EXHIBIT 10.4
MASTER SUBSIDIARY GUARANTEE, SECURITY AGREEMENT,
COLLATERAL ASSIGNMENT AND EQUITY PLEDGE
AMONG
CERTAIN SUBSIDIARIES OF TALK AMERICA HOLDINGS, INC., AS GRANTORS,
STATE STREET BANK AND TRUST COMPANY, N.A.,
AS COLLATERAL AGENT ON BEHALF OF AMERICA ONLINE, INC.,
AND
AMERICA ONLINE, INC.
DATED AS OF
SEPTEMBER 19, 2001
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS....................................................................................1
Section 1.01 Definition of Terms Used Herein.............................................1
Section 1.02 Definition of Certain Terms Used Herein.....................................2
Section 1.03 Rules of Interpretation.....................................................6
Section 1.04 Effectiveness of this Guarantee and Security Agreement......................6
ARTICLE II GUARANTEE.....................................................................................7
Section 2.01 Guarantee...................................................................7
Section 2.02 Right of Contribution ......................................................8
Section 2.03 No Subrogation...............................................................
Section 2.04 Amendments, etc. with respect to the Borrower Obligations...................8
Section 2.05 Guarantee Absolute and Unconditional.........................................
Section 2.06 Reinstatement..............................................................10
Section 2.07 Payments...................................................................10
ARTICLE III SECURITY INTEREST...........................................................................10
Section 3.01 Security Interest..........................................................10
Section 3.02 No Assumption of Liability.................................................11
Section 3.03 Power of Attorney..........................................................11
ARTICLE IV REPRESENTATIONS AND WARRANTIES...............................................................12
Section 4.01 Organization, Standing, etc................................................12
Section 4.02 Authorization; Binding Effect..............................................12
Section 4.03 No Violations; Consents and Approvals......................................12
Section 4.04 Title, No Liens and Authority..............................................13
Section 4.05 Filings....................................................................13
Section 4.06 Possession.................................................................14
Section 4.07 Control....................................................................14
Section 4.08 Marking of Chattel Paper...................................................15
Section 4.09 Validity of Security Interest..............................................15
Section 4.10 Recourse...................................................................15
Section 4.11 Litigation.................................................................15
Section 4.12 Compliance with Applicable Law.............................................15
Section 4.13 Changes....................................................................16
Section 4.15 Capitalization; Options and Warrants.......................................17
Section 4.16 Subsidiaries...............................................................17
ARTICLE V COVENANTS.....................................................................................17
Section 5.01 Change of Name; Location of Collateral; Records; Place of Business.........17
Section 5.02 Protection of Collateral Agent's Security..................................18
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Section 5.03 Modification of Terms, etc.................................................18
Section 5.04 Collection.................................................................18
Section 5.05 Financing Statements.......................................................19
Section 5.06 Further Assurances.........................................................19
Section 5.07 Additional Shares..........................................................19
Section 5.08 Additional Covenants of Each Grantor.......................................19
ARTICLE VI REMEDIES.....................................................................................19
Section 6.01 Rights of Grantor..........................................................19
Section 6.02 Remedies upon Occurrence of Event of Default...............................20
Section 6.03 Remedies; Disposition of the Collateral....................................22
Section 6.04 Restrictions...............................................................23
Section 6.05 Waiver of Claims...........................................................24
Section 6.06 Application of Proceeds....................................................24
Section 6.07 Remedies Cumulative........................................................25
Section 6.08 Discontinuance of Proceedings..............................................25
Article VII COLLATERAL AGENT DUTIES; INDEMNITY..........................................................26
Section 7.01 Limitation of Liability....................................................26
Section 7.02 Grantor Indemnity..........................................................28
Section 7.03 Indemnity Obligations Secured by Collateral; Survival......................29
Section 7.04 Fees and Indemnity.........................................................29
Article VIII MISCELLANEOUS..............................................................................30
Section 8.01 Notices....................................................................30
Section 8.02 Entire Agreement...........................................................32
Section 8.04 Governing Law..............................................................33
Section 8.05 Waivers; Amendment.........................................................33
Section 8.06 Severability...............................................................33
Section 8.07 Counterparts...............................................................33
Section 8.08 Headings...................................................................33
Section 8.09 Obligations Absolute.......................................................33
Section 8.10 Grantor's Duties...........................................................34
Section 8.11 Action by Investor.........................................................34
Section 8.12 Termination................................................................34
Section 8.13 Dispute Resolution.........................................................34
Section 8.14 Consent to Jurisdiction and Service........................................34
Section 8.15 Force Majeure..............................................................35
Section 8.16 Reproduction of Documents..................................................35
Section 8.17 Additional Grantors........................................................35
Section 8.18 Releases...................................................................35
Schedule I to the Guarantee and Security Agreement......................................................40
Schedule II to the Guarantee and Security Agreement.....................................................45
Schedule III to the Guarantee and Security Agreement....................................................60
Annex I to the Guarantee and Security Agreement.........................................................61
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MASTER SUBSIDIARY GUARANTEE, SECURITY AGREEMENT, COLLATERAL ASSIGNMENT
AND EQUITY PLEDGE dated as of September 19, 2001 (the "Guarantee and Security
Agreement") among certain Subsidiaries of Talk America Holdings, Inc. that are
signatories hereto, (the "Grantors"), State Street Bank and Trust Company, N.A.,
as collateral agent (the "Collateral Agent") on behalf of America Online, Inc.
and its successors and assigns, as holders of the Convertible Note (America
Online, Inc. ("AOL") and such successors and assigns, the "Investor") and AOL.
W I T N E S S E T H:
WHEREAS, pursuant to the Restructuring and Note Agreement dated as of
September 19, 2001, (the "Restructuring Agreement"), between Talk America
Holdings, Inc. ("Holdings") and the Investor, Investor is agreeing to
restructure Holding's current debt obligations to the Investor and Holdings is
delivering to the Investor one or more 8% senior convertible promissory notes in
the initial aggregate principal amount of $54,000,000 (collectively, the
"Convertible Note"); and
WHEREAS, the Restructuring Agreement provides that, as a condition to
the Investor's agreement to restructure Holdings' debt and accept the
Convertible Note, the Grantors are to execute a guarantee, security agreement,
collateral assignment and pledge agreement for the benefit of the Investor to
secure Holdings' obligations to the Investor under the Convertible Note;
provided that the effectiveness of this Guarantee and Security Agreement as to
any Grantor is subject to the receipt of necessary approvals and consents as
described in Section 1.04, below; and
WHEREAS, Holdings is the direct or indirect corporate parent of each of
the Grantors, Holdings and the Grantors are engaged in related businesses, and
the Restructuring Agreement provides for a relaxation of certain restrictions on
the indebtedness that such Grantors may incur, the debt restructuring will
enhance the ability of Holdings to obtain financing useful in the operation of
the businesses of the Grantors and otherwise provide greater financial
flexibility to Holdings and the Grantors, and each such Grantor thereby will
derive substantial direct and indirect benefit from the debt restructuring; and
NOW, THEREFORE, for good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged) and intending to be legally bound,
each Grantor (to induce the Investor to enter into the Restructuring Agreement),
the Collateral Agent and the Investor (for themselves and their respective
permitted successors or assigns) hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definition of Terms Used Herein. Unless the context otherwise
requires, all capitalized terms used but not defined herein shall have the
meanings set
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forth in the Restructuring Agreement. Reference in this Guarantee and Security
Agreement to the defined terms therein is for convenience only and shall not
obligate the Collateral Agent to interpret, determine compliance with or
otherwise become bound by, the Restructuring Agreement.
Section 1.02 Definition of Certain Terms Used Herein. As used herein, the
following terms shall have the following meanings:
"Accounts" shall mean all "accounts" and "deposit accounts" as such
terms are defined in the UCC and, to the extent not included within such
definition, all accounts receivable, book debts and other forms of obligations,
whether arising out of goods sold or services rendered by a Grantor or from any
other transaction, including, without limitation, any such obligation that might
be characterized as an account or contract right under the UCC, and all of any
Grantor's rights in, to and under all purchase orders or receipts for goods or
services, all of any Grantor's rights to any goods represented by any of the
foregoing, all moneys due or to become due to a Grantor under all contracts for
the sale of goods or the performance of services or both by a Grantor (whether
or not yet earned by performance on the part of such Grantor or in any other
transaction), now in existence or hereafter occurring, and expressly including,
without limitation, rights to receive the proceeds of, from or in connection
with purchase orders or contracts for the provision of telephone and other
communication services, including, without limitation, all agreements with and
sums due from customers and other persons, and all books and records recording,
evidencing or relating to such rights or any part thereof, and all collateral
security and guarantees of any kind given by any person with respect to any of
the foregoing.
"Collateral" shall mean all (a) Accounts, (b) Contracts and Leases, (c)
Equipment and Licenses, (d) Furniture and Fixtures, (e) General Intangibles, (f)
Inventory, (g) cash and cash accounts, (h) Miscellaneous Items, (i) Pledged
Collateral and (j) Proceeds, if any.
"Contracts and Leases" shall mean all contracts, undertakings, leases
or other agreements in or under which a Grantor may now or hereafter have any
right, title or interest including, without limitation, (a) construction
contracts, subscriber contracts, customer service agreements, management
agreements, rights of way, easements, tower agreements, cell site agreements,
pole attachment agreements, transmission capacity agreements, public utility
contracts and other agreements to which such Grantor is a party, whether now
existing or hereafter arising; (b) lease agreements for real or personal
property to which such Grantor is a party, whether now existing or hereafter
arising; and (c) other contracts and contractual rights, remedies or provisions,
whether now existing or hereafter arising, in favor of such Grantor, including,
with respect to an Account, any agreement relating to the terms of performance
thereof.
"Documents" means, collectively, this Guarantee and Security Agreement,
the Restructuring Agreement, the Intercreditor Agreement, and the Parent
Security Agreement.
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"Equipment and Licenses" shall mean all "equipment" as such term is
defined in the UCC and, to the extent not included within such definition, all
machinery, equipment, furnishings, vehicles, fixtures, and supplies (installed
and uninstalled), and any and all additions, substitutions and replacements of
any of the foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories installed or to be installed
thereon or affixed or to be affixed thereto, including, without limitation, all
equipment located at telephone switching office facilities; any distribution
systems and all components thereof, including but not limited to hardware,
cables, fiber optic cables, switches, computer equipment, amplifiers, and
associated devices; and any other equipment used in connection with any
Grantor's business; and all franchises, licenses, permits and operating rights
authorizing or relating to any Grantor's rights to operate and maintain
telecommunications or other related business, whether now owned or hereafter
acquired by such Grantor.
"Event of Default" shall have the meaning set forth in the
Restructuring Agreement.
"Furniture and Fixtures" shall mean all of a Grantor's right, title and
interest in and to all furniture and fixtures in which such Grantor has an
ownership, leasehold or similar legal interest, whether now owned or hereafter
acquired by such Grantor.
"General Intangibles" shall mean all "general intangibles" as such term
is defined in the UCC and, to the extent not included within such definition,
all personal property, goodwill, permits, customer lists, patents, copyrights,
proprietary or confidential information, inventions (whether patented or
patentable or not), technical information, procedures, trademarks, trademark
applications, trade names, trade secrets, designs, knowledge, know-how, payment
intangibles (as defined in the UCC), software (as defined in the UCC), data,
databases, skill, expertise, experience, processes, models, drawings, materials
and records, industrial or intellectual property or rights therein, whether
under license or otherwise, all right, title and interest in any of the
foregoing, including, without limitation, all rights to receive payment or
property upon or in connection with any transfer of any license, claims for tax
refunds, tax refund amounts and rights of indemnification, in each case, whether
now owned or hereafter acquired by a Grantor.
"Holdings" shall have the meaning assigned to such term in the
preliminary statement of this Guarantee and Security Agreement.
"Intercreditor Agreement" shall mean the Intercreditor Agreement, dated
as of September 19, 2001, between MCG Finance Corporation, as collateral agent
for itself and certain other lenders to the Holdings Subsidiaries, State Street
Bank And Trust Company, N.A., as collateral agent for the Investor, and other
collateral agents from time to time parties thereto, as the same may be amended,
modified, supplemented or restated from time to time.
"Indebtedness" shall mean and include, as of any date as of which the
amount thereof is to be determined, (i) all obligations of such person to repay
money borrowed
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(including, without limitation, all notes payable and drafts accepted
representing extensions of credit, all obligations evidenced by bonds,
debentures, notes or other similar instruments and all obligations upon which
interest charges are customarily paid), (ii) the principal amount of all
monetary obligations that are secured by any perfected lien or security interest
existing on property owned by such person whether or not the obligations secured
thereby shall have been assumed by such person, and (iii) all guaranties of
Indebtedness of any other person.
"Inventory" shall mean all "inventory" as such term is defined in the
UCC and to the extent not included within such definition, all inventory,
supplies, merchandise, goods and other personal property of whatsoever nature
and kind, and wherever situated, including, without limitation, any inventory
held for lease or sale or that are furnished or are to be furnished under a
contract of service, or that constitute raw materials, components, work in
process, finished goods, goods in transit, materials used or consumed or to be
used or consumed in a Grantor's business, packing and shipping materials, and
all accretions and accessions thereto, trust receipts and similar documents
covering the same products, whether now owned or hereafter acquired such
Grantor.
"Investment Property" shall mean all "investment property" as such term
is defined in the UCC.
"Lien" shall have the meaning set forth in Section 4.03 hereof.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, properties, operations, financial condition, income or business
prospects of Holdings and its Subsidiaries, taken as a whole, as presently
conducted or (b) the validity or enforceability of the Parent Security Agreement
or this Guarantee and Security Agreement.
"Miscellaneous Items" shall mean all goods, chattel paper, documents,
instruments, supplies, choses in action, claims, money, cash accounts, deposits,
letter of credit rights, certificates of deposit, stock or share certificates
(including, without limitation, the stock of any Subsidiaries of any Grantor now
existing or hereafter created or acquired) and licenses and other rights in
intellectual property not otherwise included as "collateral" hereunder and
including, without limitation, all other investment property of any Grantor to
the extent not otherwise included above, including all securities, security
entitlements, securities accounts and commodity contracts, whether now owned or
hereafter acquired by such Grantor.
"Obligations" shall mean: (a) all payment obligations and liabilities
(including, without limitation, guarantees and other contingent liabilities) of
Holdings to the Investor arising under the Convertible Note; (b) any and all
sums advanced by the Investor or the Collateral Agent in order to preserve the
Collateral or preserve their Security Interests in the Collateral; and (c) in
the event of any proceeding for the collection or enforcement of any payment
obligations or liabilities of Holdings referred to in clause (a), after an Event
of Default shall have occurred and be continuing, the reasonable expenses of
re-taking, holding, preparing for sale or lease, selling or otherwise disposing
or realizing on the
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Collateral, or of any exercise by the Collateral Agent of its rights hereunder,
together with reasonable attorneys' fees and court costs.
"Official Body" shall mean any federal, state, local, or other
government (or any political subdivision, agency, authority, bureau, commission,
department or instrumentality thereof, including the FCC and each State PUC) and
any court, tribunal, grand jury or arbitrator, in each instance whether foreign
or domestic.
"Parent Security Agreement" shall mean the Security and Pledge
Agreement, dated as of September 19, 2001, among Holdings, as grantor, the
Collateral Agent, on behalf of the Investor, and the Investor.
"Perfection Certificate" shall mean a certificate substantially in the
form of Schedule II hereto, completed and supplemented with the schedules and
attachments, contemplated thereby, and duly executed by an authorized officer of
each Grantor.
"Person" shall mean any natural person, corporation, partnership,
unincorporated association, trust, governmental entity, joint venture, trade
group or other entity, or any entity or group that is a part of, or associated
with any of the foregoing.
"Pledged Collateral" shall mean, collectively, (a) the shares of
capital stock owned by any Grantor and listed on Schedule I hereto and any
shares of capital stock or derivative securities of any Person acquired in the
future by any Grantor, (b) any debt securities in the future issued to any
Grantor, (c) all payments of principal or interest, dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of, in exchange for, or upon the conversion of, the
securities referred to in clauses (a) and (b) above.
"Proceeds" shall mean, to the extent not otherwise included as
"Collateral" hereunder, all "proceeds", as such term is defined in the UCC, of
each item of Collateral, and, to the extent not included within such definition,
any and all proceeds of any loss of, damage to or destruction of the above,
whether insured or not insured, and all other proceeds of any sale, lease,
license, exchange or other disposition of any property or interest therein
referred to herein, together with all proceeds of any policies of insurance
covering any item of Collateral, any and all proceeds of any award with respect
to the requisition, confiscation, condemnation, seizure or forfeiture of all or
any part of the property or assets of any Grantor, any and all proceeds of any
insurance, indemnity, warranty or guarantee payable to any Grantor from time to
time with respect to any property or assets of such Grantor, any rebates or
refunds, whether for taxes or otherwise, and any and all other amounts from time
to time paid or payable (in whatever form) under, in connection with or with
respect to any property or assets of the Grantor, and all proceeds of any such
proceeds, whether now existing or hereafter arising.
"Restructuring Agreement" shall have the meaning assigned to such term
in the preliminary statement of this Guarantee and Security Agreement.
"Security Interest" shall have the meaning assigned to such term in
Section 3.01(a).
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"Subsidiary" shall mean, as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership, limited liability company or other entity, are at
the time owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Collateral Agreement shall refer to a Subsidiary or Subsidiaries of a
Grantor.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Collateral Agent's interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, or by the laws of a jurisdiction other than a state
of the United States, the term "UCC" shall mean the Uniform Commercial Code as
in effect in such other jurisdiction or such other laws, as the case may be, for
purposes of the provisions hereof relating to such attachment, perfection or
priority.
Section 1.03 Rules of Interpretation. The definitions in Section 1.02 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include," "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Guarantee and Security Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, (a) any reference in
this Guarantee and Security Agreement to the Restructuring Agreement or the
Convertible Note shall mean the Restructuring Agreement or the Convertible Note,
in each case as the same may be amended, restated, supplemented, replaced or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time.
Section 1.04 Effectiveness of this Guarantee and Security Agreement.
Notwithstanding any other provision of this Guarantee and Security Agreement to
the contrary, Articles II, III and VI, and Sections 4.05, 4.06, 4.07, 4.08,
4.09, 5.05 and 5.06 of this Guarantee and Security Agreement shall not in any
respect be effective as to any Grantor until the date such Grantor shall have
obtained all Official Body approvals necessary for such Grantor to be bound by
the terms of this Guarantee and Security Agreement (the "Necessary Consents").
Each Grantor shall use all commercially reasonable efforts to secure as soon as
reasonably practicable the Necessary Consents. Promptly upon receipt of such
Necessary Consents as to any Grantor, such Grantor will deliver a notice of such
approval to the Investor and Administrative Agent. This Guarantee and Security
Agreement shall be effective, in its entirety, as to and binding upon the
Grantor receiving such Necessary Consents. Nothing in this undertaking and
agreement shall require any Grantor to consent or agree to make any payments to
any
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person or Official Body other than ordinary course filing, license or
registration fees or to modify or otherwise change its manner of conducting
business in order to secure any Necessary Consent.
ARTICLE II
GUARANTEE
Section 2.01 Guarantee.
(a) Each of the Grantors hereby, jointly and severally, unconditionally
and irrevocably, guarantees to the Investor, and the Collateral Agent for the
benefit of the Investor, the prompt and complete payment and performance by
Holdings when due and payable (whether at the stated maturity, by acceleration
or otherwise) of the Obligations.
(b) Anything herein or in any Document to the contrary notwithstanding,
the maximum liability of each Grantor hereunder and under the other Documents
shall in no event exceed the amount that can be guaranteed by such Grantor under
applicable law, including applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.02).
(c) Each Grantor agrees that the Obligations may at any time and from
time to time exceed the amount of the liability of such Grantor hereunder
without impairing the guarantee contained in this Article II or affecting the
rights and remedies of the Investor and the Collateral Agent hereunder.
(d) The guarantee contained in this Article II shall remain in full
force and effect until the earlier to occur of (i) the first date on which the
Convertible Note and all other Obligations then due and owing, and the
obligations of each Grantor under the guarantee contained in this Article II
then due and owing, shall have been satisfied by payment in full in cash, or
(ii) as to any Grantor, the sale or other disposition of all the capital stock
of such Grantor as permitted under the Parent Security Agreement.
(e) No payment (i) made by Holdings, any of the Grantors, any other
guarantor or any other Person or (ii) received or collected by the Investor or
the Collateral Agent from Holdings, any of the Grantors, any other guarantor or
any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of any Grantor hereunder. Such Grantor shall,
notwithstanding any such payment (other than any payment made by such Grantor in
respect of the Obligations or any payment received or collected from such
Grantor in respect of the Obligations), remain liable for the Obligations up to
the maximum liability of such Grantor hereunder until the earlier to occur of
(i) the first date on which the Convertible Note and all other Obligations then
due and owing are paid in full in cash or (ii) the sale or other disposition of
all of the Capital Stock of such Grantor as permitted under the Parent Security
Agreement.
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Section 2.02 Right of Contribution . Each Grantor hereby agrees that, to
the extent that a Grantor shall have paid more than its proportionate share of
any payment made hereunder, such Grantor shall be entitled to seek and receive
contribution from and against any other Grantor hereunder, if such Grantor has
not paid its proportionate share of such payment. Each Grantor's right of
contribution shall be subject to the terms and conditions of Section 2.03. The
provisions of this Section 2.02 shall in no respect limit the obligations and
liabilities of any Grantor to the Investor or the Collateral Agent, and each
Grantor shall remain liable to the Investor and the Collateral Agent for the
full amount guaranteed by such Grantor hereunder.
Section 2.03 No Subrogation. Notwithstanding any payment made by any
Grantor hereunder or any set-off or application of funds of any Grantor by the
Investor or the Collateral Agent, no Grantor shall be entitled to be subrogated
to any of the rights of the Investor or Collateral Agent or any other Grantor or
any collateral security or guarantee or right of offset held by the Investor or
Collateral Agent for the payment of the Obligations, nor shall any Grantor seek
or be entitled to seek any contribution or reimbursement from Holdings or any
other Grantor in respect of payments made by such Grantor hereunder, until all
amounts owing to the Investor by Holdings and such Grantor on account of the
Obligations are paid in full in cash. If any amount shall be paid to any Grantor
on account of such subrogation rights at any time when all of the Obligations
shall not have been paid in full in cash, such amount shall be held by such
Grantor in trust for the Investor, segregated from other funds of such Grantor,
and shall, forthwith upon receipt by such Grantor, be turned over to the
Collateral Agent in the exact form received by such Grantor (duly endorsed by
such Grantor to the Collateral Agent, if required), to be held as collateral
security for the Obligations (whether matured or unmatured) and/or then or at
any time thereafter may be applied against the Obligations, whether matured or
unmatured, in such order as the Investor may determine.
Section 2.04 Amendments, etc. with respect to the Borrower Obligations. To
the maximum extent permitted by applicable law, each Grantor shall remain
obligated hereunder notwithstanding that, without any reservation of rights
against any Grantor and without notice to or further assent by any Grantor, any
demand for payment of any of the Obligations made by the Collateral Agent may be
rescinded by the Investor or Collateral Agent, and any of the Obligations
continued. Such Obligations, or the liability of any other Person upon or for
any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Investor or Collateral Agent, and the Documents
and any other documents executed and delivered in connection therewith may be
amended, waived, modified, supplemented or terminated, in whole or in part, as
Investor or Collateral Agent may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by the
Investor or Collateral Agent for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. The Investor or Collateral Agent
shall not have any obligation to protect, secure, perfect or insure any Lien at
any time held by it as security for the Obligations or for the guarantee
contained in this Article II or any property subject thereto, except to the
extent required by applicable law.
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Section 2.05 Guarantee Absolute and Unconditional. Each Grantor waives, to
the maximum extent permitted by applicable law, any and all notice of the
creation, renewal, extension or accrual of any of the Obligations and notice of
or proof of reliance by the Investor or Collateral Agent upon the guarantee
contained in this Article II or acceptance of the guarantee contained in this
Article II; the Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon the guarantee contained in this Article II; and all
dealings between Holdings and any of the Grantors, on the one hand, and the
Investor or Collateral Agent, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the guarantee
contained in this Article II. Each Grantor waives, to the maximum extent
permitted by applicable law, diligence, presentment, protest, demand for payment
and notice of default or nonpayment to or upon the Borrower or any of the other
Grantors with respect to the Obligations. Each Grantor understands and agrees,
to the extent permitted by applicable law, that the guarantee contained in this
Article II shall be construed as a continuing, absolute and unconditional
guarantee of payment. Each Grantor hereby waives, to the maximum extent
permitted by applicable law, any and all defenses that it may have arising out
of or in connection with any and all of the following: (a) the validity or
enforceability of the Documents, any of the Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Investor or Collateral Agent, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) that may, at any time, be available to or be asserted by Holdings
against the Investor or Collateral Agent, (c) any change in the time, place or
manner of payment, amendment, or waiver or increase in the Obligations, (d) any
exchange, taking, or release of Collateral, (e) any change in the corporate
structure or existence of Holdings, (f) any application of Collateral to
Obligations in accordance with the terms of this Guarantee and Security
Agreement or (g) any other circumstance whatsoever, other than indefeasible
payment in full in cash of the Obligations, that (with or without notice to or
knowledge of Holdings or such Grantor) constitutes, or might be construed to
constitute, an equitable or legal discharge of Holdings for the Obligations, or
of such Grantor under the guarantee contained in this Article II, in bankruptcy
or in any other instance. When making any demand hereunder or otherwise pursuing
its rights and remedies hereunder against any Grantor, the Investor or
Collateral Agent may, but shall be under no obligation to, make a similar demand
on or otherwise pursue such rights and remedies as it may have against Holdings,
any other Grantor or any other Person or against any collateral security or
guarantee for the Obligations or any right of offset with respect thereto. Any
failure by the Investor or Collateral Agent to make any such demand, to pursue
such other rights or remedies or to collect any payments from Holdings, any
other Grantor of any other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release of
Holdings, any other Grantor or any other Person or any such collateral security,
guarantee or right of offset, shall not relieve any Grantor of any obligation or
liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Investor or
Collateral Agent against any Grantor. For the purposes hereof, "demand" shall
include the commencement and continuance of any legal proceedings.
9
Section 2.06 Reinstatement. The guarantee contained in this Article II
shall continue to be effective, or be reinstated, as the case may be, if any
time payment, or any part thereof, of any of the Obligations is rescinded or
must otherwise be restored or returned by the Investor or Collateral Agent upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of
Holdings or any Grantor, or upon or as a result of the appointment of a
receiver, intervener or conservator of, or trustee or similar officer for,
Holdings or any Grantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
Section 2.07 Payments. Each Grantor hereby guarantees that payments
hereunder will be paid to the Investor without set-off or counterclaim, in
lawful money of the United States of America at the principal office of the
Investor in Dulles, Virginia, or at such other place as the Investor shall have
designated for such purpose.
ARTICLE III
SECURITY INTEREST
Section 3.01 Security Interest.
(a) As security for the prompt and full payment when due of all of the
Obligations, whether now existing or hereinafter incurred, each Grantor hereby
grants to the Collateral Agent as collateral agent on behalf of the Investor, a
continuing security interest of first priority in all of such Grantor's right,
title and interest in, to and under the Collateral, whether now existing or
hereafter from time to time acquired (the "Security Interest") ; provided,
however, and notwithstanding any other provision contained herein, the
Collateral shall not include any property in which the Senior Agent under (and
as defined in) the Intercreditor Agreement does not have a security interest and
lien, including, without limiting the generality of the foregoing, any property
in which (i) the Senior Agent has waived or released its security interest and
(ii) the Investor's security interest has been released in accordance with
Section 4.1(a) of the Intercreditor Agreement. Without limiting the foregoing,
the Collateral Agent is hereby authorized (but not obligated) to file one or
more financing statements (including fixture filings), continuation statements,
or other documents for the purpose of perfecting, confirming, continuing,
enforcing or protecting the Security Interest granted by such Grantor, without
the signature of such Grantor, and naming such Grantor as the debtor and the
Collateral Agent as the secured party.
(b) As security for the prompt and full payment when due of all of the
Obligations, each Grantor hereby (i) pledges and deposits as security with the
Collateral Agent as agent on behalf of the Investor (except as otherwise
permitted below) the Pledged Collateral owned by such Grantor on the date
hereof, which Pledged Collateral is listed on Schedule I attached hereto, and
delivers to the Collateral Agent (or its bailee) certificates therefor
accompanied by undated stock powers duly executed in blank by the Grantor in the
case of capital stock, or such other instruments of transfer as are acceptable
to the Collateral Agent; and (ii) hereby assigns, transfers, hypothecates,
mortgages, charges and sets over to the Collateral Agent as collateral agent on
behalf of the Investor
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all of the Grantor's right, title and interest in and to such Pledged Collateral
(and in and to the certificates or instruments evidencing such Pledged
Collateral), to be held by the Collateral Agent upon the terms and conditions
set forth in this Guarantee and Security Agreement. If any Grantor's Pledged
Collateral (whether now owned or hereafter acquired) is evidenced by an
uncertificated security, such Grantor shall promptly notify the Collateral Agent
thereof in writing and shall promptly take all actions required to perfect the
Security Interest of the Collateral Agent, as agent on behalf of the Investor,
under applicable law (including the UCC). All deliveries to and deposits with
the Collateral Agent (or its bailee) made by any Grantor pursuant to this
subsection (b) shall be made promptly after this Guarantee and Security
Agreement, in accordance with Section 1.04, becomes effective in its entirety
for such Grantor.
(c) The security interests of the Collateral Agent under this Guarantee
and Security Agreement extend to all Collateral that each Grantor may acquire at
any time during the continuation of this Guarantee and Security Agreement. If
any Grantor shall acquire (by purchase, stock dividend or otherwise) any
additional Pledged Collateral at any time or from time to time after the date
hereof, such Grantor will forthwith pledge and deposit such Pledged Collateral
as security with the Collateral Agent, as collateral agent on behalf of the
Investor, and deliver to the Collateral Agent certificates therefor accompanied
by stock powers duly executed in blank by such Grantor or such other instruments
of transfer as are acceptable to the Collateral Agent, and will promptly
thereafter deliver to the Collateral Agent a certificate executed by any of the
President, any Vice President, or the Treasurer of the Grantor describing such
Pledged Collateral and certifying that the same have been duly pledged with the
Collateral Agent, as collateral agent on behalf of the Investor.
Section 3.02 No Assumption of Liability. The Security Interest is granted
as security only and shall not subject the Collateral Agent or the Investor to,
or in any way alter or modify, any obligation or liability of any Grantor with
respect to or arising out of the Collateral. Without limiting the foregoing, the
Collateral Agent shall have no duty or obligation to preserve, protect, vote or
otherwise exercise any rights of any Grantor in the Pledged Stock; the
Collateral Agent shall be responsible only to take reasonable actions for the
physical safekeeping of such stock certificates as are delivered to it
evidencing the Pledged Collateral (and otherwise to perform the specific duties
expressly set forth in this Guarantee and Security Agreement on its part to be
performed).
Section 3.03 Power of Attorney. Each Grantor hereby constitutes and
appoints the Collateral Agent as collateral agent on behalf of the Investor as
such Grantor's true and lawful attorney, irrevocably, with full power after
receiving written notice from Investor of an Event of Default (in the name of
such Grantor or otherwise), to act, require, demand, receive, compound and give
acquittance for any and all monies and claims for monies due or to become due to
such Grantor under or arising out of the Collateral, to transfer, sell, assign,
convey, pledge and otherwise dispose of any Collateral, to endorse any checks or
other instruments or orders in connection therewith and to file any claims or
take any action or institute any proceedings that the Collateral Agent may deem
to be necessary or advisable in the premises, which appointment as attorney is
coupled with an interest.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Grantor represents and warrants to the Collateral Agent and the
Investor that:
Section 4.01 Organization, Standing, etc. Each Grantor is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation. Each Grantor's exact legal name is as set forth in the
preliminary statement of this Guarantee and Security Agreement. Each Grantor is
duly qualified or licensed and, if applicable, is in good standing as a foreign
corporation, in each jurisdiction in which the properties owned, leased or
operated, or the business conducted, by it require such qualification or
licensing, except for any such failure so to qualify or be in good standing
that, individually or in the aggregate, would not have a Material Adverse
Effect. Each Grantor has the requisite power and authority, and the legal right,
to own and operate its property, to lease the property it operates as lessee and
to conduct the business in which it is currently engaged, except to the extent
that the failure to comply would not, individually or in the aggregate, have a
Material Adverse Effect.
Section 4.02 Authorization; Binding Effect. Each Grantor has the corporate
power and authority to execute, deliver and perform this Guarantee and Security
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Guarantee and Security Agreement by each
Grantor has been duly authorized by all necessary corporate action on the part
of such Grantor. This Guarantee and Security Agreement constitutes the valid and
legally binding obligation of each Grantor, enforceable against such Grantor in
accordance with its terms, except as such may be limited by bankruptcy,
insolvency, fraudulent conveyance, moratorium or other similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity, regardless of whether enforcement is sought in a
proceeding at law or in equity.
Section 4.03 No Violations; Consents and Approvals.
(a) The execution, delivery or performance by each Grantor of this
Guarantee and Security Agreement; the consummation by each Grantor of the
transactions contemplated hereby; and the performance by each Grantor of its
obligations hereunder (i) will not result in a violation or breach of such
Grantor's Certificate of Incorporation or its By-laws and (ii) will not result
in a violation or breach of (or give rise to any right of termination,
revocation, cancellation or acceleration under or increased payments under), or
constitute a default (with or without due notice or lapse of time or both)
under, or result in the creation of any lien, mortgage, charge, encumbrance or
security interest of any kind (a "Lien") upon any of the properties or assets of
such Grantor under, (A) any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, contract, agreement, obligation, instrument, offer,
commitment, understanding or other arrangement (each a "Contract") or of any
license, waiver, exemption, order, franchise, permit or concession (each a
"Permit") to which such Grantor is a party or by which any of its properties or
assets may be bound, or (B) subject
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to the governmental filings and other matters referred to in clause (b) below,
any judgment, order, decree, statute, law, regulation or rule applicable to such
Grantor, except, in the case of clause (ii), for violations, breaches, defaults,
rights of cancellation, termination, revocation or acceleration or Liens that
would not, individually or in the aggregate, have a Material Adverse Effect.
(b) Except as described in the Disclosure Letter (as defined in Section
3.4 of the Restructuring Agreement), no consent, approval, order or
authorization of, or registration, declaration or filing with, any government or
any court, administrative agency or commission or other governmental authority
or agency, federal, state, local or foreign is required with respect to any
Grantor in connection with the execution, delivery or performance by such
Grantor of this Guarantee and Security Agreement, the consummation by such
Grantor of the transactions contemplated hereby or the performance by such
Grantor of its obligations hereunder, except as may be required in connection
with the sale, transfer or disposition of Pledged Collateral.
Section 4.04 Title, No Liens and Authority. Each Grantor is the owner of,
and has good and valid rights in and title to the Collateral with respect to
which it has purported to grant a Security Interest hereunder, and will be the
owner of, and will have good and valid rights in and title to the Collateral
acquired by it from time to time after the date hereof with respect to which it
will purport to grant a Security Interest hereunder. Each Grantor is the legal,
record and beneficial owner of, and has good and marketable title, to all of the
Pledged Collateral, subject to no Lien (except the Lien created by this
Guarantee and Security Agreement, any Lien permitted under Section 5.05 hereof
and Section 5.9 of the Restructuring Agreement and any encumbrance on any
Pledged Collateral created solely by operation of law). All the shares of
capital stock of the Pledged Collateral have been duly and validly issued, are
fully paid and nonassessable. Subject to Section 5.05 hereof and Section 5.9 of
the Restructuring Agreement, the Collateral, whether now owned or existing or
hereafter acquired or arising by any Grantor from time to time after the date
hereof will be free from any Lien granted by the Grantor after the date hereof,
or other right, title or interest of any Person granted by the Grantor after the
date hereof, and the Grantor shall defend the Collateral against all claims and
demands of all Persons at any time claiming the same or any interest therein
adverse to the Collateral Agent or the Investor. The Grantor has full power and
authority to grant to the Collateral Agent the Security Interest in such
Collateral pursuant hereto and to execute, deliver and perform its obligations
in accordance with the terms of this Guarantee and Security Agreement, without
the consent or approval of any other person other than any consent or approval
that has been obtained.
Section 4.05 Filings. The Perfection Certificate for each Grantor has been
duly prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed UCC financing statements (including fixture
filings, as applicable) ("Financing Statements") containing a description of the
Collateral have been filed in each governmental office of each Grantor's state
of incorporation, as specified in Schedule II to this Guarantee and Security
Agreement (the "Filing Offices"), which are all the filings, recordings and
registrations that are necessary to publish notice of and protect the validity
of and to establish a legal, valid and perfected security interest in
13
favor of the Collateral Agent as agent on behalf of the Investor and, except
with respect to any Indebtedness permitted under Section 5.9 of the
Restructuring Agreement, superior and prior to the rights of all other Persons
and subject to no other Liens in respect of all Collateral in which the Security
Interest may be perfected by filing, recording or registration in the United
States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements. Each Grantor hereby (i) acknowledges and consents to
the delivery by the Collateral Agent to the Investor of such Financing
Statements, and to the filing thereof by the Investor with the Filing Offices
specified in Schedule II to this Guarantee and Security Agreement, and (ii)
covenants and agrees that it shall prepare and deliver to the Collateral Agent,
with a copy to the Investor, not less than forty-five days prior to the date
when the same are required to be filed under the UCC, duly completed and
appropriate UCC continuation statements for each of such Financing Statements
together with written notice to the Collateral Agent making reference to this
Section of this Guarantee and Security Agreement and instructing the Collateral
Agent to sign and file such continuation statements with the Filing Offices.
Section 4.06 Possession.
(a) Each Grantor shall have possession of the applicable Collateral
except where expressly otherwise provided in this Guarantee and Security
Agreement or where the Collateral Agent, at the written request of the Investor,
or the Investor chooses to perfect its security interest by possession in
addition to the filing of a financing statement, provided, however, if the
Investor shall deliver a written request to the Collateral Agent to request
possession of any Collateral, the Investor shall be responsible for arranging
the delivery of such Collateral to the Collateral Agent.
(b) Where Collateral is in the possession of a third party, the
applicable Grantor will notify the third party of the Collateral Agent's
security interest and use its commercially reasonable best efforts to obtain an
acknowledgment from the third party that it is holding such Collateral for the
benefit of Collateral Agent. Such Grantor shall prepare any such notice to be
delivered to the third party and provide the Collateral Agent with a copy of the
notice.
Section 4.07 Control. Each Grantor will cooperate with the Collateral Agent
in obtaining control with respect to Collateral consisting of:
(a) Deposit Accounts; and
(b) Investment Property;
(c) Letter-of-credit rights; and
(d) Electronic chattel paper.
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Section 4.08 Marking of Chattel Paper. No Grantor will create any Chattel
Paper without placing a legend on the Chattel Paper acceptable to Collateral
Agent indicating that the Collateral Agent, on behalf of the Investor, has a
security interest in the Chattel Paper.
Section 4.09 Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid continuing security interest of first priority
(or second, only with respect to any Indebtedness permitted under Section 5.9 of
the Restructuring Agreement) in all the Collateral securing the Obligations and
(b) subject to the filings described in Section 4.05 above, a perfected security
interest in all Collateral in which a security interest may be perfected by
filing, recording or registering a financing statement or analogous document in
the United States (or any political subdivision thereof) and its territories and
possessions pursuant to the UCC or other applicable law in such jurisdictions.
Section 4.10 Recourse. This Guarantee and Security Agreement is made with
full recourse to each Grantor and pursuant to and upon all the warranties,
representations, covenants and agreements on the part of each Grantor contained
herein, in the Restructuring Agreement, and otherwise in writing in connection
herewith or therewith.
Section 4.11 Litigation. As of the date of this Guarantee and Security
Agreement, there is no action, suit, proceeding or investigation pending or
currently threatened against the Grantor or any of its Subsidiaries that
questions the validity of the Documents or the right of any Grantor, as
applicable, to enter into them or to consummate the transactions contemplated
hereby or thereby. Except as set forth in the Disclosure Letter or as disclosed
in the SEC Filings (as defined in Section 3.7 of the Restructuring Agreement),
as of the date of this Guarantee and Security Agreement, there is no action,
suit, proceeding or investigation pending or currently threatened that,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, could have a Material Adverse Effect. Except as set forth in
the Disclosure Letter or as disclosed in the SEC Filings, as of the date of this
Guarantee and Security Agreement, there are no outstanding judgments, orders,
decrees, or injunctions of any Governmental Entity against any of the Grantors
that, insofar as can reasonably be foreseen, individually or in the aggregate,
in the future would have a Material Adverse Effect.
Section 4.12 Compliance with Applicable Law. Except as set forth in the
Disclosure Letter or as disclosed in the SEC Filings, each of the Grantors is in
compliance with all statutes, laws, regulations, rules, judgments, orders and
decrees of all Governmental Entities applicable to it, including without
limitation the United States Federal Communications Commission, that relate to
its respective business, and no Grantor has received any notice alleging
noncompliance except, with reference to all of the foregoing, where the failure
to be in compliance would not, individually or in the aggregate, have a Material
Adverse Effect. Each of the Grantors has all Permits that are required in order
to permit it to carry on its business as it is presently conducted, except where
the failure to have such Permits would not, individually or in the aggregate,
have a Material Adverse Effect. All such Permits are in full force and effect
and the Grantors are in compliance with the terms of such Permits, except where
the failure to be in full
15
force and effect or in compliance would not, individually or in the aggregate,
have a Material Adverse Effect.
Section 4.13 Changes. Between December 31, 2000 and the date of this
Guarantee and Security Agreement, except (1) as contemplated by this Guarantee
and Security Agreement, (2) as disclosed in the SEC Filings, or (3) as set forth
in the Disclosure Letter, there has not been:
(a) any changes in the assets, liabilities, financial condition,
operating results or, to the best of each Grantor's knowledge, prospects, of the
Grantors from that reflected in the 2000 Annual Report, except changes in the
ordinary course of business that have not been, in the aggregate, materially
adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, that would have a Material Adverse Effect;
(c) any waiver or compromise by the Grantor of a material right or of a
material debt owed to it;
(d) any satisfaction or discharge of any Lien or payment of any
obligation by any Grantor, except in the ordinary course of business and that
would not result in a Material Adverse Effect;
(e) any change to a material contract or arrangement by which any
Grantor or any of its assets is bound or subject, or any breach or waiver of any
breach of or under any such contract or amendment (or the occurrence of any
event that would, as a result of the passage of time, become or result in such a
breach or waiver), which change, breach or waiver has had a Material Adverse
Effect;
(f) any sale, assignment or transfer to a third party that is not an
Affiliate (as hereinafter defined) of any material patents, trademarks,
copyrights, trade secrets or other intangible assets for compensation that is
less than fair value;
(g) any mortgage, pledge, transfer of a security interest in, or Lien,
created by any Grantor, with respect to any of their material properties or
assets, except Liens for taxes not yet due or payable;
(h) any declaration, setting aside or payment or other distribution in
respect of any Grantor's capital stock; or
(i) any event or condition of any type that has (or will as a result of
the passage of time) materially and adversely affected (or affect) the business,
properties, financial condition, or to the best of each Grantor's knowledge, the
business prospects of such Grantor.
For purposes of this Guarantee and Security Agreement, the term
"Affiliate" means any individual or entity directly or indirectly controlling,
controlled by or under common control with, a party to this Guarantee and
Security Agreement. Without
16
limiting the foregoing, the direct or indirect ownership of 50% or more of the
outstanding voting securities of an entity, or the right to receive 50% or more
of the profits or earnings of an entity, shall be deemed to constitute control.
Section 4.14 Undisclosed Liabilities. Except as set forth in the Disclosure
Letter, the Grantors have no liability (whether absolute, accrued, contingent or
otherwise) of a nature required by GAAP to be shown on a balance sheet, except
for (i) liabilities reflected in the SEC Filings, (ii) liabilities that have
arisen since December 31, 2000 in the ordinary course of business and (iii)
contractual liabilities incurred in the ordinary course of business.
Section 4.15 Capitalization; Options and Warrants. The authorized capital
stock of each Grantor is as set forth in the Disclosure Letter. Except as
disclosed in the SEC Filings or the Disclosure Letter, and except for the
transactions contemplated by this Guarantee and Security Agreement, since
December 31, 2000, no Grantor has issued any shares of capital stock or granted
any option, warrants, rights (including conversion or preemptive rights), or
similar rights, to any person or entity to purchase or acquire any shares or any
rights with respect to any shares of capital stock of such Grantor. Except as
set forth in the Disclosure Letter and such rights as may be held by the
Investor, there are no outstanding rights to cause any Grantor to register the
securities held by any person or entity under the Securities Act.
Section 4.16 Subsidiaries. No Grantor has any equity interests with a value
of $100,000 or more in any person or entity (other than (i) any Grantor's
interest in the Subsidiaries of such Grantor or (ii) any investment of less than
5% of the outstanding securities of any corporation if such securities are
regularly traded on a recognized stock exchange), and there are no commitments
on the part of the Grantor to contribute additional capital in respect of any
equity interest in any person or entity. Each of the outstanding shares of
capital stock of each of the Grantors has been duly authorized and validly
issued, and is fully paid and nonassessable. Except as set forth in the
Disclosure Letter, all of the outstanding shares of capital stock of any
Grantor's Subsidiary are owned, either directly or indirectly, by such Grantor
free and clear of all Liens, except for Liens permitted pursuant to Section 5.9
of the Restructuring Agreement.
ARTICLE V
Covenants
Section 5.01 Change of Name; Location of Collateral; Records; Place of
Business.
(a) Each Grantor agrees to notify the Collateral Agent no less than 20
days in advance in writing of any change (i) in its corporate name or in any
trade name used to identify it in the conduct of its business or in the
ownership of its properties, (ii) in the state in which it is organized, (iii)
in its identity or corporate structure or (iv) in its Federal Taxpayer
Identification Number. Each Grantor agrees to reasonably assist the Collateral
Agent and the Investor in the event it effects or permits any change referred to
17
in the preceding sentence with all filings to be made under the UCC or otherwise
that are required in order for the Collateral Agent as collateral agent for the
Investor to continue at all times to have a valid, legal and perfected
continuing security interest of first priority in all the Collateral. Each
Grantor agrees promptly to notify the Collateral Agent if any material portion
of the Collateral owned or held by such Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, and, at such time or times as the Collateral Agent
may reasonably request, promptly prepare and deliver to the Collateral Agent a
duly certified schedule or schedules in form and detail reasonably satisfactory
to the Collateral Agent showing the identity, amount and location of any and all
Collateral.
Section 5.02 Protection of Collateral Agent's Security. No Grantor will do
anything to impair the rights of the Collateral Agent (or the Investor) in the
Collateral. Each Grantor assumes all liability and responsibility in connection
with the Collateral acquired by it and the liability of such Grantor to pay its
Obligations shall in no way be affected or diminished by reason of the fact that
such Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to such Grantor.
Section 5.03 Modification of Terms, etc. No Grantor shall rescind or cancel
any indebtedness evidenced by any Account or under any Contract, or modify any
term thereof or make any adjustment with respect thereto, or extend or renew the
same, or compromise or settle any dispute, claim, suit or legal proceeding
relating thereto, or sell any Account or Contract, or interest therein, without
the prior written consent of the Collateral Agent, as instructed in writing by
the Investor, except as permitted by Section 5.04. Each Grantor will duly
fulfill all obligations on its part to be fulfilled under or in connection with
the Accounts and Contracts and will do nothing to impair the rights of the
Collateral Agent (or the Investor) in the Accounts or Contracts.
Section 5.04 Collection. Each Grantor shall endeavor to cause to be
collected from the account debtor named in each of its Accounts or obligor under
any Contract, as and when due (including, without limitation, amounts that are
delinquent, such amounts to be collected in accordance with generally accepted
lawful collection procedures) any and all amounts owing under or on account of
such Account or Contract, and apply forthwith upon receipt thereof all such
amounts as are so collected to the outstanding balance of such Account or under
such Contract, except that, prior to the occurrence of an Event of Default, such
Grantor may allow in the ordinary course of business as adjustments to amounts
owing under its Accounts and Contracts (i) an extension or renewal of the time
or times of payment, or settlement for less than the total unpaid balance, which
such Grantor finds appropriate in accordance with sound business judgment and
(ii) a refund or credit due as a result of returned or damaged merchandise or
improperly performed services. The costs and expenses (including, without
limitation,
18
attorneys' fees) of collection, whether incurred by such Grantor or the
Collateral Agent, shall be borne by such Grantor.
Section 5.05 Financing Statements. Each Grantor agrees to execute and
deliver to the Collateral Agent such financing statements, instruments and
documents in form acceptable to the Investor as the Collateral Agent or the
Investor may from time to time reasonably request or as are necessary or
desirable to establish and maintain a valid, enforceable, first priority (or
second, only with respect to any Indebtedness permitted under Section 5.9 of the
Restructuring Agreement) Security Interest in the Collateral as provided herein
and the other rights and security contemplated herein, all in accordance with
the UCC as enacted in any and all relevant jurisdictions or any other relevant
law. Each Grantor will pay any applicable filing fees and related expenses. Each
Grantor authorizes the Collateral Agent and the Investor to file any such
financing statements without the signature of such Grantor. Notwithstanding
anything herein to the contrary, the Collateral Agent shall not be responsible
for taking any action to protect or perfect a valid enforceable security
interest in the Collateral, including but not limited to, the timely filing of
any UCC financing or continuation statements.
Section 5.06 Further Assurances. Each Grantor agrees, at its own expense,
to make, execute, endorse, acknowledge, deliver and cause to be duly filed all
such further instruments and documents and take all such actions as the
Collateral Agent or the Investor may from time to time reasonably request to
ensure the preservation and continuous perfection of its Security Interest in
the Collateral, or to effectuate the rights granted to the Collateral Agent or
Investor herein, in accordance with the terms of this Guarantee and Security
Agreement, including the payment of any fees and taxes required in connection
with the execution and delivery of this Guarantee and Security Agreement, the
granting of the Security Interest and the filing of any financing statements
(including fixture filings) or other documents in connection herewith or
therewith.
Section 5.07 Additional Shares. Each Grantor shall (a) not issue any stock
or other securities (including debt securities and derivative securities) in
addition to or in substitution for the Pledged Collateral (as such term is
defined in the Parent Security Agreement) issued by such issuer, except to
Holdings (or, if such Grantor is a Subsidiary of another Grantor, to a Grantor
or Holdings).
Section 5.08 Additional Covenants of Each Grantor.
Each Grantor hereby agrees that it shall be bound, at all times prior to
the discharge of this Guarantee and Security Agreement, by the covenants in
Section 5.3 and Section 5.14 of the Restructuring Agreement
ARTICLE VI
REMEDIES
Section 6.01 Rights of Grantor. So long as no Event of Default shall have
occurred and be continuing, each Grantor shall have the right to (i) receive all
dividends,
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interest and other payments and distributions made upon or with respect to the
Pledged Collateral, (ii) receive all proceeds of any sale of the Pledged
Collateral in accordance with Section 5.08 and (iii) vote and give consents,
ratifications and waivers, with respect to the Pledged Collateral. Each Grantor
waives any right it may have to require the Collateral Agent or Investor to
pursue any third person for any of the Obligations.
Section 6.02 Remedies upon Occurrence of Event of Default. If the
Collateral Agent shall at any time receive written notice from the Investor that
an Event of Default shall have occurred and be continuing, the Collateral Agent
shall, subject to the provisions of Section 6.04 hereof, upon request of the
Investor, (i) deliver the Collateral to the Investor (or its designee), (ii)
execute and deliver to the Investor an instrument satisfactory to the Collateral
Agent assigning to the Investor (without recourse against, and without
representation or warranty of any kind by, the Collateral Agent) all of the
Collateral Agent's rights, title and interests in and to the Collateral
hereunder, and (iii) execute and deliver to the Investor UCC assignments (as
shall have been duly completed and provided to the Collateral Agent by the
Investor) for each of the Financing Statements; provided, however, that the
Collateral Agent's obligation to deliver the foregoing shall be subject to the
Investor's payment to the Collateral Agent of all amounts owing to the
Collateral Agent hereunder, to the extent remaining unpaid by the Investor or
the Grantor (and the Investor shall be subrogated to the rights of the
Collateral Agent to the extent of such payment and such obligations of the
Grantor shall become part of the Obligations secured hereby). Upon such
assignment and delivery to the Investor, the Collateral Agent shall immediately
and automatically be released from all obligations hereunder. Unless and until
the Investor shall have made such request to the Collateral Agent, the
Collateral Agent shall have no duty or obligation to take any action pursuant to
the preceding sentence; and except for the taking of such action pursuant to the
preceding sentence upon receipt of such request, the Collateral Agent shall be
under no duty or obligation to take any other action of any kind hereunder with
respect to the Collateral or such Event of Default (including, without
limitation, no duty to enforce, foreclose, protect, preserve or otherwise
exercise any rights or remedies as a secured party with respect to the
Collateral, including without limitation the sale or other disposition of
Collateral or other exercise of rights or remedies pursuant to or as
contemplated by this Article VI). Notwithstanding the foregoing, the Collateral
Agent thereafter may exercise such rights or remedies or take such actions as
may be requested by the Investor, to the extent and upon such terms as may be
agreed to by the Collateral Agent, at its reasonable discretion (which terms
may, if the Collateral Agent deems necessary, include such additional
compensation as the Collateral Agent reasonably determines to be necessary). In
any and every such case, upon the occurrence and during the continuance of any
Event of Default, subject to any mandatory requirements of applicable law then
in effect, the Collateral Agent, on behalf of the Investor, or the Investor upon
the delivery of the Collateral to the Investor, as the case may be, in addition
to any rights now or hereafter existing under applicable law, shall have all
rights as a secured creditor under the UCC or other applicable law in all
relevant jurisdictions and may:
(a) personally, or by agents or attorneys, immediately retake
possession of the Collateral or any part thereof, from any Grantor or any other
Person
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who then has possession of any part thereof with or without notice or process of
law, and for that purpose may enter upon such Grantor's premises where any of
the Collateral is located and remove the same and use in connection with such
removal any and all services, supplies, aids and other facilities of such
Grantor; and
(b) instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Accounts) constituting the
Collateral to make any payment required by the terms of such instrument or
agreement directly to the Collateral Agent or the Investor, as appropriate; and
(c) sell, assign or otherwise liquidate, or direct any Grantor to sell,
assign or otherwise liquidate, any or all of the Collateral or any part thereof,
and take possession of the proceeds of any such sale or liquidation; and
(d) take possession of the Collateral or any part thereof, by directing
the Grantor thereof in writing to deliver the same to the Collateral Agent or
the Investor, as appropriate, at any place or places designated by the
Collateral Agent or the Investor, as appropriate, in which event such Grantor
shall, at its own expense:
(i) forthwith cause the same to be moved to the place or places
so designated by the Collateral Agent or the Investor, as appropriate,
and there delivered to the Collateral Agent or the Investor, as
appropriate,
(ii) store and keep any Collateral so delivered to the Collateral
Agent or the Investor, as appropriate, at such place or places pending
further action by the Collateral Agent or the Investor, as
appropriate, as provided in Section 6.03, and
(iii) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be reasonably necessary
to protect the same and to preserve and maintain them in good
condition; and
(e) with respect to the Pledged Collateral and subject to the
provisions of Section 6.04 hereof:
(i) receive all amounts payable in respect of the Pledged
Collateral otherwise payable to the Collateral Agent or the Investor,
as appropriate;
(ii) transfer all or any part of the Pledged Collateral into the
Collateral Agent's or the Investor's name, as appropriate, or the name
of its nominee or nominees; and
(iii) vote all or any part of the Pledged Collateral (whether or
not transferred into the name of the Collateral Agent or the Investor,
as appropriate) and give all consents, waivers and ratifications in
respect of the Collateral and otherwise act with respect thereto as
though it were the outright owner thereof (each Grantor hereby
irrevocably constituting and
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appointing the Collateral Agent or the Investor, as appropriate, the
proxy and attorney-in-fact of such Grantor, with full power of
substitution to do so);
it being understood that each Grantor's obligation so to deliver the Collateral
is of the essence of this Guarantee and Security Agreement and that,
accordingly, upon application to a court of equity having jurisdiction, the
Collateral Agent or the Investor, as appropriate, shall be entitled to a decree
requiring specific performance by such Grantor of such obligation.
Section 6.03 Remedies; Disposition of the Collateral.
(a) Any Collateral repossessed by the Collateral Agent or the Investor,
as appropriate, under or pursuant to Section 6.02, and any other Collateral
whether or not so repossessed by the Collateral Agent or the Investor, as
appropriate, may, subject to Section 6.04, be sold, assigned, leased or
otherwise disposed of under one or more contracts or as an entirety, and without
the necessity of gathering at the place of sale the property to be sold, and in
general in such manner, at such time or times, at such place or places and on
such terms as the Collateral Agent or the Investor, as appropriate, may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or the Investor, as appropriate, or after any overhaul or
repair that the Collateral Agent or the Investor, as appropriate, shall
determine to be commercially reasonable. Any such disposition that shall be a
private sale or other private proceeding permitted by such requirements shall be
made upon not less than 10 days' written notice to such Grantor specifying the
time at which such disposition is to be made and the intended sale price or
other consideration therefore, and shall be subject, for the 10 days after the
giving of such notice, to the right of such Grantor or any nominee of such
Grantor to acquire the Collateral involved at a price or for such other
consideration at least equal to the intended sale price or other consideration
so specified. Any such disposition that shall be a public sale permitted by such
requirements shall be made upon not less than 10 days' written notice to such
Grantor specifying the time and place of such sale and, in the absence of
applicable requirements of law, shall be by public auction (which may, at the
Collateral Agent's or the Investor's option, be subject to reserve), after
publication of notice of such auction not less than 10 days prior thereto in two
newspapers in general circulation in New York City. To the extent permitted by
any such requirement of law, the Collateral Agent or the Investor, as
appropriate, may bid for and become the purchaser of the Collateral or any item
thereof, offered for sale in accordance with this Section 6.03 without
accountability to Holdings or any Grantor (except to the extent of surplus money
received as provided in Section 6.05). If, under mandatory requirements of
applicable law, the Collateral Agent or the Investor, as appropriate, shall be
required to make disposition of the Collateral within a period of time that does
not permit the giving of notice to the Grantor as hereinabove specified, the
Collateral Agent or the Investor, as appropriate, need give such Grantor only
such notice of disposition as shall be reasonably practicable in view of such
mandatory requirements of applicable law.
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(b) With respect to the Pledged Collateral and subject to the
provisions of Section 6.04 hereof, after an Event of Default, the Collateral
Agent or the Investor, as appropriate, may, at any time or from time to time,
sell, assign and deliver, or grant options to purchase, all or any part of the
Pledged Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to sell or
of the time or place of sale or adjournment thereof or to redeem or otherwise
(all of which are hereby waived by each Grantor), for cash, on credit or for
other property, for immediate or future delivery without any assumption of
credit risk, and for such price or prices and on such terms as the Collateral
Agent or the Investor, as appropriate, in its absolute discretion may determine,
provided that at least 10 days' notice of the time and place of any such sale
shall be given to such Grantor. Each Grantor hereby waives and releases to the
fullest extent permitted by law any right or equity of redemption with respect
to the Pledged Collateral, whether before or after sale hereunder, and all
rights, if any, of marshaling the Pledged Collateral and any other security for
the Obligations or otherwise. At any such sale, unless prohibited by applicable
law, the Collateral Agent or the Investor, as appropriate, may bid for and
purchase all or any part of the Pledged Collateral so sold free from any such
right or equity of redemption. The Collateral Agent or the Investor, as
appropriate, shall not be liable for failure to collect or realize upon any or
all of the Pledged Collateral or for any delay in so doing nor shall it be under
any obligation to take any action whatsoever with regard thereto.
Section 6.04 Restrictions. Notwithstanding anything to the contrary
contained in this Guarantee and Security Agreement, none of the Collateral
Agent, the Investor or any Grantor will take or instruct the Collateral Agent to
take any action pursuant to this Guarantee and Security Agreement that (i) would
constitute or result in any assignment of a Permit (as defined in Section
4.03(a)) or any transfer of control of such Grantor or any Subsidiary of such
Grantor if such assignment of a Permit or transfer of control would require
under then existing law (including the written rules and regulations promulgated
by the FCC) the prior approval of the FCC or any State PUC or (ii) would
otherwise require the prior approval of the FCC or any State PUC, unless such
approval has been obtained (as applicable) from such State PUC or from the FCC.
Without limiting the generality of the foregoing, the Collateral Agent and the
Investor each specifically agrees that (a) voting rights with respect to the
Pledged Collateral will remain with the holders of such voting rights during the
existence of an Event of Default unless and until any required prior approvals
to the transfer of such voting rights have been obtained (as applicable) from
such State PUC or from the FCC, and (b) during the existence of any Event of
Default and foreclosure upon the Pledged Collateral by the Collateral Agent,
there will be either a private or public sale of the Pledged Collateral, and (c)
prior to the exercise of voting rights by the purchaser at any such sale, any
consent of any State PUC or the FCC required pursuant to any State
Communications Act or the Federal Communications Act (respectively) will be
obtained. For the purposes of this Section 6.04, "FCC" means the Federal
Communications Commission or any other entity or agency that succeeds to its
responsibilities and powers, "State Communications Acts" means the laws of any
state in which any Grantor or any Subsidiary of such Grantor does business that
govern the provision of communications services offered or performed by such
Grantor or any Subsidiary of such Grantor within such state and are
23
applicable to such Grantor or such Subsidiary of such Grantor, as amended from
time to time, and as implemented by the rules, regulations, and orders of the
applicable State PUC or any court of competent jurisdiction and "State PUC"
means the public utility commission or other regulatory agency of any state in
which any Grantor or any Subsidiary of such Grantor does business that is vested
with jurisdiction over such Grantor or such Subsidiary of such Grantor and over
State Communications Acts or the provision of communication services within such
state.
Section 6.05 Waiver of Claims. Except as otherwise provided in this
Guarantee and Security Agreement, EACH GRANTOR HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE
COLLATERAL AGENT'S OR THE INVESTOR'S, AS APPROPRIATE, TAKING POSSESSION OR THE
COLLATERAL AGENT'S OR THE INVESTOR'S, AS APPROPRIATE, DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT SUCH GRANTOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and each Grantor hereby further waives, to the extent permitted
by law:
(a) all damages occasioned by such taking of possession except any
damages that are the direct result of the Collateral Agent's or Investor's gross
negligence or willful misconduct;
(b) all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Collateral Agent's or
Investor's rights hereunder; and
(c) all rights of redemption, appraisement, valuation, stay, extension
or moratorium now or hereafter in force under any applicable law in order to
prevent or delay the enforcement of this Guarantee and Security Agreement or the
absolute sale of the Collateral or any portion thereof, and each Grantor, for
itself and all who may claim under it, insofar as it or they now or hereafter
lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of such Grantor therein and thereto, and
shall be a perpetual bar both at law and in equity against such Grantor and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
such Grantor.
Section 6.06 Application of Proceeds. The Collateral Agent or the Investor,
as appropriate, shall apply the proceeds of any collection or sale of the
Collateral, as well as any Collateral consisting of cash, as follows:
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(a) First, to the payment of all costs and expenses incurred by the
Collateral Agent and the Investor, as the case may be, in connection with any
action or proceeding taken to enforce the rights of the Collateral Agent and the
Investor under this Guarantee and Security Agreement, including, without
limitation, the initiation of any non-judicial action or any action in any court
or before any administrative or regulatory agency or tribunal to enforce such
rights, including reasonable attorneys fees and expenses;
(b) Second, to the payment of the Obligations to the Collateral Agent,
to the extent remaining unpaid, until all such Obligations are satisfied in
full;
(c) Third, to the payment of the Obligations to the Investor, until all
such Obligations are satisfied in full; and
(d) Fourth, to the appropriate Grantor, or its representative or as a
court of competent jurisdiction may direct, of any surplus then remaining from
such proceeds, or as otherwise permitted by law.
Section 6.07 Remedies Cumulative. No failure or delay on the part of the
Collateral Agent or the Investor in exercising any right, power or privilege
hereunder, under the Restructuring Agreement and no course of dealing between
Holdings or any Grantor and the Collateral Agent or the Investor shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder, under the Restructuring Agreement preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights, powers and remedies herein or in
the Restructuring Agreement expressly provided are cumulative and not exclusive
of any rights, powers or remedies that the Collateral Agent or the Investor
would otherwise have. No notice to or demand on any Grantor in any case shall
entitle any Grantor to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Collateral Agent or
the Investor to any other or further action in any circumstances without notice
or demand.
Section 6.08 Discontinuance of Proceedings. In case the Collateral Agent or
the Investor shall have instituted any proceeding to enforce any right, power or
remedy under this Guarantee and Security Agreement by foreclosure, sale, entry
or otherwise, and such proceeding shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Collateral Agent or
the Investor, as appropriate, then, and in every such case, a Grantor, the
Collateral Agent or the Investor, as appropriate, and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interests created under
this Guarantee and Security Agreement, and all rights, remedies and powers of
the Collateral Agent and the Investor shall continue as if no such proceeding
had been instituted.
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ARTICLE VII
COLLATERAL AGENT DUTIES; INDEMNITY
Section 7.01 Limitation of Liability.
(a) The Collateral Agent undertakes to perform such duties and only
such duties as are specifically set forth in this Guarantee and Security
Agreement and no implied covenants or obligations shall be read in this
Guarantee and Security Agreement against the Collateral Agent. The Collateral
Agent shall not be deemed to have any knowledge of an Event of Default unless
informed in writing by the Investor or a Grantor.
(b) The Collateral Agent shall not be required to exercise any remedies
hereunder unless requested in writing to do so by the Investor and in such event
subject to the terms of this Guarantee and Security Agreement and only if
furnished with indemnity satisfactory to the Collateral Agent by the Investor.
The Collateral Agent may consult with counsel and shall not be liable for any
action taken in good faith in reliance upon the advice of counsel. The
Collateral Agent makes no representation concerning the value or validity of the
Pledged Collateral or the validity or perfection of the pledge thereof.
(c) The Collateral Agent may, at any time on 30 days' notice to each
Grantor and the Investor, resign hereunder and may be removed by a joint writing
of each Grantor and the Investor. Upon any such resignation or removal of the
Collateral Agent, the Investor shall promptly appoint another financial
institution to act as Collateral Agent hereunder, which shall be a commercial
bank organized or licensed under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$50,000,000. To the extent that a successor Collateral Agent has not been
appointed and accepted the responsibility as successor Collateral Agent
hereunder within 30 days after the Collateral Agent's notice of resignation,
each of the Investors shall automatically succeed to and become vested with the
rights, powers, privileges and duties of the retiring Collateral Agent and the
retiring Collateral Agent shall be discharged from its duties and obligations
hereunder except that the Collateral Agent shall deliver any and all Collateral
in its possession to the Investor and assign and transfer its rights hereunder
to the Investor. The Investor agrees to cooperate in accepting the Collateral
and the assignment of the Collateral Agent's rights hereunder.
(d) The Collateral Agent (i) shall not be obligated hereunder to take
or hold possession of any Collateral other than the Pledged Collateral, (ii) has
no responsibility for the sufficiency, contents or filing of any financing
statement or continuation statement (except that it shall reasonably cooperate
with the Investor in executing appropriate continuation statements provided to
it by the Investor and upon the Investor's request), (iii) shall have no
responsibility for the genuineness, marketability, or sufficiency of or title to
any Collateral, (iv) shall have no responsibility to take or cause to be taken
any action necessary to perfect the security interest contemplated hereby (other
than to retain physical possession of the Pledged Collateral in accordance with
the terms hereof); and (v) shall not be under any duty or obligation to
determine, compel or
26
enforce performance or compliance by any Grantor with this Guarantee and
Security Agreement or the Restructuring Agreement.
(e) Upon receipt by the Collateral Agent from the Grantor of any notice
or request pursuant to Section 8.18, the Collateral Agent shall not be under any
obligation other than to forward the same promptly to the Investor and to await
instruction from the Investor as contemplated thereby.
(f) No grant of power or authority to the Collateral Agent, and no
covenant, representation or warranty by any Grantor to the Collateral Agent
under this Guarantee and Security Agreement shall be construed to impose or
imply any duty or obligation on the part of the Collateral Agent to exercise or
enforce any such power, authority, covenant, representation or warranty.
(g) The Collateral Agent shall be under no duty to invest (or otherwise
pay interest on) any funds it may hold from time to time hereunder.
(h) The Collateral Agent (i) shall not be responsible for any of the
agreements referred to or described herein (including, without limitation, the
Restructuring Agreement), or for determining or compelling compliance therewith,
and shall not otherwise be bound thereby; (ii) shall not be obligated to take
any legal or other action hereunder that might, in its judgment, involve or
cause it to incur any expense or liability unless it shall have been furnished
with acceptable indemnification; (iii) may rely on and shall be protected in
acting or refraining from acting upon any written notice, instruction
(including, without limitation, wire transfer instructions, whether incorporated
herein or provided in a separate written instruction), instrument, statement,
certificate, request or other document furnished to it hereunder and believed by
it to be genuine and to have been signed or presented by the proper person, and
shall have no responsibility for determining the accuracy thereof; and (iv)
shall not be liable to anyone for any action taken or omitted to be taken by it
hereunder except in the case of the Collateral Agent's own gross negligence or
willful misconduct in breach of the terms of this Guarantee and Security
Agreement. In no event shall the Collateral Agent be liable for indirect,
punitive, special or consequential damage or loss (including but not limited to
lost profits) whatsoever, even if the Collateral Agent has been informed of the
likelihood of such loss or damage and regardless of the form of action.
(i) The Collateral Agent shall have no more or less responsibility or
liability on account of any action or omission of any book-entry depository,
securities intermediary or other subescrow agent employed by the Collateral
Agent than any such book-entry depository, securities intermediary or other
subescrow agent has to the Collateral Agent, except to the extent that such
action or omission of any book-entry depository, securities intermediary or
other subescrow agent was caused by the Collateral Agent's own gross negligence,
bad faith or willful misconduct in breach of this Guarantee and Security
Agreement.
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Section 7.02 Grantor Indemnity.
(a) Each Grantor agrees to indemnify, reimburse and hold the Collateral
Agent and the Investor and each of their respective officers, directors,
employees, representatives and agents (hereinafter in this Section 7.02 referred
to individually as "Indemnitee" and collectively as "Indemnitees") harmless from
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses or disbursements (including
reasonable attorneys' fees and expenses) (for the purposes of this Section 7.02
the foregoing are collectively called "Expenses") of whatsoever kind or nature
that may be imposed on, asserted against or incurred by any of the Indemnitees
in any way relating to or arising out of this Guarantee and Security Agreement
or the documents executed in connection herewith or in any other way connected
with the transactions contemplated hereby or the enforcement of any of the terms
of or the preservation of any rights under any thereof, or in any way relating
to or arising out of the manufacture, ownership, ordering, purchase, delivery,
control, acceptance, lease, financing, possession, operation, condition, sale,
return or other disposition or use of the Collateral (including, without
limitation, latent or other defects, whether or not discoverable), the violation
of the laws of any country, state or other governmental body or unit, any tort
(including, without limitation, claims arising or imposed under the doctrine of
strict liability, or for or on account of injury to or the death of any Person
(including any Indemnitee), or for property damage) or any contract claim;
provided that no Indemnitee shall be indemnified pursuant to this Section
7.02(a) for Expenses to the extent caused by the gross negligence or willful
misconduct of such Indemnitee. Each Grantor agrees that, upon written notice by
any Indemnitee of any assertion that could give rise to an expense, such Grantor
shall assume full responsibility for the defense thereof. Each Indemnitee agrees
to use its best efforts to promptly notify such Grantor of any such assertion of
which such Indemnitee has knowledge.
(b) Without limiting the application of Section 7.02(a), each Grantor
agrees to pay, or reimburse the Collateral Agent or the Investor (as
appropriate) for (if the Collateral Agent or the Investor (as appropriate) shall
have incurred fees, costs or expenses because such Grantor shall have failed to
comply with its obligations under this Guarantee and Security Agreement), any
and all fees, costs and expenses of whatever kind or nature incurred in
connection with the creation, preservation or protection of the Collateral
Agent's Liens on, and Security Interests in, the Collateral, including, without
limitation, all fees and taxes in connection with the recording or filing of
instruments and documents in public offices, payment or discharge of any taxes
or Liens upon or in respect of the Collateral, premiums for insurance with
respect to the Collateral and all other fees, costs and expenses in connection
with protecting, maintaining or preserving the Collateral and the Collateral
Agent's Security Interest therein, whether through judicial proceedings or
otherwise, or in defending or prosecuting any actions, suits or proceedings
arising out of or relating to the Collateral.
(c) Without limiting the application of Section 7.02(a) or (b), each
Grantor agrees to pay, indemnify and hold each Indemnitee harmless from and
against any expenses that such Indemnitee may suffer, expend or incur in
consequence of or growing out of any misrepresentation by such Grantor in this
Guarantee and Security
28
Agreement, or in any statement or writing contemplated by or made or delivered
pursuant to or in connection with this Guarantee and Security Agreement.
(d) If and to the extent that the obligations of any Grantor under this
Section 7.02 are unenforceable for any reason, such Grantor hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations that is permissible under applicable law. Without limiting the
definition of "Obligations" set forth in Section 1.02, the obligations of the
Grantor under Sections 7.02(a), (b) and (c) shall be considered Obligations
pursuant to clause (b) of that definition.
Section 7.03 Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Grantor contained in this Article VII shall
continue in full force and effect notwithstanding the full payment of all
Obligations and notwithstanding the discharge thereof.
Section 7.04 Fees and Indemnity.
(a) In accordance with the fee schedule attached hereto as Schedule
III, the Grantors and the Investor agree, jointly and severally, to pay, or
reimburse the Collateral Agent for, on the date of execution of this Guarantee
and Security Agreement, the Collateral Agent's attorney's fees and expenses,
incurred in connection with the preparation of this Guarantee and Security
Agreement (which shall not exceed $1,000). The Grantors and the Investor agree,
jointly and severally, to pay the Collateral Agent's compensation for its normal
services hereunder in accordance with the fee schedule attached hereto as
Schedule III, which may be subject to change hereafter on an annual basis.
Without limiting the definition of "Obligations" set forth in Section 1.02, the
obligation of the Grantor to pay the amounts set forth in this Section 7.04(a)
shall be considered an Obligation pursuant to clause (b) of that definition.
Without altering or limiting the joint and several liability of the Grantors and
the Investor to the Collateral Agent hereunder, the Grantor and the Investor
agree among themselves that the Grantor will pay one half and the Grantors will
pay one-half of the amounts payable to the Collateral Agent pursuant to this
Section 7.04 (a).
(b) The Investor hereby agrees to indemnify the Collateral Agent (and
its directors, officers and employees) and hold it (and such directors, officers
and employees) harmless from and against any loss, liability, damage, cost and
expense of any nature incurred by the Collateral Agent arising out of or in
connection with this Guarantee and Security Agreement or with the administration
of its duties hereunder, including but not limited to attorney's fees and other
costs and expenses of defending or preparing to defend against any claim of
liability, unless and except to the extent such loss, liability, damage, cost
and expense shall be caused by the Collateral Agent's gross negligence, bad
faith, or willful misconduct; provided, that, if and to the extent the Investor
shall be obligated to pay any amount to the Collateral Agent hereunder, each
Grantor shall reimburse the Investor for each such amount in full and any such
amounts shall be added to and shall become part of the Obligations secured
hereby. The foregoing
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indemnification and agreement to hold harmless shall survive the termination of
this Guarantee and Security Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Notices. Notice Addresses. Any notice permitted or required
hereunder shall be in writing, and shall be sent by personal delivery, overnight
delivery by a recognized courier or delivery service, mailed by registered or
certified mail, return receipt requested, postage prepaid, or by confirmed
telecopy accompanied by mailing of the original on the same day by first class
mail, postage prepaid, in each case to the parties at their address set forth
below (or to such other address as any such party may hereafter designate by
written notice to the other parties).
If to the Grantors:
Access One Communications Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
Omnicall, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
The Other Phone Company, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
Talk America Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
Talk America of Virginia, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
30
If to Investor:
America Online, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
31
With a copy to:
America Online, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Senior Vice President,
Head of Business Affairs
If to Collateral Agent:
State Street Bank and Trust Company, N.A.
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Talk America Holdings/AOL
Security and Pledge
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Section 8.02 Entire Agreement. This Guarantee and Security Agreement, the
Restructuring Agreement, and the Intercreditor Agreement constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and thereof, except that this Guarantee and Security Agreement shall not be
deemed to amend, supplement or otherwise supersede the rights or obligations of
the parties under the Restructuring Agreement. Any conflict between this
Guarantee and Security Agreement and the Restructuring Agreement shall be
governed by the Restructuring Agreement. Any conflict between this Guarantee and
Security Agreement and the Intercreditor Agreement shall be governed by the
Intercreditor Agreement.
Section 8.03 Binding Effect; Several Agreement.
(a) This Guarantee and Security Agreement shall be binding upon the
Grantor, and the Collateral Agent and the Investor and their respective
successors and assigns, and shall bind all Persons who become bound as a debtor
to this Guarantee and Security Agreement, except to the extent any such
successor or assign is not permitted by the Restructuring Agreement.
(b) The Investor does not consent to any assignment by the Grantor,
except as expressly provided in this Guarantee and Security Agreement or the
Restructuring Agreement.
(c) In connection with any resignation or removal of the Collateral
Agent pursuant to Section 7.01(c), the Collateral Agent may assign its rights
and interests under this Guarantee and Security Agreement. If an assignment is
made, Grantor shall render performance under this Guarantee and Security
Agreement to the assignee.
32
Section 8.04 Governing Law. THIS GUARANTEE AND SECURITY AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 8.05 Waivers; Amendment.
(a) No failure or delay of the Collateral Agent or the Investor in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.
(b) Neither this Guarantee and Security Agreement nor any provision
hereof may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Collateral Agent, the Investor and
each Grantor and in accordance with the terms of the Intercreditor Agreement and
the Restructuring Agreement.
Section 8.06 Severability. In the event any one or more of the provisions
contained in this Guarantee and Security Agreement should be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
Section 8.07 Counterparts. This Guarantee and Security Agreement may be
executed in two or more counterparts, each of which shall constitute an original
but all of which when taken together shall constitute but one instrument.
Section 8.08 Headings. Article and Section headings used herein are for the
purpose of reference only, are not part of this Guarantee and Security Agreement
and are not to affect the construction of, or to be taken into consideration in
interpreting, this Guarantee and Security Agreement.
Section 8.09 Obligations Absolute. The obligations of each Grantor under
this Guarantee and Security Agreement shall be absolute and unconditional and
shall remain in full force and effect without regard to, and shall not be
released, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever, including, without limitation: (i) any
renewal, extension, amendment or modification of, or addition or supplement to
or deletion from the Restructuring Agreement or any assignment or transfer
thereof; (ii) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of the Restructuring Agreement or this Guarantee
and Security Agreement or any exercise or non-exercise of any right, remedy,
power or privilege under or in respect of this Guarantee and Security Agreement
33
or the Restructuring Agreement; (iii) any furnishing of any additional security
to the Collateral Agent on behalf of the Investor or any acceptance thereof or
any sale, exchange, release, surrender or realization of or upon any security by
the Collateral Agent on behalf of the Investor; or (iv) any invalidity,
irregularity or unenforceability of all or part of the Obligations or of any
security therefor.
Section 8.10 Grantor's Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Grantor shall remain liable
to perform all of the obligations, if any, assumed by it with respect to the
Collateral and neither the Collateral Agent nor the Investor shall have any
obligations or liabilities with respect to any Collateral by reason of or
arising out of or in connection with this Guarantee and Security Agreement, nor
shall the Collateral Agent or the Investor be required or obligated in any
manner to perform or fulfill any of the obligations of any Grantor under or with
respect to any Collateral.
Section 8.11 Action by Investor. In the event that there is more than one
holder of the Convertible Note, any decision, direction, notice or other action
to be made by the Investor pursuant to this Guarantee and Security Agreement,
shall be made by the majority of holders in principal amount of the Convertible
Note.
Section 8.12 Termination. This Guarantee and Security Agreement and the
Security Interest shall terminate when all the Obligations have been paid in
full or the Restructuring Agreement shall have terminated or been terminated,
whichever is earlier, at which time the Collateral Agent shall promptly execute
and deliver to each Grantor, at such Grantor's expense, all UCC termination
statements and similar documents that such Grantor may reasonably request to
evidence such termination.
Section 8.13 Dispute Resolution. It is understood and agreed that should
any dispute arise with respect to the delivery, ownership, right of possession,
and/or disposition of the Collateral, or should any claim be made upon the
Collateral Agent or the Collateral by a third party, the Collateral Agent upon
receipt of notice of such dispute or claim is authorized and shall be entitled
(at its sole option and election) to retain in its possession, without liability
to anyone, all or any of said Collateral until such dispute shall have been
settled either by the mutual written agreement of the parties involved or by a
final order, decree or judgment of a competent court in the United States of
America, the time for perfection of an appeal of such order, decree or judgment
having expired. The Collateral Agent may, but shall be under no duty whatsoever
to, institute or defend any legal proceedings that relate to the Collateral.
Section 8.14 Consent to Jurisdiction and Service. Each of the Grantors and
Investor (together, the "Interested Parties") hereby absolutely and irrevocably
consents and submits to the jurisdiction of the courts in the State of New York
and of any Federal court located in said State of New York in connection with
any actions or proceedings brought against any of the Interested Parties (or
each of them) by the Collateral Agent arising out of or relating to this
Guarantee and Security Agreement. In any such action or proceeding, the
Interested Parties each hereby absolutely and irrevocably (i) waives any
objection to jurisdiction or venue, (ii) waives personal service of any summons,
34
complaint, declaration or other process, and (iii) agrees that the service
thereof may be made by certified or registered first-class mail directed to such
party, as the case may be, at their respective addresses in accordance with
Section 8.01 hereof.
Section 8.15 Force Majeure. The Collateral Agent shall not be responsible
for delays or failures in performance resulting from acts beyond its control.
Such acts shall include but not be limited to acts of God, strikes, lockouts,
riots, acts of war, epidemics, governmental regulations superimposed after the
fact, fire, communication line failures, computer viruses, power failures,
earthquakes or other disasters.
Section 8.16 Reproduction of Documents. This Guarantee and Security
Agreement and all documents relating thereto, including, without limitation, (a)
consents, waivers and modifications that may hereafter be executed, and (b)
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, optical disk,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 8.17 Additional Grantors. Each new Subsidiary of Holdings that is
required to become a party to this Guarantee and Security Agreement pursuant to
Section 5.5 of the Restructuring Agreement shall become a Grantor for all
purposes of this Guarantee and Security Agreement upon execution and delivery by
such Subsidiary of an Assumption Agreement in the form of Annex 1 hereto.
Section 8.18 Releases.
(a) At such time as the Convertible Note and the other Obligations then
due and owing shall have been paid in full in cash, all Collateral shall be
released from the Liens created hereby, and this Guarantee and Security
Agreement and all obligations (other than those expressly stated to survive such
termination) of the Investor, Collateral Agent and the Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the respective
Grantors. At the request and sole expense of such Grantor following any such
termination, the Collateral Agent, in accordance with the instructions of the
Investor, shall deliver to each Grantor any Collateral held by the Collateral
Agent or the Investor hereunder, and execute and deliver to such Grantor such
documents (including, without limitation, UCC termination statements) as such
Grantor shall reasonably request to evidence such termination.
(b) In connection with the sale or other disposition permitted under
Section 5.08 hereof and the release of the Collateral subject to such sale or
other disposition, the Collateral Agent, in accordance with the instructions of
the Investor, shall execute and deliver to such Grantor (at the sole cost and
expense of such Grantor) all releases or other documents (including, without
limitation, UCC termination statements)
35
necessary or reasonably desirable for the release of Liens created hereby on
such Collateral as such Grantor may reasonably request.
Section 8.19. Subordination. THE OBLIGATIONS SECURED HEREBY AND THE
SECURITY INTERESTS GRANTED HEREUNDER ARE SUBORDINATE IN THE MANNER AND TO THE
EXTENT SET FORTH IN THE INTERCREDITOR AGREEMENT TO THE "SENIOR DEBT" UNDER (AND
AS DEFINED IN) THE INTERCREDITOR AGREEMENT. EACH OF THE COLLATERAL AGENT AND THE
INVESTOR, BY ITS ACCEPTANCE OF THE CONVERTIBLE NOTE, ACKNOWLEDGES AND AGREES TO
BE BOUND BY THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.
[The remainder of this page is intentionally left blank]
36
IN WITNESS WHEREOF, the parties hereto have duly executed this
Guarantee and Security Agreement as of the day and year first above written.
ACCESS ONE COMMUNICATIONS CORP. (Grantor)
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Lawn, IV
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Lawn, IV
Title: Executive Vice President,
General Counsel and Secretary
OMNICALL, INC. (Grantor)
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Lawn, IV
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Lawn, IV
Title: Executive Vice President,
General Counsel and Secretary
THE OTHER PHONE COMPANY, INC.
(Grantor)
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Lawn, IV
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Lawn, IV
Title: Executive Vice President,
General Counsel and ▇▇▇▇▇▇▇▇▇
▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ INC. (Grantor)
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Lawn, IV
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Lawn, IV
Title: Executive Vice President,
General Counsel and Secretary
TALK AMERICA OF VIRGINIA, INC. (Grantor)
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Lawn, IV
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Lawn, IV
Title: Executive Vice President,
General Counsel and Secretary
STATE STREET BANK AND
TRUST COMPANY, N.A., as
Collateral Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Agreed and Accepted:
AMERICA ONLINE, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President
38
Schedule I to the
Guarantee and Security Agreement
Grantor: Access One Communications Corp.
CAPITAL STOCK
State of
Incorporation of Number of Registered Number and Class Percentage of
Issuer Issuer Certificate Owner of Shares Shares
---------------- ------------------- ------------- ----------- ---------------- --------------
The Other Phone Florida * Access One 10,500 Common 100%
Company, Inc. Communications Stock
Corp.
Omnicall, Inc. South Carolina * Access One 12,269,000 Common 100%
Communications Stock
Corp.
* Certificates held by MCG Finance Corporation
DEBT SECURITIES
Issuer Issue Principal Amount Date of Note Maturity Date
----------- ---------- ----------------- -------------- -------------
None.
39
Schedule I to the
Guarantee and Security Agreement
Grantor: Omnicall, Inc.
CAPITAL STOCK
State of
Incorporation of Number of Number and Class Percentage of
Issuer Issuer Certificate Registered Owner of Shares Shares
------ --------------- ----------- ---------------- ----------------- --------------
None.
DEBT SECURITIES
Issuer Issue Principal Amount Date of Note Maturity Date
-------- -------- ----------------- ------------- ------------
None.
40
Schedule I to the
Guarantee and Security Agreement
Grantor: The Other Phone Company, Inc.
CAPITAL STOCK
State of
Incorporation of Number of Number and Class Percentage of
Issuer Issuer Certificate Registered Owner of Shares Shares
------- ---------------- ----------- ---------------- --------------- -------------
None.
DEBT SECURITIES
Issuer Issue Principal Amount Date of Note Maturity Date
------- ------- ----------------- ------------ -------------
None.
41
Schedule I to the
Guarantee and Security Agreement
Grantor: Talk America Inc.
CAPITAL STOCK
State of
Incorporation of Number of Number and Class Percentage of
Issuer Issuer Certificate Registered Owner of Shares Shares
------- ---------------- ----------- ----------------- ---------------- ------------
None.
DEBT SECURITIES
Issuer Issue Principal Amount Date of Note Maturity Date
------- ----- ---------------- ------------- --------------
None.
42
Schedule I to the
Guarantee and Security Agreement
Grantor: Talk America of Virginia, Inc.
CAPITAL STOCK
State of
Incorporation of Number of Number and Class Percentage of
Issuer Issuer Certificate Registered Owner of Shares Shares
------- ---------------- ------------ ----------------- ---------------- -------------
None.
DEBT SECURITIES
Issuer Issue Principal Amount Date of Note Maturity Date
------ ----- --------------- ------------ -------------
None.
43
Schedule II to the
Guarantee and Security Agreement
Grantor: Access One Communications Corp.
PERFECTION CERTIFICATE
Reference is made to the Master Subsidiary Guarantee, Security
Agreement, Collateral Assignment and Equity Pledge dated as of September 19,
2001 (the "Guarantee and Security Agreement") among certain subsidiaries,
including Access One Communications Corp. as a Grantor, State Street Bank and
Trust Company, N.A., as collateral agent (the "Collateral Agent") on behalf of
America Online, Inc. and its successors and assigns (AOL and such successors and
assigns, the "Investor") and AOL.
The undersigned, an authorized officer of Grantor, hereby certifies to
the Collateral Agent as follows:
Names. (a) The exact corporate name of the Grantor, as such name
appears in its certificate of incorporation, and its state of incorporation, is
as follows:
Access One Communications Corp.
New Jersey
(b) Set forth below is each other corporate name the Grantor has had in
the past five years, together with the date of the relevant change:
C L E C Holding Corp. (name changed April 28, 1998)
PRS SUB II INC. (name changed April 3, 1997)
(c) The following is a list of all other names (including trade names
or similar appellations) used by the Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:
None.
(d) Set forth below is the Federal Taxpayer Identification Number of
the Grantor:
Access One Communications Corp.: ▇▇-▇▇▇▇▇▇▇
2. Current Locations. (a) The chief executive office of the Grantor is
located at the address set forth below:
Mailing Address County State
--------------- ------ -----
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
44
(b) Set forth below are all locations other than as set forth in
paragraph (a) above, where the Grantor maintains any books or records relating
to any Accounts (with each location at which chattel paper, if any, is kept
being indicated by an "*"):
Mailing Address County State
--------------- ------ -----
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(c) Set forth below are all the places of business of the Grantor not
identified in paragraph (a) or (b) above:
Mailing Address County State
--------------- ------ -----
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2704 Alternate ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(d) Set forth below are all the locations where the Grantor maintains
any Collateral not identified above:
Mailing Address County State
--------------- ------ -----
None.
(e) Set forth below are the names and addresses of all persons other
than the Grantor that have possession of any of the Collateral of the Grantor:
Mailing Address County State
--------------- ------ -----
None.
45
IN WITNESS WHEREOF, the undersigned hereunto set his hand this 19th day
of September, 2001.
ACCESS ONE COMMUNICATIONS CORP.
By: __________________________
Name:
Title:
46
Schedule II to the
Guarantee and Security Agreement
Grantor: Omnicall, Inc.
PERFECTION CERTIFICATE
Reference is made to the Master Subsidiary Guarantee, Security
Agreement, Collateral Assignment and Equity Pledge dated as of September 19,
2001 (the "Guarantee and Security Agreement") among certain subsidiaries,
including Omnicall, Inc. as a Grantor, State Street Bank and Trust Company,
N.A., as collateral agent (the "Collateral Agent") on behalf of America Online,
Inc. and its successors and assigns (AOL and such successors and assigns, the
"Investor") and AOL.
The undersigned, an authorized officer of Grantor, hereby certifies to
the Collateral Agent as follows:
Names. (a) The exact corporate name of the Grantor, as such name
appears in its certificate of incorporation, and its state of incorporation, is
as follows:
Omnicall, Inc.
South Carolina
(b) Set forth below is each other corporate name the Grantor has had in
the past five years, together with the date of the relevant change:
None.
(c) The following is a list of all other names (including trade names
or similar appellations) used by the Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:
Omnicall International
(d) Set forth below is the Federal Taxpayer Identification Number of
the Grantor:
Omnicall, Inc.: ▇▇-▇▇▇▇▇▇▇
2. Current Locations. (a) The chief executive office of the Grantor is
located at the address set forth below:
Mailing Address County State
--------------- ------ -----
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
47
(b) Set forth below are all locations other than as set forth in
paragraph (a) above, where the Grantor maintains any books or records relating
to any Accounts (with each location at which chattel paper, if any, is kept
being indicated by an "*"):
Mailing Address County State
--------------- ------ -----
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(c) Set forth below are all the places of business of the Grantor not
identified in paragraph (a) or (b) above:
Mailing Address County State
--------------- ------ -----
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2704 Alternate ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(d) Set forth below are all the locations where the Grantor maintains
any Collateral not identified above:
Mailing Address County State
--------------- ------ -----
None.
(e) Set forth below are the names and addresses of all persons other
than the Grantor that have possession of any of the Collateral of the Grantor:
Mailing Address County State
--------------- ------ -----
None.
48
IN WITNESS WHEREOF, the undersigned hereunto set his hand this 19th day
of September, 2001.
OMNICALL, INC.
By: __________________________
Name:
Title:
49
Schedule II to the
Guarantee and Security Agreement
Grantor: The Other Phone Company, Inc.
PERFECTION CERTIFICATE
Reference is made to the Master Subsidiary Guarantee, Security
Agreement, Collateral Assignment and Equity Pledge dated as of September 19,
2001 (the "Guarantee and Security Agreement") among certain subsidiaries,
including The Other Phone Company, Inc. as a Grantor, State Street Bank and
Trust Company, N.A., as collateral agent (the "Collateral Agent") on behalf of
America Online, Inc. and its successors and assigns (AOL and such successors and
assigns, the "Investor") and AOL.
The undersigned, an authorized officer of Grantor, hereby certifies to
the Collateral Agent as follows:
Names. (a) The exact corporate name of the Grantor, as such name
appears in its certificate of incorporation, and its state of incorporation, is
as follows:
The Other Phone Company, Inc.
Florida
(b) Set forth below is each other corporate name the Grantor has had in
the past five years, together with the date of the relevant change:
None.
(c) The following is a list of all other names (including trade names
or similar appellations) used by the Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:
Access One Communications Corp.
(d) Set forth below is the Federal Taxpayer Identification Number of
the Grantor:
The Other Phone Company, Inc.: ▇▇-▇▇▇▇▇▇▇
2. Current Locations. (a) The chief executive office of the Grantor is
located at the address set forth below:
Mailing Address County State
--------------- ------ -----
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
50
(b) Set forth below are all locations other than as set forth in
paragraph (a) above, where the Grantor maintains any books or records relating
to any Accounts (with each location at which chattel paper, if any, is kept
being indicated by an "*"):
Mailing Address County State
--------------- ------ -----
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(c) Set forth below are all the places of business of the Grantor not
identified in paragraph (a) or (b) above:
Mailing Address County State
--------------- ------ -----
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2704 Alternate ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(d) Set forth below are all the locations where the Grantor maintains
any Collateral not identified above:
Mailing Address County State
--------------- ------ -----
None.
(e) Set forth below are the names and addresses of all persons other
than the Grantor that have possession of any of the Collateral of the Grantor:
Mailing Address County State
--------------- ------ -----
None.
51
IN WITNESS WHEREOF, the undersigned hereunto set his hand this 19th day
of September, 2001.
THE OTHER PHONE COMPANY, INC.
By: __________________________
Name:
Title:
52
Schedule II to the
Guarantee and Security Agreement
Grantor: Talk America Inc.
PERFECTION CERTIFICATE
Reference is made to the Master Subsidiary Guarantee, Security
Agreement, Collateral Assignment and Equity Pledge dated as of September 19,
2001 (the "Guarantee and Security Agreement") among certain subsidiaries,
including Talk America Inc. as a Grantor, State Street Bank and Trust Company,
N.A., as collateral agent (the "Collateral Agent") on behalf of America Online,
Inc. and its successors and assigns (AOL and such successors and assigns, the
"Investor") and AOL.
The undersigned, an authorized officer of Grantor, hereby certifies to
the Collateral Agent as follows:
Names. (a) The exact corporate name of the Grantor, as such name
appears in its certificate of incorporation, and its state of incorporation, is
as follows:
Talk America Inc.
Pennsylvania
(b) Set forth below is each other corporate name the Grantor has had in
the past five years, together with the date of the relevant change:
▇▇▇▇.▇▇▇ Holding Corp. (name changed April 11, 2001)
Tel-Save Inc. (name changed May 24, 1999)
(c) The following is a list of all other names (including trade names
or similar appellations) used by the Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:
▇▇▇▇.▇▇▇/▇▇▇-▇▇▇▇/▇▇▇▇▇▇▇ Services/The Phone Company/
(d) Set forth below is the Federal Taxpayer Identification Number of
the Grantor:
Talk America Inc.: ▇▇-▇▇▇▇▇▇▇
2. Current Locations. (a) The chief executive office of the Grantor is
located at the address set forth below:
53
Mailing Address County State
--------------- ------ -----
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) Set forth below are all locations other than as set forth in
paragraph (a) above, where the Grantor maintains any books or records relating
to any Accounts (with each location at which chattel paper, if any, is kept
being indicated by an "*"):
Mailing Address County State
--------------- ------ -----
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(c) Set forth below are all the places of business of the Grantor not
identified in paragraph (a) or (b) above:
Mailing Address County State
--------------- ------ -----
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2704 Alternate ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(d) Set forth below are all the locations where the Grantor maintains
any Collateral not identified above:
Mailing Address County State
--------------- ------ -----
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
54
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(e) Set forth below are the names and addresses of all persons other
than the Grantor that have possession of any of the Collateral of the Grantor:
Mailing Address County State
--------------- ------ -----
None.
IN WITNESS WHEREOF, the undersigned hereunto set his hand this 19th day
of September, 2001.
TALK AMERICA INC.
By: __________________________
Name:
Title:
55
Schedule II to the
Guarantee and Security Agreement
Grantor: Talk America of Virginia, Inc.
PERFECTION CERTIFICATE
Reference is made to the Master Subsidiary Guarantee, Security
Agreement, Collateral Assignment and Equity Pledge dated as of September 19,
2001 (the "Guarantee and Security Agreement") among certain subsidiaries,
including Talk America of Virginia, Inc. as a Grantor, State Street Bank and
Trust Company, N.A., as collateral agent (the "Collateral Agent") on behalf of
America Online, Inc. and its successors and assigns (AOL and such successors and
assigns, the "Investor") and AOL.
The undersigned, an authorized officer of Grantor, hereby certifies to
the Collateral Agent as follows:
Names. (a) The exact corporate name of the Grantor, as such name
appears in its certificate of incorporation, and its state of incorporation, is
as follows:
Talk America of Virginia, Inc.
State of Virginia
(b) Set forth below is each other corporate name the Grantor has had in
the past five years, together with the date of the relevant change:
TelSave Holdings of Virginia Inc. (name changed May 23, 2001)
(c) The following is a list of all other names (including trade names
or similar appellations) used by the Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:
None.
(d) Set forth below is the Federal Taxpayer Identification Number of
the Grantor:
Talk America of Virginia, Inc.: ▇▇-▇▇▇▇▇▇▇
2. Current Locations. (a) The chief executive office of the Grantor is
located at the address set forth elow:
Mailing Address County State
--------------- ------ -----
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
56
(b) Set forth below are all locations other than as set forth in
paragraph (a) above, where the Grantor maintains any books or records relating
to any Accounts (with each location at which chattel paper, if any, is kept
being indicated by an "*"):
Mailing Address County State
--------------- ------ -----
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(c) Set forth below are all the places of business of the Grantor not
identified in paragraph (a) or (b) above:
Mailing Address County State
--------------- ------ -----
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2704 Alternate ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(d) Set forth below are all the locations where the Grantor maintains
any Collateral not identified above:
Mailing Address County State
--------------- ------ -----
None.
(e) Set forth below are the names and addresses of all persons other
than the Grantor that have possession of any of the Collateral of the Grantor:
Mailing Address County State
--------------- ------ -----
None.
57
IN WITNESS WHEREOF, the undersigned hereunto set his hand this 19th day
of September, 2001.
TALK AMERICA OF VIRGINIA, INC.
By: __________________________
Name:
Title:
58
Schedule III to the
Guarantee and Security Agreement
FEE SCHEDULE
Annual Collateral Agent Fee: $3,500.00 per year or part thereof
The Annual Fee shall be due and payable in advance, upon signing of the Security
and Pledge Agreement; thereafter upon each anniversary date. The Annual Fee
shall be subject to an annual adjustment of up to 10% by the Collateral Agent,
upon notice.
Annual Fee Per Additional Investor: $500 per year or part thereof
Wire Fee: $25.00 per wire
Investment Fee: $65.00 per Book Entry buy/sell
(direct investments in treasuries, C/D's, $100.00 per Physical buy/sell
CP, Repo's, etc.)
Sweep Fee: 40 basis points per annum of
(SSgA or selected other Money the average daily net assets
Market Funds)
Out-of-Pocket Expenses: At Cost
(such as but not limited to, telephone, postage, insurance, shipping charges,
outside investment charges and supplies, will be charged at cost)
Legal Fee: $1,000.00 (cap)
Extraordinary Administrative Expenses
In addition to the Annual Fee, fees for extraordinary services will be
determined and charged by appraisal. Such services may include, but are not
limited to, additional responsibilities and services incurred in case of
default, dispute or third party claim upon the escrow fund.
59
Annex I to
Guarantee and Security Agreement
ASSUMPTION AGREEMENT, dated as of __________, 20__, made by
________________, a _____________ corporation (the "Additional Grantor"), in
favor of the State Street Bank and Trust Company, N.A., as collateral agent (in
such capacities, the ("Collateral Agent') on behalf of the America Online, Inc.,
and its successors and assigns, as holders of the Convertible Note (the
"Investor"). All capitalized terms not defined herein shall have the meaning
ascribed to them in the Guarantee and Security Agreement referred to below, or
if not defined therein, in the Restructuring Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to the Restructuring and Note Agreement dated as of
September 19, 2001, (the "Restructuring Agreement"), between Talk America
Holdings, Inc. ("Holdings") and the Investor, Investor is agreeing to
restructure Holding's current debt obligations to the Investor and Holdings is
delivering to the Investor a certain 8% senior convertible promissory note in
the amount of $54,000,000 (the "Convertible Note"); and
WHEREAS, the Restructuring Agreement provides that, as a condition to
the Investor's agreement to restructure Holdings' debt and accept the
Convertible Note, the Additional Grantor is to become a party to a guarantee,
security agreement, collateral assignment and pledge agreement for the benefit
of the Investor to secure Holding's obligations to the Investor under the
Convertible Note; below; and
WHEREAS, Holdings is the direct or indirect corporate parent of
Additional Grantor, Holdings and the Additional Grantor are engaged in related
businesses, and the Restructuring Agreement provides for a relaxation of certain
restrictions on the Indebtedness that such Additional Grantor may incur, the
debt restructuring will enhance the ability of Holdings to obtain financing
useful in the operation of the businesses of the Additional Grantor and
otherwise provide greater financial flexibility to Holdings and the Additional
Grantor, and such Additional Grantor thereby will derive substantial direct and
indirect benefit from the debt restructuring; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Security
Agreement;
NOW, THEREFORE, for good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged) and intending to be legally bound,
the Additional Grantor agrees as follows:
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement By executing and delivering this
Assumption Agreement, the Additional Grantor, as provided in Section 8.17 of the
60
Guarantee and Security Agreement, hereby becomes a party to the Guarantee and
Security Agreement as a Grantor thereunder with the same force and effect as if
originally named therein as a Grantor and without limiting the generality of the
foregoing, hereby expressly assumes all obligations and liabilities of Grantor
thereunder. The information set forth in Annex 1-A hereto is hereby added to the
information set forth in Schedules ____________ to the Guarantee and Security
Agreement, and such Schedules are hereby amended and modified to include such
information. The Additional Grantor hereby represents and warrants that each of
the representations and warranties of such Additional Grantor, in its capacities
as a Grantor, contained in Article IV of the Guarantee and Security Agreement is
true and correct in all material respects on and as the date hereof (after
giving effect to this Assumption Agreement) as if made on and as of such date.
2. GOVERNING LAw. THIS ASSUMPTION AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTING PARTY]
By: __________________________
Name:
Title:
61