1
EXHIBIT 10.66
================================================================================
LOAN AND SECURITY AGREEMENT
by and among
e.spire COMMUNICATIONS, INC.,
as a Debtor and a Debtor in Possession,
as Borrower,
THE SUBSIDIARIES OF THE BORROWER THAT ARE SIGNATORIES HERETO,
as Debtors and Debtors in Possession,
as Guarantors,
THE LENDERS THAT ARE SIGNATORIES HERETO,
as Lenders,
FOOTHILL CAPITAL CORPORATION,
as the Arranger and Administrative Agent
and
ABLECO FINANCE LLC,
as Co-Agent
Dated as of April 10, 2001
================================================================================
2
TABLE OF CONTENTS
Page
----
1. DEFINITIONS AND CONSTRUCTION............................................................................1
1.1 Definitions........................................................................................1
1.2 Accounting Terms..................................................................................21
1.3 Code..............................................................................................21
1.4 Construction......................................................................................21
1.5 Schedules and Exhibits............................................................................21
2. LOAN AND TERMS OF PAYMENT..............................................................................21
2.1 Revolver Advances.................................................................................21
2.2 Term Loan.........................................................................................22
2.3 Borrowing Procedures and Settlements..............................................................23
2.4 Payments..........................................................................................29
2.5 Overadvances......................................................................................32
2.6 Interest Rates, Payments, Letter of Credit Fee and Calculations...................................32
2.7 Cash Management...................................................................................33
2.8 Crediting Payments; Float Charge..................................................................34
2.9 Designated Account................................................................................35
2.10 Maintenance of Loan Account; Statements of Obligations............................................35
2.11 Fees..............................................................................................35
2.12 Capital Requirements..............................................................................36
2.13 Letters of Credit.................................................................................36
3. CONDITIONS; TERM OF AGREEMENT..........................................................................39
3.1 Conditions Precedent to the Term Loan.............................................................39
3.2 Conditions Precedent to Revolver Commitments, the Initial Advance
and the Initial Letter of Credit..................................................................41
3.3 Condition Precedent to Increase in Maximum Revolver Amount........................................42
3.4 Conditions Precedent to all Extensions of Credit..................................................43
3.5 Conditions Subsequent to the Initial Extension of Credit..........................................43
3.6 Term..............................................................................................43
3.7 Effect of Termination.............................................................................44
3.8 Early Termination by Borrower.....................................................................44
4. CREATION OF SECURITY INTEREST..........................................................................45
4.1 Grant of Security Interest........................................................................45
4.2 Negotiable Collateral.............................................................................45
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral............................45
4.4 Delivery of Additional Documentation Required.....................................................45
4.5 Power of Attorney.................................................................................46
4.6 Right to Inspect..................................................................................46
4.7 Administrative Priority...........................................................................46
4.8 Grants, Rights and Remedies.......................................................................46
4.9 No Filings Required...............................................................................47
-i-
3
Page
----
4.10 Survival..........................................................................................47
4.11 Control Agreements................................................................................48
5. REPRESENTATIONS AND WARRANTIES.........................................................................48
5.1 No Encumbrances...................................................................................48
5.2 Eligible Fiber Optic Inventory....................................................................48
5.3 Equipment.........................................................................................48
5.4 Location of Inventory and Equipment...............................................................48
5.5 Inventory Records.................................................................................48
5.6 Location of Chief Executive Office; FEIN..........................................................49
5.7 Due Organization and Qualification; Subsidiaries..................................................49
5.8 Due Authorization; No Conflict....................................................................49
5.9 Litigation........................................................................................50
5.10 No Material Adverse Change........................................................................50
5.11 Employee Benefits.................................................................................50
5.12 Environmental Condition...........................................................................50
5.13 Brokerage Fees....................................................................................50
5.14 Intellectual Property.............................................................................51
5.15 DDAs..............................................................................................51
5.16 Complete Disclosure...............................................................................51
5.17 Administrative Priority; Lien Priority............................................................51
5.18 Appointment of Trustee or Examiner; Liquidation...................................................51
5.19 Regulatory Authorizations.........................................................................52
5.20 Governmental Regulation...........................................................................52
6. AFFIRMATIVE COVENANTS..................................................................................53
6.1 Accounting System.................................................................................53
6.2 Collateral Reporting..............................................................................53
6.3 Financial Statements, Reports, Certificates.......................................................54
6.4 [INTENTIONALLY OMITTED]...........................................................................56
6.5 [INTENTIONALLY OMITTED]...........................................................................56
6.6 Maintenance of Properties.........................................................................56
6.7 Taxes.............................................................................................56
6.8 Insurance.........................................................................................56
6.9 Location of Inventory and Equipment...............................................................57
6.10 Compliance with Laws..............................................................................57
6.11 [INTENTIONALLY OMITTED]...........................................................................57
6.12 Brokerage Commissions.............................................................................57
6.13 Existence.........................................................................................58
6.14 Environmental.....................................................................................58
6.15 Disclosure Updates................................................................................58
7. NEGATIVE COVENANTS.....................................................................................58
7.1 Indebtedness......................................................................................58
7.2 Liens.............................................................................................59
7.3 Restrictions on Fundamental Changes...............................................................59
7.4 Disposal of Assets................................................................................59
7.5 Change Name.......................................................................................59
7.6 Guarantee.........................................................................................60
-ii-
4
Page
----
7.7 Nature of Business................................................................................60
7.8 Prepayments and Amendments........................................................................60
7.9 Change of Control.................................................................................60
7.10 [INTENTIONALLY OMITTED]...........................................................................60
7.11 Distributions.....................................................................................60
7.12 Accounting Methods................................................................................60
7.13 Investments.......................................................................................60
7.14 Transactions with Affiliates......................................................................60
7.15 Suspension........................................................................................61
7.16 Compensation......................................................................................61
7.17 Use of Proceeds...................................................................................61
7.18 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees............................................................................61
7.19 Securities Accounts...............................................................................61
7.20 Financial Covenants...............................................................................61
7.21 Interim Bankruptcy Court Order; Final Bankruptcy Court Order;
Administrative Expense Priority; Lien Priority; Payments..........................................66
8. EVENTS OF DEFAULT......................................................................................67
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.................................................................70
9.1 Rights and Remedies...............................................................................70
9.2 Remedies Cumulative...............................................................................72
10. TAXES AND EXPENSES.....................................................................................72
11. WAIVERS; INDEMNIFICATION...............................................................................72
11.1 Demand; Protest; etc..............................................................................72
11.2 The Lender Group's Liability for Collateral.......................................................72
11.3 Indemnification...................................................................................73
12. NOTICES................................................................................................73
13. CHOICE OF LAW; JURY TRIAL WAIVER.......................................................................74
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.............................................................75
14.1 Assignments and Participations....................................................................75
14.2 Successors........................................................................................77
15. AMENDMENTS; WAIVERS....................................................................................78
15.1 Amendments and Waivers............................................................................78
15.2 Replacement of Holdout Lender.....................................................................79
15.3 No Waivers; Cumulative Remedies...................................................................80
16. AGENT; THE LENDER GROUP................................................................................80
16.1 Appointment and Authorization of Agent............................................................80
16.2 Delegation of Duties..............................................................................81
16.3 Liability of Agent................................................................................81
16.4 Reliance by Agent.................................................................................81
16.5 Notice of Default or Event of Default.............................................................81
-iii-
5
Page
----
16.6 Credit Decision...................................................................................82
16.7 Costs and Expenses; Indemnification...............................................................82
16.8 Agent in Individual Capacity......................................................................83
16.9 Successor Agent...................................................................................83
16.10 Lender in Individual Capacity.....................................................................84
16.11 Swing Lender in Individual Capacity...............................................................84
16.12 Withholding Taxes.................................................................................84
16.13 Collateral Matters................................................................................86
16.14 Restrictions on Actions by Lenders; Sharing of Payments...........................................87
16.15 Agency for Perfection.............................................................................87
16.16 Payments by Agent to the Lenders..................................................................88
16.17 Concerning the Collateral and Related Loan Documents..............................................88
16.18 Field Audits and Examination Reports; Confidentiality; Disclaimers
by Lenders; Other Reports and Information.........................................................88
16.19 Several Obligations; No Liability.................................................................89
16.20 Co-Agent..........................................................................................89
17. GUARANTY...............................................................................................90
17.1 Guaranty..........................................................................................90
17.2 Guaranty Absolute.................................................................................90
17.3 Waiver............................................................................................91
17.4 Continuing Guaranty; Assignments..................................................................91
17.5 Subrogation.......................................................................................91
17.6 The guarantee by each Guarantor of the Guaranteed Obligations is a
joint and several obligation of each Guarantor....................................................92
18. GENERAL PROVISIONS.....................................................................................92
18.1 Effectiveness.....................................................................................92
18.2 Section Headings..................................................................................92
18.3 Interpretation....................................................................................92
18.4 Severability of Provisions........................................................................92
18.5 Amendments in Writing.............................................................................92
18.6 Counterparts; Telefacsimile Execution.............................................................92
18.7 Revival and Reinstatement of Obligations..........................................................92
18.8 Integration.......................................................................................93
18.9 Agent as Party in Interest........................................................................93
18.10 Confidentiality...................................................................................93
-iv-
6
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit I-1 Form of Interim Bankruptcy Court Order
Schedule C-1 Commitments
Schedule E-1 Eligible Fiber Optic Inventory Locations
Schedule P-1 Permitted Liens
Schedule 2.7(a) Cash Management Banks
Schedule 3.1(f) Jurisdictions
Schedule 5.4 Locations of Inventory and Equipment
Schedule 5.6 Chief Executive Office; FEIN
Schedule 5.7(b) Subsidiaries
Schedule 5.12(a) Environmental Matters
Schedule 5.14 Intellectual Property
Schedule 5.15 Demand Deposit Accounts
Schedule 5.19 Regulatory Authorizations
Schedule 6.7 Taxes
Schedule 7.16 Compensation
7
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered
into as of April 10, 2001, by and among, on the one hand, the lenders identified
on the signature pages hereof (such lenders, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), FOOTHILL CAPITAL CORPORATION, a
California corporation, as the arranger and administrative agent for the Lenders
(the "Agent"), ABLECO FINANCE LLC, a New York limited liability company, as
co-agent (the "Co-Agent") and, on the other hand, e.spire Communications, Inc.,
a Delaware corporation, as a debtor and a debtor in possession (the "Borrower"),
and the subsidiaries of Borrower that are identified on the signature pages
hereof, each as a debtor and a debtor in possession (each individually a
"Guarantor" and collectively the "Guarantors").
WHEREAS, on March 22, 2001 (the "Filing Date"), the Borrower and
the Guarantors commenced cases (the "Chapter 11 Cases") under Chapter 11 of
Title 11 of the United States Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") and the
Borrower and the Guarantors have retained possession of their assets and are
authorized under the Bankruptcy Code to continue the operation of their
businesses as debtors in possession;
WHEREAS, the Bankruptcy Court has entered an order authorizing
the joint administration of the bankruptcy estates of the Borrower and each
Guarantor;
WHEREAS, the Borrower and the Guarantors have requested that
Lenders make post-petition loans, advances and other extensions of credit to
Borrower in an aggregate principal amount not to exceed $85,000,000 at any time
outstanding (which facility shall be limited to $25,000,000 at any time
outstanding until the Final Bankruptcy Court Order (as hereinafter defined)
shall have been entered by the Bankruptcy Court); and
WHEREAS, Agent and Lenders have agreed to make such facility
available to Borrower subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following
terms shall have the following definitions:
"Account Debtor" means any Person who is or who may
become obligated under, with respect to, or on account of, an Account, chattel
paper, or a General Intangible.
"Accounts" means all of each Loan Party's now owned or
hereafter acquired right, title, and interest with respect to "accounts" (as
that term is defined in the Code), and any and all supporting obligations in
respect thereof.
8
"ACSI Network" means ACSI Network Technologies, Inc., a
Maryland corporation.
"Adequate Protection Stipulation" means the Stipulation
and Order Granting Adequate Protection and Authorizing Use of Cash Collateral
Pursuant to Bankruptcy Code Sections 361, 362(D) and 363 so ordered by the
Bankruptcy Court on March 26, 2001, as amended, modified or extended from time
to time.
"Additional Documents" has the meaning set forth in
Section 4.4.
"Additional Term Loan" has the meaning set forth in
Section 2.2.
"Advance Percentage" means the advance rate with respect
to Eligible Fiber Optic Inventory, designated as a percentage, determined by
Agent with the consent of the Required Lenders, in the exercise of their
Permitted Discretion, based upon the results of the Revolver Facility Diligence
and the lending practices of Agent.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as applied to any Person, any other
Person who, directly or indirectly, controls, is controlled by, or is under
common control with, such Person. For purposes of this definition, "control"
means the possession, directly or indirectly, of the power to direct the
management and policies of a Person, whether through the ownership of Stock, by
contract, or otherwise; provided, however, that, in any event: (a) any Person
which owns directly or indirectly 20% or more of the securities having ordinary
voting power for the election of directors or other members of the governing
body of a Person or 20% or more of the partnership or other ownership interests
of a Person (other than as a limited partner of such Person) shall be deemed to
control such Person, (b) each director (or comparable manager) of a Person shall
be deemed to be an Affiliate of such Person, and (c) each partnership or joint
venture in which a Person is a partner or joint venturer shall be deemed to be
an Affiliate of such Person.
"Agent" means Foothill, solely in its capacity as agent
for the Lenders hereunder, and any successor thereto.
"Agent's Account" means an account at a bank designated
by Agent from time to time as the account into which Borrower shall make all
payments to Agent for the benefit of the Lender Group and into which the Lender
Group shall make all payments to Agent under this Agreement and the other Loan
Documents; unless and until Agent notifies Borrower and the Lender Group to the
contrary, Agent's Account shall be that certain deposit account bearing account
number 323-266193 and maintained by Agent with The Chase Manhattan Bank, 4 New
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ABA #▇▇▇▇▇▇▇▇▇.
"Agent Advances" has the meaning set forth in Section
2.3(e)(i).
"Agent's Liens" means the Liens granted by Borrower and
Guarantors to Agent for the benefit of the Lender Group under this Agreement or
the other Loan Documents.
-2-
9
"Agent-Related Persons" means Agent together with its
Affiliates, officers, directors, employees, and agents.
"Agreed Administrative Expense Priorities" means that
administrative expenses with respect to the Loan Parties shall have the
following order of priority:
(a) first, (i) amounts payable pursuant to 28 U.S.C.
Section 1930(a)(6) and (ii) allowed fees and expenses of attorneys, accountants
and other professionals retained in the Chapter 11 Cases pursuant to Sections
327 and 1103 of the Bankruptcy Code, but the amount entitled to priority under
clause (ii) of this clause first ("Priority Professional Expenses") shall not
exceed, $3,000,000 outstanding in the aggregate at any time (in each case
inclusive of any holdbacks required by the Bankruptcy Court) (the "Professional
Expenses Cap"); provided, however, that after the occurrence and during the
continuance of an Event of Default hereunder or a default by any Loan Party of
any of its obligations under the Interim Bankruptcy Court Order or the Final
Bankruptcy Court Order, any payments actually made to such professionals after
such occurrence and during such continuance, under Sections 330 and 331 of the
Bankruptcy Code or otherwise, shall reduce the Professional Expenses Cap on a
dollar-for-dollar basis;
(b) second, all Obligations, and
(c) third, all other allowed administrative
expenses.
"Agreement" has the meaning set forth in the preamble
hereto.
"Applicable Prepayment Premium" means as of any date of
determination, an amount equal to, during the period of time from and after the
date of the execution and delivery of this Agreement up to the Maturity Date, 2%
times the sum of (i) the Maximum Revolver Amount, plus (ii) the outstanding
principal balance of the Term Loan on the date immediately prior to the date of
determination.
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and
Acceptance in the form of Exhibit A-1.
"Authorized Person" means any officer or other employee
of Borrower.
"Availability" means, as of any date of determination,
if such date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Borrower is entitled to borrow as Advances under
Section 2.1 (after giving effect to all then outstanding Obligations and all
sublimits and reserves applicable hereunder).
"Avoidance Actions" means all causes of action of any
Loan Party, as a debtor and debtor-in-possession, arising under 11 U.S.C.
Sections 542, 544, 545, 547, 548, 549, 550 and 553.
-3-
10
"Bankruptcy Code" has the meaning specified therefor in
the recitals hereto.
"Bankruptcy Court" has the meaning specified therefor in
the recitals hereto.
"Base Rate" means, the rate of interest announced within
▇▇▇▇▇ Fargo at its principal office in San Francisco as its "prime rate", with
the understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as ▇▇▇▇▇ Fargo may designate.
"Base Rate Margin" means 3.50 percentage points.
"Benefit Plan" means a "defined benefit plan" (as
defined in Section 3(35) of ERISA) for which Borrower or any ERISA Affiliate of
Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within the
past six years.
"Board of Directors" means the board of directors (or
comparable managers) of Borrower or any committee thereof duly authorized to act
on behalf of the board.
"Books" means all of each Loan Party's now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of its Records relating to its business operations or financial condition.
"Borrower" has the meaning set forth in the preamble to
this Agreement.
"Borrowing" means a borrowing hereunder consisting of
Advances (or term loans, in the case of the Term Loan) made on the same day by
the Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a
Swing Loan, or by Agent in the case of an Agent Advance.
"Borrowing Base" has the meaning set forth in Section
2.1.
"Business Day" means any day that is not a Saturday,
Sunday, or other day on which national banks are authorized or required to
close.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness
represented by obligations under a Capital Lease.
"Carve-Out Expenses" means those amounts, fees, expenses
and claims set forth in clause "first" of the definition of the term "Agreed
Administrative Expense Priorities".
-4-
11
"Cash Equivalents" means (a) marketable direct
obligations issued or unconditionally guaranteed by the United States or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within 1 year from the date of acquisition
thereof, (b) marketable direct obligations issued by any state of the United
States or any political subdivision of any such state or any public
instrumentality thereof maturing within 1 year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either S&P or ▇▇▇▇▇'▇, (c) commercial paper maturing no more than 1 year
from the date of acquisition thereof and, at the time of acquisition, having a
rating of A-1 or P-1, or better, from S&P or ▇▇▇▇▇'▇, and (d) certificates of
deposit or bankers' acceptances maturing within 1 year from the date of
acquisition thereof either (i) issued by any bank organized under the laws of
the United States or any state thereof which bank has a rating of A or A2, or
better, from S&P or ▇▇▇▇▇'▇, or (ii) certificates of deposit less than or equal
to $100,000 in the aggregate issued by any other bank insured by the Federal
Deposit Insurance Corporation.
"Cash Management Account" has the meaning set forth in
Section 2.7(a).
"Cash Management Agreements" means those certain cash
management service agreements, in form and substance satisfactory to Agent, each
of which is among a Loan Party, Agent, and one of the Cash Management Banks.
"Cash Management Bank" has the meaning set forth in
Section 2.7(a).
"Change of Control" means (a) any "person" or "group"
(within the meaning of Sections 13(d) and 14(d) of the Exchange Act), becomes
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of 20%, or more, of the Stock of Borrower having the right to
vote for the election of members of the Board of Directors, or (b) a majority of
the members of the Board of Directors do not constitute Continuing Directors, or
(c) Borrower ceases to directly own and control 100% of the outstanding capital
Stock of each of the other Loan Parties.
"Chapter 11 Cases" has the meaning specified therefor in
the recitals hereto.
"CLEC Business" means the competitive local exchange
carrier business of the Loan Parties.
"Co-Agent" means Ableco Finance LLC, solely in its
capacity as co-agent for the Lenders hereunder.
"Closing Date" means the date of the making of the Term
Loan hereunder or the date on which Agent sends Borrower a written notice that
each of the conditions precedent set forth in Section 3.1 either have been
satisfied or have been waived.
"Closing Date Projections" means Loan Parties'
forecasted twelve month (a) balance sheets, (b) profit and loss statements, and
(c) cash flow statements, all prepared on a consolidating and consolidated basis
(except for the cash flow statements which are only prepared on a consolidated
basis), consistent with Borrower's historical financial statements, in
-5-
12
each case together with appropriate supporting details and a schedule containing
the underlying assumptions.
"Closing Date Term Loan" has the meaning set forth in
Section 2.2.
"Code" means the New York Uniform Commercial Code, as in
effect from time to time.
"Collateral" means all now owned or hereafter acquired
right, title, and interest in and to the assets and property of each Loan
Party's estate (as defined in the Bankruptcy Code), including, without
limitation each of the following:
1. Accounts,
2. Books,
3. Equipment,
4. General Intangibles,
5. Inventory,
6. Investment Property,
7. Negotiable Collateral,
8. Real Property Collateral,
9. the Avoidance Actions,
10. money or other assets of any Loan Party that now
or hereafter come into the possession, custody, or control of any member of the
Lender Group, and
11. the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property Collateral, Avoidance Actions, money, deposit accounts, or other
tangible or intangible property resulting from the sale, exchange, collection,
or other disposition of any of the foregoing, or any portion thereof or interest
therein, and the proceeds thereof;
provided that, prior to the entry of the Final Bankruptcy Court Order,
Collateral shall not include Avoidance Actions.
"Collections" means all cash, checks, notes,
instruments, and other items of payment (including insurance proceeds, proceeds
of cash sales, rental proceeds, and tax refunds) of the Loan Parties.
"Commitment" means, with respect to each Lender, its
Revolver Commitment, its Term Loan Commitment, or its Total Commitment, as the
context requires,
-6-
13
and, with respect to all Lenders, their Revolver Commitments, their Term Loan
Commitments, or their Total Commitments, as the context requires, in each case
as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 or on the signature page of the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 14.1.
"Communications Act" means the Communications Act of
1934, as amended (including, without limitation, the Telecommunications Act of
1996), or any successor statute or statutes thereto, and all regulations
thereunder, in each case as from time to time in effect.
"Communications Regulatory Authority" means the FCC, any
State PUC and any future federal, state or local communications regulatory
commission, agency, department, board or authority.
"Compliance Certificate" means a certificate
substantially in the form of Exhibit C-1 delivered by the chief financial
officer of Borrower to Agent.
"Confidential Information" means written information
that Borrower furnishes to Agent or the Lenders and which is marked as
confidential, but does not include any such information that is or becomes
generally available to the public (other than information that is or becomes
available to the public as a result of disclosure by Agent or a Lender in
violation of Section 18.10) or that is or becomes available to Agent or a Lender
from a source other than Borrower or any agent of Borrower unless Agent or such
Lender knows, or reasonably should know, that such source is breaching a duty of
confidentiality to Borrower.
"Continuing Director" means (a) any member of the Board
of Directors who was a director (or comparable manager) of Borrower on the
Closing Date, and (b) any individual who becomes a member of the Board of
Directors after the Closing Date if such individual was appointed or nominated
for election to the Board of Directors by a majority of the Continuing
Directors, but excluding any such individual originally proposed for election in
opposition to the Board of Directors in office at the Closing Date in an actual
or threatened election contest relating to the election of the directors (or
comparable managers) of Borrower (as such terms are used in Rule 14a-11 under
the Exchange Act) and whose initial assumption of office resulted from such
contest or the settlement thereof.
"Control Agreement" means a control agreement, in form
and substance satisfactory to Agent, executed and delivered by Borrower, Agent,
and the applicable securities intermediary with respect to a Securities Account
or bank with respect to a deposit account.
"CyberGate" means CyberGate, Inc., a Florida
corporation.
"Daily Balance" means, with respect to each day during
the term of this Agreement, the amount of an Obligation owed at the end of such
day.
"DDA" means any checking or other demand deposit account
maintained by Borrower.
-7-
14
"Default" means an event, condition, or default that,
with the giving of notice, the passage of time, or both, would be an Event of
Default.
"Defaulting Lender" means any Lender that fails to make
any Advance (or other extension of credit) that it is required to make hereunder
on the date that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the
first 3 days from and after the date the relevant payment is due, and (b)
thereafter, at the interest rate then applicable to Advances (inclusive of the
Base Rate Margin applicable thereto).
"Designated Account" means account number 449-688-4321
of e.spire Finance Corporation maintained with the Designated Account Bank, or
such other deposit account of Borrower or a Loan Party (located within the
United States) that has been designated as such, in writing, by Borrower to
Agent.
"Designated Account Bank" means ▇▇▇▇▇ Fargo Bank,
National Association, whose office is located in San Francisco, CA, and whose
ABA number is ▇▇▇-▇▇▇-▇▇▇.
"Disbursement Letter" means an instructional letter
executed and delivered by Borrower to Agent regarding the Advances and Term Loan
to be made on the Closing Date, the form and substance of which is satisfactory
to Agent.
"Dollars" or "$" means United States dollars.
"EBITDA" means, with respect to the CLEC Business and
CyberGate for any period, the consolidated net earnings (or loss), minus
extraordinary gains, plus non-cash compensation, plus extraordinary losses, plus
interest expense, income taxes, and depreciation and amortization for the CLEC
Business and CyberGate for such period, as determined in accordance with GAAP.
"Eligible Fiber Optic Inventory" means fiber optic cable
Inventory which is owned by a Loan Party and ready for sale and is, and at all
times continues to be, acceptable to the Required Lenders in their Permitted
Discretion and shall be determined by the Agent with the consent of the Required
Lenders based upon the Revolver Facility Diligence and the lending practices of
the Agent.
"Eligible Transferee" means (a) a commercial bank
organized under the laws of the United States, or any state thereof, and having
total assets in excess of $250,000,000, (b) a commercial bank organized under
the laws of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having (together with its Affiliates) total
assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of
a Lender that was party hereto as of the Closing Date or any fund, money market
-8-
15
account, investment account or other account managed by a Lender or an Affiliate
of a Lender and (e) any other Person approved by Agent.
"Entry Date" means the date upon which the Interim
Bankruptcy Court Order is signed by the Bankruptcy Court and entered on the
docket of the Chapter 11 Cases.
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy, or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Borrower, relating to the environment, employee health and safety, or Hazardous
Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33
USC Section 1251 et seq; the Toxic Substances Control Act, 15 USC, Section 2601
et seq; the Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water
Act, 42 USC. Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC.
Section 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act
of 1986, 42 USC. Section 11001 et seq.; the Hazardous Material Transportation
Act, 49 USC Section 1801 et seq.; and the Occupational Safety and Health Act, 29
USC. Section 651 et seq. (to the extent it regulates occupational exposure to
Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all
liabilities, monetary obligations, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all reasonable fees, disbursements and expenses of counsel, experts, or
consultants, and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim or demand
by any Governmental Authority or any third party, and which relate to any
Environmental Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equipment" means all of each Loan Party's now owned or
hereafter acquired right, title, and interest with respect to equipment,
machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles
(including motor vehicles), tools, parts, goods (other than consumer goods, farm
products, or Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
-9-
16
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA
whose employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with Borrower and whose employees are aggregated with the employees of Borrower
under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section
8.
"Exchange Act" means the Securities Exchange Act of
1934, as in effect from time to time.
"FCC" means the Federal Communications Commission or any
successor agency.
"FEIN" means Federal Employer Identification Number.
"Filing Date" has the meaning specified therefor in the
recitals hereto.
"Final Bankruptcy Court Order" means the final order of
the Bankruptcy Court, substantially in form of the Interim Bankruptcy Court
Order, approving this Agreement and the other Loan Documents, including the
Advances and the Term Loan made and to be made to, and the Letters of Credit to
be issued for the account of, Borrower thereunder, as such Order may be amended,
modified or supplemented from time to time with the express written joinder or
consent of the Agent, on behalf of the Required Lenders, and the Borrower.
"Finance Corp" means e.spire Finance Corporation, a
Delaware corporation.
"Foothill" means Foothill Capital Corporation, a
California corporation.
"Funding Date" means the date on which a Borrowing
occurs.
"GAAP" means generally accepted accounting principles as
in effect from time to time in the United States, consistently applied.
"General Intangibles" means all of each Loan Party's now
owned or hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing
-10-
17
agreements, infringement claims, computer programs, information contained on
computer disks or tapes, software, literature, reports, catalogs, money, deposit
accounts, insurance premium rebates, tax refunds, and tax refund claims), and
any and all supporting obligations in respect thereof, and any other personal
property other than goods, Accounts, Investment Property, and Negotiable
Collateral.
"Governing Documents" means, with respect to any Person,
the certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state,
local, or other governmental or administrative body, instrumentality,
department, or agency or any court, tribunal, administrative hearing body,
arbitration panel, commission, or other similar dispute-resolving panel or body.
"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.
"Guaranteed Obligations" has the meaning set forth in
Section 17.1.
"Guarantor" has the meaning specified therefor in the
preamble hereto.
"Hazardous Materials" means (a) substances that are
defined or listed in, or otherwise classified pursuant to, any applicable laws
or regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Holdout Lender" has the meaning set forth in Section
15.2(a).
"Indebtedness" means (a) all obligations of any Loan
Party for borrowed money, (b) all obligations of any Loan Party evidenced by
bonds, debentures, notes, or other similar instruments and all reimbursement or
other obligations of such Loan Party in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations of any Loan Party under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of any Loan Party,
irrespective of whether such obligation or liability is assumed, (e) all
obligations of any Loan Party for the deferred purchase price of assets (other
than trade debt incurred in the ordinary course of such Loan Party's business
and repayable in accordance with customary trade practices), and (f) any
obligation of any Loan Party guaranteeing or intended to guarantee (whether
directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with
recourse to such Loan Party) any obligation of any other Person.
-11-
18
"Indemnified Liabilities" has the meaning set forth in
Section 11.3.
"Indemnified Person" has the meaning set forth in
Section 11.3.
"Interim Bankruptcy Court Order" means the interim order
of the Bankruptcy Court, substantially in the form of Exhibit I-1 hereto,
approving this Agreement and the other Loan Documents, including the Term Loan
to be made to the Borrower hereunder, as such Order may be amended, modified or
supplemented from time to time with the express written joinder or consent of
the Agent, on behalf of the Required Lenders, and the Borrower.
"Interim Facility Fee" has the meaning set forth in
Section 2.11(a).
"Inventory" means all of the now owned or hereafter
acquired right, title, and interest with respect to inventory of the Loan
Parties, including fiber optic cable inventory, goods held for sale or lease or
to be furnished under a contract of service, goods that are leased by a Loan
Party as lessor, goods that are furnished by a Loan Party under a contract of
service, and raw materials, work in process, or materials used or consumed in a
Loan Party's business.
"Investment" means, with respect to any Person, any
investment by such Person in any other Person (including Affiliates) in the form
of loans, guarantees, advances, or capital contributions (excluding (a)
commission, travel, and similar advances to officers and employees of such
Person made in the ordinary course of business, and (b) bona fide Accounts
arising from the sale of goods or rendition of services in the ordinary course
of business consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Investment Property" means all of each Loan Party's now
owned or hereafter acquired right, title, and interest with respect to
"investment property" as that term is defined in the Code, and any and all
supporting obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in
effect from time to time.
"Issuing Lender" means Foothill or any other Lender
that, at the request of Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become an Issuing Lender for the purpose of issuing
L/Cs or L/C Undertakings pursuant to Section 2.13.
"L/C" has the meaning set forth in Section 2.13(a).
"L/C Disbursement" means a payment made by the Issuing
Lender pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section
2.13(a).
"Lender" and "Lenders" have the respective meanings set
forth in the preamble to this Agreement, and shall include any other Person made
a party to this Agreement in accordance with the provisions of Section 14.1.
-12-
19
"Lender Group" means, individually and collectively,
each of the Lenders and Agent.
"Lender Group Expenses" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by any Loan Party
under any of the Loan Documents that are paid or incurred by the Lender Group,
(b) reasonable fees or charges paid or incurred by the Lender Group in
connection with the Lender Group's transactions with any Loan Party, including,
fees or charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, litigation, and
Uniform Commercial Code searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, appraisal (including periodic Collateral
appraisals or business valuations to the extent of the fees and charges (and up
to the amount of any limitation) contained in this Agreement), real estate
surveys, real estate title policies and endorsements, and environmental audits,
(c) reasonable costs and expenses incurred by the Agent in the disbursement of
funds to Borrower (by wire transfer or otherwise), (d) charges paid or incurred
by the Agent resulting from the dishonor of checks, (e) reasonable costs and
expenses paid or incurred by the Lender Group to correct any default or enforce
any provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) audit fees and expenses of the Agent and the
Co-Agent related to audit examinations of the Books to the extent of the fees
and charges contained in this Agreement, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by the Lender Group in
enforcing or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents or the Lender Group's relationship with
Borrower or any Guarantor of the Obligations, (h) Agent's and each Lender's
reasonable fees and expenses (including attorneys fees) incurred in advising,
structuring, drafting, reviewing, administering, or amending the Loan Documents,
and (i) Agent's and each Lender's reasonable fees and expenses (including
attorneys fees) incurred in terminating, enforcing (including attorneys fees and
expenses incurred in connection with any "workout," or "restructuring,"
concerning any Loan Party or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any
Lender, such Lender, together with such Lender's Affiliates, and the officers,
directors, employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking,
as the context requires.
"Letter of Credit Usage" means, as of any date of
determination, the aggregate undrawn amount of all outstanding Letters of Credit
plus 100% of the amount of outstanding time drafts accepted by an Underlying
Issuer as a result of drawings under Underlying Letters of Credit.
-13-
20
"Licenses" means all licenses, authorizations,
certifications, waivers and permits required from any Communications Regulatory
Authority acting under the Communications Act or State Law.
"Lien" means any interest in an asset securing an
obligation owed to, or a claim by, any Person other than the owner of the asset,
whether such interest shall be based on the common law, statute, or contract,
whether such interest shall be recorded or perfected, and whether such interest
shall be contingent upon the occurrence of some future event or events or the
existence of some future circumstance or circumstances, including the lien or
security interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting any Real Property Collateral.
"Liquid Cash Projections" means the Loan Parties'
forecasted twelve week cash receipts and cash disbursement schedule and schedule
of outstanding Indebtedness incurred after the Entry Date, prepared on a
consolidating and consolidated basis, together with appropriate supporting
details and a schedule containing the underlying assumptions.
"Loan Account" has the meaning set forth in Section
2.10.
"Loan Documents" means this Agreement, the Cash
Management Agreements, the Control Agreements, the Disbursement Letter, the
Letters of Credit, the Officers' Certificate, the Stock Pledge Agreement, the
Interim Bankruptcy Court Order, the Final Bankruptcy Court Order, any note or
notes executed by Borrower in connection with this Agreement and payable to a
member of the Lender Group, and any other agreement entered into, now or in the
future, by any Loan Party and the Lender Group in connection with this
Agreement.
"Loan Party" means the Borrower and each Guarantor.
"Material Adverse Change" means (a) a material adverse
change in the business, operations, assets, or financial condition of the Loan
Parties taken as a whole, except for the commencement of the Chapter 11 Cases
and events (including defaults under pre-petition credit facilities) that would
typically result from the commencement of the Chapter 11 Cases, (b) the material
impairment of any Loan Party's ability to perform its obligations under the Loan
Documents to which it is a party or of the Lender Group's ability to enforce the
Obligations or realize upon the Collateral, (c) a material adverse effect on the
value of the Collateral or the amount that the Lender Group would be likely to
receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral, or (d) a material impairment
of the enforceability or priority of the Agent's Liens with respect to the
Collateral.
"Maturity Date" has the meaning set forth in Section
3.6.
"Maximum Revolver Amount" means (i) prior to the
Revolver Facility Effective Date, $5,000,000 and (ii) after the Revolver
Facility Effective Date $45,000,000, provided that upon the receipt by the Agent
and the Borrower of additional Commitments pursuant to Section 3.3, the Maximum
Revolver Amount after the Revolver Facility Effect Date
-14-
21
will increase, on a dollar for dollar basis, by the amount of such additional
commitments received pursuant to Section 3.3 up to a maximum of $60,000,000.
"Negotiable Collateral" means all of each Loan Party's
now owned and hereafter acquired right, title, and interest with respect to
letters of credit, letter of credit rights, instruments, promissory notes,
drafts, documents, and chattel paper (including electronic chattel paper and
tangible chattel paper), and any and all supporting obligations in respect
thereof.
"Obligations" means all loans (including the Term Loan),
Advances, debts, principal, interest, contingent reimbursement obligation with
respect to outstanding Letters of Credit, premiums, liabilities, (including all
amounts charged to Borrower's Loan Account pursuant hereto), obligations, fees,
charges, costs, Lender Group Expenses, lease payments, guaranties, covenants,
and duties of any kind and description owing by the Loan Parties to the Lender
Group pursuant to or evidenced by the Loan Documents and irrespective of whether
for the payment of money, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, and including all
interest not paid when due and all Lender Group Expenses that any Loan Party is
required to pay or reimburse by the Loan Documents, by law, or otherwise. Any
reference in this Agreement or in the Loan Documents to the Obligations shall
include all amendments, changes, extensions, modifications, renewals
replacements, substitutions, and supplements, thereto and thereof, as
applicable.
"Officers' Certificate" means the representations and
warranties of officers' form submitted by Agent to Borrower, together with
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"Orders" means, collectively, the Interim Bankruptcy
Court Order and the Final Bankruptcy Court Order.
"Originating Lender" has the meaning set forth in
Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Participant" has the meaning set forth in Section
14.1(e).
"Permitted Discretion" means a determination made in
good faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other
dispositions by any Loan Party of Equipment that is substantially worn, damaged,
or obsolete in the ordinary course of such Loan Party's business, (b) sales by
any Loan Party of Inventory to buyers in the ordinary course of business, (c)
the sale of unused dark fiber and/or conduits not constituting Inventory, (d)
the use or transfer of money or Cash Equivalents by any Loan Party in a manner
that is not prohibited by the terms of this Agreement or the other Loan
Documents, and (e) the licensing by any Loan Party, on a non-exclusive basis, of
patents, trademarks, copyrights, and other intellectual property rights in the
ordinary course of such Loan Party's business.
-15-
22
"Permitted Investments" means (a) investments in Cash
Equivalents, (b) investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, and (d) Advances made by any Loan Party to another Loan
Party.
"Permitted Liens" means (a) Liens held by Agent for the
benefit of Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are
not yet delinquent, or (ii) do not constitute an Event of Default hereunder and
are the subject of Permitted Protests, (c) Liens securing the Pre-Petition
Credit Facility Debt (including any replacement Liens granted pursuant to the
Adequate Protection Stipulation), the Lien of Allfirst Bank in a segregated
deposit account maintained by the Borrower at Allfirst Bank and Liens set forth
on Schedule P-1, (d) the interests of lessors under operating leases, (e)
purchase money Liens or the interests of lessors under Capital Leases to the
extent that such Liens or interests secure Permitted Purchase Money Indebtedness
and so long as such Lien attaches only to the asset purchased or acquired and
the proceeds thereof, (f) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business of any Loan Party and not
in connection with the borrowing of money, and which Liens either (i) are for
sums not yet delinquent, or (ii) are the subject of Permitted Protests, (g)
Liens arising from deposits made in connection with obtaining worker's
compensation or other unemployment insurance, (h) Liens or deposits to secure
performance of bids, tenders, or leases incurred in the ordinary course of
business of Borrower and not in connection with the borrowing of money, (i)
Liens granted as security for surety or appeal bonds in connection with
obtaining such bonds in the ordinary course of business of the Loan Parties, (j)
with respect to the Real Property Collateral, easements, rights of way, and
zoning restrictions that do not materially interfere with or impair the use or
operation thereof by any Loan Party, (k) unperfected Liens existed on the Filing
Date that are voidable under the Bankruptcy Code, and (l) other Liens, not in
connection with the borrowing of money, securing obligations not exceeding
$3,000,000 in the aggregate for all Loan Parties.
"Permitted Priority Liens" means all Permitted Liens
other than the Liens securing the Pre-Petition Credit Facility Debt (including
any replacement Liens granted pursuant to the Adequate Protection Stipulation)
and the Liens described in clauses (b), (f) and (k) of the definition of the
term Permitted Liens.
"Permitted Protest" means the right of any Loan Party to
protest any Lien (other than any such Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on the Books in such amount as is required
under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by a Loan Party in good faith, and (c) Agent is satisfied that, while
any such protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any
date of determination, Purchase Money Indebtedness incurred after the Closing
Date in an aggregate principal amount outstanding at any one time not in excess
of (i) $750,000 in any calendar year excluding Purchase Money Indebtedness
incurred in connection with the financing of lateral connections between the
fiber optic cable of a Loan Party and the customers of such Loan Party
-16-
23
as well as in connection with the financing of other competitive local exchange
carrier networking costs incurred by a Loan Party in providing services to the
customers of such Loan Party and (ii) $3,000,000 in any calendar year for
Purchase Money Indebtedness incurred in connection with the financing of lateral
connections between the fiber optic cable of a Loan Party and the customers of
such Loan Party as well as in connection with the financing of other competitive
local exchange carrier networking costs incurred by a Loan Party in providing
services to the customers of such Loan Party.
"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral
other than Real Property Collateral.
"Pre-Petition Credit Facility Debt" means the
Indebtedness evidenced by the First Amended and Restated Credit Agreement, dated
as of September 19, 2000 as amended, among the Borrower, Finance Corp., the
lenders listed therein, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners, L.P., as sole lead
arranger and syndication agent, The Bank of New York, as administrative agent,
First Union National Bank, as documentation agent, and CIT Lending Services
Corporation, as collateral agent, and all documents related thereto.
"Priority Professional Expenses" shall mean those
expenses entitled to priority as set forth in sub-clause (ii) of the clause
"first" of the definition of the term "Agreed Administrative Expense
Priorities."
"Professional Expenses Cap" shall have the meaning given
that term in sub-clause (ii) of the clause "first" of the definition of the term
"Agreed Administrative Expense Priorities."
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make
Advances and receive payments of principal, interest, fees, costs, and expenses
with respect thereto, (i) prior to the Revolver Commitment being reduced to
zero, the percentage obtained by dividing (x) such Lender's Revolver Commitment,
by (y) the aggregate Revolver Commitments of all Lenders, and (ii) from and
after the time that the Revolver Commitment has been terminated or reduced to
zero, the percentage obtained by dividing (x) the aggregate principal amount of
such Lender's Advances by (y) the aggregate principal amount of all Advances,
(b) with respect to a Lender's obligation to
participate in Letters of Credit, to reimburse the Issuing Lender, and to
receive payments of fees with respect thereto, (i) prior to the Revolver
Commitment being reduced to zero, the percentage obtained by dividing (x) such
Lender's Revolver Commitment, by (y) the aggregate Revolver Commitments of all
Lenders, and (ii) from and after the time that the Revolver Commitment has been
terminated or reduced to zero, the percentage obtained by dividing (x) the
aggregate principal amount of such Lender's Advances by (y) the aggregate
principal amount of all Advances,
-17-
24
(c) with respect to a Lender's obligation to make
the Term Loan and receive payments of interest, fees, and principal with respect
thereto, (i) prior to the making of the Term Loan, the percentage obtained by
dividing (x) such Lender's Term Loan Commitment, by (y) the aggregate amount of
all Lenders' Term Loan Commitments, and (ii) from and after the making of the
Term Loan, the percentage obtained by dividing (x) the outstanding principal
amount of such Lender's portion of the Term Loan by (y) the outstanding
principal amount of the Term Loan, and
(d) with respect to all other matters (including the
indemnification obligations arising under Section 16.7), the percentage obtained
by dividing (i) such Lender's Revolver Commitment plus the unpaid principal
amount of such Lender's portion of the Term Loan, by (ii) the aggregate amount
of Revolver Commitments of all Lenders plus the unpaid principal amount of the
Term Loan; provided, however, that, in each case, in the event the Revolver
Commitments have been terminated or reduced to zero, Pro Rata Share shall be the
percentage obtained by dividing (x) the principal amount of such Lender's
Advances plus the unpaid principal amount of such Lender's portion of the Term
Loan by (y) the principal amount of all outstanding Advances plus the
outstanding principal amount of the Term Loan.
"Purchase Money Indebtedness" means Indebtedness (other
than the Obligations, but including Capitalized Lease Obligations), incurred at
the time of, or within 20 days after, the acquisition of any fixed assets for
the purpose of financing all or any part of the acquisition cost thereof.
"Real Property Collateral" means any estates or
interests in real property now owned or hereafter acquired by any Loan Party and
the improvements thereto.
"Record" means information that is inscribed on a
tangible medium or which is stored in an electronic or other medium and is
retrievable in perceivable form.
"Remedial Action" means all actions taken to (a) clean
up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Replacement Lender" has the meaning set forth in
Section 15.2(a).
"Report" has the meaning set forth in Section 16.17.
"Required Lenders" means, at any time, Lenders whose Pro
Rata Shares aggregate 55% as determined pursuant to clause (d) of the definition
of Pro Rata Share.
"Revolver Commitment" means, with respect to each
Lender, its "Revolver Commitment", and, with respect to all Lenders, the
aggregate amount of the "Revolver Commitments" of all Lenders, in each case as
such Dollar amounts are set forth beside such Lender's name under the applicable
heading on Schedule C-1 or on the signature page of
-18-
25
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Revolver Facility Diligence" has the meaning specified
therefor in Section 3.2(d).
"Revolver Facility Effective Date" means the date, after
the entry of the Final Bankruptcy Court Order, on which all of the conditions
precedent to the increase of the Revolver Commitments to an amount in excess of
$5,000,000 as set forth in Section 3.2 are satisfied.
"Revolver Usage" means, as of any date of determination,
the sum of (a) the then extant amount of outstanding Advances, plus (b) the then
extant amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter
of Credit, all reimbursement obligations of Borrower to the Issuing Lender with
respect to an L/C Undertaking, consisting of (a) the amount available to be
drawn or which may become available to be drawn, (b) all amounts that have been
paid by the Issuing Lender to the Underlying Issuer to the extent not reimbursed
by Borrower, whether by the making of an Advance or otherwise, and (c) all
accrued and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"Securities Account" means a "securities account" as
that term is defined in the Code.
"Settlement" has the meaning set forth in Section
2.3(f)(i).
"Settlement Date" has the meaning set forth in Section
2.3(f)(i).
"State Law" means any state law pertaining to or
regulating intrastate and local telecommunications services, or any successor
statute or statutes thereto, and all State Regulations pursuant to such State
Law, in each case as from time to time in effect.
"State PUC" means any state public utility commission or
any other state commission, agency, department, board or authority with
responsibility for regulating intrastate and local telecommunications services.
"State Regulations" means all rules, regulations,
written policies, orders and decisions of any State PUC.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
-19-
26
"Stock Pledge Agreement" means a stock pledge agreement,
in form and substance satisfactory to Agent, executed and delivered by Borrower,
Finance Corp and CyberGate to Agent with respect to the pledge of the Stock
owned by such Person.
"Subsidiary" of a Person means a corporation,
partnership, limited liability company, or other entity in which that Person
directly or indirectly owns or controls the shares of Stock having ordinary
voting power to elect a majority of the board of directors (or appoint other
comparable managers) of such corporation, partnership, limited liability
company, or other entity.
"Swing Lender" means Foothill or any other Lender that,
at the request of Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section
2.3(d)(i).
"Taxes" has the meaning set forth in Section 16.11.
"Term Loan" has the meaning set forth in Section 2.2.
"Term Loan Amount" means (i) prior to the Revolver
Facility Effective Date, $20,000,000 and (ii) after the Revolver Facility
Effective Date, $25,000,000.
"Term Loan Commitment" means, with respect to each
Lender, its "Term Loan Commitment", and, with respect to all Lenders, the
aggregate amount of the Term Loan Commitments of all Lenders, in each case as
such Dollar amounts are set forth beside such Lender's name under the applicable
heading on Schedule C-1 or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder in accordance
with the provisions of Section 14.1.
"Term Loan Holdback" has the meaning set forth in
Section 2.2(b).
"Total Commitment" means, with respect to each Lender,
its Total Commitment, and, with respect to all Lenders, their Total Commitments,
in each case as such Dollar amounts are set forth beside such Lender's name
under the applicable heading on Schedule C-1 attached hereto or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
"Underlying Issuer" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrower.
"Underlying Letter of Credit" means a letter of credit
that has been issued by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in Section
17.7.
-20-
27
"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National
Association, a national banking association.
1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein, the
term "financial statements" shall include the notes and schedules thereto.
Whenever the term "Borrower" is used in respect of a financial covenant or a
related definition, it shall be understood to mean Borrower and its Subsidiaries
on a consolidated basis unless the context clearly requires otherwise.
1.3 Code. Any terms used in this Agreement that are defined
in the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein.
1.4 Construction. Unless the context of this Agreement or
any other Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the term
"including" is not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to any Person
shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein or in the other Loan Documents shall
be satisfied by the transmission of a Record and any Record transmitted shall
constitute a representation and warranty as to the accuracy and completeness in
all material respects of the information contained therein.
1.5 Schedules and Exhibits. All of the schedules and
exhibits attached to this Agreement shall be deemed incorporated herein by
reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances. (a) Subject to the terms and
conditions of this Agreement and the Final Bankruptcy Court Order, and on and
after the Entry Date and during the term of this Agreement, each Lender with a
Revolver Commitment agrees (severally, not jointly or jointly and severally) to
make advances ("Advances") to Borrower in an amount at any one time outstanding
not to exceed such Lender's Pro Rata Share of an amount equal to the least of
(i) the Maximum Revolver Amount less the Letter of Credit Usage or (ii) the
Borrowing Base less the Letter of Credit Usage, and (iii) the maximum
Indebtedness for the corresponding month set forth in Section 7.20(c) less the
outstanding Term Loan and Letter of Credit Usage, provided that, prior to the
Revolver Facility Effective Date, clause (ii) shall not be applicable. For
purposes of this Agreement, "Borrowing Base" means at any time the difference
between (i) the Advance Percentage of Eligible Fiber Optic Inventory at such
time less (ii) the sum of (A)
-21-
28
$3,000,000 plus (B) the aggregate amount of reserves, if any, established by
Agent under Section 2.1(b).
(b) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted Discretion
shall deem necessary or appropriate, against the Borrowing Base, including,
without limitation, reserves with respect to (i) sums that Borrower is required
to pay (such as taxes, assessments, insurance premiums, or, in the case of
leased assets, rents or other amounts payable under such leases) and has failed
to pay under any Section of this Agreement or any other Loan Document, and (ii)
amounts owing by Borrower to any Person to the extent secured by a Lien on, or
trust over, any of the Collateral (other than any existing Permitted Lien set
forth on Schedule P-1 which is specifically identified thereon as entitled to
have priority over Agent's Liens), which Lien or trust, in the Permitted
Discretion of Agent likely would have a priority superior to the Agent's Liens
(such as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad
valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral. In addition to the foregoing, Agent
shall have the right to have the Inventory reappraised by a qualified appraisal
company selected by Agent from time to time after the Revolver Facility
Effective Date for the purpose of redetermining the Advance Percentage of the
Eligible Fiber Optic Inventory and, as a result, redetermining the Borrowing
Base.
(c) Lenders with Revolver Commitments shall have no
obligation to make additional Advances hereunder to the extent such additional
Advances would cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) On the Closing Date, the Borrower shall borrow
Advances in the amount of $5,000,000. Amounts borrowed pursuant to this Section
may be repaid and, subject to the terms and conditions of this Agreement,
reborrowed at any time during the term of this Agreement, provided that, prior
to the Revolver Facility Effective Date, amounts borrowed pursuant to this
Section may only be repaid (other than in connection with the Maturity Date or
the termination of this Agreement) immediately prior to the issuance of an L/C
or L/C Undertaking and such repayment shall be in the amount of such L/C or L/C
Undertaking.
2.2 Term Loan. (a) Subject to the terms and conditions of
this Agreement and the Interim Bankruptcy Court Order, on the Closing Date, each
Lender with a Term Loan Commitment agrees (severally, not jointly or jointly and
severally) to make term loans (collectively, the "Closing Date Term Loan") to
Borrower in an amount equal to such Lender's Pro Rata Share of the Term Loan
Amount on the Closing Date less the amount of the Term Loan Holdback. In
addition, subject to the terms and conditions of this Agreement and the Final
Bankruptcy Court Order, on the Revolver Facility Effective Date, each Lender
with a Term Loan Commitment agrees (severally and not jointly and severally) to
make term loans (collectively, the "Additional Term Loan" and together with the
Closing Date Term Loan, the "Term Loan") to Borrower in an amount equal to such
Lender's Pro Rata Share of the Term Loan Amount on the Revolver Facility
Effective Date less the sum of (i) amount of the Closing Date Term Loan made on
the Closing Date and (ii) the amount of the Term Loan Holdback in effect on the
Revolver Facility Effective Date.
-22-
29
(b) A portion of the Term Loan Amount equal to
$8,000,000 (the "Term Loan Holdback") shall not be available to the Borrower
until the Agent is satisfied, in its Permitted Discretion, that either the
mechanics or contractors Liens set forth on Schedule P-1 to this Agreement are
released or the obligations secured by such mechanics or contractors Liens have
been satisfied. If the Agent determines in its Permitted Discretion that any
such mechanics or contractors Liens are released or any obligations secured by
such mechanics or contractors Liens are satisfied, the Agent shall release a
portion of the Term Loan Holdback in the amount corresponding on Schedule P-1 to
the Liens released or the obligations satisfied. Upon any such release, each
Lender with a Term Loan Commitment agrees (severally and not jointly and
severally) to make an additional term loan to the Borrower in an amount
corresponding to the amount of the Term Loan Holdback released by the Agent,
provided that (i) the conditions contained in Section 3.4 are satisfied on the
date of any such additional term loan and (ii) such additional term loans made
in connection with a release of a portion of the Term Loan Holdback shall not be
made more frequently than once each week and shall not be for an amount of less
than $1,000,000 unless the Term Loan Holdback then in effect is less than
$1,000,000. The additional term loans made pursuant to this Section 2.2(b) in
connection with any release of a portion of the Term Loan Holdback shall
constitute a part of the Term Loan for all purposes of this Agreement.
(c) The outstanding unpaid principal balance and all
accrued and unpaid interest under the Term Loan shall be due and payable on the
Maturity Date, whether by the terms of this Agreement, by prepayment, or by
acceleration. All amounts outstanding under the Term Loan shall constitute
Obligations.
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be
made by an irrevocable written request by an Authorized Person delivered to
Agent (which notice must be received by Agent no later than 10:00 a.m.
(California time) on the Business Day prior to the date that is the requested
Funding Date in the case of a request for an Advance or the Term Loan specifying
(i) the amount of such Borrowing, and (ii) the requested Funding Date, which
shall be a Business Day; provided, however, that in the case of a request for a
Swing Loan in an amount of $2,000,000, or less, such notice will be timely
received if it is received by Agent no later than 10:00 a.m. (California time)
on the Business Day that is the requested Funding Date) specifying (i) the
amount of such Borrowing, and (ii) the requested Funding Date, which shall be a
Business Day. At Agent's election, in lieu of delivering the above-described
written request, any Authorized Person may give Agent telephonic notice of such
request by the required time, with such telephonic notice to be confirmed in
writing within 24 hours of the giving of such notice.
(b) Agent's Election. Promptly after receipt of a
request for a Borrowing pursuant to Section 2.3(a), Agent shall elect, in its
discretion, (i) to have the terms of Section 2.3(c) apply to such requested
Borrowing, or the terms of Section 2.3(d) in the amount of the requested
Borrowing, or (ii) if the Borrowing is for an Advance, to request Swing Lender
to make a Swing Loan pursuant to the terms of Section 2.3(d) in the amount of
the requested Borrowing; provided, however, that if Swing Lender declines in its
sole discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall
elect to have the terms of Section 2.3(c) apply to such requested Borrowing.
-23-
30
(c) Making of Advances.
(i) In the event that Agent shall elect to have the
terms of this Section 2.3(c) apply to a requested Borrowing as described
in Section 2.3(b), then promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall notify the Lenders,
not later than 1:00 p.m. (California time) on the Business Day
immediately preceding the Funding Date applicable thereto, by telecopy,
telephone, or other similar form of transmission, of the requested
Borrowing. Each Lender shall make the amount of such Lender's Pro Rata
Share of the requested Borrowing available to Agent in immediately
available funds, to Agent's Account, not later than 10:00 a.m.
(California time) on the Funding Date applicable thereto. After Agent's
receipt of the proceeds of such Advances (or the Term Loan, as
applicable), upon satisfaction of the applicable conditions precedent
set forth in Section 3 hereof, Agent shall make the proceeds thereof
available to Borrower on the applicable Funding Date by transferring
immediately available funds equal to such proceeds received by Agent to
Borrower's Designated Account; provided, however, that, subject to the
provisions of Section 2.3(i), Agent shall not request any Lender to
make, and no Lender shall have the obligation to make, any Advance (or
its portion of the Term Loan) if Agent shall have actual knowledge that
(1) one or more of the applicable conditions precedent set forth in
Section 3 will not be satisfied on the requested Funding Date for the
applicable Borrowing unless such condition has been waived, or (2) the
requested Borrowing would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing after the
Closing Date, at least 1 Business Day prior to the date of such
Borrowing, that such Lender will not make available as and when required
hereunder to Agent for the account of Borrower the amount of that
Lender's Pro Rata Share of the Borrowing, Agent may assume that each
Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but shall
not be so required), in reliance upon such assumption, make available to
Borrower on such date a corresponding amount. If and to the extent any
Lender shall not have made its full amount available to Agent in
immediately available funds and Agent in such circumstances has made
available to Borrower such amount, that Lender shall on the Business Day
following such Funding Date make such amount available to Agent,
together with interest at the Defaulting Lender Rate for each day during
such period. A notice submitted by Agent to any Lender with respect to
amounts owing under this subsection shall be conclusive, absent manifest
error. If such amount is so made available, such payment to Agent shall
constitute such Lender's portion of the requested Advance on the date of
Borrowing for all purposes of this Agreement. If such amount is not made
available to Agent on the Business Day following the Funding Date, Agent
will notify Borrower of such failure to fund and, upon demand by Agent,
Borrower shall pay such amount to Agent for Agent's account, together
with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate applicable at
the time to the Advances composing such Borrowing. The failure of any
Lender to make its portion of any Advance on any Funding Date shall not
relieve any other Lender of any obligation hereunder to make available
its portion of the requested Advance on such Funding Date,
-24-
31
but no Lender shall be responsible for the failure of any other Lender
to make its portion of the requested Advance to be made by such other
Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrower to Agent for the
Defaulting Lender's benefit, and, in the absence of such transfer to the
Defaulting Lender, Agent shall transfer any such payments to each other
non-Defaulting Lender member of the Lender Group ratably in accordance
with their Commitments (but only to the extent that such Defaulting
Lender's Advance was funded by the other members of the Lender Group)
or, if so directed by Borrower and if no Default or Event of Default had
occurred and is continuing (and to the extent such Defaulting Lender's
portion of the Advance was not funded by the Lender Group), retain the
same to be re-advanced to Borrower as if such Defaulting Lender had made
Advances to Borrower. Subject to the foregoing, Agent may hold and, in
its Permitted Discretion, re-lend to Borrower for the account of such
Defaulting Lender the amount of all such payments received and retained
by it for the account of such Defaulting Lender. Solely for the purposes
of voting or consenting to matters with respect to the Loan Documents,
such Defaulting Lender shall be deemed not to be a "Lender" and such
Lender's Commitment shall be deemed to be zero. This Section shall
remain effective with respect to such Lender until (x) the Obligations
under this Agreement shall have been declared or shall have become
immediately due and payable, (y) the non-Defaulting Lenders, Agent, and
Borrower shall have waived such Defaulting Lender's default in writing,
or (z) the Defaulting Lender makes its Pro Rata Share of the applicable
Advance and pays to Agent all amounts owing by Defaulting Lender in
respect thereof. The operation of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, to relieve or
excuse the performance by such Defaulting Lender or any other Lender of
its duties and obligations hereunder, or to relieve or excuse the
performance by Borrower of its duties and obligations hereunder to Agent
or to Lenders other than such Defaulting Lender. Any such failure to
fund by any Defaulting Lender shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Borrower at its
option, upon written notice to Agent, to arrange for a substitute Lender
to assume the Commitment of such Defaulting Lender, such substitute
Lender to be acceptable to Agent. In connection with the arrangement of
such a substitute Lender, the Defaulting Lender shall have no right to
refuse to be replaced hereunder, and agrees to execute and deliver a
completed form of Assignment and Acceptance in favor of the substitute
Lender (and agrees that it shall be deemed to have executed and
delivered such document if it fails to do so) subject only to being
repaid its share of the outstanding Obligations (including an assumption
of its Pro Rata Share of the Risk Participation Liability) without any
premium or penalty of any kind whatsoever; provided further, however,
that any such assumption of the Commitment of such Defaulting Lender
shall not be deemed to constitute a waiver of any of Lender Groups' or
Borrower's rights or remedies against any such Defaulting Lender arising
out of or in relation to such failure to fund.
(d) Making of Swing Loans.
(i) In the event Agent shall elect, with the consent
of Swing Lender, as a Lender, to have the terms of this Section 2.3(d)
apply to a requested
-25-
32
Borrowing as described in Section 2.3(b), Swing Lender as a Lender shall
make such Advance in the amount of such Borrowing (any such Advance made
solely by Swing Lender as a Lender pursuant to this Section 2.3(d) being
referred to as a "Swing Loan" and such Advances being referred to
collectively as "Swing Loans") available to Borrower on the Funding Date
applicable thereto by transferring immediately available funds to
Borrower's Designated Account. Each Swing Loan is an Advance hereunder
and shall be subject to all the terms and conditions applicable to other
Advances, except that all payments on any Swing Loan shall be payable to
Swing Lender as a Lender solely for its own account (and for the account
of the holder of any participation interest with respect to such Swing
Loan). Subject to the provisions of Section 2.3(i), Agent shall not
request Swing Lender as a Lender to make, and Swing Lender as a Lender
shall not make, any Swing Loan if Agent has actual knowledge that (i)
one or more of the applicable conditions precedent set forth in Section
3 will not be satisfied on the requested Funding Date for the applicable
Borrowing unless such condition has been waived, or (ii) the requested
Borrowing would exceed the Availability on such Funding Date. Swing
Lender as a Lender shall not otherwise be required to determine whether
the applicable conditions precedent set forth in Section 3 have been
satisfied on the Funding Date applicable thereto prior to making, in its
sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's
Liens, shall constitute Advances and Obligations hereunder, and shall
bear interest at the rate applicable from time to time to Advances.
(e) Agent Advances.
(i) Agent hereby is authorized by Borrower and the
Lenders, from time to time after the Revolver Facility Effective Date,
in Agent's sole discretion, (1) after the occurrence and during the
continuance of a Default or an Event of Default, or (2) at any time that
any of the other applicable conditions precedent set forth in Section 3
have not been satisfied, to make Advances to Borrower on behalf of the
Lenders that Agent, in its Permitted Discretion deems necessary or
desirable (A) to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of repayment of the Obligations,
or (C) to pay any other amount chargeable to Borrower pursuant to the
terms of this Agreement, including Lender Group Expenses and the costs,
fees, and expenses described in Section 10 (any of the Advances
described in this Section 2.3(e)shall be referred to as "Agent
Advances"), provided, that notwithstanding anything to the contrary
contained in this Section 2.3(e), the aggregate principal amount of
Agent Advances outstanding at any one time, when taken together with the
aggregate principal amount of Overadvances made in accordance with
Section 2.3(i) outstanding at any time, shall not exceed an amount equal
to the lesser of (x) 10% of the Borrowing Base then in effect and (y)
$5,000,000. Each Agent Advance is an Advance hereunder and shall be
subject to all the terms and conditions applicable to other Advances,
except that all payments thereon shall be payable to Agent solely for
its own account (and for the account of the holder of any participation
interest with respect to such Agent Advance).
(ii) The Agent Advances shall be repayable by
Borrower on demand and secured by the Agent's Liens granted to Agent
under the Loan Documents,
-26-
33
shall constitute Advances and Obligations hereunder, and shall bear
interest at the rate applicable from time to time to Advances.
(f) Settlement. It is agreed that each Lender's
funded portion of the Advances is intended by the Lenders to equal, at all
times, such Lender's Pro Rata Share of the outstanding Advances. Such agreement
notwithstanding, Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrower) that in
order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Advances, the Swing Loans, and the
Agent Advances shall take place on a periodic basis in accordance with the
following provisions:
(i) Agent shall request settlement
("Settlement") with the Lenders on a weekly basis, or on a more frequent
basis if so determined by Agent, (1) on behalf of Swing Lender, with
respect to each outstanding Swing Loan, (2) for itself, with respect to
each Agent Advance, and (3) with respect to Collections received by the
Agent, as to each by notifying the Lenders by telecopy, telephone, or
other similar form of transmission, of such requested Settlement, no
later than 2:00 p.m. (California time) on the Business Day immediately
prior to the date of such requested Settlement (the date of such
requested Settlement being the "Settlement Date"). Such notice of a
Settlement Date shall include a summary statement of the amount of
outstanding Advances, Swing Loans, and Agent Advances for the period
since the prior Settlement Date. Subject to the terms and conditions
contained herein (including Section 2.3(c)(iii)): (y) if a Lender's
balance of the Advances, the Swing Loans, and Agent Advances exceeds
such Lender's Pro Rata Share of the Advances, the Swing Loans, and Agent
Advances as of a Settlement Date, then Agent shall, by no later than
12:00 noon (California time) on the Settlement Date, transfer in
immediately available funds to the account of such Lender as such Lender
may designate, an amount such that each such Lender shall, upon receipt
of such amount, have as of the Settlement Date, its Pro Rata Share of
the Advances, the Swing Loans, and Agent Advances; and (z) if a Lender's
balance of the Advances, the Swing Loans, and Agent Advances is less
than such Lender's Pro Rata Share of the Advances, the Swing Loans, and
Agent Advances as of a Settlement Date, such Lender shall no later than
12:00 noon (California time) on the Settlement Date transfer in
immediately available funds to Agent's Account, an amount such that each
such Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and
Agent Advances. Such amounts made available to Agent under clause (z) of
the immediately preceding sentence shall be applied against the amounts
of the applicable Swing Loan or Agent Advance and, together with the
portion of such Swing Loan or Agent Advance representing Swing Lender's
Pro Rata Share thereof, shall constitute Advances of such Lenders. If
any such amount is not made available to Agent by any Lender on the
Settlement Date applicable thereto to the extent required by the terms
hereof, Agent shall be entitled to recover for its account such amount
on demand from such Lender together with interest thereon at the
Defaulting Lender Rate.
(ii) In determining whether a Lender's
balance of the Advances, Swing Loans, and Agent Advances is less than,
equal to, or greater than such Lender's Pro Rata Share of the Advances,
Swing Loans, and Agent Advances as of a
-27-
34
Settlement Date, Agent shall, as part of the relevant Settlement, apply
to such balance the portion of payments actually received in good funds
by Agent with respect to principal, interest, fees payable by Borrower
and allocable to the Lenders hereunder, and proceeds of Collateral. To
the extent that a net amount is owed to any such Lender after such
application, such net amount shall be distributed by Agent to that
Lender as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to the
extent no Agent Advances or Swing Loans are outstanding, may pay over to
Swing Lender any payments received by Agent, that in accordance with the
terms of this Agreement would be applied to the reduction of the
Advances, for application to Swing Lender's Pro Rata Share of the
Advances. If, as of any Settlement Date, Collections received since the
then immediately preceding Settlement Date have been applied to Swing
Lender's Pro Rata Share of the Advances other than to Swing Loans, as
provided for in the previous sentence, Swing Lender shall pay to Agent
for the accounts of the Lenders, and Agent shall pay to the Lenders, to
be applied to the outstanding Advances of such Lenders, an amount such
that each Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Advances. During the period
between Settlement Dates, Swing Lender with respect to Swing Loans,
Agent with respect to Agent Advances, and each Lender (subject to the
effect of letter agreements between Agent and individual Lenders) with
respect to the Advances other than Swing Loans and Agent Advances, shall
be entitled to interest at the applicable rate or rates payable under
this Agreement on the daily amount of funds employed by Swing Lender,
Agent, or the Lenders, as applicable.
(g) Notation. Agent shall record on its books the
principal amount of the Advances owing to each lender, including the Swing Loans
owing to Swing Lender, and Agent Advances owing to Agent, and the interests
therein of each Lender, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment of principal of such Lender's Advances in its books and records,
including computer records, such books and records constituting conclusive
evidence, absent manifest error, of the accuracy of the information contained
therein.
(h) Lenders' Failure to Perform. All Advances (other
than Swing Loans and Agent Advances) shall be made by Lenders contemporaneously
and in accordance with their Pro Rata Shares. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder, nor
shall any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
(i) Optional Overadvances. Any contrary provision of
this Agreement notwithstanding, the Lenders hereby authorize Agent or Swing
Lender, as applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrower notwithstanding that an Overadvance exists or thereby
would be created, so long as (i) after giving effect to such Advances (including
Swing Loans), the outstanding Revolver Usage does not exceed the
-28-
35
Borrowing Base by more than an amount equal to the lesser of (A) 10% of the
Borrowing Base then in effect and (B) $5,000,000, (ii) after giving effect to
such Advances (including Swing Loans) the outstanding Revolver Usage (except for
and excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) does not exceed the Maximum Revolver Amount, (iii) the aggregate
principal amount of Overadvances made pursuant to this Section 2.3(i) when taken
together with the aggregate principal amount of Agent Advances made pursuant to
Section 2.3(e) does not exceed at any time an amount equal to the lesser of (1)
10% of the Borrowing Base then in effect and (2) $5,000,000, at the time of the
making of any such Advance (including any Swing Loan), Agent does not believe,
in good faith, that the Overadvance created by such Advance will be outstanding
for more than 90 days, provided that, prior to the Revolver Facility Effective
Date, clauses (i) and (iii) shall not be applicable. The foregoing provisions
are for the exclusive benefit of Agent, Swing lender, and the Lenders and are
not intended to benefit Borrower in any way. The Advances and Swing Loans, as
applicable, that are made pursuant to this Section 2.3(i) shall be subject to
the same terms and conditions as any other Advance or Swing Loan, as applicable,
except that the rate of interest applicable thereto shall be the rate applicable
to Advances under Section 2.6(c) hereof without regard to the presence or
absence of a Default or Event of Default.
(i) In the event Agent obtains actual
knowledge that the Revolver Usage exceeds the amounts permitted by the
preceding paragraph, regardless of the amount of, or reason for, such
excess, Agent shall notify Lenders as soon as practicable (and prior to
making any (or any additional) intentional Overadvances (except for and
excluding amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) unless Agent determines that prior notice would
result in imminent harm to the Collateral or its value), and the Lenders
with Revolver Commitments thereupon shall, together with Agent, jointly
determine the terms of arrangements that shall be implemented with
Borrower intended to reduce, within a reasonable time, the outstanding
principal amount of the Advances to Borrower to an amount permitted by
the preceding paragraph. In the event Agent or any Lender disagrees over
the terms of reduction or repayment of any Overadvance, the terms of
reduction or repayment thereof shall be implemented according to the
determination of the Required Lenders.
(ii) Each Lender with a Revolver Commitment
shall be obligated to settle with Agent as provided in Section 2.3(f)
for the amount of such Lender's Pro Rata Share of any unintentional
Overadvances by Agent reported to such Lender, any intentional
Overadvances made as permitted under this Section 2.3(i), and any
Overadvances resulting from the charging to the Loan Account of
interest, fees, or Lender Group Expenses.
2.4 Payments.
(a) Payments by Borrower.
(i) Except as otherwise expressly provided
herein, all payments by Borrower shall be made to Agent's Account for
the account of the Lender Group and shall be made in immediately
available funds, no later than 11:00 a.m. (California time) on the date
specified herein. Any payment received by Agent later than
-29-
36
11:00 a.m. (California time) shall be deemed to have been received on
the following Business Day and any applicable interest or fee shall
continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from
Borrower prior to the date on which any payment is due to the Lenders
that Borrower will not make such payment in full as and when required,
Agent may assume that Borrower has made (or will make) such payment in
full to Agent on such date in immediately available funds and Agent may
(but shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent Borrower does not make such
payment in full to Agent on the date when due, each Lender severally
shall repay to Agent on demand such amount distributed to such Lender,
together with interest thereon at the Defaulting Lender Rate for each
day from the date such amount is distributed to such Lender until the
date repaid.
(b) Apportionment and Application of Payments.
(i) Except as otherwise provided with
respect to Defaulting Lenders and except as otherwise provided in the
Loan Documents (including letter agreements between Agent and individual
Lenders), aggregate principal and interest payments shall be apportioned
ratably among the Lenders (according to the unpaid principal balance of
the Obligations to which such payments relate held by each Lender) and
payments of fees and expenses (other than fees or expenses that are for
Agent's separate account, after giving effect to any letter agreements
between Agent and individual Lenders) shall be apportioned ratably among
the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to which a particular fee relates. All payments shall be
remitted to Agent and all such payments not relating to principal or
interest of specific Obligations (other than payments constituting the
payment of specific fees), and all proceeds of Accounts or other
Collateral received by Agent, shall be applied as follows:
(A) first, to pay any Lender Group
Expenses then due to Agent under the Loan Documents, until paid
in full,
(B) second, to pay any Lender Group
Expenses then due to the Lenders under the Loan Documents, on a
ratable basis, until paid in full,
(C) third, to pay any fees then due
to Agent (for its separate accounts, after giving effect to any
letter agreements between Agent and individual Lenders) under
the Loan Documents until paid in full,
(D) fourth, to pay any fees then due
to any or all of the Lenders (after giving effect to any letter
agreements between Agent and individual Lenders) under the Loan
Documents, on a ratable basis, until paid in full,
-30-
37
(E) fifth, to pay interest due in
respect of all Agent Advances, until paid in full,
(F) sixth, ratably to pay interest
due in respect of the Advances (other than Agent Advances), the
Swing Loans, and the Term Loan until paid in full,
(G) seventh, to pay the principal of
all Agent Advances until paid in full,
(H) eighth, to pay the principal of
all Swing Loans until paid in full,
(I) ninth, ratably (x) to pay the
principal of all Advances and (y) on the Maturity Date or, at
the election of the Agent or the Required Lenders (or as
otherwise provided in a letter agreement among the Agent and the
Lenders), if an Event of Default has occurred and is continuing,
to pay the outstanding principal balance of the Term Loan and to
Agent, to be held by Agent, for the ratable benefit of Issuing
Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the then extant Letter of
Credit Usage, in each case until paid in full,
(J) tenth, to pay any other
Obligations until paid in full, and
(K) eleventh, to Borrower (to be
wired to the Designated Account) or such other Person entitled
thereto under applicable law.
(ii) Agent promptly shall distribute to each
Lender, pursuant to the applicable wire instructions received from each
Lender in writing, such funds as it may be entitled to receive, subject
to a Settlement delay as provided in Section 2.3(f).
(iii) In each instance, so long as no Event of
Default has occurred and is continuing, Section 2.4(b) shall not be
deemed to apply to any payment by Borrower specified by Borrower to be
for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in
full" means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service fees,
professional fees, interest, default interest, interest on interest, and
expense reimbursements.
(v) In the event of a direct conflict
between the priority provisions of this Section 2.4 and other provisions
contained in any other Loan Document, it is the intention of the parties
hereto that such priority provisions in such documents shall be read
together and construed, to the fullest extent possible, to be in concert
with each other. In the event of any actual, irreconcilable conflict
that cannot be
-31-
38
resolved as aforesaid, the terms and provisions of this Section 2.4
shall control and govern.
2.5 Overadvances. If, at any time or for any reason, the
amount of Obligations owed by Borrower to Lender Group pursuant to Sections 2.1
and 2.13 is greater than either the Dollar or percentage limitations set forth
in Sections 2.1 and 2.13, (an "Overadvance"), Borrower immediately shall pay to
Agent, in cash, the amount of such excess, which amount shall be used by Agent
to reduce the Obligations in accordance with the priorities set forth in Section
2.4(b). In addition, Borrower hereby promises to pay the Obligations (including
principal, interest, fees, costs, and expenses) in Dollars in full to the Lender
Group as and when due and payable under the terms of this Agreement and the
other Loan Documents.
2.6 Interest Rates, Payments, Letter of Credit Fee and
Calculations.
(a) Interest Rates. Except as provided in clause (c)
below, all Obligations (except for undrawn Letters of Credit) that have been
charged to the Loan Account pursuant to the terms hereof (including the portion
of the Obligations consisting of Advances, the Term Loan and the Risk
Participation Liability except for undrawn Letters of Credit) shall bear
interest on the Daily Balance thereof at a per annum rate equal to the Base Rate
plus the Base Rate Margin.
(b) Letter of Credit Fee. Borrower shall pay Agent
(for the ratable benefit of the Lenders with a Revolver Commitment, subject to
any letter agreement between Agent and individual Lenders), a Letter of Credit
fee (in addition to the charges, commissions, fees, and costs set forth in
Section 2.13(e)) which shall accrue at a rate equal to 3.50% per annum times the
Daily Balance of the undrawn amount of all outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders), all Obligations (except for undrawn Letters of Credit) that
have been charged to the Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof at a per annum rate equal to 2 percentage
points above the per annum rate otherwise applicable hereunder, the Letter of
Credit fee provided for above shall be increased to 2 percentage points above
the per annum rate otherwise applicable hereunder.
(d) Payment. Interest, Letter of Credit fees, and
all other fees payable hereunder shall be due and payable, in arrears, on the
first day of each month at any time that Obligations or Commitments are
outstanding. Borrower hereby authorizes Agent, from time to time without prior
notice to Borrower, and the Agent agrees that it will charge such interest and
fees, all Lender Group Expenses (as and when incurred), the charges,
commissions, fees, and costs provided for in Section 2.13(e) (as and when
accrued or incurred), the fees and costs provided for in Section 2.11 (as and
when accrued or incurred) and all other payments as and when due and payable
under any Loan Document (including the amounts due and payable with respect to
the Term Loan) to Borrower's Loan Account, which amounts thereafter constitute
Advances hereunder and shall accrue interest at the rate then applicable to
Advances hereunder. Any interest not paid when due shall be compounded by being
charged to Borrower's Loan
-32-
39
Account and shall thereafter constitute Advances hereunder and shall accrue
interest at the rate then applicable to Advances.
(e) Computation. All interest and fees chargeable
under the Loan Documents shall be computed on the basis of a 360 day year for
the actual number of days elapsed. In the event the Base Rate is changed from
time to time hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate.
In no event shall the interest rate or rates payable under this Agreement, plus
any other amounts paid in connection herewith, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable. Borrower and Lender Group, in executing
and delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto, as of the date of this Agreement, Borrower is and shall
be liable only for the payment of such maximum as allowed by law, and payment
received from Borrower in excess of such legal maximum, whenever received, shall
be applied to reduce the principal balance of the Obligations to the extent of
such excess.
2.7 Cash Management.
(a) Each Loan Party shall on or before the Revolver
Facility Effective Date (i) establish and maintain cash management services of a
type and on terms satisfactory to Agent at one or more of the banks set forth on
Schedule 2.7(a) (each, a "Cash Management Bank"), and shall request in writing
and otherwise take such reasonable steps to ensure that all of its Account
Debtors forward payment of the amounts owed by them directly to such Cash
Management Bank, and (ii) deposit or cause to be deposited promptly, and in any
event no later than the first Business Day after the date of receipt thereof,
all Collections (including those sent directly by Account Debtors to a Cash
Management Bank) into a bank account in Agent's name (a "Cash Management
Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and
maintain Cash Management Agreements with Agent and a Loan Party, in form and
substance acceptable to Agent. Each such Cash Management Agreement shall
provide, among other things, that (i) all items of payment deposited in such
Cash Management Account and proceeds thereof are held by such Cash Management
Bank as agent or bailee-in-possession for Agent, (ii) the Cash Management Bank
has no rights of setoff or recoupment or any other claim against the applicable
Cash Management Account other than for payment of its service fees and other
charges directly related to the administration of such Cash Management Account
and for returned checks or other items of payment, and (iii) it immediately will
forward by daily sweep all amounts in the applicable Cash Management Account to
the Agent's Account.
(c) So long as no Default or Event of Default has
occurred and is continuing, the Loan Parties may amend Schedule 2.7(a) to add or
replace a Cash Management Bank or Cash Management Account; provided, however,
that (i) such prospective Cash
-33-
40
Management Bank shall be satisfactory to Agent and Agent shall have consented in
writing in advance to the opening of such Cash Management Account with the
prospective Cash Management Bank, and (ii) prior to the time of the opening of
such Cash Management Account, the Loan Parties and such prospective Cash
Management Bank shall have executed and delivered to Agent a Cash Management
Agreement. Each Loan Party shall close any of its Cash Management Accounts (and
establish replacement cash management accounts in accordance with the foregoing
sentence) promptly and in any event within 30 days of notice from Agent that the
creditworthiness of any Cash Management Bank is no longer acceptable in Agent's
Permitted Discretion, or as promptly as practicable and in any event within 60
days of notice from Agent that the operating performance, funds transfer, or
availability procedures or performance of the Cash Management Bank with respect
to Cash Management Accounts or Agent's liability under any Cash Management
Agreement with such Cash Management Bank is no longer acceptable in Agent's
Permitted Discretion.
(d) The Cash Management Accounts shall be cash
collateral accounts, with all cash, checks and similar items of payment in such
accounts securing payment of the Obligations, and in which the Loan Parties are
hereby deemed to have granted a Lien to Agent.
2.8 Crediting Payments; Float Charge.
(a) The receipt of any payment item by Agent
(whether from transfers to Agent by the Cash Management Banks pursuant to the
Cash Management Agreements or otherwise) shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrower shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day. All payment items
received by the Agent shall be credited to the Agent's Account for application
on each Business Day as provided above.
(b) From and after the Closing Date, Agent shall be
entitled to charge Borrower for two (2) Business Days of 'clearance' or 'float'
at the rate applicable to Advances under Section 2.6 on all Collections that are
received by a Loan Party (regardless of whether forwarded by the Cash Management
Banks to Agent). This across-the-board two (2) Business Day clearance or float
charge on all Collections is acknowledged by the parties to constitute an
integral aspect of the pricing of the financing of Borrower and shall apply
irrespective of whether or not there are any outstanding monetary Obligations;
the effect of such clearance or float charge being the equivalent of charging
two (2) Business Days of interest on such Collections. The parties acknowledge
and agree that, except as otherwise provided in letter agreements between the
Agent and individual Lenders, the economic benefit of the foregoing provisions
of this Section 2.8 shall be for the exclusive benefit of Agent.
-34-
41
2.9 Designated Account. Agent is authorized to make the
Advances and the Term Loan, and Issuing Lender is authorized to issue the
Letters of Credit, under this Agreement based upon telephonic or other
instructions received from anyone purporting to be an Authorized Person, or
without instructions if pursuant to Section 2.6(d). Borrower agrees to establish
and maintain the Designated Account with the Designated Account Bank for the
purpose of receiving the proceeds of the Advances requested by Borrower and made
by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and
Borrower, any Advance, Agent Advance, or Swing Loan requested by Borrower and
made by Agent or the Lenders hereunder shall be made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations.
Agent shall maintain an account on its books in the name of Borrower (the "Loan
Account") on which Borrower will be charged with the Term Loan, all Advances
(including Agent Advances and Swing Loans) made by Agent, Swing Lender, or the
Lenders to Borrower or for Borrower's account, the Letters of Credit issued by
Issuing Lender for Borrower's account, and with all other payment Obligations
hereunder or under the other Loan Documents, including, accrued interest, fees
and expenses, and Lender Group Expenses. In accordance with Section 2.8, the
Loan Account will be credited with all payments received by Agent from Borrower
or for Borrower's account, including all amounts received in Agent's Account
from any Cash Management. Agent shall render statements regarding the Loan
Account to Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements shall be conclusively presumed to be correct and
accurate and constitute an account stated between Borrower and the Lender Group
unless, within 30 days after receipt thereof by Borrower, Borrower shall deliver
to Agent written objection thereto describing the error or errors contained in
any such statements.
2.11 Fees. Borrower shall pay to Agent the following fees and
charges, which fees and charges shall be non-refundable when paid (irrespective
of whether this Agreement is terminated thereafter) and shall be apportioned
among the Lenders in accordance with the terms of letter agreements between
Agent and individual Lenders:
(a) Interim Facility Fee. On the Entry Date, a fee
in the amount of $350,000 (the "Interim Facility Fee") which fee shall be earned
in full when paid.
(b) Revolver Facility Fee. On the Revolver Facility
Effective Date, a fee in the amount of $2,200,000 less the amount of the Interim
Facility Fee paid by the Borrower, which fee shall be earned in full when paid.
(c) Unused Line Fee. On the first day of each month
during the term of this Agreement, an unused line fee in an amount equal to .50%
per annum times the result of (a) the Maximum Revolver Amount, less (b) the sum
of (i) the average Daily Balance of Advances that were outstanding during the
immediately preceding month, plus (ii) the average Daily Balance of the Letter
of Credit Usage during the immediately preceding month.
(d) Anniversary Fee. On the first anniversary of the
Entry Date, a fee in the amount of $150,000, which fee shall be earned in full
when paid.
-35-
42
(e) Audit, Appraisal, and Valuation Charges. For the
separate account of Agent and, in the case of clause (iii) below, the Co-Agent,
audit, appraisal, and valuation fees and charges as follows (i) a fee of $750
per day, per auditor, plus the out-of-pocket expenses for each financial audit
of any Loan Party performed by personnel employed by Agent, (ii) a fee of $1,500
per day per appraiser, plus the out-of-pocket expenses, for each appraisal of
the Collateral performed by personnel employed by Agent, and (iii) the actual
charges paid or incurred by the Agent and the Co-Agent if any such Person elects
to employ the services of one or more third Persons to perform financial audits
of any Loan Party, to appraise the Collateral, or any portion thereof, or to
assess any Loan Party's business valuation.
(f) Servicing Fee. For the sole and separate account
of Agent, on first day of each month during the term of this Agreement, and
thereafter so long as any Obligations are outstanding, a servicing fee in an
amount equal to $10,000, which fee shall be earned in full when paid.
2.12 Capital Requirements. If, after the date hereof, any
Lender determines that (i) the adoption of or change in any law, rule,
regulation or guideline regarding capital requirements for banks or bank holding
companies, or any change in the interpretation or application thereof by any
Governmental Authority charged with the administration thereof, or (ii)
compliance by such Lender or its parent bank holding company with any guideline,
request, or directive of any such entity regarding capital adequacy (whether or
not having the force of law), the effect of reducing the return on such Lender's
or such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrower and Agent thereof. Following receipt of such notice,
Borrower agrees to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
2.13 Letters of Credit.
(a) Subject to the terms and conditions of this
Agreement and the Orders, on and after the Entry Date the Issuing Lender agrees
to issue letters of credit for the account of Borrower (each, an "L/C") or to
purchase participations or execute indemnities or reimbursement obligations
(each such undertaking, an "L/C Undertaking") with respect to letters of credit
issued by an Underlying Issuer (as of the Closing Date, the prospective
Underlying Issuer is to be ▇▇▇▇▇ Fargo) for the account of Borrower, provided
that, on and after the Closing Date and prior to the Revolver Facility Effective
Date, the Issuing Lender agrees to issue L/Cs or L/C Undertakings, provided
that, prior to the issuance of any such L/C or L/C Undertaking, the Borrower
repays the Advances in an amount equal to the requested L/C or L/C Undertaking.
To request the issuance of an L/C or an L/C Undertaking (or the amendment,
renewal, or extension
-36-
43
of an outstanding L/C or L/C Undertaking), Borrower shall hand deliver or
telecopy (or transmit by electronic communication, if arrangements for doing so
have been approved by the Issuing Lender) to the Issuing Lender and Agent
(reasonably in advance of the requested date of issuance, amendment, renewal, or
extension) a notice requesting the issuance of an L/C or L/C Undertaking, or
identifying the L/C or L/C Undertaking to be amended, renewed, or extended, the
date of issuance, amendment, renewal, or extension, the date on which such L/C
or L/C Undertaking is to expire, the amount of such L/C or L/C Undertaking, the
name and address of the beneficiary thereof (or the beneficiary of the
Underlying Letter of Credit, as applicable), and such other information as shall
be necessary to prepare, amend, renew, or extend such L/C or L/C Undertaking. If
requested by the Issuing Lender, Borrower also shall be an applicant under the
application with respect to any Underlying Letter of Credit that is to be the
subject of an L/C Undertaking. The Issuing Lender shall have no obligation to
issue a Letter of Credit if any of the following would result after giving
effect to the requested Letter of Credit:
(i) after the Revolver Facility Effective
Date, the Letter of Credit Usage would exceed the Borrowing Base less
the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed
$5,000,000 prior to the Revolver Facility Effective Date and $10,000,000
thereafter, or
(iii) the Letter of Credit Usage would exceed
(A) the Maximum Revolver Amount less the then extant amount of
outstanding Advances or (B) the maximum Indebtedness for the
corresponding month set forth in Section 7.20(c) less the then extant
amount of outstanding Advances and the Term Loan.
Each Letter of Credit (and corresponding Underlying Letter of
Credit) shall have an expiry date no later than 30 days prior to the Maturity
Date and all such Letters of Credit (and corresponding Underlying Letter of
Credit) shall be in form and substance acceptable to the Issuing Lender (in the
exercise of its Permitted Discretion), including the requirement that the
amounts payable thereunder must be payable in Dollars. If Issuing Lender is
obligated to advance funds under a Letter of Credit, Borrower immediately shall
reimburse such L/C Disbursement to Issuing Lender by paying to Agent an amount
equal to such L/C Disbursement not later than 11:00 a.m., California time, on
the date that such L/C Disbursement is made, if Borrower shall have received
written or telephonic notice of such L/C Disbursement prior to 10:00 a.m.,
California time, on such date, or, if such notice has not been received by
Borrower prior to such time on such date, then not later than 11:00 a.m.,
California time, on the Business Day that Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances under Section 2.6. To the
extent an L/C Disbursement is deemed to be an Advance hereunder, Borrower's
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting Advance. Promptly following receipt by Agent of any payment
from Borrower pursuant to this paragraph, Agent shall distribute such payment to
the Issuing Lender or, to the extent that Lenders have made payments pursuant to
Section 2.13(c) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interest may appear.
-37-
44
(b) Promptly following receipt of a notice of L/C
Disbursement pursuant to Section 2.13(a), each Lender with a Revolver Commitment
agrees to fund its Pro Rata Share of any Advance deemed made pursuant to the
foregoing subsection on the same terms and conditions as if Borrower had
requested such Advance and Agent shall promptly pay to Issuing Lender the
amounts so received by it from the Lenders. By the issuance of a Letter of
Credit (or an amendment to a Letter of Credit increasing the amount thereof) and
without any further action on the part of the Issuing Lender or the Lenders with
Revolver Commitments, the Issuing Lender shall be deemed to have granted to each
Lender with a Revolver Commitment, and each Lender with a Revolver Commitment
shall be deemed to have purchased, a participation in each Letter of Credit, in
an amount equal to its Pro Rata Share of the Risk Participation Liability of
such Letter of Credit, and each such Lender agrees to pay to Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of any payments made
by the Issuing Lender under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender with a Revolver Commitment hereby
absolutely and unconditionally agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of each L/C Disbursement made by
the Issuing Lender and not reimbursed by Borrower on the date due as provided in
clause (a) of this Section, or of any reimbursement payment required to be
refunded to Borrower for any reason. Each Lender with a Revolver Commitment
acknowledges and agrees that its obligation to deliver to Agent, for the account
of the Issuing Lender, an amount equal to its respective Pro Rata Share pursuant
to this Section 2.13(b) shall be absolute and unconditional and such remittance
shall be made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in Section
3 hereof. If any such Lender fails to make available to Agent the amount of such
Lender's Pro Rata Share of any payments made by the Issuing Lender in respect of
such Letter of Credit as provided in this Section, Agent (for the account of the
Issuing Lender) shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.
(c) Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless from any loss, cost, expense, or
liability, and reasonable attorneys fees incurred by the Lender Group arising
out of or in connection with any Letter of Credit; provided, however, that
Borrower shall not be obligated hereunder to indemnify for any loss, cost,
expense, or liability that is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group.
Borrower agrees to be bound by the Underlying Issuer's regulations and
interpretations of any Underlying Letter of Credit or by Issuing Lender's
interpretations of any L/C issued by Issuing Lender to or for Borrower's
account, even though this interpretation may be different from Borrower's own,
and Borrower understands and agrees that the Lender Group shall not be liable
for any error, negligence, or mistake, whether of omission or commission, in
following Borrower's instructions or those contained in the Letter of Credit or
any modifications, amendments, or supplements thereto. Borrower understands that
the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrower
against such Underlying Issuer. Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that Borrower shall
not be obligated hereunder to
-38-
45
indemnify for any loss, cost, expense, or liability that is caused by the gross
negligence or willful misconduct of the Issuing Lender or any other member of
the Lender Group.
(d) Borrower hereby authorizes and directs any
Underlying Issuer to deliver to the Issuing Lender all instruments, documents,
and other writings and property received by such Underlying Issuer pursuant to
such Underlying Letter of Credit and to accept and rely upon the Issuing
Lender's instructions with respect to all matters arising in connection with
such Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and
costs incurred by the Issuing Lender relating to Underlying Letters of Credit
shall be Lender Group Expenses for purposes of this Agreement and immediately
shall be reimbursable by Borrower to Agent for the account of the Issuing
Lender; it being acknowledged and agreed by Borrower that, as of the Closing
Date, the issuance charge imposed by the prospective Underlying Issuer is .825%
per annum times the face amount of each Underlying Letter of Credit, that such
issuance charge may be changed from time to time, and that the Underlying Issuer
also imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change in any applicable
law, treaty, rule, or regulation or any change in the interpretation or
application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):
(i) any reserve, deposit, or similar
requirement is or shall be imposed or modified in respect of any Letter
of Credit issued hereunder, or
(ii) there shall be imposed on the Underlying
Issuer or the Lender Group any other condition regarding any Underlying
Letter of Credit or any Letter of Credit issued pursuant hereto,
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Borrower, and Borrower shall pay on demand such amounts as Agent may
specify to be necessary to compensate the Lender Group for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Advances.
The determination by Agent of any amount due pursuant to this Section, as set
forth in a certificate setting forth the calculation thereof in reasonable
detail, shall, in the absence of manifest or demonstrable error, be final and
conclusive and binding on all of the parties hereto.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Closing Date Term Loan and
Advances. The obligation of the Lender Group (or any member thereof) to make the
Closing Date Term Loan
-39-
46
and Advances, is subject to the fulfillment, to the satisfaction of Agent, of
each of the conditions precedent set forth below:
(a) the Closing Date shall occur on or before April
16, 2001;
(b) the Interim Bankruptcy Court Order shall have
been entered by the Bankruptcy Court on or before April 10, 2001 and the Agent
shall have received a certified copy of such Order and such Order shall be in
full force and effect and shall not have been reversed, stayed, modified or
amended absent the written joinder or consent of the Agent, on behalf of the
Required Lenders, and the Borrower;
(c) Agent shall have received each of the following
documents, in form and substance satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) the Disbursement Letter,
(ii) the Officers' Certificate, and
(iii) the Stock Pledge Agreement, together
with all certificates representing the shares of Stock pledged
thereunder, as well as Stock powers with respect thereto endorsed in
blank;
(d) Agent shall have received a certificate from the
secretary of each Loan Party attesting to the resolutions of such Loan Party's
Board of Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which Borrower is a party and
authorizing specific officers of such Loan Party to execute the same;
(e) Agent shall have received copies of each Loan
Party's Governing Documents, as amended, modified, or supplemented to the
Closing Date, certified by the secretary of such Loan Party;
(f) Agent shall have received a certificate of
status with respect to each Loan Party, dated within 10 days of the Closing
Date, such certificate to be issued by the appropriate officer of the
jurisdiction of organization of such Loan Party, other than those jurisdictions
set forth on Schedule 3.1(f) where the failure to be in good standing would not
constitute a Material Adverse Change, which certificate shall indicate that such
Loan Party is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status
with respect to each Loan Party, each dated within 30 days of the Closing Date,
such certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of each Loan Party) in which its
failure to be duly qualified or licensed would constitute a Material Adverse
Change, which certificates shall indicate that each such Loan Party is in good
standing in such jurisdictions;
-40-
47
(h) Agent shall have received a certificate of
insurance, together with the endorsements thereto, as are required by Section
6.8, the form and substance of which shall be satisfactory to Agent;
(i) Agent shall have received an opinion of Loan
Parties' counsel in form and substance satisfactory to Agent;
(j) Agent shall have completed its legal due
diligence;
(k) Agent shall have received and been satisfied
with the Closing Date Projections and the Liquid Cash Projections together with
a certificate of an Authorized Person stating, that the Closing Date Projections
and the Liquid Cash Projections have been prepared on a reasonable basis and in
good faith and is based on assumptions believed by the Borrower to be reasonable
at the time made and from the best information then available to the Borrower;
(l) Borrower shall have paid all Lender Group
Expenses incurred in connection with the transactions evidenced by this
Agreement owing as of the Closing Date;
(m) Agent shall have received all material licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by Borrower of this Agreement or any
other Loan Document or with the consummation of the transactions contemplated
hereby and thereby;
(n) No Material Adverse Change shall have occurred
since December 31, 2000;
(o) Agent shall have received UCC, tax and judgment
lien searches and other evidence satisfactory to it evidencing the absence of
any Liens on the Collateral other than Permitted Liens; and
(p) All other documents and legal matters in
connection with the transactions contemplated by this Agreement shall have been
delivered, executed, or recorded and shall be in form and substance satisfactory
to Agent.
3.2 Conditions Precedent to Revolver Commitments and
Advances and Letters of Credit in excess of $5,000,000. The obligation of the
Lender Group (or any member thereof) to make the Advances or assist the Borrower
in obtaining Letters of Credit in excess of $5,000,000, is subject to the
fulfillment of each of the conditions precedent set forth below:
(a) the Final Bankruptcy Court Order shall have been
entered by the Bankruptcy Court, and the Agent shall have received a certified
copy of such Order and such Order shall be in full force and effect and shall
not have been reversed, stayed, modified or amended absent the written joinder
or consent of the Agent, on behalf of the Required Lenders, and the Borrower;
(b) the Lenders, shall be satisfied that the Agent
has been granted and continues to have a perfected, first priority Lien on the
Collateral subject to Permitted Priority Liens;
-41-
48
(c) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have become a "Lender"
hereunder with a Total Commitment of not less than $10,000,000, which Commitment
may be allocated, in the Required Lenders' Permitted Discretion, to the Term
Loan or the Revolver Commitments and shall be subject to such terms and
conditions (including, without limitation, fees to be paid in connection with
such Commitments) as are acceptable to the Required Lenders in their Permitted
Discretion;
(d) Agent shall have completed its financial and
collateral due diligence review, including, without limitation (i) a collateral
audit and review of the Books and verification of Borrower's representations and
warranties to Lender Group, (ii) an inspection of some of the locations where
Eligible Fiber Optic Inventory is located, (iii) receipt of satisfactory results
of its field survey due diligence, audit and business valuation appraisal by
auditors, examiners and/or appraisers selected by the Agent with the consent of
the Required Lenders (collectively, the "Revolver Facility Diligence"), the
results of each of the foregoing of which shall be acceptable to the Required
Lenders, in their sole discretion;
(e) no Material Adverse Change shall have occurred
since the Closing Date;
(f) no pending claim, investigation or litigation by
any Governmental Authority shall exist with respect to any Loan Party or the
transactions contemplated hereby;
(g) the Required Lenders shall be satisfied in their
sole discretion with the results of a reference check on each member of key
management of Borrower;
(h) Agent shall be satisfied in its Permitted
Discretion with the cash management system of Borrower and Agent shall have
received Schedule 2.7(a) to this Agreement, which shall be satisfactory to the
Agent;
(i) the Agent shall have received a Control
Agreement, in form and substance satisfactory to Agent, duly executed for each
Securities Account of a Loan Party; and
(j) Borrower shall have paid to Agent all Lender
Group Expenses owing as of the Revolver Facility Effective Date.
3.3 Condition Precedent to Increase in Maximum Revolver
Amount. The obligation of Lender Group (or any member thereof) to make Advances
or assist in the issuance of Letters of Credit in an aggregate amount in excess
of $45,000,000 shall be subject to Persons, acceptable to Required Lenders in
their Permitted Discretion, providing a Total Commitment of up to $15,000,000,
which Commitment may be allocated, in the Required Lenders' Permitted Discretion
to the Term Loan or the Revolver Commitments and shall be subject to such term
and conditions (including, without limitation, fees to be paid in connection
with such commitments) as are acceptable to the Required Lenders in their sole
discretion.
-42-
49
3.4 Conditions Precedent to all Extensions of Credit. The
obligation of the Lender Group (or any member thereof) to make any Advance, Term
Loan (or to extend any other credit hereunder) shall be subject to the following
conditions precedent:
(a) the representations and warranties contained in
this Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of such extension of credit, as though
made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have
occurred and be continuing on the date of such extension of credit, nor shall
either result from the making thereof;
(c) no injunction, writ, restraining order, or other
order of any nature prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental Authority
against Borrower, Agent, any Lender, or any of their Affiliates;
(d) no Material Adverse Change shall have occurred
since the Closing Date; and
(e) the Interim Bankruptcy Court Order or the Final
Bankruptcy Court Order, as the case may be, shall have been signed and entered
by the Bankruptcy Court, and such Order shall be in full force and effect and
shall not have been reversed, stayed, modified or amended absent the express
written joinder or consent of Agent, on behalf of the Required Lenders, and the
Borrowers.
3.5 Conditions Subsequent to the Initial Extension of
Credit. The obligation of the Lender Group (or any member thereof) to continue
to make Advances (or otherwise extend credit hereunder) is subject to the
fulfillment, on or before the date applicable thereto, of each of the conditions
subsequent set forth below (the failure by Borrower to so perform or cause to be
performed constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to
Agent certified copies of the policies of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
which shall be satisfactory to Agent and its counsel.
3.6 Term. This Agreement shall become effective upon the
execution and delivery hereof by each Loan Party, each of the Lenders and the
Agent, and shall continue in full force and effect for a term ending on the date
(the "Maturity Date") that is the earliest to occur of (i) the date of
substantial consummation (as defined in Section 1101(2) of the Bankruptcy Code)
of a plan of reorganization in the Chapter 11 Cases that has been confirmed by
order of the ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (▇▇) ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) the conversion of
the Chapter 11 Cases in the Bankruptcy Court to cases under Chapter 7 of the
Bankruptcy Code, (iv) the appointment of a trustee under Chapter 11 of the
Bankruptcy Code, (v) the appointment of an examiner with expanded powers under
the Bankruptcy Code, (vi) the sale of all or substantially all of the assets of
Borrower or ASCI NT, Inc. under Section 363 of the Bankruptcy Code, (vii) the
date which is forty-five (45) days from the Entry Date, if upon that date the
Final Bankruptcy Court Order has
-43-
50
not been entered; and (viii) the Loan Parties ceasing and discontinuing their
ordinary business operations. The foregoing notwithstanding, the Lender Group,
upon the election of the Required Lenders, shall have the right to terminate its
obligations under this Agreement immediately and without notice to the Borrower
upon the occurrence and during the continuation of an Event of Default.
3.7 Effect of Termination. On the date of termination of
this Agreement, all Obligations (including contingent reimbursement obligations
of Borrower with respect to outstanding Letters of Credit) immediately shall
become due and payable without notice or demand. No termination of this
Agreement, however, shall relieve or discharge Borrower of its duties,
Obligations, or covenants hereunder and the Agent's Liens in the Collateral
shall remain in effect until all Obligations have been fully and finally
discharged and the Lender Group's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all
of the Obligations have been fully and finally discharged and the Lender Group's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrower's sole expense, execute and
deliver any lien releases, discharges of security interests, and other similar
discharge or release documents (and, if applicable, in recordable form) as are
reasonably necessary to release, as of record, the Agent's Liens and all notices
of security interests and liens previously filed by Agent with respect to the
Obligations.
3.8 Early Termination by Borrower. Borrower has the option,
at any time upon 90 days prior written notice to Agent, to terminate this
Agreement by paying to Agent, for the benefit of the Lender Group, in cash, the
Obligations (including either (i) providing cash collateral to be held by Agent
for the benefit of those Lenders with a Revolver Commitment in an amount equal
to 105% of the then extant Letter of Credit Usage, or (ii) causing the original
Letters of Credit to be returned to the Issuing Lender), in full, together with
the Applicable Prepayment Premium (to be allocated based upon letter agreements
between Agent and individual Lenders). If Borrower has sent a notice of
termination pursuant to the provisions of this Section, then the Commitments
shall terminate and Borrower shall be obligated to repay the Obligations
(including either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender), in full, together with the
Applicable Prepayment Premium, on the date set forth as the date of termination
of this Agreement in such notice. In the event of the termination of this
Agreement and repayment of the Obligations at any time prior to the Maturity
Date, for any other reason, including (a) termination upon the election of the
Required Lenders to terminate after the occurrence of an Event of Default, (b)
foreclosure and sale of Collateral or (c) by the confirmation of a plan of
reorganization in the Chapter 11 cases, then, in view of the impracticability
and extreme difficulty of ascertaining the actual amount of damages to the
Lender Group or profits lost by Lender Group as a result of such early
termination, and by mutual agreement of the parties as to a reasonable
estimation and calculation of the lost profits or damages of the Lender Group,
Borrower shall pay the Applicable Prepayment Premium to Agent (to be allocated
based upon letter agreements between Agent and individual Lenders), measured as
of the date of such termination.
-44-
51
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each Loan Party hereby
grants to Agent, for the benefit of the Lender Group, a continuing security
interest in all of its right, title, and interest in all currently existing and
hereafter acquired or arising Collateral in order to secure prompt repayment of
any and all of the Obligations in accordance with the terms and conditions of
the Loan Documents and in order to secure prompt performance by each Loan Party
of each of their covenants and duties under the Loan Documents. The Agent's
Liens in and to the Collateral shall attach to all Collateral without further
act on the part of Agent or any Loan Party. Anything contained in this Agreement
or any other Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, no Loan Party has authority, express or implied, to dispose of any
item or portion of the Collateral.
4.2 Negotiable Collateral. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that perfection or priority of Agent's security interest is
dependent on or enhanced by possession, each Loan Party, immediately upon the
request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and
Negotiable Collateral. At any time after the occurrence and during the
continuation of an Event of Default, Agent or Agent's designee may (a) notify
Account Debtors of each Loan Party that the Accounts, chattel paper, or General
Intangibles have been assigned to Agent or that Agent has a security interest
therein, or (b) collect the Accounts, chattel paper, or General Intangibles
directly and charge the collection costs and expenses to the Loan Account. Each
Loan Party agrees that it will hold in trust for the Lender Group, as the Lender
Group's trustee, any Collections that it receives and immediately will deliver
said Collections to Agent or a Cash Management Bank in their original form as
received by such Loan Party.
4.4 Delivery of Additional Documentation Required. At any
time upon the request of Agent, each Loan Party shall execute and deliver to
Agent, any and all financing statements, original financing statements in lieu
of continuation statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title, and all other documents (the
"Additional Documents") that Agent may request in its Permitted Discretion, in
form and substance satisfactory to Agent, to perfect and continue perfected the
Agent's Liens in the Collateral (whether now owned or hereafter arising or
acquired), to create and perfect Liens in favor of Agent in any Real Property
Collateral acquired after the Closing Date, and in order to fully consummate all
of the transactions contemplated hereby and under the other Loan Documents. To
the maximum extent permitted by applicable law, each Loan Party authorizes Agent
to execute any such Additional Documents in such Loan Party's name and
authorizes Agent to file such executed Additional Documents in any appropriate
filing office. In addition, on such periodic basis as Agent shall require, each
Loan Party shall (a) provide Agent with a report of all new material patentable,
copyrightable, or trademarkable materials acquired or generated by such Loan
Party during the prior period, (b) cause all material patents, copyrights, and
trademarks acquired or generated by such Loan Party that are not already the
subject of a registration with the appropriate filing office (or an application
therefor diligently prosecuted) to be registered with such appropriate filing
office in a manner sufficient to impart constructive
-45-
52
notice of such Loan Party's ownership thereof, and (c) cause to be prepared,
executed, and delivered to Agent supplemental schedules to the applicable Loan
Documents to identify such patents, copyrights, and trademarks as being subject
to the security interests created thereunder.
4.5 Power of Attorney. Each Loan Party hereby irrevocably
makes, constitutes, and appoints Agent (and any of Agent's officers, employees,
or agents designated by Agent) as such Loan Party's true and lawful attorney,
with power to (a) if such Loan Party refuses to, or fails timely to execute and
deliver any of the documents described in Section 4.4, sign the name of such
Loan Party on any of the documents described in Section 4.4, (b) at any time
that an Event of Default has occurred and is continuing, sign such Loan Party's
name on any invoice or ▇▇▇▇ of lading relating to the Collateral, drafts against
Account Debtors, or notices to Account Debtors, (c) send requests for
verification of Accounts, (d) endorse such Loan Party's name on any Collection
item that may come into the Lender Group's possession, (e) at any time that an
Event of Default has occurred and is continuing, make, settle, and adjust all
claims under such Loan Party's policies of insurance and make all determinations
and decisions with respect to such policies of insurance, and (f) at any time
that an Event of Default has occurred and is continuing, settle and adjust
disputes and claims respecting the Accounts, chattel paper, or General
Intangibles directly with Account Debtors, for amounts and upon terms that Agent
determines to be reasonable, and Agent may cause to be executed and delivered
any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Loan Party's attorney, and each and every one of
its rights and powers, being coupled with an interest, is irrevocable until all
of the Obligations have been fully and finally repaid and performed and the
Lender Group's obligations to extend credit hereunder are terminated.
4.6 Right to Inspect. Agent and each Lender (through any of
their respective officers, employees, or agents) shall have the right, from time
to time hereafter to inspect the Books and to check, test, and appraise the
Collateral in order to verify each Loan Party's financial condition or the
amount, quality, value, condition of, or any other matter relating to, the
Collateral and such inspection, appraisal and verification shall be conducted in
a manner so as not to unreasonably disrupt the business of any Loan Party,
provided that, in the absence of a continuing Event of Default (i) the Borrower
shall not be obligated to pay for more than two (2) such inspections, appraisals
and verifications in any calendar year, (ii) the first such inspection,
appraisal and verification shall not occur until on or after the date that is
three (3) months after the Revolver Facility Effective Date, and (iii) the
Borrower will receive reasonable prior notice of any such inspection, appraisal
or verification.
4.7 Administrative Priority. Each Loan Party hereby agrees
that the Obligations shall constitute allowed administrative expenses in the
Chapter 11 Cases having priority over all administrative expenses of and
unsecured claims against such Loan Party now existing or hereafter arising, of
any kind or nature whatsoever, including without limitation all administrative
expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy
Code, subject, as to priority, only to the Carve-Out Expenses having priority
over any Obligations to the extent set forth in the definition of Agreed
Administrative Expense Priorities.
4.8 Grants, Rights and Remedies. The Liens and security
interests granted by each Loan Party to Agent (for the benefit of Lender Group)
by and pursuant to Section 4.1 hereof and administrative priority granted by and
pursuant to Section 4.7 hereof may be independently
-46-
53
granted by the Loan Documents hereafter entered into. This Agreement, the
Interim Bankruptcy Court Order, the Final Bankruptcy Court Order and such other
Loan Documents supplement each other, and the grants, priorities, rights and
remedies of Agent hereunder and thereunder are cumulative.
4.9 No Filings Required. The Liens and security interests
granted by each Loan Party to Agent (for the benefit of Lender Group) herein
shall be deemed valid, binding, continuing, enforceable and fully-perfected
first priority Liens on the Collateral by entry of the Interim Bankruptcy Court
Order and the Final Bankruptcy Court Order, as the case may be subject to
Permitted Priority Liens. Agent shall not be required to file any financing
statements, notices of Lien or similar instruments in any jurisdiction or filing
office or to take any other action in order to validate or perfect the Liens and
security interests granted by or pursuant to this Agreement, the Interim
Bankruptcy Court Order, the Final Bankruptcy Court Order or any other Loan
Document.
4.10 Survival. The Liens and security interests granted to
Agent (for the benefit of Lender Group), the priority of such Liens and security
interests, and the administrative priorities and other rights and remedies
granted to Lender Group pursuant to this Agreement, the Interim Bankruptcy Court
Order, the Final Bankruptcy Court Order and the other Loan Documents
(specifically including but not limited to the existence, perfection and
priority of the Liens and security interest provided herein and therein) and the
administrative priority provided herein and therein shall not be modified,
altered or impaired in any manner by any other financing or extension of credit
or incurrence of debt by any Loan Party (pursuant to Section 364 of the
Bankruptcy Code or otherwise), or by any dismissal or conversion of the Chapter
11 Cases, or by any other act or omission whatsoever. Without limitation,
notwithstanding any such order, financing, extension, incurrence, dismissal,
conversion, act or omission;
(a) except for the Carve-Out Expenses having a
priority over the Obligations to the extent set forth in the definition of
Agreed Administrative Expense Priorities, no costs or expenses of administration
which have been or may be incurred in the Chapter 11 Cases or any conversion of
the same or in any other proceedings related thereto, and no priority claims,
are or will be prior to or on a parity with any claim of Agent and Lenders
against any Loan Party in respect of any Obligation;
(b) the Liens and security interests granted by each
Loan Party to Agent (for the benefit of Lender Group) by and pursuant to the
Interim Bankruptcy Court Order, the Final Bankruptcy Court Order and Section 4.1
hereof shall constitute valid, binding, continuing, enforceable and
fully-perfected first priority Liens, subject only to Permitted Priority Liens
to which such Liens and security interests shall or may be subordinate and
junior, and shall be prior to all other Liens and interests, now existing or
hereafter arising, in favor of any other creditor or any other Person
whatsoever; and
(c) the Liens and security interests granted by each
Loan Party to Agent (for the benefit of Lender Group) by and pursuant to the
Interim Bankruptcy Court Order, the Final Bankruptcy Court Order and Section 4.1
hereof shall continue to be valid, binding, continuing, enforceable and
fully-perfected without the necessity for Agent to file any financing statements
or to otherwise perfect such Liens and security interests under applicable
non-bankruptcy law.
-47-
54
4.11 Control Agreements. Each Loan Party agrees that it will
not transfer assets out of any Securities Accounts other than as permitted under
Section 7.19 and, if to another securities intermediary, unless each of such
Loan Party, Agent, and the substitute securities intermediary have entered into
a Control Agreement. No arrangement contemplated hereby or by any Control
Agreement in respect of any Securities Accounts or other Investment Property
shall be modified by any Loan Party without the prior written consent of Agent.
Upon the occurrence and during the continuance of an Event of Default, Agent may
notify any securities intermediary to liquidate the applicable Securities
Account or any related Investment Property maintained or held thereby and remit
the proceeds thereof to Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, each Loan Party makes the following representations and warranties to
the Lender Group which shall be true, correct, and complete, in all material
respects, as of the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance (or other extension of credit) made thereafter, as though
made on and as of the date of such Advance (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date) and such representations and warranties shall survive the
execution and delivery of this Agreement:
5.1 No Encumbrances. Each Loan Party has good and
indefeasible title to the Collateral attributable to such Loan Party, free and
clear of Liens except for Permitted Liens.
5.2 Eligible Fiber Optic Inventory. All Eligible Fiber Optic
Inventory is of good and merchantable quality, free from defects. As to each
item of Eligible Fiber Optic Inventory, such Inventory is
(a) owned by Borrower or Guarantors free and clear
of all Liens other than Liens in favor of Lenders and other Permitted Liens,
(b) located at one of the locations set forth on
Schedule E-1, and
(c) not goods that are obsolete, work-in-process, or
that constitute spare parts, packaging and shipping materials, supplies used or
consumed in a Loan Party's business, or defective goods.
5.3 Equipment. All of the Equipment is used or held for use
in such Loan Party's business and is fit for such purposes.
5.4 Location of Inventory and Equipment. The Inventory and
Equipment are not stored with a bailee, warehouseman, or similar party and are
located only at the locations identified on Schedule 5.4.
5.5 Inventory Records. Each Loan Party keeps correct and
accurate records itemizing and describing the type, quality, and quantity of its
Inventory and the book value thereof.
-48-
55
5.6 Location of Chief Executive Office; FEIN. The chief
executive office of each Loan Party is located at the address indicated in
Schedule 5.6 and each Loan Party's FEIN is identified in Schedule 5.6.
5.7 Due Organization and Qualification; Subsidiaries.
(a) Each Loan Party is duly organized and existing
and in good standing under the laws of the jurisdiction of its organization and
qualified to do business in any state where the failure to be so qualified
reasonably could be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.7(b), is a complete and
accurate list of each Loan Party's direct and indirect Subsidiaries, showing:
(i) the jurisdiction of their organization, (ii) the number of shares of each
class of common and preferred Stock authorized for each of such Subsidiaries,
and (iii) the number and the percentage of the outstanding shares of each such
class owned directly or indirectly by each Loan Party. All of the outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.
5.8 Due Authorization; No Conflict.
(a) Subject to the approval of the Bankruptcy Court
pursuant to the Orders, the execution, delivery, and performance by each Loan
Party of this Agreement and the Loan Documents to which it is a party have been
duly authorized by all necessary action on the part of each Loan Party.
(b) Subject to the approval of the Bankruptcy Court
pursuant to the Orders, the execution, delivery, and performance by each Loan
Party of this Agreement and the Loan Documents to which it is a party do not and
will not (i) violate any provision of federal, state, or local law or regulation
applicable to each Loan Party, the Governing Documents of any Loan Party, or any
order, judgment, or decree of any court or other Governmental Authority binding
on such Loan Party, (ii) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation of each Loan Party, except defaults that are stayed by
reason of the commencement of the Chapter 11 Cases, (iii) result in or require
the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of each Loan Party, other than Permitted Liens, or (iv)
require any approval of each Loan Party's interestholders or any approval or
consent of any Person under any material contractual obligation of each Loan
Party, except for approvals or consents where any action that may be taken as a
result of the failure to obtain such approvals or consents is stayed by reason
of commencement of the Chapter 11 Cases.
(c) The execution, delivery, and performance by each
Loan Party of this Agreement and the Loan Documents to which each Loan Party is
a party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any Governmental Authority or
other Person, except for the approval of the Bankruptcy Court pursuant to the
Orders and except to the extent any such registration, consent, approval, notice
or other action is not required by reason of the Orders or the Bankruptcy Code.
-49-
56
(d) Subject to the approval of the Bankruptcy Court
pursuant to the Orders, this Agreement and the other Loan Documents to which
each Loan Party is a party, and all other documents contemplated hereby and
thereby, when executed and delivered by each Loan Party will be the legally
valid and binding obligations of each Loan Party, enforceable against each Loan
Party in accordance with their respective terms.
(e) Subject to the approval of the Bankruptcy Court
pursuant to the Orders, the Liens granted by each Loan Party to Agent for the
benefit of Lender Group in Collateral pursuant to this Agreement and the other
Loan Documents are validly created, perfected, and first priority Liens, subject
only to Permitted Priority Liens.
5.9 Litigation. There are no actions, suits, or proceedings
pending against any Loan Party except for (a) matters stayed by the commencement
of the Chapter 11 Cases, and (b) matters arising after the Closing Date that, if
decided adversely to any Loan Party, reasonably could not be expected to result
in a Material Adverse Change.
5.10 No Material Adverse Change. All financial statements
relating to each Loan Party that have been delivered by each Loan Party to
Lender Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects, such
Loan Party's financial condition as of the date thereof and results of
operations for the period then ended. There has not been a Material Adverse
Change with respect to each Loan Party, as applicable) since the date of the
latest financial statements submitted to Lender Group on or before the Closing
Date, other than the commencement of the Chapter 11 Cases and all events and
circumstances leading thereto and associated therewith.
5.11 Employee Benefits. Neither the Borrower nor any of its
ERISA Affiliates maintains or contributes to any Benefit Plan.
5.12 Environmental Condition. Except as set forth on Schedule
5.12(a), to each Loan Party's knowledge, none of such Loan Party's assets has
ever been used by such Loan Party or by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such production, storage, handling, treatment,
release or transport was in violation, in any material respect, of applicable
Environmental Law, (b) to each Loan Party's knowledge, none of such Loan Party's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) each Loan Party has not received notice that a Lien arising
under any Environmental Law has attached to any revenues or to any Real Property
Collateral owned or operated by such Loan Party, and (d) each Loan Party has not
received a summons, citation, notice, or directive from the Environmental
Protection Agency or any other federal or state governmental agency concerning
any action or omission by such Loan Party resulting in the releasing or
disposing of Hazardous Materials into the environment.
5.13 Brokerage Fees. Borrower has not utilized the services
of any broker or finder in connection with Borrower's obtaining financing from
the Lender Group under this Agreement and no brokerage commission or finders fee
is payable by Borrower in connection herewith.
-50-
57
5.14 Intellectual Property. Each Loan Party owns, or holds
licenses in, all trademarks, trade names, copyrights, patents, patent rights,
and licenses that are necessary to the conduct of its business as currently
conducted. Attached hereto as Schedule 5.14 is a true, correct, and complete
listing of all material patents, patent applications, trademarks, trademark
applications, copyrights, and copyright registrations as to which such Loan
Party is the owner or is an exclusive licensee.
5.15 DDAs. Set forth on Schedule 5.15 are all of Borrower's
DDAs, including, with respect to each depository (i) the name and address of
such depository, and (ii) the account numbers of the accounts maintained with
such depository.
5.16 Complete Disclosure. All factual information (taken as a
whole) furnished by or on behalf of each Loan Party in writing to Agent or any
Lender (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement, the
other Loan Documents, or any transaction contemplated herein or therein is, and
all other such factual information (taken as a whole) hereafter furnished by or
on behalf of each Loan Party in writing to Agent or any Lender will be, true and
accurate, in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. The Liquid Cash Projections and Closing Date Projections represent,
and as of the date on which any other projections are delivered to Agent, such
additional projections represent, Borrower's good faith best estimate of its
future performance for the periods covered thereby. The information contained in
the Officers' Certificate is true and correct as of the Closing Date.
5.17 Administrative Priority; Lien Priority.
(i) After the Entry Date, the Obligations of
the Loan Parties will constitute allowed administrative expenses in the Chapter
11 Cases having priority in payment over all other administrative expenses and
unsecured claims against the Loan Parties now existing or hereafter arising, of
any kind or nature whatsoever, including without limitation all administrative
expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy
Code, subject, as to priority, only to the Carve-Out Expenses having priority
over the Obligations to the extent set forth in the Agreed Administrative
Expense Priorities.
(ii) The Lien and security interest of the
Agent (for the benefit of the Lender Group) on the Collateral shall be a valid
and perfected first priority Lien subject to Permitted Priority Liens.
(iii) The Interim Bankruptcy Court Order or
the Final Bankruptcy Court Order, as the case may be, is in full force and
effect, and has not been appealed, reversed, stayed, modified or amended absent
the written joinder or consent of the Agent, on behalf of the Required Lenders,
and the Borrower.
5.18 Appointment of Trustee or Examiner; Liquidation. No
order has been entered in the Chapter 11 Cases (i) for the appointment of a
Chapter 11 trustee, (ii) for the
-51-
58
appointment of an examiner with enlarged powers (beyond those set forth in
Sections 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the
Bankruptcy Code or (iii) to convert the Chapter 11 Cases to chapter 7 cases or
to dismiss the Chapter 11 Cases.
5.19 Regulatory Authorizations.
(i) Licenses. Except as set forth in Part I
of Schedule 5.19 annexed hereto, each of the Loan Parties has obtained all
licenses, permits, certifications or other authorizations required by the
Communications Regulatory Authorities under the Communications Act, State Law
and local law in order to carry out its business and operations as presently
conducted and as proposed to be conducted, including the provision of the
telecommunications services set forth in any Licenses except to the extent the
failure to obtain such licenses, permits, certifications or other authorizations
would not individually or in the aggregate result in a Material Adverse Change.
Part II of Schedule 5.19 annexed hereto accurately lists all Licenses, including
their expiration dates, held by each of the Loan Parties as of the date of this
Agreement. Each such License was duly and validly issued by the FCC, the
appropriate State PUC or local governmental authority pursuant to procedures
which materially comply with all requirements of all applicable federal, state
or local laws and is in full force and effect except to the extent the failure
to be in full force and effect could not reasonably be expected individually or
in the aggregate to result in a Material Adverse Change. None of the Loan
Parties has any knowledge of the occurrence of any event or the existence of any
circumstance which, in the reasonable judgment of such Loan Party, is reasonably
likely to lead to the revocation, suspension, non-renewal or adverse
modification of any material Licenses.
(ii) Compliance with Applicable Laws. The
Loan Parties are in compliance with the terms of all applicable regulations
except to the extent noncompliance could not reasonably be expected individually
or in the aggregate to result in a Material Adverse Change. Each of the Loan
Parties has duly filed in a timely manner all filings, including tariff filings,
required by the FCC, any State PUC or any local governmental authority to be
filed by such Loan Party as a precondition to the provision of the
telecommunications services which it offers except to the extent failure to do
so could not reasonably be excepted individually or in the aggregate to result
in a Material Adverse Change. None of the Loan Parties is a party as a defendant
to, or is aware of any overt threat of, any litigation, proceedings, action,
notice of violation or apparent liability, order to show cause, order of
forfeiture, formal or informal complaint, inquiry or investigation by or before
the FCC, any State PUC or any local governmental authority with jurisdiction
over the services which it offers as to which there is a reasonable possibility
of an adverse determination and, which if adversely determined, could reasonably
be expected, individually or in the aggregate, to result in a Material Adverse
Change.
5.20 Governmental Regulation. No Loan Party 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 (other than Regulation X
of the Board of Governors of the Federal Reserve System) which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion
of the Obligations unenforceable.
-52-
59
6. AFFIRMATIVE COVENANTS.
Each Loan Party covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, each Loan Party shall and shall cause each of its Subsidiaries to
do all of the following:
6.1 Accounting System. Maintain a system of accounting that
enables each Loan Party to produce financial statements in accordance with GAAP
and maintain records pertaining to the Collateral that contain information as
from time to time reasonably may be requested by Agent. Each Loan Party also
shall keep an inventory reporting system that shows all additions, sales and
claims with respect to the Inventory.
6.2 Collateral Reporting. Provide Agent (and if so requested
by Agent, with copies for each Lender) with the following documents at the
following times in form satisfactory to Agent:
Every Other Week (a) Inventory reports specifying Borrower's cost and the market value
of its Inventory, by category, with additional detail showing
additions to and deletions from the Inventory.
Monthly (not later than the 10th day of (b) after the Revolver Facility Effective Date, a detailed
each month in the case of clauses (b), calculation of the Borrowing Base
(c) and (e), not later than the 25th
day of each month in the case of clause (c) a detailed list of all fiber optic Inventory
(d), and not later than the 30th day of
each month in the case of clause (f)) (d) a detailed aging, by total, of the Accounts,
(e) Liquid Cash Projections, updating the Liquid Cash Projections
previously delivered to Lenders,
(f) a summary aging, by vendor, of Borrower's accounts payable and
any book overdraft, and
Quarterly (g) a detailed list of Borrower's customers,
(h) a report regarding Borrower's accrued, but unpaid, ad valorem
taxes,
(i) projections in the form of the Closing Date Projections updating
the Closing Date Projections or any subsequently delivered
projections in the form of the Closing Date Projections
previously delivered to Lenders;
-53-
60
Upon request by Agent (j) such other reports as to the Collateral, or the financial
condition of the Loan Parties, as Agent may reasonably request.
6.3 Financial Statements, Reports, Certificates. Deliver to
Agent, with copies to each Lender:
(a) as soon as available, but in any event within 30
days (45 days in the case of a month that is the end of one of the first 3
fiscal quarters in a fiscal year) after the end of each month during each of
Borrower's fiscal years,
(i) a company prepared consolidated and
consolidating balance sheet and income statement, and consolidated
statement of cash flow, in each case covering Borrower's and its
Subsidiaries' operations during such period,
(ii) a certificate signed by the chief
financial officer of Borrower to the effect that:
(A) the financial statements
delivered hereunder have been prepared in accordance with GAAP
(except for the lack of footnotes and being subject to year-end
audit adjustments) and fairly present in all material respects
the financial condition of Borrower and its Subsidiaries,
(B) the representations and
warranties of Loan Parties contained in this Agreement and the
other Loan Documents are true and correct in all material
respects on and as of the date of such certificate, as though
made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier
date), and
(C) there does not exist any
condition or event that constitutes a Default or Event of
Default (or, to the extent of any non-compliance, describing
such non-compliance as to which he or she may have knowledge and
what action Loan Parties have taken, are taking, or propose to
take with respect thereto), and
(iii) for each month that is the date on which
a financial covenant in Section 7.20 is to be tested, a Compliance
Certificate demonstrating, in reasonable detail, compliance at the end
of such period with the applicable financial covenants contained in
Section 7.20, and
(b) as soon as available, but in any event within 90
days after the end of each of Borrower's fiscal years,
(i) financial statements of Borrower and its
Subsidiaries for each such fiscal year, audited by independent certified
public accountants reasonably acceptable to Agent and certified, without
any qualifications (other than as to going concern), by such accountants
to have been prepared in accordance with GAAP (such
-54-
61
audited financial statements to include a balance sheet, income
statement, and statement of cash flow and, if prepared, such
accountants' letter to management),
(ii) a certificate of such accountants
addressed to Agent and the Lenders stating that such accountants do not
have knowledge of the existence of any Default or Event of Default under
Section 7.20,
(c) if and when filed by Borrower,
(i) Form 10-Q quarterly reports, Form 10-K
annual reports, and Form 8-K current reports,
(ii) any other filings made by Borrower with
the SEC,
(iii) copies of Borrower's federal income tax
returns, and any amendments thereto, filed with the Internal Revenue
Service, and
(iv) any other information that is provided
by Borrower to its shareholders generally,
(d) if and when filed by any Loan Party and as
requested by Agent, satisfactory evidence of payment of applicable excise taxes
in each jurisdiction in which (i) any Loan Party conducts business or is
required to pay any such excise tax, (ii) any Loan Party's failure to pay any
such applicable excise tax would result in a Lien on the properties or assets of
such Loan Party, or (iii) any Loan Party's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(e) as soon as Borrower has knowledge of any event
or condition that constitutes a Default or an Event of Default, notice thereof
and a statement of the curative action that Borrower proposes to take with
respect thereto,
(f) give or cause to be given or served on Agent and
its counsel copies of all pleadings, motions, applications, financial
information and other papers and documents filed by any Loan Party in the
Chapter 11 Cases; promptly after the sending thereof, Borrower shall give Agent
copies of all written reports given by any Loan Party to any official or
unofficial creditors' committee in the Chapter 11 Cases,
(g) upon the request of Agent, any other report
reasonably requested relating to the financial condition of any Loan Party, and
(h) promptly upon receipt of notice of (1) any
forfeiture, non-renewal, cancellation, termination, revocation, suspension,
impairment or material modification of any material License held by a Loan
Party, or any notice of default or forfeiture with respect to any such material
License, or (2) any refusal by any Communications Regulatory Authority to renew
or extend any such material License, a certificate of an Authorized Person
specifying the nature of such event, the period of existence thereof, and what
action the Loan Parties are taking and propose to take with respect thereto.
-55-
62
In addition to the financial statements referred to above,
Borrower agrees to deliver financial statements (not including draft financial
statements but, if requested by the Agent, including work papers with respect to
such delivered financial statements prepared on both a consolidated and
consolidating basis and agrees that no Subsidiary of Borrower will have a fiscal
year different from that of Borrower. Borrower agrees that, upon reasonable
prior notice to the Borrower and only after receipt by the Agent of the
quarterly and annual financial statements of the Borrower, its independent
certified public accountants are authorized to communicate with Agent and to
release to Agent whatever financial information concerning Borrower Agent
reasonably may request. Borrower waives as to the Agent the right to assert a
confidential relationship, if any, it may have with any accounting firm or
service bureau in connection with any information requested by Agent pursuant to
or in accordance with this Agreement, and agrees that, subject to the preceding
sentence, Agent may contact directly any such accounting firm or service bureau
in order to obtain such information.
6.4 [INTENTIONALLY OMITTED].
6.5 [INTENTIONALLY OMITTED].
6.6 Maintenance of Properties. Maintain and preserve all of
its properties which are necessary or useful in the proper conduct to its
business in good working order and condition, ordinary wear and tear excepted,
and comply at all times with the provisions of all leases to which it is a party
as lessee so as to prevent any loss or forfeiture thereof or thereunder.
6.7 Taxes. Except as set forth in Schedule 6.7, cause all
assessments and taxes, whether real, personal, or otherwise, due or payable by,
or imposed, levied, or assessed against any Loan Party or any of its assets to
be paid in full, before delinquency or before the expiration of any extension
period, except to the extent that the validity of such assessment or tax shall
be the subject of a Permitted Protest. Except as set forth in Schedule 6.7, each
Loan Party will make timely payment or deposit of all tax payments and
withholding taxes required of it by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to
Agent indicating that such Loan Party has made such payments or deposits. Except
as set forth in Schedule 6.7, each Loan Party shall deliver satisfactory
evidence of payment of applicable excise taxes in each jurisdictions in which
such Loan Party is required to pay any such excise tax.
6.8 Insurance.
(a) At the expense of the Loan Parties, maintain
insurance respecting their assets wherever located, covering loss or damage by
fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses. Each
Loan Party also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Each Loan Party shall deliver copies of all such policies to Agent with a
satisfactory lender's loss payable endorsement naming Agent as sole loss payee
or additional insured, as appropriate. Each policy of insurance or
-56-
63
endorsement shall contain a clause requiring the insurer to give not less than
30 days prior written notice to Agent in the event of cancellation of the policy
for any reason whatsoever.
(b) Each Loan Party shall give Agent prompt notice
of any loss covered by such insurance. Agent shall have the exclusive right to
adjust any losses payable under any such insurance policies in excess of
$1,000,000, without any liability to such Loan Party whatsoever in respect of
such adjustments. Any monies received as payment for any loss under any
insurance policy mentioned above (other than liability insurance policies) or as
payment of any award or compensation for condemnation or taking by eminent
domain, shall be paid over to Agent to be applied at the option of the Required
Lenders either to the prepayment of the Obligations or shall be disbursed to
such Loan Party under staged payment terms reasonably satisfactory to the
Required Lenders for application to the cost of repairs, replacements, or
restorations. Any such repairs, replacements, or restorations shall be effected
with reasonable promptness and shall be of a value at least equal to the value
of the items of property destroyed prior to such damage or destruction.
(c) Each Loan Party will not take out separate
insurance concurrent in form or contributing in the event of loss with that
required to be maintained under this Section 6.8, unless Agent is included
thereon as named insured with the loss payable to Agent under a lender's loss
payable endorsement or its equivalent. Each Loan Party immediately shall notify
Agent whenever such separate insurance is taken out, specifying the insurer
thereunder and full particulars as to the policies evidencing the same, and
copies of such policies promptly shall be provided to Agent.
6.9 Location of Inventory and Equipment. Keep the Inventory
and Equipment only at the locations identified on Schedule 5.4; provided,
however, that Borrower may amend Schedule 5.4 so long as such amendment occurs
by written notice to Agent not less than 30 days prior to the date on which
Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States.
6.10 Compliance with Laws. Comply with the requirements of
all applicable laws, rules, regulations, and orders of any Governmental
Authority, including the Fair Labor Standards Act and the Americans With
Disabilities Act, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, would not result in
and reasonably could not be expected to result in a Material Adverse Change.
6.11 [INTENTIONALLY OMITTED].
6.12 Brokerage Commissions. Borrower shall pay any and all
brokerage commission or finders fees incurred in connection with or as a result
of Borrower's obtaining financing from Lender Group under this Agreement.
Borrower agrees and acknowledges that payment of all such brokerage commissions
or finders fees shall be the sole responsibility of Borrower, and Borrower
agrees to indemnify, defend, and hold Agent and the Lender Group harmless from
and against any claim of any broker or finder arising out of Borrower's
obtaining financing from Lender Group under this Agreement.
-57-
64
6.13 Existence. At all times preserve and keep in full force
and effect Borrower's valid existence and good standing and any rights and
franchises material to Borrower's businesses.
6.14 Environmental.
(a) Keep any property either owned or operated by
any Loan Party free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens,
(b) comply, in all material respects, with
Environmental Laws and provide to Agent documentation of such compliance which
Agent reasonably requests,
(c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by any Loan Party and take any Remedial Actions required to ▇▇▇▇▇ said
release or otherwise to come into compliance with applicable Environmental Law,
and
(d) promptly provide Agent with written notice
within 10 days of the receipt of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of any Loan Party, (ii) commencement of any Environmental Action or notice that
an Environmental Action will be filed against any Loan Party , and (iii) notice
of a violation, citation, or other administrative order which reasonably could
be expected to result in a Material Adverse Change.
6.15 Disclosure Updates. Promptly and in no event later than
5 Business Days after obtaining knowledge thereof, (a) notify Agent if any
written information, exhibit, or report furnished to the Lender Group contained
any untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
7. NEGATIVE COVENANTS.
Each Loan Party covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, such Loan Party will not and will not permit any of its
Subsidiaries to do any of the following:
7.1 Indebtedness. Create, incur, assume, permit, guarantee,
or otherwise become or remain, directly or indirectly, liable with respect to
any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the
other Loan Documents together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit,
(b) Indebtedness in existence on the Filing Date;
-58-
65
(c) Permitted Purchase Money Indebtedness, and
(d) Indebtedness owing by any Loan Party to another
Loan Party;
(e) Indebtedness in an aggregate amount not to
exceed $500,000 at any time outstanding; and
(f) refinancings, renewals, or extensions of
Indebtedness permitted under clause (c) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not, in Agent's
Permitted Discretion, materially impair the prospects of repayment of the
Obligations by the Loan Parties or materially impair the Loan Parties'
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of, or interest rate with respect to, the
Indebtedness so refinanced, renewed, or extended, (iii) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are materially more burdensome or
restrictive to the Loan Parties, and (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must include subordination terms and conditions that are
at least as favorable to the Lender Group as those that were applicable to the
refinanced, renewed, or extended Indebtedness.
7.2 Liens. Create, incur, assume, or permit to exist,
directly or indirectly, any Lien on or with respect to any of its assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced,
renewed, or extended under Section 7.1(d) and so long as the replacement Liens
only encumber those assets that secured the refinanced, renewed, or extended
Indebtedness).
7.3 Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or
suffer any liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer,
or otherwise dispose of, in one transaction or a series of transactions, all or
any substantial part of its assets.
7.4 Disposal of Assets. Other than Permitted Dispositions,
convey, sell, lease, license, assign, transfer, or otherwise dispose of any of a
Loan Parties' assets.
7.5 Change Name. Change any Loan Party's name, FEIN,
corporate structure, or identity, or add any new fictitious name; provided,
however, that any Loan Party may change its name upon at least 30 days prior
written notice to Agent of such change.
-59-
66
7.6 Guarantee. Guarantee or otherwise become in any way
liable with respect to the obligations of any third Person except by endorsement
of instruments or items of payment for deposit to the account of any Loan Party
or which are transmitted or turned over to Agent.
7.7 Nature of Business. Make any change in the principal
nature of its business.
7.8 Prepayments and Amendments.
(a) Except in connection with a refinancing
permitted by Section 7.1(f), prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of any Loan Party, other than the Obligations in
accordance with this Agreement,
(b) Except in connection with a refinancing
permitted by Section 7.1(f), directly or indirectly, amend, modify, alter,
increase, or change any of the terms or conditions of any agreement, instrument,
document, indenture, or other writing evidencing or concerning Indebtedness
permitted under Sections 7.1(c), and
(c) Directly or indirectly consent to any material
amendment or modifications of the terms or conditions of the Adequate Protection
Stipulation.
7.9 Change of Control. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10 [INTENTIONALLY OMITTED].
7.11 Distributions. Make any distribution or declare or pay
any dividends (in cash or other property, other than common Stock) on, or
purchase, acquire, redeem, or retire any of Borrower's Stock, of any class,
whether now or hereafter outstanding.
7.12 Accounting Methods. Modify or change its method of
accounting (other than as may be required to conform to GAAP).
7.13 Investments. Except for Permitted Investments, directly
or indirectly, make or acquire any Investment or incur any liabilities
(including contingent obligations) for or in connection with any Investment;
provided, however, that, after the Revolver Facility Effective Date, the Loan
Parties shall not have Permitted Investments (other than in the Cash Management
Accounts) in excess of $3,000,000 outstanding at any one time unless the Loan
Parties and the applicable securities intermediary or bank have entered into
Control Agreements governing such Permitted Investments, as Agent shall
determine in its Permitted Discretion, to perfect (and further establish)
Agent's Liens in such Permitted Investments.
7.14 Transactions with Affiliates. Directly or indirectly
enter into or permit to exist any transaction with any Affiliate of any Loan
Party except for transactions that are in the ordinary course of such Loan
Parties' business, upon fair and reasonable terms, that are fully disclosed to
Agent, and that are no less favorable to such Loan Party than would be obtained
in an arm's length transaction with a non-Affiliate.
-60-
67
7.15 Suspension. Suspend or go out of a substantial portion
of its business.
7.16 Compensation. Except as set forth in Part A of Schedule
7.16, increase the annual fee or per-meeting fees paid to the members of its
Board of Directors during any year by more than 15% over the prior year; pay or
accrue total cash compensation, during any year, to its officers and senior
management employees set forth on Part B of Schedule 7.16 in an aggregate amount
in excess of 115% of that paid or accrued in the prior year calculated on an
annualized basis.
7.17 Use of Proceeds. The proceeds of the Term Loan and the
Advances shall be used (a) to pay transactional fees, costs, and expenses
incurred in connection with this Agreement, the other Loan Documents, and the
transactions contemplated hereby and thereby, and (b) thereafter, to fund
working capital of the Loan Parties (including, without limitation, the
provision of cash collateral for surety bonds and payments of fees and expenses
to professionals under Sections 330 and 331 of the Bankruptcy Code and
administrative expenses of the kind specified in Section 503(b) of the
Bankruptcy Code incurred in the ordinary course of business of the Loan Parties,
subject to the priorities set forth in the definition of "Agreed Administrative
Expense Priorities" herein).
7.18 Change in Location of Chief Executive Office; Inventory
and Equipment with Bailees. Relocate its chief executive office to a new
location without providing 30 days prior written notification thereof to Agent.
7.19 Securities Accounts. Establish or maintain any
Securities Account after the Revolver Facility Effective Date unless Agent shall
have received a Control Agreement in respect of such Securities Account. Each
Loan Party shall not transfer assets out of any Securities Account; provided,
however, that, so long as no Event of Default has occurred and is continuing or
would result therefrom, each such Loan Party may use such assets (and the
proceeds thereof) to the extent not prohibited by this Agreement.
7.20 Financial Covenants.
(a) Minimum Cumulative EBITDA. Fail to maintain
EBITDA for the CLEC Business and CyberGate measured on a month end basis from
April 1, 2001 through the end of each month set forth below, of not less than
the required amount set forth in the following table for the applicable month
set forth opposite thereto:
--------------------------------------------------------------------
Cumulative EBITDA Applicable Month
----------------- ----------------
--------------------------------------------------------------------
($12,000,000) April 2001
--------------------------------------------------------------------
($14,000,000) May 2001
--------------------------------------------------------------------
($15,000,000) June 2001
--------------------------------------------------------------------
($16,000,000) July 2001
--------------------------------------------------------------------
-61-
68
--------------------------------------------------------------------
Cumulative EBITDA Applicable Month
----------------- ----------------
--------------------------------------------------------------------
($16,000,000) August 2001
--------------------------------------------------------------------
($16,000,000) September 2001
--------------------------------------------------------------------
($16,000,000) October 2001
--------------------------------------------------------------------
($16,000,000) November 2001
--------------------------------------------------------------------
($15,000,000) December 2001
--------------------------------------------------------------------
($14,000,000) January 2002
--------------------------------------------------------------------
($13,000,000) February 2002
--------------------------------------------------------------------
($12,000,000) March 2002
--------------------------------------------------------------------
($11,000,000) April 2002
--------------------------------------------------------------------
($10,000,000) May 2002
--------------------------------------------------------------------
($9,000,000) June 2002
--------------------------------------------------------------------
($8,000,000) July 2002
--------------------------------------------------------------------
($7,000,000) August 2002
--------------------------------------------------------------------
($6,000,000) September 2002
--------------------------------------------------------------------
(b) Cumulative Cash Receipts from Sales. Fail to
maintain cumulative cash receipts from sales of fiber and conduit, measured on a
month end basis from April 1, 2001 through December 31, 2001 and measured on a
quarter end basis commencing January 1, 2002 and thereafter, in each case for
the relevant period ended at the end of each month set forth below, of not less
than the required amount set forth in the following table for the applicable
period set forth below opposite thereto:
--------------------------------------------------------------------
Cumulative Cash
Receipts from Sales Month
--------------------------------------------------------------------
$4,500,000 April 2001
--------------------------------------------------------------------
$12,000,000 May 2001
--------------------------------------------------------------------
-62-
69
--------------------------------------------------------------------
Cumulative Cash
Receipts from Sales Month
--------------------------------------------------------------------
$24,500,000 June 2001
--------------------------------------------------------------------
$26,500,000 July 2001
--------------------------------------------------------------------
$37,000,000 August 2001
--------------------------------------------------------------------
$55,500,000 September 2001
--------------------------------------------------------------------
$63,500,000 October 2001
--------------------------------------------------------------------
$74,750,000 November 2001
--------------------------------------------------------------------
$91,500,000 December 2001
--------------------------------------------------------------------
$131,500,000 March 2002
--------------------------------------------------------------------
$159,500,000 June 2002
--------------------------------------------------------------------
$187,500,000 September 2002
--------------------------------------------------------------------
(c) Outstanding DIP Indebtedness. Permit outstanding
Indebtedness, including Letter of Credit Usage, incurred after the Entry Date at
any time during each month set forth below, to be more than the amount set forth
in the following table for the applicable month set forth below opposite
thereto:
--------------------------------------------------------------------
Outstanding
Indebtedness Month
--------------------------------------------------------------------
$30,000,000 April 2001
--------------------------------------------------------------------
$37,000,000 May 2001
--------------------------------------------------------------------
$39,500,000 June 2001
--------------------------------------------------------------------
$57,000,000 July 2001
--------------------------------------------------------------------
$70,000,000 August 2001
--------------------------------------------------------------------
$75,000,000 September 2001
--------------------------------------------------------------------
$80,000,000 October 2001
--------------------------------------------------------------------
-63-
70
--------------------------------------------------------------------
Outstanding
Indebtedness Month
--------------------------------------------------------------------
$80,000,000 November 2001
--------------------------------------------------------------------
$69,000,000 December 2001
--------------------------------------------------------------------
$57,000,000 January 2002
--------------------------------------------------------------------
$49,000,000 February 2002
--------------------------------------------------------------------
$25,500,000 March 2002
--------------------------------------------------------------------
$20,000,000 April 2002
--------------------------------------------------------------------
$15,000,000 May 2002
--------------------------------------------------------------------
$10,000,000 June 2002
--------------------------------------------------------------------
$7,500,000 July 2002
--------------------------------------------------------------------
$2,000,000 August 2002
--------------------------------------------------------------------
$0 September 2002
--------------------------------------------------------------------
(d) Capital Expenditures. (i) For the period from
the Closing Date through December 31, 2001, permit (A) aggregate capital
expenditures for the CLEC Business and for CyberGate to exceed $15,000,000, (B)
aggregate capital expenditures for the CLEC Business and for CyberGate for new
or existing customers in existing markets to exceed $7,500,000, and (C)
aggregate capital expenditures for the CLEC Business and for CyberGate for
general infrastructure to exceed $7,500,000.
(ii) For the calendar year ended December 31,
2002, permit the aggregate amount of year to date capital expenditures
for the CLEC Business and for CyberGate at any time to exceed three
times the EBITDA for the CLEC Business and for CyberGate for the
preceding calendar quarter.
(iii) Permit aggregate capital expenditures
for ACSI Network and its Subsidiaries to exceed $5,000,000 (A) for the
period from the Closing Date through December 31, 2001 or (B) for the
calendar year ended December 31, 2002.
-64-
71
(e) Gross Conduit Miles Installed. Fail to maintain
gross conduit miles installed at ACSI Network, for each quarter set forth below,
of not less than the required miles installed in the following table for the
applicable quarter set forth below opposite thereto:
--------------------------------------------------------------------
Gross Conduit
Miles Installed Quarter End
--------------------------------------------------------------------
789 June 30, 2001
--------------------------------------------------------------------
807 September 30, 2001
--------------------------------------------------------------------
926 December 31, 2001
--------------------------------------------------------------------
939 March 31, 2002
--------------------------------------------------------------------
939 June 30, 2002
--------------------------------------------------------------------
939 September 30, 2002
--------------------------------------------------------------------
(f) Gross Fiber Miles Installed. Fail to maintain,
gross fiber miles installed at ACSI Network, for each quarter set forth below,
of not less than the required miles installed in the following table for the
applicable quarter set forth below opposite thereto:
--------------------------------------------------------------------
Gross Fiber
Miles Installed Quarter End
--------------------------------------------------------------------
205,000 June 30, 2001
--------------------------------------------------------------------
217,000 September 30, 2001
--------------------------------------------------------------------
264,000 December 31, 2001
--------------------------------------------------------------------
277,000 March 31, 2002
--------------------------------------------------------------------
291,000 June 30, 2002
--------------------------------------------------------------------
291,000 September 30, 2002
--------------------------------------------------------------------
-65-
72
7.21 Interim Bankruptcy Court Order; Final Bankruptcy Court
Order; Administrative Expense Priority; Lien Priority; Payments.
(a) Seek, consent to or suffer to exist at any time
any modification, stay, vacation or amendment of the Orders, except for
modifications and amendments joined or consented to in writing by Agent, on
behalf of the Required Lenders, and the Borrower.
(b) Suffer to exist at any time a priority for any
administrative expense or unsecured claim (now existing or hereafter arising of
any kind or nature whatsoever, including, without limitation, any administrative
expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy
Code) against any Loan Party equal or superior to the priority of Lender Group
in respect of the Obligations, except for the Carve-Out Expenses having a
priority over the Obligations to the extent set forth in the definition of
Agreed Administrative Expense Priorities.
(c) Suffer to exist at any time any Lien on any
Collateral having a priority equal or superior to the Lien of the Agent for the
benefit of the Lender Group in respect of the Collateral except for Permitted
Priority Liens.
(d) Prior to the date on which the Obligations have
been paid in full in cash and the Commitments have been terminated, pay any
administrative expense claims except (A) Priority Professional Expenses and
other payments pursuant to sub-clause (i) of clause "first" of the definition of
the term "Agreed Administrative Expense Priorities", (B) any Obligations due and
payable hereunder, (C) other administrative expense claims incurred in the
ordinary course of the business of the Loan Parties in their respective Chapter
11 Cases, and (D) payments of pre-petition obligations permitted pursuant to
paragraph (e) hereof, in each case to the extent and having the order of
priority set forth in the Agreed Administrative Expense Priorities.
(e) Make any payment of principal or interest or
otherwise on account of any Indebtedness or trade payable incurred prior to the
Filing Date, provided that such payments may be made: (i) to the holders of, or
in respect of, wage, salary, commission or other compensation and employee
benefit obligations (including expense reimbursements) to employees and
independent contractors which arose prior to the Filing Date; (ii) to landlords
in connection with the assumption of unexpired leases under Section 365 of the
Bankruptcy Code in an aggregate amount acceptable to the Agent; (iii) to lessors
and non-debtor parties to executory contracts in connection with the assumption
of such leases and contracts under Section 365 of the Bankruptcy Code; (iv) in
respect of workers' compensation benefits and liability and property insurance
policies of the Loan Parties; (v) with respect to payroll taxes, garnishment
payments, sales taxes, customer credits or other trust fund disbursements in
accordance with past practice of the Loan Parties; (vi) to the holders of
Permitted Priority Liens, the proceeds of the assets subject to such Permitted
Priority Liens in connection with the sale of such assets; and (vii) in respect
of interest, fees and costs with respect to the Pre-Petition Credit Facility
Debt pursuant to the Adequate Protection Stipulation (provided that any material
modifications or amendments to the Adequate Protection Stipulation as in effect
on the date of this Agreement have been consented to by the Agent on behalf of
the Required Lenders), in each case, after prior written notice of such payment
has been given by the Borrower to the Agent and subject to approval of the
Bankruptcy Court,
-66-
73
provided that, prior written notice is not required in the case of the payments
described in clauses (i), (iv), (v) and (vii) above.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
8.1 If any Loan Party fails to pay when due and payable, or
when declared due and payable, all or any portion of the Obligations (whether of
principal, interest, fees and charges due Lender Group, reimbursement of the
Lender Group Expenses, or other amounts constituting Obligations) and, in the
case of the failure to pay interest, such failure continues unremedied for one
(1) Business Day;
8.2 If Loan Party fails to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in Sections 6.1,
6.2 (but only up to three times during any 12 month period, and any in relation
to Defaults caused by the failure of third persons to provide required
information or reporting, and not in relation to Defaults caused by a Loan
Party), 6.3, 6.9, 6.10 and 6.15 of this Agreement, or comparable provisions of
the other Loan Documents, within 10 days of the date when required (or within 5
days of the date when required in the case of Section 6.2 or Section 6.3), or if
a Loan Party otherwise fails to perform, keep or observe any other term,
provision, condition, covenant, or agreement contained in this Agreement or in
any of the other Loan Documents;
8.3 If any material portion of any Loan Party's assets is
attached, seized, subjected to a writ or distress warrant, levied upon, or comes
into the possession of any third Person;
8.4 If one or more judgments or decrees shall be entered
against any Loan Party involving in the aggregate a post-Filing Date liability
(not paid or fully covered by insurance) of $750,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within the time required by the terms of such judgment or
decrees;
8.5 An order with respect to the Chapter 11 Cases shall be
entered by the Bankruptcy Court appointing (i) a trustee under Section 1104, or
(ii) an examiner with enlarged powers (powers beyond those set forth in Section
1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the
Bankruptcy Code;
8.6 An order with respect to the Chapter 11 Cases shall be
entered by the Bankruptcy Court converting the Chapter 11 Cases to Chapter 7
cases under the Bankruptcy Code;
8.7 An order shall be entered by the Bankruptcy Court
confirming a plan of reorganization in the Chapter 11 Cases which does not (a)
contain a provision for termination of this Agreement, and the indefeasible
payment in full in cash of all Obligations in a manner satisfactory to Agent on
or before the effective date of such plan and (b) provide for the
-67-
74
continuation of the Liens and security interests granted to Agent and priorities
until such plan effective date;
8.8 An order shall be entered by the Bankruptcy Court
dismissing the Chapter 11 Cases which does not contain a provision for
termination of this Agreement, and the indefeasible payment in full in cash of
all Obligations in a manner satisfactory to Agent upon such dismissal;
8.9 An order with respect to the Chapter 11 Cases shall be
entered by the Bankruptcy Court without the express prior written consent of
Agent, (i) to revoke, vacate, reverse, stay, modify, supplement or amend this
Agreement and the transactions contemplated hereby, any Loan Document, the
Interim Bankruptcy Court Order or the Final Bankruptcy Court Order, or (ii) to
permit any administrative expense or any claim (now existing or hereafter
arising, of any kind or nature whatsoever) to have administrative priority as to
any Loan Party equal or superior to the priority of Lender Group in respect of
the Obligations, except for the Carve-Out Expenses having a priority over the
Obligations to the extent set forth in the definition of Agreed Administrative
Expense Priorities;
8.10 An order shall be entered by the Bankruptcy Court
granting relief from the automatic stay to any creditor(s) of any Loan Party
with respect to any claim in an amount equal to or exceeding $750,000 in the
aggregate; provided, however, that it shall not be an Event of Default if relief
from the automatic stay is granted (i) solely for the purpose of allowing such
creditor to determine the liquidated amount of its claim against such Loan Party
or (ii) to permit the commencement of and/or prosecution of a proceeding to
collect solely against an insurance company;
8.11 An application for any of the orders described in
Section 8.5, 8.6, 8.7, 8.8, 8.9 or 8.10 herein shall be made by any Loan Party
or any other Person and such application (if made by any Person other than a
Loan Party) is not contested by the Loan Parties in good faith or the relief
requested is granted in an order that is not stayed pending appeal;
8.12 If (a) any Loan Party shall attempt to invalidate,
reduce or otherwise impair the Liens or security interests of Agent, claims or
rights against any Loan Party or to subject any Collateral to assessment
pursuant to Section 506(c) of the Bankruptcy Code, (b) any Lien or security
interest created by this Agreement, the Interim Bankruptcy Court Order or the
Final Bankruptcy Court Order shall, for any reason, cease to be valid or (c) any
action is commenced by any Loan Party or any other Person which contests the
validity, perfection or enforceability of any of the Liens and security
interests of Agent created by this Agreement, the Interim Bankruptcy Court Order
or the Final Bankruptcy Court Order;
8.13 If any Loan Party is enjoined, restrained, or in any way
prevented by court order from continuing to conduct all or any material part of
its business affairs;
8.14 If a Lien, levy, or assessment is filed of record with
respect to any of the Loan Parties' assets by the United States, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or if any taxes or debts owing at any
-68-
75
time hereafter to any one or more of such entities becomes a Lien, whether
▇▇▇▇▇▇ or otherwise, upon any of the Loan Parties' assets and the same is not
paid before such payment is delinquent;
8.15 If there is a default in any material agreement to which
any Loan Party is a party and such default results in a right by the other party
thereto, which is not stayed by reason of the commencement of the Chapter 11
Cases and irrespective of whether exercised, to accelerate the maturity of any
Loan Party's obligations thereunder, to terminate such agreement, or to refuse
to renew such agreement pursuant to an automatic renewal right therein;
8.16 If any Loan Party makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the Obligations, except to the extent such payment is permitted by
the terms of the subordination provisions applicable to such Indebtedness;
8.17 If any material misstatement or misrepresentation exists
now or hereafter in any warranty, representation, statement, or Record made to
the Lender Group by any Loan Party, or any officer, employee, agent, or director
of any Loan Party;
8.18 If this Agreement or any other Loan Document that
purports to create a Lien, shall, for any reason, fail or cease to create a
valid and perfected and, except to the extent permitted by the terms hereof or
thereof, first priority Lien on or security interest in the Collateral covered
hereby or thereby;
8.19 Any provision of any Loan Document shall at any time for
any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Loan Party, or a proceeding shall be commenced
by any Loan Party, or by any Governmental Authority having jurisdiction over any
Loan Party, seeking to establish the invalidity or unenforceability thereof, or
any Loan Party shall deny that such Loan Party has any liability or obligation
purported to be created under any Loan Document;
8.20 Any of the following shall occur, the result of which
would reasonably be expected to result in a Material Adverse Change: (i) any
material License shall be cancelled, terminated, rescinded, revoked, suspended,
materially impaired or otherwise finally denied renewal, or shall cease to be in
full force and effect; (ii) any proceeding shall have been instituted by or
shall have been commenced before any court or any Communications Regulatory
Authority that would reasonably be expected to result in (a) cancellation,
termination, rescission, revocation, material impairment, suspension or denial
of renewal of a material License, or (b) a modification of a material License in
a material adverse respect or a renewal thereof on terms that materially and
adversely affect the economic or commercial value or usefulness thereof; or
(iii) any material interconnection agreement shall be terminated, reformed,
suspended or otherwise materially impaired, or shall be renegotiated and renewed
or replaced on terms that materially and adversely affect the economic or
commercial value or usefulness thereof, whether by action of the parties thereto
or by action of or under, modification to, or rescinding of the Communications
Act, State Law or any Regulations, in whole or in part; or
8.21 The Loan Parties shall have defaulted in any of their
obligations under the Adequate Protection Stipulation.
-69-
76
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Notwithstanding the provisions of
Section 362 of the Bankruptcy Code, upon the occurrence, and during the
continuation, of an Event of Default, Agent may, and shall at the authorization
and instruction of the Required Lenders (at their election but without notice of
their election and without demand) do any one or more of the following on behalf
of the Lender Group, all of which are authorized by the Loan Parties:
(a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) Cease advancing money or extending credit to or
for the benefit of Borrower under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other
Loan Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
(d) Settle or adjust disputes and claims directly
with Account Debtors for amounts and upon terms which Agent considers advisable,
and in such cases, Agent will credit Borrower's Loan Account with only the net
amounts received by Agent in payment of such disputed Accounts after deducting
all Lender Group Expenses incurred or expended in connection therewith;
(e) Cause each Loan Party to hold all returned
Inventory in trust for the Lender Group, segregate all returned Inventory from
all other assets of each Loan Party or in each Loan Party's possession and
conspicuously label said returned Inventory as the property of the Lender Group;
(f) Without notice to or demand upon any Loan Party,
make such payments and do such acts as Agent considers necessary or reasonable
to protect its security interests in the Collateral. Each Loan Party agrees to
assemble the Personal Property Collateral if Agent so requires, and to make the
Personal Property Collateral available to Agent at a place that Agent may
designate which is reasonably convenient to both parties. Each Loan Party
authorizes Agent to enter the premises where the Personal Property Collateral is
located, to take and maintain possession of the Personal Property Collateral, or
any part of it, and to pay, purchase, contest, or compromise any Lien that in
Agent's determination appears to conflict with the Agent's Liens and to pay all
expenses incurred in connection therewith and to charge Borrower's Loan Account
therefor. With respect to any Loan Party's owned or leased premises, each Loan
Party hereby grants Agent a license to enter into possession of such premises
and to occupy the same, without charge, in order to exercise any of Lender
Group's rights or remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to any Loan Party (such notice
being expressly waived), and without constituting a retention of any collateral
in satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of any Loan Party
held by the Lender Group (including any amounts received in the
-70-
77
Cash Management Accounts), or (ii) Indebtedness at any time owing to or for the
credit or the account of any Loan Party held by the Lender Group;
(h) Hold, as cash collateral, any and all balances
and deposits of each Loan Party held by the Lender Group, and any amounts
received in the Cash Management Accounts, to secure the full and final repayment
of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Personal Property Collateral. Each Loan Party hereby grants to
Agent a license or other right to use, without charge, such Loan Party's labels,
patents, copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Personal Property Collateral, in completing production of, advertising for sale,
and selling any Personal Property Collateral and such Loan Party's rights under
all licenses and all franchise agreements shall inure to the Lender Group's
benefit;
(j) Sell the Personal Property Collateral at either
a public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
any Loan Party's premises) as Agent determines is commercially reasonable. It is
not necessary that the Personal Property Collateral be present at any such sale;
(k) Except as otherwise provided in the Orders or in
any other order of the Bankruptcy Court in the Chapter 11 Cases, Agent shall
give notice of the disposition of the Collateral as follows:
(i) Agent shall give Borrower a notice in
writing of the time and place of public sale, or, if the sale is a
private sale or some other disposition other than a public sale is to be
made of the Collateral, the time on or after which the private sale or
other disposition is to be made; and
(ii) The notice shall be personally delivered
or mailed, postage prepaid, to Borrower as provided in Section 12, at
least 10 days before the earliest time of disposition set forth in the
notice; no notice needs to be given prior to the disposition of any
portion of the Collateral that is perishable or threatens to decline
speedily in value or that is of a type customarily sold on a recognized
market;
(l) Agent, on behalf of the Lender Group, may credit
bid and purchase at any public sale; and
(m) Agent may seek the appointment of a receiver or
keeper to take possession of all or any portion of the Collateral or to operate
same and, to the maximum extent permitted by law, may seek the appointment of
such a receiver without the requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and
remedies available at law or in equity or pursuant to any other Loan Document;
and
-71-
78
(o) Any deficiency that exists after disposition of
the Collateral as provided above will be paid immediately by the Loan Parties.
Any excess will be returned, without interest and subject to the rights of third
Persons, by Agent to Borrower.
9.2 Remedies Cumulative. The rights and remedies of the
Lender Group under this Agreement, the other Loan Documents, and all other
agreements shall be cumulative. The Lender Group shall have all other rights and
remedies not inconsistent herewith as provided under the Code, by law, or in
equity. No exercise by the Lender Group of one right or remedy shall be deemed
an election, and no waiver by the Lender Group of any Event of Default shall be
deemed a continuing waiver. No delay by the Lender Group shall constitute a
waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Loan Party fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Loan Party, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
Borrower's Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 6.8 hereof, obtain and maintain insurance policies of the
type described in Section 6.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each Loan Party waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which any Loan Party may in any way be liable.
11.2 The Lender Group's Liability for Collateral. Each Loan
Party hereby agrees that: (a) so long as Agent complies with its obligations, if
any, under the Code, the Lender Group shall not in any way or manner be liable
or responsible for: (i) the safekeeping of the Collateral, (ii) any loss or
damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by the
Loan Parties.
-72-
79
11.3 Indemnification. Each Loan Party shall pay, indemnify,
defend, and hold the Agent-Related Persons, the Lender-Related Persons with
respect to each Lender, each Participant, and each of their respective officers,
directors, employees, agents, and attorneys-in-fact (each, an "Indemnified
Person") harmless (to the fullest extent permitted by law) from and against any
and all claims, demands, suits, actions, investigations, proceedings, and
damages, and all reasonable attorneys fees and disbursements and other costs and
expenses actually incurred in connection therewith (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or
administration of this Agreement, any of the other Loan Documents, or the
transactions contemplated hereby or thereby, and (b) with respect to any
investigation, litigation, or proceeding related to this Agreement, any other
Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event, or circumstance in any manner related thereto (all the
foregoing, collectively, the "Indemnified Liabilities"). The foregoing to the
contrary notwithstanding, each Loan Party shall have no obligation to any
Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any payment to any
other Indemnified Person with respect to an Indemnified Liability as to which
Borrower was required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrower with respect thereto. WITHOUT LIMITATION,
THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Borrower or Agent to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Borrower or Agent, as applicable, may designate to
each other in accordance herewith), or telefacsimile to Borrower or Agent, as
the case may be, at its address set forth below:
If to any Loan Party:
e.spire Communications, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
-73-
80
with copies to:
Skadden, Arps, Slate, Meager & ▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
If to Agent:
FOOTHILL CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance Division Manager
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
Agent and Borrower may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Borrower acknowledges and agrees that notices sent by the
Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN
DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO
THE EXTENT GOVERNED BY THE BANKRUPTCY CODE.
-74-
81
(b) EACH LOAN PARTY AND THE LENDER GROUP HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH LOAN
PARTY AND THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
(a) Any Lender may, with the written consent of
Agent (provided that no written consent of Agent shall be required in connection
with any assignment and delegation by a Lender to an Eligible Transferee and no
notice to Agent shall be required in connection with any assignment and
delegation by a Lender to an Affiliate of a Lender or a fund or account managed
by a Lender or an Affiliate of a Lender), assign and delegate to one or more
assignees (each an "Assignee") all, or any ratable part of all, of the
Obligations, the Commitments and the other rights and obligations of such Lender
hereunder and under the other Loan Documents, in a minimum amount of $5,000,000
(except such minimum amount shall not apply to any Affiliate of a Lender or to a
fund or account managed by a Lender, provided that if the minimum amount is not
met, Borrower and Agent may continue to deal solely and directly with such
Lender in connection with the interest so assigned to an Assignee); provided,
however, that Borrower and Agent may continue to deal solely and directly with
such Lender in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions,
addresses, and related information with respect to the Assignee, have been given
to Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its
Assignee have delivered to Borrower and Agent a fully-executed Assignment and
Acceptance substantially in the form of Exhibit A-1, and (iii) the assignor
Lender or Assignee has paid to Agent for Agent's separate account a processing
fee in the amount of $5,000. Anything contained herein to the contrary
notwithstanding, the consent of Agent shall not be required (and payment of any
fees shall not be required) if such assignment is in connection with any merger,
consolidation, sale, transfer, or other disposition of all or any substantial
portion of the business or loan portfolio of such Lender or the assignee is an
Affiliate (other than individuals) of, or a fund, money market account,
investment account or other account managed by a Lender or an Affiliate of a
Lender.
(b) From and after the date that Agent notifies the
assignor Lender (with a copy to Borrower), if applicable, that it has received a
fully-executed Assignment and Acceptance and payment (if applicable) of the
above-referenced processing fee, (i) 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 and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been
-75-
82
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
(except with respect to Section 11.3 hereof) and be released from its
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall affect
a novation between Borrower and the Assignee.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (1) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Loan Party or the performance or observance by any Loan Party of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon each Assignee's making its
processing fee payment (if applicable) under the Assignment and Acceptance and
receipt and acknowledgment by Agent of such fully executed Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.
(e) Any Lender may at any time, sell to one or more
commercial banks, financial institutions, or other Persons not Affiliates of
such Lender (a "Participant") participating interests in its Obligations, the
Commitment, and the other rights and interests of that Lender (the "Originating
Lender") hereunder and under the other Loan Documents (provided that no written
consent of Agent shall be required in connection with any sale of any such
participating interests by a Lender to an Eligible Transferee); provided,
however, that (i) the Originating Lender shall remain a "Lender" for all
purposes of this Agreement and the other Loan Documents and the Participant
receiving the participating interest in the Obligations, the Commitments, and
the other rights and interests of the Originating Lender hereunder shall not
constitute a "Lender" hereunder or under the other Loan Documents and the
Originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the Originating Lender shall
-76-
83
remain solely responsible for the performance of such obligations, (iii)
Borrower, Agent, and the Lenders shall continue to deal solely and directly with
the Originating Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or a material portion of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant, or (E) change the amount or due
dates of scheduled principal repayments or prepayments or premiums in respect of
the Obligations hereunder in which such Participant is participating, or (F)
subordinates the Lien of the Agent for the benefit of the Lender Group to the
Liens of any other creditor of the Loan Parties, and (v) all amounts payable by
Borrower hereunder shall be determined as if such Lender had not sold such
participation, except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as Lender under this Agreement,
provided that a Participant shall only have such right of set-off if the
Borrower has received prior written notice of such Participant. The rights of
any Participant only shall be derivative through the Originating Lender with
whom such Participant participates and no Participant shall have any rights
under this Agreement or the other Loan Documents or any direct rights as to the
other Lenders, Agent, Borrower, the Collections, the Collateral, or otherwise in
respect of the Obligations. No Participant shall have the right to participate
directly in the making of decisions by the Lenders among themselves. The
provisions of this Section 14(e) are solely for the benefit of the Lender Group,
and none of the Loan Parties shall have any rights as a third party beneficiary
of any such provisions.
(f) In connection with any such assignment or
participation or proposed assignment or participation, a Lender may disclose all
documents and information which it now or hereafter may have relating to
Borrower or Borrower's business.
(g) Any other provision in this Agreement
notwithstanding, any Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Bank or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
14.2 Successors. This Agreement shall bind and inure to the
benefit of the respective successors and assigns of each of the parties;
provided, however, that the Loan Parties may not assign this Agreement or any
rights or duties hereunder without the Lenders' prior written consent and any
prohibited assignment shall be absolutely void ab initio. No consent to
-77-
84
assignment by the Lenders shall release any Loan Party from its Obligations. A
Lender may assign this Agreement and the other Loan Documents and its rights and
duties hereunder and thereunder pursuant to Section 14.1 hereof and, except as
expressly required pursuant to Section 14.1 hereof, no consent or approval by
Borrower is required in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. (i) No amendment or waiver of
any provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by any Loan Party therefrom, shall be effective unless
the same shall be in writing and signed by the Required Lenders (or by Agent at
the written request of the Required Lenders) and Borrower and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all of the Lenders
affected thereby and Borrower, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees, or other amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest
on, any loan or other extension of credit hereunder, or reduce any fees or other
amounts payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is
required to take any action hereunder,
(e) amend, modify or waive this Section or any
provision of the Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by
Section 16.12,
(g) change the definition of "Required Lenders" or
"Pro Rata Share",
(h) contractually subordinate any of Agent's Liens,
(i) release any Loan Party from any obligation for
the payment of money,
(j) change the definitions, or any definitions used
therein, of Borrowing Base, Eligible Fiber Optic Inventory, Maximum Revolver
Amount, or Term Loan Amount,
(k) modify, waive, release or subordinate the
superpriority claim status of the Obligations (except as permitted in this
Agreement and the Loan Documents),
-78-
85
(l) amend any of the provisions of Section 2.1(a),
Section 2.2, Section 2.3(e), Section 2.3(i), Section 2.4(b), Section 3.2(c),
Section 3.3 or Section 16, or
(m) change the definition of Eligible Transferee or
amend, modify or waive any of the provisions of Section 14.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Swing Lender or Issuing
Lenders, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrower, shall not require consent by or the agreement of Borrower.
(ii) The Agent and the Lenders, have executed
an agreement on the Closing Date pursuant to which the Agent and the Lenders
have agreed to certain intercreditor arrangements, including but not limited to,
certain arrangements regarding voting, allocation of payments, participations in
and buyouts of the Obligations and repayment priorities. The rights and duties
of the Agent and the Lenders with respect to such matters, are subject to such
agreement.
15.2 Replacement of Holdout Lender.
(a) If any action to be taken by the Lender Group or
Agent hereunder requires the unanimous consent, authorization, or agreement of
all Lenders, and a Lender ("Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a "Replacement Lender"), and
the Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
(b) Prior to the effective date of such replacement,
the Holdout Lender and each Replacement Lender shall execute and deliver an
Assignment and Acceptance, subject only to the Holdout Lender being repaid its
share of the outstanding Obligations (including an assumption of its Pro Rata
Share of the Risk Participation Liability) without any premium or penalty of any
kind whatsoever. If the Holdout Lender shall refuse or fail to execute and
deliver any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of Section 14.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender's Pro Rata Share of Advances and to purchased a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
-79-
86
15.3 No Waivers; Cumulative Remedies. No failure by Agent or
any Lender to exercise any right, remedy, or option under this Agreement or any
other Loan Document, or delay by Agent or any Lender in exercising the same,
will operate as a waiver thereof. No waiver by Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by Agent or any Lender on any occasion shall affect or
diminish Agent's and each Lender's rights thereafter to require strict
performance by Borrower of any provision of this Agreement. Agent's and each
Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy Agent or any Lender
may have.
16. AGENT; THE LENDER GROUP.
16.1 Appointment and Authorization of Agent. Each Lender
hereby designates and appoints Foothill as its representative under this
Agreement and the other Loan Documents and each Lender hereby irrevocably
authorizes Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to Agent by the terms of this Agreement
or any other Loan Document, together with such powers as are reasonably
incidental thereto. Agent agrees to act as such on the express conditions
contained in this Section 16. The provisions of this Section 16 are solely for
the benefit of Agent, and the Lenders, and Borrower shall have no rights as a
third party beneficiary of any of the provisions contained herein. Any provision
to the contrary contained elsewhere in this Agreement or in any other Loan
Document notwithstanding, Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall Agent have or be deemed to
have any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against Agent;
it being expressly understood and agreed that the use of the word "Agent" is for
convenience only, that Foothill is merely the representative of the Lenders, and
only has the contractual duties set forth herein. Except as expressly otherwise
provided in this Agreement, Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions that Agent expressly is
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, or of any
other provision of the Loan Documents that provides rights or powers to Agent,
Lenders agree that Agent shall have the right to exercise the following powers
as long as this Agreement remains in effect: (a) maintain, in accordance with
its customary business practices, ledgers and records reflecting the status of
the Obligations, the Collateral, the Collections, and related matters, (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections as
provided in the Loan Documents, (e) open and maintain such bank accounts and
cash management arrangements as Agent deems necessary and appropriate in
accordance with the Loan Documents for the foregoing purposes with respect to
the Collateral and the Collections, (f) perform, exercise, and enforce any and
all other rights and remedies of the Lender Group with respect to Borrower, the
Obligations, the Collateral, the Collections, or otherwise related to any of
same as provided in the Loan Documents, and (g)
-80-
87
incur and pay such Lender Group Expenses as Agent may deem necessary or
appropriate for the performance and fulfillment of its functions and powers
pursuant to the Loan Documents.
16.2 Delegation of Duties. Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Agent shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects as long as such selection was made without gross negligence or willful
misconduct.
16.3 Liability of Agent. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by Borrower or any
Subsidiary or Affiliate of Borrower, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
Borrower or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the Books or properties of Borrower or the
books or records or properties of any of Borrower's Subsidiaries or Affiliates.
16.4 Reliance by Agent. Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent, or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to Borrower or counsel to any Lender), independent accountants and other experts
selected by Agent. Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless Agent shall
first receive such advice or concurrence of the Lenders as it deems appropriate
and until such instructions are received, Agent shall act, or refrain from
acting, as it deems advisable. If Agent so requests, it shall first be
indemnified to its reasonable satisfaction by Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of Lenders and such request and
any action taken or failure to act pursuant thereto shall be binding upon all of
Lenders.
16.5 Notice of Default or Event of Default. Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default, except with respect to defaults in the payment of principal,
interest, fees, and expenses required to be paid to Agent for the account of the
Lenders, except with respect to Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from Lenders or
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a
-81-
88
"notice of default." Agent promptly will notify the Lenders of its receipt of
any such notice or of any Event of Default of which Agent has actual knowledge.
If any Lender obtains actual knowledge of any Event of Default, such Lender
promptly shall notify the other Lenders and Agent of such Event of Default. Each
Lender shall be solely responsible for giving any notices to its Participants,
if any. Subject to Section 16.4, Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 9; provided, however, that unless and until Agent has
received any such request, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable.
16.6 Credit Decision. Each Lender acknowledges that none of
the Agent-Related Persons has made any representation or warranty to it, and
that no act by Agent hereinafter taken, including any review of the affairs of
Borrower and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrower and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 Costs and Expenses; Indemnification. Agent may incur and
pay Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrower is obligated to reimburse Agent
or Lenders for such expenses pursuant to the Loan Agreement or otherwise. Agent
is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon
-82-
89
demand the Agent-Related Persons (to the extent not reimbursed by or on behalf
of Borrower and without limiting the obligation of Borrower to do so), according
to their Pro Rata Shares, from and against any and all Indemnified Liabilities;
provided, however, that no Lender shall be liable for the payment to any
Agent-Related Person of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct nor shall any
Lender be liable for the obligations of any Defaulting Lender in failing to make
an Advance or other extension of credit hereunder. Without limitation of the
foregoing, each Lender shall reimburse Agent upon demand for such Lender's
ratable share of any costs or out-of-pocket expenses (including attorneys fees
and expenses) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment, or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that Agent is not reimbursed for such expenses by or on behalf of Borrower. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of Agent.
16.8 Agent in Individual Capacity. Foothill and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in, and generally engage in any kind of
banking, lending, trust, financial advisory, underwriting, or other business
with Borrower and its Subsidiaries and Affiliates and any other Person (other
than the Lender Group) party to any Loan Documents as though Foothill were not
Agent hereunder, and, in each case, without notice to or consent of the other
members of the Lender Group. The other members of the Lender Group acknowledge
that, pursuant to such activities, Foothill or its Affiliates may receive
information regarding Borrower or its Affiliates and any other Person (other
than the Lender Group) party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrower or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver Agent will use its reasonable best
efforts to obtain), Agent shall not be under any obligation to provide such
information to them. The terms "Lender" and "Lenders" include Foothill in its
individual capacity.
16.9 Successor Agent. Agent may resign as Agent upon 45 days
notice to the Lenders and the Borrower. If Agent resigns under this Agreement,
the Required Lenders shall appoint a successor Agent for the Lenders. If no
successor Agent is appointed prior to the effective date of the resignation of
Agent, Agent may appoint, after consulting with the Lenders, a successor Agent.
If Agent has materially breached or failed to perform any material provision of
this Agreement or of applicable law, the Required Lenders may agree in writing
to remove and replace Agent with a successor Agent from among the Lenders. In
any such event, upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the rights, powers, and
duties of the retiring Agent and the term "Agent" shall mean such successor
Agent and the retiring Agent's appointment, powers, and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 16 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement. If no
successor Agent has accepted appointment as Agent by the date which is 45 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of
-83-
90
the duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above.
16.10 Lender in Individual Capacity. Any Lender and its
respective Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in and generally engage in
any kind of banking, trust, financial advisory, underwriting or other business
with Borrower and its Subsidiaries and Affiliates and any other Person (other
than the Lender Group) party to any Loan Documents as though such Lender were
not a Lender hereunder without notice to or consent of the other members of the
Lender Group. The other members of the Lender Group acknowledge that, pursuant
to such activities, such Lender and its respective Affiliates may receive
information regarding Borrower or its Affiliates and any other Person (other
than the Lender Group) party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrower or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender not shall be under any obligation to
provide such information to them. Notwithstanding anything to the contrary, the
Lenders and the Agent acknowledge that any Lender which is an Affiliate of the
Borrower may be prohibited by fiduciary duties or other laws from disclosing
certain information to the Agent and the Lenders, and in any such case said
Lender shall not have any obligation to obtain such waivers or to make such
disclosure.
16.11 Swing Lender in Individual Capacity. With respect to the
Swing Loans and Agent Advances, Swing Lender shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same as
though it were not the sub-agent of Agent.
16.12 Withholding Taxes.
(a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the IRC and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the IRC, such Lender agrees with and in favor of Agent and Borrower, to
deliver to Agent and Borrower:
(i) if such Lender claims an exemption from
withholding tax pursuant to its portfolio interest exception, (a) a
statement of the Lender, signed under penalty of perjury, that it is not
a (I) a "bank" as described in Section 881(c)(3)(A) of the IRC, (II) a
10% shareholder (within the meaning of Section 881(c)(3)(B) of the IRC),
or (III) a controlled foreign corporation described in Section
881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form W-8BEN,
before the first payment of any interest under this Agreement and at any
other time reasonably requested by Agent or Borrower;
(ii) if such Lender claims an exemption from,
or a reduction of, withholding tax under a United States tax treaty,
properly completed IRS Form W-8BEN before the first payment of any
interest under this Agreement and at any other time reasonably requested
by Agent or Borrower;
-84-
91
(iii) if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed copies of
IRS Form W-8ECI before the first payment of any interest is due under
this Agreement and at any other time reasonably requested by Agent or
Borrower;
(iv) such other form or forms as may be
required under the IRC or other laws of the United States as a condition
to exemption from, or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or
reduction of, withholding tax under a United States tax treaty by providing IRS
Form W-8BEN and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Borrower to such Lender,
such Lender agrees to notify Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of Borrower to such Lender. To the
extent of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN
as no longer valid.
(c) If any Lender is entitled to a reduction in the
applicable withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(d) If the Internal Revenue Service or any other
Governmental Authority of the United States or other jurisdiction asserts a
claim that Agent did not properly withhold tax from amounts paid to or for the
account of any Lender (because the appropriate form was not delivered, was not
properly executed, or because such Lender failed to notify Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify and hold
Agent harmless for all amounts paid, directly or indirectly, by Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to Agent under this Section, together
with all costs and expenses (including attorneys fees and expenses). The
obligation of Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of Agent.
(e) All payments made by Borrower hereunder or under
any note will be made without setoff, counterclaim, or other defense, except as
required by applicable law other than for Taxes (as defined below). All such
payments will be made free and clear of, and without deduction or withholding
for, any present or future taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature now or hereafter imposed by any jurisdiction
(other than the United States) or by any political subdivision or taxing
authority thereof or therein (other than of the United States) with respect to
such payments (but excluding, any tax imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein
-85-
92
(i) measured by or based on the net income or net profits of a Lender, or (ii)
to the extent that such tax results from a change in the circumstances of the
Lender, including a change in the residence, place of organization, or principal
place of business of the Lender, or a change in the branch or lending office of
the Lender participating in the transactions set forth herein) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied or imposed,
Borrower agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement or under any note, including any amount paid pursuant to this Section
16.11(e) after withholding or deduction for or on account of any Taxes, will not
be less than the amount provided for herein; provided, however, that Borrower
shall not be required to increase any such amounts payable to Agent or any
Lender (i) that is not organized under the laws of the United States, if such
Person fails to comply with the other requirements of this Section 16.11, or
(ii) if the increase in such amount payable results from Agent's or such
Lender's own willful misconduct or gross negligence. Borrower will furnish to
Agent as promptly as possible after the date the payment of any Taxes is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by Borrower.
16.13 Collateral Matters.
(a) Lenders hereby irrevocably authorize Agent, at
its option and in its sole discretion, to release or subordinate any Lien on any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrower of all Obligations, (ii) constituting property
being sold or disposed of if a release is required or desirable in connection
therewith and, in the case of material property or assets of a Loan Party, if
Borrower certifies to Agent that the sale or disposition is permitted under
Section 7.4 of this Agreement or the other Loan Documents (and Agent may rely
conclusively on any such certificate, without further inquiry), (iii)
constituting property in which Borrower owned no interest at the time the
security interest was granted or at any time thereafter, or (iv) constituting
property leased to Borrower under a lease that has expired or is terminated in a
transaction permitted under this Agreement. Except as provided above, Agent will
not execute and deliver a release of any Lien on any Collateral without the
prior written authorization of (y) if the release is of all or any substantial
portion of the Collateral, all of the Lenders, or (z) otherwise, the Required
Lenders. Upon request by Agent or Borrower at any time, the Lenders will confirm
in writing Agent's authority to release any such Liens on particular types or
items of Collateral pursuant to this Section 16.12; provided, however, that (1)
Agent shall not be required to execute any document necessary to evidence such
release on terms that, in Agent's opinion, would expose Agent to liability or
create any obligation or entail any consequence other than the release of such
Lien without recourse, representation, or warranty, and (2) such release shall
not in any manner discharge, affect, or impair the Obligations or any Liens
(other than those expressly being released) upon (or obligations of Borrower in
respect of) all interests retained by Borrower, including, the proceeds of any
sale, all of which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any
of the Lenders to assure that the Collateral exists or is owned by Borrower or
is cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise
-86-
93
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission,
or event related thereto, subject to the terms and conditions contained herein,
Agent may act in any manner it may deem appropriate, in its sole discretion
given Agent's own interest in the Collateral in its capacity as one of the
Lenders and that Agent shall have no other duty or liability whatsoever to any
Lender as to any of the foregoing, except as otherwise provided herein.
16.14 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of Lenders agrees that it shall not,
without the express consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of Agent, set off against the
Obligations, any amounts owing by such Lender to Borrower or any deposit
accounts of Borrower now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
by Agent, take or cause to be taken any action, including, the commencement of
any legal or equitable proceedings, to foreclose any Lien on, or otherwise
enforce any security interest in, any of the Collateral the purpose of which is,
or could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall
receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of
Collateral or any payments with respect to the Obligations arising under, or
relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from Agent pursuant to the terms of
this Agreement, or (ii) payments from Agent in excess of such Lender's Pro Rata
Share of all such distributions by Agent, such Lender promptly shall (1) turn
the same over to Agent, in kind, and with such endorsements as may be required
to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(2) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among Lenders in accordance with
their Pro Rata Shares; provided, however, that if all or part of such excess
payment received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the
recovery of the excess payment.
16.15 Agency for Perfection. Agent hereby appoints each other
Lender as its agent (and each Lender hereby accepts such appointment) for the
purpose of perfecting the Agent's Liens in assets which, in accordance with
Article 9 of the UCC can be perfected only by possession. Should any Lender
obtain possession of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent's request therefor shall deliver such
Collateral to Agent or in accordance with Agent's instructions.
-87-
94
16.16 Payments by Agent to the Lenders. All payments to be
made by Agent to Lenders shall be made by bank wire transfer or internal
transfer of immediately available funds pursuant to such wire transfer
instructions as each party may designate for itself by written notice to Agent.
Concurrently with each such payment, Agent shall identify whether such payment
(or any portion thereof) represents principal, premium, or interest of the
Obligations.
16.17 Concerning the Collateral and Related Loan Documents.
Each member of Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents relating to the Collateral, for the
benefit of the Lender Group. Each member of the Lender Group agrees that any
action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent of its
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
16.18 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish
such Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by or
at the request of Agent, and Agent shall so furnish each Lender with such
Reports,
(b) expressly agrees and acknowledges that Agent
does not (i) make any representation or warranty as to the accuracy of any
Report, and (ii) shall not be liable for any information contained in any
Report,
(c) expressly agrees and acknowledges that the
Reports are not comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific information
regarding Borrower and will rely significantly upon the Books, as well as on
representations of Borrower's personnel,
(d) agrees to keep all Reports and other material,
non-public information regarding Borrower and its Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner; it being understood and agreed by Borrower that in any
event such Lender may make disclosures (a) to counsel for and other advisors,
accountants, and auditors to such Lender, (b) reasonably required by any bona
fide potential or actual Assignee or Participant in connection with any
contemplated or actual assignment or transfer by such Lender of an interest
herein or any participation interest in such Lender's rights hereunder, (c) of
information that has become public by disclosures made by Persons other than
such Lender, its Affiliates, assignees, transferees, or Participants, or (d) as
required or requested by any court, governmental or administrative agency,
pursuant to any subpoena or other legal process, or by any law, statute,
regulation, or court order; provided, however, that, unless prohibited by
applicable law, statute, regulation, or court order, such Lender shall notify
Borrower of any request by any court, governmental or administrative agency, or
pursuant to any subpoena or other legal process for disclosure of any such
non-public material information concurrent with, or where practicable, prior to
the disclosure thereof, and
-88-
95
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrower, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Borrower, and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to
time request of Agent in writing that Agent provide to such Lender a copy of any
report or document provided by Borrower to Agent that has not been
contemporaneously provided by Borrower to such Lender, and, upon receipt of such
request, Agent promptly shall provide a copy of same to such Lender, (y) to the
extent that Agent is entitled, under any provision of the Loan Documents, to
request additional reports or information from Borrower, any Lender may, from
time to time, reasonably request Agent to exercise such right as specified in
such Lender's notice to Agent, whereupon Agent promptly shall request of
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Borrower, Agent promptly shall provide a
copy of same to such Lender, and (z) any time that Agent renders to Borrower a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.
16.19 Several Obligations; No Liability. Notwithstanding that
certain of the Loan Documents now or hereafter may have been or will be executed
only by or in favor of Agent in its capacity as such, and not by or in favor of
Lenders, any and all obligations on the part of Lenders (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of Lender Group shall have
any liability for the acts or any other member of the Lender Group. No Lender
shall be responsible to Borrower or any other Person for any failure by any
other Lender to fulfill its obligations to make credit available hereunder, nor
to advance for it or on its behalf in connection with its Commitment, nor to
take any other action on its behalf hereunder or in connection with the
financing contemplated herein.
16.20 Co-Agent. Notwithstanding the provisions of this
Agreement or any of the other Loan Documents, Ableco Finance LLC (in its
capacity as Co-Agent as opposed to its capacity as a Lender) shall have no
powers, rights, duties, responsibilities, or liabilities with respect to this
Agreement and the other Loan Documents (except as expressly provided in this
-89-
96
Agreement) nor shall Ableco Finance LLC (in such capacity as Co-Agent) have or
be deemed to have any fiduciary relationship with any Lender.
17. GUARANTY.
17.1 Guaranty. Each Guarantor hereby unconditionally and
irrevocably jointly and severally guarantees the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all Obligations of
the Borrower now or hereafter existing under any Loan Document, whether for
principal, interest fees, expenses or otherwise (such obligations, to the extent
not paid by the Borrower, being the "Guaranteed Obligations"), and agrees to pay
any and all expenses (including reasonable counsel fees and expenses) incurred
by the Lender Group in enforcing any rights under the guaranty set forth in this
Article.
17.2 Guaranty Absolute. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent, or the Lenders with respect thereto. The obligations of each Guarantor
under this Article are independent of the Guaranteed Obligations, and a separate
action or actions may be brought and prosecuted against each Guarantor to
enforce such obligations, irrespective of whether any action is brought against
Borrower or whether Borrower is joined in any such action or actions. The
liability of each Guarantor under this Article shall be irrevocable, absolute
and unconditional irrespective of, and each Guarantor hereby irrevocably waives
any defenses it may now or hereafter have in any way relating to, any or all of
the following:
(a) any lack of validity or enforceability of any
Loan Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Guaranteed Obligations,
or any other amendment or waiver of or any consent to departure from any Loan
Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to Borrower or
otherwise;
(c) any taking, exchange, release or non-perfection
of any Collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) any change, restructuring or termination of the
corporate, limited liability company or partnership structure or existence of
any Borrower; or
(e) any other circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance on any
representation by the Agent, or the Lenders that might otherwise constitute a
defense available to, or a discharge of, any Guarantor, any Borrower or any
other guarantor or surety.
-90-
97
This Article shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Agent or the Lenders or any other Person,
all as though such payment had not been made.
17.3 Waiver. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Article and any requirement that the Agent, or
the Lenders exhaust any right or take any action against any Borrower or any
other Person or any Collateral. Each Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated herein
and that the waiver set forth in this Section 17.3 is knowingly made in
contemplation of such benefits. Each Guarantor hereby waives any right to revoke
this Article, and acknowledges that this Article is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.
17.4 Continuing Guaranty; Assignments. This Article is a
continuing guaranty and shall (a) remain in full force and effect until the
later of the cash payment in full of the Guaranteed Obligations (other than
indemnification obligations as to which no claim has been made) and all other
amounts payable under this Article and the Maturity Date, (b) be binding upon
each Guarantor, its successors and assigns and (c) inure to the benefit of and
be enforceable by the Agent, and the Lenders and their successors, pledgees,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), any Lender may pledge, assign or otherwise transfer all or any portion of
its rights and obligations under this Agreement (including, without limitation,
all or any portion of its Commitments, its loans, owing to it and any note held
by it) to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted such Lender herein or
otherwise, in each case as provided in Article 14.
17.5 Subrogation. No Guarantor will exercise any rights that
it may now or hereafter acquire against any Borrower or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
such Guarantor's obligations under this Article, including, without limitation,
any right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the Agent
and the Lenders against any Borrower or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any Borrower or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and
until all of the Guaranteed Obligations and all other amounts payable under this
Article shall have been paid in full in cash and the Maturity Date shall have
occurred. If any amount shall be paid to any Guarantor in violation of the
immediately preceding sentence at any time prior to the later of the payment in
full in cash of the Guaranteed Obligations and all other amounts payable under
this Article and the Maturity Date, such amount shall be held in trust for the
benefit of the Agent and the Lenders and shall forthwith be paid to the Agent
and the Lenders to be credited and applied to the Guaranteed Obligations and all
other amounts payable under this Article, whether matured or unmatured, in
accordance with the terms of this Agreement, or to be held as collateral for any
Guaranteed Obligations or other amounts payable under this Article thereafter
arising. If (i) any Guarantor shall make payment to the Agent and the Lenders of
all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this
-91-
98
Article shall be paid in full in cash and (iii) the Maturity Date shall have
occurred, the Agent and the Lenders will, at such Guarantor's request and
expense, execute and deliver to such Guarantor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer by subrogation to such Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Guarantor.
17.6 The guarantee by each Guarantor of the Guaranteed
Obligations is a joint and several obligation of each Guarantor.
18. GENERAL PROVISIONS.
18.1 Effectiveness. This Agreement shall be binding and
deemed effective when executed by each Loan Party, Agent, and each Lender whose
signature is provided for on the signature pages hereof.
18.2 Section Headings. Headings and numbers have been set
forth herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each Section applies equally to this entire
Agreement.
18.3 Interpretation. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed against Lender Group or
Borrower, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
18.4 Severability of Provisions. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
18.5 Amendments in Writing. This Agreement only can be
amended by a writing signed by Agent (on behalf of the requisite number of
Lenders required by this Agreement) and Borrower (on behalf of the Loan
Parties).
18.6 Counterparts; Telefacsimile Execution. This Agreement
may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. Delivery of an executed counterpart
of this Agreement by telefacsimile shall be equally as effective as delivery of
an original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile also shall deliver an
original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement. The foregoing shall apply to each other Loan
Document mutatis mutandis.
18.7 Revival and Reinstatement of Obligations. If the
incurrence or payment of the Obligations by Borrower or Guarantor or the
transfer to the Lender Group of any property should for any reason subsequently
be declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
-92-
99
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
Lender Group is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable Transfer, or the amount thereof that the Lender
Group is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrower or Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
18.8 Integration. This Agreement, together with the other
Loan Documents, reflects the entire understanding of the parties with respect to
the transactions contemplated hereby and shall not be contradicted or qualified
by any other agreement, oral or written, before the date hereof.
18.9 Agent as Party in Interest. Each Loan Party hereby
stipulates and agrees that Agent is and shall remain a party in interest in the
Chapter 11 Cases and shall have the right to participate, object and be heard in
any motion or proceeding in connection therewith. Without limitation of the
foregoing, Agent shall have the right to make any motion or raise any objection
it deems to be in its interest (specifically including but not limited to
objections to use of proceeds of the Advances and the Term Loan, to payment of
professional fees and expenses or the amount thereof, to sales or other
transactions outside the ordinary course of business or to assumption or
rejection of any executory contract or lease).
18.10 Confidentiality. Except as otherwise provided in this
Agreement, Agent and each of the Lenders shall not disclose any Confidential
Information to any Person without the consent of Borrower, other than (a) to
Agent's or a Lender's Affiliates and its officers, directors, employees, agents
and advisors and to actual or prospective assignees and participants, and then
only on a confidential basis; (b) as required by any law, rule, or regulation or
judicial process; and (c) as requested or required by any state, federal, or
foreign authority or examiner regulating banks or banking. If Agent or a Lender
is required by any law, rule, or regulation or judicial process to disclose any
Confidential Information, to the extent permitted by applicable law, it shall
promptly give notice to Borrower so that Borrower may seek a protective order or
other appropriate remedy. If Borrower does not obtain such a protective order or
other remedy, to the extent permitted by applicable law, Agent or the Lender, as
applicable, will endeavor to furnish only that portion of the Confidential
Information which it reasonably believes to be legally required.
[Signature pages to follow.]
-93-
100
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
BORROWER:
e.spire Communications, Inc.,
a Delaware corporation, as Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------
Title: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
GUARANTORS:
e.spire Finance Corporation,
a Delaware corporation
ACSI Network Technologies, Inc.,
a Maryland corporation
e.spireDATA, Inc.,
a Maryland corporation
ACSI Local Switched Services, Inc.,
a Maryland corporation
ACSI Long Distance, Inc.,
a Maryland corporation
e.spire Leasing Corporation,
a Maryland corporation
American Communication Services of Albuquerque, Inc.,
a Delaware corporation
American Communication Services of Amarillo, Inc.,
a Maryland corporation
American Communication Services of Atlanta, Inc.,
a Maryland corporation
American Communication Services of Austin, Inc.,
a Delaware corporation
American Communication Services of Baton Rouge, Inc.,
a Maryland corporation
American Communication Services of Birmingham, Inc.,
a Delaware corporation
American Communication Services of Charleston, Inc.,
a Delaware corporation
American Communication Services of Chattanooga, Inc.,
a Delaware corporation
American Communication Services of Colorado Springs, Inc.,
a Maryland corporation
American Communication Services of Columbia, Inc.,
a Delaware corporation
101
American Communication Services of Columbus, Inc.,
a Maryland corporation
American Communication Services of Corpus Christi, Inc.,
a Maryland corporation Inc.
American Communication Services of Dallas, Inc.,
a Maryland corporation
American Communication Services of D.C., Inc.,
a Maryland corporation
American Communication Services of El Paso, Inc.,
a Delaware corporation
American Communication Services of Fort Worth, Inc.,
a Delaware corporation
American Communication Services of Greenville, Inc.,
a Delaware corporation
American Communication Services of Irving, Inc.,
a Maryland corporation
American Communication Services of Jackson, Inc.,
a Maryland corporation
American Communication Services of Jacksonville, Inc.,
a Maryland corporation
American Communication Services of Kansas City, Inc.,
a Maryland corporation
American Communication Services of Las Vegas, Inc.,
a Maryland corporation
American Communication Services of Lexington, Inc.,
a Delaware corporation
American Communication Services of Little Rock, Inc.,
a Delaware corporation
American Communication Services of Louisiana, Inc.,
a Delaware corporation
American Communication Services of Louisville, Inc.,
a Delaware corporation
American Communication Services of Maryland, Inc.,
a Maryland corporation
American Communication Services of Miami, Inc.,
a Maryland corporation
American Communication Services of Mobile, Inc.,
a Delaware corporation
American Communication Services of ▇▇▇▇▇▇▇▇▇▇, Inc.,
a Maryland corporation
American Communication Services of Pima County, Inc.,
a Delaware corporation
American Communication Services of Rio Rancho, Inc.,
a Maryland corporation
American Communication Services of Roanoke, Inc.,
a Maryland corporation
102
American Communication Services of San Antonio, Inc.,
a Delaware corporation
American Communication Services of Savannah, Inc.,
a Maryland corporation
American Communication Services of Shreveport, Inc.,
a Maryland corporation
American Communication Services of Spartanburg, Inc.,
a Maryland corporation
American Communication Services of Tampa, Inc.,
a Maryland corporation
American Communication Services of Tulsa, Inc.,
a Maryland corporation
American Communication Services of Virginia, Inc.,
a Virginia corporation
American Communication Services International, Inc.,
a Delaware corporation
ACSI Local Switched Services of Virginia, Inc.,
a Virginia corporation
Cybergate, Inc.,
a Florida corporation
FloridaNet, Inc.,
a Florida corporation
Each by: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Title: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
AGENTS AND LENDERS:
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: [SIG]
----------------------------------------------
Title: SVP
ABLECO FINANCE LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------------
Title: ▇▇▇▇▇ ▇▇▇▇▇
Senior Vice President
