SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): November 20, 1997
DICTAPHONE CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 33-93464 13-3838908
(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
3191 Broadbridge Avenue, Stratford, Connecticut 06497
(Address of Principal Executive Offices, Including Zip Code)
Registrant's telephone number, including area code: (203) 381-7000
Exhibit List Appears on Page 3
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Item 5. Other Events.
On November 20, 1997, Dictaphone Corporation (the "Company")
executed a fourth amendment (the "Fourth Amendment") to its existing Credit
Agreement, dated August 7, 1995, as modified by amendments to Credit Agreement,
dated June 28, 1996, June 27, 1997 and July 21, 1997 (collectively, the "Credit
Agreement"). The Fourth Amendment permits the Company to issue a new Tranche C
Term Loan in the amount of $62.8 million (the "Tranche C Loan"), the proceeds of
which were used to extinguish amounts outstanding under the $75.0 million
Tranche A Term Loan due March 31, 2001 (the "Tranche A Loan") and to prepay
certain required principal payments on the outstanding amounts under the $75.0
million Tranche B Term Loan due June 20, 2002 (the "Tranche B Loan"). The
Tranche C Loan requires amortization equal to 1% of the total loan amount
annually through 2001, 30% in 2002 and 66% in 2003. In addition, certain of the
financial covenants in the Credit Agreement have been revised. As a result, in
the fourth quarter of 1997 the Company expects to record a pre-tax extraordinary
non-cash charge of $2.1 million associated with the write-off of the unamortized
debt issuance costs resulting from the early extinguishment of the outstanding
balances under the Tranche A Loan and the Tranche B Loan.
In addition, on November 20, 1997, the Company issued an
aggregate of 3,500,000 shares of its common stock, $.01 par value per share (the
"Common Stock") to certain of its existing stockholders. The sale of such shares
of Common Stock was effected in reliance upon the exemption from the
registration requirements provided by Section 4(2) of the Securities Act of
1933, as amended, on the basis that such transactions did not involve a public
offering. There were no underwriters employed in connection with such sale. The
proceeds from the sale of the 3,500,000 shares were used by the Company to repay
amounts outstanding under the Company's $40.0 million Revolving Credit Facility
as well as fees associated with the issuance of the Tranche C Loan. The Company
also cancelled its Convertible Promissory Note Due January 30, 1998 between the
Company and Bankers Trust Company.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
Not Applicable
(b) Pro Forma Financial Information.
Not Applicable
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<PAGE>
(c) Exhibits.
The following exhibits are filed with this Report:
Exhibit No. Description
- ---------- -----------
10.20 Fourth Amendment to Credit Agreement, dated as of November 14,
1997, by and among Dictaphone Corporation and the Lenders
party thereto (see Exhibit No. 10.21 for relevant exhibits and
schedules).
10.21 Credit Agreement, dated as of November 14, 1997, by and among
Dictaphone Corporation and the Lenders a party thereto
(including exhibits and schedules).
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
DICTAPHONE CORPORATION
Date: November 21, 1997 By: /S/ JOSEPH D. SKRZYPCZAK
--------------------------------------
Name: Joseph D. Skrzypczak
Title: Vice President and
Chief Financial Officer
(Principal Financial and Accounting
Officer)
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<PAGE>
EXHIBIT LIST
Exhibit No. Description
- ---------- -----------
10.20 Fourth Amendment to Credit Agreement, dated as of
November 14, 1997, by and among Dictaphone Corporation
and the Lenders party thereto (see Exhibit No. 10.21
for relevant exhibits and schedules).
10.21 Credit Agreement, dated as of November 14, 1997, by
and among Dictaphone Corporation and the Lenders a
party thereto (including exhibits and schedules).
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DICTAPHONE CORPORATION
FOURTH AMENDMENT TO CREDIT AGREEMENT
This FOURTH AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated
as of November 14, 1997 and entered into by and among DICTAPHONE CORPORATION
(formerly Dictaphone Acquisition Inc.), a Delaware corporation ("COMPANY"), and
the financial institutions listed on the signature pages hereof ("LENDERS"), and
is made with reference to that certain Credit Agreement dated as of August 7,
1995, as amended to the date hereof (as so amended, the "CREDIT AGREEMENT"), by
and among Company, Lenders, NationsBank, N.A. (Carolinas), as documentation
agent for Lenders, and Bankers Trust Company, as administrative agent for
Lenders. Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Credit Agreement.
R E C I T A L S
WHEREAS, Company, Lenders and Agents have entered into the Credit
Agreement pursuant to which Company currently has outstanding Indebtedness and
Contingent Obligations in respect of Loans and Letters of Credit;
WHEREAS, the Obligations of Loan Parties under the Credit Agreement
and the other Loan Documents are secured by first priority Liens on (i) 100% of
the capital stock of all Domestic Subsidiaries, (ii) 66% of the capital stock of
all direct Foreign Subsidiaries of Company and its Domestic Subsidiaries, and
(ii) substantially all of the other personal property and certain of the real
property of Company and its Domestic Subsidiaries;
WHEREAS, Company also currently has outstanding Indebtedness to BTCo
pursuant to that certain Convertible Promissory Note Due January 30, 1998
between Company and BTCo dated as of July 31, 1997 (the "LIQUIDITY LOAN");
WHEREAS, Stonington Fund has agreed to provide Company with
$35,000,000 in new cash equity contributions, the proceeds of which will be used
by Company to prepay the Liquidity Loan in full and to prepay outstanding
Revolving Loans with no corresponding reduction in the Revolving Loan
Commitments;
WHEREAS, Company desires to enter into a new credit agreement (the
"NEW CREDIT AGREEMENT") under which Company intends to incur $62,750,000 of
Indebtedness in the form of term loans (the "NEW TERM LOANS") from certain
lenders (the "NEW LENDERS") for the purpose of prepaying the Tranche A Term
Loans in full and certain scheduled principal installments in respect of the
Tranche B Term Loans;
WHEREAS, Company desires to secure the New Term Loans with Liens on
all Collateral other than (i) the Closing Date Mortgaged Properties (as defined
in subsection 4.1K of the Credit Agreement) and (ii) any Collateral under the
Collateral Account Agreement (all such non-excluded Collateral being the "SHARED
COLLATERAL"), in each case pursuant to amendments and restatements of the
applicable Collateral Documents (the "SHARED COLLATERAL DOCUMENTS") and an
intercreditor agreement (the "INTERCREDITOR AGREEMENT") providing for a pro rata
sharing of the Shared Collateral by Lenders and New Lenders;
WHEREAS, Company and its Subsidiaries also desire (i) to dispose of
the Closing Date Mortgaged Properties and certain other real property assets
pursuant to sale or sale and lease-back transactions, and/or to obtain mortgage
financing with respect thereto, (ii) to retain a portion of the proceeds thereof
for working capital and general corporate purposes, and (iii) to use the
remainder of the proceeds thereof to prepay certain scheduled principal
installments in respect of the Tranche B Term Loans; and
WHEREAS, Company and Lenders wish to amend the Credit Agreement to
permit Company to enter into the transactions described above on the terms and
conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SUBSECTION 1.1: CERTAIN DEFINED TERMS
A. AMENDMENTS TO EXISTING DEFINITIONS. Certain definitions contained in
subsection 1.1 of the Credit Agreement are hereby amended as follows:
(i) The definition of "CONSOLIDATED NET WORTH" is hereby amended by
deleting it in its entirety and substituting therefor the following:
"CONSOLIDATED NET WORTH" means, as at any date of determination, (i)
the sum of the capital stock and additional paid-in capital plus retained
earnings (or minus accumulated deficits) plus (ii) an amount equal to any
write-downs taken to the item designated as "Intangibles" on the
consolidated balance sheet of Company and its Subsidiaries during the
period from the Fourth Amendment Effective Date to and including December
31, 1998 plus (iii) an amount equal to any asset write-downs associated
with any Asset Sale constituting a Specified Asset Sale/Financing, in each
case net of any capital gains realized in respect of the assets that are
the subject of such Asset Sale minus (iv) any loans to shareholders or
other items which would properly be excluded in the calculation of net
worth, all of the foregoing as determined on a consolidated basis for
Company and its Subsidiaries in conformity with GAAP.
(ii) Each of the definitions of "COMPANY PLEDGE AGREEMENT", "COMPANY
SECURITY AGREEMENT", "SUBSIDIARY PLEDGE AGREEMENT", "SUBSIDIARY SECURITY
AGREEMENT", "SUBSIDIARY TRADEMARK SECURITY AGREEMENT" and "SUBSIDIARY PATENT
SECURITY AGREEMENT" is hereby amended by adding the phrase "(including pursuant
to any amendment and restatement thereof (or to the form thereof), in the form
attached to the Fourth Amendment, pursuant to which Collateral Agent is made the
secured party thereunder)" immediately after the phrase "otherwise modified from
time to time" contained therein.
(iii) The definition of "LOAN DOCUMENTS" is hereby amended by deleting
it in its entirety and substituting therefor the following:
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letters of
Credit (and any applications for, or reimbursement agreements or other
documents or certificates executed by Company in favor of an Issuing Lender
relating to, the Letters of Credit), the Subsidiary Guaranty, the
Collateral Documents and the Intercreditor Agreement.
(iv) The definition of "SUBSIDIARY GUARANTY" is hereby amended by
adding the phrase "(including pursuant to any amendment and restatement thereof,
in the form attached to the Fourth Amendment, pursuant to which Collateral Agent
is made the agent for and representative of Existing Lenders, New Lenders and
certain other parties thereunder)" immediately after the phrase "otherwise
modified from time to time" contained therein.
B. ADDITION OF NEW DEFINITIONS. Subsection 1.1 of the Credit Agreement is
hereby further amended by adding thereto the following definitions which shall
be inserted in proper alphabetical order:
"CLOSING DATE MORTGAGED PROPERTY" has the meaning assigned to that
term in subsection 4.1K.
"CLOSING DATE MORTGAGES" has the meaning assigned to that term in
subsection 4.1K.
"COLLATERAL AGENT" means BTCo, in its capacity as Collateral Agent
under the Subsidiary Guaranty, the Shared Collateral Documents and the
Intercreditor Agreement, and also means and includes any successor
Collateral Agent appointed in accordance with the terms
of the Intercreditor Agreement.
"EXISTING LENDERS' SHARE" means, as at any date of determination (i)
prior to such time as the Tranche B Term Loans and the New Term Loans have
been paid in full, a fraction the numerator of which is the aggregate
outstanding principal balance of the Tranche B Term Loans and the
denominator of which is the sum of the aggregate outstanding principal
balance of the Tranche B Term Loans plus the aggregate outstanding
principal balance of the New Term Loans, and (ii) from and after such time
as the Tranche B Term Loans and the New Term Loans have been paid in full,
a percent equal to 100%.
"FOURTH AMENDMENT" means that certain Fourth Amendment to Credit
Agreement dated as of November 14, 1997 by and among Company and Lenders.
"FOURTH AMENDMENT EFFECTIVE DATE" has the meaning assigned to that
term in the Fourth Amendment.
"HEADQUARTERS ASSET SALE" means an Asset Sale with respect to the
Headquarters Facility.
"HEADQUARTERS FACILITY" means the Closing Date Mortgaged Property
located in Stratford, Connecticut.
"HEADQUARTERS FINANCING" means Indebtedness in an original principal
amount equal to not less than 70% of the appraised value of the
Headquarters Facility secured solely by a Lien on the Headquarters
Facility; provided that, subject to customary exceptions for non-recourse
real estate financings, the holders of such Indebtedness shall have
recourse solely to such security and no personal recourse may be had
against Company or any of its Subsidiaries for the payment of the principal
of or interest or premium on such Indebtedness.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement,
dated of even date with the Fourth Amendment and substantially in the form
of Annex __ attached to the Fourth Amendment, by and among Administrative
Agent, New Agent, Collateral Agent, Loan Parties (by way of acknowledgment)
and the other Persons that may from time to time become parties thereto in
accordance with the terms thereof, as such Intercreditor Agreement may be
amended, restated, supplemented or otherwise modified from time to time.
"LIQUIDITY LOAN" means the Indebtedness evidenced by that certain
Convertible Promissory Note Due January 30, 1998 between Company and BTCo
dated as of July 31, 1997.
"MELBOURNE ASSET SALE" means an Asset Sale with respect to (i) the
Closing Date Mortgaged Property located in Melbourne, Florida and the other
assets and operations of Company associated therewith, or (ii) the stock of
a newly-created Subsidiary of Company to which such Closing Date Mortgaged
Property and other assets and operations have been transferred in
contemplation of such Asset Sale.
"NEW AGENT" means BTCo or its successor acting as administrative agent
under the New Credit Agreement.
"NEW CREDIT AGREEMENT" means that certain Credit Agreement dated as of
November 14, 1997 by and among Dictaphone Corporation, New Lenders, Morgan
Stanley Senior Funding, Inc., as syndication agent, and BTCo, as
administrative agent and collateral agent for New Lenders, as in effect on
the Fourth Amendment Effective Date and as it may thereafter be amended,
supplemented or otherwise modified from time to time.
"NEW EQUITY" means not less than $35,000,000 in new equity
contributions made to Company by the Stonington Fund on the Fourth
Amendment Effective Date.
"NEW LENDERS" means the financial institutions party to the New Credit
Agreement as lenders.
"NEW LENDERS' SHARE" means, as at any date of determination, a
fraction the numerator of which is the aggregate outstanding principal
balance of the New Term Loans and the denominator of which is the sum of
the aggregate outstanding principal balance of the Tranche B Term Loans
plus the aggregate outstanding principal balance of the New Term Loans.
"NEW TERM LOANS" means loans made by New Lenders to Company pursuant
to the New Credit Agreement in an aggregate principal amount not to exceed
$62,750,000 at any time outstanding.
"SHARED COLLATERAL DOCUMENTS" means the Collateral Documents other
than the Collateral Account Agreement and the Closing Date Mortgages.
"SPECIFIED ASSET SALE/FINANCING" means each of the Headquarters Asset
Sale, the Headquarters Financing, the Melbourne Asset Sale and/or the Swiss
Asset Sale.
"SWISS ASSET SALE" means an Asset Sale with respect to any real
property assets owned by Swiss Sub as of the Fourth Amendment Effective
Date.
1.2 AMENDMENTS TO SUBSECTION 2.1A: COMMITMENTS.
A. CLEAN-DOWN OF REVOLVING LOANS. Subsection 2.1A(iii) of the Credit
Agreement is hereby amended by deleting the second paragraph thereof in its
entirety and substituting therefor the following:
"Anything contained in this Agreement to the contrary notwithstanding,
the Revolving Loans and the Revolving Loan Commitments shall be subject to
the limitation that in no event shall the Total Utilization of Revolving
Loan Commitments at any time exceed the Revolving Loan Commitments then in
effect."
B. CLEAN-DOWN OF SWING LINE LOANS. Subsection 2.1A(iv) of the Credit
Agreement is hereby amended by deleting the second paragraph thereof in its
entirety and substituting therefor the following:
"Anything contained in this Agreement to the contrary notwithstanding,
the Swing Line Loans and the Swing Line Loan Commitment shall be subject to
the limitation that in no event shall the Total Utilization of Revolving
Loan Commitments at any time exceed the Revolving Loan Commitments then in
effect."
1.3 AMENDMENTS TO SUBSECTION 2.4B: PREPAYMENTS AND
REDUCTIONS IN COMMITMENTS
A. MANDATORY PREPAYMENT EVENTS. Subsection 2.4B(iii) of the Credit
Agreement is hereby amended by deleting it in its entirety and substituting
therefor the following:
"(iii) Mandatory Prepayments and Mandatory Reductions of Revolving
Loan Commitments.
(a) Prepayments From New Equity and New Term Loans. On the Fourth
Amendment Effective Date, (1) Company shall apply the proceeds of the
New Equity first to prepay the Liquidity Loan in full and second, to
the full extent of the remaining amount of such proceeds, to prepay
all outstanding Revolving Loans (but not to reduce the Revolving Loan
Commitments in connection therewith), and (2) Company shall apply the
proceeds of the New Term Loans (x) to prepay the Tranche A Term Loans
in full and (y) to prepay $3,000,000 in outstanding principal amount
of the Tranche B Term Loans, such prepayment to be applied to the next
four remaining scheduled installments of principal of the Tranche B
Term Loans set forth in subsection 2.4A(ii) in forward order of
maturity.
(b) Prepayments and Reductions from Specified Asset
Sale/Financings. On the date of receipt by Company or any of its
Subsidiaries of any Cash Proceeds of an Asset Sale constituting a
Specified Asset Sale/Financing or the Cash proceeds of any
Headquarters Financing, Company shall prepay the Tranche B Term Loans
in an amount (each a "NET SASF PROCEEDS AMOUNT") equal to the Net Cash
Proceeds of such Asset Sale or the Cash proceeds (net of reasonable
costs and expenses associated therewith, including without limitation
reasonable legal fees and expenses) of such Headquarters Financing, as
the case may be; provided that, anything contained herein to the
contrary notwithstanding, (1) Company shall be entitled to retain
(without any corresponding prepayment under this subsection
2.4B(iii)(b)) 100% of all Net SASF Proceeds Amounts until such time as
the sum (the "AGGREGATE RETAINED AMOUNT") of all such retained Net
SASF Proceeds Amounts equals $10,000,000, and (2) from and after such
time as the Aggregate Retained Amount equals $10,000,000, Company
shall be entitled to retain (without any corresponding prepayment
under this subsection 2.4B(iii)(b)) 50% of any Net SASF Proceeds
Amounts not included in the Aggregate Retained Amount. Any prepayments
of the Tranche B Term Loans pursuant to this subsection 2.4B(iii)(b)
shall be applied to the remaining scheduled installments of principal
of the Tranche B Term Loans set forth in subsection 2.4A(ii) in
forward order of maturity.
(c) Prepayments and Reductions from Other Asset Sales. On the
date of receipt by Company or any of its Subsidiaries of any Cash
Proceeds of any Asset Sale not constituting a Specified Asset
Sale/Financing, (1) Company shall prepay the Tranche B Term Loans in
an amount equal to Existing Lenders' Share of the Net Cash Proceeds of
such Asset Sale and (2) to the extent Existing Lenders' Share of the
Net Cash Proceeds of such Asset Sale exceeds the aggregate outstanding
principal amount of the Tranche B Term Loans, Company shall prepay in
an amount equal to such excess first the Swing Line Loans to the full
extent thereof and second the Revolving Loans, and the Revolving Loan
Commitments shall be permanently reduced, in an amount equal to such
excess; provided that, anything contained herein to the contrary
notwithstanding, to the extent any portion of New Lenders' Share of
any Net Cash Proceeds of any such Asset Sale are not applied to prepay
the New Term Loans, Company shall promptly make an additional
prepayment of the Tranche B Term Loans, Swing Line Loans or Revolving
Loans, as the case may be (and, if applicable, the Revolving Loan
Commitments shall be permanently reduced), in the manner described
above in an amount equal to such portion not so applied to prepay the
New Term Loans.
(d) Prepayments and Reductions Due to Issuance of Other Debt or
Equity Securities. On the date of receipt by Company or any of its
Subsidiaries of the Cash proceeds (any such proceeds, net of
underwriting discounts and commissions and other reasonable costs and
expenses associated therewith, including without limitation reasonable
legal fees and expenses, being "NET SECURITIES PROCEEDS") from the
issuance of any debt or equity Securities of Company or any of its
Subsidiaries after the Fourth Amendment Effective Date (other than
Cash proceeds of any Headquarters Financing or any other Indebtedness
permitted under subsection 7.1), (1) Company shall prepay the Tranche
B Term Loans in an amount equal to Existing Lenders' Share of such Net
Securities Proceeds and (2) to the extent Existing Lenders' Share of
such Net Securities Proceeds exceeds the aggregate outstanding
principal amount of the Tranche B Term Loans, Company shall prepay in
an amount equal to such excess first the Swing Line Loans to the full
extent thereof and second the Revolving Loans, and the Revolving Loan
Commitments shall be permanently reduced, in an amount equal to such
excess; provided that to the extent any portion of New Lenders' Share
of any such Net Securities Proceeds are not applied to prepay the New
Term Loans, Company shall promptly make an additional prepayment of
the Tranche B Term Loans, Swing Line Loans or Revolving Loans, as the
case may be (and, if applicable, the Revolving Loan Commitments shall
be permanently reduced), in the manner described above in an amount
equal to such portion not so applied to prepay the New Term Loans.
(e) Prepayments and Reductions from Receivables Programs. On the
date of receipt by Company or any of its Subsidiaries of any Cash
Proceeds of Receivables Program, (1) Company shall prepay the Tranche
B Term Loans in an amount equal to Existing Lenders' Share of the Net
Cash Proceeds of such Receivables Program and (2) to the extent
Existing Lenders' Share of the Net Cash Proceeds of such Receivables
Program exceeds the aggregate outstanding principal amount of the
Tranche B Term Loans, Company shall prepay in an amount equal to such
excess first the Swing Line Loans to the full extent thereof and
second the Revolving Loans, and the Revolving Loan Commitments shall
be permanently reduced, in an amount equal to such excess; provided
that to the extent any portion of New Lenders' Share of any Net Cash
Proceeds of any Receivables Program are not applied to prepay the New
Term Loans, Company shall promptly make an additional prepayment of
the Tranche B Term Loans, Swing Line Loans or Revolving Loans, as the
case may be (and, if applicable, the Revolving Loan Commitments shall
be permanently reduced), in the manner described above in an amount
equal to such portion not so applied to prepay the New Term Loans.
(f) Prepayments and Reductions Due to Reversion of Surplus Assets
of Pension Plans. On the date of return to Company or any of its
Subsidiaries of any surplus assets of any pension plan of Company or
any of its Subsidiaries, (1) Company shall prepay the Tranche B Term
Loans in an amount equal to Existing Lenders' Share of an amount (the
"NET REVERSION AMOUNT") equal to 100% of such returned surplus assets,
net of transaction costs and expenses incurred in obtaining such
return, including incremental taxes payable as a result thereof, and
(2) to the extent Existing Lenders' Share of the Net Reversion Amount
exceeds the aggregate outstanding principal amount of the Tranche B
Term Loans, Company shall prepay in an amount equal to such excess
first the Swing Line Loans to the full extent thereof and second the
Revolving Loans, and the Revolving Loan Commitments shall be
permanently reduced, in an amount equal to such excess; provided that
to the extent any portion of New Lenders' Share of any Net Reversion
Amount is not applied to prepay the New Term Loans, Company shall
promptly make an additional prepayment of the Tranche B Term Loans,
Swing Line Loans or Revolving Loans, as the case may be (and, if
applicable, the Revolving Loan Commitments shall be permanently
reduced), in the manner described above in an amount equal to such
portion not so applied to prepay the New Term Loans.
(g) Prepayments and Reductions from Consolidated Excess Cash
Flow. No later than the date occurring ninety (90) days after the end
of each Fiscal Year, commencing with Fiscal Year 1997, (1) Company
shall prepay the Tranche B Term Loans in an amount (the "EXCESS CASH
FLOW REPAYMENT AMOUNT") equal to Existing Lenders' Share of 75% of
Consolidated Excess Cash Flow and (2) to the extent the Excess Cash
Flow Repayment Amount exceeds the aggregate outstanding principal
amount of the Tranche B Term Loans, Company shall prepay in an amount
equal to such excess first the Swing Line Loans to the full extent
thereof and second the Revolving Loans, and the Revolving Loan
Commitments shall be permanently reduced, in an amount equal to such
excess; provided that to the extent any portion of New Lenders' Share
of 75% of Consolidated Excess Cash Flow for any Fiscal Year is not
applied to prepay the New Term Loans, Company shall promptly make an
additional prepayment of the Tranche B Term Loans, Swing Line Loans or
Revolving Loans, as the case may be (and, if applicable, the Revolving
Loan Commitments shall be permanently reduced), in the manner
described above in an amount equal to such portion not so applied to
prepay the New Term Loans.
(h) Calculations of Net Proceeds Amounts; Additional Prepayments
and Reductions Based on Subsequent Calculations. Concurrently with any
prepayment of the Loans and/or reduction of the Revolving Loan
Commitments pursuant to subsections 2.4B(iii)(b)-(g), Company shall
deliver to Agent an Officers' Certificate demonstrating the
calculation of the amount (the "NET PROCEEDS AMOUNT") of the
applicable Net SASF Proceeds Amount, Net Cash Proceeds of Asset Sale,
Net Securities Proceeds, Net Cash Proceeds of Receivables Program, Net
Reversion Amount or Excess Cash Flow Repayment Amount, as the case may
be, that gave rise to such prepayment and/or reduction (and, if
applicable, the calculation of Existing Lenders' Share thereof). In
the event that Company shall subsequently determine that the actual
Net Proceeds Amount was greater than the amount set forth in such
Officers' Certificate, Company shall promptly make an additional
prepayment of the Loans (and/or, if applicable, the Revolving Loan
Commitments shall be permanently reduced), in the manner described
above in the applicable subsection of this subsection 2.4B(iii), in an
amount equal to the amount of such excess (or, if applicable, Existing
Lenders' Share thereof), and Company shall concurrently therewith
deliver to Agent an Officers' Certificate demonstrating the derivation
of the additional Net Proceeds Amount resulting in such excess (and,
if applicable, the calculation of Existing Lenders' Share thereof).
(i) Prepayments Due to Reductions or Restrictions of Revolving
Loan Commitments. Company shall from time to time prepay first the
Swing Line Loans and second the Revolving Loans to the extent
necessary so that the Total Utilization of Revolving Loan Commitments
shall not at any time exceed the Revolving Loan Commitments then in
effect.
(j) Reductions of Revolving Loan Commitments Not Limited to
Amount of Revolving Loans Outstanding. The amount of any required
reduction of the Revolving Loan Commitments pursuant to any provision
of this subsection 2.4B(iii) shall not be affected by the fact that
the outstanding principal amount of Revolving Loans at the time of
such reduction is less than the amount of such reduction."
B. APPLICATION OF CERTAIN MANDATORY PREPAYMENTS. Subsection 2.4B(iv)(b) of
the Credit Agreement is hereby amended by deleting it in its entirety and
substituting therefor the following:
"(b) Application of Certain Mandatory Prepayments of Tranche B
Term Loans to the Scheduled Installments of Principal Thereof. Any
mandatory prepayments of the Tranche B Term Loans pursuant to
subsections 2.4B(iii)(c)-(g) (and any related such mandatory
prepayments pursuant to subsection 2.4B(iii)(h)) shall be applied to
reduce the remaining scheduled installments of principal of the
Tranche B Term Loans set forth in subsection 2.4A(ii) in inverse order
of maturity."
1.4 AMENDMENT TO SUBSECTION 5.1E: COLLATERAL DOCUMENTS.
Subsection 5.1E of the Credit Agreement is hereby amended by deleting
it in its entirety and substituting therefor the following:
"E. COLLATERAL DOCUMENTS. The security interests created in favor
of Administrative Agent or Collateral Agent, as the case may be, under
the Collateral Documents will at all times from and after the Closing
Date constitute, as security for the obligations purported to be
secured thereby, a legal, valid and enforceable security interest in
and Lien on all of the Collateral referred to therein in favor of
Administrative Agent or Collateral Agent, as the case may be, for the
benefit of Lenders (and, in the case of the Shared Collateral
Documents, New Lenders), perfected and prior to the rights of all
third persons (subject to Liens consented to in writing by
Administrative Agent or Collateral Agent, as the case may be, with
respect to such Collateral and other Liens permitted by subsection
7.2) in accordance with the requirements of all applicable Collateral
Documents. No consents, filings or recordings are required in order to
perfect (or maintain the perfection or priority of) the security
interests purported to be created by any of the Collateral Documents,
other than such as have been obtained and which remain in full force
and effect and Uniform Commercial Code financing statements to be
filed, or delivered to Administrative Agent or Collateral Agent, as
the case may be, for filing, on the Closing Date and periodic Uniform
Commercial Code continuation filings or as otherwise specified by the
terms of any applicable Collateral Document."
1.5 AMENDMENTS TO SUBSECTION 6.9: EXECUTION OF SUBSIDIARY GUARANTY
AND COLLATERAL DOCUMENTS BY CERTAIN SUBSIDIARIES AND FUTURE
SUBSIDIARIES.
Subsection 6.9A of the Credit Agreement is hereby amended by deleting
it in its entirety and substituting therefor the following:
A. EXECUTION OF SUBSIDIARY GUARANTY, COLLATERAL DOCUMENTS AND
ACKNOWLEDGMENT TO INTERCREDITOR AGREEMENT. In the event that any Domestic
Subsidiary existing as of the date hereof (other than U.S. Dictaphone)
hereafter owns or acquires assets with an aggregate fair market value
(without netting such fair market value against any liability of such
Subsidiary) exceeding $150,000, or in the event that any Person becomes a
Domestic Subsidiary after the date hereof, Company will promptly notify
Administrative Agent and Collateral Agent of that fact and cause such
Subsidiary to execute and deliver to Collateral Agent (i) a counterpart of
the Subsidiary Guaranty, (ii) a Subsidiary Pledge Agreement, a Subsidiary
Security Agreement, a Subsidiary Trademark Security Agreement, a Subsidiary
Patent Security Agreement and (if applicable) Additional Mortgages, and
(iii) an acknowledgment to the Intercreditor Agreement and to take all such
further action and execute all such further documents and instruments as
may be reasonably required to grant and perfect in favor of Collateral
Agent, for the benefit of Lenders and New Lenders, a first-priority
security interest (subject to Permitted Encumbrances) in all of the Real
Property Assets and all of the personal property assets of such Subsidiary
described in the applicable Collateral Documents."
1.6 AMENDMENTS TO SUBSECTIONS 6.10 AND 6.11:
ADDITIONAL MORTGAGES; ASSIGNABILITY AND
RECORDING OF LEASE AGREEMENTS.
Each of subsections 6.9B, 6.10 and 6.11 of the Credit Agreement is
hereby amended by deleting each reference to the term "Administrative Agent"
contained therein and substituting therefor the term "Collateral Agent".
1.7 AMENDMENTS TO SUBSECTION 7.1: INDEBTEDNESS.
Subsection 7.1 of the Credit Agreement is hereby amended by deleting
the word "and" at the end of subsection 7.1(vii), by renumbering subsection
7.1(viii) as subsection 7.1(x), and by adding new subsections 7.1(viii) and
7.1(ix) thereto as follows:
"(viii) Company may become and remain liable with
respect to Indebtedness in respect of the New Term Loans;
(ix) Company may become and remain liable with
respect to the Headquarters Financing; and"
1.8 AMENDMENTS TO SUBSECTION 7.2A: PROHIBITION ON LIENS.
Subsection 7.2 of the Credit Agreement is hereby amended by deleting
the word "and" at the end of subsection 7.2(v), by renumbering subsection
7.2(vi) as subsection 7.2(vii), and by adding a new subsection 7.2(vi) thereto
as follows:
"(vi) Liens encumbering the Headquarters Facility
to secure the Headquarters Financing; and"
1.9 AMENDMENTS TO SUBSECTION 7.3: INVESTMENTS.
Subsection 7.3(viii) of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting therefor the following:
"(viii) Company may make loans to members of senior management of
Company, in an aggregate principal amount not to exceed $1,700,000 at any
time outstanding, the proceeds of which are used solely to purchase Company
Common Stock; "
1.10 AMENDMENTS TO SUBSECTION 7.4: CONTINGENT OBLIGATIONS.
Subsection 7.4(x) of the Credit Agreement is hereby amended by
deleting the reference to "$1,500,000" contained therein and substituting
therefor "$3,000,000".
1.11 AMENDMENTS TO SUBSECTION 7.6: FINANCIAL COVENANTS
A. MAXIMUM LEVERAGE RATIO. Subsection 7.6A of the Credit Agreement is
hereby amended by deleting the table set forth therein in its entirety and
substituting therefor the following:
PERIOD MAXIMUM LEVERAGE RATIO
October 1, 1997 - December 31, 1997 9.40:1.00
January 1, 1998 - March 31, 1998 9.40:1.00
April 1, 1998 - June 30, 1998 8.60:1.00
July 1, 1998 - September 30, 1998 8.50:1.00
October 1, 1998 - December 31, 1998 7.90:1.00
January 1, 1999 - March 31, 1999 7.70:1.00
April 1, 1999 - June 30, 1999 7.50:1.00
July 1, 1999 - September 30, 1999 7.20:1.00
October 1, 1999 - December 31, 1999 6.90:1.00
January 1, 2000 - March 31, 2000 6.80:1.00
April 1, 2000 - June 30, 2000 6.70:1.00
July 1, 2000 - September 30, 2000 6.50:1.00
October 1, 2000 - December 31, 2000 6.30:1.00
January 1, 2001 - March 31, 2001 6.10:1.00
April 1, 2001 - June 30, 2001 5.90:1.00
July 1, 2001 - September 30, 2001 5.60:1.00
October 1, 2001 - December 31, 2001 5.30:1.00
January 1, 2002 - March 31, 2002 5.10:1.00
April 1, 2002 - June 30, 2002 4.90:1.00
July 1, 2002 - September 30, 2002 4.70:1.00
October 1, 2002 - December 31, 2002 4.40:1.00
B. MINIMUM CONSOLIDATED EBITDA. Subsection 7.6B of the Credit Agreement is
hereby amended by deleting the table set forth therein in its entirety and
substituting therefor the following:
MINIMUM CONSOLIDATED
DATE EBITDA
December 31, 1997 39,000,000
March 31, 1998 40,000,000
June 30, 1998 44,000,000
September 30, 1998 46,000,000
December 31, 1998 48,000,000
March 31, 1999 49,000,000
June 30, 1999 50,000,000
September 30, 1999 52,000,000
December 31, 1999 55,000,000
March 31, 2000 56,000,000
June 30, 2000 57,000,000
September 30, 2000 58,000,000
December 31, 2000 60,000,000
March 31, 2001 62,000,000
June 30, 2001 64,000,000
September 30, 2001 67,000,000
December 31, 2001 70,000,000
March 31, 2002 72,000,000
June 30, 2002 74,000,000
September 30, 2002 77,000,000
December 31, 2002 80,000,000
<PAGE>
C. MINIMUM CONSOLIDATED NET WORTH. Subsection 7.6C of the Credit Agreement
is hereby amended by deleting the table set forth therein in its entirety and
substituting therefor the following:
MINIMUM
PERIOD CONSOLIDATED NET WORTH
October 1, 1997 - December 31, 1997 120,000,000
January 1, 1998 - March 31, 1998 120,000,000
April 1, 1998 - June 30, 1998 120,000,000
July 1, 1998 - September 30, 1998 125,000,000
October 1, 1998 - December 31, 1998 130,000,000
January 1, 1999 - March 31, 1999 133,000,000
April 1, 1999 - June 30, 1999 136,000,000
July 1, 1999 - September 30, 1999 140,000,000
October 1, 1999 - December 31, 1999 145,000,000
January 1, 2000 - March 31, 2000 150,000,000
April 1, 2000 - June 30, 2000 155,000,000
July 1, 2000 - September 30, 2000 160,000,000
October 1, 2000 - December 31, 2000 165,000,000
January 1, 2001 - March 31, 2001 170,000,000
April 1, 2001 - June 30, 2001 175,000,000
July 1, 2001 - September 30, 2001 180,000,000
October 1, 2001 - December 31, 2001 190,000,000
January 1, 2002 - March 31, 2002 200,000,000
April 1, 2002 - June 30, 2002 210,000,000
July 1, 2002 - September 30, 2002 220,000,000
October 1, 2002 - December 31, 2002 230,000,000
D. MINIMUM INTEREST COVERAGE RATIO. Subsection 7.6D of the Credit Agreement
is hereby amended by deleting the table set forth therein in its entirety and
substituting therefor the following:
MINIMUM INTEREST
PERIOD COVERAGE RATIO
October 1, 1997 - December 31, 1998 0.70:1.00
January 1, 1999 - March 31, 1999 0.75:1.00
April 1, 1999 - June 30, 1999 0.80:1.00
July 1, 1999 - September 30, 1999 0.90:1.00
October 1, 1999 - June 30, 2000 1.00:1.00
July 1, 2000 - September 30, 2000 1.03:1.00
October 1, 2000 - December 31, 2000 1.05:1.00
January 1, 2001 - March 31, 2001 1.40:1.00
April 1, 2001 - June 30, 2001 1.35:1.00
July 1, 2001 - December 31, 2001 1.30:1.00
January 1, 2002 - March 31, 2002 1.35:1.00
April 1, 2001 - June 30, 2002 1.45:1.00
July 1, 2002 - September 30, 2002 1.55:1.00
October 1, 2001 - December 31, 2002 1.70:1.00
1.12 AMENDMENTS TO SUBSECTION 7.7: RESTRICTION ON FUNDAMENTAL
CHANGES; ASSET SALES AND ACQUISITIONS.
A. MERGERS. Subsection 7.7(i) of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting therefor the following:
"(i) any Subsidiary of Company may be merged with or into Company or any
wholly-owned Subsidiary of Company, or be liquidated, wound up or dissolved,
or all or any part of its business, property or assets may be conveyed, sold,
leased, transferred or otherwise disposed of, in one transaction or a series
of transactions, to Company or any wholly-owned Subsidiary of Company;
provided that, in the case of such a merger, Company or such wholly-owned
Subsidiary (or, in the case of a merger of Company with and into U.S.
Dictaphone, U.S. Dictaphone) shall be the continuing or surviving corporation;
provided further that, in the case of any such merger of a Domestic Subsidiary
and a Foreign Subsidiary, the Domestic Subsidiary shall be the surviving
corporation; provided further that U.S. Dictaphone may only merge with
Company; and provided further that, in the case of a merger of Company with
U.S. Dictaphone, (a) in the event U.S. Dictaphone is the continuing or
surviving corporation in such merger, U.S. Dictaphone shall expressly assume,
pursuant to documentation satisfactory in form and substance to Administrative
Agent and its counsel, all of the Obligations of Company under this Agreement
and the other Loan Documents, and (b) in any event the continuing or surviving
corporation in such merger shall enter into (and, if applicable, cause to be
filed or recorded with all relevant governmental authorities) all such
amendments to the Collateral Documents (including without limitation any
Mortgages to which Dictaphone or U.S. Dictaphone is a party at the time of
consummation of such merger but excluding the Company Pledge Agreement), and
take all such other actions, as may reasonably be deemed necessary or
advisable by Collateral Agent in order to insure that the Collateral under
such Collateral Documents continues to secure payment of all applicable
Secured Obligations (as such term is defined in the Intercreditor Agreement);"
B. ASSET SALES. Subsection 7.7(vii) of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting therefor the
following:
"(vii) subject to subsection 7.13, Company and its Subsidiaries (a) may
make Asset Sales constituting Specified Asset Sale/Financings and (b) may make
other Asset Sales of assets having a fair market value not in excess of
$2,000,000 in the aggregate during the term of this Agreement; provided that
(x) the consideration received for the assets that are the subject of any such
Asset Sale described in the foregoing clause (a) or (b) shall be in an amount
at least equal to the fair market value thereof; (y) at least 80% of the
consideration received shall be cash; and (z) the proceeds of such Asset Sales
shall be applied as required by subsection 2.4B(iii)(b) or subsection
2.4B(iii)(c), as the case may be."
1.13 AMENDMENT TO SUBSECTION 7.8: CONSOLIDATED CAPITAL EXPENDITURES.
Subsection 7.8 of the Credit Agreement is hereby amended by deleting it
in its entirety and substituting therefor the following:
"7.8 CONSOLIDATED CAPITAL EXPENDITURES.
Company shall not, and shall not permit its Subsidiaries to, make or
incur Consolidated Capital Expenditures, in any Fiscal Year indicated below,
in an aggregate amount in excess of the corresponding amount (the "MAXIMUM
CONSOLIDATED CAPITAL EXPENDITURES AMOUNT") set forth below opposite such
Fiscal Year; provided that the Maximum Consolidated Capital Expenditures
Amount for any Fiscal Year commencing with Fiscal Year 1998 shall be increased
by an amount equal to the excess, if any, (but in no event more than
$2,000,000) of the Maximum Consolidated Capital Expenditures Amount for the
previous Fiscal Year (as adjusted in accordance with this proviso) over the
actual amount of Consolidated Capital Expenditures for such previous Fiscal
Year:
MAXIMUM CONSOLIDATED
FISCAL YEAR CAPITAL EXPENDITURES
1997 15,000,000
1998 25,000,000
1999 25,000,000
2000 25,000,000
2001 25,000,000
2002 25,000,000"
1.14 AMENDMENT TO SUBSECTION 7.9: RESTRICTION ON LEASES.
Subsection 7.9 of the Credit Agreement is hereby amended by adding the
following proviso immediately after the table set forth therein:
"; provided that, notwithstanding anything to the contrary contained in this
subsection 7.9, Company may enter into a lease (whether an Operating Lease or
a Capital Lease) with respect to the Headquarters Facility following an Asset
Sale of the Headquarters Facility constituting a Specified Asset
Sale/Financing; provided that the Consolidated Rental Payments in respect of
such lease do not exceed $2,000,000 in any Fiscal Year during the term of this
Agreement.
1.15 AMENDMENT TO SUBSECTION 8.13: FAILURE OF SECURITY.
Subsection 8.13 of the Credit Agreement is hereby amended by adding the
phrase "or Collateral Agent, as the case may be," immediately after each
reference to the term "Administrative Agent" contained therein.
1.16 AMENDMENT TO SUBSECTION 9.6: COLLATERAL DOCUMENTS
AND GUARANTIES.
Subsection 9.6 of the Credit Agreement is hereby amended by deleting it
in its entirety and substituting therefor the following:
"9.6 COLLATERAL DOCUMENTS AND GUARANTIES.
A. APPOINTMENT OF ADMINISTRATIVE AGENT IN RESPECT OF INTERCREDITOR
AGREEMENT AND CERTAIN COLLATERAL DOCUMENTS. Each Lender hereby further
authorizes Administrative Agent to enter into the Intercreditor Agreement and
each Collateral Document (other than the Shared Collateral Documents) as agent
and/or secured party on behalf of and for the benefit of Lenders, and each
Lender agrees to be bound by the terms of the Intercreditor Agreement and each
such Collateral Document; provided that, subject to any provision of
subsection 10.6 requiring the consent of any additional Lenders,
Administrative Agent shall not enter into or consent to any amendment,
modification, termination or waiver of any provision contained in the
Intercreditor Agreement or any such Collateral Document without the prior
consent of Requisite Lenders; and provided, further that Administrative Agent
may release any Lien covering any items of Collateral under any such
Collateral Document that are the subject of a sale or other disposition of
assets permitted by this Agreement or to which Requisite Lenders have
consented.
B. APPOINTMENT OF COLLATERAL AGENT IN RESPECT OF SUBSIDIARY GUARANTY,
INTERCREDITOR AGREEMENT AND SHARED COLLATERAL DOCUMENTS. Each Lender hereby
further authorizes and directs Collateral Agent (i) to act as agent for and
representative of Lenders and New Lenders under the Subsidiary Guaranty in the
form attached as Annex A to the Fourth Amendment and (ii) to enter into the
Intercreditor Agreement and each Shared Collateral Document, in the forms
attached as Annex B through Annex H to the Fourth Amendment, as secured party
on behalf of and for the benefit of Lenders and New Lenders, and each Lender
agrees to be bound by the terms of the Subsidiary Guaranty, the Intercreditor
Agreement and each Shared Collateral Document.
C. LIMITATIONS ON LENDERS' RIGHTS IN RESPECT OF SUBSIDIARY GUARANTY AND
COLLATERAL DOCUMENTS. Anything contained in any of the Loan Documents to the
contrary notwithstanding, each Lender agrees that no Lender shall have any
right individually to realize upon any of the Collateral under any Collateral
Document (including without limitation through the exercise of a right of
set-off against call deposits of such Lender in which any funds on deposit in
the Collateral Account may from time to time be invested) or to enforce the
Subsidiary Guaranty, it being understood and agreed that all rights and
remedies under the Collateral Documents and the Subsidiary Guaranty may be
exercised solely by Administrative Agent or Collateral Agent, as the case may
be, for the benefit of Lenders (and, in the case of the Subsidiary Guaranty
and the Shared Collateral Documents, New Lenders) in accordance with the terms
thereof and (in the case of the Subsidiary Guaranty and the Shared Collateral
Documents) the terms of the Intercreditor Agreement."
1.17 AMENDMENT TO EXHIBIT VIII-A: FORM OF COMPLIANCE
CERTIFICATE (MONTHLY).
Exhibit VIII-A annexed to the Credit Agreement is hereby amended by
deleting it in its entirety and substituting therefor a new form of Exhibit
VIII-A in the form of Annex I attached hereto.
1.18 AMENDMENTS TO EXHIBIT VIII-B: FORM OF COMPLIANCE
CERTIFICATE (QUARTERLY/ANNUAL).
Exhibit VIII-B annexed to the Credit Agreement is hereby amended by
deleting it in its entirety and substituting therefor a new form of Exhibit
VIII-B in the form of Annex J attached hereto.
1.19 AMENDMENTS TO EXHIBIT XXII: FORM OF MORTGAGE.
Exhibit XXII annexed to the Credit Agreement is hereby amended by
deleting it in its entirety and substituting therefor a new form of Exhibit XXII
in the form of Annex K attached hereto.
SECTION 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the prior or
concurrent satisfaction, on or before November 30, 1997, of all of the following
conditions (the date of satisfaction of such conditions being referred to herein
as the "FOURTH AMENDMENT EFFECTIVE DATE"):
A. COMPANY DOCUMENTS. On or before the Fourth Amendment Effective Date,
Company shall deliver to Lenders (or to Administrative Agent for Lenders with
sufficient originally executed copies, where appropriate, for each Lender and
its counsel) the following, each, unless otherwise noted, dated the Fourth
Amendment Effective Date:
1. Resolutions of its Board of Directors approving and authorizing the
execution, delivery, and performance of this Amendment, the Intercreditor
Agreement and the amendments and restatements contemplated hereby with respect
to the Shared Collateral Documents to which it is a party, certified as of the
Fourth Amendment Effective Date by its corporate secretary or an assistant
secretary as being in full force and effect without modification or amendment;
2. Signature and incumbency certificates of its officers executing
this Amendment, the Intercreditor Agreement and the amendments and restatements
of such Shared Collateral Documents; and
3. Executed copies of this Amendment, the Intercreditor Agreement and
the amendments and restatements of such Shared Collateral Documents.
B. SUBSIDIARY GUARANTOR DOCUMENTS. On or before the Fourth Amendment
Effective Date, Company shall deliver or cause to be delivered to Lenders (or to
Administrative Agent for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and its counsel) the following with respect
to each Subsidiary Guarantor, each, unless otherwise noted, dated the Fourth
Amendment Effective Date:
1. Resolutions of its Board of Directors approving and authorizing the
execution, delivery, and performance of the Intercreditor Agreement and the
amendments and restatements contemplated hereby with respect to the Shared
Collateral Documents to which it is a party, certified as of the Fourth
Amendment Effective Date by its corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment;
2. Signature and incumbency certificates of its officers executing the
amendments and restatements of such Shared Collateral Documents; and
3. Executed copies of the amendments and restatements of such Shared
Collateral Documents and of an acknowledgement to the Intercreditor Agreement.
C. RECEIPT OF NEW EQUITY FROM STONINGTON FUND. Stonington Fund shall have
contributed the New Equity in cash in an aggregate amount of not less than
$35,000,000, the proceeds of which shall have been applied to the prepayment of
the Liquidity Loan and the Revolving Loans pursuant to subsection 2.4B(iii)(a)
of the Credit Agreement as amended by this Agreement (the "AMENDED AGREEMENT").
D. CLOSING AND FUNDING OF NEW CREDIT AGREEMENT. Company, New Lenders and
New Agent shall have executed and delivered the New Credit Agreement, all
conditions to funding thereunder shall have been satisfied or waived with the
consent of Requisite Lenders, the New Term Loans shall have been made and the
proceeds thereof shall have been applied as provided in subsection 2.4B(iii)(a)
of the Amended Agreement.
E. EXECUTION OF INTERCREDITOR AGREEMENT AND SHARED COLLATERAL DOCUMENTS
BY ADMINISTRATIVE AGENT, NEW AGENT AND COLLATERAL AGENT. Collateral Agent,
Administrative Agent and New Agent shall have executed and delivered the
Intercreditor Agreement. Collateral Agent shall have entered into the amendments
and restatements of the Shared Collateral Documents contemplated hereby.
F. PAYMENT OF AMENDMENT FEE. Company shall have paid to Administrative
Agent, for distribution to each Lender that executes and delivers a counterpart
of this Amendment to Administrative Agent at or prior to 5:00 P.M. (New York
time) on November 14, 1997, an amendment fee in an amount equal to the sum of
(i) 1.00% multiplied by the Tranche B Term Loan Exposure of such Lender plus
(ii) 0.25% multiplied by the Revolving Loan Exposure of such Lender.
G. OPINION OF COMPANY'S COUNSEL. Lenders shall have received originally
executed copies of one or more favorable written opinions of Shearman & Sterling
and Dan Hart, Esq., counsel for Company, in form and substance reasonably
satisfactory to Administrative Agent and its counsel, dated as of the Fourth
Amendment Effective Date and setting forth substantially the matters in the
opinions designated in Annex L-1 and Annex L-2 attached hereto respectively and
as to such other matters as Administrative Agent acting on behalf of Lenders may
reasonably request, together with evidence satisfactory to Administrative Agent
that Company has requested such counsel to deliver such opinion to Lenders.
H. OTHER PROCEEDINGS. On or before the Fourth Amendment Effective Date,
all corporate and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by Administrative Agent, acting on behalf of
Lenders, and its counsel shall be satisfactory in form and substance to
Administrative Agent and such counsel, and Administrative Agent and such counsel
shall have received all such counterpart originals or certified copies of such
documents as Administrative Agent may reasonably request.
SECTION 3. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend the
Credit Agreement in the manner provided herein, Company represents and warrants
to each Lender that the following statements are true, correct and complete:
A. CORPORATE POWER AND AUTHORITY. Company has all requisite corporate power
and authority to enter into this Amendment and to carry out the transactions
contemplated by, and perform its obligations under, the Amended Agreement.
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the other Loan Documents contemplated hereby, and the performance
of the Amended Agreement and such other Loan Documents have been duly authorized
by all necessary corporate action on the part of Company.
C. NO CONFLICT. The execution and delivery by Company of this Amendment
and the other Loan Documents contemplated hereby, and the performance by Company
of the Amended Agreement and such other Loan Documents do not and will not (i)
violate any provision of any law or any governmental rule or regulation
applicable to Company or any of its Subsidiaries, the Certificate or Articles of
Incorporation or Bylaws of Company or any of its Subsidiaries or any order,
judgment or decree of any court or other agency of government binding on Company
or any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Company or any of its Subsidiaries (other than Liens created under any
of the Loan Documents in favor of Agents on behalf of Lenders), or (iv) require
any approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of Company or any of its Subsidiaries.
D. GOVERNMENTAL CONSENTS. The execution and delivery by Company of this
Amendment and the other Loan Documents contemplated hereby, and the performance
by Company of the Amended Agreement and such other Loan Documents do not and
will not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other governmental authority
or regulatory body.
E. BINDING OBLIGATION. This Amendment and the other Loan Documents
contemplated hereby have been duly executed and delivered by Company, and this
Amendment, the Amended Agreement and such other Loan Documents are the legally
valid and binding obligations of Company, enforceable against Company in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT AGREEMENT.
The representations and warranties contained in Section 5 of the Credit
Agreement are and will be true, correct and complete in all material respects on
and as of the Fourth Amendment Effective Date to the same extent as though made
on and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
G. ABSENCE OF DEFAULT. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.
SECTION 4. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(i) On and after the Fourth Amendment Effective Date, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to the "Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement shall mean and be a
reference to the Amended Agreement.
(ii) Except as specifically amended as contemplated by this Amendment,
the Credit Agreement and the other Loan Documents shall remain in full force
and effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any provision
of, or operate as a waiver of any right, power or remedy of Agent or any
Lender under, the Credit Agreement or any of the other Loan Documents.
B. FEES AND EXPENSES. Company acknowledges that all costs, fees and
expenses as described in subsection 10.2 of the Credit Agreement incurred by
Administrative Agent and its counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of
Company.
C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK).
E. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment (other than the provisions of Section 1
hereof, the effectiveness of which is governed by Section 2 hereof) shall become
effective upon the execution of a counterpart hereof by Company, by Requisite
Lenders and by Requisite Class Lenders of Lenders having Tranche B Term Loan
Exposure and upon receipt by Company and Administrative Agent of written or
telephonic notification of such execution and authorization of delivery thereof.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
DICTAPHONE CORPORATION
By: /s/ Joseph Skrzypczak
------------------------------------
Title: Senior Vice President and Chief
Financial Officer
--------------------------------
LENDERS:
BANKERS TRUST COMPANY
By: /s/ Mary Jo Jolly
-----------------------------------
Title: Assistant Vice President
--------------------------------
<PAGE>
NATIONSBANK, N.A. (CAROLINAS)
By: /s/ Robert Wilson
------------------------------------
Title: Vice President
---------------------------------
<PAGE>
DK ACQUISITION PARTNERS, L.P.
by M.H. Davidson & Co.,
its General Partner
By: /s/ Thomas V. Kemper, Jr.
------------------------------------
Title:
---------------------------------
<PAGE>
THE CHASE MANHATTAN BANK
By: /s/ A. Neil Sweeny
-------------------------------------
Title: Vice President
----------------------------------
<PAGE>
THE BANK OF NOVA SCOTIA
By: /s/ A.T.D. Clarke
------------------------------------
Title: Senior Manager
---------------------------------
<PAGE>
BEAR STEARNS INVESTMENT PRODUCTS, INC.
By: /s/ Gregory Hanley
------------------------------------
Title: Vice President
---------------------------------
<PAGE>
PILGRIM AMERICA PRIME RATE TRUST
By: /s/ Thomas C. Hunt
-----------------------------------
Title: Assistant Portfolio Manager
--------------------------------
<PAGE>
MERRILL LYNCH SENIOR
FLOATING RATE FUND, INC.
By: /s/ Gil Marchand
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Title:
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<PAGE>
MERRILL LYNCH PRIME RATE PORTFOLIO
By: /s/ Gil Marchand
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Title:
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<PAGE>
MERRILL LYNCH DEBT STRATEGIES
PORTFOLIO, INC.
By: /s/ Gil Marchand
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Title:
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<PAGE>
ML CBO IV (CAYMAN) LTD.
By Protective Asset Management Company
as Collateral Manager
By: /s/ Mark K. Okada, CFA
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Title: Executive Vice President
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<PAGE>
PAMCO CAYMAN LTD.
By Protective Asset Management Company
as Collateral Manager
By: /s/ Mark K. Okada, CFA
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Title: Executive Vice President
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<PAGE>
FIRST SOURCE FINANCIAL LLP
BY: First Source Financial, Inc., its Agent/Manager
By: /s/ Gary L. Francis
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Title: Senior Vice President
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<PAGE>
MORGAN STANLEY SENIOR FUNDING, INC.
By: /s/ Christopher A. Pucillo
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Title: Vice President
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<PAGE>
FRANKLIN MUTUAL ADVISORS, INC.
By: /s/ Lee Walzer
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Title: Vice President
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<PAGE>
MERRILL LYNCH PIERCE,
FENNER & SMITH INCORPORATED
By: /s/ Neil Brisson
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Title: Director
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CREDIT AGREEMENT
DATED AS OF NOVEMBER 14, 1997
AMONG
DICTAPHONE CORPORATION,
AS BORROWER,
THE LENDERS LISTED HEREIN,
AS LENDERS,
MORGAN STANLEY SENIOR FUNDING, INC.,
AS SYNDICATION AGENT,
AND
BANKERS TRUST COMPANY,
AS ADMINISTRATIVE AGENT
<PAGE>
DICTAPHONE CORPORATION
CREDIT AGREEMENT
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . 2
1.1 Certain Defined Terms . . . . . . . . . . . . . . . 2
1.2 Accounting Terms; Utilization of GAAP for
Purposes of Calculations Under Agreement. . . . . . 26
1.3 Other Definitional Provisions . . . . . . . . . . . 27
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS . . 27
2.1 Commitments; Making of Loans; the Register;
Optional Notes. . . . . . . . . . . . . . . . . . . 27
2.2 Interest on the Loans . . . . . . . . . . . . . . . 30
2.3 Fees. . . . . . . . . . . . . . . . . . . . . . . . 34
2.4 Repayments and Prepayments; General Provisions
Regarding Payments. . . . . . . . . . . . . . . . . 34
2.5 Use of Proceeds . . . . . . . . . . . . . . . . . . 38
2.6 Special Provisions Governing Eurodollar Rate
Loans . . . . . . . . . . . . . . . . . . . . . . . 39
2.7 Increased Costs; Taxes; Capital Adequacy. . . . . . 41
2.8 Obligation of Lenders to Mitigate . . . . . . . . . 46
2.9 Removal of a Lender.. . . . . . . . . . . . . . . . 46
SECTION 3. [INTENTIONALLY OMITTED]. . . . . . . . . . . . 47
SECTION 4. CONDITIONS TO LOANS. . . . . . . . . . . . . . 47
4.1 Certain Conditions to Loans . . . . . . . . . . . . 47
4.2 Additional Conditions to Loans. . . . . . . . . . . 50
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES . . . 51
5.1 Organization, Powers, Qualification, Good
Standing, Business, Subsidiaries and Shared
Collateral Documents. . . . . . . . . . . . . . . . 51
5.2 Authorization of Borrowing, etc.. . . . . . . . . . 52
5.3 Financial Condition . . . . . . . . . . . . . . . . 53
5.4 No Material Adverse Change; No Restricted Junior
Payments. . . . . . . . . . . . . . . . . . . . . . 54
5.5 Title to Properties; Liens. . . . . . . . . . . . . 54
5.6 Litigation; Adverse Facts . . . . . . . . . . . . . 54
5.7 Payment of Taxes. . . . . . . . . . . . . . . . . . 55
5.8. Real Property Collateral . . . . . . . . . . . 55
5.9 Performance of Agreements; Materially Adverse
Agreements. . . . . . . . . . . . . . . . . . . . . 55
5.10 Governmental Regulation. . . . . . . . . . . . 55
5.11 Securities Activities. . . . . . . . . . . . . 56
5.12 Employee Benefit Plans . . . . . . . . . . . . 56
5.13 Certain Fees . . . . . . . . . . . . . . . . . 56
5.14 Environmental Protection . . . . . . . . . . . 57
5.15 Employee Matters . . . . . . . . . . . . . . . 58
5.16 Solvency . . . . . . . . . . . . . . . . . . . 58
5.17 Disclosure . . . . . . . . . . . . . . . . . . 58
SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS. . . . . . . . 59
6.1 Financial Statements and Other Reports. . . . . . . 59
6.2 Corporate Existence, etc. . . . . . . . . . . . . . 65
6.3 Payment of Taxes and Claims; Tax Consolidation. . . 65
6.4 Maintenance of Properties; Insurance. . . . . . . . 65
6.5 Inspection; Lender Meeting. . . . . . . . . . . . . 67
6.6 Compliance with Laws, etc.. . . . . . . . . . . . . 67
6.7 Environmental Disclosure and Inspection . . . . . . 67
6.8 Interest Rate Protection. . . . . . . . . . . . . . 69
6.9 Execution of Subsidiary Guaranty and Shared
Collateral Documents by Certain Subsidiaries and
Future Subsidiaries . . . . . . . . . . . . . . . . 69
6.10 Additional Mortgages . . . . . . . . . . . . . 70
6.11 Assignability and Recording of Lease
Agreements. . . . . . . . . . . . . . . . . . . . . 72
SECTION 7. COMPANY'S NEGATIVE COVENANTS . . . . . . . . . 72
7.1 Indebtedness. . . . . . . . . . . . . . . . . . . . 72
7.2 Liens and Related Matters . . . . . . . . . . . . . 74
7.3 Investments; Joint Ventures . . . . . . . . . . . . 75
7.4 Contingent Obligations. . . . . . . . . . . . . . . 76
7.5 Restricted Junior Payments. . . . . . . . . . . . . 78
7.6 Financial Covenants . . . . . . . . . . . . . . . . 78
7.7 Restriction on Fundamental Changes; Asset Sales
and Acquisitions. . . . . . . . . . . . . . . . . . 81
7.8 Consolidated Capital Expenditures . . . . . . . . . 83
7.9 Restriction on Leases . . . . . . . . . . . . . . . 83
7.10 Sales and Lease-Backs. . . . . . . . . . . . . 84
7.11 Sale or Discount of Receivables. . . . . . . . 84
7.12 Transactions with Shareholders and
Affiliates. . . . . . . . . . . . . . . . . . . . . 84
7.13 Disposal of Subsidiary Stock . . . . . . . . . 85
7.14 Conduct of Business. . . . . . . . . . . . . . 85
7.15 Amendments or Waivers of Stockholders'
Agreement; Amendments of Documents Relating
to Subordinated Indebtedness and
Receivables Program Agreements; Designation
of "Designated Senior Indebtedness". . . . . . 85
7.16 Fiscal Year. . . . . . . . . . . . . . . . . . 86
7.17 Receivables Programs . . . . . . . . . . . . . 86
SECTION 8. EVENTS OF DEFAULT. . . . . . . . . . . . . . . 87
8.1 Failure to Make Payments When Due . . . . . . . . . 87
8.2 Default in Other Agreements . . . . . . . . . . . . 87
8.3 Breach of Certain Covenants . . . . . . . . . . . . 87
8.4 Breach of Warranty. . . . . . . . . . . . . . . . . 87
8.5 Other Defaults Under Loan Documents . . . . . . . . 88
8.6 Involuntary Bankruptcy; Appointment of Receiver,
etc.. . . . . . . . . . . . . . . . . . . . . . . . 88
8.7 Voluntary Bankruptcy; Appointment of Receiver,
etc.. . . . . . . . . . . . . . . . . . . . . . . . 88
8.8 Judgments and Attachments . . . . . . . . . . . . . 89
8.9 Dissolution . . . . . . . . . . . . . . . . . . . . 89
8.10 Employee Benefit Plans . . . . . . . . . . . . 89
8.11 Change in Control. . . . . . . . . . . . . . . 89
8.12 Invalidity of Subsidiary Guaranty. . . . . . . 90
8.13 Failure of Security. . . . . . . . . . . . . . 90
SECTION 9. AGENTS . . . . . . . . . . . . . . . . . . . . 91
9.1 Appointment . . . . . . . . . . . . . . . . . . . . 91
9.2 Powers and Duties; General Immunity . . . . . . . . 91
9.3 Representations and Warranties; No
Responsibility For Appraisal of Creditworthiness. . 93
9.4 Right to Indemnity. . . . . . . . . . . . . . . . . 93
9.5 Successor Administrative Agent. . . . . . . . . . . 94
9.6 Shared Collateral Documents and Guaranties. . . . . 94
SECTION 10. MISCELLANEOUS. . . . . . . . . . . . . . . . . 95
10.1 Assignments and Participations in Loans. . . . 95
10.2 Expenses . . . . . . . . . . . . . . . . . . . 97
10.3 Indemnity. . . . . . . . . . . . . . . . . . . 98
10.4 Set-Off. . . . . . . . . . . . . . . . . . . . 99
10.5 Ratable Sharing. . . . . . . . . . . . . . . . 99
10.6 Amendments and Waivers . . . . . . . . . . . .100
10.7 Independence of Covenants. . . . . . . . . . .101
10.8 Notices. . . . . . . . . . . . . . . . . . . .101
10.9 Survival of Representations, Warranties and
Agreements. . . . . . . . . . . . . . . . . . . . .101
10.10 Failure or Indulgence Not Waiver; Remedies
Cumulative. . . . . . . . . . . . . . . . . . . . .101
10.11 Marshalling; Payments Set Aside. . . . . . . .102
10.12 Severability . . . . . . . . . . . . . . . . .102
10.13 Obligations Several; Independent Nature of
Lenders' Rights . . . . . . . . . . . . . . . . . .102
10.14 Headings . . . . . . . . . . . . . . . . . . .102
10.15 Applicable Law . . . . . . . . . . . . . . . .103
10.16 Successors and Assigns . . . . . . . . . . . .103
10.17 Consent to Jurisdiction and Service of
Process . . . . . . . . . . . . . . . . . . . . . .103
10.18 Waiver of Jury Trial . . . . . . . . . . . . .103
10.19 Confidentiality. . . . . . . . . . . . . . . .104
10.20 Counterparts; Effectiveness. . . . . . . . . .104
Signature pages . . . . . . . . . . . . . . . . . .S-1
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTE
IV-A FORM OF COMPLIANCE CERTIFICATE (MONTHLY)
IV-B FORM OF COMPLIANCE CERTIFICATE
(QUARTERLY/ANNUAL)
V-A FORM OF OPINION OF SHEARMAN & STERLING
V-B FORM OF OPINION OF DAN HART, ESQ.
VI FORM OF OPINION OF O'MELVENY & MYERS
VII FORM OF ASSIGNMENT AGREEMENT
VIII FORM OF CERTIFICATE RE NON-BANK STATUS
IX FORM OF COMPANY PLEDGE AGREEMENT
X FORM OF COMPANY SECURITY AGREEMENT
XI FORM OF SUBSIDIARY GUARANTY
XII FORM OF SUBSIDIARY PLEDGE AGREEMENT
XIII FORM OF SUBSIDIARY SECURITY AGREEMENT
XIV FORM OF SUBSIDIARY TRADEMARK SECURITY
AGREEMENT
XV FORM OF SUBSIDIARY PATENT SECURITY AGREEMENT
XVI FORM OF MORTGAGE
XVII FORM OF INTERCREDITOR AGREEMENT
<PAGE>
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
5.1 SUBSIDIARIES OF COMPANY
5.3 CERTAIN CONTINGENT LIABILITIES, ETC.
5.6 LITIGATION
5.8 REAL PROPERTY
5.12 CERTAIN EMPLOYEE BENEFIT PLAN MATTERS
5.14 ENVIRONMENTAL MATTERS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
<PAGE>
DICTAPHONE CORPORATION
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of November 14, 1997 and entered
into by and among DICTAPHONE CORPORATION, a Delaware corporation ("COMPANY"),
THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each
individually referred to herein as a "LENDER" and collectively as "LENDERS"),
MORGAN STANLEY SENIOR FUNDING, INC., as syndication agent (in such capacity,
"SYNDICATION AGENT"), and BANKERS TRUST COMPANY ("BTCO"), as administrative
agent for Lenders (in such capacity, "ADMINISTRATIVE AGENT") and as collateral
agent for Lenders (in such capacity, "COLLATERAL AGENT").
R E C I T A L S
WHEREAS, Company is party to that certain Credit Agreement dated as of
August 7, 1995, as amended through the date hereof, by and among Company, the
financial institutions party thereto as lenders ("EXISTING LENDERS"),
Nationsbank, N.A. (Carolinas), as documentation agent for Existing Lenders, and
BTCo, as administrative agent for Existing Lenders, pursuant to which Company
currently has outstanding Indebtedness (this and other capitalized terms used in
these recitals without definition being used as defined in subsection 1.1) and
Contingent Obligations in respect of loans and letters of credit;
WHEREAS, the obligations of Company and its Subsidiaries under the
Existing Credit Agreement and the other loan documents executed in connection
therewith are secured by first priority Liens on (i) 100% of the capital stock
of all Domestic Subsidiaries, (ii) 66% of the capital stock of all direct
Foreign Subsidiaries of Company and its Domestic Subsidiaries, and (ii)
substantially all of the other personal property and certain of the real
property of Company and its Domestic Subsidiaries;
WHEREAS, Company also currently has outstanding Indebtedness to BTCo
pursuant to that certain Convertible Promissory Note Due January 30, 1998
between Company and BTCo dated as of July 31, 1997 (the "LIQUIDITY LOAN");
WHEREAS, Stonington Fund has agreed to provide Company with
$35,000,000 in new cash equity contributions, the proceeds of which will be used
by Company to prepay the Liquidity Loan in full and to prepay outstanding
Existing Revolving Loans with no corresponding reduction in the Existing
Revolving Commitments;
WHEREAS, Company has requested Lenders to make additional credit
facilities available to Company under which Company may borrow $62,750,000 in
the form of term loans for the purpose of prepaying the Existing Tranche A Term
Loans in full and certain scheduled principal installments in respect of the
Existing Tranche B Term Loans;
WHEREAS, Company has agreed to secure such additional credit
facilities with Liens on the Shared Collateral, subject to the terms of the
Intercreditor Agreement which provides for a pro rata sharing of the Shared
Collateral by Lenders and Existing Lenders; and
WHEREAS, Lenders have agreed to provide such additional credit
facilities to Company on the terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Agents agree as
follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum obtained by dividing (i) the offered quotation, if any (rounded upward to
the nearest 1/16 of one percent), by BTCo to first class banks in the interbank
Eurodollar market for U.S. dollar deposits of amounts in same day funds
comparable to the principal amount of the Eurodollar Rate Loan of BTCo for which
the Adjusted Eurodollar Rate is then being determined with maturities comparable
to such Interest Period as of approximately 10:00 A.M. (New York time) on such
Interest Rate Determination Date by (ii) a percentage equal to 100% minus the
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable on
such Interest Rate Determination Date to any member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" as defined in Regulation D (or
any successor category of liabilities under Regulation D).
"ADMINISTRATIVE AGENT" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5A.
"AFFECTED LENDER" has the meaning assigned to that term in subsection
2.6C.
"AFFILIATE", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"AGENTS" means Administrative Agent and Syndication Agent.
"AGREEMENT" means this Credit Agreement dated as of November 14, 1997,
as it may be amended, supplemented or otherwise modified from time to time.
"ASSET SALE" means the sale by Company or any of its Subsidiaries to
any Person other than Company or any of its wholly-owned Domestic Subsidiaries
of (i) any of the stock of any Subsidiary of Company, (ii) substantially all of
the assets of any division or line of business of Company or any of its
Subsidiaries, or (iii) any other assets (whether tangible or intangible) of
Company or any of its Subsidiaries other than (a) inventory sold in the ordinary
course of business and (b) any such other assets to the extent that the
aggregate value of such assets sold in any single transaction or related series
of transactions is equal to $250,000 or less.
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in substantially
the form of Exhibit VII annexed hereto.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate or
(y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"BTCO" has the meaning assigned to that term in the introduction to
this Agreement.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in such state are authorized or required by
law or other governmental action to close.
"CANADIAN SUB" means Dictaphone Canada Acquisition Inc.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CASH" means money, currency or a credit balance in a Deposit Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("MOODY'S"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (v) shares of any money market mutual fund that (a)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody's.
"CASH PROCEEDS OF ASSET SALE" means, with respect to any Asset Sale,
Cash payments (including any Cash received by way of deferred payment pursuant
to, or monetization of, a note receivable or otherwise, but only as and when so
received) actually received from such Asset Sale.
"CASH PROCEEDS OF RECEIVABLES PROGRAM" means, with respect to any
Receivables Program, the aggregate amount of cash proceeds received (whether as
proceeds of sales or other financings of accounts receivable or proceeds of
Indebtedness secured by accounts receivable or otherwise) by Company and its
Subsidiaries in connection with such Receivables Program; provided that there
shall be excluded from Cash Proceeds of Receivables Program any cash proceeds
received by Company and its Subsidiaries as a result, directly or indirectly, of
the payment or collection of any accounts receivable included in such
Receivables Program (including without limitation (i) any cash proceeds received
in connection with the sale or financing of additional accounts receivable under
such Receivables Program in replacement of accounts receivable previously sold
or financed under such Receivables Program and subsequently paid or collected
and (ii) any cash proceeds received in respect of any note or similar instrument
issued to Company or any of its Subsidiaries under such Receivables Program
which is payable only in connection with the termination of such Receivables
Program).
"CERTIFICATE RE NON-BANK STATUS" means a certificate substantially in
the form of Exhibit VIII annexed hereto delivered by a Lender to Administrative
Agent pursuant to subsection 2.7B(iii).
"CLOSING DATE" means the date on or before November 30, 1997, on which
the Loans are made.
"CLOSING DATE MORTGAGED PROPERTY" means each "Closing Date Mortgaged
Property" as defined in the Existing Credit Agreement and identified in Schedule
4.1K to the Existing Credit Agreement.
"COLLATERAL" means, collectively, all of the real, personal and mixed
property (including capital stock) in which Liens are purported to be granted by
the Shared Collateral Documents.
"COLLATERAL AGENT" means BTCo, in its capacity as Collateral Agent
under the Subsidiary Guaranty, the Shared Collateral Documents and the
Intercreditor Agreement, and also means and includes any successor Collateral
Agent appointed in accordance with the terms of the Intercreditor Agreement.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by Company or
any of its Subsidiaries in the ordinary course of business of Company or such
Subsidiary.
"COMMITMENT" means the commitment of a Lender to make a Loan to
Company pursuant to subsection 2.1A(i), and "COMMITMENTS" means such commitments
of all Lenders in the aggregate.
"COMPANY" has the meaning assigned to that term in the introduction to
this Agreement.
"COMPANY COMMON STOCK" means the common stock of Company, par value
$0.01 per share.
"COMPANY PLEDGE AGREEMENT" means that certain Amended & Restated
Company Pledge Agreement by and between Company and Collateral Agent dated as of
the Closing Date and substantially in the form of Exhibit IX annexed hereto, as
such Company Pledge Agreement may be amended, restated, supplemented or
otherwise modified from time to time.
"COMPANY SECURITY AGREEMENT" means that certain Amended and Restated
Company Security Agreement by and between Company and Collateral Agent dated as
of the Closing Date and substantially in the form of Exhibit X annexed hereto,
as such Company Security Agreement may be amended, restated, supplemented or
otherwise modified from time to time.
"COMPLIANCE CERTIFICATE" means a certificate, substantially in the
form of (i) Exhibit IV-A annexed hereto, in the case of any such certificate
required to be delivered together with the financial statements described in
subsection 6.1(i), and (ii) Exhibit IV-B annexed hereto, in the case of any such
certificate required to be delivered together with the financial statements
described in subsection 6.1(ii) or 6.1(iii), in each case delivered to
Administrative Agent and Lenders by Company pursuant to subsection 6.1(iv).
"CONFIDENTIAL INFORMATION MEMORANDUM" means that certain Confidential
Senior Debt Syndication Memorandum relating to Company dated July, 1995.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the sum of
(i) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of Company and its
Subsidiaries) by Company and its Subsidiaries during that period that, in
conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated statement of cash
flows of Company and its Subsidiaries plus (ii) to the extent not covered by
clause (i) of this definition, the aggregate of all expenditures by Company and
its Subsidiaries during that period (a) to develop computer software or systems
to be sold, leased or otherwise marketed by Company and its Subsidiaries in the
ordinary course of business (but only to the extent such expenditures are
capitalized on the consolidated balance sheet of Company and its Subsidiaries in
conformity with GAAP) or (b) to acquire (by purchase or otherwise) the business,
property or fixed assets of any Person, or the stock or other evidence of
beneficial ownership of any Person that, as a result of such acquisition,
becomes a Subsidiary of Company plus (iii) the aggregate amount of any
Investments that are (a) made by Company and its Subsidiaries during that period
in Persons engaged in businesses in which Company and its Subsidiaries are
permitted to engage pursuant to subsection 7.14 and (b) designated by Company,
at the time of making such Investments, as being included in Consolidated
Capital Expenditures; provided that, except in calculating Consolidated Excess
Cash Flow, there shall be excluded from Consolidated Capital Expenditures up to
$5,000,000 in any Fiscal Year of expenditures by Company and its Subsidiaries to
purchase tangible personal property that is held for rent or rented to Persons
other than Company or any of its Subsidiaries.
"CONSOLIDATED CURRENT ASSETS" means, as at any date of determination,
the total assets of Company and its Subsidiaries on a consolidated basis which
may properly be classified as current assets in conformity with GAAP, excluding
Cash and Cash Equivalents.
"CONSOLIDATED CURRENT LIABILITIES" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP, excluding the current portions of any Indebtedness.
"CONSOLIDATED EBITDA" means, for any period, the sum of the amounts
for such period of (i) Consolidated Net Income, (ii) Consolidated Interest
Expense, (iii) provisions for taxes based on income, (iv) total depreciation
expense, (v) total amortization expense, and (vi) other non-cash items reducing
Consolidated Net Income less other non-cash items increasing Consolidated Net
Income, all of the foregoing as determined on a consolidated basis for Company
and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED EXCESS CASH FLOW" means, for any period, an amount, if
not less than $0, equal to (i) the sum, without duplication, of the amounts for
such period of (a) Consolidated EBITDA and (b) the Consolidated Working Capital
Adjustment minus (ii) the sum, without duplication, of the amounts for such
period of (a) voluntary and scheduled repayments of Consolidated Total Debt
(excluding repayments of Existing Revolving Loans except to the extent the
Existing Revolving Loan Commitments are permanently reduced in connection with
such repayments), (b) Consolidated Capital Expenditures (net of any proceeds of
any related financings with respect to such expenditures), (c) Consolidated
Interest Expense, and (d) the provision for current taxes based on income of
Company and its Subsidiaries.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company and
its Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements, but
excluding, however, any amounts referred to in subsection 2.3 payable to Agents
and Lenders on or before the Closing Date.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
that there shall be excluded (i) the income (or loss) of any Person (other than
a Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses.
"CONSOLIDATED NET WORTH" means, as at any date of determination, (i)
the sum of the capital stock and additional paid-in capital plus retained
earnings (or minus accumulated deficits) plus (ii) an amount equal to any
write-downs taken to the item designated as "Intangibles" on the consolidated
balance sheet of Company and its Subsidiaries during the period from the Closing
Date to and including December 31, 1998 plus (iii) an amount equal to any asset
write-downs associated with any Asset Sale constituting a Specified Asset
Sale/Financing, in each case net of any capital gains realized in respect of the
assets that are the subject of such Asset Sale minus (iv) any loans to
shareholders or other items which would properly be excluded in the calculation
of net worth, all of the foregoing as determined on a consolidated basis for
Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED RENTAL PAYMENTS" means, for any period, the aggregate
amount of all rents paid or payable by Company and its Subsidiaries on a
consolidated basis during that period under all Capital Leases and Operating
Leases to which Company or any of its Subsidiaries is a party as lessee.
"CONSOLIDATED TOTAL DEBT" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED WORKING CAPITAL" means, as at any date of determination,
the excess of Consolidated Current Assets over Consolidated Current Liabilities.
"CONSOLIDATED WORKING CAPITAL ADJUSTMENT" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which the
Consolidated Working Capital of Company and its Subsidiaries as of the beginning
of such period exceeds (or is less than) the Consolidated Working Capital of
Company and its Subsidiaries as of the end of such period.
"CONTINGENT OBLIGATION", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Interest Rate Agreements and Currency Agreements. Contingent Obligations
shall include, without limitation, (a) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the obligation
of another through any agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(Y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"DICTAPHONE BUSINESS" means the business, operations, properties and
assets of U.S. Dictaphone, German Sub, Swiss Sub, U.K. Sub and Dictaphone Canada
prior to the Acquisition.
"DICTAPHONE CANADA" means Dictaphone Canada Ltd./Ltee., a corporation
organized under the laws of Canada.
"DIRECT FOREIGN SUBSIDIARY OBLIGATIONS" means, collectively, (i) the
outstanding principal amount of any Indebtedness of Foreign Subsidiaries to
Persons other than Company or any of its Subsidiaries and (ii) Contingent
Obligations of Foreign Subsidiaries to Persons other than Company or any of its
Subsidiaries in respect of Commercial Letters of Credit not constituting Letters
of Credit; provided, that, until Swiss Sub is purchased by Company in accordance
with the terms of the Purchase Agreement, Direct Foreign Subsidiary Obligations
shall not include the outstanding principal amount of any Indebtedness of German
Sub to Swiss Sub.
"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
"DOMESTIC SUBSIDIARY" means a Subsidiary of Company that is
incorporated or organized under the laws of a state of the United States of
America.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including, but not limited to, insurance companies, mutual
funds and lease financing companies and (B) any Lender and any Affiliate of any
Lender; provided that no Affiliate of Company shall be an Eligible Assignee.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is, or was at any time, maintained or contributed
to by Company or any of its ERISA Affiliates.
"ENVIRONMENTAL CLAIM" means any written notice of violation, claim,
demand or abatement order received by Company or any of its Subsidiaries from
any governmental authority or any Person for any damage, including, without
limitation, personal injury (including sickness, disease or death), tangible or
intangible property damage, contribution, indemnity, indirect or consequential
damages, damage to the environment, nuisance, pollution, contamination or other
adverse effects on the environment, or for fines, penalties or restrictions, in
each case relating to, resulting from or in connection with any generation, use,
storage, transportation or Release of Hazardous Materials and relating to
Company, any of its Subsidiaries, or any of their respective Affiliates.
"ENVIRONMENTAL LAWS" means all statutes, ordinances, rules,
regulations, and all enforceable plans, policies or decrees of any applicable
governmental or regulatory authority relating to (i) environmental matters,
including, without limitation, those relating to fines, injunctions, penalties,
damages, contribution, cost recovery compensation, losses or injuries resulting
from the Release or threatened Release of Hazardous Materials, (ii) the
generation, use, storage, transportation or disposal of Hazardous Materials, or
(iii) industrial hygiene in any manner applicable to Company or any of its
Subsidiaries or any of their respective properties, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
Section 136 et seq.) and the Emergency Planning and Community Right-to-Know Act
(42 U.S.C. Section 11001 et seq.), each as amended or supplemented, and any
analogous future or present local, state and federal statutes and regulations
promulgated pursuant thereto, each as in effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA AFFILIATE", as applied to any Person, means (i) any corporation
which is, or was at any time, a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of which that
Person is, or was at any time, a member; (ii) any trade or business (whether or
not incorporated) which is, or was at any time, a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the
Internal Revenue Code of which that Person is, or was at any time, a member; and
(iii) any member of an affiliated service group within the meaning of Section
414(m) or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is, or was at any time, a member.
"ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company or any of its ERISA Affiliates from any Pension Plan with
two or more contributing sponsors or the termination of any such Pension Plan
resulting in liability pursuant to Sections 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan pursuant to
Section 4042 of ERISA, or the occurrence of any event or condition described in
Section 4042 of ERISA (other than subsection (a)(4) thereof) which could
reasonably be expected to constitute grounds under ERISA for the termination of,
or the appointment of a trustee to administer, any Pension Plan; (vi) the
imposition of liability on Company or any of its ERISA Affiliates pursuant to
Section 4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA; (vii) the withdrawal by Company or any of its ERISA Affiliates
in a complete or partial withdrawal (within the meaning of Sections 4203 and
4205 of ERISA) from any Multiemployer Plan if there is any potential liability
therefor, or the receipt by Company or any of its ERISA Affiliates of notice
from any Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act
or omission which could reasonably be expected to give rise to the imposition on
Company or any of its ERISA Affiliates of fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under Section 409 or
502(c), (i) or (l) or 4071 of ERISA in respect of any Employee Benefit Plan;
(ix) the assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or the assets
thereof, or against Company or any of its ERISA Affiliates in connection with
any such Employee Benefit Plan; (x) receipt from the Internal Revenue Service of
notice of the failure of any Pension Plan (or any other Employee Benefit Plan
intended to be qualified under Section 401(a) of the Internal Revenue Code) to
qualify under Section 401(a) of the Internal Revenue Code, or the failure of any
trust forming part of any Pension Plan to qualify for exemption from taxation
under Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a
Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"EXISTING ADMINISTRATIVE AGENT" means BTCo or its successor acting as
administrative agent under the Existing Credit Agreement.
"EXISTING CREDIT AGREEMENT" means that certain Credit Agreement dated
as of August 7, 1995 by and among Company, Existing Lenders, NationsBank, N.A.
(Carolinas) as documentation agent, and BTCo, as administrative agent for
Existing Lenders, as in effect on the Closing Date and as it may thereafter be
amended, supplemented or otherwise modified from time to time.
"EXISTING LENDERS" has the meaning assigned to that term in the
recitals to this Agreement.
"EXISTING LENDERS' SHARE" means, as at any date of determination, a
fraction the numerator of which is the aggregate outstanding principal balance
of the Existing Tranche B Term Loans and the denominator of which is the sum of
the aggregate outstanding principal balance of the Existing Tranche B Term Loans
plus the aggregate outstanding principal balance of the Loans.
"EXISTING REVOLVING LOANS" has the meaning assigned to the term
"Revolving Loans" in the Existing Credit Agreement as in effect on the Closing
Date.
"EXISTING REVOLVING LOAN COMMITMENT" and "EXISTING REVOLVING LOAN
COMMITMENTS" have the meanings assigned to the terms "Revolving Loan Commitment"
and "Revolving Loan Commitments" in the Existing Credit Agreement as in effect
on the Closing Date.
"EXISTING TRANCHE A TERM LOANS" has the meaning assigned to the term
"Tranche A Term Loans" in the Existing Credit Agreement as in effect on the
Closing Date.
"EXISTING TRANCHE B TERM LOANS" has the meaning assigned to the term
"Tranche B Term Loans" in the Existing Credit Agreement as in effect on the
Closing Date.
"FACILITIES" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now
or hereafter during the term of this Agreement owned, leased or operated or
heretofore owned by (i) Company or any of its Subsidiaries, (ii) any of
Company's or any such Subsidiary's predecessors by merger or consolidation, or
(iii) any of Company's Affiliates that are directly or indirectly controlled by
Company.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.
"FEE PROPERTY" means a Real Property Asset consisting of a fee
interest in real property.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its Subsidiaries
ending on December 31 of each calendar year.
"FOREIGN SUBSIDIARY" means a Subsidiary of Company other than a
Domestic Subsidiary.
"FOREIGN SUBSIDIARY SUPPORT OBLIGATIONS" means Contingent Obligations
of Company or any Domestic Subsidiary in respect of Direct Foreign Subsidiary
Obligations (including without limitation any such Contingent Obligations in
respect of Letters of Credit supporting any Direct Foreign Subsidiary
Obligations).
"FUNDING AND PAYMENT OFFICE" means the office of Administrative Agent
located at One Bankers Trust Plaza, New York, New York 10006.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set forth
in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GERMAN SUB" means Dictaphone Deutschland GmbH, a corporation
organized under the laws of the Federal Republic of Germany.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"HAZARDOUS MATERIALS" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic substances" or any
other terms intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto; (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any drilling fluids, produced
waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iv) any flammable
substances or explosives; (v) any radioactive materials; (vi) asbestos in any
form that is or could reasonably be expected to become friable; (vii) urea
formaldehyde foam insulation; (viii) electrical equipment which contains any oil
or dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million; (ix) pesticides; and (x) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by any
governmental authority.
"HEADQUARTERS ASSET SALE" means an Asset Sale with respect to the
Headquarters Facility.
"HEADQUARTERS FACILITY" means the Closing Date Mortgaged Property
located in Stratford, Connecticut.
"HEADQUARTERS FINANCING" means Indebtedness in an original principal
amount equal to not less than 70% of the appraised value of the Headquarters
Facility secured solely by a Lien on the Headquarters Facility; provided that,
subject to customary exceptions for non-recourse real estate financings, the
holders of such Indebtedness shall have recourse solely to such security and no
personal recourse may be had against Company or any of its Subsidiaries for the
payment of the principal of or interest or premium on such Indebtedness.
"INDEBTEDNESS", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements and Currency
Agreements constitute Contingent Obligations and not Indebtedness.
"INDEMNITEE" has the meaning assigned to that term in subsection 10.3.
"INTELLECTUAL PROPERTY" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries, taken as a whole.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement,
dated of even date with this Agreement and substantially in the form of Exhibit
XVII annexed hereto, by and among Administrative Agent, Existing Administrative
Agent, Collateral Agent, Loan Parties (by way of acknowledgment) and the other
Persons that may from time to time become parties thereto in accordance with the
terms thereof, as such Intercreditor Agreement may be amended, restated,
supplemented or otherwise modified from time to time.
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan,
each March 15, June 15, September 15 and December 15 of each year, commencing on
the first such date to occur after the Closing Date, and (ii) with respect to
any Eurodollar Rate Loan, the last day of each Interest Period applicable to
such Loan; provided that in the case of each Interest Period of longer than
three months "Interest Payment Date" shall also include each date that is three
months, or an integral multiple thereof, after the commencement of such Interest
Period.
"INTEREST PERIOD" has the meaning assigned to that term in subsection
2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect Company or any of its Subsidiaries
against fluctuations in interest rates.
"INTEREST RATE DETERMINATION DATE" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (other than a Person that prior
to such purchase or acquisition was, or as a result of such purchase or
acquisition becomes, a wholly-owned Domestic Subsidiary), (ii) any direct or
indirect redemption, retirement, purchase or other acquisition for value, by any
Subsidiary of Company from any Person other than Company or any of its
Subsidiaries, of any equity Securities of such Subsidiary, or (iii) any direct
or indirect loan, advance (other than advances to employees for moving,
relocation, entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
Company or any of its Subsidiaries to any other Person other than a wholly-owned
Domestic Subsidiary, including all indebtedness and accounts receivable from
that other Person that are not current assets or did not arise from sales to
that other Person in the ordinary course of business. The amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment.
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1.
"LENDERS SHARE" means, as at any date of determination, a fraction the
numerator of which is the aggregate outstanding principal balance of the Loans
and the denominator of which is the sum of the aggregate outstanding principal
balance of the Existing Tranche B Term Loans plus the aggregate outstanding
principal balance of the Loans.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Commercial Letters of
Credit and Standby Letters of Credit issued or to be issued by Existing Lenders
for the account of Company pursuant to subsection 3.1. of the Existing Credit
Agreement.
"LIEN" means any lien, mortgage, pledge, assignment (to the extent
such assignment is intended to secure an obligation of any Person), security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"LIQUIDITY LOAN" means the Indebtedness evidenced by that certain
Convertible Promissory Note Due January 30, 1998 between Company and BTCo dated
as of July 31, 1997.
"LOAN EXPOSURE" means, with respect to any Lender as of any date of
determination (i) prior to the funding of the Loans, that Lender's Commitment
and (ii) after the funding of the Loans, the outstanding principal amount of the
Loan of that Lender.
"LOANS" means the Loans made by Lenders to Company pursuant to
subsection 2.1A.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Subsidiary
Guaranty, the Shared Collateral Documents and the Intercreditor Agreement.
"LOAN PARTIES" means Company and Subsidiary Guarantors.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of the Dictaphone Business or of Company and its Subsidiaries, taken
as a whole, or (ii) the impairment of the ability of any Loan Party to perform,
or of Administrative Agent or Lenders to enforce, any Obligations of a monetary
nature.
"MATERIAL LEASEHOLD" means a Real Property Asset consisting of a
leasehold interest in an Operating Lease or a Capital Lease which is reasonably
determined by Agents to be of material value as collateral for the Obligations;
provided that in no event shall any such leasehold interest with respect to
which the aggregate amount of all rents payable during any Fiscal Year is less
than $100,000 be deemed to be a Material Leasehold; and provided, further that
in no event shall any such leasehold interest of office space used solely for
conducting the sales and service operations of Company and its Subsidiaries (in
each case on a basis consistent with the past practices of Company and its
Subsidiaries prior to the Closing Date with respect to the conduct of business
at their respective branch and district sales and service offices (but not the
Melbourne, Florida sales and service facilities of U.S. Dictaphone)) be deemed
to be a Material Leasehold.
"MATERIAL SUBSIDIARY" means each Subsidiary of Company now existing or
hereafter acquired or formed by Company which, on a consolidated basis for such
Subsidiary and its Subsidiaries, (i) for the most recent Fiscal Year accounted
for more than 5% of the consolidated revenues of Company and its Subsidiaries or
(ii) as at the end of such Fiscal Year, was the owner of more than 5% of the
consolidated assets of Company and its Subsidiaries.
"MELBOURNE ASSET SALE" means an Asset Sale with respect to (i) the
Closing Date Mortgaged Property located in Melbourne, Florida and the other
assets and operations of Company associated therewith, or (ii) the stock of a
newly-created Subsidiary of Company to which such Closing Date Mortgaged
Property and other assets and operations have been transferred in contemplation
of such Asset Sale.
"MORTGAGE" means an instrument (whether designated as a deed of trust,
a trust deed or a mortgage or by any similar title), executed and delivered by
Company or any Subsidiary Guarantor pursuant to subsection 6.10 and
substantially in the form of Exhibit XVI annexed hereto, encumbering a fee or
leasehold interest in Real Property Assets, as such instrument may be amended,
supplemented or otherwise modified from time to time, and "MORTGAGES" means all
such instruments, collectively.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", as defined in
Section 3(37) of ERISA, to which Company or any of its ERISA Affiliates is
contributing, or ever has contributed, or to which Company or any of its ERISA
Affiliates has, or ever has had, an obligation to contribute.
"NET CASH PROCEEDS" means (i) with respect to any Asset Sale, the
corresponding Cash Proceeds of Asset Sale net of bona fide direct costs incurred
in connection with such Asset Sale, including without limitation (a) taxes
reasonably estimated to be actually payable as a result of such Asset Sale
within two years of the date of such Asset Sale, (b) payment of the outstanding
principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Loans) that is secured by a Lien on the stock or
assets in question and that is required to be repaid under the terms thereof as
a result of such Asset Sale, and (c) reasonable brokerage commissions, legal
fees and expenses, finder's fees and other similar fees, expenses and
commissions, and (ii) with respect to any Receivables Program, the corresponding
Cash Proceeds of Receivables Program net of bona fide direct costs of
implementing such Receivables Program.
"NEW EQUITY" means not less than $35,000,000 in new equity
contributions made to Company by the Stonington Fund on the Closing Date.
"NON-RECOURSE INDEBTEDNESS" means, as applied to any Receivables
Program, Indebtedness under the terms of which no personal recourse may be had
against Company or any of its Subsidiaries for the payment of the principal of
or interest or premium on such Indebtedness solely as a result of a default by
one or more account debtors in the payment of any accounts receivable included
in such Receivables Program.
"NOTES" means any promissory notes of Company issued pursuant to
subsection 2.1E to evidence the Loans of any Lenders, substantially in the form
of Exhibit III annexed hereto, as they may be amended, supplemented or otherwise
modified from time to time.
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Administrative Agent pursuant
to subsection 2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in
the form of Exhibit II annexed hereto delivered by Company to Administrative
Agent pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"OBLIGATIONS" means all obligations of every nature of each Loan Party
from time to time owed to Agents, Lenders or any of them under the Loan
Documents, whether for principal, interest, fees, expenses, indemnification or
otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer; provided that every Officers' Certificate
with respect to the compliance with a condition precedent to the making of any
Loans hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers, such condition has been complied with.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor;
provided that the term Operating Lease shall not include any such lease with
respect to which the aggregate amount of all rents paid or payable by Company
and its Subsidiaries during the entire term thereof (including any optional
renewal terms) does not exceed $3,000,000.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"PERMITTED ENCUMBRANCES" means the following types of Liens (other
than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, repairmen, workmen and materialmen and other Liens imposed by
law, in each case incurred in the ordinary course of business for (a)
amounts not yet overdue or (b) amounts that are overdue and that (in the
case of any such amounts overdue for a period in excess of 45 days) are
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made for
any such contested amounts;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or securing liability to insurance
carriers under insurance or self-insurance arrangements, or obtaining
utility service, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
trade contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) leases or subleases granted to others not interfering in any
material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, encroachments, minor
defects or irregularities in title, and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of Company or any of its Subsidiaries;
(vii) any (a) interest or title of a lessor or sublessor under any
lease permitted by subsection 7.9, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any restriction or encumbrance referred to in the preceding clause (b);
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; and
(x) Liens securing reimbursement obligations under Letters of Credit
that are Commercial Letters of Credit and encumbering the materials or
goods being purchased with proceeds of such Commercial Letters of Credit.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"PRIME RATE" means the rate that Administrative Agent announces from
time to time as its prime lending rate, as in effect from time to time. The
Prime Rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer. Administrative Agent or any other
Lender may make commercial loans or other loans at rates of interest at, above
or below the Prime Rate.
"PRO RATA SHARE" means, with respect to each Lender, the percentage
obtained by dividing (x) the Loan Exposure of that Lender by (y) the aggregate
Loan Exposure of all Lenders. The initial Pro Rata Share of each Lender is set
forth opposite the name of that Lender in Schedule 2.1 annexed hereto.
"PURCHASE AGREEMENT" means the Stock and Asset Purchase Agreement,
dated as of April 25, 1995, by and between Pitney Bowes Inc. and Dictaphone
Acquisition, Inc., in the form delivered to Agents and Lenders prior to their
execution of this Agreement, as such agreement may be amended from time to time
to the extent permitted under subsection 7.15A.
"REAL PROPERTY ASSETS" means all real property from time to time owned
in fee by any Loan Party and all rights, title and interest in and to any and
all leases of real property as to which any Loan Party has a leasehold interest,
including without limitation any such fee or leasehold interests acquired by any
Loan Party after the date hereof.
"RECEIVABLES PROGRAM" has the meaning set forth in subsection 7.17.
"RECEIVABLES PROGRAM AGREEMENT" has the meaning set forth in
subsection 7.17.
"REGISTER" has the meaning assigned to that term in subsection 2.1D.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as in effect from time to time.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge or dumping of
Hazardous Materials into the environment (including, without limitation, the
abandonment or disposal of any barrels, containers or other closed receptacles
containing any Hazardous Materials).
"REQUISITE LENDERS" means Lenders having or holding 51% or more of the
aggregate Loan Exposure of all Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Company now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Company now or hereafter outstanding, and (iv)
any payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Subordinated
Indebtedness.
"SECURITIES" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"SHARED COLLATERAL DOCUMENTS" means the Company Pledge Agreement, the
Company Security Agreement, the Subsidiary Pledge Agreements, the Subsidiary
Security Agreements, the Subsidiary Trademark Security Agreements, the
Subsidiary Patent Security Agreements and any and all Mortgages.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"SPECIFIED ASSET SALE/FINANCING" means each of the Headquarters Asset
Sale, the Headquarters Financing, the Melbourne Asset Sale and/or the Swiss
Asset Sale.
"STANDBY LETTER OF CREDIT" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of third party
insurers of Company or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with respect
to Capital Leases or Operating Leases of Company or any of its Subsidiaries, and
(v) performance, payment, deposit or surety obligations of Company or any of its
Subsidiaries, in any case if required by law or governmental rule or regulation
or in accordance with custom and practice in the industry; provided that Standby
Letters of Credit may not be issued for the purpose of supporting (a) trade
payables or (b) any Indebtedness constituting "antecedent debt" (as that term is
used in Section 547 of the Bankruptcy Code).
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement, dated as of
August 11, 1995, by and among Dictaphone Acquisition Inc., the stockholders and
the holders of options listed on Schedule 1 thereto, the stockholder listed in
Schedule 2 thereto and the institutional investors listed in Schedule 3 thereto,
as such agreement may be amended from time to time to the extent permitted under
subsection 7.15A.
"STONINGTON" means Stonington Partners, Inc., a Delaware corporation.
"STONINGTON FUND" means Stonington Capital Appreciation 1994 Fund,
L.P., a Delaware limited partnership.
"SUBORDINATED INDEBTEDNESS" means (i) the Indebtedness of Company
evidenced by the Subordinated Notes and (ii) any other Indebtedness of Company
subordinated in right of payment to the Obligations pursuant to documentation
containing maturities, amortization schedules, covenants, defaults, remedies,
subordination provisions and other material terms in form and substance
satisfactory to Administrative Agent and Requisite Lenders.
"SUBORDINATED NOTE INDENTURE" means the indenture pursuant to which
the Subordinated Notes are issued, as such indenture may be amended from time to
time to the extent permitted under subsection 7.15B.
"SUBORDINATED NOTES" means the $200,000,000 principal amount of 113/4%
Senior Subordinated Notes due 2005 of Company issued pursuant to the
Subordinated Note Indenture.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which more
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of the Person or Persons (whether directors, managers, trustees
or other Persons performing similar functions) having the power to direct or
cause the direction of the management and policies thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof.
"SUBSIDIARY GUARANTOR" means any Domestic Subsidiary that executes and
delivers a counterpart of the Subsidiary Guaranty on the Closing Date or from
time to time thereafter pursuant to subsection 6.9.
"SUBSIDIARY GUARANTY" means the Amended and Restated Subsidiary
Guaranty executed and delivered by Domestic Subsidiaries on the Closing Date and
to be executed and delivered by Domestic Subsidiaries from time to time
thereafter in accordance with subsection 6.9, substantially in the form of
Exhibit XI annexed hereto, as such Subsidiary Guaranty may be amended,
supplemented or otherwise modified from time to time.
"SUBSIDIARY PATENT SECURITY AGREEMENT" means each Amended and Restated
Subsidiary Patent Collateral Assignment and Security Agreement executed and
delivered by Domestic Subsidiaries on the Closing Date or to be executed and
delivered by Domestic Subsidiaries from time to time thereafter in accordance
with subsection 6.9, in each case substantially in the form of Exhibit XV
annexed hereto, as such Subsidiary Patent Collateral Assignment and Security
Agreement may be amended, supplemented or otherwise modified from time to time,
and "SUBSIDIARY PATENT SECURITY AGREEMENTS" means all such Subsidiary Patent
Collateral Assignment and Security Agreements, collectively.
"SUBSIDIARY PLEDGE AGREEMENT" means each Amended and Restated
Subsidiary Pledge Agreement executed and delivered by Domestic Subsidiaries on
the Closing Date or to be executed and delivered by Domestic Subsidiaries from
time to time thereafter in accordance with subsection 6.9, in each case
substantially in the form of Exhibit XII annexed hereto, as such Subsidiary
Pledge Agreement may be amended, supplemented or otherwise modified from time to
time, and "SUBSIDIARY PLEDGE AGREEMENTS" means all such Subsidiary Pledge
Agreements, collectively.
"SUBSIDIARY SECURITY AGREEMENT" means each Amended and Restated
Subsidiary Security Agreement executed and delivered by Domestic Subsidiaries on
the Closing Date or to be executed and delivered by Domestic Subsidiaries from
time to time thereafter in accordance with subsection 6.9, in each case
substantially in the form of Exhibit XIII annexed hereto, as such Subsidiary
Security Agreement may be amended, supplemented or otherwise modified from time
to time, and "SUBSIDIARY SECURITY AGREEMENTS" means all such Subsidiary Security
Agreements, collectively.
"SUBSIDIARY TRADEMARK SECURITY AGREEMENT" means each Amended and
Restated Subsidiary Trademark Collateral Security Agreement and Conditional
Assignment executed and delivered by Domestic Subsidiaries on the Closing Date
or to be executed and delivered by Domestic Subsidiaries from time to time
thereafter in accordance with subsection 6.9, in each case substantially in the
form of Exhibit XIV annexed hereto, as such Subsidiary Trademark Collateral
Security Agreement and Conditional Assignment may be amended, supplemented or
otherwise modified from time to time, and "SUBSIDIARY TRADEMARK SECURITY
AGREEMENTS" means all such Subsidiary Trademark Collateral Security Agreements
and Conditional Assignments, collectively.
"SWISS ASSET SALE" means an Asset Sale with respect to any real
property assets owned by Swiss Sub as of the Closing Date.
"SWISS SUB" means Dictaphone International A.G., a corporation
organized under the laws of Switzerland.
"SYNDICATION AGENT" has the meaning assigned to that term in the
introduction to this Agreement.
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains of that Person
(whether worldwide, or only insofar as such income, profits or gains are
considered to arise in or to relate to a particular jurisdiction, or otherwise).
"U.K. HOLDINGS" means Dictaphone U.K. Acquisition Limited, a
corporation organized under the laws of the United Kingdom.
"U.K. SUB" means Dictaphone Company Ltd., a corporation organized
Under the laws of the United Kingdom.
"U.S. DICTAPHONE" means Dictaphone Corporation (U.S.), a Delaware
corporation and a wholly-owned subsidiary of Company.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF
CALCULATIONS UNDER AGREEMENT.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii),
(iii) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(v)). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in subsection 5.3.
1.3 OTHER DEFINITIONAL PROVISIONS.
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; OPTIONAL NOTES.
A. COMMITMENTS. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Company herein set forth,
each Lender hereby severally agrees to lend to Company on the Closing Date an
amount not exceeding its Pro Rata Share of the aggregate amount of the
Commitments to be used for the purposes identified in subsection 2.5A. The
amount of each Lender's Commitment is set forth opposite its name on Schedule
2.1 annexed hereto and the aggregate amount of the Commitments is $62,750,000.
Each Lender's Commitment shall expire immediately and without further action on
November 30, 1997 if the Loans are not made on or before that date. Company may
make only one borrowing under the Commitments. Amounts borrowed under this
subsection 2.1A and subsequently repaid or prepaid may not be reborrowed.
B. BORROWING MECHANICS. Whenever Company desires that Lenders make the
Loans it shall deliver to Administrative Agent a Notice of Borrowing no later
than 10:00 A.M. (New York City time) at least one Business Day in advance of the
proposed Closing Date. The Notice of Borrowing shall specify (i) the proposed
Closing Date (which shall be a Business Day), (ii) the amount of Loans
requested, and (iii) that such Loans shall initially be Base Rate Loans. Loans
may be continued as or converted into Base Rate Loans and Eurodollar Rate Loans
in the manner provided in subsection 2.2D. In lieu of delivering the
above-described Notice of Borrowing, Company may give Administrative Agent
telephonic notice by the required time of any proposed borrowing under this
subsection 2.1B; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Borrowing to Administrative Agent on or
before the Closing Date.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon receipt
by Company of the proceeds of any Loans funded by Lenders in accordance with
this Agreement pursuant to any such telephonic notice Company shall have
effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding of the
Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the Closing Date, and the acceptance by Company of the proceeds of the Loans
shall constitute a re-certification by Company, as of the Closing Date, as to
the matters to which Company is required to certify in the applicable Notice of
Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in accordance
therewith.
C. DISBURSEMENT OF FUNDS. The Loans under this Agreement shall be made by
Lenders simultaneously and proportionately to their respective Pro Rata Shares,
it being understood that no Lender shall be responsible for any default by any
other Lender in that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender be increased or decreased as a
result of a default by any other Lender in that other Lender's obligation to
make a Loan requested hereunder. Promptly after receipt by Administrative Agent
of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice in
lieu thereof), Administrative Agent shall notify each Lender of the proposed
borrowing. Each Lender shall make the amount of its Loan available to
Administrative Agent not later than 12:00 noon (New York City time) on the
Closing Date, in same day funds in Dollars, at the Funding and Payment Office.
Administrative Agent shall make the proceeds of such Loans available to Company
on the Closing Date by causing an amount of same day funds in Dollars equal to
the proceeds of all such Loans received by Administrative Agent from Lenders to
be credited to the account of Company at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender
prior to the Closing Date that such Lender does not intend to make available to
Administrative Agent the amount of such Lender's Loan requested on the Closing
Date, Administrative Agent may assume that such Lender has made such amount
available to Administrative Agent on the Closing Date and Administrative Agent
may, in its sole discretion, but shall not be obligated to, make available to
Company a corresponding amount on the Closing Date. If such corresponding amount
is not in fact made available to Administrative Agent by such Lender,
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from the
Closing Date until the date such amount is paid to Administrative Agent, at the
customary rate set by Administrative Agent for the correction of errors among
banks for three Business Days and thereafter at the Base Rate. If such Lender
does not pay such corresponding amount forthwith upon Administrative Agent's
demand therefor, Administrative Agent shall promptly notify Company and Company
shall immediately pay such corresponding amount to Administrative Agent together
with interest thereon, for each day from the Closing Date until the date such
amount is paid to Administrative Agent, at the rate payable under this Agreement
for Base Rate Loans. Nothing in this subsection 2.1C shall be deemed to relieve
any Lender from its obligation to fulfill its Commitments hereunder or to
prejudice any rights that Company may have against any Lender as a result of any
default by such Lender hereunder.
D. THE REGISTER.
(i) Administrative Agent shall maintain, at its address referred to in
subsection 10.8, a register for the recordation of the names and addresses
of Lenders and the Commitment and Loan of each Lender from time to time
(the "REGISTER"). The Register shall be available for inspection by Company
or any Lender at any reasonable time and from time to time upon reasonable
prior notice.
(ii) Administrative Agent shall record in the Register the Commitment
and the Loan from time to time of each Lender and each repayment or
prepayment in respect of the principal amount of the Loan of each Lender.
Any such recordation shall be conclusive and binding on Company and each
Lender, absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect Company's
Obligations in respect of the applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation, any Note held by such Lender) the amount of the Loan
made by it and each payment in respect thereof. Any such recordation shall
be conclusive and binding on Company, absent manifest error; provided that
failure to make any such recordation, or any error in such recordation,
shall not affect Company's Obligations in respect of the applicable Loan;
and provided, further that in the event of any inconsistency between the
Register and any Lender's records, the recordations in the Register shall
govern.
(iv) Company, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any such Commitment or Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii). Prior to such recordation, all amounts owed with respect to the
applicable Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and
binding on any subsequent holder, assignee or transferee of the
corresponding Commitment or Loan.
(v) Company hereby designates Administrative Agent to serve as
Company's agent solely for purposes of maintaining the Register as provided
in this subsection 2.1D, and Company hereby agrees that, to the extent
Administrative Agent serves in such capacity, Administrative Agent and its
officers, directors, employees, agents and affiliates shall constitute
Indemnitees for all purposes under subsection 10.3.
E. OPTIONAL NOTES. If so requested by any Lender by written notice to
Company (with a copy to Administrative Agent) at least two Business Days prior
to the Closing Date or at any time thereafter, Company shall execute and deliver
to such Lender (and/or, if applicable and if so specified in such notice, to any
Person who is an assignee of such Lender pursuant to subsection 10.1) on the
Closing Date (or, if such notice is delivered after the Closing Date, promptly
after Company's receipt of such notice) a promissory note or promissory notes to
evidence such Lender's Loan, substantially in the form of Exhibit III annexed
hereto with appropriate insertions.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and 2.7,
each Loan shall bear interest on the unpaid principal amount thereof from the
date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted Eurodollar Rate. All
Loans shall initially bear interest at a rate determined by reference to the
Base Rate, and the basis for determining the interest rate with respect to any
Loan may be changed from time to time pursuant to subsection 2.2D. If on any day
a Loan is outstanding with respect to which notice has not been delivered to
Administrative Agent in accordance with the terms of this Agreement specifying
the applicable basis for determining the rate of interest, then for that day
that Loan shall bear interest determined by reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, the Loans shall
bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus 2.75%
per annum; or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus 3.75% per annum.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan, Company
may, pursuant to the applicable Notice of Conversion/Continuation, select an
interest period (each an "INTEREST PERIOD") to be applicable to such Loan, which
Interest Period shall be, at Company's option, either a one, two, three or six
month period or, if deposits in the interbank Eurodollar market are generally
available for such period (as determined by each Lender making or converting
such Loan), a 12-month period; provided that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the date specified in the applicable Notice of
Conversion/Continuation;
(ii) in the case of immediately successive Interest Periods applicable
to a Eurodollar Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on
the day on which the next preceding
Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the Loans shall
extend beyond June 30, 2003.
(vi) no Interest Period with respect to any portion of the Loans shall
extend beyond a date on which Company is required to make a scheduled
payment of principal of the Loans unless the sum of (a) the aggregate
principal amount of Loans that are Base Rate Loans plus (b) the aggregate
principal amount of Loans that are Eurodollar Rate Loans with Interest
Periods expiring on or before such date equals or exceeds the principal
amount required to be paid on the Loans on such date;
(vii) there shall be no more than twelve Interest Periods outstanding
at any time; and
(viii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection 2.6,
Company shall have the option (i) to convert at any time all or any part of its
outstanding Loans equal to $5,000,000 and integral multiples of $1,000,000 in
excess of that amount from Loans bearing interest at a rate determined by
reference to one basis to Loans bearing interest at a rate determined by
reference to an alternative basis or (ii) upon the expiration of any Interest
Period applicable to a Eurodollar Rate Loan, to continue all or any portion of
such Loan equal to $5,000,000 and integral multiples of $1,000,000 in excess of
that amount as a Eurodollar Rate Loan; provided, however, that a Eurodollar Rate
Loan may only be converted into a Base Rate Loan on the expiration date of an
Interest Period applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 10:00 A.M. (New York City time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan) and the Administrative Agent shall
promptly after receipt of such Notice of Conversion/Continuation notify the
relevant Lenders thereof. A Notice of Conversion/Continuation shall specify (i)
the proposed conversion/continuation date (which shall be a Business Day), (ii)
the amount and type of the Loan to be con- verted/continued, (iii) the nature of
the proposed conver- sion/continuation, (iv) in the case of a conversion to, or
a continuation of, a Eurodollar Rate Loan, the requested Interest Period, and
(v) in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan, that no Potential Event of Default or Event of Default has occurred and is
continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conver- sion/continuation date.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Company shall be
bound to effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration
of the Interest Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Administrative Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be computed on the
basis of a 360-day year, in each case for the actual number of days elapsed in
the period during which it accrues. In computing interest on any Loan, the date
of the making of such Loan or the first day of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted from a Eurodollar
Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
case may be, shall be excluded; provided that if a Loan is repaid on the same
day on which it is made, one day's interest shall be paid on that Loan.
2.3 FEES.
A. FACILITY FEES. Company agrees to pay to Administrative Agent on the
Closing Date, for distribution to each Lender in proportion to that Lender's Pro
Rata Share, an aggregate facility fee equal to the aggregate amount of the
Commitments multiplied by 1.00%.
B. OTHER FEES. Company agrees to pay to each Agent such other fees in the
amounts and at the times separately agreed upon between Company and such Agent.
2.4 REPAYMENTS AND PREPAYMENTS; GENERAL PROVISIONS REGARDING PAYMENTS.
A. SCHEDULED PAYMENTS OF LOANS. Company shall make principal payments on
the Loans in installments on the dates and in the amounts set forth below:
Scheduled Repayment
Date of Loans
December 31, 1998 $ 627,500
December 31, 1999 $ 627,500
December 31, 2000 $ 627,500
December 31, 2001 $ 627,500
September 30, 2002 $ 9,412,500
December 31, 2002 $ 9,412,500
March 31, 2003 $ 20,707,500
June 30, 2003 $ 20,707,500
Total $ 62,750,000
; provided that the scheduled installments of principal of the Loans set forth
above shall be reduced in connection with any voluntary or mandatory prepayments
of the Loans in accordance with subsection 2.4B(iii); and provided, further that
the Loans and all other amounts owed hereunder with respect to the Loans shall
be paid in full no later than June 30, 2003, and the final installment payable
by Company in respect of the Loans on such date shall be in an amount, if such
amount is different from that specified above, sufficient to repay all amounts
owing by Company under this Agreement with respect to the Loans.
B. PREPAYMENTS.
(i) Voluntary Prepayments. Company may, upon not less than one
Business Day's prior written or telephonic notice, in the case of Base Rate
Loans, and three Business Days' prior written or telephonic notice, in the
case of Eurodollar Rate Loans, in each case given to Administrative Agent
by 12:00 Noon (New York City time) on the date required and, if given by
telephone, promptly confirmed in writing to Administrative Agent (which
original written or telephonic notice Administrative Agent will promptly
transmit by telefacsimile or telephone to each Lender), at any time and
from time to time prepay any Loans on any Business Day in whole or in part
in an aggregate minimum amount of $1,000,000 and integral multiples of
$500,000 in excess of that amount; provided that, any partial prepayment of
a Eurodollar Rate Loan prior to the end of an Interest Period shall be in
an amount such that after such prepayment the outstanding amount of such
Eurodollar Rate Loan shall be equal to $5,000,000 or integral multiples of
$1,000,000 in excess of that amount. Notice of prepayment having been given
as aforesaid, the principal amount of the Loans specified in such notice
shall become due and payable on the prepayment date specified therein.
(ii) Mandatory Prepayments.
(a) Prepayments from Asset Sales. On the date of receipt by
Company or any of its Subsidiaries of any Cash Proceeds of Asset Sale
not constituting a Specified Asset Sale/Financing, Company shall
prepay the Loans in an amount equal to Lenders' Share of the Net Cash
Proceeds of such Asset Sale; provided that, anything contained herein
to the contrary notwithstanding, to the extent any portion of Existing
Lenders' Share of any Net Cash Proceeds of any such Asset Sale are not
applied to prepay the Existing Tranche B Term Loans, Company shall
promptly make an additional prepayment of the Loans in an amount equal
to such portion not so applied to prepay the Existing Tranche B Term
Loans.
(b) Prepayments Due to Issuance of Debt or Equity Securities. On
the date of receipt by Company or any of its Subsidiaries of the Cash
proceeds (net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including without
limitation reasonable legal fees and expenses, being "NET SECURITIES
PROCEEDS") from the issuance of any debt or equity Securities of
Company or any of its Subsidiaries after the Closing Date (other than
Cash proceeds of any Headquarters Financing or any other Indebtedness
permitted under subsection 7.1), Company shall prepay the Loans in an
amount equal to Lenders' Share of such Net Securities Proceeds;
provided that to the extent any portion of Existing Lenders' Share of
any such Net Securities Proceeds are not applied to prepay the
Existing Tranche B Term Loans, Company shall promptly make an
additional prepayment of the Loans in an amount equal to such portion
not so applied to prepay the Existing Tranche B Term Loans.
(c) Prepayments from Receivables Programs. On the date of receipt
by Company or any of its Subsidiaries of any Cash Proceeds of
Receivables Program, Company shall prepay the Loans in an amount equal
to Lenders' Share of the Net Cash Proceeds of such Receivables
Program; provided that to the extent any portion of Existing Lenders'
Share of any Net Cash Proceeds of any Receivables Program are not
applied to prepay the Existing Tranche B Term Loans, Company shall
promptly make an additional prepayment of the Loans in an amount equal
to such portion not so applied to prepay the Existing Tranche B Term
Loans.
(d) Prepayments to Reversion of Surplus Assets of Pension Plans.
On the date of return to Company or any of its Subsidiaries of any
surplus assets of any pension plan of Company or any of its
Subsidiaries, Company shall prepay the Loans in an amount equal to
Lenders' Share of an amount (the "NET REVERSION AMOUNT") equal to 100%
of such returned surplus assets, net of transaction costs and expenses
incurred in obtaining such return, including incremental taxes payable
as a result thereof; provided that to the extent any portion of
Existing Lenders' Share of any Net Reversion Amount is not applied to
prepay the Existing Tranche B Term Loans, Company shall promptly make
an additional prepayment of the Loans in an amount equal to such
portion not so applied to prepay the Existing Tranche B Term Loans.
(e) Prepayments from Consolidated Excess Cash Flow. No later than
the date occurring ninety (90) days after the end of each Fiscal Year,
commencing with Fiscal Year 1997, Company shall prepay the Loans in an
amount (the "EXCESS CASH FLOW REPAYMENT AMOUNT") equal to Lenders'
Share of 75% of Consolidated Excess Cash Flow; provided that to the
extent any portion of Existing Lenders' Share of 75% of Consolidated
Excess Cash Flow for any Fiscal Year is not applied to prepay the
Existing Tranche B Term Loans, Company shall promptly make an
additional prepayment of the Loans in an amount equal to such portion
not so applied to prepay the Existing Tranche B Term Loans.
(f) Calculations of Net Proceeds Amounts; Additional Prepayments
Based on Subsequent Calculations. Concurrently with any prepayment of
the Loans pursuant to subsections 2.4B(ii)(a)-(e), Company shall
deliver to Agent an Officers' Certificate demonstrating the
calculation of the amount (the "NET PROCEEDS AMOUNT") of the
applicable Net Cash Proceeds of Asset Sale, Net Securities Proceeds,
Net Cash Proceeds of Receivables Program, Net Reversion Amount or
Excess Cash Flow Repayment Amount, as the case may be, that gave rise
to such prepayment and/or reduction and the calculation of Lenders'
Share thereof. In the event that Company shall subsequently determine
that the actual Net Proceeds Amount was greater than the amount set
forth in such Officers' Certificate, Company shall promptly make an
additional prepayment of the Loans in an amount equal to Lenders'
Share of the amount of such excess, and Company shall concurrently
therewith deliver to Administrative Agent an Officers' Certificate
demonstrating the derivation of the additional Net Proceeds Amount
resulting in such excess and the calculation of Lenders' Share
thereof.
(iii) Application of Prepayments.
(a) Application of Voluntary Prepayments by Order of Maturity.
Any voluntary prepayments of the Loans pursuant to subsection 2.4B(i)
shall be applied to reduce the scheduled installments of principal of
the Loans set forth in subsection 2.4A in inverse order of maturity.
(b) Application of Mandatory Prepayments of Loans to the
Scheduled Installments of Principal Thereof. Any mandatory prepayments
of the Loans pursuant to subsection 2.4B(ii) shall be applied to
reduce the scheduled installments of principal of the Loans set forth
in subsection 2.4A in inverse order of maturity.
(c) Application of Prepayments to Base Rate Loans and Eurodollar
Rate Loans. Any prepayment of the Loans shall be applied first to Base
Rate Loans to the full extent thereof before application to Eurodollar
Rate Loans, in each case in a manner which minimizes the amount of any
payments required to be made by Company pursuant to subsection 2.6D.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company of principal,
interest, fees and other Obligations hereunder and under the Notes shall be
made in Dollars in same day funds, without defense, setoff or counterclaim,
free of any restriction or condition, and delivered to Administrative Agent
not later than 12:00 Noon (New York City time) on the date due at the
Funding and Payment Office for the account of Lenders; funds received by
Administrative Agent after that time on such due date shall be deemed to
have been paid by Company on the next succeeding Business Day. Company
hereby authorizes Administrative Agent to charge its accounts with
Administrative Agent in order to cause timely payment to be made to
Administrative Agent of all principal, interest, fees and expenses due
hereunder (subject to sufficient funds being available in its accounts for
that purpose).
(ii) Application of Payments to Principal and Interest. All payments
in respect of the principal amount of any Loan shall include payment of
accrued interest on the principal amount being repaid or prepaid, and all
such payments shall be applied to the payment of interest before
application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
payments in respect of Loans shall be apportioned among all outstanding
Loans to which such payments relate, in each case proportionately to
Lenders' respective Pro Rata Shares. Administrative Agent shall promptly
distribute to each Lender, at its primary address set forth below its name
on the appropriate signature page hereof or at such other address as such
Lender may request, its Pro Rata Share of all such payments received by
Administrative Agent and the facility fee of such Lender when received by
Administrative Agent pursuant to subsection 2.3. Notwithstanding the
foregoing provisions of this subsection 2.4C(iii), if, pursuant to the
provisions of subsection 2.6C, any Notice of Conversion/Continuation is
withdrawn as to any Affected Lender or if any Affected Lender makes Base
Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans,
Administrative Agent shall give effect thereto in apportioning payments
received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder.
(v) Notation of Payment. Each Lender agrees that before disposing of
any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of the
Loan evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Company hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
2.5 USE OF PROCEEDS.
A. LOANS. The proceeds of the Loans shall be applied by Company (i) to
prepay in full all outstanding Existing Tranche A Term Loans and (ii) to prepay
$3,000,000 in aggregate outstanding principal amount of the Existing Tranche B
Term Loans, such prepayment to be applied to the next four remaining scheduled
installments of principal of the Existing Tranche B Term Loans set forth in
subsection 2.4A(ii) of the Existing Credit Agreement in forward order of
maturity.
B. MARGIN REGULATIONS. No portion of the proceeds of the Loans shall be
used by Company or any of its Subsidiaries in any manner that might cause the
borrowing or the application of such proceeds to violate Regulation G,
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable after
10:00 A.M. (New York time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be converted to Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of
Conversion/Continuation given by Company with respect to the Loans in respect of
which such determination was made shall be deemed to be rescinded by Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto but shall be made only
after consultation with Company and Administrative Agent) that the maintaining
or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result
of compliance by such Lender in good faith with any law, treaty, governmental
rule, regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Lender material hardship, as a result
of contingencies occurring after the date of this Agreement which materially and
adversely affect the interbank Eurodollar market or the position of such Lender
in that market, then, and in any such event, such Lender shall be an "AFFECTED
LENDER" and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Administrative Agent of such determination
(which notice Administrative Agent shall promptly transmit to each other
Lender). Thereafter (a) the obligation of the Affected Lender to convert Loans
to Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn
by the Affected Lender, (b) to the extent such determination by the Affected
Lender relates to a Eurodollar Rate Loan then being requested by Company
pursuant to a Notice of Conversion/Continuation, the Affected Lender shall
maintain such Loan as (or convert such Loan to, as the case may be) a Base Rate
Loan, (c) the Affected Lender's obligation to maintain its outstanding
Eurodollar Rate Loans (the "AFFECTED LOANS") shall be terminated at the earlier
to occur of the expiration of the Interest Period then in effect with respect to
the Affected Loans or when required by law, and (d) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by an Affected
Lender as described above relates to a Eurodollar Rate Loan then being requested
by Company pursuant to a Notice of Conversion/Continuation, Company shall have
the option, subject to the provisions of subsection 2.6D, to rescind such Notice
of Conversion/Continuation as to all Lenders by giving notice (by telefacsimile
or by telephone confirmed in writing) to Administrative Agent of such rescission
on the date on which the Affected Lender gives notice of its determination as
described above (which notice of rescission Administrative Agent shall promptly
transmit to each other Lender). Except as provided in the immediately preceding
sentence, nothing in this subsection 2.6C shall affect the obligation of any
Lender other than an Affected Lender to maintain Loans as, or to convert Loans
to, Eurodollar Rate Loans in accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to carry its
Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender) a conversion to or continuation of any Eurodollar Rate Loan does not
occur on a date specified therefor in a Notice of Conversion/Continuation or a
telephonic request for conversion or continuation, (ii) if any prepayment
(including without limitation any prepayment pursuant to subsection 2.4B(i)) or
other principal payment or any conversion of any of its Eurodollar Rate Loans
occurs on a date prior to the last day of an Interest Period applicable to that
Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on
any date specified in a notice of prepayment given by Company, or (iv) as a
consequence of any other default by Company in the repayment of its Eurodollar
Rate Loans when required by the terms of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calculation of
all amounts payable to a Lender under this subsection 2.6 and under subsection
2.7A shall be made as though that Lender had actually funded each of its
relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and during
the continuation of a Potential Event of Default or an Event of Default, (i)
Company may not elect to have a Loan be maintained as, or converted to, a
Eurodollar Rate Loan after the expiration of any Interest Period then in effect
for that Loan and (ii) subject to the provisions of subsection 2.6D, any Notice
of Conversion/Continuation given by Company with respect to a requested
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the provisions of
subsection 2.7B (which shall be controlling with regard to the matters covered
thereby), in the event that any Lender shall determine (which determination
shall, absent manifest error (including arithmetical error), be final and
conclusive and binding upon all parties hereto) that any law, treaty or
governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by such Lender with any
guideline, request or directive issued or made after the date hereof by any
central bank or other governmental or quasi-governmental authority (whether or
not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, or advances or loans by, or other credit extended by,
or any other acquisition of funds by, any office of such Lender (other than
any such reserve or other requirements with respect to Eurodollar Rate
Loans that are reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error (including arithmetical error).
Notwithstanding the foregoing, any Lender subject to any additional
Tax described in subsection 2.7A(i) shall furnish to Company and any applicable
governmental authorities such forms, certifications or other documents or
instruments as may reasonably be requested by Company in order to establish that
such Lender is entitled to an exemption from, or a reduction in the amount of,
such Tax, and no additional amounts shall be payable by Company to such Lender
pursuant to subsection 2.7A(i) to the extent that the liability of such Lender
for such Tax could be eliminated or reduced by the furnishing by such Lender of
such forms, certifications or other documents or instruments.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by Company under
this Agreement and the other Loan Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net
income of any Lender) imposed, levied, collected, withheld or assessed by
or within the United States of America or any political subdivision in or
of the United States of America or any other jurisdiction from or to which
a payment is made by or on behalf of Company or by any federation or
organization of which the United States of America or any such jurisdiction
is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is
required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by Company to Administrative Agent or any
Lender under any of the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Company) for its own account or (if that liability
is imposed on Administrative Agent or such Lender, as the case may be)
on behalf of and in the name of Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the relevant
deduction, withholding or payment is required shall be increased to
the extent necessary to ensure that, after the making of that
deduction, withholding or payment, Administrative Agent or such
Lender, as the case may be, receives on the due date a net sum equal
to what it would have received had no such deduction, withholding or
payment been required or made; and
(d) within 30 days after paying any sum from which it is required
by law to make any deduction or withholding, and within 30 days after
the due date of payment of any Tax which it is required by clause (b)
above to pay, Company shall deliver to Administrative Agent, to the
extent reasonably available, evidence reasonably satisfactory to the
other affected parties of such deduction, withholding or payment and
of the remittance thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after
the date hereof (in the case of each Lender listed on the signature pages
hereof) or after the date of the Assignment Agreement pursuant to which
such Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date of this Agreement or at the date of
such Assignment Agreement, as the case may be, in respect of payments to
such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "NON-US LENDER") shall deliver to Administrative Agent
for transmission to Company, on or prior to the Closing Date (in the
case of each Lender listed on the signature pages hereof) or on or
prior to the date of the Assignment Agreement pursuant to which it
becomes a Lender (in the case of each other Lender), and at such other
times as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue Service Form
1001 or 4224 (or any successor forms), properly completed and duly
executed by such Lender, together with any other certificate or
statement of exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Internal Revenue Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224 pursuant to
clause (1) above, a Certificate re Non-Bank Status together with two
original copies of Internal Revenue Service Form W-8 (or any successor
form), properly completed and duly executed by such Lender, together
with any other certificate or statement of exemption required under
the Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or withholding
of United States federal income tax with respect to any payments to
such Lender of interest payable under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees,
from time to time after the initial delivery by such Lender of such
forms, certificates or other evidence, whenever a lapse in time or
change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such
Lender shall promptly (1) deliver to Administrative Agent for
transmission to Company two new original copies of Internal Revenue
Service Form 1001 or 4224, or a Certificate re Non-Bank Status and two
original copies of Internal Revenue Service Form W-8, as the case may
be, properly completed and duly executed by such Lender, together with
any other certificate or statement of exemption required in order to
confirm or establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to
payments to such Lender under the Loan Documents or (2) notify
Administrative Agent and Company of its inability to deliver any such
forms, certificates or other evidence.
(c) Company shall not be required to pay any additional amount to
any Non-US Lender under clause (c) of subsection 2.7B(ii) if such
Lender shall have failed to satisfy the requirements of clause (a) or
(b)(1) of this subsection 2.7B(iii); provided that if such Lender
shall have satisfied the requirements of subsection 2.7B(iii)(a) on
the Closing Date (in the case of each Lender listed on the signature
pages hereof) or on the date of the Assignment Agreement pursuant to
which it became a Lender (in the case of each other Lender), nothing
in this subsection 2.7B(iii)(c) shall relieve Company of its
obligation to pay any additional amounts pursuant to clause (c) of
subsection 2.7B(ii) in the event that, as a result of any change in
any applicable law, treaty or governmental rule, regulation or order,
or any change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver forms,
certificates or other evidence at a subsequent date establishing the
fact that such Lender is not subject to withholding as described in
subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or 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 Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loan or other obligations hereunder with respect to the Loans to a
level below that which such Lender or such controlling corporation could have
achieved but for such adoption, effectiveness, phase-in, applicability, change
or compliance (taking into consideration the policies of such Lender or such
controlling corporation with regard to capital adequacy), then from time to
time, within five Business Days after receipt by Company from such Lender of the
statement referred to in the next sentence, Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.
2.8 OBLIGATION OF LENDERS TO MITIGATE.
Each Lender agrees that, as promptly as practicable after the officer
of such Lender responsible for administering the Loan of such Lender becomes
aware of the occurrence of an event or the existence of a condition that would
cause such Lender to become an Affected Lender or that would entitle such Lender
to receive payments under subsection 2.7, it will, to the extent not
inconsistent with the internal policies of such Lender and any applicable legal
or regulatory restrictions, use reasonable efforts (i) to maintain the affected
Loan of such Lender through another lending office of such Lender or (ii) take
such other measures as such Lender may deem reasonable, if as a result thereof
the circumstances which would cause such Lender to be an Affected Lender would
cease to exist or the additional amounts which would otherwise be required to be
paid to such Lender pursuant to subsection 2.7 would be materially reduced and
if, as determined by such Lender in its sole discretion, the maintaining of such
Loan through such other lending office or in accordance with such other
measures, as the case may be, would not otherwise materially adversely affect
such Loan or the interests of such Lender; provided that such Lender will not be
obligated to utilize such other lending office pursuant to this subsection 2.8
unless Company agrees to pay all incremental expenses incurred by such Lender as
a result of utilizing such other lending office as described in clause (i)
above. A certificate as to the amount of any such expenses payable by Company
pursuant to this subsection 2.8 (setting forth in reasonable detail the basis
for requesting such amount) submitted by such Lender to Company (with a copy to
Administrative Agent) shall be conclusive absent manifest error.
2.9 REMOVAL OF A LENDER.
In the event that any Lender shall give notice to Company that such
Lender is an Affected Lender or that such Lender is entitled to receive payments
under subsection 2.7, and unless the circumstances which have caused such Lender
to be an Affected Lender or which entitle such Lender to receive such payments
are no longer in effect, Company may, if such Lender shall fail to withdraw such
notice within 5 Business Days after Company's request for such withdrawal, upon
thirty days' prior written notice by Company to Administrative Agent and such
Lender, elect (i) to prepay the outstanding Loan of such Lender, together with
accrued and unpaid interest thereon and any other amounts payable to such Lender
hereunder pursuant to subsection 2.7 or otherwise; provided that the written
consent of Agents and Requisite Lenders, which consent shall not be unreasonably
withheld, shall be required in order for Company to make the foregoing election;
or (ii) to cause such Lender to assign its Loan in full to an Eligible Assignee
in accordance with the provisions of subsection 10.1B; provided that Company
shall pay any amounts payable to such Lender pursuant to subsection 2.7 or
otherwise on the date of such assignment.
SECTION 3. [INTENTIONALLY OMITTED]
SECTION 4. CONDITIONS TO LOANS
The obligations of Lenders to make Loans hereunder are subject to the
satisfaction of the following conditions.
4.1 CERTAIN CONDITIONS TO LOANS.
The obligations of Lenders to make the Loans are, in addition to the
conditions precedent specified in subsection 4.2, subject to prior or concurrent
satisfaction of the following conditions:
A. COMPANY DOCUMENTS. On or before the Closing Date, Company shall deliver
or cause to be delivered to Lenders (or to Administrative Agent for Lenders with
sufficient originally executed copies, where appropriate, for each Lender and
for Agents' counsel) the following, each, unless otherwise noted, dated the
Closing Date:
(i) Certified copies of its Certificate of Incorporation, together
with a good standing certificate from the Secretary of State of the State
of Delaware and each other state in which it is qualified as a foreign
corporation to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority
of each of such states, each dated a recent date prior to the Closing Date;
(ii) Copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other
Loan Documents, certified as of the Closing Date by its corporate secretary
or an assistant secretary as being in full force and effect without
modification or amendment;
(iv) Signature and incumbency certificates of its officers executing
this Agreement and the other Loan Documents;
(v) Executed originals of this Agreement, the Notes (duly executed in
accordance with subsection 2.1E, drawn to the order of each Lender and with
appropriate insertions) and the other Loan Documents; and
(vi) Such other documents as Administrative Agent may reasonably
request.
B. SUBSIDIARY GUARANTOR DOCUMENTS. On or before the Closing Date, Company
shall cause each Subsidiary Guarantor to deliver to Lenders (or to
Administrative Agent for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and for Agents' counsel) the following, each,
unless otherwise noted, dated the Closing Date:
(i) Certified copies of the Certificate or Articles of Incorporation
of such Subsidiary Guarantor, together with a good standing certificate
from the Secretary of State of the State of such Subsidiary Guarantor's
State of incorporation and each other state in which such Subsidiary
Guarantor is qualified as a foreign corporation to do business and, to the
extent generally available, a certificate or other evidence of good
standing as to payment of any applicable franchise or similar taxes from
the appropriate taxing authority of each of such states, each dated a
recent date prior to the Closing Date;
(ii) Copies of the Bylaws of such Subsidiary Guarantor, certified as
of the Closing Date by such Subsidiary Guarantor's corporate secretary or
an assistant secretary;
(iii) Resolutions of the Board of Directors of such Subsidiary
Guarantor approving and authorizing the execution, delivery and performance
of the Loan Documents to which it is a party, certified as of the Closing
Date by the corporate secretary or an assistant secretary of such
Subsidiary Guarantor as being in full force and effect without modification
or amendment;
(iv) Signature and incumbency certificates of the officers of such
Subsidiary Guarantor executing the Loan Documents;
(v) Executed originals of the Loan Documents to which such Subsidiary
Guarantor is a party; and
(vi) Such other documents as Administrative Agent may reasonably
request.
C. NO MATERIAL ADVERSE EFFECT. Since December 31, 1996, no Material Adverse
Effect (in the sole opinion of Agents) shall have occurred.
D. EQUITY CONTRIBUTION. Stonington Fund shall have provided Company with
$35,000,000 in new cash equity contributions and Company shall have applied the
proceeds thereof first to prepay the Liquidity Loan in full and thereafter, to
the extent of any remaining such proceeds, to prepay outstanding Existing
Revolving Loans.
E. AMENDMENT OF EXISTING CREDIT AGREEMENT. Company and Existing Lenders
shall have executed and delivered a Fourth Amendment to the Existing Credit
Agreement in form and substance satisfactory to Lenders.
F. INTERCREDITOR AGREEMENT. Existing Administrative Agent, Administrative
Agent, Collateral Agent and Loan parties shall have entered into the
Intercreditor Agreement.
G. SECURITY INTERESTS IN COLLATERAL. Loan Parties and Collateral Agent
shall have taken or caused to be taken (and Agents shall have received
satisfactory evidence thereof) any additional actions necessary so that
Collateral Agent has a valid and perfected first priority security interest
(subject to Liens permitted by subsection 7.2) as of the Closing Date in the
entire Collateral, subject to the provisions of the Intercreditor Agreement.
H. EVIDENCE OF INSURANCE. Company shall have delivered to Collateral Agent
certificates of insurance naming Collateral Agent on behalf of Lenders as loss
payee under the casualty insurance policies, and as additional insured under the
liability and business interruption policies, all as required pursuant to
subsection 6.4 hereof or pursuant to the Shared Collateral Documents. All such
certificates of insurance shall contain such endorsements as are reasonably
required by Collateral Agent.]
I. OPINIONS OF COMPANY'S COUNSEL. Lenders shall have received originally
executed copies of one or more favorable written opinions of Shearman &
Sterling, and Dan Hart, Esq., counsel for Company, in form and substance
reasonably satisfactory to Agents and their counsel, dated as of the Closing
Date and setting forth substantially the matters in the opinions designated in
Exhibit V-A and Exhibit V-B annexed hereto respectively and as to such other
matters as Agents acting on behalf of Lenders may reasonably request, together
with evidence satisfactory to Agents that Company has requested such counsel to
deliver such opinions to Lenders.
J. OPINIONS OF O'MELVENY & MYERS. Lenders shall have received originally
executed copies of one or more favorable written opinions of O'Melveny & Myers,
dated as of the Closing Date, substantially in the form of Exhibit VI annexed
hereto and as to such other matters as Agents acting on behalf of Lenders may
reasonably request.
K. FEES. Company shall have paid to Agents, for distribution (as
appropriate) to Agents and Lenders, the fees payable on the Closing Date
referred to in subsection 2.3.
L. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Company shall
have delivered to Agents an Officers' Certificate, in form and substance
satisfactory to Agents, to the effect that the representations and warranties in
Section 5 hereof are true, correct and complete in all material respects on and
as of the Closing Date to the same extent as though made on and as of that date
(or, to the extent such representations and warranties specifically relate to an
earlier date, that such representations and warranties were true, correct and
complete in all material respects on and as of such earlier date) and that
Company shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before the Closing Date except as otherwise disclosed to
and agreed to in writing by Lenders.
M. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agents, acting
on behalf of Lenders, and their counsel shall be satisfactory in form and
substance to Agents and such counsel, and Agents and such counsel shall have
received all such counterpart originals or certified copies of such documents as
Agents may reasonably request.
4.2 ADDITIONAL CONDITIONS TO LOANS.
The obligations of Lenders to make the Loans on the Closing Date are
subject to the following further conditions precedent:
A. Administrative Agent shall have received before the Closing Date,
in accordance with the provisions of subsection 2.1B, an originally executed
Notice of Borrowing, in each case signed by the chief executive officer, the
chief financial officer or the treasurer of Company or by any executive officer
of Company designated by any of the above-described officers on behalf of
Company in a writing delivered to Administrative Agent.
B. As of the Closing Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of the Closing Date to the same extent as though made on
and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete
in all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;
(iii) Company shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides shall
be performed or satisfied by it on or before the Closing Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it on the Closing Date;
(v) The making of the Loans requested on the Closing Date shall not
violate any law including, without limitation, Regulation G, Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System; and
(vi) There shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has not been disclosed
by Company in writing pursuant to subsection 5.6 or 6.1(x) prior to the
making of the last preceding Loans (or, in the case of the initial Loans,
prior to the execution of this Agreement), and there shall have occurred no
development not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, that, in either
event, in the opinion of Agents or of Requisite Lenders, could reasonably
be expected to have a Material Adverse Effect; and no injunction or other
restraining order shall have been issued and no hearing to cause an
injunction or other restraining order to be issued shall be pending or
noticed with respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of, or to recover any damages or obtain
relief as a result of, the transactions contemplated by this Agreement or
the making of Loans hereunder.
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make
the Loans, Company represents and warrants to each Lender, on the date of this
Agreement and on the Closing Date, that the following statements are true,
correct and complete (it being agreed that each such statement which expressly
refers to a particular date shall be understood to continue to refer to such
particular date each time that the representation and warranty of Company set
forth in this paragraph is made):
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING,
BUSINESS, SUBSIDIARIES AND SHARED COLLATERAL DOCUMENTS.
A. ORGANIZATION AND POWERS. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Company has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents and to carry out the transactions
contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Company is qualified to do business and
in good standing in every jurisdiction where it owns or leases property and
wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and would not be reasonably likely to have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.14.
D. SUBSIDIARIES. All of the Subsidiaries of Company are identified in
Schedule 5.1 annexed hereto, as said Schedule 5.1 may be supplemented from time
to time pursuant to the provisions of subsection 6.1(xvii). The capital stock of
each of the Subsidiaries of Company identified in Schedule 5.1 annexed hereto
(as so supplemented) is duly authorized, validly issued, fully paid and
nonassessable and none of such capital stock constitutes Margin Stock. Each of
the Subsidiaries of Company identified in Schedule 5.1 annexed hereto (as so
supplemented) is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation set
forth therein, has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted, and is qualified to do business and in good standing
in every jurisdiction where it owns or leases property and wherever necessary to
carry out its business and operations, in each case except where failure to be
so qualified or in good standing or a lack of such corporate power and authority
has not had and would not be reasonably likely to have a Material Adverse
Effect. Schedule 5.1 annexed hereto (as so supplemented) correctly sets forth,
the ownership interest of Company and each of its Subsidiaries in each of the
Subsidiaries of Company identified therein.
E. SHARED COLLATERAL DOCUMENTS. The security interests created in favor of
Collateral Agent under the Shared Collateral Documents will at all times from
and after the Closing Date constitute, as security for the obligations purported
to be secured thereby, a legal, valid and enforceable security interest in and
Lien on all of the Collateral referred to therein in favor of Collateral Agent
for the benefit of Lenders and Existing Lenders, perfected and prior to the
rights of all third persons (subject to Liens consented to in writing by
Collateral Agent with respect to such Collateral and other Liens permitted by
subsection 7.2) in accordance with the requirements of all applicable Shared
Collateral Documents. No consents, filings or recordings are required in order
to perfect (or maintain the perfection or priority of) the security interests
purported to be created by any of the Shared Collateral Documents, other than
such as have been obtained and which remain in full force and effect and
periodic Uniform Commercial Code continuation filings or as otherwise specified
by the terms of any applicable Collateral Document.
5.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance of
the Loan Documents have been duly author- ized by all necessary corporate action
on the part of each Loan Party.
B. NO CONFLICT. Except as set forth on Part I of Schedule 5.2 annexed
hereto, the execution, delivery and performance by the Loan Parties of the Loan
Documents and the consummation of the transactions contemplated by the Loan
Documents do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Company
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Company or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of Company or any of
its Subsidiaries, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Company or any of its Subsidiaries
(other than any Liens created under any of the Loan Documents in favor of
Collateral Agent on behalf of Lenders), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of Company or any of its Subsidiaries, except for such approvals or
consents which will be obtained on or before the Closing Date and disclosed in
writing to Lenders.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by the
Loan Parties of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body, except for
filings and recordings required in connection with the perfection of the
security interests granted pursuant to the Loan Documents.
D. BINDING OBLIGATION. Each of the Loan Documents has been duly executed
and delivered by the Loan Parties, party thereto and is the legally valid and
binding obligation of each such Loan Party, enforceable against such Loan Party
in accordance with its respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
5.3 FINANCIAL CONDITION.
Company has heretofore delivered to Lenders, at Lenders' request, (i)
audited consolidated financial statements of Company and its Subsidiaries for
the Fiscal Year ending December 31, 1996, consisting of a consolidated balance
sheet as at such date and the related consolidated statements of income,
stockholders' equity and cash flows for the Fiscal Year than ended, and (ii)
unaudited consolidated financial statements of Company and its Subsidiaries for
the eight-month period ending August 31, 1997, consisting of a consolidated
balance sheet as at such date and the related consolidated statements of income,
stockholders' equity and cash flows for such eight-month period. All such
statements were prepared in conformity with GAAP and fairly present, in all
material respects, the financial position (on a consolidated basis) of the
entities described in such financial statements as at the respective dates
thereof and the results of operations and cash flows (on a consolidated basis)
of the business or entities described therein for each of the periods then
ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments. Company does not
(and will not following the funding of the Loans) have any Contingent
Obligation, contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment that is not reflected in the foregoing
financial statements or the notes thereto or on Schedule 5.3 annexed hereto and
which in any such case is material in relation to the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Company
or any of its Subsidiaries.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
Since December 31, 1996, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Neither Company nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so except as permitted by subsection
7.5.
5.5 TITLE TO PROPERTIES; LIENS.
Company and its Subsidiaries have (i) good, sufficient and legal title
to (in the case of fee interests in real property), (ii) valid leasehold
interests in (in the case of leasehold interests in real or personal property),
or (iii) good title to (in the case of all other personal property), all of
their respective properties and assets reflected in the financial statements
referred to in subsection 5.3 or in the most recent financial statements
delivered pursuant to subsection 6.1, in each case except for assets disposed of
since the date of such financial statements in the ordinary course of business
or as otherwise permitted under subsection 7.7. Except as permitted by this
Agreement, all such properties and assets are free and clear of Liens.
5.6 LITIGATION; ADVERSE FACTS.
Except as set forth in Schedule 5.6 annexed hereto, there are no
actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of Company or any of its Subsidiaries) at
law or in equity or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, pending or, to the knowledge of Company, threatened against
or affecting Company or any of its Subsidiaries or any property of Company or
any of its Subsidiaries that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither Company nor any of
its Subsidiaries is (i) in violation of any applicable laws that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect or (ii) subject to or in default with respect to any final
judgments, writs, injunctions, decrees, rules or regulations of any court or any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, that, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect.
5.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 6.3, all tax returns and
reports of Company and its Subsidiaries required to be filed by any of them have
been timely filed, and all taxes shown on such tax returns to be due and payable
and all assessments, fees and other governmental charges upon Company and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid when due and payable.
Company knows of no proposed tax assessment against Company or any of its
Subsidiaries which is not being contested by Company or such Subsidiary in good
faith and by appropriate proceedings; provided that such reserves or other
appropriate provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.
5.8. REAL PROPERTY COLLATERAL
As of the Closing Date, Schedule 5.8 annexed hereto contains a true,
accurate and complete list of (a) all leases and subleases affecting each parcel
of real property leased by any Loan Party, regardless of whether such Loan Party
is the landlord or tenant (whether directly or as an assignee or successor in
interest) under such lease or sublease and (b) all real property owned in fee by
any of the Loan Parties. Except as specified in such Schedule 5.8, each
agreement listed in clause (a) is in full force and effect.
5.9 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not be reasonably likely to have a
Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, would reasonably
be likely to result in a Material Adverse Effect.
5.10 GOVERNMENTAL REGULATION.
Neither Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
5.11 SECURITIES ACTIVITIES.
Neither Company nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
5.12 EMPLOYEE BENEFIT PLANS.
A. Company and each of its ERISA Affiliates are in compliance in all
material respects with all applicable provisions and requirements of ERISA and
the regulations and published interpretations thereunder with respect to each
Employee Benefit Plan, and have performed all their obligations under each
Employee Benefit Plan.
B. No ERISA Event has occurred prior to the date hereof, and no ERISA
Event is reasonably expected to occur after the date hereof which would
reasonably be likely to result in a liability to Company or any of its ERISA
Affiliates that would result in a Material Adverse Effect.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code or except as set forth in Schedule 5.12 annexed hereto, no Employee
Benefit Plan provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employees of Company or any of
its ERISA Affiliates. No Employee Benefit Plans listed in Schedule 5.12 annexed
hereto have been amended since July 1, 1995 in a manner that increases the
liabilities of Company or any of its ERISA Affiliates under such Employee
Benefit Plans by an amount which would have a Material Adverse Effect.
D. As of the most recent valuation date for any Pension Plan, the
amount of unfunded current liabilities (as defined in Section 302(d)(8) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed an amount which, if such Pension
Plans were terminated, would result in liability to Company or any of its ERISA
Affiliates in an amount that would reasonably be likely to result in a Material
Adverse Effect.
5.13 CERTAIN FEES.
No broker's or finder's fee or commission (other than any such fees or
commissions that may be payable to Persons engaged by Agents or any Lender in
connection with such engagement by Agents or such Lender) will be payable with
respect to this Agreement or any of the transactions contemplated hereby, and
Company hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
5.14 ENVIRONMENTAL PROTECTION.
Except as set forth in Schedule 5.14 annexed hereto:
(i) the operations of Company and each of its Subsidiaries (including,
without limitation, all operations and conditions at or in the Facilities
that are currently owned, leased or occupied by Company or any of its
Subsidiaries) comply in all material respects with all Environmental Laws;
(ii) Company and each of its Subsidiaries have obtained all
Governmental Authorizations under Environmental Laws necessary to their
respective operations, and all such Governmental Authorizations are in good
standing, and Company and each of its Subsidiaries are in compliance with
all material terms and conditions of such Governmental Authorizations;
(iii) neither Company nor any of its Subsidiaries has received (a) any
notice or claim to the effect that it is or may be liable to any Person as
a result of or in connection with any Hazardous Materials or (b) any letter
or request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Section
9604) or comparable state laws, and, to the best of Company's knowledge,
none of the operations of Company or any of its Subsidiaries is the subject
of any federal or state investigation relating to or in connection with any
Hazardous Materials at any Facility or at any other location;
(iv) none of the operations of Company or any of its Subsidiaries is
subject to any judicial or administrative proceeding alleging the violation
of or liability under any Environmental Laws which if adversely determined
could reasonably be expected to have a Material Adverse Effect;
(v) neither Company nor any of its Subsidiaries nor any of their
respective Facilities that are currently owned, leased or occupied by
Company or any of its Subsidiaries or operations are subject to any
outstanding written order or agreement with any governmental authority or
private party (a) relating to any Environmental Claims or (b) relating
principally to any Environmental Laws;
(vi) neither Company nor any of its Subsidiaries nor, to the best
knowledge of Company, any predecessor of Company or any of its Subsidiaries
has filed any notice with any regulatory authority under any Environmental
Law indicating past or present treatment or Release of Hazardous Materials
at any Facility, and none of Company's or any of its Subsidiaries'
operations involves the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40 C.F.R.
Parts 260-270 or any state equivalent;
(vii) to the best knowledge of Company, no Hazardous Materials exist
on, under or about any Facility in a manner that could reasonably be
expected to give rise to an Environmental Claim having a Material Adverse
Effect;
(viii) neither Company nor any of its Subsidiaries nor, to the best
knowledge of Company, any of their respective predecessors has Released or
disposed of any Hazardous Materials in a manner that could reasonably be
expected to give rise to an Environmental Claim having a Material Adverse
Effect;
(ix) no underground storage tanks or surface impoundments are on or at
any Facility that is currently owned, leased or occupied by Company or any
Subsidiary or at any other Facility where the existence of such tanks or
surface impoundments could reasonably be expected to have a Material
Adverse Effect; and
(x) no Lien in favor of any Person relating to or in connection with
any Environmental Claim has been filed or has been attached to any Facility
that is currently owned, leased or occupied by Company or any Subsidiary.
5.15 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that would reasonably be expected
to have a Material Adverse Effect.
5.16 SOLVENCY.
Company and each of its Subsidiaries is and, upon the incurrence of
any Obligations by Company on any date on which this representation is made,
will be, Solvent.
5.17 DISCLOSURE.
No representation or warranty of Company or any of its Subsidiaries
contained in any Loan Document or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to Company, in the case of any document not furnished by
it) necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by Company to be
reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There are no facts known (or which should upon the
reasonable exercise of diligence be known) to Company (other than matters of a
general economic nature) that, individually or in the aggregate, would
reasonably be expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to Lenders for use in connection with the transactions contemplated
hereby.
SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Administrative Agent and Lenders:
(i) Monthly Financials: as soon as available and in any event within
30 days after the end of each month ending after the Closing Date, (a) the
consolidated and consolidating balance sheets of Company and its
Subsidiaries as at the end of such month and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows of
Company and its Subsidiaries for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month, setting
forth in each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the corresponding
figures from the consolidated plan and financial forecast for the current
Fiscal Year delivered pursuant to subsection 6.1(xiii), to the extent
prepared on a monthly basis, all in substantially the form of the financial
statements contained in the Confidential Information Memorandum and in
reasonable detail and certified by the chief financial officer of Company
that they fairly present, in all material respects, the financial condition
of Company and its Subsidiaries as at the dates indicated and the results
of their operations and their cash flows for the periods indicated, subject
to changes resulting from audit and normal year-end adjustments, and (b) a
narrative report describing the operations of Company and its Subsidiaries
in the form prepared for presentation to senior management for such month
and for the period from the beginning of the then current Fiscal Year to
the end of such month;
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each of the first three Fiscal Quarters of
each Fiscal Year, (a) the consolidated and consolidating balance sheets of
Company and its Subsidiaries as at the end of such Fiscal Quarter and the
related consolidated and consolidating statements of income, stockholders'
equity and cash flows of Company and its Subsidiaries for such Fiscal
Quarter and for the period from the beginning of the then current Fiscal
Year to the end of such Fiscal Quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding periods of
the previous Fiscal Year and the corresponding figures from the
consolidated plan and financial forecast delivered pursuant to subsection
6.1(xiii) for the Fiscal Year covered by such financial statements, all in
substantially the form of the financial statements contained in the
Confidential Information Memorandum and in reasonable detail and certified
by the chief financial officer of Company that they fairly present, in all
material respects, the financial condition of Company and its Subsidiaries
as at the dates indicated and the results of their operations and their
cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments, and (b) a narrative report
describing the operations of Company and its Subsidiaries in the form
prepared for presentation to senior management for such Fiscal Quarter and
for the period from the beginning of the then current Fiscal Year to the
end of such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated and
consolidating balance sheets of Company and its Subsidiaries as at the end
of such Fiscal Year and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows of Company and
its Subsidiaries for such Fiscal Year and for the fourth Fiscal Quarter of
such Fiscal Year, setting forth in each case in comparative form the
corresponding figures for the previous Fiscal Year or the fourth Fiscal
Quarter thereof, as the case may be, and the corresponding figures from the
consolidated plan and financial forecast delivered pursuant to subsection
6.1(xiii) for the Fiscal Year covered by such financial statements, all in
substantially the form of the financial statements contained in the
Confidential Information Memorandum and in reasonable detail and certified
by the chief financial officer of Company that they fairly present, in all
material respects, the financial condition of Company and its Subsidiaries
as at the dates indicated and the results of their operations and their
cash flows for the periods indicated, (b) a narrative report describing the
operations of Company and its Subsidiaries in the form prepared for
presentation to senior management for such Fiscal Year, and (c) a report
thereon of Deloitte & Touche, L.L.P. or other independent certified public
accountants of recognized national standing selected by Company and
satisfactory to Administrative Agent, which report shall be unqualified,
shall express no doubts about the ability of Company and its Subsidiaries
to continue as a going concern, and shall state that such consolidated
financial statements fairly present, in all material respects, the
consolidated financial position of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(iv) Officers' and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (i), (ii) and (iii) above, (a) an Officers' Certificate of
Company stating that the signers have reviewed the terms of this Agreement
and have made, or caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of Company and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of such Officers' Certificate, of
any condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
Company has taken, is taking and proposes to take with respect thereto; and
(b) a Compliance Certificate demonstrating in reasonable detail compliance
during and at the end of the applicable accounting periods with the
restrictions contained in Section 7, in each case to the extent compliance
with such restrictions is required to be tested at the end of the
applicable accounting period;
(v) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 5.3, the
consolidated financial statements of Company and its Subsidiaries delivered
pursuant to subdivisions (ii), (iii) or (xiii) of this subsection 6.1 will
differ in any material respect from the consolidated financial statements
that would have been delivered pursuant to such subdivisions had no such
change in accounting principles and policies been made, then (a) together
with the first delivery of financial statements pursuant to subdivision
(ii), (iii) or (xiii) of this subsection 6.1 following such change,
consolidated financial statements of Company and its Subsidiaries for (y)
the current Fiscal Year to the effective date of such change and (z) the
two full Fiscal Years immediately preceding the Fiscal Year in which such
change is made, in each case prepared on a pro forma basis as if such
change had been in effect during such periods, and (b) together with each
delivery of financial statements pursuant to subdivision (ii), (iii) or
(xiii) of this subsection 6.1 following such change, a written statement of
the chief accounting officer or chief financial officer of Company setting
forth the differences (including without limitation any differences that
would affect any calculations relating to the financial covenants set forth
in subsection 7.6) which would have resulted if such financial statements
had been prepared without giving effect to such change;
(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (iii) above, a letter from the independent certified public
accountants giving their report thereon stating that either nothing has
come to their attention that caused them to believe that the Company failed
to comply with the covenants of subsections 7.6, 7.8 and 7.9 of this
Agreement insofar as they relate to accounting matters or, if something has
come to their attention, specifying the nature and period of existence
thereof; provided that such accountants shall not be liable by reason of
any failure to obtain knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the course of their audit
examination;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants,
including, without limitation, any comment letter submitted by such
accountants to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company to its
security holders or by any Subsidiary of Company to its security holders
other than Company or another Subsidiary of Company, (b) all regular and
periodic reports and all registration statements (other than on Form S-8 or
a similar form) and original and final prospectuses, if any, filed by
Company or any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental or private
regulatory authority, and (c) all press releases and other statements made
available generally by Company or any of its Subsidiaries to the public
concerning material developments in the business of Company or any of its
Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of Company
obtaining knowledge (a) of any condition or event that constitutes an Event
of Default or Potential Event of Default, or becoming aware that any Lender
has given any notice (other than to Administrative Agent) or taken any
other action with respect to a claimed Event of Default or Potential Event
of Default, (b) that any Person has given any notice to Company or any of
its Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in subsection 8.2,
(c) of any condition or event that would be required to be disclosed in a
current report filed by Company with the Securities and Exchange Commission
on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date
hereof) if Company were required to file such reports under the Exchange
Act, or (d) of the occurrence of any event or change that has caused or
evidences, either in any case or in the aggregate, a Material Adverse
Effect, an Officers' Certificate specifying the nature and period of
existence of such condition, event or change, or specifying the notice
given or action taken by any such Person and the nature of such claimed
Event of Default, Potential Event of Default, default, event or condition,
and what action Company has taken, is taking and proposes to take with
respect thereto;
(x) Litigation or Other Proceedings: promptly upon any officer of
Company obtaining knowledge of (a) the institution of, or non-frivolous
threat of, any action, suit, proceeding (whether administrative, judicial
or otherwise), governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any property of Company or
any of its Subsidiaries (collectively, "PROCEEDINGS") not previously
disclosed in writing by Company to Lenders or (b) any material development
in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters;
(xi) ERISA Events: promptly upon becoming aware of the occurrence of
or forthcoming occurrence of any ERISA Event, a written notice specifying
the nature thereof, what action Company or any of its ERISA Affiliates has
taken, is taking or proposes to take with respect thereto and, when known,
any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a) if
requested by any Lender, each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) filed by Company or any of its ERISA
Affiliates with the Internal Revenue Service with respect to each Pension
Plan; (b) all notices received by Company or any of its ERISA Affiliates
from a Multiemployer Plan sponsor concerning an ERISA Event; and (c) such
other documents or governmental reports or filings relating to any Employee
Benefit Plan as Administrative Agent shall reasonably request;
(xiii) Financial Plans: as soon as practicable and in any event no
later than 30 days prior to the beginning of each Fiscal Year, a
consolidated and consolidating plan and financial forecast for such Fiscal
Year, including without limitation (a) forecasted consolidated and
consolidating balance sheets and forecasted consolidated and consolidating
statements of income and cash flows of Company and its Subsidiaries for
such Fiscal Year, together with a pro forma Compliance Certificate for such
Fiscal Year and an explanation of the assumptions on which such forecasts
are based, (b) forecasted consolidated and consolidating statements of
income and cash flows of Company and its Subsidiaries for each month of
such Fiscal Year, together with an explanation of the assumptions on which
such forecasts are based, and (c) such other information and projections as
any Lender may reasonably request;
(xiv) Insurance: as soon as practicable and in any event by the last
day of each Fiscal Year, a report in form and substance reasonably
satisfactory to Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by Company and its
Subsidiaries and all material insurance coverage planned to be maintained
by Company and its Subsidiaries in the immediately succeeding Fiscal Year;
(xv) Environmental Audits and Reports: as soon as practicable
following receipt thereof by Company, copies of all environmental audits
and reports, whether prepared by personnel of Company or any of its
Subsidiaries or by independent consultants, with respect to an
Environmental Claim or any matter governed by or arising under applicable
Environmental Laws which, in either case, could reasonably be expected to
result in a Material Adverse Effect;
(xvi) Board of Directors: with reasonable promptness, written notice
of any change in the Board of Directors of Company;
(xvii) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Company and
(b) all of the data required to be set forth in Schedule 5.1 annexed hereto
with respect to all Subsidiaries of Company (it being understood that such
written notice shall be deemed to supplement Schedule 5.1 annexed hereto
for all purposes of this Agreement);
(xviii) UCC Search Report: As promptly as practicable after the
Closing Date, Company shall furnish to Collateral Agent the results of
completed requests for information listing the financing statements
referred to in subsection 4.1L(ii) and all other effective financing
statements that name any Loan Party as debtor, together with copies of all
such other financing statements; and
(xix) Other Information: with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Lender.
6.2 CORPORATE EXISTENCE, ETC.
Except as permitted under subsection 7.7, Company will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to its
business; provided, however, that neither Company nor any of its Subsidiaries
shall be required to preserve any such right or franchise if the Board of
Directors of Company or such Subsidiary shall determine that the preservation
thereof is no longer desirable in the conduct of the business of Company or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to Company, such Subsidiary or Lenders.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Company will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or may become a Lien upon
any of its properties or assets, prior to the time when any penalty or fine
shall be incurred with respect thereto; provided that no such tax, charge or
claim need be paid if being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and if such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor.
B. Except to the extent otherwise required of Company by applicable
law, Company will not, nor will it permit any of its Subsidiaries to, file or
consent to the filing of any consolidated income tax return with any Person
(other than Company or any of its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE.
Company will, and will cause each of its Subsidiaries to, maintain or
cause to be maintained in good repair, working order and condition, ordinary
wear and tear excepted, all material properties used or useful in the business
of Company and its Subsidiaries (including, without limitation, Intellectual
Property) and from time to time will make or cause to be made all appropriate
repairs, renewals and replacements thereof. Company will maintain or cause to be
maintained, with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and businesses of its
Subsidiaries against loss or damage (including, without limitation, flood
insurance, if necessary or advisable) of the kinds customarily carried or
maintained under similar circumstances by corporations of established reputation
engaged in similar businesses (but in any event including business interruption
insurance), in such amounts (giving effect to self-insurance), with such
deductibles and by such methods as shall be customary for corporations similarly
situated in the industry. Without limiting the generality of the foregoing,
Company will maintain or cause to be maintained flood insurance with respect to
each Additional Flood Hazard Property (as defined in subsection 6.10) to the
extent such Additional Flood Hazard Property is located in a community that
participates in the National Flood Insurance Program. Each such policy of
insurance that insures against loss or damage with respect to any Collateral or
against losses due to business interruption shall name Collateral Agent, for the
benefit of Lenders and Existing Lenders, as the loss payee thereunder for any
covered loss in excess of $1,000,000 and shall provide for at least 30 days
prior written notice to Collateral Agent of any modification or cancellation of
such policy. Upon receipt by Collateral Agent of any insurance proceeds as loss
payee (i) in respect of any such business interruption insurance, (a) Collateral
Agent shall, so long as no Event of Default or Potential Event of Default shall
have occurred and be continuing, deliver such insurance proceeds to Company, and
(b) if an Event of Default or Potential Event of Default shall have occurred and
be continuing, Collateral Agent shall, and Company hereby authorizes Collateral
Agent to, apply such insurance proceeds to prepay the Loans and the Existing
Tranche B Term Loans in the same manner as if such insurance proceeds were Net
Cash Proceeds of an Asset Sale to be applied as provided in subsection
2.4B(ii)(a) and subsection 2.4B(iii)(c) of the Existing Credit Agreement, and
(ii) in respect of any such insurance against loss or damage with respect to any
Collateral, (a) to the extent that Company or any of its Subsidiaries intends to
use any such insurance proceeds to repair, restore or replace the assets of
Company or any of its Subsidiaries in respect of which such insurance proceeds
were received, Collateral Agent shall, so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing, deliver such
insurance proceeds to Company, and Company shall use such insurance proceeds to
effect such repair, restoration or replacement, and (b) if an Event of Default
or Potential Event of Default shall have occurred and be continuing or to the
extent that neither Company nor any of its Subsidiaries intends to use any such
insurance proceeds to repair, restore or replace assets of Company or any of its
Subsidiaries as described above, Collateral Agent shall, and Company hereby
authorizes Collateral Agent to, apply such insurance proceeds to prepay the
Loans and the Existing Tranche B Term Loans in the same manner as if such
insurance proceeds were proceeds of a sale of the applicable Collateral to be
applied as provided in the Intercreditor Agreement.
6.5 INSPECTION; LENDER MEETING.
Company shall, and shall cause each of its Subsidiaries to, (i) permit
any authorized representatives designated by any Lender to visit and inspect any
of the properties of Company or any of its Subsidiaries, including its and their
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and accounts with its
and their officers and independent public accountants (provided that Company
may, if it so chooses, be present at or participate in any such discussion), all
upon reasonable notice and at such reasonable times during normal business hours
and as often as may be reasonably requested and (ii) permit any authorized
representatives designated by Administrative Agent to conduct at Company's
expense, during each twelve month period following the Closing Date, one audit
of all inventory and all accounts receivable of Company and its Subsidiaries in
scope and substance substantially similar to the audit of inventory and accounts
receivable of the Dictaphone Business that was conducted by authorized
representatives of Existing Administrative Agent in July, 1995, all upon
reasonable notice and at such reasonable times during normal business hours and
as often as may be reasonably requested. Without in any way limiting the
foregoing, Company will, upon the request of Administrative Agent or Requisite
Lenders, participate in a meeting of Administrative Agent and Lenders once
during each Fiscal Year to be held at Company's corporate offices (or such other
location as may be agreed to by Company and Administrative Agent) at such time
as may be agreed to by Company and Administrative Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
Company shall, and shall cause each of its Subsidiaries to, comply
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority, noncompliance with which could reasonably be
expected to cause, individually or in the aggregate at any one time, a Material
Adverse Effect, in each case except to the extent that Company's or such
Subsidiary's requirement to comply therewith is being contested in good faith by
Company or such Subsidiary, as the case may be, and such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor.
6.7 ENVIRONMENTAL DISCLOSURE AND INSPECTION.
A. Company shall, and shall cause each of its Subsidiaries to,
exercise reasonable due diligence in order to comply and cause (i) all tenants
under any leases or occupancy agreements affecting any portion of the Facilities
that are currently owned, leased or occupied by Company or any of its
Subsidiaries and (ii) all other Persons on or occupying such Facilities, to
comply with all Environmental Laws and Governmental Authorizations.
B. Company agrees that Administrative Agent may, from time to time and
in its reasonable discretion, or if an Event of Default shall have occurred and
be continuing in its sole and absolute discretion, retain, at Company's expense,
an independent professional consultant to review any report relating to
Hazardous Materials prepared by or for Company and to conduct its own
investigation of any Facility currently owned, leased, operated or used by
Company or any of its Subsidiaries, and Company agrees to use its best efforts
to obtain permission for Administrative Agent's professional consultant to
conduct without expense to Company its own investigation of any Facility
previously owned, leased, operated or used by Company or any of its
Subsidiaries. Company hereby grants to Administrative Agent and its agents,
employees, consultants and contractors the right to enter into or on to the
Facilities currently owned, leased, operated or used by Company or any of its
Subsidiaries to perform such tests on such property as are reasonably necessary
to conduct such a review and/or investigation. Any such investigation of any
Facility shall be conducted, unless otherwise agreed to by Company and
Administrative Agent, during normal business hours and, to the extent reasonably
practicable, shall be conducted so as not to interfere with the ongoing
operations at any such Facility or to cause any damage or loss to any property
at such Facility. Company and Administrative Agent hereby acknowledge and agree
that any report of any investigation conducted at the request of Administrative
Agent pursuant to this subsection 6.7B will be obtained and shall be used by
Administrative Agent and Lenders for the purposes of Lenders' internal credit
decisions, to monitor and police the Loans and to protect Lenders' security
interests, if any, created by the Loan Documents. Administrative Agent agrees to
deliver a copy of any such report to Company with the understanding that Company
acknowledges and agrees that (i) it will indemnify and hold harmless
Administrative Agent and each Lender from any costs, losses or liabilities
relating to Company's use of or reliance on such report, (ii) neither
Administrative Agent nor any Lender makes any representation or warranty with
respect to such report, and (iii) by delivering such report to Company, neither
Administrative Agent nor any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.
C. Company shall promptly after obtaining knowledge thereof advise
Lenders in writing and in reasonable detail of (i) any Release of any Hazardous
Materials at any Facility required to be reported to any federal, state or local
governmental or regulatory agency under any applicable Environmental Laws, (ii)
any and all written communications with respect to any Environmental Claims that
could reasonably be expected to give rise to a Material Adverse Effect or with
respect to any Release of Hazardous Materials required to be reported to any
federal, state or local governmental or regulatory agency, (iii) any remedial
action taken by Company or any other Person in response to (x) any Hazardous
Materials on, under or about any Facility, the existence of which could
reasonably be expected to result in an Environmental Claim having a Material
Adverse Effect, or (y) any Environmental Claim that could reasonably be expected
to have a Material Adverse Effect, (iv) any Release of Hazardous Materials at
any Facility which is subject to a Mortgage that could reasonably be expected to
cause such Facility or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability or use thereof under any Environmental
Laws, and (v) any request for information from any governmental agency that
suggests such agency is investigating whether Company or any of its Subsidiaries
may be potentially responsible for a Release of Hazardous Materials.
D. Company shall promptly notify Lenders of any proposed acquisition
of stock, assets, or property by Company or any of its Subsidiaries that could
reasonably be expected to expose Company or any of its Subsidiaries to, or
result in, Environmental Claims that could have a Material Adverse Effect or
that could reasonably be expected to have a material adverse effect on any
Governmental Authorization then held by Company or any of its Subsidiaries.
E. Company shall, at its own expense, provide copies of such documents
or written information as Administrative Agent may reasonably request in
relation to any matters disclosed pursuant to this subsection 6.7.
6.8 INTEREST RATE PROTECTION.
At all times after the date which is 90 days after the Closing Date,
Company shall maintain in effect one or more Interest Rate Agreements with
respect to the Loans, each such Interest Rate Agreement to be for a term and in
form and substance reasonably satisfactory to Agents, which Interest Rate
Agreements shall effectively limit the Unadjusted Eurodollar Rate Component (as
hereinafter defined) of the interest costs to Company with respect to an
aggregate notional principal amount of not less than 50% of the aggregate
principal amount of the Loans outstanding from time to time (based on the
assumption that such notional principal amount was a Eurodollar Rate Loan with
an Interest Period of three months), to a rate equal to not more than 9% per
annum. For purposes of this subsection 6.8, the term "UNADJUSTED EURODOLLAR RATE
COMPONENT" means that component of the interest costs to Company in respect of a
Eurodollar Rate Loan that is based upon the rate obtained pursuant to clause (i)
of the definition of Adjusted Eurodollar Rate.
6.9 EXECUTION OF SUBSIDIARY GUARANTY AND SHARED COLLATERAL DOCUMENTS BY
CERTAIN SUBSIDIARIES AND FUTURE SUBSIDIARIES.
A. EXECUTION OF SUBSIDIARY GUARANTY, SHARED COLLATERAL DOCUMENTS AND
ACKNOWLEDGMENT TO INTERCREDITOR AGREEMENT. In the event that any Domestic
Subsidiary existing as of the date hereof (other than U.S. Dictaphone) hereafter
owns or acquires assets with an aggregate fair market value (without netting
such fair market value against any liability of such Subsidiary) exceeding
$150,000, or in the event that any Person becomes a Domestic Subsidiary after
the date hereof, Company will promptly notify Administrative Agent and
Collateral Agent of that fact and cause such Subsidiary to execute and deliver
to to Collateral Agent (i) a counterpart of the Subsidiary Guaranty, (ii) a
Subsidiary Pledge Agreement, a Subsidiary Security Agreement, a Subsidiary
Trademark Security Agreement, a Subsidiary Patent Security Agreement and (if
applicable) Additional Mortgages, and (iii) an acknowledgment to the
Intercreditor Agreement and to take all such further action and execute all such
further documents and instruments as may be reasonably required to grant and
perfect in favor of Collateral Agent, for the benefit of Lenders and Existing
Lenders, a first-priority security interest (subject to Permitted Encumbrances)
in all of the Real Property Assets and all of the personal property assets of
such Subsidiary described in the applicable Shared Collateral Documents.
B. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC. Company shall
deliver to Collateral Agent, together with the Subsidiary Guaranty and such
Shared Collateral Documents, (i) certified copies of such Subsidiary's Articles
or Certificate of Incorporation, together with a good standing certificate from
the Secretary of State of the jurisdiction of its incorporation, each to be
dated a recent date prior to their delivery to Collateral Agent, (ii) a copy of
such Subsidiary's Bylaws, certified by its corporate secretary or an assistant
corporate secretary as of a recent date prior to their delivery to Collateral
Agent, (iii) a certificate executed by the secretary or an assistant secretary
of such Subsidiary as to (a) the incumbency and signatures of the officers of
such Subsidiary executing the Subsidiary Guaranty and the Shared Collateral
Documents to which such Subsidiary is a party and (b) the fact that the attached
resolutions of the Board of Directors of such Subsidiary authorizing the
execution, delivery and performance of the Subsidiary Guaranty and such Shared
Collateral Documents are in full force and effect and have not been modified or
rescinded, and (iv) a favorable opinion of counsel to such Subsidiary, in form
and substance satisfactory to Collateral Agent and its counsel, as to (a) the
due organization and good standing of such Subsidiary, (b) the due
authorization, execution and delivery by such Subsidiary of the Subsidiary
Guaranty and such Shared Collateral Documents, (c) the enforceability of the
Subsidiary Guaranty and such Shared Collateral Documents against such
Subsidiary, and (d) such other matters as Collateral Agent may reasonably
request, all of the foregoing to be satisfactory in form and substance to
Collateral Agent and its counsel.
6.10 ADDITIONAL MORTGAGES.
A. From and after the Closing Date, in the event that (i) Company or
any Subsidiary Guarantor acquires any Fee Property or any Material Leasehold
(each a "COVERED REAL PROPERTY ASSET") or (ii) at the time any Person becomes a
Subsidiary Guarantor, such Person owns or holds any Covered Real Property Asset,
Company or such Subsidiary Guarantor shall, as soon as practicable after the
acquisition of such Covered Real Property Asset or such Person's becoming a
Subsidiary Guarantor, as the case may be, deliver (a) fully executed
counterparts of Mortgages (each an "ADDITIONAL MORTGAGE" and collectively, the
"ADDITIONAL MORTGAGES") encumbering such Covered Real Property Asset, together
with evidence that counterparts of such Additional Mortgages have been recorded
in all places to the extent necessary or desirable, in the reasonable judgment
of Collateral Agent, so as to effectively create a valid and enforceable first
priority lien (or such other priority lien as may be specified in the applicable
Additional Mortgage), subject to Permitted Encumbrances, on such Covered Real
Property Asset in favor of Collateral Agent (or such other trustee as may be
required or desired under local law) for the benefit of Lenders; (b) a title
report obtained by Company in respect of any such Covered Real Property Asset;
(c) if required by Collateral Agent, an opinion of counsel (which counsel shall
be reasonably satisfactory to Collateral Agent) in the state in which such
Covered Real Property Asset is located with respect to the enforceability of the
form of Additional Mortgage recorded in such state and such other matters as
Collateral Agent may reasonably request, in form and substance reasonably
satisfactory to Collateral Agent; (d) in the case of each such Covered Real
Property Asset consisting of a Material Leasehold, such estoppel letters from
the landlord on such Material Leasehold as may be reasonably requested by
Collateral Agent, in form and substance reasonably satisfactory to Collateral
Agent; (e) if required by Collateral Agent, in the case of each such Covered
Real Property Asset consisting of a Fee Property, environmental audits prepared
by professional consultants mutually acceptable to Company and Collateral Agent,
in form, scope and substance satisfactory to Collateral Agent in its reasonable
discretion; (f) if required by Collateral Agent, in the case of each such
Covered Real Property Asset consisting of a Fee Property, an ALTA mortgagee
title insurance policy issued by a title insurer reasonably satisfactory to
Collateral Agent (an "ADDITIONAL MORTGAGE POLICY"), in an amount reasonably
satisfactory to Collateral Agent, assuring Collateral Agent that the applicable
Additional Mortgage creates a valid and enforceable first priority mortgage lien
(or such other priority lien as may be specified in the applicable Additional
Mortgage) on such Covered Real Property Asset, free and clear of all defects and
encumbrances except Permitted Encumbrances and subject to a standard survey
exception, which Additional Mortgage Policy shall be in form and substance
reasonably satisfactory to Collateral Agent and shall include an endorsement for
mechanics' liens, for future advances under this Agreement, the Notes and the
other Loan Documents, and for any other matters that Collateral Agent may
reasonably request, and shall provide for affirmative insurance and such
reinsurance as Collateral Agent may reasonably request, all of the foregoing in
form and substance reasonably satisfactory to Collateral Agent; (g) evidence,
which may be in the form of a letter from an insurance broker or a municipal
engineer, as to whether (1) such Covered Real Property Asset (an "ADDITIONAL
FLOOD HAZARD PROPERTY") is in an area designated by the Federal Emergency
Management Agency as having special flood or mud slide hazards and (2) the
community in which such Covered Real Property Asset (if it is an Additional
Flood Hazard Property) is located is participating in the National Flood
Insurance Program; and (h) if such Covered Real Property Asset is an Additional
Flood Hazard Property, Company's written acknowledgement of receipt of written
notification from Collateral Agent (1) as to the existence of such Additional
Flood Hazard Property and (2) as to whether the community in which such Flood
Hazard Property is located is participating in the National Flood Insurance
Program. Collateral Agent and Lenders shall cooperate reasonably with Company,
at Company's expense, in structuring any Additional Mortgages in a manner so as
to minimize mortgage taxes associated therewith, to the extent possible
consistent with the protection of Lenders' interests.
B. Company shall, and shall cause each of its Subsidiaries to, permit
any authorized representatives designated by Collateral Agent, upon reasonable
notice, to visit and inspect any Covered Real Property Asset for the purpose of
obtaining an appraisal of value, conducted by consultants retained by Collateral
Agent in compliance with all applicable banking regulations, with respect to
such Covered Real Property Asset.
C. In the event that Company or the applicable Subsidiary Guarantor
fails to consummate a Specified Asset Sale/Financing with respect to any Closing
Date Mortgaged Property on or before December 31, 1999, Company or such
Subsidiary Guarantor shall, as soon as practicable after such date, deliver (a)
an executed counterpart of an amendment (a "CLOSING DATE MORTGAGE AMENDMENT") to
the applicable Closing Date Mortgage (such term being used herein as defined in
the Existing Credit Agreement) together with evidence that a counterpart of such
Closing Date Mortgage Amendment has been recorded in all places to the extent
necessary or desirable, in the reasonable judgment of Collateral Agent, so as to
effectively create a valid and enforceable first priority lien (or such other
priority lien as may be specified in the applicable Closing Date Mortgage),
subject to Permitted Encumbrances, on such Closing Date Mortgaged Property in
favor of Collateral Agent (or such other trustee as may be required or desired
under local law) for the benefit of all Secured Parties (as such term is defined
in the Intercreditor Agreement); (b) an updated title report obtained by Company
in respect of such Closing Date Mortgaged Property; (c) if required by
Collateral Agent, an opinion of counsel (which counsel shall be reasonably
satisfactory to Collateral Agent) in the state in which such Closing Date
Mortgaged Property is located with respect to the enforceability of the form of
Closing Date Mortgage Amendment recorded in such state and such other matters as
Collateral Agent may reasonably request, in form and substance reasonably
satisfactory to Collateral Agent; and (d) if required by Collateral Agent, a
bringdown of the title insurance policy issued with respect to such Closing Date
Mortgaged Property, assuring Collateral Agent that the applicable Closing Date
Mortgage, as amended pursuant to such Closing Date Mortgage Amendment, continues
to create a valid and enforceable first priority mortgage lien (or such other
priority lien as may be specified in such Closing Date Mortgage) on such Closing
Date Mortgaged Property, free and clear of all defects and encumbrances except
Permitted Encumbrances and subject to a standard survey exception. Collateral
Agent and Lenders shall cooperate reasonably with Company, at Company's expense,
in structuring any such amendment to a Closing Date Mortgage in a manner so as
to minimize mortgage taxes associated therewith, to the extent possible
consistent with the protection of Secured Parties' interests.
6.11 ASSIGNABILITY AND RECORDING OF LEASE AGREEMENTS.
From and after the Closing Date, in the event that Company or any of
its Domestic Subsidiaries enters into any lease that is a Material Leasehold,
Company shall, or shall cause such Subsidiary to, (i) obtain lease terms
permitting (or not expressly prohibiting) the encumbrancing of such Material
Leasehold pursuant to an Additional Mortgage and the assignment of such Material
Leasehold interest to the successful bidder at a foreclosure or similar sale
(and to a subsequent third party assignee by Collateral Agent or any Lender to
the extent Collateral Agent or such Lender is the successful bidder at such
sale) in the event of a foreclosure or similar action pursuant to such
Additional Mortgage and (ii) cause such lease, or a memorandum of lease with
respect thereto, or other evidence of such lease in form and substance
reasonably satisfactory to Collateral Agent, to be recorded in all places to the
extent necessary or desirable, in the reasonable judgment of Collateral Agent,
so as to enable an Additional Mortgage encumbering such Material Leasehold to
effectively create a valid and enforceable first priority lien (subject to
Permitted Encumbrances) on such Material Leasehold in favor of Collateral Agent
(or such other Person as may be required or desired under local law) for the
benefit of Lenders.
SECTION 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 7.
7.1 INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Company may become and remain liable with respect to the
Obligations;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases; provided that such
Capital Leases are permitted under the terms of subsection 7.9;
(iv) Company may become and remain liable with respect to Indebtedness
to any of its wholly-owned Subsidiaries, and any wholly-owned Domestic
Subsidiary may become and remain liable with respect to Indebtedness to
Company or any other wholly-owned Subsidiary of Company; provided that (a)
all such intercompany Indebtedness shall be evidenced by promissory notes,
(b) all such intercompany Indebtedness owed by Company to any of its
Subsidiaries shall be subordinated in right of payment to the payment in
full of the Obligations pursuant to the terms of the applicable promissory
notes or an intercompany subordination agreement, and (c) any payment by
any Subsidiary of Company under any guaranty of the Obligations shall
result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by such Subsidiary to Company or to any of its
Subsidiaries for whose benefit such payment is made;
(v) Foreign Subsidiaries may become and remain liable with respect to
(a) Indebtedness to other Foreign Subsidiaries, (b) Indebtedness to Company
and any Domestic Subsidiaries in an aggregate principal amount not to
exceed $30,000,000 at any time outstanding, and (c) Indebtedness to Persons
other than Company or any of its Subsidiaries; provided that the aggregate
amount of all Direct Foreign Subsidiary Obligations of any Foreign
Subsidiary shall not exceed at any time the sum of (X) 80% of all accounts
receivable of such Foreign Subsidiary plus (Y) 50% of all inventory of such
Foreign Subsidiary;
(vi) Company may become and remain liable with respect to the
Subordinated Notes;
(vii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness to the extent such Indebtedness is secured by Liens
permitted under subsection 7.2A(iii);
(viii) Company may become and remain liable in respect of Indebtedness
under the Existing Credit Agreement in an aggregate principal amount not to
exceed $111,250,000;
(ix) Company may become and remain liable with respect to the
Headquarters Financing; and
(x) Company and Subsidiary Guarantors may become and remain liable
with respect to other Indebtedness in an aggregate principal amount not to
exceed $10,000,000 at any time outstanding.
7.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or permit
to exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Shared Collateral Documents and the
other "Collateral Documents" as defined in the Existing Credit Agreement;
(iii) Liens arising from the giving, simultaneously with or within 90
days after the acquisition or construction of real property or tangible
personal property, of any purchase money Lien (including vendors' rights
under purchase contracts under an agreement whereby title is retained for
the purpose of securing the purchase price thereof) on real property or
tangible personal property hereafter acquired or constructed and not
heretofore owned by Company or any of its Subsidiaries, or from the
acquiring hereafter of real property or tangible personal property not
heretofore owned by Company or any of its Subsidiaries subject to any then
existing Lien (whether or not assumed), or from the extension, renewal or
replacement of any Indebtedness secured by any of the foregoing Liens so
long as the aggregate principal amount thereof and the security therefor is
not thereby increased; provided, however, that in each case (a) such Lien
is limited to such acquired or constructed real or tangible personal
property and fixed improvements, if any, then existing or thereafter
erected thereon, and (b) the principal amount of the Indebtedness secured
by such Lien, together (without duplication) with the principal amount of
all other Indebtedness secured by Liens on such property, shall not exceed
the cost (which shall be deemed to include, without duplication, the amount
of Indebtedness secured by Liens, including existing Liens, on such
property) of such property to Company or any of its Subsidiaries; and
provided, further that the aggregate amount of outstanding Indebtedness
secured by all such Liens shall at no time exceed $5,000,000;
(iv) Liens encumbering assets of Foreign Subsidiaries and securing
Indebtedness permitted under clause (c) of subsection 7.1(v);
(v) Liens described in Schedule 7.2 annexed hereto;
(vi) Liens encumbering the Headquarters Facility to secure the
Headquarters Financing; and
(vii) Other Liens securing Indebtedness in an aggregate amount not to
exceed $5,000,000 at any time outstanding.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its Domestic
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale, neither Company nor any
of its Domestic Subsidiaries shall enter into any agreement (other than the
Subordinated Note Indenture or any other agreement prohibiting the creation of
Liens securing Subordinated Indebtedness) prohibiting the creation or assumption
of any Lien upon any of its properties or assets, whether now owned or hereafter
acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except as provided herein, Company will not, and will not permit
any of its Domestic Subsidiaries to, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by Company or any
other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or
advances to Company or any other Subsidiary of Company, or (iv) transfer any of
its property or assets to Company or any other Subsidiary of Company.
7.3 INVESTMENTS; JOINT VENTURES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments in Cash
Equivalents;
(ii) Foreign Subsidiaries may make and own Investments in an aggregate
amount not to exceed at any time outstanding $5,000,000 consisting of
overnight loans to Pitney Bowes Finance Plc;
(iii) Company and its Subsidiaries may make intercompany loans to the
extent permitted under subsection 7.1(iv) or 7.1(v);
(iv) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.8;
(v) Company and its Subsidiaries may continue to own the Investments
(including Investments in any Foreign Subsidiaries) owned by them and
described in Schedule 7.3 annexed hereto;
(vi) Company and its Subsidiaries may make and own Investments in an
aggregate amount not to exceed at any time outstanding $500,000 consisting
of any deferred portion of the sales price received by Company or any of
its Subsidiaries in connection with any Asset Sale permitted under
subsection 7.7(vii);
(vii) Company or any of its Subsidiaries may make and maintain
Investments received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers, in each case arising in the
ordinary course of business;
(viii) Company may make loans to members of senior management of
Company, in an aggregate principal amount not to exceed $1,700,000 at any
time outstanding, the proceeds of which are used solely to purchase Company
Common Stock;
(ix) Foreign Subsidiaries may make and own Investments in Persons
engaged in businesses in which Company and its Subsidiaries are permitted
to engage pursuant to subsection 7.14; and
(x) Company and its Subsidiaries may make and own other Investments in
an aggregate amount not to exceed at any time (x) from July 1, 1997 to and
including June 30, 1998, $10,000,000, and (y) thereafter, $15,000,000.
7.4 CONTINGENT OBLIGATIONS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Company may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit and Company may become and
remain liable with respect to Contingent Obligations in respect of other
Commercial Letters of Credit in an aggregate amount not to exceed at any
time $5,000,000; provided that the aggregate amount of all Foreign
Subsidiary Support Obligations shall not exceed at any time $2,000,000;
(ii) Foreign Subsidiaries may become and remain liable with respect to
Contingent Obligations in respect of Commercial Letters of Credit not
constituting Letters of Credit; provided that the aggregate amount of all
Direct Foreign Subsidiary Obligations of any Foreign Subsidiary shall not
exceed at any time the sum of (a) 80% of all accounts receivable of such
Foreign Subsidiary plus (b) 50% of all inventory of such Foreign
Subsidiary;
(iii) Subsidiary Guarantors may become liable with respect to
Contingent Obligations arising under (a) the Subsidiary Guaranty and (b)
their subordinated guaranties of the Subordinated Notes as set forth in the
Subordinated Note Indenture;
(iv) Company may become and remain liable with respect to Contingent
Obligations under Interest Rate Agreements (including Interest Rate
Agreements required under subsection 6.9) in an aggregate notional
principal amount not to exceed the aggregate principal amount of the Loans
outstanding from time to time;
(v) Company or any of its Subsidiaries may become and remain liable
with respect to Contingent Obligations under Currency Agreements designed
to protect Company or such Subsidiary against fluctuations in currency
values;
(vi) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of any Indebtedness of Company
or any of its Subsidiaries permitted by subsection 7.1; provided that the
aggregate amount of all Foreign Subsidiary Support Obligations shall not
exceed at any time $2,000,000;
(vii) Company or any of its Subsidiaries may remain liable with
respect to Contingent Obligations of Company or such Subsidiary, as
applicable, described in Schedule 7.4 annexed hereto;
(viii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of indemnification and
purchase price adjustment obligations incurred in connection with Asset
Sales or other sales of assets so long as such indemnification and purchase
price adjustment obligations are customary in light of the type of Asset
Sales or other sales of assets in connection with which they were incurred;
(ix) Company or any of its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of leasehold interests
assigned by Company or such Subsidiary on or after the Closing Date to any
Person other than Company or any of its Subsidiaries; and
(x) Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum
aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such other Contingent Obligations permitted
by this subdivision (x) shall at no time exceed $3,000,000.
7.5 RESTRICTED JUNIOR PAYMENTS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; provided that (i) Company may make regularly
scheduled payments of interest in respect of any Subordinated Indebtedness in
accordance with the terms of, and only to the extent required by, and subject to
the subordination provisions contained in, the indenture or other agreement
pursuant to which such Subordinated Indebtedness was issued, as such indenture
or other agreement may be amended from time to time to the extent permitted
under subsection 7.15B; and (ii) so long as no Event of Default or Potential
Event of Default shall have occurred and be continuing or shall be caused
thereby, Company may make Restricted Junior Payments to repurchase shares of
Company Common Stock (or options or warrants to acquire Company Common Stock)
from members of Company's senior management in accordance with the terms of the
Stockholders Agreement.
7.6 FINANCIAL COVENANTS.
A. MAXIMUM LEVERAGE RATIO. Company shall not permit the ratio of (i)
Consolidated Total Debt as of the last day of any four-Fiscal Quarter period
ending during any of the periods set forth below to (ii) Consolidated EBITDA for
such four- Fiscal Quarter period to exceed the correlative ratio indicated:
PERIOD MAXIMUM LEVERAGE RATIO
October 1, 1997 - December 31, 1997 9.40:1.00
January 1, 1998 - March 31, 1998 9.40:1.00
April 1, 1998 - June 30, 1998 8.60:1.00
July 1, 1998 - September 30, 1998 8.50:1.00
October 1, 1998 - December 31, 1998 7.90:1.00
January 1, 1999 - March 31, 1999 7.70:1.00
April 1, 1999 - June 30, 1999 7.50:1.00
July 1, 1999 - September 30, 1999 7.20:1.00
October 1, 1999 - December 31, 1999 6.90:1.00
January 1, 2000 - March 31, 2000 6.80:1.00
April 1, 2000 - June 30, 2000 6.70:1.00
July 1, 2000 - September 30, 2000 6.50:1.00
October 1, 2000 - December 31, 2000 6.30:1.00
January 1, 2001 - March 31, 2001 6.10:1.00
April 1, 2001 - June 30, 2001 5.90:1.00
July 1, 2001 - September 30, 2001 5.60:1.00
October 1, 2001 - December 31, 2001 5.30:1.00
January 1, 2002 - March 31, 2002 5.10:1.00
April 1, 2002 - June 30, 2002 4.90:1.00
July 1, 2002 - September 30, 2002 4.70:1.00
October 1, 2002 - December 31, 2002 4.40:1.00
B. MINIMUM CONSOLIDATED EBITDA. Company shall not permit Consolidated
EBITDA for any four-Fiscal Quarter period ending on any of the dates set forth
below to be less than the correlative amount indicated:
MINIMUM CONSOLIDATED
DATE EBITDA
December 31, 1997 39,000,000
March 31, 1998 40,000,000
June 30, 1998 44,000,000
September 30, 1998 46,000,000
December 31, 1998 48,000,000
March 31, 1999 49,000,000
June 30, 1999 50,000,000
September 30, 1999 52,000,000
December 31, 1999 55,000,000
March 31, 2000 56,000,000
June 30, 2000 57,000,000
September 30, 2000 58,000,000
December 31, 2000 60,000,000
March 31, 2001 62,000,000
June 30, 2001 64,000,000
September 30, 2001 67,000,000
December 31, 2001 70,000,000
March 31, 2002 72,000,000
June 30, 2002 74,000,000
September 30, 2002 77,000,000
December 31, 2002 80,000,000
C. MINIMUM CONSOLIDATED NET WORTH. Company shall not permit the sum of (i)
Consolidated Net Worth plus (ii) cumulative total amortization expense, as
determined on a consolidated basis for Company and its Subsidiaries in
conformity with GAAP, for the period from the Closing Date to the applicable
date of determination to be less than the correlative amount indicated at any
time during any of the periods set forth below:
MINIMUM
PERIOD CONSOLIDATED NET WORTH
October 1, 1997 - December 31, 1997 120,000,000
January 1, 1998 - March 31, 1998 120,000,000
April 1, 1998 - June 30, 1998 120,000,000
July 1, 1998 - September 30, 1998 125,000,000
October 1, 1998 - December 31, 1998 130,000,000
January 1, 1999 - March 31, 1999 133,000,000
April 1, 1999 - June 30, 1999 136,000,000
July 1, 1999 - September 30, 1999 140,000,000
October 1, 1999 - December 31, 1999 145,000,000
January 1, 2000 - March 31, 2000 150,000,000
April 1, 2000 - June 30, 2000 155,000,000
July 1, 2000 - September 30, 2000 160,000,000
October 1, 2000 - December 31, 2000 165,000,000
January 1, 2001 - March 31, 2001 170,000,000
April 1, 2001 - June 30, 2001 175,000,000
July 1, 2001 - September 30, 2001 180,000,000
October 1, 2001 - December 31, 2001 190,000,000
January 1, 2002 - March 31, 2002 200,000,000
April 1, 2002 - June 30, 2002 210,000,000
July 1, 2002 - September 30, 2002 220,000,000
October 1, 2002 - December 31, 2002 230,000,000
D. MINIMUM INTEREST COVERAGE RATIO. Company shall not permit the ratio of
(i) Consolidated EBITDA minus Consolidated Capital Expenditures to (ii)
Consolidated Interest Expense for any four-Fiscal Quarter period ending during
any of the periods set forth below to be less than the correlative ratio
indicated:
MINIMUM INTEREST
PERIOD COVERAGE RATIO
October 1, 1997 - December 31, 1998 0.70:1.00
January 1, 1999 - March 31, 1999 0.75:1.00
April 1, 1999 - June 30, 1999 0.80:1.00
July 1, 1999 - September 30, 1999 0.90:1.00
October 1, 1999 - June 30, 2000 1.00:1.00
July 1, 2000 - September 30, 2000 1.03:1.00
October 1, 2000 - December 31, 2000 1.05:1.00
January 1, 2001 - March 31, 2001 1.40:1.00
April 1, 2001 - June 30, 2001 1.35:1.00
July 1, 2001 - December 31, 2001 1.30:1.00
January 1, 2002 - March 31, 2002 1.35:1.00
April 1, 2001 - June 30, 2002 1.45:1.00
July 1, 2002 - September 30, 2002 1.55:1.00
October 1, 2001 - December 31, 2002 1.70:1.00
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
Company shall not, and shall not permit any of its Subsidiaries to alter
the corporate structure of Company or any of its Subsidiaries or enter into any
transaction of merger or consolidation, or liquidate, wind-up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease
(as lessor or sub-lessor), transfer or otherwise dispose of, in one transaction
or a series of transactions, all or any part of its business, property or
assets, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or substantially all the business, property or fixed assets of, or
stock or other evidence of beneficial ownership of, any Person or any division
or line of business of any Person, except:
(i) any Subsidiary of Company may be merged with or into Company or any
wholly-owned Subsidiary of Company, or be liquidated, wound up or dissolved,
or all or any part of its business, property or assets may be conveyed, sold,
leased, transferred or otherwise disposed of, in one transaction or a series
of transactions, to Company or any wholly-owned Subsidiary of Company;
provided that, in the case of such a merger, Company or such wholly-owned
Subsidiary or, in the case of a merger of Company with and into U.S.
Dictaphone, U.S. Dictaphone) shall be the continuing or surviving corporation;
provided further that, in the case of any such merger of a Domestic Subsidiary
and a Foreign Subsidiary, the Domestic Subsidiary shall be the surviving
corporation; provided further that U.S. Dictaphone may only merge with
Company; and provided, further that, in the case of a merger of Company with
U.S. Dictaphone, (a) in the event U.S. Dictaphone is the continuing or
surviving corporation in such merger, U.S. Dictaphone shall expressly assume,
pursuant to documentation satisfactory in form and substance to Administrative
Agent and its counsel, all of the Obligations of Company under this Agreement
and the other Loan Documents, and (b) in any event the continuing or surviving
corporation in such merger shall enter into (and, if applicable, cause to be
filed or recorded with all relevant governmental authorities) all such
amendments to the Collateral Documents (including without limitation any
Mortgages to which Dictaphone or U.S. Dictaphone is a party at the time of
consummation of such merger but excluding the Company Pledge Agreement), and
take all such other actions, as may reasonably be deemed necessary or
advisable by Collateral Agent in order to insure that the Collateral under
such Collateral Documents continues to secure payment of all applicable
Secured Obligations (as such term is defined in the Intercreditor Agreement);
(ii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted under subsection 7.8;
(iii) Company and its Subsidiaries may sell inventory in the ordinary
course of business;
(iv) Company and its Subsidiaries may dispose of obsolete, worn out or
surplus property disposed of in the ordinary course of business;
(v) U.S. Dictaphone may either (i) enter into a lease with Pitney Bowes,
Inc. with respect to the space currently occupied by the Facsimile Division of
Pitney Bowes, Inc. in the form delivered to and approved by Administrative
Agent on the Closing Date with such other terms as may be acceptable to the
officers of U.S. Dictaphone in the good faith exercise of their business
judgment in the context of the Acquisition or (ii) allow Pitney Bowes, Inc. to
continue to occupy such space pursuant to and in accordance with the terms and
provisions of Section 5.13 of the Purchase Agreement and Company and its
Subsidiaries may, as lessor or sub-lessor, lease or sub-lease any other Real
Property Assets in the ordinary course of business;
(vi) Company and its Subsidiaries may sell or otherwise dispose of assets
in transactions that do not constitute Asset Sales; provided that the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof; and
(vii) subject to subsection 7.13, Company and its Subsidiaries (a) may
make Asset Sales constituting Specified Asset Sale/Financings and (b) may make
other Asset Sales of assets having a fair market value not in excess of
$2,000,000 during the term of this Agreement; provided that (x) the
consideration received for the assets that are the subject of any such Asset
Sale described in the foregoing clause (a) or (b) shall be in an amount at
least equal to the fair market value thereof; (y) at least 80% of the
consideration received shall be cash; and (z) the proceeds of such Asset Sales
described in the foregoing clause (b) shall be applied as required by
subsection 2.4B(ii)(a).
7.8 CONSOLIDATED CAPITAL EXPENDITURES.
Company shall not, and shall not permit its Subsidiaries to, make or
incur Consolidated Capital Expenditures, in any Fiscal Year indicated below, in
an aggregate amount in excess of the corresponding amount (the "MAXIMUM
CONSOLIDATED CAPITAL EXPENDITURES AMOUNT") set forth below opposite such Fiscal
Year; provided that the Maximum Consolidated Capital Expenditures Amount for any
Fiscal Year commencing with Fiscal Year 1998 shall be increased by an amount
equal to the excess, if any, (but in no event more than $2,000,000) of the
Maximum Consolidated Capital Expenditures Amount for the previous Fiscal Year
(as adjusted in accordance with this proviso) over the actual amount of
Consolidated Capital Expenditures for such previous Fiscal Year:
MAXIMUM CONSOLIDATED
FISCAL YEAR CAPITAL EXPENDITURES
1997 $ 15,000,000
1998 25,000,000
1999 25,000,000
2000 25,000,000
2001 25,000,000
2002 25,000,000
7.9 RESTRICTION ON LEASES.
Company shall not, and shall not permit any of its Subsidiaries to,
become liable in any way, whether directly or by assignment or as a guarantor or
other surety, for the obligations of the lessee under any lease, whether an
Operating Lease or a Capital Lease (other than intercompany leases between
Company and its wholly-owned Subsidiaries), unless, immediately after giving
effect to the incurrence of liability with respect to such lease, the
Consolidated Rental Payments at the time in effect during the then current
Fiscal Year shall not exceed the correlative amount set forth below opposite
such Fiscal Year:
Maximum Consolidated
Fiscal Year Rental Payments
1997 $ 7,500,000
1998 8,000,000
1999 8,600,000
2000 9,200,000
2001 9,800,000
2002 10,500,000
; provided that, notwithstanding anything to the contrary contained in this
subsection 7.9, Company may enter into a lease (whether an Operating Lease or a
Capital Lease) with respect to the Headquarters Facility following an Asset Sale
of the Headquarters Facility constituting a Specified Asset Sale/Financing;
provided that the Consolidated Rental Payments in respect of such lease do not
exceed $2,000,000 in any Fiscal Year during the term of this Agreement.
7.10 SALES AND LEASE-BACKS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Company or any of its Subsidiaries
to any Person (other than Company or any of its Subsidiaries) in connection with
such lease; provided that Company and its Subsidiaries may become and remain
liable as lessee, guarantor or other surety with respect to any such lease if
and to the extent that Company or any of its Subsidiaries would be permitted to
enter into, and remain liable under, such lease under subsection 7.9.
7.11 SALE OR DISCOUNT OF RECEIVABLES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.
7.12 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of Company or with any Affiliate of Company or of any
such holder, on terms that are less favorable to Company or that Subsidiary, as
the case may be, than those that might be obtained at the time from Persons who
are not such a holder or Affiliate; provided that the foregoing restriction
shall not apply to (i) any transaction between Company and any of its
wholly-owned Subsidiaries or between any of its wholly-owned Subsidiaries or
(ii) reasonable and customary fees paid to members of the Boards of Directors of
Company and its Subsidiaries.
7.13 DISPOSAL OF SUBSIDIARY STOCK.
Except for any sale of 100% of the capital stock or other equity
Securities of any of its Subsidiaries other than U.S. Dictaphone in compliance
with the provisions of subsection 7.7(vii), Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity Securities of any
of its Subsidiaries, except to qualify directors if required by applicable
law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including such
Subsidiary), except to Company, another Subsidiary of Company, or to
qualify directors if required by applicable law.
7.14 CONDUCT OF BUSINESS.
From and after the Closing Date, Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than (i) the
Dictaphone Business and similar or related businesses and (ii) such other lines
of business as may be consented to by Requisite Lenders.
7.15 AMENDMENTS OR WAIVERS OF STOCKHOLDERS' AGREEMENT; AMENDMENTS OF
DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS AND RECEIVABLES
PROGRAM AGREEMENTS; DESIGNATION OF "DESIGNATED SENIOR INDEBTEDNESS".
A. Neither Company nor any of its Subsidiaries will agree to any
material amendment to, or waive any of its material rights under, the
Stockholders Agreement without in each case obtaining the prior written consent
of Requisite Lenders to such amendment or waiver.
B. Company shall not, and shall not permit any of its Subsidiaries to,
amend or otherwise change the terms of any Subordinated Indebtedness, or make
any payment consistent with an amendment thereof or change thereto, if the
effect of such amendment or change is to increase the interest rate on such
Subordinated Indebtedness, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate any such event of default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof,
change the subordination provisions thereof (or of any guaranty thereof), or
change any collateral therefor (other than to release such collateral), or if
the effect of such amendment or change, together with all other amendments or
changes made, is to increase materially the obligations of the obligor
thereunder or to confer any additional rights on the holders of such
Subordinated Indebtedness (or a trustee or other representative on their behalf)
which would be adverse to Company or Lenders.
C. Company shall not, and shall not permit any of its Subsidiaries to,
amend or otherwise change the terms of any Receivables Program or any
Receivables Program Agreement related thereto, or make any payment consistent
with an amendment thereof or change thereto, if the effect of such amendment or
change, together with all other amendments or changes made, is to increase
materially the obligations of Company or any of its Subsidiaries thereunder or
to confer additional rights on any other parties to the applicable Receivables
Program Agreements which would be adverse to Company or any of its Subsidiaries
or to Lenders.
C. Company shall not designate any Indebtedness as "Designated Senior
Indebtedness" (as defined in the Subordinated Note Indenture) for purposes of
the Subordinated Note Indenture without the prior written consent of Requisite
Lenders.
7.16 FISCAL YEAR
Company shall not change its Fiscal Year-end from December 31.
7.17 RECEIVABLES PROGRAMS.
Notwithstanding anything to the contrary contained in this Agreement
(including without limitation subsection 10.7), Company may, and may permit its
Subsidiaries to, enter into one or more transactions (each such transaction
being referred to herein as a "RECEIVABLES PROGRAM") involving (i) the sale or
other financing by Company or any of its Subsidiaries, without recourse based
solely upon a default by one or more account debtors in the payment of any
accounts receivable included in the applicable Receivables Program, of accounts
receivable arising in the ordinary course of business of Company or any of its
Subsidiaries or (ii) the incurrence by Company or any of its Subsidiaries of
Non-Recourse Indebtedness secured by Liens on accounts receivable arising in the
ordinary course of business of Company or any of its Subsidiaries; provided that
the terms and conditions of each Receivables Program and all agreements and
instruments related thereto (all such agreements and instruments being
collectively referred to herein as "RECEIVABLES PROGRAM AGREEMENTS") shall be
satisfactory in form and substance to Agents and Requisite Lenders; provided
further that, prior to the consummation of any Receivables Program, Agents shall
have received originally executed copies of one or more favorable written
opinions of Shearman & Sterling, counsel for Company, in each case satisfactory
in form and substance to Agents and their counsel, to the effect that the
consummation of such Receivables Program does not conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any of the indentures pursuant to which any Subordinated Indebtedness has
been issued and covering such other matters as Agents may reasonably request;
and provided further that the proceeds of all Receivables Programs shall be
applied as required by subsection 2.4B(ii)(c).
SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of any Loan
when due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; or failure by Company to pay
any interest on any Loan or any fee or any other amount due under this Agreement
within five days after the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of Company or any of its Material Subsidiaries to pay when
due any principal of or interest on or other amount payable in respect of one or
more items of Indebtedness (other than Indebtedness referred to in subsection
8.1) or Contingent Obligations in either an individual or an aggregate principal
amount of $5,000,000 or more, in each case beyond the end of any grace period
provided therefor; or (ii) breach or default by Company or any of its Material
Subsidiaries with respect to any other material term of (a) one or more items of
Indebtedness or Contingent Obligations in the individual or aggregate principal
amounts referred to in clause (i) above or (b) any loan agreement, mortgage,
indenture or other agreement relating to such item(s) of Indebtedness or
Contingent Obligation(s), if the effect of such breach or default is to cause,
or to permit the holder or holders of that Indebtedness or Contingent
Obligation(s) (or a trustee on behalf of such holder or holders) then to cause,
that Indebtedness or Contingent Obligation(s) to become or be declared due and
payable prior to its stated maturity or the stated maturity of any underlying
obligation, as the case may be (in each case after giving effect to any
applicable grace periods); or
8.3 BREACH OF CERTAIN COVENANTS.
Failure of Company to perform or comply with any term or condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Company or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
Any Loan Party shall default in the performance of or compliance with
any term contained in this Agreement or any of the other Loan Documents, other
than any such term referred to in any other subsection of this Section 8, and
such default shall not have been remedied or waived within (i) 10 days after
receipt by Company and such Loan Party of notice from Administrative Agent or
any Lender of any such default under subsection 6.1 or (ii) 30 days after
receipt by Company and such Loan Party of such notice of any such default under
any other provision of this Agreement or any of the other Loan Documents; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of Company or any of its Material Subsidiaries in
an involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Company or any of its Material Subsidiaries under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Company or any of its
Material Subsidiaries, or over all or a substantial part of its property, shall
have been entered; or there shall have occurred the involuntary appointment of
an interim receiver, trustee or other custodian of Company or any of its
Material Subsidiaries for all or a substantial part of its property; or a
warrant of attachment, execution or similar process shall have been issued
against any substantial part of the property of Company or any of its Material
Subsidiaries, and any such event described in this clause (ii) shall continue
for 60 days unless dismissed, bonded or discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) Company or any of its Material Subsidiaries shall have an order
for relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Company or any of its Material Subsidiaries
shall make any general assignment for the benefit of creditors; or (ii) Company
or any of its Material Subsidiaries shall be unable, or shall fail generally, or
shall admit in writing its inability, to pay its debts as such debts become due;
or the Board of Directors of Company or any of its Material Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to in clause (i) above or this clause
(ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar process
involving, either in any individual case or in the aggregate at any time, an
amount in excess of $5,000,000 (in either case not adequately covered by
insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage) shall be entered or filed against Company or any of its
Material Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of 60 days (or in any
event later than five days prior to the date of any proposed sale thereunder);
or
8.9 DISSOLUTION.
Any order, judgment or decree shall be entered against Company or any
of its Material Subsidiaries decreeing the dissolution or split up of Company or
that Subsidiary and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events which individually or in
the aggregate results in or might reasonably be expected to result in liability
of Company or any of its ERISA Affiliates in excess of $5,000,000 during the
term of this Agreement; or there shall exist an amount of unfunded current
liabilities (as defined in Section 302(d)(8) of ERISA), individually or in the
aggregate for all Pension Plans (excluding for purposes of such computation any
Pension Plans with respect to which assets exceed benefit liabilities), which
exceeds $10,000,000; or
8.11 CHANGE IN CONTROL.
(i) Except as permitted under subsection 7.7(i) or subsection 7.13,
Company shall at any time not own 100% of the capital stock of U.S. Dictaphone,
U.K. Holdings, German Sub, Swiss Sub and Canadian Sub (excluding directors'
shares of U.K. Holdings); or (ii) Stonington and/or its Affiliates shall cease
to beneficially own and control at least a majority of the issued and
outstanding shares of capital stock of Company entitled (without regard to the
occurrence of any contingency) to vote for the election of members of the Board
of Directors of Company;
8.12 INVALIDITY OF SUBSIDIARY GUARANTY.
Upon execution and delivery thereof, the Subsidiary Guaranty for any
reason, other than the satisfaction in full of all Obligations, ceases to be in
full force and effect as to any Subsidiary Guarantor (other than in accordance
with its terms) or is declared to be null and void, or any Subsidiary Guarantor
denies in writing that it has any further liability, including without
limitation with respect to future advances by Lenders, under the Subsidiary
Guaranty; or
8.13 FAILURE OF SECURITY.
Upon execution and delivery thereof, any Shared Collateral Document
shall, at any time, cease to be in full force and effect (other than by reason
of a release of Collateral thereunder in accordance with the terms hereof or
thereof, the satisfaction in full of the Obligations or any other termination of
such Shared Collateral Document in accordance with the terms hereof or thereof)
or shall be declared null and void, or the validity or enforceability thereof
shall be contested in writing by any Loan Party, or Collateral Agent shall not
have or shall cease to have, for any reason other than the failure of Collateral
Agent or any Lender to take any action within its control, a valid security
interest in any Collateral purported to be covered thereby having a fair market
value individually or in the aggregate exceeding $500,000, perfected and with
the priority required by this Agreement and the relevant Shared Collateral
Document and subject only to Liens permitted under this Agreement and the
applicable Shared Collateral Document;
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans and (b) all other Obligations shall automatically become immediately due
and payable, without presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by Company, and the obligation of
each Lender to make any Loan shall thereupon terminate, and (ii) upon the
occurrence and during the continuation of any other Event of Default,
Administrative Agent shall, upon the written request or with the written consent
of Requisite Lenders, by written notice to Company, declare all or any portion
of the amounts described in clauses (a) and (b) above to be, and the same shall
forthwith become, immediately due and payable, and the obligation of each Lender
to make any Loan shall thereupon terminate.
Notwithstanding anything contained in the preceding paragraph, if at
any time within 60 days after an acceleration of the Loans pursuant to clause
(ii) of such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than
non-payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended to
benefit Company and do not grant Company, at any time, the right to require
Lenders to rescind or annul any acceleration hereunder or preclude Lenders from
exercising any of their rights or remedies, even if the conditions set forth
herein are met.
SECTION 9. AGENTS
9.1 APPOINTMENT.
BTCo. is hereby appointed Administrative Agent hereunder and under the
other Loan Documents and each Lender hereby authorizes Administrative Agent to
act as its agent in accordance with the terms of this Agreement and the other
Loan Documents. Morgan Stanley Senior Funding,Inc., is hereby appointed
Syndication Agent hereunder and under the other Loan Documents and each Lender
hereby authorizes Syndication Agent to act as its agent in accordance with the
terms of this Agreement and the other Loan Documents. Each Agent agrees to act
upon the express conditions contained in this Agreement and the other Loan
Documents, as applicable. The provisions of this Section 9 are solely for the
benefit of Agents and Lenders and Company shall have no rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties under this Agreement, each Agent shall act solely as an agent of Lenders
and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for Company or any of its
Subsidiaries.
9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably authorizes each Agent
to take such action on such Lender's behalf and to exercise such powers, rights
and remedies hereunder and under the other Loan Documents as are specifically
delegated or granted to such Agent by the terms hereof and thereof, together
with such powers, rights and remedies as are reasonably incidental thereto. Each
Agent shall have only those duties and responsibilities that are expressly
specified in this Agreement and the other Loan Documents. Each Agent may
exercise such powers, rights and remedies and perform such duties by or through
its agents or employees. Neither Agent shall have, by reason of this Agreement
or any of the other Loan Documents, a fiduciary relationship in respect of any
Lender; and nothing in this Agreement or any of the other Loan Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
either Agent any obligations in respect of this Agreement or any of the other
Loan Documents except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Neither Agent shall be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by either Agent to Lenders or by or on
behalf of Company to either Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of Company or any other Person liable for the
payment of any Obligations, nor shall either Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or as to the existence or possible
existence of any Event of Default or Potential Event of Default. Anything
contained in this Agreement to the contrary notwithstanding, neither Agent shall
have any liability arising from confirmations of the amount of outstanding
Loans.
C. EXCULPATORY PROVISIONS. Neither Administrative Agent nor Syndication
Agent nor any of its respective officers, directors, employees or agents shall
be liable to Lenders for any action taken or omitted by such Agent under or in
connection with any of the Loan Documents except to the extent caused by such
Agent's gross negligence or willful misconduct. If either Agent shall request
instructions from Lenders with respect to any act or action (including the
failure to take an action) in connection with this Agreement or any of the other
Loan Documents, such Agent shall be entitled to refrain from such act or taking
such action unless and until such Agent shall have received instructions from
Requisite Lenders (or such other Lenders as may be required under subsection
10.6 hereof). Without prejudice to the generality of the foregoing, (i) each
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for Company and its Subsidiaries),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against either Agent as a
result of such Agent acting or (where so instructed) refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required
under subsection 10.6 hereof). Agents shall be entitled to refrain from
exercising any power, discretion or authority vested in it under this Agreement
or any of the other Loan Documents except for actions explicitly required of the
Agent unless and until it has obtained the instructions of Requisite Lenders (or
such other Lenders as may be required under subsection 10.6 hereof).
D. AGENTS ENTITLED TO ACT AS LENDER. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, either Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans. Agents shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not performing the duties and functions delegated to it
hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless
the context clearly otherwise indicates, include Agents in their individual
capacity. Either Agent and its respective Affiliates may accept deposits from,
lend money to and generally engage in any kind of banking, trust, financial
advisory or other business with Company or any of its Affiliates as if it were
not performing the duties specified herein, and may accept fees and other
consideration from Company for services in connection with this Agreement and
otherwise without having to account for the same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR
APPRAISAL OF CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and that it has made
and shall continue to make its own appraisal of the creditworthiness of Company
and its Subsidiaries. Neither Agent shall have any duty or responsibility,
either initially or on a continuing basis, to make any such investigation or any
such appraisal on behalf of Lenders or to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter, and neither
Agent shall have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
9.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Agents, to the extent that such Agent shall not have been reimbursed
by Company, for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including,
without limitation, counsel fees and disbursements) or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or asserted against
such Agent in exercising its powers, rights and remedies or performing its
duties hereunder or under the other Loan Documents or otherwise in its capacity
as Administrative Agent or Syndication Agent, as the case may be, in any way
relating to or arising out of this Agreement or the other Loan Documents;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct. If any indemnity furnished to either Agent for any purpose
shall, in the opinion of such Agent, be insufficient or become impaired, such
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
9.5 SUCCESSOR ADMINISTRATIVE AGENT.
Administrative Agent may resign at any time by giving 30 days' prior
written notice thereof to Lenders and Company, and Administrative Agent may be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to Company and Administrative Agent and signed
by Requisite Lenders. Upon any such notice of resignation by, or any such
removal of, Administrative Agent, Requisite Lenders shall have the right, upon
five Business Days' notice to Company, to appoint a successor Administrative
Agent, and upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, that successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Administrative Agent, and the
retiring or removed Administrative Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Administrative
Agent's resignation or removal hereunder as Administrative Agent, the provisions
of this Section 9 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement.
9.6 SHARED COLLATERAL DOCUMENTS AND GUARANTIES.
A. APPOINTMENT OF ADMINISTRATIVE AGENT IN RESPECT OF INTERCREDITOR
AGREEMENT. Each Lender hereby further authorizes Administrative Agent to enter
into the Intercreditor Agreement as agent and/or secured party on behalf of and
for the benefit of Lenders, and each Lender agrees to be bound by the terms of
the Intercreditor Agreement; provided that, subject to any provision of
subsection 10.6 requiring the consent of any additional Lenders, Administrative
Agent shall not enter into or consent to any amendment, modification,
termination or waiver of any provision contained in the Intercreditor Agreement
without the prior consent of Requisite Lenders.
B. APPOINTMENT OF COLLATERAL AGENT IN RESPECT OF SUBSIDIARY GUARANTY,
INTERCREDITOR AGREEMENT AND SHARED COLLATERAL DOCUMENTS. Each Lender hereby
further authorizes and directs Collateral Agent (i) to act as agent for and
representative of Lenders and Existing Lenders under the Subsidiary Guaranty and
(ii) to enter into the Intercreditor Agreement and each Shared Collateral
Document as secured party on behalf of and for the benefit of Lenders and
Existing Lenders, and each Lender agrees to be bound by the terms of the
Subsidiary Guaranty, the Intercreditor Agreement and each Shared Collateral
Document.
C. LIMITATIONS ON LENDERS' RIGHTS IN RESPECT OF SUBSIDIARY GUARANTY
AND COLLATERAL DOCUMENTS. Anything contained in any of the Loan Documents to the
contrary notwithstanding, each Lender agrees that no Lender shall have any right
individually to realize upon any of the Collateral under any Shared Collateral
Document or to enforce the Subsidiary Guaranty, it being understood and agreed
that all rights and remedies under the Shared Collateral Documents and the
Subsidiary Guaranty may be exercised solely by Collateral Agent for the benefit
of Lenders and Existing Lenders in accordance with the terms thereof and the
terms of the Intercreditor Agreement.
SECTION 10. MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS.
A. GENERAL. Subject to subsection 10.1B, each Lender shall have the right
at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii)
sell participations to any Person in, all or any part of its Commitment or the
Loan made by it or any other interest herein or in any other Obligations owed to
it; provided that no such sale, assignment, transfer or participation shall,
without the consent of Company, require Company to file a registration statement
with the Securities and Exchange Commission or apply to qualify such sale,
assignment, transfer or participation under the securities laws of any state.
Except as otherwise provided in this subsection 10.1, no Lender shall, as
between Company and such Lender, be relieved of any of its obligations hereunder
as a result of any sale, assignment or transfer of, or any granting of
participations in, all or any part of its Commitment or the Loan or the other
Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Commitment, Loan or other
Obligation may (a) be assigned in any amount to another Lender, or to an
Affiliate of the assigning Lender or another Lender, with the giving of
notice to Company and Agents and, in the case of an assignment to any such
Affiliate where the assigning Lender can reasonably foresee that such
assignment would result in a requirement on the part of Company to pay such
Affiliate any greater amount pursuant to subsection 2.6D or 2.7 than
Company would have been required to pay the assigning Lender in respect of
the amount of such assignment had no such assignment occurred, with the
consent of Company to such assignment (which consent shall not be
unreasonably withheld), or (b) be assigned in an aggregate amount of not
less than $5,000,000 (or such lesser amount as shall constitute the
aggregate amount of the Commitment, Loan, and other Obligations of the
assigning Lender) to any other Eligible Assignee with the consent of
Company and Administrative Agent (which consent of Company and
Administrative Agent shall not be unreasonably withheld or delayed). To the
extent of any such assignment in accordance with either clause (a) or (b)
above, the assigning Lender shall be relieved of its obligations with
respect to its Commitment, Loan or other Obligations or the portion thereof
so assigned. The parties to each such assignment shall execute and deliver
to Administrative Agent, for its acceptance and recording in the Register,
an Assignment Agreement, together with a processing and recordation fee of
$3,500 and such forms, certificates or other evidence, if any, with respect
to United States federal income tax withholding matters as the assignee
under such Assignment Agreement may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(iii)(a). Upon such
execution, delivery, and acceptance and recordation, from and after the
effective date specified in such Assignment Agreement, (y) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and
(z) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than any rights which survive the
termination of this Agreement under subsection 10.9B) and be released from
its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be
a party hereto. The Commitments hereunder shall be modified to reflect the
Commitment of such assignee and any remaining Commitment of such assigning
Lender and, if any such assignment occurs after the issuance of any Notes
hereunder, the assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable, surrender its
applicable Note, if any, to Administrative Agent for cancellation, and
thereupon new Notes shall, if so requested by the assignee and/or the
assigning Lender in accordance with subsection 2.1E, be issued to the
assignee and/or to the assigning Lender, substantially in the form of
Exhibit III annexed hereto with appropriate insertions, to reflect the
outstanding Loans of the assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register. Upon
its receipt of an Assignment Agreement executed by an assigning Lender and
an assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in subsection 10.1B(i) and any
forms, certificates or other evidence with respect to United States federal
income tax withholding matters that such assignee may be required to
deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a),
Administrative Agent shall, if Administrative Agent and Company have
consented to the assignment evidenced thereby (in each case to the extent
such consent is required pursuant to subsection 10.1B(i)), (a) accept such
Assignment Agreement by executing a counterpart thereof as provided therein
(which acceptance shall evidence any required consent of Administrative
Agent to such assignment), (b) record the information contained therein in
the Register, and (c) give prompt notice thereof to Company. Administrative
Agent shall maintain a copy of each Assignment Agreement delivered to and
accepted by it as provided in this subsection 10.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an Affiliate
of the Lender granting such participation, shall not be entitled to require such
Lender to take or omit to take any action hereunder except action directly
affecting (i) the extension of the final scheduled maturity of any portion of
the principal amount of or interest on any Loan allocated to such participation
or (ii) a reduction of the principal amount of or the rate of interest payable
on any Loan allocated to such participation, and all amounts payable by Company
hereunder (including without limitation amounts payable to such Lender pursuant
to subsections 2.6D and 2.7) shall be determined as if such Lender had not sold
such participation. Company and each Lender hereby acknowledge and agree that,
solely for purposes of subsections 10.4 and 10.5, (a) any participation will
give rise to a direct obligation of Company to the participant and (b) the
participant shall be considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments and
participations permitted under the foregoing provisions of this subsection 10.1,
any Lender may assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning Company
and its Subsidiaries in the possession of that Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject to subsection 10.19.
10.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents and any consents,
amendments, waivers or other modifications thereto; (ii) all the costs of
furnishing all opinions by counsel for Company (including without limitation any
opinions requested by Lenders as to any legal matters arising hereunder) and of
Company's performance of and compliance with all agreements and conditions on
its part to be performed or complied with under this Agreement and the other
Loan Documents including, without limitation, with respect to confirming
compliance with environmental and insurance requirements; (iii) the reasonable
fees, expenses and disbursements of counsel to Agents (including allocated costs
of internal counsel) in connection with the negotiation, preparation, execution
and administration of the Loan Documents and any consents, amendments, waivers
or other modifications thereto and any other documents or matters requested by
Company; (iv) all the actual costs and reasonable expenses of creating and
perfecting the Liens in favor of Collateral Agent pursuant to the Loan
Documents, including filing and recording fees and expenses, title insurance,
fees and expenses of counsel for providing such opinions as Lenders may
reasonably request and fees and expenses of legal counsel to Agents (including
local counsel); (v) all other actual and reasonable costs and expenses incurred
by Agents and their Affiliates (including BT Securities Corporation) in
connection with the syndication of the Commitments and the negotiation,
preparation and execution of the Loan Documents and any consents, amendments,
waivers or other modifications thereto and the transactions contemplated
thereby; and (vi) after the occurrence of an Event of Default, all costs and
expenses, including reasonable attorneys' fees (including allocated costs of
internal counsel) and costs of settlement, incurred by Agents and Lenders in
enforcing any Obligations of or in collecting any payments due from Company
hereunder or under the other Loan Documents by reason of such Event of Default
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
10.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend, indemnify, pay and hold harmless Agents and Lenders,
and the officers, directors, employees, agents and affiliates of Agents and
Lenders (collectively called the "INDEMNITEES") from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation the reasonable fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any Person,
whether or not any such Indemnitee shall be designated as a party or a potential
party thereto), whether direct, indirect or consequential and whether based on
any federal, state or foreign laws, statutes, rules or regulations (including
without limitation securities and commercial laws, statutes, rules or
regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of this Agreement
or the other Loan Documents or the transactions contemplated hereby or thereby
(including without limitation Lenders' agreement to make the Loans hereunder or
the use or intended use of the proceeds of any of the Loans or the statements
contained in the commitment letter delivered by any Lender to Company with
respect thereto (collectively called the "INDEMNIFIED LIABILITIES"); provided
that Company shall not have any obligation to any Indemnitee hereunder with
respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise solely from the gross negligence or willful misconduct of that
Indemnitee as determined by a final judgment of a court of competent
jurisdiction; and provided, further that in connection with investigating,
preparing to defend, or defending against any Indemnified Liability of, to or
against more than one Indemnitee, such investigation, preparation or defense
shall be conducted by the same legal counsel on behalf of all such Indemnitees
except to the extent that one or more of such Indemnitees determines in good
faith that there is a conflict of interests between such Indemnitee or
Indemnitees and some or all of the remaining Indemnitees. To the extent that the
undertaking to defend, indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Company shall contribute the maximum portion that it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them.
10.4 SET-OFF.
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by Company at any time or from
time to time, without notice to Company or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by that Lender to or for the credit or the account of Company against and
on account of the obligations and liabilities of Company to that Lender under
this Agreement and the other Loan Documents, including, but not limited to, all
claims of any nature or description arising out of or connected with this
Agreement or any other Loan Document, irrespective of whether or not (i) that
Lender shall have made any demand hereunder or (ii) the principal of or the
interest on the Loans or any other amounts due hereunder shall have become due
and payable pursuant to Section 8 and although said obligations and liabilities,
or any of them, may be contingent or unmatured.
10.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment, by realization upon security, through the exercise
of any right of set-off or banker's lien, by counterclaim or cross action or by
the enforcement of any right under the Loan Documents or otherwise, or as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code, receive payment or reduction of a proportion of the aggregate amount of
principal, interest, fees and other amounts then due and owing to that Lender
hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them; provided that if all or part of such proportionately
greater payment received by such purchasing Lender is thereafter recovered from
such Lender upon the bankruptcy or reorganization of Company or otherwise, those
purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such purchasing Lender ratably to the extent
of such recovery, but without interest. Company expressly consents to the
foregoing arrangement and agrees that any holder of a participation so purchased
may exercise any and all rights of banker's lien, set-off or counterclaim with
respect to any and all monies owing by Company to that holder with respect
thereto as fully as if that holder were owed the amount of the participation
held by that holder.
10.6 AMENDMENTS AND WAIVERS.
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, and no consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
waiver or consent which: increases the amount of any of the Commitments or
reduces the principal amount of any of the Loans; changes in any manner the
definition of "Pro Rata Share" or the definition of "Requisite Lenders"; changes
in any manner any provision of this Agreement which, by its terms, expressly
requires the approval or concurrence of all Lenders; postpones the scheduled
final maturity date of any of the Loans; postpones the date or reduces the
amount of any scheduled payment (but not prepayment) of principal of any of the
Loans; postpones the date on which any interest or any fees are payable;
decreases the interest rate borne by any of the Loans (other than any waiver of
any increase in the interest rate applicable to any of the Loans pursuant to
subsection 2.2E) or the amount of any fees payable hereunder; increases the
maximum duration of Interest Periods permitted hereunder; releases 25% or more
in aggregate fair market value of the Collateral; releases any Subsidiary
Guarantor from its obligations under the Subsidiary Guaranty; or changes in any
manner the provisions contained in subsection 8.1 or this subsection 10.6 shall
be effective only if evidenced by a writing signed by or on behalf of all
Lenders. In addition, (i) any amendment, modification, termination or waiver of
any of the provisions contained in Section 4 shall be effective only if
evidenced by a writing signed by or on behalf of Administrative Agent and
Requisite Lenders, (ii) no amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
Lender which is the holder of that Note, and (iii) no amendment, modification,
termination or waiver of any provision of Section 9 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of Administrative Agent shall be effective without the written
concurrence of Administrative Agent. Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Company in any case
shall entitle Company to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.6 shall be binding upon each
Lender at the time outstanding, each future Lender and, if signed by Company, on
Company.
10.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Administrative Agent shall not
be effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or (i) as to Company and Administrative Agent, such other address as
shall be designated by such Person in a written notice delivered to the other
parties hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Administrative Agent.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the
Loans.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 10.2,
10.3 and 10.4 and the agreements of Lenders set forth in subsections 9.2C, 9.4
and 10.5 shall survive the payment of the Loans and the termination of this
Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Administrative Agent or any Lender
in the exercise of any power, right or privilege hereunder or under any other
Loan Document shall impair such power, right or privilege or be construed to be
a waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10.11 MARSHALLING; PAYMENTS SET ASIDE.
Neither Administrative Agent, Collateral Agent nor any Lender shall be
under any obligation to marshal any assets in favor of Company or any other
party or against or in payment of any or all of the Obligations. To the extent
that Company makes a payment or payments to Administrative Agent or Lenders (or
to Administrative Agent for the benefit of Lenders), or Collateral Agent or
Lenders enforce any security interests or exercise their rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or un- enforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).
10.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and permitted assigns of Lenders (it being understood
that Lenders' rights of assignment are subject to subsection 10.1). Neither
Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written consent of all
Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT COMPANY ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND
NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH
OTHER LOAN DOCUMENT OR SUCH OBLIGATION. Company hereby agrees that service of
all process in any such proceeding in any such court may be made by registered
or certified mail, return receipt requested, to Company at its address provided
in subsection 10.8, such service being hereby acknowledged by Company to be
sufficient for personal jurisdiction in any action against Company in any such
court and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of any Lender to bring proceedings
against Company in the courts of any other jurisdiction.
10.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
10.19 CONFIDENTIALITY.
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by Company that in any event a
Lender may make disclosures to Affiliates of such Lender or disclosures
reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Loans or any participations therein or disclosures required or requested by any
governmental agency or representative thereof or pursuant to legal process;
provided that, unless specifically prohibited by applicable law or court order,
each Lender shall notify Company of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; and provided, further that in no event shall any Lender be
obligated or required to return any materials furnished by Company or any of its
Subsidiaries.
10.20 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
DICTAPHONE CORPORATION
By: /s/ Joseph Skrzypczak
------------------------------------
Title: Senior Vice President and Chief Financial Officer
-------------------------------------------------
Notice Address:
Dictaphone Corporation
3191 Broadbridge Avenue
Stratford, Connecticut 06497
Attention: Dan Hart, Esq.
LENDERS:
BANKERS TRUST COMPANY, individually
and as Administrative Agent
By: /s/ Mary Jo Jolly
--------------------------------------
Title: Assistant Vice President
-----------------------------------
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Zadroga
with a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Victoria A. Floyd
<PAGE>
MORGAN STANLEY SENIOR FUNDING, INC.
By: /s/ Christopher Pucillo
------------------------------------
Title: Vice President
---------------------------------
Notice Address:
Morgan Stanley Senior Funding, Inc.
1585 Broadway, 10th Floor
New York, New York 10036
Attention: Christopher Pucillo
<PAGE>
MERRILL LYNCH PRIME RATE PORTFOLIO
By: /s/ Gil Marchand
----------------------------------
Title:
-------------------------------
Notice Address:
Merrill Lynch Prime Rate Portfolio
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attention: Gil Marchand
<PAGE>
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By: /s/ Gil Marchand
----------------------------------
Title:
-------------------------------
Notice Address:
Merrill Lynch Senior Floating Rate Fund, Inc.
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attention: Gil Marchand
<PAGE>
CIBC INC.
By: /s/ William M. Swenson
----------------------------------
Title:
-------------------------------
Notice Address:
c/o Canadian Imperial Bank of Commerce
425 Lexington Avenue, 7th Floor
New York, New York 10017
Attention: Bill Swenson
<PAGE>
PILGRIM AMERICA PRIME RATE TRUST
By: /s/ Howard Tiffen
--------------------------------------
Title: Senior Vice President
-----------------------------------
Notice Address:
Two Renaissance Square
40 N. Central Avenue, Suite 1200
Phoenix, Arizona 85004
Attention: Tim Hunt
<PAGE>
FIRST SOURCE FINANCIAL
By: /s/ Gary L. Francis
--------------------------------------
Title: Senior Vice President
----------------------------------
Notice Address:
First Source Financial
2850 W. Goff Road, 5th Floor
Rolling Meadows, IL 60008
Attention: Janice Rackow
<PAGE>
SCHEDULE 2.1
LENDERS' COMMITMENTS AND PRO RATA SHARES
LENDER COMMITMENT PRO RATA SHARE
Merrill Lynch Senior
Floating Rate Fund, Inc. $ 7,750,000.00 12.3506%
Morgan Stanley Senior
Funding, Inc. $35,000,000.00 55.7769%
CIBC Inc. $15,000,000.00 23.9044%
Pilgrim America Prime Rate Trust $ 5,000,000.00 7.9681%
-------------- ------------
TOTAL $62,750,000.00 100%
<PAGE>
EXHIBIT I
[FORM OF NOTICE OF BORROWING]
NOTICE OF BORROWING
Pursuant to that certain Credit Agreement dated as of November 14,
1997, as amended, supplemented or otherwise modified to the date hereof (said
Credit Agreement, as so amended, supplemented or otherwise modified, being the
"CREDIT AGREEMENT", the terms defined therein and not otherwise defined herein
being used herein as therein defined), by and among Dictaphone Corporation, a
Delaware corporation ("COMPANY"), the financial institutions listed therein as
Lenders ("LENDERS"), Morgan Stanley Senior Funding, Inc., as Syndication Agent,
and Bankers Trust Company, as Administrative Agent ("ADMINISTRATIVE AGENT"),
this represents Company's request to borrow Base Rate Loans from Lenders, in
accordance with their applicable Pro Rata Shares, as follows:
1. Date of borrowing: November __, 1997
-----------------
2. Amount of borrowing: $___________________
-------------------
The proceeds of such Loans are to be deposited in Company's account at
Administrative Agent.
The undersigned officer, to the best of his or her knowledge, on
behalf of Company certifies that:
(i) The representations and warranties contained in the Credit
Agreement and the other Loan Documents are true, correct and complete in
all material respects on and as of the date hereof to the same extent as
though made on and as of the date hereof, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties were true, correct and
complete in all material respects on and as of such earlier date;
(ii) No event has occurred and is continuing or would result from
the consummation of the borrowing contemplated hereby that would
constitute an Event of Default or a Potential Event of Default; and
(iii) Company has performed in all material respects all agreements
and satisfied all conditions which the Credit Agreement provides shall
be performed or satisfied by it on or before the date hereof.
DATED: ____________________ DICTAPHONE CORPORATION
By:--------------------------
Title:------------------------
<PAGE>
EXHIBIT II
[FORM OF NOTICE OF CONVERSION/CONTINUATION]
NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Credit Agreement dated as of November 14,
1997, as amended, supplemented or otherwise modified to the date hereof (said
Credit Agreement, as so amended, supplemented or otherwise modified, being the
"CREDIT AGREEMENT", the terms defined therein and not otherwise defined herein
being used herein as therein defined), by and among Dictaphone Corporation, a
Delaware corporation ("COMPANY"), the financial institutions listed therein as
Lenders, Morgan Stanley Senior Funding, Inc., as Syndication Agent, and Bankers
Trust Company, as Administrative Agent, this represents Company's request to
convert or continue Loans as follows:
1. DATE OF CONVERSION/CONTINUATION: __________________, ______
2. AMOUNT OF LOANS BEING CONVERTED/CONTINUED:$______________________
3. NATURE OF CONVERSION/CONTINUATION:
/__/ a. Conversion of Base Rate Loans
to Eurodollar Rate Loans
/__/ b. Conversion of Eurodollar Rate
Loans to Base Rate Loans
/__/ c. Continuation of Eurodollar
Rate Loans as such
4. If Loans are being continued as or converted to
Eurodollar Rate Loans, the duration of the new Interest
Period that commences on the conversion/ continuation
date: _______________ month(s)
In the case of a conversion to or continuation of Eurodollar Rate
Loans, the undersigned officer, to the best of his or her knowledge, on behalf
of Company certifies that no Event of Default or Potential Event of Default has
occurred and is continuing under the Credit Agreement.
DATED: _____________________ DICTAPHONE CORPORATION
By:--------------------------
Title:------------------------
<PAGE>
EXHIBIT III
[FORM OF TERM NOTE]
DICTAPHONE CORPORATION
PROMISSORY NOTE DUE JUNE 30, 2003
$
FOR VALUE RECEIVED, DICTAPHONE CORPORATION, a Delaware corporation
("COMPANY"), promises to pay to ("PAYEE") or its registered assigns the
principal amount of ($[ ]) in the installments referred to below.
Company also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the times
which shall be determined in accordance with the provisions of that certain
Credit Agreement dated as of November 14, 1997 by and among Company, the
financial institutions listed therein as Lenders, Morgan Stanley Senior Funding,
Inc., as Syndication Agent, and Bankers Trust Company, as Administrative Agent
(said Credit Agreement, as it may be amended, supplemented or otherwise modified
from time to time, being the "CREDIT AGREEMENT", the terms defined therein and
not otherwise defined herein being used herein as therein defined).
Company shall make principal payments on this Note in consecutive
annual installments, commencing on December 31, 1997 and ending on December 31,
2001, and thereafter in consecutive installments on September 30, 2002, December
31, 2002, March 31, 2003 and June 30, 2003. Each such installment shall be due
on the date specified in the Credit Agreement and in an amount determined in
accordance with the provisions thereof; provided that the last such installment
shall be in an amount sufficient to repay the entire unpaid principal balance of
this Note, together with all accrued and unpaid interest thereon.
This Note is one of Company's "Notes" in the aggregate principal
amount of $62,750,000 and is issued pursuant to and entitled to the benefits of
the Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Loan evidenced hereby was
made and is to be repaid.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at the
Funding and Payment Office or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Unless and until an Assignment Agreement effecting the assignment or transfer of
this Note shall have been accepted by Administrative Agent and recorded in the
Register as provided in subsection 10.1B(ii) of the Credit Agreement, Company
and Administrative Agent shall be entitled to deem and treat Payee as the owner
and holder of this Note and the Loan evidenced hereby. Payee hereby agrees, by
its acceptance hereof, that before disposing of this Note or any part hereof it
will make a notation hereon of all principal payments previously made hereunder
and of the date to which interest hereon has been paid; provided, however, that
the failure to make a notation of any payment made on this Note shall not limit
or otherwise affect the obligations of Company hereunder with respect to
payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in
subsection 2.4B(ii) of the Credit Agreement and to prepayment at the option of
Company as provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued and unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as
provided in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligations of Company,
which are absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.
Company promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in subsection 10.2 of the Credit Agreement,
incurred in the collection and enforcement of this Note. Company hereby consents
to renewals and extensions of time at or after the maturity hereof, without
notice, and hereby waives diligence, presentment, protest, demand and notice of
every kind and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly executed
and delivered by its officer thereunto duly authorized as of the date and at the
place first written above.
DICTAPHONE CORPORATION
By:---------------------------
Title:------------------------
<PAGE>
EXHIBIT IV-A
[FORM OF COMPLIANCE CERTIFICATE (MONTHLY)]
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) We are the duly elected [Title] and [Title] of Dictaphone
Corporation, a Delaware corporation ("COMPANY");
(2) We have reviewed the terms of that certain Credit Agreement
dated as of November 14, 1997, as amended, supplemented or otherwise
modified to the date hereof (said Credit Agreement, as so amended,
supplemented or otherwise modified, being the "CREDIT AGREEMENT", the
terms defined therein and not otherwise defined in this Certificate
(including Attachment No. 1 annexed hereto and made a part hereof)
being used in this Certificate as therein defined), by and among
Company, the financial institutions listed therein as Lenders, Morgan
Stanley Senior Funding, Inc., as Syndication Agent, and Bankers Trust
Company, as Administrative Agent, and the terms of the other Loan
Documents, and we have made, or have caused to be made under our
supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period
covered by the attached financial statements; and
(3) The examination described in paragraph (2) above did not
disclose, and we have no knowledge of, the existence of any condition
or event which constitutes an Event of Default or Potential Event of
Default during or at the end of the accounting period covered by the
attached financial statements or as of the date of this Certificate,
except for any such condition or event which no longer constitutes an
Event of Default or Potential Event of Default as of the date of this
Certificate and which was previously reported to the Lenders in
accordance with subsection 6.1(ix) of the Credit Agreement[, and
except as set forth below].
[Set forth [below] [in a separate attachment to this Certificate]
are all exceptions to paragraph (3) above listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
Company has taken, is taking, or proposes to take with respect to each such
condition or event:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________]
The foregoing certifications, together with the computations set
forth in Attachment No. 1 annexed hereto and made a part hereof and the
financial statements delivered with this Certificate in support hereof, are made
and delivered this __________ day of _____________, 199_ pursuant to subsection
6.1(iv) of the Credit Agreement.
DICTAPHONE CORPORATION
By:---------------------------
Title:------------------------
By:---------------------------
Title:------------------------
<PAGE>
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a Compliance
Certificate dated as of ____________, 199_ and pertains to the period from
____________, 199_ to ____________, 199_. Subsection references herein relate to
subsections of the Credit Agreement.
A. INDEBTEDNESS
1. Indebtedness of Foreign Subsidiaries to Company and
Domestic Subsidiaries (7.1(v)(b)): $------------
2. Maximum Indebtedness permitted under subsection
7.1(v)(b): $30,000,000
3. Indebtedness of [Name of Foreign Subsidiary] to
Persons other than Company or Subsidiaries (7.1(v)(c)): $------------
4. Contingent Obligations of [Name of Foreign
Subsidiary] to Persons other than Company or
Subsidiaries in respect of Commercial Letters
of Credit not constituting Letters of Credit: $------------
5. Direct Foreign Subsidiary Obligations of
[Name of Foreign Subsidiary] (3+4): $------------
6. Aggregate amount of accounts receivable for
[Name of Foreign Subsidiary]: $------------
7. Aggregate amount of inventory of
[Name of Foreign Subsidiary]: $------------
8. Maximum amount of Direct Foreign
Obligations of [Name of Foreign
Subsidiary] permitted under subsection
7.1(v)(c) ((80% x item 6) + (50% x item 7)) $------------
[REPEAT ITEMS 3 THROUGH 8 FOR EACH FOREIGN SUBSIDIARY]
9. Indebtedness permitted under subsection 7.1(x): $------------
10. Maximum Indebtedness permitted under
subsection 7.1(x): $10,000,000
B. LIENS
1. Indebtedness secured by Liens permitted under
subsection 7.2A(iii): $-------------
2. Maximum permitted under subsection 7.2A(iii): $5,000,000
3. Indebtedness secured by Liens permitted
under subsection 7.2A(vii): $-------------
4. Maximum permitted under subsection 7.2A(vii): $5,000,000
C. INVESTMENTS
1. Aggregate amount of overnight loans by Foreign
Subsidiaries to Pitney Bowes Finance Plc (7.3(ii)): $-------------
2. Maximum overnight loans permitted under
subsection 7.3(ii): $5,000,000
3. Investments of Company and Subsidiaries consisting
of any deferred portion of the sales price received
by Company or Subsidiaries in connection with Asset
Sales (7.3(vi)): $-------------
4. Maximum Investments permitted under subsection 7.3(vi): $500,000
5. Loans to senior management by Company (7.3(viii)): $-------------
6. Maximum loans to senior management permitted
under subsection 7.3(viii): $1,700,000
7. Investments permitted under subsection 7.3(x): $-------------
8. Maximum permitted under subsection 7.3(x): $-------------
D. CONTINGENT OBLIGATIONS
1. Contingent Obligations of Company in respect
of Commercial Letters of Credit (other than
Letters of Credit) (7.4(i)): $-------------
2. Maximum Contingent Obligations permitted
under subsection 7.4(i): $5,000,000
3. Contingent Obligations of Company and Domestic
Subsidiaries in respect of Direct Foreign
Subsidiary Obligations (including without
limitation any such Contingent obligations
in respect of Letters of Credit
supporting any Direct Foreign Subsidiary
Obligations) ("Foreign Subsidiary Support
Obligations") (7.4(i)): $-------------
4. Maximum Foreign Subsidiary Support Obligations
permitted under Subsection 7.4(i): $2,000,000
5. Notional principal amount of Interest Rate Agreements
(including Interest Rate Agreements required under
subsection 6.9) with respect to which Company is
liable (7.4(iv)): $-------------
6. Aggregate principal amount of Term Loans outstanding: $-------------
7. Maximum permitted notional amount under subsection
7.4(iv) (item 6): $-------------
8. Contingent Obligations of Company and Subsidiaries
permitted under subsection 7.4(x): $-------------
9. Maximum Contingent Obligations of Company and
Subsidiaries permitted under subsection 7.4(x): $3,000,000
E. FUNDAMENTAL CHANGES
1. Aggregate fair market value of assets sold in any
one or more Asset Sales after Closing Date in one
or more transactions (7.7(vii)): $-------------
2. Maximum permitted under subsection 7.7(vii): $2,000,000
F. CONSOLIDATED CAPITAL EXPENDITURES
1. Consolidated Capital Expenditures of Company and
Subsidiaries for Fiscal Year-to-date (7.8): $-------------
2. Maximum amount of Consolidated Capital Expenditures
permitted under subsection 7.8 for Fiscal Year
(unadjusted): $-------------
3. Maximum Consolidated Capital Expenditures permitted under
subsection 7.8 for previous Fiscal Year (as adjusted
in accordance with subsection 7.8): $-------------
4. Actual amount of Consolidated Capital Expenditures
for previous Fiscal year: $-------------
5. (3-4) (but not greater than $2,000,000): $-------------
6. Maximum amount of Consolidated Capital Expenditure
permitted under subsection 7.8 for Fiscal Year
(adjusted) (2+5): $-------------
G. LEASES
1. Consolidated Rental Payments of leases to which
Company or Subsidiaries are liable (7.9): $-------------
2. Maximum Consolidated Rental Payments permitted under
subsection 7.9: $-------------
<PAGE>
EXHIBIT IV-B
[FORM OF COMPLIANCE CERTIFICATE (QUARTERLY/ANNUAL)]
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) We are the duly elected [Title] and [Title] of Dictaphone
Corporation, a Delaware corporation ("COMPANY");
(2) We have reviewed the terms of that certain Credit Agreement dated
as of November 14, 1997, as amended, supplemented or otherwise modified to
the date hereof (said Credit Agreement, as so amended, supplemented or
otherwise modified, being the "CREDIT AGREEMENT", the terms defined therein
and not otherwise defined in this Certificate (including Attachment No. 1
annexed hereto and made a part hereof) being used in this Certificate as
therein defined), by and among Company, the financial institutions listed
therein as Lenders, Morgan Stanley Senior Funding, Inc., as Syndication
Agent, and Bankers Trust Company, as Administrative Agent, and the terms of
the other Loan Documents, and we have made, or have caused to be made under
our supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period
covered by the attached financial statements; and
(3) The examination described in paragraph (2) above did not disclose,
and we have no knowledge of, the existence of any condition or event which
constitutes an Event of Default or Potential Event of Default during or at
the end of the accounting period covered by the attached financial
statements or as of the date of this Certificate, except for any such
condition or event which no longer constitutes an Event of Default or
Potential Event of Default as of the date of this Certificate and which was
previously reported to the Lenders in accordance with subsection 6.1(ix) of
the Credit Agreement[, and except as set forth below].
[Set forth [below] [in a separate attachment to this Certificate] are
all exceptions to paragraph (3) above listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
Company has taken, is taking, or proposes to take with respect to each such
condition or event:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------]
The foregoing certifications, together with the computations set forth
in Attachment No. 1 annexed hereto and made a part hereof and the financial
statements delivered with this Certificate in support hereof, are made and
delivered this __________ day of _____________, 199_ pursuant to subsection
6.1(iv) of the Credit Agreement.
DICTAPHONE CORPORATION
By: __________________________
Title: ________________________
By: __________________________
Title: ________________________
<PAGE>
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of
a Compliance Certificate dated as of ____________, 199_ and
pertains to the period from ____________, 199_ to ____________,
199_. Subsection references herein relate to subsections of the
Credit Agreement.
A. INDEBTEDNESS
1. Indebtedness of Foreign Subsidiaries to Company and
Domestic Subsidiaries (7.1(v)(b)): $------------
2. Maximum Indebtedness permitted under subsection 7.1(v)(b): $30,000,000
3. Indebtedness of [Name of Foreign Subsidiary] to
Persons other than Company or Subsidiaries (7.1(v)(c)): $-------------
4. Contingent Obligations of [Name of Foreign Subsidiary]
to Persons other than Company or Subsidiaries in
respect of Commercial Letters of Credit not
constituting Letters of Credit: $-------------
5. Direct Foreign Subsidiary Obligations of [Name of Foreign
Subsidiary] (3+4): $-------------
6. Aggregate amount of accounts receivable for [Name of
Foreign Subsidiary]: $-------------
7. Aggregate amount of inventory of [Name of Foreign
Subsidiary]: $-------------
8. Maximum amount of Direct Foreign Obligations of $-------------
[Name of Foreign Subsidiary] permitted under subsection
7.1(v)(c) ((80% x item 6) + (50% x item 7))
[REPEAT ITEMS 3 THROUGH 8 FOR EACH FOREIGN SUBSIDIARY]
9. Indebtedness permitted under subsection 7.1(x): $-------------
10. Maximum Indebtedness permitted under subsection 7.1(x): $10,000,000
B. LIENS
1. Indebtedness secured by Liens permitted under
subsection 7.2A(iii): $-------------
2. Maximum permitted under subsection 7.2A(iii): $5,000,000
3. Indebtedness secured by Liens permitted under
subsection 7.2A(vii): $-------------
4. Maximum permitted under subsection 7.2A(vii): $5,000,000
C. INVESTMENTS
1. Aggregate amount of overnight loans by Foreign
Subsidiaries to Pitney Bowes Finance Plc. (7.3(ii)): $-------------
2. Maximum overnight loans permitted under subsection
7.3(ii): $5,000,000
3. Investments of Company and Subsidiaries consisting of
any deferred portion of the sales price received by
Company or Subsidiaries in connection with Asset
Sales (7.3(vi)): $-------------
4. Maximum Investments permitted under subsection 7.3(vi): $500,000
5. Loans to senior management by Company (7.3(viii)): $-------------
6. Maximum loans to senior management permitted under
subsection 7.3(viii): $1,700,000
7. Investments permitted under subsection 7.3(x): $-------------
8. Maximum permitted under subsection 7.3(x): $-------------
D. CONTINGENT OBLIGATIONS
1. Contingent Obligations of Company in respect of
Commercial Letters of Credit (other than Letters of
Credit) (7.4(i)): $-------------
2. Maximum Contingent Obligations permitted under
subsection 7.4(i): $5,000,000
3. Contingent Obligations of Company and Domestic
Subsidiaries in respect of Direct Foreign Subsidiary
Obligations (including without limitation any such
Contingent obligations in respect of Letters of
Credit supporting any direct Foreign Subsidiary
Obligations) ("Foreign Subsidiary Support Obligations")
(7.4(i)): $-------------
4. Maximum Foreign Subsidiary Support Obligations permitted
under subsection 7.4(i): $2,000,000
5. Notional principal amount of Interest Rate Agreements
(including Interest Rate Agreements required under
subsection 6.9) with respect to which Company is
liable (7.4(iv)): $-------------
6. Aggregate principal amount of Term Loans outstanding: $-------------
7. Maximum permitted notional amount under subsection
7.4(iv) (item 6): $-------------
8. Contingent Obligations of Company and Subsidiaries
permitted under subsection 7.4(x): $-------------
9. Maximum Contingent Obligations of Company and
Subsidiaries permitted under subsection 7.4(x): $3,000,000
E. MAXIMUM LEVERAGE RATIO (as of the last day of the four-
Fiscal Quarter period ending _____________, 199_)
1. Consolidated Total Debt: $-------------
2. Consolidated EBITDA: $-------------
3. Leverage Ratio (1):(2): ____:1.00
4. Maximum ratio permitted under subsection 7.6A: ____:1.00
F. MINIMUM CONSOLIDATED EBITDA (for the four-Fiscal Quarter
period ending ____________, 199_)
1. Consolidated Net Income: $-------------
2. Consolidated Interest Expense: $-------------
3. Provisions for taxes based on income: $-------------
4. Total depreciation expense: $-------------
5. Total amortization expense: $-------------
6. Other non-cash items reducing Consolidated Net Income: $-------------
7. Other non-cash items increasing Consolidated Net Income: $-------------
8. Consolidated EBITDA (1+2+3+4+5+6-7): $-------------
9. Minimum Consolidated EBITDA permitted under
subsection 7.6B: $-------------
G. MINIMUM CONSOLIDATED NET WORTH (as of ____________, 199_)
1. Consolidated Net Worth: $-------------
2. Cumulative total amortization expense on a consolidated
basis for Company and Subsidiaries: $-------------
3. (1+2): $-------------
4. Minimum Consolidated Net Worth permitted under
subsection 7.6C: $-------------
H. MINIMUM INTEREST COVERAGE RATIO (for the four-Fiscal Quarter
period ending _____________, 199_)
1. Consolidated EBITDA: $-------------
2. Consolidated Capital Expenditures: $-------------
3. Consolidated Interest Expense: $-------------
4. (1-2): $-------------
5. Interest Coverage Ratio (4):(3): ____:1.00
6. Minimum Interest Coverage Ratio permitted under
subsection 7.6D: ____:1.00
I. FUNDAMENTAL CHANGES
1. Aggregate fair market value of assets sold in any
one or more Asset Sales (other than Specified Asset
Sale/Financings) after Closing Date in one or more
transactions (7.7(vii)): $-------------
2. Maximum permitted under subsection 7.7(vii): $2,000,000
J. CONSOLIDATED CAPITAL EXPENDITURES
1. Consolidated Capital Expenditures of Company and
Subsidiaries for Fiscal Year-to-date (7.8): $-------------
2. Maximum amount of Consolidated Capital Expenditures
permitted under subsection 7.8 for Fiscal Year
(unadjusted): $-------------
3. Maximum Consolidated Capital Expenditures permitted
under subsection 7.8 for previous Fiscal Year
(as adjusted in accordance with subsection 7.8): $-------------
4. Actual amount of Consolidated Capital Expenditures for
previous Fiscal year: $-------------
5. (3-4) (but not greater than $2,000,000): $-------------
6. Maximum amount of Consolidated Capital Expenditure
permitted under subsection 7.8 for Fiscal Year
(adjusted) (2+5): $-------------
K. LEASES
1. Consolidated Rental Payments of leases to which
Company or Subsidiaries are liable (7.9): $-------------
2. Maximum Consolidated Rental Payments permitted under
subsection 7.9: $-------------
<PAGE>
EXHIBIT V-A
[FORM OF OPINION OF SHEARMAN & STERLING]
[Shearman & Sterling Letterhead]
November 20, 1997
To the Lenders listed on Schedule A attached hereto, and to Morgan Stanley
Senior Funding, Inc., as Syndication Agent for such Lenders, and Bankers
Trust Company, as Administrative Agent for such Lenders
Dictaphone Corporation
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.1I of the
Credit Agreement dated as of November 14, 1997 (the "CREDIT AGREEMENT"), among
Dictaphone Corporation, a Delaware corporation (the "COMPANY"), and each of you.
Unless otherwise defined herein, terms defined in the Credit Agreement are used
herein as therein defined.
We have acted as special counsel to the Company in connection with the
preparation, execution and delivery of the Credit Agreement and of the Notes,
the Company Pledge Agreement and the Company Security Agreement executed and
delivered by the Company on the date hereof (collectively, for purposes of this
opinion, the "COMPANY CREDIT DOCUMENTS"), and we have acted as special counsel
to U.S. Dictaphone in connection with the preparation, execution and delivery of
the Amended and Restated Subsidiary Pledge Agreement, the Amended and Restated
Subsidiary Security Agreement and the Amended and Restated Subsidiary Guaranty
executed and delivered by U.S. Dictaphone on the date hereof (for purposes of
this opinion, the "SUBSIDIARY PLEDGE AGREEMENT", the "SUBSIDIARY SECURITY
AGREEMENT" and the "SUBSIDIARY GUARANTY", respectively, and, collectively, the
"U.S. DICTAPHONE CREDIT DOCUMENTS"; together with the Company Credit Documents,
the "CREDIT DOCUMENTS").
In that connection, we have examined counterparts of each of the
Company Credit Documents and the U.S. Dictaphone Credit Documents and of the
Amended and Restated Subsidiary Patent Security Agreement and the Amended and
Restated Subsidiary Trademark Security Agreement executed and delivered by U.S.
Dictaphone on the date hereof (for purposes of this opinion, the "SUBSIDIARY
PATENT SECURITY AGREEMENT" and the "SUBSIDIARY TRADEMARK SECURITY AGREEMENT",
respectively), and, to the extent relevant to our opinions expressed below, the
other documents furnished by the Company and U.S. Dictaphone pursuant to Section
4 of the Credit Agreement including:
(a) The Certificate of Incorporation of each of the Company and
U.S. Dictaphone, as amended through the date hereof;
(b) The Bylaws of each of the Company and U.S. Dictaphone, as amended
through the date hereof; and
(c) A copy of a UCC-1 financing statement and the exhibits attached
thereto (the "FINANCING STATEMENT"), filed under the Uniform Commercial
Code as in effect on the date hereof in the State of California (the
"CALIFORNIA UCC"), naming U.S. Dictaphone as debtor and the Collateral
Agent as secured party, which Financing Statement was filed in the office
of the Secretary of State of the State of California on August 17, 1995
(the "FILING OFFICE").
In addition, we have examined the originals, or copies certified or
otherwise identified to our satisfaction, of such other corporate records of the
Company and U.S. Dictaphone, certificates of public officials and of officers of
the Company and U.S. Dictaphone and agreements, instruments and other documents
as we have deemed necessary as a basis for the opinions expressed below. As to
questions of fact material to such opinions, we have, when relevant facts were
not independently established by us, relied upon certificates of the Company or
U.S. Dictaphone or of their respective officers or of public officials.
In our examination of the documents referred to above, we have
assumed, without independent investigation, (i) the due execution and delivery,
pursuant to due power and authority (corporate and otherwise) of each of the
documents referred to above by all parties thereto and the Notes by the Company,
(ii) the authenticity of all such documents submitted to us as originals, and
(iii) the conformity to originals of all such documents submitted to us as
copies.
In addition, we have assumed, without independent investigation, that
(i) each of the Company and U.S. Dictaphone is duly organized and validly
existing under the laws of the jurisdiction of its organization and has full
power and authority (corporate and otherwise) to execute, deliver and perform
each Credit Document to which it is party and (ii) the execution, delivery and
performance by each of the Company and U.S. Dictaphone of each Credit Document
to which it is a party has been duly authorized by all necessary action
(corporate or otherwise) and does not (A) contravene the certificate of
incorporation, bylaws or other constituent documents of such party, (B) conflict
with or result in the breach of any document or instrument binding on such party
or (C) violate or require any governmental or regulatory authorization or other
action under any law, rule or regulation applicable to such party other than New
York law or United States federal law applicable to borrowers, guarantors and
grantors generally or, assuming the correctness of the Company's statements made
as representations and warranties in Sections 5.2B and 5.2C of the Credit
Agreement, applicable to the Loan Parties. We have also assumed that each of the
Credit Documents is the legal, valid and binding obligation of each Lender, each
Agent and the Collateral Agent party thereto, enforceable against such Lender,
Agent and Collateral Agent in accordance with its terms.
In rendering our opinion expressed in paragraphs 2, 3 and 4 below, we
have relied upon those representations and warranties made to you by the Company
and U.S. Dictaphone, as the case may be, as set forth in the relevant Credit
Documents as to the ownership and location of the Collateral.
Based upon the foregoing and upon such investigation as we have deemed
necessary, and subject to the qualifications set forth below, we are of the
following opinion:
1. Each of the Credit Documents is the legal, valid and binding obligation
of the Company or U.S. Dictaphone, as the case may be, enforceable against the
Company or U.S. Dictaphone, as the case may be, in accordance with its terms.
2. Each of the Company Pledge Agreement and the Subsidiary Pledge Agreement
creates, subject to possession of certificates representing the Pledged Shares
(as defined in the Company Pledge Agreement or the Subsidiary Pledge Agreement,
as the case may be) as provided in the next succeeding sentence, a valid
security interest in favor of the Collateral Agent (as defined in the Company
Pledge Agreement or the Subsidiary Pledge Agreement, as the case may be) in the
Pledged Shares, securing payment of the Secured Obligations (as defined in the
Company Pledge Agreement or the Subsidiary Pledge Agreement, as the case may
be). Assuming that (a) the Collateral Agent is holding the certificates
representing the Pledged Shares in the State of New York, (b) the Company and
U.S. Dictaphone, as the case may be, has rights in the Pledged Shares and (c)
the Collateral Agent has acquired and taken delivery of such certificates as a
bona fide purchaser, within the meaning of the Uniform Commercial Code as in
effect on the date hereof in the State of New York (the "NEW YORK UCC"), such
security interest in the Pledged Shares is perfected and first priority.
3. Each of the Company Security Agreement and the Subsidiary Security
Agreement creates a valid security interest in favor of the Collateral Agent (as
defined in the Company Security Agreement or the Subsidiary Security Agreement,
as the case may be) in the Collateral (as defined in the Company Security
Agreement or the Subsidiary Security Agreement, as the case may be), to the
extent that the Company or U.S. Dictaphone, as the case may be, has rights in
the Collateral referred to therein and to the extent that the New York UCC is
applicable thereto, securing payment of the Secured Obligations (as defined in
the Company Security Agreement or the Subsidiary Security Agreement, as the case
may be).
4. The Financing Statement is in appropriate form for filing in the Filing
Office under the California UCC and, assuming the Financing Statement has been
properly filed in the Filing Office and that applicable filing fees have been
paid, such security interest in the Collateral (as defined in the Subsidiary
Security Agreement) has been perfected to the extent security interests in such
Collateral can be perfected by filing financing statements under the California
UCC and to the extent perfection of a security interest in such Collateral is
governed by the California UCC.
Our opinions set forth above are subject to the following qualifications:
(a) Our opinion in paragraph 1 above is subject to the effect of
general principles of equity including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing (regardless of
whether considered in a proceeding in equity or at law).
(b) Our opinion in paragraph 1 above is also subject to the effect of
any applicable bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar law affecting creditors' rights generally.
(c) Our opinion in paragraph 1 above is also subject to the
qualification that we express no opinion as to Sections 10.4 and 10.11 of
the Credit Agreement.
(d) Our opinion in paragraph 1 above is also subject to the effect of
applicable law that may limit the enforceability or render ineffective
certain of the provisions of the Company Pledge Agreement, the Company
Security Agreement, the Subsidiary Pledge Agreement, the Subsidiary
Security Agreement and the Subsidiary Guaranty, although the inclusion of
such provisions does not affect the validity of the Company Pledge
Agreement, the Company Security Agreement, the Subsidiary Pledge Agreement,
the Subsidiary Security Agreement or the Subsidiary Guaranty, as the case
may be, as a whole, and there exist legally adequate remedies for a
realization of the principal benefits afforded thereby.
(e) Our opinion in paragraph 2 above is subject to the qualification
that we express no opinion as to the priority of the security interests in
the Pledged Shares as against (i) any lien creditor (as defined in Article
9 of the New York UCC) to the extent that the security interest therein
purports to secure any advances or other extensions of credit other than
Loans made pursuant to existing Commitments under the Credit Agreement or
(ii) any claim or lien in favor of the United States of America or any
agency or instrumentality thereof (including, without limitation, federal
tax liens and liens under Title IV of ERISA).
(f) Our opinions in paragraphs 2, 3 and 4 above are subject to the
qualification that (i) we express no opinion as to the Company's or U.S.
Dictaphone's rights in or title to the Pledged Shares (as defined in the
Company Pledge Agreement or the Subsidiary Pledge Agreement, as the case
may be) or the Collateral (as defined in the Company Security Agreement or
the Subsidiary Security Agreement, as the case may be) and (ii) in the case
of proceeds, continuation of perfection of the Collateral Agent's security
interest therein is limited to the extent set forth in Section 9-306 of the
New York UCC or Section 9306 of the California UCC.
(g) Our opinions in paragraphs 2, 3 and 4 above are also subject to
following qualifications:
(i) in the case of all Collateral (as defined in the Subsidiary
Security Agreement) in which the security interest of the Collateral
Agent (as defined in the Subsidiary Security Agreement) has been
perfected by the filing of the Financing Statement in the Filing
Office, Division 9 of the California UCC requires the filing of
continuation statements within the period of six months prior to the
expiration of each five years from the date of the original filing in
order to maintain the effectiveness of the filing referred to in
paragraph 4 above;
(ii) in the case of property which becomes Collateral (as defined
in the Company Security Agreement or the Subsidiary Security
Agreement, as the case may be) after the date hereof, Section 552 of
the Federal Bankruptcy Code limits the extent to which property
acquired by a debtor after the commencement of a case under the
Federal Bankruptcy Code may be subject to a security interest arising
from a security agreement entered into by the debtor before the
commencement of such case;
(iii) the perfection of such security interest will be terminated
as to any Collateral (as defined in the Subsidiary Security Agreement)
acquired by U.S. Dictaphone more than four months after U.S.
Dictaphone so changes its name, identity or corporate structure as to
make the Financing Statement seriously misleading, unless a new
appropriate financing statement indicating the new name, identity or
corporate structure of U.S. Dictaphone is properly filed before the
expiration of such four months;
(iv) we express no opinion as to the creation or perfection of
any security interest in Collateral (as defined in the Company
Security Agreement or the Subsidiary Security Agreement, as the case
may be) that is excluded from Article 9 of the New York UCC under
Section 9-104 thereof or Division 9 of the California UCC under
Section 9104 thereof;
(v) we express no opinion as to the perfection of any security
interest in (A) any Collateral consisting of inventory at a time
during or after which the Company or U.S. Dictaphone is or becomes a
retail merchant (as such term is defined in Section 9102 of the
California UCC), (B) any Collateral consisting of patents, trademarks,
trade names or other intellectual property or any rights with respect
thereto, or any other Collateral covered solely by the Subsidiary
Patent Security Agreement or the Subsidiary Trademark Security
Agreement or (C) any Collateral consisting of consumer goods, crops
growing or to be grown, timber to be cut, minerals or the like, or
accounts resulting from the sale of minerals or the like at the
wellhead or the minehead; and
(vi) except as provided in paragraph 2 above, we express no
opinion as to the priority of any lien or security interest created by
any of the Credit Documents (including, without limitation, the
priority of any such lien or security interest in fixtures under
Section 9313 of the California UCC against an encumbrances or owner of
the real estate, it being understood that no fixture filing is being
filed under such Section at this time).
(h) We express no opinion as to the enforceability of indemnification
provisions in any of the Credit Documents to the extent enforcement thereof
is contrary to public policy.
(i) Our opinions set forth above are limited to the law of the State
of New York, the General Corporation Law of the State of Delaware, the
federal law of the United States of America and, solely for the purposes of
our opinion expressed above in paragraph 4, the California UCC, and we do
not express any opinion herein concerning any other law. Without limiting
the foregoing, we express no opinion as to the effect of the law of any
jurisdiction other than the State of New York wherein any Lender may be
located or wherein enforcement of any of the Credit Documents may be sought
that limits the rates of interest legally chargeable or collectible.
A copy of this opinion letter may be delivered by any of you to any
Eligible Assignee in connection with and at the time of any assignment and
delegation by any of you as a Lender to such Eligible Assignee of all or a
portion of your Loans and Commitments in accordance with the provisions of the
Credit Agreement, and such Eligible Assignee may rely on the opinions expressed
above as if this opinion letter were addressed and delivered to such Eligible
Assignee on the date hereof.
This opinion letter speaks only as of the date hereof. We do not
assume, and we expressly disclaim, any responsibility to advise any of you or
any other Person who is permitted to rely on any opinion expressed herein as
specified in the next preceding paragraph of any change of law or fact that may
occur after the date of this opinion letter even though such change may affect
the legal analysis, a legal conclusion or any other matter set forth in or
relating to the opinion letter.
Very truly yours,
<PAGE>
Schedule A
Lenders
Merrill Lynch Senior Floating Rate Fund, Inc.
Morgan Stanley Senior Funding, Inc.
CIBC Inc.
Pilgrim America Prime Rate Trust
<PAGE>
EXHIBIT V-B
[FORM OF OPINION OF GENERAL
COUNSEL TO DICTAPHONE CORPORATION]
[Dictaphone Corporation Letterhead]
November 20, 1997
To the Lenders listed on Schedule A attached hereto, and to Morgan Stanley
Senior Funding, Inc., as Syndication Agent for such Lenders, and Bankers
Trust Company, as Administrative Agent for such Lenders
Dictaphone Corporation
Ladies and Gentlemen:
I am Senior Vice President and General Counsel of Dictaphone
Corporation, a Delaware corporation (the "COMPANY"), and Dictaphone Corporation
(U.S.), a Delaware corporation ("U.S. DICTAPHONE") a wholly-owned subsidiary of
the Company. This opinion is furnished to you pursuant to Section 4.1I of the
Credit Agreement dated as of November 14, 1997 among the Company, and each of
you. Unless otherwise defined herein, terms defined in the Credit Agreement are
used herein as therein defined.
In rendering the opinions expressed below, I have examined:
(i) a copy of the Credit Agreement executed by the Company,
(ii) copies of the Notes executed by the Company,
(iii) a copy of the Company Pledge Agreement executed by the Company,
(iv) a copy of the Company Security Agreement executed by the Company
(items (i) through (iv) collectively, for purposes of this opinion, the
"COMPANY CREDIT DOCUMENTS"),
(v) a copy of the Amended and Restated Subsidiary Pledge Agreement
executed by U.S. Dictaphone (the "SUBSIDIARY PLEDGE AGREEMENT"),
(vi) a copy of the Amended and Restated Subsidiary Security Agreement
executed by U.S. Dictaphone (the "SUBSIDIARY SECURITY AGREEMENT"), and
(vii) a copy of the Amended and Restated Subsidiary Guaranty executed
by U.S. Dictaphone (the "SUBSIDIARY GUARANTY", for purposes of this
opinion, the "SUBSIDIARY PLEDGE AGREEMENT", the "SUBSIDIARY SECURITY
AGREEMENT" and the "SUBSIDIARY GUARANTY", collectively, the "U.S.
DICTAPHONE CREDIT DOCUMENTS"; together with the Company Credit Documents,
the "CREDIT DOCUMENTS").
I have also examined counterparts of each of the Amended and Restated
Subsidiary Patent Security Agreement and the Amended and Restated Subsidiary
Trademark Security Agreement executed and delivered by U.S. Dictaphone on the
date hereof (for purposes of this opinion, the "SUBSIDIARY PATENT SECURITY
AGREEMENT" and the "SUBSIDIARY TRADEMARK SECURITY AGREEMENT", respectively) as
well as the following:
(a) The Certificate of Incorporation of each of the
Company and U.S. Dictaphone, as amended through the date
hereof;
(b) The Bylaws of each of the Company and U.S.
Dictaphone, as amended through the date hereof; and
(c) Resolutions of the Board of Directors of each of
the Company and U.S. Dictaphone regarding the Credit
Documents and the transactions contemplated thereby.
In addition, I have examined the originals, or copies certified or
otherwise identified to my satisfaction, of such other corporate records of the
Company and U.S. Dictaphone, certificates of public officials and of officers of
the Company and U.S. Dictaphone and agreements, instruments and other documents
as I have deemed necessary as a basis for the opinions expressed below. As to
questions of fact material to such opinions, I have, when relevant facts were
not independently established by me, relied upon certificates of the Company or
U.S. Dictaphone or of their respective officers or of public officials.
In my examination of the documents referred to above, I have assumed,
without independent investigation, (i) the due execution and delivery, pursuant
to due power and authority (corporate and otherwise) of each of the documents
referred to above by all parties thereto other than the Company and U.S.
Dictaphone, (ii) the authenticity of all such documents submitted to me as
originals, and (iii) the conformity to originals of all such documents submitted
to me as copies.
Based upon the foregoing assumptions and upon such investigation as I
have deemed necessary, and subject to the qualifications set forth below, I am
of the opinion that, as of the date hereof:
5. The Company is a corporation duly organized, and U.S. Dictaphone is
a corporation duly incorporated, in each case under the laws of the State of
Delaware. Each of the Company and U.S. Dictaphone is validly existing and in
good standing under the laws of the State of Delaware, with corporate power and
authority under the laws of the State of Delaware to own, lease and operate its
properties and to conduct its business as presently conducted.
6. The execution, delivery and performance by each of the Company and
U.S. Dictaphone of the Credit Documents, the Subsidiary Patent Security
Agreement and the Subsidiary Trademark Security Agreement to which the Company
or U.S. Dictaphone, as the case may be, is a party, are within the respective
corporate powers of the Company and U.S. Dictaphone, have been duly authorized
by all necessary corporate action on the part of the Company or U.S. Dictaphone,
as the case may be, and do not (a) contravene the Certificate of Incorporation
or Bylaws of the Company or U.S. Dictaphone, as the case may be, (b) violate any
law, rule or regulation (including Regulation X of the Board of Governors of the
Federal Reserve System) or any judgment, order or decree of any government,
governmental instrumentality or court, domestic or foreign, having jurisdiction
over the Company or U.S. Dictaphone or (c) conflict with, or result in the
breach of or constitute a default under, or result in the creation or imposition
of any Liens upon any property or assets of the Company and U.S. Dictaphone
under, the Subordinated Note Indenture.
7. Except for such consents, approvals, authorizations, registrations,
declarations and filings as have heretofore been obtained or made by the
Company, no consents or approvals of, authorizations by, or registrations,
declarations or filings with any federal, Delaware or New York governmental
authority are required by the Company or U.S. Dictaphone in connection with the
execution, delivery and performance by the Company or U.S. Dictaphone, as the
case may be, of the Credit Documents to which it is a party.
8. Each of the Credit Documents, the Subsidiary Patent Security
Agreement and the Subsidiary Trademark Security Agreement has been duly executed
and delivered by the Company or U.S. Dictaphone, as the case may be.
5. The Company is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
6. To the best of my knowledge after due inquiry, there are no
actions, suits or proceedings pending or threatened against the Company or U.S.
Dictaphone which have a significant likelihood of materially and adversely
affecting either the ability of the Company or U.S. Dictaphone to perform its
obligations under any Loan Document or the financial condition or operations of
the Company and its Subsidiaries, taken as a whole, other than as described in
Schedule 5.6 annexed to the Credit Agreement.
The opinions set forth above are subject to the following
qualifications:
My opinions set forth above are limited to the law of the State of New
York, the General Corporation Law of the State of Delaware, and the federal
law of the United States of America, in each case as in effect on the date
hereof, and I do not express any opinion herein concerning any other law.
Without limiting the foregoing, I express no opinion as to the effect of
the law of any jurisdiction other than the State of New York wherein any
Lender may be located or wherein enforcement of any of the Credit Documents
may be sought that limits the rates of interest legally chargeable or
collectible.
A copy of this opinion letter may be delivered by any of you to any
Eligible Assignee in connection with and at the time of any assignment and
delegation by any of you as a Lender to such Eligible Assignee of all or a
portion of your Loans and Commitments in accordance with the provisions of the
Credit Agreement, and such Eligible Assignee may rely on the opinions expressed
above as if this opinion letter were addressed and delivered to such Eligible
Assignee on the date hereof.
This opinion letter speaks only as of the date hereof. I do not
assume, and I expressly disclaim, any responsibility to advise any of you or any
other Person who is permitted to rely on any opinion expressed herein as
specified in the next preceding paragraph of any change of law or fact that may
occur after the date of this opinion letter even though such change may affect
the legal analysis, a legal conclusion or any other matter set forth in or
relating to the opinion letter.
Very truly yours,
<PAGE>
Schedule A
Lenders
Merrill Lynch Senior Floating Rate Fund, Inc.
Morgan Stanley Senior Funding, Inc.
CIBC Inc.
Pilgrim America Prime Rate Trust
<PAGE>
EXHIBIT VI
[FORM OF OPINION OF O'MELVENY & MYERS]
[O'M&M Letterhead]
[Date]
1 9 9 7
[file number]
[doc ID]
Bankers Trust Company
[Address]
Morgan Stanley Senior Funding, Inc.
[Address]
and
The Lenders Party to the Credit
Agreement Referenced Below
Re: Loans to Dictaphone Corporation
Ladies and Gentlemen:
We have acted as counsel to Bankers Trust Company, as Administrative
Agent (in such capacity, "Administrative Agent") in connection with the
preparation and delivery of a Credit Agreement dated as of November 14, 1997
(the "Credit Agreement") among Dictaphone Corporation, a Delaware corporation
("Company"), the financial institutions listed therein as Lenders, Morgan
Stanley Senior Funding, Inc., as Syndication Agent ("Syndication Agent") and
Administrative Agent and in connection with the preparation and delivery of
certain related documents.
We have participated in various conferences with representatives of
Company and Administrative Agent and conferences and telephone calls with
Shearman & Sterling, counsel to Company, [and with your representatives,] during
which the Credit Agreement and related matters have been discussed, and we have
also participated in the meeting held on the date hereof (the "Closing")
incident to the funding of the initial loans made under the Credit Agreement. We
have reviewed the forms of the Credit Agreement and the exhibits thereto,
including the form of the promissory note annexed thereto (the "Notes"), and the
opinions of Shearman & Sterling and Dan Hart, Esq. (collectively, the
"Opinions") and the officers' certificates and other documents delivered at the
Closing. We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals or copies and the due authority of
all persons executing the same, and we have relied as to factual matters on the
documents that we have reviewed.
Although we have not independently considered all of the matters
covered by the Opinions to the extent necessary to enable us to express the
conclusions therein stated, we believe that the Credit Agreement and the
exhibits thereto are in substantially acceptable legal form and that the
Opinions and the officers' certificates and other documents delivered in
connection with the execution and delivery of, and as conditions to the making
of the initial loans under, the Credit Agreement and the Notes are substantially
responsive to the requirements of the Credit Agreement.
Respectfully submitted,
<PAGE>
EXHIBIT VII
[FORM OF ASSIGNMENT AGREEMENT]
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this "AGREEMENT") is entered into by and
between the parties designated as Assignor ("ASSIGNOR") and Assignee
("ASSIGNEE") above the signatures of such parties on the Schedule of Terms
attached hereto and hereby made an integral part hereof (the "SCHEDULE OF
TERMS") and relates to that certain Credit Agreement described in the Schedule
of Terms (said Credit Agreement, as amended, supplemented or otherwise modified
to the date hereof and as it may hereafter be amended, supplemented or otherwise
modified from time to time, being the "CREDIT AGREEMENT", the terms defined
therein and not otherwise defined herein being used herein as therein defined).
IN CONSIDERATION of the agreements, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
SECTION 1. ASSIGNMENT AND ASSUMPTION.
(a) Effective upon the Settlement Date specified in Item 4 of the
Schedule of Terms (the "SETTLEMENT DATE"), Assignor hereby sells and assigns to
Assignee, without recourse, representation or warranty (except as expressly set
forth herein), and Assignee hereby purchases and assumes from Assignor, that
percentage interest in all of Assignor's rights and obligations as a Lender
arising under the Credit Agreement and the other Loan Documents with respect to
Assignor's outstanding Loans which represents, as of the Settlement Date, the
percentage interest specified in Item 3 of the Schedule of Terms of all rights
and obligations of Lenders arising under the Credit Agreement and the other Loan
Documents with respect to the Loans (the "ASSIGNED SHARE").
(b) In consideration of the assignment described above, Assignee
hereby agrees to pay to Assignor, on the Settlement Date, the principal amount
of the outstanding Loan included within the Assigned Share, such payment to be
made by wire transfer of immediately available funds in accordance with the
applicable payment instructions set forth in Item 5 of the Schedule of Terms.
(c) Assignor hereby represents and warrants that Item 3 of the
Schedule of Terms correctly sets forth the amount of the outstanding Loan and
the Pro Rata Share of Assignee after giving effect to the assignment and
assumption described above.
(d) Assignor and Assignee hereby agree that, upon giving effect to the
assignment and assumption described above, (i) Assignee shall be a party to the
Credit Agreement and shall have all of the rights and obligations under the Loan
Documents, and shall be deemed to have made all of the covenants and agreements
contained in the Loan Documents, arising out of or otherwise related to the
Assigned Share, and (ii) Assignor shall be absolutely released from any of such
obligations, covenants and agreements assumed or made by Assignee in respect of
the Assigned Share. Assignee hereby acknowledges and agrees that the agreement
set forth in this Section 1(d) is expressly made for the benefit of Company,
Administrative Agent, Assignor and the other Lenders and their respective
successors and permitted assigns.
(e) Assignor and Assignee hereby acknowledge and confirm their
understanding and intent that (i) this Agreement shall effect the assignment by
Assignor and the assumption by Assignee of Assignor's rights and obligations
with respect to the Assigned Share, (ii) any other assignments by Assignor of a
portion of its rights and obligations with respect to its outstanding Loan shall
have no effect on the Loan and the Pro Rata Share of Assignee set forth in Item
3 of the Schedule of Terms, and (iii) from and after the Settlement Date,
Administrative Agent shall make all payments under the Credit Agreement in
respect of the Assigned Share (including without limitation all payments of
principal and accrued but unpaid interest with respect thereto) (A) in the case
of any such interest and fees that shall have accrued prior to the Settlement
Date, to Assignor, and (B) in all other cases, to Assignee; provided that
Assignor and Assignee shall make payments directly to each other to the extent
necessary to effect any appropriate adjustments in any amounts distributed to
Assignor and/or Assignee by Administrative Agent under the Loan Documents in
respect of the Assigned Share in the event that, for any reason whatsoever, the
payment of consideration contemplated by Section 1(b) occurs on a date other
than the Settlement Date.
SECTION 2. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) Assignor represents and warrants that it is the legal and
beneficial owner of the Assigned Share, free and clear of any adverse claim.
(b) Assignor shall not be responsible to Assignee for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of any of the Loan Documents or for any representations, warranties,
recitals or statements made therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Assignor to Assignee or by or on behalf
of Company or any of its Subsidiaries to Assignor or Assignee in connection with
the Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any other Person liable
for the payment of any Obligations, nor shall Assignor be required to ascertain
or inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or as to the existence or possible
existence of any Event of Default or Potential Event of Default.
(c) Assignee represents and warrants that it is an Eligible Assignee;
that it has experience and expertise in the making of loans such as the Loans;
that it has acquired the Assigned Share for its own account and not with any
present intention of selling all or any portion of such interest; and that it
has received, reviewed and approved a copy of the Credit Agreement (including
all Exhibits and Schedules thereto).
(d) Assignee represents and warrants that it has received from
Assignor such financial information regarding Company and its Subsidiaries as is
available to Assignor and as Assignee has requested, that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the assignment evidenced by this Agreement,
and that it has made and shall continue to make its own appraisal of the
creditworthiness of Company and its Subsidiaries. Assignor shall have no duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Assignee or to provide Assignee
with any other credit or other information with respect thereto, whether coming
into its possession before the making of the initial Loans or at any time or
times thereafter, and Assignor shall not have any responsibility with respect to
the accuracy of or the completeness of any information provided to Assignee.
(e) Each party to this Agreement represents and warrants to the other
party hereto that it has full power and authority to enter into this Agreement
and to perform its obligations hereunder in accordance with the provisions
hereof, that this Agreement has been duly authorized, executed and delivered by
such party and that this Agreement constitutes a legal, valid and binding
obligation of such party, enforceable against such party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity.
SECTION 3. MISCELLANEOUS.
(a) Each of Assignor and Assignee hereby agrees from time to time,
upon request of the other such party hereto, to take such additional actions and
to execute and deliver such additional documents and instruments as such other
party may reasonably request to effect the transactions contemplated by, and to
carry out the intent of, this Agreement.
(b) Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated, except by an instrument in writing signed by the party
(including, if applicable, any party required to evidence its consent to or
acceptance of this Agreement) against whom enforcement of such change, waiver,
discharge or termination is sought.
(c) Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed. For the purposes hereof, the notice address of each of
Assignor and Assignee shall be as set forth on the Schedule of Terms or, as to
either such party, such other address as shall be designated by such party in a
written notice delivered to the other such party. In addition, the notice
address of Assignee set forth on the Schedule of Terms shall serve as the
initial notice address of Assignee for purposes of subsection 10.8 of the Credit
Agreement.
(d) In case any provision in or obligation under this Agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
(e) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).
(f) This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns.
(g) This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
(h) This Agreement shall become effective upon the date (the
"EFFECTIVE DATE") upon which all of the following conditions are satisfied: (i)
the execution of a counterpart hereof by each of Assignor and Assignee, (ii) the
execution of a counterpart hereof by Company as evidence of its consent hereto
to the extent required under subsection 10.1B(i) of the Credit Agreement, (iii)
the receipt by Administrative Agent of the processing and recordation fee
referred to in subsection 10.1B(i) of the Credit Agreement, (iv) in the event
Assignee is a Non-US Lender (as defined in subsection 2.7B(iii)(a) of the Credit
Agreement), the delivery by Assignee to Administrative Agent of such forms,
certificates or other evidence with respect to United States federal income tax
withholding matters as Assignee may be required to deliver to Administrative
Agent pursuant to said subsection 2.7B(iii)(a), (v) the execution of a
counterpart hereof by Administrative Agent as evidence of its acceptance hereof
in accordance with subsection 10.1B(ii) of the Credit Agreement, (vi) the
receipt by Administrative Agent of originals or telefacsimiles of the
counterparts described above and authorization of delivery thereof, and (vii)
the recordation by Administrative Agent in the Register of the pertinent
information regarding the assignment effected hereby in accordance with
subsection 10.1B(ii) of the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized, such execution being made as of the Effective Date in the applicable
spaces provided on the Schedule of Terms.
<PAGE>
SCHEDULE OF TERMS
1. Borrower: Dictaphone Corporation
2. Name and Date of Credit Agreement: Credit Agreement dated as of November
14, 1997 by and among Dictaphone Corporation, the financial institutions
listed therein as Lenders, Morgan Stanley Senior Funding, Inc., as
Syndication Agent, and Bankers Trust Company, as Administrative Agent.
3. Amounts:
(a) Aggregate Outstanding Loans of all Lenders:$_________
(b) Assigned Share/Pro Rata Share: ________%
(c) Amount of Assigned Share of Loans: $_________
4. Settlement Date: ____________, 199_
5. Payment Instructions:
ASSIGNOR: ASSIGNEE:
---------------------------- ----------------------------
---------------------------- ----------------------------
---------------------------- ----------------------------
Attention: __________________ Attention:------------------
Reference: _________________ Reference:-----------------
6. Notice Addresses:
ASSIGNOR: ASSIGNEE:
---------------------------- ----------------------------
---------------------------- ----------------------------
---------------------------- ----------------------------
---------------------------- ----------------------------
7. Signatures:
[NAME OF ASSIGNOR], [NAME OF ASSIGNEE],
as Assignor as Assignee
By:--------------------------- By:------------------------------
Title:------------------------ Title:---------------------------
Consented to in accordance with Accepted in accordance with subsection
subsection 10.1B(I) of the Credit 10.1B(II) of the Credit Agreement
Agreement
DICTAPHONE CORPORATION BANKERS TRUST COMPANY, as
Administrative Agent
By:---------------------------- By:--------------------------------
Title:------------------------- Title:-----------------------------
<PAGE>
EXHIBIT VIII
[FORM OF CERTIFICATE RE NON-BANK STATUS]
CERTIFICATE RE NON-BANK STATUS
Reference is hereby made to that certain Credit Agreement dated as of
November 14, 1997 (said Credit Agreement, as amended, supplemented or otherwise
modified to the date hereof, being the "CREDIT AGREEMENT") by and among
Dictaphone Corporation, a Delaware corporation, the financial institutions
listed therein as Lenders, Morgan Stanley Senior Funding, Inc., as Syndication
Agent, and Bankers Trust Company, as Administrative Agent. Pursuant to
subsection 2.7B(iii) of the Credit Agreement, the undersigned hereby certifies
that it is not a "bank" or other Person described in Section 881(c)(3) of the
Internal Revenue Code of 1986, as amended.
[NAME OF LENDER]
By: ____________________
Title: __________________
<PAGE>
EXHIBIT IX
[FORM OF COMPANY PLEDGE AGREEMENT]
AMENDED AND RESTATED COMPANY PLEDGE AGREEMENT
This AMENDED AND RESTATED COMPANY PLEDGE AGREEMENT (this "AGREEMENT")
is dated as of November 14, 1997 and entered into by and between DICTAPHONE
CORPORATION, a Delaware corporation ("PLEDGOR"), and BANKERS TRUST COMPANY
("BTCO"), as collateral agent for and representative of (in such capacity herein
called "COLLATERAL AGENT") the Secured Parties (as hereinafter defined), and
amends and restates that certain Pledge Agreement (the "EXISTING PLEDGE
AGREEMENT") dated as of August 7, 1995 between Pledgor and Existing Agent (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Pledgor, the financial institutions party thereto as lenders
("EXISTING LENDERS"), and Bankers Trust Company, as administrative agent for
Existing Lenders (in such capacity, together with its successors in such
capacity, "EXISTING AGENT") are parties to that certain Credit Agreement dated
as of August 7, 1995 (said Credit Agreement, as amended through and including
the date hereof and as it may hereafter be further amended, amended and
restated, supplemented or otherwise modified from time to time, being the
"EXISTING CREDIT AGREEMENT") pursuant to which Existing Lenders have made
certain credit facilities available to Pledgor in the form of loans and letters
of credit, and all Existing Credit Agreement Obligations (as defined in the
Intercreditor Agreement referred to below) are currently secured by the Pledged
Collateral (as hereinafter defined).
B. Pledgor, the financial institutions party thereto as lenders ("NEW
LENDERS"; together with Existing Lenders, "CURRENT LENDERS"), and Bankers Trust
Company, as administrative agent for New Lenders (in such capacity, together
with its successors in such capacity, "NEW AGENT"; together with Existing Agent,
"CURRENT AGENTS") have entered into that certain Credit Agreement dated as of
even date herewith (said Credit Agreement, as it may hereafter be amended,
amended and restated, supplemented or otherwise modified from time to time,
being the "NEW CREDIT AGREEMENT"; together with the Existing Credit Agreement,
the "CURRENT CREDIT AGREEMENTS") pursuant to which New Lenders have made certain
credit facilities available to Pledgor in the form of loans the proceeds of
which will be used on the date hereof to prepay a portion of the loans
outstanding under the Existing Credit Agreement, and the terms of the New Credit
Agreement require that all New Credit Agreement Obligations (as defined in the
Intercreditor Agreement) be secured by the Pledged Collateral.
C. It is contemplated that, from time to time, one or more Current
Lenders and/or one or more other financial institutions (any such Current
Lenders and/or other financial institutions being referred to herein
collectively as "SUCCESSOR LENDERS") may enter into one or more agreements with
Pledgor and/or its Subsidiaries (any such agreements, as they may exist from
time to time, being "SUCCESSOR CREDIT AGREEMENTS") which either refinance,
replace or otherwise restructure all or any portion of the indebtedness under
the Current Credit Agreements and/or any Successor Credit Agreement (the Current
Credit Agreements and any Successor Credit Agreements being referred to herein
collectively as "CREDIT AGREEMENTS"; Current Lenders and any Successor Lenders
being referred to herein collectively as "LENDERS"; and Current Agents and any
administrative agents (collectively, "SUCCESSOR AGENTS") under any Successor
Credit Agreements being referred to herein collectively as "AGENTS"), and the
terms of any Successor Credit Agreement may require that all Successor Credit
Agreement Obligations (as defined in the Intercreditor Agreement) in respect
thereof be secured by the Pledged Collateral.
D. Pledgor has entered into, or may from time to time enter into, one
or more Lender Interest Rate Agreements (as defined in the Intercreditor
Agreement) with one or more Interest Rate Exchangers (as defined in the
Intercreditor Agreement), and the terms of any Lender Interest Rate Agreement
may require that all Interest Rate Obligations (as defined in the Intercreditor
Agreement) in respect thereof be secured by the Pledged Collateral.
E. Current Agents and Collateral Agent have entered into, and all
existing Loan Parties (as defined in the Intercreditor Agreement) have
acknowledged and agreed to the terms of, that certain Intercreditor Agreement
dated as of even date herewith (said Intercreditor Agreement, as it may
hereafter be amended, amended and restated, supplemented or otherwise modified
from time to time, being the "INTERCREDITOR AGREEMENT"; terms defined therein
and not otherwise defined herein being used herein as therein defined) which
provides for, among other things, the appointment of Collateral Agent to
administer and enforce this Agreement in the manner set forth herein and
therein.
F. Pursuant to the authority granted to Collateral Agent by Existing
Agent and the other Parties under the Intercreditor Agreement, Collateral Agent
and Pledgor desire to amend and restate the Existing Pledge Agreement as
hereinafter set forth in order to (i) substitute BTCo, in its capacity as
Collateral Agent, for BTCo, in its capacity as Existing Agent, as the secured
party hereunder, (ii) confirm the continuation of the existing pledge and grant
of security interests with respect to the Pledged Collateral, as provided for in
the Existing Pledge Agreement, for the benefit of Existing Agent, Existing
Lenders [and any Interest Rate Exchangers secured under the Existing Pledge
Agreement on the date hereof], and (iii) provide that such pledge and grant of
security interests with respect to the Pledged Collateral shall hereafter be for
the benefit of Current Lenders, Current Agents, any Successor Lender or
Successor Agent becoming a party to the Intercreditor Agreement in the manner
provided therein, any Successor Lenders represented by any such Successor Agent,
any Interest Rate Exchanger becoming a party to the Intercreditor Agreement in
the manner provided therein, and Collateral Agent (all of the Persons described
in this clause (iii) being referred to herein collectively as "SECURED
PARTIES").
NOW, THEREFORE, in consideration of the premises, in order to induce
Lenders to make and/or maintain extensions of credit to Pledgor under the Credit
Agreements and to induce Interest Rate Exchangers to enter into and/or maintain
Lender Interest Rate Agreements, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Existing Pledge
Agreement is hereby amended and restated in its entirety as follows:
SECTION 1. PLEDGE OF SECURITY. Pledgor hereby pledges and assigns to
Collateral Agent, and hereby grants to Collateral Agent a security interest in,
all of Pledgor's right, title and interest in and to the following (the "PLEDGED
COLLATERAL"):
(a) the shares of stock (the "PLEDGED SHARES") described in Part A of
Schedule I annexed hereto and issued by the corporations named therein, the
certificates representing the Pledged Shares and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to the Pledged
Shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Shares;
provided that, anything contained herein to the contrary notwithstanding, the
shares of stock of Swiss Sub (such term being used herein as defined in the
Current Credit Agreements as in effect on the date hereof) listed in Part A of
Schedule I annexed hereto shall not become part of the Pledged Shares for any
purpose hereunder until such time as such shares of stock are released by the
applicable governmental authority in Switzerland that holds such shares of stock
on the date hereof and the pledge of such shares is permitted under Swiss law;
(b) the indebtedness (the "PLEDGED DEBT") described in Part B of
Schedule I annexed hereto and issued by the obligors named therein, the
instruments evidencing the Pledged Debt, and all interest, cash, instruments and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Debt;
(c) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any issuer of the Pledged Shares from time to time acquired by Pledgor in any
manner (which shares shall be deemed to be part of the Pledged Shares), the
certificates or other instruments representing such additional shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to such additional
shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional
shares, securities, warrants, options or other rights; provided, however that,
subject to Section 12 hereof, (i) in no event shall more than 66% (rounded
downward to avoid fractional shares) of all issued and outstanding shares of any
class of the capital stock of any direct Foreign Subsidiary (such term being
used herein as defined in the Current Credit Agreements as in effect on the date
hereof) constitute Pledged Shares or Pledged Collateral hereunder and (ii) if at
any time Pledgor delivers to Collateral Agent stock certificates representing
more than 66% of the issued and outstanding shares of all classes of capital
stock of any direct Foreign Subsidiary, such excess shares shall not constitute
Pledged Shares or Pledged Collateral and shall not be subject to any right of
set-off by any Lender;
(d) all additional indebtedness from time to time owed to Pledgor by
any obligor on the Pledged Debt and the instruments evidencing such
indebtedness, and all interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such indebtedness;
(e) all shares of, and all securities convertible into and warrants,
options and other rights to purchase or otherwise acquire, stock of any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a direct Subsidiary of Pledgor (which shares shall be deemed to be part of the
Pledged Shares), the certificates or other instruments representing such shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to such shares,
and all dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares, securities, warrants,
options or other rights; provided, however that, subject to Section 12 hereof,
(i) in no event shall more than 66% (rounded downward to avoid fractional
shares) of all issued and outstanding shares of any class of the capital stock
of any direct Foreign Subsidiary constitute Pledged Shares or Pledged Collateral
hereunder and (ii) if at any time Pledgor delivers to Collateral Agent stock
certificates representing more than 66% of the issued and outstanding shares of
all classes of capital stock of any direct Foreign Subsidiary, such excess
shares shall not constitute Pledged Shares or Pledged Collateral and shall not
be subject to any right of set-off by any Lender;
(f) all indebtedness from time to time owed to Pledgor by any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a direct or indirect Domestic Subsidiary (such term being used herein as defined
in the Current Credit Agreements as in effect on the date hereof), and all
interest, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such indebtedness; and
(g) to the extent not covered by clauses (a) through (f) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes of this
Agreement, the term "PROCEEDS" includes whatever is receivable or received when
Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes,
without limitation, proceeds of any indemnity or guaranty payable to Pledgor or
Collateral Agent from time to time with respect to any of the Pledged
Collateral.
The foregoing pledge and grant of a security interest (i) confirms the
original pledge and grant of a first priority security interest made in the
Existing Pledge Agreement in respect of the Pledged Collateral as security for
the "Secured Obligations" (as defined in the Existing Pledge Agreement) and
continues in all respects such original pledge and grant without in any way
causing any interruption in continuity from such original pledge and grant and
(ii) extends such pledge and grant of a first priority security interest in
respect of the Pledged Collateral to secure all other Secured Obligations as
defined herein.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Pledged Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and
liabilities of Pledgor of every nature whatsoever now or hereafter existing or
arising in respect of the Credit Agreement Obligations and the Interest Rate
Obligations and all extensions or renewals thereof, whether for principal,
interest (including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to Pledgor, would accrue on such
obligations, whether or not a claim is allowed against Pledgor for such interest
in any such bankruptcy proceedings), reimbursement of amounts drawn under
letters of credit, payments for early termination of Lender Interest Rate
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from any Secured Party as a preference, fraudulent transfer or
otherwise (all such obligations and liabilities being the "UNDERLYING DEBT"),
and all obligations of every nature of Pledgor now or hereafter existing under
this Agreement (all such obligations of Pledgor, together with the Underlying
Debt, being the "SECURED OBLIGATIONS"); provided that the pledge made and
security interest granted in Section 1 hereof, and any other provisions of this
Agreement, shall be effective as to any Successor Credit Agreement Obligations
or Interest Rate Obligations only if the applicable Successor Lenders (or a
Successor Agent acting on their behalf) or Interest Rate Exchanger shall have
executed and delivered to Collateral Agent a counterpart of the Intercreditor
Agreement, acknowledged by Pledgor, as provided in the Intercreditor Agreement.
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Collateral Agent pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable, shall be accompanied
by Pledgor's endorsement, where necessary, or duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Collateral Agent. Upon the occurrence and during the continuation of an Event of
Default, Collateral Agent shall have the right, without notice to Pledgor, to
transfer to or to register in the name of Collateral Agent or any of its
nominees any or all of the Pledged Collateral, subject only to the revocable
rights specified in Section 7(a). In addition, Collateral Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of smaller or
larger denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the
Pledged Shares have been duly authorized and validly issued and are fully paid
and non-assessable. All of the Pledged Debt has been duly authorized,
authenticated or issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof and is not in default.
(b) Description of Pledged Collateral. The Pledged Shares constitute
(i) with respect to each issuer thereof that is a Domestic Subsidiary, the
percentage of the issued and outstanding shares of stock thereof indicated on
Schedule I annexed hereto and (ii) with respect to each issuer thereof that is a
direct Foreign Subsidiary, 66% of the issued and outstanding shares of stock
thereof, and there are no outstanding warrants, options or other rights to
purchase, or other agreements outstanding with respect to, or property that is
now or hereafter convertible into, or that requires the issuance or sale of, any
Pledged Shares. The Pledged Debt constitutes all of the issued and outstanding
intercompany indebtedness evidenced by a promissory note of the respective
issuers thereof owing to Pledgor.
(c) Ownership of Pledged Collateral. Pledgor is the legal, record and
beneficial owner of the Pledged Collateral free and clear of any Lien except for
the security interest created by this Agreement and Permitted Encumbrances (such
term being used herein as defined in the Current Credit Agreements as in effect
on the date hereof).
(d) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge by Pledgor of the Pledged
Collateral pursuant to this Agreement and the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the exercise by Collateral Agent of the voting or
other rights, or the remedies in respect of the Pledged Collateral, provided for
in this Agreement (except as may be required in connection with a disposition of
Pledged Collateral by laws affecting the offering and sale of securities
generally including, without limitation, with respect to the Pledged Shares
relating to Canadian Sub (as defined in the Current Credit Agreements as in
effect on the date hereof), the provisions of the Investment Canada Act and the
Competition Act (Canada)).
(e) Perfection. The pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral, securing the payment of the Secured Obligations.
(f) Other Information. All information heretofore, herein or
hereafter supplied to Collateral Agent by or on behalf of Pledgor with respect
to the Pledged Collateral is accurate and complete in all respects.
SECTION 5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL;
ETC. Pledgor shall:
(a) not, except as expressly permitted by the Credit Agreements, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) create or
suffer to exist any Lien (other than Permitted Encumbrances) upon or with
respect to any of the Pledged Collateral, except for the security interest under
this Agreement, or (iii) permit any issuer of Pledged Shares to merge or
consolidate unless all the outstanding capital stock of the surviving or
resulting corporation is, upon such merger or consolidation, pledged hereunder
and no cash, securities or other property is distributed in respect of the
outstanding shares of any other constituent corporation; provided that in the
event Pledgor makes an Asset Sale permitted by the Credit Agreements and the
assets subject to such Asset Sale are Pledged Shares, Collateral Agent shall
release the Pledged Shares that are the subject of such Asset Sale to Pledgor
free and clear of the lien and security interest under this Agreement
concurrently with the consummation of such Asset Sale; provided, further that,
as a condition precedent to such release, Collateral Agent shall have received
evidence satisfactory to it that arrangements satisfactory to it have been made
for the allocation and application of the proceeds of such Asset Sale as
provided in the Current Credit Agreements and, to the extent not inconsistent
with the allocation and application provided for in the Current Credit
Agreements, any Successor Credit Agreements;
(b) (i) cause each issuer of Pledged Shares not to issue any stock or
other securities in addition to or in substitution for the Pledged Shares issued
by such issuer, except to Pledgor, (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional shares of
stock or other securities of each issuer of Pledged Shares, and (iii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all shares of stock of any Person that, after the date of this
Agreement, becomes, as a result of any occurrence, a direct Subsidiary of
Pledgor; provided, however that, subject to Section 12 hereof, (i) in no event
shall more than 66% of all issued and outstanding shares of any class of the
capital stock of any direct Foreign Subsidiary constitute Pledged Shares or
Pledged Collateral hereunder and (ii) if at any time Pledgor delivers to
Collateral Agent stock certificates representing more than 66% of all issued and
outstanding shares of all classes of capital stock of any direct Foreign
Subsidiary, such excess shares shall not constitute Pledged Shares or Pledged
Collateral and shall not be subject to any right of set-off by any Lender;
(c) (i) pledge hereunder, immediately upon their issuance, any and all
instruments or other evidences of additional indebtedness from time to time owed
to Pledgor by any obligor on the Pledged Debt, and (ii) pledge hereunder,
immediately upon their issuance, any and all instruments or other evidences of
indebtedness from time to time owed to Pledgor by any Person that after the date
of this Agreement becomes, as a result of any occurrence, a direct or indirect
Domestic Subsidiary;
(d) promptly deliver to Collateral Agent all written notices received
by it with respect to the Pledged Collateral; and
(e) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Pledged Collateral,
except to the extent the validity thereof is being contested in good faith;
provided that Pledgor shall in any event pay such taxes, assessments, charges,
levies or claims not later than five days prior to the date of any proposed sale
under any judgment, writ or warrant of attachment entered or filed against
Pledgor or any of the Pledged Collateral as a result of the failure to make such
payment.
SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that
Collateral Agent may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Collateral Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Without limiting the generality of the foregoing, Pledgor
will: (i) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Collateral Agent may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby and
(ii) at Collateral Agent's request, appear in and defend any action or
proceeding that may affect Pledgor's title to or Collateral Agent's security
interest in all or any part of the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 5(b) or (c), promptly (and in any event within five Business Days)
deliver to Collateral Agent a Pledge Amendment, duly executed by Pledgor, in
substantially the form of Schedule II annexed hereto (a "PLEDGE AMENDMENT"), in
respect of the additional Pledged Shares or Pledged Debt to be pledged pursuant
to this Agreement. Pledgor hereby authorizes Collateral Agent to attach each
Pledge Amendment to this Agreement and agrees that all Pledged Shares or Pledged
Debt listed on any Pledge Amendment delivered to Collateral Agent shall for all
purposes hereunder be considered Pledged Collateral; provided that the failure
of Pledgor to execute a Pledge Amendment with respect to any additional Pledged
Shares or Pledged Debt pledged pursuant to this Agreement shall not impair the
security interest of Collateral Agent therein or otherwise adversely affect the
rights and remedies of Collateral Agent hereunder with respect thereto.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms of this Agreement or the
Credit Agreements; provided, however, that Pledgor shall not exercise or
refrain from exercising any such right if Collateral Agent shall have
notified Pledgor that, in Collateral Agent's judgment, such action would
have a material adverse effect on the value of the Pledged Collateral or
any part thereof; and provided, further, that Pledgor shall give Collateral
Agent at least five Business Days' prior written notice of the manner in
which it intends to exercise, or the reasons for refraining from
exercising, any such right. It is understood, however, that neither (A) the
voting by Pledgor of any Pledged Shares for or Pledgor's consent to the
election of directors at a regularly scheduled annual or other meeting of
stockholders or with respect to incidental matters at any such meeting nor
(B) Pledgor's consent to or approval of any action otherwise permitted
under this Agreement and the Credit Agreements shall be deemed inconsistent
with the terms of this Agreement or the Credit Agreements within the
meaning of this Section 7(a)(i), and no notice of any such voting or
consent need be given to Collateral Agent;
(ii) Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the lien of this Agreement, any and all dividends and
interest paid in respect of the Pledged Collateral; provided, however, that
any and all
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal (other than dividends and interest) or in redemption of or
in exchange for any Pledged Collateral,
shall be, and shall forthwith be delivered to Collateral Agent to hold as,
Pledged Collateral and shall, if received by Pledgor, be received in trust
for the benefit of Collateral Agent, be segregated from the other property
or funds of Pledgor and be forthwith delivered to Collateral Agent as
Pledged Collateral in the same form as so received (with all necessary
endorsements); and
(iii) Collateral Agent shall promptly execute and deliver (or cause to
be executed and delivered) to Pledgor all such proxies, dividend payment
orders and other instruments as Pledgor may from time to time reasonably
request for the purpose of enabling Pledgor to exercise the voting and
other consensual rights which it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends, principal or interest
payments which it is authorized to receive and retain pursuant to paragraph
(ii) above.
(b) Upon the occurrence and during the continuation of an Event of
Default:
(i) upon written notice from Collateral Agent to Pledgor, all rights
of Pledgor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to Section 7(a)(i) shall
cease, and all such rights shall thereupon become vested in Collateral
Agent who shall thereupon have the sole right to exercise such voting and
other consensual rights;
(ii) all rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain
pursuant to Section 7(a)(ii) shall cease, and all such rights shall
thereupon become vested in Collateral Agent who shall thereupon have the
sole right to receive and hold as Pledged Collateral such dividends and
interest payments; and
(iii) all dividends, principal and interest payments which are
received by Pledgor contrary to the provisions of paragraph (ii) of this
Section 7(b) shall be received in trust for the benefit of Collateral
Agent, shall be segregated from other funds of Pledgor and shall forthwith
be paid over to Collateral Agent as Pledged Collateral in the same form as
so received (with any necessary endorsements).
(c) In order to permit Collateral Agent to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant to Section
7(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) Pledgor
shall promptly execute and deliver (or cause to be executed and delivered) to
Collateral Agent all such proxies, dividend payment orders, powers of attorney,
and other instruments, and Pledgor shall take all such further actions, as
Collateral Agent may from time to time reasonably request, including without
limitation to the extent necessary so that the pledge of any shares of stock of
any Foreign Subsidiary is registered (if not already so registered) on the
appropriate books and records of the issuer of the applicable Pledged Shares if
such registration is required under applicable law in order to permit Collateral
Agent to exercise such rights or to receive such dividends and other
distributions, and (ii) without limiting the effect of the immediately preceding
clause (i), Pledgor hereby grants to Collateral Agent an irrevocable proxy to
vote the Pledged Shares and to exercise all other rights, powers, privileges and
remedies to which a holder of the Pledged Shares would be entitled (including,
without limitation, giving or withholding written consents of shareholders,
calling special meetings of shareholders and voting at such meetings), which
proxy shall be effective, automatically and without the necessity of any action
(including any transfer of any Pledged Shares on the record books of the issuer
thereof) by any other Person (including the issuer of the Pledged Shares or any
officer or agent thereof), upon the occurrence of an Event of Default and
written notice from Collateral Agent to Pledgor and which proxy shall only
terminate upon the payment in full of the Secured Obligations.
SECTION 8. COLLATERAL AGENT APPOINTED ATTORNEY-IN- FACT. Pledgor
hereby irrevocably appoints Collateral Agent as Pledgor's attorney-in-fact, and
Pledgor declares that the power of attorney granted hereby, being coupled with
an interest, is being given for valuable consideration, with full authority in
the place and stead of Pledgor and in the name of Pledgor, Collateral Agent or
otherwise, from time to time (a) upon the occurrence and during the continuance
of an Event of Default or (b) with respect to any action or the execution of any
instrument that Collateral Agent may deem necessary or advisable to accomplish
the purposes of this Agreement, (i) upon the occurrence and during the
continuance of a Potential Event of Default (as defined in any Credit Agreement)
or (ii) after the fifth Business Day after Collateral Agent makes a written
request to Pledgor to take such action or execute such instrument (provided that
Pledgor fails to fully comply with such request on or prior to such fifth
Business Day) in Collateral Agent's discretion to take any action and to execute
any instrument that Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including without limitation:
(a) to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Pledged Collateral
without the signature of Pledgor;
(b) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Pledged Collateral;
(c) to receive, endorse and collect any instruments made payable to
Pledgor representing any dividend, principal or interest payment or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same; and
(d) to file any claims or take any action or institute any proceedings
that Collateral Agent may deem necessary or desirable for the collection of any
of the Pledged Collateral or otherwise to enforce the rights of Collateral Agent
with respect to any of the Pledged Collateral.
SECTION 9. COLLATERAL AGENT MAY PERFORM. If Pledgor fails to perform
any agreement contained herein, Collateral Agent may itself perform, or cause
performance of, such agreement, and the expenses of Collateral Agent incurred in
connection therewith shall be payable by Pledgor under Section 14(b).
SECTION 10. STANDARD OF CARE. The powers conferred on Collateral Agent
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Pledged Collateral in its possession
and the accounting for moneys actually received by it hereunder, Collateral
Agent shall have no duty as to any Pledged Collateral, it being understood that
Collateral Agent shall have no responsibility for (a) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Pledged Collateral, whether or not Collateral
Agent has or is deemed to have knowledge of such matters, (b) taking any
necessary steps (other than steps taken in accordance with the standard of care
set forth above to maintain possession of the Pledged Collateral) to preserve
rights against any parties with respect to any Pledged Collateral, (c) taking
any necessary steps to collect or realize upon the Secured Obligations or any
guarantee therefor, or any part thereof, or any of the Pledged Collateral, or
(d) initiating any action to protect the Pledged Collateral against the
possibility of a decline in market value. Collateral Agent shall be deemed to
have exercised reasonable care in the custody and preservation of Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equal to that which Collateral Agent accords its own property
consisting of negotiable securities.
SECTION 11. REMEDIES.
(a) If any Event of Default shall have occurred and be continuing,
Collateral Agent may exercise in respect of the Pledged Collateral, in addition
to all other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "CODE") (whether
or not the Code applies to the affected Pledged Collateral), or any other
applicable laws whether of the United States or of any state thereof or any
foreign jurisdiction, and Collateral Agent may also in its sole discretion,
without notice except as specified below, sell the Pledged Collateral or any
part thereof in one or more parcels at public or private sale, at any exchange
or broker's board or at any of Collateral Agent's offices or elsewhere, for
cash, on credit or for future delivery, at such time or times and at such price
or prices and upon such other terms as Collateral Agent may deem commercially
reasonable, irrespective of the impact of any such sales on the market price of
the Pledged Collateral. Collateral Agent or any Lender or Interest Rate
Exchanger may be the purchaser of any or all of the Pledged Collateral at any
such sale and Collateral Agent, as agent for and representative of Lenders and
Interest Rate Exchangers (but not any Lender, Lenders, Interest Rate Exchanger
or Interest Rate Exchangers in its or their respective individual capacities
unless Requisite Obligees otherwise agree), shall be entitled, for the purpose
of bidding and making settlement or payment of the purchase price for all or any
portion of the Pledged Collateral sold at any such public sale, to use and apply
any of the Secured Obligations as a credit on account of the purchase price for
any Pledged Collateral payable by Collateral Agent at such sale. Each purchaser
at any such sale shall hold the property sold absolutely free from any claim or
right on the part of Pledgor, and Pledgor hereby waives (to the extent permitted
by applicable law) all rights of redemption, stay and/or appraisal which it now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to Pledgor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. Collateral Agent shall not be
obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Pledgor hereby waives any claims against Collateral Agent arising by
reason of the fact that the price at which any Pledged Collateral may have been
sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Collateral Agent accepts the first offer
received and does not offer such Pledged Collateral to more than one offeree. If
the proceeds of any sale or other disposition of the Pledged Collateral are
insufficient to pay all the Secured Obligations, Pledgor shall be liable for the
deficiency and the fees of any attorneys employed by Collateral Agent to collect
such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act (such term being used herein as defined in the
Current Credit Agreements) and applicable state securities laws, Collateral
Agent may be compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior registration or qualification of such
Pledged Collateral under the Securities Act and/or such state securities laws,
to limit purchasers to those who will agree, among other things, to acquire the
Pledged Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. Pledgor acknowledges that any such private
sales may be at prices and on terms less favorable than those obtainable through
a public sale without such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the Securities Act)
and, notwithstanding such circumstances and the registration rights granted to
Collateral Agent by Pledgor pursuant to Section 13, Pledgor agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that Collateral Agent shall have no obligation to engage in public
sales and no obligation to delay the sale of any Pledged Collateral for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree to
so register it.
(c) If Collateral Agent determines to exercise its right to sell any
or all of the Pledged Collateral, upon written request, Pledgor shall and shall
cause each issuer of any Pledged Shares to be sold hereunder from time to time
to furnish to Collateral Agent all such information as Collateral Agent may
request in order to determine the number of shares and other instruments
included in the Pledged Collateral which may be sold by Collateral Agent in
exempt transactions under the Securities Act and the rules and regulations of
the Securities and Exchange Commission thereunder, as the same are from time to
time in effect.
SECTION 12. PLEDGE OF ADDITIONAL SHARES OF FOREIGN SUBSIDIARIES.
Anything contained in this Agreement or any of the other Loan Documents to the
contrary notwithstanding, in the event that, as a result of any changes in
United States tax laws after the date hereof, the pledge of any additional
shares of stock of any Foreign Subsidiaries pursuant to this Agreement would not
result in an increase in the aggregate net consolidated tax liabilities of
Company and its Subsidiaries, then Pledgor shall promptly pledge such additional
shares of stock hereunder.
SECTION 13. REGISTRATION RIGHTS. If Collateral Agent shall determine
to exercise its right to sell all or any of the Pledged Collateral pursuant to
Section 11, Pledgor agrees that, upon request of Collateral Agent (which request
may be made by Collateral Agent in its sole discretion), Pledgor will, at its
own expense:
(a) execute and deliver, and cause each issuer of the Pledged
Collateral contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the opinion of
Collateral Agent, advisable to register such Pledged Collateral 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 Shares, or that
portion thereof to be sold, and to make all amendments and supplements thereto
and to the related prospectus which, in the opinion of Collateral Agent, 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;
(b) use its best efforts to qualify the Pledged Collateral under all
applicable state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Collateral, as requested by
Collateral Agent;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earnings statement which will satisfy the provisions
of Section 11(a) of the Securities Act;
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law; and
(e) bear all costs and expenses, including reasonable attorneys' fees,
of carrying out its obligations under this Section 13.
Pledgor further agrees that a breach of any of the covenants contained
in this Section 13 will cause irreparable injury to Collateral Agent, that
Collateral Agent has no adequate remedy at law in respect of such breach and, as
a consequence, that each and every covenant contained in this Section 13 shall
be specifically enforceable against Pledgor, and to the extent permitted by
applicable law Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no default has occurred giving rise to the Secured Obligations
becoming due and payable prior to their stated maturities. Nothing in this
Section 13 shall in any way alter the rights of Collateral Agent under Section
11.
SECTION 14. APPLICATION OF PROCEEDS. Except as otherwise expressly
provided elsewhere in this Agreement or the Intercreditor Agreement, all
Proceeds received by Collateral Agent in respect of all or any part of the
Pledged Collateral may, in the discretion of Collateral Agent, be held by
Collateral Agent as Pledged Collateral for, and/or then, or at any time
thereafter, applied in full or in part by Collateral Agent against, the Secured
Obligations in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable fees and expenses of
Collateral Agent and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Collateral Agent in connection
therewith, and all amounts for which Collateral Agent is entitled to
indemnification hereunder and all advances made by Collateral Agent
hereunder for the account of Pledgor, and to the payment of all costs and
expenses paid or incurred by Collateral Agent in connection with the
exercise of any right or remedy hereunder, all in accordance with Section
15;
SECOND: To the payment of all other Secured Obligations as provided
in Section 4 of the Intercreditor Agreement; and
THIRD: To the payment to or upon the order of Pledgor, or to whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such proceeds.
SECTION 15. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Collateral Agent and each other
Secured Party from and against any and all claims, losses and liabilities in any
way relating to, growing out of or resulting from this Agreement or any related
Financing Agreement and the transactions contemplated hereby and thereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Collateral Agent's
or such other Secured Party's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Pledgor shall pay to Collateral Agent upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of Collateral Agent hereunder, or (iv) the failure by Pledgor to perform
or observe any of the provisions hereof.
(c) In the event of any public sale described in Section 13, Pledgor
agrees to indemnify and hold harmless Collateral Agent and each of Collateral
Agent's directors, officers, employees and agents from and against any loss,
fee, cost, expense, damage, liability or claim, joint or several, to which
Collateral Agent or such other persons may become subject or for which any of
them may be liable, under the Securities Act or otherwise, insofar as such
losses, fees, costs, expenses, damages, liabilities or claims (or any litigation
commenced or threatened in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, registration statement, prospectus or other such
document published or filed in connection with such public sale, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse Collateral Agent and such other persons for any legal or other
expenses reasonably incurred by Collateral Agent and such other persons in
connection with any litigation, of any nature whatsoever, commenced or
threatened in respect thereof (including without limitation any and all fees,
costs and expenses whatsoever reasonably incurred by Collateral Agent and such
other persons and counsel for Collateral Agent and such other persons in
investigating, preparing for, defending against or providing evidence, producing
documents or taking any other action in respect of, any such commenced or
threatened litigation or any claims asserted). This indemnity shall be in
addition to any liability which Pledgor may otherwise have and shall extend upon
the same terms and conditions to each person, if any, that controls Collateral
Agent or such persons within the meaning of the Securities Act.
SECTION 16. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in full force and effect until the payment in full of all
Secured Obligations, the cancellation or termination of all Commitments and the
cancellation or expiration of all outstanding letters of credit issued pursuant
to any of the Credit Agreements then secured by the Pledged Collateral, (b) be
binding upon Pledgor, its successors and assigns, and (c) inure, together with
the rights and remedies of Collateral Agent hereunder, to the benefit of
Collateral Agent and its successors and permitted assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Existing Credit Agreement and subsection 10.1 of the New
Credit Agreement and any comparable provisions of any Successor Credit Agreement
secured by the Pledged Collateral, any Lender may assign any loans held by it
under the applicable Credit Agreement to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding letters of credit referred to
above, the security interest granted hereby shall terminate and all rights to
the Pledged Collateral shall revert to Pledgor. Upon any such termination
Collateral Agent will, at Pledgor's expense, execute and deliver to Pledgor such
documents as Pledgor shall reasonably request to evidence such termination and
Pledgor shall be entitled to the return, upon its request and at its expense,
against receipt and without recourse to Collateral Agent, of such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
SECTION 17. COLLATERAL AGENT AS AGENT.
(a) Collateral Agent has been appointed to act as Collateral Agent
hereunder by the Parties under the Intercreditor Agreement, which appointment
and the terms thereof have been acknowledged and agreed to by Pledgor, and
Collateral Agent shall be entitled to the benefits of the Intercreditor
Agreement in acting as Collateral Agent hereunder. Collateral Agent shall be
obligated, and shall have the right hereunder, to make demands, to give notices,
to exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including, without limitation, the release or substitution of
Pledged Collateral), solely in accordance with the terms of this Agreement and
the Intercreditor Agreement; provided that, anything contained herein to the
contrary notwithstanding, in the event of any conflict between the express terms
and provisions of this Agreement and the express terms and provisions of the
Intercreditor Agreement, such terms and provisions of the Intercreditor
Agreement shall be controlling for all purposes hereof.
(b) Collateral Agent shall at all times be the same Person that is
Collateral Agent under the Intercreditor Agreement. Written notice of
resignation by Collateral Agent pursuant to Section 9(g)(i) of the Intercreditor
Agreement shall also constitute notice of resignation as Collateral Agent under
this Agreement; removal of Collateral Agent pursuant to Section 9(g)(ii) of the
Intercreditor Agreement shall also constitute removal as Collateral Agent under
this Agreement; and appointment of a successor Collateral Agent pursuant to
Section 9(g) of the Intercreditor Agreement shall also constitute appointment of
a successor Collateral Agent under this Agreement. Upon the acceptance of any
appointment as Collateral Agent under Section 9(g) of the Intercreditor
Agreement, the successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Pledged
Collateral held hereunder, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of the
successor Collateral Agent hereunder, and (ii) execute and deliver to such
successor Collateral Agent any amendments to financing statements, and take any
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Collateral Agent of the security interests created
hereunder, whereupon such retiring or removed Collateral Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Collateral Agent's resignation or removal hereunder as
Collateral Agent, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it
was Collateral Agent hereunder.
SECTION 18. AMENDMENTS; ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, and no consent to any departure by
Pledgor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Collateral Agent and, in the case of any such amendment or
modification, by Pledgor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 19. NOTICES. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or five Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
SECTION 20. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Collateral Agent in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 21. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 22. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 23. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the
Credit Agreements, terms used in Articles 8 and 9 of the Uniform Commercial Code
in the State of New York are used herein as therein defined.
SECTION 24. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
(A) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY FINAL AND NON-APPEALABLE JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT. Pledgor hereby agrees that service of all
process in any such proceeding in any such court may be made by registered or
certified mail, return receipt requested, to Pledgor at its address provided in
Section 19, such service being hereby acknowledged by Pledgor to be sufficient
for personal jurisdiction in any action against Pledgor in any such court and to
be otherwise effective and binding service in every respect. Nothing herein
shall affect the right to serve process in any other manner permitted by law or
shall limit the right of Collateral Agent to bring proceedings against Pledgor
in the courts of any other jurisdiction.
(b) Without limiting the generality of the last sentence of Section
24(a), any judicial proceedings brought against Pledgor arising out of or
relating to the pledge of shares of stock of any Foreign Subsidiary hereunder
may be brought in any court of competent jurisdiction in the jurisdiction in
which such Foreign Subsidiary is organized, and by execution and delivery of
this Agreement Pledgor accepts for itself and in connection with its properties
(including without limitation the applicable Pledged Shares), generally and
unconditionally, the nonexclusive jurisdiction of any such court and waives any
defense of forum non conveniens (or any similar defense under the laws of such
jurisdiction) and irrevocably agrees to be bound by any judgment rendered
thereby in connection with such pledge or the enforcement thereof.
SECTION 25. WAIVER OF JURY TRIAL. PLEDGOR AND COLLATERAL AGENT HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Collateral Agent each
acknowledge that this waiver is a material inducement for Pledgor and Collateral
Agent to enter into a business relationship, that Pledgor and Collateral Agent
have already relied on this waiver in entering into this Agreement and that each
will continue to rely on this waiver in their related future dealings. Pledgor
and Collateral Agent further warrant and represent that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 25
AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 26. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
SECTION 27. DESIGNATION OF COLLATERAL AGENT ON FINANCING STATEMENTS.
For purposes of any financing statements filed with respect to any of the
Pledged Collateral under the Code, BTCo, in its capacity as Collateral Agent
hereunder, may be referred to as "Bankers Trust Company", "Bankers Trust
Company, as Agent", "Bankers Trust Company, as Administrative Agent", or
"Bankers Trust Company, as Collateral Agent".
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, Pledgor and Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
DICTAPHONE CORPORATION
By: __________________________
Title:
Notice Address:
Dictaphone Corporation
3191 Broadbridge Avenue
Stratford, Connecticut 06497
Attention: Dan Hart, Esq.
BANKERS TRUST COMPANY
By: __________________________
Title:
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Zadroga
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Victoria A. Floyd
<PAGE>
SCHEDULE I
Attached to and forming a part of the Amended and Restated Company
Pledge Agreement dated as of November 14, 1997 between Dictaphone Corporation,
as Pledgor, and Bankers Trust Company, as Collateral Agent.
Part A
Percentage of
Issued and
Class of Stock Certi- Par Number of Outstanding Shares
Stock Issuer Stock ficate Nos. Value Shares Owned by Pledgor
- ------------ -------- ------------ ----- --------- ------------------
Part B
Debt Issuer Amount of Indebtedness
- ----------- ----------------------
<PAGE>
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, ____, is delivered pursuant
to Section 6(b) of the Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Amended and
Restated Company Pledge Agreement dated as of November 14, 1997, between the
undersigned and Bankers Trust Company, as Collateral Agent (the "PLEDGE
AGREEMENT," capitalized terms defined therein being used herein as therein
defined), and that the [Pledged Shares] [Pledged Debt] listed on this Pledge
Amendment shall be deemed to be part of the [Pledged Shares] [Pledged Debt] and
shall become part of the Pledged Collateral and shall secure all Secured
Obligations.
DICTAPHONE CORPORATION
By: ___________________________
Title:
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
- ------------ -------- ------------ ----- ---------
Debt Issuer Amount of Indebtedness
- ----------- ----------------------
<PAGE>
EXHIBIT X
[FORM OF COMPANY SECURITY AGREEMENT]
AMENDED AND RESTATED COMPANY SECURITY AGREEMENT
This AMENDED AND RESTATED COMPANY SECURITY AGREEMENT (this
"AGREEMENT") is dated as of November 14, 1997 and entered into by and between
DICTAPHONE CORPORATION, a Delaware corporation ("GRANTOR"), and BANKERS TRUST
COMPANY ("BTCO"), as collateral agent for and representative of (in such
capacity herein called "COLLATERAL AGENT") the Secured Parties (as hereinafter
defined) and amends and restates that certain Security Agreement (the "EXISTING
SECURITY AGREEMENT") dated as of August 7, 1995 between Grantor and Existing
Agent (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Grantor, the financial institutions party thereto as lenders
("EXISTING LENDERS"), and Bankers Trust Company, as administrative agent for
Existing Lenders (in such capacity, together with its successors in such
capacity, "EXISTING AGENT") are parties to that certain Credit Agreement dated
as of August 7, 1995 (said Credit Agreement, as amended through and including
the date hereof and as it may hereafter be further amended, amended and
restated, supplemented or otherwise modified from time to time, being the
"EXISTING CREDIT AGREEMENT") pursuant to which Existing Lenders have made
certain credit facilities available to Grantor in the form of loans and letters
of credit, and all Existing Credit Agreement Obligations (as defined in the
Intercreditor Agreement referred to below) are currently secured by the
Collateral (as hereinafter defined).
B. Grantor, the financial institutions party thereto as lenders ("NEW
LENDERS"; together with Existing Lenders, "CURRENT LENDERS"), and Bankers Trust
Company, as administrative agent for New Lenders (in such capacity, together
with its successors in such capacity, "NEW AGENT"; together with Existing Agent,
"CURRENT AGENTS") have entered into that certain Credit Agreement dated as of
even date herewith (said Credit Agreement, as it may hereafter be amended,
amended and restated, supplemented or otherwise modified from time to time,
being the "NEW CREDIT AGREEMENT"; together with the Existing Credit Agreement,
the "CURRENT CREDIT AGREEMENTS") pursuant to which New Lenders have made certain
credit facilities available to Pledgor in the form of loans the proceeds of
which will be used on the date hereof to prepay a portion of the loans
outstanding under the Existing Credit Agreement, and the terms of the New Credit
Agreement require that all New Credit Agreement Obligations (as defined in the
Intercreditor Agreement) be secured by the Collateral.
C. It is contemplated that, from time to time, one or more Current
Lenders and/or one or more other financial institutions (any such Current
Lenders and/or other financial institutions being referred to herein
collectively as "SUCCESSOR LENDERS") may enter into one or more agreements with
Grantor and/or its Subsidiaries (any such agreements, as they may exist from
time to time, being "SUCCESSOR CREDIT AGREEMENTS") which either refinance,
replace or otherwise restructure all or any portion of the indebtedness under
the Current Credit Agreements and/or any Successor Credit Agreement (the Current
Credit Agreements and any Successor Credit Agreements being referred to herein
collectively as "CREDIT AGREEMENTS"; Current Lenders and any Successor Lenders
being referred to herein collectively as "LENDERS"; and Current Agents and any
administrative agents (collectively, "SUCCESSOR AGENTS") under any Successor
Credit Agreements being referred to herein collectively as "AGENTS"), and the
terms of any Successor Credit Agreement may require that all Successor Credit
Agreement Obligations (as defined in the Intercreditor Agreement) in respect
thereof be secured by the Collateral.
D. Grantor has entered into, or may from time to time enter into, one
or more Lender Interest Rate Agreements (as defined in the Intercreditor
Agreement) with one or more Interest Rate Exchangers (as defined in the
Intercreditor Agreement), and the terms of any Lender Interest Rate Agreement
may require that all Interest Rate Obligations (as defined in the Intercreditor
Agreement) in respect thereof be secured by the Collateral.
E. Current Agents and Collateral Agent have entered into, and all
existing Loan Parties (as defined in the Intercreditor Agreement) have
acknowledged and agreed to the terms of, that certain Intercreditor Agreement
dated as of even date herewith (said Intercreditor Agreement, as it may
hereafter be amended, amended and restated, supplemented or otherwise modified
from time to time, being the "INTERCREDITOR AGREEMENT"; terms defined therein
and not otherwise defined herein being used herein as therein defined) which
provides for, among other things, the appointment of Collateral Agent to
administer and enforce this Agreement in the manner set forth herein and
therein.
F. Pursuant to the authority granted to Collateral Agent by Existing
Agent and the other Parties under the Intercreditor Agreement, Collateral Agent
and Pledgor desire to amend and restate the Existing Security Agreement as
hereinafter set forth in order to (i) substitute BTCo, in its capacity as
Collateral Agent, for BTCo, in its capacity as Existing Agent, as the secured
party hereunder, (ii) confirm the continuation of the existing assignment and
grant of security interests with respect to the Collateral, as provided for in
the Existing Security Agreement, for the benefit of Existing Agent, Existing
Lenders [and any Interest Rate Exchangers secured under the Existing Pledge
Agreement on the date hereof], and (iii) provide that such assignment and grant
of security interests with respect to the Collateral shall hereafter be for the
benefit of Current Lenders, Current Agents, any Successor Lender or Successor
Agent becoming a party to the Intercreditor Agreement in the manner provided
therein, any Successor Lenders represented by any such Successor Agent, any
Interest Rate Exchanger becoming a party to the Intercreditor Agreement in the
manner provided therein, and Collateral Agent (all of the Persons described in
this clause (iii) being referred to herein collectively as "SECURED PARTIES").
NOW, THEREFORE, in consideration of the premises, in order to induce
Lenders to make and/or maintain extensions of credit to Grantor under the Credit
Agreements and to induce Interest Rate Exchangers to enter into and/or maintain
Lender Interest Rate Agreements, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Existing Security
Agreement is hereby amended and restated in its entirety as follows:
SECTION 1. GRANT OF SECURITY. Grantor hereby assigns to Collateral
Agent, and hereby grants to Collateral Agent a security interest in, all of
Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "COLLATERAL"):
(a) all equipment in all of its forms, all parts thereof and all
accessions thereto (any and all such equipment, parts and accessions being the
"EQUIPMENT");
(b) all inventory in all of its forms (including, but not limited to,
(i) all goods held by Grantor for sale or lease or to be furnished under
contracts of service or so leased or furnished, (ii) all raw materials, work in
process, finished goods, and materials used or consumed in the manufacture,
packing, shipping, advertising, selling, leasing, furnishing or production of
such inventory or otherwise used or consumed in Grantor's business, (iii) all
goods in which Grantor has an interest in mass or a joint or other interest or
right of any kind, and (iv) all goods which are returned to or repossessed by
Grantor) and all accessions thereto and products thereof (all such inventory,
accessions and products being the "INVENTORY") and all negotiable documents of
title (including without limitation warehouse receipts, dock receipts and bills
of lading) issued by any Person covering any Inventory (any such negotiable
document of title being a "NEGOTIABLE DOCUMENT OF TITLE");
(c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other rights and obligations of any kind
and all rights in, to and under all security agreements, leases and other
contracts securing or otherwise relating to any such accounts, contract rights,
chattel paper, documents, instruments, general intangibles or other obligations
(any and all such accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other obligations being the "ACCOUNTS", and
any and all such security agreements, leases and other contracts being the
"RELATED CONTRACTS");
(d) the agreements listed in Schedule I annexed hereto, as each such
agreement may be amended, supplemented or otherwise modified from time to time
(said agreements, as so amended, supplemented or otherwise modified, being
referred to herein individually as an "ASSIGNED AGREEMENT" and collectively as
the "ASSIGNED AGREEMENTS"), including without limitation (i) all rights of
Grantor to receive moneys due or to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements, (iii)
all claims of Grantor for damages arising out of any breach of or default under
the Assigned Agreements, and (iv) all rights of Grantor to terminate, amend,
supplement, modify or exercise rights or options under the Assigned Agreements,
to perform thereunder and to compel performance and otherwise exercise all
remedies thereunder;
(e) all deposit accounts, including without limitation all deposit
accounts maintained with Collateral Agent;
(f) all trademarks, tradenames, tradesecrets, business names, patents,
patent applications, licenses, copyrights, registrations and franchise rights,
and all goodwill associated with any of the foregoing;
(g) to the extent not included in any other paragraph of this Section
1, all other general intangibles (including without limitation tax refunds,
rights to payment or performance, choses in action and judgments taken on any
rights or claims included in the Collateral);
(h) all plant fixtures, business fixtures and other fixtures and
storage and office facilities, and all accessions thereto and products thereof;
(i) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any time
evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(j) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance (whether or not Collateral Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.
The foregoing assignment and grant of a security interest (i) confirms
the original assignment and grant of a first priority security interest made in
the Existing Security Agreement in respect of the Collateral as security for the
"Secured Obligations" (as defined in the Existing Security Agreement) and
continues in all respects such original assignment and grant without in any way
causing any interruption in continuity from such original assignment and grant
and (ii) extends such assignment and grant of a first priority security interest
in respect of the Collateral to secure all other Secured Obligations as defined
herein.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and
liabilities of Grantor of every nature whatsoever now or hereafter existing or
arising in respect of the Credit Agreement Obligations and the Interest Rate
Obligations and all extensions or renewals thereof, whether for principal,
interest (including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to Grantor, would accrue on such
obligations, whether or not a claim is allowed against Grantor for such interest
in any such bankruptcy proceedings), reimbursement of amounts drawn under
letters of credit, payments for early termination of Lender Interest Rate
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from any Secured Party as a preference, fraudulent transfer or
otherwise (all such obligations and liabilities being the "UNDERLYING DEBT"),
and all obligations of every nature of Pledgor now or hereafter existing under
this Agreement (all such obligations of Pledgor, together with the Underlying
Debt, being the "SECURED OBLIGATIONS"); provided that the assignment and grant
of a security interest pursuant to Section 1 hereof, and any other provisions of
this Agreement, shall be effective as to any Successor Credit Agreement
Obligations or Interest Rate Obligations only if the applicable Successor
Lenders (or a Successor Agent acting on their behalf) or Interest Rate Exchanger
shall have executed and delivered to Collateral Agent a counterpart of the
Intercreditor Agreement, acknowledged by Pledgor, as provided in the
Intercreditor Agreement.
SECTION 3. GRANTOR REMAINS LIABLE. Anything contained herein to the
contrary notwithstanding, (a) Grantor shall remain liable under any contracts
and agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Collateral Agent of
any of its rights hereunder shall not release Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) Collateral Agent shall not have any obligation or liability under any
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall Collateral Agent be obligated to perform any of the obligations or
duties of Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Grantor represents and
warrants as follows:
(a) Ownership of Collateral. Except for the security interest created
by this Agreement, Grantor owns the Collateral free and clear of any Lien other
than Permitted Encumbrances (such term being used herein as defined in the
Current Credit Agreements as in effect on the date hereof). Except such as may
have been filed in favor of Collateral Agent relating to this Agreement, no
effective financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any filing or recording office.
(b) Location of Equipment and Inventory. All of the Equipment and
Inventory is, as of the date hereof, located at the places specified in Schedule
II annexed hereto.
(c) Negotiable Documents of Title. No Negotiable Documents of Title
are outstanding with respect to any of the Inventory (other than in respect of
(i) Inventory with an aggregate value not in excess of $500,000 or (ii)
Inventory which, in the ordinary course of business, is in transit either (A)
from a supplier to Grantor, (B) between the locations specified in Schedule II
hereto, or (C) to customers of Grantor).
(d) Office Locations; Other Names. The chief place of business, the
chief executive office and the office where Grantor keeps its records regarding
the Accounts and all originals of all chattel paper that evidence Accounts is
located at 3191 Broadbridge Avenue, Stratford, Connecticut 06497. Grantor has
not in the past done, and does not now do, business under any other name
(including any trade-name or fictitious business name) except that Grantor was
formerly known as Dictaphone Acquisition Inc.
(e) Delivery of Certain Collateral. All notes and other instruments
(excluding checks) comprising any and all items of Collateral have been
delivered to Collateral Agent duly endorsed and accompanied by duly executed
instruments of transfer or assignment in blank.
(f) Governmental Authorizations. Except as described in clause (g)
below, no authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for either (i)
the grant by Grantor of the security interest granted hereby, (ii) the
execution, delivery or performance of this Agreement by Grantor, or (iii) the
perfection of or the exercise by Collateral Agent of its rights and remedies
hereunder (except as may have been taken by or at the direction of Grantor).
(g) Perfection. This Agreement creates a valid, perfected and first
priority security interest in the Collateral, securing the payment of the
Secured Obligations, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly made or taken.
(h) Other Information. All information heretofore, herein or
hereafter supplied to Collateral Agent by or on behalf of Grantor with respect
to the Collateral is accurate and complete in all respects.
SECTION 5. FURTHER ASSURANCES.
(a) Grantor agrees that from time to time, at the expense of Grantor,
Grantor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that
Collateral Agent may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Collateral Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, Grantor will: (i)
mark conspicuously each item of chattel paper included in the Accounts, each
Related Contract and, at the request of Collateral Agent, each of its records
pertaining to the Collateral, with a legend, in form and substance satisfactory
to Collateral Agent, indicating that such Collateral is subject to the security
interest granted hereby, (ii) at the request of Collateral Agent, deliver and
pledge to Collateral Agent hereunder all promissory notes and other instruments
(including checks) and all original counterparts of chattel paper constituting
Collateral, duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to Collateral
Agent, (iii) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Collateral Agent may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby, (iv)
promptly after the acquisition by Grantor of any item of Equipment which is
covered by a certificate of title under a statute of any jurisdiction under the
law of which indication of a security interest on such certificate is required
as a condition of perfection thereof, execute and file with the registrar of
motor vehicles or other appropriate authority in such jurisdiction an
application or other document requesting the notation or other indication of the
security interest created hereunder on such certificate of title, (v) within 30
days after the end of each calendar quarter, deliver to Collateral Agent copies
of all such applications or other documents filed during such calendar quarter
and copies of all such certificates of title issued during such calendar quarter
indicating the security interest created hereunder in the items of Equipment
covered thereby, (vi) at any reasonable time, upon request by Collateral Agent,
exhibit the Collateral to and allow inspection of the Collateral by Collateral
Agent, or persons designated by Collateral Agent, and (vii) at Collateral
Agent's request, appear in and defend any action or proceeding that may affect
Grantor's title to or Collateral Agent's security interest in all or any part of
the Collateral.
(b) Grantor hereby authorizes Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Grantor. Grantor agrees that
a carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by Grantor shall be sufficient as a financing statement and may
be filed as a financing statement in any and all jurisdictions.
(c) Grantor will furnish to Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Collateral Agent may
reasonably request, all in reasonable detail.
SECTION 6. CERTAIN COVENANTS OF GRANTOR. Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Collateral Agent of any change in Grantor's name, identity
or corporate structure within 15 days of such change;
(c) give Collateral Agent 30 days' prior written notice of any change
in Grantor's chief place of business, chief executive office or residence or the
office where Grantor keeps its records regarding the Accounts and all originals
of all chattel paper that evidence Accounts;
(d) if Collateral Agent gives value to enable Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes; and
(e) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except to the
extent the validity thereof is being contested in good faith; provided that
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment entered or filed against Grantor or any
of the Collateral as a result of the failure to make such payment.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND INVENTORY.
Grantor shall:
(a) keep the Equipment and Inventory at the places therefor specified
on Schedule II annexed hereto or, upon 30 days' prior written notice to
Collateral Agent, at such other places in jurisdictions where all action that
may be necessary or desirable, or that Collateral Agent may request, in order to
perfect and protect any security interest granted or purported to be granted
hereby, or to enable Collateral Agent to exercise and enforce its rights and
remedies hereunder, with respect to such Equipment and Inventory shall have been
taken;
(b) cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with Grantor's past practices, and shall forthwith,
or, in the case of any loss or damage to any of the Equipment when subsection
(c) of Section 8 is not applicable, as quickly as practicable after the
occurrence thereof, make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable to such
end. Grantor shall promptly furnish to Collateral Agent a statement respecting
any material loss or damage to any of the Equipment;
(c) keep correct and accurate records of the Inventory, itemizing and
describing the kind, type and quantity of Inventory, Grantor's cost therefor and
(where applicable) the current list prices for the Inventory;
(d) if any Inventory is in possession or control of any of Grantor's
agents or processors, if the aggregate book value of all such Inventory exceeds
$500,000, and in any event upon the occurrence and during the continuance of an
Event of Default, instruct such agent or processor to hold all such Inventory
for the account of Collateral Agent and subject to the instructions of
Collateral Agent; and
(e) promptly upon the issuance and delivery to Grantor of any
Negotiable Document of Title (other than any one or more Negotiable Documents of
Title covering (i) Inventory with an aggregate value not in excess of $500,000
or (ii) Inventory which, in the ordinary course of business, is in transit
either (A) from a supplier to Grantor, (B) between the locations specified in
Schedule II hereto, or (C) to customers of Grantor), deliver such Negotiable
Document of Title to Collateral Agent.
SECTION 8. INSURANCE.
(a) Grantor shall, at its own expense, maintain insurance with respect
to the Equipment and Inventory in accordance with the terms of the Credit
Agreements. Such insurance shall include, without limitation, property damage
insurance and liability insurance. Each policy for property damage insurance
shall provide for all losses (except for losses in an amount equal to or less
than $1,000,000 per occurrence) to be paid directly to Collateral Agent for
application as provided herein and in the Intercreditor Agreement. Each policy
shall in addition name Grantor and Collateral Agent as insured parties
thereunder (without any representation or warranty by or obligation upon
Collateral Agent) as their interests may appear and have attached thereto a loss
payable clause acceptable to Collateral Agent that shall (i) contain an
agreement by the insurer that any loss thereunder shall be payable to Collateral
Agent notwithstanding any action, inaction or breach of representation or
warranty by Grantor, (ii) provide that there shall be no recourse against
Collateral Agent for payment of premiums or other amounts with respect thereto,
and (iii) provide that at least 30 days' prior written notice of cancellation,
material amendment, reduction in scope or limits of coverage or of lapse shall
be given to Collateral Agent by the insurer. Grantor shall, if so requested by
Collateral Agent, deliver to Collateral Agent original or duplicate policies of
such insurance and, as often as Collateral Agent may reasonably request, a
report of a reputable insurance broker with respect to such insurance. Further,
Grantor shall, at the request of Collateral Agent, duly execute and deliver
instruments of assignment of such insurance policies to comply with the
requirements of Section 5(a) and cause the respective insurers to acknowledge
notice of such assignment.
(b) Reimbursement under any liability insurance maintained by Grantor
pursuant to this Section 8 may be paid directly to the Person who shall have
incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory when subsection (c) of this Section 8 is not
applicable, Grantor shall make or cause to be made the necessary repairs to or
replacements of such Equipment or Inventory, and any proceeds of insurance
maintained by Grantor pursuant to this Section 8 shall be paid to Grantor as
reimbursement for the costs of such repairs or replacements.
(c) Upon (i) the occurrence and during the continuation of any Event
of Default or (ii) the actual or constructive loss (in excess of $500,000 per
occurrence) of any Equipment or Inventory, all insurance payments in respect of
such Equipment or Inventory shall be paid to and applied by Collateral Agent as
specified in Section 17.
SECTION 9. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND RELATED
CONTRACTS.
(a) Grantor shall keep its chief place of business and chief executive
office and the office where it keeps its records concerning the Accounts and
Related Contracts, and all originals of all chattel paper that evidence
Accounts, at the location therefor specified in Section 4 or, upon 30 days'
prior written notice to Collateral Agent, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Collateral Agent may request, in order to perfect and protect any security
interest granted or purported to be granted hereby, or to enable Collateral
Agent to exercise and enforce its rights and remedies hereunder, with respect to
such Accounts and Related Contracts shall have been taken. Grantor will hold and
preserve such records and chattel paper and will permit representatives of
Collateral Agent at any time during normal business hours to inspect and make
abstracts from such records and chattel paper, and Grantor agrees to render to
Collateral Agent, at Grantor's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. Promptly upon the
request of Collateral Agent, Grantor shall deliver to Collateral Agent complete
and correct copies of each Related Contract.
(b) Except as otherwise provided in this subsection (b), Grantor shall
continue to collect, at its own expense, all amounts due or to become due to
Grantor under the Accounts and Related Contracts. In connection with such
collections, Grantor may take (and, at Collateral Agent's direction, shall take)
such action as Grantor or Collateral Agent may deem necessary or advisable to
enforce collection of amounts due or to become due under the Accounts; provided,
however, that Collateral Agent shall have the right at any time, upon the
occurrence and during the continuation of a Potential Event of Default (such
term being used herein as defined in any Credit Agreement) or an Event of
Default and upon written notice to Grantor of its intention to do so, to notify
the account debtors or obligors under any Accounts of the assignment of such
Accounts to Collateral Agent and to direct such account debtors or obligors to
make payment of all amounts due or to become due to Grantor thereunder directly
to Collateral Agent, to notify each Person maintaining a lockbox or similar
arrangement to which account debtors or obligors under any Accounts have been
directed to make payment to remit all amounts representing collections on checks
and other payment items from time to time sent to or deposited in such lockbox
or other arrangement directly to Collateral Agent and, upon such notification
and at the expense of Grantor, to enforce collection of any such Accounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as Grantor might have done. After receipt by Grantor of
the notice from Collateral Agent referred to in the proviso to the preceding
sentence, (i) all amounts and proceeds (including checks and other instruments)
received by Grantor in respect of the Accounts and the Related Contracts shall
be received in trust for the benefit of Collateral Agent hereunder, shall be
segregated from other funds of Grantor and shall be forthwith paid over or
delivered to Collateral Agent in the same form as so received (with any
necessary endorsement) to be held as cash Collateral and applied as provided by
Section 17, and (ii) Grantor shall not adjust, settle or compromise the amount
or payment of any Account, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon.
SECTION 10. SPECIAL PROVISIONS WITH RESPECT TO THE ASSIGNED
AGREEMENTS.
(a) Grantor shall at its expense:
(i) perform and observe all terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned
Agreements in full force and effect, enforce the Assigned Agreements in
accordance with their terms, and take all such action to such end as may be
from time to time requested by Collateral Agent; and
(ii) furnish to Collateral Agent, promptly upon receipt thereof,
copies of all notices, requests and other documents received by Grantor
under or pursuant to the Assigned Agreements, and from time to time (A)
furnish to Collateral Agent such information and reports regarding the
Assigned Agreements as Collateral Agent may reasonably request and (B) upon
request of Collateral Agent make to each other party to such Assigned
Agreements such demands and requests for information and reports or for
action as Grantor is entitled to make under the Assigned Agreements.
(b) Grantor shall not:
(i) cancel or terminate any of the Assigned Agreements or
consent to or accept any cancellation or termination thereof;
(ii) amend or otherwise modify the Assigned Agreements in
any material respect or give any material consent, waiver or approval
thereunder;
(iii) waive any default under or breach of the Assigned
Agreements;
(iv) consent to or permit or accept any prepayment of amounts to
become due under or in connection with the Assigned Agreements, except
as expressly provided therein; or
(v) take any other action in connection with the Assigned
Agreements that would materially impair the value of the interest or rights
of Grantor thereunder or that would materially impair the interest or
rights of Collateral Agent.
SECTION 11. DEPOSIT ACCOUNTS. Upon the occurrence and during the
continuation of an Event of Default, Collateral Agent may exercise dominion and
control over, and refuse to permit further withdrawals (whether of money,
securities, instruments or other property) from any deposit accounts maintained
with Collateral Agent constituting part of the Collateral.
SECTION 12. TRANSFERS AND OTHER LIENS. Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreements;
or
(b) except for the security interest created by this Agreement, create
or suffer to exist any Lien (other than Permitted Encumbrances) upon or with
respect to any of the Collateral to secure the indebtedness or other obligations
of any Person.
SECTION 13. COLLATERAL AGENT APPOINTED ATTORNEY-IN- FACT. Grantor
hereby irrevocably appoints Collateral Agent as Grantor's attorney-in-fact, with
full authority in the place and stead of Grantor and in the name of Grantor,
Collateral Agent or otherwise, from time to time (a) upon the occurrence and
during the continuance of an Event of Default or (b) with respect to any action
or the execution of any instrument that Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, (i) upon the occurrence
and during the continuance of a Potential Event of Default or (ii) after the
fifth Business Day after Collateral Agent makes a written request to Grantor to
take such action or execute such instrument (provided that Grantor fails to
fully comply with such request on or prior to such fifth Business Day) in
Collateral Agent's discretion to take any action and to execute any instrument
that Collateral Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including without limitation:
(a) to obtain and adjust insurance required to be maintained by
Grantor or paid to Collateral Agent pursuant to Section 8;
(b) to ask for, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(d) to file any claims or take any action or institute any proceedings
that Collateral Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of Collateral Agent with
respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreements) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Collateral Agent in
its sole discretion, any such payments made by Collateral Agent to become
obligations of Grantor to Collateral Agent, due and payable immediately without
demand;
(f) to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and
(g) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though Collateral Agent were the absolute owner thereof for all purposes, and
to do, at Collateral Agent's option and Grantor's expense, at any time or from
time to time, all acts and things that Collateral Agent deems necessary to
protect, preserve or realize upon the Collateral and Collateral Agent's security
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as Grantor might do.
SECTION 14. COLLATERAL AGENT MAY PERFORM. If Grantor fails to perform
any agreement contained herein, Collateral Agent may itself perform, or cause
performance of, such agreement, and the expenses of Collateral Agent incurred in
connection therewith shall be payable by Grantor under Section 18.
SECTION 15. STANDARD OF CARE. The powers conferred on Collateral Agent
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Collateral Agent shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Collateral Agent shall be deemed to have exercised reasonable care
in the custody and preservation of Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which Collateral
Agent accords its own property.
SECTION 16. REMEDIES.
If any Event of Default shall have occurred and be continuing,
Collateral Agent may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "CODE") (whether
or not the Code applies to the affected Collateral), and also may (a) require
Grantor to, and Grantor hereby agrees that it will at its expense and upon
request of Collateral Agent forthwith, assemble all or part of the Collateral as
directed by Collateral Agent and make it available to Collateral Agent at a
place to be designated by Collateral Agent that is reasonably convenient to both
parties, (b) enter onto the property where any Collateral is located and take
possession thereof with or without judicial process, (c) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Collateral Agent deems appropriate, (d) take possession of Grantor's
premises or place custodians in exclusive control thereof, remain on such
premises and use the same and any of Grantor's equipment for the purpose of
completing any work in process, taking any actions described in the preceding
clause (c) and collecting any Secured Obligation, and (e) without notice except
as specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Collateral Agent may deem
commercially reasonable. Collateral Agent or any Lender or Interest Rate
Exchanger may be the purchaser of any or all of the Collateral at any such sale
and Collateral Agent, as agent for and representative of Lenders and Interest
Rate Exchangers (but not any Lender, Lenders, Interest Rate Exchanger or
Interest Rate Exchangers in its or their respective individual capacities unless
Requisite Obligees shall otherwise agree in writing), shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Secured Obligations as a credit on account of the purchase
price for any Collateral payable by Collateral Agent at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of Grantor, and Grantor hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days' notice to Grantor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. Collateral Agent shall
not be obligated to make any sale of Collateral regardless of notice of sale
having been given. Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Grantor hereby waives any claims against Collateral Agent arising by
reason of the fact that the price at which any Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale, even if Collateral Agent accepts the first offer received and does
not offer such Collateral to more than one offeree. If the proceeds of any sale
or other disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantor shall be liable for the deficiency and the fees of any
attorneys employed by Collateral Agent to collect such deficiency.
SECTION 17. APPLICATION OF PROCEEDS. Except as otherwise expressly
provided elsewhere in this Agreement or the Intercreditor Agreement, all
Proceeds received by Collateral Agent in respect of all or any part of the
Collateral may, in the discretion of Collateral Agent, be held by Collateral
Agent as Collateral for, and/or then, or at any time thereafter, applied in full
or in part by Collateral Agent against, the Secured Obligations in the following
order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including, without limitation, fees and
expenses of counsel, and all other expenses, liabilities and advances made
or incurred by Collateral Agent in connection therewith, and all amounts
for which Collateral Agent is entitled to indemnification hereunder and all
advances made by Collateral Agent hereunder for the account of Grantor, and
to the payment of all costs and expenses paid or incurred by Collateral
Agent in connection with the exercise of any right or remedy hereunder, all
in accordance with Section 18;
SECOND: To the payment of all other Secured Obligations as provided
in Section 4 of the Intercreditor Agreement; and
THIRD: To the payment to or upon the order of Grantor, or to whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such proceeds.
SECTION 18. INDEMNITY AND EXPENSES.
(a) Grantor agrees to indemnify Collateral Agent and each other
Secured Party from and against any and all claims, losses and liabilities in any
way relating to, growing out of or resulting from this Agreement or any related
Financing Agreement and the transactions contemplated hereby and thereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Collateral Agent's
or such other Secured Party's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Grantor shall pay to Collateral Agent upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Collateral Agent hereunder, or (iv) the failure by Grantor
to perform or observe any of the provisions hereof.
SECTION 19. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the payment in full of all
Secured Obligations, the cancellation or termination of all Commitments and the
cancellation or expiration of all outstanding letters of credit issued pursuant
to any of the Credit Agreements then secured by the Collateral, (b) be binding
upon Grantor, its successors and assigns, and (c) inure, together with the
rights and remedies of Collateral Agent hereunder, to the benefit of Collateral
Agent and its successors and permitted assigns. Without limiting the generality
of the foregoing clause (c), but subject to the provisions of subsection 10.1 of
the Existing Credit Agreement and subsection 10.1 of the New Credit Agreement
and any comparable provisions of any Successor Credit Agreement secured by the
Collateral, any Lender may assign any loans held by it under the applicable
Credit Agreement to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to Lenders herein
or otherwise. Upon the payment in full of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding letters of credit referred to above, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to Grantor. Upon any such termination Collateral Agent will, at Grantor's
expense, execute and deliver to Grantor such documents as Grantor shall
reasonably request to evidence such termination.
SECTION 20. COLLATERAL AGENT AS AGENT.
(a) Collateral Agent has been appointed to act as Collateral Agent
hereunder by the Parties under the Intercreditor Agreement, which appointment
and the terms thereof have been acknowledged and agreed to by Grantor, and
Collateral Agent shall be entitled to the benefits of the Intercreditor
Agreement in acting as Collateral Agent hereunder. Collateral Agent shall be
obligated, and shall have the right hereunder, to make demands, to give notices,
to exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including, without limitation, the release or substitution of
Collateral), solely in accordance with the terms of this Agreement and the
Intercreditor Agreement; provided that, anything contained herein to the
contrary notwithstanding, in the event of any conflict between the express terms
and provisions of this Agreement and the express terms and provisions of the
Intercreditor Agreement, such terms and provisions of the Intercreditor
Agreement shall be controlling for all purposes hereof.
(b) Collateral Agent shall at all times be the same Person that is
Collateral Agent under the Intercreditor Agreement. Written notice of
resignation by Collateral Agent pursuant to Section 9(g)(i) of the Intercreditor
Agreement shall also constitute notice of resignation as Collateral Agent under
this Agreement; removal of Collateral Agent pursuant to Section 9(g)(ii) of the
Intercreditor Agreement shall also constitute removal as Collateral Agent under
this Agreement; and appointment of a successor Collateral Agent pursuant to
Section 9(g) of the Intercreditor Agreement shall also constitute appointment of
a successor Collateral Agent under this Agreement. Upon the acceptance of any
appointment as Collateral Agent under Section 9(g) of the Intercreditor
Agreement, the successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Collateral Agent hereunder, and (ii) execute and deliver to such successor
Collateral Agent any amendments to financing statements, and take any other
actions, as may be necessary or appropriate in connection with the assignment to
such successor Collateral Agent of the security interests created hereunder,
whereupon such retiring or removed Collateral Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring or removed
Collateral Agent's resignation or removal hereunder as Collateral Agent, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Collateral Agent
hereunder.
SECTION 21. AMENDMENTS; ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, and no consent to any departure by
Grantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Collateral Agent and, in the case of any such amendment or
modification, by Grantor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 22. NOTICES. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or five Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
SECTION 23. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Collateral Agent in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 24. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 25. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 26. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit
Agreements, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of New York are used herein as therein defined.
SECTION 27. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT
GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY FINAL AND NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Grantor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Grantor at its address provided in Section 22, such
service being hereby acknowledged by Grantor to be sufficient for personal
jurisdiction in any action against Grantor in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Collateral Agent to bring proceedings against Grantor in the courts of
any other jurisdiction.
SECTION 28. WAIVER OF JURY TRIAL. GRANTOR AND COLLATERAL AGENT HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Grantor and Collateral Agent each
acknowledge that this waiver is a material inducement for Grantor and Collateral
Agent to enter into a business relationship, that Grantor and Collateral Agent
have already relied on this waiver in entering into this Agreement and that each
will continue to rely on this waiver in their related future dealings. Grantor
and Collateral Agent further warrant and represent that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 28
AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 29. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
SECTION 30. DESIGNATION OF COLLATERAL AGENT ON FINANCING STATEMENTS.
For purposes of any financing statements filed with respect to any of the
Collateral under the Code, BTCo, in its capacity as Collateral Agent hereunder,
may be referred to as "Bankers Trust Company", "Bankers Trust Company, as
Agent", "Bankers Trust Company, as Administrative Agent", or "Bankers Trust
Company, as Collateral Agent".
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, Grantor and Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
DICTAPHONE CORPORATION
By: __________________________
Title:
Notice Address:
Dictaphone Corporation
3191 Broadbridge Avenue
Stratford, Connecticut 06497
Attention: Dan Hart, Esq.
BANKERS TRUST COMPANY
By: __________________________
Title:
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Zadroga
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Victoria A. Floyd
<PAGE>
SCHEDULE I
TO SECURITY AGREEMENT
Assigned Agreements:
<PAGE>
SCHEDULE II
TO SECURITY AGREEMENT
Locations of Equipment:
Locations of Inventory:
<PAGE>
EXHIBIT XI
[FORM OF SUBSIDIARY GUARANTY]
AMENDED AND RESTATED SUBSIDIARY GUARANTY
This AMENDED AND RESTATED SUBSIDIARY GUARANTY is entered into as of
November 14, 1997 by THE UNDERSIGNED (each a "GUARANTOR" and collectively,
"GUARANTORS") in favor of and for the benefit of BANKERS TRUST COMPANY ("BTCO"),
as agent for and representative of (in such capacity herein called "COLLATERAL
AGENT") the Guarantied Parties (as hereinafter defined), and amends and restates
that certain Guaranty (the "EXISTING SUBSIDIARY GUARANTY") dated as of August 7,
1995 by Guarantors in favor of Existing Agent (as hereinafter defined).
RECITALS
A. Dictaphone Corporation, a Delaware corporation ("COMPANY"), the
financial institutions party thereto as lenders ("EXISTING LENDERS"), and
Bankers Trust Company, as administrative agent for Existing Lenders (in such
capacity, together with its successors in such capacity, "EXISTING AGENT") are
parties to that certain Credit Agreement dated as of August 7, 1995 (said Credit
Agreement, as amended through and including the date hereof and as it may
hereafter be further amended, amended and restated, supplemented or otherwise
modified from time to time, being the "EXISTING CREDIT AGREEMENT") pursuant to
which Existing Lenders have made certain credit facilities available to Company
in the form of loans and letters of credit, and all Existing Credit Agreement
Obligations (as defined in the Intercreditor Agreement referred to below) are
currently guarantied by Guarantors under the Existing Subsidiary Guaranty.
B. Company, the financial institutions party thereto as lenders ("NEW
LENDERS"; together with Existing Lenders, "CURRENT LENDERS"), and Bankers Trust
Company, as administrative agent for New Lenders (in such capacity, together
with its successors in such capacity, "NEW AGENT"; together with Existing Agent,
"CURRENT AGENTS") have entered into that certain Credit Agreement dated as of
even date herewith (said Credit Agreement, as it may hereafter be amended,
amended and restated, supplemented or otherwise modified from time to time,
being the "NEW CREDIT AGREEMENT"; together with the Existing Credit Agreement,
the "CURRENT CREDIT AGREEMENTS") pursuant to which New Lenders have made certain
credit facilities available to Company in the form of loans the proceeds of
which will be used on the date hereof to prepay a portion of the loans
outstanding under the Existing Credit Agreement, and the terms of the New Credit
Agreement require that all New Credit Agreement Obligations (as defined in the
Intercreditor Agreement) be guarantied by Guarantors.
C. It is contemplated that, from time to time, one or more Current
Lenders and/or one or more other financial institutions (any such Current
Lenders and/or other financial institutions being referred to herein
collectively as "SUCCESSOR LENDERS") may enter into one or more agreements with
Company and/or its Subsidiaries (any such agreements, as they may exist from
time to time, being "SUCCESSOR CREDIT AGREEMENTS") which either refinance,
replace or otherwise restructure all or any portion of the indebtedness under
the Current Credit Agreements and/or any Successor Credit Agreement (the Current
Credit Agreements and any Successor Credit Agreements being referred to herein
collectively as "CREDIT AGREEMENTS"; Current Lenders and any Successor Lenders
being referred to herein collectively as "LENDERS"; and Current Agents and any
administrative agents (collectively, "SUCCESSOR AGENTS") under any Successor
Credit Agreements being referred to herein collectively as "AGENTS"), and the
terms of any Successor Credit Agreement may require that all Successor Credit
Agreement Obligations (as defined in the Intercreditor Agreement) in respect
thereof be guarantied by Guarantors.
D. Company has entered into, or may from time to time enter into, one
or more Lender Interest Rate Agreements (as defined in the Intercreditor
Agreement) with one or more Interest Rate Exchangers (as defined in the
Intercreditor Agreement), and the terms of any Lender Interest Rate Agreement
may require that all Interest Rate Obligations (as defined in the Intercreditor
Agreement) in respect thereof be guarantied by Guarantors.
E. Current Agents and Collateral Agent have entered into, and all
existing Loan Parties (as defined in the Intercreditor Agreement) have
acknowledged and agreed to the terms of, that certain Intercreditor Agreement
dated as of even date herewith (said Intercreditor Agreement, as it may
hereafter be amended, amended and restated, supplemented or otherwise modified
from time to time, being the "INTERCREDITOR AGREEMENT"; terms defined therein
and not otherwise defined herein being used herein as therein defined) which
provides for, among other things, the appointment of Collateral Agent to
administer and enforce this Agreement in the manner set forth herein and
therein.
F. Pursuant to the authority granted to Collateral Agent by Existing
Agent and the other Parties under the Intercreditor Agreement, Collateral Agent
and Guarantors desire to amend and restate the Existing Subsidiary Guaranty as
hereinafter set forth in order to (i) substitute BTCo, in its capacity as
Collateral Agent, for BTCo, in its capacity as Existing Agent, as the agent for
Guarantied Parties hereunder, and (ii) provide that the guaranty of Guarantors
hereunder shall hereafter be for the benefit of Current Lenders, Current Agents,
any Successor Lender or Successor Agent becoming a party to the Intercreditor
Agreement in the manner provided therein, any Successor Lenders represented by
any such Successor Agent, any Interest Rate Exchanger becoming a party to the
Intercreditor Agreement in the manner provided therein, and Collateral Agent
(all of the Persons described in this clause (ii) being referred to herein
collectively as "GUARANTIED PARTIES").
G. A portion of the benefits of the Guarantied Obligations (as
hereinafter defined) have been and/or may be made available, directly or
indirectly, to Guarantors and thus the Guarantied Obligations have been or are
being incurred for, and have or will inure to the benefit of, Guarantors (which
benefits are hereby acknowledged).
H. Guarantors are willing irrevocably and unconditionally to
guaranty all Guarantied Obligations.
NOW, THEREFORE, in consideration of the premises, in order to induce
Lenders to make and/or maintain extensions of credit to Company under the Credit
Agreements and to induce Interest Rate Exchangers to enter into and/or maintain
Lender Interest Rate Agreements, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, Guarantors hereby
agree to amend and restate the Existing Subsidiary Guaranty in its entirety as
follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Guaranty, the following terms
shall have the following meanings unless the context otherwise requires:
"GUARANTIED OBLIGATIONS" has the meaning assigned to that term in
subsection 2.1.
"GUARANTY" means this Amended and Restated Subsidiary Guaranty dated
as of November 14, 1997, as it may hereafter be amended, amended and
restated, supplemented or otherwise modified from time to time.
"PAYMENT IN FULL", "PAID IN FULL" or any similar term means payment in
full of the applicable Guarantied Obligations as required under the
applicable Financing Agreements.
1.2 INTERPRETATION. References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Guaranty unless otherwise
specifically provided.
SECTION 2. THE GUARANTY
2.1 GUARANTY OF THE GUARANTIED OBLIGATIONS. Subject to the provisions of
subsection 2.2(a), Guarantors jointly and severally hereby irrevocably and
unconditionally guaranty, as primary obligors and not merely as sureties, the
due and punctual payment in full of all Guarantied Obligations when the same
shall become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)). The term "GUARANTIED
OBLIGATIONS" is used herein in its most comprehensive sense and includes:
(a) any and all Credit Agreement Obligations and Interest Rate
Obligations now or hereafter made, incurred or created, whether absolute or
contingent, liquidated or unliquidated, whether due or not due, and however
arising under or in connection with the applicable Financing Agreements,
including those arising under successive borrowing transactions under any
applicable Credit Agreement which shall either continue the applicable
Credit Agreement Obligations or from time to time renew them after they
have been satisfied; and
(b) those expenses set forth in subsection 2.8 hereof;
; provided that the guaranty of Guarantors under this Guaranty shall be
effective as to any Successor Credit Agreement Obligations or Interest Rate
Obligations only if the applicable Successor Lenders (or a Successor Agent
acting on their behalf) or Interest Rate Exchanger shall have executed and
delivered to Collateral Agent a counterpart of the Intercreditor Agreement,
acknowledged by each Guarantor that is then a party hereto, as provided in the
Intercreditor Agreement.
2.2 LIMITATION ON AMOUNT GUARANTIED; CONTRIBUTION BY GUARANTORS. (a)
Anything contained in this Guaranty to the contrary notwithstanding, if any
Fraudulent Transfer Law (as hereinafter defined) is determined by a court of
competent jurisdiction to be applicable to the obligations of any Guarantor
under this Guaranty, such obligations of such Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "FRAUDULENT
TRANSFER LAWS"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (x) in respect of intercompany indebtedness to Company or other
affiliates of Company to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Guarantor hereunder and (y) under
any guaranty of Subordinated Indebtedness which guaranty contains a limitation
as to maximum amount similar to that set forth in this subsection 2.2(a),
pursuant to which the liability of such Guarantor hereunder is included in the
liabilities taken into account in determining such maximum amount) and after
giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
reimbursement, indemnification or contribution of such Guarantor pursuant to
applicable law or pursuant to the terms of any agreement (including without
limitation any such right of contribution under subsection 2.2(b)).
(b) Guarantors under this Guaranty together desire to allocate among
themselves, in a fair and equitable manner, their obligations arising under this
Guaranty. Accordingly, in the event any payment or distribution is made on any
date by any Guarantor under this Guaranty (a "FUNDING GUARANTOR") that exceeds
its Fair Share (as defined below) as of such date, that Funding Guarantor shall
be entitled to a contribution from each of the other Guarantors in the amount of
such other Guarantor's Fair Share Shortfall (as defined below) as of such date,
with the result that all such contributions will cause each Guarantor's
Aggregate Payments (as defined below) to equal its Fair Share as of such date.
"FAIR SHARE" means, with respect to a Guarantor as of any date of determination,
an amount equal to (i) the ratio of (x) the Adjusted Maximum Amount (as defined
below) with respect to such Guarantor to (y) the aggregate of the Adjusted
Maximum Amounts with respect to all Guarantors, multiplied by (ii) the aggregate
amount paid or distributed on or before such date by all Funding Guarantors
under this Guaranty in respect of the obligations guarantied. "FAIR SHARE
SHORTFALL" means, with respect to a Guarantor as of any date of determination,
the excess, if any, of the Fair Share of such Guarantor over the Aggregate
Payments of such Guarantor. "ADJUSTED MAXIMUM AMOUNT" means, with respect to a
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Guarantor under this Guaranty, determined as of such date in
accordance with subsection 2.2(a); provided that, solely for purposes of
calculating the "Adjusted Maximum Amount" with respect to any Guarantor for
purposes of this subsection 2.2(b), any assets or liabilities of such Guarantor
arising by virtue of any rights to subrogation, reimbursement or indemnification
or any rights to or obligations of contribution hereunder shall not be
considered as assets or liabilities of such Guarantor. "AGGREGATE PAYMENTS"
means, with respect to a Guarantor as of any date of determination, an amount
equal to (i) the aggregate amount of all payments and distributions made on or
before such date by such Guarantor in respect of this Guaranty (including,
without limitation, in respect of this subsection 2.2(b)) minus (ii) the
aggregate amount of all payments received on or before such date by such
Guarantor from the other Guarantors as contributions under this subsection
2.2(b). The amounts payable as contributions hereunder shall be determined as of
the date on which the related payment or distribution is made by the applicable
Funding Guarantor. The allocation among Guarantors of their obligations as set
forth in this subsection 2.2(b) shall not be construed in any way to limit the
liability of any Guarantor hereunder.
2.3 PAYMENT BY GUARANTORS; APPLICATION OF PAYMENTS. Subject to the
provisions of subsection 2.2(a), Guarantors hereby jointly and severally agree,
in furtherance of the foregoing and not in limitation of any other right which
Collateral Agent or any other Person may have at law or in equity against any
Guarantor by virtue hereof, that upon the failure of Company to pay any of the
Guarantied Obligations when and as the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)),
Guarantors will upon demand pay, or cause to be paid, in cash, to Collateral
Agent for the benefit of Guarantied Parties as provided in the Intercreditor
Agreement, an amount equal to the sum of the unpaid principal amount of all
Guarantied Obligations then due as aforesaid, accrued and unpaid interest on
such Guarantied Obligations (including, without limitation, interest which, but
for the filing of a petition in bankruptcy with respect to Company, would have
accrued on such Guarantied Obligations, whether or not a claim is allowed
against Company for such interest in any such bankruptcy proceeding) and all
other Guarantied Obligations then owed to Guarantied Parties as aforesaid. All
such payments shall be applied promptly from time to time by Agent:
First, to the payment of the costs and expenses of any collection or
other realization under this Guaranty, including reasonable fees and
expenses of Collateral Agent and its agents and counsel, and all expenses,
liabilities and advances made or incurred by Collateral Agent in connection
therewith;
Second, to the payment of all other Guarantied
Obligations as provided in Section 4 of the Intercreditor
Agreement; and
Third, after payment in full of all Guarantied Obligations, to the
payment to Guarantors, or their respective successors or assigns, or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
payments.
2.4 LIABILITY OF GUARANTORS ABSOLUTE. Each Guarantor agrees that its
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guarantied Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) Collateral Agent may enforce this Guaranty upon the occurrence of
an Event of Default notwithstanding the existence of any dispute between
Company and any Guarantied Party with respect to the existence of such
Event of Default.
(c) The obligations of each Guarantor hereunder are independent of the
obligations of Company under the Financing Agreements and the obligations
of any other guarantor (including any other Guarantor) of the obligations
of Company under any of the Financing Agreements, and a separate action or
actions may be brought and prosecuted against such Guarantor whether or not
any action is brought against Company or any of such other guarantors and
whether or not Company is joined in any such action or actions.
(d) Payment by any Guarantor of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge any
Guarantor's liability for any portion of the Guarantied Obligations which
has not been paid. Without limiting the generality of the foregoing, if
Collateral Agent is awarded a judgment in any suit brought to enforce any
Guarantor's covenant to pay a portion of the Guarantied Obligations, such
judgment shall not be deemed to release such Guarantor from its covenant to
pay the unpaid portion of the Guarantied Obligations that is not the
subject of such suit, and such judgment shall not, except to the extent
satisfied by such Guarantor, limit, affect, modify or abridge any other
Guarantor's liability hereunder in respect of the Guarantied Obligations.
(e) Any Guarantied Party, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or
enforceability of this Guaranty or giving rise to any reduction,
limitation, impairment, discharge or termination of any Guarantor's
liability hereunder, from time to time may (i) renew, extend, accelerate,
increase the rate of interest on, or otherwise change the time, place,
manner or terms of payment of any of the Guarantied Obligations, (ii)
settle, compromise, release or discharge, or accept or refuse any offer of
performance with respect to, or substitutions for, any of the Guarantied
Obligations or any agreement relating thereto and/or subordinate the
payment of the same to the payment of any other obligations; (iii) request
and accept other guaranties of any of the Guarantied Obligations and take
and hold security for the payment of this Guaranty or any of the Guarantied
Obligations; (iv) release, surrender, exchange, substitute, compromise,
settle, rescind, waive, alter, subordinate or modify, with or without
consideration, any security for payment of any of the Guarantied
Obligations, any other guaranties of any of the Guarantied Obligations, or
any other obligation of any Person (including any other Guarantor) with
respect to any of the Guarantied Obligations; (v) enforce and apply any
security now or hereafter held by or for the benefit of any Guarantied
Party in respect of this Guaranty or any of the Guarantied Obligations and
direct the order or manner of sale thereof, or exercise any other right or
remedy that any Guarantied Party may have against any such security, as
such Guarantied Party in its discretion may determine consistent with the
terms of the Intercreditor Agreement and any applicable security agreement,
including foreclosure on any such security pursuant to one or more judicial
or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right or
remedy of any Guarantor against Company or any security for any of the
Guarantied Obligations; and (vi) subject to the terms of the Intercreditor
Agreement, exercise any other rights available to it under the Financing
Agreements.
(f) This Guaranty and the obligations of Guarantors hereunder shall be
valid and enforceable and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason (other than
payment in full of the Guarantied Obligations), including without
limitation the occurrence of any of the following, whether or not any
Guarantor shall have had notice or knowledge of any of them: (i) any
failure or omission to assert or enforce, or any agreement or election not
to assert or enforce, or the stay or enjoining (by order of court, by
operation of law or otherwise) of the exercise or enforcement of, any claim
or demand or any right, power or remedy (whether arising under any of the
Financing Agreements, at law, in equity or otherwise) with respect to any
of the Guarantied Obligations or any agreement relating thereto, or with
respect to any other guaranty of or security for the payment of any of the
Guarantied Obligations; (ii) any rescission, waiver, amendment or
modification of, or any consent to departure from, any of the terms or
provisions (including without limitation provisions relating to events of
default) of any of the Financing Agreements or any agreement or instrument
executed pursuant thereto, or of any other guaranty or security for any of
the Guarantied Obligations, in each case whether or not in accordance with
the terms of such Financing Agreement or any agreement relating to such
other guaranty or security; (iii) any of the Guarantied Obligations, or any
agreement relating thereto, at any time being found to be illegal, invalid
or unenforceable in any respect; (iv) the application of payments received
from any source (other than payments received pursuant to the other
Financing Agreements or from the proceeds of any security for any of the
Guarantied Obligations, except to the extent such security also serves as
collateral for indebtedness other than the Guarantied Obligations) to the
payment of indebtedness other than the Guarantied Obligations, even though
any Guarantied Party might have elected to apply such payment to any part
or all of the Guarantied Obligations; (v) any Guarantied Party's consent to
the change, reorganization or termination of the corporate structure or
existence of Company or any of its Subsidiaries and to any corresponding
restructuring of any of the Guarantied Obligations; (vi) any failure to
perfect or continue perfection of a security interest in any collateral
which secures any of the Guarantied Obligations; (vii) any defenses,
set-offs or counterclaims which Company may allege or assert against any
Guarantied Party in respect of any of the Guarantied Obligations, including
but not limited to failure of consideration, breach of warranty, payment,
statute of frauds, statute of limitations, accord and satisfaction and
usury; and (viii) any other act or thing or omission, or delay to do any
other act or thing, which may or might in any manner or to any extent vary
the risk of any Guarantor as an obligor in respect of any of the Guarantied
Obligations.
2.5 WAIVERS BY GUARANTORS. Each Guarantor hereby waives, for the benefit
of Guarantied Parties:
(a) any right to require any Guarantied Party, as a condition of
payment or performance by such Guarantor, to (i) proceed against Company,
any other guarantor (including any other Guarantor) of any of the
Guarantied Obligations, or any other Person, (ii) proceed against or
exhaust any security held from Company, any other guarantor (including any
other Guarantor) of any of the Guarantied Obligations, or any other Person,
(iii) proceed against or have resort to any balance of any deposit account
or credit on the books of any Guarantied Party in favor of Company or any
other Person, or (iv) pursue any other remedy in the power of any
Guarantied Party whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of Company including, without
limitation, any defense based on or arising out of the lack of validity or
the unenforceability of any of the Guarantied Obligations or any agreement
or instrument relating thereto or by reason of the cessation of the
liability of Company from any cause other than payment in full of the
Guarantied Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;
(d) any defense based upon any Guarantied Party's errors or omissions
in the administration of any of the Guarantied Obligations, except errors
or omissions which amount to gross negligence or willful misconduct;
(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Guaranty and any
legal or equitable discharge of such Guarantor's obligations hereunder,
(ii) the benefit of any statute of limitations affecting such Guarantor's
liability hereunder or the enforcement hereof, (iii) any rights to
set-offs, recoupments and counterclaims, and (iv) promptness, diligence and
any requirement that any Guarantied Party protect, secure, perfect or
insure any security interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including
acceptance of this Guaranty, notices of default under any Financing
Agreement or any agreement or instrument related thereto, notices of any
renewal, extension or modification of any of the Guarantied Obligations or
any agreement related thereto, notices of any extension of credit to
Company and notices of any of the matters referred to in subsection 2.4 and
any right to consent to any thereof; and
(g) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or
which may conflict with the terms of this Guaranty.
2.6 GUARANTORS' RIGHTS OF SUBROGATION, CONTRIBUTION, ETC. Each Guarantor
hereby waives any claim, right or remedy, direct or indirect, that such
Guarantor now has or may hereafter have against Company or any of its assets in
connection with this Guaranty or the performance by such Guarantor of its
obligations hereunder, in each case whether such claim, right or remedy arises
in equity, under contract, by statute, under common law or otherwise and
including without limitation (a) any right of subrogation, reimbursement or
indemnification that such Guarantor now has or may hereafter have against
Company, (b) any right to enforce, or to participate in, any claim, right or
remedy that any Guarantied Party now has or may hereafter have against Company,
and (c) any benefit of, and any right to participate in, any collateral or
security now or hereafter held by any Guarantied Party. In addition, until the
Guarantied Obligations shall have been paid in full, each Guarantor shall
withhold exercise of any right of contribution such Guarantor may have against
any other guarantor (including any other Guarantor) of any of the Guarantied
Obligations (including without limitation any such right of contribution under
subsection 2.2(b). Each Guarantor further agrees that, to the extent the waiver
or agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification such Guarantor may have
against Company or against any collateral or security, and any rights of
contribution such Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights Collateral Agent or any other Guarantied
Party may have against Company, to all right, title and interest any Guarantied
Party may have in any such collateral or security, and to any right any
Guarantied Party may have against such other guarantor. Subject to the terms of
the Intercreditor Agreement, any Guarantied Party may use, sell or dispose of
any item of collateral or security as it sees fit without regard to any
subrogation rights any Guarantor may have, and upon any such disposition or sale
any rights of subrogation such Guarantor may have shall terminate. If any amount
shall be paid to any Guarantor on account of any such subrogation, reimbursement
or indemnification rights at any time when all Guarantied Obligations shall not
have been paid in full, such amount shall be held in trust for Collateral Agent
on behalf of Guarantied Parties and shall forthwith be paid over to Collateral
Agent for the benefit of Guarantied Parties to be credited and applied against
the Guarantied Obligations, whether matured or unmatured, in accordance with the
terms hereof.
2.7 SUBORDINATION OF OTHER OBLIGATIONS. Any indebtedness of Company now or
hereafter held by any Guarantor is hereby subordinated in right of payment to
the Guarantied Obligations, and any such indebtedness of Company to such
Guarantor collected or received by such Guarantor after an Event of Default has
occurred and is continuing shall be held in trust for Collateral Agent on behalf
of Guarantied Parties and shall forthwith be paid over to Collateral Agent for
the benefit of Guarantied Parties to be credited and applied against the
Guarantied Obligations but without affecting, impairing or limiting in any
manner the liability of such Guarantor under any other provision of this
Guaranty.
2.8 EXPENSES. Guarantors jointly and severally agree to pay, or cause to be
paid, on demand, and to save Guarantied Parties harmless against liability for,
any and all costs and expenses (including reasonable fees and disbursements of
counsel and allocated costs of internal counsel) incurred or expended by any
Guarantied Party in connection with the enforcement of or preservation of any
rights under this Guaranty.
2.9 CONTINUING GUARANTY. This Guaranty is a continuing guaranty and shall
remain in effect until all of the Guarantied Obligations shall have been paid in
full. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty
as to future transactions giving rise to any Guarantied Obligations.
2.10 AUTHORITY OF GUARANTORS OR COMPANY. It is not necessary for any
Guarantied Party to inquire into the capacity or powers of any Guarantor or
Company or the officers, directors or any agents acting or purporting to act on
behalf of any of them.
2.11 FINANCIAL CONDITION OF COMPANY. Any extensions of credit may be
granted to Company or continued from time to time under any of the Financing
Agreements without notice to or authorization from any Guarantor regardless of
the financial or other condition of Company at the time of any such grant or
continuation. Guarantied Parties shall have no obligation to disclose or discuss
with any Guarantor their assessment, or any Guarantor's assessment, of the
financial condition of Company. Each Guarantor has adequate means to obtain
information from Company on a continuing basis concerning the financial
condition of Company and its ability to perform its obligations under the
Financing Agreements, and each Guarantor assumes the responsibility for being
and keeping informed of the financial condition of Company and of all
circumstances bearing upon the risk of nonpayment of the Guarantied Obligations.
Each Guarantor hereby waives and relinquishes any duty on the part of any
Guarantied Party to disclose any matter, fact or thing relating to the business,
operations or conditions of Company now known or hereafter known by any
Guarantied Party.
2.12 RIGHTS CUMULATIVE. The rights, powers and remedies given to Collateral
Agent by this Guaranty are cumulative and shall be in addition to and
independent of all rights, powers and remedies given to Collateral Agent or any
other Guarantied Party by virtue of any statute or rule of law or in any of the
other Financing Agreements or any other agreement between any Guarantor and any
Guarantied Party or between Company and any Guarantied Party . Any forbearance
or failure to exercise, and any delay by Collateral Agent in exercising, any
right, power or remedy hereunder shall not impair any such right, power or
remedy or be construed to be a waiver thereof, nor shall it preclude the further
exercise of any such right, power or remedy.
2.13 BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF GUARANTY. (a) So
long as any Guarantied Obligations remain outstanding, no Guarantor shall,
without the prior written consent of Collateral Agent, commence or join with any
other Person in commencing any bankruptcy, reorganization or insolvency
proceedings of or against Company. The obligations of Guarantors under this
Guaranty shall not be reduced, limited, impaired, discharged, deferred,
suspended or terminated by any proceeding, voluntary or involuntary, involving
the bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of Company or by any defense which Company may have by reason of the
order, decree or decision of any court or administrative body resulting from any
such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any
portion of the Guarantied Obligations which accrues after the commencement of
any proceeding referred to in clause (a) above (or, if interest on any portion
of the Guarantied Obligations ceases to accrue by operation of law by reason of
the commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceedings had not been
commenced) shall be included in the Guarantied Obligations because it is the
intention of Guarantors and Guarantied Parties that the Guarantied Obligations
which are guarantied by Guarantors pursuant to this Guaranty should be
determined without regard to any rule of law or order which may relieve Company
of any portion of such Guarantied Obligations. Guarantors will permit any
trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit
of creditors or similar person to pay Collateral Agent, or allow the claim of
Collateral Agent in respect of, any such interest accruing after the date on
which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied Obligations
are paid by Company, the obligations of Guarantors hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from Collateral Agent or any other Guarantied Party as a
preference, fraudulent transfer or otherwise, and any such payments which are so
rescinded or recovered shall constitute Guarantied Obligations for all purposes
under this Guaranty.
2.14 SET-OFF. In addition to any other rights any Guarantied Party may have
under law or in equity, if any amount shall at any time be due and owing by any
Guarantor to any Guarantied Party under this Guaranty, such Guarantied Party is
authorized at any time or from time to time, without notice (any such notice
being hereby expressly waived), to set-off and to appropriate and to apply any
and all deposits (general or special, including but not limited to indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness of any Guarantied Party owing to such Guarantor and any other
property of such Guarantor held by any Guarantied Party to or for the credit or
the account of such Guarantor against and on account of the Guarantied
Obligations and liabilities of such Guarantor to any Guarantied Party under this
Guaranty.
2.15 DISCHARGE OF GUARANTY UPON SALE OF GUARANTOR. If all of the stock of
any Guarantor or any of its successors in interest under this Guaranty shall be
sold or otherwise disposed of (including by merger or consolidation) in an Asset
Sale not prohibited by the applicable Credit Agreements or otherwise consented
to by the requisite Lenders thereunder, the Guaranty of such Guarantor or such
successor in interest, as the case may be, hereunder shall automatically be
discharged and released without any further action by Collateral Agent or any
other Guarantied Party or any other Person effective as of the time of such
Asset Sale; provided that, as a condition precedent to such discharge and
release, Collateral Agent shall have received evidence reasonably satisfactory
to it that arrangements satisfactory to it have been made for the allocation and
application of the proceeds of such Asset Sale as provided in the Current Credit
Agreements and, to the extent not inconsistent with the allocation and
application provided for in the Current Credit Agreements, any Successor Credit
Agreements.
SECTION 3. MISCELLANEOUS
3.1 SURVIVAL OF WARRANTIES. All agreements, representations and warranties
made herein shall survive the execution and delivery of this Guaranty and the
other Financing Agreements.
3.2 NOTICES. Any communications between Collateral Agent and any Guarantor
and any notices or requests provided herein to be given may be given by mailing
the same, postage prepaid, or by telex, facsimile transmission or cable to each
such party at its address set forth in the Intercreditor Agreement, on the
signature pages hereof or to such other addresses as each such party may in
writing hereafter indicate. Any notice, request or demand to or upon Collateral
Agent or any other Guarantied Party or any Guarantor shall not be effective
until received.
3.3 SEVERABILITY. In case any provision in or obligation under this
Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
3.4 AMENDMENTS AND WAIVERS. No amendment, modification, termination or
waiver of any provision of this Guaranty, and no consent to any departure by any
Guarantor therefrom, shall in any event be effective without the written
concurrence of Collateral Agent given in accordance with the terms of the
Intercreditor Agreement and, in the case of any such amendment or modification,
each Guarantor against whom enforcement of such amendment or modification is
sought. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
3.5 HEADINGS. Section and subsection headings in this Guaranty are included
herein for convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose or be given any substantive effect.
3.6 APPLICABLE LAW. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
GUARANTORS AND COLLATERAL AGENT HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK).
3.7 SUCCESSORS AND ASSIGNS. This Guaranty is a continuing guaranty and
shall be binding upon each Guarantor and its respective successors and assigns.
This Guaranty shall inure to the benefit of Guarantied Parties and their
respective successors and assigns. No Guarantor shall assign this Guaranty or
any of the rights or obligations of such Guarantor hereunder without the prior
written consent of Collateral Agent given in accordance with the terms of the
Intercreditor Agreement. Any Guarantied Party may, without notice or consent,
assign its interest in this Guaranty in whole or in part. The terms and
provisions of this Guaranty shall inure to the benefit of any transferee or
assignee of any Guarantied Obligation, and in the event of such transfer or
assignment the rights and privileges herein conferred upon Guarantied Parties
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.
3.8 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS
GUARANTY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY EACH
GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY FINAL AND NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
GUARANTY. Each Guarantor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to such Guarantor at its address provided in subsection 5.2,
such service being hereby acknowledged by such Guarantor to be sufficient for
personal jurisdiction in any action against such Guarantor in any such court and
to be otherwise effective and binding service in every respect. Nothing herein
shall affect the right to serve process in any other manner permitted by law or
shall limit the right of Collateral Agent or (subject to the terms of the
Intercreditor Agreement) any other Guarantied Party to bring proceedings against
any Guarantor in the courts of any other jurisdiction.
3.9 WAIVER OF TRIAL BY JURY. EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE
BENEFITS HEREOF, COLLATERAL AGENT EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS GUARANTY. The scope of this waiver is intended to be all encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each Guarantor and, by its acceptance of the benefits hereof,
Collateral Agent, each (i) acknowledges that this waiver is a material
inducement for such Guarantor and Collateral Agent to enter into a business
relationship, that such Guarantor and Collateral Agent have already relied on
this waiver in entering into this Guaranty or accepting the benefits thereof, as
the case may be, and that each will continue to rely on this waiver in their
related future dealings and (ii) further warrants and represents that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SUBSECTION 3.9 AND EXECUTED BY EACH OF THE PARTIES HERETO),
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS GUARANTY. In the event of litigation, this Guaranty may
be filed as a written consent to a trial by the court.
3.10 NO OTHER WRITING. This writing is intended by Guarantors and
Collateral Agent as the final expression of this Guaranty and is also intended
as a complete and exclusive statement of the terms of their agreement with
respect to the matters covered hereby. No course of dealing, course of
performance or trade usage, and no parol evidence of any nature, shall be used
to supplement or modify any terms of this Guaranty. There are no conditions to
the full effectiveness of this Guaranty.
3.11 FURTHER ASSURANCES. At any time or from time to time, upon the request
of Collateral Agent, Guarantors shall execute and deliver such further documents
and do such other acts and things as Collateral Agent may reasonably request in
order to effect fully the purposes of this Guaranty.
3.12 ADDITIONAL GUARANTORS. The initial Guarantor hereunder shall be the
Subsidiary of Company that is a signatory hereto on the date hereof. From time
to time subsequent to the date hereof, additional Subsidiaries of Company may
become parties hereto, as additional Guarantors (each an "ADDITIONAL
GUARANTOR"), by executing a counterpart of this Guaranty. Upon delivery of any
such counterpart to Collateral Agent, notice of which is hereby waived by
Guarantors, each such Additional Guarantor shall be a Guarantor and shall be as
fully a party hereto as if such Additional Guarantor were an original signatory
hereof. Each Guarantor expressly agrees that its obligations arising hereunder
shall not be affected or diminished by the addition or release of any other
Guarantor hereunder, nor by any election of Collateral Agent not to cause any
Subsidiary of Company to become an Additional Guarantor hereunder. This Guaranty
shall be fully effective as to any Guarantor that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Guarantor hereunder.
3.13 COUNTERPARTS; EFFECTIVENESS. This Guaranty may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Guaranty shall become effective
as to each Guarantor upon the execution of a counterpart hereof by such
Guarantor (whether or not a counterpart hereof shall have been executed by any
other Guarantor) and receipt by Collateral Agent of written or telephonic
notification of such execution and authorization of delivery thereof.
3.14 REFERENCES TO "GUARANTY" IN CLOSING DATE MORTGAGES. Anything contained
herein to the contrary notwithstanding, (i) for purposes of any Closing Date
Mortgage (as such term is defined in the Existing Credit Agreement) this
Guaranty shall continue in effect the guaranty by Guarantors of the "Guarantied
Obligations" as defined in the Existing Subsidiary Guaranty (the "ORIGINAL
GUARANTIED OBLIGATIONS"), and (ii) to the extent the guaranty by Guarantors of
the other Guarantied Obligations hereunder would in any manner invalidate,
impair or otherwise limit the enforceability of the Lien created pursuant to
such Closing Date Mortgage, this Guaranty shall, solely for purposes of
enforcing such Closing Date Mortgage and determining the obligations secured
thereby, and without in any manner limiting the scope of the Guarantied
Obligations for purposes of any other Financing Agreement, be deemed to be
solely a guaranty of the Original Guarantied Obligations.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, each of the undersigned Guarantors has caused this
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first written above.
[NAME OF SUBSIDIARY]
By------------------------------------
Title---------------------------------
Address:------------------------------
------------------------------
------------------------------
<PAGE>
IN WITNESS WHEREOF, the undersigned Additional Guarantor has caused
this Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of ______________, 199_.
----------------------------------------
(Name of Additional Guarantor)
By--------------------------------------
Title-----------------------------------
<PAGE>
EXHIBIT XII
[FORM OF SUBSIDIARY PLEDGE AGREEMENT]
AMENDED AND RESTATED SUBSIDIARY PLEDGE AGREEMENT
This AMENDED AND RESTATED SUBSIDIARY PLEDGE AGREEMENT (this
"AGREEMENT") is dated as of November 14, 1997 and entered into by and between
[SUBSIDIARY], a corporation ("PLEDGOR"), and BANKERS TRUST COMPANY ("BTCO"), as
collateral agent for and representative of (in such capacity herein called
"COLLATERAL AGENT") the Secured Parties (as hereinafter defined)[, and amends
and restates that certain Pledge Agreement (the "EXISTING SUBSIDIARY PLEDGE
AGREEMENT") dated as of August 7, 1995 between Pledgor and Existing Agent (as
hereinafter defined)].
PRELIMINARY STATEMENTS
A. Dictaphone Corporation ("COMPANY"), the financial institutions
party thereto as lenders ("EXISTING LENDERS"), and Bankers Trust Company, as
administrative agent for Existing Lenders (in such capacity, together with its
successors in such capacity, "EXISTING AGENT") are parties to that certain
Credit Agreement dated as of August 7, 1995 (said Credit Agreement, as amended
through and including the date hereof and as it may hereafter be further
amended, amended and restated, supplemented or otherwise modified from time to
time, being the "EXISTING CREDIT AGREEMENT") pursuant to which Existing Lenders
have made certain credit facilities available to Company in the form of loans
and letters of credit.
B. Company, the financial institutions party thereto as lenders ("NEW
LENDERS"; together with Existing Lenders, "CURRENT LENDERS"), and Bankers Trust
Company, as administrative agent for New Lenders (in such capacity, together
with its successors in such capacity, "NEW AGENT"; together with Existing Agent,
"CURRENT AGENTS") have entered into that certain Credit Agreement dated as of
even date herewith (said Credit Agreement, as it may hereafter be amended,
amended and restated, supplemented or otherwise modified from time to time,
being the "NEW CREDIT AGREEMENT"; together with the Existing Credit Agreement,
the "CURRENT CREDIT AGREEMENTS") pursuant to which New Lenders have made certain
credit facilities available to Company in the form of loans the proceeds of
which will be used on the date hereof to prepay a portion of the loans
outstanding under the Existing Credit Agreement.
C. It is contemplated that, from time to time, one or more Current
Lenders and/or one or more other financial institutions (any such Current
Lenders and/or other financial institutions being referred to herein
collectively as "SUCCESSOR LENDERS") may enter into one or more agreements with
Company and/or its Subsidiaries (any such agreements, as they may exist from
time to time, being "SUCCESSOR CREDIT AGREEMENTS") which either refinance,
replace or otherwise restructure all or any portion of the indebtedness under
the Current Credit Agreements and/or any Successor Credit Agreement (the Current
Credit Agreements and any Successor Credit Agreements being referred to herein
collectively as "CREDIT AGREEMENTS"; Current Lenders and any Successor Lenders
being referred to herein collectively as "LENDERS"; and Current Agents and any
administrative agents (collectively, "SUCCESSOR AGENTS") under any Successor
Credit Agreements being referred to herein collectively as "AGENTS").
D. Company has entered into, or may from time to time enter into, one
or more Lender Interest Rate Agreements (as defined in the Intercreditor
Agreement referred to below) with one or more Interest Rate Exchangers (as
defined in the Intercreditor Agreement).
E. Pledgor and the other Subsidiaries of Company party thereto
(collectively, "SUBSIDIARY GUARANTORS") have executed and delivered a Guaranty
dated as of August 7, 1995 (the "EXISTING SUBSIDIARY GUARANTY") in favor of
BTCo, in its capacity as Existing Agent, for the benefit of Existing Lenders
[and any Interest Rate Exchangers party to Lender Interest Rate Agreements
entered into prior to the date hereof], pursuant to which Subsidiary Guarantors
have guarantied the prompt payment and performance when due of all Existing
Credit Agreement Obligations (as defined in the Intercreditor Agreement) [and
all Interest Rate Obligations (as defined in the Intercreditor Agreement) in
respect of such Lender Interest Rate Agreements], and all obligations of Pledgor
under the Existing Subsidiary Guaranty are currently secured by the Pledged
Collateral (as hereinafter defined).
F. Subsidiary Guarantors have amended and restated the Existing
Subsidiary Guaranty pursuant to an Amended and Restated Subsidiary Guaranty
dated as of even date herewith (said Amended and Restated Subsidiary Guaranty,
as it may hereafter be amended, amended and restated, supplemented or otherwise
modified from time to time, being the "NEW SUBSIDIARY GUARANTY") in favor BTCo,
in its capacity as Collateral Agent, for the benefit of Current Lenders, Current
Agents, any Successor Lender or Successor Agent becoming a party to the
Intercreditor Agreement in the manner provided therein, any Successor Lenders
represented by any such Successor Agent, any Interest Rate Exchanger becoming a
party to the Intercreditor Agreement in the manner provided therein, and
Collateral Agent (all of such Persons being referred to herein collectively as
"SECURED PARTIES"), and the terms of the Current Credit Agreements require, and
the terms of any Successor Credit Agreement or Lender Interest Rate Agreement
may require, that all obligations of Pledgor under the New Subsidiary Guaranty
be secured by the Pledged Collateral.
G. Current Agents and Collateral Agent have entered into, and all
existing Loan Parties (as defined in the Intercreditor Agreement) have
acknowledged and agreed to the terms of, that certain Intercreditor Agreement
dated as of even date herewith (said Intercreditor Agreement, as it may
hereafter be amended, amended and restated, supplemented or otherwise modified
from time to time, being the "INTERCREDITOR AGREEMENT"; terms defined therein
and not otherwise defined herein being used herein as therein defined) which
provides for, among other things, the appointment of Collateral Agent to
administer and enforce this Agreement in the manner set forth herein and
therein.
H. Pursuant to the authority granted to Collateral Agent by Existing
Agent and the other Parties under the Intercreditor Agreement, Collateral Agent
and Pledgor desire to amend and restate the Existing Subsidiary Pledge Agreement
as hereinafter set forth in order to (i) substitute BTCo, in its capacity as
Collateral Agent, for BTCo, in its capacity as Existing Agent, as the secured
party hereunder, (ii) confirm the continuation of the existing pledge and grant
of security interests with respect to the Pledged Collateral, as provided for in
the Existing Pledge Agreement, for the benefit of Existing Agent, Existing
Lenders [and any Interest Rate Exchangers secured under the Existing Pledge
Agreement on the date hereof], and (iii) provide that such pledge and grant of
security interests with respect to the Pledged Collateral shall hereafter be for
the benefit of Secured Parties.
NOW, THEREFORE, in consideration of the premises, in order to induce
Lenders to make and/or maintain extensions of credit to Company under the Credit
Agreements and to induce Interest Rate Exchangers to enter into and/or maintain
Lender Interest Rate Agreements, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Existing
Subsidiary Pledge Agreement is hereby amended and restated in its entirety as
follows:
SECTION 1. PLEDGE OF SECURITY. Pledgor hereby pledges and assigns to
Collateral Agent, and hereby grants to Collateral Agent a security interest in,
all of Pledgor's right, title and interest in and to the following (the "PLEDGED
COLLATERAL"):
(a) the shares of stock (the "PLEDGED SHARES") described in Part A of
Schedule I annexed hereto and issued by the corporations named therein, the
certificates representing the Pledged Shares and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to the Pledged
Shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Shares;
(b) the indebtedness (the "PLEDGED DEBT") described in Part B of
Schedule I annexed hereto and issued by the obligors named therein, the
instruments evidencing the Pledged Debt, and all interest, cash, instruments and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Debt;
(c) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any issuer of the Pledged Shares from time to time acquired by Pledgor in any
manner (which shares shall be deemed to be part of the Pledged Shares), the
certificates or other instruments representing such additional shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to such additional
shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional
shares, securities, warrants, options or other rights; provided, however that,
subject to Section 12 hereof, (i) in no event shall more than 66% (rounded
downward to avoid fractional shares) of all issued and outstanding shares of any
class of the capital stock of any direct Foreign Subsidiary (such term being
used herein as defined in the Current Credit Agreements as in effect on the date
hereof) constitute Pledged Shares or Pledged Collateral hereunder and (ii) if at
any time Pledgor delivers to Collateral Agent stock certificates representing
more than 66% of the issued and outstanding shares of all classes of capital
stock of any direct Foreign Subsidiary, such excess shares shall not constitute
Pledged Shares or Pledged Collateral and shall not be subject to any right of
set-off by any Lender;
(d) all additional indebtedness from time to time owed to Pledgor by
any obligor on the Pledged Debt and the instruments evidencing such
indebtedness, and all interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such indebtedness;
(e) all shares of, and all securities convertible into and warrants,
options and other rights to purchase or otherwise acquire, stock of any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a direct Subsidiary of Pledgor (which shares shall be deemed to be part of the
Pledged Shares), the certificates or other instruments representing such shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to such shares,
and all dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares, securities, warrants,
options or other rights; provided, however that, subject to Section 12 hereof,
(i) in no event shall more than 66% (rounded downward to avoid fractional
shares) of all issued and outstanding shares of any class of the capital stock
of any direct Foreign Subsidiary constitute Pledged Shares or Pledged Collateral
hereunder and (ii) if at any time Pledgor delivers to Collateral Agent stock
certificates representing more than 66% of the issued and outstanding shares of
all classes of capital stock of any direct Foreign Subsidiary, such excess
shares shall not constitute Pledged Shares or Pledged Collateral and shall not
be subject to any right of set-off by any Lender;
(f) all indebtedness from time to time owed to Pledgor by any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a direct or indirect Domestic Subsidiary (such term being used herein as defined
in the Current Credit Agreements as in effect on the date hereof), and all
interest, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such indebtedness; and
(g) to the extent not covered by clauses (a) through (f) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes of this
Agreement, the term "PROCEEDS" includes whatever is receivable or received when
Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes,
without limitation, proceeds of any indemnity or guaranty payable to Pledgor or
Collateral Agent from time to time with respect to any of the Pledged
Collateral.
The foregoing pledge and grant of a security interest (i) confirms the
original pledge and grant of a first priority security interest made in the
Existing Subsidiary Pledge Agreement in respect of the Pledged Collateral as
security for the "Secured Obligations" (as defined in the Existing Subsidiary
Pledge Agreement) and continues in all respects such original pledge and grant
without in any way causing any interruption in continuity from such original
pledge and grant and (ii) extends such pledge and grant of a first priority
security interest in respect of the Pledged Collateral to secure all other
Secured Obligations as defined herein.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Pledged Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and
liabilities of Pledgor of every nature whatsoever now or hereafter existing
under or arising in respect of the New Subsidiary Guaranty and all extensions or
renewals thereof, whether for principal, interest (including without limitation
interest that, but for the filing of a petition in bankruptcy with respect to
Company, would accrue on such obligations, whether or not a claim is allowed
against Company for such interest in any such bankruptcy proceedings),
reimbursement of amounts drawn under letters of credit, payments for early
termination of Lender Interest Rate Agreements, fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from any Secured Party as a
preference, fraudulent transfer or otherwise (all such obligations and
liabilities being the "UNDERLYING DEBT"), and all obligations of every nature of
Pledgor now or hereafter existing under this Agreement (all such obligations of
Pledgor, together with the Underlying Debt, being the "SECURED OBLIGATIONS");
provided that the pledge made and security interest granted in Section 1 hereof,
and any other provisions of this Agreement, shall be effective as to any
Successor Credit Agreement Obligations or Interest Rate Obligations only if the
applicable Successor Lenders (or a Successor Agent acting on their behalf) or
Interest Rate Exchanger shall have executed and delivered to Collateral Agent a
counterpart of the Intercreditor Agreement, acknowledged by Pledgor, as provided
in the Intercreditor Agreement.
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Collateral Agent pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable, shall be accompanied
by Pledgor's endorsement, where necessary, or duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Collateral Agent. Upon the occurrence and during the continuation of an Event of
Default, Collateral Agent shall have the right, without notice to Pledgor, to
transfer to or to register in the name of Collateral Agent or any of its
nominees any or all of the Pledged Collateral, subject only to the revocable
rights specified in Section 7(a). In addition, Collateral Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of smaller or
larger denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the
Pledged Shares have been duly authorized and validly issued and are fully paid
and non-assessable. All of the Pledged Debt has been duly authorized,
authenticated or issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof and is not in default.
(b) Description of Pledged Collateral. The Pledged Shares constitute
(i) with respect to each issuer thereof that is a Domestic Subsidiary, the
percentage of the issued and outstanding shares of stock thereof indicated on
Schedule I annexed hereto and (ii) with respect to each issuer thereof that is a
direct Foreign Subsidiary, 66% of the issued and outstanding shares of stock
thereof, and there are no outstanding warrants, options or other rights to
purchase, or other agreements outstanding with respect to, or property that is
now or hereafter convertible into, or that requires the issuance or sale of, any
Pledged Shares. The Pledged Debt constitutes all of the issued and outstanding
intercompany indebtedness evidenced by a promissory note of the respective
issuers thereof owing to Pledgor.
(c) Ownership of Pledged Collateral. Pledgor is the legal, record and
beneficial owner of the Pledged Collateral free and clear of any Lien except for
the security interest created by this Agreement and Permitted Encumbrances (such
term being used herein as defined in the Current Credit Agreements as in effect
on the date hereof).
(d) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge by Pledgor of the Pledged
Collateral pursuant to this Agreement and the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the exercise by Collateral Agent of the voting or
other rights, or the remedies in respect of the Pledged Collateral, provided for
in this Agreement (except as may be required in connection with a disposition of
Pledged Collateral by laws affecting the offering and sale of securities
generally).
(e) Perfection. The pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral, securing the payment of the Secured Obligations.
(f) Other Information. All information heretofore, herein or hereafter
supplied to Collateral Agent by or on behalf of Pledgor with respect to the
Pledged Collateral is accurate and complete in all respects.
SECTION 5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL;
ETC. Pledgor shall:
(a) not, except as expressly permitted by the Credit Agreements, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) create or
suffer to exist any Lien (other than Permitted Encumbrances) upon or with
respect to any of the Pledged Collateral, except for the security interest under
this Agreement, or (iii) permit any issuer of Pledged Shares to merge or
consolidate unless all the outstanding capital stock of the surviving or
resulting corporation is, upon such merger or consolidation, pledged hereunder
and no cash, securities or other property is distributed in respect of the
outstanding shares of any other constituent corporation; provided that in the
event Pledgor makes an Asset Sale permitted by the Credit Agreements and the
assets subject to such Asset Sale are Pledged Shares, Collateral Agent shall
release the Pledged Shares that are the subject of such Asset Sale to Pledgor
free and clear of the lien and security interest under this Agreement
concurrently with the consummation of such Asset Sale; provided, further that,
as a condition precedent to such release, Collateral Agent shall have received
evidence satisfactory to it that arrangements satisfactory to it have been made
for the allocation and application of the proceeds of such Asset Sale as
provided in the Current Credit Agreements and, to the extent not inconsistent
with the allocation and application provided for in the Current Credit
Agreements, any Successor Credit Agreements;
(b) (i) cause each issuer of Pledged Shares not to issue any stock or
other securities in addition to or in substitution for the Pledged Shares issued
by such issuer, except to Pledgor, (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional shares of
stock or other securities of each issuer of Pledged Shares, and (iii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all shares of stock of any Person that, after the date of this
Agreement, becomes, as a result of any occurrence, a direct Subsidiary of
Pledgor; provided, however that, subject to Section 12 hereof, (i) in no event
shall more than 66% of all issued and outstanding shares of any class of the
capital stock of any direct Foreign Subsidiary constitute Pledged Shares or
Pledged Collateral hereunder and (ii) if at any time Pledgor delivers to
Collateral Agent stock certificates representing more than 66% of the issued and
outstanding shares of all classes of capital stock of any direct Foreign
Subsidiary, such excess shares shall not constitute Pledged Shares or Pledged
Collateral and shall not be subject to any right of set-off by any Lender;
(c) (i) pledge hereunder, immediately upon their issuance, any and all
instruments or other evidences of additional indebtedness from time to time owed
to Pledgor by any obligor on the Pledged Debt, and (ii) pledge hereunder,
immediately upon their issuance, any and all instruments or other evidences of
indebtedness from time to time owed to Pledgor by any Person that after the date
of this Agreement becomes, as a result of any occurrence, a direct or indirect
Domestic Subsidiary;
(d) promptly deliver to Collateral Agent all written notices received
by it with respect to the Pledged Collateral; and
(e) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Pledged Collateral,
except to the extent the validity thereof is being contested in good faith;
provided that Pledgor shall in any event pay such taxes, assessments, charges,
levies or claims not later than five days prior to the date of any proposed sale
under any judgment, writ or warrant of attachment entered or filed against
Pledgor or any of the Pledged Collateral as a result of the failure to make such
payment.
SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that
Collateral Agent may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Collateral Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Without limiting the generality of the foregoing, Pledgor
will: (i) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Collateral Agent may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby and
(ii) at Collateral Agent's request, appear in and defend any action or
proceeding that may affect Pledgor's title to or Collateral Agent's security
interest in all or any part of the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 5(b) or (c), promptly (and in any event within five Business Days)
deliver to Collateral Agent a Pledge Amendment, duly executed by Pledgor, in
substantially the form of Schedule II annexed hereto (a "PLEDGE AMENDMENT"), in
respect of the additional Pledged Shares or Pledged Debt to be pledged pursuant
to this Agreement. Pledgor hereby authorizes Collateral Agent to attach each
Pledge Amendment to this Agreement and agrees that all Pledged Shares or Pledged
Debt listed on any Pledge Amendment delivered to Collateral Agent shall for all
purposes hereunder be considered Pledged Collateral; provided that the failure
of Pledgor to execute a Pledge Amendment with respect to any additional Pledged
Shares or Pledged Debt pledged pursuant to this Agreement shall not impair the
security interest of Collateral Agent therein or otherwise adversely affect the
rights and remedies of Collateral Agent hereunder with respect thereto.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms of this Agreement or the
Credit Agreements; provided, however, that Pledgor shall not exercise or
refrain from exercising any such right if Collateral Agent shall have
notified Pledgor that, in Collateral Agent's judgment, such action would
have a material adverse effect on the value of the Pledged Collateral or
any part thereof; and provided, further, that Pledgor shall give Collateral
Agent at least five Business Days' prior written notice of the manner in
which it intends to exercise, or the reasons for refraining from
exercising, any such right. It is understood, however, that neither (A) the
voting by Pledgor of any Pledged Shares for or Pledgor's consent to the
election of directors at a regularly scheduled annual or other meeting of
stockholders or with respect to incidental matters at any such meeting nor
(B) Pledgor's consent to or approval of any action otherwise permitted
under this Agreement and the Credit Agreements shall be deemed inconsistent
with the terms of this Agreement or the Credit Agreements within the
meaning of this Section 7(a)(i), and no notice of any such voting or
consent need be given to Collateral Agent;
(ii) Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the lien of this Agreement, any and all dividends and
interest paid in respect of the Pledged Collateral; provided, however, that
any and all
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal (other than dividends and interest) or in redemption of or
in exchange for any Pledged Collateral,
shall be, and shall forthwith be delivered to Collateral Agent to hold as,
Pledged Collateral and shall, if received by Pledgor, be received in trust
for the benefit of Collateral Agent, be segregated from the other property
or funds of Pledgor and be forthwith delivered to Collateral Agent as
Pledged Collateral in the same form as so received (with all necessary
endorsements); and
(iii) Collateral Agent shall promptly execute and deliver (or cause to
be executed and delivered) to Pledgor all such proxies, dividend payment
orders and other instruments as Pledgor may from time to time reasonably
request for the purpose of enabling Pledgor to exercise the voting and
other consensual rights which it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends, principal or interest
payments which it is authorized to receive and retain pursuant to paragraph
(ii) above.
(b) Upon the occurrence and during the continuation of an Event of
Default:
(i) upon written notice from Collateral Agent to Pledgor, all rights
of Pledgor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to Section 7(a)(i) shall
cease, and all such rights shall thereupon become vested in Collateral
Agent who shall thereupon have the sole right to exercise such voting and
other consensual rights;
(ii) all rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain
pursuant to Section 7(a)(ii) shall cease, and all such rights shall
thereupon become vested in Collateral Agent who shall thereupon have the
sole right to receive and hold as Pledged Collateral such dividends and
interest payments; and
(iii) all dividends, principal and interest payments which are
received by Pledgor contrary to the provisions of paragraph (ii) of this
Section 7(b) shall be received in trust for the benefit of Collateral
Agent, shall be segregated from other funds of Pledgor and shall forthwith
be paid over to Collateral Agent as Pledged Collateral in the same form as
so received (with any necessary endorsements).
(c) In order to permit Collateral Agent to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant to Section
7(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) Pledgor
shall promptly execute and deliver (or cause to be executed and delivered) to
Collateral Agent all such proxies, dividend payment orders, powers of attorney
and other instruments, and Pledgor shall take all such further actions, as
Collateral Agent may from time to time reasonably request, including without
limitation to the extent necessary so that the pledge of any shares of stock of
any Foreign Subsidiary is registered (if not already so registered) on the
appropriate books and records of the issuer of the applicable Pledged Shares if
such registration is required under applicable law in order to permit Collateral
Agent to exercise such rights or to receive such dividends and other
distributions, and (ii) without limiting the effect of the immediately preceding
clause (i), Pledgor hereby grants to Collateral Agent an irrevocable proxy to
vote the Pledged Shares and to exercise all other rights, powers, privileges and
remedies to which a holder of the Pledged Shares would be entitled (including,
without limitation, giving or withholding written consents of shareholders,
calling special meetings of shareholders and voting at such meetings), which
proxy shall be effective, automatically and without the necessity of any action
(including any transfer of any Pledged Shares on the record books of the issuer
thereof) by any other Person (including the issuer of the Pledged Shares or any
officer or agent thereof), upon the occurrence of an Event of Default and
written notice from Collateral Agent to Pledgor and which proxy shall only
terminate upon the payment in full of the Secured Obligations.
SECTION 8. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
irrevocably appoints Collateral Agent as Pledgor's attorney-in-fact, and Pledgor
declares that the power of attorney granted hereby, being coupled with an
interest, is being given for valuable consideration, with full authority in the
place and stead of Pledgor and in the name of Pledgor, Collateral Agent or
otherwise, from time to time (a) upon the occurrence and during the continuance
of an Event of Default or (b) with respect to any action or the execution of any
instrument that Collateral Agent may deem necessary or advisable to accomplish
the purposes of this Agreement, (i) upon the occurrence and during the
continuance of a Potential Event of Default (as defined in any Credit Agreement)
or (ii) after the fifth Business Day after Collateral Agent makes a written
request to Pledgor to take such action or execute such instrument (provided that
Pledgor fails to fully comply with such request on or prior to such fifth
Business Day) in Collateral Agent's discretion to take any action and to execute
any instrument that Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including without limitation:
(a) to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Pledged Collateral
without the signature of Pledgor;
(b) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Pledged Collateral;
(c) to receive, endorse and collect any instruments made payable to
Pledgor representing any dividend, principal or interest payment or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same; and
(d) to file any claims or take any action or institute any proceedings
that Collateral Agent may deem necessary or desirable for the collection of any
of the Pledged Collateral or otherwise to enforce the rights of Collateral Agent
with respect to any of the Pledged Collateral.
SECTION 9. COLLATERAL AGENT MAY PERFORM. If Pledgor fails to perform
any agreement contained herein, Collateral Agent may itself perform, or cause
performance of, such agreement, and the expenses of Collateral Agent incurred in
connection therewith shall be payable by Pledgor under Section 14(b).
SECTION 10. STANDARD OF CARE. The powers conferred on Collateral Agent
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Pledged Collateral in its possession
and the accounting for moneys actually received by it hereunder, Collateral
Agent shall have no duty as to any Pledged Collateral, it being understood that
Collateral Agent shall have no responsibility for (a) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Pledged Collateral, whether or not Collateral
Agent has or is deemed to have knowledge of such matters, (b) taking any
necessary steps (other than steps taken in accordance with the standard of care
set forth above to maintain possession of the Pledged Collateral) to preserve
rights against any parties with respect to any Pledged Collateral, (c) taking
any necessary steps to collect or realize upon the Secured Obligations or any
guarantee therefor, or any part thereof, or any of the Pledged Collateral, or
(d) initiating any action to protect the Pledged Collateral against the
possibility of a decline in market value. Collateral Agent shall be deemed to
have exercised reasonable care in the custody and preservation of Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equal to that which Collateral Agent accords its own property
consisting of negotiable securities.
SECTION 11. REMEDIES.
(a) If any Event of Default shall have occurred and be continuing,
Collateral Agent may exercise in respect of the Pledged Collateral, in addition
to all other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "CODE") (whether
or not the Code applies to the affected Pledged Collateral) or any other
applicable laws whether of the United States or of any state thereof or any
foreign jurisdiction, and Collateral Agent may also in its sole discretion,
without notice except as specified below, sell the Pledged Collateral or any
part thereof in one or more parcels at public or private sale, at any exchange
or broker's board or at any of Collateral Agent's offices or elsewhere, for
cash, on credit or for future delivery, at such time or times and at such price
or prices and upon such other terms as Collateral Agent may deem commercially
reasonable, irrespective of the impact of any such sales on the market price of
the Pledged Collateral. Collateral Agent or any Lender or Interest Rate
Exchanger may be the purchaser of any or all of the Pledged Collateral at any
such sale and Collateral Agent, as agent for and representative of Lenders and
Interest Rate Exchangers (but not any Lender, Lenders, Interest Rate Exchanger
or Interest Rate Exchangers in its or their respective individual capacities
unless Requisite Obligees shall otherwise agree in writing), shall be entitled,
for the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Pledged Collateral sold at any such public
sale, to use and apply any of the Secured Obligations as a credit on account of
the purchase price for any Pledged Collateral payable by Collateral Agent at
such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Pledgor, and Pledgor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Collateral Agent shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given. Collateral
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Pledgor hereby
waives any claims against Collateral Agent arising by reason of the fact that
the price at which any Pledged Collateral may have been sold at such a private
sale was less than the price which might have been obtained at a public sale,
even if Collateral Agent accepts the first offer received and does not offer
such Pledged Collateral to more than one offeree. If the proceeds of any sale or
other disposition of the Pledged Collateral are insufficient to pay all the
Secured Obligations, Pledgor shall be liable for the deficiency and the fees of
any attorneys employed by Collateral Agent to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act (such term being used herein as defined in the
Current Credit Agreements) and applicable state securities laws, Collateral
Agent may be compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior registration or qualification of such
Pledged Collateral under the Securities Act and/or such state securities laws,
to limit purchasers to those who will agree, among other things, to acquire the
Pledged Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. Pledgor acknowledges that any such private
sales may be at prices and on terms less favorable than those obtainable through
a public sale without such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the Securities Act)
and, notwithstanding such circumstances and the registration rights granted to
Collateral Agent by Pledgor pursuant to Section 12, Pledgor agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that Collateral Agent shall have no obligation to engage in public
sales and no obligation to delay the sale of any Pledged Collateral for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree to
so register it.
(c) If Collateral Agent determines to exercise its right to sell any
or all of the Pledged Collateral, upon written request, Pledgor shall and shall
cause each issuer of any Pledged Shares to be sold hereunder from time to time
to furnish to Collateral Agent all such information as Collateral Agent may
request in order to determine the number of shares and other instruments
included in the Pledged Collateral which may be sold by Collateral Agent in
exempt transactions under the Securities Act and the rules and regulations of
the Securities and Exchange Commission thereunder, as the same are from time to
time in effect.
SECTION 12. PLEDGE OF ADDITIONAL SHARES OF FOREIGN SUBSIDIARIES.
Anything contained in this Agreement or any of the other Loan Documents to the
contrary notwithstanding, in the event that, as a result of any changes in
United States tax laws after the date hereof, the pledge of any additional
shares of stock of any Foreign Subsidiaries pursuant to this Agreement would not
result in an increase in the aggregate net consolidated tax liabilities of
Company and its Subsidiaries, then Pledgor shall promptly pledge such additional
shares of stock hereunder.
SECTION 13. APPLICATION OF PROCEEDS. Except as otherwise expressly
provided elsewhere in this Agreement or the Intercreditor Agreement, all
Proceeds received by Collateral Agent in respect of all or any part of the
Pledged Collateral may, in the discretion of Collateral Agent, be held by
Collateral Agent as Pledged Collateral for, and/or then, or at any time
thereafter, applied in full or in part by Collateral Agent against, the Secured
Obligations in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable fees and expenses of
Collateral Agent and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Collateral Agent in connection
therewith, and all amounts for which Collateral Agent is entitled to
indemnification hereunder and all advances made by Collateral Agent
hereunder for the account of Pledgor, and to the payment of all costs and
expenses paid or incurred by Collateral Agent in connection with the
exercise of any right or remedy hereunder, all in accordance with Section
14;
SECOND: To the payment of all other Secured Obligations as provided
in Section 4 of the Intercreditor Agreement; and
THIRD: To the payment to or upon the order of Pledgor, or to whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such proceeds.
SECTION 14. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Collateral Agent and each other
Secured Party from and against any and all claims, losses and liabilities in any
way relating to, growing out of or resulting from this Agreement or any related
Financing Agreement and the transactions contemplated hereby and thereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Collateral Agent's
or such other Secured Party's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Pledgor shall pay to Collateral Agent upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of Collateral Agent hereunder, or (iv) the failure by Pledgor to perform
or observe any of the provisions hereof.
(c) In the event of any public sale described in Section 11, Pledgor
agrees to indemnify and hold harmless Collateral Agent and each of Collateral
Agent's directors, officers, employees and agents from and against any loss,
fee, cost, expense, damage, liability or claim, joint or several, to which
Collateral Agent or such other persons may become subject or for which any of
them may be liable, under the Securities Act or otherwise, insofar as such
losses, fees, costs, expenses, damages, liabilities or claims (or any litigation
commenced or threatened in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, registration statement, prospectus or other such
document published or filed in connection with such public sale, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse Collateral Agent and such other persons for any legal or other
expenses reasonably incurred by Collateral Agent and such other persons in
connection with any litigation, of any nature whatsoever, commenced or
threatened in respect thereof (including without limitation any and all fees,
costs and expenses whatsoever reasonably incurred by Collateral Agent and such
other persons and counsel for Collateral Agent and such other persons in
investigating, preparing for, defending against or providing evidence, producing
documents or taking any other action in respect of, any such commenced or
threatened litigation or any claims asserted). This indemnity shall be in
addition to any liability which Pledgor may otherwise have and shall extend upon
the same terms and conditions to each person, if any, that controls Collateral
Agent or such persons within the meaning of the Securities Act.
SECTION 15. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in full force and effect until the payment in full of all
Secured Obligations, the cancellation or termination of all Commitments and the
cancellation or expiration of all outstanding letters of credit issued pursuant
to any of the Credit Agreements then secured by the Pledged Collateral, (b) be
binding upon Pledgor, its successors and assigns, and (c) inure, together with
the rights and remedies of Collateral Agent hereunder, to the benefit of
Collateral Agent and its successors and permitted assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Existing Credit Agreement and subsection 10.1 of the New
Credit Agreement and any comparable provisions of any Successor Credit Agreement
secured by the Pledged Collateral, any Lender may assign any loans held by it
under the applicable Credit Agreement to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding letters of credit referred to
above, the security interest granted hereby shall terminate and all rights to
the Pledged Collateral shall revert to Pledgor. Upon any such termination
Collateral Agent will, at Pledgor's expense, execute and deliver to Pledgor such
documents as Pledgor shall reasonably request to evidence such termination and
Pledgor shall be entitled to the return, upon its request and at its expense,
against receipt and without recourse to Collateral Agent, of such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
SECTION 16. COLLATERAL AGENT AS AGENT.
(a) Collateral Agent has been appointed to act as Collateral Agent
hereunder by the Parties under the Intercreditor Agreement, which appointment
and the terms thereof have been acknowledged and agreed to by Pledgor, and
Collateral Agent shall be entitled to the benefits of the Intercreditor
Agreement in acting as Collateral Agent hereunder. Collateral Agent shall be
obligated, and shall have the right hereunder, to make demands, to give notices,
to exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including, without limitation, the release or substitution of
Pledged Collateral), solely in accordance with the terms of this Agreement and
the Intercreditor Agreement; provided that, anything contained herein to the
contrary notwithstanding, in the event of any conflict between the express terms
and provisions of this Agreement and the express terms and provisions of the
Intercreditor Agreement, such terms and provisions of the Intercreditor
Agreement shall be controlling for all purposes hereof.
(b) Collateral Agent shall at all times be the same Person that is
Collateral Agent under the Intercreditor Agreement. Written notice of
resignation by Collateral Agent pursuant to Section 9(g)(i) of the Intercreditor
Agreement shall also constitute notice of resignation as Collateral Agent under
this Agreement; removal of Collateral Agent pursuant to Section 9(g)(ii) of the
Intercreditor Agreement shall also constitute removal as Collateral Agent under
this Agreement; and appointment of a successor Collateral Agent pursuant to
Section 9(g) of the Intercreditor Agreement shall also constitute appointment of
a successor Collateral Agent under this Agreement. Upon the acceptance of any
appointment as Collateral Agent under Section 9(g) of the Intercreditor
Agreement, the successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Pledged
Collateral held hereunder, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of the
successor Collateral Agent hereunder, and (ii) execute and deliver to such
successor Collateral Agent any amendments to financing statements, and take any
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Collateral Agent of the security interests created
hereunder, whereupon such retiring or removed Collateral Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Collateral Agent's resignation or removal hereunder as
Collateral Agent, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it
was Collateral Agent hereunder.
SECTION 17. AMENDMENTS; ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, and no consent to any departure by
Pledgor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Collateral Agent and, in the case of any such amendment or
modification, by Pledgor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 18. NOTICES. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or five Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
SECTION 19. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Collateral Agent in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 20. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 21. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 22. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the
Credit Agreements, terms used in Articles 8 and 9 of the Uniform Commercial Code
in the State of New York are used herein as therein defined.
SECTION 23. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
(A) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING
TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY FINAL AND NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT. Pledgor hereby agrees that service of all process in any
such proceeding in any such court may be made by registered or certified mail,
return receipt requested, to Pledgor at its address provided in Section 19, such
service being hereby acknowledged by Pledgor to be sufficient for personal
jurisdiction in any action against Pledgor in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Collateral Agent to bring proceedings against Pledgor in the courts of
any other jurisdiction.
(b) Without limiting the generality of the last sentence of Section 23(a), any
judicial proceedings brought against Pledgor arising out of or relating to the
pledge of shares of stock of any Foreign Subsidiary hereunder may be brought in
any court of competent jurisdiction in the jurisdiction in which such Foreign
Subsidiary is organized, and by execution and delivery of this Agreement Pledgor
accepts for itself and in connection with its properties (including without
limitation the applicable Pledged Shares), generally and unconditionally, the
nonexclusive jurisdiction of any such court and waives any defense of forum non
conveniens (or any similar defense under the laws of such jurisdiction) and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with such pledge or the enforcement thereof.
SECTION 24. WAIVER OF JURY TRIAL. PLEDGOR AND COLLATERAL AGENT HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Collateral Agent each
acknowledge that this waiver is a material inducement for Pledgor and Collateral
Agent to enter into a business relationship, that Pledgor and Collateral Agent
have already relied on this waiver in entering into this Agreement and that each
will continue to rely on this waiver in their related future dealings. Pledgor
and Collateral Agent further warrant and represent that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 24
AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 25. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
SECTION 26. DESIGNATION OF COLLATERAL AGENT ON FINANCING STATEMENTS.
For purposes of any financing statements filed with respect to any of the
Pledged Collateral under the Code, BTCo, in its capacity as Collateral Agent
hereunder, may be referred to as "Bankers Trust Company", "Bankers Trust
Company, as Agent", "Bankers Trust Company, as Administrative Agent", or
"Bankers Trust Company, as Collateral Agent".
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, Pledgor and Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[SUBSIDIARY]
By: __________________________
Title:
Notice Address:---------------------
---------------------
---------------------
BANKERS TRUST COMPANY
By: __________________________
Title:
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Zadroga
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Victoria A. Floyd
<PAGE>
SCHEDULE I
Attached to and forming a part of the Amended and Restated Subsidiary
Pledge Agreement dated as of November 14, 1997 between [Insert Name of
Subsidiary], as Pledgor, and Bankers Trust Company, as Collateral Agent.
Part A
Percentage of
Issued and
Class of Stock Certi- Par Number of Outstanding Shares
Stock Issuer Stock ficate Nos. Value Shares Owned by Pledgor
- ------------ -------- ------------ ----- --------- ------------------
Part B
Debt Issuer Amount of Indebtedness
- ----------- ----------------------
<PAGE>
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, 19__, is delivered pursuant
to Section 6(b) of the Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Amended and
Restated Subsidiary Pledge Agreement dated November 14, 1997, between the
undersigned and Bankers Trust Company, as Collateral Agent (the "PLEDGE
AGREEMENT," capitalized terms defined therein being used herein as therein
defined), and that the [Pledged Shares] [Pledged Debt] listed on this Pledge
Amendment shall be deemed to be part of the [Pledged Shares] [Pledged Debt] and
shall become part of the Pledged Collateral and shall secure all Secured
Obligations.
[SUBSIDIARY]
By: ___________________________
Title:
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
- ------------ -------- ------------ ----- ----------
Debt Issuer Amount of Indebtedness
- ----------- ----------------------
<PAGE>
EXHIBIT XIII
[FORM OF SUBSIDIARY SECURITY AGREEMENT]
AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT
This AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT (this
"AGREEMENT") is dated as of November 14, 1997 and entered into by and between
[SUBSIDIARY], a _____________________ corporation ("GRANTOR"), and BANKERS TRUST
COMPANY ("BTCO"), as collateral agent for and representative of (in such
capacity herein called "COLLATERAL AGENT") the Secured Parties (as hereinafter
defined)[, and amends and restates that certain Security Agreement (the
"EXISTING SUBSIDIARY SECURITY AGREEMENT") dated as of August 7, 1995 between
Grantor and Existing Agent (as hereinafter defined)].
PRELIMINARY STATEMENTS
A. Dictaphone Corporation ("COMPANY"), the financial institutions
party thereto as lenders ("EXISTING LENDERS"), and Bankers Trust Company, as
administrative agent for Existing Lenders (in such capacity, together with its
successors in such capacity, "EXISTING AGENT") are parties to that certain
Credit Agreement dated as of August 7, 1995 (said Credit Agreement, as amended
through and including the date hereof and as it may hereafter be further
amended, amended and restated, supplemented or otherwise modified from time to
time, being the "EXISTING CREDIT AGREEMENT") pursuant to which Existing Lenders
have made certain credit facilities available to Company in the form of loans
and letters of credit.
B. Company, the financial institutions party thereto as lenders ("NEW
LENDERS"; together with Existing Lenders, "CURRENT LENDERS"), and Bankers Trust
Company, as administrative agent for New Lenders (in such capacity, together
with its successors in such capacity, "NEW AGENT"; together with Existing Agent,
"CURRENT AGENTS") have entered into that certain Credit Agreement dated as of
even date herewith (said Credit Agreement, as it may hereafter be amended,
amended and restated, supplemented or otherwise modified from time to time,
being the "NEW CREDIT AGREEMENT"; together with the Existing Credit Agreement,
the "CURRENT CREDIT AGREEMENTS") pursuant to which New Lenders have made certain
credit facilities available to Company in the form of loans the proceeds of
which will be used on the date hereof to prepay a portion of the loans
outstanding under the Existing Credit Agreement.
C. It is contemplated that, from time to time, one or more Current
Lenders and/or one or more other financial institutions (any such Current
Lenders and/or other financial institutions being referred to herein
collectively as "SUCCESSOR LENDERS") may enter into one or more agreements with
Company and/or its Subsidiaries (any such agreements, as they may exist from
time to time, being "SUCCESSOR CREDIT AGREEMENTS") which either refinance,
replace or otherwise restructure all or any portion of the indebtedness under
the Current Credit Agreements and/or any Successor Credit Agreement (the Current
Credit Agreements and any Successor Credit Agreements being referred to herein
collectively as "CREDIT AGREEMENTS"; Current Lenders and any Successor Lenders
being referred to herein collectively as "LENDERS"; and Current Agents and any
administrative agents (collectively, "SUCCESSOR AGENTS") under any Successor
Credit Agreements being referred to herein collectively as "AGENTS").
D. Company has entered into, or may from time to time enter into, one
or more Lender Interest Rate Agreements (as defined in the Intercreditor
Agreement referred to below) with one or more Interest Rate Exchangers (as
defined in the Intercreditor Agreement).
E. Grantor and the other Subsidiaries of Company party thereto
(collectively, "SUBSIDIARY GUARANTORS") have executed and delivered a Guaranty
dated as of August 7, 1995 (the "EXISTING SUBSIDIARY GUARANTY") in favor of
BTCo, in its capacity as Existing Agent, for the benefit of Existing Lenders
[and any Interest Rate Exchangers party to Lender Interest Rate Agreements
entered into prior to the date hereof], pursuant to which Subsidiary Guarantors
have guarantied the prompt payment and performance when due of all Existing
Credit Agreement Obligations (as defined in the Intercreditor Agreement) [and
all Interest Rate Obligations (as defined in the Intercreditor Agreement) in
respect of such Lender Interest Rate Agreements], and all obligations of Grantor
under the Existing Subsidiary Guaranty are currently secured by the Collateral
(as hereinafter defined).
F. Subsidiary Guarantors have amended and restated the Existing
Subsidiary Guaranty pursuant to an Amended and Restated Subsidiary Guaranty
dated as of even date herewith (said Amended and Restated Subsidiary Guaranty,
as it may hereafter be amended, amended and restated, supplemented or otherwise
modified from time to time, being the "NEW SUBSIDIARY GUARANTY") in favor of
BTCo, in its capacity as Collateral Agent, for the benefit of Current Lenders,
Current Agents, any Successor Lender or Successor Agent becoming a party to the
Intercreditor Agreement in the manner provided therein, any Successor Lenders
represented by any such Successor Agent, any Interest Rate Exchanger becoming a
party to the Intercreditor Agreement in the manner provided therein, and
Collateral Agent (all of such Persons being referred to herein collectively as
"SECURED PARTIES"), and the terms of the Current Credit Agreements require, and
the terms of any Successor Credit Agreement or Lender Interest Rate Agreement
may require, that all obligations of Grantor under the New Subsidiary Guaranty
be secured by the Collateral.
G. Current Agents and Collateral Agent have entered into, and all
existing Loan Parties (as defined in the Intercreditor Agreement) have
acknowledged and agreed to the terms of, that certain Intercreditor Agreement
dated as of even date herewith (said Intercreditor Agreement, as it may
hereafter be amended, amended and restated, supplemented or otherwise modified
from time to time, being the "INTERCREDITOR AGREEMENT"; terms defined therein
and not otherwise defined herein being used herein as therein defined) which
provides for, among other things, the appointment of Collateral Agent to
administer and enforce this Agreement in the manner set forth herein and
therein.
H. Pursuant to the authority granted to Collateral Agent by Existing
Agent and the other Parties under the Intercreditor Agreement, Collateral Agent
and Grantor desire to amend and restate the Existing Subsidiary Pledge Agreement
as hereinafter set forth in order to (i) substitute BTCo, in its capacity as
Collateral Agent, for BTCo, in its capacity as Existing Agent, as the secured
party hereunder, (ii) confirm the continuation of the existing assignment and
grant of security interests with respect to the Collateral, as provided for in
the Existing Pledge Agreement, for the benefit of Existing Agent, Existing
Lenders [and any Interest Rate Exchangers secured under the Existing Pledge
Agreement on the date hereof], and (iii) provide that such assignment and grant
of security interests with respect to the Collateral shall hereafter be for the
benefit of Secured Parties.
NOW, THEREFORE, in consideration of the premises, in order to induce
Lenders to make and/or maintain extensions of credit to Company under the Credit
Agreements and to induce Interest Rate Exchangers to enter into and/or maintain
Lender Interest Rate Agreements, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Existing
Subsidiary Security Agreement is hereby amended and restated in its entirety as
follows:
SECTION 1. GRANT OF SECURITY. Grantor hereby assigns to Collateral
Agent, and hereby grants to Collateral Agent a security interest in, all of
Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "COLLATERAL"):
(a) all equipment in all of its forms, all parts thereof and all
accessions thereto (any and all such equipment, parts and accessions being the
"EQUIPMENT");
(b) all inventory in all of its forms (including, but not limited to,
(i) all goods held by Grantor for sale or lease or to be furnished under
contracts of service or so leased or furnished, (ii) all raw materials, work in
process, finished goods, and materials used or consumed in the manufacture,
packing, shipping, advertising, selling, leasing, furnishing or production of
such inventory or otherwise used or consumed in Grantor's business, (iii) all
goods in which Grantor has an interest in mass or a joint or other interest or
right of any kind, and (iv) all goods which are returned to or repossessed by
Grantor) and all accessions thereto and products thereof (all such inventory,
accessions and products being the "INVENTORY") and all negotiable documents of
title (including without limitation warehouse receipts, dock receipts and bills
of lading) issued by any Person covering any Inventory (any such negotiable
document of title being a "NEGOTIABLE DOCUMENT OF TITLE");
(c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other rights and obligations of any kind
and all rights in, to and under all security agreements, leases and other
contracts securing or otherwise relating to any such accounts, contract rights,
chattel paper, documents, instruments, general intangibles or other obligations
(any and all such accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other obligations being the "ACCOUNTS", and
any and all such security agreements, leases and other contracts being the
"RELATED CONTRACTS");
(d) the agreements listed in Schedule I annexed hereto, as each such
agreement may be amended, supplemented or otherwise modified from time to time
(said agreements, as so amended, supplemented or otherwise modified, being
referred to herein individually as an "ASSIGNED AGREEMENT" and collectively as
the "ASSIGNED AGREEMENTS"), including without limitation (i) all rights of
Grantor to receive moneys due or to become due under or pursuant to the Assigned
Agreements, (ii) all rights of Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements, (iii)
all claims of Grantor for damages arising out of any breach of or default under
the Assigned Agreements, and (iv) all rights of Grantor to terminate, amend,
supplement, modify or exercise rights or options under the Assigned Agreements,
to perform thereunder and to compel performance and otherwise exercise all
remedies thereunder;
(e) all deposit accounts, including without limitation all deposit
accounts maintained with Collateral Agent;
(f) all trademarks, tradenames, tradesecrets, business names, patents,
patent applications, licenses, copyrights, registrations and franchise rights,
and all goodwill associated with any of the foregoing;
(g) to the extent not included in any other paragraph of this Section
1, all other general intangibles (including without limitation tax refunds,
rights to payment or performance, choses in action and judgments taken on any
rights or claims included in the Collateral);
(h) all plant fixtures, business fixtures and other fixtures and
storage and office facilities, and all accessions thereto and products thereof;
(i) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any time
evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(j) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance (whether or not Collateral Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.
The foregoing assignment and grant of a security interest (i) confirms
the original assignment and grant of a first priority security interest made in
the Existing Subsidiary Security Agreement in respect of the Collateral as
security for the "Secured Obligations" (as defined in the Existing Subsidiary
Security Agreement) and continues in all respects such original assignment and
grant without in any way causing any interruption in continuity from such
original assignment and grant and (ii) extends such assignment and grant of a
first priority security interest in respect of the Collateral to secure all
other Secured Obligations as defined herein.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and
liabilities of Grantor of every nature whatsoever now or hereafter existing
under or arising in respect of the New Subsidiary Guaranty and all extensions or
renewals thereof, whether for principal, interest (including without limitation
interest that, but for the filing of a petition in bankruptcy with respect to
Company, would accrue on such obligations, whether or not a claim is allowed
against Company for such interest in any such bankruptcy proceedings),
reimbursement of amounts drawn under letters of credit, payments for early
termination of Lender Interest Rate Agreements, fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from any Secured Party as a
preference, fraudulent transfer or otherwise (all such obligations and
liabilities being the "UNDERLYING DEBT"), and all obligations of every nature of
Grantor now or hereafter existing under this Agreement (all such obligations of
Grantor, together with the Underlying Debt, being the "SECURED OBLIGATIONS");
provided that the assignment and grant of a security interest pursuant to
Section 1 hereof, and any other provisions of this Agreement, shall be effective
as to any Successor Credit Agreement Obligations or Interest Rate Obligations
only if the applicable Successor Lenders (or a Successor Agent acting on their
behalf) or Interest Rate Exchanger shall have executed and delivered to
Collateral Agent a counterpart of the Intercreditor Agreement, acknowledged by
Grantor, as provided in the Intercreditor Agreement.
SECTION 3. GRANTOR REMAINS LIABLE. Anything contained herein to the
contrary notwithstanding, (a) Grantor shall remain liable under any contracts
and agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Collateral Agent of
any of its rights hereunder shall not release Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) Collateral Agent shall not have any obligation or liability under any
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall Collateral Agent be obligated to perform any of the obligations or
duties of Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Grantor represents and
warrants as follows:
(a) Ownership of Collateral. Except for the security interest created
by this Agreement, Grantor owns the Collateral free and clear of any Lien other
than Permitted Encumbrances (such term being used herein as defined in the
Current Credit Agreements as in effect on the date hereof). Except such as may
have been filed in favor of Collateral Agent relating to this Agreement, no
effective financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any filing or recording office.
(b) Location of Equipment and Inventory. All of the Equipment and
Inventory is, as of the date hereof, located at the places specified in Schedule
II annexed hereto.
(c) Negotiable Documents of Title. No Negotiable Documents of Title
are outstanding with respect to any of the Inventory (other than in respect of
(i) Inventory with an aggregate value not in excess of $500,000 or (ii)
Inventory which, in the ordinary course of business, is in transit either (A)
from a supplier to Grantor, (B) between the locations specified in Schedule I
hereto, or (C) to customers of Grantor).
(d) Office Locations; Other Names. The chief place of business, the
chief executive office and the office where Grantor keeps its records regarding
the Accounts and all originals of all chattel paper that evidence Accounts is,
and has been for the four month period preceding the date hereof, located at
______________________________. Grantor has not in the past done, and does not
now do, business under any other name (including any trade-name or fictitious
business name) [except _______________].
(e) Delivery of Certain Collateral. All notes and other instruments
(excluding checks) comprising any and all items of Collateral have been
delivered to Collateral Agent duly endorsed and accompanied by duly executed
instruments of transfer or assignment in blank.
(f) Governmental Authorizations. Except as described in clause (g)
below, no authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for either (i)
the grant by Grantor of the security interest granted hereby, (ii) the
execution, delivery or performance of this Agreement by Grantor, or (iii) the
perfection of or the exercise by Collateral Agent of its rights and remedies
hereunder (except as may have been taken by or at the direction of Grantor).
(g) Perfection. This Agreement creates a valid, perfected and first
priority security interest in the Collateral, securing the payment of the
Secured Obligations, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly made or taken.
(h) Other Information. All information heretofore, herein or
hereafter supplied to Collateral Agent by or on behalf of Grantor with respect
to the Collateral is accurate and complete in all respects.
SECTION 5. FURTHER ASSURANCES.
(a) Grantor agrees that from time to time, at the expense of Grantor,
Grantor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that
Collateral Agent may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Collateral Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, Grantor will: (i)
mark conspicuously each item of chattel paper included in the Accounts, each
Related Contract and, at the request of Collateral Agent, each of its records
pertaining to the Collateral, with a legend, in form and substance satisfactory
to Collateral Agent, indicating that such Collateral is subject to the security
interest granted hereby, (ii) at the request of Collateral Agent, deliver and
pledge to Collateral Agent hereunder all promissory notes and other instruments
(including checks) and all original counterparts of chattel paper constituting
Collateral, duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to Collateral
Agent, (iii) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Collateral Agent may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby, (iv)
promptly after the acquisition by Grantor of any item of Equipment which is
covered by a certificate of title under a statute of any jurisdiction under the
law of which indication of a security interest on such certificate is required
as a condition of perfection thereof, execute and file with the registrar of
motor vehicles or other appropriate authority in such jurisdiction an
application or other document requesting the notation or other indication of the
security interest created hereunder on such certificate of title, (v) within 30
days after the end of each calendar quarter, deliver to Collateral Agent copies
of all such applications or other documents filed during such calendar quarter
and copies of all such certificates of title issued during such calendar quarter
indicating the security interest created hereunder in the items of Equipment
covered thereby, (vi) at any reasonable time, upon request by Collateral Agent,
exhibit the Collateral to and allow inspection of the Collateral by Collateral
Agent, or persons designated by Collateral Agent, and (vii) at Collateral
Agent's request, appear in and defend any action or proceeding that may affect
Grantor's title to or Collateral Agent's security interest in all or any part of
the Collateral.
(b) Grantor hereby authorizes Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Grantor. Grantor agrees that
a carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by Grantor shall be sufficient as a financing statement and may
be filed as a financing statement in any and all jurisdictions.
(c) Grantor will furnish to Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Collateral Agent may
reasonably request, all in reasonable detail.
SECTION 6. CERTAIN COVENANTS OF GRANTOR. Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Collateral Agent of any change in Grantor's name, identity
or corporate structure within 15 days of such change;
(c) give Collateral Agent 30 days' prior written notice of any change
in Grantor's chief place of business, chief executive office or residence or the
office where Grantor keeps its records regarding the Accounts and all originals
of all chattel paper that evidence Accounts;
(d) if Collateral Agent gives value to enable Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes; and
(e) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except to the
extent the validity thereof is being contested in good faith; provided that
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment entered or filed against Grantor or any
of the Collateral as a result of the failure to make such payment.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND INVENTORY.
Grantor shall:
(a) keep the Equipment and Inventory at the places therefor specified
on Schedule II annexed hereto or, upon 30 days' prior written notice to
Collateral Agent, at such other places in jurisdictions where all action that
may be necessary or desirable, or that Collateral Agent may request, in order to
perfect and protect any security interest granted or purported to be granted
hereby, or to enable Collateral Agent to exercise and enforce its rights and
remedies hereunder, with respect to such Equipment and Inventory shall have been
taken;
(b) cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with Grantor's past practices, and shall forthwith,
or, in the case of any loss or damage to any of the Equipment when subsection
(c) of Section 8 is not applicable, as quickly as practicable after the
occurrence thereof, make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable to such
end. Grantor shall promptly furnish to Collateral Agent a statement respecting
any material loss or damage to any of the Equipment;
(c) keep correct and accurate records of the Inventory, itemizing and
describing the kind, type and quantity of Inventory, Grantor's cost therefor and
(where applicable) the current list prices for the Inventory;
(d) if any Inventory is in possession or control of any of Grantor's
agents or processors, if the aggregate book value of all such Inventory exceeds
$500,000, and in any event upon the occurrence and during the continuation of an
Event of Default, instruct such agent or processor to hold all such Inventory
for the account of Collateral Agent and subject to the instructions of
Collateral Agent; and
(e) promptly upon the issuance and delivery to Grantor of any
Negotiable Document of Title (other than any one or more Negotiable Documents of
Title covering (i) Inventory with an aggregate value not in excess of $500,000
or (ii) Inventory which, in the ordinary course of business, is in transit
either (A) from a supplier to Grantor, (B) between the locations specified in
Schedule II hereto, or (C) to customers of Grantor), deliver such Negotiable
Document of Title to Collateral Agent.
SECTION 8. INSURANCE.
(a) Grantor shall, at its own expense, maintain insurance with respect
to the Equipment and Inventory in accordance with the terms of the Credit
Agreements. Such insurance shall include, without limitation, property damage
insurance and liability insurance. Each policy for property damage insurance
shall provide for all losses (except for losses in an amount equal to or less
than $1,000,000 per occurrence) to be paid directly to Collateral Agent for
application as provided herein and in the Intercreditor Agreement. Each policy
shall in addition name Grantor and Collateral Agent as insured parties
thereunder (without any representation or warranty by or obligation upon
Collateral Agent) as their interests may appear and have attached thereto a loss
payable clause acceptable to Collateral Agent that shall (i) contain an
agreement by the insurer that any loss thereunder shall be payable to Collateral
Agent notwithstanding any action, inaction or breach of representation or
warranty by Grantor, (ii) provide that there shall be no recourse against
Collateral Agent for payment of premiums or other amounts with respect thereto,
and (iii) provide that at least 30 days' prior written notice of cancellation,
material amendment, reduction in scope or limits of coverage or of lapse shall
be given to Collateral Agent by the insurer. Grantor shall, if so requested by
Collateral Agent, deliver to Collateral Agent original or duplicate policies of
such insurance and, as often as Collateral Agent may reasonably request, a
report of a reputable insurance broker with respect to such insurance. Further,
Grantor shall, at the request of Collateral Agent, duly execute and deliver
instruments of assignment of such insurance policies to comply with the
requirements of Section 5(a) and cause the respective insurers to acknowledge
notice of such assignment.
(b) Reimbursement under any liability insurance maintained by Grantor
pursuant to this Section 8 may be paid directly to the Person who shall have
incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory when subsection (c) of this Section 8 is not
applicable, Grantor shall make or cause to be made the necessary repairs to or
replacements of such Equipment or Inventory, and any proceeds of insurance
maintained by Grantor pursuant to this Section 8 shall be paid to Grantor as
reimbursement for the costs of such repairs or replacements.
(c) Upon (i) the occurrence and during the continuation of any Event
of Default or (ii) the actual or constructive loss (in excess of $500,000 per
occurrence) of any Equipment or Inventory, all insurance payments in respect of
such Equipment or Inventory shall be paid to and applied by Collateral Agent as
specified in Section 17.
SECTION 9. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND RELATED
CONTRACTS.
(a) Grantor shall keep its chief place of business and chief executive
office and the office where it keeps its records concerning the Accounts and
Related Contracts, and all originals of all chattel paper that evidence
Accounts, at the location therefor specified in Section 4 or, upon 30 days'
prior written notice to Collateral Agent, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Collateral Agent may request, in order to perfect and protect any security
interest granted or purported to be granted hereby, or to enable Collateral
Agent to exercise and enforce its rights and remedies hereunder, with respect to
such Accounts and Related Contracts shall have been taken. Grantor will hold and
preserve such records and chattel paper and will permit representatives of
Collateral Agent at any time during normal business hours to inspect and make
abstracts from such records and chattel paper, and Grantor agrees to render to
Collateral Agent, at Grantor's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. Promptly upon the
request of Collateral Agent, Grantor shall deliver to Collateral Agent complete
and correct copies of each Related Contract.
(b) Except as otherwise provided in this subsection (b), Grantor shall
continue to collect, at its own expense, all amounts due or to become due to
Grantor under the Accounts and Related Contracts. In connection with such
collections, Grantor may take (and, at Collateral Agent's direction, shall take)
such action as Grantor or Collateral Agent may deem necessary or advisable to
enforce collection of amounts due or to become due under the Accounts; provided,
however, that Collateral Agent shall have the right at any time, upon the
occurrence and during the continuation of a Potential Event of Default (such
term being used herein as defined in any Credit Agreement) or an Event of
Default and upon written notice to Grantor of its intention to do so, to notify
the account debtors or obligors under any Accounts of the assignment of such
Accounts to Collateral Agent and to direct such account debtors or obligors to
make payment of all amounts due or to become due to Grantor thereunder directly
to Collateral Agent, to notify each Person maintaining a lockbox or similar
arrangement to which account debtors or obligors under any Accounts have been
directed to make payment to remit all amounts representing collections on checks
and other payment items from time to time sent to or deposited in such lockbox
or other arrangement directly to Collateral Agent and, upon such notification
and at the expense of Grantor, to enforce collection of any such Accounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as Grantor might have done. After receipt by Grantor of
the notice from Collateral Agent referred to in the proviso to the preceding
sentence, (i) all amounts and proceeds (including checks and other instruments)
received by Grantor in respect of the Accounts and the Related Contracts shall
be received in trust for the benefit of Collateral Agent hereunder, shall be
segregated from other funds of Grantor and shall be forthwith paid over or
delivered to Collateral Agent in the same form as so received (with any
necessary endorsement) to be held as cash Collateral and applied as provided by
Section 17, and (ii) Grantor shall not adjust, settle or compromise the amount
or payment of any Account, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon.
SECTION 10. SPECIAL PROVISIONS WITH RESPECT TO THE ASSIGNED
AGREEMENTS.
(a) Grantor shall at its expense:
(i) perform and observe all terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned
Agreements in full force and effect, enforce the Assigned Agreements in
accordance with their terms, and take all such action to such end as may be
from time to time requested by Collateral Agent; and
(ii) furnish to Collateral Agent, promptly upon receipt thereof,
copies of all notices, requests and other documents received by Grantor
under or pursuant to the Assigned Agreements, and from time to time (A)
furnish to Collateral Agent such information and reports regarding the
Assigned Agreements as Collateral Agent may reasonably request and (B) upon
request of Collateral Agent make to each other party to such Assigned
Agreements such demands and requests for information and reports or for
action as Grantor is entitled to make under the Assigned Agreements.
(b) Grantor shall not:
(i) cancel or terminate any of the Assigned Agreements or consent
to or accept any cancellation or termination thereof;
(ii) amend or otherwise modify the Assigned Agreements in any
material respect or give any material consent, waiver or approval
thereunder;
(iii) waive any default under or breach of the Assigned
Agreements;
(iv) consent to or permit or accept any prepayment of amounts
to become due under or in connection with the Assigned Agreements, except
as expressly provided therein; or
(v) take any other action in connection with the Assigned
Agreements that would materially impair the value of the interest or rights
of Grantor thereunder or that would materially impair the interest or
rights of Collateral Agent.
SECTION 11. DEPOSIT ACCOUNTS. Upon the occurrence and during the
continuation of an Event of Default, Collateral Agent may exercise dominion and
control over, and refuse to permit further withdrawals (whether of money,
securities, instruments or other property) from any deposit accounts maintained
with Collateral Agent constituting part of the Collateral.
SECTION 12. TRANSFERS AND OTHER LIENS. Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreements;
or
(b) except for the security interest created by this Agreement, create
or suffer to exist any Lien (other than Permitted Encumbrances) upon or with
respect to any of the Collateral to secure the indebtedness or other obligations
of any Person.
SECTION 13. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Grantor
hereby irrevocably appoints Collateral Agent as Grantor's attorney-in-fact, with
full authority in the place and stead of Grantor and in the name of Grantor,
Collateral Agent or otherwise, from time to time (a) upon the occurrence and
during the continuance of an Event of Default or (b) with respect to any action
or the execution of any instrument that Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, (i) upon the occurrence
and during the continuance of a Potential Event of Default or (ii) after the
fifth Business Day after Collateral Agent makes a written request to Grantor to
take such action or execute such instrument (provided that Grantor fails to
fully comply with such request on or prior to such fifth Business Day) in
Collateral Agent's discretion to take any action and to execute any instrument
that Collateral Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including without limitation:
(a) to obtain and adjust insurance required to be maintained by
Grantor or paid to Collateral Agent pursuant to Section 8;
(b) to ask for, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(d) to file any claims or take any action or institute any proceedings
that Collateral Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of Collateral Agent with
respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreements) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Collateral Agent in
its sole discretion, any such payments made by Collateral Agent to become
obligations of Grantor to Collateral Agent, due and payable immediately without
demand;
(f) to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and
(g) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though Collateral Agent were the absolute owner thereof for all purposes, and
to do, at Collateral Agent's option and Grantor's expense, at any time or from
time to time, all acts and things that Collateral Agent deems necessary to
protect, preserve or realize upon the Collateral and Collateral Agent's security
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as Grantor might do.
SECTION 14. COLLATERAL AGENT MAY PERFORM. If Grantor fails to perform
any agreement contained herein, Collateral Agent may itself perform, or cause
performance of, such agreement, and the expenses of Collateral Agent incurred in
connection therewith shall be payable by Grantor under Section 18.
SECTION 15. STANDARD OF CARE. The powers conferred on Collateral Agent
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Collateral Agent shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Collateral Agent shall be deemed to have exercised reasonable care
in the custody and preservation of Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which Collateral
Agent accords its own property.
SECTION 16. REMEDIES. If any Event of Default shall have occurred and
be continuing, Collateral Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the Uniform Commercial Code as in effect in any relevant jurisdiction (the
"CODE") (whether or not the Code applies to the affected Collateral), and also
may (a) require Grantor to, and Grantor hereby agrees that it will at its
expense and upon request of Collateral Agent forthwith, assemble all or part of
the Collateral as directed by Collateral Agent and make it available to
Collateral Agent at a place to be designated by Collateral Agent that is
reasonably convenient to both parties, (b) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (c) prior to the disposition of the Collateral, store, process, repair
or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Collateral Agent deems appropriate, (d)
take possession of Grantor's premises or place custodians in exclusive control
thereof, remain on such premises and use the same and any of Grantor's equipment
for the purpose of completing any work in process, taking any actions described
in the preceding clause (c) and collecting any Secured Obligation, and (e)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of Collateral
Agent's offices or elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and upon such other terms as
Collateral Agent may deem commercially reasonable. Collateral Agent or any
Lender or Interest Rate Exchanger may be the purchaser of any or all of the
Collateral at any such sale and Collateral Agent, as agent for and
representative of Lenders and Interest Rate Exchangers (but not any Lender,
Lenders, Interest Rate Exchanger or Interest Rate Exchangers in its or their
respective individual capacities unless Requisite Obligees otherwise agree),
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any such
public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Collateral payable by Collateral Agent at
such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Grantor, and Grantor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Grantor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Grantor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Collateral Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Collateral Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Grantor hereby waives any
claims against Collateral Agent arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Collateral Agent
accepts the first offer received and does not offer such Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Secured Obligations, Grantor shall be liable for
the deficiency and the fees of any attorneys employed by Collateral Agent to
collect such deficiency.
SECTION 17. APPLICATION OF PROCEEDS. Except as otherwise expressly
provided elsewhere in this Agreement or the Intercreditor Agreement, all
Proceeds received by Collateral Agent in respect of all or any part of the
Collateral may, in the discretion of Collateral Agent, be held by Collateral
Agent as Collateral for, and/or then, or at any time thereafter, applied in full
or in part by Collateral Agent against, the Secured Obligations in the following
order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including, without limitation, fees and
expenses of counsel, and all other expenses, liabilities and advances made
or incurred by Collateral Agent in connection therewith, and all amounts
for which Collateral Agent is entitled to indemnification hereunder and all
advances made by Collateral Agent hereunder for the account of Grantor, and
to the payment of all costs and expenses paid or incurred by Collateral
Agent in connection with the exercise of any right or remedy hereunder, all
in accordance with Section 18;
SECOND: To the payment of all other Secured Obligations
as provided in Section 4 of the Intercreditor Agreement; and
THIRD: To the payment to or upon the order of Grantor, or to whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such proceeds.
SECTION 18. INDEMNITY AND EXPENSES.
(a) Grantor agrees to indemnify Collateral Agent and each other
Secured Party from and against any and all claims, losses and liabilities in any
way relating to, growing out of or resulting from this Agreement or any related
Financing Agreement and the transactions contemplated hereby and thereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Collateral Agent's
or such other Secured Party's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Grantor shall pay to Collateral Agent upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Collateral Agent hereunder, or (iv) the failure by Grantor
to perform or observe any of the provisions hereof.
SECTION 19. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the payment in full of all
Secured Obligations, the cancellation or termination of all Commitments and the
cancellation or expiration of all outstanding letters of credit issued pursuant
to any of the Credit Agreements then secured by the Collateral, (b) be binding
upon Grantor, its successors and assigns, and (c) inure, together with the
rights and remedies of Collateral Agent hereunder, to the benefit of Collateral
Agent and its successors and permitted assigns. Without limiting the generality
of the foregoing clause (c), but subject to the provisions of subsection 10.1 of
the Existing Credit Agreement and subsection 10.1 of the New Credit Agreement
and any comparable provisions of any Successor Credit Agreement secured by the
Collateral, any Lender may assign any loans held by it under the applicable
Credit Agreement to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to Lenders herein
or otherwise. Upon the payment in full of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding letters of credit referred to above, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to Grantor. Upon any such termination Collateral Agent will, at Grantor's
expense, execute and deliver to Grantor such documents as Grantor shall
reasonably request to evidence such termination.
SECTION 20. COLLATERAL AGENT AS AGENT.
(a) Collateral Agent has been appointed to act as Collateral Agent
hereunder by the Parties under the Intercreditor Agreement, which appointment
and the terms thereof have been acknowledged and agreed to by Grantor, and
Collateral Agent shall be entitled to the benefits of the Intercreditor
Agreement in acting as Collateral Agent hereunder. Collateral Agent shall be
obligated, and shall have the right hereunder, to make demands, to give notices,
to exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including, without limitation, the release or substitution of
Collateral), solely in accordance with the terms of this Agreement and the
Intercreditor Agreement; provided that, anything contained herein to the
contrary notwithstanding, in the event of any conflict between the express terms
and provisions of this Agreement and the express terms and provisions of the
Intercreditor Agreement, such terms and provisions of the Intercreditor
Agreement shall be controlling for all purposes hereof.
(b) Collateral Agent shall at all times be the same Person that is
Collateral Agent under the Intercreditor Agreement. Written notice of
resignation by Collateral Agent pursuant to Section 9(g)(i) of the Intercreditor
Agreement shall also constitute notice of resignation as Collateral Agent under
this Agreement; removal of Collateral Agent pursuant to Section 9(g)(ii) of the
Intercreditor Agreement shall also constitute removal as Collateral Agent under
this Agreement; and appointment of a successor Collateral Agent pursuant to
Section 9(g) of the Intercreditor Agreement shall also constitute appointment of
a successor Collateral Agent under this Agreement. Upon the acceptance of any
appointment as Collateral Agent under Section 9(g) of the Intercreditor
Agreement, the successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Collateral Agent hereunder, and (ii) execute and deliver to such successor
Collateral Agent any amendments to financing statements, and take any other
actions, as may be necessary or appropriate in connection with the assignment to
such successor Collateral Agent of the security interests created hereunder,
whereupon such retiring or removed Collateral Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring or removed
Collateral Agent's resignation or removal hereunder as Collateral Agent, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Collateral Agent
hereunder.
SECTION 21. AMENDMENTS; ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, and no consent to any departure by
Grantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Collateral Agent and, in the case of any such amendment or
modification, by Grantor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 22. NOTICES. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or five Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
SECTION 23. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Collateral Agent in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 24. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 25. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 26. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit
Agreements, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of New York are used herein as therein defined.
SECTION 27. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT
GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY FINAL AND NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Grantor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Grantor at its address provided in Section 22, such
service being hereby acknowledged by Grantor to be sufficient for personal
jurisdiction in any action against Grantor in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Collateral Agent to bring proceedings against Grantor in the courts of
any other jurisdiction.
SECTION 28. WAIVER OF JURY TRIAL. GRANTOR AND COLLATERAL AGENT HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Grantor and Collateral Agent each
acknowledge that this waiver is a material inducement for Grantor and Collateral
Agent to enter into a business relationship, that Grantor and Collateral Agent
have already relied on this waiver in entering into this Agreement and that each
will continue to rely on this waiver in their related future dealings. Grantor
and Collateral Agent further warrant and represent that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 28
AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 29. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
SECTION 30. DESIGNATION OF COLLATERAL AGENT ON FINANCING STATEMENTS.
For purposes of any financing statements filed with respect to any of the
Collateral under the Code, BTCo, in its capacity as Collateral Agent hereunder,
may be referred to as "Bankers Trust Company", "Bankers Trust Company, as
Agent", "Bankers Trust Company, as Administrative Agent", or "Bankers Trust
Company, as Collateral Agent".
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, Grantor and Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[SUBSIDIARY]
By: ____________________
Title:
Notice Address: ---------------------
---------------------
---------------------
BANKERS TRUST COMPANY
By: __________________________
Title:
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Zadroga
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Victoria A. Floyd
<PAGE>
SCHEDULE I
TO SECURITY AGREEMENT
Assigned Agreements:
<PAGE>
SCHEDULE II
TO SECURITY AGREEMENT
Locations of Equipment:
Locations of Inventory:
<PAGE>
EXHIBIT XIV
[FORM OF SUBSIDIARY TRADEMARK SECURITY AGREEMENT]
AMENDED AND RESTATED SUBSIDIARY TRADEMARK SECURITY AGREEMENT
This AMENDED AND RESTATED TRADEMARK COLLATERAL SECURITY AGREEMENT AND
CONDITIONAL ASSIGNMENT (this "AGREEMENT") is dated as of November 14, 1997 and
entered into by and between [SUBSIDIARY], a _____________________ corporation
("GRANTOR"), and BANKERS TRUST COMPANY ("BTCO"), as collateral agent for and
representative of (in such capacity herein called "COLLATERAL AGENT") the
Secured Parties (as hereinafter defined)[, and amends and restates that certain
Trademark Security Agreement (the "EXISTING SUBSIDIARY TRADEMARK SECURITY
AGREEMENT") dated as of August 7, 1995 between Grantor and Existing Agent (as
hereinafter defined)].
PRELIMINARY STATEMENTS
A. Dictaphone Corporation ("COMPANY"), the financial institutions
party thereto as lenders ("EXISTING LENDERS"), and Bankers Trust Company, as
administrative agent for Existing Lenders (in such capacity, together with its
successors in such capacity, "EXISTING AGENT") are parties to that certain
Credit Agreement dated as of August 7, 1995 (said Credit Agreement, as amended
through and including the date hereof and as it may hereafter be further
amended, amended and restated, supplemented or otherwise modified from time to
time, being the "EXISTING CREDIT AGREEMENT") pursuant to which Existing Lenders
have made certain credit facilities available to Company in the form of loans
and letters of credit.
B. Company, the financial institutions party thereto as lenders ("NEW
LENDERS"; together with Existing Lenders, "CURRENT LENDERS"), and Bankers Trust
Company, as administrative agent for New Lenders (in such capacity, together
with its successors in such capacity, "NEW AGENT"; together with Existing Agent,
"CURRENT AGENTS") have entered into that certain Credit Agreement dated as of
even date herewith (said Credit Agreement, as it may hereafter be amended,
amended and restated, supplemented or otherwise modified from time to time,
being the "NEW CREDIT AGREEMENT"; together with the Existing Credit Agreement,
the "CURRENT CREDIT AGREEMENTS") pursuant to which New Lenders have made certain
credit facilities available to Company in the form of loans the proceeds of
which will be used on the date hereof to prepay a portion of the loans
outstanding under the Existing Credit Agreement.
C. It is contemplated that, from time to time, one or more Current
Lenders and/or one or more other financial institutions (any such Current
Lenders and/or other financial institutions being referred to herein
collectively as "SUCCESSOR LENDERS") may enter into one or more agreements with
Company and/or its Subsidiaries (any such agreements, as they may exist from
time to time, being "SUCCESSOR CREDIT AGREEMENTS") which either refinance,
replace or otherwise restructure all or any portion of the indebtedness under
the Current Credit Agreements and/or any Successor Credit Agreement (the Current
Credit Agreements and any Successor Credit Agreements being referred to herein
collectively as "CREDIT AGREEMENTS"; Current Lenders and any Successor Lenders
being referred to herein collectively as "LENDERS"; and Current Agents and any
administrative agents (collectively, "SUCCESSOR AGENTS") under any Successor
Credit Agreements being referred to herein collectively as "AGENTS").
D. Company has entered into, or may from time to time enter into, one
or more Lender Interest Rate Agreements (as defined in the Intercreditor
Agreement referred to below) with one or more Interest Rate Exchangers (as
defined in the Intercreditor Agreement).
E. Grantor and the other Subsidiaries of Company party thereto
(collectively, "SUBSIDIARY GUARANTORS") have executed and delivered a Guaranty
dated as of August 7, 1995 (the "EXISTING SUBSIDIARY GUARANTY") in favor of
BTCo, in its capacity as Existing Agent, for the benefit of Existing Lenders
[and any Interest Rate Exchangers party to Lender Interest Rate Agreements
entered into prior to the date hereof], pursuant to which Subsidiary Guarantors
have guarantied the prompt payment and performance when due of all Existing
Credit Agreement Obligations (as defined in the Intercreditor Agreement) [and
all Interest Rate Obligations (as defined in the Intercreditor Agreement) in
respect of such Lender Interest Rate Agreements], and all obligations of Grantor
under the Existing Subsidiary Guaranty are currently secured by the Collateral
(as hereinafter defined).
F. Subsidiary Guarantors have amended and restated the Existing
Subsidiary Guaranty pursuant to an Amended and Restated Subsidiary Guaranty
dated as of even date herewith (said Amended and Restated Subsidiary Guaranty,
as it may hereafter be amended, amended and restated, supplemented or otherwise
modified from time to time, being the "NEW SUBSIDIARY GUARANTY") in favor of
BTCo, in its capacity as Collateral Agent, for the benefit of Current Lenders,
Current Agents, any Successor Lender or Successor Agent becoming a party to the
Intercreditor Agreement in the manner provided therein, any Successor Lenders
represented by any such Successor Agent, any Interest Rate Exchanger becoming a
party to the Intercreditor Agreement in the manner provided therein, and
Collateral Agent (all of such Persons being referred to herein collectively as
"SECURED PARTIES"), and the terms of the Current Credit Agreements require, and
the terms of any Successor Credit Agreement or Lender Interest Rate Agreement
may require, that all obligations of Grantor under the New Subsidiary Guaranty
be secured by the Collateral.
G. Current Agents and Collateral Agent have entered into, and all
existing Loan Parties (as defined in the Intercreditor Agreement) have
acknowledged and agreed to the terms of, that certain Intercreditor Agreement
dated as of even date herewith (said Intercreditor Agreement, as it may
hereafter be amended, amended and restated, supplemented or otherwise modified
from time to time, being the "INTERCREDITOR AGREEMENT"; terms defined therein
and not otherwise defined herein being used herein as therein defined) which
provides for, among other things, the appointment of Collateral Agent to
administer and enforce this Agreement in the manner set forth herein and
therein.
H. Grantor owns and uses in its business, and will in the future adopt
and so use, various intangible assets, including trademarks, service marks,
designs, logos, indicia, tradenames, corporate names, company names, business
names, fictitious business names, trade styles and/or other source and/or
business identifiers and applications pertaining thereto (collectively, the
"TRADEMARKS").
I. Pursuant to the Existing Subsidiary Trademark Security Agreement,
BTCo, in its capacity as Existing Agent, has become a secured creditor, for the
benefit of Existing Lenders, with respect to and, under the circumstances
described therein, an assignee of all of the existing and future Trademarks, all
registrations that have been or may hereafter be issued or applied for thereon
in the United States and any state thereof and in foreign countries (the
"REGISTRATIONS"), all common law and other rights in and to the Trademarks in
the United States and any state thereof and in foreign countries (the "TRADEMARK
RIGHTS"), all goodwill of Grantor's business symbolized by the Trademarks and
associated therewith, including without limitation the documents and things
described in Section 1(b) (the "ASSOCIATED GOODWILL"), and all proceeds of the
Trademarks, the Registrations, the Trademark Rights and the Associated Goodwill,
and Grantor desires to continue the secured and protected interest in the
Trademarks, the Registrations, the Trademark Rights, the Associated Goodwill and
all the proceeds thereof for the benefit of Existing Agent and Existing Lenders,
and to extend the benefit thereof to all other Secured Parties, all as provided
herein.
J. (i) pursuant to that certain Subsidiary Security Agreement dated as
of August 7, 1995 (the "EXISTING SECURITY AGREEMENT"), Grantor has granted to
Existing Agent, for the benefit of Existing Lenders [and any Interest Rate
Exchangers party to Lender Interest Rate Agreements entered into prior to the
date hereof], a lien on and security interest in, among other assets, the
machinery, equipment, formulations, manufacturing procedures, quality control
procedures and product specifications relating to the products and services sold
or delivered under or in connection with the Trademarks such that, upon the
occurrence and during the continuation of an "Event of Default" (as defined in
the Existing Security Agreement), Existing Agent would be able to exercise its
remedies consistent with the Existing Security Agreement, the Existing
Subsidiary Trademark Security Agreement and applicable law to foreclose upon
Grantor's business and use the Trademarks, the Registrations and the Trademark
Rights in conjunction with the continued operation of such business, maintaining
substantially the same product and service specifications and quality as
maintained by Grantor, and benefit from the Associated Goodwill, and (ii)
pursuant to an Amended and Restated Subsidiary Security Agreement dated as of
even date herewith (said Amended and Restated Subsidiary Security Agreement, as
it may hereafter be amended, amended and restated, supplemented, or otherwise
modified from time to time, being the "SECURITY AGREEMENT"), Grantor has amended
and restated the Existing Security Agreement in order to continue the grant of
the security interest created thereunder in favor of Collateral Agent, for the
benefit of Secured Parties, such that, upon the occurrence and during the
continuation of an Event of Default, Collateral Agent would be able, consistent
with the Security Agreement, this Agreement and applicable law, to exercise its
remedies to foreclose upon Grantor's business as described in clause (i) above.
K. Upon the occurrence and during the continuation of an Event of
Default, and to permit Collateral Agent to operate Grantor's business without
interruption and to use the Trademarks, Registrations, Trademark Rights and
Associated Goodwill in conjunction therewith, Grantor has agreed to grant to
Collateral Agent hereunder, for the benefit of Secured Parties, the conditional
assignment of Grantor's entire right, title and interest in and to the
Collateral and to appoint Collateral Agent, for the benefit of Secured Parties,
as Grantor's attorney-in-law and attorney-in-fact to execute documents and take
actions to confirm said assignments, which grant and appointment continue a
similar grant and appointment made in favor of Existing Agent pursuant to the
Existing Subsidiary Trademark Security Agreement.
L. Pursuant to the authority granted to Collateral Agent by Existing
Agent and the other Parties under the Intercreditor Agreement, Collateral Agent
and Grantor desire to amend and restate the Existing Subsidiary Trademark
Security Agreement as hereinafter set forth in order to (i) substitute BTCo, in
its capacity as Collateral Agent, for BTCo, in its capacity as Existing Agent,
as the secured party hereunder, (ii) confirm the continuation of the existing
grant of security interests and conditional assignments with respect to the
Collateral, as provided for in the Existing Trademark Subsidiary Security
Agreement, for the benefit of Existing Agent, Existing Lenders [and any Interest
Rate Exchangers secured under the Existing Subsidiary Security Agreement on the
date hereof], and (iii) provide that such grant of security interests and
conditional assignments with respect to the Collateral shall hereafter be for
the benefit of Current Lenders, Current Agents, any Successor Lender or
Successor Agent becoming a party to the Intercreditor Agreement in the manner
provided therein, any Successor Lenders represented by any such Successor Agent,
any Interest Rate Exchanger becoming a party to the Intercreditor Agreement in
the manner provided therein, and Collateral Agent (all of the Persons described
in this clause (iii) being referred to herein collectively as "SECURED
PARTIES").
NOW, THEREFORE, in consideration of the premises, in order to induce
Lenders to make and/or maintain extensions of credit to Company under the Credit
Agreements and to induce Interest Rate Exchangers to enter into and/or maintain
Lender Interest Rate Agreements, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Existing
Subsidiary Security Agreement is hereby amended and restated in its entirety as
follows:
SECTION 1. GRANT OF SECURITY. Grantor hereby assigns to Collateral
Agent, and hereby grants to Collateral Agent a security interest in, all of
Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "COLLATERAL"):
(a) each of the Trademarks and rights and interests in Trademarks
which are presently, or in the future may be, owned, held (whether pursuant to a
license or otherwise) or used by Grantor, in whole or in part (including,
without limitation, the Trademarks specifically identified in Schedule A annexed
hereto, as the same may be amended pursuant hereto from time to time), and
including all Trademark Rights with respect thereto and all federal, state and
foreign Registrations therefor heretofore or hereafter granted or applied for,
the right (but not the obligation) to register claims under any state or federal
trademark law or regulation or any trademark law or regulation of any foreign
country and to apply for, renew and extend the Trademarks, Registrations and
Trademark Rights, the right (but not the obligation) to sue or bring opposition
or cancellation proceedings in the name of Grantor or in the name of Collateral
Agent or otherwise for past, present and future infringements of the Trademarks,
Registrations or Trademark Rights and all rights (but not obligations)
corresponding thereto in the United States and any foreign country, and the
Associated Goodwill; it being understood that the rights and interests included
herein shall include, without limitation, all rights and interests pursuant to
licensing or other contracts in favor of Grantor pertaining to the Trademarks,
Registrations or Trademark Rights presently or in the future owned or used by
third parties but, in the case of third parties which are not Affiliates (such
term being used herein as defined in the Current Credit Agreements as in effect
on the date hereof) of Grantor, only to the extent permitted by such licensing
or other contracts and, if not so permitted, only with the consent of such third
parties;
(b) the following documents and things in Grantor's possession, or
subject to Grantor's right to possession, related to (Y) the production, sale
and delivery by Grantor, or by any Affiliate, licensee or subcontractor of
Grantor, of products or services sold or delivered by or under the authority of
Grantor in connection with the Trademarks, Registrations or Trademark Rights
(which products and services shall, for purposes of this Agreement, be deemed to
include, without limitation, products and services sold or delivered pursuant to
merchandising operations utilizing any Trademarks, Registrations or Trademark
Rights); or (Z) any retail or other merchandising operations conducted under the
name of or in connection with the Trademarks, Registrations or Trademark Rights
by Grantor or any Affiliate, licensee or subcontractor of Grantor:
(i) all lists and ancillary documents that identify and describe
any of Grantor's customers, or those of its Affiliates, licensees or
subcontractors, for products sold and services delivered under or in
connection with the Trademarks or Trademark Rights, including without
limitation any lists and ancillary documents that contain a customer's name
and address, the name and address of any of its warehouses, branches or
other places of business, the identity of the Person or Persons having the
principal responsibility on a customer's behalf for ordering products or
services of the kind supplied by Grantor, or the credit, payment, discount,
delivery or other sale terms applicable to such customer, together with
information setting forth the total purchases, by brand, product, service,
style, size or other criteria, and the patterns of such purchases;
(ii) all product and service specification documents and
production and quality control manuals used in the manufacture or delivery
of products and services sold or delivered under or in connection with the
Trademarks or Trademark Rights;
(iii) all documents which reveal the name and address of any
source of supply, and any terms of purchase and delivery, for any and all
materials, components and services used in the production of products and
services sold or delivered under or in connection with the Trademarks or
Trademark Rights; and
(iv) all documents constituting or concerning the then current or
proposed advertising and promotion by Grantor or its Affiliates, licensees
or subcontractors of products and services sold or delivered under or in
connection with the Trademarks or Trademark Rights including, without
limitation, all documents which reveal the media used or to be used and the
cost for all such advertising conducted within the described period or
planned for such products and services;
(c) all general intangibles relating to the Collateral;
(d) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any time
evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(e) all proceeds, products, rents and profits (including without
limitation license royalties and proceeds of infringement suits) of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Collateral Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.
The foregoing assignment and grant of a security interest (i) confirms
the original assignment and grant of a first priority security interest made in
the Existing Subsidiary Trademark Security Agreement in respect of the
Collateral as security for the "Secured Obligations" (as defined in the Existing
Subsidiary Trademark Security Agreement) and continues in all respects such
original assignment and grant without in any way causing any interruption in
continuity from such original assignment and grant and (ii) extends such
assignment and grant of a first priority security interest in respect of the
Collateral to secure all other Secured Obligations as defined herein.
SECTION 2. CONDITIONAL ASSIGNMENT. In addition to, and not by way of
limitation of, the granting of a security interest in the Collateral pursuant to
Section 1, Grantor hereby, effective upon the occurrence of an Event of Default
and upon written notice from Collateral Agent, grants, sells, conveys,
transfers, assigns and sets over to Collateral Agent, for its benefit and the
ratable benefit of the other Secured Parties, all of Grantor's right, title and
interest in and to the Collateral, including without limitation Grantor's right,
title and interest in and to the Trademarks identified in Schedule A annexed
hereto, the goodwill of the business symbolized by said Trademarks and all
Registrations relating to said Trademarks.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and
liabilities of Grantor of every nature whatsoever now or hereafter existing
under or arising in respect of the New Subsidiary Guaranty and all extensions or
renewals thereof, whether for principal, interest (including without limitation
interest that, but for the filing of a petition in bankruptcy with respect to
Company, would accrue on such obligations, whether or not a claim is allowed
against Company for such interest in any such bankruptcy proceedings),
reimbursement of amounts drawn under letters of credit, payments for early
termination of Lender Interest Rate Agreements, fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from any Secured Party as a
preference, fraudulent transfer or otherwise (all such obligations and
liabilities being the "UNDERLYING DEBT"), and all obligations of every nature of
Grantor now or hereafter existing under this Agreement (all such obligations of
Grantor, together with the Underlying Debt, being the "SECURED OBLIGATIONS");
provided that the assignment and grant of a security interest pursuant to
Section 1 hereof, and any other provisions of this Agreement, shall be effective
as to any Successor Credit Agreement Obligations or Interest Rate Obligations
only if the applicable Successor Lenders (or a Successor Agent acting on their
behalf) or Interest Rate Exchanger shall have executed and delivered to
Collateral Agent a counterpart of the Intercreditor Agreement, acknowledged by
Grantor, as provided in the Intercreditor Agreement.
SECTION 4. GRANTOR REMAINS LIABLE. Anything contained herein to the
contrary notwithstanding, (a) Grantor shall remain liable under any contracts
and agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Collateral Agent of
any of its rights hereunder shall not release Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) Collateral Agent shall not have any obligation or liability under any
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall Collateral Agent be obligated to perform any of the obligations or
duties of Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Grantor represents and
warrants as follows:
(a) Description of Collateral. A true and complete list of all
Trademarks, Registrations and Trademark Rights owned, held (whether pursuant to
a license or otherwise) or used by Grantor, in whole or in part, as of the date
of this Agreement is set forth in Schedule A annexed hereto.
(b) Validity and Enforceability of Collateral. Each of the Trademarks,
Registrations and Trademark Rights is valid, subsisting and enforceable and
Grantor is not aware of any pending or threatened claim by any third party that
any of the Trademarks, Registrations or Trademark Rights is invalid or
unenforceable or that the use of any of the Trademarks, Registrations or
Trademark Rights violates the rights of any third person or of any basis for any
such claim.
(c) Ownership of Collateral. Except for the security interest and
conditional assignment created by this Agreement, Grantor owns the Collateral
free and clear of any Lien other than Permitted Encumbrances (such term being
used herein as defined in the Current Credit Agreements as in effect on the date
hereof). Except such as may have been filed in favor of Collateral Agent
relating to this Agreement, (i) no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any filing or recording office and (ii) no effective filing covering all
or any part of the Collateral is on file in the United States Patent and
Trademark Office.
(d) Office Locations; Other Names. The chief place of business, the
chief executive office and the office where Grantor keeps its records regarding
the Collateral is, and has been for the four month period preceding the date
hereof, located at ___________________________________. Grantor has not in the
past done, and does not now do, business under any other name (including any
trade-name or fictitious business name) [except
- ---------------].
(e) Governmental Authorizations. Except as described in clause (f)
below, no authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for either (i)
the grant by Grantor of the security interest and conditional assignment granted
hereby, (ii) the execution, delivery or performance of this Agreement by
Grantor, or (iii) the perfection of or the exercise by Collateral Agent of its
rights and remedies hereunder (except as may have been taken by or at the
direction of Grantor).
(f) Perfection. This Agreement, together with the filing of a
financing statement describing the Collateral with the Secretary of State of the
State of Connecticut and the recording of this Agreement with the United States
Patent and Trademark Office, creates a valid, perfected and first priority
security interest in the Collateral, securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable to perfect
and protect such security interest have been duly made or taken.
(g) Other Information. All information heretofore, herein or hereafter
supplied to Collateral Agent by or on behalf of Grantor with respect to the
Collateral is accurate and complete in all respects.
SECTION 6. FURTHER ASSURANCES; NEW TRADEMARKS, REGISTRATIONS AND
TRADEMARK RIGHTS.
(a) Grantor agrees that from time to time, at the expense of Grantor,
Grantor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that
Collateral Agent may request, in order to perfect and protect any security
interest or conditional assignment granted or purported to be granted hereby or
to enable Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, Grantor will: (i) at the request of Collateral Agent, mark
conspicuously each of its records pertaining to the Collateral with a legend, in
form and substance satisfactory to Collateral Agent, indicating that such
Collateral is subject to the security interest granted hereby, (ii) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as Collateral
Agent may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby, (iii) use its best efforts to obtain
any necessary consents of third parties to the grant and perfection of a
security interest and assignment to Collateral Agent with respect to any
Collateral, (iv) at any reasonable time, upon request by Collateral Agent,
exhibit the Collateral to and allow inspection of the Collateral by Collateral
Agent, or persons designated by Collateral Agent, and (v) at Collateral Agent's
request, appear in and defend any action or proceeding that may affect Grantor's
title to or Collateral Agent's security interest in all or any part of the
Collateral.
(b) Grantor hereby authorizes Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Grantor. Grantor agrees that
a carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by Grantor shall be sufficient as a financing statement and may
be filed as a financing statement in any and all jurisdictions.
(c) Grantor hereby authorizes Collateral Agent to modify this
Agreement without obtaining Grantor's approval of or signature to such
modification by amending Schedule A annexed hereto to include reference to any
right, title or interest in any existing Trademark, Registration or Trademark
Right or any Trademark, Registration or Trademark Right acquired or developed by
Grantor after the execution hereof or to delete any reference to any right,
title or interest in any Trademark, Registration or Trademark Right in which
Grantor no longer has or claims any right, title or interest.
(d) Grantor will furnish to Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Collateral Agent may
reasonably request, all in reasonable detail.
(e) If Grantor shall obtain rights to any new Trademarks,
Registrations or Trademark Rights, the provisions of this Agreement shall
automatically apply thereto. Grantor shall promptly notify Collateral Agent in
writing of any rights to any new Trademarks or Trademark Rights acquired by
Grantor after the date hereof and of any Registrations issued or applications
for Registration made after the date hereof. Concurrently with the filing of an
application for Registration for any Trademark, Grantor shall execute, deliver
and record in all places where this Agreement is recorded an appropriate
Trademark Collateral Security Agreement and Conditional Assignment,
substantially in the form hereof, with appropriate insertions, or an amendment
to this Agreement, in form and substance satisfactory to Collateral Agent,
pursuant to which Grantor shall grant a security interest and conditional
assignment to the extent of its interest in such Registration as provided herein
to Collateral Agent unless so doing would, in the reasonable judgment of
Grantor, after due inquiry, result in the grant of a Registration in the name of
Collateral Agent, in which event Grantor shall give written notice to Collateral
Agent as soon as reasonably practicable and the filing shall instead be
undertaken as soon as practicable but in no case later than immediately
following the grant of the Registration.
SECTION 7. CERTAIN COVENANTS OF GRANTOR. Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Collateral Agent of any change in Grantor's name, identity
or corporate structure within 15 days of such change;
(c) give Collateral Agent 30 days' prior written notice of any change
in Grantor's chief place of business or chief executive office or the office
where Grantor keeps its records regarding the Collateral;
(d) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except to the
extent the validity thereof is being contested in good faith; provided that
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment entered or filed against Grantor or any
of the Collateral as a result of the failure to make such payment;
(e) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreements;
(f) except for the security interest and conditional assignment
created by this Agreement, not create or suffer to exist any Lien (other than
Permitted Encumbrances) upon or with respect to any of the Collateral to secure
the indebtedness or other obligations of any Person;
(g) diligently keep reasonable records respecting the Collateral and
at all times keep at least one complete set of its records concerning
substantially all of the Trademarks, Registrations and Trademark Rights at its
chief executive office or principal place of business;
(h) not permit the inclusion in any contract to which it becomes a
party of any provision that could or might in any way impair or prevent the
creation of a security interest in, or the assignment of, Grantor's rights and
interests in any property included within the definitions of any Trademarks,
Registrations, Trademark Rights and Associated Goodwill acquired under such
contracts;
(i) take all steps necessary to protect the secrecy of all trade
secrets relating to the products and services sold or delivered under or in
connection with the Trademarks and Trademark Rights, including without
limitation entering into confidentiality agreements with employees and labeling
and restricting access to secret information and documents;
(j) use proper statutory notice in connection with its use of each of
the Trademarks, Registrations and Trademark Rights;
(k) use consistent standards of high quality (which may be consistent
with Grantor's past practices) in the manufacture, sale and delivery of products
and services sold or delivered under or in connection with the Trademarks,
Registrations and Trademark Rights, including, to the extent applicable, in the
operation and maintenance of its retail stores and other merchandising
operations; and
(l) upon any officer of Grantor obtaining knowledge thereof, promptly
notify Collateral Agent in writing of any event that may materially and
adversely affect the value of the Collateral or any portion thereof, the ability
of Grantor or Collateral Agent to dispose of the Collateral or any portion
thereof, or the rights and remedies of Collateral Agent in relation thereto,
including without limitation the levy of any legal process against the
Collateral or any portion thereof.
SECTION 8. CERTAIN INSPECTION RIGHTS. Grantor hereby grants to
Collateral Agent and its employees, representatives and agents the right to
visit Grantor's and any of its Affiliate's or subcontractor's plants, facilities
and other places of business that are utilized in connection with the
manufacture, production, inspection, storage or sale of products and services
sold or delivered under any of the Trademarks, Registrations or Trademark Rights
(or which were so utilized during the prior six month period), and to inspect
the quality control and all other records relating thereto upon reasonable
notice to Grantor and as often as may be reasonably requested.
SECTION 9. AMOUNTS PAYABLE IN RESPECT OF THE COLLATERAL. Except as
otherwise provided in this Section 9, Grantor shall continue to collect, at its
own expense, all amounts due or to become due to Grantor in respect of the
Collateral or any portion thereof. In connection with such collections, Grantor
may take (and, at Collateral Agent's direction, shall take) such action as
Grantor or Collateral Agent may deem necessary or advisable to enforce
collection of such amounts; provided, however, that Collateral Agent shall have
the right at any time, upon the occurrence and during the continuation of an
Event of Default and upon written notice to Grantor of its intention to do so,
to notify the obligors with respect to any such amounts of the existence of the
security interest created, and the conditional assignment effected hereby, and
to direct such obligors to make payment of all such amounts directly to
Collateral Agent, and, upon such notification and at the expense of Grantor, to
enforce collection of any such amounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as Grantor
might have done. After receipt by Grantor of the notice from Collateral Agent
referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including checks and other instruments) received by Grantor in respect
of amounts due to Grantor in respect of the Collateral or any portion thereof
shall be received in trust for the benefit of Collateral Agent hereunder, shall
be segregated from other funds of Grantor and shall be forthwith paid over or
delivered to Collateral Agent in the same form as so received (with any
necessary endorsement) to be held as cash Collateral and applied as provided by
Section 17, and (ii) Grantor shall not adjust, settle or compromise the amount
or payment of any such amount or release wholly or partly any obligor with
respect thereto or allow any credit or discount thereon.
SECTION 10. TRADEMARK APPLICATIONS AND LITIGATION.
(a) Grantor shall have the duty diligently, through counsel reasonably
acceptable to Collateral Agent, to prosecute any trademark application relating
to any of the Trademarks specifically identified in Schedule A annexed hereto
that is pending as of the date of this Agreement, to make federal application on
any existing or future registerable but unregistered Trademarks, and to file and
prosecute opposition and cancellation proceedings, renew Registrations and do
any and all acts which are necessary or desirable to preserve and maintain all
rights in all Trademarks, Registrations and Trademark Rights. Any expenses
incurred in connection therewith shall be borne solely by Grantor. Grantor shall
not abandon any Trademark, Registration or Trademark Right.
(b) Except as provided in Section 10(d) and notwithstanding Section 2,
Grantor shall have the right to commence and prosecute in its own name, as real
party in interest, for its own benefit and at its own expense, such suits,
proceedings or other actions for infringement, unfair competition, dilution or
other damage as are in its reasonable business judgment necessary to protect the
Collateral. Collateral Agent shall provide, at Grantor's expense, all reasonable
and necessary cooperation in connection with any such suit, proceeding or action
including, without limitation, joining as a necessary party.
(c) Grantor shall promptly, following its becoming aware thereof,
notify Collateral Agent of the institution of, or of any adverse determination
in, any proceeding (whether in the United States Patent and Trademark Office or
any federal, state, local or foreign court) described in Section 10(a) or 10(b)
or regarding Grantor's claim of ownership in or right to use any of the
Trademarks, Registrations or Trademark Rights, its right to register the same,
or its right to keep and maintain such Registration. Grantor shall provide to
Collateral Agent any information with respect thereto requested by Collateral
Agent.
(d) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, Collateral
Agent shall have the right (but not the obligation) to bring suit, in the name
of Grantor, Collateral Agent or otherwise, to enforce any Trademark,
Registration, Trademark Right, Associated Goodwill and any license thereunder,
in which event Grantor shall, at the request of Collateral Agent, do any and all
lawful acts and execute any and all documents required by Collateral Agent in
aid of such enforcement and Grantor shall promptly, upon demand, reimburse and
indemnify Collateral Agent as provided in Section 18 in connection with the
exercise of its rights under this Section 10. To the extent that Collateral
Agent shall elect not to bring suit to enforce any Trademark, Registration,
Trademark Right, Associated Goodwill or any license thereunder as provided in
this Section 10(d), Grantor agrees to use all reasonable measures, whether by
action, suit, proceeding or otherwise, to prevent the infringement of any of the
Trademarks, Registrations, Trademark Rights or Associated Goodwill by others and
for that purpose agrees to diligently maintain any action, suit or proceeding
against any Person so infringing necessary to prevent such infringement.
SECTION 11. NON-DISTURBANCE AGREEMENTS, ETC. If and to the extent that
Grantor is permitted to license the Collateral, Collateral Agent shall enter
into a non-disturbance agreement or other similar arrangement, at Grantor's
request and expense, with Grantor and any licensee of any Collateral permitted
hereunder in form and substance satisfactory to Collateral Agent pursuant to
which (a) Collateral Agent shall agree not to disturb or interfere with such
licensee's rights under its license agreement with Grantor so long as such
licensee is not in default thereunder and (b) such licensee shall acknowledge
and agree that the Collateral licensed to it is subject to the security interest
and conditional assignment created in favor of Collateral Agent and the other
terms of this Agreement.
SECTION 12. REASSIGNMENT OF COLLATERAL. If (a) an Event of Default
shall have occurred and, by reason of cure, waiver, modification, amendment or
otherwise, no longer be continuing, (b) no other Event of Default shall have
occurred and be continuing, (c) an assignment to Collateral Agent of any rights,
title and interests in and to the Collateral shall have been previously made and
shall have become absolute and effective pursuant to Section 2, Section 13(f) or
Section 16(b), and (d) the Secured Obligations shall not have become immediately
due and payable, upon the written request of Grantor and the written consent of
Collateral Agent, Collateral Agent shall promptly execute and deliver to Grantor
such assignments as may be necessary to reassign to Grantor any such rights,
title and interests as may have been assigned to Collateral Agent as aforesaid,
subject to any disposition thereof that may have been made by Collateral Agent
pursuant hereto; provided that, after giving effect to such reassignment,
Collateral Agent's security interest and conditional assignment granted pursuant
to Section 1 and Section 2, as well as all other rights and remedies of
Collateral Agent granted hereunder, shall continue to be in full force and
effect; and provided, further that the rights, title and interests so reassigned
shall be free and clear of all Liens other than Liens (if any) encumbering such
rights, title and interest at the time of their assignment to Collateral Agent
and Permitted Encumbrances.
SECTION 13. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Grantor
hereby irrevocably appoints Collateral Agent as Grantor's attorney-in-fact, with
full authority in the place and stead of Grantor and in the name of Grantor,
Collateral Agent or otherwise, from time to time (a) upon the occurrence and
during the continuance of an Event of Default or (b) with respect to any action
or the execution of any instrument that Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, (i) upon the occurrence
and during the continuance of a Potential Event of Default (as defined in any
Credit Agreement) or (ii) after the fifth Business Day after Collateral Agent
makes a written request to Grantor to take such action or execute such
instrument (provided that Grantor fails to fully comply with such request on or
prior to such fifth Business Day) in Collateral Agent's discretion to take any
action and to execute any instrument that Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including without
limitation:
(a) to endorse Grantor's name on all applications, documents, papers
and instruments necessary for Collateral Agent in the use or maintenance of the
Collateral;
(b) to ask for, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) to file any claims or take any action or institute any proceedings
that Collateral Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of Collateral Agent with
respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement and the Credit Agreements) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Collateral Agent in
its sole discretion, any such payments made by Collateral Agent to become
obligations of Grantor to Collateral Agent, due and payable immediately without
demand; and
(f) (i) to execute and deliver any of the assignments or documents
requested by Collateral Agent pursuant to Section 16(b), (ii) to grant or issue
an exclusive or non-exclusive license to the Collateral or any portion thereof
to any Person, and (iii) otherwise generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though Collateral Agent were the absolute owner thereof for
all purposes, and to do, at Collateral Agent's option and Grantor's expense, at
any time or from time to time, all acts and things that Collateral Agent deems
necessary to protect, preserve or realize upon the Collateral and Collateral
Agent's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as Grantor might do.
SECTION 14. COLLATERAL AGENT MAY PERFORM. If Grantor fails to perform
any agreement contained herein, Collateral Agent may itself perform, or cause
performance of, such agreement, and the expenses of Collateral Agent incurred in
connection therewith shall be payable by Grantor under Section 18.
SECTION 15. STANDARD OF CARE. The powers conferred on Collateral Agent
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Collateral Agent shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Collateral Agent shall be deemed to have exercised reasonable care
in the custody and preservation of Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which Collateral
Agent accords its own property.
SECTION 16. REMEDIES.
If any Event of Default shall have occurred and be continuing:
(a) Collateral Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the Uniform Commercial Code as in effect in any relevant jurisdiction (the
"CODE") (whether or not the Code applies to the affected Collateral), and also
may (i) require Grantor to, and Grantor hereby agrees that it will at its
expense and upon request of Collateral Agent forthwith, assemble all or part of
the Collateral as directed by Collateral Agent and make it available to
Collateral Agent at a place to be designated by Collateral Agent that is
reasonably convenient to both parties, (ii) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (iii) prior to the disposition of the Collateral, store the Collateral
or otherwise prepare the Collateral for disposition in any manner to the extent
Collateral Agent deems appropriate, (iv) take possession of Grantor's premises
or place custodians in exclusive control thereof, remain on such premises and
use the same for the purpose of taking any actions described in the preceding
clause (iii) and collecting any Secured Obligation, (v) exercise any and all
rights and remedies of Grantor under or in connection with the contracts related
to the Collateral or otherwise in respect of the Collateral, including without
limitation any and all rights of Grantor to demand or otherwise require payment
of any amount under, or performance of any provision of, such contracts, and
(vi) without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of Collateral
Agent's offices or elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and upon such other terms as
Collateral Agent may deem commercially reasonable. Collateral Agent or any
Lender or Interest Rate Exchanger may be the purchaser of any or all of the
Collateral at any such sale and Collateral Agent, as agent for and
representative of Lenders and Interest Rate Exchangers (but not any Lender,
Lenders, Interest Rate Exchanger or Interest Rate Exchangers in its or their
respective individual capacities unless Requisite Obligees otherwise agree),
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any such
public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Collateral payable by Collateral Agent at
such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Grantor, and Grantor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Grantor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Grantor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Collateral Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Collateral Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Grantor hereby waives any
claims against Collateral Agent arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Collateral Agent
accepts the first offer received and does not offer such Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Secured Obligations, Grantor shall be liable for
the deficiency and the fees of any attorneys employed by Collateral Agent to
collect such deficiency.
(b) Upon written demand from Collateral Agent, Grantor shall execute
and deliver to Collateral Agent an assignment or assignments of the Trademarks,
Registrations, Trademark Rights and the Associated Goodwill and such other
documents as are necessary or appropriate to carry out the intent and purposes
of this Agreement; provided that the failure of Grantor to comply with such
demand will not impair or affect the validity of the conditional assignment
effected by Section 2 or its effectiveness upon notice by Collateral Agent as
specified in Section 2. Grantor agrees that such an assignment (including
without limitation the conditional assignment effected by Section 2) and/or
recording shall be applied to reduce the Secured Obligations outstanding only to
the extent that Collateral Agent (or any Lender) receives cash proceeds in
respect of the sale of, or other realization upon, the Collateral.
(c) Within five Business Days after written notice from Collateral
Agent, Grantor shall make available to Collateral Agent, to the extent within
Grantor's power and authority, such personnel in Grantor's employ on the date of
such Event of Default as Collateral Agent may reasonably designate, by name,
title or job responsibility, to permit Grantor to continue, directly or
indirectly, to produce, advertise and sell the products and services sold or
delivered by Grantor under or in connection with the Trademarks, Registrations
and Trademark Rights, such persons to be available to perform their prior
functions on Collateral Agent's behalf and to be compensated by Collateral Agent
at Grantor's expense on a per diem, pro-rata basis consistent with the salary
and benefit structure applicable to each as of the date of such Event of
Default.
SECTION 17. APPLICATION OF PROCEEDS. Except as otherwise expressly
provided elsewhere in this Agreement or the Intercreditor Agreement, all
Proceeds received by Collateral Agent in respect of all or any part of the
Collateral may, in the discretion of Collateral Agent, be held by Collateral
Agent as Collateral for, and/or then, or at any time thereafter, applied in full
or in part by Collateral Agent against, the Secured Obligations in the following
order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including, without limitation, fees and
expenses of counsel, and all other expenses, liabilities and advances made
or incurred by Collateral Agent in connection therewith, and all amounts
for which Collateral Agent is entitled to indemnification hereunder and all
advances made by Collateral Agent hereunder for the account of Grantor, and
to the payment of all costs and expenses paid or incurred by Collateral
Agent in connection with the exercise of any right or remedy hereunder, all
in accordance with Section 18;
SECOND: To the payment of all other Secured Obligations as provided in
Section 4 of the Intercreditor Agreement; and
THIRD: To the payment to or upon the order of Grantor, or to whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such proceeds.
SECTION 18. INDEMNITY AND EXPENSES.
(a) Grantor agrees to indemnify Collateral Agent and each other
Secured Party from and against any and all claims, losses and liabilities in any
way relating to, growing out of or resulting from this Agreement or any related
Financing Agreement and the transactions contemplated hereby and thereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Collateral Agent's
or such other Secured Party's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Grantor shall pay to Collateral Agent upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Collateral Agent hereunder, or (iv) the failure by Grantor
to perform or observe any of the provisions hereof.
SECTION 19. CONTINUING SECURITY INTEREST AND CONDITIONAL ASSIGNMENT;
TRANSFER OF LOANS. This Agreement shall create a continuing security interest
in, and conditional assignment of, the Collateral and shall (a) remain in full
force and effect until the payment in full of all Secured Obligations, the
cancellation or termination of all Commitments and the cancellation or
expiration of all outstanding letters of credit issued pursuant to any of the
Credit Agreements then secured by the Collateral, (b) be binding upon Grantor,
its successors and assigns, and (c) inure, together with the rights and remedies
of Collateral Agent hereunder, to the benefit of Collateral Agent and its
successors and permitted assigns. Without limiting the generality of the
foregoing clause (c), but subject to the provisions of subsection 10.1 of the
Existing Credit Agreement and subsection 10.1 of the New Credit Agreement and
any comparable provisions of any Successor Credit Agreement secured by the
Collateral, any Lender may assign any loans held by it under the applicable
Credit Agreement to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to Lenders herein
or otherwise. Upon the payment in full of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding letters of credit referred to above, the security
interest and conditional assignment granted hereby shall terminate and all
rights to the Collateral shall revert to Grantor. Upon any such termination
Collateral Agent will, at Grantor's expense, execute and deliver to Grantor such
documents as Grantor shall reasonably request to evidence such termination.
SECTION 20. COLLATERAL AGENT AS AGENT.
(a) Collateral Agent has been appointed to act as Collateral Agent
hereunder by the Parties under the Intercreditor Agreement, which appointment
and the terms thereof have been acknowledged and agreed to by Grantor, and
Collateral Agent shall be entitled to the benefits of the Intercreditor
Agreement in acting as Collateral Agent hereunder. Collateral Agent shall be
obligated, and shall have the right hereunder, to make demands, to give notices,
to exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including, without limitation, the release or substitution of
Collateral), solely in accordance with the terms of this Agreement and the
Intercreditor Agreement; provided that, anything contained herein to the
contrary notwithstanding, in the event of any conflict between the express terms
and provisions of this Agreement and the express terms and provisions of the
Intercreditor Agreement, such terms and provisions of the Intercreditor
Agreement shall be controlling for all purposes hereof.
(b) Collateral Agent shall at all times be the same Person that is
Collateral Agent under the Intercreditor Agreement. Written notice of
resignation by Collateral Agent pursuant to Section 9(g)(i) of the Intercreditor
Agreement shall also constitute notice of resignation as Collateral Agent under
this Agreement; removal of Collateral Agent pursuant to Section 9(g)(ii) of the
Intercreditor Agreement shall also constitute removal as Collateral Agent under
this Agreement; and appointment of a successor Collateral Agent pursuant to
Section 9(g) of the Intercreditor Agreement shall also constitute appointment of
a successor Collateral Agent under this Agreement. Upon the acceptance of any
appointment as Collateral Agent under Section 9(g) of the Intercreditor
Agreement, the successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Collateral Agent hereunder, and (ii) execute and deliver to such successor
Collateral Agent any amendments to financing statements, and take any other
actions, as may be necessary or appropriate in connection with the assignment to
such successor Collateral Agent of the security interests created hereunder,
whereupon such retiring or removed Collateral Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring or removed
Collateral Agent's resignation or removal hereunder as Collateral Agent, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Collateral Agent
hereunder.
SECTION 21. AMENDMENTS; ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, and no consent to any departure by
Grantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Collateral Agent and, in the case of any such amendment or
modification, by Grantor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 22. NOTICES. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or five Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
SECTION 23. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Collateral Agent in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 24. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 25. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 26. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit
Agreements, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of New York are used herein as therein defined.
SECTION 27. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT
GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY FINAL AND NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Grantor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Grantor at its address provided in Section 22, such
service being hereby acknowledged by Grantor to be sufficient for personal
jurisdiction in any action against Grantor in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Collateral Agent to bring proceedings against Grantor in the courts of
any other jurisdiction.
SECTION 28. WAIVER OF JURY TRIAL. GRANTOR AND COLLATERAL AGENT HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Grantor and Collateral Agent each
acknowledge that this waiver is a material inducement for Grantor and Collateral
Agent to enter into a business relationship, that Grantor and Collateral Agent
have already relied on this waiver in entering into this Agreement and that each
will continue to rely on this waiver in their related future dealings. Grantor
and Collateral Agent further warrant and represent that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 28
AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 29. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
SECTION 30. DESIGNATION OF COLLATERAL AGENT ON FINANCING STATEMENTS.
For purposes of any financing statements filed with respect to any of the
Collateral under the Code, BTCo, in its capacity as Collateral Agent hereunder,
may be referred to as "Bankers Trust Company", "Bankers Trust Company, as
Agent", "Bankers Trust Company, as Administrative Agent", or "Bankers Trust
Company, as Collateral Agent".
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, Grantor and Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[SUBSIDIARY]
By:-----------------------------------
Title:
Notice Address: ---------------------
---------------------
---------------------
BANKERS TRUST COMPANY
By: __________________________
Title:
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Zadroga
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Victoria A. Floyd
<PAGE>
SCHEDULE A
TO
TRADEMARK COLLATERAL
SECURITY AGREEMENT AND
CONDITIONAL ASSIGNMENT
UNITED STATES
REGISTERED TRADEMARK REGISTRATION REGISTRATION
OWNER DESCRIPTION NUMBER DATE
- ---------- ------------- ------------ ------------
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF ____________ )
On this ____ day of _____________, 19___, before me personally came
__________________________________, to me known, who, being by me duly sworn,
did depose and say that he/she resides at ____________________________________;
that he/she is a/the _________________________ of
__________________________________, one of the corporations described in and
which executed the foregoing instrument; and that he/she signed his/her name
thereto by authority of the Board of Directors of said corporation.
---------------------------------
Notary Public
<PAGE>
EXHIBIT XV
[FORM OF SUBSIDIARY PATENT SECURITY AGREEMENT]
AMENDED AND RESTATED SUBSIDIARY PATENT SECURITY AGREEMENT
This AMENDED AND RESTATED SUBSIDIARY PATENT SECURITY AGREEMENT (this
"AGREEMENT") is dated as of November 14, 1997 and entered into by and between
[SUBSIDIARY], a __________________ corporation ("ASSIGNOR"), and BANKERS TRUST
COMPANY ("BTCO"), as collateral agent for and representative of (in such
capacity herein called "COLLATERAL AGENT") the Secured Parties (as hereinafter
defined)[, and amends and restates that certain Patent Security Agreement (the
"EXISTING SUBSIDIARY PATENT SECURITY AGREEMENT") dated as of August 7, 1995
between Assignor and Existing Agent (as hereinafter defined)].
PRELIMINARY STATEMENTS
A. Assignor has and may in the future have rights, title and interests
in and to various Patents and other related Collateral (as such terms are
hereinafter defined).
B. Dictaphone Corporation ("COMPANY"), the financial institutions
party thereto as lenders ("EXISTING LENDERS"), and Bankers Trust Company, as
administrative agent for Existing Lenders (in such capacity, together with its
successors in such capacity, "EXISTING AGENT") are parties to that certain
Credit Agreement dated as of August 7, 1995 (said Credit Agreement, as amended
through and including the date hereof and as it may hereafter be further
amended, amended and restated, supplemented or otherwise modified from time to
time, being the "EXISTING CREDIT AGREEMENT") pursuant to which Existing Lenders
have made certain credit facilities available to Company in the form of loans
and letters of credit.
C. Company, the financial institutions party thereto as lenders ("NEW
LENDERS"; together with Existing Lenders, "CURRENT LENDERS"), and Bankers Trust
Company, as administrative agent for New Lenders (in such capacity, together
with its successors in such capacity, "NEW AGENT"; together with Existing Agent,
"CURRENT AGENTS") have entered into that certain Credit Agreement dated as of
even date herewith (said Credit Agreement, as it may hereafter be amended,
amended and restated, supplemented or otherwise modified from time to time,
being the "NEW CREDIT AGREEMENT"; together with the Existing Credit Agreement,
the "CURRENT CREDIT AGREEMENTS") pursuant to which New Lenders have made certain
credit facilities available to Company in the form of loans the proceeds of
which will be used on the date hereof to prepay a portion of the loans
outstanding under the Existing Credit Agreement.
D. It is contemplated that, from time to time, one or more Current
Lenders and/or one or more other financial institutions (any such Current
Lenders and/or other financial institutions being referred to herein
collectively as "SUCCESSOR LENDERS") may enter into one or more agreements with
Company and/or its Subsidiaries (any such agreements, as they may exist from
time to time, being "SUCCESSOR CREDIT AGREEMENTS") which either refinance,
replace or otherwise restructure all or any portion of the indebtedness under
the Current Credit Agreements and/or any Successor Credit Agreement (the Current
Credit Agreements and any Successor Credit Agreements being referred to herein
collectively as "CREDIT AGREEMENTS"; Current Lenders and any Successor Lenders
being referred to herein collectively as "LENDERS"; and Current Agents and any
administrative agents (collectively, "SUCCESSOR AGENTS") under any Successor
Credit Agreements being referred to herein collectively as "AGENTS").
E. Company has entered into, or may from time to time enter into, one
or more Lender Interest Rate Agreements (as defined in the Intercreditor
Agreement referred to below) with one or more Interest Rate Exchangers (as
defined in the Intercreditor Agreement).
F. Assignor and the other Subsidiaries of Company party thereto
(collectively, "SUBSIDIARY GUARANTORS") have executed and delivered a Guaranty
dated as of August 7, 1995 (the "EXISTING SUBSIDIARY GUARANTY") in favor of
BTCo, in its capacity as Existing Agent, for the benefit of Existing Lenders
[and any Interest Rate Exchangers party to Lender Interest Rate Agreements
entered into prior to the date hereof], pursuant to which Subsidiary Guarantors
have guarantied the prompt payment and performance when due of all Existing
Credit Agreement Obligations (as defined in the Intercreditor Agreement) [and
all Interest Rate Obligations (as defined in the Intercreditor Agreement) in
respect of such Lender Interest Rate Agreements], and all obligations of
Assignor under the Existing Subsidiary Guaranty are currently secured by the
Collateral.
G. Subsidiary Guarantors have amended and restated the Existing
Subsidiary Guaranty pursuant to an Amended and Restated Subsidiary Guaranty
dated as of even date herewith (said Amended and Restated Subsidiary Guaranty,
as it may hereafter be amended, amended and restated, supplemented or otherwise
modified from time to time, being the "NEW SUBSIDIARY GUARANTY") in favor of
BTCo, in its capacity as Collateral Agent, for the benefit of Current Lenders,
Current Agents, any Successor Lender or Successor Agent becoming a party to the
Intercreditor Agreement in the manner provided therein, any Successor Lenders
represented by any such Successor Agent, any Interest Rate Exchanger becoming a
party to the Intercreditor Agreement in the manner provided therein, and
Collateral Agent (all of such Persons being referred to herein collectively as
"SECURED PARTIES"), and the terms of the Current Credit Agreements require, and
the terms of any Successor Credit Agreement or Lender Interest Rate Agreement
may require, that all obligations of Assignor under the New Subsidiary Guaranty
be secured by the Collateral.
H. Current Agents and Collateral Agent have entered into, and all
existing Loan Parties (as defined in the Intercreditor Agreement) have
acknowledged and agreed to the terms of, that certain Intercreditor Agreement
dated as of even date herewith (said Intercreditor Agreement, as it may
hereafter be amended, amended and restated, supplemented or otherwise modified
from time to time, being the "INTERCREDITOR AGREEMENT"; terms defined therein
and not otherwise defined herein being used herein as therein defined) which
provides for, among other things, the appointment of Collateral Agent to
administer and enforce this Agreement in the manner set forth herein and
therein.
I. Pursuant to the authority granted to Collateral Agent by Existing
Agent and the other Parties under the Intercreditor Agreement, Collateral Agent
and Assignor desire to amend and restate the Existing Subsidiary Patent Security
Agreement as hereinafter set forth in order to (i) substitute BTCo, in its
capacity as Collateral Agent, for BTCo, in its capacity as Existing Agent, as
the secured party and assignee hereunder, (ii) confirm the continuation of the
existing grant of security interests and conditional assignments with respect to
the Collateral, as provided for in the Existing Subsidiary Patent Security
Agreement, for the benefit of Existing Agent, Existing Lenders [and any Interest
Rate Exchangers secured under the Existing Subsidiary Patent Security Agreement
on the date hereof], and (iii) provide that such grant of security interests and
conditional assignments with respect to the Collateral shall hereafter be for
the benefit of Current Lenders, Current Agents, any Successor Lender or
Successor Agent becoming a party to the Intercreditor Agreement in the manner
provided therein, any Successor Lenders represented by any such Successor Agent,
any Interest Rate Exchanger becoming a party to the Intercreditor Agreement in
the manner provided therein, and Collateral Agent (all of the Persons described
in this clause (iii) being referred to herein collectively as "SECURED
PARTIES").
NOW, THEREFORE, in consideration of the premises, in order to induce
Lenders to make and/or maintain extensions of credit to Company under the Credit
Agreements and to induce Interest Rate Exchangers to enter into and/or maintain
Lender Interest Rate Agreements, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Existing
Subsidiary Patent Security Agreement is hereby amended and restated in its
entirety as follows:
SECTION 1. GRANT OF SECURITY. Assignor hereby assigns to Collateral
Agent, and hereby grants to Collateral Agent a security interest in, all of
Assignor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Assignor now has or hereafter
acquires an interest and wherever the same may be located (the "COLLATERAL"):
(a) all patents and patent applications and rights and interests in
patents and patent applications under any domestic law that are presently, or in
the future may be, owned by Assignor and all patents and patent applications and
rights and interests in patents and patent applications under any domestic law
that are presently, or in the future may be, held or used by Assignor in whole
or in part (including, without limitation, the patents and patent applications
listed in Schedule A annexed hereto, as the same may be amended pursuant hereto
from time to time), all rights (but not obligations) corresponding thereto
(including without limitation the right (but not the obligation) to sue for
past, present and future infringements in the name of Assignor or in the name of
Collateral Agent or Lenders), and all re-issues, divisions, continuations,
renewals, extensions and continuations-in-part thereof (all of the foregoing
being collectively referred to as the "PATENTS"); it being understood that the
rights and interest assigned hereby shall include, without limitation, all
rights and interests pursuant to licensing or other contracts in favor of
Assignor pertaining to patent applications and patents presently or in the
future owned or used by third parties but, in the case of third parties which
are not Affiliates of Assignor, only to the extent permitted by such licensing
or other contracts and, if not so permitted, only with the consent of such third
parties;
(b) all general intangibles relating to the Patents;
(c) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any time
evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(d) all proceeds, products, rents and profits (including without
limitation license royalties and proceeds of infringement suits) of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Collateral Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.
The foregoing assignment and grant of a security interest (i) confirms
the original assignment and grant of a first priority security interest made in
the Existing Subsidiary Patent Security Agreement in respect of the Collateral
as security for the "Secured Obligations" (as defined in the Existing Subsidiary
Patent Security Agreement) and continues in all respects such original
assignment and grant without in any way causing any interruption in continuity
from such original assignment and grant and (ii) extends such assignment and
grant of a first priority security interest in respect of the Collateral to
secure all other Secured Obligations as defined herein.
SECTION 2. CONDITIONAL ASSIGNMENT. In addition to, and not by way of
limitation of, the granting of a security interest in the Collateral pursuant to
Section 1, Assignor hereby, effective upon the occurrence and during the
continuation of an Event of Default and upon written notice from Collateral
Agent, grants, sells, conveys, transfers, assigns and sets over to Collateral
Agent, for its benefit and the ratable benefit of the other Secured Parties, all
of Assignor's right, title and interest in and to the Collateral, including
without limitation Assignor's right, title and interest in and to the Patents
identified in Schedule A annexed hereto.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and
liabilities of Assignor of every nature whatsoever now or hereafter existing
under or arising in respect of the New Subsidiary Guaranty and all extensions or
renewals thereof, whether for principal, interest (including without limitation
interest that, but for the filing of a petition in bankruptcy with respect to
Company, would accrue on such obligations, whether or not a claim is allowed
against Company for such interest in any such bankruptcy proceedings),
reimbursement of amounts drawn under letters of credit, payments for early
termination of Lender Interest Rate Agreements, fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from any Secured Party as a
preference, fraudulent transfer or otherwise (all such obligations and
liabilities being the "UNDERLYING DEBT"), and all obligations of every nature of
Assignor now or hereafter existing under this Agreement (all such obligations of
Assignor, together with the Underlying Debt, being the "SECURED OBLIGATIONS");
provided that the assignment and grant of a security interest pursuant to
Section 1 hereof, and any other provisions of this Agreement, shall be effective
as to any Successor Credit Agreement Obligations or Interest Rate Obligations
only if the applicable Successor Lenders (or a Successor Agent acting on their
behalf) or Interest Rate Exchanger shall have executed and delivered to
Collateral Agent a counterpart of the Intercreditor Agreement, acknowledged by
Assignor, as provided in the Intercreditor Agreement.
SECTION 4. ASSIGNOR REMAINS LIABLE. Anything contained herein to the
contrary notwithstanding, (a) Assignor shall remain liable under any contracts
and agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Collateral Agent of
any of its rights hereunder shall not release Assignor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) Collateral Agent shall not have any obligation or liability under any
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall Collateral Agent be obligated to perform any of the obligations or
duties of Assignor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Assignor represents and
warrants as follows:
(a) Description of Collateral. A true and complete list of all Patents
owned, held (whether pursuant to a license or otherwise) or used by Assignor, in
whole or in part, as of the date of this Agreement is set forth in Schedule A
annexed hereto.
(b) Validity and Enforceability of Collateral. Each of the Patents is
valid, subsisting and enforceable and Assignor is not aware of any pending or
threatened claim by any third party that any of the Patents is invalid or
unenforceable or that the use of any of the Patents violates the rights of any
third person or of any basis for any such claim.
(c) Ownership of Collateral. Except for the security interest and
conditional assignment created by this Agreement, Assignor owns the Collateral
free and clear of any Lien other than Permitted Encumbrances (such term being
used herein as defined in the Current Credit Agreements as in effect on the date
hereof). Except such as may have been filed in favor of Collateral Agent
relating to this Agreement, (i) no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any filing or recording office and (ii) no effective filing covering all
or any part of the Collateral is on file in the United States Patent and
Trademark Office.
(d) Office Locations; Other Names. The chief place of business, the
chief executive office and the office where Assignor keeps its records regarding
the Collateral is, and has been for the four month period preceding the date
hereof, located at ___________________________________. Assignor has not in the
past done, and does not now do, business under any other name (including any
trade-name or fictitious business name) [except
- ---------------].
(e) Governmental Authorizations. Except as described in clause (f)
below, no authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for either (i)
the grant by Assignor of the security interest and conditional assignment
granted hereby, (ii) the execution, delivery or performance of this Agreement by
Assignor, or (iii) the perfection of or the exercise by Collateral Agent of its
rights and remedies hereunder (except as may have been taken by or at the
direction of Assignor).
(f) Perfection. This Agreement, together with the filing of a
financing statement describing the Collateral with the Secretary of State of the
State of Connecticut and the recording of this Agreement with the United States
Patent and Trademark Office, creates a valid, perfected and first priority
security interest in the Collateral, securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable to perfect
and protect such security interest have been duly made or taken.
(g) Other Information. All information heretofore, herein or hereafter
supplied to Collateral Agent by or on behalf of Assignor with respect to the
Collateral is accurate and complete in all respects.
SECTION 6. FURTHER ASSURANCES; NEW PATENTS AND PATENT APPLICATIONS.
(a) Assignor agrees that from time to time, at the expense of
Assignor, Assignor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Collateral Agent may request, in order to perfect and protect any security
interest or conditional assignment granted or purported to be granted hereby or
to enable Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, Assignor will: (i) at the request of Collateral Agent, mark
conspicuously each of its records pertaining to the Collateral with a legend, in
form and substance satisfactory to Collateral Agent, indicating that such
Collateral is subject to the security interest granted hereby, (ii) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as Collateral
Agent may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby, (iii) use its best efforts to obtain
any necessary consents of third parties to the grant and perfection of a
security interest and assignment to Collateral Agent with respect to any
Collateral, (iv) at any reasonable time, upon request by Collateral Agent,
exhibit the Collateral to and allow inspection of the Collateral by Collateral
Agent, or persons designated by Collateral Agent, and (v) at Collateral Agent's
request, appear in and defend any action or proceeding that may affect
Assignor's title to or Collateral Agent's security interest in all or any part
of the Collateral.
(b) Assignor hereby authorizes Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Assignor. Assignor agrees
that a carbon, photographic or other reproduction of this Agreement or of a
financing statement signed by Assignor shall be sufficient as a financing
statement and may be filed as a financing statement in any and all
jurisdictions.
(c) Assignor hereby authorizes Collateral Agent to modify this
Agreement without obtaining Assignor's approval of or signature to such
modification by amending Schedule A annexed hereto to include reference to any
right, title or interest in any existing Patent or any Patent acquired or
developed by Assignor after the execution hereof or to delete any reference to
any right, title or interest in any Patent in which Assignor no longer has or
claims any right, title or interest.
(d) Assignor will furnish to Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Collateral Agent may
reasonably request, all in reasonable detail.
(e) If Assignor shall hereafter obtain rights to any patentable
inventions, or become entitled to the benefit of any patent application or
patent or any reissue, division, continuation, renewal, extension, or
continuation-in-part of any Patent or any improvement on any Patent, the
provisions of this Agreement shall automatically apply thereto. Assignor shall
promptly notify Collateral Agent in writing of any of the foregoing rights or
benefits acquired by Assignor after the date hereof. Concurrently with the
filing of an application for any Patent, Assignor shall execute, deliver and
record in all places where this Agreement is recorded an appropriate Patent
Collateral Assignment and Security Agreement, substantially in the form hereof,
with appropriate insertions, or an amendment to this Agreement, in form and
substance satisfactory to Collateral Agent, pursuant to which Assignor shall
grant a security interest and conditional assignment to the extent of its
interest in such Patent as provided herein to Collateral Agent unless so doing
would, in the reasonable judgment of Assignor, after due inquiry, result in the
grant of a Patent in the name of Collateral Agent, in which event Assignor shall
give written notice to Collateral Agent as soon as reasonably practicable and
the filing shall instead be undertaken as soon as practicable but in no case
later than immediately following the grant of the Patent.
SECTION 7. CERTAIN COVENANTS OF ASSIGNOR. Assignor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Collateral Agent of any change in Assignor's name, identity
or corporate structure within 15 days of such change;
(c) give Collateral Agent 30 days' prior written notice of any change
in Assignor's chief place of business or chief executive office or the office
where Assignor keeps its records regarding the Collateral;
(d) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except to the
extent the validity thereof is being contested in good faith; provided that
Assignor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment entered or filed against Assignor or any
of the Collateral as a result of the failure to make such payment;
(e) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreements;
(f) except for the security interest and conditional assignment
created by this Agreement, not create or suffer to exist any Lien (other than
Permitted Encumbrances) upon or with respect to any of the Collateral to secure
the indebtedness or other obligations of any Person;
(g) diligently keep reasonable records respecting the Collateral and
at all times keep at least one complete set of its records concerning
substantially all of the Patents at its chief executive office or principal
place of business;
(h) not permit the inclusion in any contract to which it becomes a
party of any provision that could or might in any way impair or prevent the
creation of a security interest in, or the assignment of, Assignor's rights and
interests in any property included within the definition of any Patents acquired
under such contracts;
(i) take all steps necessary to protect the secrecy of all trade
secrets relating to the products and services sold or delivered under or in
connection with the Patents, including without limitation entering into
confidentiality agreements with employees and labeling and restricting access to
secret information and documents;
(j) use proper statutory notice in connection with its use of each of
the Patents;
(k) use consistent standards of high quality (which may be consistent
with Assignor's past practices) in the manufacture, sale and delivery of
products and services sold or delivered under or in connection with the Patents,
including, to the extent applicable, in the operation and maintenance of its
retail stores and other merchandising operations; and
(l) upon any officer of Assignor obtaining knowledge thereof, promptly
notify Collateral Agent in writing of any event that may materially and
adversely affect the value of the Collateral or any portion thereof, the ability
of Assignor or Collateral Agent to dispose of the Collateral or any portion
thereof, or the rights and remedies of Collateral Agent in relation thereto,
including without limitation the levy of any legal process against the
Collateral or any portion thereof.
SECTION 8. CERTAIN INSPECTION RIGHTS. Assignor hereby grants to
Collateral Agent and its employees, representatives and agents the right to
visit Assignor's and any of its Affiliate's or subcontractor's plants,
facilities and other places of business that are utilized in connection with the
manufacture, production, inspection, storage or sale of products and services
sold or delivered under any of the Patents (or which were so utilized during the
prior six month period), and to inspect the quality control and all other
records relating thereto upon reasonable notice to Assignor and as often as may
be reasonably requested.
SECTION 9. AMOUNTS PAYABLE IN RESPECT OF THE COLLATERAL. Except as
otherwise provided in this Section 9, Assignor shall continue to collect, at its
own expense, all amounts due or to become due to Assignor in respect of the
Collateral or any portion thereof. In connection with such collections, Assignor
may take (and, at Collateral Agent's direction, shall take) such action as
Assignor or Collateral Agent may deem necessary or advisable to enforce
collection of such amounts; provided, however, that Collateral Agent shall have
the right at any time, upon the occurrence and during the continuation of an
Event of Default and upon written notice to Assignor of its intention to do so,
to notify the obligors with respect to any such amounts of the existence of the
security interest created, and the conditional assignment effected hereby, and
to direct such obligors to make payment of all such amounts directly to
Collateral Agent, and, upon such notification and at the expense of Assignor, to
enforce collection of any such amounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as Assignor
might have done. After receipt by Assignor of the notice from Collateral Agent
referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including checks and other instruments) received by Assignor in
respect of amounts due to Assignor in respect of the Collateral or any portion
thereof shall be received in trust for the benefit of Collateral Agent
hereunder, shall be segregated from other funds of Assignor and shall be
forthwith paid over or delivered to Collateral Agent in the same form as so
received (with any necessary endorsement) to be held as cash Collateral and
applied as provided by Section 17, and (ii) Assignor shall not adjust, settle or
compromise the amount or payment of any such amount or release wholly or partly
any obligor with respect thereto or allow any credit or discount thereon.
SECTION 10. PATENT APPLICATIONS AND LITIGATION.
(a) Assignor shall have the duty diligently, through counsel
reasonably acceptable to Collateral Agent, to prosecute any patent application
relating to any of the Patents specifically identified in Schedule A annexed
hereto that is pending as of the date of this Agreement, to make application on
any existing or future unpatented but patentable invention, and to do any and
all acts which are necessary or desirable to preserve and maintain all rights in
all Patents. Any expenses incurred in connection therewith shall be borne solely
by Assignor. Assignor shall not abandon any right to file a patent application
or any pending patent application or any Patent without the prior written
consent of Collateral Agent.
(b) Except as provided in Section 10(d) and notwithstanding Section 2,
Assignor shall have the right to commence and prosecute in its own name, as real
party in interest, for its own benefit and at its own expense, such suits,
proceedings or other actions for infringement, unfair competition, or other
damage or reexamination or reissue proceedings as are in its reasonable business
judgment necessary to protect the Collateral. Collateral Agent shall provide, at
Assignor's expense, all reasonable and necessary cooperation in connection with
any such suit, proceeding or action including, without limitation, joining as a
necessary party.
(c) Assignor shall promptly, following its becoming aware thereof,
notify Collateral Agent of the institution of, or of any adverse determination
in, any proceeding (whether in the United States Patent and Trademark Office or
any federal, state, local or foreign court) described in Section 10(a) or 10(b)
or regarding Assignor's interests in any Collateral. Assignor shall provide to
Collateral Agent any information with respect thereto requested by Collateral
Agent.
(d) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, Collateral
Agent shall have the right (but not the obligation) to bring suit, in the name
of Assignor, Collateral Agent or otherwise, to enforce any Patent and any
license thereunder, in which event Assignor shall, at the request of Collateral
Agent, do any and all lawful acts and execute any and all documents required by
Collateral Agent in aid of such enforcement and Assignor shall promptly, upon
demand, reimburse and indemnify Collateral Agent as provided in Section 18 in
connection with the exercise of its rights under this Section 10. To the extent
that Collateral Agent shall elect not to bring suit to enforce any Patent or any
license thereunder as provided in this Section 10(d), Assignor agrees to use all
reasonable measures, whether by action, suit, proceeding or otherwise, to
prevent the infringement of any of the Patents by others and for that purpose
agrees to diligently maintain any action, suit or proceeding against any Person
so infringing necessary to prevent such infringement.
SECTION 11. NON-DISTURBANCE AGREEMENTS, ETC. If and to the extent that
Assignor is permitted to license the Collateral, Collateral Agent shall enter
into a non-disturbance agreement or other similar arrangement, at Assignor's
request and expense, with Assignor and any licensee of any Collateral permitted
hereunder in form and substance satisfactory to Collateral Agent pursuant to
which (a) Collateral Agent shall agree not to disturb or interfere with such
licensee's rights under its license agreement with Assignor so long as such
licensee is not in default thereunder and (b) such licensee shall acknowledge
and agree that the Collateral licensed to it is subject to the security interest
and conditional assignment created in favor of Collateral Agent and the other
terms of this Agreement.
SECTION 12. REASSIGNMENT OF COLLATERAL. If (a) an Event of Default
shall have occurred and, by reason of cure, waiver, modification, amendment or
otherwise, no longer be continuing, (b) no other Event of Default shall have
occurred and be continuing, (c) an assignment to Collateral Agent of any rights,
title and interests in and to the Collateral shall have been previously made and
shall have become absolute and effective pursuant to Section 2, Section 13(f) or
Section 16(b), and (d) the Secured Obligations shall not have become immediately
due and payable, upon the written request of Assignor and the written consent of
Collateral Agent, Collateral Agent shall promptly execute and deliver to
Assignor such assignments as may be necessary to reassign to Assignor any such
rights, title and interests as may have been assigned to Collateral Agent as
aforesaid, subject to any disposition thereof that may have been made by
Collateral Agent pursuant hereto; provided that, after giving effect to such
reassignment, Collateral Agent's security interest and conditional assignment
granted pursuant to Section 1 and Section 2, as well as all other rights and
remedies of Collateral Agent granted hereunder, shall continue to be in full
force and effect; and provided, further that the rights, title and interests so
reassigned shall be free and clear of all Liens other than Liens (if any)
encumbering such rights, title and interest at the time of their assignment to
Collateral Agent and Permitted Encumbrances.
SECTION 13. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Assignor
hereby irrevocably appoints Collateral Agent as Assignor's attorney-in-fact,
with full authority in the place and stead of Assignor and in the name of
Assignor, Collateral Agent or otherwise, from time to time (a) upon the
occurrence and during the continuance of an Event of Default or (b) with respect
to any action or the execution of any instrument that Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, (i) upon
the occurrence and during the continuance of a Potential Event of Default (as
defined in any Credit Agreement) or (ii) after the fifth Business Day after
Collateral Agent makes a written request to Pledgor to take such action or
execute such instrument (provided that Pledgor fails to fully comply with such
request on or prior to such fifth Business Day) in Collateral Agent's discretion
to take any action and to execute any instrument that Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation:
(a) to endorse Assignor's name on all applications, documents, papers
and instruments necessary for Collateral Agent in the use or maintenance of the
Collateral;
(b) to ask for, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) to file any claims or take any action or institute any proceedings
that Collateral Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of Collateral Agent with
respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement and the Credit Agreements) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Collateral Agent in
its sole discretion, any such payments made by Collateral Agent to become
obligations of Assignor to Collateral Agent, due and payable immediately without
demand; and
(f) (i) to execute and deliver any of the assignments or documents
requested by Collateral Agent pursuant to Section 16(b), (ii) to grant or issue
an exclusive or non-exclusive license to the Collateral or any portion thereof
to any Person, and (iii) otherwise generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though Collateral Agent were the absolute owner thereof for
all purposes, and to do, at Collateral Agent's option and Assignor's expense, at
any time or from time to time, all acts and things that Collateral Agent deems
necessary to protect, preserve or realize upon the Collateral and Collateral
Agent's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as Assignor might do.
SECTION 14. COLLATERAL AGENT MAY PERFORM. If Assignor fails to perform
any agreement contained herein, Collateral Agent may itself perform, or cause
performance of, such agreement, and the expenses of Collateral Agent incurred in
connection therewith shall be payable by Assignor under Section 18.
SECTION 15. STANDARD OF CARE. The powers conferred on Collateral Agent
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Collateral Agent shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Collateral Agent shall be deemed to have exercised reasonable care
in the custody and preservation of Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which Collateral
Agent accords its own property.
SECTION 16. REMEDIES. If any Event of Default shall have occurred and
be continuing:
(a) Collateral Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the Uniform Commercial Code as in effect in any relevant jurisdiction (the
"CODE") (whether or not the Code applies to the affected Collateral), and also
may (i) require Assignor to, and Assignor hereby agrees that it will at its
expense and upon request of Collateral Agent forthwith, assemble all or part of
the Collateral as directed by Collateral Agent and make it available to
Collateral Agent at a place to be designated by Collateral Agent that is
reasonably convenient to both parties, (ii) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (iii) prior to the disposition of the Collateral, store the Collateral
or otherwise prepare the Collateral for disposition in any manner to the extent
Collateral Agent deems appropriate, (iv) take possession of Assignor's premises
or place custodians in exclusive control thereof, remain on such premises and
use the same for the purpose of taking any actions described in the preceding
clause (iii) and collecting any Secured Obligation, (v) exercise any and all
rights and remedies of Assignor under or in connection with the contracts
related to the Collateral or otherwise in respect of the Collateral, including
without limitation any and all rights of Assignor to demand or otherwise require
payment of any amount under, or performance of any provision of, such contracts,
and (vi) without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any of
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as Collateral Agent may deem commercially reasonable. Collateral Agent or
any Lender or Interest Rate Exchanger may be the purchaser of any or all of the
Collateral at any such sale and Collateral Agent, as agent for and
representative of Lenders and Interest Rate Exchangers (but not any Lender,
Lenders, Interest Rate Exchanger or Interest Rate Exchangers in its or their
respective individual capacities unless Requisite Obligees otherwise agree),
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any such
public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Collateral payable by Collateral Agent at
such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Assignor, and Assignor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Assignor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Assignor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Collateral Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Collateral Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Assignor hereby waives any
claims against Collateral Agent arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Collateral Agent
accepts the first offer received and does not offer such Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Secured Obligations, Assignor shall be liable
for the deficiency and the fees of any attorneys employed by Collateral Agent to
collect such deficiency.
(b) Upon written demand from Collateral Agent, Assignor shall execute
and deliver to Collateral Agent an assignment or assignments of the Patents and
such other documents as are necessary or appropriate to carry out the intent and
purposes of this Agreement; provided that the failure of Assignor to comply with
such demand will not impair or affect the validity of the conditional assignment
effected by Section 2 or its effectiveness upon notice by Collateral Agent as
specified in Section 2. Assignor agrees that such an assignment (including
without limitation the conditional assignment effected by Section 2) and/or
recording shall be applied to reduce the Secured Obligations outstanding only to
the extent that Collateral Agent (or any Lender) receives cash proceeds in
respect of the sale of, or other realization upon, the Collateral.
SECTION 17. APPLICATION OF PROCEEDS. Except as otherwise expressly
provided elsewhere in this Agreement or the Intercreditor Agreement, all
Proceeds received by Collateral Agent in respect of all or any part of the
Collateral may, in the discretion of Collateral Agent, be held by Collateral
Agent as Collateral for, and/or then, or at any time thereafter, applied in full
or in part by Collateral Agent against, the Secured Obligations in the following
order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including, without limitation, fees and
expenses of counsel, and all other expenses, liabilities and advances made
or incurred by Collateral Agent in connection therewith, and all amounts
for which Collateral Agent is entitled to indemnification hereunder and all
advances made by Collateral Agent hereunder for the account of Assignor,
and to the payment of all costs and expenses paid or incurred by Collateral
Agent in connection with the exercise of any right or remedy hereunder, all
in accordance with Section 18;
SECOND: To the payment of all other Secured Obligations as provided in
Section 4 of the Intercreditor Agreement; and
THIRD: To the payment to or upon the order of Assignor, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
SECTION 18. INDEMNITY AND EXPENSES.
(a) Assignor agrees to indemnify Collateral Agent and each other
Secured Party from and against any and all claims, losses and liabilities in any
way relating to, growing out of or resulting from this Agreement or any related
Financing Agreement and the transactions contemplated hereby and thereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Collateral Agent's
or such other Secured Party's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Assignor shall pay to Collateral Agent upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Collateral Agent hereunder, or (iv) the failure by Assignor
to perform or observe any of the provisions hereof.
SECTION 19. CONTINUING ASSIGNMENT AND SECURITY INTEREST; TRANSFER OF
LOANS. This Agreement shall create a continuing security interest in, and
conditional assignment of, the Collateral and shall (a) remain in full force and
effect until the payment in full of all Secured Obligations, the cancellation or
termination of all Commitments and the cancellation or expiration of all
outstanding letters of credit issued pursuant to any of the Credit Agreements
then secured by the Collateral, (b) be binding upon Assignor, its successors and
assigns, and (c) inure, together with the rights and remedies of Collateral
Agent hereunder, to the benefit of Collateral Agent and its successors and
permitted assigns. Without limiting the generality of the foregoing clause (c),
but subject to the provisions of subsection 10.1 of the Existing Credit
Agreement and subsection 10.1 of the New Credit Agreement and any comparable
provisions of any Successor Credit Agreement secured by the Collateral, any
Lender may assign any loans held by it under the applicable Credit Agreement to
any other Person, and such other Person shall thereupon become vested with all
the benefits in respect thereof granted to Lenders herein or otherwise. Upon the
payment in full of all Secured Obligations, the cancellation or termination of
the Commitments and the cancellation or expiration of all outstanding letters of
credit referred to above, the security interest and conditional assignment
granted hereby shall terminate and all rights to the Collateral shall revert to
Assignor. Upon any such termination Collateral Agent will, at Assignor's
expense, execute and deliver to Assignor such documents as Assignor shall
reasonably request to evidence such termination.
SECTION 20. COLLATERAL AGENT AS AGENT.
(a) Collateral Agent has been appointed to act as Collateral Agent
hereunder by the Parties under the Intercreditor Agreement, which appointment
and the terms thereof have been acknowledged and agreed to by Assignor, and
Collateral Agent shall be entitled to the benefits of the Intercreditor
Agreement in acting as Collateral Agent hereunder. Collateral Agent shall be
obligated, and shall have the right hereunder, to make demands, to give notices,
to exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including, without limitation, the release or substitution of
Collateral), solely in accordance with the terms of this Agreement and the
Intercreditor Agreement; provided that, anything contained herein to the
contrary notwithstanding, in the event of any conflict between the express terms
and provisions of this Agreement and the express terms and provisions of the
Intercreditor Agreement, such terms and provisions of the Intercreditor
Agreement shall be controlling for all purposes hereof.
(b) Collateral Agent shall at all times be the same Person that is
Collateral Agent under the Intercreditor Agreement. Written notice of
resignation by Collateral Agent pursuant to Section 9(g)(i) of the Intercreditor
Agreement shall also constitute notice of resignation as Collateral Agent under
this Agreement; removal of Collateral Agent pursuant to Section 9(g)(ii) of the
Intercreditor Agreement shall also constitute removal as Collateral Agent under
this Agreement; and appointment of a successor Collateral Agent pursuant to
Section 9(g) of the Intercreditor Agreement shall also constitute appointment of
a successor Collateral Agent under this Agreement. Upon the acceptance of any
appointment as Collateral Agent under Section 9(g) of the Intercreditor
Agreement, the successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Collateral Agent hereunder, and (ii) execute and deliver to such successor
Collateral Agent any amendments to financing statements, and take any other
actions, as may be necessary or appropriate in connection with the assignment to
such successor Collateral Agent of the security interests created hereunder,
whereupon such retiring or removed Collateral Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring or removed
Collateral Agent's resignation or removal hereunder as Collateral Agent, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Collateral Agent
hereunder.
SECTION 21. AMENDMENTS; ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, and no consent to any departure by
Assignor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Collateral Agent and, in the case of any such amendment or
modification, by Assignor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 22. NOTICES. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or five Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
SECTION 23. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Collateral Agent in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 24. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 25. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 26. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit
Agreements, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of New York are used herein as therein defined.
SECTION 27. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ASSIGNOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT
ASSIGNOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY FINAL AND NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Assignor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Assignor at its address provided in Section 22, such
service being hereby acknowledged by Assignor to be sufficient for personal
jurisdiction in any action against Assignor in any such court and to be
otherwise effective and binding service in every respect. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of Collateral Agent to bring proceedings against Assignor in the
courts of any other jurisdiction.
SECTION 28. WAIVER OF JURY TRIAL. ASSIGNOR AND COLLATERAL AGENT HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Assignor and Collateral Agent each
acknowledge that this waiver is a material inducement for Assignor and
Collateral Agent to enter into a business relationship, that Assignor and
Collateral Agent have already relied on this waiver in entering into this
Agreement and that each will continue to rely on this waiver in their related
future dealings. Assignor and Collateral Agent further warrant and represent
that each has reviewed this waiver with its legal counsel, and that each
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SECTION 28 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
SECTION 29. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
SECTION 30. DESIGNATION OF COLLATERAL AGENT ON FINANCING STATEMENTS.
For purposes of any financing statements filed with respect to any of the
Collateral under the Code, BTCo, in its capacity as Collateral Agent hereunder,
may be referred to as "Bankers Trust Company", "Bankers Trust Company, as
Agent", "Bankers Trust Company, as Administrative Agent", or "Bankers Trust
Company, as Collateral Agent".
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, Assignor and Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[SUBSIDIARY]
By:-----------------------------------
Title:
Notice Address: ----------------------
----------------------
----------------------
BANKERS TRUST COMPANY
By: __________________________
Title:
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Zadroga
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Victoria A. Floyd
<PAGE>
SCHEDULE A
TO PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
PATENTS ISSUED
Patent No. Issue Date Invention Inventor
- ---------- ---------- --------- --------
PATENTS PENDING
Applicant's Date Application
Name Filed No. Invention Inventor
- ----------- ----- ----------- --------- --------
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF ____________ )
On this ____ day of _____________, 19___, before me personally came
________________________________, to me known, who, being by me duly sworn, did
depose and say that he/she resides at ____________________________________; that
he/she is a/the _________________________ of __________________________________,
one of the corporations described in and which executed the foregoing
instrument; and that he/she signed his/her name thereto by authority of the
Board of Directors of said corporation.
---------------------------------
Notary Public
<PAGE>
SCHEDULE 5.1
SUBSIDIARIES OF COMPANY
Ownership
Jurisdiction of Direct by (Each)
Entity Incorporation Parent(s) Direct Parent
-------- --------------- --------- -------------
%
<PAGE>
EXHIBIT XVI
FORM OF MORTGAGE
THIS INSTRUMENT PREPARED BY,
RECORDING REQUESTED BY,
AND WHEN RECORDED MAIL TO:
O'MELVENY & MYERS
400 South Hope Street
Los Angeles, California 90071
Attn: Robin Gohlke, Esq.
(045,710-595)
- --------------------------------------------------------------------------------
MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING
THIS MORTGAGE, ASSIGNMENT, SECURITY AGREEMENT
AND FIXTURE FILING (this "MORTGAGE"), dated as of ________, is made by
DICTAPHONE CORPORATION (U.S.), a Delaware corporation formerly known as
Dictaphone Corporation, having an office at 3191 Broadbridge Avenue, Stratford,
Connecticut 06497 (Attention: Joseph D. Skrzypczak) ("MORTGAGOR"), to BANKERS
TRUST COMPANY, a New York banking corporation having an address at One Bankers
Trust Plaza, 130 Liberty Street, 14th Floor, New York, New York 10006
(Attention: Robert T. Wagner), as collateral agent for and representative of the
Secured Parties (as hereinafter defined) and their successors and permitted
assigns (in such capacity, "MORTGAGEE"). Terms defined in the Intercreditor
Agreement (as hereinafter defined) and not otherwise defined in this Mortgage
have the meaning given to such terms in the Intercreditor Agreement.
PRELIMINARY STATEMENTS
A. Dictaphone Corporation ("COMPANY"), the financial institutions
party thereto as lenders ("EXISTING LENDERS"), and Bankers Trust Company, as
administrative agent for Existing Lenders (in such capacity, together with its
successors in such capacity, "EXISTING AGENT") are parties to that certain
Credit Agreement dated as of August 7, 1995 (said Credit Agreement, as amended
through and including the date hereof and as it may hereafter be further
amended, amended and restated, supplemented or otherwise modified from time to
time, being the "EXISTING CREDIT AGREEMENT") pursuant to which Existing Lenders
have made certain credit facilities available to Company in the form of loans
and letters of credit.
B. Company, the financial institutions party thereto as lenders ("NEW
LENDERS"; together with Existing Lenders, "CURRENT LENDERS"), and Bankers Trust
Company, as administrative agent for New Lenders (in such capacity, together
with its successors in such capacity, "NEW AGENT"; together with Existing Agent,
"CURRENT AGENTS") have entered into that certain Credit Agreement dated as of
November 14, 1997 (said Credit Agreement, as amended through and including the
date hereof and as it may hereafter be further amended, amended and restated,
supplemented or otherwise modified from time to time, being the "NEW CREDIT
AGREEMENT"; together with the Existing Credit Agreement, the "CURRENT CREDIT
AGREEMENTS") pursuant to which New Lenders have made certain credit facilities
available to Company in the form of loans the proceeds of which were used to
prepay a portion of the loans outstanding under the Existing Credit Agreement.
C. It is contemplated that, from time to time, one or more Current
Lenders and/or one or more other financial institutions (any such Current
Lenders and/or other financial institutions being referred to herein
collectively as "SUCCESSOR LENDERS") may enter into one or more agreements with
Company and/or its Subsidiaries (any such agreements, as they may exist from
time to time, being "SUCCESSOR CREDIT AGREEMENTS") which either refinance,
replace or otherwise restructure all or any portion of the indebtedness under
the Current Credit Agreements and/or any Successor Credit Agreement (the Current
Credit Agreements and any Successor Credit Agreements being referred to herein
collectively as "CREDIT AGREEMENTS"; Current Lenders and any Successor Lenders
being referred to herein collectively as "LENDERS"; and Current Agents and any
administrative agents (collectively, "SUCCESSOR AGENTS") under any Successor
Credit Agreements being referred to herein collectively as "AGENTS").
D. Company has entered into, or may from time to time enter into, one
or more Lender Interest Rate Agreements (as defined in the Intercreditor
Agreement) with one or more Interest Rate Exchangers (as defined in the
Intercreditor Agreement).
E. Mortgagor and the other Subsidiaries of Company party thereto
(collectively, "SUBSIDIARY GUARANTORS") have executed and delivered an Amended
and Restated Subsidiary Guaranty dated as of November 14, 1997 (said Amended and
Restated Subsidiary Guaranty, as amended through and including the date hereof
and as it may hereafter be further amended, amended and restated, supplemented
or otherwise modified from time to time, being the "SUBSIDIARY GUARANTY") in
favor of BTCo, in its capacity as Collateral Agent, for the benefit of Current
Lenders, Current Agents, any Successor Lender or Successor Agent becoming a
party to the Intercreditor Agreement in the manner provided therein, any
Successor Lenders represented by any such Successor Agent, any Interest Rate
Exchanger becoming a party to the Intercreditor Agreement in the manner provided
therein, and Collateral Agent (all of such Persons being referred to herein
collectively as "SECURED PARTIES"), and the terms of the Current Credit
Agreements require, and the terms of any Successor Credit Agreement or Lender
Interest Rate Agreement may require, that all obligations of Mortgagor under the
Subsidiary Guaranty be secured by the Mortgage Estate (as hereafter defined).
F. Current Agents and Collateral Agent have entered into, and all
existing Loan Parties (as defined in the Intercreditor Agreement) have
acknowledged and agreed to the terms of, that certain Intercreditor Agreement
dated as of even date herewith (said Intercreditor Agreement, as amended through
and including the date hereof and as it may hereafter be amended, amended and
restated, supplemented or otherwise modified from time to time, being the
"INTERCREDITOR AGREEMENT") which provides for, among other things, the
appointment of Collateral Agent to administer and enforce this Agreement in the
manner set forth herein and therein.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, including the
indebtedness herein recited and the trust herein created, the receipt and
sufficiency of which are hereby acknowledged, Mortgagor hereby irrevocably
mortgages, grants, transfers, conveys and assigns to Mortgagee, for the benefit
and security of Mortgagee, under and subject to the terms and conditions
hereinafter set forth, all right, title and interest now owned or hereafter
acquired by Mortgagor in and to the following property (all of the following
property being collectively referred to herein as the "MORTGAGE ESTATE," and
those portions of the Mortgage Estate located on or directly relating to the
Land designated by a particular address in the exhibits attached hereto being
collectively referred to herein as a "MORTGAGED PROPERTY"):
(1) The real property described in EXHIBIT A attached hereto (the "[IF
A LEASEHOLD MORTGAGE: FEE] LAND").
[IF A LEASEHOLD MORTGAGE, ADD: (2) All leasehold estate, right, title
and interest in, to and under any and all leases described or referred to
in EXHIBIT B attached hereto, and any amendments, modifications,
extensions, renewals or substitutions for any of such leases (each such
lease, together with any amendments, modifications, extensions, renewals or
substitutions therefor being referred to herein as a "LEASE"), affecting
all or portions of the real property described in said EXHIBIT B or
described in the recorded documents referred to in said EXHIBIT B (which
property descriptions are incorporated herein by this reference)
(collectively, the "LEASED LAND"; the Fee Land and the Leased Land being
sometimes collectively referred to as the "LAND") or affecting any of the
Improvements (as hereinafter defined), including any and all rights to
security deposits, advance rentals, and other deposits under any Lease
(collectively, "DEPOSITS"); together with any greater estate in the Leased
Land or the Improvements now owned or hereafter acquired by Mortgagor,
whether pursuant to the terms of any Lease or otherwise.]
(2) Any and all buildings and improvements now or hereafter erected in
or on the Land, including all fixtures, attachments, appliances, equipment,
machinery and other articles attached to the Land or to such buildings and
improvements (collectively, the "IMPROVEMENTS"), all of which shall be
deemed and construed to be a part of the realty (the Land and the
Improvements being sometimes collectively referred to as the "PROPERTY");
(3) All rents, issues, profits, royalties, income and other benefits
(collectively, the "RENTS") derived from the Property or the ownership,
use, management, operation, leasing or occupancy of the Property, subject
to the terms of ARTICLE III below;
(4) All tenements, hereditaments, appurtenances, privileges and other
rights and interests now or in the future arising in respect of, benefiting
or otherwise relating to the Property, including easements, rights-of-way,
development rights, mineral rights, water rights and water stock, including
all right, title and interest now owned or hereafter acquired by Mortgagor
in and to any land lying within the right of way of any street, open or
proposed, adjoining the Property, and any and all sidewalks, alleys,
driveways, and strips and gores of land adjacent to or used in connection
with the Property;
(5) All the estate, interest, right, title, or other claim or demand,
both in law and in equity, with respect to, or relating to the ownership,
use, management, operation, leasing, or occupancy of the Property,
including claims for damages with respect thereto, claims or demands with
respect to insurance proceeds, and any and all awards made for the taking
of all or any part of the Property by eminent domain, or by any proceeding
or purchase in lieu thereof, including without limitation any awards
resulting from a change of grade of streets and awards for severance
damages (collectively, "PROCEEDS");
(6) All governmental approvals, authorizations, permits, rights, and
entitlements now or hereafter owned by Mortgagor which have been or will be
issued with respect to the Property, which are necessary or useful in
connection with the development, construction or operation of the Property
or any portion thereof;
FOR THE PURPOSE OF SECURING the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and
liabilities of every nature of Mortgagor now or hereafter existing under or
arising out of or in connection with the Subsidiary Guaranty, the Loan
Documents, or any of them, and all extensions and renewals thereof, whether for
principal, interest (including interest that, but for the filing of a petition
in bankruptcy with respect to Company, Mortgagor, or both of them, would accrue
on such obligations), reimbursement of amounts drawn under Letters of Credit,
fees, expenses, indemnities or otherwise, whether voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any part
of such payment is avoided or recovered directly or indirectly from any Secured
Party as a preference, fraudulent transfer or otherwise (all such obligations
and liabilities of Mortgagor under, arising out of or in connection with the
Subsidiary Guaranty, the Loan Documents, or any of them, being referred to
herein as the "SECURED OBLIGATIONS").
TO PROTECT THE SECURITY OF THIS MORTGAGE, MORTGAGOR HEREBY COVENANTS
AND AGREES AS FOLLOWS:
ARTICLE I.
CERTAIN OBLIGATIONS OF MORTGAGOR
1.01. PAYMENT OF SECURED OBLIGATIONS. Mortgagor shall duly and
punctually pay and perform its obligations under the Subsidiary Guaranty and pay
and perform all Secured Obligations in accordance with their terms.
1.02. MAINTENANCE, REPAIRS, ALTERATIONS, USE. Mortgagor shall: (A)
keep the Mortgage Estate in good condition and repair; (B) complete or cause to
be completed promptly and in a good and workmanlike manner any Improvements
which may be now or hereafter constructed on the Property, and pay when due
(subject to Mortgagor's right to contest claims in accordance with SECTION 1.08
hereof) all claims for labor performed and materials furnished therefor, other
than, so long as no Event of Default exists, any such claims the nonpayment of
which would not have a material adverse effect on the value, operation or
ownership of any Mortgaged Property, or on Mortgagee's lien thereon or security
therein; (C) not commit or permit any waste of the Mortgage Estate; (D) secure
and maintain in full force and effect all permits necessary for the use,
occupancy and operation of the Mortgage Estate; and (E) except as otherwise
prohibited or restricted by this Mortgage, do any and all other acts which may
be reasonably necessary to protect or preserve the Mortgage Estate and the
rights of Mortgagee with respect thereto.
1.03. INSURANCE.
(A) TYPES AND AMOUNTS REQUIRED. Mortgagor shall at all times provide,
maintain and keep in force, at no expense to Mortgagee, fire and other insurance
with respect to the Property as required by the Credit Agreements.
(B) POLICY REQUIREMENTS. All policies of insurance maintained with
respect to the Property (I) shall name Mortgagee as an additional insured as its
interests may appear; (II) shall contain a standard Lender's Loss Payable
endorsement and other non-contributory standard mortgagee protection clauses;
and (III) shall contain an agreement by the insurer that such policy shall not
be amended or canceled without at least thirty (30) days' prior written notice
to Mortgagee. Any policies containing a coinsurance clause shall include a
replacement cost endorsement adequate to ensure that the coinsurance clause is
rendered inoperative. Mortgagor may provide any of the required insurance
through blanket policies carried by Mortgagor and covering more than one
location, or by policies procured by a tenant or other party holding under
Mortgagor.
(C) EVIDENCE OF INSURANCE. Mortgagor shall furnish Mortgagee with an
original of all policies of insurance required under this Section or a
certificate of insurance for each required policy setting forth the coverage,
the limits of liability, the deductibles, if any, the name of the carrier, the
policy number, and the period of coverage, which certificates shall be executed
by authorized officials of the companies issuing such insurance, or by agents or
attorneys-in-fact authorized to issue said certificates. Mortgagor shall furnish
to Mortgagee from time to time, within ten (10) days after each request therefor
by Mortgagee, a certificate of Mortgagor specifying all insurance policies with
respect to the Mortgage Estate required hereby then outstanding and in force,
and stating whether or not such insurance complies with the requirements of this
Section and, if it does not, the manner in which it does not comply.
(D) PROCUREMENT BY MORTGAGEE. If Mortgagor fails to provide, maintain,
keep in force or deliver to Mortgagee the policies of insurance required by this
Mortgage (or certificates evidencing same), Mortgagee may (but shall have no
obligation to) procure such insurance, or single interest insurance for such
risks covering Mortgagee's interests, and Mortgagor shall pay all premiums
therefor promptly upon demand by Mortgagee; and until such payment is made by
Mortgagor, the amount of all such premiums, together with interest thereon at
the Agreed Rate (defined in SECTION 2.01 hereof), shall be secured by this
Mortgage.
(E) ASSIGNMENT OF POLICIES UPON FORECLOSURE. In the event of
foreclosure of this Mortgage or other transfer of title or assignment of the
Mortgage Estate in extinguishment, in whole or in part, of the debt secured
hereby, all right, title and interest of Mortgagor in and to all policies of
insurance required by this Section and any unearned premiums paid thereon shall,
to the extent assignable and without further act, be assigned to and shall inure
to the benefit of and pass to the successor in interest to Mortgagor or the
purchaser or grantee of the Mortgage Estate, and Mortgagor hereby appoints
Mortgagee its lawful attorney-in-fact to execute an assignment thereof and any
other document necessary to effect such transfer.
1.04. CASUALTIES; INSURANCE PROCEEDS.
(A) NOTICE OF CASUALTIES. Mortgagor shall give prompt written notice
thereof to Mortgagee after the happening of any casualty to the Mortgage Estate
resulting or reasonably expected to result in aggregate losses to the Mortgage
Estate in excess of $500,000, whether or not such casualty is covered by
insurance.
(B) PROCEEDS TO MORTGAGEE. All proceeds of insurance that are (I)
payable during the existence of an Event of Default in connection with any
casualty affecting the Mortgage Estate, or (II) payable at any time in
connection with any casualty affecting the Mortgage Estate resulting in
aggregate insurance proceeds in excess of $1,000,000 (a "MAJOR CASUALTY"), shall
be payable to Mortgagee. Mortgagor hereby authorizes and directs any affected
insurance company to make payment of such proceeds directly to Mortgagee. If
Mortgagor receives or shall be holding any proceeds of insurance during the
existence of an Event of Default or at any time resulting from a Major Casualty,
Mortgagor shall promptly pay over such proceeds to Mortgagee. Mortgagor shall
not settle, adjust or compromise any claims for loss, damage or destruction of
the Mortgage Estate or any part thereof under any policy or policies of
insurance as a result of a Major Casualty without the prior written consent of
Mortgagee to such settlement, adjustment or compromise; and during the existence
of an Event of Default hereunder Mortgagee shall have the sole and exclusive
right, and Mortgagor hereby authorizes and empowers Mortgagee, to settle, adjust
or compromise any insurance claims, and any such action taken by Mortgagor
without Mortgagee's written consent shall be null and void.
(C) USE IN RESTORATION. After deducting therefrom all costs and
expenses (regardless of the particular nature thereof and whether incurred with
or without suit), including reasonable attorneys' fees, incurred by Mortgagee in
connection with such Major Casualty or the collection of Proceeds, Mortgagee
shall disburse the insurance proceeds held by it to Mortgagor, in accordance
with and subject to such customary terms, conditions, and procedures as
Mortgagee may require, for the sole purpose of paying the cost of restoration of
the Mortgage Estate, so long as no Event of Default then exists.
(D) APPLICATION BY MORTGAGEE. If at any time an Event of Default has
occurred and is continuing, Mortgagee has the option, in its sole and absolute
discretion, (I) to apply all or any portion of such proceeds to the Secured
Obligations secured hereby pursuant to the Intercreditor Agreement, or (II) to
apply all or any portion of such proceeds to the restoration of the Mortgage
Estate, subject to conditions determined by Mortgagee, or (III) to deliver all
or any portion of such proceeds to Mortgagor, subject to conditions determined
by Mortgagee.
(E) DUTY TO RESTORE. Mortgagor shall promptly restore in a good and
workmanlike manner any Improvements which may be damaged or destroyed from any
cause whatsoever, regardless of whether or not insurance proceeds are available
for restoration (unless the unavailability of insurance proceeds results solely
from Mortgagee's wrongful withholding thereof from Mortgagor), whether or not
any such proceeds are sufficient in amount, or whether or not the Mortgage
Estate can be restored to the same condition and character as existed prior to
such damage or destruction.
1.05. WAIVER OF SUBROGATION. Mortgagor waives any and all right to
claim or recover against Mortgagee, its officers, employees, agents and
representatives, for loss of or damage to Mortgagor, the Mortgage Estate,
Mortgagor's property or the property of others under Mortgagor's control from
any cause insured against or required to be insured against hereunder or under
the Credit Agreements; provided, however, that this waiver of subrogation shall
not be effective with respect to any policy of insurance permitted or required
by this Mortgage if such policy prohibits, or if coverage thereunder would be
reduced as a result of, such waiver of subrogation, and Mortgagor is unable to
obtain from a carrier issuing such insurance a policy that, by special
endorsement or otherwise, permits such a waiver of subrogation.
1.06. TAXES AND IMPOSITIONS.
(A) PAYMENT BY MORTGAGOR. Notwithstanding SECTION 1.08 hereof or any
provision of the Subsidiary Guaranty or the Credit Agreements to the contrary,
but subject to Mortgagor's contest rights under SECTION 1.06(B) hereof,
Mortgagor shall pay, or cause to be paid, prior to delinquency, all real
property taxes and assessments, general and special, and all other taxes and
assessments of any kind or nature whatsoever, including, without limitation,
non-governmental levies or charges resulting from covenants, conditions or
restrictions affecting the Mortgage Estate, which are assessed or imposed upon
the Mortgage Estate, or become due and payable, and which create, may create or
appear to create a lien upon the Mortgage Estate, or any part thereof, other
than, so long as no Event of Default exists, any such taxes, assessments or
charges the nonpayment of which would not have a material adverse effect on the
value, operation, or ownership of any Mortgaged Property, or on Mortgagee's lien
thereon or security therein (all of which taxes, assessments and charges,
together with any and all other taxes, assessments and charges of a similar kind
or nature are collectively referred to as "IMPOSITIONS"); provided, however,
that if, by law, any such Imposition is payable, or may at the option of the
taxpayer be paid, in installments, Mortgagor may pay the same or cause it to be
paid, together with any accrued interest on the unpaid balance of such
Imposition, in installments as the same become due and before any fine, penalty,
interest or cost may be added thereto for the nonpayment of any such installment
and interest.
(B) CONTEST OF ASSESSMENTS. Mortgagor shall have the right to contest
or object in good faith to the amount or validity of any such Imposition by
appropriate proceedings, but this shall not be deemed or construed in any way as
relieving, modifying or extending Mortgagor's covenant to pay any such
Imposition at the time and in the manner provided in this SECTION 1.06 unless
(I) with respect to any Imposition in excess of $100,000, Mortgagor has given
prior written notice to Mortgagee, and (II) with respect to any Imposition (A)
the proceedings operate to prevent the sale of the Mortgage Estate, or any part
thereof, to satisfy such Imposition prior to final determination of such
proceedings; or (B) Mortgagor furnishes a good and sufficient bond or surety
satisfactory to Mortgagee; or (C) Mortgagor provides a good and sufficient
undertaking as required or permitted by law to accomplish a stay of any such
sale.
(C) JOINT ASSESSMENT. Mortgagor shall not initiate, and, to the
maximum extent permitted by law (and provided that Mortgagor is not required to
make any material expenditure or undertake any material obligation), shall not
suffer or permit the joint assessment of any real and personal property any part
of which constitutes all or a portion of the Mortgage Estate, or any other
procedure whereby the lien of real property taxes and the lien of personal
property taxes shall be assessed, levied or charged to the Mortgage Estate as a
single lien.
1.07. UTILITIES. Mortgagor shall pay or shall cause to be paid when
due all utility charges which are or may become a charge or lien against the
Mortgage Estate, for gas, electricity, water or sewer services furnished to the
Mortgage Estate, and all other assessments or charges of a similar nature,
whether public or private, affecting or related to the Mortgage Estate or any
portion thereof, whether or not such assessments or charges are or may become
liens thereon, other than, so long as no Event of Default exists, any such
utility charges or other assessments or charges the nonpayment of which would
not have a material adverse effect on the value, operation, or ownership of any
Mortgaged Property, or on Mortgagee's lien thereon or security therein.
1.08. LIENS. Mortgagor shall pay and promptly discharge, at
Mortgagor's cost and expense, all liens, encumbrances and charges upon the
Mortgage Estate, or any part thereof or interest therein which are, appear or
are alleged to be prior to the lien of this Mortgage, other than (A) any such
matters constituting Permitted Encumbrances or otherwise approved by Mortgagee
in writing, and (B) any such matters to which this Mortgage is hereafter
subordinated; provided, however, that Mortgagor may contest or object in good
faith to the amount or validity of any such charges by appropriate proceedings,
subject to any applicable provisions of this SECTION 1.08 and of SECTION 1.09
below. Mortgagor shall have the right to contest in good faith by appropriate
proceedings the validity of any such lien, encumbrance or charge, provided that
Mortgagor shall promptly notify Mortgagee of any such contest, and shall
diligently proceed to cause such lien, encumbrance or charge to be removed and
discharged but this shall not be deemed or construed in any way as relieving,
modifying or extending Mortgagor's covenant to pay and promptly discharge any
such lien, encumbrance or charge unless (I) the proceedings operate to prevent
the sale of the Mortgage Estate, or any part thereof, to satisfy such lien,
encumbrance or charge prior to final determination of such proceedings, or (II)
Mortgagor furnishes a good and sufficient bond or surety satisfactory to
Mortgagee, or (III) Mortgagor provides a good and sufficient undertaking as
required or permitted by law to accomplish a stay of any such sale. If Mortgagor
fails to discharge any such lien, encumbrance or charge, then, in addition to
any other right or remedy of Mortgagee, Mortgagee may, but shall not be
obligated to, discharge the same, without inquiring into the validity of such
lien, encumbrance or charge nor into the existence of any defense or offset
thereto, by paying the amount claimed to be due, or by procuring the discharge
thereof by depositing in a court a bond or the amount claimed or otherwise
giving security for such claim, or by procuring such discharge in such other
manner as is or may be prescribed by law. Immediately upon demand therefor by
Mortgagee, Mortgagor shall pay to Mortgagee an amount equal to all costs and
expenses incurred by Mortgagee in connection with the exercise by Mortgagee of
the foregoing right to discharge any such lien, encumbrance or charge, together
with interest thereon from date of expenditure at the Agreed Rate; and, until
paid, such sums shall be secured hereby.
1.09. ACTIONS AFFECTING MORTGAGE ESTATE OR PARTIES. Mortgagor, at no
cost or expense to Mortgagee, shall appear in and contest any action or
proceeding purporting to affect the security hereof or the rights or powers of
Mortgagee hereunder. Mortgagor shall indemnify, defend and hold Mortgagee
harmless from all liability, damage, cost and expense incurred by Mortgagee by
reason of any action or proceeding, of whatever kind or nature, concerning the
Mortgage Estate or any part thereof or interest therein, or the occupancy
thereof, (including, without limitation, the reasonable fees of attorneys for
Mortgagee, and other expenses, of whatever kind or nature, incurred by Mortgagee
as a result of such action or proceeding), whether or not such action or
proceeding is prosecuted to judgment or decision, except those arising solely
from the gross negligence or wilful misconduct of Mortgagee as determined by a
final judgment of a court of competent jurisdiction. Immediately upon demand
therefor by Mortgagee, Mortgagor shall pay thereto an amount equal to
Mortgagor's liability to Mortgagee under this Section, together with interest
thereon from date of expenditure at the Agreed Rate; and, until paid, such sums
shall be secured hereby.
1.10. EMINENT DOMAIN.
(A) NOTICE TO MORTGAGEE. If any proceeding or action is commenced for
the taking of the Mortgage Estate, or any part thereof or interest therein, for
public or quasi-public use under the power of eminent domain, condemnation or
otherwise, or if the same is taken or damaged by reason of any public
improvement or condemnation proceeding, or in any other manner, or if Mortgagor
receives any notice or other information regarding such a proceeding, action,
taking or damage (including any proposal to purchase any portion of the Mortgage
Estate in lieu of condemnation), (limited to information received in writing,
except in the case of a pending action or proceeding) Mortgagor shall give
prompt written notice thereof to Mortgagee.
(B) AWARD TO MORTGAGEE. Mortgagee shall be entitled, at its option,
without regard to the adequacy of its security, to investigate and negotiate
with the condemnor concerning the proposed taking, to commence, appear in and
prosecute in its own name any such action or proceeding (but will not exercise
such option unless an Event of Default exists or unless Mortgagee shall have
determined, in its reasonable judgment, that Mortgagor was not diligently
proceeding to protect Mortgagee's interests), and, if an Event of Default exists
hereunder, to make any compromise or settlement in connection with such taking
or damage. Mortgagor shall not compromise or settle any such action or
proceeding or agree to any sale in lieu of condemnation during the existence of
an Event of Default without the prior written consent of Mortgagee, and any such
action by Mortgagor taken without Mortgagee's written consent shall, at the
option of Mortgagee, be null and void. All compensation, awards, damages, rights
of action and proceeds (the "AWARD") awarded to Mortgagor by reason of any such
taking, transfer or damage (a "TAKING") are hereby assigned to Mortgagee and
Mortgagor agrees to execute such further assignments of the Award as Mortgagee
may require.
(C) USE IN RESTORATION. So long as no Event of Default exists and so
long as Mortgagor shall not have determined, in accordance with SECTION 1.10(E)
below, not to use the Award for restoration of the affected Mortgaged Property,
Mortgagee shall disburse the Award to Mortgagor, in accordance with and subject
to such customary terms, conditions, and procedures as Mortgagee may reasonably
require, for the sole purpose of paying the cost of restoration of the Mortgage
Estate, after deducting therefrom all costs and expenses (regardless of the
particular nature thereof and whether incurred with or without suit), including
reasonable attorneys' fees, incurred by Mortgagee in connection with any such
negotiations, action or proceeding (whether or not prosecuted to judgment).
(D) APPLICATION BY MORTGAGEE. If, at any time, an Event of Default has
occurred and is continuing, Mortgagee shall have the option, in its sole and
absolute discretion, (1) to apply all or any portion of the Award to the Secured
Obligations in such order as Mortgagee may determine, whether or not then due
and payable, or (2) to apply all or any portion of the Award to the restoration
of the Mortgage Estate, subject to such conditions as Mortgagee may determine in
its sole discretion, or (3) to deliver all or any portion of the Award, after
such deductions, to Mortgagor, subject to such conditions as Mortgagee may
determine in its sole discretion. If no Event of Default has occurred and is
continuing, and (II) Mortgagor determines, in accordance with SECTION 1.10(E)
below, not to use the Award for restoration of the affected Mortgaged Property,
Mortgagee shall have the option, in its sole and absolute discretion, (A) to
apply all or any portion of the Award to the Secured Obligations in such order
as Mortgagee may determine, whether or not then due and payable, or (B) to
deliver all or any portion of the Award, after such deductions, to Mortgagor,
subject to such conditions as Mortgagee may determine in its sole discretion.
(E) DUTY TO RESTORE. Mortgagor shall promptly repair, to the maximum
extent practicable, any damage to the Mortgaged Property in question caused by
any taking, regardless of whether or not the Award is available for restoration
(unless the unavailability of the Award results solely from Mortgagee's wrongful
withholding thereof from Mortgagor), whether or not any such Award is sufficient
in amount, or whether or not such Mortgaged Property can be restored to the same
condition and character as existed prior to such taking unless (I) no Event of
Default exists, and (II) Mortgagor, in the exercise of its good faith business
judgment, consistent with past practices, determines that such Mortgaged
Property is no longer necessary for the proper conduct of its business and that
restoration of such Mortgaged Property in such manner would not be prudent.
1.11. SURVIVAL OF WARRANTIES; FULL PERFORMANCE REQUIRED. All
representations, warranties and covenants of Mortgagor made to Mortgagee set
forth in the Loan Documents shall survive the execution and delivery of this
Mortgage and shall remain continuing obligations, warranties and representations
of Mortgagor so long as any portion of the obligations secured by this Mortgage
remain outstanding; and Mortgagor shall fully and faithfully satisfy and perform
all such obligations, representations, warranties and covenants.
1.12. OTHER INSTRUMENTS. Mortgagor shall punctually pay all amounts
due and payable under, and shall promptly and faithfully perform or observe each
and every other obligation or condition to be performed or observed under, each
deed of trust, mortgage or other lien or encumbrance, lease, sublease,
declaration, covenant, condition, restriction, license, order or other
instrument or agreement affecting the Mortgage Estate, in law or in equity, if
the failure to perform or observe such obligation or condition could have (i) a
material adverse effect on Mortgagee's lien on the Mortgaged Properties, or (ii)
a Material Adverse Effect.
1.13. FURTHER ACTS. Mortgagor shall do and perform all acts necessary
to keep valid and effective the charges and lien hereof, to carry into effect
its object and purposes, and shall execute and deliver to Mortgagee at any time,
upon request of Mortgagee, all other and further instruments in writing
necessary to vest in and secure to Mortgagee each and every part of the Mortgage
Estate and the Rents and the rights and interest of Mortgagee therein or with
respect thereto; and, upon request by Mortgagee, shall supply evidence of
fulfillment of each of the covenants herein contained concerning which a request
for such evidence has been made.
1.14 ADDITIONAL COVENANTS.
(A) Mortgagor shall not remove or demolish the Improvements on any
Mortgaged Property, except as may be required by law or as may be necessary in
order to comply with law, without the prior written consent of Mortgagee, and if
Mortgagor is required by law to remove or demolish Improvements comprising a
portion of a Mortgaged Property, Mortgagor shall, to the extent practicable,
promptly replace such Improvements with Improvements of comparable value and
utility (it being understood that the foregoing shall not be construed as
requiring Mortgagee's consent for Mortgagor to undertake a renovation of the
Improvements on a Mortgaged Property, unless such renovation would involve the
demolition or removal of Improvements representing more than half of the
replacement cost of the Improvements currently located on such Mortgaged
Property);
(B) Mortgagor shall comply with all laws, statutes, ordinances, rules,
regulations, orders, covenants, conditions and restrictions now or hereafter
affecting the Mortgaged Properties or any part thereof or requiring any
alterations or improvements;
(C) Mortgagor shall not abandon the Mortgaged Properties or any
portion thereof or leave the Mortgaged Properties unprotected, unguarded, vacant
or deserted;
(D) Mortgagor shall not sell, assign, exchange, transfer, abandon,
release, relinquish, otherwise encumber or otherwise dispose of any of
Mortgagor's right, title or interest in and to any of the Mortgaged Properties
without the prior written consent of Mortgagee except as may be expressly
permitted by the Credit Agreements.
[IF LEASEHOLD MORTGAGE, ADD: 1.15. COVENANTS REGARDING THE LEASES.
Mortgagor covenants, represents and warrants to Mortgagee as follows with
respect to each Lease:
(A) NO DEFAULT. As of the date hereof, each Lease is a valid and
subsisting lease and is in full force and effect in accordance with its terms.
Mortgagor is the owner of the entire lessee's interest in and under each Lease.
To Mortgagor's knowledge, as of the date hereof, no default has occurred and is
continuing under any Lease. This Mortgage is lawfully executed and delivered in
conformity with the terms of each Lease and is and will be kept a valid lien on
the interests of Mortgagor therein.
(B) ENCUMBRANCES. Mortgagor shall not, without the prior written
consent of Mortgagee, (I) except as may be expressly permitted under the Credit
Agreements, further encumber its leasehold estate, the Land, or any other
portion of the Mortgage Estate, or (II) except as required by a particular Lease
as of the date hereof, subordinate or consent to the subordination of such Lease
to any underlying lease, mortgage or deed of trust on the lessor's interest in
the premises demised by such Lease unless the lessor under such underlying lease
or the mortgagee or beneficiary under such mortgage or deed of trust
concurrently executes and acknowledges a non-disturbance agreement for the
benefit of Mortgagor in form and substance reasonably acceptable to Mortgagee.
(C) NOTICES OF DEFAULT. Mortgagor shall notify Mortgagee promptly in
writing of (I) any material default by Mortgagor or the lessor under any Lease
and (II) the receipt by Mortgagor of any written notice of default from the
lessor under any Lease. Mortgagor shall promptly deliver to Mortgagee a copy of
any such written notice of default under any Lease and shall promptly notify
Mortgagee of any judicial proceedings arising therefrom. Mortgagor shall
promptly notify Mortgagee of any request made by either party to any Lease for
arbitration proceedings pursuant to such Lease and of the institution of any
such arbitration proceedings, and promptly deliver to Mortgagee a copy of the
determination of the arbitrators in each such arbitration proceeding.
(D) COOPERATION WITH MORTGAGEE'S EFFORTS TO CURE. If any material
default under a Lease shall have occurred and is continuing, upon the written
request of Mortgagee, Mortgagor shall promptly execute, acknowledge and deliver
to Mortgagee such instruments as may reasonably be required to permit Mortgagee
to cure such default or to permit Mortgagee to take such other action required
to enable Mortgagee to cure or remedy the matter in default and to preserve the
security interest of Mortgagee under this Mortgage with respect to such Lease.
Mortgagor irrevocably appoints Mortgagee, during the existence of an Event of
Default as its true and lawful attorney-in-fact to do, in its name or otherwise,
any and all acts and to execute any and all documents which are necessary to
preserve any rights of Mortgagor under or with respect to the Leases, including,
without limitation, the right to effectuate any extension or renewal of the
Leases, or to preserve any rights of Mortgagor whatsoever in respect of any part
of any Lease (and the above powers granted to Mortgagor are coupled with an
interest and shall be irrevocable).
(E) PERFORMANCE UNDER LEASES. Mortgagor shall promptly and timely
perform and observe all the material terms covenants and conditions required to
be performed and observed by Mortgagor as lessee under any Lease and do all
things necessary to preserve and to keep unimpaired its rights under any Lease.
Mortgagor shall not, without Mortgagee's prior written consent, surrender,
terminate, forfeit, or suffer or permit the surrender, termination or forfeiture
of, or change, modify or amend in any material adverse manner, any Lease.
(F) LESSOR'S PERFORMANCE. Mortgagor shall enforce the material
obligations of the lessor under each Lease to the end that Mortgagor may enjoy
all of the material rights granted to it as lessee under any Lease and not
waive, excuse, condone or in any way release or discharge the lessor under any
Lease of or from such lessor's material obligations, covenants and/or conditions
under any Lease, without the prior written consent of Mortgagee, except as
required by the provisions of such Lease (e.g., upon sale of the property by the
lessor).
(G) FEE MORTGAGE. Unless Mortgagee otherwise consents, the acquisition
of any fee title or other interest in the Leased Land or the Improvements by
Mortgagor, whether pursuant to an option in a Lease or otherwise, shall not
result in a merger of the leasehold estate with such fee title or other
interest. If Mortgagor acquires any such fee title or other interest, such fee
title or other interest shall be subject to the terms of this Mortgage.
(H) RIGHTS IN BANKRUPTCY; CLAIMS AGAINST LESSOR.
(I) Mortgagor shall notify Mortgagee of any filing by or against
any lessor under any Lease of a petition under any bankruptcy, insolvency,
reorganization, moratorium or similar law (any such law being herein
referred to as a "BANKRUPTCY LAW"), promptly after learning thereof,
setting forth any information available to Mortgagor as to the date of such
filing, the court in which the petition was filed, and the relief sought.
Mortgagor shall promptly deliver to Mortgagee any and all notices,
summonses, pleadings, applications and other documents received by
Mortgagor in connection with any such petition and any proceedings relating
thereto.
(II) If a Lease is rejected or disaffirmed by the lessor
thereunder (or by any receiver, trustee, custodian or other party who
succeeds to the rights of such lessor) pursuant to any Bankruptcy Law, (A)
Mortgagor shall not elect to treat such Lease as terminated under 11 U.S.C.
Section 365(h) or any similar or successor law or right, (B) Mortgagor
shall remain in possession of the leased premises to the extent it is then
legally entitled to do so and shall perform all acts necessary for
Mortgagor to retain its right to remain in such possession for the
unexpired term of such Lease (including all renewal and extension options),
whether such acts are required under the then-existing terms and provisions
of such Lease or otherwise, and (C) all of the terms and provisions of this
Mortgage and the lien created hereby shall remain in full force and effect
and shall be extended automatically to such possession, occupancy and
interest of Mortgagor.
(III) Mortgagor assigns to Mortgagee the proceeds of any claim
that Mortgagor may have against the lessor under any Lease (or any
receiver, trustee, custodian or other party who succeeds to the rights of
such lessor) by reason of any breach or any inability of such lessor (or
any such successor) to perform the terms and provisions of such Lease
(including by reason of a rejection or disaffirmance of such Lease pursuant
to any Bankruptcy Law). If an Event of Default has occurred and is
continuing, Mortgagee has the sole right to elect either (A) to proceed
against such lessor (or such receiver, trustee, custodian or other party)
as if Mortgagee were the named lessee under such Lease, in Mortgagor's
name, or in Mortgagee's name as agent for Mortgagor, and Mortgagor agrees
to cooperate with Mortgagee in such action and shall execute any and all
documents required in furtherance of such action, or (B) to have Mortgagor
proceed in Mortgagor's and Mortgagee's behalf in which event Mortgagee may
participate in any such proceedings, and Mortgagor from time to time will
deliver to Mortgagee all instruments requested by Mortgagee or as may be
required to permit such participation. So long as no Event of Default has
occurred and is continuing, Mortgagor shall, at its expense, have the right
to prosecute any such proceedings in its own behalf.
(J) ATTORNMENT AGREEMENTS. Mortgagor shall use its best efforts to
cause all leases and subleases hereafter entered into by Mortgagor as lessor or
sublessor (and all existing leases and subleases hereafter modified or amended
by Mortgagor as lessor or sublessor thereunder) (each such lease or sublease
being a "TENANT LEASE", and the lessee or sublessee thereunder being a "TENANT")
to provide that if Mortgagee forecloses under this Mortgage or, in the case of a
Tenant Lease which is a sublease, enters into a new lease with any lessor under
the applicable Lease, whether pursuant to any provisions for such a new lease
contained in the applicable Lease or otherwise, then the Tenant shall attorn to
Mortgagee or its assignee and the Tenant Lease will remain in full force and
effect in accordance with its terms notwithstanding such foreclosure or the
termination of the applicable Lease.
(K) STATUS OF THE LEASE; MODIFICATIONS. With respect to each Lease
described in EXHIBIT B, Mortgagor represents and warrants that Mortgagor is the
current lessee under such Lease, such Lease has not been amended, modified,
extended, renewed, substituted or assigned except as disclosed to Mortgagee in
writing, and that Mortgagor has delivered to Mortgagee a true, accurate and
complete copy of such Lease. Mortgagor represents that EXHIBIT B accurately sets
forth all recording data with respect to the filing or recordation of such Lease
or a legally valid memorandum thereof, and if such Lease or such a memorandum
has been recorded. From time to time, within ten business days following the
receipt of a request therefor from Mortgagee, Mortgagor shall deliver to
Mortgagee true and correct copies of any and all amendments to such Lease
executed after the date hereof.
(L) MEMORANDUM OF LEASE; ATTORNMENT AGREEMENT. Mortgagor shall use its
best efforts promptly to obtain and deliver to Mortgagee, if Mortgagor's
leasehold interest under any Lease is not of record, an original of such Lease
or a memorandum of such Lease, executed and acknowledged by the lessor
thereunder, or an original of, or an original memorandum of, the assignment of
the leasehold interest thereunder to Mortgagor by a prior lessee whose interest
was of record, executed and acknowledged by the assignor, in either case in form
sufficient to give constructive notice (when recorded) of Mortgagor's leasehold
interest under such Lease to third-party purchasers or encumbrancers of the
Leased Land and otherwise in form reasonably satisfactory to Mortgagee. Upon
obtaining the recordable document described in the foregoing sentence, and
following recordation thereof, Mortgagor shall, upon Mortgagee's request,
promptly execute, acknowledge and deliver an amendment to this Mortgage, in form
satisfactory to Mortgagee, setting forth the recording information with respect
thereto.
(M) LESSOR ESTOPPEL CERTIFICATES. Mortgagor shall promptly upon demand
by Mortgagee from time to time, use reasonable efforts (other than payment to
the lessor) to obtain from the lessor under any Lease and furnish to Mortgagee
the estoppel certificate of such lessor stating the date through which rent has
been paid and whether or not there are any defaults under such Lease and
specifying the nature of such defaults, if any;
(N) PURCHASE OPTIONS. Mortgagor shall notify Mortgagee at least 120
days prior to the last date provided for the exercise of any purchase option
contained in any Lease (each, a "PURCHASE OPTION"). Mortgagor shall observe and
perform all of the obligations required to maintain each Purchase Option in full
force and effect. Mortgagor shall exercise each Purchase Option at least 30 days
prior to the last date provided therefor in the applicable Lease unless
otherwise agreed by Mortgagee in writing. Mortgagor appoints Mortgagee as
Mortgagor's attorney-in-fact, with full authority in the place of Mortgagor and
in the name of Mortgagor or Mortgagee, to take such action and to execute such
documents, agreements, approvals or other instruments as Mortgagee may
reasonably deem necessary or advisable to exercise any Purchase Option if
Mortgagor fails to exercise the same if and when required by this SECTION
1.15(N), or if an Event of Default shall have occurred and be continuing.
The generality of the provisions of this SECTION 1.15 relating to the Leases
shall not be limited by other provisions of this Mortgage setting forth
particular obligations of Mortgagor which are also required of Mortgagor with
respect to the Lease, the Improvements, or the Leased Land.]
ARTICLE II.
OTHER COVENANTS AND AGREEMENTS
2.01. ACTIONS BY MORTGAGEE TO PRESERVE MORTGAGE ESTATE. If Mortgagor
fails to make any payment or to do any act as and in the manner provided in this
Mortgage, Mortgagee, in its own discretion, without obligation so to do, without
notice to or demand upon Mortgagor and without releasing Mortgagor from any
obligation, may, upon the occurrence and during the continuation of an Event of
Default, make or do the same in such manner and to such extent as it may deem
necessary to protect the security hereof. Without limiting the generality of
foregoing, upon the occurrence and during the continuation of an Event of
Default, Mortgagee shall have the option to cure any default and to perform any
or all of Mortgagor's obligations under any lease which is part of the Mortgage
Estate [IF LEASEHOLD MORTGAGE: , including, without limitation, the Leases]. In
exercising such powers (without limiting their general and other powers, whether
conferred herein, in the Subsidiary Guaranty, in the Credit Agreements, or in
any other Loan Document), Mortgagee shall have and is given the right, but not
the obligation,
(A) to enter upon and take possession of the Mortgage Estate, or any
portion thereof;
(B) to make additions, alterations, repairs and improvements to the
Mortgage Estate which it may consider necessary or proper to keep the Mortgage
Estate in good condition and repair;
(C) to appear and participate in any action or proceeding affecting or
which may affect the security hereof or the rights or powers of Mortgagee;
(D) to pay, purchase, contest or compromise any encumbrance, claim,
charge, lien or debt which in the judgment of Mortgagee may affect or appears to
affect the security of this Mortgage or to be prior or superior hereto; and
(E) in exercising such powers, to pay necessary expenses, including
employment of counsel and other necessary or desirable consultants.
Immediately upon demand therefor by Mortgagee, Mortgagor shall pay to Mortgagee
an amount equal to all costs and expenses incurred by Mortgagee in connection
with the exercise of the foregoing rights, including, without limitation, costs
of evidence of title, court costs, appraisals, surveys, and receiver's, and
reasonable attorneys' fees, costs and expenses, whether or not an action is
actually commenced in connection therewith, together with interest thereon, from
date of expenditure until Mortgagee has been repaid such amount, at the rate
(the "AGREED RATE") which is the lesser of: (X) the Base Rate plus two percent
(2%) per annum, or (Y) the maximum interest rate that can lawfully be charged by
Mortgagee to Mortgagor on such funds on the date such funds are expended by
Mortgagee (interest on each such expenditure being calculated separately at the
particular Agreed Rate applicable to such expenditure); and, until paid,
Mortgagor's obligation to repay said sums shall be secured hereby.
2.02. INSPECTIONS. Mortgagee is authorized to enter upon or in any
part of the Mortgage Estate (which entry shall be at reasonable times and upon
reasonable notice to Mortgagor, unless an Event of Default shall have occurred
and be continuing) to inspect the same or to perform any of the acts authorized
hereunder or under the terms of any of the Loan Documents.
2.03. LIMITED EFFECT OF INDULGENCES.
(A) Without affecting the liability of any other person liable for the
payment of any obligation under any of the Loan Documents, and without affecting
the lien or charge of this Mortgage upon any portion of the Mortgage Estate not
then or theretofore released as security for the full amount of all unpaid
obligations, Mortgagee may, from time to time and without notice, (I) release
any person so liable, (II) extend the maturity or alter any of the terms of any
such obligation, (III) grant other indulgences, (IV) release or reconvey, or
cause to be released or reconveyed, at any time, at Mortgagee's option, any
parcel, portion or all of the Mortgage Estate, (V) take or release any other or
additional security for any obligation herein mentioned, or (VI) make
compositions or other arrangements with debtors in relation thereto.
(B) By accepting payment or performance of any obligation secured by
this Mortgage after the payment or performance is due or after the filing of a
notice of default and election to sell, Mortgagee shall not have thereby waived
its right to require prompt payment or performance, when due, of all other
obligations secured hereby, or to declare a default for failure so to pay or
perform, or to proceed with the sale under any notice of default and election to
sell theretofore given by Mortgagee, or to any unpaid balance of the
indebtedness secured hereby. The acceptance by Mortgagee of any sum in an amount
less than the entire sum then due is not a waiver of the obligation of Mortgagor
to pay said sum. Mortgagor's failure to pay the entire sum then due shall be and
continue to be a default, notwithstanding the acceptance of partial payment,
and, until the entire sum then due shall have been paid, Mortgagee shall at all
times be entitled to exercise all the remedies herein conferred, whether or not
such amounts are received prior or subsequent to such notice. No delay or
omission of Mortgagee in the exercising of any right or power hereunder shall
impair such right or power or any other right or power nor shall the same be
construed to be a waiver of any default or any acquiescence therein.
2.04. ADDITIONAL SECURITY. Neither other security now existing or
hereafter taken to secure the obligations secured hereby, nor the liability of
any maker, surety or endorser with respect to such obligations, or any of them,
shall be impaired or affected by the execution of this Mortgage or by any of the
acts referred to in SECTION 2.03. All additional security shall be taken,
considered and held as cumulative. If Mortgagee at any time holds additional
security for any of the obligations secured hereby, it may enforce the sale
thereof or otherwise realize upon the same, at its option, either before,
concurrently, or after a sale is made hereunder.
2.05. EXECUTION OF INSTRUMENTS BY MORTGAGEE. At any time, and from
time to time, without liability therefor and without notice, and without
affecting the personal liability of any person for payment of the indebtedness
or the performance of any other obligation secured hereby or the effect of this
Mortgage upon the remainder of said Mortgage Estate, Mortgagee may (I) release
the lien of this Mortgage with respect to any part of said Mortgage Estate, (II)
consent in writing to the making of any map or plat thereof or join in granting
any easement, right of way, restrictive covenant or other dedication thereon, or
(III) join in any extension agreement, agreement subordinating the lien or
charge hereof, or other agreement or instrument relating hereto or to the
Mortgage Estate or any portion thereof.
2.06. INVALIDITY OF LIEN. If the lien of this Mortgage is invalid or
unenforceable as to any part of the Secured Obligations, or if the lien is
invalid or unenforceable as to any part of the Mortgage Estate, the unsecured or
partially secured portion of the Secured Obligations shall be completely paid
prior to the payment of the remaining and secured or partially secured portion
of the debt, and all payments made on the Secured Obligations, whether voluntary
or under foreclosure or other enforcement action or procedure, shall be
considered to have been first paid on and applied to the full payment of that
portion of the Secured Obligations which is not secured or is not fully secured
by the lien of this Mortgage.
2.07. MORTGAGOR WAIVER OF RIGHTS.
(A) Mortgagor waives, to the fullest extent permitted by law, (I) the
benefit of all laws now existing or hereafter enacted providing for any
appraisement before sale of any portion of the Mortgage Estate; and, (II)
whether now existing or hereafter arising or created, (A) all rights to direct
the order in which the Mortgage Estate may be sold and all rights of valuation,
appraisement, stay of execution, notice of election to mature or declare due the
whole of the secured indebtedness and marshaling in the event of foreclosure of
the liens hereby created, (B) all rights and remedies which Mortgagor may have
or be able to assert by reason of the laws of any state pertaining to the rights
and remedies of sureties, (C) any and all rights of redemption before, at, or
after sale under any order or decree of foreclosure of this Mortgage on behalf
of Mortgagor and each and every person acquiring any interest or title to the
Mortgage Estate subsequent to the date of this Mortgage, (D) except as otherwise
herein provided, all rights and remedies which Mortgagor may have or be able to
assert to insurance proceeds, to the proceeds of any action or proceeding in
eminent domain affecting the Mortgage Estate or any portion thereof, and to
proceeds of a sale in lieu of such taking, and (E) all present and future
statutes of limitations as a defense to any action to foreclose this Mortgage.
(B) Unless otherwise expressly provided, all sums secured by this
Mortgage shall be paid without notice, demand, counterclaim, setoff, deduction
or defense and without abatement, suspension, deferment, diminution or
reduction, and the obligations and liabilities of Mortgagor to pay such sums,
and to perform all other obligations of Mortgagor hereunder, under the
Subsidiary Guaranty or under the other Loan Documents shall in no way be
released, discharged or otherwise affected by reason of: (I) any damage to or
destruction of or any condemnation or similar taking of the Mortgage Estate or
any part thereof; (II) any restriction or prevention of or interference by
Mortgagee, or any third party with any use of the Mortgage Estate or any part
thereof; (III) any title defect or encumbrance or any eviction from the Mortgage
Estate or any part thereof by title paramount or otherwise; (IV) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceeding relating to Mortgagee, or any action taken with respect to
this Mortgage by any trustee or receiver thereof, or by any court in any such
proceeding; (V) any claim which Mortgagor has or might have against Mortgagee;
(VI) any default or failure on the part of Mortgagee to perform or comply with
any of the terms hereof or of any other agreement with Mortgagor; or (VII) any
other occurrence whatsoever, whether similar or dissimilar to the foregoing;
whether or not Mortgagor shall have notice or knowledge of any of the foregoing.
2.08. RELEASE; DEFEASANCE. If Mortgagor pays all sums due under the
Subsidiary Guaranty, and all sums due under the Loan Documents have been paid,
all in accordance with the terms thereof, then this Mortgage and the estate and
rights hereby created shall cease, terminate, and become void, and thereupon
Mortgagee, upon the written request and at the expense of Mortgagor, shall
execute and deliver to Mortgagor such instruments as shall be required to
evidence of record the satisfaction of this Mortgage and the lien thereof.
ARTICLE III.
ASSIGNMENT OF RENTS, ISSUES AND PROFITS
3.01. ASSIGNMENT OF RENTS, ISSUES AND PROFITS. Mortgagor hereby
assigns and transfers all of the Rents to Mortgagee, and hereby gives to and
confers upon Mortgagee the right, power and authority to collect the Rents.
Mortgagor irrevocably appoints Mortgagee its true and lawful attorney-in-fact,
at the option of Mortgagee at any time and from time to time while this Mortgage
remains in effect, to demand, receive and enforce payment; to give receipts,
releases and satisfactions; to sue, in the name of Mortgagor or Mortgagee, for
all Rents; and to apply the same to the indebtedness secured hereby; provided,
however, that so long as no Event of Default exists, Mortgagor shall have the
right to collect and use the Rents in the ordinary course of its business (but
not more than ninety days in advance unless the written approval of Mortgagee
has first been obtained). The assignment of the Rents in this Article III is
intended to be an absolute assignment from Mortgagor to Mortgagee and not merely
the passing of a security interest. Upon request by Mortgagee, Mortgagor shall,
from time to time hereafter, execute and deliver to Mortgagee recordable
assignments in form satisfactory to Mortgagee of any or all leases, subleases,
licenses, and concession or other agreements with respect to the use or
occupancy of the Mortgage Estate or any portion thereof by any person other than
Mortgagor now or hereafter affecting any portion of the Mortgage Estate.
3.02. COLLECTION UPON DEFAULT. Upon the occurrence of an Event of
Default hereunder, Mortgagee may, at any time without notice, either in person,
by agent or by a receiver appointed by a court, and without regard to the
adequacy of any security for Secured Obligations, enter upon and take possession
of the Mortgage Estate, or any part thereof, and, with or without taking
possession of the Mortgage Estate or any part thereof, in its own name sue for
or otherwise collect the Rents, including those past due and unpaid; and all
prepaid Rents and all other moneys which may have been or may hereafter be
deposited with Mortgagor by any lessee or tenant of Mortgagor to secure the
payment of any rent or for any services thereafter to be rendered by Mortgagor
or for any other obligation of any tenant to Mortgagor arising under any lease
which is part of the Mortgage Estate. Upon the occurrence of any Event of
Default, Mortgagor shall promptly deliver all such Rents and other moneys to
Mortgagee, and Mortgagee may apply the same, less costs and expenses of
operation and collection (including reasonable attorneys' fees and costs,
whether or not suit is brought or prosecuted to judgment), upon any of the
Secured Obligations, in such order as Mortgagee may determine, notwithstanding
that said indebtedness or the performance of said obligation may not then be due
and payable. The collection of the Rents, or the entering upon and taking
possession of the Mortgage Estate, or the application thereof as aforesaid,
shall not cure or waive any default or notice of default hereunder, or
invalidate any act done in response to such default or pursuant to such notice
of default, or be deemed or construed to make Mortgagee a mortgagee-
in-possession of the Mortgage Estate or any portion thereof.
ARTICLE IV.
REMEDIES UPON DEFAULT
4.01. EVENTS OF DEFAULT. The occurrence of any event specified in the
Subsidiary Guaranty or in SECTION 8 of the Credit Agreements shall constitute an
event of default ("EVENT OF DEFAULT") hereunder.
4.02. ACCELERATION UPON DEFAULT; ADDITIONAL REMEDIES. Upon the
occurrence and during the continuation of an Event of Default, whether or not
the Secured Obligations are accelerated in accordance with the terms of the Loan
Documents, Mortgagee may:
(A) Either in person or by agent, with or without bringing any action
or proceeding, or by a receiver appointed by a court and without regard to the
adequacy of its security, enter upon and take possession of the Mortgage Estate,
or any part thereof, in its own name, and do any acts which it deems necessary
or desirable to preserve the value, marketability or rentability of the Mortgage
Estate, or part thereof or interest therein, to increase the income therefrom or
to protect the security hereof and, with or without taking possession of the
Mortgage Estate or any part thereof, sue for or otherwise collect the Rents,
including those past due and unpaid, and apply the same, less costs and expenses
of operation and collection, including reasonable attorneys' fees, upon any
indebtedness secured hereby, all in such order as Mortgagee may determine. The
entering upon and taking possession of the Mortgage Estate, the collection of
such rents, issues and profits and the application thereof as aforesaid shall
not cure or waive any default or notice of default hereunder or invalidate any
act done in response to such default or pursuant to such notice of default; and,
notwithstanding the continuance in possession by Mortgagee or a receiver of all
or any portion of the Mortgage Estate or the collection, receipt and application
of rents, issues or profits thereby, Mortgagee shall be entitled to exercise
every right provided for herein or in any other Loan Document or by law upon the
occurrence of any Event of Default;
(B) Commence an action to foreclose this Mortgage, appoint a receiver,
or specifically enforce any of the covenants hereof;
(C) Exercise all other rights and remedies provided herein, in the
Subsidiary Guaranty, in any other Loan Document, or in any other document or
agreement now or hereafter securing all or any portion of the obligations
secured hereby, or provided by law.
4.03. APPOINTMENT OF RECEIVER. If an Event of Default shall have
occurred and is continuing, Mortgagee, as a matter of right and without notice
to Mortgagor or anyone claiming under Mortgagor, and without regard to the then
value of the Mortgage Estate or the interest of Mortgagor therein, shall have
the right to apply to any court having jurisdiction to appoint a receiver or
receivers of the Mortgage Estate, and Mortgagor hereby irrevocably consents to
such appointment and waives notice of any application therefor. Any such
receiver or receivers shall have all the usual powers and duties of receivers in
like or similar cases and all the powers and duties of Mortgagee in case of
entry as provided herein and shall continue as such and any such receiver shall
exercise all such powers until the date of confirmation of sale of the Mortgage
Estate unless such receivership is sooner terminated.
4.04. APPLICATION OF FUNDS AFTER DEFAULT. Except as otherwise provided
herein or in any other Loan Document, upon the occurrence and during the
continuation of an Event of Default hereunder, Mortgagee may, at any time
without notice, apply any or all sums or amounts received and held by Mortgagee
to pay insurance premiums, Impositions, or either of them, or as rents or income
of the Mortgage Estate, or as insurance or condemnation proceeds, and all other
sums or amounts received by Mortgagee from or on account of Mortgagor or the
Mortgage Estate, or otherwise, upon any indebtedness or obligation of the
Mortgagor secured hereby, in such manner and order as Mortgagee may elect,
notwithstanding that said indebtedness or the performance of said obligation may
not yet be due according to the terms thereof. The receipt, use or application
of any such sums or amounts shall not be construed to affect the maturity of any
indebtedness secured by this Mortgage, or any of the rights or powers of
Mortgagee under the terms of this Mortgage, the Subsidiary Guaranty or any other
Loan Document, or any obligations of Mortgagor or any other obligor under any of
the other Loan Documents, or to cure or waive any default or notice of default;
or to invalidate any act of Mortgagee.
4.05. COSTS OF ENFORCEMENT. Upon the occurrence of any Event of
Default, Mortgagee may employ an attorney or attorneys to protect their rights
hereunder. Mortgagor promises to pay to Mortgagee, on demand, the reasonable
fees and expenses of such attorneys and all other costs of enforcing the
obligations secured hereby, including but not limited to, recording fees,
receivers' fees and expenses, and all other expenses, of whatever kind or
nature, incurred by Mortgagee in connection with the enforcement of the
obligations secured hereby, whether or not such enforcement includes the filing
of a lawsuit. Until paid, such sums shall be secured hereby and shall bear
interest, from date of expenditure, at the Agreed Rate.
4.06. REMEDIES NOT EXCLUSIVE. Mortgagee shall be entitled to enforce
payment of any indebtedness and performance of any other obligations secured
hereby and to exercise all rights and powers under this Mortgage, under the
Subsidiary Guaranty or under any other Loan Document or other agreement or any
laws now or hereafter in force, notwithstanding some or all of the said
indebtedness and obligations secured hereby may now or hereafter be otherwise
secured, whether by mortgage, deed of trust, pledge, lien, assignment or
otherwise. Neither the acceptance of this Mortgage nor its enforcement, whether
by court action or pursuant to other powers herein contained, shall prejudice or
in any manner affect Mortgagee's right to realize upon or enforce any other
security now or hereafter held by Mortgagee, it being agreed that Mortgagee
shall be entitled to enforce this Mortgage and any other security now or
hereafter held by Mortgagee in such order and manner as it may in its absolute
discretion determine. All rights and remedies existing under this Mortgage are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
Every power or remedy given by this Mortgage, the Subsidiary Guaranty or any
other Loan Document to Mortgagee or to which it may be otherwise entitled, may
be exercised, concurrently or independently, from time to time and as often as
may be deemed expedient by Mortgagee. This Mortgage may be foreclosed at any
time against all or successively against any part or parts of the Mortgage
Estate as Mortgagee may elect, and this Mortgage and the right of foreclosure
hereunder shall not be impaired or exhausted by one or any foreclosure or by one
or any sale and may be foreclosed successively and in parts until all of the
Mortgage Estate shall have been foreclosed and sold.
4.07. REQUEST FOR NOTICE. Mortgagor hereby requests that a copy of any
notice of default hereunder be mailed to Mortgagor at the address of Mortgagor
set forth in the first paragraph of this Mortgage.
ARTICLE V.
SECURITY AGREEMENT
5.01. CREATION OF SECURITY INTEREST. Mortgagor hereby grants to
Mortgagee a security interest in all of Mortgagor's estate, right, title and
interest, now owned or hereafter acquired, in and to all of the following
property (collectively, the "PERSONAL PROPERTY"), whether now or hereafter
existing, as security for the Secured Obligations, upon and subject to all of
the terms and conditions set forth in the Security Agreement (which terms are
incorporated herein by this reference):
(A) all Rents and Proceeds, as hereinabove defined;
(B) all plans, specifications, maps, surveys, studies, reports,
permits, licenses, architectural, engineering and construction contracts, books
of account, insurance policies and other documents, of whatever kind or
character, relating to use, construction upon, occupancy, leasing, sale or
operation of the Property, together with the proceeds, including insurance
proceeds, thereof; and
(C) all other personal property and fixtures (including, without
limiting the generality of the foregoing, goods, equipment, inventory, proceeds
and general intangibles, as those terms are defined in the Uniform Commercial
Code in effect in the State in which the Land is situated (the "UCC")) now or at
any time hereafter located on or at the Property or used in connection
therewith, together with the proceeds, including insurance proceeds, thereof.
This Mortgage constitutes a security agreement as that term is used in the UCC
and any other state in which any of the Personal Property is located; Mortgagee
shall have all the rights and remedies of a secured party under the UCC as in
effect from time to time (including, without limitation, the rights and remedies
under Section 9501 of the UCC) as well as all other rights and remedies
available hereunder or under the Security Agreement or at law or in equity.
5.02. FIXTURE FILING. Some of the above goods are or are to become
fixtures on the Land, and this instrument is to be recorded in the real estate
records. This Mortgage is effective as a financing statement filed as a fixture
filing, executed by Mortgagor, as debtor, in favor of Mortgagee, as secured
party, with respect to all fixtures included in the Personal Property. Products
of the collateral are also covered. Information concerning the security interest
in fixtures can be obtained from Mortgagee at its address set forth in the
preamble to this Mortgage.
5.03. OTHER SECURITY AGREEMENT. The rights and obligations of
Mortgagor and Mortgagee with respect to all Personal Property described in the
Security Agreement shall be controlled by the terms and provisions of the
Security Agreement to the extent, if any, that the provisions of this Mortgage
are inconsistent therewith. To the extent not inconsistent, the respective
rights and obligations of Mortgagor and Mortgagee hereunder and under the
Security Agreement shall be cumulative.
ARTICLE VI.
ENVIRONMENTAL INDEMNITY
6.01 DEFINED TERMS. As used in this Article, the following terms have
the following meanings:
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.), as heretofore
or hereafter amended from time to time.
"COVERED PERIOD" means the period from the date hereof to and
including the Transfer Date, but excluding the period, if any, prior to the
Transfer Date, during which (A) Mortgagee or its Affiliate has obtained and
then remains in possession and control of the Property, and (B) Mortgagor
is neither in possession or control of the Property nor engaging in any
Hazardous Materials Activity on or at the Property.
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by any
Indemnitee, arising out of or as a result of: (I) any Hazardous Materials
Activity that occurs or is alleged to have occurred in whole or in part on
or prior to the date hereof or during the Covered Period; (II) any
violation on or prior to the date hereof or during the Covered Period of
any applicable Environmental Laws relating to the Property or to the
ownership, use, occupancy or operation thereof; (III) any investigation,
inquiry, order, hearing, action, or other proceeding by or before any
governmental agency in connection with any Hazardous Materials Activity
that occurs or is alleged to have occurred in whole or in part on or prior
to the date hereof or during the Covered Period; or (IV) any claim, demand
or cause of action, or any action or other proceeding, whether meritorious
or not, brought or asserted against any Indemnitee (hereinafter defined)
which directly or indirectly relates to, arises from or is based on any of
the matters described in CLAUSES (I), (II), or (III), or any allegation of
any such matters.
"HAZARDOUS MATERIALS ACTIVITY" means any use, storage, holding,
existence, release (including any spilling, leaking, pumping, pouring,
emitting, emptying, dumping, disposing into the environment, and the
continuing migration into or through soil, surface water, or groundwater),
emission, discharge, generation, processing, abatement, removal,
disposition or handling of any Hazardous Materials from, under, in, into or
on the Property or surrounding property, or any transportation to or from
the Property of any Hazardous Materials, including, without limitation, the
movement or migration of any Hazardous Materials from surrounding property
or groundwater in, into or onto the Property and any residual Hazardous
Materials contamination on or under the Property.
"LOSSES" means any and all losses, liabilities, damages (whether
actual, consequential, punitive, or otherwise denominated), demands,
claims, actions, judgements, causes of action, assessments, penalties,
costs and expenses (including, without limitation, reasonable attorneys'
fees and disbursements), of any and every kind or character, foreseeable
and unforeseeable, liquidated and contingent, proximate and remote.
"TRANSFER DATE" means the date on which Mortgagee (or its Affiliate)
acquires that title previously held by Mortgagor to the Property pursuant
to foreclosure of the lien of this Mortgage, or by receipt of a deed in
lieu of such foreclosure, and any and all redemption rights of Mortgagor
have expired, unless within a period of ninety-one (91) days after the date
on which such title vests in Mortgagee (or its Affiliate) a bankruptcy or
other insolvency proceeding is filed by or against Mortgagor. If Mortgagor
should remain in or reacquire possession of the Property after the Transfer
Date, or if Mortgagor should engage in any Hazardous Materials Activity on
or at the Property after the Transfer Date, the Transfer Date shall be
deemed to be the date after which Mortgagor is no longer in possession of
the Property and has ceased to engage in any Hazardous Materials Activity
on or at the Property.
6.02. INDEMNITY.
(A) Mortgagor hereby agrees to indemnify, defend, and hold harmless
Mortgagee and Lenders and each of their respective successors, assigns and
participants, and their respective parent, subsidiary and affiliated
corporations, and the respective directors, officers, agents, attorneys, and
employees of each of the foregoing (each of which is referred to herein
individually as an "INDEMNITEE" and collectively as the "INDEMNITEES"), and each
of them, from and against any and all Environmental Losses except those arising
solely from the gross negligence or wilful misconduct of the Indemnitee as
determined by a final judgment of a court of competent jurisdiction.
(B) If any Indemnitee notifies Mortgagor of any claim or notice of the
commencement of any action, administrative or legal proceeding, or investigation
as to which the indemnity provided for in this SECTION 6.02 (the "INDEMNITY")
applies, Mortgagor shall assume on behalf of such Indemnitee and conduct with
due diligence and in good faith the investigation and defense thereof and the
response thereto with counsel reasonably satisfactory to such Indemnitee;
provided, however, that the Indemnitee, at its own expense, shall have the right
to be represented by advisory counsel of its own selection and advised by such
experts and consultants as such Indemnitee reasonably believes may be necessary;
and provided, further, that if any such claim, action, proceeding, or
investigation involves both Mortgagor and an Indemnitee and such Indemnitee
shall have reasonably concluded that there may be legal defenses available to it
which are inconsistent with those available to Mortgagor, or otherwise shall
have concluded in good faith that separate counsel is necessary in order to
protect Mortgagee's interests, then such Indemnitee shall have the right to
select separate counsel to participate in the investigation and defense of and
response to such claim, action, proceeding or investigation on its own behalf at
Mortgagor's expense.
(C) If any claim, action, proceeding, or investigation arises as to
which the Indemnity applies, and Mortgagor fails to assume promptly (and in any
event within thirty (30) days after being notified of the claim, action,
proceeding, or investigation) the defense of an Indemnitee, then such Indemnitee
may contest and settle the claim, action, proceeding, or investigation at
Mortgagor's expense using counsel and experts selected by such Indemnitee;
provided, however, that after any such failure by Mortgagor no such contest need
be made by such Indemnitee and settlement or full payment of any claim may be
made by such Indemnitee without Mortgagor's consent and without releasing
Mortgagor from any obligations to such Indemnitee hereunder.
(D) The obligations of Mortgagor under this Article are independent
of, and shall not be measured or affected by (I) any amounts at any time owing
under the Loans or any Interest Rate Agreement, (II) the sufficiency or
insufficiency of any collateral (including, without limitation, the Property)
given to secure repayment of the Loans and payment of Mortgagor's obligations
under the Subsidiary Guaranty and Company's obligations under the Interest Rate
Agreements, (III) the consideration given by Mortgagee or any other party in
order to acquire the Property, or any portion thereof, (IV) the modification,
expiration, foreclosure, release, or termination of this Mortgage, the
Subsidiary Guaranty or any other document or instrument relating to the Loans or
the Interest Rate Agreements, or (V) the discharge or repayment in full of the
Loans or Mortgagor's obligations under the Subsidiary Guaranty and Company's
obligations under any Interest Rate Agreement (including, without limitation, by
amounts paid or credit bid at a foreclosure sale or by discharge in connection
with a deed in lieu of foreclosure).
(E) Mortgagor's obligations under this Article shall survive the sale
or other transfer of the Property by Mortgagor prior to the Transfer Date as
well as the foreclosure, release, or termination of this Mortgage. The rights of
each Indemnitee under this Indemnity shall be in addition to any other rights
and remedies of such Indemnitee against Mortgagor under any other document or
instrument now or hereafter executed by Mortgagor, or at law or in equity
(including, without limitation, any right of reimbursement or contribution
pursuant to CERCLA or other similar Environmental Laws), and shall not in any
way be deemed a waiver of any of such rights. Mortgagor agrees that it shall
withhold the exercise of any right of contribution (including, without
limitation, any right of contribution under CERCLA or other similar
Environmental Laws) or subrogation against any other Loan Party in connection
with any Environmental Losses, unless and until all obligations of Mortgagor
under this Article have been satisfied.
(F) All obligations of Mortgagor under this Article shall be payable
on demand, and any amount due and payable under this Article to any Indemnitee
by Mortgagor which is not paid within thirty (30) days after written demand
therefor from an Indemnitee with an explanation of the amounts demanded shall
bear interest from the date of such demand at the Agreed Rate.
(G) Mortgagor agrees to pay to each Indemnitee all costs and expenses
(including, without limitation, Indemnitee's reasonable attorneys' fees and
disbursements) incurred by such Indemnitee in connection with the Indemnity or
the enforcement hereof.
ARTICLE VII.
MISCELLANEOUS
7.01. AMENDMENTS. This instrument cannot be waived, changed,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of any waiver, change, discharge or
termination is sought.
7.02. GOVERNING LAW. IN ACCORDANCE WITH THE TERMS OF THE LOAN
DOCUMENTS, THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS MORTGAGE, THE
SUBSIDIARY GUARANTY AND UNDER THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS-OF-LAW RULES AND PRINCIPLES OF
SUCH STATE. MORTGAGOR AND MORTGAGEE FURTHER ACKNOWLEDGE, AGREE, AND STIPULATE
THAT THE STATE OF NEW YORK HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES
INVOLVED IN THIS TRANSACTION AND TO THE UNDERLYING TRANSACTIONS SECURED BY THIS
MORTGAGE. NOTWITHSTANDING THE FOREGOING, THE PARTIES AGREE THAT:
(A) THE PROCEDURES GOVERNING THE ENFORCEMENT BY MORTGAGEE OF
PROVISIONAL REMEDIES AGAINST MORTGAGOR DIRECTLY RELATING TO THE REAL PROPERTY
ENCUMBERED HEREBY, INCLUDING, BY WAY OF ILLUSTRATION BUT NOT LIMITATION, ANY
SUCH ACTIONS FOR REPLEVIN, FOR CLAIM OF DELIVERY OF PROPERTY, OR FOR THE
APPOINTMENT OF A RECEIVER, SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH
THE PROPERTY IS SITUATED (THE "SITUS STATE");
(B) THE LAW OF THE SITUS STATE SHALL APPLY TO THE EXTENT, BUT ONLY TO
THE EXTENT, NECESSARY IN ORDER TO CREATE, TO PERFECT, AND TO FORECLOSE THE
SECURITY INTERESTS AND LIENS CREATED HEREBY; PROVIDED, HOWEVER, THAT NOTHING IN
THIS SECTION SHALL IN ANY EVENT BE CONSTRUED TO PROVIDE THAT THE SUBSTANTIVE LAW
OF THE SITUS STATE SHALL APPLY TO THE OBLIGATIONS AND INDEBTEDNESS SECURED BY
THIS MORTGAGE OR EVIDENCED BY THE SUBSIDIARY GUARANTY OR THE OTHER LOAN
DOCUMENTS, WHICH ARE AND SHALL CONTINUE TO BE GOVERNED BY THE SUBSTANTIVE LAW OF
THE STATE OF NEW YORK. IN SUCH CONNECTION, THE PARTIES FURTHER AGREE THAT
MORTGAGEE MAY ENFORCE ITS RIGHTS UNDER THE SUBSIDIARY GUARANTY AND THE OTHER
LOAN DOCUMENTS, INCLUDING ITS RIGHT TO SUE MORTGAGOR, TO COLLECT ANY OUTSTANDING
INDEBTEDNESS, OR TO OBTAIN A JUDGMENT AGAINST MORTGAGOR IN NEW YORK OR OTHER
STATES FOR ANY DEFICIENCY PRIOR TO OR FOLLOWING FORECLOSURE, IN ACCORDANCE WITH
NEW YORK LAW, AND IF MORTGAGEE OBTAINS A DEFICIENCY JUDGMENT IN A STATE OTHER
THAN THE SITUS STATE, THEN MORTGAGEE SHALL HAVE THE RIGHT TO ENFORCE SUCH
JUDGMENT IN THE SITUS STATE, AS WELL AS IN OTHER STATES.
7.03. INTERPRETATION. In this Mortgage the singular shall include the
plural and the masculine shall include the feminine and neuter and vice versa,
if the context so requires; and the word "PERSON" shall include corporation,
partnership or other form of association or entity. The captions or headings at
the beginning of Articles, Sections and Subsections hereof are for the
convenience of the parties, are not a part of this Mortgage, and shall not be
used in construing it. The terms "INCLUDING" and "INCLUDES" shall be construed
as though followed by the words "without limitation." All exhibits attached to
this Mortgage are incorporated herein by this reference and made a part hereof.
7.04. SEVERABILITY. In case any provision in or obligation under this
Mortgage shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
7.05. SUCCESSORS AND ASSIGNS. This Mortgage applies to and shall be
binding on and inure to the benefit of all parties hereto and their respective
successors and assigns.
7.06. MORTGAGEE STATEMENTS. For any statement or accounting regarding
the Secured Obligations requested by Mortgagor, Mortgagee may charge the maximum
amount permitted by law at the time of the request for such statement, or if
there is no such maximum, then an amount consistent with Mortgagee's customary
charges therefor or the actual cost to Mortgagee thereof, whichever is greater.
7.07. NOTICES. Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally served, telexed
or sent by telefacsimile or United States mail or courier service and shall be
deemed to have been given when delivered in person or by courier service, upon
receipt of telefacsimile or telex, or three Business Days after depositing it in
the United States mail with postage prepaid and properly addressed. For the
purposes hereof, the address of each party hereto shall be as hereinabove set
forth following such party's name (provided that a copy of any notice or other
communication to Mortgagee shall also be delivered to Bankers Trust Company, 300
South Grand Avenue, 41st Floor, Los Angeles, CA 90071, Attn: Victoria A. Floyd,
or, as to any party, such other address as shall be designated by such party in
a written notice delivered to the other parties hereto.
7.08. NONFOREIGN ENTITY. Section 1445 of the Internal Revenue Code of
1986, as amended (the "INTERNAL REVENUE CODE") provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform Mortgagee that the withholding of tax will not be required in
the event of the disposition of the Mortgage Estate pursuant to the terms of
this Mortgage, Mortgagor hereby certifies, under penalty of perjury, that: (A)
Mortgagor is not a foreign corporation, foreign partnership, foreign trust or
foreign estate, as those terms are defined in the Internal Revenue Code and the
regulations promulgated thereunder; (B) Mortgagor's U.S. employer identification
number (EIN) is as set forth on the signature page of this Mortgage following
Mortgagor's name; (C) Mortgagor's principal place of business is at the address
set forth on the first page of this Mortgage following Mortgagor's name; and (D)
Mortgagor is duly qualified to do business in the state in which the Property is
situated. It is understood that Mortgagee may disclose the contents of this
certification to the Internal Revenue Service and that any false statement
contained herein could be punished by fine, imprisonment or both. Mortgagor
covenants and agrees to execute such further certificates, which shall be signed
under penalty of perjury, as Mortgagee shall reasonably require. The covenant
set forth herein shall survive the foreclosure of the lien of this Mortgage or
acceptance of a deed in lieu thereof.
[**7.09. REVOLVING CREDIT; MAXIMUM AMOUNT SECURED; MATURITY DATE. This
Mortgage secures all future advances, whether such advances are obligatory or
made at the option of Mortgagee or any Lender, which may be advanced by
Mortgagee or any Lender within twenty years from the date of this Mortgage and
which constitutes the Secured Obligations secured hereby. All such future
advances, together with interest thereon, shall be secured to the same extent
and have the same priority as if such future advances were made on the date of
the execution of this Mortgage and shall be subject to all the terms and
provisions of this Mortgage. The total amount of Secured Obligations that may be
secured at any one time by this Mortgage may decrease or increase from time to
time, but the total unpaid principal balance of the Secured Obligations so
secured at any one time by this Mortgage shall not exceed $______, plus interest
thereon, and any disbursements made for the payment of taxes, levies or
insurance on the Mortgaged Property with interest on such disbursements.**]
EXECUTED as of the day and year first above written.
SIGNED, SEALED, AND DELIVERED
IN THE PRESENCE OF: DICTAPHONE CORPORATION (U.S.), a Delaware
corporation
__________________________ (EIN # [_____])
__________________________ By:____________________
Name:__________________
<PAGE>
ACKNOWLEDGMENT
<PAGE>
EXHIBIT A
DESCRIPTION OF LAND
<PAGE>
EXHIBIT B
[DESCRIPTION OF LEASED LAND]
<PAGE>
EXHIBIT XVII
[FORM OF INTERCREDITOR AGREEMENT]
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (as amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with the
terms hereof, herein called this "AGREEMENT") is dated as of November __, 1997,
among BANKERS TRUST COMPANY, as (i) administrative agent (in such capacity,
together with its successors in such capacity, "EXISTING AGENT") for the lenders
("EXISTING LENDERS") party to the Existing Credit Agreement (as hereinafter
defined), (ii) administrative agent (in such capacity, together with its
successors in such capacity, "NEW AGENT"; together with Existing Agent, "CURRENT
AGENTS") for the lenders ("NEW LENDERS"; together with Existing Lenders,
"CURRENT LENDERS") party to the New Credit Agreement (as hereinafter defined),
and (iii) collateral agent (in such capacity, together with its successors in
such capacity, "COLLATERAL AGENT") for Existing Agent, Existing Lenders, New
Agent, New Lenders and such other Persons (as hereinafter defined) who may
become Secured Parties (as hereinafter defined) as provided herein.
R E C I T A L S
WHEREAS, Dictaphone Corporation, a Delaware corporation ("COMPANY"),
Existing Lenders and Existing Agent are parties to that certain Credit Agreement
dated as of August 7, 1995 (said Credit Agreement, as amended through and
including the date hereof and as it may hereafter be further amended, amended
and restated, supplemented or otherwise modified from time to time, being the
"EXISTING CREDIT AGREEMENT") pursuant to which Existing Lenders have made
certain credit facilities available to Company in the form of loans and letters
of credit, and it is desired that Existing Lenders and Existing Agent become
Secured Parties subject to the terms of this Agreement;
WHEREAS, Company, New Lenders and New Agent have entered into that
certain Credit Agreement dated as of even date herewith (said Credit Agreement,
as it may hereafter be amended, amended and restated, supplemented or otherwise
modified from time to time, being the "NEW CREDIT AGREEMENT"; together with the
Existing Credit Agreement, the "CURRENT CREDIT AGREEMENTS") pursuant to which
New Lenders have made certain credit facilities available to Company in the form
of loans the proceeds of which will be used on the date hereof to prepay a
portion of the loans outstanding under the Existing Credit Agreement, and it is
desired that New Lenders and New Agent become Secured Parties subject to the
terms of this Agreement;
WHEREAS, it is contemplated that, from time to time, one or more
Current Lenders and/or one or more other financial institutions (any such
Current Lenders and/or other financial institutions being referred to herein
collectively as "SUCCESSOR LENDERS") may enter into one or more agreements with
Company and/or its Subsidiaries (any such agreements, as they may exist from
time to time, being "SUCCESSOR CREDIT AGREEMENTS") which either refinance,
replace or otherwise restructure all or any portion of the indebtedness under
the Current Credit Agreements and/or any Successor Credit Agreement (the Current
Credit Agreements and any Successor Credit Agreements being referred to herein
collectively as "CREDIT AGREEMENTS"; Current Lenders and any Successor Lenders
being referred to herein collectively as "LENDERS"; and Current Agents and any
administrative agents (collectively, "SUCCESSOR AGENTS") under any Successor
Credit Agreements being referred to herein collectively as "AGENTS"), and it is
desired that any Successor Lenders and Successor Agents may become Secured
Parties subject to the terms of this Agreement;
WHEREAS, Company has entered into, or may from time to time enter
into, one or more Lender Interest Rate Agreements (as hereinafter defined) with
one or more Interest Rate Exchangers (as hereinafter defined), and it is desired
that such Interest Rate Exchangers may become Secured Parties subject to the
terms of this Agreement;
WHEREAS, (i) certain subsidiaries of Company ("ORIGINAL SUBSIDIARY
GUARANTORS") have guarantied all of the obligations of Company to Secured
Parties under the Current Credit Agreements, any Successor Credit Agreements and
any Lender Interest Rate Agreements pursuant to the terms of that certain
Subsidiary Guaranty dated as of even date herewith (as amended, amended and
restated, supplemented or otherwise modified from time to time in accordance
with the terms hereof and thereof, the "SUBSIDIARY GUARANTY") and (ii) pursuant
to the terms of the Current Credit Agreements, certain future subsidiaries of
Company ("FUTURE SUBSIDIARY GUARANTORS"; together with Original Subsidiary
Guarantors, "SUBSIDIARY GUARANTORS") are required to enter into the Subsidiary
Guaranty;
WHEREAS, Company has executed and delivered to Collateral Agent, for
the benefit of Secured Parties, (i) that certain Amended and Restated Company
Pledge Agreement dated as of even date herewith (as amended, amended and
restated, supplemented or otherwise from time to time modified in accordance
with the terms hereof and thereof, the "COMPANY PLEDGE AGREEMENT") and (ii) that
certain Amended and Restated Company Security Agreement dated as of even date
herewith (as amended, amended and restated, supplemented or otherwise modified
from time to time in accordance with the terms hereof and thereof, the "COMPANY
SECURITY AGREEMENT");
WHEREAS, (i) each Original Subsidiary Guarantor has executed and
delivered to Collateral Agent, for the benefit of Secured Parties, an Amended
and Restated Subsidiary Pledge Agreement, an Amended and Restated Subsidiary
Security Agreement, an Amended and Restated Subsidiary Patent Security Agreement
and an Amended and Restated Subsidiary Trademark Security Agreement, each dated
as of even date herewith (as amended, amended and restated, supplemented or
otherwise modified from time to time in accordance with the terms hereof and
thereof, the "ORIGINAL SUBSIDIARY PLEDGE AGREEMENTS", the "ORIGINAL SUBSIDIARY
SECURITY AGREEMENTS", the "ORIGINAL SUBSIDIARY PATENT SECURITY AGREEMENTS" and
the "ORIGINAL SUBSIDIARY TRADEMARK SECURITY AGREEMENTS," respectively, of
Original Subsidiary Guarantors) and (ii) pursuant to the terms of the Current
Credit Agreements, each Future Subsidiary Guarantor is required to execute and
deliver to Collateral Agent, for the benefit of Secured Parties, such an Amended
and Restated Subsidiary Pledge Agreement, Amended and Restated Subsidiary
Security Agreement, Amended and Restated Subsidiary Patent Security Agreement
and Amended and Restated Subsidiary Trademark Security Agreement (as amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof and thereof, the "FUTURE SUBSIDIARY PLEDGE
AGREEMENTS", the "FUTURE SUBSIDIARY SECURITY AGREEMENTS", the "FUTURE SUBSIDIARY
PATENT SECURITY AGREEMENTS" and the "FUTURE SUBSIDIARY TRADEMARK SECURITY
AGREEMENTS," respectively, of Future Subsidiary Guarantors; together with the
Original Subsidiary Pledge Agreements, the Original Subsidiary Security
Agreements, the Original Subsidiary Patent Security Agreements and the Original
Subsidiary Trademark Security Agreements, the "SUBSIDIARY PLEDGE AGREEMENTS",
the "SUBSIDIARY SECURITY AGREEMENTS", the "SUBSIDIARY PATENT SECURITY
AGREEMENTS" and the "SUBSIDIARY TRADEMARK SECURITY AGREEMENTS," respectively, of
Subsidiary Guarantors);
WHEREAS, pursuant to the terms of the Current Credit Agreements,
Company and Subsidiary Guarantors are required to grant mortgages or deeds of
trust to Collateral Agent, for the benefit of Secured Parties, on certain real
property and leasehold estates of Company and Subsidiary Guarantors after the
date hereof (as amended, amended and restated, supplemented or otherwise
modified from time to time in accordance with the terms hereof and thereof, the
"MORTGAGES" of Company and Subsidiary Guarantors);
WHEREAS, the Parties (as hereinafter defined) desire to enter into
this Agreement in order (i) to provide that Secured Parties shall be ratably
guarantied under the Subsidiary Guaranty and ratably secured by the Collateral
(as hereinafter defined), (ii) to set forth their agreement relating to the
appointment, duties and responsibilities of Collateral Agent and to set forth
certain other provisions governing the exercise of remedies under the Subsidiary
Guaranty and the Collateral Documents (as hereinafter defined), (iii) to set
forth their agreement as to the allocation of Subsidiary Guaranty Payments (as
hereinafter defined) and Proceeds (as hereinafter defined), and (iv) to
acknowledge that Asset Sales (as hereinafter defined) in respect of any
Collateral shall be made in accordance with the provisions of the Current Credit
Agreements and that the disposition of the proceeds of such Asset Sales shall be
governed by the terms of the Current Credit Agreements;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties hereby agree as follows:
SECTION 1. DEFINITIONS. The following terms used in this Agreement
shall have the following meanings:
"ASSET SALE" shall have the meaning assigned to that term in each of
the Current Credit Agreements as in effect on the date hereof.
"COLLATERAL" shall mean all of the real, personal or mixed property of
Company and Subsidiary Guarantors as to which Collateral Agent has been
granted a Lien pursuant to the Collateral Documents.
"COLLATERAL DOCUMENTS" shall mean, collectively, the Company Pledge
Agreement, the Company Security Agreement, the Subsidiary Pledge
Agreements, the Subsidiary Security Agreements, the Subsidiary Patent
Security Agreements, the Subsidiary Trademark Security Agreements and the
Mortgages.
"COMMITMENTS" shall mean, collectively, the "Revolving Loan
Commitments" as defined in the Existing Credit Agreement and any
outstanding commitments of any Secured Parties constituting Successor
Lenders to extend credit to Company and/or any of its Subsidiaries under
any Successor Credit Agreement.
"CREDIT AGREEMENT OBLIGATIONS" shall mean, collectively, the Existing
Credit Agreement Obligations, the New Credit Agreement Obligations and any
Successor Credit Agreement Obligations.
"EVENT OF DEFAULT" shall mean (i) so long as any Credit Agreement
Obligations or any Commitments remain outstanding, an "Event of Default"
under, and as defined in, any outstanding Credit Agreement to which any
Secured Party is a party, and (ii) from and after such time as no Credit
Agreement Obligations or Commitments remain outstanding, the occurrence of
an "Early Termination Date" (as defined in a Master Agreement or an
Interest Rate Swap Agreement or Interest Rate and Currency Exchange
Agreement in the form prepared by the International Swap and Derivatives
Association Inc. or a similar event under any similar swap agreement) under
any outstanding Lender Interest Rate Agreement secured by the Collateral.
"EXISTING CREDIT AGREEMENT OBLIGATIONS" shall mean the "Obligations"
as defined in the Existing Credit Agreement as in effect on the date
hereof.
"FINANCING AGREEMENTS" shall have the meaning assigned to that term in
Section 9(a) hereof.
"INDEMNIFIED LIABILITIES" shall have the meaning assigned to that term
in Section 9(c) hereof.
"INTEREST RATE EXCHANGER" shall mean any Lender that is a party to a
Lender Interest Rate Agreement.
"INTEREST RATE OBLIGATIONS" shall mean the obligations of Company
under any Lender Interest Rate Agreements secured by the Collateral,
including the obligations of Company to make payments thereunder in the
event of early termination thereof.
"LENDER INTEREST RATE AGREEMENT" shall mean any interest rate
agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement or arrangement designed to protect Company against
fluctuations in interest rates, in each case to the extent such agreement
or arrangement is entered into between Company and any Lender, in
accordance with the terms of the applicable Credit Agreement to which such
Lender is a party, with respect to outstanding indebtedness under such
Credit Agreement.
"LIEN" shall mean any lien, mortgage, pledge, assignment (to the
extent such assignment is intended to secure an obligation of any Person),
security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical effect
of any of the foregoing.
"LOAN DOCUMENTS" shall mean, as applicable, the "Loan Documents" as
defined in the Existing Credit Agreement and/or the New Credit Agreement
and/or any Successor Credit Agreement secured by the Collateral.
"LOAN PARTIES" shall mean Company and Subsidiary Guarantors.
"NEW CREDIT AGREEMENT OBLIGATIONS" shall mean the "Obligations" as
defined in the New Credit Agreement as in effect on the date hereof.
"OUTSTANDING CURRENT CREDIT AGREEMENT OBLIGATIONS" shall have the
meaning assigned to that term in Section 3(b)(1)(A) hereof.
"OUTSTANDING INTEREST RATE OBLIGATIONS" shall have the meaning
assigned to that term in Section 3(b)(1)(C) hereof.
"OUTSTANDING SUCCESSOR CREDIT AGREEMENT OBLIGATIONS" shall have the
meaning assigned to that term in Section 3(b)(1)(B) hereof.
"PARTIES" shall mean, collectively, Current Agents (in their
individual capacities and on behalf of the applicable Current Lenders), any
Successor Lender or any Successor Agent (in its individual capacity and on
behalf of the applicable Successor Lenders) becoming a party to this
Agreement in the manner provided herein, any Interest Rate Exchanger
becoming a party to this Agreement in the manner provided herein, and
Collateral Agent (in its individual capacity and on behalf of Secured
Parties).
"PERSON" shall mean and include natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
"PROCEEDS" shall have the meaning assigned to that term in Section
4(b) hereof.
"PRO RATA SHARE" shall have the meaning assigned to that term in
Section 4(c) hereof.
"REQUISITE OBLIGEES" shall have the meaning assigned to that term in
Section 3(b)(1) hereof.
"SECURED OBLIGATIONS" shall mean, collectively, the Credit Agreement
Obligations and any Interest Rate Obligations.
"SECURED PARTIES" shall mean, collectively, the Parties, Current
Lenders, and any Successor Lender represented by a Successor Agent that is
a Party.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which
more than 50% of the total voting power of shares of stock or other
ownership interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the
management and policies thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"SUBSIDIARY GUARANTY PAYMENTS" shall have the meaning assigned to that
term in Section 4(a) hereof.
"SUCCESSOR CREDIT AGREEMENT OBLIGATIONS" shall mean all obligations of
every nature of each Loan Party from time to time owed to Successor Agents,
Successor Lenders or any of them under any Successor Credit Agreements
secured by the Collateral and any related Loan Documents, whether for
principal, interest, reimbursement of amounts drawn under letters of
credit, fees, expenses, indemnification or otherwise.
SECTION 2. APPOINTMENT AS COLLATERAL AGENT. Existing Agent (on behalf
of itself and Existing Lenders) and New Agent (on behalf of itself and New
Lenders) each hereby appoints, and each Successor Lender, Successor Agent (on
behalf of itself and the Successor Lenders for whom it is acting as agent) or
Interest Rate Exchanger signing an acknowledgement hereto by such signing
appoints, Bankers Trust Company to serve as Collateral Agent, and authorizes
Collateral Agent to act as agent for such Secured Parties for the purposes of
(i) executing and delivering this Agreement and the Collateral Documents on
behalf of such Secured Parties and (ii) subject to the provisions of this
Agreement, enforcing Secured Parties' rights under the Subsidiary Guaranty and
in respect of the Collateral and enforcing the obligations of Loan Parties under
the Subsidiary Guaranty and the Collateral Documents.
SECTION 3. DECISIONS RELATING TO EXERCISE OF REMEDIES.
(a) Collateral Agent agrees (i) to make such demands and give such
notices under, and to consent to such amendments, modifications or waivers with
respect to, the Subsidiary Guaranty and/or any of the Collateral Documents, (ii)
to take such actions to enforce the Subsidiary Guaranty and/or any of the
Collateral Documents and to foreclose upon, collect, release or otherwise
dispose of the Collateral or any portion thereof, and (iii) after the occurrence
and during the continuation of an Event of Default, to vote the Pledged Shares
(as defined in the Company Pledge Agreement or any of the Subsidiary Pledge
Agreements, as applicable) pursuant to Section 7(b)(i) of the Company Pledge
Agreement or the applicable Subsidiary Pledge Agreement, as the case may be, in
each case as may be requested or directed by Requisite Obligees as provided
herein.
(b)(1) For purposes of this Agreement, "REQUISITE OBLIGEES" means, as
of any date of determination with respect to any request or direction by Secured
Parties to Collateral Agent:
(A) so long as any Existing Credit Agreement Obligations or any
Commitments under the Existing Credit Agreement or any New Credit Agreement
Obligations shall remain outstanding, Secured Parties holding (or
representing) 51% or more of the sum of (i) the aggregate Tranche B Term
Loan Exposure (as defined in the Existing Credit Agreement as in effect on
the date hereof) of all Existing Lenders plus (ii) the aggregate Revolving
Loan Exposure (as defined in the Existing Credit Agreement as in effect on
the date hereof) of all Existing Lenders plus (iii) the aggregate Loan
Exposure (as defined in the New Credit Agreement as in effect on the date
hereof) of all New Lenders (the sum of the amounts referred to in the
immediately preceding clauses (i)-(iii) is hereinafter referred to as the
"OUTSTANDING CURRENT CREDIT AGREEMENT OBLIGATIONS");
(B) if all Existing Credit Agreement Obligations and New Credit
Agreement Obligations have been paid in full and all Commitments under the
Existing Credit Agreement have been terminated, so long as any Successor
Credit Agreement Obligations shall remain outstanding, Secured Parties
holding (or representing) 51% or more of the sum of the aggregate principal
amounts of (i) all loans outstanding under all Successor Credit Agreements
secured by the Collateral, (ii) all other credit facilities utilized under
all such Successor Credit Agreements (including the stated amounts of all
outstanding letters of credit issued thereunder and the amount of any
unreimbursed drawings thereunder), and (iii) all outstanding unused
Commitments under all such Successor Credit Agreements (the sum of the
amounts referred to in the immediately preceding clauses (i)-(iii) is
hereinafter referred to as the "OUTSTANDING SUCCESSOR CREDIT AGREEMENT
OBLIGATIONS"); and
(C) if all Credit Agreement Obligations have been paid in full and all
Commitments have been terminated, Secured Parties holding (or representing)
51% or more of the aggregate amount of all Interest Rate Obligations then
outstanding under all Lender Interest Rate Agreements (such amount being
hereinafter referred to as the "OUTSTANDING INTEREST RATE OBLIGATIONS").
(b)(2) For purposes of the definition of "Requisite Obligees" set
forth herein, subject to the applicable provisions of the respective Credit
Agreement, each Agent shall be deemed to hold or represent, and shall be
entitled to vote and give notices and directions to Collateral Agent in respect
of, the applicable Credit Agreement Obligations in respect of such Credit
Agreement.
(c) Each Party on behalf of itself and, in the case of any Agent, on
behalf of the applicable Lenders, agrees that Collateral Agent may act as
Requisite Obligees may request or direct (regardless of whether any individual
Party or Secured Party agrees, disagrees or abstains with respect to such
request or direction), that Collateral Agent shall have no liability for acting
in accordance with such request or direction (provided such action does not
conflict with the express terms of this Agreement) and that no Party or Secured
Party shall have any liability to any other Party or Secured Party for any such
request or direction. Collateral Agent shall give prompt written notice to all
Parties of any action taken pursuant to the instructions of Requisite Obligees;
provided that the failure to give any such notice shall not impair the right of
Collateral Agent to take any such action or the validity or enforceability under
this Agreement or the Subsidiary Guaranty or any Collateral Document of the
action so taken. Each Interest Rate Exchanger that is a Party acknowledges and
agrees that, until all Credit Agreement Obligations have been paid in full and
all Commitments have been terminated, the only right of such Party under the
Subsidiary Guaranty and the Collateral Documents is to be guarantied under the
Subsidiary Guaranty and secured by the Collateral as and to the extent provided
herein and therein and to receive a share of any Subsidiary Guaranty Payments
and/or Proceeds to the extent and at the times provided under Section 4 hereof
and any applicable provisions of the Subsidiary Guaranty and/or the Collateral
Documents; provided that, until all Credit Agreement Obligations have been paid
in full and all Commitments have been terminated, in no event shall any rights
or benefits accorded any Interest Rate Exchanger include any right to challenge,
contest or dispute any action taken, or any decision made to refrain from taking
any action, by Collateral Agent or any other Party in compliance with this
Agreement, the Subsidiary Guaranty and the applicable Collateral Documents, and
until all Credit Agreement Obligations have been paid in full and all
Commitments have been terminated, in no event shall the guaranty by Subsidiary
Guarantors of the Interest Rate Obligations pursuant to the Subsidiary Guaranty
or the security interests granted for the benefit of Interest Rate Exchangers
under the Collateral Documents entitle any Interest Rate Exchanger to enforce
its rights in respect of the Subsidiary Guaranty or the Collateral except
through Collateral Agent in accordance with this Agreement.
(d) Collateral Agent may at any time request directions from Requisite
Obligees with respect to any course of action or other matter relating hereto or
to the Subsidiary Guaranty or the Collateral Documents. Directions given by
Requisite Obligees to Collateral Agent hereunder shall be binding on all Parties
and Secured Parties for all purposes (provided such directions do not conflict
with the express terms of this Agreement).
(e) Each Party on behalf of itself and, in the case of any Agent, on
behalf of the applicable Lenders, agrees not to take any action whatsoever to
enforce any term or provision of the Subsidiary Guaranty or any Collateral
Document, or to enforce any of its rights in respect of the Subsidiary Guaranty
or any of the Collateral, except through Collateral Agent in accordance with
this Agreement.
SECTION 4. APPLICATION OF SUBSIDIARY GUARANTY PAYMENTS AND PROCEEDS
FROM ENFORCEMENT OF COLLATERAL DOCUMENTS.
(a) Any and all amounts (other than amounts constituting Proceeds)
actually received by Collateral Agent in connection with the enforcement of the
Subsidiary Guaranty ("SUBSIDIARY GUARANTY PAYMENTS") shall be promptly applied
by Collateral Agent as provided in the Subsidiary Guaranty and in Section 4(c)
hereof. Until any Subsidiary Guaranty Payments are so applied, Collateral Agent
shall hold such Subsidiary Guaranty Payments in its custody in accordance with
its regular procedures for handling deposited funds.
(b) Any and all amounts actually received by Collateral Agent (i) as
loss payee in respect of any casualty insurance maintained by any Loan Party in
respect of any Collateral, (ii) in connection with the enforcement of any of the
Collateral Documents, or (iii) as agent for Secured Parties in connection with a
distribution in any bankruptcy, insolvency or similar proceeding involving any
Loan Party, including (in the case of both clause (i) and (ii) above) the
proceeds of any collection, sale or other disposition of the Collateral or any
portion thereof (all such amounts described in clauses (i), (ii) and (iii) above
being, collectively, "PROCEEDS") shall be promptly applied by Collateral Agent
as provided for in the respective Collateral Documents and in Section 4(c)
hereof. Until any Proceeds are so applied, Collateral Agent shall hold such
Proceeds in its custody in accordance with its regular procedures for handling
deposited funds.
(c) Until all of the Secured Obligations have been paid in full and
all Commitments have been terminated, any Subsidiary Guaranty Payments or
Proceeds received by Collateral Agent shall be applied in such a manner that
each Secured Party shall receive its Pro Rata Share of the aggregate amount of
such Subsidiary Guaranty Payments or Proceeds, as the case may be. For purposes
of this Agreement, "PRO RATA SHARE" shall mean, when calculating any Secured
Party's portion of any distribution or amount, an amount (expressed as a
percentage) equal to a fraction the numerator of which is the aggregate amount
of such Secured Party's then outstanding Secured Obligations and the denominator
of which is the then outstanding amount aggregate of all Secured Obligations.
Solely for purposes of determining the respective Pro Rata Shares of Secured
Parties at the time any Subsidiary Guaranty Payments or Proceeds are to be
distributed under this Section 4, (i) the aggregate amount of the outstanding
Secured Obligations under any Credit Agreement shall be deemed to be the sum of
(x) the aggregate amount of principal and interest then due and payable in
respect of any outstanding loans under such Credit Agreement plus (y) without
duplication, the aggregate stated amount of all letters of credit then
outstanding under such Credit Agreement and any unreimbursed drawings thereunder
plus (z) the amount of any commitment fees and/or letter of credit fees then due
and payable under such Credit Agreement, and (ii) the aggregate amount of the
outstanding Secured Obligations under any Lender Interest Rate Agreement secured
by the Collateral shall be deemed to be the aggregate amount of all obligations
of Company then due and payable (exclusive of expenses or similar liabilities
but including any early termination payments then due thereunder) under such
Lender Interest Rate Agreement.
(d) Any Subsidiary Guaranty Payments or Proceeds to be distributed to
any Lender in accordance with this Section 4 shall be distributed by Collateral
Agent to the applicable Agent for distribution to such Lender (or, in the case
of any Successor Lender not represented by an Agent, as directed by such
Successor Lender).
SECTION 5. ASSET SALES. Current Agents hereby acknowledge and agree,
and each Successor Lender, Successor Agent and/or Interest Rate Exchanger, by
executing an acknowledgement hereto, acknowledges and agrees (which agreement
shall be binding upon each applicable Lender), that (i) the Current Credit
Agreements each permit, and any Successor Credit Agreements may permit, certain
Asset Sales by Company and its Subsidiaries, (ii) such Asset Sales may, to the
extent permitted by such Credit Agreements, involve the sale or disposition of
all or a portion of the Collateral, and (iii) Collateral Agent may release the
assets that are the subject of such Asset Sales free and clear of the Liens
created pursuant to the applicable Collateral Documents in accordance with the
terms of such Collateral Documents so long as the proceeds thereof are allocated
and applied as provided in the Current Credit Agreements and, to the extent not
inconsistent with the allocation and application provided for in the Current
Credit Agreements, any Successor Credit Agreements.
SECTION 6. INFORMATION.
In the event Collateral Agent proceeds to foreclose upon, collect,
sell or otherwise dispose of, or to take any other action with respect to, the
Collateral or any portion thereof, or in the event Collateral Agent otherwise
proceeds to enforce the Subsidiary Guaranty or any Collateral Document or
proposes to take any other action pursuant to this Agreement or the Subsidiary
Guaranty or any Collateral Document or otherwise requests instructions from
Requisite Obligees as provided herein, upon the request of Collateral Agent,
each of the following Parties agrees to provide to Collateral Agent the
information described below:
(a) Existing Agent (on behalf of Existing Lenders) agrees promptly
from time to time, as reasonably requested by Collateral Agent, to notify
Collateral Agent in reasonable detail of (i) the aggregate amount of the
Outstanding Current Credit Agreement Obligations in respect of the Existing
Credit Agreement as at such date as Collateral Agent may specify, (ii) the
current Commitment of each Existing Lender under the Existing Credit Agreement,
and (iii) any amount received by Existing Agent that will be applied (but has
not yet been so applied) to the payment of all or any portion of the Outstanding
Current Credit Agreement Obligations described in clause (i) above. Existing
Agent shall certify as to such amounts and Collateral Agent shall be entitled to
rely conclusively upon such certification.
(b) New Agent (on behalf of New Lenders) agrees promptly from time to
time, as reasonably requested by Collateral Agent, to notify Collateral Agent in
reasonable detail of (i) the aggregate amount of the Outstanding Current Credit
Agreement Obligations in respect of the New Credit Agreement as at such date as
Collateral Agent may specify and (ii) any amount received by New Agent that will
be applied (but has not yet been so applied) to the payment of all or any
portion of the Outstanding Current Credit Agreement Obligations described in
clause (i) above. New Agent shall certify as to such amounts and Collateral
Agent shall be entitled to rely conclusively upon such certification.
(c) Each Successor Lender or Successor Agent (on behalf of the
applicable Successor Lenders) that is a Party, by signing an acknowledgment to
this Agreement, agrees that such Successor Lender or Successor Agent, as the
case may be, will promptly from time to time, as reasonably requested by
Collateral Agent, notify Collateral Agent in reasonable detail of (i) the
aggregate amount of the Outstanding Successor Credit Agreement Obligations in
respect of the applicable Successor Credit Agreement as at such date as
Collateral Agent may specify, (ii) the current Commitment of each Successor
Lender under such Successor Credit Agreement, and (iii) any amount received by
such Successor Lender or Successor Agent, as the case may be, that will be
applied (but has not yet been so applied) to the payment of all or any portion
of the Outstanding Successor Credit Agreement Obligations described in clause
(i) above. Such Successor Lender or Successor Agent shall certify as to such
amounts and Collateral Agent shall be entitled to rely conclusively upon such
certification.
(d) Each Interest Rate Exchanger, by signing an acknowledgment to this
Agreement, agrees that such Interest Rate Exchanger will promptly from time to
time, as reasonably requested by Collateral Agent, notify Collateral Agent in
reasonable detail of (i) the notional amount under each applicable Lender
Interest Rate Agreement and the amount, if any, then due and payable (exclusive
of expenses and similar liabilities, but including any early termination
payments then due) by Company in accordance with such Lender Interest Rate
Agreement as at such date as Collateral Agent may specify, and (ii) any amount
received by such Interest Rate Exchanger that will be applied (but has not yet
been so applied) to the payment of all or any portion of any amounts then due
and payable by Company as described in clause (i) above. Such Interest Rate
Exchanger shall certify as to such amounts and Collateral Agent shall be
entitled to rely conclusively upon such certification.
SECTION 7. SUCCESSOR CREDIT AGREEMENTS AND LENDER INTEREST RATE
AGREEMENTS TO BE GUARANTIED UNDER THE SUBSIDIARY GUARANTY AND SECURED BY THE
COLLATERAL.
(a) Each Successor Lender becoming party to a Successor Credit
Agreement, or any Successor Agent for such Successor Lender, may cause the
applicable Successor Credit Agreement Obligations to be guarantied under the
Subsidiary Guaranty and secured by the Collateral by signing a counterpart of an
acknowledgment hereto, in the form contained on the signature pages hereof,
pursuant to which such Successor Lender or Successor Agent (on its own behalf
and on behalf of such Successor Lender) agrees to be bound by the terms of this
Agreement, and by delivering such signed counterpart, acknowledged by all
applicable Loan Parties, to Collateral Agent; provided that in no event shall
any amendment, amendment and restatement or other modification of either of the
Current Credit Agreements after the date hereof cause such Current Credit
Agreement to be deemed to be a Successor Credit Agreement or require the
applicable Agent to execute such an acknowledgement to this Agreement in
connection with such amendment, amendment and restatement or other modification.
(b) Each Interest Rate Exchanger becoming a party to a Lender Interest
Rate Agreement may cause the applicable Interest Rate Obligations to be
guarantied under the Subsidiary Guaranty and secured by the Collateral by
signing a counterpart of an acknowledgment hereto, in the form contained on the
signature pages hereof, pursuant to which such Interest Rate Exchanger agrees to
be bound by the terms of this Agreement, and by delivering such signed
counterpart, acknowledged by all applicable Loan Parties, to Collateral Agent.
SECTION 8. PARI PASSU STATUS OF LIENS. Each Party, on behalf of itself
and, in the case of any Agent, on behalf of the applicable Lenders, hereby
agrees (i) not to contest in any manner, or to raise any objection or defense
with respect to (a) the enforceability of the Subsidiary Guaranty or any
Collateral Document as it relates to any of the Secured Obligations or (b) the
validity, perfection or priority (as set forth below in this Section 8) of any
Lien in respect of any of the Collateral as security for any of the Secured
Obligations and (ii) that, subject to the other terms of this Agreement, all
Secured Parties shall have the ratable benefit of the Subsidiary Guaranty and
the benefit of a pari passu first priority security interest in all of the
Collateral.
SECTION 9. DISCLAIMERS, INDEMNITY, ETC.
(a) Collateral Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement, the Subsidiary Guaranty and the
Collateral Documents, and Collateral Agent shall not, by reason of this
Agreement, the Subsidiary Guaranty or any of the Collateral Documents, be a
trustee for any Party or Secured Party or have any other fiduciary obligation to
any Party or Secured Party (including without limitation any obligation under
the Trust Indenture Act of 1939, as amended). Collateral Agent shall not be
responsible to any Party or Secured Party for any recitals, statements,
representations or warranties contained in this Agreement, any Credit Agreement
or any other Loan Document, any Lender Interest Rate Agreement, the Subsidiary
Guaranty or any Collateral Document (collectively, the "FINANCING AGREEMENTS")
or in any certificate or other document or instrument referred to or provided
for in, or received by any of them under, any of the Financing Agreements, or
for the genuineness, validity, enforceability, effectiveness, sufficiency or
value of any of the Financing Agreements or any other document or instrument
referred to or provided for therein, or for the validity, perfection or priority
of any Lien under any of the Collateral Documents, or for any failure by any
Loan Party to perform any of its respective obligations under any of the
Financing Agreements. Collateral Agent may employ agents and attorneys-in-fact
and shall not be responsible, except as to money or securities received by it or
its authorized agents, for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Neither Collateral Agent
nor any of its directors, officers, employees or agents shall be liable or
responsible for any action taken or omitted to be taken by it or them under or
in connection with any Financing Agreement, except for its or their own gross
negligence or willful misconduct.
(b) Collateral Agent shall be entitled to rely upon any certification,
notice or other communication (including any thereof by telex, telecopy,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to any Loan Party),
independent accountants and other experts selected by Collateral Agent with
reasonable care. As to any matters not expressly provided for by this Agreement,
the Subsidiary Guaranty or any Collateral Document, Collateral Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
and under the Subsidiary Guaranty and the Collateral Documents in accordance
with instructions signed by Requisite Obligees, and such instructions of
Requisite Obligees, and any action taken or failure to act pursuant thereto,
shall be binding on all of the Parties and Secured Parties.
(c) Each Agent (on behalf of the applicable Lenders) and each
Successor Lender or Interest Rate Exchanger that is a Party each hereby agrees
that such Secured Party, and all other Secured Parties represented by it, shall
each indemnify Collateral Agent and its directors, officers, employees and
agents (collectively, "INDEMNITEES"), ratably in accordance with the amount of
the Secured Obligations held by each such Secured Party, to the extent neither
reimbursed by any Loan Party nor reimbursed out of any Subsidiary Guaranty
Payments or any Proceeds pursuant to the applicable provisions of the Subsidiary
Guaranty and/or any Collateral Documents, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever (collectively,
"INDEMNIFIED LIABILITIES") which may be imposed on, incurred by or asserted
against any Indemnitee in any way relating to or arising out of any of the
Financing Agreements or any other documents or instruments contemplated by or
referred to therein or any of the transactions contemplated thereby or the
enforcement of any of the terms of any thereof; provided, however, that no such
Secured Party shall be required to indemnify any Indemnitee in respect of any
Indemnified Liability to the extent it arises from the gross negligence or
willful misconduct of such Indemnitee.
(d) Except for action expressly required of Collateral Agent hereunder
or under the Subsidiary Guaranty or any Collateral Document, Collateral Agent
shall, notwithstanding anything to the contrary in Section 9(c) hereof, in all
cases be fully justified in failing or refusing to act hereunder or under the
Subsidiary Guaranty or under any or all of the Collateral Documents unless and
until it shall be further indemnified to its satisfaction by the Parties and/or
the Secured Parties against any and all Indemnified Liabilities which may be
incurred by it by reason of taking or refusing to take any such action. In
addition, Collateral Agent shall in no event be required to take any action that
is, in its opinion, contrary to law or to the terms of this Agreement or the
Subsidiary Guaranty or any or all of the Collateral Documents or which would, in
its opinion, subject any Indemnitee to liability.
(e) Collateral Agent may deem and treat the registered holder of any
Secured Obligation or, if any Secured Obligation is unregistered, the holder of
any promissory note or other evidence of indebtedness relating to such Secured
Obligation, as the owner and holder thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof (and of the
registration of such assignment or transfer, in the case of a Secured Obligation
that is registered), in form reasonably satisfactory to Collateral Agent and
signed by the new registered holder thereof or by the new holder, transferee or
assignee of such note or other evidence of indebtedness, as the case may be (and
by the registrar in respect of any such registered Secured Obligation), shall
have been filed with Collateral Agent. Any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is such registered holder or the holder of such note or other evidence
of indebtedness, as the case may be, shall be conclusive and binding on any
subsequent registered holder of such Secured Obligation or any subsequent
holder, transferee or assignee of such note or other evidence of indebtedness
(and of any note or notes or other evidences of indebtedness issued in exchange
therefor), as the case may be.
(f) Except as expressly provided herein and in the applicable
Collateral Document, Collateral Agent (i) shall have no duty to take any
affirmative steps with respect to the collection of any amounts payable in
respect of any of the Collateral, (ii) shall incur no liability as a result of
any sale of any Collateral at any private sale authorized by Requisite Obligees,
even though the price at which such Collateral was sold at such private sale was
less than the price which might have been obtained at a public sale, and (iii)
except as otherwise expressly directed by Requisite Obligees, shall have no
obligation to delay the sale of any Collateral for the period of time necessary
to permit a public sale thereof (including any period necessary to permit the
issuer of any Pledged Shares (as defined in the Company Pledge Agreement or any
of the Subsidiary Pledge Agreements, as applicable) to register such Pledged
Shares for a form of public sale requiring registration under the Securities Act
of 1933 or under any applicable state securities laws, even if such issuer
would, or should, agree to so register such Pledged Shares).
(g) (i) Collateral Agent may resign at any time by giving written
notice of its resignation to the Parties, such resignation to become effective
upon (x) the appointment of a successor Collateral Agent and (y) the acceptance
of such appointment by such successor Collateral Agent. As promptly as
practicable after the giving of any such notice by Collateral Agent, Requisite
Obligees shall appoint a successor Collateral Agent. If no successor Collateral
Agent shall have been so appointed and shall have accepted such appointment
within 90 days after Collateral Agent gives the aforesaid notice of resignation,
Collateral Agent may apply to any court of competent jurisdiction to appoint a
successor Collateral Agent to act until such time, if any, as a successor
Collateral Agent shall have been appointed as provided in this Section 9(g)(i).
Any successor Collateral Agent so appointed by such court shall immediately and
without further act be superseded by any successor Collateral Agent appointed by
Requisite Obligees as provided in this Section 9(g)(i); and
(ii) Requisite Obligees may, at any time upon 10 days' prior
written notice thereof given to the other Parties, remove Collateral Agent for
cause and appoint a successor Collateral Agent, such removal to be effective
upon (x) the appointment of such successor Collateral Agent and (y) the
acceptance of such appointment by such successor Collateral Agent; and
(iii) Upon the acceptance of any appointment as a successor
Collateral Agent under this Section 9(g), the successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Collateral Agent under this Agreement, the
Subsidiary Guaranty and the Collateral Documents, and the retiring or removed
Collateral Agent shall promptly (A) transfer to such successor Collateral Agent
all sums, securities and other items of Collateral held under any of the
Collateral Documents, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Collateral Agent under this Agreement, the Subsidiary Guaranty and the
Collateral Documents, and (B) execute and deliver to such successor Collateral
Agent any amendments to financing statements, and take any other actions, as may
be necessary or appropriate in connection with the assignment to such successor
Collateral Agent of the security interests created under the Collateral
Documents, whereupon such retiring or removed Collateral Agent shall be
discharged from its duties and obligations under this Agreement, the Subsidiary
Guaranty and the Collateral Documents; and
(iv) After any retiring or removed Collateral Agent's resignation
or removal hereunder as Collateral Agent, the provisions of this Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it under
this Agreement, the Subsidiary Guaranty and the Collateral Documents while it
was Collateral Agent hereunder; and
(v) Every successor Collateral Agent appointed pursuant to this
Section 9(g) in each case (i) shall be a bank or trust company in good standing
and having power to act as Collateral Agent hereunder, incorporated under the
laws of the United States of America or any State thereof or the District of
Columbia and having its principal office within the 48 contiguous States, (ii)
shall have capital, surplus and undivided profits of not less than $500,000,000,
and (iii) shall be reasonably acceptable to Company.
(vi) Any corporation into which Collateral Agent may be merged,
or with which it may be consolidated, or any corporation resulting from any
merger or consolidation to which Collateral Agent shall be a party, shall be
Collateral Agent under this Agreement, the Subsidiary Guaranty and the
Collateral Documents without the execution or filing of any document or
instrument or any further act on the part of any Party; provided that if, as a
result thereof, Collateral Agent no longer meets the requirements set forth in
Section 9(g)(v), Collateral Agent shall promptly resign as provided in Section
9(g)(i).
(h) Except as expressly provided herein or in the Subsidiary Guaranty
or any of the Collateral Documents with respect to any Subsidiary Guaranty
Payments or Proceeds actually received by Collateral Agent, in no event shall
Collateral Agent or any other Secured Party be liable or responsible to any
Secured Party for any funds received by any Secured Party from Company or any
other Loan Party or any investments thereof.
SECTION 10. AMENDMENTS.
This Agreement may be modified or waived only by an instrument or
instruments in writing signed by each Party and, so long as no event of default
has occurred and is continuing, with respect to any amendments which adversely
affect any Loan Party, such Loan Party.
SECTION 11. DESIGNATION OF COLLATERAL AGENT ON FINANCING STATEMENTS.
For purposes of any financing statements filed with respect to any of
the Collateral under the Uniform Commercial Code as in effect in any applicable
jurisdiction, Bankers Trust Company, in its capacity as Collateral Agent under
the applicable Collateral Document, may be referred to as "Bankers Trust
Company", "Bankers Trust Company, as Agent", "Bankers Trust Company, as
Administrative Agent", or "Bankers Trust Company, as Collateral Agent".
SECTION 12. MISCELLANEOUS.
(a) All notices and other communications provided for herein shall be
in writing and may be personally served, telecopied or sent by United States
mail or overnight courier and shall be deemed to have been given when delivered
in person or by overnight courier, upon receipt of telecopy or four Business
Days after deposit in the United States mail, registered or certified, with
postage prepaid and properly addressed. For the purposes hereof, the addresses
of the Parties (until notice of a change thereof is delivered as provided in
this Section 11(a)) shall be as set forth under each Party's name on the
signature pages hereof.
(b) This Agreement shall be binding upon and inure to the benefit of
Collateral Agent, each other Party, each Secured Party and their respective
successors and assigns.
(c) This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same instrument, and any
Party may execute this Agreement by signing any such counterpart; provided that
any Successor Lender (or any Successor Agent on behalf of any Successor Lender)
or any Interest Rate Exchanger desiring the benefit of this Agreement shall sign
a counterpart of this Agreement as provided in Section 7(a) or 7(b) hereof, as
the case may be.
(d) This Agreement shall become effective (i) as to Collateral Agent,
Existing Agent and New Agent upon (A) execution by each such Party of a
counterpart hereof and delivery of such Party's counterpart to Collateral Agent
and (B) acknowledgment hereof by all applicable Loan Parties and (ii) as to any
Successor Lender (or any Successor Agent on behalf of any Successor Lender) or
any Interest Rate Exchanger upon the execution by such Person of a counterpart
to this Agreement and delivery of such executed counterpart, acknowledged by all
applicable Loan Parties, to Collateral Agent as provided in Section 7(a) or 7(b)
hereof, as the case may be.
(e) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
BANKERS TRUST COMPANY,
as Administrative Agent for Existing
Lenders
By: _________________________________
Name:_________________________________
Title:________________________________
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Zadroga
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Victoria A. Floyd
<PAGE>
BANKERS TRUST COMPANY,
as Administrative Agent for New Lenders
By: _________________________________
Name:_________________________________
Title:________________________________
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Zadroga
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Victoria A. Floyd
<PAGE>
BANKERS TRUST COMPANY,
as Collateral Agent
By: _________________________________
Name:_________________________________
Title:________________________________
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Zadroga
With a copy to:
Bankers Trust Company
300 South Grand Avenue
Los Angeles, California 90071
Attn: Victoria A Floyd
<PAGE>
Acknowledged and Agreed:
DICTAPHONE CORPORATION,
a Delaware corporation
By: ____________________
Name: __________________
Title: __________________
[SUBSIDIARY GUARANTOR],
a Delaware corporation
By: ____________________
Name: __________________
Title: __________________
<PAGE>
EXHIBIT A
FORM OF
COUNTERPART AND ACKNOWLEDGMENT FOR
ADDITIONAL PARTIES TO INTERCREDITOR AGREEMENT
Reference is hereby made to that certain Intercreditor Agreement dated,
as of November __, 1997 (this "AGREEMENT," the terms defined therein being used
herein as therein defined), among Bankers Trust Company, as Existing Agent, as
New Agent, and as Collateral Agent, in which this Counterpart and Acknowledgment
is incorporated. The undersigned [Successor Lender] [Successor Agent] [Interest
Rate Exchanger] has entered into the [Successor Credit Agreement] [Lender
Interest Rate Agreement] described below with Company and/or one or more of its
Subsidiaries [and the Successor Lenders represented by such Successor Agent],
and the undersigned desires that the [Successor Credit Agreement Obligations]
[Interest Rate Obligations] thereunder be guarantied under the Subsidiary
Guaranty and secured by the Collateral. The undersigned [Successor Lender]
[Successor Agent] [Interest Rate Exchanger] hereby appoints Collateral Agent to
act on its behalf[, and on behalf of the Successor Lenders for which it acts as
administrative agent,] in accordance with the terms of this Agreement, the
Subsidiary Guaranty and the Collateral Documents and hereby acknowledges the
terms of this Agreement and agrees to be bound hereby.
The [Successor Credit Agreement] [Lender Interest Rate Agreement]
described above is that certain [Insert description of Successor Credit
Agreement or Lender Interest Rate Agreement.]
[Insert Name of Successor Lender,
Successor Agent or Interest Rate Exchanger]
Date: _____________________ By: ______________________
Name: ______________________
Title: ______________________
Notice Address:
------------------------------
------------------------------
------------------------------
<PAGE>
Acknowledged and Agreed:
DICTAPHONE CORPORATION,
a Delaware corporation
By: ____________________
Name: __________________
Title: __________________
[SUBSIDIARY GUARANTOR],
a Delaware corporation
By: ____________________
Name: __________________
Title: __________________
<PAGE>
CREDIT AGREEMENT
DATED AS OF NOVEMBER 14, 1997
AMONG
DICTAPHONE CORPORATION,
AS BORROWER,
THE LENDERS LISTED HEREIN,
AS LENDERS,
MORGAN STANLEY SENIOR FUNDING, INC.,
AS SYNDICATION AGENT,
AND
BANKERS TRUST COMPANY,
AS ADMINISTRATIVE AGENT
<PAGE>
DICTAPHONE CORPORATION
CREDIT AGREEMENT
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . 2
1.1 Certain Defined Terms . . . . . . . . . . . . . . . 2
1.2 Accounting Terms; Utilization of GAAP for
Purposes of Calculations Under Agreement. . . . . . 26
1.3 Other Definitional Provisions . . . . . . . . . . . 27
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS . . 27
2.1 Commitments; Making of Loans; the Register;
Optional Notes. . . . . . . . . . . . . . . . . . . 27
2.2 Interest on the Loans . . . . . . . . . . . . . . . 30
2.3 Fees. . . . . . . . . . . . . . . . . . . . . . . . 34
2.4 Repayments and Prepayments; General Provisions
Regarding Payments. . . . . . . . . . . . . . . . . 34
2.5 Use of Proceeds . . . . . . . . . . . . . . . . . . 38
2.6 Special Provisions Governing Eurodollar Rate
Loans . . . . . . . . . . . . . . . . . . . . . . . 39
2.7 Increased Costs; Taxes; Capital Adequacy. . . . . . 41
2.8 Obligation of Lenders to Mitigate . . . . . . . . . 46
2.9 Removal of a Lender.. . . . . . . . . . . . . . . . 46
SECTION 3. [INTENTIONALLY OMITTED]. . . . . . . . . . . . 47
SECTION 4. CONDITIONS TO LOANS. . . . . . . . . . . . . . 47
4.1 Certain Conditions to Loans . . . . . . . . . . . . 47
4.2 Additional Conditions to Loans. . . . . . . . . . . 50
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES . . . 51
5.1 Organization, Powers, Qualification, Good
Standing, Business, Subsidiaries and Shared
Collateral Documents. . . . . . . . . . . . . . . . 51
5.2 Authorization of Borrowing, etc.. . . . . . . . . . 52
5.3 Financial Condition . . . . . . . . . . . . . . . . 53
5.4 No Material Adverse Change; No Restricted Junior
Payments. . . . . . . . . . . . . . . . . . . . . . 54
5.5 Title to Properties; Liens. . . . . . . . . . . . . 54
5.6 Litigation; Adverse Facts . . . . . . . . . . . . . 54
5.7 Payment of Taxes. . . . . . . . . . . . . . . . . . 55
5.8. Real Property Collateral . . . . . . . . . . . 55
5.9 Performance of Agreements; Materially Adverse
Agreements. . . . . . . . . . . . . . . . . . . . . 55
5.10 Governmental Regulation. . . . . . . . . . . . 55
5.11 Securities Activities. . . . . . . . . . . . . 56
5.12 Employee Benefit Plans . . . . . . . . . . . . 56
5.13 Certain Fees . . . . . . . . . . . . . . . . . 56
5.14 Environmental Protection . . . . . . . . . . . 57
5.15 Employee Matters . . . . . . . . . . . . . . . 58
5.16 Solvency . . . . . . . . . . . . . . . . . . . 58
5.17 Disclosure . . . . . . . . . . . . . . . . . . 58
SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS. . . . . . . . 59
6.1 Financial Statements and Other Reports. . . . . . . 59
6.2 Corporate Existence, etc. . . . . . . . . . . . . . 65
6.3 Payment of Taxes and Claims; Tax Consolidation. . . 65
6.4 Maintenance of Properties; Insurance. . . . . . . . 65
6.5 Inspection; Lender Meeting. . . . . . . . . . . . . 67
6.6 Compliance with Laws, etc.. . . . . . . . . . . . . 67
6.7 Environmental Disclosure and Inspection . . . . . . 67
6.8 Interest Rate Protection. . . . . . . . . . . . . . 69
6.9 Execution of Subsidiary Guaranty and Shared
Collateral Documents by Certain Subsidiaries and
Future Subsidiaries . . . . . . . . . . . . . . . . 69
6.10 Additional Mortgages . . . . . . . . . . . . . 70
6.11 Assignability and Recording of Lease
Agreements. . . . . . . . . . . . . . . . . . . . . 72
SECTION 7. COMPANY'S NEGATIVE COVENANTS . . . . . . . . . 72
7.1 Indebtedness. . . . . . . . . . . . . . . . . . . . 72
7.2 Liens and Related Matters . . . . . . . . . . . . . 74
7.3 Investments; Joint Ventures . . . . . . . . . . . . 75
7.4 Contingent Obligations. . . . . . . . . . . . . . . 76
7.5 Restricted Junior Payments. . . . . . . . . . . . . 78
7.6 Financial Covenants . . . . . . . . . . . . . . . . 78
7.7 Restriction on Fundamental Changes; Asset Sales
and Acquisitions. . . . . . . . . . . . . . . . . . 81
7.8 Consolidated Capital Expenditures . . . . . . . . . 83
7.9 Restriction on Leases . . . . . . . . . . . . . . . 83
7.10 Sales and Lease-Backs. . . . . . . . . . . . . 84
7.11 Sale or Discount of Receivables. . . . . . . . 84
7.12 Transactions with Shareholders and
Affiliates. . . . . . . . . . . . . . . . . . . . . 84
7.13 Disposal of Subsidiary Stock . . . . . . . . . 85
7.14 Conduct of Business. . . . . . . . . . . . . . 85
7.15 Amendments or Waivers of Stockholders'
Agreement; Amendments of Documents Relating
to Subordinated Indebtedness and
Receivables Program Agreements; Designation
of "Designated Senior Indebtedness". . . . . . 85
7.16 Fiscal Year. . . . . . . . . . . . . . . . . . 86
7.17 Receivables Programs . . . . . . . . . . . . . 86
SECTION 8. EVENTS OF DEFAULT. . . . . . . . . . . . . . . 87
8.1 Failure to Make Payments When Due . . . . . . . . . 87
8.2 Default in Other Agreements . . . . . . . . . . . . 87
8.3 Breach of Certain Covenants . . . . . . . . . . . . 87
8.4 Breach of Warranty. . . . . . . . . . . . . . . . . 87
8.5 Other Defaults Under Loan Documents . . . . . . . . 88
8.6 Involuntary Bankruptcy; Appointment of Receiver,
etc.. . . . . . . . . . . . . . . . . . . . . . . . 88
8.7 Voluntary Bankruptcy; Appointment of Receiver,
etc.. . . . . . . . . . . . . . . . . . . . . . . . 88
8.8 Judgments and Attachments . . . . . . . . . . . . . 89
8.9 Dissolution . . . . . . . . . . . . . . . . . . . . 89
8.10 Employee Benefit Plans . . . . . . . . . . . . 89
8.11 Change in Control. . . . . . . . . . . . . . . 89
8.12 Invalidity of Subsidiary Guaranty. . . . . . . 90
8.13 Failure of Security. . . . . . . . . . . . . . 90
SECTION 9. AGENTS . . . . . . . . . . . . . . . . . . . . 91
9.1 Appointment . . . . . . . . . . . . . . . . . . . . 91
9.2 Powers and Duties; General Immunity . . . . . . . . 91
9.3 Representations and Warranties; No
Responsibility For Appraisal of Creditworthiness. . 93
9.4 Right to Indemnity. . . . . . . . . . . . . . . . . 93
9.5 Successor Administrative Agent. . . . . . . . . . . 94
9.6 Shared Collateral Documents and Guaranties. . . . . 94
SECTION 10. MISCELLANEOUS. . . . . . . . . . . . . . . . . 95
10.1 Assignments and Participations in Loans. . . . 95
10.2 Expenses . . . . . . . . . . . . . . . . . . . 97
10.3 Indemnity. . . . . . . . . . . . . . . . . . . 98
10.4 Set-Off. . . . . . . . . . . . . . . . . . . . 99
10.5 Ratable Sharing. . . . . . . . . . . . . . . . 99
10.6 Amendments and Waivers . . . . . . . . . . . .100
10.7 Independence of Covenants. . . . . . . . . . .101
10.8 Notices. . . . . . . . . . . . . . . . . . . .101
10.9 Survival of Representations, Warranties and
Agreements. . . . . . . . . . . . . . . . . . . . .101
10.10 Failure or Indulgence Not Waiver; Remedies
Cumulative. . . . . . . . . . . . . . . . . . . . .101
10.11 Marshalling; Payments Set Aside. . . . . . . .102
10.12 Severability . . . . . . . . . . . . . . . . .102
10.13 Obligations Several; Independent Nature of
Lenders' Rights . . . . . . . . . . . . . . . . . .102
10.14 Headings . . . . . . . . . . . . . . . . . . .102
10.15 Applicable Law . . . . . . . . . . . . . . . .103
10.16 Successors and Assigns . . . . . . . . . . . .103
10.17 Consent to Jurisdiction and Service of
Process . . . . . . . . . . . . . . . . . . . . . .103
10.18 Waiver of Jury Trial . . . . . . . . . . . . .103
10.19 Confidentiality. . . . . . . . . . . . . . . .104
10.20 Counterparts; Effectiveness. . . . . . . . . .104
Signature pages . . . . . . . . . . . . . . . . . .S-1
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTE
IV-A FORM OF COMPLIANCE CERTIFICATE (MONTHLY)
IV-B FORM OF COMPLIANCE CERTIFICATE
(QUARTERLY/ANNUAL)
V-A FORM OF OPINION OF SHEARMAN & STERLING
V-B FORM OF OPINION OF DAN HART, ESQ.
VI FORM OF OPINION OF O'MELVENY & MYERS
VII FORM OF ASSIGNMENT AGREEMENT
VIII FORM OF CERTIFICATE RE NON-BANK STATUS
IX FORM OF COMPANY PLEDGE AGREEMENT
X FORM OF COMPANY SECURITY AGREEMENT
XI FORM OF SUBSIDIARY GUARANTY
XII FORM OF SUBSIDIARY PLEDGE AGREEMENT
XIII FORM OF SUBSIDIARY SECURITY AGREEMENT
XIV FORM OF SUBSIDIARY TRADEMARK SECURITY
AGREEMENT
XV FORM OF SUBSIDIARY PATENT SECURITY AGREEMENT
XVI FORM OF MORTGAGE
XVII FORM OF INTERCREDITOR AGREEMENT
<PAGE>
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
5.1 SUBSIDIARIES OF COMPANY
5.3 CERTAIN CONTINGENT LIABILITIES, ETC.
5.6 LITIGATION
5.8 REAL PROPERTY
5.12 CERTAIN EMPLOYEE BENEFIT PLAN MATTERS
5.14 ENVIRONMENTAL MATTERS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
<PAGE>
DICTAPHONE CORPORATION
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of November 14, 1997 and entered
into by and among DICTAPHONE CORPORATION, a Delaware corporation ("COMPANY"),
THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each
individually referred to herein as a "LENDER" and collectively as "LENDERS"),
MORGAN STANLEY SENIOR FUNDING, INC., as syndication agent (in such capacity,
"SYNDICATION AGENT"), and BANKERS TRUST COMPANY ("BTCO"), as administrative
agent for Lenders (in such capacity, "ADMINISTRATIVE AGENT") and as collateral
agent for Lenders (in such capacity, "COLLATERAL AGENT").
R E C I T A L S
WHEREAS, Company is party to that certain Credit Agreement dated as of
August 7, 1995, as amended through the date hereof, by and among Company, the
financial institutions party thereto as lenders ("EXISTING LENDERS"),
Nationsbank, N.A. (Carolinas), as documentation agent for Existing Lenders, and
BTCo, as administrative agent for Existing Lenders, pursuant to which Company
currently has outstanding Indebtedness (this and other capitalized terms used in
these recitals without definition being used as defined in subsection 1.1) and
Contingent Obligations in respect of loans and letters of credit;
WHEREAS, the obligations of Company and its Subsidiaries under the
Existing Credit Agreement and the other loan documents executed in connection
therewith are secured by first priority Liens on (i) 100% of the capital stock
of all Domestic Subsidiaries, (ii) 66% of the capital stock of all direct
Foreign Subsidiaries of Company and its Domestic Subsidiaries, and (ii)
substantially all of the other personal property and certain of the real
property of Company and its Domestic Subsidiaries;
WHEREAS, Company also currently has outstanding Indebtedness to BTCo
pursuant to that certain Convertible Promissory Note Due January 30, 1998
between Company and BTCo dated as of July 31, 1997 (the "LIQUIDITY LOAN");
WHEREAS, Stonington Fund has agreed to provide Company with
$35,000,000 in new cash equity contributions, the proceeds of which will be used
by Company to prepay the Liquidity Loan in full and to prepay outstanding
Existing Revolving Loans with no corresponding reduction in the Existing
Revolving Commitments;
WHEREAS, Company has requested Lenders to make additional credit
facilities available to Company under which Company may borrow $62,750,000 in
the form of term loans for the purpose of prepaying the Existing Tranche A Term
Loans in full and certain scheduled principal installments in respect of the
Existing Tranche B Term Loans;
WHEREAS, Company has agreed to secure such additional credit
facilities with Liens on the Shared Collateral, subject to the terms of the
Intercreditor Agreement which provides for a pro rata sharing of the Shared
Collateral by Lenders and Existing Lenders; and
WHEREAS, Lenders have agreed to provide such additional credit
facilities to Company on the terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Agents agree as
follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum obtained by dividing (i) the offered quotation, if any (rounded upward to
the nearest 1/16 of one percent), by BTCo to first class banks in the interbank
Eurodollar market for U.S. dollar deposits of amounts in same day funds
comparable to the principal amount of the Eurodollar Rate Loan of BTCo for which
the Adjusted Eurodollar Rate is then being determined with maturities comparable
to such Interest Period as of approximately 10:00 A.M. (New York time) on such
Interest Rate Determination Date by (ii) a percentage equal to 100% minus the
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable on
such Interest Rate Determination Date to any member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" as defined in Regulation D (or
any successor category of liabilities under Regulation D).
"ADMINISTRATIVE AGENT" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5A.
"AFFECTED LENDER" has the meaning assigned to that term in subsection
2.6C.
"AFFILIATE", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"AGENTS" means Administrative Agent and Syndication Agent.
"AGREEMENT" means this Credit Agreement dated as of November 14, 1997,
as it may be amended, supplemented or otherwise modified from time to time.
"ASSET SALE" means the sale by Company or any of its Subsidiaries to
any Person other than Company or any of its wholly-owned Domestic Subsidiaries
of (i) any of the stock of any Subsidiary of Company, (ii) substantially all of
the assets of any division or line of business of Company or any of its
Subsidiaries, or (iii) any other assets (whether tangible or intangible) of
Company or any of its Subsidiaries other than (a) inventory sold in the ordinary
course of business and (b) any such other assets to the extent that the
aggregate value of such assets sold in any single transaction or related series
of transactions is equal to $250,000 or less.
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in substantially
the form of Exhibit VII annexed hereto.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate or
(y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"BTCO" has the meaning assigned to that term in the introduction to
this Agreement.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in such state are authorized or required by
law or other governmental action to close.
"CANADIAN SUB" means Dictaphone Canada Acquisition Inc.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CASH" means money, currency or a credit balance in a Deposit Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("MOODY'S"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (v) shares of any money market mutual fund that (a)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody's.
"CASH PROCEEDS OF ASSET SALE" means, with respect to any Asset Sale,
Cash payments (including any Cash received by way of deferred payment pursuant
to, or monetization of, a note receivable or otherwise, but only as and when so
received) actually received from such Asset Sale.
"CASH PROCEEDS OF RECEIVABLES PROGRAM" means, with respect to any
Receivables Program, the aggregate amount of cash proceeds received (whether as
proceeds of sales or other financings of accounts receivable or proceeds of
Indebtedness secured by accounts receivable or otherwise) by Company and its
Subsidiaries in connection with such Receivables Program; provided that there
shall be excluded from Cash Proceeds of Receivables Program any cash proceeds
received by Company and its Subsidiaries as a result, directly or indirectly, of
the payment or collection of any accounts receivable included in such
Receivables Program (including without limitation (i) any cash proceeds received
in connection with the sale or financing of additional accounts receivable under
such Receivables Program in replacement of accounts receivable previously sold
or financed under such Receivables Program and subsequently paid or collected
and (ii) any cash proceeds received in respect of any note or similar instrument
issued to Company or any of its Subsidiaries under such Receivables Program
which is payable only in connection with the termination of such Receivables
Program).
"CERTIFICATE RE NON-BANK STATUS" means a certificate substantially in
the form of Exhibit VIII annexed hereto delivered by a Lender to Administrative
Agent pursuant to subsection 2.7B(iii).
"CLOSING DATE" means the date on or before November 30, 1997, on which
the Loans are made.
"CLOSING DATE MORTGAGED PROPERTY" means each "Closing Date Mortgaged
Property" as defined in the Existing Credit Agreement and identified in Schedule
4.1K to the Existing Credit Agreement.
"COLLATERAL" means, collectively, all of the real, personal and mixed
property (including capital stock) in which Liens are purported to be granted by
the Shared Collateral Documents.
"COLLATERAL AGENT" means BTCo, in its capacity as Collateral Agent
under the Subsidiary Guaranty, the Shared Collateral Documents and the
Intercreditor Agreement, and also means and includes any successor Collateral
Agent appointed in accordance with the terms of the Intercreditor Agreement.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by Company or
any of its Subsidiaries in the ordinary course of business of Company or such
Subsidiary.
"COMMITMENT" means the commitment of a Lender to make a Loan to
Company pursuant to subsection 2.1A(i), and "COMMITMENTS" means such commitments
of all Lenders in the aggregate.
"COMPANY" has the meaning assigned to that term in the introduction to
this Agreement.
"COMPANY COMMON STOCK" means the common stock of Company, par value
$0.01 per share.
"COMPANY PLEDGE AGREEMENT" means that certain Amended & Restated
Company Pledge Agreement by and between Company and Collateral Agent dated as of
the Closing Date and substantially in the form of Exhibit IX annexed hereto, as
such Company Pledge Agreement may be amended, restated, supplemented or
otherwise modified from time to time.
"COMPANY SECURITY AGREEMENT" means that certain Amended and Restated
Company Security Agreement by and between Company and Collateral Agent dated as
of the Closing Date and substantially in the form of Exhibit X annexed hereto,
as such Company Security Agreement may be amended, restated, supplemented or
otherwise modified from time to time.
"COMPLIANCE CERTIFICATE" means a certificate, substantially in the
form of (i) Exhibit IV-A annexed hereto, in the case of any such certificate
required to be delivered together with the financial statements described in
subsection 6.1(i), and (ii) Exhibit IV-B annexed hereto, in the case of any such
certificate required to be delivered together with the financial statements
described in subsection 6.1(ii) or 6.1(iii), in each case delivered to
Administrative Agent and Lenders by Company pursuant to subsection 6.1(iv).
"CONFIDENTIAL INFORMATION MEMORANDUM" means that certain Confidential
Senior Debt Syndication Memorandum relating to Company dated July, 1995.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the sum of
(i) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of Company and its
Subsidiaries) by Company and its Subsidiaries during that period that, in
conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated statement of cash
flows of Company and its Subsidiaries plus (ii) to the extent not covered by
clause (i) of this definition, the aggregate of all expenditures by Company and
its Subsidiaries during that period (a) to develop computer software or systems
to be sold, leased or otherwise marketed by Company and its Subsidiaries in the
ordinary course of business (but only to the extent such expenditures are
capitalized on the consolidated balance sheet of Company and its Subsidiaries in
conformity with GAAP) or (b) to acquire (by purchase or otherwise) the business,
property or fixed assets of any Person, or the stock or other evidence of
beneficial ownership of any Person that, as a result of such acquisition,
becomes a Subsidiary of Company plus (iii) the aggregate amount of any
Investments that are (a) made by Company and its Subsidiaries during that period
in Persons engaged in businesses in which Company and its Subsidiaries are
permitted to engage pursuant to subsection 7.14 and (b) designated by Company,
at the time of making such Investments, as being included in Consolidated
Capital Expenditures; provided that, except in calculating Consolidated Excess
Cash Flow, there shall be excluded from Consolidated Capital Expenditures up to
$5,000,000 in any Fiscal Year of expenditures by Company and its Subsidiaries to
purchase tangible personal property that is held for rent or rented to Persons
other than Company or any of its Subsidiaries.
"CONSOLIDATED CURRENT ASSETS" means, as at any date of determination,
the total assets of Company and its Subsidiaries on a consolidated basis which
may properly be classified as current assets in conformity with GAAP, excluding
Cash and Cash Equivalents.
"CONSOLIDATED CURRENT LIABILITIES" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP, excluding the current portions of any Indebtedness.
"CONSOLIDATED EBITDA" means, for any period, the sum of the amounts
for such period of (i) Consolidated Net Income, (ii) Consolidated Interest
Expense, (iii) provisions for taxes based on income, (iv) total depreciation
expense, (v) total amortization expense, and (vi) other non-cash items reducing
Consolidated Net Income less other non-cash items increasing Consolidated Net
Income, all of the foregoing as determined on a consolidated basis for Company
and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED EXCESS CASH FLOW" means, for any period, an amount, if
not less than $0, equal to (i) the sum, without duplication, of the amounts for
such period of (a) Consolidated EBITDA and (b) the Consolidated Working Capital
Adjustment minus (ii) the sum, without duplication, of the amounts for such
period of (a) voluntary and scheduled repayments of Consolidated Total Debt
(excluding repayments of Existing Revolving Loans except to the extent the
Existing Revolving Loan Commitments are permanently reduced in connection with
such repayments), (b) Consolidated Capital Expenditures (net of any proceeds of
any related financings with respect to such expenditures), (c) Consolidated
Interest Expense, and (d) the provision for current taxes based on income of
Company and its Subsidiaries.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company and
its Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements, but
excluding, however, any amounts referred to in subsection 2.3 payable to Agents
and Lenders on or before the Closing Date.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
that there shall be excluded (i) the income (or loss) of any Person (other than
a Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses.
"CONSOLIDATED NET WORTH" means, as at any date of determination, (i)
the sum of the capital stock and additional paid-in capital plus retained
earnings (or minus accumulated deficits) plus (ii) an amount equal to any
write-downs taken to the item designated as "Intangibles" on the consolidated
balance sheet of Company and its Subsidiaries during the period from the Closing
Date to and including December 31, 1998 plus (iii) an amount equal to any asset
write-downs associated with any Asset Sale constituting a Specified Asset
Sale/Financing, in each case net of any capital gains realized in respect of the
assets that are the subject of such Asset Sale minus (iv) any loans to
shareholders or other items which would properly be excluded in the calculation
of net worth, all of the foregoing as determined on a consolidated basis for
Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED RENTAL PAYMENTS" means, for any period, the aggregate
amount of all rents paid or payable by Company and its Subsidiaries on a
consolidated basis during that period under all Capital Leases and Operating
Leases to which Company or any of its Subsidiaries is a party as lessee.
"CONSOLIDATED TOTAL DEBT" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED WORKING CAPITAL" means, as at any date of determination,
the excess of Consolidated Current Assets over Consolidated Current Liabilities.
"CONSOLIDATED WORKING CAPITAL ADJUSTMENT" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which the
Consolidated Working Capital of Company and its Subsidiaries as of the beginning
of such period exceeds (or is less than) the Consolidated Working Capital of
Company and its Subsidiaries as of the end of such period.
"CONTINGENT OBLIGATION", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Interest Rate Agreements and Currency Agreements. Contingent Obligations
shall include, without limitation, (a) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the obligation
of another through any agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(Y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"DICTAPHONE BUSINESS" means the business, operations, properties and
assets of U.S. Dictaphone, German Sub, Swiss Sub, U.K. Sub and Dictaphone Canada
prior to the Acquisition.
"DICTAPHONE CANADA" means Dictaphone Canada Ltd./Ltee., a corporation
organized under the laws of Canada.
"DIRECT FOREIGN SUBSIDIARY OBLIGATIONS" means, collectively, (i) the
outstanding principal amount of any Indebtedness of Foreign Subsidiaries to
Persons other than Company or any of its Subsidiaries and (ii) Contingent
Obligations of Foreign Subsidiaries to Persons other than Company or any of its
Subsidiaries in respect of Commercial Letters of Credit not constituting Letters
of Credit; provided, that, until Swiss Sub is purchased by Company in accordance
with the terms of the Purchase Agreement, Direct Foreign Subsidiary Obligations
shall not include the outstanding principal amount of any Indebtedness of German
Sub to Swiss Sub.
"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
"DOMESTIC SUBSIDIARY" means a Subsidiary of Company that is
incorporated or organized under the laws of a state of the United States of
America.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including, but not limited to, insurance companies, mutual
funds and lease financing companies and (B) any Lender and any Affiliate of any
Lender; provided that no Affiliate of Company shall be an Eligible Assignee.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is, or was at any time, maintained or contributed
to by Company or any of its ERISA Affiliates.
"ENVIRONMENTAL CLAIM" means any written notice of violation, claim,
demand or abatement order received by Company or any of its Subsidiaries from
any governmental authority or any Person for any damage, including, without
limitation, personal injury (including sickness, disease or death), tangible or
intangible property damage, contribution, indemnity, indirect or consequential
damages, damage to the environment, nuisance, pollution, contamination or other
adverse effects on the environment, or for fines, penalties or restrictions, in
each case relating to, resulting from or in connection with any generation, use,
storage, transportation or Release of Hazardous Materials and relating to
Company, any of its Subsidiaries, or any of their respective Affiliates.
"ENVIRONMENTAL LAWS" means all statutes, ordinances, rules,
regulations, and all enforceable plans, policies or decrees of any applicable
governmental or regulatory authority relating to (i) environmental matters,
including, without limitation, those relating to fines, injunctions, penalties,
damages, contribution, cost recovery compensation, losses or injuries resulting
from the Release or threatened Release of Hazardous Materials, (ii) the
generation, use, storage, transportation or disposal of Hazardous Materials, or
(iii) industrial hygiene in any manner applicable to Company or any of its
Subsidiaries or any of their respective properties, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
Section 136 et seq.) and the Emergency Planning and Community Right-to-Know Act
(42 U.S.C. Section 11001 et seq.), each as amended or supplemented, and any
analogous future or present local, state and federal statutes and regulations
promulgated pursuant thereto, each as in effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA AFFILIATE", as applied to any Person, means (i) any corporation
which is, or was at any time, a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of which that
Person is, or was at any time, a member; (ii) any trade or business (whether or
not incorporated) which is, or was at any time, a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the
Internal Revenue Code of which that Person is, or was at any time, a member; and
(iii) any member of an affiliated service group within the meaning of Section
414(m) or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is, or was at any time, a member.
"ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company or any of its ERISA Affiliates from any Pension Plan with
two or more contributing sponsors or the termination of any such Pension Plan
resulting in liability pursuant to Sections 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan pursuant to
Section 4042 of ERISA, or the occurrence of any event or condition described in
Section 4042 of ERISA (other than subsection (a)(4) thereof) which could
reasonably be expected to constitute grounds under ERISA for the termination of,
or the appointment of a trustee to administer, any Pension Plan; (vi) the
imposition of liability on Company or any of its ERISA Affiliates pursuant to
Section 4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA; (vii) the withdrawal by Company or any of its ERISA Affiliates
in a complete or partial withdrawal (within the meaning of Sections 4203 and
4205 of ERISA) from any Multiemployer Plan if there is any potential liability
therefor, or the receipt by Company or any of its ERISA Affiliates of notice
from any Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act
or omission which could reasonably be expected to give rise to the imposition on
Company or any of its ERISA Affiliates of fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under Section 409 or
502(c), (i) or (l) or 4071 of ERISA in respect of any Employee Benefit Plan;
(ix) the assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or the assets
thereof, or against Company or any of its ERISA Affiliates in connection with
any such Employee Benefit Plan; (x) receipt from the Internal Revenue Service of
notice of the failure of any Pension Plan (or any other Employee Benefit Plan
intended to be qualified under Section 401(a) of the Internal Revenue Code) to
qualify under Section 401(a) of the Internal Revenue Code, or the failure of any
trust forming part of any Pension Plan to qualify for exemption from taxation
under Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a
Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"EXISTING ADMINISTRATIVE AGENT" means BTCo or its successor acting as
administrative agent under the Existing Credit Agreement.
"EXISTING CREDIT AGREEMENT" means that certain Credit Agreement dated
as of August 7, 1995 by and among Company, Existing Lenders, NationsBank, N.A.
(Carolinas) as documentation agent, and BTCo, as administrative agent for
Existing Lenders, as in effect on the Closing Date and as it may thereafter be
amended, supplemented or otherwise modified from time to time.
"EXISTING LENDERS" has the meaning assigned to that term in the
recitals to this Agreement.
"EXISTING LENDERS' SHARE" means, as at any date of determination, a
fraction the numerator of which is the aggregate outstanding principal balance
of the Existing Tranche B Term Loans and the denominator of which is the sum of
the aggregate outstanding principal balance of the Existing Tranche B Term Loans
plus the aggregate outstanding principal balance of the Loans.
"EXISTING REVOLVING LOANS" has the meaning assigned to the term
"Revolving Loans" in the Existing Credit Agreement as in effect on the Closing
Date.
"EXISTING REVOLVING LOAN COMMITMENT" and "EXISTING REVOLVING LOAN
COMMITMENTS" have the meanings assigned to the terms "Revolving Loan Commitment"
and "Revolving Loan Commitments" in the Existing Credit Agreement as in effect
on the Closing Date.
"EXISTING TRANCHE A TERM LOANS" has the meaning assigned to the term
"Tranche A Term Loans" in the Existing Credit Agreement as in effect on the
Closing Date.
"EXISTING TRANCHE B TERM LOANS" has the meaning assigned to the term
"Tranche B Term Loans" in the Existing Credit Agreement as in effect on the
Closing Date.
"FACILITIES" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now
or hereafter during the term of this Agreement owned, leased or operated or
heretofore owned by (i) Company or any of its Subsidiaries, (ii) any of
Company's or any such Subsidiary's predecessors by merger or consolidation, or
(iii) any of Company's Affiliates that are directly or indirectly controlled by
Company.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.
"FEE PROPERTY" means a Real Property Asset consisting of a fee
interest in real property.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its Subsidiaries
ending on December 31 of each calendar year.
"FOREIGN SUBSIDIARY" means a Subsidiary of Company other than a
Domestic Subsidiary.
"FOREIGN SUBSIDIARY SUPPORT OBLIGATIONS" means Contingent Obligations
of Company or any Domestic Subsidiary in respect of Direct Foreign Subsidiary
Obligations (including without limitation any such Contingent Obligations in
respect of Letters of Credit supporting any Direct Foreign Subsidiary
Obligations).
"FUNDING AND PAYMENT OFFICE" means the office of Administrative Agent
located at One Bankers Trust Plaza, New York, New York 10006.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set forth
in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GERMAN SUB" means Dictaphone Deutschland GmbH, a corporation
organized under the laws of the Federal Republic of Germany.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"HAZARDOUS MATERIALS" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic substances" or any
other terms intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto; (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any drilling fluids, produced
waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iv) any flammable
substances or explosives; (v) any radioactive materials; (vi) asbestos in any
form that is or could reasonably be expected to become friable; (vii) urea
formaldehyde foam insulation; (viii) electrical equipment which contains any oil
or dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million; (ix) pesticides; and (x) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by any
governmental authority.
"HEADQUARTERS ASSET SALE" means an Asset Sale with respect to the
Headquarters Facility.
"HEADQUARTERS FACILITY" means the Closing Date Mortgaged Property
located in Stratford, Connecticut.
"HEADQUARTERS FINANCING" means Indebtedness in an original principal
amount equal to not less than 70% of the appraised value of the Headquarters
Facility secured solely by a Lien on the Headquarters Facility; provided that,
subject to customary exceptions for non-recourse real estate financings, the
holders of such Indebtedness shall have recourse solely to such security and no
personal recourse may be had against Company or any of its Subsidiaries for the
payment of the principal of or interest or premium on such Indebtedness.
"INDEBTEDNESS", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements and Currency
Agreements constitute Contingent Obligations and not Indebtedness.
"INDEMNITEE" has the meaning assigned to that term in subsection 10.3.
"INTELLECTUAL PROPERTY" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries, taken as a whole.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement,
dated of even date with this Agreement and substantially in the form of Exhibit
XVII annexed hereto, by and among Administrative Agent, Existing Administrative
Agent, Collateral Agent, Loan Parties (by way of acknowledgment) and the other
Persons that may from time to time become parties thereto in accordance with the
terms thereof, as such Intercreditor Agreement may be amended, restated,
supplemented or otherwise modified from time to time.
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan,
each March 15, June 15, September 15 and December 15 of each year, commencing on
the first such date to occur after the Closing Date, and (ii) with respect to
any Eurodollar Rate Loan, the last day of each Interest Period applicable to
such Loan; provided that in the case of each Interest Period of longer than
three months "Interest Payment Date" shall also include each date that is three
months, or an integral multiple thereof, after the commencement of such Interest
Period.
"INTEREST PERIOD" has the meaning assigned to that term in subsection
2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect Company or any of its Subsidiaries
against fluctuations in interest rates.
"INTEREST RATE DETERMINATION DATE" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (other than a Person that prior
to such purchase or acquisition was, or as a result of such purchase or
acquisition becomes, a wholly-owned Domestic Subsidiary), (ii) any direct or
indirect redemption, retirement, purchase or other acquisition for value, by any
Subsidiary of Company from any Person other than Company or any of its
Subsidiaries, of any equity Securities of such Subsidiary, or (iii) any direct
or indirect loan, advance (other than advances to employees for moving,
relocation, entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
Company or any of its Subsidiaries to any other Person other than a wholly-owned
Domestic Subsidiary, including all indebtedness and accounts receivable from
that other Person that are not current assets or did not arise from sales to
that other Person in the ordinary course of business. The amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment.
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1.
"LENDERS SHARE" means, as at any date of determination, a fraction the
numerator of which is the aggregate outstanding principal balance of the Loans
and the denominator of which is the sum of the aggregate outstanding principal
balance of the Existing Tranche B Term Loans plus the aggregate outstanding
principal balance of the Loans.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Commercial Letters of
Credit and Standby Letters of Credit issued or to be issued by Existing Lenders
for the account of Company pursuant to subsection 3.1. of the Existing Credit
Agreement.
"LIEN" means any lien, mortgage, pledge, assignment (to the extent
such assignment is intended to secure an obligation of any Person), security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"LIQUIDITY LOAN" means the Indebtedness evidenced by that certain
Convertible Promissory Note Due January 30, 1998 between Company and BTCo dated
as of July 31, 1997.
"LOAN EXPOSURE" means, with respect to any Lender as of any date of
determination (i) prior to the funding of the Loans, that Lender's Commitment
and (ii) after the funding of the Loans, the outstanding principal amount of the
Loan of that Lender.
"LOANS" means the Loans made by Lenders to Company pursuant to
subsection 2.1A.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Subsidiary
Guaranty, the Shared Collateral Documents and the Intercreditor Agreement.
"LOAN PARTIES" means Company and Subsidiary Guarantors.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of the Dictaphone Business or of Company and its Subsidiaries, taken
as a whole, or (ii) the impairment of the ability of any Loan Party to perform,
or of Administrative Agent or Lenders to enforce, any Obligations of a monetary
nature.
"MATERIAL LEASEHOLD" means a Real Property Asset consisting of a
leasehold interest in an Operating Lease or a Capital Lease which is reasonably
determined by Agents to be of material value as collateral for the Obligations;
provided that in no event shall any such leasehold interest with respect to
which the aggregate amount of all rents payable during any Fiscal Year is less
than $100,000 be deemed to be a Material Leasehold; and provided, further that
in no event shall any such leasehold interest of office space used solely for
conducting the sales and service operations of Company and its Subsidiaries (in
each case on a basis consistent with the past practices of Company and its
Subsidiaries prior to the Closing Date with respect to the conduct of business
at their respective branch and district sales and service offices (but not the
Melbourne, Florida sales and service facilities of U.S. Dictaphone)) be deemed
to be a Material Leasehold.
"MATERIAL SUBSIDIARY" means each Subsidiary of Company now existing or
hereafter acquired or formed by Company which, on a consolidated basis for such
Subsidiary and its Subsidiaries, (i) for the most recent Fiscal Year accounted
for more than 5% of the consolidated revenues of Company and its Subsidiaries or
(ii) as at the end of such Fiscal Year, was the owner of more than 5% of the
consolidated assets of Company and its Subsidiaries.
"MELBOURNE ASSET SALE" means an Asset Sale with respect to (i) the
Closing Date Mortgaged Property located in Melbourne, Florida and the other
assets and operations of Company associated therewith, or (ii) the stock of a
newly-created Subsidiary of Company to which such Closing Date Mortgaged
Property and other assets and operations have been transferred in contemplation
of such Asset Sale.
"MORTGAGE" means an instrument (whether designated as a deed of trust,
a trust deed or a mortgage or by any similar title), executed and delivered by
Company or any Subsidiary Guarantor pursuant to subsection 6.10 and
substantially in the form of Exhibit XVI annexed hereto, encumbering a fee or
leasehold interest in Real Property Assets, as such instrument may be amended,
supplemented or otherwise modified from time to time, and "MORTGAGES" means all
such instruments, collectively.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", as defined in
Section 3(37) of ERISA, to which Company or any of its ERISA Affiliates is
contributing, or ever has contributed, or to which Company or any of its ERISA
Affiliates has, or ever has had, an obligation to contribute.
"NET CASH PROCEEDS" means (i) with respect to any Asset Sale, the
corresponding Cash Proceeds of Asset Sale net of bona fide direct costs incurred
in connection with such Asset Sale, including without limitation (a) taxes
reasonably estimated to be actually payable as a result of such Asset Sale
within two years of the date of such Asset Sale, (b) payment of the outstanding
principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Loans) that is secured by a Lien on the stock or
assets in question and that is required to be repaid under the terms thereof as
a result of such Asset Sale, and (c) reasonable brokerage commissions, legal
fees and expenses, finder's fees and other similar fees, expenses and
commissions, and (ii) with respect to any Receivables Program, the corresponding
Cash Proceeds of Receivables Program net of bona fide direct costs of
implementing such Receivables Program.
"NEW EQUITY" means not less than $35,000,000 in new equity
contributions made to Company by the Stonington Fund on the Closing Date.
"NON-RECOURSE INDEBTEDNESS" means, as applied to any Receivables
Program, Indebtedness under the terms of which no personal recourse may be had
against Company or any of its Subsidiaries for the payment of the principal of
or interest or premium on such Indebtedness solely as a result of a default by
one or more account debtors in the payment of any accounts receivable included
in such Receivables Program.
"NOTES" means any promissory notes of Company issued pursuant to
subsection 2.1E to evidence the Loans of any Lenders, substantially in the form
of Exhibit III annexed hereto, as they may be amended, supplemented or otherwise
modified from time to time.
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Administrative Agent pursuant
to subsection 2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in
the form of Exhibit II annexed hereto delivered by Company to Administrative
Agent pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"OBLIGATIONS" means all obligations of every nature of each Loan Party
from time to time owed to Agents, Lenders or any of them under the Loan
Documents, whether for principal, interest, fees, expenses, indemnification or
otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer; provided that every Officers' Certificate
with respect to the compliance with a condition precedent to the making of any
Loans hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers, such condition has been complied with.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor;
provided that the term Operating Lease shall not include any such lease with
respect to which the aggregate amount of all rents paid or payable by Company
and its Subsidiaries during the entire term thereof (including any optional
renewal terms) does not exceed $3,000,000.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"PERMITTED ENCUMBRANCES" means the following types of Liens (other
than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, repairmen, workmen and materialmen and other Liens imposed by
law, in each case incurred in the ordinary course of business for (a)
amounts not yet overdue or (b) amounts that are overdue and that (in the
case of any such amounts overdue for a period in excess of 45 days) are
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made for
any such contested amounts;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or securing liability to insurance
carriers under insurance or self-insurance arrangements, or obtaining
utility service, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
trade contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) leases or subleases granted to others not interfering in any
material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, encroachments, minor
defects or irregularities in title, and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of Company or any of its Subsidiaries;
(vii) any (a) interest or title of a lessor or sublessor under any
lease permitted by subsection 7.9, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any restriction or encumbrance referred to in the preceding clause (b);
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; and
(x) Liens securing reimbursement obligations under Letters of Credit
that are Commercial Letters of Credit and encumbering the materials or
goods being purchased with proceeds of such Commercial Letters of Credit.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"PRIME RATE" means the rate that Administrative Agent announces from
time to time as its prime lending rate, as in effect from time to time. The
Prime Rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer. Administrative Agent or any other
Lender may make commercial loans or other loans at rates of interest at, above
or below the Prime Rate.
"PRO RATA SHARE" means, with respect to each Lender, the percentage
obtained by dividing (x) the Loan Exposure of that Lender by (y) the aggregate
Loan Exposure of all Lenders. The initial Pro Rata Share of each Lender is set
forth opposite the name of that Lender in Schedule 2.1 annexed hereto.
"PURCHASE AGREEMENT" means the Stock and Asset Purchase Agreement,
dated as of April 25, 1995, by and between Pitney Bowes Inc. and Dictaphone
Acquisition, Inc., in the form delivered to Agents and Lenders prior to their
execution of this Agreement, as such agreement may be amended from time to time
to the extent permitted under subsection 7.15A.
"REAL PROPERTY ASSETS" means all real property from time to time owned
in fee by any Loan Party and all rights, title and interest in and to any and
all leases of real property as to which any Loan Party has a leasehold interest,
including without limitation any such fee or leasehold interests acquired by any
Loan Party after the date hereof.
"RECEIVABLES PROGRAM" has the meaning set forth in subsection 7.17.
"RECEIVABLES PROGRAM AGREEMENT" has the meaning set forth in
subsection 7.17.
"REGISTER" has the meaning assigned to that term in subsection 2.1D.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as in effect from time to time.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge or dumping of
Hazardous Materials into the environment (including, without limitation, the
abandonment or disposal of any barrels, containers or other closed receptacles
containing any Hazardous Materials).
"REQUISITE LENDERS" means Lenders having or holding 51% or more of the
aggregate Loan Exposure of all Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Company now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Company now or hereafter outstanding, and (iv)
any payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Subordinated
Indebtedness.
"SECURITIES" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"SHARED COLLATERAL DOCUMENTS" means the Company Pledge Agreement, the
Company Security Agreement, the Subsidiary Pledge Agreements, the Subsidiary
Security Agreements, the Subsidiary Trademark Security Agreements, the
Subsidiary Patent Security Agreements and any and all Mortgages.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"SPECIFIED ASSET SALE/FINANCING" means each of the Headquarters Asset
Sale, the Headquarters Financing, the Melbourne Asset Sale and/or the Swiss
Asset Sale.
"STANDBY LETTER OF CREDIT" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of third party
insurers of Company or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with respect
to Capital Leases or Operating Leases of Company or any of its Subsidiaries, and
(v) performance, payment, deposit or surety obligations of Company or any of its
Subsidiaries, in any case if required by law or governmental rule or regulation
or in accordance with custom and practice in the industry; provided that Standby
Letters of Credit may not be issued for the purpose of supporting (a) trade
payables or (b) any Indebtedness constituting "antecedent debt" (as that term is
used in Section 547 of the Bankruptcy Code).
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement, dated as of
August 11, 1995, by and among Dictaphone Acquisition Inc., the stockholders and
the holders of options listed on Schedule 1 thereto, the stockholder listed in
Schedule 2 thereto and the institutional investors listed in Schedule 3 thereto,
as such agreement may be amended from time to time to the extent permitted under
subsection 7.15A.
"STONINGTON" means Stonington Partners, Inc., a Delaware corporation.
"STONINGTON FUND" means Stonington Capital Appreciation 1994 Fund,
L.P., a Delaware limited partnership.
"SUBORDINATED INDEBTEDNESS" means (i) the Indebtedness of Company
evidenced by the Subordinated Notes and (ii) any other Indebtedness of Company
subordinated in right of payment to the Obligations pursuant to documentation
containing maturities, amortization schedules, covenants, defaults, remedies,
subordination provisions and other material terms in form and substance
satisfactory to Administrative Agent and Requisite Lenders.
"SUBORDINATED NOTE INDENTURE" means the indenture pursuant to which
the Subordinated Notes are issued, as such indenture may be amended from time to
time to the extent permitted under subsection 7.15B.
"SUBORDINATED NOTES" means the $200,000,000 principal amount of 113/4%
Senior Subordinated Notes due 2005 of Company issued pursuant to the
Subordinated Note Indenture.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which more
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of the Person or Persons (whether directors, managers, trustees
or other Persons performing similar functions) having the power to direct or
cause the direction of the management and policies thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof.
"SUBSIDIARY GUARANTOR" means any Domestic Subsidiary that executes and
delivers a counterpart of the Subsidiary Guaranty on the Closing Date or from
time to time thereafter pursuant to subsection 6.9.
"SUBSIDIARY GUARANTY" means the Amended and Restated Subsidiary
Guaranty executed and delivered by Domestic Subsidiaries on the Closing Date and
to be executed and delivered by Domestic Subsidiaries from time to time
thereafter in accordance with subsection 6.9, substantially in the form of
Exhibit XI annexed hereto, as such Subsidiary Guaranty may be amended,
supplemented or otherwise modified from time to time.
"SUBSIDIARY PATENT SECURITY AGREEMENT" means each Amended and Restated
Subsidiary Patent Collateral Assignment and Security Agreement executed and
delivered by Domestic Subsidiaries on the Closing Date or to be executed and
delivered by Domestic Subsidiaries from time to time thereafter in accordance
with subsection 6.9, in each case substantially in the form of Exhibit XV
annexed hereto, as such Subsidiary Patent Collateral Assignment and Security
Agreement may be amended, supplemented or otherwise modified from time to time,
and "SUBSIDIARY PATENT SECURITY AGREEMENTS" means all such Subsidiary Patent
Collateral Assignment and Security Agreements, collectively.
"SUBSIDIARY PLEDGE AGREEMENT" means each Amended and Restated
Subsidiary Pledge Agreement executed and delivered by Domestic Subsidiaries on
the Closing Date or to be executed and delivered by Domestic Subsidiaries from
time to time thereafter in accordance with subsection 6.9, in each case
substantially in the form of Exhibit XII annexed hereto, as such Subsidiary
Pledge Agreement may be amended, supplemented or otherwise modified from time to
time, and "SUBSIDIARY PLEDGE AGREEMENTS" means all such Subsidiary Pledge
Agreements, collectively.
"SUBSIDIARY SECURITY AGREEMENT" means each Amended and Restated
Subsidiary Security Agreement executed and delivered by Domestic Subsidiaries on
the Closing Date or to be executed and delivered by Domestic Subsidiaries from
time to time thereafter in accordance with subsection 6.9, in each case
substantially in the form of Exhibit XIII annexed hereto, as such Subsidiary
Security Agreement may be amended, supplemented or otherwise modified from time
to time, and "SUBSIDIARY SECURITY AGREEMENTS" means all such Subsidiary Security
Agreements, collectively.
"SUBSIDIARY TRADEMARK SECURITY AGREEMENT" means each Amended and
Restated Subsidiary Trademark Collateral Security Agreement and Conditional
Assignment executed and delivered by Domestic Subsidiaries on the Closing Date
or to be executed and delivered by Domestic Subsidiaries from time to time
thereafter in accordance with subsection 6.9, in each case substantially in the
form of Exhibit XIV annexed hereto, as such Subsidiary Trademark Collateral
Security Agreement and Conditional Assignment may be amended, supplemented or
otherwise modified from time to time, and "SUBSIDIARY TRADEMARK SECURITY
AGREEMENTS" means all such Subsidiary Trademark Collateral Security Agreements
and Conditional Assignments, collectively.
"SWISS ASSET SALE" means an Asset Sale with respect to any real
property assets owned by Swiss Sub as of the Closing Date.
"SWISS SUB" means Dictaphone International A.G., a corporation
organized under the laws of Switzerland.
"SYNDICATION AGENT" has the meaning assigned to that term in the
introduction to this Agreement.
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains of that Person
(whether worldwide, or only insofar as such income, profits or gains are
considered to arise in or to relate to a particular jurisdiction, or otherwise).
"U.K. HOLDINGS" means Dictaphone U.K. Acquisition Limited, a
corporation organized under the laws of the United Kingdom.
"U.K. SUB" means Dictaphone Company Ltd., a corporation organized
Under the laws of the United Kingdom.
"U.S. DICTAPHONE" means Dictaphone Corporation (U.S.), a Delaware
corporation and a wholly-owned subsidiary of Company.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF
CALCULATIONS UNDER AGREEMENT.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii),
(iii) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(v)). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in subsection 5.3.
1.3 OTHER DEFINITIONAL PROVISIONS.
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; OPTIONAL NOTES.
A. COMMITMENTS. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Company herein set forth,
each Lender hereby severally agrees to lend to Company on the Closing Date an
amount not exceeding its Pro Rata Share of the aggregate amount of the
Commitments to be used for the purposes identified in subsection 2.5A. The
amount of each Lender's Commitment is set forth opposite its name on Schedule
2.1 annexed hereto and the aggregate amount of the Commitments is $62,750,000.
Each Lender's Commitment shall expire immediately and without further action on
November 30, 1997 if the Loans are not made on or before that date. Company may
make only one borrowing under the Commitments. Amounts borrowed under this
subsection 2.1A and subsequently repaid or prepaid may not be reborrowed.
B. BORROWING MECHANICS. Whenever Company desires that Lenders make the
Loans it shall deliver to Administrative Agent a Notice of Borrowing no later
than 10:00 A.M. (New York City time) at least one Business Day in advance of the
proposed Closing Date. The Notice of Borrowing shall specify (i) the proposed
Closing Date (which shall be a Business Day), (ii) the amount of Loans
requested, and (iii) that such Loans shall initially be Base Rate Loans. Loans
may be continued as or converted into Base Rate Loans and Eurodollar Rate Loans
in the manner provided in subsection 2.2D. In lieu of delivering the
above-described Notice of Borrowing, Company may give Administrative Agent
telephonic notice by the required time of any proposed borrowing under this
subsection 2.1B; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Borrowing to Administrative Agent on or
before the Closing Date.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon receipt
by Company of the proceeds of any Loans funded by Lenders in accordance with
this Agreement pursuant to any such telephonic notice Company shall have
effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding of the
Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the Closing Date, and the acceptance by Company of the proceeds of the Loans
shall constitute a re-certification by Company, as of the Closing Date, as to
the matters to which Company is required to certify in the applicable Notice of
Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in accordance
therewith.
C. DISBURSEMENT OF FUNDS. The Loans under this Agreement shall be made by
Lenders simultaneously and proportionately to their respective Pro Rata Shares,
it being understood that no Lender shall be responsible for any default by any
other Lender in that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender be increased or decreased as a
result of a default by any other Lender in that other Lender's obligation to
make a Loan requested hereunder. Promptly after receipt by Administrative Agent
of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice in
lieu thereof), Administrative Agent shall notify each Lender of the proposed
borrowing. Each Lender shall make the amount of its Loan available to
Administrative Agent not later than 12:00 noon (New York City time) on the
Closing Date, in same day funds in Dollars, at the Funding and Payment Office.
Administrative Agent shall make the proceeds of such Loans available to Company
on the Closing Date by causing an amount of same day funds in Dollars equal to
the proceeds of all such Loans received by Administrative Agent from Lenders to
be credited to the account of Company at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender
prior to the Closing Date that such Lender does not intend to make available to
Administrative Agent the amount of such Lender's Loan requested on the Closing
Date, Administrative Agent may assume that such Lender has made such amount
available to Administrative Agent on the Closing Date and Administrative Agent
may, in its sole discretion, but shall not be obligated to, make available to
Company a corresponding amount on the Closing Date. If such corresponding amount
is not in fact made available to Administrative Agent by such Lender,
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from the
Closing Date until the date such amount is paid to Administrative Agent, at the
customary rate set by Administrative Agent for the correction of errors among
banks for three Business Days and thereafter at the Base Rate. If such Lender
does not pay such corresponding amount forthwith upon Administrative Agent's
demand therefor, Administrative Agent shall promptly notify Company and Company
shall immediately pay such corresponding amount to Administrative Agent together
with interest thereon, for each day from the Closing Date until the date such
amount is paid to Administrative Agent, at the rate payable under this Agreement
for Base Rate Loans. Nothing in this subsection 2.1C shall be deemed to relieve
any Lender from its obligation to fulfill its Commitments hereunder or to
prejudice any rights that Company may have against any Lender as a result of any
default by such Lender hereunder.
D. THE REGISTER.
(i) Administrative Agent shall maintain, at its address referred to in
subsection 10.8, a register for the recordation of the names and addresses
of Lenders and the Commitment and Loan of each Lender from time to time
(the "REGISTER"). The Register shall be available for inspection by Company
or any Lender at any reasonable time and from time to time upon reasonable
prior notice.
(ii) Administrative Agent shall record in the Register the Commitment
and the Loan from time to time of each Lender and each repayment or
prepayment in respect of the principal amount of the Loan of each Lender.
Any such recordation shall be conclusive and binding on Company and each
Lender, absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect Company's
Obligations in respect of the applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation, any Note held by such Lender) the amount of the Loan
made by it and each payment in respect thereof. Any such recordation shall
be conclusive and binding on Company, absent manifest error; provided that
failure to make any such recordation, or any error in such recordation,
shall not affect Company's Obligations in respect of the applicable Loan;
and provided, further that in the event of any inconsistency between the
Register and any Lender's records, the recordations in the Register shall
govern.
(iv) Company, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any such Commitment or Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii). Prior to such recordation, all amounts owed with respect to the
applicable Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and
binding on any subsequent holder, assignee or transferee of the
corresponding Commitment or Loan.
(v) Company hereby designates Administrative Agent to serve as
Company's agent solely for purposes of maintaining the Register as provided
in this subsection 2.1D, and Company hereby agrees that, to the extent
Administrative Agent serves in such capacity, Administrative Agent and its
officers, directors, employees, agents and affiliates shall constitute
Indemnitees for all purposes under subsection 10.3.
E. OPTIONAL NOTES. If so requested by any Lender by written notice to
Company (with a copy to Administrative Agent) at least two Business Days prior
to the Closing Date or at any time thereafter, Company shall execute and deliver
to such Lender (and/or, if applicable and if so specified in such notice, to any
Person who is an assignee of such Lender pursuant to subsection 10.1) on the
Closing Date (or, if such notice is delivered after the Closing Date, promptly
after Company's receipt of such notice) a promissory note or promissory notes to
evidence such Lender's Loan, substantially in the form of Exhibit III annexed
hereto with appropriate insertions.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and 2.7,
each Loan shall bear interest on the unpaid principal amount thereof from the
date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted Eurodollar Rate. All
Loans shall initially bear interest at a rate determined by reference to the
Base Rate, and the basis for determining the interest rate with respect to any
Loan may be changed from time to time pursuant to subsection 2.2D. If on any day
a Loan is outstanding with respect to which notice has not been delivered to
Administrative Agent in accordance with the terms of this Agreement specifying
the applicable basis for determining the rate of interest, then for that day
that Loan shall bear interest determined by reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, the Loans shall
bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus 2.75%
per annum; or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus 3.75% per annum.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan, Company
may, pursuant to the applicable Notice of Conversion/Continuation, select an
interest period (each an "INTEREST PERIOD") to be applicable to such Loan, which
Interest Period shall be, at Company's option, either a one, two, three or six
month period or, if deposits in the interbank Eurodollar market are generally
available for such period (as determined by each Lender making or converting
such Loan), a 12-month period; provided that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the date specified in the applicable Notice of
Conversion/Continuation;
(ii) in the case of immediately successive Interest Periods applicable
to a Eurodollar Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on
the day on which the next preceding
Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the Loans shall
extend beyond June 30, 2003.
(vi) no Interest Period with respect to any portion of the Loans shall
extend beyond a date on which Company is required to make a scheduled
payment of principal of the Loans unless the sum of (a) the aggregate
principal amount of Loans that are Base Rate Loans plus (b) the aggregate
principal amount of Loans that are Eurodollar Rate Loans with Interest
Periods expiring on or before such date equals or exceeds the principal
amount required to be paid on the Loans on such date;
(vii) there shall be no more than twelve Interest Periods outstanding
at any time; and
(viii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection 2.6,
Company shall have the option (i) to convert at any time all or any part of its
outstanding Loans equal to $5,000,000 and integral multiples of $1,000,000 in
excess of that amount from Loans bearing interest at a rate determined by
reference to one basis to Loans bearing interest at a rate determined by
reference to an alternative basis or (ii) upon the expiration of any Interest
Period applicable to a Eurodollar Rate Loan, to continue all or any portion of
such Loan equal to $5,000,000 and integral multiples of $1,000,000 in excess of
that amount as a Eurodollar Rate Loan; provided, however, that a Eurodollar Rate
Loan may only be converted into a Base Rate Loan on the expiration date of an
Interest Period applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 10:00 A.M. (New York City time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan) and the Administrative Agent shall
promptly after receipt of such Notice of Conversion/Continuation notify the
relevant Lenders thereof. A Notice of Conversion/Continuation shall specify (i)
the proposed conversion/continuation date (which shall be a Business Day), (ii)
the amount and type of the Loan to be con- verted/continued, (iii) the nature of
the proposed conver- sion/continuation, (iv) in the case of a conversion to, or
a continuation of, a Eurodollar Rate Loan, the requested Interest Period, and
(v) in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan, that no Potential Event of Default or Event of Default has occurred and is
continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conver- sion/continuation date.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Company shall be
bound to effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration
of the Interest Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Administrative Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be computed on the
basis of a 360-day year, in each case for the actual number of days elapsed in
the period during which it accrues. In computing interest on any Loan, the date
of the making of such Loan or the first day of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted from a Eurodollar
Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
case may be, shall be excluded; provided that if a Loan is repaid on the same
day on which it is made, one day's interest shall be paid on that Loan.
2.3 FEES.
A. FACILITY FEES. Company agrees to pay to Administrative Agent on the
Closing Date, for distribution to each Lender in proportion to that Lender's Pro
Rata Share, an aggregate facility fee equal to the aggregate amount of the
Commitments multiplied by 1.00%.
B. OTHER FEES. Company agrees to pay to each Agent such other fees in the
amounts and at the times separately agreed upon between Company and such Agent.
2.4 REPAYMENTS AND PREPAYMENTS; GENERAL PROVISIONS REGARDING PAYMENTS.
A. SCHEDULED PAYMENTS OF LOANS. Company shall make principal payments on
the Loans in installments on the dates and in the amounts set forth below:
Scheduled Repayment
Date of Loans
December 31, 1998 $ 627,500
December 31, 1999 $ 627,500
December 31, 2000 $ 627,500
December 31, 2001 $ 627,500
September 30, 2002 $ 9,412,500
December 31, 2002 $ 9,412,500
March 31, 2003 $ 20,707,500
June 30, 2003 $ 20,707,500
Total $ 62,750,000
; provided that the scheduled installments of principal of the Loans set forth
above shall be reduced in connection with any voluntary or mandatory prepayments
of the Loans in accordance with subsection 2.4B(iii); and provided, further that
the Loans and all other amounts owed hereunder with respect to the Loans shall
be paid in full no later than June 30, 2003, and the final installment payable
by Company in respect of the Loans on such date shall be in an amount, if such
amount is different from that specified above, sufficient to repay all amounts
owing by Company under this Agreement with respect to the Loans.
B. PREPAYMENTS.
(i) Voluntary Prepayments. Company may, upon not less than one
Business Day's prior written or telephonic notice, in the case of Base Rate
Loans, and three Business Days' prior written or telephonic notice, in the
case of Eurodollar Rate Loans, in each case given to Administrative Agent
by 12:00 Noon (New York City time) on the date required and, if given by
telephone, promptly confirmed in writing to Administrative Agent (which
original written or telephonic notice Administrative Agent will promptly
transmit by telefacsimile or telephone to each Lender), at any time and
from time to time prepay any Loans on any Business Day in whole or in part
in an aggregate minimum amount of $1,000,000 and integral multiples of
$500,000 in excess of that amount; provided that, any partial prepayment of
a Eurodollar Rate Loan prior to the end of an Interest Period shall be in
an amount such that after such prepayment the outstanding amount of such
Eurodollar Rate Loan shall be equal to $5,000,000 or integral multiples of
$1,000,000 in excess of that amount. Notice of prepayment having been given
as aforesaid, the principal amount of the Loans specified in such notice
shall become due and payable on the prepayment date specified therein.
(ii) Mandatory Prepayments.
(a) Prepayments from Asset Sales. On the date of receipt by
Company or any of its Subsidiaries of any Cash Proceeds of Asset Sale
not constituting a Specified Asset Sale/Financing, Company shall
prepay the Loans in an amount equal to Lenders' Share of the Net Cash
Proceeds of such Asset Sale; provided that, anything contained herein
to the contrary notwithstanding, to the extent any portion of Existing
Lenders' Share of any Net Cash Proceeds of any such Asset Sale are not
applied to prepay the Existing Tranche B Term Loans, Company shall
promptly make an additional prepayment of the Loans in an amount equal
to such portion not so applied to prepay the Existing Tranche B Term
Loans.
(b) Prepayments Due to Issuance of Debt or Equity Securities. On
the date of receipt by Company or any of its Subsidiaries of the Cash
proceeds (net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including without
limitation reasonable legal fees and expenses, being "NET SECURITIES
PROCEEDS") from the issuance of any debt or equity Securities of
Company or any of its Subsidiaries after the Closing Date (other than
Cash proceeds of any Headquarters Financing or any other Indebtedness
permitted under subsection 7.1), Company shall prepay the Loans in an
amount equal to Lenders' Share of such Net Securities Proceeds;
provided that to the extent any portion of Existing Lenders' Share of
any such Net Securities Proceeds are not applied to prepay the
Existing Tranche B Term Loans, Company shall promptly make an
additional prepayment of the Loans in an amount equal to such portion
not so applied to prepay the Existing Tranche B Term Loans.
(c) Prepayments from Receivables Programs. On the date of receipt
by Company or any of its Subsidiaries of any Cash Proceeds of
Receivables Program, Company shall prepay the Loans in an amount equal
to Lenders' Share of the Net Cash Proceeds of such Receivables
Program; provided that to the extent any portion of Existing Lenders'
Share of any Net Cash Proceeds of any Receivables Program are not
applied to prepay the Existing Tranche B Term Loans, Company shall
promptly make an additional prepayment of the Loans in an amount equal
to such portion not so applied to prepay the Existing Tranche B Term
Loans.
(d) Prepayments to Reversion of Surplus Assets of Pension Plans.
On the date of return to Company or any of its Subsidiaries of any
surplus assets of any pension plan of Company or any of its
Subsidiaries, Company shall prepay the Loans in an amount equal to
Lenders' Share of an amount (the "NET REVERSION AMOUNT") equal to 100%
of such returned surplus assets, net of transaction costs and expenses
incurred in obtaining such return, including incremental taxes payable
as a result thereof; provided that to the extent any portion of
Existing Lenders' Share of any Net Reversion Amount is not applied to
prepay the Existing Tranche B Term Loans, Company shall promptly make
an additional prepayment of the Loans in an amount equal to such
portion not so applied to prepay the Existing Tranche B Term Loans.
(e) Prepayments from Consolidated Excess Cash Flow. No later than
the date occurring ninety (90) days after the end of each Fiscal Year,
commencing with Fiscal Year 1997, Company shall prepay the Loans in an
amount (the "EXCESS CASH FLOW REPAYMENT AMOUNT") equal to Lenders'
Share of 75% of Consolidated Excess Cash Flow; provided that to the
extent any portion of Existing Lenders' Share of 75% of Consolidated
Excess Cash Flow for any Fiscal Year is not applied to prepay the
Existing Tranche B Term Loans, Company shall promptly make an
additional prepayment of the Loans in an amount equal to such portion
not so applied to prepay the Existing Tranche B Term Loans.
(f) Calculations of Net Proceeds Amounts; Additional Prepayments
Based on Subsequent Calculations. Concurrently with any prepayment of
the Loans pursuant to subsections 2.4B(ii)(a)-(e), Company shall
deliver to Agent an Officers' Certificate demonstrating the
calculation of the amount (the "NET PROCEEDS AMOUNT") of the
applicable Net Cash Proceeds of Asset Sale, Net Securities Proceeds,
Net Cash Proceeds of Receivables Program, Net Reversion Amount or
Excess Cash Flow Repayment Amount, as the case may be, that gave rise
to such prepayment and/or reduction and the calculation of Lenders'
Share thereof. In the event that Company shall subsequently determine
that the actual Net Proceeds Amount was greater than the amount set
forth in such Officers' Certificate, Company shall promptly make an
additional prepayment of the Loans in an amount equal to Lenders'
Share of the amount of such excess, and Company shall concurrently
therewith deliver to Administrative Agent an Officers' Certificate
demonstrating the derivation of the additional Net Proceeds Amount
resulting in such excess and the calculation of Lenders' Share
thereof.
(iii) Application of Prepayments.
(a) Application of Voluntary Prepayments by Order of Maturity.
Any voluntary prepayments of the Loans pursuant to subsection 2.4B(i)
shall be applied to reduce the scheduled installments of principal of
the Loans set forth in subsection 2.4A in inverse order of maturity.
(b) Application of Mandatory Prepayments of Loans to the
Scheduled Installments of Principal Thereof. Any mandatory prepayments
of the Loans pursuant to subsection 2.4B(ii) shall be applied to
reduce the scheduled installments of principal of the Loans set forth
in subsection 2.4A in inverse order of maturity.
(c) Application of Prepayments to Base Rate Loans and Eurodollar
Rate Loans. Any prepayment of the Loans shall be applied first to Base
Rate Loans to the full extent thereof before application to Eurodollar
Rate Loans, in each case in a manner which minimizes the amount of any
payments required to be made by Company pursuant to subsection 2.6D.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company of principal,
interest, fees and other Obligations hereunder and under the Notes shall be
made in Dollars in same day funds, without defense, setoff or counterclaim,
free of any restriction or condition, and delivered to Administrative Agent
not later than 12:00 Noon (New York City time) on the date due at the
Funding and Payment Office for the account of Lenders; funds received by
Administrative Agent after that time on such due date shall be deemed to
have been paid by Company on the next succeeding Business Day. Company
hereby authorizes Administrative Agent to charge its accounts with
Administrative Agent in order to cause timely payment to be made to
Administrative Agent of all principal, interest, fees and expenses due
hereunder (subject to sufficient funds being available in its accounts for
that purpose).
(ii) Application of Payments to Principal and Interest. All payments
in respect of the principal amount of any Loan shall include payment of
accrued interest on the principal amount being repaid or prepaid, and all
such payments shall be applied to the payment of interest before
application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
payments in respect of Loans shall be apportioned among all outstanding
Loans to which such payments relate, in each case proportionately to
Lenders' respective Pro Rata Shares. Administrative Agent shall promptly
distribute to each Lender, at its primary address set forth below its name
on the appropriate signature page hereof or at such other address as such
Lender may request, its Pro Rata Share of all such payments received by
Administrative Agent and the facility fee of such Lender when received by
Administrative Agent pursuant to subsection 2.3. Notwithstanding the
foregoing provisions of this subsection 2.4C(iii), if, pursuant to the
provisions of subsection 2.6C, any Notice of Conversion/Continuation is
withdrawn as to any Affected Lender or if any Affected Lender makes Base
Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans,
Administrative Agent shall give effect thereto in apportioning payments
received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder.
(v) Notation of Payment. Each Lender agrees that before disposing of
any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of the
Loan evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Company hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
2.5 USE OF PROCEEDS.
A. LOANS. The proceeds of the Loans shall be applied by Company (i) to
prepay in full all outstanding Existing Tranche A Term Loans and (ii) to prepay
$3,000,000 in aggregate outstanding principal amount of the Existing Tranche B
Term Loans, such prepayment to be applied to the next four remaining scheduled
installments of principal of the Existing Tranche B Term Loans set forth in
subsection 2.4A(ii) of the Existing Credit Agreement in forward order of
maturity.
B. MARGIN REGULATIONS. No portion of the proceeds of the Loans shall be
used by Company or any of its Subsidiaries in any manner that might cause the
borrowing or the application of such proceeds to violate Regulation G,
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable after
10:00 A.M. (New York time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be converted to Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of
Conversion/Continuation given by Company with respect to the Loans in respect of
which such determination was made shall be deemed to be rescinded by Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the event
that on any date any Lender shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto but shall be made only
after consultation with Company and Administrative Agent) that the maintaining
or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result
of compliance by such Lender in good faith with any law, treaty, governmental
rule, regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Lender material hardship, as a result
of contingencies occurring after the date of this Agreement which materially and
adversely affect the interbank Eurodollar market or the position of such Lender
in that market, then, and in any such event, such Lender shall be an "AFFECTED
LENDER" and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Administrative Agent of such determination
(which notice Administrative Agent shall promptly transmit to each other
Lender). Thereafter (a) the obligation of the Affected Lender to convert Loans
to Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn
by the Affected Lender, (b) to the extent such determination by the Affected
Lender relates to a Eurodollar Rate Loan then being requested by Company
pursuant to a Notice of Conversion/Continuation, the Affected Lender shall
maintain such Loan as (or convert such Loan to, as the case may be) a Base Rate
Loan, (c) the Affected Lender's obligation to maintain its outstanding
Eurodollar Rate Loans (the "AFFECTED LOANS") shall be terminated at the earlier
to occur of the expiration of the Interest Period then in effect with respect to
the Affected Loans or when required by law, and (d) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by an Affected
Lender as described above relates to a Eurodollar Rate Loan then being requested
by Company pursuant to a Notice of Conversion/Continuation, Company shall have
the option, subject to the provisions of subsection 2.6D, to rescind such Notice
of Conversion/Continuation as to all Lenders by giving notice (by telefacsimile
or by telephone confirmed in writing) to Administrative Agent of such rescission
on the date on which the Affected Lender gives notice of its determination as
described above (which notice of rescission Administrative Agent shall promptly
transmit to each other Lender). Except as provided in the immediately preceding
sentence, nothing in this subsection 2.6C shall affect the obligation of any
Lender other than an Affected Lender to maintain Loans as, or to convert Loans
to, Eurodollar Rate Loans in accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to carry its
Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender) a conversion to or continuation of any Eurodollar Rate Loan does not
occur on a date specified therefor in a Notice of Conversion/Continuation or a
telephonic request for conversion or continuation, (ii) if any prepayment
(including without limitation any prepayment pursuant to subsection 2.4B(i)) or
other principal payment or any conversion of any of its Eurodollar Rate Loans
occurs on a date prior to the last day of an Interest Period applicable to that
Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on
any date specified in a notice of prepayment given by Company, or (iv) as a
consequence of any other default by Company in the repayment of its Eurodollar
Rate Loans when required by the terms of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calculation of
all amounts payable to a Lender under this subsection 2.6 and under subsection
2.7A shall be made as though that Lender had actually funded each of its
relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and during
the continuation of a Potential Event of Default or an Event of Default, (i)
Company may not elect to have a Loan be maintained as, or converted to, a
Eurodollar Rate Loan after the expiration of any Interest Period then in effect
for that Loan and (ii) subject to the provisions of subsection 2.6D, any Notice
of Conversion/Continuation given by Company with respect to a requested
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the provisions of
subsection 2.7B (which shall be controlling with regard to the matters covered
thereby), in the event that any Lender shall determine (which determination
shall, absent manifest error (including arithmetical error), be final and
conclusive and binding upon all parties hereto) that any law, treaty or
governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by such Lender with any
guideline, request or directive issued or made after the date hereof by any
central bank or other governmental or quasi-governmental authority (whether or
not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, or advances or loans by, or other credit extended by,
or any other acquisition of funds by, any office of such Lender (other than
any such reserve or other requirements with respect to Eurodollar Rate
Loans that are reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error (including arithmetical error).
Notwithstanding the foregoing, any Lender subject to any additional
Tax described in subsection 2.7A(i) shall furnish to Company and any applicable
governmental authorities such forms, certifications or other documents or
instruments as may reasonably be requested by Company in order to establish that
such Lender is entitled to an exemption from, or a reduction in the amount of,
such Tax, and no additional amounts shall be payable by Company to such Lender
pursuant to subsection 2.7A(i) to the extent that the liability of such Lender
for such Tax could be eliminated or reduced by the furnishing by such Lender of
such forms, certifications or other documents or instruments.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by Company under
this Agreement and the other Loan Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net
income of any Lender) imposed, levied, collected, withheld or assessed by
or within the United States of America or any political subdivision in or
of the United States of America or any other jurisdiction from or to which
a payment is made by or on behalf of Company or by any federation or
organization of which the United States of America or any such jurisdiction
is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is
required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by Company to Administrative Agent or any
Lender under any of the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Company) for its own account or (if that liability
is imposed on Administrative Agent or such Lender, as the case may be)
on behalf of and in the name of Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the relevant
deduction, withholding or payment is required shall be increased to
the extent necessary to ensure that, after the making of that
deduction, withholding or payment, Administrative Agent or such
Lender, as the case may be, receives on the due date a net sum equal
to what it would have received had no such deduction, withholding or
payment been required or made; and
(d) within 30 days after paying any sum from which it is required
by law to make any deduction or withholding, and within 30 days after
the due date of payment of any Tax which it is required by clause (b)
above to pay, Company shall deliver to Administrative Agent, to the
extent reasonably available, evidence reasonably satisfactory to the
other affected parties of such deduction, withholding or payment and
of the remittance thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after
the date hereof (in the case of each Lender listed on the signature pages
hereof) or after the date of the Assignment Agreement pursuant to which
such Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date of this Agreement or at the date of
such Assignment Agreement, as the case may be, in respect of payments to
such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "NON-US LENDER") shall deliver to Administrative Agent
for transmission to Company, on or prior to the Closing Date (in the
case of each Lender listed on the signature pages hereof) or on or
prior to the date of the Assignment Agreement pursuant to which it
becomes a Lender (in the case of each other Lender), and at such other
times as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue Service Form
1001 or 4224 (or any successor forms), properly completed and duly
executed by such Lender, together with any other certificate or
statement of exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Internal Revenue Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224 pursuant to
clause (1) above, a Certificate re Non-Bank Status together with two
original copies of Internal Revenue Service Form W-8 (or any successor
form), properly completed and duly executed by such Lender, together
with any other certificate or statement of exemption required under
the Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or withholding
of United States federal income tax with respect to any payments to
such Lender of interest payable under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees,
from time to time after the initial delivery by such Lender of such
forms, certificates or other evidence, whenever a lapse in time or
change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such
Lender shall promptly (1) deliver to Administrative Agent for
transmission to Company two new original copies of Internal Revenue
Service Form 1001 or 4224, or a Certificate re Non-Bank Status and two
original copies of Internal Revenue Service Form W-8, as the case may
be, properly completed and duly executed by such Lender, together with
any other certificate or statement of exemption required in order to
confirm or establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to
payments to such Lender under the Loan Documents or (2) notify
Administrative Agent and Company of its inability to deliver any such
forms, certificates or other evidence.
(c) Company shall not be required to pay any additional amount to
any Non-US Lender under clause (c) of subsection 2.7B(ii) if such
Lender shall have failed to satisfy the requirements of clause (a) or
(b)(1) of this subsection 2.7B(iii); provided that if such Lender
shall have satisfied the requirements of subsection 2.7B(iii)(a) on
the Closing Date (in the case of each Lender listed on the signature
pages hereof) or on the date of the Assignment Agreement pursuant to
which it became a Lender (in the case of each other Lender), nothing
in this subsection 2.7B(iii)(c) shall relieve Company of its
obligation to pay any additional amounts pursuant to clause (c) of
subsection 2.7B(ii) in the event that, as a result of any change in
any applicable law, treaty or governmental rule, regulation or order,
or any change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver forms,
certificates or other evidence at a subsequent date establishing the
fact that such Lender is not subject to withholding as described in
subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or 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 Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loan or other obligations hereunder with respect to the Loans to a
level below that which such Lender or such controlling corporation could have
achieved but for such adoption, effectiveness, phase-in, applicability, change
or compliance (taking into consideration the policies of such Lender or such
controlling corporation with regard to capital adequacy), then from time to
time, within five Business Days after receipt by Company from such Lender of the
statement referred to in the next sentence, Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.
2.8 OBLIGATION OF LENDERS TO MITIGATE.
Each Lender agrees that, as promptly as practicable after the officer
of such Lender responsible for administering the Loan of such Lender becomes
aware of the occurrence of an event or the existence of a condition that would
cause such Lender to become an Affected Lender or that would entitle such Lender
to receive payments under subsection 2.7, it will, to the extent not
inconsistent with the internal policies of such Lender and any applicable legal
or regulatory restrictions, use reasonable efforts (i) to maintain the affected
Loan of such Lender through another lending office of such Lender or (ii) take
such other measures as such Lender may deem reasonable, if as a result thereof
the circumstances which would cause such Lender to be an Affected Lender would
cease to exist or the additional amounts which would otherwise be required to be
paid to such Lender pursuant to subsection 2.7 would be materially reduced and
if, as determined by such Lender in its sole discretion, the maintaining of such
Loan through such other lending office or in accordance with such other
measures, as the case may be, would not otherwise materially adversely affect
such Loan or the interests of such Lender; provided that such Lender will not be
obligated to utilize such other lending office pursuant to this subsection 2.8
unless Company agrees to pay all incremental expenses incurred by such Lender as
a result of utilizing such other lending office as described in clause (i)
above. A certificate as to the amount of any such expenses payable by Company
pursuant to this subsection 2.8 (setting forth in reasonable detail the basis
for requesting such amount) submitted by such Lender to Company (with a copy to
Administrative Agent) shall be conclusive absent manifest error.
2.9 REMOVAL OF A LENDER.
In the event that any Lender shall give notice to Company that such
Lender is an Affected Lender or that such Lender is entitled to receive payments
under subsection 2.7, and unless the circumstances which have caused such Lender
to be an Affected Lender or which entitle such Lender to receive such payments
are no longer in effect, Company may, if such Lender shall fail to withdraw such
notice within 5 Business Days after Company's request for such withdrawal, upon
thirty days' prior written notice by Company to Administrative Agent and such
Lender, elect (i) to prepay the outstanding Loan of such Lender, together with
accrued and unpaid interest thereon and any other amounts payable to such Lender
hereunder pursuant to subsection 2.7 or otherwise; provided that the written
consent of Agents and Requisite Lenders, which consent shall not be unreasonably
withheld, shall be required in order for Company to make the foregoing election;
or (ii) to cause such Lender to assign its Loan in full to an Eligible Assignee
in accordance with the provisions of subsection 10.1B; provided that Company
shall pay any amounts payable to such Lender pursuant to subsection 2.7 or
otherwise on the date of such assignment.
SECTION 3. [INTENTIONALLY OMITTED]
SECTION 4. CONDITIONS TO LOANS
The obligations of Lenders to make Loans hereunder are subject to the
satisfaction of the following conditions.
4.1 CERTAIN CONDITIONS TO LOANS.
The obligations of Lenders to make the Loans are, in addition to the
conditions precedent specified in subsection 4.2, subject to prior or concurrent
satisfaction of the following conditions:
A. COMPANY DOCUMENTS. On or before the Closing Date, Company shall deliver
or cause to be delivered to Lenders (or to Administrative Agent for Lenders with
sufficient originally executed copies, where appropriate, for each Lender and
for Agents' counsel) the following, each, unless otherwise noted, dated the
Closing Date:
(i) Certified copies of its Certificate of Incorporation, together
with a good standing certificate from the Secretary of State of the State
of Delaware and each other state in which it is qualified as a foreign
corporation to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority
of each of such states, each dated a recent date prior to the Closing Date;
(ii) Copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other
Loan Documents, certified as of the Closing Date by its corporate secretary
or an assistant secretary as being in full force and effect without
modification or amendment;
(iv) Signature and incumbency certificates of its officers executing
this Agreement and the other Loan Documents;
(v) Executed originals of this Agreement, the Notes (duly executed in
accordance with subsection 2.1E, drawn to the order of each Lender and with
appropriate insertions) and the other Loan Documents; and
(vi) Such other documents as Administrative Agent may reasonably
request.
B. SUBSIDIARY GUARANTOR DOCUMENTS. On or before the Closing Date, Company
shall cause each Subsidiary Guarantor to deliver to Lenders (or to
Administrative Agent for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and for Agents' counsel) the following, each,
unless otherwise noted, dated the Closing Date:
(i) Certified copies of the Certificate or Articles of Incorporation
of such Subsidiary Guarantor, together with a good standing certificate
from the Secretary of State of the State of such Subsidiary Guarantor's
State of incorporation and each other state in which such Subsidiary
Guarantor is qualified as a foreign corporation to do business and, to the
extent generally available, a certificate or other evidence of good
standing as to payment of any applicable franchise or similar taxes from
the appropriate taxing authority of each of such states, each dated a
recent date prior to the Closing Date;
(ii) Copies of the Bylaws of such Subsidiary Guarantor, certified as
of the Closing Date by such Subsidiary Guarantor's corporate secretary or
an assistant secretary;
(iii) Resolutions of the Board of Directors of such Subsidiary
Guarantor approving and authorizing the execution, delivery and performance
of the Loan Documents to which it is a party, certified as of the Closing
Date by the corporate secretary or an assistant secretary of such
Subsidiary Guarantor as being in full force and effect without modification
or amendment;
(iv) Signature and incumbency certificates of the officers of such
Subsidiary Guarantor executing the Loan Documents;
(v) Executed originals of the Loan Documents to which such Subsidiary
Guarantor is a party; and
(vi) Such other documents as Administrative Agent may reasonably
request.
C. NO MATERIAL ADVERSE EFFECT. Since December 31, 1996, no Material Adverse
Effect (in the sole opinion of Agents) shall have occurred.
D. EQUITY CONTRIBUTION. Stonington Fund shall have provided Company with
$35,000,000 in new cash equity contributions and Company shall have applied the
proceeds thereof first to prepay the Liquidity Loan in full and thereafter, to
the extent of any remaining such proceeds, to prepay outstanding Existing
Revolving Loans.
E. AMENDMENT OF EXISTING CREDIT AGREEMENT. Company and Existing Lenders
shall have executed and delivered a Fourth Amendment to the Existing Credit
Agreement in form and substance satisfactory to Lenders.
F. INTERCREDITOR AGREEMENT. Existing Administrative Agent, Administrative
Agent, Collateral Agent and Loan parties shall have entered into the
Intercreditor Agreement.
G. SECURITY INTERESTS IN COLLATERAL. Loan Parties and Collateral Agent
shall have taken or caused to be taken (and Agents shall have received
satisfactory evidence thereof) any additional actions necessary so that
Collateral Agent has a valid and perfected first priority security interest
(subject to Liens permitted by subsection 7.2) as of the Closing Date in the
entire Collateral, subject to the provisions of the Intercreditor Agreement.
H. EVIDENCE OF INSURANCE. Company shall have delivered to Collateral Agent
certificates of insurance naming Collateral Agent on behalf of Lenders as loss
payee under the casualty insurance policies, and as additional insured under the
liability and business interruption policies, all as required pursuant to
subsection 6.4 hereof or pursuant to the Shared Collateral Documents. All such
certificates of insurance shall contain such endorsements as are reasonably
required by Collateral Agent.]
I. OPINIONS OF COMPANY'S COUNSEL. Lenders shall have received originally
executed copies of one or more favorable written opinions of Shearman &
Sterling, and Dan Hart, Esq., counsel for Company, in form and substance
reasonably satisfactory to Agents and their counsel, dated as of the Closing
Date and setting forth substantially the matters in the opinions designated in
Exhibit V-A and Exhibit V-B annexed hereto respectively and as to such other
matters as Agents acting on behalf of Lenders may reasonably request, together
with evidence satisfactory to Agents that Company has requested such counsel to
deliver such opinions to Lenders.
J. OPINIONS OF O'MELVENY & MYERS. Lenders shall have received originally
executed copies of one or more favorable written opinions of O'Melveny & Myers,
dated as of the Closing Date, substantially in the form of Exhibit VI annexed
hereto and as to such other matters as Agents acting on behalf of Lenders may
reasonably request.
K. FEES. Company shall have paid to Agents, for distribution (as
appropriate) to Agents and Lenders, the fees payable on the Closing Date
referred to in subsection 2.3.
L. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Company shall
have delivered to Agents an Officers' Certificate, in form and substance
satisfactory to Agents, to the effect that the representations and warranties in
Section 5 hereof are true, correct and complete in all material respects on and
as of the Closing Date to the same extent as though made on and as of that date
(or, to the extent such representations and warranties specifically relate to an
earlier date, that such representations and warranties were true, correct and
complete in all material respects on and as of such earlier date) and that
Company shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before the Closing Date except as otherwise disclosed to
and agreed to in writing by Lenders.
M. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agents, acting
on behalf of Lenders, and their counsel shall be satisfactory in form and
substance to Agents and such counsel, and Agents and such counsel shall have
received all such counterpart originals or certified copies of such documents as
Agents may reasonably request.
4.2 ADDITIONAL CONDITIONS TO LOANS.
The obligations of Lenders to make the Loans on the Closing Date are
subject to the following further conditions precedent:
A. Administrative Agent shall have received before the Closing Date,
in accordance with the provisions of subsection 2.1B, an originally executed
Notice of Borrowing, in each case signed by the chief executive officer, the
chief financial officer or the treasurer of Company or by any executive officer
of Company designated by any of the above-described officers on behalf of
Company in a writing delivered to Administrative Agent.
B. As of the Closing Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of the Closing Date to the same extent as though made on
and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete
in all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;
(iii) Company shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides shall
be performed or satisfied by it on or before the Closing Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it on the Closing Date;
(v) The making of the Loans requested on the Closing Date shall not
violate any law including, without limitation, Regulation G, Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System; and
(vi) There shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has not been disclosed
by Company in writing pursuant to subsection 5.6 or 6.1(x) prior to the
making of the last preceding Loans (or, in the case of the initial Loans,
prior to the execution of this Agreement), and there shall have occurred no
development not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, that, in either
event, in the opinion of Agents or of Requisite Lenders, could reasonably
be expected to have a Material Adverse Effect; and no injunction or other
restraining order shall have been issued and no hearing to cause an
injunction or other restraining order to be issued shall be pending or
noticed with respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of, or to recover any damages or obtain
relief as a result of, the transactions contemplated by this Agreement or
the making of Loans hereunder.
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make
the Loans, Company represents and warrants to each Lender, on the date of this
Agreement and on the Closing Date, that the following statements are true,
correct and complete (it being agreed that each such statement which expressly
refers to a particular date shall be understood to continue to refer to such
particular date each time that the representation and warranty of Company set
forth in this paragraph is made):
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING,
BUSINESS, SUBSIDIARIES AND SHARED COLLATERAL DOCUMENTS.
A. ORGANIZATION AND POWERS. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Company has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents and to carry out the transactions
contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Company is qualified to do business and
in good standing in every jurisdiction where it owns or leases property and
wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and would not be reasonably likely to have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.14.
D. SUBSIDIARIES. All of the Subsidiaries of Company are identified in
Schedule 5.1 annexed hereto, as said Schedule 5.1 may be supplemented from time
to time pursuant to the provisions of subsection 6.1(xvii). The capital stock of
each of the Subsidiaries of Company identified in Schedule 5.1 annexed hereto
(as so supplemented) is duly authorized, validly issued, fully paid and
nonassessable and none of such capital stock constitutes Margin Stock. Each of
the Subsidiaries of Company identified in Schedule 5.1 annexed hereto (as so
supplemented) is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation set
forth therein, has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted, and is qualified to do business and in good standing
in every jurisdiction where it owns or leases property and wherever necessary to
carry out its business and operations, in each case except where failure to be
so qualified or in good standing or a lack of such corporate power and authority
has not had and would not be reasonably likely to have a Material Adverse
Effect. Schedule 5.1 annexed hereto (as so supplemented) correctly sets forth,
the ownership interest of Company and each of its Subsidiaries in each of the
Subsidiaries of Company identified therein.
E. SHARED COLLATERAL DOCUMENTS. The security interests created in favor of
Collateral Agent under the Shared Collateral Documents will at all times from
and after the Closing Date constitute, as security for the obligations purported
to be secured thereby, a legal, valid and enforceable security interest in and
Lien on all of the Collateral referred to therein in favor of Collateral Agent
for the benefit of Lenders and Existing Lenders, perfected and prior to the
rights of all third persons (subject to Liens consented to in writing by
Collateral Agent with respect to such Collateral and other Liens permitted by
subsection 7.2) in accordance with the requirements of all applicable Shared
Collateral Documents. No consents, filings or recordings are required in order
to perfect (or maintain the perfection or priority of) the security interests
purported to be created by any of the Shared Collateral Documents, other than
such as have been obtained and which remain in full force and effect and
periodic Uniform Commercial Code continuation filings or as otherwise specified
by the terms of any applicable Collateral Document.
5.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance of
the Loan Documents have been duly author- ized by all necessary corporate action
on the part of each Loan Party.
B. NO CONFLICT. Except as set forth on Part I of Schedule 5.2 annexed
hereto, the execution, delivery and performance by the Loan Parties of the Loan
Documents and the consummation of the transactions contemplated by the Loan
Documents do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Company
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Company or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of Company or any of
its Subsidiaries, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Company or any of its Subsidiaries
(other than any Liens created under any of the Loan Documents in favor of
Collateral Agent on behalf of Lenders), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of Company or any of its Subsidiaries, except for such approvals or
consents which will be obtained on or before the Closing Date and disclosed in
writing to Lenders.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by the
Loan Parties of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body, except for
filings and recordings required in connection with the perfection of the
security interests granted pursuant to the Loan Documents.
D. BINDING OBLIGATION. Each of the Loan Documents has been duly executed
and delivered by the Loan Parties, party thereto and is the legally valid and
binding obligation of each such Loan Party, enforceable against such Loan Party
in accordance with its respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
5.3 FINANCIAL CONDITION.
Company has heretofore delivered to Lenders, at Lenders' request, (i)
audited consolidated financial statements of Company and its Subsidiaries for
the Fiscal Year ending December 31, 1996, consisting of a consolidated balance
sheet as at such date and the related consolidated statements of income,
stockholders' equity and cash flows for the Fiscal Year than ended, and (ii)
unaudited consolidated financial statements of Company and its Subsidiaries for
the eight-month period ending August 31, 1997, consisting of a consolidated
balance sheet as at such date and the related consolidated statements of income,
stockholders' equity and cash flows for such eight-month period. All such
statements were prepared in conformity with GAAP and fairly present, in all
material respects, the financial position (on a consolidated basis) of the
entities described in such financial statements as at the respective dates
thereof and the results of operations and cash flows (on a consolidated basis)
of the business or entities described therein for each of the periods then
ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments. Company does not
(and will not following the funding of the Loans) have any Contingent
Obligation, contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment that is not reflected in the foregoing
financial statements or the notes thereto or on Schedule 5.3 annexed hereto and
which in any such case is material in relation to the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Company
or any of its Subsidiaries.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
Since December 31, 1996, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Neither Company nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so except as permitted by subsection
7.5.
5.5 TITLE TO PROPERTIES; LIENS.
Company and its Subsidiaries have (i) good, sufficient and legal title
to (in the case of fee interests in real property), (ii) valid leasehold
interests in (in the case of leasehold interests in real or personal property),
or (iii) good title to (in the case of all other personal property), all of
their respective properties and assets reflected in the financial statements
referred to in subsection 5.3 or in the most recent financial statements
delivered pursuant to subsection 6.1, in each case except for assets disposed of
since the date of such financial statements in the ordinary course of business
or as otherwise permitted under subsection 7.7. Except as permitted by this
Agreement, all such properties and assets are free and clear of Liens.
5.6 LITIGATION; ADVERSE FACTS.
Except as set forth in Schedule 5.6 annexed hereto, there are no
actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of Company or any of its Subsidiaries) at
law or in equity or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, pending or, to the knowledge of Company, threatened against
or affecting Company or any of its Subsidiaries or any property of Company or
any of its Subsidiaries that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither Company nor any of
its Subsidiaries is (i) in violation of any applicable laws that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect or (ii) subject to or in default with respect to any final
judgments, writs, injunctions, decrees, rules or regulations of any court or any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, that, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect.
5.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 6.3, all tax returns and
reports of Company and its Subsidiaries required to be filed by any of them have
been timely filed, and all taxes shown on such tax returns to be due and payable
and all assessments, fees and other governmental charges upon Company and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid when due and payable.
Company knows of no proposed tax assessment against Company or any of its
Subsidiaries which is not being contested by Company or such Subsidiary in good
faith and by appropriate proceedings; provided that such reserves or other
appropriate provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.
5.8. REAL PROPERTY COLLATERAL
As of the Closing Date, Schedule 5.8 annexed hereto contains a true,
accurate and complete list of (a) all leases and subleases affecting each parcel
of real property leased by any Loan Party, regardless of whether such Loan Party
is the landlord or tenant (whether directly or as an assignee or successor in
interest) under such lease or sublease and (b) all real property owned in fee by
any of the Loan Parties. Except as specified in such Schedule 5.8, each
agreement listed in clause (a) is in full force and effect.
5.9 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not be reasonably likely to have a
Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, would reasonably
be likely to result in a Material Adverse Effect.
5.10 GOVERNMENTAL REGULATION.
Neither Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
5.11 SECURITIES ACTIVITIES.
Neither Company nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
5.12 EMPLOYEE BENEFIT PLANS.
A. Company and each of its ERISA Affiliates are in compliance in all
material respects with all applicable provisions and requirements of ERISA and
the regulations and published interpretations thereunder with respect to each
Employee Benefit Plan, and have performed all their obligations under each
Employee Benefit Plan.
B. No ERISA Event has occurred prior to the date hereof, and no ERISA
Event is reasonably expected to occur after the date hereof which would
reasonably be likely to result in a liability to Company or any of its ERISA
Affiliates that would result in a Material Adverse Effect.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code or except as set forth in Schedule 5.12 annexed hereto, no Employee
Benefit Plan provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employees of Company or any of
its ERISA Affiliates. No Employee Benefit Plans listed in Schedule 5.12 annexed
hereto have been amended since July 1, 1995 in a manner that increases the
liabilities of Company or any of its ERISA Affiliates under such Employee
Benefit Plans by an amount which would have a Material Adverse Effect.
D. As of the most recent valuation date for any Pension Plan, the
amount of unfunded current liabilities (as defined in Section 302(d)(8) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed an amount which, if such Pension
Plans were terminated, would result in liability to Company or any of its ERISA
Affiliates in an amount that would reasonably be likely to result in a Material
Adverse Effect.
5.13 CERTAIN FEES.
No broker's or finder's fee or commission (other than any such fees or
commissions that may be payable to Persons engaged by Agents or any Lender in
connection with such engagement by Agents or such Lender) will be payable with
respect to this Agreement or any of the transactions contemplated hereby, and
Company hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
5.14 ENVIRONMENTAL PROTECTION.
Except as set forth in Schedule 5.14 annexed hereto:
(i) the operations of Company and each of its Subsidiaries (including,
without limitation, all operations and conditions at or in the Facilities
that are currently owned, leased or occupied by Company or any of its
Subsidiaries) comply in all material respects with all Environmental Laws;
(ii) Company and each of its Subsidiaries have obtained all
Governmental Authorizations under Environmental Laws necessary to their
respective operations, and all such Governmental Authorizations are in good
standing, and Company and each of its Subsidiaries are in compliance with
all material terms and conditions of such Governmental Authorizations;
(iii) neither Company nor any of its Subsidiaries has received (a) any
notice or claim to the effect that it is or may be liable to any Person as
a result of or in connection with any Hazardous Materials or (b) any letter
or request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Section
9604) or comparable state laws, and, to the best of Company's knowledge,
none of the operations of Company or any of its Subsidiaries is the subject
of any federal or state investigation relating to or in connection with any
Hazardous Materials at any Facility or at any other location;
(iv) none of the operations of Company or any of its Subsidiaries is
subject to any judicial or administrative proceeding alleging the violation
of or liability under any Environmental Laws which if adversely determined
could reasonably be expected to have a Material Adverse Effect;
(v) neither Company nor any of its Subsidiaries nor any of their
respective Facilities that are currently owned, leased or occupied by
Company or any of its Subsidiaries or operations are subject to any
outstanding written order or agreement with any governmental authority or
private party (a) relating to any Environmental Claims or (b) relating
principally to any Environmental Laws;
(vi) neither Company nor any of its Subsidiaries nor, to the best
knowledge of Company, any predecessor of Company or any of its Subsidiaries
has filed any notice with any regulatory authority under any Environmental
Law indicating past or present treatment or Release of Hazardous Materials
at any Facility, and none of Company's or any of its Subsidiaries'
operations involves the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40 C.F.R.
Parts 260-270 or any state equivalent;
(vii) to the best knowledge of Company, no Hazardous Materials exist
on, under or about any Facility in a manner that could reasonably be
expected to give rise to an Environmental Claim having a Material Adverse
Effect;
(viii) neither Company nor any of its Subsidiaries nor, to the best
knowledge of Company, any of their respective predecessors has Released or
disposed of any Hazardous Materials in a manner that could reasonably be
expected to give rise to an Environmental Claim having a Material Adverse
Effect;
(ix) no underground storage tanks or surface impoundments are on or at
any Facility that is currently owned, leased or occupied by Company or any
Subsidiary or at any other Facility where the existence of such tanks or
surface impoundments could reasonably be expected to have a Material
Adverse Effect; and
(x) no Lien in favor of any Person relating to or in connection with
any Environmental Claim has been filed or has been attached to any Facility
that is currently owned, leased or occupied by Company or any Subsidiary.
5.15 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that would reasonably be expected
to have a Material Adverse Effect.
5.16 SOLVENCY.
Company and each of its Subsidiaries is and, upon the incurrence of
any Obligations by Company on any date on which this representation is made,
will be, Solvent.
5.17 DISCLOSURE.
No representation or warranty of Company or any of its Subsidiaries
contained in any Loan Document or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to Company, in the case of any document not furnished by
it) necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by Company to be
reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There are no facts known (or which should upon the
reasonable exercise of diligence be known) to Company (other than matters of a
general economic nature) that, individually or in the aggregate, would
reasonably be expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to Lenders for use in connection with the transactions contemplated
hereby.
SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Administrative Agent and Lenders:
(i) Monthly Financials: as soon as available and in any event within
30 days after the end of each month ending after the Closing Date, (a) the
consolidated and consolidating balance sheets of Company and its
Subsidiaries as at the end of such month and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows of
Company and its Subsidiaries for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month, setting
forth in each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the corresponding
figures from the consolidated plan and financial forecast for the current
Fiscal Year delivered pursuant to subsection 6.1(xiii), to the extent
prepared on a monthly basis, all in substantially the form of the financial
statements contained in the Confidential Information Memorandum and in
reasonable detail and certified by the chief financial officer of Company
that they fairly present, in all material respects, the financial condition
of Company and its Subsidiaries as at the dates indicated and the results
of their operations and their cash flows for the periods indicated, subject
to changes resulting from audit and normal year-end adjustments, and (b) a
narrative report describing the operations of Company and its Subsidiaries
in the form prepared for presentation to senior management for such month
and for the period from the beginning of the then current Fiscal Year to
the end of such month;
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each of the first three Fiscal Quarters of
each Fiscal Year, (a) the consolidated and consolidating balance sheets of
Company and its Subsidiaries as at the end of such Fiscal Quarter and the
related consolidated and consolidating statements of income, stockholders'
equity and cash flows of Company and its Subsidiaries for such Fiscal
Quarter and for the period from the beginning of the then current Fiscal
Year to the end of such Fiscal Quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding periods of
the previous Fiscal Year and the corresponding figures from the
consolidated plan and financial forecast delivered pursuant to subsection
6.1(xiii) for the Fiscal Year covered by such financial statements, all in
substantially the form of the financial statements contained in the
Confidential Information Memorandum and in reasonable detail and certified
by the chief financial officer of Company that they fairly present, in all
material respects, the financial condition of Company and its Subsidiaries
as at the dates indicated and the results of their operations and their
cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments, and (b) a narrative report
describing the operations of Company and its Subsidiaries in the form
prepared for presentation to senior management for such Fiscal Quarter and
for the period from the beginning of the then current Fiscal Year to the
end of such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated and
consolidating balance sheets of Company and its Subsidiaries as at the end
of such Fiscal Year and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows of Company and
its Subsidiaries for such Fiscal Year and for the fourth Fiscal Quarter of
such Fiscal Year, setting forth in each case in comparative form the
corresponding figures for the previous Fiscal Year or the fourth Fiscal
Quarter thereof, as the case may be, and the corresponding figures from the
consolidated plan and financial forecast delivered pursuant to subsection
6.1(xiii) for the Fiscal Year covered by such financial statements, all in
substantially the form of the financial statements contained in the
Confidential Information Memorandum and in reasonable detail and certified
by the chief financial officer of Company that they fairly present, in all
material respects, the financial condition of Company and its Subsidiaries
as at the dates indicated and the results of their operations and their
cash flows for the periods indicated, (b) a narrative report describing the
operations of Company and its Subsidiaries in the form prepared for
presentation to senior management for such Fiscal Year, and (c) a report
thereon of Deloitte & Touche, L.L.P. or other independent certified public
accountants of recognized national standing selected by Company and
satisfactory to Administrative Agent, which report shall be unqualified,
shall express no doubts about the ability of Company and its Subsidiaries
to continue as a going concern, and shall state that such consolidated
financial statements fairly present, in all material respects, the
consolidated financial position of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(iv) Officers' and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (i), (ii) and (iii) above, (a) an Officers' Certificate of
Company stating that the signers have reviewed the terms of this Agreement
and have made, or caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of Company and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of such Officers' Certificate, of
any condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
Company has taken, is taking and proposes to take with respect thereto; and
(b) a Compliance Certificate demonstrating in reasonable detail compliance
during and at the end of the applicable accounting periods with the
restrictions contained in Section 7, in each case to the extent compliance
with such restrictions is required to be tested at the end of the
applicable accounting period;
(v) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 5.3, the
consolidated financial statements of Company and its Subsidiaries delivered
pursuant to subdivisions (ii), (iii) or (xiii) of this subsection 6.1 will
differ in any material respect from the consolidated financial statements
that would have been delivered pursuant to such subdivisions had no such
change in accounting principles and policies been made, then (a) together
with the first delivery of financial statements pursuant to subdivision
(ii), (iii) or (xiii) of this subsection 6.1 following such change,
consolidated financial statements of Company and its Subsidiaries for (y)
the current Fiscal Year to the effective date of such change and (z) the
two full Fiscal Years immediately preceding the Fiscal Year in which such
change is made, in each case prepared on a pro forma basis as if such
change had been in effect during such periods, and (b) together with each
delivery of financial statements pursuant to subdivision (ii), (iii) or
(xiii) of this subsection 6.1 following such change, a written statement of
the chief accounting officer or chief financial officer of Company setting
forth the differences (including without limitation any differences that
would affect any calculations relating to the financial covenants set forth
in subsection 7.6) which would have resulted if such financial statements
had been prepared without giving effect to such change;
(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (iii) above, a letter from the independent certified public
accountants giving their report thereon stating that either nothing has
come to their attention that caused them to believe that the Company failed
to comply with the covenants of subsections 7.6, 7.8 and 7.9 of this
Agreement insofar as they relate to accounting matters or, if something has
come to their attention, specifying the nature and period of existence
thereof; provided that such accountants shall not be liable by reason of
any failure to obtain knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the course of their audit
examination;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants,
including, without limitation, any comment letter submitted by such
accountants to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company to its
security holders or by any Subsidiary of Company to its security holders
other than Company or another Subsidiary of Company, (b) all regular and
periodic reports and all registration statements (other than on Form S-8 or
a similar form) and original and final prospectuses, if any, filed by
Company or any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental or private
regulatory authority, and (c) all press releases and other statements made
available generally by Company or any of its Subsidiaries to the public
concerning material developments in the business of Company or any of its
Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of Company
obtaining knowledge (a) of any condition or event that constitutes an Event
of Default or Potential Event of Default, or becoming aware that any Lender
has given any notice (other than to Administrative Agent) or taken any
other action with respect to a claimed Event of Default or Potential Event
of Default, (b) that any Person has given any notice to Company or any of
its Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in subsection 8.2,
(c) of any condition or event that would be required to be disclosed in a
current report filed by Company with the Securities and Exchange Commission
on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date
hereof) if Company were required to file such reports under the Exchange
Act, or (d) of the occurrence of any event or change that has caused or
evidences, either in any case or in the aggregate, a Material Adverse
Effect, an Officers' Certificate specifying the nature and period of
existence of such condition, event or change, or specifying the notice
given or action taken by any such Person and the nature of such claimed
Event of Default, Potential Event of Default, default, event or condition,
and what action Company has taken, is taking and proposes to take with
respect thereto;
(x) Litigation or Other Proceedings: promptly upon any officer of
Company obtaining knowledge of (a) the institution of, or non-frivolous
threat of, any action, suit, proceeding (whether administrative, judicial
or otherwise), governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any property of Company or
any of its Subsidiaries (collectively, "PROCEEDINGS") not previously
disclosed in writing by Company to Lenders or (b) any material development
in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters;
(xi) ERISA Events: promptly upon becoming aware of the occurrence of
or forthcoming occurrence of any ERISA Event, a written notice specifying
the nature thereof, what action Company or any of its ERISA Affiliates has
taken, is taking or proposes to take with respect thereto and, when known,
any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a) if
requested by any Lender, each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) filed by Company or any of its ERISA
Affiliates with the Internal Revenue Service with respect to each Pension
Plan; (b) all notices received by Company or any of its ERISA Affiliates
from a Multiemployer Plan sponsor concerning an ERISA Event; and (c) such
other documents or governmental reports or filings relating to any Employee
Benefit Plan as Administrative Agent shall reasonably request;
(xiii) Financial Plans: as soon as practicable and in any event no
later than 30 days prior to the beginning of each Fiscal Year, a
consolidated and consolidating plan and financial forecast for such Fiscal
Year, including without limitation (a) forecasted consolidated and
consolidating balance sheets and forecasted consolidated and consolidating
statements of income and cash flows of Company and its Subsidiaries for
such Fiscal Year, together with a pro forma Compliance Certificate for such
Fiscal Year and an explanation of the assumptions on which such forecasts
are based, (b) forecasted consolidated and consolidating statements of
income and cash flows of Company and its Subsidiaries for each month of
such Fiscal Year, together with an explanation of the assumptions on which
such forecasts are based, and (c) such other information and projections as
any Lender may reasonably request;
(xiv) Insurance: as soon as practicable and in any event by the last
day of each Fiscal Year, a report in form and substance reasonably
satisfactory to Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by Company and its
Subsidiaries and all material insurance coverage planned to be maintained
by Company and its Subsidiaries in the immediately succeeding Fiscal Year;
(xv) Environmental Audits and Reports: as soon as practicable
following receipt thereof by Company, copies of all environmental audits
and reports, whether prepared by personnel of Company or any of its
Subsidiaries or by independent consultants, with respect to an
Environmental Claim or any matter governed by or arising under applicable
Environmental Laws which, in either case, could reasonably be expected to
result in a Material Adverse Effect;
(xvi) Board of Directors: with reasonable promptness, written notice
of any change in the Board of Directors of Company;
(xvii) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Company and
(b) all of the data required to be set forth in Schedule 5.1 annexed hereto
with respect to all Subsidiaries of Company (it being understood that such
written notice shall be deemed to supplement Schedule 5.1 annexed hereto
for all purposes of this Agreement);
(xviii) UCC Search Report: As promptly as practicable after the
Closing Date, Company shall furnish to Collateral Agent the results of
completed requests for information listing the financing statements
referred to in subsection 4.1L(ii) and all other effective financing
statements that name any Loan Party as debtor, together with copies of all
such other financing statements; and
(xix) Other Information: with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Lender.
6.2 CORPORATE EXISTENCE, ETC.
Except as permitted under subsection 7.7, Company will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to its
business; provided, however, that neither Company nor any of its Subsidiaries
shall be required to preserve any such right or franchise if the Board of
Directors of Company or such Subsidiary shall determine that the preservation
thereof is no longer desirable in the conduct of the business of Company or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to Company, such Subsidiary or Lenders.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Company will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or may become a Lien upon
any of its properties or assets, prior to the time when any penalty or fine
shall be incurred with respect thereto; provided that no such tax, charge or
claim need be paid if being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and if such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor.
B. Except to the extent otherwise required of Company by applicable
law, Company will not, nor will it permit any of its Subsidiaries to, file or
consent to the filing of any consolidated income tax return with any Person
(other than Company or any of its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE.
Company will, and will cause each of its Subsidiaries to, maintain or
cause to be maintained in good repair, working order and condition, ordinary
wear and tear excepted, all material properties used or useful in the business
of Company and its Subsidiaries (including, without limitation, Intellectual
Property) and from time to time will make or cause to be made all appropriate
repairs, renewals and replacements thereof. Company will maintain or cause to be
maintained, with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and businesses of its
Subsidiaries against loss or damage (including, without limitation, flood
insurance, if necessary or advisable) of the kinds customarily carried or
maintained under similar circumstances by corporations of established reputation
engaged in similar businesses (but in any event including business interruption
insurance), in such amounts (giving effect to self-insurance), with such
deductibles and by such methods as shall be customary for corporations similarly
situated in the industry. Without limiting the generality of the foregoing,
Company will maintain or cause to be maintained flood insurance with respect to
each Additional Flood Hazard Property (as defined in subsection 6.10) to the
extent such Additional Flood Hazard Property is located in a community that
participates in the National Flood Insurance Program. Each such policy of
insurance that insures against loss or damage with respect to any Collateral or
against losses due to business interruption shall name Collateral Agent, for the
benefit of Lenders and Existing Lenders, as the loss payee thereunder for any
covered loss in excess of $1,000,000 and shall provide for at least 30 days
prior written notice to Collateral Agent of any modification or cancellation of
such policy. Upon receipt by Collateral Agent of any insurance proceeds as loss
payee (i) in respect of any such business interruption insurance, (a) Collateral
Agent shall, so long as no Event of Default or Potential Event of Default shall
have occurred and be continuing, deliver such insurance proceeds to Company, and
(b) if an Event of Default or Potential Event of Default shall have occurred and
be continuing, Collateral Agent shall, and Company hereby authorizes Collateral
Agent to, apply such insurance proceeds to prepay the Loans and the Existing
Tranche B Term Loans in the same manner as if such insurance proceeds were Net
Cash Proceeds of an Asset Sale to be applied as provided in subsection
2.4B(ii)(a) and subsection 2.4B(iii)(c) of the Existing Credit Agreement, and
(ii) in respect of any such insurance against loss or damage with respect to any
Collateral, (a) to the extent that Company or any of its Subsidiaries intends to
use any such insurance proceeds to repair, restore or replace the assets of
Company or any of its Subsidiaries in respect of which such insurance proceeds
were received, Collateral Agent shall, so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing, deliver such
insurance proceeds to Company, and Company shall use such insurance proceeds to
effect such repair, restoration or replacement, and (b) if an Event of Default
or Potential Event of Default shall have occurred and be continuing or to the
extent that neither Company nor any of its Subsidiaries intends to use any such
insurance proceeds to repair, restore or replace assets of Company or any of its
Subsidiaries as described above, Collateral Agent shall, and Company hereby
authorizes Collateral Agent to, apply such insurance proceeds to prepay the
Loans and the Existing Tranche B Term Loans in the same manner as if such
insurance proceeds were proceeds of a sale of the applicable Collateral to be
applied as provided in the Intercreditor Agreement.
6.5 INSPECTION; LENDER MEETING.
Company shall, and shall cause each of its Subsidiaries to, (i) permit
any authorized representatives designated by any Lender to visit and inspect any
of the properties of Company or any of its Subsidiaries, including its and their
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and accounts with its
and their officers and independent public accountants (provided that Company
may, if it so chooses, be present at or participate in any such discussion), all
upon reasonable notice and at such reasonable times during normal business hours
and as often as may be reasonably requested and (ii) permit any authorized
representatives designated by Administrative Agent to conduct at Company's
expense, during each twelve month period following the Closing Date, one audit
of all inventory and all accounts receivable of Company and its Subsidiaries in
scope and substance substantially similar to the audit of inventory and accounts
receivable of the Dictaphone Business that was conducted by authorized
representatives of Existing Administrative Agent in July, 1995, all upon
reasonable notice and at such reasonable times during normal business hours and
as often as may be reasonably requested. Without in any way limiting the
foregoing, Company will, upon the request of Administrative Agent or Requisite
Lenders, participate in a meeting of Administrative Agent and Lenders once
during each Fiscal Year to be held at Company's corporate offices (or such other
location as may be agreed to by Company and Administrative Agent) at such time
as may be agreed to by Company and Administrative Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
Company shall, and shall cause each of its Subsidiaries to, comply
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority, noncompliance with which could reasonably be
expected to cause, individually or in the aggregate at any one time, a Material
Adverse Effect, in each case except to the extent that Company's or such
Subsidiary's requirement to comply therewith is being contested in good faith by
Company or such Subsidiary, as the case may be, and such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor.
6.7 ENVIRONMENTAL DISCLOSURE AND INSPECTION.
A. Company shall, and shall cause each of its Subsidiaries to,
exercise reasonable due diligence in order to comply and cause (i) all tenants
under any leases or occupancy agreements affecting any portion of the Facilities
that are currently owned, leased or occupied by Company or any of its
Subsidiaries and (ii) all other Persons on or occupying such Facilities, to
comply with all Environmental Laws and Governmental Authorizations.
B. Company agrees that Administrative Agent may, from time to time and
in its reasonable discretion, or if an Event of Default shall have occurred and
be continuing in its sole and absolute discretion, retain, at Company's expense,
an independent professional consultant to review any report relating to
Hazardous Materials prepared by or for Company and to conduct its own
investigation of any Facility currently owned, leased, operated or used by
Company or any of its Subsidiaries, and Company agrees to use its best efforts
to obtain permission for Administrative Agent's professional consultant to
conduct without expense to Company its own investigation of any Facility
previously owned, leased, operated or used by Company or any of its
Subsidiaries. Company hereby grants to Administrative Agent and its agents,
employees, consultants and contractors the right to enter into or on to the
Facilities currently owned, leased, operated or used by Company or any of its
Subsidiaries to perform such tests on such property as are reasonably necessary
to conduct such a review and/or investigation. Any such investigation of any
Facility shall be conducted, unless otherwise agreed to by Company and
Administrative Agent, during normal business hours and, to the extent reasonably
practicable, shall be conducted so as not to interfere with the ongoing
operations at any such Facility or to cause any damage or loss to any property
at such Facility. Company and Administrative Agent hereby acknowledge and agree
that any report of any investigation conducted at the request of Administrative
Agent pursuant to this subsection 6.7B will be obtained and shall be used by
Administrative Agent and Lenders for the purposes of Lenders' internal credit
decisions, to monitor and police the Loans and to protect Lenders' security
interests, if any, created by the Loan Documents. Administrative Agent agrees to
deliver a copy of any such report to Company with the understanding that Company
acknowledges and agrees that (i) it will indemnify and hold harmless
Administrative Agent and each Lender from any costs, losses or liabilities
relating to Company's use of or reliance on such report, (ii) neither
Administrative Agent nor any Lender makes any representation or warranty with
respect to such report, and (iii) by delivering such report to Company, neither
Administrative Agent nor any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.
C. Company shall promptly after obtaining knowledge thereof advise
Lenders in writing and in reasonable detail of (i) any Release of any Hazardous
Materials at any Facility required to be reported to any federal, state or local
governmental or regulatory agency under any applicable Environmental Laws, (ii)
any and all written communications with respect to any Environmental Claims that
could reasonably be expected to give rise to a Material Adverse Effect or with
respect to any Release of Hazardous Materials required to be reported to any
federal, state or local governmental or regulatory agency, (iii) any remedial
action taken by Company or any other Person in response to (x) any Hazardous
Materials on, under or about any Facility, the existence of which could
reasonably be expected to result in an Environmental Claim having a Material
Adverse Effect, or (y) any Environmental Claim that could reasonably be expected
to have a Material Adverse Effect, (iv) any Release of Hazardous Materials at
any Facility which is subject to a Mortgage that could reasonably be expected to
cause such Facility or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability or use thereof under any Environmental
Laws, and (v) any request for information from any governmental agency that
suggests such agency is investigating whether Company or any of its Subsidiaries
may be potentially responsible for a Release of Hazardous Materials.
D. Company shall promptly notify Lenders of any proposed acquisition
of stock, assets, or property by Company or any of its Subsidiaries that could
reasonably be expected to expose Company or any of its Subsidiaries to, or
result in, Environmental Claims that could have a Material Adverse Effect or
that could reasonably be expected to have a material adverse effect on any
Governmental Authorization then held by Company or any of its Subsidiaries.
E. Company shall, at its own expense, provide copies of such documents
or written information as Administrative Agent may reasonably request in
relation to any matters disclosed pursuant to this subsection 6.7.
6.8 INTEREST RATE PROTECTION.
At all times after the date which is 90 days after the Closing Date,
Company shall maintain in effect one or more Interest Rate Agreements with
respect to the Loans, each such Interest Rate Agreement to be for a term and in
form and substance reasonably satisfactory to Agents, which Interest Rate
Agreements shall effectively limit the Unadjusted Eurodollar Rate Component (as
hereinafter defined) of the interest costs to Company with respect to an
aggregate notional principal amount of not less than 50% of the aggregate
principal amount of the Loans outstanding from time to time (based on the
assumption that such notional principal amount was a Eurodollar Rate Loan with
an Interest Period of three months), to a rate equal to not more than 9% per
annum. For purposes of this subsection 6.8, the term "UNADJUSTED EURODOLLAR RATE
COMPONENT" means that component of the interest costs to Company in respect of a
Eurodollar Rate Loan that is based upon the rate obtained pursuant to clause (i)
of the definition of Adjusted Eurodollar Rate.
6.9 EXECUTION OF SUBSIDIARY GUARANTY AND SHARED COLLATERAL DOCUMENTS BY
CERTAIN SUBSIDIARIES AND FUTURE SUBSIDIARIES.
A. EXECUTION OF SUBSIDIARY GUARANTY, SHARED COLLATERAL DOCUMENTS AND
ACKNOWLEDGMENT TO INTERCREDITOR AGREEMENT. In the event that any Domestic
Subsidiary existing as of the date hereof (other than U.S. Dictaphone) hereafter
owns or acquires assets with an aggregate fair market value (without netting
such fair market value against any liability of such Subsidiary) exceeding
$150,000, or in the event that any Person becomes a Domestic Subsidiary after
the date hereof, Company will promptly notify Administrative Agent and
Collateral Agent of that fact and cause such Subsidiary to execute and deliver
to to Collateral Agent (i) a counterpart of the Subsidiary Guaranty, (ii) a
Subsidiary Pledge Agreement, a Subsidiary Security Agreement, a Subsidiary
Trademark Security Agreement, a Subsidiary Patent Security Agreement and (if
applicable) Additional Mortgages, and (iii) an acknowledgment to the
Intercreditor Agreement and to take all such further action and execute all such
further documents and instruments as may be reasonably required to grant and
perfect in favor of Collateral Agent, for the benefit of Lenders and Existing
Lenders, a first-priority security interest (subject to Permitted Encumbrances)
in all of the Real Property Assets and all of the personal property assets of
such Subsidiary described in the applicable Shared Collateral Documents.
B. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC. Company shall
deliver to Collateral Agent, together with the Subsidiary Guaranty and such
Shared Collateral Documents, (i) certified copies of such Subsidiary's Articles
or Certificate of Incorporation, together with a good standing certificate from
the Secretary of State of the jurisdiction of its incorporation, each to be
dated a recent date prior to their delivery to Collateral Agent, (ii) a copy of
such Subsidiary's Bylaws, certified by its corporate secretary or an assistant
corporate secretary as of a recent date prior to their delivery to Collateral
Agent, (iii) a certificate executed by the secretary or an assistant secretary
of such Subsidiary as to (a) the incumbency and signatures of the officers of
such Subsidiary executing the Subsidiary Guaranty and the Shared Collateral
Documents to which such Subsidiary is a party and (b) the fact that the attached
resolutions of the Board of Directors of such Subsidiary authorizing the
execution, delivery and performance of the Subsidiary Guaranty and such Shared
Collateral Documents are in full force and effect and have not been modified or
rescinded, and (iv) a favorable opinion of counsel to such Subsidiary, in form
and substance satisfactory to Collateral Agent and its counsel, as to (a) the
due organization and good standing of such Subsidiary, (b) the due
authorization, execution and delivery by such Subsidiary of the Subsidiary
Guaranty and such Shared Collateral Documents, (c) the enforceability of the
Subsidiary Guaranty and such Shared Collateral Documents against such
Subsidiary, and (d) such other matters as Collateral Agent may reasonably
request, all of the foregoing to be satisfactory in form and substance to
Collateral Agent and its counsel.
6.10 ADDITIONAL MORTGAGES.
A. From and after the Closing Date, in the event that (i) Company or
any Subsidiary Guarantor acquires any Fee Property or any Material Leasehold
(each a "COVERED REAL PROPERTY ASSET") or (ii) at the time any Person becomes a
Subsidiary Guarantor, such Person owns or holds any Covered Real Property Asset,
Company or such Subsidiary Guarantor shall, as soon as practicable after the
acquisition of such Covered Real Property Asset or such Person's becoming a
Subsidiary Guarantor, as the case may be, deliver (a) fully executed
counterparts of Mortgages (each an "ADDITIONAL MORTGAGE" and collectively, the
"ADDITIONAL MORTGAGES") encumbering such Covered Real Property Asset, together
with evidence that counterparts of such Additional Mortgages have been recorded
in all places to the extent necessary or desirable, in the reasonable judgment
of Collateral Agent, so as to effectively create a valid and enforceable first
priority lien (or such other priority lien as may be specified in the applicable
Additional Mortgage), subject to Permitted Encumbrances, on such Covered Real
Property Asset in favor of Collateral Agent (or such other trustee as may be
required or desired under local law) for the benefit of Lenders; (b) a title
report obtained by Company in respect of any such Covered Real Property Asset;
(c) if required by Collateral Agent, an opinion of counsel (which counsel shall
be reasonably satisfactory to Collateral Agent) in the state in which such
Covered Real Property Asset is located with respect to the enforceability of the
form of Additional Mortgage recorded in such state and such other matters as
Collateral Agent may reasonably request, in form and substance reasonably
satisfactory to Collateral Agent; (d) in the case of each such Covered Real
Property Asset consisting of a Material Leasehold, such estoppel letters from
the landlord on such Material Leasehold as may be reasonably requested by
Collateral Agent, in form and substance reasonably satisfactory to Collateral
Agent; (e) if required by Collateral Agent, in the case of each such Covered
Real Property Asset consisting of a Fee Property, environmental audits prepared
by professional consultants mutually acceptable to Company and Collateral Agent,
in form, scope and substance satisfactory to Collateral Agent in its reasonable
discretion; (f) if required by Collateral Agent, in the case of each such
Covered Real Property Asset consisting of a Fee Property, an ALTA mortgagee
title insurance policy issued by a title insurer reasonably satisfactory to
Collateral Agent (an "ADDITIONAL MORTGAGE POLICY"), in an amount reasonably
satisfactory to Collateral Agent, assuring Collateral Agent that the applicable
Additional Mortgage creates a valid and enforceable first priority mortgage lien
(or such other priority lien as may be specified in the applicable Additional
Mortgage) on such Covered Real Property Asset, free and clear of all defects and
encumbrances except Permitted Encumbrances and subject to a standard survey
exception, which Additional Mortgage Policy shall be in form and substance
reasonably satisfactory to Collateral Agent and shall include an endorsement for
mechanics' liens, for future advances under this Agreement, the Notes and the
other Loan Documents, and for any other matters that Collateral Agent may
reasonably request, and shall provide for affirmative insurance and such
reinsurance as Collateral Agent may reasonably request, all of the foregoing in
form and substance reasonably satisfactory to Collateral Agent; (g) evidence,
which may be in the form of a letter from an insurance broker or a municipal
engineer, as to whether (1) such Covered Real Property Asset (an "ADDITIONAL
FLOOD HAZARD PROPERTY") is in an area designated by the Federal Emergency
Management Agency as having special flood or mud slide hazards and (2) the
community in which such Covered Real Property Asset (if it is an Additional
Flood Hazard Property) is located is participating in the National Flood
Insurance Program; and (h) if such Covered Real Property Asset is an Additional
Flood Hazard Property, Company's written acknowledgement of receipt of written
notification from Collateral Agent (1) as to the existence of such Additional
Flood Hazard Property and (2) as to whether the community in which such Flood
Hazard Property is located is participating in the National Flood Insurance
Program. Collateral Agent and Lenders shall cooperate reasonably with Company,
at Company's expense, in structuring any Additional Mortgages in a manner so as
to minimize mortgage taxes associated therewith, to the extent possible
consistent with the protection of Lenders' interests.
B. Company shall, and shall cause each of its Subsidiaries to, permit
any authorized representatives designated by Collateral Agent, upon reasonable
notice, to visit and inspect any Covered Real Property Asset for the purpose of
obtaining an appraisal of value, conducted by consultants retained by Collateral
Agent in compliance with all applicable banking regulations, with respect to
such Covered Real Property Asset.
C. In the event that Company or the applicable Subsidiary Guarantor
fails to consummate a Specified Asset Sale/Financing with respect to any Closing
Date Mortgaged Property on or before December 31, 1999, Company or such
Subsidiary Guarantor shall, as soon as practicable after such date, deliver (a)
an executed counterpart of an amendment (a "CLOSING DATE MORTGAGE AMENDMENT") to
the applicable Closing Date Mortgage (such term being used herein as defined in
the Existing Credit Agreement) together with evidence that a counterpart of such
Closing Date Mortgage Amendment has been recorded in all places to the extent
necessary or desirable, in the reasonable judgment of Collateral Agent, so as to
effectively create a valid and enforceable first priority lien (or such other
priority lien as may be specified in the applicable Closing Date Mortgage),
subject to Permitted Encumbrances, on such Closing Date Mortgaged Property in
favor of Collateral Agent (or such other trustee as may be required or desired
under local law) for the benefit of all Secured Parties (as such term is defined
in the Intercreditor Agreement); (b) an updated title report obtained by Company
in respect of such Closing Date Mortgaged Property; (c) if required by
Collateral Agent, an opinion of counsel (which counsel shall be reasonably
satisfactory to Collateral Agent) in the state in which such Closing Date
Mortgaged Property is located with respect to the enforceability of the form of
Closing Date Mortgage Amendment recorded in such state and such other matters as
Collateral Agent may reasonably request, in form and substance reasonably
satisfactory to Collateral Agent; and (d) if required by Collateral Agent, a
bringdown of the title insurance policy issued with respect to such Closing Date
Mortgaged Property, assuring Collateral Agent that the applicable Closing Date
Mortgage, as amended pursuant to such Closing Date Mortgage Amendment, continues
to create a valid and enforceable first priority mortgage lien (or such other
priority lien as may be specified in such Closing Date Mortgage) on such Closing
Date Mortgaged Property, free and clear of all defects and encumbrances except
Permitted Encumbrances and subject to a standard survey exception. Collateral
Agent and Lenders shall cooperate reasonably with Company, at Company's expense,
in structuring any such amendment to a Closing Date Mortgage in a manner so as
to minimize mortgage taxes associated therewith, to the extent possible
consistent with the protection of Secured Parties' interests.
6.11 ASSIGNABILITY AND RECORDING OF LEASE AGREEMENTS.
From and after the Closing Date, in the event that Company or any of
its Domestic Subsidiaries enters into any lease that is a Material Leasehold,
Company shall, or shall cause such Subsidiary to, (i) obtain lease terms
permitting (or not expressly prohibiting) the encumbrancing of such Material
Leasehold pursuant to an Additional Mortgage and the assignment of such Material
Leasehold interest to the successful bidder at a foreclosure or similar sale
(and to a subsequent third party assignee by Collateral Agent or any Lender to
the extent Collateral Agent or such Lender is the successful bidder at such
sale) in the event of a foreclosure or similar action pursuant to such
Additional Mortgage and (ii) cause such lease, or a memorandum of lease with
respect thereto, or other evidence of such lease in form and substance
reasonably satisfactory to Collateral Agent, to be recorded in all places to the
extent necessary or desirable, in the reasonable judgment of Collateral Agent,
so as to enable an Additional Mortgage encumbering such Material Leasehold to
effectively create a valid and enforceable first priority lien (subject to
Permitted Encumbrances) on such Material Leasehold in favor of Collateral Agent
(or such other Person as may be required or desired under local law) for the
benefit of Lenders.
SECTION 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 7.
7.1 INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Company may become and remain liable with respect to the
Obligations;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases; provided that such
Capital Leases are permitted under the terms of subsection 7.9;
(iv) Company may become and remain liable with respect to Indebtedness
to any of its wholly-owned Subsidiaries, and any wholly-owned Domestic
Subsidiary may become and remain liable with respect to Indebtedness to
Company or any other wholly-owned Subsidiary of Company; provided that (a)
all such intercompany Indebtedness shall be evidenced by promissory notes,
(b) all such intercompany Indebtedness owed by Company to any of its
Subsidiaries shall be subordinated in right of payment to the payment in
full of the Obligations pursuant to the terms of the applicable promissory
notes or an intercompany subordination agreement, and (c) any payment by
any Subsidiary of Company under any guaranty of the Obligations shall
result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by such Subsidiary to Company or to any of its
Subsidiaries for whose benefit such payment is made;
(v) Foreign Subsidiaries may become and remain liable with respect to
(a) Indebtedness to other Foreign Subsidiaries, (b) Indebtedness to Company
and any Domestic Subsidiaries in an aggregate principal amount not to
exceed $30,000,000 at any time outstanding, and (c) Indebtedness to Persons
other than Company or any of its Subsidiaries; provided that the aggregate
amount of all Direct Foreign Subsidiary Obligations of any Foreign
Subsidiary shall not exceed at any time the sum of (X) 80% of all accounts
receivable of such Foreign Subsidiary plus (Y) 50% of all inventory of such
Foreign Subsidiary;
(vi) Company may become and remain liable with respect to the
Subordinated Notes;
(vii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness to the extent such Indebtedness is secured by Liens
permitted under subsection 7.2A(iii);
(viii) Company may become and remain liable in respect of Indebtedness
under the Existing Credit Agreement in an aggregate principal amount not to
exceed $111,250,000;
(ix) Company may become and remain liable with respect to the
Headquarters Financing; and
(x) Company and Subsidiary Guarantors may become and remain liable
with respect to other Indebtedness in an aggregate principal amount not to
exceed $10,000,000 at any time outstanding.
7.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or permit
to exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Shared Collateral Documents and the
other "Collateral Documents" as defined in the Existing Credit Agreement;
(iii) Liens arising from the giving, simultaneously with or within 90
days after the acquisition or construction of real property or tangible
personal property, of any purchase money Lien (including vendors' rights
under purchase contracts under an agreement whereby title is retained for
the purpose of securing the purchase price thereof) on real property or
tangible personal property hereafter acquired or constructed and not
heretofore owned by Company or any of its Subsidiaries, or from the
acquiring hereafter of real property or tangible personal property not
heretofore owned by Company or any of its Subsidiaries subject to any then
existing Lien (whether or not assumed), or from the extension, renewal or
replacement of any Indebtedness secured by any of the foregoing Liens so
long as the aggregate principal amount thereof and the security therefor is
not thereby increased; provided, however, that in each case (a) such Lien
is limited to such acquired or constructed real or tangible personal
property and fixed improvements, if any, then existing or thereafter
erected thereon, and (b) the principal amount of the Indebtedness secured
by such Lien, together (without duplication) with the principal amount of
all other Indebtedness secured by Liens on such property, shall not exceed
the cost (which shall be deemed to include, without duplication, the amount
of Indebtedness secured by Liens, including existing Liens, on such
property) of such property to Company or any of its Subsidiaries; and
provided, further that the aggregate amount of outstanding Indebtedness
secured by all such Liens shall at no time exceed $5,000,000;
(iv) Liens encumbering assets of Foreign Subsidiaries and securing
Indebtedness permitted under clause (c) of subsection 7.1(v);
(v) Liens described in Schedule 7.2 annexed hereto;
(vi) Liens encumbering the Headquarters Facility to secure the
Headquarters Financing; and
(vii) Other Liens securing Indebtedness in an aggregate amount not to
exceed $5,000,000 at any time outstanding.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its Domestic
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale, neither Company nor any
of its Domestic Subsidiaries shall enter into any agreement (other than the
Subordinated Note Indenture or any other agreement prohibiting the creation of
Liens securing Subordinated Indebtedness) prohibiting the creation or assumption
of any Lien upon any of its properties or assets, whether now owned or hereafter
acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except as provided herein, Company will not, and will not permit
any of its Domestic Subsidiaries to, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by Company or any
other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or
advances to Company or any other Subsidiary of Company, or (iv) transfer any of
its property or assets to Company or any other Subsidiary of Company.
7.3 INVESTMENTS; JOINT VENTURES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments in Cash
Equivalents;
(ii) Foreign Subsidiaries may make and own Investments in an aggregate
amount not to exceed at any time outstanding $5,000,000 consisting of
overnight loans to Pitney Bowes Finance Plc;
(iii) Company and its Subsidiaries may make intercompany loans to the
extent permitted under subsection 7.1(iv) or 7.1(v);
(iv) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.8;
(v) Company and its Subsidiaries may continue to own the Investments
(including Investments in any Foreign Subsidiaries) owned by them and
described in Schedule 7.3 annexed hereto;
(vi) Company and its Subsidiaries may make and own Investments in an
aggregate amount not to exceed at any time outstanding $500,000 consisting
of any deferred portion of the sales price received by Company or any of
its Subsidiaries in connection with any Asset Sale permitted under
subsection 7.7(vii);
(vii) Company or any of its Subsidiaries may make and maintain
Investments received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers, in each case arising in the
ordinary course of business;
(viii) Company may make loans to members of senior management of
Company, in an aggregate principal amount not to exceed $1,700,000 at any
time outstanding, the proceeds of which are used solely to purchase Company
Common Stock;
(ix) Foreign Subsidiaries may make and own Investments in Persons
engaged in businesses in which Company and its Subsidiaries are permitted
to engage pursuant to subsection 7.14; and
(x) Company and its Subsidiaries may make and own other Investments in
an aggregate amount not to exceed at any time (x) from July 1, 1997 to and
including June 30, 1998, $10,000,000, and (y) thereafter, $15,000,000.
7.4 CONTINGENT OBLIGATIONS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Company may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit and Company may become and
remain liable with respect to Contingent Obligations in respect of other
Commercial Letters of Credit in an aggregate amount not to exceed at any
time $5,000,000; provided that the aggregate amount of all Foreign
Subsidiary Support Obligations shall not exceed at any time $2,000,000;
(ii) Foreign Subsidiaries may become and remain liable with respect to
Contingent Obligations in respect of Commercial Letters of Credit not
constituting Letters of Credit; provided that the aggregate amount of all
Direct Foreign Subsidiary Obligations of any Foreign Subsidiary shall not
exceed at any time the sum of (a) 80% of all accounts receivable of such
Foreign Subsidiary plus (b) 50% of all inventory of such Foreign
Subsidiary;
(iii) Subsidiary Guarantors may become liable with respect to
Contingent Obligations arising under (a) the Subsidiary Guaranty and (b)
their subordinated guaranties of the Subordinated Notes as set forth in the
Subordinated Note Indenture;
(iv) Company may become and remain liable with respect to Contingent
Obligations under Interest Rate Agreements (including Interest Rate
Agreements required under subsection 6.9) in an aggregate notional
principal amount not to exceed the aggregate principal amount of the Loans
outstanding from time to time;
(v) Company or any of its Subsidiaries may become and remain liable
with respect to Contingent Obligations under Currency Agreements designed
to protect Company or such Subsidiary against fluctuations in currency
values;
(vi) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of any Indebtedness of Company
or any of its Subsidiaries permitted by subsection 7.1; provided that the
aggregate amount of all Foreign Subsidiary Support Obligations shall not
exceed at any time $2,000,000;
(vii) Company or any of its Subsidiaries may remain liable with
respect to Contingent Obligations of Company or such Subsidiary, as
applicable, described in Schedule 7.4 annexed hereto;
(viii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of indemnification and
purchase price adjustment obligations incurred in connection with Asset
Sales or other sales of assets so long as such indemnification and purchase
price adjustment obligations are customary in light of the type of Asset
Sales or other sales of assets in connection with which they were incurred;
(ix) Company or any of its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of leasehold interests
assigned by Company or such Subsidiary on or after the Closing Date to any
Person other than Company or any of its Subsidiaries; and
(x) Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum
aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such other Contingent Obligations permitted
by this subdivision (x) shall at no time exceed $3,000,000.
7.5 RESTRICTED JUNIOR PAYMENTS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; provided that (i) Company may make regularly
scheduled payments of interest in respect of any Subordinated Indebtedness in
accordance with the terms of, and only to the extent required by, and subject to
the subordination provisions contained in, the indenture or other agreement
pursuant to which such Subordinated Indebtedness was issued, as such indenture
or other agreement may be amended from time to time to the extent permitted
under subsection 7.15B; and (ii) so long as no Event of Default or Potential
Event of Default shall have occurred and be continuing or shall be caused
thereby, Company may make Restricted Junior Payments to repurchase shares of
Company Common Stock (or options or warrants to acquire Company Common Stock)
from members of Company's senior management in accordance with the terms of the
Stockholders Agreement.
7.6 FINANCIAL COVENANTS.
A. MAXIMUM LEVERAGE RATIO. Company shall not permit the ratio of (i)
Consolidated Total Debt as of the last day of any four-Fiscal Quarter period
ending during any of the periods set forth below to (ii) Consolidated EBITDA for
such four- Fiscal Quarter period to exceed the correlative ratio indicated:
PERIOD MAXIMUM LEVERAGE RATIO
October 1, 1997 - December 31, 1997 9.40:1.00
January 1, 1998 - March 31, 1998 9.40:1.00
April 1, 1998 - June 30, 1998 8.60:1.00
July 1, 1998 - September 30, 1998 8.50:1.00
October 1, 1998 - December 31, 1998 7.90:1.00
January 1, 1999 - March 31, 1999 7.70:1.00
April 1, 1999 - June 30, 1999 7.50:1.00
July 1, 1999 - September 30, 1999 7.20:1.00
October 1, 1999 - December 31, 1999 6.90:1.00
January 1, 2000 - March 31, 2000 6.80:1.00
April 1, 2000 - June 30, 2000 6.70:1.00
July 1, 2000 - September 30, 2000 6.50:1.00
October 1, 2000 - December 31, 2000 6.30:1.00
January 1, 2001 - March 31, 2001 6.10:1.00
April 1, 2001 - June 30, 2001 5.90:1.00
July 1, 2001 - September 30, 2001 5.60:1.00
October 1, 2001 - December 31, 2001 5.30:1.00
January 1, 2002 - March 31, 2002 5.10:1.00
April 1, 2002 - June 30, 2002 4.90:1.00
July 1, 2002 - September 30, 2002 4.70:1.00
October 1, 2002 - December 31, 2002 4.40:1.00
B. MINIMUM CONSOLIDATED EBITDA. Company shall not permit Consolidated
EBITDA for any four-Fiscal Quarter period ending on any of the dates set forth
below to be less than the correlative amount indicated:
MINIMUM CONSOLIDATED
DATE EBITDA
December 31, 1997 39,000,000
March 31, 1998 40,000,000
June 30, 1998 44,000,000
September 30, 1998 46,000,000
December 31, 1998 48,000,000
March 31, 1999 49,000,000
June 30, 1999 50,000,000
September 30, 1999 52,000,000
December 31, 1999 55,000,000
March 31, 2000 56,000,000
June 30, 2000 57,000,000
September 30, 2000 58,000,000
December 31, 2000 60,000,000
March 31, 2001 62,000,000
June 30, 2001 64,000,000
September 30, 2001 67,000,000
December 31, 2001 70,000,000
March 31, 2002 72,000,000
June 30, 2002 74,000,000
September 30, 2002 77,000,000
December 31, 2002 80,000,000
C. MINIMUM CONSOLIDATED NET WORTH. Company shall not permit the sum of (i)
Consolidated Net Worth plus (ii) cumulative total amortization expense, as
determined on a consolidated basis for Company and its Subsidiaries in
conformity with GAAP, for the period from the Closing Date to the applicable
date of determination to be less than the correlative amount indicated at any
time during any of the periods set forth below:
MINIMUM
PERIOD CONSOLIDATED NET WORTH
October 1, 1997 - December 31, 1997 120,000,000
January 1, 1998 - March 31, 1998 120,000,000
April 1, 1998 - June 30, 1998 120,000,000
July 1, 1998 - September 30, 1998 125,000,000
October 1, 1998 - December 31, 1998 130,000,000
January 1, 1999 - March 31, 1999 133,000,000
April 1, 1999 - June 30, 1999 136,000,000
July 1, 1999 - September 30, 1999 140,000,000
October 1, 1999 - December 31, 1999 145,000,000
January 1, 2000 - March 31, 2000 150,000,000
April 1, 2000 - June 30, 2000 155,000,000
July 1, 2000 - September 30, 2000 160,000,000
October 1, 2000 - December 31, 2000 165,000,000
January 1, 2001 - March 31, 2001 170,000,000
April 1, 2001 - June 30, 2001 175,000,000
July 1, 2001 - September 30, 2001 180,000,000
October 1, 2001 - December 31, 2001 190,000,000
January 1, 2002 - March 31, 2002 200,000,000
April 1, 2002 - June 30, 2002 210,000,000
July 1, 2002 - September 30, 2002 220,000,000
October 1, 2002 - December 31, 2002 230,000,000
D. MINIMUM INTEREST COVERAGE RATIO. Company shall not permit the ratio of
(i) Consolidated EBITDA minus Consolidated Capital Expenditures to (ii)
Consolidated Interest Expense for any four-Fiscal Quarter period ending during
any of the periods set forth below to be less than the correlative ratio
indicated:
MINIMUM INTEREST
PERIOD COVERAGE RATIO
October 1, 1997 - December 31, 1998 0.70:1.00
January 1, 1999 - March 31, 1999 0.75:1.00
April 1, 1999 - June 30, 1999 0.80:1.00
July 1, 1999 - September 30, 1999 0.90:1.00
October 1, 1999 - June 30, 2000 1.00:1.00
July 1, 2000 - September 30, 2000 1.03:1.00
October 1, 2000 - December 31, 2000 1.05:1.00
January 1, 2001 - March 31, 2001 1.40:1.00
April 1, 2001 - June 30, 2001 1.35:1.00
July 1, 2001 - December 31, 2001 1.30:1.00
January 1, 2002 - March 31, 2002 1.35:1.00
April 1, 2001 - June 30, 2002 1.45:1.00
July 1, 2002 - September 30, 2002 1.55:1.00
October 1, 2001 - December 31, 2002 1.70:1.00
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
Company shall not, and shall not permit any of its Subsidiaries to alter
the corporate structure of Company or any of its Subsidiaries or enter into any
transaction of merger or consolidation, or liquidate, wind-up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease
(as lessor or sub-lessor), transfer or otherwise dispose of, in one transaction
or a series of transactions, all or any part of its business, property or
assets, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or substantially all the business, property or fixed assets of, or
stock or other evidence of beneficial ownership of, any Person or any division
or line of business of any Person, except:
(i) any Subsidiary of Company may be merged with or into Company or any
wholly-owned Subsidiary of Company, or be liquidated, wound up or dissolved,
or all or any part of its business, property or assets may be conveyed, sold,
leased, transferred or otherwise disposed of, in one transaction or a series
of transactions, to Company or any wholly-owned Subsidiary of Company;
provided that, in the case of such a merger, Company or such wholly-owned
Subsidiary or, in the case of a merger of Company with and into U.S.
Dictaphone, U.S. Dictaphone) shall be the continuing or surviving corporation;
provided further that, in the case of any such merger of a Domestic Subsidiary
and a Foreign Subsidiary, the Domestic Subsidiary shall be the surviving
corporation; provided further that U.S. Dictaphone may only merge with
Company; and provided, further that, in the case of a merger of Company with
U.S. Dictaphone, (a) in the event U.S. Dictaphone is the continuing or
surviving corporation in such merger, U.S. Dictaphone shall expressly assume,
pursuant to documentation satisfactory in form and substance to Administrative
Agent and its counsel, all of the Obligations of Company under this Agreement
and the other Loan Documents, and (b) in any event the continuing or surviving
corporation in such merger shall enter into (and, if applicable, cause to be
filed or recorded with all relevant governmental authorities) all such
amendments to the Collateral Documents (including without limitation any
Mortgages to which Dictaphone or U.S. Dictaphone is a party at the time of
consummation of such merger but excluding the Company Pledge Agreement), and
take all such other actions, as may reasonably be deemed necessary or
advisable by Collateral Agent in order to insure that the Collateral under
such Collateral Documents continues to secure payment of all applicable
Secured Obligations (as such term is defined in the Intercreditor Agreement);
(ii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted under subsection 7.8;
(iii) Company and its Subsidiaries may sell inventory in the ordinary
course of business;
(iv) Company and its Subsidiaries may dispose of obsolete, worn out or
surplus property disposed of in the ordinary course of business;
(v) U.S. Dictaphone may either (i) enter into a lease with Pitney Bowes,
Inc. with respect to the space currently occupied by the Facsimile Division of
Pitney Bowes, Inc. in the form delivered to and approved by Administrative
Agent on the Closing Date with such other terms as may be acceptable to the
officers of U.S. Dictaphone in the good faith exercise of their business
judgment in the context of the Acquisition or (ii) allow Pitney Bowes, Inc. to
continue to occupy such space pursuant to and in accordance with the terms and
provisions of Section 5.13 of the Purchase Agreement and Company and its
Subsidiaries may, as lessor or sub-lessor, lease or sub-lease any other Real
Property Assets in the ordinary course of business;
(vi) Company and its Subsidiaries may sell or otherwise dispose of assets
in transactions that do not constitute Asset Sales; provided that the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof; and
(vii) subject to subsection 7.13, Company and its Subsidiaries (a) may
make Asset Sales constituting Specified Asset Sale/Financings and (b) may make
other Asset Sales of assets having a fair market value not in excess of
$2,000,000 during the term of this Agreement; provided that (x) the
consideration received for the assets that are the subject of any such Asset
Sale described in the foregoing clause (a) or (b) shall be in an amount at
least equal to the fair market value thereof; (y) at least 80% of the
consideration received shall be cash; and (z) the proceeds of such Asset Sales
described in the foregoing clause (b) shall be applied as required by
subsection 2.4B(ii)(a).
7.8 CONSOLIDATED CAPITAL EXPENDITURES.
Company shall not, and shall not permit its Subsidiaries to, make or
incur Consolidated Capital Expenditures, in any Fiscal Year indicated below, in
an aggregate amount in excess of the corresponding amount (the "MAXIMUM
CONSOLIDATED CAPITAL EXPENDITURES AMOUNT") set forth below opposite such Fiscal
Year; provided that the Maximum Consolidated Capital Expenditures Amount for any
Fiscal Year commencing with Fiscal Year 1998 shall be increased by an amount
equal to the excess, if any, (but in no event more than $2,000,000) of the
Maximum Consolidated Capital Expenditures Amount for the previous Fiscal Year
(as adjusted in accordance with this proviso) over the actual amount of
Consolidated Capital Expenditures for such previous Fiscal Year:
MAXIMUM CONSOLIDATED
FISCAL YEAR CAPITAL EXPENDITURES
1997 $ 15,000,000
1998 25,000,000
1999 25,000,000
2000 25,000,000
2001 25,000,000
2002 25,000,000
7.9 RESTRICTION ON LEASES.
Company shall not, and shall not permit any of its Subsidiaries to,
become liable in any way, whether directly or by assignment or as a guarantor or
other surety, for the obligations of the lessee under any lease, whether an
Operating Lease or a Capital Lease (other than intercompany leases between
Company and its wholly-owned Subsidiaries), unless, immediately after giving
effect to the incurrence of liability with respect to such lease, the
Consolidated Rental Payments at the time in effect during the then current
Fiscal Year shall not exceed the correlative amount set forth below opposite
such Fiscal Year:
Maximum Consolidated
Fiscal Year Rental Payments
1997 $ 7,500,000
1998 8,000,000
1999 8,600,000
2000 9,200,000
2001 9,800,000
2002 10,500,000
; provided that, notwithstanding anything to the contrary contained in this
subsection 7.9, Company may enter into a lease (whether an Operating Lease or a
Capital Lease) with respect to the Headquarters Facility following an Asset Sale
of the Headquarters Facility constituting a Specified Asset Sale/Financing;
provided that the Consolidated Rental Payments in respect of such lease do not
exceed $2,000,000 in any Fiscal Year during the term of this Agreement.
7.10 SALES AND LEASE-BACKS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Company or any of its Subsidiaries
to any Person (other than Company or any of its Subsidiaries) in connection with
such lease; provided that Company and its Subsidiaries may become and remain
liable as lessee, guarantor or other surety with respect to any such lease if
and to the extent that Company or any of its Subsidiaries would be permitted to
enter into, and remain liable under, such lease under subsection 7.9.
7.11 SALE OR DISCOUNT OF RECEIVABLES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.
7.12 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of Company or with any Affiliate of Company or of any
such holder, on terms that are less favorable to Company or that Subsidiary, as
the case may be, than those that might be obtained at the time from Persons who
are not such a holder or Affiliate; provided that the foregoing restriction
shall not apply to (i) any transaction between Company and any of its
wholly-owned Subsidiaries or between any of its wholly-owned Subsidiaries or
(ii) reasonable and customary fees paid to members of the Boards of Directors of
Company and its Subsidiaries.
7.13 DISPOSAL OF SUBSIDIARY STOCK.
Except for any sale of 100% of the capital stock or other equity
Securities of any of its Subsidiaries other than U.S. Dictaphone in compliance
with the provisions of subsection 7.7(vii), Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity Securities of any
of its Subsidiaries, except to qualify directors if required by applicable
law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including such
Subsidiary), except to Company, another Subsidiary of Company, or to
qualify directors if required by applicable law.
7.14 CONDUCT OF BUSINESS.
From and after the Closing Date, Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than (i) the
Dictaphone Business and similar or related businesses and (ii) such other lines
of business as may be consented to by Requisite Lenders.
7.15 AMENDMENTS OR WAIVERS OF STOCKHOLDERS' AGREEMENT; AMENDMENTS OF
DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS AND RECEIVABLES
PROGRAM AGREEMENTS; DESIGNATION OF "DESIGNATED SENIOR INDEBTEDNESS".
A. Neither Company nor any of its Subsidiaries will agree to any
material amendment to, or waive any of its material rights under, the
Stockholders Agreement without in each case obtaining the prior written consent
of Requisite Lenders to such amendment or waiver.
B. Company shall not, and shall not permit any of its Subsidiaries to,
amend or otherwise change the terms of any Subordinated Indebtedness, or make
any payment consistent with an amendment thereof or change thereto, if the
effect of such amendment or change is to increase the interest rate on such
Subordinated Indebtedness, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate any such event of default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof,
change the subordination provisions thereof (or of any guaranty thereof), or
change any collateral therefor (other than to release such collateral), or if
the effect of such amendment or change, together with all other amendments or
changes made, is to increase materially the obligations of the obligor
thereunder or to confer any additional rights on the holders of such
Subordinated Indebtedness (or a trustee or other representative on their behalf)
which would be adverse to Company or Lenders.
C. Company shall not, and shall not permit any of its Subsidiaries to,
amend or otherwise change the terms of any Receivables Program or any
Receivables Program Agreement related thereto, or make any payment consistent
with an amendment thereof or change thereto, if the effect of such amendment or
change, together with all other amendments or changes made, is to increase
materially the obligations of Company or any of its Subsidiaries thereunder or
to confer additional rights on any other parties to the applicable Receivables
Program Agreements which would be adverse to Company or any of its Subsidiaries
or to Lenders.
C. Company shall not designate any Indebtedness as "Designated Senior
Indebtedness" (as defined in the Subordinated Note Indenture) for purposes of
the Subordinated Note Indenture without the prior written consent of Requisite
Lenders.
7.16 FISCAL YEAR
Company shall not change its Fiscal Year-end from December 31.
7.17 RECEIVABLES PROGRAMS.
Notwithstanding anything to the contrary contained in this Agreement
(including without limitation subsection 10.7), Company may, and may permit its
Subsidiaries to, enter into one or more transactions (each such transaction
being referred to herein as a "RECEIVABLES PROGRAM") involving (i) the sale or
other financing by Company or any of its Subsidiaries, without recourse based
solely upon a default by one or more account debtors in the payment of any
accounts receivable included in the applicable Receivables Program, of accounts
receivable arising in the ordinary course of business of Company or any of its
Subsidiaries or (ii) the incurrence by Company or any of its Subsidiaries of
Non-Recourse Indebtedness secured by Liens on accounts receivable arising in the
ordinary course of business of Company or any of its Subsidiaries; provided that
the terms and conditions of each Receivables Program and all agreements and
instruments related thereto (all such agreements and instruments being
collectively referred to herein as "RECEIVABLES PROGRAM AGREEMENTS") shall be
satisfactory in form and substance to Agents and Requisite Lenders; provided
further that, prior to the consummation of any Receivables Program, Agents shall
have received originally executed copies of one or more favorable written
opinions of Shearman & Sterling, counsel for Company, in each case satisfactory
in form and substance to Agents and their counsel, to the effect that the
consummation of such Receivables Program does not conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any of the indentures pursuant to which any Subordinated Indebtedness has
been issued and covering such other matters as Agents may reasonably request;
and provided further that the proceeds of all Receivables Programs shall be
applied as required by subsection 2.4B(ii)(c).
SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of any Loan
when due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; or failure by Company to pay
any interest on any Loan or any fee or any other amount due under this Agreement
within five days after the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of Company or any of its Material Subsidiaries to pay when
due any principal of or interest on or other amount payable in respect of one or
more items of Indebtedness (other than Indebtedness referred to in subsection
8.1) or Contingent Obligations in either an individual or an aggregate principal
amount of $5,000,000 or more, in each case beyond the end of any grace period
provided therefor; or (ii) breach or default by Company or any of its Material
Subsidiaries with respect to any other material term of (a) one or more items of
Indebtedness or Contingent Obligations in the individual or aggregate principal
amounts referred to in clause (i) above or (b) any loan agreement, mortgage,
indenture or other agreement relating to such item(s) of Indebtedness or
Contingent Obligation(s), if the effect of such breach or default is to cause,
or to permit the holder or holders of that Indebtedness or Contingent
Obligation(s) (or a trustee on behalf of such holder or holders) then to cause,
that Indebtedness or Contingent Obligation(s) to become or be declared due and
payable prior to its stated maturity or the stated maturity of any underlying
obligation, as the case may be (in each case after giving effect to any
applicable grace periods); or
8.3 BREACH OF CERTAIN COVENANTS.
Failure of Company to perform or comply with any term or condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Company or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
Any Loan Party shall default in the performance of or compliance with
any term contained in this Agreement or any of the other Loan Documents, other
than any such term referred to in any other subsection of this Section 8, and
such default shall not have been remedied or waived within (i) 10 days after
receipt by Company and such Loan Party of notice from Administrative Agent or
any Lender of any such default under subsection 6.1 or (ii) 30 days after
receipt by Company and such Loan Party of such notice of any such default under
any other provision of this Agreement or any of the other Loan Documents; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of Company or any of its Material Subsidiaries in
an involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Company or any of its Material Subsidiaries under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Company or any of its
Material Subsidiaries, or over all or a substantial part of its property, shall
have been entered; or there shall have occurred the involuntary appointment of
an interim receiver, trustee or other custodian of Company or any of its
Material Subsidiaries for all or a substantial part of its property; or a
warrant of attachment, execution or similar process shall have been issued
against any substantial part of the property of Company or any of its Material
Subsidiaries, and any such event described in this clause (ii) shall continue
for 60 days unless dismissed, bonded or discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) Company or any of its Material Subsidiaries shall have an order
for relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Company or any of its Material Subsidiaries
shall make any general assignment for the benefit of creditors; or (ii) Company
or any of its Material Subsidiaries shall be unable, or shall fail generally, or
shall admit in writing its inability, to pay its debts as such debts become due;
or the Board of Directors of Company or any of its Material Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to in clause (i) above or this clause
(ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar process
involving, either in any individual case or in the aggregate at any time, an
amount in excess of $5,000,000 (in either case not adequately covered by
insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage) shall be entered or filed against Company or any of its
Material Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of 60 days (or in any
event later than five days prior to the date of any proposed sale thereunder);
or
8.9 DISSOLUTION.
Any order, judgment or decree shall be entered against Company or any
of its Material Subsidiaries decreeing the dissolution or split up of Company or
that Subsidiary and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events which individually or in
the aggregate results in or might reasonably be expected to result in liability
of Company or any of its ERISA Affiliates in excess of $5,000,000 during the
term of this Agreement; or there shall exist an amount of unfunded current
liabilities (as defined in Section 302(d)(8) of ERISA), individually or in the
aggregate for all Pension Plans (excluding for purposes of such computation any
Pension Plans with respect to which assets exceed benefit liabilities), which
exceeds $10,000,000; or
8.11 CHANGE IN CONTROL.
(i) Except as permitted under subsection 7.7(i) or subsection 7.13,
Company shall at any time not own 100% of the capital stock of U.S. Dictaphone,
U.K. Holdings, German Sub, Swiss Sub and Canadian Sub (excluding directors'
shares of U.K. Holdings); or (ii) Stonington and/or its Affiliates shall cease
to beneficially own and control at least a majority of the issued and
outstanding shares of capital stock of Company entitled (without regard to the
occurrence of any contingency) to vote for the election of members of the Board
of Directors of Company;
8.12 INVALIDITY OF SUBSIDIARY GUARANTY.
Upon execution and delivery thereof, the Subsidiary Guaranty for any
reason, other than the satisfaction in full of all Obligations, ceases to be in
full force and effect as to any Subsidiary Guarantor (other than in accordance
with its terms) or is declared to be null and void, or any Subsidiary Guarantor
denies in writing that it has any further liability, including without
limitation with respect to future advances by Lenders, under the Subsidiary
Guaranty; or
8.13 FAILURE OF SECURITY.
Upon execution and delivery thereof, any Shared Collateral Document
shall, at any time, cease to be in full force and effect (other than by reason
of a release of Collateral thereunder in accordance with the terms hereof or
thereof, the satisfaction in full of the Obligations or any other termination of
such Shared Collateral Document in accordance with the terms hereof or thereof)
or shall be declared null and void, or the validity or enforceability thereof
shall be contested in writing by any Loan Party, or Collateral Agent shall not
have or shall cease to have, for any reason other than the failure of Collateral
Agent or any Lender to take any action within its control, a valid security
interest in any Collateral purported to be covered thereby having a fair market
value individually or in the aggregate exceeding $500,000, perfected and with
the priority required by this Agreement and the relevant Shared Collateral
Document and subject only to Liens permitted under this Agreement and the
applicable Shared Collateral Document;
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans and (b) all other Obligations shall automatically become immediately due
and payable, without presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by Company, and the obligation of
each Lender to make any Loan shall thereupon terminate, and (ii) upon the
occurrence and during the continuation of any other Event of Default,
Administrative Agent shall, upon the written request or with the written consent
of Requisite Lenders, by written notice to Company, declare all or any portion
of the amounts described in clauses (a) and (b) above to be, and the same shall
forthwith become, immediately due and payable, and the obligation of each Lender
to make any Loan shall thereupon terminate.
Notwithstanding anything contained in the preceding paragraph, if at
any time within 60 days after an acceleration of the Loans pursuant to clause
(ii) of such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than
non-payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended to
benefit Company and do not grant Company, at any time, the right to require
Lenders to rescind or annul any acceleration hereunder or preclude Lenders from
exercising any of their rights or remedies, even if the conditions set forth
herein are met.
SECTION 9. AGENTS
9.1 APPOINTMENT.
BTCo. is hereby appointed Administrative Agent hereunder and under the
other Loan Documents and each Lender hereby authorizes Administrative Agent to
act as its agent in accordance with the terms of this Agreement and the other
Loan Documents. Morgan Stanley Senior Funding,Inc., is hereby appointed
Syndication Agent hereunder and under the other Loan Documents and each Lender
hereby authorizes Syndication Agent to act as its agent in accordance with the
terms of this Agreement and the other Loan Documents. Each Agent agrees to act
upon the express conditions contained in this Agreement and the other Loan
Documents, as applicable. The provisions of this Section 9 are solely for the
benefit of Agents and Lenders and Company shall have no rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties under this Agreement, each Agent shall act solely as an agent of Lenders
and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for Company or any of its
Subsidiaries.
9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably authorizes each Agent
to take such action on such Lender's behalf and to exercise such powers, rights
and remedies hereunder and under the other Loan Documents as are specifically
delegated or granted to such Agent by the terms hereof and thereof, together
with such powers, rights and remedies as are reasonably incidental thereto. Each
Agent shall have only those duties and responsibilities that are expressly
specified in this Agreement and the other Loan Documents. Each Agent may
exercise such powers, rights and remedies and perform such duties by or through
its agents or employees. Neither Agent shall have, by reason of this Agreement
or any of the other Loan Documents, a fiduciary relationship in respect of any
Lender; and nothing in this Agreement or any of the other Loan Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
either Agent any obligations in respect of this Agreement or any of the other
Loan Documents except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Neither Agent shall be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by either Agent to Lenders or by or on
behalf of Company to either Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of Company or any other Person liable for the
payment of any Obligations, nor shall either Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or as to the existence or possible
existence of any Event of Default or Potential Event of Default. Anything
contained in this Agreement to the contrary notwithstanding, neither Agent shall
have any liability arising from confirmations of the amount of outstanding
Loans.
C. EXCULPATORY PROVISIONS. Neither Administrative Agent nor Syndication
Agent nor any of its respective officers, directors, employees or agents shall
be liable to Lenders for any action taken or omitted by such Agent under or in
connection with any of the Loan Documents except to the extent caused by such
Agent's gross negligence or willful misconduct. If either Agent shall request
instructions from Lenders with respect to any act or action (including the
failure to take an action) in connection with this Agreement or any of the other
Loan Documents, such Agent shall be entitled to refrain from such act or taking
such action unless and until such Agent shall have received instructions from
Requisite Lenders (or such other Lenders as may be required under subsection
10.6 hereof). Without prejudice to the generality of the foregoing, (i) each
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for Company and its Subsidiaries),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against either Agent as a
result of such Agent acting or (where so instructed) refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required
under subsection 10.6 hereof). Agents shall be entitled to refrain from
exercising any power, discretion or authority vested in it under this Agreement
or any of the other Loan Documents except for actions explicitly required of the
Agent unless and until it has obtained the instructions of Requisite Lenders (or
such other Lenders as may be required under subsection 10.6 hereof).
D. AGENTS ENTITLED TO ACT AS LENDER. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, either Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans. Agents shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not performing the duties and functions delegated to it
hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless
the context clearly otherwise indicates, include Agents in their individual
capacity. Either Agent and its respective Affiliates may accept deposits from,
lend money to and generally engage in any kind of banking, trust, financial
advisory or other business with Company or any of its Affiliates as if it were
not performing the duties specified herein, and may accept fees and other
consideration from Company for services in connection with this Agreement and
otherwise without having to account for the same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR
APPRAISAL OF CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and that it has made
and shall continue to make its own appraisal of the creditworthiness of Company
and its Subsidiaries. Neither Agent shall have any duty or responsibility,
either initially or on a continuing basis, to make any such investigation or any
such appraisal on behalf of Lenders or to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter, and neither
Agent shall have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
9.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Agents, to the extent that such Agent shall not have been reimbursed
by Company, for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including,
without limitation, counsel fees and disbursements) or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or asserted against
such Agent in exercising its powers, rights and remedies or performing its
duties hereunder or under the other Loan Documents or otherwise in its capacity
as Administrative Agent or Syndication Agent, as the case may be, in any way
relating to or arising out of this Agreement or the other Loan Documents;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct. If any indemnity furnished to either Agent for any purpose
shall, in the opinion of such Agent, be insufficient or become impaired, such
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
9.5 SUCCESSOR ADMINISTRATIVE AGENT.
Administrative Agent may resign at any time by giving 30 days' prior
written notice thereof to Lenders and Company, and Administrative Agent may be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to Company and Administrative Agent and signed
by Requisite Lenders. Upon any such notice of resignation by, or any such
removal of, Administrative Agent, Requisite Lenders shall have the right, upon
five Business Days' notice to Company, to appoint a successor Administrative
Agent, and upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, that successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Administrative Agent, and the
retiring or removed Administrative Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Administrative
Agent's resignation or removal hereunder as Administrative Agent, the provisions
of this Section 9 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement.
9.6 SHARED COLLATERAL DOCUMENTS AND GUARANTIES.
A. APPOINTMENT OF ADMINISTRATIVE AGENT IN RESPECT OF INTERCREDITOR
AGREEMENT. Each Lender hereby further authorizes Administrative Agent to enter
into the Intercreditor Agreement as agent and/or secured party on behalf of and
for the benefit of Lenders, and each Lender agrees to be bound by the terms of
the Intercreditor Agreement; provided that, subject to any provision of
subsection 10.6 requiring the consent of any additional Lenders, Administrative
Agent shall not enter into or consent to any amendment, modification,
termination or waiver of any provision contained in the Intercreditor Agreement
without the prior consent of Requisite Lenders.
B. APPOINTMENT OF COLLATERAL AGENT IN RESPECT OF SUBSIDIARY GUARANTY,
INTERCREDITOR AGREEMENT AND SHARED COLLATERAL DOCUMENTS. Each Lender hereby
further authorizes and directs Collateral Agent (i) to act as agent for and
representative of Lenders and Existing Lenders under the Subsidiary Guaranty and
(ii) to enter into the Intercreditor Agreement and each Shared Collateral
Document as secured party on behalf of and for the benefit of Lenders and
Existing Lenders, and each Lender agrees to be bound by the terms of the
Subsidiary Guaranty, the Intercreditor Agreement and each Shared Collateral
Document.
C. LIMITATIONS ON LENDERS' RIGHTS IN RESPECT OF SUBSIDIARY GUARANTY
AND COLLATERAL DOCUMENTS. Anything contained in any of the Loan Documents to the
contrary notwithstanding, each Lender agrees that no Lender shall have any right
individually to realize upon any of the Collateral under any Shared Collateral
Document or to enforce the Subsidiary Guaranty, it being understood and agreed
that all rights and remedies under the Shared Collateral Documents and the
Subsidiary Guaranty may be exercised solely by Collateral Agent for the benefit
of Lenders and Existing Lenders in accordance with the terms thereof and the
terms of the Intercreditor Agreement.
SECTION 10. MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS.
A. GENERAL. Subject to subsection 10.1B, each Lender shall have the right
at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii)
sell participations to any Person in, all or any part of its Commitment or the
Loan made by it or any other interest herein or in any other Obligations owed to
it; provided that no such sale, assignment, transfer or participation shall,
without the consent of Company, require Company to file a registration statement
with the Securities and Exchange Commission or apply to qualify such sale,
assignment, transfer or participation under the securities laws of any state.
Except as otherwise provided in this subsection 10.1, no Lender shall, as
between Company and such Lender, be relieved of any of its obligations hereunder
as a result of any sale, assignment or transfer of, or any granting of
participations in, all or any part of its Commitment or the Loan or the other
Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Commitment, Loan or other
Obligation may (a) be assigned in any amount to another Lender, or to an
Affiliate of the assigning Lender or another Lender, with the giving of
notice to Company and Agents and, in the case of an assignment to any such
Affiliate where the assigning Lender can reasonably foresee that such
assignment would result in a requirement on the part of Company to pay such
Affiliate any greater amount pursuant to subsection 2.6D or 2.7 than
Company would have been required to pay the assigning Lender in respect of
the amount of such assignment had no such assignment occurred, with the
consent of Company to such assignment (which consent shall not be
unreasonably withheld), or (b) be assigned in an aggregate amount of not
less than $5,000,000 (or such lesser amount as shall constitute the
aggregate amount of the Commitment, Loan, and other Obligations of the
assigning Lender) to any other Eligible Assignee with the consent of
Company and Administrative Agent (which consent of Company and
Administrative Agent shall not be unreasonably withheld or delayed). To the
extent of any such assignment in accordance with either clause (a) or (b)
above, the assigning Lender shall be relieved of its obligations with
respect to its Commitment, Loan or other Obligations or the portion thereof
so assigned. The parties to each such assignment shall execute and deliver
to Administrative Agent, for its acceptance and recording in the Register,
an Assignment Agreement, together with a processing and recordation fee of
$3,500 and such forms, certificates or other evidence, if any, with respect
to United States federal income tax withholding matters as the assignee
under such Assignment Agreement may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(iii)(a). Upon such
execution, delivery, and acceptance and recordation, from and after the
effective date specified in such Assignment Agreement, (y) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and
(z) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than any rights which survive the
termination of this Agreement under subsection 10.9B) and be released from
its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be
a party hereto. The Commitments hereunder shall be modified to reflect the
Commitment of such assignee and any remaining Commitment of such assigning
Lender and, if any such assignment occurs after the issuance of any Notes
hereunder, the assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable, surrender its
applicable Note, if any, to Administrative Agent for cancellation, and
thereupon new Notes shall, if so requested by the assignee and/or the
assigning Lender in accordance with subsection 2.1E, be issued to the
assignee and/or to the assigning Lender, substantially in the form of
Exhibit III annexed hereto with appropriate insertions, to reflect the
outstanding Loans of the assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register. Upon
its receipt of an Assignment Agreement executed by an assigning Lender and
an assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in subsection 10.1B(i) and any
forms, certificates or other evidence with respect to United States federal
income tax withholding matters that such assignee may be required to
deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a),
Administrative Agent shall, if Administrative Agent and Company have
consented to the assignment evidenced thereby (in each case to the extent
such consent is required pursuant to subsection 10.1B(i)), (a) accept such
Assignment Agreement by executing a counterpart thereof as provided therein
(which acceptance shall evidence any required consent of Administrative
Agent to such assignment), (b) record the information contained therein in
the Register, and (c) give prompt notice thereof to Company. Administrative
Agent shall maintain a copy of each Assignment Agreement delivered to and
accepted by it as provided in this subsection 10.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an Affiliate
of the Lender granting such participation, shall not be entitled to require such
Lender to take or omit to take any action hereunder except action directly
affecting (i) the extension of the final scheduled maturity of any portion of
the principal amount of or interest on any Loan allocated to such participation
or (ii) a reduction of the principal amount of or the rate of interest payable
on any Loan allocated to such participation, and all amounts payable by Company
hereunder (including without limitation amounts payable to such Lender pursuant
to subsections 2.6D and 2.7) shall be determined as if such Lender had not sold
such participation. Company and each Lender hereby acknowledge and agree that,
solely for purposes of subsections 10.4 and 10.5, (a) any participation will
give rise to a direct obligation of Company to the participant and (b) the
participant shall be considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments and
participations permitted under the foregoing provisions of this subsection 10.1,
any Lender may assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning Company
and its Subsidiaries in the possession of that Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject to subsection 10.19.
10.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents and any consents,
amendments, waivers or other modifications thereto; (ii) all the costs of
furnishing all opinions by counsel for Company (including without limitation any
opinions requested by Lenders as to any legal matters arising hereunder) and of
Company's performance of and compliance with all agreements and conditions on
its part to be performed or complied with under this Agreement and the other
Loan Documents including, without limitation, with respect to confirming
compliance with environmental and insurance requirements; (iii) the reasonable
fees, expenses and disbursements of counsel to Agents (including allocated costs
of internal counsel) in connection with the negotiation, preparation, execution
and administration of the Loan Documents and any consents, amendments, waivers
or other modifications thereto and any other documents or matters requested by
Company; (iv) all the actual costs and reasonable expenses of creating and
perfecting the Liens in favor of Collateral Agent pursuant to the Loan
Documents, including filing and recording fees and expenses, title insurance,
fees and expenses of counsel for providing such opinions as Lenders may
reasonably request and fees and expenses of legal counsel to Agents (including
local counsel); (v) all other actual and reasonable costs and expenses incurred
by Agents and their Affiliates (including BT Securities Corporation) in
connection with the syndication of the Commitments and the negotiation,
preparation and execution of the Loan Documents and any consents, amendments,
waivers or other modifications thereto and the transactions contemplated
thereby; and (vi) after the occurrence of an Event of Default, all costs and
expenses, including reasonable attorneys' fees (including allocated costs of
internal counsel) and costs of settlement, incurred by Agents and Lenders in
enforcing any Obligations of or in collecting any payments due from Company
hereunder or under the other Loan Documents by reason of such Event of Default
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
10.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend, indemnify, pay and hold harmless Agents and Lenders,
and the officers, directors, employees, agents and affiliates of Agents and
Lenders (collectively called the "INDEMNITEES") from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation the reasonable fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any Person,
whether or not any such Indemnitee shall be designated as a party or a potential
party thereto), whether direct, indirect or consequential and whether based on
any federal, state or foreign laws, statutes, rules or regulations (including
without limitation securities and commercial laws, statutes, rules or
regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of this Agreement
or the other Loan Documents or the transactions contemplated hereby or thereby
(including without limitation Lenders' agreement to make the Loans hereunder or
the use or intended use of the proceeds of any of the Loans or the statements
contained in the commitment letter delivered by any Lender to Company with
respect thereto (collectively called the "INDEMNIFIED LIABILITIES"); provided
that Company shall not have any obligation to any Indemnitee hereunder with
respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise solely from the gross negligence or willful misconduct of that
Indemnitee as determined by a final judgment of a court of competent
jurisdiction; and provided, further that in connection with investigating,
preparing to defend, or defending against any Indemnified Liability of, to or
against more than one Indemnitee, such investigation, preparation or defense
shall be conducted by the same legal counsel on behalf of all such Indemnitees
except to the extent that one or more of such Indemnitees determines in good
faith that there is a conflict of interests between such Indemnitee or
Indemnitees and some or all of the remaining Indemnitees. To the extent that the
undertaking to defend, indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Company shall contribute the maximum portion that it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them.
10.4 SET-OFF.
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by Company at any time or from
time to time, without notice to Company or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by that Lender to or for the credit or the account of Company against and
on account of the obligations and liabilities of Company to that Lender under
this Agreement and the other Loan Documents, including, but not limited to, all
claims of any nature or description arising out of or connected with this
Agreement or any other Loan Document, irrespective of whether or not (i) that
Lender shall have made any demand hereunder or (ii) the principal of or the
interest on the Loans or any other amounts due hereunder shall have become due
and payable pursuant to Section 8 and although said obligations and liabilities,
or any of them, may be contingent or unmatured.
10.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment, by realization upon security, through the exercise
of any right of set-off or banker's lien, by counterclaim or cross action or by
the enforcement of any right under the Loan Documents or otherwise, or as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code, receive payment or reduction of a proportion of the aggregate amount of
principal, interest, fees and other amounts then due and owing to that Lender
hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them; provided that if all or part of such proportionately
greater payment received by such purchasing Lender is thereafter recovered from
such Lender upon the bankruptcy or reorganization of Company or otherwise, those
purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such purchasing Lender ratably to the extent
of such recovery, but without interest. Company expressly consents to the
foregoing arrangement and agrees that any holder of a participation so purchased
may exercise any and all rights of banker's lien, set-off or counterclaim with
respect to any and all monies owing by Company to that holder with respect
thereto as fully as if that holder were owed the amount of the participation
held by that holder.
10.6 AMENDMENTS AND WAIVERS.
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, and no consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
waiver or consent which: increases the amount of any of the Commitments or
reduces the principal amount of any of the Loans; changes in any manner the
definition of "Pro Rata Share" or the definition of "Requisite Lenders"; changes
in any manner any provision of this Agreement which, by its terms, expressly
requires the approval or concurrence of all Lenders; postpones the scheduled
final maturity date of any of the Loans; postpones the date or reduces the
amount of any scheduled payment (but not prepayment) of principal of any of the
Loans; postpones the date on which any interest or any fees are payable;
decreases the interest rate borne by any of the Loans (other than any waiver of
any increase in the interest rate applicable to any of the Loans pursuant to
subsection 2.2E) or the amount of any fees payable hereunder; increases the
maximum duration of Interest Periods permitted hereunder; releases 25% or more
in aggregate fair market value of the Collateral; releases any Subsidiary
Guarantor from its obligations under the Subsidiary Guaranty; or changes in any
manner the provisions contained in subsection 8.1 or this subsection 10.6 shall
be effective only if evidenced by a writing signed by or on behalf of all
Lenders. In addition, (i) any amendment, modification, termination or waiver of
any of the provisions contained in Section 4 shall be effective only if
evidenced by a writing signed by or on behalf of Administrative Agent and
Requisite Lenders, (ii) no amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
Lender which is the holder of that Note, and (iii) no amendment, modification,
termination or waiver of any provision of Section 9 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of Administrative Agent shall be effective without the written
concurrence of Administrative Agent. Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Company in any case
shall entitle Company to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.6 shall be binding upon each
Lender at the time outstanding, each future Lender and, if signed by Company, on
Company.
10.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Administrative Agent shall not
be effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or (i) as to Company and Administrative Agent, such other address as
shall be designated by such Person in a written notice delivered to the other
parties hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Administrative Agent.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the
Loans.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 10.2,
10.3 and 10.4 and the agreements of Lenders set forth in subsections 9.2C, 9.4
and 10.5 shall survive the payment of the Loans and the termination of this
Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Administrative Agent or any Lender
in the exercise of any power, right or privilege hereunder or under any other
Loan Document shall impair such power, right or privilege or be construed to be
a waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10.11 MARSHALLING; PAYMENTS SET ASIDE.
Neither Administrative Agent, Collateral Agent nor any Lender shall be
under any obligation to marshal any assets in favor of Company or any other
party or against or in payment of any or all of the Obligations. To the extent
that Company makes a payment or payments to Administrative Agent or Lenders (or
to Administrative Agent for the benefit of Lenders), or Collateral Agent or
Lenders enforce any security interests or exercise their rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or un- enforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).
10.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and permitted assigns of Lenders (it being understood
that Lenders' rights of assignment are subject to subsection 10.1). Neither
Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written consent of all
Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT COMPANY ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND
NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH
OTHER LOAN DOCUMENT OR SUCH OBLIGATION. Company hereby agrees that service of
all process in any such proceeding in any such court may be made by registered
or certified mail, return receipt requested, to Company at its address provided
in subsection 10.8, such service being hereby acknowledged by Company to be
sufficient for personal jurisdiction in any action against Company in any such
court and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of any Lender to bring proceedings
against Company in the courts of any other jurisdiction.
10.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
10.19 CONFIDENTIALITY.
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by Company that in any event a
Lender may make disclosures to Affiliates of such Lender or disclosures
reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Loans or any participations therein or disclosures required or requested by any
governmental agency or representative thereof or pursuant to legal process;
provided that, unless specifically prohibited by applicable law or court order,
each Lender shall notify Company of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; and provided, further that in no event shall any Lender be
obligated or required to return any materials furnished by Company or any of its
Subsidiaries.
10.20 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
DICTAPHONE CORPORATION
By: /s/ Joseph Skrzypczak
------------------------------------
Title: Senior Vice President and Chief Financial Officer
-------------------------------------------------
Notice Address:
Dictaphone Corporation
3191 Broadbridge Avenue
Stratford, Connecticut 06497
Attention: Dan Hart, Esq.
LENDERS:
BANKERS TRUST COMPANY, individually
and as Administrative Agent
By: /s/ Mary Jo Jolly
--------------------------------------
Title: Assistant Vice President
-----------------------------------
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Zadroga
with a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Victoria A. Floyd
<PAGE>
MORGAN STANLEY SENIOR FUNDING, INC.
By: /s/ Christopher Pucillo
------------------------------------
Title: Vice President
---------------------------------
Notice Address:
Morgan Stanley Senior Funding, Inc.
1585 Broadway, 10th Floor
New York, New York 10036
Attention: Christopher Pucillo
<PAGE>
MERRILL LYNCH PRIME RATE PORTFOLIO
By: /s/ Gil Marchand
----------------------------------
Title:
-------------------------------
Notice Address:
Merrill Lynch Prime Rate Portfolio
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attention: Gil Marchand
<PAGE>
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By: /s/ Gil Marchand
----------------------------------
Title:
-------------------------------
Notice Address:
Merrill Lynch Senior Floating Rate Fund, Inc.
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attention: Gil Marchand
<PAGE>
CIBC INC.
By: /s/ William M. Swenson
----------------------------------
Title:
-------------------------------
Notice Address:
c/o Canadian Imperial Bank of Commerce
425 Lexington Avenue, 7th Floor
New York, New York 10017
Attention: Bill Swenson
<PAGE>
PILGRIM AMERICA PRIME RATE TRUST
By: /s/ Howard Tiffen
--------------------------------------
Title: Senior Vice President
-----------------------------------
Notice Address:
Two Renaissance Square
40 N. Central Avenue, Suite 1200
Phoenix, Arizona 85004
Attention: Tim Hunt
<PAGE>
FIRST SOURCE FINANCIAL
By: /s/ Gary L. Francis
--------------------------------------
Title: Senior Vice President
----------------------------------
Notice Address:
First Source Financial
2850 W. Goff Road, 5th Floor
Rolling Meadows, IL 60008
Attention: Janice Rackow
