DICTAPHONE CORPORATION
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is dated as of
June 27, 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.
RECITALS
WHEREAS, Company and Lenders desire to amend certain provisions of the
Credit Agreement as 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 2.1A (iii)(b): LIMITATIONS ON REVOLVING LOAN
COMMITMENTS AND OUTSTANDING REVOLVING LOANS
Subsection 2.1A(iii)(b) of the Credit Agreement is hereby amended by adding
the phase "commencing on or after January 1, 1999," immediately after the phrase
"each consecutive twelve-month period" contained therein.
1.2 AMENDMENT TO SUBSECTION 2.1A(iv)(b): LIMITATION ON SWING LINE LOAN
COMMITMENT AND OUTSTANDING SWING LINE LOANS
Subsection 2.1A(iv)(b) of the Credit Agreement is hereby amended by adding
the phrase "commencing on or after January 1, 1999," immediately after the
phrase "each consecutive twelve-month period" contained therein.
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1.3 AMENDMENT TO SUBSECTION 7.1(viii): LIMITATION ON INDEBTEDNESS
Subsection 7.1(viii) of the Credit Agreement is hereby amended by deleting
the reference to "$1,500,000" contained therein and substituting therefor
"$10,000,000".
1.4 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
April 1, 1997 - June 30, 1997 8.60:1.00
July 1, 1997 - September 30, 1997 8.70:1.00
October 1, 1997 - December 31, 1997 8.10:1.00
January 1, 1998 - March 31, 1998 8.00:1.00
April 1, 1998 - June 30, 1998 6.90:1.00
July 1, 1998 - September 30, 1998 6.50:1:00
October 1, 1998 - December 31, 1998 6.00:1.00
January 1, 1999 - March 31, 1999 4.90:1.00
April 1, 1999 - June 30, 1999 4.75:1.00
July 1, 1999 - September 30, 1999 4.60:1.00
October 1, 1999 - December 31, 1999 4.35:1.00
Janaury 1, 2000 - March 31, 2000 4.25:1.00
April 1, 2000 - June 30, 2000 4.10:1.00
July 1, 2000 - September 30, 2000 3.90:1.00
October 1, 2000 - December 31, 2000 3.70:1.00
January 1, 2001 - March 31, 2001 3.50:1.00
Thereafter 3.25:1.00
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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:
DATE MINIMUM CONSOLIDATED EBITDA
June 30, 1997 43,000,000
September 30, 1997 43,000,000
December 31, 1997 46,000,000
March 31, 1998 48,000,000
June 30, 1998 55,000,000
September 30, 1998 58,000,000
December 31, 1998 61,000,000
March 31, 1999 67,000,000
June 30, 1999 68,000,000
September 30, 1999 69,000,000
December 31, 1999 70,000,000
March 31, 2000 73,000,000
June 30, 2000 75,500,000
September 30, 2000 78,500,000
December 31, 2000 82,500,000
March 31, 2001 83,300,000
June 30, 2001 84,000,000
September 30, 2001 84,700,000
December 31, 2001 85,500,000
March 31, 2002 86,100,000
June 30, 2002 86,800,000
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C. 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:
PERIOD MINIMUM INTEREST COVERAGE RATIO
January 1, 1997 - June 30, 1997 0.80:1.00
July 1, 1997 - September 30, 1997 0.90:1.00
October 1, 1997 - March 31, 1998 0.95:1.00
April 1, 1998 - June 30, 1998 1.10:1.00
July 1, 1998 - September 30, 1998 1.20:1.00
October 1, 1998 - December 31, 1998 1.30:1.00
January 1, 1999 - March 31, 1999 1.45:1.00
April 1, 1999 - September 30, 1999 1.50:1.00
October 1, 1999 - December 31, 1999 1.55:1.00
January 1, 2000 - March 31, 2000 1.60:1.00
April 1, 2000 - June 30, 2000 1.75:1.00
July 1, 2000 - September 30, 2000 1.85:1.00
October 1, 2000 - September 30, 2001 2.00:1.00
Thereafter 2.50:1.00
Section 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the payment by
Company 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 June 27, 1997, of an amendment fee in the amount
of 0.25% MULTIPLED BY the sum of (i) the Tranche A Term Loan Exposure of such
Lender PLUS (ii) the Tranche B Term Loan Exposure of such lender PLUS (iii) the
Revolving Loan Exposure of such Lender (the date of satisfaction of such
condition being referred to herein as the "SECOND AMENDMENT EFFECTIVE DATE").
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 Credit
Agreement as amended by this Amendment (the "AMENDED AGREEMENT").
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B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of the Company.
C. NO CONFLICT. The execution and delivery by Company of this Amendment and
the performance by Company of the Amended Agreement 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 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.
D. GOVERNMENTAL CONSENTS. The execution and delivery by the Company of
this Amemdment and the performance by Company of the Amended Agreement 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 Amended Agreement have been
duly executed and delivered by Company and are the legally valid and binding
obligations of Company, enforceable against Company in accordance with their
respective terms, except as may be limitied 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 4 of the Credit
Agreement are and will be true, correct and complete in all material respects
on and as of the Second 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 occured 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.
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Section 4. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(i) On and after the Second 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 by this Agreement, 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 Agreement 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
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), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
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
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counterpart hereof by Company and Requisite Lenders and receipt by Company and
Agent of written or telephone notification of such execution and
authorization of delivery thereof.
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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/ Xxxxxx Xxxxxxxxxx
-----------------------------------
Title: Vice President and
Chief Financial Officer
LENDERS:
BANKERS TRUST COMPANY
By: /s/ Xxxx Xx Xxxxx
------------------------------------
Title: Assistant Vice President
NATIONSBANK, N.A.(CAROLINAS)
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Title: Vice President
BANQUE PARIBAS
By: /s/ Xxxx Xxxxxxx
------------------------------------
Title: Vice President
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------------
Title: Assistant Vice President
THE CHASE MANHATTANBANK
By: /s/ A. Xxxx Xxxxxx
------------------------------------
Title: Vice President
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XXX XXXX XX XXXX XXXXXX
By:-------------------------------------
Title:----------------------------------
THE FUJI BANK LTD.
NEW YORK BRANCH
By: /s/ Xxxxx Xxxxxxxx
------------------------------------
Title: Vice President and Manager
U.S. BANK
By: /s/ Xxxx Xxxxxx
------------------------------------
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI, LIMITED
By: /s/ Xxxx Xxxxxxx
------------------------------------
Title: Senior Vice President and Manager
PILGRIM AMERICA PRIME RATE TRUST
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Title: Assistant Portfolio Manager
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XXXXXXX XXXXX SENIOR
FLOATING RATE FUND, INC.
By: /s/ Xxxxxx Xxxxxxxx, CFA
------------------------------------
Title: Authorized Signatory
XXXXXXX XXXXX PRIME RATE PORTFOLIO
By: /s/ Xxxxxx Xxxxxxxx, CFA
------------------------------------
Title: Authorized Signatory
XXXXXXX XXXXX DEBT STRATEGIES
PORTFOLIO INC.
By: /s/ Xxxxxx Xxxxxxxx, CFA
------------------------------------
Title: Authorized Signatory
ML CBO IV (CAYMAN) LTD.
By: Protective Asset Management, L.L.C.
As Collateral Manager
By: /s/ Xxxxx Xxxxxxx, CPA, CFA
------------------------------------
Title: President Protective Asset
Management, L.L.C.
ORIX USA CORPORATION
By:-------------------------------------
Title:----------------------------------
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FIRST SOURCE FINANCIAL LLP
By: First Source Financial, Inc., its
Agent/Manager
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Title: Senior Vice President
INDOSUEZ CAPITAL FUNDING II, LIMITED
By: Indosuez Capital, as Portfolio
Advisor
By: /s/ Xxxxxxxxx Xxxxxxxxx
------------------------------------
Title:----------------------------------
XXXXXX XXXXXXX SENIOR FUNDING, INC.
By: /s/ Xxxx Xxxxxxxxxxx
------------------------------------
Title: Vice President
XXXXXXX XXXXX CREDIT PARTNERS L.P.
By: /s/ Xxxx Xxxxx
------------------------------------
Title: Authorized Signer
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By: /s/ Koji Sasayama
------------------------------------
Title: Deputy General Manager
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