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EXHIBIT 10.10
THIRD LOAN MODIFICATION AGREEMENT
This Third Loan Modification Agreement ("this Agreement") is made as
of September 26, 1996 between Voicetek Corporation, a Massachusetts corporation
(the "Borrower") and Fleet National Bank (successor by merger to Fleet Bank of
Massachusetts, N.A.) (the "Bank"). For good and valuable consideration, receipt
and sufficiency of which are hereby acknowledged, the Borrower and the Bank act
and agree as follows:
I. Reference is made to: (i) that certain letter agreement dated
September 21, 1994 between the Borrower and Fleet Bank of Massachusetts, N.A.,
as amended by Loan Extension Agreement dated as of September 1, 1995 and by
Second Loan Modification Agreement dated as of September 20, 1995 and as
affected by certain allonges heretofore executed by the Borrower (as so amended
and affected, the "Letter Agreement"), the Bank having succeeded to the rights
of Fleet Bank of Massachusetts, N.A. thereunder; (ii) that certain $3,000,000
face principal amount promissory note dated September 20, 1995 made by the
Borrower and payable to the order of Fleet Bank of Massachusetts, N.A., as
affected by certain allonges heretofore executed by the Borrower (as so
affected, the "1995 Revolving Note"); (iii) that certain Inventory, Accounts
Receivable and Intangibles Security Agreement dated September 21, 1994 (the "IAR
Security Agreement") given by the Borrower to Fleet Bank of Massachusetts, N.A.,
the Bank having succeeded to the rights of Fleet Bank of Massachusetts, N.A.
thereunder; (iv) that certain Supplementary Security Agreement - Security
Interest in Goods and Chattels dated September 21, 1994 (the "Supplementary
Security Agreement") given by the Borrower to Fleet Bank of Massachusetts, N.A.,
the Bank having succeeded to the rights of Fleet Bank of Massachusetts, N.A.
thereunder; (v) the Subordination Agreement dated September 21, 1994 (the
"Subordination Agreement") given to Fleet Bank of Massachusetts, N.A. by
Massachusetts Technology Development Corp. ("MTDC"), the Bank having succeeded
to the rights of Fleet Bank of Massachusetts, N.A. thereunder; (vi) that certain
Assignment of Trademarks as Security (the "Trademark Assignment") from the
Borrower to Fleet Bank of Massachusetts, N.A., the Bank having succeeded to the
rights of Fleet Bank of Massachusetts, N.A. thereunder; (vii) that certain
Assignment of Patents as Security (the "Patent Assignment") from the Borrower to
Fleet Bank of Massachusetts, N.A., the Bank having succeeded to the rights of
Fleet Bank of Massachusetts, N.A. thereunder, (viii) that certain $5,000,000
face principal amount promissory note of even date herewith (the "1996
Revolving Note") made by the Borrower and payable to the order of the Bank, and
(ix) that certain $1,000,000 face principal amount promissory note of even date
herewith (the "Term Note") made by the Borrower and payable to the order of the
Bank. The aforesaid Second Loan Modification Agreement dated as of September 20,
1995 is hereinafter referred to as the "1995 Modification". The Letter
Agreement, the IAR Security Agreement, the Supplementary Security Agreement, the
Subordination Agreement, the Trademark Assignment, the Patent Assignment, the
1996 Revolving Note and the Term Note are hereinafter collectively referred to
as the "Financing Documents".
2. The Letter Agreement is hereby amended, effective as of the
date hereof;
a. By providing that all references therein to the "Bank" will be
deemed to refer to Fleet National Bank.
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b. By deleting in its entirety clause (i) of Section 1.1 of the Letter
Agreement and by substituting in its stead the following:
"(i) that certain $5,000,000 face principal amount promissory
note (the 'Revolving Note') dated September 26, 1996 made by
the Borrower and payable to the order of the Bank,"
As a result, all references in the Letter Agreement to a "Revolving Note" will
be deemed to refer to the 1996 Revolving Note.
c. By deleting the period at the end of Section 1.1 of the Letter
Agreement and by substituting in its stead the following:
", and (iv) that certain $1,000,000 face principal amount
promissory note (the 'Term Note') dated September 26, 1996
made by the Borrower pursuant to Section 1.4 below and payable
to the order of the Bank."
d. By deleting from the first sentence of Section 1.2 of the Letter
Agreement the words "Aggregate Bank Liabilities" and by substituting in their
stead the following:
"Aggregate Revolving Bank Liabilities"
e. By deleting in their entireties the last four sentences of Section
1.2 of the Letter Agreement.
f. By deleting from the second sentence of Section 1.3 of the Letter
Agreement, in both places where same appear, the words "Aggregate Bank
Liabilities" and by substituting in their stead (in each such place) the
following:
"Aggregate Revolving Bank Liabilities"
g. By renumbering Section 1.4 of the Letter Agreement. at ("Advances
and Payments") so that it will be known as "Section 1.6".
h. By renumbering Section 1.5 of the Letter Agreement ("Letters of
Credit") so that it will be known as "Section 1.7".
i. By renumbering Section 1.6 of the Letter Agreement ("Conditions to
Advance") so that it will be known as "Section 1.8".
j. By inserting into the Letter Agreement, immediately after Section
1.3 thereof, the following:
" 1.4. Term Loans; Term Note. In addition to the foregoing, the Bank
may make one or more loans (the 'Term Loans') to the Borrower, in an
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aggregate principal amount up to $1,000,000, in order to finance Qualifying
Equipment. A Term Loan shall be made, no more than once per calendar quarter (or
more frequently for any Term Loan in excess of $25,000), in such amount as may
be requested by the Borrower; provided that (i) no Term Loan will be made after
September 26, 1997; (ii) the aggregate original principal amounts of all Term
Loans will not exceed $1,000,000; (iii) no Term Loan will be in an amount in
excess of 80% (70% for First Half Qualifying Equipment) of the invoiced actual
costs of the tangible property constituting the items of Qualifying Equipment
with respect to which such Term Loan is made (excluding taxes, duties,
installation charges, software, shipping and other 'soft' costs); and (iv) the
Qualifying Equipment with respect to which each Term Loan is made will be
limited to those items of Qualifying Equipment acquired by the Borrower after
June 30, 1996 (except for First Half Qualifying Equipment, which may have been
acquired at any time during the period January 1, 1996 through and including
June 30, 1996) and which were not previously financed by any other Term Loan.
Prior to the making of each Term Loan, and as a precondition thereto, the
Borrower will provide the Bank with: (i) invoices supporting the costs and
purchase dates of the relevant items of Qualifying Equipment (including, without
limitation, First Half Qualifying Equipment); (ii) such evidence as the Bank may
require showing that such Qualifying Equipment (including, without limitation
First Half Qualifying Equipment) has been installed at the Borrower's
Chelmsford, MA, Premises, has become fully operational, has been paid for by the
Borrower and is owned by the Borrower free of all liens and interests of any
other Person (other than the security interest of the Bank pursuant to the
Security Agreement); (iii) evidence satisfactory to the Bank that the Qualifying
Equipment (including, without limitation, First Half Qualifying Equipment) is
fully insured against casualty loss, with insurance naming the Bank as secured
party and first loss payee, (iv) the duly executed Term Note and such clerk's
certificates and opinions of counsel as the Bank may require in connection
therewith, and (v) all such Uniform Commercial Code financing statements and
other documentation as may be necessary or desirable in order to give the Bank a
fully perfected first priority security interest in all of the Qualifying
Equipment (including, without limitation, First Half Qualifying Equipment). The
Term Loans will be evidenced by the Term Note, substantially in the form of Item
1.4 attached to this letter agreement. Interest on each Term Loan shall be
payable at the times and at the rate provided for in the Term Note. Overdue
principal of any Term Loan and, to the extent permitted by law, overdue interest
shall bear interest at a fluctuating rate per annum which at all times shall be
equal to the sum of (1) two percent (2%) per annum plus (ii) the per annum rate
otherwise payable under the Term Note (but in no event in excess of the maximum
rate from time to time permitted by then applicable law), compounded monthly and
payable on demand. The Borrower hereby irrevocably authorizes the Bank to make
or cause to be made, on a schedule attached to
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the Term Note or on the books of the Bank, at or following the time of making
each Term Loan and of receiving any payment of principal, an appropriate
notation reflecting such transaction and the then aggregate unpaid principal
balance of the Term Loans. The amount so noted shall constitute presumptive
evidence as to the amount owed by the Borrower with respect to principal of the
Term Loans. Failure of the Bank to make any such notation shall not, however,
affect any obligation of the Borrower or any right of the Bank hereunder or
under the Term Note.
1.5 Principal Repayment of Term Loans. The Term Loans made at any time through
and including September 30, 1996 are hereinafter referred to as the 'Tranche A
Term Loans'. Principal of the Tranche A Term Loans shall be repaid by the
Borrower to the Bank in 36 equal consecutive monthly installments (each in an
amount equal to 1/36th of the aggregate principal amount of the Tranche A Term
Loans outstanding at the close of business on September 30, 1996), such
installments to commence October 1, 1996 and to continue thereafter through and
including September 1, 1999. The Term Loans made at any time during the period
beginning on October 1, 1996 and continuing through and including December 31,
1996 are hereinafter referred to as the 'Tranche B Term Loans'. Principal of the
Tranche B Term Loans shall be repaid by the Borrower to the Bank in 36 equal
consecutive monthly installments (each in an amount equal to 1/36th of the
aggregate principal amount of the Tranche B Term Loans outstanding at the close
of business on December 31, 1996), such installments to commence January 1, 1997
and to continue thereafter through and including December 1, 1999. The Term
Loans made at any time during the period beginning on January 1, 1997 and
continuing through and including March 31, 1997 are hereinafter referred to as
the 'Tranche C Term Loans'. Principal of the Tranche C Term Loans shall be
repaid by the Borrower to the Bank in 36 equal consecutive monthly installments
(each in an amount equal to 1/36th of the aggregate principal amount of the
Tranche C Term Loans outstanding at the close of business on March 31, 1997),
such installments to commence April 1, 1997 and to continue thereafter through
and including March 1, 2000. The Term Loans made at any time during the period
beginning on April 1, 1997 and continuing through and including June 30, 1997
are hereinafter referred to as the 'Tranche D Term Loans'. Principal of the
Tranche D Term Loans shall be repaid by the Borrower to the Bank in 36 equal
consecutive monthly installments (each in an amount equal to 1/36th of the
aggregate principal amount of the Tranche D Term Loans outstanding at the close
of business on June 30, 1997), such installments to commence July 1, 1997 and to
continue thereafter through and including June 1, 2000. The Term Loans made at
any time on or after July 1, 1997 and are hereinafter referred to as the
'Tranche E Term Loans'. Principal of the Tranche E Term Loans shall be repaid by
the Borrower to the Bank in 36 equal consecutive monthly installments (each in
an amount equal to 1/36th of the aggregate principal amount of the Tranche E
Term
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Loans outstanding at the close of business on September 30,
1997), such installments to commence October 1, 1997 and to
continue thereafter through and including September 1, 2000.
The Borrower may prepay, at any time or from time to time,
without premium or penalty, the whole or any portion of the
Term Loans; provided that each such principal prepayment
shall be accompanied by payment of all interest under the Term
Note accrued but unpaid to the date of payment. Any partial
prepayment of principal of the Term Loans will be applied to
installments of principal of the Term Loans thereafter coming
due, in inverse order of normal maturity. Amounts paid or
prepaid on the Term Loans will not be available for
reborrowing."
k. By deleting from the first sentence of Section 1.6 of the Letter
Agreement (formerly known as "Section 1.4") the word "Revolving".
l. By adding to the first paragraph of Section 1.6 of the Letter
Agreement (formerly known as "Section 1.4"), at the end of such paragraph, the
following:
"The proceeds of each Term Loan will be used by the Borrower
solely to pay or reimburse costs of Qualifying Equipment
(including, without limitation, First Half Qualifying
Equipment)."
m. By deleting from Section 1.6 of the Letter Agreement (formerly known
as "Section 1.4"), in each of the four places in said Section where same appear,
the words "the Revolving Note" and by substituting in their stead, in each such
place, the following:
"any Note"
n. By adding to Section 1.6 of the Letter Agreement (formerly known as
"Section "1.4"), at the end of such Section, the following:
"All payments of interest, principal and any other sum payable
hereunder and/or under any Note and/or with respect to any
letter of credit shall be made to the Bank, in immediately
available funds, at its offices at 75 State Street, Boston, MA
02109 or to such other address as the Bank may from time to
time direct. All payments received by the Bank after 2:00 p.m.
on any day shall be deemed received as of the next succeeding
Business Day. All monies received by the Bank shall be applied
first to fees, charges, costs and expenses payable to the Bank
under this letter agreement, any Note and/or any of the other
Loan Documents and/or with respect to any letter of credit,
next to interest then accrued on account of any Loans or
letter of credit reimbursement obligations and only thereafter
to principal of the Loans and letter of credit reimbursement
obligations, being applied against the Loans and/or such
obligations in such order as the Borrower may designate (and,
failing such designation, being applied first against the
letter of credit reimbursement obligations, next against the
Revolving Loans and
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thereafter against installments of the Term Loans in inverse order
of normal maturity). All interest and fees payable hereunder and/or
under any Note shall be calculated on the basis of a 360-day year
for the actual number of days elapsed."
o. By deleting from the first sentence of Section 1.7 of the Letter
Agreement (formerly known as "Section 1.5") the amount "$3,000,000" (such amount
having been inserted by the 1995 Modification) and by substituting in its stead
the following:
"$5,000,000"
p. By deleting from the second grammatical paragraph of Section 1.8 of
the Letter Agreement (formerly known as "Section 1.6") the words "Revolving
Loan", in each of the five places in said paragraph where such words appear, and
by substituting in their stead, in each such place, the following:
"Loan"
q. By deleting from the first sentence of the last paragraph of Section
1.8 of the Letter Agreement (formerly known as "Section 1.6"), in both places
where same appear, the words "Revolving Loan" and by substituting in their
stead, in each such place, the following:
"Loan"
r. By deleting from the first sentence of the last paragraph of Section
1.8 of the Letter Agreement (formerly known as "Section 1.6"), the number
"Section 1.6" and by substituting in its stead the following:
"Section 1.8"
s. By inserting into the introduction to Section 2.1 of the Letter
Agreement, immediately after the words "Revolving Loans" the following:
"and Term Loans"
t. By inserting into the introduction to Article III of the Letter
Agreement, immediately after the words "any Revolving Loan", the following:
"or any Term Loan"
u. By adding to clause (ii) of Section 3.6 of the Letter Agreement, at
the end of such clause, the following:
"Notwithstanding the foregoing, from and after the date on which the
Borrower consummates an initial public offering generating not less
than $15,000,000 in net cash proceeds to the Borrower, in lieu
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of the above-described monthly financial statements the Borrower shall
provide quarterly financial statements. Such quarterly financial
statements shall be delivered to the Bank within 45 days after the end
of each fiscal quarter of the Borrower and shall include consolidated
and consolidating balance sheets of the Borrower and its Subsidiaries
and related consolidated and consolidating statements of income and
stockholders' equity and cash flow, unaudited but prepared in
accordance with generally accepted accounting principles consistently
applied (except that such quarterly statements need not contain
footnotes) and certified as accurate (subject to normal year-end audit
adjustments, which shall not be material) by the chief financial
officer of the Borrower, such balance sheets to be as at the end of
such fiscal quarter and such statements of income and stockholders'
equity and cash flow to be for such fiscal quarter and for the year to
date, in each case together with a comparison to budget."
v. By deleting from clause (iii) of Section 3.6 of the Letter Agreement
the words "annual and monthly" and by substituting in their stead the following:
"annual, quarterly or monthly"
w. By deleting in its entirety clause (iv) of Section 3.6 of the Letter
Agreement and by substituting in its stead the following:
"(iv) Monthly, within 10 days after the end of each month (and more
frequently if required by the Bank), (A) an aging report in form
satisfactory to the Bank covering all Receivables of the Borrower
outstanding as at the end of such month (or as at such other date as is
requested by the Bank), and (B) a certificate of the chief financial
officer of the Borrower setting forth the Borrowing Base as at the end
of such month (or as of such other date as is requested by the Bank),
all in form reasonably satisfactory to the Bank. Notwithstanding the
foregoing, the Borrower need not provide such an aging report and
Borrowing Base certificate as at the end of any month if no Revolving
Loans or letters of credit are outstanding at such month-end; provided
that if the Borrower omits delivery of such aging report and Borrowing
Base certificate for any month-end in reliance on the preceding
provisions of this sentence, then the Borrower will provide a current
aging report and Borrowing Base certificate in connection with any
subsequent Revolving Loan or letter of credit issuance or at any time
at the Bank's request."
x. By deleting in their entireties Section 3.7 through 3.9 of the
Letter Agreement and by substituting in their stead the following:
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"3.7 Debt to Worth. The Borrower will maintain as at the end of each
fiscal quarter (commencing with September 30, 1996) on a
consolidated basis a Leverage Ratio of not more than the following:
not more than 1.35 to 1 as at September 30, 1996; and not more than
1.25 to 1 as at December 31, 1996 and as at the end of each fiscal
quarter thereafter. As used herein, 'Leverage Ratio' means, as at
any date when same is to be determined, the ratio of (x) all
outstanding Liabilities of the Borrower and/or its Subsidiaries to
(y) the Borrower's consolidated Capital Base.
3.8 Capital Base. The Borrower will maintain as at the end of each
fiscal quarter (commencing with September 30, 1996) a consolidated
Capital Base of not less than the then-effective Capital Base
Requirement. The Capital Base Requirement is deemed to have been
$3,000,000 as at June 30, 1996; and as at the last day of each
fiscal quarter thereafter (beginning with September 30, 1996) the
Capital Base Requirement will be deemed to become an amount equal
to the sum of: (i) that Capital Base Requirement which had been in
effect on the last day of the immediately preceding fiscal quarter,
plus (ii) 75% of the net proceeds of any equity securities sold by
the Borrower during the fiscal quarter then ended and 75% of the
proceeds of any Subordinated Debt issued by the Borrower and/or its
Subsidiaries during such fiscal quarter then ended (nothing
contained herein being deemed to approve the issuance of any
additional Subordinated Debt), plus (iii) 75% of the consolidated
Net Income of the Borrower and Subsidiaries during said fiscal
quarter then ended (but without giving effect to any Net Income
which is less than zero for any fiscal quarter).
3.9 Profitability. The Borrower will achieve quarterly consolidated
Net Income of at least the following: at least $200,000 for its
fiscal quarter ending September 30, 1996, at least $500,000 for its
fiscal quarter ending December 31, 1996, and at least $150,000 for
its fiscal quarter ending March 31, 1997 and for each subsequent
fiscal quarter. Without limitation of the foregoing, the Borrower
will achieve annual consolidated Net Income of at least $500,000
for its fiscal year ending December 31, 1996 and for each fiscal year
thereafter."
y. By inserting into the introduction to Article IV of the Letter
Agreement, immediately after the words "any Revolving Loan", the following:
"or any Term Loan"
z. By deleting from clause (i) of Section 4.1 of the Letter Agreement
the words "the Revolving Note" and by substituting in their stead the following:
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"the Notes"
aa. By deleting from Section 4.12 of the Letter Agreement the words
"Revolving Loan" and by substituting in their stead the following:
"Loan"
bb. By inserting into clause (a) of Section 5.1 of the Letter
Agreement, immediately after the words "Revolving Note", the following:
"or the Term Note"
cc. By deleting from clause (b) of Section 5.1 of the Letter Agreement
the word "Revolving".
dd. By inserting into clause (a) of Section 5.2 of the Letter
Agreement, immediately after the words "Revolving Note", the following:
"and the Term Note"
ee. By inserting into clause (b) of Section 5.2 of the Letter
Agreement, immediately after the words "revolving financing arrangements", the
following:
"and term loan facility"
ff. By inserting into clause (c) of Section 5.2 of the Letter
Agreement, immediately after the words "Revolving Note", the following:
", under the Term Note"
gg. By inserting into the first sentence of Section 6.1 of the Letter
Agreement, immediately after the words "the Revolving Note", in both places.
where same appear, the following:
", the Term Note"
hh. By deleting from the first sentence of Section 6.1 of the Letter
Agreement the words "Revolving Loan" and by substituting in their stead the
following:
"Loan"
ii. By inserting into the second sentence of Section 6.1 of the Letter
Agreement, immediately after the words "the Revolving Note", the following:
"the Term Note"
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jj. By deleting from the first paragraph of Section 6.2 of the Letter
Agreement, in both places where same appear, the words "the within-described
revolving loan facility" and by substituting in their stead the following:
"any Term Loans, the within-described revolving loan facility
and/or the within-described term loan facility"
kk. By deleting in its entirety Section 6.3 of the Letter Agreement
and by substituting in its stead the following:
"6.3. Facility Fees. With respect to the within arrangements for
Revolving Loans, the Borrower will pay to the Bank, on September
26, 1996 and thereafter on the first day of each calendar quarter
(commencing on October 1, 1996) as long as the within-described
revolving loan arrangements are in effect a non-refundable
quarterly facility fee payable in advance in the amount of $9,375
per quarter (appropriately pro-rated for any partial calendar
quarter). In addition, if the within-described revolving
financing arrangements are terminated by the Borrower for any
reason or by the Bank as the result of the Borrower's default,
the Borrower shall forthwith upon such termination pay to the
Bank a sum equal to all of the fees which would have become due
pursuant to the immediately preceding sentence from the date of
such termination through the Expiration Date. Fees described in
this Section are in addition to any balances and fees required by
the Bank or any of its affiliates in connection with any other
services now or hereafter made available to the Borrower."
ll. By deleting from Section 6.6 of the Letter Agreement the words
"Fleet Bank of Massachusetts, N.A." and by substituting in their stead the
following:
"Fleet National Bank"
mm. By inserting into the fourth sentence of Section 6.7 of the Letter
Agreement, immediately after the words "termination to the Bank", the following:
"together with the payment required by the second sentence of
Section 6.3 above"
nn. By deleting from the first sentence of Section 6.8 of the Letter
Agreement the words "the Revolving Note" and by substituting in their stead the
following:
"any of the Notes"
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oo. By modifying the defined term "Aggregate Bank Liabilities"
appearing in Section 7.1 of the Letter Agreement so that it will read "Aggregate
Revolving Bank Liabilities".
pp. By deleting from the definition of "Expiration Date" appearing in
Section 7.1 of the Letter Agreement the date "August 1, 1996" (such date having
been inserted by the 1995 Modification and having been extended through October
1, 1996 by the aforesaid allonges) and by substituting in its stead the
following:
"September 1, 1997"
As a result, from and after the date hereof, for the purposes of the Letter
Agreement and the other Financing Documents, the "Expiration Date" will be
deemed to be September 1, 1997.
qq. By inserting into Section 7.1 of the Letter Agreement, immediately
after the definition of "Expiration Date", the following:
"'First Half Qualifying Equipment' - Items of computer-related
equipment shown on an Equipment List approved in writing for this
purpose by the Bank, which items meet all of the criteria set
forth below in the first sentence of the definition of
'Qualifying Equipment' except that such items were acquired on
or after January 1, 1996 and prior to July 1, 1996."
rr. By inserting into Section 7.1 of the Letter Agreement, immediately
after the definition of "Liabilities", the following:
"'Loan' - Any Revolving Loan or any Term Loan."
ss. By inserting into the definition of "Loan Documents" appearing in
Section 7.1 of the Letter Agreement, immediately after the words "Revolving
Note", the following:
"the Term Note,"
tt. By deleting from the definition of "Maximum Revolving Amount"
appearing in Section 7.1 of the Letter Agreement the amount "$3,000,000" (said
amount having been inserted by the 1995 Modification) and by inserting in its
stead the following:
"$5,000,000"
uu. By inserting into Section 7.1 of the Letter Agreement, immediately
after the definition of "Net Income", the following:
"'Notes' - Collectively, the Revolving Note and the Term Note."
vv. By inserting into the definition of "Principal Office" appearing in
Section 7.1 of the Letter Agreement, immediately after the words "of the Bank",
the following:
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"in Boston, MA"
ww. By inserting into Section 7.1 of the Letter Agreement, immediately
after the definition of "Qualified Receivables", the following:
" 'Qualifying Equipment' - Computer-related equipment
(excluding pre-packaged software) purchased by the Borrower
after June 30, 1996 for use in the Borrower's business which
meets all of the following criteria: (i) such equipment
consists of one of the items shown on an equipment list
heretofore delivered by the Borrower to the Bank or has
otherwise been approved by the Bank for use in supporting a
Term Loan, (ii) each item of such equipment has been delivered
to or installed at the Premises and has become fully
operational and (iii) the Borrower has paid in full for each
item of such equipment and holds title to same, free of all
interests and claims of any other Person (other than the
security interest of the Bank). In addition, and without
limitation of the foregoing, 'Qualifying Equipment' will be
deemed to include First Half Qualifying Equipment."
xx. By adding to paragraph (a) of Section 7.2 of the Letter Agreement,
immediately after the words "Revolving Note", the following:
"the Term Note"
yy. By adding to the Letter Agreement, as an exhibit thereto, Item 1.4
in the form attached to this Agreement.
3. Each of the IAR Security Agreement, the Supplementary Security
Agreement, the Subordination Agreement, the Trademark Assignment and the Patent
Assignment is hereby modified by providing that all references therein to the
"Bank" or to "Fleet Bank of Massachusetts, N.A." will be deemed to refer to
Fleet National Bank.
4. Wherever in any Financing Document, or in any certificate or opinion
to be delivered in connection therewith, reference is made to a "letter
agreement" or to the "Letter Agreement", from and after the date hereof same
will be deemed to refer to the Letter Agreement, as hereby amended.
5. Simultaneously with the execution and delivery of this Agreement,
the Borrower is executing and delivering to the Bank the 1996 Revolving Note, in
substitution for the 1995 Revolving Note. The 1996 Revolving Note is a
$5,000,000 promissory note of the Borrower, substantially in the form attached
hereto as Exhibit 1. Wherever in any of the Financing Documents or in any
certificate or opinion to be delivered in connection therewith, reference is
made to a "Revolving Note", from and after the date hereof same will be deemed
to refer to the 1996 Revolving Note.
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6. In order to induce the Bank to enter into this Agreement, the
Borrower further represents and warrants as follows:
a. The execution, delivery and performance of this Agreement, the 1996
Revolving Note and the Term Note have been duly authorized by the Borrower by
all necessary corporate and other action, will not require the consent of any
third party and will not conflict with, violate the provisions of, or cause a
default or constitute an event which, with the passage of time or the giving of
notice or both, could cause a default on the part of the Borrower under its
charter documents or by-laws or under any contract, agreement, law, rule, order,
ordinance, franchise, instrument or other document, or result in the imposition
of any lien or encumbrance (except in favor of the Bank) on any property or
assets of the Borrower.
b. The Borrower has duly executed and delivered each of this Agreement,
the 1996 Revolving Note and the Term Note.
c. Each of this Agreement, the 1996 Revolving Note and the Term Note is
the legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its respective terms.
d. The statements, representations and warranties made in the Letter
Agreement, in the IAR Security Agreement and/or in the Supplementary Security
Agreement continue to be correct as of the date hereof; except as amended,
updated and/or supplemented by the attached Supplemental Disclosure Schedule.
e. The covenants and agreements of the Borrower contained in the Letter
Agreement, in the IAR Security Agreement and/or in the Supplementary Security
Agreement have been complied with on and as of the date hereof.
f. No event which constitutes or which, with notice or lapse of time,
or both, could constitute, an Event of Default (as defined in the Letter
Agreement) has occurred and is continuing.
g. No material adverse change has occurred in the financial condition
of the Borrower from that disclosed in the annual consolidated financial
statements of the Borrower dated December 31, 1995, heretofore furnished to the
Bank.
7. Except as expressly affected hereby, the Letter Agreement and each
of the other Financing Documents remains in full force and effect as heretofore.
8. Nothing contained herein will be deemed to constitute a waiver or a
release of any provision of any of the Financing Documents. Nothing contained
herein will in any event be deemed to constitute an agreement to give a waiver
or release or to agree to any amendment or modification of any provision of any
of the Financing Documents on any other or future occasion.
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14
9. By its signature below, MTDC agrees: (i) that all references in the
Subordination Agreement to the "Bank" will be deemed to refer to Fleet National
Bank, (ii) that the number "$3,000,000" set forth in Section 1 of the
Subordination Agreement (as amended by the 1995 Modification) is hereby amended
to read "$6,000,000", (iii) that, as amended hereby, the Subordination Agreement
remains in full force and effect and runs to the benefit of Fleet National Bank,
and (iv) that the term "Senior Debt", as used in the Subordination Agreement,
includes the Letter Agreement (as amended hereby), all Loans (as defined in the
Letter Agreement, as so amended), the 1996 Revolving Note and the Term Note.
Executed, as an instrument under seal, as of the day and year first
above written.
VOICETEK CORPORATION
By: /s/ Roger Tuttle
-----------------------------
Name: Roger Tuttle
Title: Chief Financial Officer
Accepted and agreed:
FLEET NATIONAL BANK
By: /s/ Catherine Bruton
------------------------
Name: Catherine Bruton
----------------
Title: VP
----------------
Accepted and agreed as
Subordinated Lender:
MASSACHUSETTS TECHNOLOGY
DEVELOPMENT CORP.
By: /s/ Robert J. Creeden
--------------------------
Name: Robert J. Creeden
------------------
Title: Vice President
------------------
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15
EXHIBIT 1.4
PROMISSORY NOTE
$1,000,000.00 Boston, Massachusetts
September 26, 1996
FOR VALUE RECEIVED, the undersigned Voicetek Corporation, a
Massachusetts corporation (the "Borrower") hereby promises to pay to the order
of FLEET NATIONAL BANK (the "Bank") the principal amount of One Million and
00/100 ($ 1,000,000.00) Dollars or such portion thereof as maybe advanced by the
Bank pursuant to Section 1.4 of the below described Letter Agreement and remains
outstanding from time to time thereunder ("Principal"), with interest, at the
rate hereinafter set forth, on the daily balance of all unpaid Principal, from
the date hereof until payment in full of all Principal and interest hereunder.
As used herein, "Letter Agreement" means that certain letter agreement dated
September 21, 1994, as amended, between the Borrower and Fleet Bank of
Massachusetts, N.A., the Bank having succeeded to the rights of Fleet Bank of
Massachusetts, N.A. thereunder.
Interest on all unpaid Principal shall be due and payable monthly in
arrears, on the first day of each month commencing on the first such date after
the advance of any Principal and continuing on the first day of each month
thereafter and on the date of payment of this note in full, at a fluctuating
rate per annum (computed on the basis of a year of three hundred sixty (360)
days for the actual number of days elapsed) which shall at all times be equal to
the sum of (i) one (1.0%) percent per annum plus (ii) the Prime Rate, as in
effect from time to time (but in no event in excess of the maximum rate
permitted by then applicable law). A change in the aforesaid rate of interest
will become effective on the same day on which any change in the Prime Rate is
effective. Overdue principal shall bear interest at a fluctuating rate per annum
which at all times shall be equal to the sum of (i) two (2%) percent per annum
plus (ii) the per annum rate otherwise payable under this note (but in no event
in excess of the maximum rate permitted by then applicable law), compounded
monthly and payable on demand. As used herein, "Prime Rate" means that rate of
interest per annum announced by the Bank from time to time as its prime rate, it
being understood that such rate is merely a reference rate, not necessarily the
lowest, which serves as the basis upon which effective rates of interest are
calculated for obligations making reference thereto. If the entire amount of any
required Principal and/or interest is not paid within ten (10) days after the
same is due, the Borrower shall pay to the Bank a late fee equal to five percent
(5%) of the required payment, provided that such late fee shall be reduced to
three percent (3%) of any required Principal and interest that is not paid
within fifteen (15) days of the date it is due if this note is secured by a
mortgage on an owner-occupied residence of 1-4 units.
All advances of Principal made at any time on or prior to September 30,
1996 are hereinafter referred to as the "Tranche A Term Loans". Principal of the
Tranche A Term Loans shall be repaid by the Borrower to the Bank in 36 equal
consecutive monthly installments (each in an amount, equal to 1/36th of the
aggregate principal amount of Tranche A Term Loans outstanding at the close of
business on September 30, 1996), such installments to commence October 1, 1996
and to continue thereafter on the first day of each month through and including
September 1, 1999, on which date all then remaining Principal of the
16
Tranche A Term Loans and all interest accrued but unpaid thereon will be due and
payable in full.
All advances of Principal made at any time on or after October 1, 1996
and prior to January 1, 1997 are hereinafter referred to as the "Tranche B Term
Loans". Principal of the Tranche B Term Loans shall be repaid by the Borrower to
the Bank in 36 equal consecutive monthly installments (each in an amount equal
to 1/36th of the aggregate principal amount of Tranche B Term Loans outstanding
at the close of business on December 31, 1996), such installments to commence
January 1, 1997 and to continue thereafter on the first day of each month
through and including December 1, 1999, on which date all then remaining
Principal of the Tranche B Term Loans and all interest accrued but unpaid
thereon will be due and payable in full.
All advances of Principal made at any time on or after January 1, 1997
and prior to April 1, 1997 are hereinafter referred to as the "Tranche C Term
Loans". Principal of the Tranche C Term Loans shall be repaid by the Borrower to
the Bank in 36 equal consecutive monthly installments (each in an amount equal
to 1/36th of the aggregate principal amount of Tranche C Term Loans outstanding
at the close of business on March 31, 1997), such installments to commence April
1, 1997 and to continue thereafter on the first day of each month through and
including March 1, 2000, on which date all then remaining Principal of the
Tranche C Term Loans and all interest accrued but unpaid thereon will be due and
payable in full.
All advances of Principal made at any time on or after April 1, 1997
and prior to July 1, 1997 are hereinafter referred to as the "Tranche D Term
Loans". Principal of the Tranche D Term Loans shall be repaid by the Borrower to
the Bank in 36 equal consecutive monthly installments (each in an amount equal
to 1/36th of the aggregate principal amount of Tranche D Term Loans outstanding
at the close of business on June 30, 1997), such installments to commence July
1, 1997 and to continue thereafter on the first day of each month through and
including June 1, 2000, on which date all then remaining Principal of the
Tranche D Term Loans and all interest accrued but unpaid thereon will be due and
payable in full.
All advances of Principal made at any time on or after July 1, 1997
are hereinafter referred to as the "Tranche E Term Loans". Principal of
the Tranche E Term Loans shall be repaid by the Borrower to the Bank in 36 equal
consecutive monthly installments (each in an amount equal to 1/36th of the
aggregate principal amount of Tranche E Term Loans outstanding at the close of
business on September 30, 1997), such installments to commence October 1, 1997
and to continue thereafter on the first day of each month through and including
September 1, 2000, on which date all then remaining Principal of the Tranche E
Term Loans and all interest accrued but unpaid thereon will be due and payable
in full.
The Borrower may at any time and from time to time, without premium or
penalty, prepay all or any portion of the Principal; provided that each such
Principal prepayment shall be accompanied by payment of all interest on this
note accrued but unpaid to the date of
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17
payment. Any partial prepayment of Principal will be applied against Principal
installments in inverse order of normal maturity.
Payments of both Principal and interest shall be made, in immediately
available funds, at the office of the Bank located at 75 State Street, Boston,
Massachusetts 02109, or at such other address as the Bank may from time to time
designate.
The undersigned Borrower irrevocably authorizes the Bank to make or
cause to be made, on a schedule attached to this note or on the books of the
Bank, at or following the time of making any Term Loan (as defined in the Letter
Agreement) and of receiving any payment of Principal, an appropriate notation
reflecting such transaction and the then unpaid balance of Principal. Failure of
the Bank to make any such notation shall not, however, affect any obligation of
the Borrower hereunder or under the Letter Agreement. The unpaid Principal
amount of this note, as recorded by the Bank from time to time on such schedule
or on such books, shall constitute presumptive evidence of the aggregate
outstanding principal amount of the Term Loans.
The Borrower hereby (a) waives notice of and consents to any and all
advances, settlements, compromises, favors and indulgences (including, without
limitation, any extension or postponement of the time for payment), any and all
receipts, substitutions, additions, exchanges and releases of collateral, and
any and all additions, substitutions and releases of any person primarily or
secondarily liable, (b) waives presentment, demand, notice, protest and all
other demands and notices generally in connection with the delivery,
acceptance, performance, default or enforcement of or under this note, and (c)
agrees to pay all costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred or paid by the Bank in enforcing this note and any
collateral or security therefor, all whether or not litigation is commenced.
This note is the Term Note referred to in, and is entitled to the
benefits of, the Letter Agreement. This note is secured by the Security
Agreement (as defined in the Letter Agreement). This note is subject to
prepayment as set forth in the Letter Agreement. The maturity of this note may
be accelerated upon the occurrence of an Event of Default, as provided in the
Letter Agreement.
Executed, as an instrument under seal, as of the day and year first
above written.
CORPORATE SEAL VOICETEK CORPORATION
ATTEST:
By:
-----------------------
- -------------------------
Clerk Name:
Title:
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EXHIBIT 1
PROMISSORY NOTE
$5,000,000.00 Boston, Massachusetts
September 26, 1996
FOR VALUE RECEIVED, the undersigned Voicetek Corporation, a
Massachusetts corporation (the "Borrower) hereby promises to pay to the order of
FLEET NATIONAL BANK (the "Bank") the principal amount of Five Million and 00/100
($5,000,000.00) Dollars or such portion thereof as has been advanced by the Bank
and/or its corporate predecessor or may hereafter be advanced by the Bank
pursuant to Section 1.2 of that certain letter agreement between the Borrower
and Fleet Bank of Massachusetts, N.A. dated September 21, 1994, as amended (as
so amended, the "Letter Agreement") (the Bank having succeeded to the rights of
Fleet Bank of Massachusetts, N.A. thereunder) and remains outstanding from time
to time hereunder ("Principal"), with interest, at the rate hereinafter set
forth, on the daily balance of all unpaid Principal, from the date hereof until
payment in full of all Principal and interest hereunder.
Interest on all unpaid Principal shall be due and payable monthly in
arrears, on the first day of each month, commencing on the first such date after
the advance of any Principal and continuing on the first day of each month
thereafter and on the date of payment of this note in full, at a fluctuating
rate per annum (computed on the basis of a year of three hundred sixty (360)
days for the actual number of days elapsed) which shall at all times be equal to
the sum of (i) three-quarters of one percent (0.75%) per annum plus (ii) the
Prime Rate, as in effect from time to time (but in no event in excess of the
maximum rate permitted by then applicable law). A change in the aforesaid rate
of interest shall become effective on the same day on which any change in the
Prime Rate is effective. Overdue Principal and, to the extent permitted by law,
overdue interest from and after the date on which same becomes past due shall
bear interest at a fluctuating rate per annum which at all times shall be equal
to the sum of (i) two (2%) percent per annum plus (ii) the per annum rate
otherwise payable under this note (but in no event in excess of the maximum rate
permitted by then applicable law), compounded monthly and payable on demand. As
used herein, "Prime Rate" means that rate of interest per annum announced by
the Bank from time to time as its prime rate, it being understood that such rate
is merely a reference rate, not necessarily the lowest, which serves as the
basis upon which effective rates of interest are calculated for obligations
making reference thereto. If the entire amount of any required Principal and/or
interest is not paid within ten (10) days after the same is due, the Borrower
shall pay to the Bank a late fee equal to five percent (5%) of the required
payment, provided that such late fee shall be reduced to three percent (3%) of
any required Principal and interest that is not paid within fifteen (15) days of
the date it is due if this note is secured by a mortgage on an owner-occupied
residence of 1-4 units.
All outstanding Principal and all interest accrued thereon shall be due
and payable in full on the first to occur of: (i) an acceleration under Section
5.2 of the Letter Agreement or (ii) September 1, 1997. The Borrower may at any
time and from time to time prepay all or any portion of said
19
Principal, without premium or penalty. Under certain circumstances set forth in
the Letter Agreement, prepayments of Principal may be required.
Payments of both Principal and interest shall be made, in immediately
available funds, at the office of the Bank located at 75 State Street, Boston,
Massachusetts 02109, or at such other address as the Bank may from time to time
designate.
The undersigned Borrower irrevocably authorizes the Bank to make or
cause to be made, on a schedule attached to this note or on the books of the
Bank, at or following the time of making any Revolving Loan (as defined in the
Letter Agreement) and of receiving any payment of Principal, an appropriate
notation reflecting such transaction and the then aggregate unpaid balance of
Principal. Failure of the Bank to make any such notation shall not, however,
affect any obligation of the Borrower hereunder or under the Letter Agreement.
The unpaid Principal balance of this note, as recorded by the Bank from time to
time on such schedule or on such books, shall constitute presumptive evidence of
the aggregate unpaid principal amount of the Revolving Loans.
The Borrower hereby (a) waives notice of and consents to any and all
advances, settlements, compromises, favors and indulgences (including, without
limitation, any extension or postponement of the time for payment), any and all
receipts, substitutions, additions, exchanges and releases of collateral, and
any and all additions, substitutions and releases of any person primarily or
secondarily liable, (b) waives presentment, demand, notice, protest and all
other demands and notices generally in connection with the delivery, acceptance,
performance, default or enforcement of or under this note, and (c) agrees to pay
all costs and expenses, including, without limitation, reasonable attorneys'
fees, incurred or paid by the Bank in enforcing this note and any collateral or
security therefor, all whether or not litigation is commenced.
This note is the Revolving Note referred to in the Letter Agreement.
This note is secured by, and is entitled to the benefits of, the Security
Agreement (as defined in the Letter Agreement). This note is subject to
prepayment as set forth in the Letter Agreement. The maturity of this note may
be accelerated upon the occurrence of an Event of Default, as provided in the
Letter Agreement.
Executed, as an instrument under seal, as of the day and year first
above written.
CORPORATE SEAL VOICETEK CORPORATION
ATTEST:
By:___________________
_____________________
Clerk Name:
Title:
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SUPPLEMENTAL DISCLOSURE SCHEDULE
None.