. Bogen's products are sold to
commercial, industrial, professional and institutional customers worldwide.
Except for historical information contained herein, the statements made in this
release constitute forward-looking statements that involve certain risks and
uncertainties. Certain factors may cause actual results to differ materially
from those contained in the forward looking statements, including potential
acquisitions and divestitures, and other risks detailed from time to time in
Bogen's reports on file at the Securities and Exchange Commission, including
Bogen's Form 10-K for the fiscal year ended December 31, 1997, and Bogen's form
10-Q for the fiscal quarter ended March 31, 1998.
Bogen(R) is a registered trademark of Bogen Communications, Inc. and Speech
Design(R) is a registered trademark of Bogen Communications international, Inc.
Copyright 1998, All Rights Reserved, Bogen Communications, Inc.
Contact:
Bogen Communications International Inc.
Yoav M. Cohen
Senior Vice President, CFO
201-934-8500 ext. 1261
or
Jonathan Guss
CEO
201-934-8500 ext. 1214
BOGEN COMMUNICATIONS INTERNATIONAL, INC., 1st QUARTER NET INCOME INCREASED 41%
PREFERRED SHAREHOLDERS ELECT CONVERSION TO COMMON SHARES
Ramsey, NJ, May 20, 1998 - Bogen Communication International, Inc. (AMEX: BGN)
("Bogen") today announced results for its first quarter ended March 31, 1998.
Net income increased by 41% to $457,000 from $325,000 in the same period in
1997. Bogen's revenue for the first quarter was $11,432,000 compared to
$11,508,000 for the same quarter in 1997. Bogen's net income was reduced by the
9% per annum dividend payable to its Preferred shareholders, a non-cash amount
of $450,000, leaving $7,000 of net income available to Common shareholders.
The Company also announced today that all holders of its Preferred shares have
notified the Company of their election to convert the Preferred shares into
Common shares effective July 1, 1998. The semi-annual dividend payment due on
the Preferred shares for the period ending June 30, 1998, which the Board of
Directors has elected to pay-in-kind rather than in cash, will therefore be paid
in the number of Common shares into which such dividend shares would have been
converted. The convertible Preferred shares were issued in November, 1997, in
order to finance Bogen's repurchase of 64% of its shares from its prior majority
shareholders and were sold for $20,000,000 to a group of investors, including,
among others, Metropolitan Capital and Bedford Falls Investors LP.
Bogen's CEO, Jonathan Guss, commented "The conversion of the Preferred shares
simplifies our capital structure in a way that wasn't possible last November,
eliminates the preferred dividend, and avoids the tremendous expense and
diversion of managerial effort which would be required to raise the additional
capital necessary for redemption of the Preferred shares. It represents a great
vote of confidence in the Company's prospects on the part of our Preferred
shareholders. To underscore the benefit, note that in this quarter $450,000 of
our $457,000 in after-tax income must be set aside for the preferred dividend.
While this is a non-cash charge, it still has the effect of reducing both
Bogen's reported first quarter basic and diluted EPS for common shareholders to
zero. Because of the conversion, there will only be one more dividend charge of
$450,000 recorded in the next quarter, after which the dividend ceases."
Bogen's President, Michael P. Fleischer, discussed the financial results,
saying, "We are pleased with the healthy upward trend in Bogen's profitability.
Speech Design continued its rapid revenue growth in DM terms, although the top
line effect was muted by the strengthening dollar. I find it encouraging to note
that Bogen's overall profit gain was achieved on essentially flat revenues
(after making currency adjustments for our European operations). While margins
remain a focal point for Bogen, and, indeed, the gross margin has climbed
modestly, we will continue to emphasize actions aimed at resuming revenue growth
in our core U.S. markets."
<PAGE>
Bogen Communications International, Inc., based in Ramsey, New Jersey, and in
Munich, Germany, develops, manufactures, and markets telecommunications
peripherals and sound processing equipment. Bogen's products are sold to
commercial, industrial, professional and institutional customers worldwide.
Except for historical information contained herein, the statements made in this
release constitute forward-looking statements that involve certain risks and
uncertainties. Certain factors may cause actual results to differ materially
from those contained in the forward-looking statements, including potential
acquisitions and divestitures, and other risks detailed from time to time in
Bogen's reports on file at the Securities and Exchange Commission, including
Bogen's Form 10-K for the fiscal year ended December 31, 1997, and Bogen's Form
10-Q for the fiscal quarter ended March 31, 1998.
Bogen(R) is a registered trademark of Bogen Communications, Inc. and Speech
Design(R) is a registered trademark of Bogen Communications international, Inc.
Copyright 1998, All Rights Reserved, Bogen Communications, Inc.
Contact:
Bogen Communications International Inc.
Yoav M. Cohen
Senior Vice President, CFO
201-934-8500 ext. 1261
or
Jonathan Guss
CEO
201-934-8500 ext. 1214
(Table follows)
