================================================================================
$8,000,000.00 Revolving Loan Facility
REVOLVING CREDIT AND SECURITY AGREEMENT
between
COVISTA COMMUNICATIONS, INC.,
CAPSULE COMMUNICATIONS, INC.,
COVISTA OF VIRGINIA, INC.,
TOTAL-TEL SOUTHEAST, INC.,
TOTALTEL ENHANCED SERVICES, INC.,
TOTALTEL SARASOTA, INC.,
TOTALTEL INTERNATIONAL, INC.,
COVISTA CARRIER SERVICES, INC.,
COVISTA, INC.,
MADATRON CORPORATION,
MANSOL TOOL CORPORATION,
GAYSHEN CORP., and
COVISTA OF NEW YORK, INC.
collectively, as Borrower
and
CAPITALSOURCE FINANCE LLC,
as Agent and Lender
Dated as of
April 16, 2003
================================================================================
REVOLVING CREDIT AND SECURITY AGREEMENT
TABLE OF CONTENTS
Page
I. DEFINITIONS.................................................................................1
1.1 General Terms......................................................................1
II. LOANS, PAYMENT AND INTEREST; COLLATERAL.....................................................2
2.1 The Revolving Facility.............................................................2
2.2 The Revolving Notes; Maturity......................................................2
2.3 Interest on the Revolving Notes....................................................2
2.4 Facility Disbursements; Requirement to Deliver Borrowing Certificate...............3
2.5 Collections; Repayment; Borrowing and Lockbox......................................3
2.6 Intentionally Omitted..............................................................4
2.7 Intentionally Omitted..............................................................4
2.8 Intentionally Omitted..............................................................4
2.9 Promise to Pay; Manner of Payment..................................................4
2.10 Repayment of Excess Advances.......................................................5
2.11 Other Mandatory Prepayments........................................................5
2.12 Payments by Agent..................................................................5
2.13 Grant of Security Interest; Collateral.............................................5
2.14 Collateral Administration..........................................................6
2.15 Power of Attorney..................................................................7
2.16 Notes..............................................................................8
2.17 Replacement of Lost Notes..........................................................8
III. FEES AND OTHER CHARGES......................................................................8
3.1 Commitment Fee.....................................................................8
3.2 Unused Line Fee....................................................................8
3.3 Collateral Management Fee..........................................................9
3.4 Early Termination Fee..............................................................9
3.5 Computation of Fees; Lawful Limits.................................................9
3.6 Default Rate of Interest...........................................................9
3.7 Acknowledgement of Joint and Several Liability....................................10
IV. CONDITIONS PRECEDENT.......................................................................12
4.1 Conditions to Initial Advance and Closing.........................................12
4.2 Conditions to Each Advance........................................................15
V. REPRESENTATIONS AND WARRANTIES.............................................................16
5.1 Organization and Authority........................................................16
5.2 Loan Documents....................................................................16
5.3 Subsidiaries, Capitalization and Ownership Interests..............................17
5.4 Properties........................................................................17
5.5 Other Agreements..................................................................18
5.6 Litigation........................................................................18
5.7 Hazardous Materials...............................................................18
5.8 Tax Returns; Governmental Reports.................................................18
5.9 Financial Statements and Reports..................................................18
5.10 Compliance with Law; Business.....................................................19
5.11 Intellectual Property.............................................................19
5.12 Licenses and Permits; Labor.......................................................20
5.13 No Default; Solvency..............................................................20
5.14 Disclosure........................................................................20
5.15 Existing Indebtedness; Investments, Guarantees and Certain Contracts..............20
5.16 Affiliated Agreements.............................................................21
5.17 Insurance.........................................................................21
5.18 Names; Location of Offices, Records and Collateral; Deposit Accounts and
Investment Property............................................................21
5.19 Non-Subordination.................................................................21
5.20 Accounts..........................................................................21
5.21 Legal Investments.................................................................22
5.22 No Criminal Activity..............................................................22
5.23 Surety Obligations................................................................22
5.24 Survival..........................................................................22
5.25 Broker's or Finder's Commissions..................................................22
VI. AFFIRMATIVE COVENANTS......................................................................23
6.1 Financial Statements, Reports and Other Information...............................23
6.2 Payment of Obligations............................................................26
6.3 Conduct of Business and Maintenance of Existence and Assets.......................26
6.4 Compliance with Legal and Other Obligations.......................................26
6.5 Insurance.........................................................................26
6.6 True Books........................................................................27
6.7 Inspection; Periodic Audits.......................................................27
6.8 Further Assurances; Post Closing..................................................27
6.9 Payment of Indebtedness...........................................................28
6.10 Lien Releases.....................................................................28
6.11 Use of Proceeds...................................................................28
6.12 Collateral Documents; Security Interest in Collateral.............................28
6.13 Taxes and Other Charges...........................................................29
VII. NEGATIVE COVENANTS.........................................................................30
7.1 Financial Covenants...............................................................30
7.2 Indebtedness......................................................................30
7.3 Liens.............................................................................30
7.4 Investments; Investment Property; New Facilities or Collateral; Subsidiaries......31
7.5 Dividends; Redemptions; Equity....................................................31
7.6 Transactions with Affiliates......................................................32
7.7 Charter Documents; Fiscal Year; Dissolution; Use of Proceeds; Insurance Policies;
Disposition of Collateral; Taxes; Trade Names..................................33
7.8 Transfer of Assets................................................................33
7.9 Contingent Obligations and Risks..................................................33
7.10 Truth of Statements...............................................................34
7.11 Payment on Subordinated Debt......................................................34
7.12 Modifications of Agreements.......................................................34
7.13 Real Property; Negative Pledge....................................................34
VIII. EVENTS OF DEFAULT..........................................................................34
IX. RIGHTS AND REMEDIES AFTER DEFAULT..........................................................37
9.1 Rights and Remedies...............................................................37
9.2 Application of Proceeds...........................................................38
9.3 Rights to Appoint Receiver........................................................38
9.4 Attorney in Fact..................................................................39
9.5 Blocked Accounts..................................................................39
9.6 Rights and Remedies not Exclusive.................................................39
X. WAIVERS AND JUDICIAL PROCEEDINGS...........................................................39
10.1 Waivers...........................................................................39
10.2 Delay; No Waiver of Defaults......................................................39
10.3 Jury Waiver.......................................................................40
10.4 Intentionally Omitted.............................................................40
10.5 Amendment and Waivers.............................................................40
XI. EFFECTIVE DATE AND TERMINATION.............................................................41
11.1 Effectiveness and Termination.....................................................41
11.2 Survival..........................................................................41
XI-A. AGENCY PROVISIONS..........................................................................42
11-A.1 Agent.............................................................................42
11-A.2 Consents..........................................................................46
11-A.3 Set Off and Sharing of Payments...................................................46
11-A.4 Disbursement of Funds.............................................................47
11-A.5 Settlements; Payments and Information.............................................47
11-A.6 Dissemination of Information......................................................48
XII. MISCELLANEOUS..............................................................................48
12.1 Governing Law; Jurisdiction; Service of Process; Venue............................49
12.2 Successors and Assigns; Assignments and Participations............................49
12.3 Application of Payments...........................................................51
12.4 Indemnity.........................................................................52
12.5 Notice............................................................................52
12.6 Severability; Captions; Counterparts; Facsimile Signatures........................53
12.7 Expenses..........................................................................53
12.8 Entire Agreement..................................................................53
12.9 Approvals and Duties..............................................................54
12.10 Confidentiality and Publicity.....................................................54
12.11 Release of Collateral.............................................................55
REVOLVING CREDIT AND SECURITY AGREEMENT
THIS REVOLVING CREDIT AND SECURITY AGREEMENT (the "Agreement") dated
as of April 16, 2003, is entered into by and between COVISTA COMMUNICATIONS
INC., a New Jersey corporation ("Covista"), CAPSULE COMMUNICATIONS, INC., a
Delaware corporation ("Capsule"), COVISTA OF VIRGINIA, INC., a Virginia
corporation ("Virginia"), TOTAL-TEL SOUTHEAST, INC., a Georgia corporation
("Southeast"), TOTALTEL ENHANCED SERVICES, INC., a New Jersey corporation
("TES"), TOTALTEL SARASOTA, INC., a New Jersey corporation ("Sarasota"),
TOTALTEL INTERNATIONAL, INC., a New Jersey corporation ("International"),
COVISTA CARRIER SERVICES, INC., a New Jersey corporation ("Carrier"), COVISTA,
INC., a New Jersey corporation ("CINC"), MADATRON CORPORATION, a New Jersey
corporation ("Madatron"), MANSOL TOOL CORPORATION, a New Jersey corporation
("Mansol"), GAYSHEN CORP., a New Jersey corporation ("Gayshen"), and COVISTA OF
NEW YORK, INC. ("York", individually and collectively with Covista, Capsule,
Virginia, Southeast, TES, Sarasota, International, Carrier, CINC, Madatron,
Mansol and Gayshen, the "Borrower"), CAPITALSOURCE FINANCE LLC, a Delaware
limited liability company ("CapitalSource"), as administrative, payment and
collateral agent for Lenders (in such capacities, the "Agent"), and the Lenders.
WHEREAS, Borrowers have requested that Lenders make available to
Borrowers a revolving credit facility (the "Revolving Facility") in a maximum
principal amount at any time outstanding of up to Eight Million Dollars
($8,000,000.00) (the "Facility Cap"), the proceeds of which shall be used by
Borrowers for refinancing Borrowers' existing obligations and indebtedness and
working capital needs of Borrowers in connection with their telecommunications
provider and related services business (the "Business");
WHEREAS, Lenders are willing to make the Revolving Facility available
to Borrowers upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which hereby are
acknowledged, Borrowers, Agent and Lenders hereby agree as follows:
I. DEFINITIONS
1.1 General Terms
For purposes of the Loan Documents and all Annexes thereto, in
addition to the definitions above and elsewhere in this Agreement or the other
Loan Documents, the terms listed in Appendix A hereto shall have the meanings
given such terms in Appendix A, which is incorporated herein and made a part
hereof. All capitalized terms used which are not specifically defined shall have
meanings provided in Article 9 of the UCC in effect on the date hereof to the
extent the same are used or defined therein. Unless otherwise specified herein
or in Appendix A, this Agreement and any agreement or contract referred to
herein or in Appendix A shall mean such agreement as modified, amended or
supplemented from time to time. Unless otherwise specified, as used in the Loan
Documents or in any certificate, report, instrument or other document made or
delivered pursuant to any of the Loan Documents, all accounting terms not
defined in Appendix A or elsewhere in this Agreement shall have the meanings
given to such terms in and shall be interpreted in accordance with GAAP.
1
II. LOANS, PAYMENT AND INTEREST; COLLATERAL
2.1 The Revolving Facility
Subject to the provisions of this Agreement, each Revolving Lender
agrees to make available its Pro Rata Share of Advances to Borrowers under the
Revolving Facility from time to time during the Term; provided, that (a) the Pro
Rata Share of the Advances of any Revolving Lender shall not at any time exceed
its separate Commitment, and (b) the aggregate amount of all Advances at any
time outstanding under the Revolving Facility shall not exceed the lesser of (i)
the Facility Cap and (ii) the Availability (as defined below). The obligations
of Revolving Lenders hereunder shall be several and not joint or joint and
several up to the amount of the Commitments. The Revolving Facility is a
revolving credit facility, which may be drawn, repaid and redrawn, from time to
time as permitted under this Agreement. Any determination as to whether there is
availability within the Borrowing Base for requested Advances shall be made by
Agent in its Permitted Discretion and shall be final and binding on Borrowers.
Unless otherwise permitted by Agent, each Advance shall be in an amount of at
least $100,000. Subject to the provisions of this Agreement, Borrowers may
request Advances under the Revolving Facility up to and including the value in
U.S. dollars, of the sum of (a) eighty percent (80%) of the Borrowing Base for
Eligible Billed Receivables, plus (b) the lesser of (i) sixty-five percent (65%)
of the Borrowing Base for Eligible Unbilled Receivables and (ii) $3,000,000
(provided that the amount under clause (b) is not to exceed thirty-five percent
(35%) of the Availability), minus, if applicable, (c) amounts reserved pursuant
to this Agreement (such aggregate calculated amount being referred to herein as
the "Availability"). Advances under the Revolving Facility automatically shall
be made for the payment of interest on the Notes and other Obligations on the
date when due to the extent available and as provided for herein. Borrowers may
not at any time increase, reduce or otherwise adjust the Facility Cap. Agent
shall have the right to establish and readjust from time to time, in its
Permitted Discretion, reserves against the Borrowing Base, which reserves shall
have the effect of reducing the amounts otherwise eligible to be disbursed to
Borrowers under the Revolving Facility pursuant to this Agreement.
2.2 The Revolving Notes; Maturity
(a) All Advances under the Revolving Facility shall be evidenced by
the Revolving Notes, payable to the order of each Revolving Lender in the
principal amount of the Commitment of such Revolving Lender, duly executed and
delivered by Borrowers. The Revolving Notes shall evidence the aggregate
Indebtedness of Borrowers to Revolving Lenders resulting from Advances under the
Revolving Facility from time to time. Each Revolving Lender hereby is
authorized, but is not obligated, to enter the amount of such Revolving Lender's
Pro Rata Share of each Advance under the Revolving Facility, and the amount of
each payment or prepayment of principal or interest thereon in the appropriate
spaces on the reverse of or on an attachment to such Revolving Lender's
Revolving Note. Agent will account to Borrowers monthly with a statement of
Advances under the Revolving Facility, and charges and payments made pursuant to
this Agreement, and in the absence of manifest error, such accounting rendered
by Agent shall be deemed final, binding and conclusive unless Agent is notified
by Borrowers in writing to the contrary within thirty (30) calendar days of
Receipt of each accounting, which notice shall be deemed an objection only to
items specifically objected to therein.
(b) All amounts outstanding under the Revolving Notes and other
Obligations under the Revolving Facility shall be due and payable in full, if
not earlier in accordance with this Agreement, on the Maturity Date.
2.3 Interest on the Revolving Notes
Interest on outstanding Advances under the Revolving Notes shall be
payable monthly in arrears on the first day of each calendar month at an annual
rate equal to the Prime Rate plus 2.00%,
2
provided, however, that, notwithstanding any provision of any Loan Document, the
interest on outstanding Advances under the Revolving Note shall not be less than
6.25%, in each case calculated on the basis of a 360-day year and for the actual
number of calendar days elapsed in each interest calculation period Interest
accrued on each Advance under the Revolving Notes shall be due and payable on
the first day of each calendar month, in accordance with the procedures provided
for in Section 2.5 and Section 2.9, commencing May 1, 2003 and continuing until
the later of the expiration of the Term and the full performance and
indefeasible payment in full in cash of the Obligations and termination of this
Agreement.
2.4 Facility Disbursements; Requirement to Deliver Borrowing Certificate
So long as no Default or Event of Default shall have occurred and be
continuing, Borrowers may give Agent irrevocable written notice requesting an
Advance under the Revolving Facility by delivering to Agent not later than noon
(New York City time) at least one (1) but not more than five (5) Business Days
before the proposed borrowing date of such requested Advance (the "Borrowing
Date"), a completed Borrowing Certificate requesting such Advance accompanied by
relevant supporting documentation satisfactory to Agent in its Permitted
Discretion, which shall (a) specify the proposed Borrowing Date of such Advance
which shall be a Business Day, (b) specify the principal amount of such
requested Advance, and (c) certify the matters contained in Section 4.2 and, to
the extent applicable, provide calculations evidencing satisfaction of the
conditions set forth in Section 4.2. Each time a request for an Advance is made
Borrowers shall deliver to Agent a Borrowing Certificate; provided, however,
that ineligible amounts in the Borrowing Base are only required to be computed
on a monthly basis. In addition, (i) on Wednesday of each week during the Term
(and more frequently if Agent shall so request in its Permitted Discretion)
until the Obligations are indefeasibly paid in cash in full and this Agreement
is terminated, Borrowers shall deliver to Agent a weekly Borrowing Certificate
("Weekly Borrowing Certificate") accompanied by a weekly internally prepared
flash sales report covering the prior week for all Borrowers and weekly
internally prepared collections report covering the prior week for all Borrowers
and such other supporting documentation with respect to the foregoing and other
figures and information in the Weekly Borrowing Certificate as Agent shall
request in its Permitted Discretion, and (ii) within fifteen (15) calendar days
after the last day of each calendar month during the Term (and more frequently
if Agent shall so request in its Permitted Discretion) until the Obligations are
indefeasibly paid in cash in full and this Agreement is terminated, Borrowers
shall deliver to Agent a monthly Borrowing Certificate ("Monthly Borrowing
Certificate") accompanied by a separate detailed aging and categorizing of
Borrowers' accounts receivable, a summary accounts payable aging for all
Borrowers, an inventory listing for all Borrowers, a sales report for all
Borrowers, a collections report for all Borrowers, a credit memo report for all
Borrowers and a reconciliation of accounts receivable, accounts payable and
inventory to the Borrowers' general ledger and financial statements and such
other supporting documentation with respect to the foregoing and other figures
and information in the Monthly Borrowing Certificate as Agent shall request in
its Permitted Discretion. On each Borrowing Date, Borrowers irrevocably
authorize Agent and Lenders to disburse the proceeds of the requested Advance to
the applicable Borrower's account as set forth on Schedule 2.4, in all cases for
credit to the applicable Borrower (or to such other account as to which the
Borrower shall instruct Agent in writing) via Federal funds wire transfer no
later than 3:00 p.m. (New York City time).
2.5 Collections; Repayment; Borrowing and Lockbox
Borrowers shall maintain a lockbox together with a blocked account
(individually and collectively, the "Blocked Account") with one or more banks
acceptable to Agent (each, a "Lockbox Bank"), and shall execute with each
Lockbox Bank one or more agreements acceptable to Agent (individually and
collectively, the "Lockbox Agreement"), and such other agreements related
thereto as Agent may require. Borrowers shall ensure that all collections of
their respective Accounts and all other cash payments received by Borrowers are
paid and delivered directly from Account Debtors and other
3
Persons into the Blocked Account. The Lockbox Agreements shall provide that the
Lockbox Banks immediately will transfer all funds paid into the Blocked Accounts
into a depository account or accounts maintained by Agent or an Affiliate of
Agent at such bank as Agent may communicate to Borrowers from time to time (the
"Concentration Account"). Notwithstanding and without limiting any other
provision of any Loan Document, Agent shall have the right to apply, on a daily
basis, all funds transferred into the Concentration Account pursuant to the
Lockbox Agreement and this Section 2.5 in such order and manner as determined by
Agent. To the extent that any Accounts collections of Borrowers or any other
cash payments received by Borrowers are not sent directly to the Blocked Account
but are received by any Borrower or any of their Affiliates, such collections
and proceeds shall be held in trust for the benefit of Agent and Lenders and
immediately remitted (and in any event within two (2) Business Days), in the
form received, to the Blocked Account for immediate transfer to the
Concentration Account. Borrowers acknowledge and agree that compliance with the
terms of this Section 2.5 is an essential term of this Agreement, and that
nothing shall prevent Agent from considering any failure to comply with the
terms of this Section 2.5 to be a Default or an Event of Default or from taking
any action or exercising any right or remedy available to Agent or any Lender
with respect to any Default or Event of Default. All funds transferred to the
Concentration Account for application to the Obligations under the Revolving
Facility shall be applied to reduce the Obligations under the Revolving
Facility, but for purposes of calculating interest hereunder, shall be subject
to a five (5) Business Day clearance period. If as a result of collections of
Accounts and/or any other cash payments received by Borrowers pursuant to this
Section 2.5 a credit balance exists with respect to the Concentration Account,
such credit balance shall not accrue interest in favor of Borrowers but shall be
available to Borrowers upon written request in accordance with the terms of this
Agreement. If applicable, at any time prior to the execution of all or any of
the Lockbox Agreements and operation of the Blocked Account, Borrowers and their
Affiliates shall direct all collections or proceeds they receive on Accounts or
from other Collateral or any other cash payments received by Borrowers or such
Affiliate, as applicable, to the accounts(s) and in the manner specified by
Agent in its Permitted Discretion. Borrowers further covenant and agree that the
payments made to, or funds deposited in, the Blocked Account with Valley
National Bank, shall only be made by electronically.
2.6 Intentionally Omitted.
2.7 Intentionally Omitted.
2.8 Intentionally Omitted.
2.9 Promise to Pay; Manner of Payment
Borrowers absolutely and unconditionally promise to pay when due and
payable hereunder, principal, interest and all other amounts and Obligations
payable hereunder or under any other Loan Document, without any right of
rescission and without any deduction whatsoever, including any deduction for
set-off, recoupment or counterclaim, or defense for any reason (other than the
indefeasible payment in full in cash of the principal, interest and all other
amounts and Obligations payable hereunder and under any other Loan Document) and
notwithstanding any damage to, defects in or destruction of the Collateral or
any other event, including obsolescence of any property or improvements. Any
payments made by Borrowers (other than payments automatically paid through
Advances under the Revolving Facility as provided herein), shall be made only by
wire transfer on the date when due, without offset, deduction, or counterclaim,
in U.S. dollars, in immediately available funds to such account as may be
indicated in writing by Agent to Borrowers from time to time. Any such payment
received after 2:00 p.m. New York City time on any date shall be deemed received
on the following Business Day. Whenever any payment hereunder shall be stated to
be due or shall become due and payable on a day other than a Business Day, the
due date thereof shall be extended to, and such payment shall be made on, the
next succeeding Business Day, and such extension of time in such case shall be
included in the computation of payment of any interest (at the interest rate
then in effect during such extension) and/or fees, as the case may be.
4
2.10 Repayment of Excess Advances
Any balance of Advances under the Revolving Facility outstanding at
any time in excess of the lesser of (a) the Availability and (b) the Facility
Cap shall be immediately due and payable by Borrowers without the necessity of
any demand, at the Payment Office, whether or not a Default or Event of Default
has occurred or is continuing and shall be paid in the manner specified in
Section 2.9 and, notwithstanding any other provision of this Agreement, shall be
an Event of Default.
2.11 Other Mandatory Prepayments
In addition to and without limiting any provision of any Loan
Document:
(a) if a Change of Control occurs, on or prior to the first Business
Day following the date of such Change of Control, Borrowers shall prepay the
Loans and all other Obligations in full in cash together with accrued interest
thereon to the date of prepayment and all other amounts owing to Agent and
Lenders under the Loan Documents; and
(b) if any Borrower or any of Borrowers' Subsidiaries, in any
transaction or series of related transactions, (i) sells any of its material
assets or other properties (other than sales of assets that are promptly (and in
any event within 180 days) replaced with similar assets), (ii) sells or issues
any equity or debt securities, capital stock or ownership interests (other than
Permitted Indebtedness and/or Permitted Securities and/or, so long as no Default
or Event of Default has occurred and is continuing or would be caused by or
result therefrom, sales or issuances of Permitted Options), including, but not
limited to, any sale or issuance undertaken in connection with or as part of a
Public Offering, (iii) receives any property damage insurance award (other than
the WTC Claim) or any other insurance proceeds of any kind that are not used
promptly after receipt (and in any event within 180 days) to repair or replace
the property or assets covered thereby, (iv) incurs any Indebtedness except for
Permitted Indebtedness, or (v) receives any life insurance proceeds, then it
shall apply 100% (or such lesser amount as is required to indefeasibly pay in
cash in full the Obligations) of the proceeds thereof to the prepayment of the
Loans together with accrued interest thereon and all other Obligations, such
payment to be applied at such time and in such manner as Agent shall decide in
its Permitted Discretion.
2.12 Payments by Agent
Should any amount required to be paid under any Loan Document be
unpaid beyond any applicable cure period, such amount may be paid by Agent, for
the account of Lenders, which payment shall be deemed a request for an Advance
under the Revolving Facility as of the date such payment is due, and Borrowers
irrevocably authorize disbursement of any such funds to Agent, for the benefit
of Lenders, by way of direct payment of the relevant amount, interest or
Obligations, without necessity of any demand in accordance with Section 2.9
whether or not a Default or Event of Default has occurred or is continuing. No
payment or prepayment of any amount by Agent, Lenders or any other Person shall
entitle any Person to be subrogated to the rights of Agent and/or Lenders under
any Loan Document unless and until the Obligations have been fully performed and
paid indefeasibly in cash and this Agreement has been terminated. Any sums
expended or amounts paid by Agent and/or Lenders as a result of any Borrower's
or any Guarantor's failure to pay, perform or comply with any Loan Document or
any of the Obligations may be charged to such Borrower's account as an Advance
under the Revolving Facility and added to the Obligations.
2.13 Grant of Security Interest; Collateral
(i) To secure the payment and performance of the Obligations, each
Borrower hereby grants to Agent, for the benefit of itself and the Lenders, a
valid, perfected, continuing first priority (other than with respect to property
or assets covered by Priority Permitted Liens) security
5
interest in and Lien upon, and pledges to Agent, for the benefit of itself and
the Lenders, all of its right, title and interest in and to and upon all of such
Borrower's assets, now owned or hereafter acquired, including, without
limitation, all of the following property and interests in property of such
Borrower:
(a) all of such Borrower's tangible personal property, including
without limitation all present and future Goods, Inventory, and Equipment
(including items of equipment which are or become Fixtures), Software and
Computer Hardware and Software, now owned or hereafter acquired;
(b) all of such Borrower's intangible personal property,
including without limitation all present and future Accounts, securities,
Contract Rights, Permits, General Intangibles, Chattel Paper, Investment
Property, Intellectual Property, Documents, Instruments, Deposit Accounts,
Letter-of-Credit Rights and Supporting Obligations, rights to the payment of
money or other forms of consideration of any kind, tax refunds, insurance
proceeds (including, without limitation, proceeds of any life insurance policy),
now owned or hereafter acquired, and all intangible and tangible personal
property relating to or arising out of any of the foregoing;
(c) all of such Borrower's present and future Government
Contracts and rights thereunder and the related Government Accounts and proceeds
thereof, now or hereafter owned or acquired by such Borrower; provided, however,
that Agent shall not have a security interest in any rights under any Government
Contract of such Borrower or in the related Government Account where the taking
of such security interest would be a violation of an express prohibition
contained in the Government Contract (for purposes of this limitation, the fact
that a Government Contract is subject to, or otherwise refers to, Title 31,
Section 203 or Title ▇▇, ▇▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code shall not be
deemed an express prohibition against assignment thereof) or is prohibited by
applicable law; and
(d) any and all additions to any of the foregoing, and any and
all replacements, products and proceeds (including insurance proceeds) of any of
the foregoing.
(ii) Each Borrower has full right and power to grant to Agent, for the
benefit of itself and the Lenders, a perfected, first priority (other than with
respect to property or assets covered by Priority Permitted Liens) security
interest and Lien in the Collateral pursuant to this Agreement, subject to the
following sentence. Upon the execution and delivery of this Agreement, and upon
the filing of the necessary financing statements and/or appropriate filings
and/or delivery of the necessary certificates evidencing equity interests,
control and/or possession, as applicable, without any further action, Agent, for
the benefit of itself and the Lenders, will have a good, valid and first
priority (other than with respect to property or assets covered by Priority
Permitted Liens) and perfected Lien and security interest in the Collateral, not
subject to any transfer or any other restrictions or Liens of any kind in favor
of any other Person except for Permitted Liens. No financing statement relating
to any of the Collateral is on file in any public office except those (a) on
behalf of Agent, for the benefit of itself and the Lenders and/or (b) in
connection with Permitted Liens. No Borrower is a party to any agreement,
document or instrument that conflicts with this Section 2.13.
2.14 Collateral Administration
(a) All Collateral (except Deposit Accounts and Collateral in the
possession of Agent) will at all times be kept by Borrowers at the locations set
forth on Schedule 5.18B hereto, and shall not, without ten (10) Business Days
prior written notice to Agent, be moved therefrom (other than to another such
location), and in any case shall not be moved outside the continental United
States. Whether or not an Event of Default has occurred, any of the Agent's
officers, employees, representatives or agents shall have the right, at any time
during normal business hours, in the name of Agent, any designee of Agent, or
any Borrower, to verify the validity, amount or any other matter relating to the
Collateral. Borrowers shall cooperate fully with Agent in an effort to
facilitate and promptly conclude such
6
verification process. In addition to and notwithstanding any provision of any
Loan Document, Agent shall have the right at all times after the occurrence and
during the continuance of an Event of Default to notify Persons owing Accounts
to Borrowers that their Accounts have been assigned to Agent and to collect such
Accounts directly in its own name and to charge collection costs and expenses,
including reasonable attorney's fees, to Borrowers. Borrowers shall endeavor in
the first instance to make collection of their Accounts for Agent, for the
account of Lenders.
(b) As and when determined by Agent in its Permitted Discretion, Agent
will perform the searches described in clauses (i) and (ii) below against
Borrowers (the results of which are to be consistent with Borrowers'
representations and warranties under this Agreement), all at Borrowers' expense:
(i) UCC searches with the Secretary of State and local filing offices of each
jurisdiction where any Borrower and any Guarantor, if any, is organized and
maintains its respective executive office, a place of business or assets; and
(ii) judgment, federal tax lien and corporate and partnership tax lien searches,
in each jurisdiction searched under clause (i) above.
(c) Upon Agent's request, Borrowers shall promptly deliver to Agent
all items for which Agent must receive possession to obtain a perfected Lien and
security interest and all notes, certificates, and documents of title, Chattel
Paper, warehouse receipts, Instruments, and any other similar Instruments
constituting Collateral, in each case to the extent not already in the
possession of Agent.
(d) Borrowers shall keep accurate and complete records of the
Collateral and all payments and collections thereon and shall submit such
records to Agent on such periodic bases as Agent may request in its Permitted
Discretion. In addition, if Accounts of Borrowers in an aggregate face amount in
excess of $50,000 become ineligible because they fall within one of the
specified categories of ineligibility set forth in the definition of Eligible
Billed Receivables or Eligible Unbilled Receivables, Borrowers shall notify
Agent of such occurrence no later than five (5) Business Days following such
occurrence and the Borrowing Base shall thereupon be adjusted to reflect such
occurrence. If requested by Agent upon or at any time after the occurrence and
during the continuation of an Event of Default, Borrowers shall execute and
deliver to Agent formal written assignments of all of their respective Accounts
as Agent may request, including all Accounts created since the date of the last
assignment, together with copies of claims, invoices and/or other information
related thereto. To the extent that collections from such assigned Accounts
exceed the amount of the Obligations, such excess amount shall not accrue
interest in favor of Borrowers but shall be available to Borrowers upon written
request in accordance with the terms of this Agreement.
(e) Borrowers (i) shall provide prompt written notice to their current
bank to transfer all items, collections and remittances to the Concentration
Account, (ii) shall direct or shall have directed each Account Debtor to make
payments to the appropriate Blocked Account, and Borrower hereby authorizes
Agent and/or Lenders, upon any failure to send such directions within ten (10)
calendar days after the date of this Agreement or ten (10)calendar days after
the Person becomes an Account Debtor, to send any and all similar notices and
directions to such Account Debtors, and (iii) shall do anything further that may
be lawfully required by Agent in its Permitted Discretion to secure Agent, for
the benefit of itself and Lenders, and effectuate the intentions of the Loan
Documents.
2.15 Power of Attorney
Agent is hereby irrevocably made, constituted and appointed the true and
lawful attorney for Borrowers (without requiring Agent to act as such) with full
power of substitution to do the following: (i) endorse the name of any such
Person upon any and all checks, drafts, money orders and other instruments for
the payment of money that are payable to such Person and constitute collections
on such Person's Accounts; (ii) execute and/or file in the name of any Borrower
any financing statements, amendments to financing statements, schedules to
financing statements, releases or terminations thereof
7
(and such Borrower hereby waives any right to file any of the foregoing until
the Obligations are indefeasibly paid in full in cash and this Agreement is
terminated or with the prior written consent of Agent in its Permitted
Discretion), (iii) execute and/or file in the name of the Borrower assignments,
instruments, documents, schedules, and statements that it is or they are
obligated to give Agent under any of the Loan Documents (to the extent such
Borrower fails to so execute and/or file any of the foregoing within two (2)
Business Days of Agent's request or the time when such Borrower is otherwise
obligated to do so); and (iv) do such other and further acts and deeds in the
name of Borrower that Agent may deem necessary or desirable in its Permitted
Discretion to enforce, make, create, maintain, continue or perfect Agent's, for
the benefit of itself and Lenders, security interest or lien or rights in any
Collateral. In addition, if any Borrower breaches its obligation hereunder to
direct payments of Accounts or the proceeds of any other Collateral to the
appropriate Blocked Account, Agent, as the irrevocably made, constituted and
appointed true and lawful attorney for such Person pursuant to this paragraph,
may, by the signature or other act of any of Agent's officers or authorized
signatories (without requiring any of them to do so), direct any federal, state
or private payor or fiscal intermediary to pay proceeds of Accounts or any other
Collateral to the appropriate Blocked Account.
2.16 Notes
Upon Agent's or any Lender's request, and in any event within three (3)
Business Days of any such request, Borrowers shall execute and deliver to Agent
new Notes and/or divide and/or split the Notes in exchange for the then existing
Notes in such smaller amounts or denominations as Agent or such Lender shall
specify in their respective sole discretion, provided that the aggregate
principal amount of such new Notes does not exceed the aggregate principal
amount of the Notes outstanding at the time such request is made.
2.17 Replacement of Lost Notes
Upon receipt of evidence reasonably satisfactory to Borrowers of the
mutilation, destruction, loss or theft of any Notes and the ownership thereof,
Borrowers shall, upon the written request of the holder of such Notes, execute
and deliver in replacement thereof new Notes in the same form, in the same
original principal amount and dated the same date as the Notes so mutilated,
destroyed, lost or stolen; and such Notes so mutilated, destroyed, lost or
stolen shall then be deemed no longer outstanding hereunder. If the Notes being
replaced have been mutilated, they shall be surrendered to Borrowers after
Agent's receipt of the replacement Notes; and if such replaced Notes have been
destroyed, lost or stolen, such holder shall furnish Borrowers with an indemnity
in writing reasonably acceptable to Borrowers to save them harmless in respect
of (a) such replaced Notes and (b) any reasonable legal fees or costs incurred
by Borrowers in connection with such indemnity.
III. FEES AND OTHER CHARGES
3.1 Commitment Fee
On the Closing Date, Borrowers shall pay to Agent, for the ratable
benefit of Revolving Lenders, $120,000 (or such portion thereof as remains
unpaid as of the date hereof) as a nonrefundable commitment fee.
3.2 Unused Line Fee
Borrowers shall pay to Agent, for the ratable benefit of Revolving
Lenders, an unused line fee (the "Unused Line Fee") in an amount equal to 0.5%
(per annum) of the difference derived by subtracting (a) the sum of (i) the
daily average amount of the balances under the Revolving Facility outstanding
during the preceding month, and (ii) $1,000,000, provided, however, that such
figure shall instead be $-0- on and after the date on which Borrowers are not
subject to the Excess Availability covenant described in paragraph (4) of Annex
I hereof, from (b) the highest Facility Cap existing at any
8
time during such month. The Unused Line Fee shall be payable monthly in arrears
on the first day of each successive calendar month (starting with the month in
which the Closing Date occurs).
3.3 Collateral Management Fee
Borrowers shall pay Agent for its own account a monthly collateral
management fee (the "Collateral Management Fee") in an amount equal to 1.0% (per
annum) of the daily average amount of the balances under the Revolving Facility
outstanding during the preceding month. The Collateral Management Fee shall be
payable monthly in arrears on the first day of each successive calendar month
(starting with the month in which the Closing Date occurs).
3.4 Early Termination Fee
If (i) Borrowers terminate this Agreement under Section 11.1 hereof or
otherwise make final payment of any Loan, (ii) Agent or any Lender demands or
accelerates the Obligations, or Borrowers are otherwise required to make payment
in full of any Loan, or Lenders' obligations to make Loans shall terminate upon
the occurrence of an Event of Default, (iii) a Change of Control or final
payment of all outstanding Obligations pursuant to Section 2.11 occurs or is
required to occur, (iv) any other termination of this Agreement and/or final
prepayment of any Loan or Obligations occurs, whether by virtue of Agent's
exercising its right of set-off or otherwise, or (v) any automatic acceleration
of any Loan or Obligations or cessation of lending on account of or during or
payment or reduction of any outstanding Loan or Obligations is made on account
of or during a bankruptcy, reorganization or other proceeding or liquidation or
pursuant to any Debtor Relief Law (each, a "Termination"), then, at the
effective date of any such Termination, Borrowers shall pay Agent, for the
ratable benefit of Lenders (in addition to the then outstanding principal,
accrued interest and other Obligations owing pursuant to the terms of this
Agreement and any other Loan Document), as yield maintenance for the loss of
bargain and not as a penalty, an amount equal to the Termination Fee.
3.5 Computation of Fees; Lawful Limits
All fees hereunder shall be computed on the basis of a year of 360
days and for the actual number of days elapsed in each calculation period, as
applicable. In no contingency or event whatsoever, whether by reason of
acceleration or otherwise, shall the interest and other charges paid or agreed
to be paid to Agent, for the benefit of Lenders, for the use, forbearance or
detention of money hereunder exceed the maximum rate permissible under
applicable law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. If, due to any circumstance whatsoever,
fulfillment of any provision hereof, at the time performance of such provision
shall be due, shall exceed any such limit, then, the obligation to be so
fulfilled shall be reduced to such lawful limit, and, if Agent or Lenders shall
have received interest or any other charges of any kind which might be deemed to
be interest under applicable law in excess of the maximum lawful rate, then such
excess shall be applied first to any unpaid fees and charges hereunder, then to
unpaid principal balance owed by Borrowers hereunder, and if the then remaining
excess interest is greater than the previously unpaid principal balance, Agent
and Lenders shall promptly refund such excess amount to Borrowers and the
provisions hereof shall be deemed amended to provide for such permissible rate.
The terms and provisions of this Section 3.5 shall control to the extent any
other provision of any Loan Document is inconsistent herewith.
3.6 Default Rate of Interest
Upon the occurrence and during the continuation of an Event of
Default, the Applicable Rate of interest in effect at such time with respect to
the Obligations shall be increased by three percent (3.0%) per annum (the
"Default Rate") (i) upon written notice of such increase given by Agent to
Borrowers with respect to all Events of Default other than those described in
Sections 8(g) or (h), or (ii) automatically, and without notice, with respect to
any Event of Default described in Sections 8(g) or (h).
9
3.7 Acknowledgement of Joint and Several Liability
(a) Each Borrower acknowledges that all Borrowers are jointly and
severally liable for all of the Obligations under the Loan Documents. Each
Borrower expressly (i) understands, agrees and acknowledges that Borrowers are
all affiliated entities by common ownership, (ii) agrees to have the
availability of common loans instead of separate loans, (iii) understands,
agrees and acknowledges that Lenders hereby will extend such common loans on the
terms herein provided, (iv) understands, agrees and acknowledges that Lenders
will be lending against, and relying on a lien upon, all of the Borrowers'
assets even though the proceeds of the Loans made hereunder may not be advanced
directly to a particular Borrower, (v) understands, agrees and acknowledges that
each Borrower will nonetheless benefit by the making of the Loans hereunder by
Lenders and the availability of loans of a size greater than each could
independently warrant, (vi) understands, agrees and acknowledges that all of the
representations, warranties, covenants, obligations, conditions, agreements and
other terms contained in the Loan Documents shall be applicable to and binding
upon each Borrower as set forth in the Loan Documents, and (vii) understands,
agrees and acknowledges that the Borrowers have each executed the Notes as
co-makers of the Notes and that it would not be able to obtain the credit
provided by the Lenders without the financial support provided by the other
Borrowers.
(b) Without limitation of and in furtherance of the foregoing, each
Borrower hereby guarantees the prompt payment and performance in full of all
Obligations. Such guarantee constitutes a guarantee of payment and not of
collection. Each Borrower's obligations under this Agreement shall, to the
fullest extent permitted by law, be unconditional irrespective of (i) the
validity or enforceability, avoidance, or subordination of the Obligations of
any other Borrower or of any promissory note or other document evidencing all or
any part of the Obligations of any other Borrower, (ii) the absence of any
attempt to collect the Obligations from any other Borrower, any Guarantor, if
any, or any other security therefor, or the absence of any other action to
enforce the same, (iii) the waiver, consent, extension, forbearance, or granting
of any indulgence by the Agent and/or any Lender with respect to any provision
of any instrument evidencing the Obligations of any other Borrower or Guarantor,
if any, or any part thereof, or any other agreement now or hereafter executed by
any other Borrower or Guarantor, if any, and delivered to the Agent and/or any
Lender, (iv) the failure by the Agent and/or any Lender to take any steps to
perfect and maintain its security interest in, or to preserve its rights to, any
security or collateral for the Obligations of any other Borrower or Guarantor,
if any, (v) the Agent's and/or any Lender's election, in any proceeding
instituted under the United States Bankruptcy Code (the "Bankruptcy Code"), of
the application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing
or grant of a security interest by any other Borrower, as debtor-in-possession
under Section 364 of the Bankruptcy Code, (vii) the disallowance of all or any
portion of the Agent's and/or any Lender's claim(s) for the repayment of the
Obligations of any other Borrower under Section 502 of the Bankruptcy Code, or
(viii) any other circumstances which might constitute a legal or equitable
discharge or defense of a guarantor or of any other Borrower (other than actual
indefeasible payment in full in cash). With respect to any Borrower's
Obligations arising as a result of the joint and several liability of the
Borrowers hereunder with respect to Advances or other extensions of credit made
to any of the other Borrowers hereunder, such Borrower waives, until the
Obligations (other than indemnity obligations under the Loan Documents not then
due and payable for any events of claims that would give rise thereto that are
not then pending) shall have been indefeasibly paid in full and this Agreement
shall have been terminated, any right to enforce any right of subrogation or any
remedy which the Agent and/or any Lender now has or may hereafter have against
any other Borrower, any endorser or any Guarantor, if any, of all or any part of
the Obligations, and any benefit of, and any right to participate in, any
security or collateral given to the Agent and/or any Lender to secure payment of
the Obligations or any other liability of any Borrower to the Agent and/or any
Lender. During any Event of Default, the Agent may proceed directly and at once,
without notice, against any Borrower to collect and recover the full amount, or
any portion of the Obligations, without first proceeding against any other
Borrower or any other Person, or against any
10
security or collateral for the Obligations. Each Borrower consents and agrees
that the Agent shall be under no obligation to marshal any assets in favor of
any Borrower or against or in payment of any or all of the Obligations.
(c) Each Borrower is obligated to repay the Obligations as joint and
several obligors under this Agreement. To the extent that any Borrower shall,
under this Agreement as a joint and several obligor, repay any of the
Obligations constituting Advances made to another Borrower hereunder or other
Obligations incurred directly and primarily by any other Borrower (an
"Accommodation Payment"), then the Borrower making such Accommodation Payment
shall be entitled to contribution and indemnification from, and be reimbursed
by, each of the other Borrowers in an amount, for each of such other Borrowers,
equal to a fraction of such Accommodation Payment, the numerator of which
fraction is such other Borrower's Allocable Amount and the denominator of which
is the sum of the Allocable Amounts of all of the Borrowers. As of any date of
determination, the "Allocable Amount" of each Borrower shall be equal to the
maximum amount of liability for Accommodation Payments which could be asserted
against such Borrower hereunder without (i) rendering such Borrower "insolvent"
within the meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the
Uniform Fraudulent Transfer Act ("UFTA") or Section 2 of the Uniform Fraudulent
Conveyance Act ("UFCA"), (ii) leaving such Borrower with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA, or (iii) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA. All
rights and claims of contribution, indemnification, and reimbursement under this
Section 3.7 shall be subordinate in right of payment to the prior payment in
full of the Obligations. The provisions of this Section 3.7 shall, to the extent
inconsistent with any provision in any Loan Document, supersede such
inconsistent provision.
(d) If (i) any court holds that the Borrowers are guarantors and not
jointly and severally liable or (ii) bankruptcy or reorganization proceedings at
any time are instituted by or against any Borrower under any Debtor Relief Law,
each Borrower hereby: (A) until indefeasible payment in full of the Obligations,
expressly and irrevocably waives, to the fullest extent possible, on behalf of
such Borrower, any and all rights at law or in equity to subrogation, to
reimbursement, to exoneration, to contribution, to indemnification, to set off
or to any other rights that could accrue to a surety against a principal, to a
guarantor against a maker or obligor, to an accommodation party against the
party accommodated, to a holder or transferee against a maker, or to the holder
of a claim against any Person, and which such Borrower may have or hereafter
acquire against any Person in connection with or as a result of such Borrower's
execution, delivery and/or performance of this Agreement, or any other documents
to which such Borrower is a party or otherwise; (B) until indefeasible payment
in full of the Obligations, expressly and irrevocably waives any "claim" (as
such term is defined in the Bankruptcy Code) of any kind against any other
Borrower, and further agrees that it shall not have or assert any such rights
against any Person (including any surety), either directly or as an attempted
set off to any action commenced against such Borrower by the Agent or a Lender
or any other Person; and (C) acknowledges and agrees (I) that this waiver is
intended to benefit the Agent and the Lenders and shall not limit or otherwise
affect such Borrower's liability hereunder or the enforceability of this
Agreement, and (II) that the Agent and the Lenders and their successors and
assigns are intended beneficiaries of this waiver, and agreements set forth in
this Section 3.7 and their rights under this Section 3.7 shall survive payment
in full of the Obligations.
(e) This Agreement shall in all respects be continuing, absolute and
unconditional, and shall remain in full force and effect with respect to each
Borrower until all Obligations shall have been indefeasibly fully paid. No
compromise, settlement, release or discharge of, or indulgence with respect to,
or failure, neglect or omission to enforce or exercise any right against, any
one or more Borrowers shall release or discharge the other Borrowers.
11
(f) EACH BORROWER WAIVES THE FILING OF A CLAIM WITH A COURT IN THE
EVENT OF RECEIVERSHIP OR BANKRUPTCY OF ANY BORROWER, AND WAIVES EVERY DEFENSE,
CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH ANY BORROWER MAY NOW HAVE OR
HEREAFTER MAY HAVE TO ANY ACTION BY THE AGENT OR ANY LENDER IN ENFORCING THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, EVERY DEFENSE, COUNTERCLAIM OR SETOFF
WHICH SUCH BORROWER MAY NOW HAVE, OR HEREAFTER MAY HAVE, AGAINST ANOTHER
BORROWER OR ANY OTHER PARTY LIABLE TO THE AGENT OR ANY LENDER IN ANY MANNER. AS
FURTHER SECURITY, ANY AND ALL DEBTS AND LIABILITIES NOW OR HEREAFTER ARISING AND
OWING TO ANY BORROWER BY ANY OTHER BORROWER, OR TO ANY OTHER PARTY LIABLE TO THE
AGENT OR ANY LENDER, ARE HEREBY SUBORDINATED TO THE AGENT'S AND ANY SUCH
LENDER'S CLAIMS AND UPON THE OCCURRENCE OF AN EVENT OF DEFAULT ARE ASSIGNED TO
THE AGENT FOR THE BENEFIT OF THE LENDERS. EACH BORROWER RATIFIES AND CONFIRMS
WHATEVER THE AGENT OR A LENDER MAY DO PURSUANT TO THE TERMS HEREOF, AND AGREES
THAT NEITHER THE AGENT NOR ANY LENDER SHALL BE LIABLE FOR ANY ERROR IN JUDGMENT
OR MISTAKES OF FACT OR LAW. EACH BORROWER HEREBY AGREES THAT IT MAY BE JOINED AS
A PARTY DEFENDANT IN ANY LEGAL PROCEEDING (INCLUDING, BUT NOT LIMITED TO, A
FORECLOSURE PROCEEDING) INSTITUTED BY THE AGENT OR ANY LENDER AGAINST ANY OTHER
BORROWER.
(g) Should a claim be made upon the Agent or any Lender at any time
for repayment of any amount received by the Agent or any Lender in payment of
the Obligations, or any part thereof, whether received from any Borrower or
received by the Agent or any Lender as the proceeds of Collateral, by reason of:
(i) any judgment, decree or order of any court or administrative body having
jurisdiction over the Agent or any Lender or any of their property, or (ii) any
settlement or compromise of any such claim effected by the Agent or any Lender,
in its sole discretion, with the claimant (including a Borrower), each Borrower
shall remain liable to the Agent or any such Lender for the amount so repaid to
the same extent as if such amount had never originally been received by the
Agent or any such Lender, notwithstanding any termination hereof or the
cancellation of any note or other instrument evidencing any of the indebtedness.
To the extent the Agent is required to repay any such amount, each Lender shall,
to the extent the Agent previously paid to such Lender a portion of the amount
which must be repaid, upon demand of the Agent, return to the Agent the amount
which had previously been paid by the Agent to such Lender.
(h) To the extent that any payment to, or realization by, the Lender
or the Agent on the Obligations exceeds the limitations of this Section 3.7 and
is otherwise subject to avoidance and recovery in any such proceeding, the
amount subject to avoidance shall in all events be limited to the amount by
which such actual payment or realization exceeds such limitation, and this
Agreement as limited shall in all events remain in full force and effect and be
fully enforceable against such Borrower. This Section 3.7 is intended solely to
reserve the rights of the Lenders and the Agent hereunder against each Borrower,
in such proceeding to the maximum extent permitted by applicable Debtor Relief
Laws and neither the Borrowers, any guarantor of the Obligations nor any other
Person shall have any right, claim or defense under this Section 3.7 that would
not otherwise be available under applicable Debtor Relief Laws in such
proceeding.
IV. CONDITIONS PRECEDENT
4.1 Conditions to Initial Advance and Closing
12
The obligations of Lenders to consummate the transactions contemplated
herein and to make the initial Advance under the Revolving Facility (the
"Initial Advance") are subject, in each case, to the satisfaction, in the
reasonable judgment of Agent, of the following:
(a) (i) Each Borrower shall have delivered to Agent (A) the Loan
Documents to which it is a party, each duly executed by an authorized officer of
such Borrower and the other parties thereto, (B) the Life Insurance Policy, and
(C) a Borrowing Certificate for the Initial Advance executed by an authorized
officer of such Borrower, and (ii) each Guarantor, if any, shall have delivered
to Agent the Loan Documents to which such Guarantor is a party, each duly
executed and delivered by such Guarantor or an authorized officer of such
Guarantor, as applicable, and the other parties thereto;
(b) all in form and substance satisfactory to Agent in its Permitted
Discretion, Agent shall have received (i) a report of Uniform Commercial Code
financing statement, tax and judgment lien searches performed with respect to
Borrowers and each Guarantor, if any, or obligor in each jurisdiction determined
by Agent in its Permitted Discretion, and such report shall show no Liens on the
Collateral (other than Permitted Liens and Liens to be terminated at Closing),
(ii) each document (including, without limitation, any Uniform Commercial Code
financing statement) required by any Loan Document or under law or requested by
Agent to be filed, registered or recorded to create, in favor of Agent, for the
benefit of Lenders, a first priority (other than with respect to property or
assets covered by Priority Permitted Liens) and perfected security interest upon
the Collateral, and (iii) evidence of each such filing, registration or
recordation and of the payment by Borrowers of any necessary fee, tax or expense
relating thereto;
(c) Agent shall have received (i) the Charter and Good Standing
Documents, all in form and substance acceptable to Agent in its Permitted
Discretion, (ii) a certificate of the corporate secretary or assistant secretary
of each Borrower dated the Closing Date, as to the incumbency and signature of
the Persons executing the Loan Documents on behalf of such Borrower, in form and
substance acceptable to Agent in its Permitted Discretion, (iii) the written
legal opinions of counsel for Borrowers and Guarantors, if any, in each case in
form and substance satisfactory to Agent in its Permitted Discretion and its
counsel and usual and customary for transactions of this type, (iv) a
certificate executed by an authorized officer of each Borrower, which shall
constitute a representation and warranty by such Borrower as of the Closing Date
and the applicable Borrowing Date for the Initial Advance that the conditions
contained in this Agreement have been satisfied;
(d) Agent shall have received a certificate of the chief financial
officer (or, in the absence of a chief financial officer, the chief executive
officer) of each Borrower in his or her capacity as such and not in his or her
personal capacity, in form and substance satisfactory to Agent in its Permitted
Discretion (each, a "Solvency Certificate"), certifying (i) the solvency of such
Borrower after giving effect to the transactions and the Indebtedness
contemplated by the Loan Documents, and (ii) as to such Borrower's financial
resources and anticipated ability to meet its obligations and liabilities as
they become due, to the effect that as of the Closing Date and the Borrowing
Date for the Initial Advance, and after giving effect to such transactions and
Indebtedness: (A) the assets of such Borrower, at a Fair Valuation, exceed the
total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of such Borrower, and (B) no unreasonably small
capital base with which to engage in its anticipated business exists with
respect to such Borrower;
(e) Agent shall have completed examinations, the results of which
shall be satisfactory in form and substance to Agent, of the Collateral, the
financial statements and the books, records, business, obligations, financial
condition and operational state of Borrowers and each Guarantor, if any, and
Borrowers shall have demonstrated to Agent's satisfaction in its Permitted
Discretion that (i) their operations comply, in all respects deemed material by
Agent, in its Permitted Discretion, with all applicable federal, state, foreign
and local laws, statutes and regulations, (ii) their operations are not the
13
subject of any governmental investigation, evaluation or any remedial action
which could result in any expenditure or liability deemed material by Agent, in
its Permitted Discretion, and (iii) they have no liabilities (whether contingent
or otherwise) that are deemed material by Agent, in its Permitted Discretion;
(f) Agent shall have received all fees, charges and expenses payable
to Agent and Lenders on or prior to the Closing Date pursuant to the Loan
Documents;
(g) all in form and substance satisfactory to Agent in its Permitted
Discretion, Agent shall have received such consents, approvals and agreements
from such third parties as Agent and its counsel shall determine in their
Permitted Discretion are necessary or desirable with respect to (i) the Loan
Documents and/or the transactions contemplated thereby, (ii) claims against
Borrower or any Guarantor, if any, or the Collateral, and/or (iii) agreements,
documents or instruments to which Borrower is a party or by which any of its
properties or assets are bound or subject, including, without limitation, the
Leasehold Mortgage and any applicable Landlord Waivers and Consents with respect
to any and all leases;
(h) Borrower shall be in compliance with Section 7.7 and Section 6.5,
and Agent shall have received original certificates of all such required
insurance policies and confirming that they are in effect and that the premiums
due and owing with respect thereto have been paid in full and naming Agent only,
for the benefit of itself and Lenders, as sole beneficiary or loss payee and
additional insured, as appropriate;
(i) all corporate and other proceedings, documents, instruments and
other legal matters in connection with the transactions contemplated by the Loan
Documents (including, but not limited to, those relating to corporate and
capital structures of Borrowers) shall be satisfactory to Agent in its Permitted
Discretion;
(j) no default shall exist pursuant to any obligations of any Borrower
or any Guarantor, if any, under any material contract, and each Borrower and
each Guarantor, if any, shall be in compliance with applicable laws and there
shall exist no material fact, condition or circumstance which, with the passage
of time, the giving of notice or both, could reasonably be expected to
constitute or become a default under any material contract to which any Borrower
or any Guarantor is a party or any law to which any Borrower or any Guarantor is
subject;
(k) no Borrower, Guarantor or principal or key management personnel of
any Borrower shall have been indicted or under active investigation by an U.S.
Attorney for a felony crime;
(l) Borrower shall have established the Blocked Account(s) pursuant to
Section 2.5;
(m) Agent shall have received copies of all Permits required for each
Borrower and each Guarantor, if any, to conduct the business in which it is
currently engaged or is contemplated pursuant to the Loan Documents, the absence
of which could reasonably be expected to be, have or result in a Material
Adverse Effect;
(n) Agent shall have completed its due diligence examinations of
Borrowers, including, without limitation, an examination of the terms and
conditions of all obligations owed by Borrowers the results of which shall be
satisfactory in form and substance to Agent in its Permitted Discretion;
(o) Agent shall have received evidence (i) of repayment in full and
termination of all liabilities and obligations of Borrowers to ▇▇▇▇▇ Fargo and
all related documents, agreements and
14
instruments and of all Liens and Uniform Commercial Code financing statements
relating thereto, including, without limitation, any Liens and/or Uniform
Commercial Code financing statements covering or relating to any assets or
properties of any shareholder of any Borrower, (ii) of release and termination
of, or Agent's authority to release and terminate, any and all Liens and/or
Uniform Commercial Code financing statements in, on, against or with respect to
any of the Collateral (other than Permitted Liens), (iii) that any and all
existing lockbox arrangements are either terminated or made subject to and
covered by a Lockbox Agreement as required pursuant to Section 2.5; and (iv)
that no Indebtedness, management fees, or dividends are payable to any security
holder of Covista or any Affiliate thereof other than dividends accruing on
Permitted Securities as in effect on the date hereof (which have been
irrevocably deferred for the Term);
(p) Agent shall have received the Collateral Assignment of Life
Insurance Policy and be named as sole beneficiary under the Life Insurance
Policy;
(q) there shall not have occurred any Material Adverse Change or
Material Adverse Effect from that which was reflected on the financial
statements provided to Agent or any liabilities or obligations of any nature
with respect to any Borrower or any Guarantor, if any, which could reasonably be
likely to have a Material Adverse Effect;
(r) Agent shall have received final unaudited financial statements of
Borrowers on a consolidated and pro-forma basis for and as of December 31, 2002,
in form and substance acceptable to Agent;
(s) Agent shall have received detailed (i) monthly projections of
Borrowers from the Closing Date through the fiscal year ended January 31, 2004,
and (ii) annual projections of Borrowers from the Closing Date through the
fiscal year ended January 31, 2005 and January 31, 2006, with each of the
foregoing in form and substance acceptable to Agent;
(t) Agent shall have received from each Borrower and Guarantor, if
any, a completed IRS Form 8821;
(u) Agent shall have received executed copies of the Affiliate Leases,
which shall be in form and substance satisfactory to Agent in its Permitted
Discretion; and
(v) Agent shall have received (i) executed Subordination Agreements
from all parties thereto (other than Agent), (ii) that certain Amended and
Restated Security Agreement, dated as of the date hereof, between certain
Borrowers and ▇▇▇▇▇ ▇. ▇▇▇▇▇, III, in form and substance satisfactory to Agent
in its Permitted Discretion, (iii) the SunTrust Consent, (iv) copies of all
other intercompany agreements, management agreements, documents relating to
borrowed money, Capital Leases, occupancy leases, and other material contracts,
and (iii) such other documents or materials as Agent shall deem necessary or
appropriate.
4.2 Conditions to Each Advance
The obligations of Lenders to make any Advance under the Revolving
Facility (including, without limitation, the Initial Advance) are subject to the
satisfaction, in the sole judgment of Agent, of the following additional
conditions precedent:
(a) Borrowers shall have delivered to Agent a Borrowing Certificate
for the Advance, in each case with necessary supporting documentation and
executed by an authorized officer of Borrowers, which shall constitute a
representation and warranty by Borrowers as of the Borrowing Date
15
that the conditions contained in this Section 4.2 and in Section 4.1 have been
satisfied; provided, however, that any determination as to whether to fund
Advances or extensions of credit shall be made by Agent in its Permitted
Discretion;
(b) each of the representations and warranties made by Borrowers and
Guarantors, if any, in or pursuant to the Loan Documents shall be accurate in
all material respects before and after giving effect to funding or making such
Advance (except for those representations and warranties made as of a specific
date) and Borrowers and each Guarantor, if any, shall be in compliance with all
covenants, agreements and obligations under the Loan Documents, and no Default
or Event of Default shall have occurred or be continuing or would exist after
giving effect to the requested Advance on such date;
(c) immediately after giving effect to the requested Advance, the
aggregate outstanding principal amount of Advances under the Revolving Facility
shall not exceed the lesser of the Availability and the Facility Cap in
existence as of such Borrowing Date;
(d) Agent shall have received all fees, charges and expenses payable
to Agent and/or Lenders on or prior to such date pursuant to the Loan Documents;
and
(e) there shall not have occurred any Material Adverse Change or
Material Adverse Effect, nor shall there be any liabilities or obligations with
respect to Borrower of any nature whatsoever which, either individually or in
the aggregate, would reasonably be likely to have or result in a Material
Adverse Effect.
V. REPRESENTATIONS AND WARRANTIES
Each Borrower, jointly and severally, represents and warrants as of
the date hereof, the Closing Date and each Borrowing Date, except for
representations that, as explicitly set forth below, are given as of the Closing
Date, as follows:
5.1 Organization and Authority
Each Borrower is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of its state of
formation. Each Borrower (a) has all requisite corporate power and authority to
own its properties and assets (including, without limitation, the Collateral)
and to carry on its business as now being conducted and as contemplated in the
Loan Documents, (b) is duly qualified to do business in the jurisdictions set
forth on Schedule 5.1, which are all of the jurisdictions in which failure so to
qualify could reasonably be likely to have or result in a Material Adverse
Effect, and (c) has all requisite power and authority (i) to execute, deliver
and perform the Loan Documents to which it is a party, (ii) to borrow hereunder,
(iii) to consummate the transactions contemplated under the Loan Documents, and
(iv) to grant the Liens with regard to the Collateral pursuant to the Security
Documents to which it is a party. No Borrower is an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, or is controlled by such an "investment company."
5.2 Loan Documents
The execution, delivery and performance by each Borrower of the Loan
Documents to which it is a party and the consummation of the transactions
contemplated thereby, (a) have been duly authorized by all requisite action of
such Borrower and have been duly executed and delivered by or on behalf of such
Borrower; (b) do not violate any provisions of (i) any applicable law, statute,
rule, regulation, ordinance or tariff (including, without limitation, all FCC
and other applicable telecommunication laws, rules, statutes, regulations,
ordinances and tariffs), (ii) any order of any Governmental Authority binding on
such Borrower or any of its properties, or (iii) the certificate of
16
incorporation or bylaws (or any other equivalent governing agreement or
document) of such Borrower, or any agreement between such Borrower and its
shareholders, members, partners or equity owners or among any such shareholders,
members, partners or equity owners; (c) are not in conflict with, and do not
result in a breach or default of or constitute an event of default, or an event,
fact, condition or circumstance which, with notice or passage of time, or both,
would constitute or result in a conflict, breach, default or event of default
under, any indenture, agreement or other instrument to which such Borrower is a
party, or by which the properties or assets of such Borrower are bound, the
effect of which could reasonably be expected to be, have or result in a Material
Adverse Effect; (d) except as set forth herein or therein, will not result in
the creation or imposition of any Lien of any nature upon any of the properties
or assets of such Borrower, and (e) except as set forth on Schedule 5.2, do not
require the consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority or any other Person. When
executed and delivered, each of the Loan Documents to which such Borrower is a
party will constitute the legal, valid and binding obligation of such Borrower,
enforceable against such Borrower in accordance with its terms, subject to the
effect of any applicable bankruptcy, moratorium, insolvency, reorganization or
other similar law affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding at law or in
equity).
5.3 Subsidiaries, Capitalization and Ownership Interests
No Borrower has Subsidiaries other than those Persons listed as
Subsidiaries on Schedule 5.3 as of the Closing Date. Schedule 5.3 states the (a)
authorized and issued capitalization of each Borrower (including, without
limitation, Covista), (b) the number and class of equity securities and/or
ownership, voting or partnership interests issued and outstanding of each
Borrower (including, without limitation, Covista), and (c) the beneficial and
record owners of each Borrower (including options, warrants and other rights to
acquire any of the foregoing) other than Covista. Schedule 5.3 also states (i)
the number and class of equity securities and/or ownership, voting or
partnership interests of Covista owned by each director, (ii) each beneficial
owner of 5% or more of Common Stock and (iii) each owner of any equity
securities other than Common Stock (in each case, including options, warrants
and other rights to acquire any of the foregoing). The outstanding equity
securities and/or ownership, voting or partnership interests of each Borrower
have been duly authorized and validly issued and are fully paid and
nonassessable and each Person listed on Schedule 5.3 as of the Closing Date owns
beneficially and of record all of the equity securities it is listed as owning
free and clear of any Liens other than Liens created by the Loan Documents.
Schedule 5.3 also lists the directors, members, managers and/or partners of each
Borrower as of the Closing Date. Except as listed on Schedule 5.3 as of the
Closing Date, no Borrower (i) owns any Investment Property or (ii) owns any
interest or participates or engages in any joint venture, partnership or similar
arrangements with any Person.
5.4 Properties
Each Borrower (a) is the sole owner and has good, valid and marketable
title to, or a valid leasehold interest in or license of, or right to use, all
of its properties and assets, including the Collateral, whether personal or
real, subject to no transfer restrictions or Liens of any kind except for
Permitted Liens, and (b) is in compliance in all material respects with each
lease or license to which it is a party or otherwise bound. Schedule 5.4 lists
all real properties (and their locations) owned or leased by or to, and all
other material assets or property that are leased or licensed by, any Borrower
and all leases (including leases of leased real property) covering or with
respect to such properties and assets. Each Borrower enjoys peaceful and
undisturbed possession under all such leases and such leases are all the leases
necessary for the operation of such properties and assets, are valid and
subsisting and are in full force and effect. All personal property and assets of
each Borrower are in good repair, working order and condition (normal wear and
tear excepted) and are suitable and adequate for the uses for which they are
being used or are intended.
17
5.5 Other Agreements
No Borrower is (a) a party to any judgment, order or decree or any
agreement, document or instrument, or subject to any restriction, which would
materially adversely affect its ability to execute and deliver, or perform
under, any Loan Document or to pay the Obligations, (b) in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained in any agreement, document or instrument to which it is a party or to
which any of its properties or assets are subject, which default, if not
remedied within any applicable grace or cure period, could reasonably be
expected to be, have or result in a Material Adverse Effect, nor is there any
event, fact, condition or circumstance which, with notice or passage of time or
both, would constitute or result in a conflict, breach, default or event of
default under, any of the foregoing which, if not remedied within any applicable
grace or cure period could reasonably be expected to be, have or result in a
Material Adverse Effect, or (c) a party or subject to any agreement, document or
instrument with respect to, or obligation to pay any, service or management fee
with respect to, the ownership, operation, leasing or performance of any of its
business.
5.6 Litigation
Except as set forth on Schedule 5.6, there is no action, suit,
proceeding or investigation pending or, to its knowledge, threatened against any
Borrower that (a) questions or could reasonably be expected to prevent the
validity of any of the Loan Documents or the right of such Borrower to enter
into any Loan Document or to consummate the transactions contemplated thereby,
(b) could reasonably be expected to be, have or result in, either individually
or in the aggregate, any Material Adverse Change or Material Adverse Effect, or
(c) could reasonably be expected to result in any Change of Control or other
change in the current ownership, control or management of such Borrower. No
Borrower is aware that there is any basis for the foregoing. No Borrower is a
party or subject to any order, writ, injunction, judgment or decree of any
Governmental Authority. There is no action, suit, proceeding or investigation
initiated by any Borrower currently pending. No Borrower has existing accrued
and/or unpaid Indebtedness to any Governmental Authority or any other
governmental payor.
5.7 Hazardous Materials
Each Borrower is in compliance in all material respects with all
applicable Environmental Laws. No Borrower has been notified of any action,
suit, proceeding or investigation (a) relating in any way to compliance by or
liability of any Borrower under any Environmental Laws, (b) which otherwise
deals with any Hazardous Substance or any Environmental Law, or (c) which seeks
to suspend, revoke or terminate any license, permit or approval necessary for
the generation, handling, storage, treatment or disposal of any Hazardous
Substance.
5.8 Tax Returns; Governmental Reports
Except as set forth on Schedule 5.8, each Borrower (a) has filed all
federal, state, foreign (if applicable) and local tax returns and other reports
which are required by law to be filed by such Borrower, and (b) has paid all
taxes, assessments, fees and other governmental charges, including, without
limitation, payroll and other employment related taxes, in each case that are
due and payable, except only for items that such Borrower is currently
contesting in good faith and that are described on Schedule 5.8.
5.9 Financial Statements and Reports
All financial statements and financial information relating to
Borrowers that have been or may hereafter be delivered to Agent by Borrowers are
(a) accurate and complete in all material respects in accordance with GAAP, (b)
consistent with the books of account and records of Borrowers, (c) have been
prepared in accordance with GAAP on a consistent basis throughout the indicated
periods, except that the
18
unaudited financial statements contain no footnotes or year-end adjustments, and
(d) present fairly in all material respects the consolidated financial
condition, assets and liabilities and results of operations of Borrowers at the
dates and for the relevant periods indicated in accordance with GAAP on a basis
consistently applied. Borrowers have no material obligations or liabilities of
any kind not disclosed in such audited financial information or statements, and
since the date of the most recent financial statements submitted to Agent, there
has not occurred any Material Adverse Change or Material Adverse Effect or, to
Borrowers' knowledge, any other event or condition that could reasonably be
expected to be, have or result in a Material Adverse Effect.
5.10 Compliance with Law; Business
Each Borrower (a) is in compliance with all laws, statutes, rules,
regulations, ordinances and tariffs of any Governmental Authority applicable to
such Borrower, the Business and/or such Borrower's assets or operations,
including, without limitation, ERISA, FCC and any laws or regulations pertaining
to the telecommunications industry, business, activities or services, and (b) is
not in violation of any order of any Governmental Authority or other board or
tribunal, except, in the case of both (a) and (b), where noncompliance or
violation could not reasonably be expected to be, have or result in a Material
Adverse Effect. There is no event, fact, condition or circumstance which, with
notice or passage of time, or both, would constitute or result in any
noncompliance with, or any violation of, any of the foregoing , in each case
except where noncompliance or violation could not reasonably be expected to be,
have or result in a Material Adverse Effect. No Borrower has received any notice
that any Borrower is not in compliance in any material respect with any of the
requirements of any of the foregoing. No Borrower has (i) engaged in any
Prohibited Transactions as defined in Section 406 of ERISA and Section 4975 of
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder, (ii) failed to meet any applicable minimum funding
requirements under Section 302 of ERISA in respect of its plans and no funding
requirements have been postponed or delayed, (iii) knowledge of any event or
occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any of the employee
benefit plans, (iv) fiduciary responsibility under ERISA for investments with
respect to any plan existing for the benefit of Persons other than its employees
or former employees, or (v) withdrawn, completely or partially, from any
multi-employer pension plans so as to incur liability under the Multiemployer
Pension Plan Amendments of 1980. With respect to each Borrower, there exists no
event described in Section 4043 of ERISA, excluding Subsections 4043(b)(2) and
4043(b)(3) thereof, for which the thirty (30) day notice period contained in 12
C.F.R. 'SS' 2615.3 has not been waived. Each Borrower has maintained in all
material respects all records required to be maintained by any applicable
Governmental Authority. Each Borrower and its predecessors have not engaged, and
do not engage, directly or indirectly, in any business other than the Business.
5.11 Intellectual Property
Except as set forth on Schedule 5.11, no Borrower owns, licenses or
utilizes, or is a party to, any patents, patent applications, trademarks,
trademark applications, service marks, service ▇▇▇▇ applications, registered
copyrights, copyright applications, copyrights, trade secrets, trade names,
software or licenses. The items listed on Schedule 5.11 constitute all of the
Intellectual Property necessary or required for the operation of each Borrower's
Business as of the Closing Date and as proposed to be conducted and such
Borrower owns or has a valid and enforceable right to use all such Intellectual
Property. All such items are in full force and effect and not in known conflict
with the rights of others. No Borrower is in breach of or default under the
provisions of any of the foregoing, nor is there any event, fact, condition or
circumstance known to any Borrower which, with notice or passage of time or
both, would constitute or result in a conflict, breach, default or event of
default under, any of the foregoing which, if not remedied within any applicable
grace or cure period could reasonably be expected to be, have or result in a
Material Adverse Effect.
19
5.12 Licenses and Permits; Labor
Each Borrower is in compliance with and has all Permits and
Intellectual Property necessary or required by applicable law or Governmental
Authority for the operation of its Businesses as presently conducted and as
proposed to be conducted (including, without limitation, all FCC and other
applicable telecommunication laws, rules, statutes, regulations, ordinances and
tariffs) except where noncompliance, violation or lack thereof could not
reasonably be expected to be, have or result in a Material Adverse Effect.
Schedule 5.12 lists all Permits necessary or required by applicable law
(including, without limitation, all FCC and other applicable telecommunication
laws, rules, statutes, regulations, ordinances and tariffs) or Governmental
Authority for the operation of each Borrower's Businesses as of the Closing Date
and as proposed to be conducted except where noncompliance, violation or lack
thereof could not reasonably be expected to be, have or result in a Material
Adverse Effect. All Permits necessary or required by applicable law or
Governmental Authority for the operation of each Borrower's Business are in full
force and effect and not in known conflict with the rights of others, except
where such conflict or lack of being in full force and effect could not
reasonably be expected to be, have or result in a Material Adverse Effect. No
Borrower (a) is in breach of or default under the provisions of any of the
foregoing, nor is there any event, fact, condition or circumstance which, with
notice or passage of time or both, would constitute or result in a conflict,
breach, default or event of default under, any of the foregoing which, if not
remedied within any applicable grace or cure period could reasonably be expected
to be, have or result in a Material Adverse Effect, or (b) has been involved in
any labor dispute, strike, walkout or union organization.
5.13 No Default; Solvency
There does not exist any Default or Event of Default. Each Borrower is
and, after giving effect to the transactions and the Indebtedness contemplated
by the Loan Documents, will be solvent and able to meet its obligations and
liabilities as they become due, and the assets of each Borrower, at a Fair
Valuation, exceed the total liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities) of such Borrower, and no unreasonably
small capital base with which to engage in its anticipated business exists with
respect to any Borrower.
5.14 Disclosure
No Loan Document nor any other agreement, document, certificate, or
statement furnished to Agent by or on behalf of any Borrower in connection with
the transactions contemplated by the Loan Documents, nor any representation or
warranty made by any Borrower in any Loan Document, contains any untrue
statement of material fact or omits to state any fact necessary to make the
actual statements therein taken as a whole not materially misleading in light of
the circumstances under which it was furnished. There is no fact known to any
Borrower which has not been disclosed to Agent in writing which could reasonably
be expected to be, have or result in a Material Adverse Effect.
5.15 Existing Indebtedness; Investments, Guarantees and Certain Contracts
Except as contemplated by the Loan Documents or as otherwise set forth
on Schedule 5.15, no Borrower (a) has outstanding Indebtedness (other than
Permitted Indebtedness), (b) is subject or party to any mortgage, note,
indenture, indemnity or guarantee of, with respect to or evidencing any
Indebtedness of any other Person, and/r (c) owns or holds any equity or
long-term debt investments in, or has any outstanding advances to or any
outstanding guarantees for, the obligations of, or any outstanding borrowings
from, any other Person. Each Borrower has performed all material obligations
required to be performed by Borrower pursuant to or in connection with any items
listed on Schedule 5.15 and there has occurred no breach, default or event of
default under any document evidencing any such items or any fact, circumstance,
condition or event which, with the giving of notice or passage of time or both,
would constitute or result in a material breach, default or event of default
thereunder. Except for
20
Permitted Indebtedness, Borrower, directly or indirectly, has not made, and
there does not exist, any loans, advances or guarantees to or for the benefit of
any Person or agreements to assume, guarantee, endorse, contingently agree to
purchase or otherwise become liable for or upon or incur any obligation of any
Person.
5.16 Affiliated Agreements
Except as set forth on Schedule 5.16, (i) there are no existing or
proposed agreements, arrangements, understandings or transactions between any
Borrower and any of such Borrower's officers, members, managers, directors,
stockholders, partners, other interest holders, employees, or Affiliates or any
members of their respective families, and (ii) to each Borrower's knowledge,
none of the foregoing Persons are directly or indirectly, indebted to or have
any direct/or indirect ownership, partnership or voting interest in, any
Affiliate of any Borrower or any Person with which any Borrower has a business
relationship or which competes with any Borrower (except that any such Persons
may own stock in (but not exceeding two (2%) percent of the outstanding capital
stock of) any publicly traded company that may compete with any Borrower.
5.17 Insurance
Each Borrower has in full force and effect such insurance policies as
are customary in its industry and as may be required pursuant to Section 6.5
hereof. All such insurance policies as of the Closing Date are listed and
described on Schedule 5.17. No Borrower has assumed any risks or liabilities
other than those relating to its Business.
5.18 Names; Location of Offices, Records and Collateral; Deposit Accounts and
Investment Property
During the preceding five (5) years, none of the Borrowers nor any of
their predecessors has conducted business under or used any name (whether
corporate, partnership or assumed) other than as shown on Schedule 5.18A. Each
Borrower is (and such Borrower's predecessors were) the sole owner(s) of all of
its and their names listed on Schedule 5.18A, and any and all business done and
invoices issued in such names are such Borrower's (or any such predecessors')
sales, business and invoices. Each Borrower maintains, and such Borrower's
predecessors maintained, its and their respective places of business and chief
executive offices only at the locations set forth on Schedule 5.18B or, after
the Closing Date, as disclosed to Agent in writing in accordance with Section
7.4, and all Accounts of Borrower arise, originate and are located, and all of
the Collateral and all books and records in connection therewith or in any way
relating thereto or evidencing the Collateral are located and shall be only, in
and at such locations; provided, that the only location which houses any books
or records in connection with any Collateral is the chief executive office of
the Borrower at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
the only types of Collateral housed at any other location of the Borrower are
switches. All of the Collateral is located only in the continental United
States. Schedule 5.18C lists all of Borrowers' Deposit Accounts and Investment
Property as of the Closing Date.
5.19 Non-Subordination
The Obligations are not subordinated in any way to any other
obligations of any Borrower or to the rights of any other Person.
5.20 Accounts
In determining which Accounts are Eligible Receivables, Agent may rely
on all statements and representations made by any Borrower with respect to any
Account. Unless otherwise indicated in writing to Agent, each Account of each
Borrower (a) is genuine and in all respects what it purports to be and is not
evidenced by a judgment, (b) arises out of a completed, bona fide sale and
21
delivery of goods or rendering of services by such Borrower in the ordinary
course of business and in accordance with the terms and conditions of all
purchase orders, contracts, certifications, participations, certificates of need
and other documents relating thereto or forming a part of the contract between
such Borrower and the Account Debtor, (c) is for a liquidated amount maturing as
stated in a claim or invoice covering such sale of goods or rendering of
services, a copy of which has been furnished or is available to Agent, (d)
together with Agent's security interest therein, is not and will not be in the
future (by voluntary act or omission by such Borrower), subject to any offset,
lien, deduction, defense, dispute, counterclaim or other adverse condition, is
absolutely owing to such Borrower and is not contingent in any respect or for
any reason (other than pursuant to Permitted Liens or offsets, deductions,
defenses, disputes or counterclaims arising in the ordinary course of business),
(e) there are no facts, events or occurrences which in any way impair the
validity or enforceability thereof or tend to reduce the amount payable
thereunder from the face amount of the claim or invoice and statements delivered
to Agent with respect thereto (other than those arising in the ordinary course
of business), (f) to the best of such Borrower's knowledge, (i) the Account
Debtor thereunder had the capacity to contract at the time any contract or other
document giving rise thereto was executed and (ii) such Account Debtor is
solvent, (g) to the best of such Borrower's knowledge, there are no proceedings
or actions which are threatened or pending against any Account Debtor thereunder
which might result in any material adverse change in such Account Debtor's
financial condition or the collectability thereof, (h) has been billed and
forwarded to the Account Debtor for payment in accordance with applicable laws
and is in compliance and conformance with any requisite procedures, requirements
and regulations governing payment by such Account Debtor with respect to such
Account, and (i) such Borrower has obtained and currently has all Permits
necessary in the generation thereof.
5.21 Legal Investments
The Borrowers are not engaged in the business of extending credit for the
purpose of purchasing or carrying any "margin stock" or "margin security"
(within the meaning of Regulation T, U, or X issued by the Board of Governors of
the Federal Reserve System), and no proceeds of the Loans will be used to
purchase or carry any margin stock or margin security or to extend credit to
others for the purpose of purchasing or carrying any margin stock or margin
security.
5.22 No Criminal Activity
No Borrower, nor any management employee of any Borrower, has been
criminally charged, indicted, or convicted of a felony or similar criminal
activity or is subject to investigation relating to any felony or similar
criminal activity.
5.23 Surety Obligations
Borrower is not obligated as surety, guarantor, or indemnitor under any
surety or similar bond or under any contract, indemnity or agreement to assure
payment, performance or completion of performance of any undertaking or
obligation of any other Person.
5.24 Survival
Borrower makes the representations and warranties contained herein with the
knowledge and intention that Agent and Lenders are relying and will rely
thereon. All such representations and warranties will survive the execution and
delivery of this Agreement, the Closing and the making of any and all Advances.
5.25 Broker's or Finder's Commissions
22
Except as set forth on the "Broker Schedule," no broker's or finder's or
placement fee or commission will be payable to any broker or agent engaged by
any Borrower or any of its officers, directors or agents with respect to the
issue of the Notes or the transactions contemplated by this Agreement except for
fees payable to Agent and the Lenders. The Borrowers agree to indemnify Agent
and Lenders and hold them harmless from against any claim, demand or liability
for broker's or finder's or placement fees or similar commissions, whether or
not payable by the Borrowers, alleged to have been incurred in connection with
such transactions, other than any broker's or finder's fees payable to Persons
engaged by Agent or Lenders without the knowledge of the Borrowers.
VI. AFFIRMATIVE COVENANTS
Each Borrower, jointly and severally, covenants and agrees that, until full
performance and satisfaction, and indefeasible payment in full in cash, of all
the Obligations and termination of this Agreement:
6.1 Financial Statements, Reports and Other Information
(a) Financial Reports. Borrowers shall furnish to Agent (i) as soon as
available and in any event within ninety (90) calendar days after the end of
each fiscal year of Borrowers, audited annual consolidated financial statements
of Borrower, including the notes thereto, consisting of a consolidated balance
sheet at the end of such completed fiscal year and the related consolidated
statements of income, retained earnings, cash flows and owners' equity for such
completed fiscal year, which financial statements shall be prepared and
certified without qualification by an independent certified public accounting
firm satisfactory to Agent in its Permitted Discretion and accompanied by
related management letters, if available, (ii) as soon as available and in any
event within forty-five (45) calendar days after the end of each fiscal quarter
of Borrowers (other than the last fiscal quarter of each fiscal year), unaudited
consolidated financial statements of Borrowers consisting of a balance sheet and
statements of income, retained earnings and cash flows and owners' equity as of
the end of the immediately preceding fiscal quarter, (iii) as soon as available
and in any event within thirty (30) calendar days after the end of each calendar
month (other than the last calendar month of a fiscal quarter), unaudited
consolidated financial statements of Borrowers consisting of a balance sheet and
statements of income, retained earnings, cash flows and owners' equity as of the
end of the immediately preceding calendar month, and (iv) within thirty (30)
calendar days after the end of each calendar month, a listing of all proposed
nonrecurring adjustments to EBITDA during such calendar month. All such
financial statements shall be prepared in accordance with GAAP consistently
applied with prior periods (subject, as to interim statements, to lack of
footnotes and year-end adjustments). With each quarterly and annual financial
statement, Borrowers shall also deliver a compliance certificate of their chief
financial officers in the form satisfactory to Agent in its Permitted
Discretion, stating that (A) such persons have reviewed the relevant terms of
the Loan Documents and the condition of Borrowers, (B) no Default or Event of
Default has occurred or is continuing, or, if any of the foregoing has occurred
or is continuing, specifying the nature and status and period of existence
thereof and the steps taken or proposed to be taken with respect thereto, and
(C) Borrowers are in compliance with all financial covenants in this Agreement
attached as Annex I hereto and the covenants in Article VI and Article VII
hereof. Such certificate shall be accompanied by the calculations necessary to
show compliance with the financial covenants in a form satisfactory to the Agent
in its Permitted Discretion.
(b) Other Materials. Borrowers shall furnish to Agent as soon as
available, and in any event within ten (10) calendar days after the preparation
or issuance thereof or at such other time as set forth below, as applicable: (i)
copies of such financial statements (other than those required to be delivered
pursuant to Section 6.1(a)) prepared by, for or on behalf of Borrowers and any
other notes and reports related thereto, including, without limitation, any pro
forma financial statements and monthly
23
board reports, (ii) any reports, returns, and related information, notices and
other materials that any Borrower shall send to all or any class of series of
its stockholders, members, partners and/or other equity owners and/or directors
or managers generally as a group or by class at any time together with any and
all supporting documentation related thereto, (iii) on Wednesday of each week
during the Term (and more frequently if Agent shall so request in its Permitted
Discretion) until the Obligations are paid in cash in full and this Agreement is
terminated, a Weekly Borrowing Certificate as required pursuant to Section 2.4,
(iv) within fifteen (15) calendar days after the last day of each calendar month
during the Term (and more frequently if Agent shall so request in its Permitted
Discretion) until the Obligations are paid in cash in full and this Agreement is
terminated, a Monthly Borrowing Certificate as required pursuant to Section 2.4,
(v) within fifteen (15) calendar days after the end of each calendar month, a
consolidated monthly operating report for all Borrowers, which report shall
include a detailed comparison of actual year to date operating results against
(A) the projected operating budget for such period and (B) the actual operating
results for the same period during the prior calendar year, in each case
inclusive of profit and loss, (vi) copies of any matters required to be reported
to any Borrower's audit committee and any reports submitted to any Borrower by
its independent accountants and copies of each management control letter
provided by such independent accountants, (vii) copies of any and all materials,
documents, instrument and other items as Agent may request in its Permitted
Discretion that relate to, secure, evidence, give rise to or generate or
otherwise relate to the Collateral, (viii) within forty (40) calendar days after
the end of each calendar month for such month, all of the information called for
on Annex II to this Agreement, which annex is incorporated herein and made a
part hereof, and (ix) such additional information, documents, statements,
reports and other materials as Agent may request in its Permitted Discretion
from time to time. Borrowers shall furnish to Agent not less than thirty (30)
calendar days prior to the commencement of each fiscal year in the Term, a list
setting forth the location of the Collateral. Borrowers shall furnish to Agent
within ten (10) calendar days after the end of each calendar month a report
specifying all unpaid amounts, fees, payables, and balances owing to any
Governmental Authority (other than for taxes) as of the last day of such ended
calendar month.
(c) Notices. Borrowers shall promptly, and in any event within three
(3) Business Days after any Borrower or any authorized officer of any Borrower
obtains knowledge thereof, notify Agent in writing of (i) any pending or
threatened litigation, suit, investigation, arbitration, dispute resolution
proceeding or administrative or regulatory proceeding brought or initiated by or
against any Borrower or otherwise affecting or involving or relating to any
Borrower or any of its property or assets to the extent (A) the amount in
controversy exceeds $50,000 individually or $100,000 in the aggregate for all
such events, or (B) to the extent any of the foregoing seeks injunctive relief,
(ii) any Default or Event of Default, which notice shall specify the nature and
status thereof, the period of existence thereof and what action is proposed to
be taken with respect thereto, (iii) any other development, event, fact,
circumstance or condition that could reasonably be expected to be, have or
result in a Material Adverse Effect, in each case describing the nature and
status thereof and the action proposed to be taken with respect thereto, (iv)
any notice received by any Borrower from any payor of a claim, suit or other
action such payor has, claims or has filed against any Borrower for an amount in
excess of $50,000 individually or $100,000 in the aggregate, (v) any matter(s)
in the amount of $50,000, individually or $100,000 in the aggregate, in
existence at any one time affecting the value, enforceability or collectability
of any of the Collateral, (vi) any notice given by any Borrower to any other
lender of any Borrower or received by any Borrower from any such lender and
shall furnish to Agent a copy of such notice, (vii) receipt of any notice or
request from any Governmental Authority regarding any liability or claim of
liability in the amount equal to or exceeding $50,000 individually or $100,000
in the aggregate, (viii) receipt of any notice by any Borrower regarding
termination of any lease of real property (other than by expiration of the term)
or any Senior Executive, (ix) if any Account or other Collateral becomes
evidenced or secured by an Instrument or Chattel Paper, (x) the filing,
recording or assessment of any federal, state, local or foreign tax lien against
the Collateral or any Borrower, (xi) any action taken or threatened to be taken
by any Governmental Authority (or any notice of any of the foregoing) with
respect to any Borrower which
24
could reasonably be expected to be, have or result in a Material Adverse Effect
or with respect to any Collateral, (xii) any change in the corporate name of any
Borrower or Guarantor, and/or (xiii) the loss, termination or expiration of any
material contract to which any Borrower is a party or by which its properties or
assets are subject or bound.
(d) Consents. Borrowers shall obtain and deliver to Agent and Lenders
from time to time all required consents, approvals and agreements from such
third parties as Agent shall determine are necessary or desirable in its
Permitted Discretion and that are satisfactory to Agent in its Permitted
Discretion with respect to (i) the Loan Documents and the transactions
contemplated thereby, (ii) claims against any Borrower, or the Collateral,
and/or (iii) any agreements, consents, documents or instruments to which any
Borrower is a party or by which any properties or assets of Borrower or any of
the Collateral is or are bound or subject, including, without limitation, the
Leasehold Mortgages with respect to any Affiliate Lease and Landlord Waivers and
Consents with respect to leases.
(e) Operating Budget. Borrowers shall furnish to Agent on or prior to
the Closing Date and for each fiscal year of Borrowers thereafter not less than
thirty (30) calendar days prior to the commencement of such fiscal year,
consolidated month by month projected operating budgets, projections, profit and
loss statements, income statements, balance sheets and cash flow reports of and
for Borrowers for such upcoming fiscal year (including an income statement and a
balance sheet as at the end of each month), and annual projections for the
remaining years in the Term, in each case prepared in accordance with GAAP
consistently applied with prior periods (subject to lack of footnotes and
year-end adjustments).
(f) Shareholder Reports and Government Filings. Each Borrower shall
furnish to Agent, concurrently with the sending or filing thereof, a copy of any
proxy statement, financial statements or reports which Borrower has made
available to its shareholders or other equity owners as a class or any class or
series of shareholders or other equity owners as a class or series and a copy of
any regular, periodic and special reports or registration statements which
Borrower files with the Securities and Exchange Commission, any stock exchange
or any Governmental Authority.
(g) Deposit Accounts, Other Accounts and Investment Property.
Borrowers shall (i) promptly, and in any event within five (5) Business Days
after any Borrower (A) establishes any Deposit Account, securities account,
money market account or any similar account, or (B) becomes the owner of any
Investment Property, in each case, on and with respect to which Agent, for
itself and the benefit of the Lenders, does not have a perfected, first priority
Lien, notify Agent of such, and thereafter (ii) deliver to Agent, within ten
(10) Business Days, documentation to perfect Agent's, for its benefit and the
benefit of the Lenders, Lien thereon, in each case in form and substance
acceptable to Agent in its Permitted Discretion; provided that Borrowers may
deposit and/or maintain no more than $50,000.00, individually or in the
aggregate, in any bank or other depository accounts, with respect to which
Agent, for itself and the benefit of the Lenders, shall not have a perfected,
first priority Lien pursuant to this clause.
(h) Intellectual Property. Borrowers shall furnish to Agent within
five (5) Business Days after June 30 and December 31 of each year, a report
specifying any interests in Intellectual Property acquired by, obtained by, or
licensed to Borrowers during the six-month period then ended, and shall deliver
to Agent, within fifteen (15) Business Days, documentation to perfect Agent's,
for its benefit and the benefit of the Lenders, Lien in such Intellectual
Property, in each case in form and substance acceptable to Agent in its
Permitted Discretion.
(i) Payroll and Payroll Taxes. Without limiting or being limited by
any other provision of any Loan Document, Borrowers shall pay all payroll
currently in accordance with the normal payroll cycle in effect on the Closing
Date and Borrowers shall retain and use a third party acceptable to
25
Agent in its Permitted Discretion to timely process, manage and pay their
payroll taxes and shall cause to be delivered to Agent within ten (10) calendar
days after the end of each calendar month a report of such payroll taxes of the
Borrowers for the immediately preceding calendar month and evidence of payment
thereof.
6.2 Payment of Obligations
Borrowers shall make full and timely indefeasible payment in cash of
the principal of and interest on the Loans, Advances and all other Obligations.
6.3 Conduct of Business and Maintenance of Existence and Assets
Each Borrower shall (a) conduct its business in accordance with good
business practices customary to the industry, (b) engage principally in the same
or similar lines of business substantially as heretofore conducted, (c) collect
its Accounts in the ordinary course of business, (d) maintain all of its
material properties, assets and equipment used or useful in its business in good
repair, working order and condition (normal wear and tear excepted and except as
may be disposed of in the ordinary course of business and in accordance with the
terms of the Loan Documents), (e) from time to time to make all necessary or
desirable repairs, renewals and replacements thereof, (f) maintain and keep in
full force and effect its existence and all material Permits and qualifications
to do business and good standing in its jurisdiction of formation and each other
jurisdiction in which the ownership or lease of property or the nature of its
business makes such Permits or qualification necessary and in which failure to
maintain such Permits or qualification could reasonably be expected to be, have
or result in a Material Adverse Effect; (g) remain in good standing and maintain
operations in all jurisdictions in which currently located, except where the
failure to remain in good standing or maintain operations would not reasonably
be expected to be, have or result in a Material Adverse Effect, and (h)
maintain, comply with and keep in full force and effect its existence and all
Intellectual Property and Permits necessary to conduct its Business the loss of
which or failure to maintain could reasonably be expected to be, have or result
in a Material Adverse Effect.
6.4 Compliance with Legal and Other Obligations
Each Borrower shall (a) comply with all laws, statutes, rules,
regulations, ordinances and tariffs of all Governmental Authorities applicable
to it or its business, assets or operations, (b) pay all taxes, assessments,
fees, governmental charges, claims for labor, supplies, rent and all other
obligations or liabilities of any kind, except liabilities being contested in
good faith by appropriate proceedings and against which adequate reserves have
been established, (c) perform in accordance with its terms each contract,
agreement or other arrangement to which it is a party or by which it or any of
the Collateral is bound (except where the failure to comply, pay, file or
perform with respect to clauses (a), (b), and/or (c) would not reasonably be
expected to be, have or result in a Material Adverse Effect), (d) properly file
all reports required to be filed with any Governmental Authority, and (e)
maintain and comply with all Permits necessary to conduct its Business and
comply with any new or additional requirements that may be imposed on it or its
Business.
6.5 Insurance
Each Borrower shall (a) keep the Life Insurance Policy fully paid and
in full force and effect, (b) keep all of its insurable properties and assets
adequately insured in all material respects against losses, damages and hazards
as are customarily insured against by businesses engaging in similar activities
or lines of business or owning similar assets or properties and at least the
minimum amount required by this Agreement, applicable law and any agreement to
which any Borrower is a party or pursuant to which any Borrower provides any
services, including, without limitation, liability, errors and omissions and
property and business interruption insurance, as applicable; and maintain
general liability insurance at all times against liability on account of damage
to persons and property having such limits,
26
deductibles, exclusions and co-insurance and other provisions as are customary
for a business engaged in activities similar to those of any Borrower; and (c)
maintain insurance under all applicable workers' compensation laws; all of the
foregoing insurance policies and coverage levels to (i) name Agent, for the
benefit of itself and Lenders, as loss payee and additional insured thereunder,
as applicable (except that Agent shall be named, for itself and for the benefit
of Lenders, as sole beneficiary of the Life Insurance Policy), and (ii)
expressly provide that they cannot be altered, amended or modified in any
material respect (including, without limitation, with respect to amounts of
coverage, deductibles, beneficiaries and/or loss payees and additional insureds)
or canceled or terminated without thirty (30) Business Days prior written notice
to Agent, and that they inure to the benefit of Agent, for the benefit of itself
and Lenders, notwithstanding any action or omission or negligence of or by
Borrower, or any insured thereunder.
6.6 True Books
Borrowers shall (a) keep true, complete and accurate (in accordance
with GAAP) books of record and account in accordance with commercially
reasonable business practices in which true and correct entries are made of all
of their dealings and transactions in all material respects; and (b) set up and
maintain on their books such reserves as may be required by GAAP with respect to
doubtful accounts and all taxes, assessments, charges, levies and claims and
with respect to their businesses, and include such reserves in their quarterly
as well as year end financial statements.
6.7 Inspection; Periodic Audits
Borrowers shall permit the representatives of Agent, at the expense of
Borrowers from time to time during normal business hours upon reasonable notice,
to (a) visit and inspect any Borrower's offices or properties or any other place
where Collateral is located to inspect the Collateral and/or to examine any
Borrower's books of account, records, reports and other papers, (b) make copies
and extracts therefrom, and (c) discuss any Borrower's business, operations,
prospects, properties, assets, liabilities, condition and/or Accounts with its
officers and independent public accountants (and by this provision such officers
and accountants are authorized to discuss the foregoing), provided, however,
that no such notice shall be required to do any of the foregoing if an Event of
Default has occurred and is continuing.
6.8 Further Assurances; Post Closing
At Borrowers' cost and expense, Borrowers shall (a) within five (5)
Business Days (or such longer period in the case of actions involving third
parties as determined by Agent in its Permitted Discretion) after Agent's
demand, take such further actions, obtain such consents and approvals and duly
execute and deliver such further agreements, assignments, instructions or
documents as Agent may request in its Permitted Discretion with respect to the
purposes, terms and conditions of the Loan Documents and the consummation of the
transactions contemplated thereby, whether before, at or after the performance
and/or consummation of the transactions contemplated hereby or the occurrence of
a Default or Event of Default, (b) without limiting and notwithstanding any
other provision of any Loan Document, execute and deliver, or cause to be
executed and delivered, such agreements and documents, and take or cause to be
taken such actions, and otherwise perform, observe and comply with such
obligations, as are set forth on Schedule 6.8, and (c) upon the exercise by
Agent, any Lender or any of their Affiliates of any power, right, privilege or
remedy pursuant to any Loan Document or under applicable law or at equity which
requires any consent, approval, registration, qualification or authorization of
any Person (including, without limitation, any Governmental Authority), execute
and deliver, or cause the execution and delivery of, all applications,
certificates, instruments and other documents that may be so required for such
consent, approval, registration, qualification or authorization. Without
limiting the foregoing, upon the exercise by Agent, any Lender or any of their
Affiliates of any right or remedy under any Loan Document which requires any
consent, approval or registration with, consent, qualification or authorization
by, any Person, Borrowers shall execute and deliver, or cause the
27
execution and delivery of, all applications, certificates, instruments and other
documents that Agent, any Lender or such Affiliate may be required to obtain for
itself or on its behalf for such consent, approval, registration, qualification
or authorization.
6.9 Payment of Indebtedness
Except as otherwise prescribed in the Loan Documents, Borrowers shall
pay, discharge or otherwise satisfy at or before maturity (subject to applicable
grace periods and, in the case of trade payables, to ordinary course payment
practices) all of their material obligations and liabilities, except when the
amount or validity thereof is being contested in good faith by appropriate
proceedings and such reserves as Agent may deem proper and necessary in its
Permitted Discretion shall have been made.
6.10 Lien Releases
If Liens other than Permitted Liens exist, Borrowers immediately shall
take, execute and deliver all actions, documents and instruments necessary to
release and terminate such Liens.
6.11 Use of Proceeds
Borrowers shall use the proceeds from Advances under the Revolving
Facility only for the purposes set forth in the recitals to this Agreement.
6.12 Collateral Documents; Security Interest in Collateral
(a) Upon reasonable notice from Agent in its Permitted Discretion, each
Borrower shall make available to Agent during normal business hours copies of
any and all documents, instruments, materials and other items that relate to,
secure, evidence, give rise to or generate or otherwise involve Collateral,
including, without limitation, Accounts of such Borrower. Each Borrower shall
(i) execute, obtain, deliver, file, register and/or record any and all financing
statements, continuation statements, stock powers, instruments and other
documents, or cause the execution, filing, registration, recording or delivery
of any and all of the foregoing, that are necessary or required under law or
otherwise or reasonably requested by Agent to be executed, filed, registered,
obtained, delivered or recorded to create, maintain, perfect, preserve, validate
or otherwise protect the pledge of the Collateral to Agent and Agent's, for its
benefit and the benefit of the Lenders, perfected first priority (other than
with respect to property or assets covered by Priority Permitted Liens) Lien on
the Collateral (and each Borrower irrevocably grants Agent the right, at Agent's
option, to file any or all of the foregoing), (ii) maintain, or cause to be
maintained, at all times, the pledge of the Collateral to Agent and Agent's, for
its benefit and the benefit of the Lenders, first priority (other than with
respect to property or assets covered by Priority Permitted Liens) and perfected
Lien on the Collateral, (iii) immediately upon learning thereof, report to Agent
any reclamation, return or repossession of goods in excess of $50,000
individually or $100,000 in the aggregate, and (iv) defend the Collateral and
Agent's, for its benefit and the benefit of the Lenders, first priority (other
than with respect to property or assets covered by Priority Permitted Liens) and
perfected Lien thereon against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to Agent, and pay all costs
and expenses (including, without limitation, in-house documentation and
diligence fees and legal expenses and reasonable attorneys' fees and expenses)
in connection with such defense, which may at Agent's discretion be added to the
Obligations.
(b) If, after the date hereof, any Borrower shall (i) obtain any registered
Trademark, Patent or Copyright, or apply for any such registration in the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable, or in any similar office or agency in the United States, any State
thereof, any political subdivision thereof or in any other country, or (ii)
become the owner of any Trademark, Patent or Copyright registrations or
applications for Trademark, Patent or Copyright registration used in the United
States or any State thereof, political subdivision thereof or in any other
country, the provisions of Section 2.13 hereof shall automatically apply
thereto. Upon the request of
28
Agent, Borrowers shall promptly execute and deliver to Agent any and all
assignments, agreements, instruments, documents and such other papers as may be
requested by Agent in its Permitted Discretion to evidence the security interest
in and conditional assignment of such Trademark, Patent or Copyright, as the
case may be, in favor of Agent (for the benefit of the Lenders). Borrowers
shall: (i) prosecute diligently any Trademark, Patent or Copyright application
at any time pending; (ii) make application for registration or issuance of all
new Trademarks, Patents and Copyrights as reasonably deemed appropriate by
Borrower; (iii) preserve and maintain all rights in the Intellectual Property;
and (iv) use their best efforts to obtain any consents, waivers or agreements
necessary to enable Agent to exercise its remedies with respect to such
Intellectual Property. No Borrower shall abandon any material right to file a
Trademark, Patent or Copyright application nor shall any Borrower abandon any
material pending Trademark, Patent or Copyright application, or material
Trademark, Patent or Copyright without the prior written consent of Agent.
6.13 Taxes and Other Charges
All payments and reimbursements to Agent, for its own account and/or
for the benefit of Lenders, made under any Loan Document shall be free and clear
of and without deduction for all taxes, levies, imposts, deductions,
assessments, charges or withholdings, and all liabilities with respect thereto
of any nature whatsoever, excluding taxes to the extent imposed on or measured
by each Lender's net income. If any Borrower or any Guarantor, if any, shall be
required by law to deduct any such amounts from or in respect of any sum payable
under any Loan Document to Agent, for its own account and/or for the benefit of
Lenders, then the sum payable to Agent, for its own account and/or for the
benefit of Lenders, shall be increased as may be necessary so that, after making
all required deductions, each Lender receives an amount equal to the sum it
would have received had no such deductions been made. Notwithstanding any other
provision of any Loan Document, if at any time after the Closing or the making
of any Advance (a) any change in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (b) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (c) compliance by Agent or any Lender with any request or directive
(whether or not having the force of law) from any Governmental Authority: (i)
subjects Agent or such Lender to any tax, levy, impost, deduction, assessment,
charge or withholding of any kind whatsoever with respect to any Loan Document,
or changes the basis of taxation of payments to Agent, for its own account
and/or for the benefit of Lenders, of any amount payable thereunder (except for
net income taxes, or franchise taxes imposed in lieu of net income taxes,
imposed generally by federal, state or local taxing authorities with respect to
interest or commitment fees or other fees payable hereunder or changes in the
rate of tax on the overall net income of Agent and/or each Lender), or (ii)
imposes on Agent or Lenders any other condition or increased cost in connection
with the transactions contemplated thereby or participations therein; and the
result of any of the foregoing is to increase the cost to Agent or Lenders of
making or continuing or maintaining any Loan hereunder or to reduce any amount
receivable hereunder, then, in any such case, Borrower shall promptly pay to
Agent, for its own account and/or for the benefit of Lenders, any additional
amounts necessary to compensate Agent and each Lender, on an after-tax basis,
for such additional cost or reduced amount as determined by Agent and/or such
Lender. If any Lender makes one or more claims for additional amounts pursuant
to this Section 6.13 which either individually or in the aggregate result in the
effective cost of funds on the Loans increasing by in excess of 20% percent per
annum, then Borrowers may terminate this Agreement without any requirement to
pay the Termination Fee; provided, that simultaneously with or prior to such
termination there shall have been full performance and indefeasible payment in
full in cash of all Obligations. If Agent or any Lender becomes entitled to
claim any additional amounts pursuant to this Section 6.13 it shall promptly
notify Borrower of the event by reason of which Agent or such Lender has become
so entitled, and each such notice of additional amounts payable pursuant to this
Section 6.13 submitted by Agent or such Lender to Borrower shall, absent
manifest error, be final, conclusive and binding for all purposes.
29
VII. NEGATIVE COVENANTS
Each Borrower, jointly and severally, covenants and agrees that, until
full performance and satisfaction, and indefeasible payment in full in cash, of
all the Obligations and termination of this Agreement:
7.1 Financial Covenants
No Borrower shall violate, and each Borrower shall fully comply with,
the financial covenants set forth on Annex I to this Agreement, which annex is
incorporated herein and made a part hereof.
7.2 Indebtedness
No Borrower shall create, incur, assume or suffer to exist any
Indebtedness, except the following (collectively, "Permitted Indebtedness"): (a)
Indebtedness under the Loan Documents, (b) any Indebtedness set forth on
Schedule 7.2 and replacements thereof (except any replacement, amendment or
modification of the SunTrust Agreement), (c) Capitalized Lease Obligations
incurred after the Closing Date and Indebtedness incurred after the Closing Date
pursuant to purchase money Liens permitted by Section 7.3(e); provided, that the
aggregate amount thereof outstanding at any time shall not exceed $1,000,000,
(d) Subordinated Debt, provided, that the aggregate amount thereof outstanding
at any time shall not exceed $5,000,000, (e) standby letters of credit in an
aggregate amount not to exceed $1,000,000 necessary for the operation of
Borrowers' Business that are non-recourse to Borrowers or the Collateral (except
for cash collateral (not to exceed the lesser of $1,000,000 or the face amount
of such letter of credit) pledged to the issuing bank) and are issued pursuant
to documentation, including without limitation, intercreditor agreements,
satisfactory in form and substance to Agent in its Permitted Discretion, and (f)
accounts payable to trade creditors and current operating expenses which are not
aged more than ninety (90) calendar days from the billing date or sixty (60)
calendar days from the due date, in each case incurred in the ordinary course of
business and paid within such time period, unless the same are being contested
in good faith and by appropriate and lawful proceedings and such reserves, if
any, with respect thereto as are required by GAAP and deemed adequate by
Borrowers' independent accountants shall have been established to the
satisfaction of Agent in its Permitted Discretion. No Borrower shall make
prepayments on any existing or future Indebtedness to any Person other than to
Agent, for its own account and/or for the benefit of Lenders, or to the extent
specifically permitted by this Agreement or the applicable Subordination
Agreement.
7.3 Liens
No Borrower shall create, incur, assume or suffer to exist any Lien upon,
in or against, or pledge of, any of the Collateral or any of its properties or
assets or any of its shares, securities or other equity or ownership or
partnership interests, whether now owned or hereafter acquired, except the
following (collectively, "Permitted Liens"): (a) Liens under the Loan Documents
or otherwise arising in favor of Agent, for the benefit of itself and Lenders,
(b) Liens imposed by law for taxes, assessments or charges of any Governmental
Authority for claims not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained by such Person in accordance with
GAAP to the satisfaction of Agent in its Permitted Discretion, (c) (i) statutory
Liens of landlords (provided that any such landlord has executed a Landlord
Waiver and Consent in form and substance satisfactory to Agent in its Permitted
Discretion), and of carriers, warehousemen, mechanics and/or materialmen, and
(ii) other Liens imposed by law or that arise by operation of law in the
ordinary course of business from the date of creation thereof, in each case only
for amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained by such Person in accordance with
GAAP to the satisfaction of Agent in its Permitted Discretion, (d) Liens
incurred or
30
deposits made in the ordinary course of business (including, without limitation,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security benefits or to secure
the performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar obligations,
provided, that Borrowers shall not at any time maintain a balance in excess of
$100,000, individually or in the aggregate, in any deposit account or other
account held by SunTrust Bank or any Affiliate thereof, (e) purchase money Liens
(i) securing Indebtedness permitted under Section 7.2(c), or (ii) in connection
with the purchase by such Person of equipment in the normal course of business;
provided, that such payables, Indebtedness and amounts shall not exceed any
limits on Indebtedness provided for herein and shall otherwise be Permitted
Indebtedness hereunder and such Liens shall only apply to the equipment
purchased thereby, (f) Liens necessary and desirable for the operation of such
Person's business, provided, that with respect to this clause (f) Agent has
consented to such Liens in writing before their creation and existence and the
priority of such Liens and the debt secured thereby are both subject and
subordinate in right of repayment, liens, security and remedies and in all other
respects to the Liens securing the Collateral and to the Obligations and all of
the rights and remedies of Agent and each Lender, all in form and substance
satisfactory to Agent in its sole discretion; (g) easements, rights-of-way,
restrictions and other similar encumbrances incurred in the ordinary course of
business which do not materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the Business of
Borrower and (h) Liens disclosed on Schedule 7.3 as of the Closing Date and
replacements thereof.
7.4 Investments; Investment Property; New Facilities or Collateral;
Subsidiaries
No Borrower, directly or indirectly, shall (a) merge with, purchase,
own, hold, invest in or otherwise acquire any obligations or stock or securities
of, or any other interest in, or all or substantially all of the assets of, any
Person or any joint venture, (b) purchase, own, hold, invest in or otherwise
acquire any Investment Property (except those set forth on Schedule 5.3 as of
the Closing Date or Cash Equivalents with respect to which Agent, for itself and
the benefit of the Lenders, has a perfected, first priority Lien in form and
substance satisfactory to Agent in its Permitted Discretion), or (c) make or
permit to exist any loans, advances or guarantees to or for the benefit of any
Person or assume, guarantee, endorse, contingently agree to purchase or
otherwise become liable for or upon or incur any obligation of any Person (other
than (i) those created by the Loan Documents, (ii) Permitted Indebtedness set
forth on Schedule 7.2, (iii) trade credit extended in the ordinary course of
business, (iv) advances for business travel and similar temporary advances made
in the ordinary course of business to officers, directors and employees, and (v)
the endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business). No Borrower, directly or
indirectly, shall purchase, lease, own, operate, hold, invest in or otherwise
acquire any property or asset or any Collateral that is located (A) outside of
the continental United States of America or (B) at locations other than the
locations set forth on Schedule 5.18B, unless as to such other locations
Borrower shall provide to Agent at least ten (10) Business Days prior written
notice; provided, that Borrower shall not permit any Collateral to be located at
the following addresses (other than the switch located at each such address as
of the date hereof): ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇; and provided further,
that Borrower shall not permit any Collateral (other than switches) or any books
or records in connection with any Collateral to be housed at any location unless
Borrower shall have first delivered to Agent a Leasehold Mortgage or Landlord
Consent and Waiver for such location. No Borrower shall have any Subsidiaries
(except such Subsidiaries of Covista as are listed on Schedule 5.3) unless such
Subsidiaries execute a Joinder Agreement and become a party to this Agreement
and such other Loan Documents as Agent shall determine in its Permitted
Discretion and the securities of such Subsidiaries are pledged to Agent, for its
benefit and the benefit of the Lenders, pursuant to a Pledge Agreement.
7.5 Dividends; Redemptions; Equity
31
Notwithstanding any provision of any Loan Document, no Borrower shall
(a) declare, pay or make any dividend or distribution on any shares of capital
stock or other securities or interests (other than dividends or distributions
payable in its stock, or split-ups or reclassifications of its stock), (b) apply
any of its funds, property or assets to the acquisition, redemption or other
retirement of any capital stock or other securities or interests or of any
options to purchase or acquire any of the foregoing; (provided, however, that
Covista may redeem its capital stock from terminated employees, non-employee
directors and consultants pursuant to, but only to the extent required under,
the terms of the related employment or other compensation related agreements as
long as no Default or Event of Default has occurred and is continuing or would
be caused by or result therefrom), (c) otherwise make any payments, dividends or
Distributions to any stockholder, director, member, partner or other equity
owner in such Person's capacity as such (other than payments or Distributions
from one Borrower to another), (d) make any payment of any Management Fee or any
management, service or related or similar fee to any Person (other than payments
to directors in an aggregate amount not to exceed $60,000 in any calendar year),
or (e) issue, sell or create any capital stock or other equity securities other
than Permitted Securities and Permitted Options.
7.6 Transactions with Affiliates
Notwithstanding any provision of any Loan Document, no Borrower shall
enter into or consummate any transaction of any kind with any of its Affiliates
(other than another Borrower) or any Guarantor, if any, or any of their
respective Affiliates other than: (a) salary, bonus, employee stock option and
other compensation and employment arrangements with directors or employees in
the ordinary course of business; provided, that no payments of any bonus,
compensation or remuneration or otherwise (except normal salaries consistent
with past practices) shall be permitted if a Default or Event of Default has
occurred and remains in effect or would be caused by or result from such
payment, (b) distributions and dividends permitted pursuant to Section 7.5, (c)
transactions with Agent or any Affiliate of Agent, (d) sales and issuances of
Permitted Securities upon notice to Agent (which notice will include a revised
Schedule 5.16) on terms and conditions at least as favorable to Borrower as
prevail in the market place and for at least fair market value consideration, or
(e) other transactions and payments under and pursuant to written agreements
entered into by and between Borrower and one or more of its Affiliates that both
(i) reflect and constitute transactions and payments on overall terms at least
as favorable to Borrower as would be the case in an arm's length transaction
between unrelated parties of equal bargaining power, and (ii) if Agent requests,
are subject to such subordination terms and conditions as determined by Agent in
its Permitted Discretion; provided further, that notwithstanding the foregoing
or any provision of any Loan Document, no Borrower shall (A) enter into or
consummate any transaction or agreement pursuant to which it becomes a party to
any mortgage, note, indenture or guarantee evidencing any Indebtedness of any of
its Affiliates or otherwise to become responsible or liable, as a guarantor,
surety or otherwise, pursuant to agreement for any Indebtedness of any such
Affiliate (other than another Borrower), (B) make any payment to any of its
Affiliates, other than in connection with Affiliate Leases, in excess of $10,000
individually or $50,000 in the aggregate without the prior written consent of
Agent, (C) enter into any new Affiliate Leases without the prior written consent
of Agent in its Permitted Discretion, or (D) pay more than $325,000.00 annually
in the aggregate to any Affiliate (or any successor or assign of any Affiliate)
pursuant to any Affiliate Lease. No Borrower shall amend, modify or restate any
of the Affiliate Leases without the prior written consent of Agent in its
Permitted Discretion. Notwithstanding any other provision of any Loan Document,
no Borrower shall enter into, make, take, do or suffer to exist any transaction,
payment or action permitted under this Section 7.6 if a Default or Event of
Default has occurred and remains in effect or would be caused by or result
therefrom (other than payments specifically permitted under clause (a) of this
Section 7.6). Notwithstanding the foregoing, no Borrower shall be permitted to
make any payment to, or sell, lease, transfer, pledge, assign or otherwise
dispose of any Collateral or any interest therein to, any of Digipak
Corporation, Payless Telecom Inc., TotalTel Florida, Inc., Carriers Group, Inc.
or USW Corp., or any Affiliate of any of the foregoing which is not a Borrower.
None of Digipak Corporation, Payless Telecom Inc., TotalTel Florida, Inc.,
Carriers Group,
32
Inc. or USW Corp., or any Affiliate of any of the foregoing which is not a
Borrower, shall conduct business, and no Borrower shall permit or cause any of
the foregoing entities to conduct business.
7.7 Charter Documents; Fiscal Year; Dissolution; Use of Proceeds; Insurance
Policies; Disposition of Collateral; Taxes; Trade Names
No Borrower shall (a) amend, modify, restate or change its certificate
of incorporation or bylaws or similar charter documents in a manner that would
be adverse to Agent or any Lender, (b) change its state of organization or
change its corporate name without thirty (30) calendar days prior written notice
to Agent, (c) change its fiscal year, (d) amend, alter or suspend or terminate
or make provisional in any material way, any Permit the suspension, amendment,
alteration or termination of which could reasonably be expected to be, have or
result in a Material Adverse Effect without the prior written consent of Agent,
which consent shall not be unreasonably withheld, (e) wind up, liquidate or
dissolve (voluntarily or involuntarily) or commence or suffer any proceedings
seeking or that would result in any of the foregoing, (f) use any proceeds of
any Loans for "purchasing" or "carrying" "margin stock" as defined in
Regulations T, U or X of the Board of Governors of the Federal Reserve System
for any use not contemplated or permitted by this Agreement, (g) amend, modify,
restate or change any insurance policies (including, without limitation, the
Life Insurance Policy) in any material respect (including, without limitation,
any increase in the amount of deductibles or decrease in the coverages and/or
loss payees and additional insureds), (h) sell, lease, transfer, pledge, assign
or otherwise dispose of any Collateral or any interest therein (except as
permitted under this Agreement), (i) engage, directly or indirectly, in any
business other than the Business, (j) change its federal tax employer
identification number or establish new or additional trade names without
providing not less than thirty (30) calendar days advance written notice to
Agent, or (k) revoke, alter or amend any Tax Information Authorization (on IRS
Form 8821 or otherwise) given to Agent.
7.8 Transfer of Assets
(a) No Borrower shall sell, lease, transfer, pledge, assign or
otherwise dispose of any Collateral or any interest therein, or agree to do any
of the foregoing, except that:
(i) Borrower may lease (other than by a sale-leaseback
transaction) as lessee real or personal property or surrender all or a portion
of a lease of the same, in each case in the ordinary course of business (so long
as such lease does not create or result in and is not otherwise a Capitalized
Lease Obligation prohibited under this Agreement), provided that such Landlord
Waiver and Consents as are required by Agent in its Permitted Discretion are
signed and delivered to Agent with respect to any lease of real property;
(ii) Borrower may sell obsolete or replaced equipment or excess
equipment no longer needed in the ordinary course of business; and
(iii) Borrower may sell material assets or properties only so
long as Borrower complies with the mandatory prepayment provisions of Section
2.11 in connection therewith.
(b) Borrower shall not transfer any material Collateral, whether in
one transaction or a series of transactions, to any of its locations for which
it has not obtained a Landlord Waiver and Consent.
7.9 Contingent Obligations and Risks
No Borrower shall enter into any Contingent Obligations or assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
for or upon or incur any obligation of any Person (other than any other
Borrower); provided, however, that nothing contained in this Section 7.9
33
shall prohibit any Borrower from endorsing checks in the course of its Business.
No Borrower shall assume any risks or liabilities other than those relating to
its Business.
7.10 Truth of Statements
No Borrower shall furnish to Agent or any Lender any certificate or
other document that contains any untrue statement of a material fact or that
omits to state a material fact necessary to make it not misleading in light of
the circumstances under which it was furnished.
7.11 Payment on Subordinated Debt.
Except to the extent permitted pursuant to an applicable Subordination
Agreement, no Borrower shall (a) make any payment of any part or all of any
Subordinated Debt or any Management Fee, including, without limitation, any
prepayments thereof, (b) repurchase, redeem, prepay or retire any instrument
evidencing any such Subordinated Debt prior to maturity, or (c) enter into any
agreement (oral or written) which could in any way be construed to amend, modify
or alter in a manner adverse to Agent or any Lender as determined by Agent in
its Permitted Discretion or to terminate any one or more instruments or
agreements evidencing or relating to any Subordinated Debt or any Management
Fee. Borrower shall make payments on the Subordinated Debt and Management Fee
only in accordance with the provisions of the applicable Subordination
Agreements as long as no Event of Default has occurred and is continuing or
would result therefrom.
7.12 Modifications of Agreements.
No Borrower shall make, or agree to make, any modification, amendment or
waiver of any of the terms or provisions of, and will not fail to enforce or
diligently pursue its remedies under any and all documents and/or certificates
executed in connection with any Subordinated Debt or any Management Fee, in each
case as and from in existence on the Closing Date, in a manner adverse to Agent
or any Lender as determined by Agent in its Permitted Discretion.
Notwithstanding any other provision of the Loan Documents, no Borrower shall
make any payment in respect of any Management Fee if a Default or Event of
Default has occurred and remains in effect or would be caused by or result
therefrom.
7.13 Real Property; Negative Pledge.
(a) Except for Permitted Liens described in clauses (b) and (c) of
Section 7.3 hereof, no Borrower shall pledge or ▇▇▇▇▇ ▇ ▇▇▇▇ on any real
property which it owns at any time to any Person other than Agent for itself and
the benefit of Lenders.
(b) No Borrower shall enter into any agreement with any other Person
or agree to enter into any such agreement that would limit or restrict any
Borrower's ability to grant to Agent (for the benefit of itself and the Lenders)
a first priority, perfected Lien on any Borrower's property and assets, tangible
and intangible, real and personal, wherever located and whenever arising or
existing.
VIII. EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an
"Event of Default:"
(a) Borrower shall fail to pay any amount on the Obligations or
provided for in any Loan Document when due (in all cases, whether on any payment
date, at maturity, by reason of acceleration, by notice of intention to prepay,
by required prepayment or otherwise);
(b) any representation, statement or warranty made or deemed made by
any Borrower or Guarantor, if any, in any Loan Document or in any other
certificate, document, report or
34
opinion delivered in conjunction with any Loan Document to which it is a party,
shall not be true and correct in all material respects or shall have been false
or misleading in any material respect on the date when made or deemed to have
been made (except to the extent already qualified by materiality, in which case
it shall be true and correct in all respects and shall not be false or
misleading in any respect except those made as of a specific date);
(c) Borrower or any Guarantor, if any, or other party thereto, other
than Agent or any Lender, shall be in violation, breach or default of, or shall
fail to perform, observe or comply with any covenant, obligation or agreement
set forth in, or any event of default occurs under, any Loan Document and such
violation, breach, default, event of default or failure shall not be cured
within the applicable period set forth in the applicable Loan Document; provided
that, with respect to the affirmative covenants set forth in Article VI (other
than Sections 6.2, 6.3(b) and (f), 6.9 and 6.11, for which there shall be no
cure period), there shall be a thirty (30) calendar day cure period commencing
from the earlier of (i) Receipt by such Person of written notice of such breach,
default, violation or failure, and (ii) the time at which such Person or any
authorized officer thereof knew or became aware, or should reasonably have known
or been aware, of such failure, violation, breach or default.
(d) (i) any of the Loan Documents ceases to be in full force and
effect, or (ii) any Lien created thereunder ceases to constitute a valid first
priority (other than with respect to property or assets covered by Priority
Permitted Liens) perfected Lien on the Collateral in accordance with the terms
thereof, or Agent, for the benefit of itself and Lenders, ceases to have a valid
perfected first priority security interest in (subject to Priority Permitted
Liens) any of the Collateral or any securities pledged to Agent, for the benefit
of itself and Lenders, pursuant to the Security Documents;
(e) (i) one or more judgments or decrees is rendered against any
Borrower or any Guarantor, if any, in an amount in excess of $100,000
individually or $200,000 in the aggregate, which is/are not satisfied, stayed,
vacated or discharged of record within thirty (30) calendar days of being
rendered;
(f) (i) any default or breach occurs, which is not cured within any
applicable grace period or waived, (x) in the payment of any amount with respect
to any Indebtedness (other than the Obligations) of Borrower or any Guarantor,
if any, in excess of $100,000 individually or in the aggregate, (y) in the
performance, observance or fulfillment of any provision contained in any
agreement, contract, document or instrument to which any Borrower or any
Guarantor is a party or to which any of their properties or assets are subject
or bound (1) that is a material (as determined by Agent in its Permitted
Discretion) agreement of such Borrower and such default or breach continues for
more than any applicable grace period or permits the other party thereto to
terminate such agreement, setoff any amounts or otherwise reduce or limit any
amounts owed by such other party thereunder, (2) under or pursuant to which any
Indebtedness in excess of $100,000 individually or in the aggregate was issued,
created, assumed, guaranteed or secured and such default or breach continues for
more than any applicable grace period or permits the holder of any such
Indebtedness to accelerate the maturity thereof, or (3) that is between any
Borrower or any Guarantor, if any, and Agent or any Lender or Affiliate of Agent
or any Lender (other than the Loan Documents), or (ii) any Indebtedness of any
Borrower or any Guarantor in excess of $100,000 individually or in the aggregate
is declared to be due and payable or is required to be prepaid (other than by a
regularly scheduled payment) prior to the stated maturity thereof, or any
obligation of such Person for the payment of Indebtedness in excess of $100,000
individually or in the aggregate (other than the Obligations) is not paid when
due or within any applicable grace period, or any such obligation becomes or is
declared to be due and payable before the expressed maturity thereof, or there
occurs any event which would cause any such obligation to become, or allow any
such obligation to be declared, due and payable;
35
(g) any Borrower or any Guarantor shall (i) be unable to pay its debts
generally as they become due, (ii) file a petition under any insolvency statute,
(iii) make a general assignment for the benefit of its creditors, (iv) commence
a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial part of its property or
shall otherwise be dissolved or liquidated, or (v) file a petition seeking
reorganization or liquidation or similar relief under any Debtor Relief Law or
any other applicable law or statute;
(h) (i) a court of competent jurisdiction shall (A) enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of any Borrower or any Guarantor or the whole or any substantial
part of any such Person's properties, which shall continue unstayed and in
effect for a period of sixty (60) calendar days, (B) shall approve a petition
filed against any Borrower or any Guarantor seeking reorganization, liquidation
or similar relief under the any Debtor Relief Law or any other applicable law or
statute, which is not dismissed within sixty (60) calendar days or, (C) under
the provisions of any Debtor Relief Law or other applicable law or statute,
assume custody or control of any Borrower or any Guarantor or of the whole or
any substantial part of any such Person's properties, which is not irrevocably
relinquished within sixty (60) calendar days, or (ii) there is commenced against
any Borrower or any Guarantor any proceeding or petition seeking reorganization,
liquidation or similar relief under any Debtor Relief Law or any other
applicable law or statute, which (A) is not unconditionally dismissed within
sixty (60) calendar days after the date of commencement, or (B) is with respect
to which any Borrower or any Guarantor takes any action to indicate its approval
of or consent;
(i) (i) any Change of Control occurs, or (ii) any Material Adverse
Effect or Material Adverse Change occurs;
(j) any Borrower or any Guarantor, if any, engages, directly or
indirectly (or Agent or any Lender receives any indication that any Borrower or
any Guarantor, if any, has engaged) in any type of activity which, in Agent's
Permitted Discretion, might reasonably result in forfeiture of any material (as
determined in Agent's Permitted Discretion) property or assets to any
Governmental Authority which shall have continued unremedied for a period of
twenty (20) calendar days after written notice from Agent;
(k) an event of default occurs under any other Loan Document and
remains unremedied or uncured for any applicable cure period;
(l) uninsured damage to, or loss, theft or destruction of, any portion
of the Collateral occurs that exceeds $100,000 in the aggregate;
(m) any Borrower or any of its respective directors or senior officers
is criminally indicted or convicted of or under (a) a felony, or (b) any law
that could lead to a forfeiture of any material (as determined in Agent's
Permitted Discretion) Collateral;
(n) the issuance of any process for levy, attachment or garnishment or
execution in an amount that exceeds $100,000 in the aggregate upon or prior to
any judgment against any Borrower or any Guarantor, if any, or any of their
material property or assets or against any of the Collateral, in each case which
is/are not satisfied, stayed, vacated, dismissed or discharged within thirty
(30) calendar days of being issued or executed; or
(o) any Borrower or any Guarantor, if any, does, or enters into or
becomes a party to any agreement or commitment to do, or cause to be done, any
of the things described in this Article VIII or otherwise prohibited by any Loan
Document (subject to any cure periods set forth therein);
36
(p) MCI WorldCom Network Services, Inc. ("MCI"), or any Affiliate
thereof, takes any action whatsoever to collect or enforce any amounts due to
MCI or such Affiliate by any Borrower or any Affiliate thereof, including,
without limitation, any effort to enforce or realize upon any Lien in any assets
or property of any Borrower or any Affiliate of any Borrower;
then, and in any such event, notwithstanding any other provision of any Loan
Document, (I) Agent may (and at the request of Requisite Lenders, shall), by
notice to Borrower (i) terminate Lenders' obligations hereunder, whereupon the
same shall immediately terminate, and (ii) declare all or any of the Loans
and/or Notes, all interest thereon and all other Obligations to be due and
payable immediately (except in the case of an Event of Default under Section
8(d), (g), or (h) (other than an Event of Default under Section 8(g) or (h) with
respect to any Guarantor), in which event all of the foregoing shall
automatically and without further act by Agent or any Lender be due and payable
and Lenders obligations hereunder shall terminate; provided, that, with respect
to non-material breaches or violations that constitute Events of Default under
clause (ii) of Section 8(d), there shall be a five (5) Business Day cure period
commencing from the earlier of (A) Receipt by the applicable Person of written
notice of such breach or violation or of any event, fact or circumstance
constituting or resulting in any of the foregoing, and (B) the time at which
such Person or any authorized officer thereof knew or became aware, or should
have known or been aware, of such breach or violation and resulting Event of
Default or of any event, fact or circumstance constituting or resulting in any
of the foregoing)), in each case without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower, and
(II) effective immediately upon Receipt of notice from Agent (unless
specifically prohibited and provided for in Article VII, in which case effective
immediately upon an Event of Default without any action of Agent or Lenders), no
action permitted to be taken under Article VII hereof may be taken.
IX. RIGHTS AND REMEDIES AFTER DEFAULT
9.1 Rights and Remedies
(a) In addition to the acceleration provisions set forth in Article
VIII above, upon the occurrence and continuation of an Event of Default, Agent
shall have the right to (and at the request of Requisite Lenders, shall)
exercise any and all rights, options and remedies provided for in any Loan
Document, under the UCC or at law or in equity, including, without limitation,
the right to (i) apply any property of Borrower or any Guarantor held by Agent,
for the benefit of Lenders, or Lenders to reduce the Obligations, (ii) foreclose
the Liens created under the Loan Documents, (iii) realize upon, take possession
of and/or sell any Collateral or securities pledged, with or without judicial
process, (iv) exercise all rights and powers with respect to the Collateral as
Borrower or any Guarantor, as applicable, might exercise, (v) collect and send
notices regarding the Collateral, with or without judicial process, (vi) by its
own means or with judicial assistance, enter any premises at which Collateral
and/or pledged securities are located, or render any of the foregoing unusable
or dispose of the Collateral and/or pledged securities on such premises without
any liability for rent, storage, utilities, or other sums, and no Borrower or
Guarantor shall resist or interfere with such action, (vii) at Borrowers'
expense, require that all or any part of the Collateral be assembled and made
available to Agent at any place designated by Agent in its Permitted Discretion,
(viii) reduce or otherwise change the Facility Cap, the Availability and/or any
component of the foregoing, (ix) relinquish or abandon any Collateral or
securities pledged or any Lien thereon and/or (x) (A) file, register and/or
record one or more of the Leasehold Mortgages with such Governmental Authority
as Agent determines in its sole discretion, and (B) Borrowers shall, upon
Agent's request and at Borrowers' expense, execute and/or deliver any and all
documents and/or instruments (including but not limited to written legal
opinions of counsel for Borrowers and Guarantors, if any, in each case in form
and substance satisfactory to Agent in its Permitted Discretion) as Agent shall
request in its Permitted Discretion. Notwithstanding any provision of any Loan
Document, Agent, in its Permitted Discretion, shall have the right, at any time
that Borrower fails to do so, and from time to time, without prior notice, to:
(i) obtain insurance covering any of the Collateral to the extent required
37
hereunder; (ii) pay for the performance of any of the Obligations; (iii)
discharge taxes, levies and/or Liens on any of the Collateral that are in
violation of any Loan Document unless Borrower is in good faith with due
diligence by appropriate proceedings contesting those items; and (iv) pay for
the maintenance, repair and/or preservation of the Collateral. Such expenses and
advances shall be added to the Obligations until reimbursed to Agent and shall
be secured by the Collateral, and such payments by Agent shall not be construed
as a waiver by Agent or Lenders of any Event of Default or any other rights or
remedies of Agent and Lenders.
(b) Borrowers agree that notice received by any of them at least ten
(10) calendar days before the time of any intended public sale, or the time
after which any private sale or other disposition of Collateral is to be made,
shall be deemed to be reasonable notice of such sale or other disposition. If
permitted by applicable law, any perishable Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Agent without prior notice to Borrowers. At any sale or
disposition of Collateral or securities pledged, Agent may (to the extent
permitted by applicable law) purchase all or any part thereof free from any
right of redemption by any Borrower or any Guarantor which right is hereby
waived and released. Borrowers, jointly and severally, covenant and agree not
to, and not to permit or cause any of their Subsidiaries to, interfere with or
impose any obstacle to Agent's exercise of its rights and remedies with respect
to the Collateral. In dealing with or disposing of the Collateral or any part
thereof, Agent and Lenders shall not be required to give priority or preference
to any item of Collateral or otherwise to marshal assets or to take possession
or sell any Collateral with judicial process.
9.2 Application of Proceeds
In addition to any other rights, options and remedies Agent and
Lenders have under the Loan Documents, the UCC, at law or in equity, all
dividends, interest, rents, issues, profits, fees, revenues, income and other
proceeds collected or received from collecting, holding, managing, renting,
selling, or otherwise disposing of all or any part of the Collateral or any
proceeds thereof upon exercise of its remedies hereunder upon the occurrence and
continuation of an Event of Default shall be applied in the following order of
priority: (i) first, to the payment of all costs and expenses of such
collection, storage, lease, holding, operation, management, sale, disposition or
delivery and of conducting Borrowers' business and of maintenance, repairs,
replacements, alterations, additions and improvements of or to the Collateral,
and to the payment of all sums which Agent or Lenders may be required or may
elect to pay, if any, for taxes, assessments, insurance and other charges upon
the Collateral or any part thereof, and all other payments that Agent or Lenders
may be required or authorized to make under any provision of this Agreement
(including, without limitation, in each such case, in-house documentation and
diligence fees and legal expenses, search, audit, recording, professional and
filing fees and expenses and reasonable attorneys' fees and all expenses,
liabilities and advances made or incurred in connection therewith); (ii) second,
to the payment of all Obligations in such order as determined by Agent in its
sole discretion; (iii) third, to the satisfaction of indebtedness secured by any
subordinate security interest of record in the Collateral if written
notification of demand therefor is received before distribution of the proceeds
is completed, provided, that, if requested by Agent, the holder of a subordinate
security interest shall furnish reasonable proof of its interest, and unless it
does so, Agent and Lenders need not address their claims; and (iv) fourth, to
the payment of any surplus then remaining to Borrowers, unless otherwise
provided by law or directed by a court of competent jurisdiction, provided that
Borrowers shall be liable for any deficiency if such proceeds are insufficient
to satisfy the Obligations or any of the other items referred to in this Section
(other than Section 9.2(iii) to the extent the Obligations have been
indefeasibly paid in full in cash).
9.3 Rights to Appoint Receiver
Without limiting and in addition to any other rights, options and
remedies Agent and Lenders have under the Loan Documents, the UCC, at law or in
equity, upon the occurrence and
38
continuation of an Event of Default, Agent and Lenders shall have the right to
apply for a receiver appointed by a court of competent jurisdiction in any
action taken by Agent to enforce its and Lenders' rights and remedies in order
to manage, protect and preserve the Collateral and continue the operation of the
business of Borrower and to collect all revenues and profits thereof and apply
the same to the payment of all expenses and other charges of such receivership
including the compensation of the receiver and to the payments as aforesaid
until a sale or other disposition of such Collateral shall be finally made and
consummated.
9.4 Attorney in Fact
Each Borrower hereby irrevocably appoints Agent, for its benefit and
the benefit of Lenders, as its attorney in fact to take any action Agent deems
necessary or desirable upon the occurrence and continuation of an Event of
Default to protect and realize upon its and Lenders' Lien in the Collateral,
including the execution and delivery of any and all documents or instruments
related to the Collateral in such Borrower's name, and said appointment shall
create in Agent, for its benefit and the benefit of Lenders, a power coupled
with an interest.
9.5 Blocked Accounts
Without limiting any other provision of any Loan Document and in
addition to any other rights, options and remedies, Agent and Lenders have under
the Loan Documents, the UCC, at law or in equity, upon the occurrence and
continuation of any Event of Default, Agent shall have the right to exercise
control over all Deposit Accounts of Borrower and to otherwise require that all
amounts in all Deposit Accounts of Borrower and that all cash payments received
by Borrower are paid and delivered directly into a blocked account under the
sole dominion and control of Agent and that all such amounts are immediately
transferred into a depository account or accounts maintained by Agent or an
Affiliate of Agent at such bank as Agent may determine in its sole discretion.
9.6 Rights and Remedies not Exclusive
Agent shall have the right in its sole discretion to determine which
rights, Liens and/or remedies Agent or Lenders may at any time pursue,
relinquish, subordinate or modify, and such determination will not in any way
modify or affect any of Agent's or Lenders' rights, Liens or remedies under any
Loan Document, applicable law or equity. The enumeration of any rights and
remedies in any Loan Document is not intended to be exhaustive, and all rights
and remedies of Agent described in any Loan Document are cumulative and are not
alternative to or exclusive of any other rights or remedies which Agent
otherwise may have. The partial or complete exercise of any right or remedy
shall not preclude any other further exercise of such or any other right or
remedy.
X. WAIVERS AND JUDICIAL PROCEEDINGS
10.1 Waivers
Except as expressly provided for herein, each Borrower hereby waives
set off, counterclaim, demand, presentment, protest, all defenses with respect
to any and all instruments and all notices and demands of any description, and
the pleading of any statute of limitations as a defense to any demand under any
Loan Document. Each Borrower hereby waives any and all defenses and
counterclaims it may have or could interpose in any action or procedure brought
by Agent or any Lender to obtain an order of court recognizing the assignment
of, or Lien of Agent, for the benefit of itself and Lenders, in and to, any
Collateral.
10.2 Delay; No Waiver of Defaults
39
No course of action or dealing, renewal, release or extension of any
provision of any Loan Document, or single or partial exercise of any such
provision, or delay, failure or omission on Agent's or Lenders' part in
enforcing any such provision shall affect the liability of any Borrower or any
Guarantor or operate as a waiver of such provision or affect the liability of
any Borrower or any Guarantor or preclude any other or further exercise of such
provision. No waiver by any party to any Loan Document of any one or more
defaults by any other party in the performance of any of the provisions of any
Loan Document shall operate or be construed as a waiver of any future default,
whether of a like or different nature, and each such waiver shall be limited
solely to the express terms and provisions of such waiver. Notwithstanding any
other provision of any Loan Document, by completing the Closing under this
Agreement and/or by making Advances neither Agent nor any Lender waives any
breach of any representation or warranty of under any Loan Document, and all of
Agent's and Lenders' claims and rights resulting from any such breach or
misrepresentation are specifically reserved.
10.3 Jury Waiver
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN DOCUMENTS
OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH
RESPECT TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF
THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
10.4 Intentionally Omitted
10.5 Amendment and Waivers
(a) Except as otherwise provided herein, no amendment, modification,
termination, or waiver of any provision of this Agreement or any Loan Document,
or consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by Requisite Lenders,
Agent and Borrower; provided, that no amendment, modification, termination, or
waiver shall, unless in writing and signed by each Lender directly affected
thereby, do any of the following and that the agreement of Borrower shall not be
required for any amendment, modification, termination, or waiver that does any
of the following (other than item (vi) below to the extent adverse to Borrowers
and unless any of the following would increase any commitment fee owing to
Borrowers): (i) increase the Commitment of any individual Lender (which action
shall be deemed to directly affect all Lenders); (ii) reduce the principal of,
rate of interest on or fees payable with respect to any Loan; (iii) extend the
scheduled due date, or reduce the amount due on any scheduled due date, of any
installment of principal, interest, or fees payable with respect to any Loan, or
waive, forgive, extend, defer or postpone the payment thereof; (iv) change the
percentage of the Commitments, of the aggregate unpaid principal amount of the
Loans, or of Lenders which shall be required for Lenders or any of them to take
any action hereunder (which action shall be deemed to directly affect all
Lenders); (v) except as otherwise permitted herein or in the other Loan
Documents, release any Guaranty or release any of the Collateral (which action
shall be deemed to directly affect all Lenders) (provided, that consent to such
release shall not be required if such release is made after and during the
continuance of an Event of Default in connection with the sale or disposition of
the Collateral by Agent); (vi) amend, modify or waive this Section 10.5 or the
definitions of the terms used in this Section 10.5 insofar as the definitions
affect the substance of this Section 10.5 (which action shall be deemed to
directly affect all Lenders); (vii) consent
40
to the assignment or other transfer by Borrower or any other party (other than
Agent or any Lender) to any Loan Documents of any of their rights and
obligations under any Loan Document; and, provided, further, that no amendment,
modification, termination or waiver affecting the rights or duties of Agent
under any Loan Document shall in any event be effective, unless in writing and
signed by Agent, in addition to Lenders required herein above to take such
action.
(b) Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent, for the benefit of itself and the benefit of Lenders, to
take additional Collateral pursuant to any Loan Document.
(c) Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 10.5 shall be binding upon Agent, each
Lender and Borrower.
XI. EFFECTIVE DATE AND TERMINATION
11.1 Effectiveness and Termination
Subject to Agent's and Lenders' rights to accelerate the Loans and
terminate and cease making and funding Loans upon or after any Event of Default,
this Agreement shall continue in full force and effect until the later of the
Maturity Date and the full performance and indefeasible payment in full in cash
of all Obligations, unless terminated sooner as provided in this Section 11.1.
Borrower may not terminate this Agreement or the Revolving Facility without
terminating the entire Agreement and indefeasibly repaying all Obligations in
cash. Borrower may terminate this Agreement at any time upon not less than
thirty (30) calendar days' prior written notice to Agent and upon full
performance and indefeasible payment in full in cash of all Obligations on or
prior to such 30th calendar day after Receipt by Agent of such written notice.
Upon the earlier of the Maturity Date and any such termination by Borrower, the
obligation of Lenders to make Advances under the Revolving Facility and all
other obligations of the Lenders hereunder shall terminate. All of the
Obligations shall be immediately due and payable upon the earlier of the
Maturity Date and any such termination prior to the Maturity Date on the
termination date stated in any notice of termination, as applicable (the
"Termination Date"); provided, that, notwithstanding any other provision of any
Loan Document, a Termination Date voluntarily caused by Borrowers shall be
effective no earlier than the first Business Day of the month following the
expiration of the thirty (30) calendar days' prior written notice period.
Notwithstanding the foregoing, any termination notice by Borrowers pursuant to
this Section 11.1 shall be revocable; provided, that any revocation shall be by
written notice by Borrowers to Agent and to the extent Borrowers wish to
terminate this Agreement after any such revocation they shall do so only in
compliance with the time periods and other requirements of this Section 11.1
(i.e., once a termination notice is revoked, any subsequent termination notice
shall be subject to the full advance notice and effectiveness requirements of
this Section 11.1). Notwithstanding any other provision of any Loan Document, no
termination of this Agreement shall affect any Lender's or Agent's rights or any
of the Obligations existing as of the effective date of such termination, and
the provisions of the Loan Documents shall continue to be fully operative until
the Obligations have been fully performed and indefeasibly paid in cash in full.
The Liens granted to Agent, for the benefit of itself and Lenders, under the
Security Documents and the financing statements filed pursuant thereto and the
rights and powers of Agent and Lenders shall continue in full force and effect
notwithstanding the fact that any Borrower's borrowings hereunder may from time
to time be in a zero or credit position until all of the Obligations have been
fully performed and indefeasibly paid in full in cash.
11.2 Survival
41
All obligations, covenants, agreements, representations, warranties,
waivers and indemnities made by any Borrower or any Guarantor, if any, in any
Loan Document shall survive the execution and delivery of the Loan Documents,
the Closing, the making and funding of the Loans and any termination of this
Agreement until all Obligations are fully performed and indefeasibly paid in
full in cash. The obligations and provisions of Sections 3.4, 3.5, 3.6, 3.7,
6.13, 10.1, 10.3, 11.1, 11.2, 12.3, 12.4, 12.7, 12.9, 12.10, 12.11 and Article
XI-A shall survive termination of the Loan Documents and any payment, in full or
in part, of the Obligations.
XI-A. AGENCY PROVISIONS
11-A.1 Agent
(a) Appointment. Each Lender hereby designates and appoints
CapitalSource as the administrative agent, payment agent, and collateral agent,
under this Agreement and the other Loan Documents, and each Lender hereby
irrevocably authorizes CapitalSource, as the administrative agent, payment
agent, and collateral agent for such Lender, to take such action or to refrain
from taking such action on its behalf under the provisions of this Agreement and
the other Loan Documents and to exercise such powers and perform such duties as
are delegated to the Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Agent agrees to act as such on the conditions contained in this Article XI-A.
The provisions of this Article XI-A are solely for the benefit of Agent and
Lenders, and Borrowers shall have no rights as a third-party beneficiary of any
of the provisions of this Article XI-A other than the second sentence of Section
11-A.1(h)(iii). Agent may perform any of its duties hereunder, or under the Loan
Documents, by or through its agents or employees.
(b) Nature of Duties. In performing its functions and duties under
this Agreement, Agent is acting solely on behalf of Lenders and its duties are
administrative in nature and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for
Lenders, other than as expressly set forth herein and in the other Loan
Documents, or Borrowers. Agent shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents. Agent shall not have by reason of this Agreement or any
other Loan Document a fiduciary relationship in respect of any Lender. Except
for information, notices, reports, and other documents expressly required to be
furnished to Lenders by the Agent hereunder or given to the Agent for the
account of or with copies for Lenders, each Lender shall make its own
independent investigation of the financial condition and affairs of Borrowers in
connection with the extension of credit hereunder and shall make its own
appraisal of the creditworthiness of Borrower, and Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the Closing Date or at any time or times thereafter. If
Agent seeks the consent or approval of any Lenders to the taking or refraining
from taking any action hereunder, then Agent shall send prior written notice
thereof to each Lender. Agent shall promptly notify (in writing) each Lender any
time that the applicable percentage of Lenders have instructed Agent to act or
refrain from acting pursuant hereto.
(c) Rights, Exculpation, Etc. Neither Agent nor any of its officers,
directors, managers, members, equity owners, employees or agents shall be liable
to any Lender for any action lawfully taken or omitted by them hereunder or
under any of the other Loan Documents, or in connection herewith or therewith.
Notwithstanding the foregoing, Agent shall be obligated on the terms set forth
herein for performance of its express duties and obligations hereunder, and
Agent shall be liable with respect to its own gross negligence or willful
misconduct. Agent shall not be liable for any apportionment or distribution of
payments made by it in good faith, and if any such apportionment or distribution
is subsequently determined to have been made in error, the sole recourse of any
Lender to whom payment was due but not made shall be to recover from other
Lenders any payment in excess of
42
the amount to which they are determined to be entitled (and such other Lenders
hereby agree to return to such Lender any such erroneous payments received by
them). In performing its functions and duties hereunder, Agent shall exercise
the same care which it would in dealing with loans for its own account. Agent
shall not be responsible to any Lender for any recitals, statements,
representations or warranties made by Borrowers herein or for the execution,
effectiveness, genuineness, validity, enforceability, collectability, or
sufficiency of this Agreement or any of the other Loan Documents or the
transactions contemplated thereby, or for the financial condition of Borrowers.
Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions, or conditions of this
Agreement or any of the Loan Documents or the financial condition of Borrowers,
or the existence or possible existence of any Default or Event of Default. Agent
may at any time request instructions from Lenders with respect to any actions or
approvals which by the terms of this Agreement or of any of the other Loan
Documents Agent is permitted or required to take or to grant, and Agent shall be
absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from taking any action or withholding any approval under any of the
Loan Documents until it shall have received such instructions from the
applicable percentage of Lenders. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting under this Agreement or any of the other Loan
Documents in accordance with the instructions of the applicable percentage of
Lenders and notwithstanding the instructions of Lenders, Agent shall have no
obligation to take any action if it, in good faith believes that such action
exposes Agent or any of its officers, directors, managers, members, equity
owners, employees or agents to any personal liability unless Agent receives an
indemnification reasonably satisfactory to it from Lenders with respect to such
action.
(d) Reliance. Agent shall be entitled to rely upon any written
notices, statements, certificates, orders or other documents or any telephone
message or other communication (including any writing, telex, telecopy or
telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the other Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel, independent accountants,
and other experts selected by Agent in its sole discretion.
(e) Indemnification. Each Lender, severally and not (i) jointly or
(ii) jointly and severally, agrees to reimburse and indemnify and hold harmless
Agent and its officers, directors, managers, members, equity owners, employees
and agents (to the extent not reimbursed by Borrowers or the Guarantors, if
any), ratably according to their respective Pro Rata Share in effect on the date
on which indemnification is sought under this subsection of the total
outstanding obligations (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with their Pro Rata Share immediately prior to
such date of the total outstanding obligations), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances, or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against Agent or any of its
officers, directors, managers, members, equity owners, employees or agents in
any way relating to or arising out of this Agreement or any of the other Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the other Loan Documents; provided, however, that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or disbursements
resulting from Agent's gross negligence or willful misconduct. The obligations
of Lenders under this Article XI-A shall survive the payment in full of the
Obligations and the termination of this Agreement.
(f) CapitalSource Individually. With respect to the Loans made by it,
and the Notes issued to it, CapitalSource shall have and may exercise the same
rights and powers hereunder and under the other Loan Documents and is subject to
the same obligations and liabilities as and to the extent set
43
forth herein and the other Loan Documents as any other Lender. The terms
"Lenders" or "Requisite Lenders" or any similar terms shall, unless the context
clearly otherwise indicates, include CapitalSource in its individual capacity as
a Lender or one of the Requisite Lenders. CapitalSource may lend money to, and
generally engage in any kind of banking, trust or other business with any
Borrower or any Subsidiary or Affiliates of any Borrower as if it were not
acting as Agent pursuant hereto.
(g) Successor Agent.
(i) Resignation. Agent may resign from the performance of all or
part of its functions and duties hereunder at any time by giving at least thirty
(30) days' prior written notice to Borrowers and Lenders. Such resignation shall
take effect upon the acceptance by a successor Agent of appointment pursuant to
clause (ii) below or as otherwise provided below.
(ii) Appointment of Successor. Upon any such notice of
resignation pursuant to clause (g)(i) above, Requisite Lenders shall appoint a
successor Agent reasonably acceptable to Borrowers, which consent shall not be
unreasonably withheld, delayed or conditioned. If a successor Agent shall not
have been so appointed within said thirty (30) day period, the retiring Agent,
upon notice to Borrowers, may, on behalf of Lenders, then appoint a successor
Agent reasonably acceptable to Borrowers, which consent shall not be
unreasonably withheld, delayed or conditioned, who shall serve as Agent until
such time, as Requisite Lenders, appoint a successor Agent as provided above. If
no successor Agent has been appointed pursuant to the foregoing within said
thirty (30) day period, the resignation shall become effective and Requisite
Lenders shall thereafter perform all the duties of Agent hereunder, until such
time, if any, as Requisite Lenders appoint a successor Agent as provided above.
(iii) Successor Agent. Upon the acceptance of any appointment as
Agent under the Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and, upon the earlier of such acceptance or
the effective date of the retiring Agent's resignation, the retiring Agent shall
be discharged from its duties and obligations under the Loan Documents, except
that any indemnity rights or other rights in favor of such retiring Agent shall
continue. After any retiring Agent's resignation as Agent under the Loan
Documents, the provisions of this Article XI-A shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under the Loan
Documents.
(h) Collateral Matters.
(i) Collateral. Each Lender agrees that any action taken by the
Agent or the Requisite Lenders (or, where required by the express terms of this
Agreement, a greater proportion of Lenders) in accordance with the provisions of
this Agreement or of the other Loan Documents relating to the Collateral, and
the exercise by the Agent or the Requisite Lenders (or, where so required, such
greater proportion) of the powers set forth herein or therein, together with
such other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of Lenders and the Agent. Without limiting the generality of
the foregoing, the Agent shall have the sole and exclusive right and authority
to (i) act as the disbursing and collecting agent for Lenders with respect to
all payments and collections arising in connection herewith and with the Loan
Documents in connection with the Collateral; (ii) execute and deliver each Loan
Document relating to the Collateral and accept delivery of each such agreement
delivered by Borrowers or any of their Subsidiaries; (iii) act as collateral
agent for Lenders for purposes of the perfection of all security interests and
Liens created by such agreements and all other purposes stated therein; (iv)
manage, supervise and otherwise deal with the Collateral; (v) take such action
as is necessary or desirable to maintain the perfection and priority of the
security interests and Liens created or purported to be created by the Loan
Documents relating to the Collateral, and (vi) except as may be otherwise
specifically restricted by the terms hereof or of any other Loan Document,
exercise all remedies
44
given to such Agent and Lenders with respect to the Collateral under the Loan
Documents relating thereto, applicable law or otherwise.
(ii) Release of Collateral. Lenders hereby irrevocably authorize
Agent, at its option and in its discretion, to release any Lien granted to or
held by Agent for the benefit of Lenders upon any property covered by the Loan
Documents (A) upon termination of this Agreement and payment and satisfaction in
full of all Obligations; (B) constituting property being sold or disposed of if
Borrowers certify to Agent that the sale or disposition is made in compliance
with the provisions of the Loan Documents (and Agent may rely in good faith
conclusively on any such certificate, without further inquiry); or (C)
constituting property leased to any Borrower under a lease which has expired or
been terminated in a transaction permitted under this Agreement or is about to
expire and which has not been, and is not intended by such Borrower to be,
renewed or extended.
(iii) Confirmation of Authority; Execution of Releases. Without
in any manner limiting Agent's authority to act without any specific or further
authorization or consent by Lenders (as set forth in Section 11-A.1(h)(i) and
(ii)), each Lender agrees to confirm in writing, upon request by Borrowers, the
authority to release any property covered by this Agreement or the Loan
Documents conferred upon Agent under Section 11-A.1(h)(ii). So long as no Event
of Default is then continuing, upon receipt by Agent of confirmation from the
requisite percentage of Lenders, of its authority to release any particular item
or types of property covered by this Agreement or the Loan Documents, and upon
at least five (5) Business Days prior written request by Borrowers, Agent shall
(and is hereby irrevocably authorized by Lenders to) execute such documents as
may be necessary to evidence the release of the Liens granted to Agent for the
benefit of Lenders herein or pursuant hereto upon such Collateral; provided,
however, that (A) Agent shall not be required to execute any such document on
terms which, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty (other than that such Collateral is free and clear,
on the date of such delivery, of any and all Liens arising from such Person's
own acts), and (B) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens upon (or obligations of Borrowers or any
Subsidiary of Borrowers, in respect of), all interests retained by Borrowers or
any Subsidiary of Borrowers, including, without limitation, the proceeds of any
sale, all of which shall continue to constitute part of the property covered by
this Agreement or the Loan Documents.
(iv) Absence of Duty. Agent shall have no obligation whatsoever
to any Lender or any other Person to assure that the property covered by this
Agreement or the Loan Documents exists or is owned by Borrowers or is cared for,
protected or insured or has been encumbered or that the Liens granted to Agent
on behalf of Lenders herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected, enforced or maintained
or are entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure, or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this Section 11-A.1(h) or in any of the Loan Documents, it
being understood and agreed that in respect of the property covered by this
Agreement or the Loan Documents or any act, omission, or event related thereto,
Agent may act in any manner it may deem appropriate, in its discretion, given
Agent's own interest in property covered by this Agreement or the Loan Documents
as one of Lenders and that Agent shall have no duty or liability whatsoever to
any of the other Lenders; provided, that Agent shall exercise the same care
which it would in dealing with loans for its own account. Notwithstanding the
foregoing, Agent shall be liable with respect to its own gross negligence or
willful misconduct.
(i) Agency for Perfection. Each Lender hereby appoints Agent as agent
for the purpose of perfecting Lenders' security interest in Collateral which, in
accordance with Article 9 of the UCC in any applicable jurisdiction, can be
perfected only by possession. Should any Lender (other than
45
Agent) obtain possession of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent's request therefor, shall deliver such
Collateral to Agent or in accordance with Agent's instructions.
(j) Exercise of Remedies. Except as set forth in Section 11-A.3, each
Lender agrees that it will not have any right individually to enforce or seek to
enforce this Agreement or any Loan Document or to realize upon any collateral
security for the Loans, it being understood and agreed that such rights and
remedies may be exercised only by Agent.
11-A.2 Consents
(a) In the event Agent requests the consent of a Lender and does not
receive a written denial thereof within five (5) Business Days after such
Lender's receipt of such request, then such Lender will be deemed to have given
such consent so long as such request contained a notice stating that such
failure to respond within five (5) Business Days would be deemed to be a consent
by such Lender.
(b) In the event Agent requests the consent of a Lender in a situation
where such Lender's consent would be required and such consent is denied, then
Agent may, at its option, require such Lender to assign its interest in the
Loans to Agent for a price equal to the then outstanding principal amount
thereof due such Lender plus accrued and unpaid interest and fees due such
Lender, which principal, interest and fees will be paid to the Lenders when
collected from Borrowers. In the event that Agent elects to require any Lender
to assign its interest to Agent pursuant to this Section 11-A.2, Agent will so
notify such Lender in writing within forty-five (45) days following such
Lender's denial, and such Lender will assign its interest to Agent no later than
five (5) calendar days following receipt of such notice.
11-A.3 Set Off and Sharing of Payments
In addition to any rights and remedies now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default, each Lender is
hereby authorized by Borrowers at any time or from time to time, to the fullest
extent permitted by law and regardless of the adequacy of any Collateral, with
reasonably prompt subsequent notice to Borrowers or to any other Person (any
prior or contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (a) balances (general or special, time or
demand, provisional or final) held by such Lender or such holder at any of its
offices for the account of Borrowers or any of their Subsidiaries (regardless of
whether such balances are then due to Borrowers or their Subsidiaries), and (b)
other property at any time held or owing by such Lender or such holder to or for
the credit or for the account of Borrowers or any of their Subsidiaries, against
and on account of any of the Obligations which are not paid when due; except
that no Lender or any such holder shall exercise any such right without the
prior written notice to Agent; provided, however, that the failure to give
notice to Borrowers or to any other Person shall not affect the validity of such
set-off and application. Any Revolving Lender which has exercised its right to
set off or otherwise has received any payment on account of the Obligations
shall, to the extent the amount of any such set off or payment exceeds its Pro
Rata Share of payments obtained by all the Revolving Lenders on account of such
Obligations, purchase for cash (and the other Revolving Lenders or holders of
Revolving Loans shall sell) participations in each such other Revolving Lender's
or holder's Pro Rata Share of the Obligations as would be necessary to cause
such Revolving Lender to share such excess with each other Revolving Lender or
holders in accordance with their respective Pro Rata Share; provided, however,
that if all or any portion of such excess payment or benefits is thereafter
recovered from such purchasing Revolving Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery. Each Borrower agrees, to the fullest extent permitted by law, that (a)
any Lender or holder
46
may exercise its right to set off with respect to amounts in excess of its Pro
Rata Share of the Obligations and may sell participations in such excess to
other Lenders and holders, and (b) any Lender or holder so purchasing a
participation in the Loans made or other Obligations held by other Lenders or
holders may exercise all rights of set-off, bankers' lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender or
holder were a direct holder of Loans and other Obligations in the amount of such
participation.
11-A.4 Disbursement of Funds
Agent may, on behalf of Revolving Lenders, disburse funds to Borrowers
for Advances requested. Each Revolving Lender shall reimburse Agent on demand
for its Pro Rata Share of all funds disbursed on its behalf by Agent, or if
Agent so requests, each Revolving Lender will remit to Agent its Pro Rata Share
of any Advance before Agent disburses same to Borrowers. If Agent elects to
require that funds be made available prior to disbursement to Borrowers, Agent
shall advise each Revolving Lender by telephone, telex or telecopy of the amount
of such Revolving Lender's Pro Rata Share of such requested Advance no later
than one (1) Business Day prior to the funding date applicable thereto, and each
such Revolving Lender shall pay Agent such Revolving Lender's Pro Rata Share of
such requested Loan, in same day funds, by wire transfer to Agent's account not
later than 3:00 p.m. (New York City time). If any Revolving Lender fails to pay
the amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall
promptly notify Borrowers, and Borrowers shall immediately repay such amount to
Agent. Any repayment required pursuant to this Section 11-A.4 shall be without
premium or penalty. Nothing in this Section 11-A.4 or elsewhere in this
Agreement or the other Loan Documents, including without limitation the
provisions of Section 11-A.5, shall be deemed to require Agent to advance funds
on behalf of any Lender or to relieve any Lender from its obligation to fulfill
its commitments hereunder or to prejudice any rights that Agent or Borrowers may
have against any Lender as a result of any default by such Lender hereunder.
11-A.5 Settlements; Payments and Information
(a) Advances; Payments; Interest and Fee Payments.
(i) The amount of outstanding Loans pursuant to Advances may
fluctuate from day to day through Agent's disbursement of funds to, and receipt
of funds from, Borrowers. In order to minimize the frequency of transfers of
funds between Agent and each Lender notwithstanding terms to the contrary set
forth in Section 11-A.4, Advances and repayments may be settled according to the
procedures described in Sections 11-A.5(a)(ii) and 11-A.5(a)(iii) of this
Agreement. Payments of principal, interest and fees in respect of the Loans will
be settled, in accordance with each Revolving Lender's Pro Rata Share on the
first Business Day after such payments are received. Notwithstanding these
procedures, each Lender's obligation to fund its Pro Rata Share of any Advances
made by Agent to Borrowers will commence on the date such Advances are made by
Agent; provided, however, nothing contained in this Agreement shall obligate a
Lender to make an Advance at any time an Event of Default exists. Such payments
will be made by such Lender without set-off, counterclaim or reduction of any
kind.
(ii) Once each week, or more frequently (including daily), if
Agent so elects (each such day being a "Settlement Date"), Agent will advise
each Lender by 1:00 p.m. (New York City time) by telephone, telex, or telecopy
of the amount of each such Lender's Pro Rata Share of the outstanding Loans. In
the event payments are necessary to adjust the amount of such Lender's share of
the Loans to such Lender's Pro Rata Share of the Loans, the party from which
such payment is due will pay the other, in same day funds, by wire transfer to
the other's account not later than 3:00 p.m. (New York City time) on the
Business Day following the Settlement Date.
47
(iii) On the first Business Day of each month ("Interest
Settlement Date"), Agent will advise each Lender by telephone or facsimile of
the amount of interest and fees charged to and collected from Borrowers for the
proceeding month in respect of the applicable Loans. Provided that such Lender
has made all payments required to be made by it under this Agreement, Agent will
pay to such Lender, by wire transfer to such Lender's account (as specified by
such Lender on Schedule A of this Agreement as amended by such Lender from time
to time after the date hereof pursuant to the notice provisions contained herein
or in the applicable Lender Addition Agreement) not later than 3:00 p.m. (New
York City time) on the next Business Day following the Interest Settlement Date
such Lender's share of such interest and fees.
(b) Availability of Lenders' Pro Rata Share.
(i) Unless Agent has been notified by a Revolving Lender prior to
any proposed funding date of such Lender's intention not to fund its Pro Rata
Share of the Advance amount requested by Borrowers, Agent may assume that such
Lender will make such amount available to Agent on the proposed funding date or
the Business Day following the next Settlement Date, as applicable; provided,
however, nothing contained in this Agreement shall obligate a Lender to make an
Advance at any time an Event of Default exists. If such amount is not, in fact,
made available to Agent by such Lender when due, Agent will be entitled to
recover such amount on demand from such Lender without set-off, counterclaim, or
deduction of any kind.
(ii) Nothing contained in this Section 11-A.5(b) will be deemed
to relieve a Lender of its obligation to fulfill its commitments or to prejudice
any rights Agent or Borrowers may have against such Lender as a result of any
default by such Lender under this Agreement.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Agent from Borrowers and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender without set-off,
counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrowers or paid to any other
Person pursuant to any solvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement, Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender will
repay to Agent on demand any portion of such amount that Agent has distributed
to such Lender, together with interest at such rate, if any, as Agent is
required to pay to Borrowers or such other Person, without set-off, counterclaim
or deduction of any kind.
11-A.6 Dissemination of Information
Upon request by each Lender, the Agent will distribute promptly to
such Lender, unless previously provided by Borrowers to such Lender, copies of
all notices, schedules, reports, projections, financial statements, agreements
and other material and other information, including, but not limited to,
financial and reporting information received from Borrowers or their
Subsidiaries or generated by a third party (and excluding only internal
information generated by CapitalSource for its own use as a Lender or as Agent),
as provided for in this Agreement and the other Loan Documents as received by
Agent. Agent shall not be liable to Lenders for any failure to comply with its
obligations under this Section 11-A.6, except to the extent that such failure is
attributable to Agent's gross negligence or willful misconduct.
XII. MISCELLANEOUS
48
12.1 Governing Law; Jurisdiction; Service of Process; Venue
The Loan Documents shall be governed by and construed in accordance
with the internal laws of the State of Maryland without giving effect to its
choice of law provisions. Any judicial proceeding against any Borrower with
respect to the Obligations, any Loan Document or any related agreement may be
brought in any federal or state court of competent jurisdiction located in the
State of Maryland. By execution and delivery of each Loan Document to which it
is a party, each Borrower (i) accepts the non-exclusive jurisdiction of the
aforesaid courts and irrevocably agrees to be bound by any judgment rendered
thereby, (ii) waives personal service of process, (iii) agrees that service of
process upon it may be made by certified or registered mail, return receipt
requested, pursuant to Section 12.5 hereof, and (iv) waives any objection to
jurisdiction and venue of any action instituted hereunder and agrees not to
assert any defense based on lack of jurisdiction, venue, convenience or forum
non conveniens. Nothing shall affect the right of Agent or any Lender to serve
process in any manner permitted by law or shall limit the right of Agent or any
Lender to bring proceedings against any Borrower in the courts of any other
jurisdiction having jurisdiction. Any judicial proceedings against Agent or any
Lender involving, directly or indirectly, the Obligations, any Loan Document or
any related agreement shall be brought only in a federal or state court located
in the State of Maryland. All parties acknowledge that they participated in the
negotiation and drafting of this Agreement with the assistance of counsel and
that, accordingly, no party shall move or petition a court construing this
Agreement to construe it more stringently against one party than against any
other.
12.2 Successors and Assigns; Assignments and Participations
(a) Each Lender may at any time assign all or a portion of its rights
and delegate all or a portion of its obligations under this Agreement and the
other Loan Documents (including all its rights and obligations with respect to
the Loans) to one or more Persons (a "Transferee"); provided, that such
Transferee and such assigning Lender shall execute and deliver to Agent for
acceptance and recording in the Register, a Lender Addition Agreement. Upon such
execution, delivery, acceptance and recording, from and after the effective date
determined pursuant to such Lender Addition Agreement, (i) the Transferee
thereunder shall be a party hereto and, to the extent provided in such Lender
Addition Agreement, have the same rights, benefits and obligations as it would
if it were a Lender hereunder, (ii) the assigning Lender shall be relieved of
its obligations hereunder with respect to its Commitment or assigned portion
thereof, as the case may be, to the extent that such obligations shall have been
expressly assumed by the Transferee pursuant to such Lender Addition Agreement
(and, in the case of a Lender Addition Agreement covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto but shall nevertheless
continue to be entitled to the benefits of Sections 12.4 and 12.7). Each
Borrower hereby acknowledges and agrees that any assignment will give rise to a
direct obligation of any Borrower to the Transferee and that the Transferee
shall be considered to be a "Lender" hereunder. No Borrower may sell, assign or
transfer any interest in this Agreement, any of the other Loan Documents, or any
of the Obligations, or any portion thereof, including any Borrower's rights,
title, interests, remedies, powers, and duties hereunder or thereunder.
(b) Each Lender may at any time sell participations in all or any part
of its rights and obligations under this Agreement and the other Loan Documents
(including all its rights and obligations with respect to the Loans) to one or
more Persons (a "Participant"). In the event of any such sale by a Lender of a
participation to a Participant, such Lender's obligations under this Agreement
to the other parties to this Agreement shall remain unchanged, such Lender shall
remain solely responsible for the performance thereof, such Lender shall remain
the holder of any such Loan (and any Note evidencing such Loan) for all purposes
under this Agreement and the other Loan Documents and the Borrowers and the
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and the other
Loan Documents. Any agreement pursuant to
49
which any Lender shall sell any such participation shall provide that such
Lender shall retain the sole right and responsibility to exercise such Lender's
rights and enforce each Borrower's obligations hereunder, including the right to
consent to any amendment, supplement, modification or waiver of any provision of
this Agreement or any of the other Loan Documents; provided, that such
participation agreement may provide that such Lender will not agree, without the
consent of the Participant, to any amendment, supplement, modification or waiver
of: (i) any reduction in the principal amount, interest rate or fees payable
with respect to any Loan in which such holder participates; (ii) any extension
of the termination date of this Agreement or the date fixed for any payment of
principal, interest or fees payable with respect to any Loan in which such
holder participates; and (iii) any release of all or substantially all of the
Collateral (other than in accordance with the terms of this Agreement or the
Loan Documents). Each Borrower hereby acknowledges and agrees that the
Participant under each participation shall, solely for the purposes of Sections
10.5(b) and (c), 12.4 and 12.7 of this Agreement be considered to be a "Lender"
hereunder.
(c) The Agent, on behalf of the Borrowers, shall maintain at its
address referred to in Section 12.5 a copy of each Lender Addition Agreement
delivered to it and a written or electronic register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
the principal amount of the Loans owing to, and the Notes evidencing such Loans
owned by, each Lender from time to time. Notwithstanding anything in this
Agreement to the contrary, each of the Borrowers, the Agent and the Lenders
shall treat each Person whose name is recorded in the Register as the owner of
the Loans, the Notes and the Commitment recorded therein for all purposes of
this Agreement. The Register shall be available for inspection by the Borrowers
or any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) Notwithstanding anything in this Agreement to the contrary, no
assignment under subsection 12.2(a) of any rights or obligations under or in
respect of the Loans or the Notes evidencing such Loans shall be effective
unless and until the Agent shall have recorded the assignment pursuant to
subsection 12.2(c). Upon its receipt of a Lender Addition Agreement executed by
an assigning Lender and an Transferee, the Agent shall (i) promptly accept such
Lender Addition Agreement and (ii) on the effective date determined pursuant
thereto record the information contained therein in the Register and give prompt
notice of such acceptance and recordation to the Lenders and the Borrowers. On
or prior to such effective date, the assigning Lender shall surrender any
outstanding Notes held by it all or a portion of which are being assigned, and
the Borrowers, at their own expense, shall, upon the request of the Agent by the
assigning Lender or the Transferee, as applicable, execute and deliver to the
Agent, within five (5) Business Days of any request, new Notes to reflect the
interest held by the assigning Lender and its Transferee.
(e) Except as otherwise provided in this Section 12.2 no Lender shall,
as between Borrowers and that Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of participation in, all or any part of the Loans or other Obligations
owed to such Lender. Each Lender may furnish any information concerning
Borrowers and their Subsidiaries in the possession of that Lender from time to
time to assignees and participants (including prospective assignees and
participants), subject to confidentiality requirements hereunder.
(f) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement, including, without limitation, the Loans owing
to it and the Notes held by it and the other Loan Documents and Collateral.
50
(g) Borrowers agree to use commercially reasonable best efforts to
cooperate with and to take all actions reasonably requested by any Lender in
assigning or selling participations in all or any part of any Loans made by such
Lender to another Person identified by such Lender.
(h) Notwithstanding anything in the Loan Documents to the contrary,
(i) CapitalSource and its Affiliates shall not be required to execute and
deliver a Lender Addition Agreement in connection with any transaction involving
its Affiliates, lenders, or financing or funding sources, (ii) no lender to or
financing or funding source of CapitalSource or its Affiliates shall be
considered a Transferee and (iii) there shall be no limitation or restriction on
(A) CapitalSource's ability to assign or otherwise transfer any Loan Document or
Obligation to any such Affiliate or lender or financing or funding source,
and/or (B) any such Affiliate's or lender's or financing or funding source's
ability to assign or otherwise transfer any Loan Document or Obligation;
provided, however, CapitalSource shall continue to be liable as a "Lender" under
the Loan Documents unless such Affiliate or lender executes a Lender Addition
Agreement and thereby becomes a "Lender."
(i) The Loan Documents shall inure to the benefit of each Lender,
Agent, Transferees, Participants (to the extent expressly provided therein only)
and all future holders of the Note, the Obligations and/or any of the
Collateral, and each of their respective successors and assigns. Each Loan
Document shall be binding upon the Persons other than Lender and Agent that are
parties thereto and their respective successors and assigns, and no such Person
may assign, delegate or transfer any Loan Document or any of its rights or
obligations thereunder without the prior written consent of Agent. No rights are
intended to be created under any Loan Document for the benefit of any third
party donee, creditor or incidental beneficiary of Borrower or any Guarantor.
Nothing contained in any Loan Document shall be construed as a delegation to
Agent or any Lender of any other Person's duty of performance. BORROWERS
ACKNOWLEDGE AND AGREE THAT AGENT OR ANY LENDER AT ANY TIME AND FROM TIME TO TIME
MAY (I) DIVIDE AND REISSUE (WITHOUT SUBSTANTIVE CHANGES OTHER THAN THOSE
RESULTING FROM SUCH DIVISION) THE NOTES, AND/OR (II) SELL, ASSIGN OR GRANT
PARTICIPATING INTERESTS IN OR TRANSFER ALL OR ANY PART OF ITS RIGHTS OR
OBLIGATIONS UNDER ANY LOAN DOCUMENT, NOTE, THE OBLIGATIONS AND/OR THE COLLATERAL
TO OTHER PERSONS, IN EACH CASE ON THE TERMS AND CONDITIONS PROVIDED HEREIN. Each
Transferee and Participant shall have all of the rights and benefits with
respect to the Obligations, Notes, Collateral and/or Loan Documents held by it
as fully as if the original holder thereof, provided that, notwithstanding
anything to the contrary in any Loan Document, no Borrower shall be obligated to
pay under this Agreement to any Transferee or Participant any sum in excess of
the sum which it would have been obligated to pay to Lenders had such
participation not been effected. Notwithstanding any other provision of any Loan
Document, Agent and Lenders may disclose to any Transferee or Participant all
information, reports, financial statements, certificates and documents obtained
under any provision of any Loan Document; provided, that Transferees and
Participants shall be subject to the confidentiality provisions contained herein
that are applicable to Agent and Lenders.
12.3 Application of Payments
To the extent that any payment made or received with respect to the
Obligations is subsequently invalidated, determined to be fraudulent or
preferential, set aside, defeased, or required to be repaid to a trustee, debtor
in possession, receiver, custodian or any other Person under any Debtor Relief
Law, common law or equitable cause or any other law, then this Agreement and the
Obligations intended to be satisfied by such payment shall be revived and
renewed and shall continue as if such payment had not been received by Agent or
any Lender and the Liens created hereby shall be renewed and renewed
automatically without any action on the part of any party hereto and shall
continue as if such payment had not been received by Agent or any Lender. Except
as specifically provided in this Agreement, any
51
payments with respect to the Obligations received shall be credited and applied
in such manner and order as Agent shall decide in its sole discretion.
12.4 Indemnity
Borrowers, jointly and severally, shall indemnify Agent and each
Lender, their respective Affiliates and managers, members, directors,
principals, officers, employees, Affiliates, agents, representatives,
successors, assigns, accountants and attorneys (collectively, the "Indemnified
Persons") from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, reasonable fees
and disbursements of counsel and in-house documentation and diligence fees and
legal expenses) which may be imposed on, incurred by or asserted against any
Indemnified Person with respect to or arising out of, or in any litigation,
proceeding or investigation instituted or conducted by any Person with respect
to any aspect of, or any transaction contemplated by, or any matter related to,
any Loan Document or any agreement, document or transaction contemplated
thereby, whether or not such Indemnified Person is a party thereto, except to
the extent that a final and nonappealable order of judgment binding on such
Indemnified Person of a court of competent jurisdiction determines that any of
the foregoing arises out of the fraud, gross negligence or willful misconduct of
such Indemnified Person. If any Indemnified Person uses in-house counsel for any
purpose for which Borrowers are responsible to pay or indemnify, Borrowers
expressly agree that their indemnification obligations include reasonable
charges for such work commensurate with the fees that would otherwise be charged
by outside legal counsel selected by such Indemnified Person in its sole
discretion for the work performed. Agent agrees to give Borrowers prompt notice
of any event of which Agent becomes aware for which indemnification may be
required under this Section 12.4, and Agent may elect (but is not obligated) to
direct the defense thereof; provided, that the selection of counsel shall be
subject to Borrower's consent, which consent shall not be unreasonably withheld
or delayed, and Borrower shall be entitled to participate in the defense of any
matter for which indemnification may be required under this Section 12.4 and to
employ counsel at its own expense to assist in the handling of such matter. Any
Indemnified Person may, in its reasonable discretion, take such actions as it
deems necessary and appropriate to investigate, defend or settle any event or
take other remedial or corrective actions with respect thereto as may be
necessary for the protection of such Indemnified Person or the Collateral,
subject to Borrower's prior approval of any settlement, which shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, if any insurer
agrees to undertake the defense of an event (an "Insured Event"), Agent agrees
not to exercise its right to select counsel to defend the event if that would
cause Borrower's insurer to deny coverage; provided, however, that Agent
reserves the right to retain counsel to represent any Indemnified Person with
respect to an Insured Event at its sole cost and expense. To the extent that
Agent or any Lender obtains recovery from a third party other than an
Indemnified Person of any of the amounts that Borrowers have paid to Agent or
any Lender pursuant to the indemnity set forth in this Section 12.4, then Agent
and/or Lender shall promptly pay to Borrowers the amount of such recovery.
Without limiting any of the foregoing, Borrowers, jointly and severally,
indemnify the Indemnified Parties for all claims for brokerage fees or
commissions (other than claims of a broker with whom such Indemnified Party has
directly contracted in writing) which may be made in connection with any aspect
of, or any transaction contemplated by or referred to in, or any matter related
to, any Loan Document.
12.5 Notice
Any notice or request under any Loan Document shall be given to any
party to this Agreement at such party's address set forth beneath its signature
on the signature page to this Agreement, or at such other address as such party
may hereafter specify in a notice given in the manner required under this
Section 12.5. Any notice or request hereunder shall be given only by, and shall
be deemed to have been received upon (each, a "Receipt"): (i) registered or
certified mail, return receipt requested, on the date on which such received as
indicated in such return receipt, (ii) delivery by a nationally
52
recognized overnight courier, one (1) Business Day after deposit with such
courier, or (iii) facsimile or electronic transmission, in each case upon
telephone or further electronic communication from the recipient acknowledging
receipt (whether automatic or manual from recipient), as applicable.
12.6 Severability; Captions; Counterparts; Facsimile Signatures
If any provision of any Loan Document is adjudicated to be invalid
under applicable laws or regulations, such provision shall be inapplicable to
the extent of such invalidity without affecting the validity or enforceability
of the remainder of the Loan Documents which shall be given effect so far as
possible. The captions in the Loan Documents are intended for convenience and
reference only and shall not affect the meaning or interpretation of the Loan
Documents. The Loan Documents may be executed in one or more counterparts (which
taken together, as applicable, shall constitute one and the same instrument) and
by facsimile transmission, which facsimile signatures shall be considered
original executed counterparts. Each party to this Agreement agrees that it will
be bound by its own facsimile signature and that it accepts the facsimile
signature of each other party.
12.7 Expenses
Except for brokerage fees or commissions owed by Agent or Lenders to
brokers with whom Agent, Lenders and/or their Affiliates have contracted with
respect to the transactions contemplated by the Loan Documents, Borrowers shall
pay, whether or not the Closing occurs, all costs and expenses incurred by
Agent, Lenders and/or their Affiliates, including, without limitation,
documentation and diligence fees and expenses, all search, audit, appraisal,
recording, professional and filing fees and expenses and all other out-of-pocket
charges and expenses (including, without limitation, UCC and judgment and tax
lien searches and UCC filings and fees for post-Closing UCC and judgment and tax
lien searches and wire transfer fees and audit expenses), and reasonable
attorneys' fees and expenses, (i) in any effort to enforce, protect or collect
payment of any Obligation or to enforce any Loan Document or any related
agreement, document or instrument, (ii) in connection with entering into,
negotiating, preparing, reviewing and executing the Loan Documents and/or any
related agreements, documents or instruments, (iii) arising in any way out of
administration of the Obligations or the taking or refraining from taking by
Agent or Lender of any action requested by any Borrower, (iv) in connection with
instituting, maintaining, preserving, enforcing and/or foreclosing on Agent's,
for the benefit of itself and Lenders, Liens in any of the Collateral or
securities pledged under the Loan Documents, whether through judicial
proceedings or otherwise, (v) in defending or prosecuting any actions, claims or
proceedings arising out of or relating to Agent's and/or Lenders' transactions
with any Borrower, (vi) in seeking, obtaining or receiving any advice with
respect to its rights and obligations under any Loan Document and any related
agreement, document or instrument, (vii) arising out of or relating to any
Default or Event of Default or occurring thereafter or as a result thereof,
(viii) in connection with all actions, visits, audits and inspections undertaken
by Agent or Lenders or their Affiliates pursuant to the Loan Documents, and/or
(ix) in connection with any modification, restatement, supplement, amendment,
waiver or extension of any Loan Document and/or any related agreement, document
or instrument. All of the foregoing shall be charged to Borrowers' account and
shall be part of the Obligations. If Agent, any Lender or any of their
Affiliates uses in-house counsel for any purpose under any Loan Document for
which Borrowers are responsible to pay or indemnify, Borrowers expressly agree
that their Obligations include reasonable charges for such work commensurate
with the fees that would otherwise be charged by outside legal counsel selected
by Agent, such Lender or such Affiliate in its sole discretion for the work
performed. Without limiting the foregoing, Borrowers shall pay all taxes (other
than taxes based upon or measured by each Lender's income or revenues or any
personal property tax), if any, in connection with the issuance of any Note and
the filing and/or recording of any documents and/or financing statements.
12.8 Entire Agreement
53
This Agreement and the other Loan Documents to which Borrowers are
parties constitute the entire agreement between Borrowers, Agent and Lenders
with respect to the subject matter hereof and thereof, and supersede all prior
agreements and understandings (including but not limited to the commitment
letter dated January 24, 2003 between Covista and CapitalSource), if any,
relating to the subject matter hereof or thereof. Any promises, representations,
warranties or guarantees not herein contained and hereinafter made shall have no
force and effect unless in writing signed by all Borrowers, Agent and Lenders or
Requisite Lenders, as appropriate. Except as set forth in and subject to Section
10.5, no provision of any Loan Document may be changed, modified, amended,
restated, waived, supplemented, discharged, canceled or terminated orally or by
any course of dealing or in any other manner other than by an agreement in
writing signed by all Borrowers, Agent and Requisite Lenders; provided, that no
consent or agreement by any Borrower shall be required to amend, modify, change,
restate, waive, supplement, discharge, cancel or terminate any provision of
Article 11-A so long as no additional duties are required to be assumed by
Borrowers. Each party hereto acknowledges that it has been advised by counsel in
connection with the negotiation and execution of this Agreement and is not
relying upon oral representations or statements inconsistent with the terms and
provisions hereof. The schedules attached hereto may be amended or supplemented
by Borrowers upon delivery to Agent of such amendments or supplements and,
except as expressly provided otherwise in this Agreement, the written approval
thereof by Agent.
12.9 Approvals and Duties
Unless expressly provided herein to the contrary, any approval,
consent, waiver or satisfaction of Agent or Lenders with respect to any matter
that is subject of any Loan Document may be granted or withheld by Agent or
Lenders, as applicable, in their sole and absolute discretion. Other than
Agent's duty of reasonable care with respect to Collateral delivered pursuant to
the Pledge Agreements, Agent and Lenders shall have no responsibility for or
obligation or duty with respect to any of the Collateral or any matter or
proceeding arising out of or relating thereto, including, without limitation,
any obligation or duty to collect any sums due in respect thereof or to protect
or preserve any rights pertaining thereto.
12.10 Confidentiality and Publicity
Each Borrower agrees, and agrees to cause each of its Affiliates, (i)
except to the extent required by applicable laws or regulations (in which case
such Borrower shall, and shall cause its Affiliates to, request and use its best
efforts to obtain confidential treatment of such information to the extent
permitted by applicable law), not to transmit or disclose any provision of any
Loan Document to any Person (other than to such Borrower's directors, advisors,
officers, shareholders, and investors on a need-to-know basis) without Agent's
prior written consent, and (ii) to inform all Persons of the confidential nature
of the Loan Documents and to direct them not to disclose the same to any other
Person and to require each of them to be bound by these provisions. Agent and
each Lender reserve the right to review and approve all materials that any
Borrower or any of its Affiliates prepares that contain Agent's or such Lender's
name or describe or refer to any Loan Document, any of the terms thereof or any
of the transactions contemplated thereby (other than materials prepared solely
for such Borrower's internal use and which are not disclosed to any other
Person). No Borrower shall, nor shall any permit Borrower any of its Affiliates
to, use either Agent's or any Lender's name (or the name of any of Agent's or
any Lenders' Affiliates) in connection with any of its business operations,
provided, that Borrowers may disclose the Lenders' names, the aggregate
principal amount of the Loans outstanding and other principal terms of such
Loans to their shareholders and other equity owners and prospective purchasers
of debt or equity securities of Borrowers so long as Borrowers inform such
prospective purchasers of the confidential nature of such information and such
Persons agree in writing not to disclose the same to any other Person and to be
bound by the confidentiality provisions of this Agreement. Nothing contained in
any Loan Document is intended to permit or authorize any Borrower or any of its
Affiliates to contract on
54
behalf of Agent or any Lender. Borrowers agree that Agent or any Affiliate of
Agent may (i) disclose a general description of transactions arising under the
Loan Documents for advertising, marketing or other similar purposes, and (ii)
use any Borrower's name, logo or other indicia germane to such party in
connection with such advertising, marketing or other similar purposes.
12.11 Release of Collateral
Subject to Section 12.3, promptly following full performance and
satisfaction and indefeasible payment in full in cash of all Obligations and the
termination of this Agreement, the Liens created hereby shall terminate and
Agent and Lenders shall execute and deliver such documents, at Borrowers'
expense, as are necessary to release Lenders' Liens in the Collateral and shall
return the Collateral to Borrowers; provided, however, that the parties agree
that, notwithstanding any such termination or release or the execution, delivery
or filing of any such documents or the return of any Collateral, if and to the
extent that any such payment made or received with respect to the Obligations is
subsequently invalidated, determined to be fraudulent or preferential, set
aside, defeased or required to be repaid to a trustee, debtor in possession,
receiver, custodian or any other Person under any Debtor Relief Law, common law
or equitable cause or any other law, then this Agreement and the Obligations
intended to be satisfied by such payment shall be revived and shall continue as
if such payment had not been received by Agent or any Lender and the Liens
created hereby shall be revived automatically without any action on the part of
any party hereto and shall continue as if such payment had not been received by
Agent or any Lender Agent and Lenders shall not be deemed to have made any
representation or warranty with respect to any Collateral so delivered except
that such Collateral is free and clear, on the date of such delivery, of any and
all Liens arising from such Person's own acts.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
55
Signature Page To Revolving Credit And Security Agreement
IN WITNESS WHEREOF, each of the parties has duly executed this Revolving
Credit and Security Agreement as of the date first written above.
BORROWERS: COVISTA COMMUNICATIONS, INC.
By:
-------------------------------------------------
Name: A. ▇▇▇▇ ▇▇▇▇▇., Jr.
Title: President
Maclellan Building, Second Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: A. ▇▇▇▇ ▇▇▇▇▇., Jr.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
E-MAIL: ▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
CAPSULE COMMUNICATIONS, INC.,
COVISTA OF VIRGINIA, INC.,
TOTAL-TEL SOUTHEAST, INC.,
TOTALTEL ENHANCED SERVICES, INC.,
TOTALTEL SARASOTA, INC.,
TOTALTEL INTERNATIONAL, INC.,
COVISTA CARRIER SERVICES, INC.,
COVISTA, INC.,
MADATRON CORPORATION
MANSOL TOOL CORPORATION,
GAYSHEN CORP., and
COVISTA OF NEW YORK, INC.
By:
-------------------------------------------------
Name: A. ▇▇▇▇ ▇▇▇▇▇., Jr.
Title: President
Maclellan Building, Second Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: A. ▇▇▇▇ ▇▇▇▇▇., Jr.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
E-MAIL: ▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
58
AGENT AND LENDER: CAPITALSOURCE FINANCE LLC
By:
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Associate General Counsel
CapitalSource Finance LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Finance Group, Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
E-MAIL: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
59
ANNEXES
Annex I Financial Covenants
Annex II Additional Reporting Requirements
EXHIBITS
Exhibit A Borrowing Certificate
Exhibit B Form of Opinion of Regulatory Counsel
SCHEDULES
Schedule A Lenders/Commitments
Schedule 2.4 Borrowers' Account
Schedule 5.1 Organization and Authority
Schedule 5.2 Consents to Loan Documents
Schedule 5.3 Subsidiaries, Capitalization and Ownership Interests
Schedule 5.4 Properties
Schedule 5.6 Litigation
Schedule 5.8 Tax Returns; Governmental Reports
Schedule 5.11 Intellectual Property
Schedule 5.12 Licenses and Permits; Labor
Schedule 5.15 Existing Indebtedness; Investments, Guaranties and Certain Contracts
Schedule 5.16 Affiliated Agreements
Schedule 5.17 Insurance
Schedule 5.18A Names
Schedule 5.18B Location of Offices, Records and Collateral
Schedule 5.18C Deposit Accounts and Investment Property
Schedule 6.8 Further Assurances and Post Closing Deliverables
Schedule 7.2 Permitted Indebtedness
Schedule 7.3 Permitted Liens
"Broker Schedule" Broker's, Finder's or Placement Fees
"Affiliate Lease Schedule" Affiliate Lease Payments
Schedule 6.8
Further Assurances and Post Closing Deliverables
In accordance with and in furtherance of the provisions of Section 6.8 of the
Agreement, the following actions, items and deliverables will be completed,
taken and/or delivered to Agent's satisfaction on or before the date specified
below. The failure to take, comply with or provide any of the actions or items
referred to herein on or before such date shall constitute and be deemed an
Event of Default under the Agreement. Nothing in this Schedule 6.8 shall limit
the effect of any provision of the Agreement or Credit Parties' obligations
thereunder. Capitalized terms not otherwise defined in this Schedule 6.8 shall
have the same meaning as in the Agreement.
1. Terminations/Releases of Liens. On or before May 16, 2003, Borrower
shall provide to Agent filed a copy of the following termination
statement and release of liens in form and substance satisfactory to
Agent in its Permitted Discretion
------------------------------------------------------------------------------
Secured Party Jurisdiction File No. Debtor
------------------------------------------------------------------------------
DSC Marketing Services, Inc. Pennsylvania 29160736 U.S. Wats, Inc.
Secretary of State
------------------------------------------------------------------------------
2. Control Account Agreements.
(a) On or before May 16, 2003, Borrower shall have delivered to Agent
an executed Control Account Agreement between Borrowers, Agent and
Greater Community Bank governing any and all of Borrower's bank or
other depository accounts with such bank, in form and substance
satisfactory to Agent in its Permitted Discretion.
(b) On or before June 2, 2003, Borrower shall have either (i) provided
to Agent satisfactory evidence (in Agent's Permitted Discretion) that
any and all of Borrower's bank or other depository accounts with
Wachovia Bank, National Association, First Union National Bank, or any
predecessor, successor or other Affiliate of any of the foregoing,
have been closed, or (ii) delivered to Agent an executed Control
Account Agreement between Borrowers, Agent and Wachovia Bank governing
any and all of Borrower's bank or other depository accounts with such
bank, in form and substance satisfactory to Agent in its Permitted
Discretion.
3. Dissolutions.
(a) On or before June 16, 2003, Borrower shall either (i) provide to
Agent satisfactory evidence in Agent's Permitted Discretion of the
dissolution of Carriers Group, Inc. and USW Corp., each an Affiliate
of the Borrower, or (ii) take all actions necessary to make each of
Carriers Group, Inc. and USW Corp. a Borrower under the Loan Documents
(including, without limitation, providing to Agent all documents,
agreements or instruments requested in connection therewith by Agent
in its sole and absolute discretion).
(b) On or before June 16, 2003, Borrower shall provide to Agent
satisfactory evidence (in Agent's Permitted Discretion) of the
dissolution of each of the following Affiliates of the Borrower:
Digipak Corporation, Payless Telecom Inc., and TotalTel Florida, Inc.
4. Good Standing Certificates and Foreign Qualifications.
(a) On or before April 30, 2003, Borrower shall deliver to Agent an
original certificate from the Secretary of State of Delaware
indicating that Capsule Communications, Inc. is in good standing in
such jurisdiction.
(b) On or before May 16, 2003:
(i) Borrower shall deliver to Agent an original certificate from
the Secretary of State of New Jersey indicating that Covista, Inc. is
in good standing in such jurisdiction.
(ii) Borrower shall deliver to Agent an original certificate from
the Secretary of State of New Jersey indicating that Capsule
Communications, Inc. is authorized to do business as a foreign
corporation and is otherwise in good standing in such jurisdiction.
(iii) Borrower shall deliver to Agent an original certificate
from the Secretary of State of New York indicating that Covista of New
York, Inc. is authorized to do business as a foreign corporation and
is otherwise in good standing in such jurisdiction.
5. Life Insurance. On or before May 16, 2003, Borrower shall cause to be
delivered to Agent the Life Insurance Policy on A. ▇▇▇▇ ▇▇▇▇▇, Jr. and
an executed Collateral Assignment of Life Insurance Policy naming
Agent, for itself and the benefit of Lenders, as sole beneficiary
under the Life Insurance Policy.
6. Financial Information. On or before May 16, 2003, Borrower shall
deliver to Agent annual projections of the Borrowers from the Closing
Date through the fiscal year ended January 31, 2005 and January 31,
2006, in form and substance acceptable to Agent.
7. Regulatory Opinion. On or before July 18, 2003, Borrower shall have
corrected all of the deficiencies reflected in the written legal
opinion of regulatory counsel delivered to Agent on the date hereof
and all other deficiencies with respect to any and all Permits and
shall have delivered to Agent a written legal opinion of regulatory
counsel for Borrowers (and Guarantors, if applicable), such opinion to
be in the form attached hereto as Exhibit B and otherwise satisfactory
to Agent in its sole and absolute discretion.
8. Original Stock Certificates and Original Stock Powers. No later than
Monday, April 21, 2003, Borrower shall have delivered to Agent
original executed stock certificates and stock powers for each of USW
Corp. and Carriers Group, Inc., in each case in form and substance
satisfactory to Agent in its sole and absolute discretion.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
ANNEX I
FINANCIAL COVENANTS
1) Cash Velocity
Collections of Borrowers' Accounts as of the last day of each month,
for the three (3) calendar month period then ending, shall not be less than (A)
eighty-five percent (85%), at any time prior to the first anniversary hereof,
and (B) ninety percent (90%), at any time on or after the first anniversary
hereof, of collections from Borrowers' Retail Accounts and KISSLD Accounts for
the three (3) calendar month period immediately prior to the three (3) calendar
month period being tested; provided, that the cash velocity test shall be
conducted on a monthly basis; and provided further, that upon any violation of
or failure to comply with this covenant Agent shall have the right, in its
Permitted Discretion, to consider for all purposes under this Agreement as
though Borrowers actually collected Retail Accounts and KISSLD Accounts equal to
such minimum required amount.
2) Fixed Charge Coverage Ratio
As of the date on which Borrowers are not subject to the Excess
Availability covenant described in paragraph (4) below, the Fixed Charge
Coverage Ratio shall not be less than 1.00 to 1.00 as of the last day of each
calendar month beginning with the first calendar month ending on or after the
date on which Borrowers are no longer subject to such Excess Availability
covenant.
3) Capital Expenditures
As of the date on which Borrowers are not subject to the Excess
Availability covenant described in paragraph (4) below, Borrowers shall be
prohibited from permitting their Capital Expenditures to exceed, in the
aggregate, $2,000,000.
4) Excess Availability
Borrowers shall maintain Excess Availability of at least $1,000,000
until such time as Borrowers' Fixed Charge Coverage Ratio is equal to or greater
than 1.00 to 1.00 as of the last day of each of three (3) consecutive calendar
months (as measured on a trailing twelve (12) month basis).
For purposes of the covenants set forth in this Annex I, the terms
listed below shall have the following meanings:
"Capital Expenditures" shall mean the sum (without duplication) of all
expenditures (whether paid in cash or accrued as liabilities) that are or are
required to be treated as capital expenditures under GAAP.
"EBITDA" shall mean the sum, without duplication, of the following:
Net Income determined in accordance with GAAP, plus, (a) Interest Expense, (b)
taxes on income, (c) depreciation expense, (d) amortization expense, (e) all
other non-cash, non-recurring charges and expenses approved by Agent in its
Permitted Discretion, excluding accruals for cash expenses made in the ordinary
course of business, (f) loss from any sale of assets, other than sales in the
ordinary course of
business, less (a) gain from any sale of assets, other than sales in the
ordinary course of business, and (b) all non-cash and/or non-recurring income,
all of the foregoing determined in accordance with GAAP.
"Excess Availability" shall mean, as determined by Agent in its
Permitted Discretion, (i) the lesser of (a) the Facility Cap and (b)
Availability, minus (ii) the outstanding balance of all Advances minus (iii) the
aggregate amount of all then outstanding and unpaid trade payables and other
obligations of the Borrowers which are outstanding more than sixty (60) days
past due as of such time (other than trade payables or other obligations being
contested or disputed by the Borrowers in good faith), minus (iv) without
duplication, the amount of checks issued by the Borrowers to pay trade payables
and other obligations which are more than sixty (60) days past due as of such
time (other than trade payables or other obligations being contested or disputed
by the Borrowers in good faith), but not yet sent and the book overdraft of the
Borrowers.
"Fixed Charge Coverage Ratio" shall mean, for Borrowers on a
consolidated basis, at any date of determination, the ratio of (a) EBITDA, minus
non-financed Capital Expenditures, minus income taxes paid in cash, to (b) Fixed
Charges, in each case for the twelve (12) months then ending taken as one
accounting period.
"Fixed Charges" shall mean the sum of the following for Borrowers, on
a consolidated basis: (a) Total Debt Service, (b) dividends and/or distributions
paid in cash, and (c) cash paid for stock repurchases and/or redemptions.
"Interest Expense" shall mean total interest expense generated during
the period in question (including attributable to conditional sales contracts,
Capital Leases and other title retention agreements in accordance with GAAP) of
Borrowers on a consolidated basis with respect to all outstanding Indebtedness
including accrued interest and payment-in-kind interest and capitalized interest
but excluding commissions, discounts and other fees owed with respect to letters
of credit and bankers' acceptance financing, and net costs under Interest Rate
Agreements.
"Interest Rate Agreement" shall mean any interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to hedge the
position with respect to interest rates.
"Net Income" shall mean the net income (or loss) of Borrowers on a
consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP; provided, that there shall be excluded (i)
the income (or loss) of any Person in which any other Person (other than
Borrowers) has a joint interest, except to the extent of the amount of dividends
or other distributions actually paid to any Borrower by such Person during such
period, (ii) the income (or loss) of any Person accrued prior to the date it
becomes a Borrower or is merged into or consolidated with a Borrower or that
Person's assets are acquired by a Borrower, (iii) the income of any Subsidiary
of any Borrower to the extent that the declaration or payment of dividends or
similar distributions of that income by that Subsidiary is not at the time
permitted by operation of the terms of the charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary, (iv) compensation expense resulting from the issuance of
capital stock, stock options or stock appreciation rights issued to former or
current employees, including officers, of a Borrower, or the exercise of such
options or rights, in each case to the extent the obligation (if any) associated
therewith is not expected to be settled by the payment of cash by a Borrower or
any Affiliate thereof, and (v) compensation expense resulting from the
repurchase of capital stock, options and rights described in clause (iv) of this
definition of Net Income.
"Total Debt" shall mean, at any date of determination, the total
Indebtedness of Borrowers on a consolidated basis, including, without
limitation, all Indebtedness under the Loan
Documents and all Subordinated Debt and all accrued interest on the foregoing,
including, without limitation, all payment-in-kind interest and all Capital
Leases, but excluding current operating liabilities. For all purposes of this
Agreement, the term "Total Debt" shall be calculated to include (i.e., not net
of) discounts, deductions or allocations relating or applicable to or arising
from any equity or equity participation or fees, whether under GAAP or
otherwise.
"Total Debt Service" shall mean the sum of (i) scheduled or other
required payments of principal on Total Debt, (ii) any other cash or fees due or
payable with respect to, in connection with or on Total Debt, and (iii) cash
Interest Expense.
ANNEX II
ADDITIONAL REPORTING REQUIREMENTS
As required pursuant to Section 6.1(b) of the Agreement, each Borrower
shall furnish to Agent as soon as available, and in any event within forty (40)
calendar days after the end of each calendar month for such month, all of the
following:
o New customer adds and customer losses by month, broken out
by Retail Account and Wholesale Account.
o Current month and rolling last twelve month summary of:
o minutes billed in relation to each of the
following:
o Retail Accounts;
o Wholesale Accounts, and
o KISSLD Accounts;
o Current month and rolling last twelve month
summary of price per minute in relation to each of
the following:
o Retail Accounts;
o Wholesale Accounts; and
o KISSLD Accounts;
o Consolidated cost per minute (for Retail Accounts,
Wholesale Accounts and KISSLD Accounts on a
combined basis); and
o Gross margin dollars and percentage per minute.
[Remainder of this page intentionally left blank]
APPENDIX A
DEFINITIONS
"Accommodation Payment" shall have the meaning assigned to it in
Section 3.7(c) hereof.
"Account Debtor" shall mean any Person who is obligated under an
Account.
"Accounts" shall mean all "accounts" (as defined in the UCC) of
Borrower (or, if referring to another Person, of such other Person), including
without limitation, accounts, accounts receivables, monies due or to become due
and obligations in any form (whether arising in connection with contracts,
Contract Rights, Instruments, General Intangibles or Chattel Paper), in each
case whether arising out of goods sold or services rendered or from any other
transaction and whether or not earned by performance, now or hereafter in
existence, and all documents of title or other documents representing any of the
foregoing, and all collateral security and guaranties of any kind, now or
hereafter in existence, given by any Person with respect to any of the
foregoing.
"Advances" shall mean a borrowing under the Revolving Facility. Any
amounts paid by Agent or any Lender on behalf of any Borrower or any Guarantor
under any Loan Document shall be an Advance for purposes of this Agreement.
"Affiliate" or "affiliate" shall mean, as to any Person, any other
Person (a) that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person, (b)
who is a director or officer (i) of such Person, (ii) of any Subsidiary of such
Person, or (iii) of any Person described in clause (a) above with respect to
such Person, or (c) which, directly or indirectly through one or more
intermediaries, is the beneficial or record owner (as defined in Rule 13d-3 of
the Securities Exchange Act of 1934, as amended, as the same is in effect on the
date hereof) of five percent (5%) or more of any class of the outstanding voting
stock, securities or other equity or ownership interests of such Person. For
purposes of this definition, the term "control" (and the correlative terms,
"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies, whether through ownership of securities or other
interests, by contract or otherwise.
"Affiliate Lease" shall mean any lease or similar agreement between
any Borrower and any Affiliate of any Borrower. For the avoidance of doubt, the
term "Affiliate Lease" shall include each lease noted on the Affiliate Lease
Schedule.
"Agreement" shall have the meaning assigned to it in the introductory
paragraph hereof.
"Allocable Amount" shall have the meaning assigned to it in Section
3.7(c) hereof.
"Applicable Rate" shall mean the interest rates applicable from time
to time to Loans and other Obligations under this Agreement.
"Availability" shall have the meaning given in Section 2.1 hereof.
"Bankruptcy Code" shall have the meaning assigned to it in Section
3.7(b) hereof.
"Blocked Accounts" shall mean the lockbox and accounts maintained by
Borrowers at the Lockbox Banks into which all collections or payments on their
Accounts and other Collateral and other cash payments received by Borrowers
(other than direct proceeds of Subordinated Debt) are paid pursuant to this
Agreement.
"Borrowing Base" shall mean, as of any date of determination, the net
collectible value of Eligible Receivables, as applicable, as determined with
reference to the most recent Borrowing Certificate and otherwise in accordance
with this Agreement; provided, however, that if as of such date the most recent
Borrowing Certificate is as of a date more than five (5) Business Days before or
after such date, the Borrowing Base shall be determined by Agent in its
Permitted Discretion.
"Borrowing Certificate" shall mean a Borrowing Certificate
substantially in the form of Exhibit A hereto.
"Borrowing Date" shall have the meaning assigned to it in Section 2.4
hereof.
"Business" shall have the meaning given such term in the recitals of
this Agreement.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which the Federal Reserve or Agent is closed.
"Capital Lease" shall mean, as to any Person, a lease of any interest
in any kind of property or asset by that Person as lessee that is, should be or
should have been recorded as a "capital lease" in accordance with GAAP.
"Capitalized Lease Obligations" shall mean all obligations of any
Person under Capital Leases, in each case, taken at the amount thereof accounted
for as a liability in accordance with GAAP.
"Cash Equivalent" shall mean (a) securities issued, or directly and
fully guaranteed or insured, by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six
months from the date of acquisition, (b) U.S. dollar denominated time deposits,
certificates of deposit and bankers' acceptances of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of
$500,000,000, or (ii) any bank (or the parent company of such bank) whose
short-term commercial paper rating from Standard & Poor's Ratings Services
("S&P") is at least A-2 or the equivalent thereof or from ▇▇▇▇▇'▇ Investors
Service, Inc. ("▇▇▇▇▇'▇") is at least P-2 or the equivalent thereof in each case
with maturities of not more than six months from the date of acquisition (any
bank meeting the qualifications specified in clauses (b)(i) or (ii), an
"Approved Bank"), (c) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (a), above,
entered into with any Approved Bank, (d) commercial paper issued by any Approved
Bank or by the parent company of any Approved Bank and commercial paper issued
by, or guaranteed by, any industrial or financial company with a short-term
commercial paper rating of at least A-2 or the equivalent thereof by S&P or at
least P-2 or the equivalent thereof by Moody's, or guaranteed by any industrial
company with a long term unsecured debt rating of at least A or A2, or the
equivalent of each thereof, from S&P or Moody's, as the case may be, and in each
case maturing within six months after the date of acquisition and (e)
investments in money market funds substantially all of whose assets are
comprised of securities of the type described in clauses (a) through (d) above.
"Change of Control" shall mean, with respect to any Borrower or any
Guarantor, if any, individually and/or collectively and/or any division or
business or operating units thereof, the occurrence of any of the following: (i)
a merger, consolidation, reorganization, recapitalization or share or interest
exchange, sale or transfer or any other transaction or series of transactions in
which its stockholders,
managers, partners, owners or interest holders immediately prior to such
transaction or series of transactions receive, in exchange for the stock or
interests owned by them, cash, property or securities of the resulting or
surviving entity or any Affiliate thereof, and, as a result thereof, Persons
who, individually or in the aggregate, were holders of 50% or more of its voting
stock, securities or equity, partnership or ownership interests immediately
prior to such transaction or series of transactions hold less than 50% of the
voting stock, securities or other equity, partnership or ownership interests of
the resulting or surviving entity or such Affiliate thereof, calculated on a
fully diluted basis, (ii) a direct or indirect sale, transfer or other
conveyance or disposition, in any single transaction or series of transactions,
of all or substantially all of its assets, (iii) a direct or indirect sale,
transfer or other conveyance or disposition, in any single transaction or series
of transactions, of all or substantially all of the equity ownership of any
Subsidiary thereof, (iv) the liquidation or dissolution of any Subsidiary
thereof, (v) any "change in/of control" or "sale" or "disposition" or similar
event as defined in any certificate or incorporation or formation or statement
of designations or operating agreement of any Borrower or Guarantor, if any, or
in any document governing indebtedness of such Person in excess of $100,000,
individually or in the aggregate which gives the holder of such indebtedness the
right to accelerate or otherwise require payment of such indebtedness prior to
the maturity date thereof, (vi) the consummation of an initial Public Offering,
(vii) ▇▇▇▇▇ ▇. ▇▇▇▇▇, III, ceases to be the record owner of 35% of the voting
power of Covista, calculated on a fully diluted basis, or ceases to have the
right to appoint or elect a majority of the board of managers/advisors of
Covista, or (viii) (A) ▇▇▇▇▇ ▇. ▇▇▇▇▇, III, ceases to be employed as Chairman of
the Board of Directors of Covista or becomes disabled and he is not replaced
within thirty (30) calendar days by an interim Chairman, and within 180 calendar
days by a permanent Chairman, each to Agent's satisfaction as determined in its
Permitted Discretion, or any such replacement Chairman ceases such employment or
otherwise becomes disabled unless replaced in the same time periods and to
Agent's satisfaction as determined in its Permitted Discretion, or (B) A. ▇▇▇▇
▇▇▇▇▇, Jr. ceases to be employed as Chief Executive Officer of Covista or become
disabled and he is not replaced within thirty (30) calendar days by an interim
Chief Executive Officer, and within 180 calendar days by a permanent Chief
Executive Officer, each to Agent's satisfaction as determined in its Permitted
Discretion, or any such replacement Chief Executive Officer ceases such
employment or otherwise becomes disabled unless replaced in the same time
periods and to Agent's satisfaction as determined in its Permitted Discretion.
"Charter and Good Standing Documents" shall mean, for each Borrower
(i) a copy of the certificate of incorporation or formation (or other charter
document) certified as of a date not more than five (5) Business Days before the
Closing Date by the applicable Governmental Authority of the jurisdiction of
incorporation or organization of such Borrower, (ii) a copy of the bylaws or
similar organizational documents of certified as of a date not more than five
(5) Business Days before the Closing Date by the corporate secretary or
assistant secretary of such Borrower, (iii) an original certificate of good
standing as of a date acceptable to Agent issued by the applicable Governmental
Authority of the jurisdiction of incorporation or organization of such Borrower
and of every other jurisdiction in which Borrower has an office or conducts
business or is otherwise required to be in good standing, and (iv) copies of the
resolutions of the Board of Directors or managers (or other applicable governing
body) and, if required, stockholders, members or other equity owners authorizing
the execution, delivery and performance of the Loan Documents to which Borrower
is a party, certified by an authorized officer of such Person as of the Closing
Date.
"Closing" shall mean the satisfaction, or written waiver by Agent, of
all of the conditions precedent set forth in this Agreement required to be
satisfied prior to the consummation of the transactions contemplated hereby.
"Closing Date" shall mean the date of this Agreement.
"Collateral" shall mean, collectively and each individually, all
collateral and/or security granted and/or securities pledged to Agent, for the
benefit of itself and Lenders, by Borrowers and/or
Guarantors, if any, pursuant to the Loan Documents including, without
limitation, the items set forth in Section 2.13 of this Agreement.
"Collateral Assignment of Life Insurance Policy" shall mean a
collateral assignment of the Life Insurance Policy whereby Borrowers shall
collaterally assign all of the Borrowers' rights in the Life Insurance Policy to
Agent for the benefit of Lenders, in forma and substance satisfactory to Agent
in its sole discretion.
"Collateral Management Fee" shall have the meaning assigned to it in
Section 3.3 hereof.
"Commitment" or "Commitments" shall mean, (a) as to any Lender, the
aggregate commitment of such Lender to make Advances as set forth on Schedule I
or the most recent Lender Addition Agreement executed by such Lender, and (b) as
to all Lenders, the aggregate commitment of all Lenders to make Advances, in
each case as the same may be reduced, modified or terminated pursuant to this
Agreement.
"Common Stock" shall mean the common shares, par value $0.05 per
share, of Covista.
"Computer Hardware and Software" shall mean all of Borrowers' rights
(including rights as licensee and lessee) with respect to (a) computer and other
electronic data processing hardware, including all integrated computer systems,
central processing units, memory units, display terminals, printers, computer
elements, card readers, tape drives, hard and soft disk drives, cables,
electrical supply hardware, generators, power equalizers, accessories,
peripheral devices and other related computer hardware; (b) all Software and all
software programs designed for use on the computers and electronic data
processing hardware described in clause (a) above, including all operating
system software, utilities and application programs in any form (source code and
object code in magnetic tape, disk or hard copy format or any other listings
whatsoever) and any other Software; (c) any firmware associated with any of the
foregoing; (d) any other Software; and (e) any documentation for or related to
hardware, Software and firmware described in clauses (a), (b), (c) and (d)
above, including flow charts, logic diagrams, manuals, specifications, training
materials, charts and pseudo codes.
"Concentration Account" shall have the meaning assigned to it in
Section 2.5 hereof.
"Contingent Obligations" shall mean, as to any Person, any obligation
of such Person guaranteeing or intending to guaranty any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (d) otherwise to assure or to hold harmless the
owner of such primary obligation against loss in respect thereof, provided,
however, that the term "Contingent Obligation" shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Contract Right" shall mean any right of any Borrower to payment under
a contract for the sale or lease of goods or the rendering of services, which
right is at the time not yet earned by performance.
"Copyrights" shall mean all of Borrowers' now existing or hereafter
acquired right, title, and interest in and to: (i) copyrights, rights and
interests in copyrights, works protectable by copyright, all applications,
registrations and recordings relating to the foregoing as may at any time be
filed in the United States Copyright Office or in any similar office or agency
of the United States, any State thereof, any political subdivision thereof or in
any other country, and all research and development relating to the foregoing;
and (ii) all renewals of any of the foregoing.
"Debtor Relief Law" shall mean, collectively, the Bankruptcy Code of
the United States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally, as amended from time to
time.
"Default" shall mean any event, fact, circumstance or condition that,
with the giving of applicable notice or passage of time or both, would
constitute or be or result in an Event of Default.
"Default Rate" shall have the meaning given such term in Section 3.7
of this Agreement.
"Deposit Account" shall mean, individually and collectively, any
Blocked Accounts and all bank or other depository accounts of any Borrower.
"Distribution" shall mean any fee, payment, bonus or other
remuneration of any kind, and any repayment of or debt service on loans or other
indebtedness.
"Document" has the meaning given such term in the UCC.
"Eligible Billed Receivables" shall mean each Account (other than
Eligible Unbilled Receivables, which Eligible Unbilled Receivables shall become
Eligible Billed Receivables only upon satisfaction of the terms of this
definition of Eligible Billed Receivables) arising in the ordinary course of any
Borrower's business from the sale of goods or rendering of services which Agent,
in its Permitted Discretion, deems an Eligible Billed Receivable unless:
(a) it is a Wholesale Account or a KISSLD Account;
(b) it is not subject to a valid perfected first priority security
interest in favor of Agent, for the benefit of itself and Lenders, subject to no
other lien other than Permitted Liens having a lower priority than the Liens of
Agent, for the benefit of itself and Lenders;
(c) it is not evidenced by an invoice, statement or other documentary
evidence satisfactory to Agent; provided, that Agent in its sole discretion may
from time to time include as Accounts that are not evidenced by an invoice,
statement or other documentary evidence satisfactory to Agent as Eligible Billed
Receivables and determine the advance rates, and reserves applicable to Advances
made on any such Accounts;
(d) it arises out of services rendered or sales made to, or out of any
other transaction between, among, or with, one or more Affiliates of such
Borrower and/or one or more Borrowers (i.e., between or among Borrowers);
(e) it remains unpaid for longer than the earlier of (i) sixty (60)
calendar days after the original due date, (ii) ninety (90) calendar days after
the original invoice date and (iii) 120 calendar days after the applicable
services were rendered or the applicable goods were sold;
(f) with respect to all Accounts owed by any particular Account Debtor
and/or its Affiliates, if more than 50% of the aggregate balance of all such
Accounts owing from such Account Debtor and/or its Affiliates remain unpaid for
longer than the earlier of (i) sixty (60) calendar days after the original due
date, (ii) ninety (90) calendar days after the original invoice date and (iii)
120 calendar days after the applicable services were rendered or the applicable
goods were sold;
(g) with respect to all Accounts owed by any particular Account Debtor
and/or its Affiliates, 50% or more of all such Accounts are not deemed Eligible
Billed Receivables for any reason hereunder (which percentage may, in Agent's
Permitted Discretion, be increased or decreased);
(h) with respect to all Accounts owed by any particular Account Debtor
and/or its Affiliates, if such Accounts exceed ten percent (10%) (such
percentage or any other percentage now or hereafter established for any
particular Account Debtor, a "Concentration Limit") of the net collectible
dollar value of all Accounts at any one time (but the portion of the Accounts
not in excess of the applicable percentages may be deemed Eligible Billed
Receivables, in Agent's Permitted Discretion);
(i) any covenant, agreement, representation or warranty contained in
any Loan Document with respect to such Account has been breached and remains
uncured;
(j) the Account Debtor for such Account has commenced a voluntary case
under any Debtor Relief Law or has made an assignment for the benefit of
creditors, or a decree or order for relief has been entered by a court having
jurisdiction in respect of such Account Debtor in an involuntary case under any
Debtor Relief Law, or any other petition or application for relief under any
Debtor Relief Law has been filed against such Account Debtor, or such Account
Debtor has failed, suspended business, ceased to be solvent, called a meeting of
its creditors, or has consented to or suffered a receiver, trustee, liquidator
or custodian to be appointed for it or for all or a significant portion of its
assets or affairs, or such Borrower, in the ordinary course of business, should
have known of any of the foregoing;
(k) it arises from the sale of property or services rendered to one or
more Account Debtors outside the continental United States or that have their
principal place of business or chief executive offices outside the continental
United States;
(l) it represents the sale of goods or rendering of services to an
Account Debtor on a ▇▇▇▇-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment or any other repurchase or return basis or is evidenced by
Chattel Paper or an Instrument of any kind or has been reduced to judgment;
(m) the applicable Account Debtor for such Account is any Governmental
Authority, unless rights to payment of such Account have been assigned to Agent,
for the benefit of itself and Lenders, pursuant to the Assignment of Claims Act
of 1940, as amended (31 U.S.C. Section 3727, et seq. and 41 U.S.C. Section 15,
et seq.), or otherwise all with applicable statutes or regulations respecting
the assignment of government Accounts have been complied with;
(n) it is subject to any offset, credit (including any resource or
other income credit or offset), deduction, defense, discount, chargeback,
freight claim, allowance, adjustment, dispute or counterclaim, or is contingent
in any respect or for any reason (but only to the extent of such offset, credit,
deduction, defense, discount, chargeback, freight claim, allowance, adjustment,
dispute or counterclaim or contingency);
(o) there is any agreement with an Account Debtor for any deduction
from such Account, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each invoice related thereto,
such that only the discounted amount of such Account after giving effect to such
discounts and allowances shall be considered an Eligible Billed Receivable;
(p) any return, rejection or repossession of goods or services related
to it has occurred;
(q) it is not payable to any Borrower;
(r) such Borrower has agreed to accept or has accepted any non-cash
payment for such Account;
(s) it constitutes a re-billing of an amount previously billed or
double billing (i.e., counted twice);
(t) it constitutes a billing for a sample;
(u) with respect to any Account arising from the sale of goods, the
goods have not been shipped to the Account Debtor or its designee;
(v) with respect to any Account arising from the performance of
services, the services have not been actually performed or the services were
undertaken in violation of any law;
(w) it is an Account that is subject to a surety bond, guaranty,
indemnity, or other similar arrangement;
(x) is an Account that is subject to collection actions or legal
process by such Borrower (other than the recording of a mechanics lien as
required by applicable law to avoid the lapse or expiration of the period of
time required to make such recording) or the Account Debtor for such Account is
otherwise subject to collection actions or legal process by such Borrower;
(y) the applicable Account Debtor for such Account is located in the
States of New Jersey, Minnesota, or West Virginia (or any other state that
requires a creditor to file a business activity report or similar document in
order to bring suit or otherwise enforce its remedies against such Account
Debtor in the courts or through any judicial process of such state), unless the
Borrower to whom such Account is owing has qualified to do business in New
Jersey, Minnesota, West Virginia, or such other states, or has filed a business
activities report with the applicable division of taxation, the department of
revenue, or with such other state offices, as appropriate, for the then-current
year, or is exempt from such filing requirement; or
(z) it fails to meet such other specifications and requirements which
may from time to time be established by Agent or is not otherwise satisfactory
to Agent, as determined in Agent's Permitted Discretion.
"Eligible Receivables" shall mean Eligible Billed Receivables and
Eligible Unbilled Receivables.
"Eligible Unbilled Receivables" shall mean each unbilled Account
(other than Eligible Billed Receivables) arising in the ordinary course of any
Borrower's business from the sale of goods or
rendering of services which Agent, in its Permitted Discretion, deems an
Eligible Unbilled Receivable unless:
(a) it is a Wholesale Account or a KISSLD Account;
(b) it is not subject to a valid perfected first priority security
interest in favor of Agent, for the benefit of itself and Lenders, subject to no
other lien other than Permitted Liens having a lower priority than the Liens of
Agent, for the benefit of itself and Lenders;
(c) it arises out of services rendered or sales made to, or out of any
other transaction between, among, or with, one or more Affiliates of such
Borrower and/or one or more Borrowers (i.e., between or among Borrowers);
(d) it remains unpaid for longer than the earlier of (i) sixty (60)
calendar days after the original due date, (ii) ninety (90) calendar days after
the original invoice date and (iii) 120 calendar days after the applicable
services were rendered or the applicable goods were sold;
(e) with respect to all Accounts owed by any particular Account Debtor
and/or its Affiliates, if more than 50% of the aggregate balance of all such
Accounts owing from such Account Debtor and/or its Affiliates remain unpaid for
longer than the earlier of (i) sixty (60) calendar days after the original due
date, (ii) ninety (90) calendar days after the original invoice date and (iii)
120 calendar days after the applicable services were rendered or the applicable
goods were sold;
(f) with respect to all Accounts owed by any particular Account Debtor
and/or its Affiliates, 50% or more of all such Accounts are not deemed Eligible
Unbilled Receivables for any reason hereunder (which percentage may, in Agent's
Permitted Discretion, be increased or decreased);
(g) with respect to all Accounts owed by any particular Account Debtor
and/or its Affiliates, if such Accounts exceed a ten percent (10%) Concentration
Limit of the net collectible dollar value of all Accounts at any one time (but
the portion of the Accounts not in excess of the applicable percentages may be
deemed Eligible Unbilled Receivables, in Agent's Permitted Discretion);
(h) any covenant, agreement, representation or warranty contained in
any Loan Document with respect to such Account has been breached and remains
uncured;
(i) the Account Debtor for such Account has commenced a voluntary case
under any Debtor Relief Law or has made an assignment for the benefit of
creditors, or a decree or order for relief has been entered by a court having
jurisdiction in respect of such Account Debtor in an involuntary case under any
Debtor Relief Law, or any other petition or application for relief under any
Debtor Relief Law has been filed against such Account Debtor, or such Account
Debtor has failed, suspended business, ceased to be solvent, called a meeting of
its creditors, or has consented to or suffered a receiver, trustee, liquidator
or custodian to be appointed for it or for all or a significant portion of its
assets or affairs, or such Borrower, in the ordinary course of business, should
have known of any of the foregoing;
(j) it arises from the sale of property or services rendered to one or
more Account Debtors outside the continental United States or that have their
principal place of business or chief executive offices outside the continental
United States;
(k) it represents the sale of goods or rendering of services to an
Account Debtor on a ▇▇▇▇-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment or any other repurchase or return basis or is evidenced by
Chattel Paper or an Instrument of any kind or has been reduced to judgment;
(l) the applicable Account Debtor for such Account is any Governmental
Authority, unless rights to payment of such Account have been assigned to Agent,
for the benefit of itself and Lenders, pursuant to the Assignment of Claims Act
of 1940, as amended (31 U.S.C. Section 3727, et seq. and 41 U.S.C. Section 15,
et seq.), or otherwise all with applicable statutes or regulations respecting
the assignment of government Accounts have been complied with;
(m) it is subject to any offset, credit (including any resource or
other income credit or offset), deduction, defense, discount, chargeback,
freight claim, allowance, adjustment, dispute or counterclaim, or is contingent
in any respect or for any reason (but only to the extent of such offset, credit,
deduction, defense, discount, chargeback, freight claim, allowance, adjustment,
dispute or counterclaim or contingency);
(n) there is any agreement with an Account Debtor for any deduction
from such Account, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each invoice related thereto,
such that only the discounted amount of such Account after giving effect to such
discounts and allowances shall be considered an Eligible Unbilled Receivable;
(o) any return, rejection or repossession of goods or services related
to it has occurred;
(p) it is not payable to any Borrower;
(q) such Borrower has agreed to accept or has accepted any non-cash
payment for such Account;
(r) it constitutes a re-billing of an amount previously billed or
double billing (i.e., counted twice);
(s) it constitutes a billing for a sample;
(t) with respect to any Account arising from the sale of goods, the
goods have not been shipped to the Account Debtor or its designee;
(u) with respect to any Account arising from the performance of
services, the services have not been actually performed or the services were
undertaken in violation of any law;
(v) it is an Account that is subject to a surety bond, guaranty,
indemnity, or other similar arrangement;
(w) is an Account that is subject to collection actions or legal
process by such Borrower (other than the recording of a mechanics lien as
required by applicable law to avoid the lapse or expiration of the period of
time required to make such recording) or the Account Debtor for such Account is
otherwise subject to collection actions or legal process by such Borrower;
(x) the applicable Account Debtor for such Account is located in the
States of New Jersey, Minnesota, or West Virginia (or any other state that
requires a creditor to file a business activity report or similar document in
order to bring suit or otherwise enforce its remedies against such Account
Debtor in the courts or through any judicial process of such state), unless the
Borrower to whom such Account is owing has qualified to do business in New
Jersey, Minnesota, West Virginia, or such other states, or has filed a business
activities report with the applicable division of taxation, the department of
revenue, or with such other state offices, as appropriate, for the then-current
year, or is exempt from such filing requirement; or
(y) it fails to meet such other specifications and requirements which
may from time to time be established by Agent or is not otherwise satisfactory
to Agent, as determined in Agent's Permitted Discretion.
"Environmental Laws" shall mean, collectively and each individually,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Superfund Amendment and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Clean Air
Act, the Clean Water Act, any other "Superfund" or "Superlien" law and all other
federal, state and local and foreign environmental, land use, zoning, health,
chemical use, safety and sanitation laws, statutes, ordinances and codes
relating to the protection of the environment and/or governing the use, storage,
treatment, generation, transportation, processing, handling, production or
disposal of Hazardous Substances, in each case, as amended, and the rules,
regulations, policies, guidelines, interpretations, decisions, orders and
directives of Governmental Authorities with respect thereto.
"Equipment" shall mean all "equipment" (as defined in the UCC) of
Borrowers (or, if referring to another Person, of such other Person), now owned
or hereafter acquired, and all documents of title or other documents
representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"Event of Default" shall mean the occurrence of any event set forth in
Article VIII.
"Facility Cap" shall have the meaning given such term in the recitals
of this Agreement as subject to adjustment by Agent as provided in Section
9.1(a) hereof.
"Fair Valuation" shall mean the determination of the value of the
consolidated assets of a Person on the basis of the amount which may be realized
by a willing seller within a reasonable time through collection or sale of such
assets at market value on a going concern basis to an interested buyer who is
willing to purchase under ordinary selling conditions in an arm's length
transaction.
"FCC" shall mean the Federal Communications Commission.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time as applied by nationally
recognized accounting firms.
"Governmental Authority" shall mean any federal, state, municipal,
national, local or other governmental department, court, commission, board,
bureau, agency or instrumentality or political subdivision thereof, or any
entity or officer exercising executive, legislative or judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case, whether of the United States or a state, territory or possession
thereof, a foreign sovereign entity or country or jurisdiction or the District
of Columbia, including but not limited to the Federal Communications Commission
and any similar state regulatory authority.
"Government Account" shall be defined to mean all Accounts arising out
of or with respect to any Government Contract.
"Government Contracts" shall mean all contracts with the United States
government or any other Governmental Authority or any agency of any of the
foregoing, and all amendments, modifications and supplements thereto.
"Guarantor" shall mean, collectively and each individually, all
guarantors, if any, of the Obligations or any part thereof, including, without
limitation, all Persons who execute a Guaranty.
"Guaranty" shall mean, collectively and each individually, all
guarantees executed by any Guarantors, if any, including, without limitation,
any guarantees set forth in any Pledge Agreement executed by any Person relating
to the securities of Borrowers or any of their respective Subsidiaries.
"Hazardous Substances" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in or subject to any applicable Environmental Law.
"Indebtedness" of any Person shall mean, without duplication, (a) all
items which, in accordance with GAAP, would be included in determining total
liabilities as shown on the liability side of the balance sheet of such Person
as of the date as of which Indebtedness is to be determined, including any lease
which, in accordance with GAAP would constitute Indebtedness, (b) all
indebtedness secured by any mortgage, pledge, security, Lien or conditional sale
or other title retention agreement to which any property or asset owned or held
by such Person is subject, whether or not the indebtedness secured thereby shall
have been assumed, (c) all indebtedness of others which such Person has directly
or indirectly guaranteed, endorsed (otherwise than for collection or deposit in
the ordinary course of business), discounted or sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, stock, equity or other ownership interest purchase, capital
contribution or otherwise) or otherwise to become directly or indirectly liable.
"Initial Advance" shall have the meaning given such term in Section
4.1.
"Intellectual Property" shall mean all present and future: trade
secrets, know-how and other proprietary information; Trademarks, internet domain
names, service marks, trade dress, trade names, business names, designs, logos,
slogans (and all translations, adaptations, derivations and combinations of the
foregoing) indicia and other source and/or business identifiers, and the
goodwill of the business relating thereto and all registrations or applications
for registrations which have heretofore been or may hereafter be issued thereon
throughout the world; Copyrights (including Copyrights for computer programs)
and all tangible and intangible property embodying the Copyrights, unpatented
inventions (whether or not patentable); Patents; industrial design applications
and registered industrial designs; license agreements related to any of the
foregoing and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software, source codes,
object codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any of the foregoing; the right
to ▇▇▇ for all past, present and future infringements of any of the foregoing;
all other intellectual property; and all common law and other rights throughout
the world in and to all of the foregoing.
"Intellectual Property Acknowledgement" shall mean that certain
Acknowledgement of Intellectual Property Collateral Lien executed by Borrowers
and/or Guarantors, if any, in favor of Agent, for the benefit of itself and
Lenders, as such may be modified, amended or supplemented from time to time.
"Inventory" shall mean all "inventory" (as defined in the UCC) of
Borrowers (or, if referring to another Person, of such other Person), now owned
or hereafter acquired, and all documents of title or other documents
representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"Joinder Agreement" shall mean an agreement in form and substance
acceptable to Agent in its Permitted Discretion, the material terms of which
shall provide that a Person shall become a party to and become bound by the
terms of this Agreement and/or any other Loan Document in the same capacity and
to the same extent as Borrower.
"KISSLD Account" shall mean each Account arising in the ordinary
course of any Borrower's business from the sale of goods or rendering of
services to, or out of any other transaction between, among or with, one or more
customers under the KISSLD Plan.
"KISSLD Plan" shall mean that certain plan governing those customer
Accounts which are secured via marketing through internet web site advertising,
direct mail and/or mailing lists requiring the end user to enroll via the
internet and secure payment for services with a credit card.
"Landlord Waiver and Consent" shall mean a waiver/consent in form and
substance satisfactory to Agent in its Permitted Discretion from the
owner/lessor of any premises not owned by Borrower at which any of the
Collateral is now or hereafter located for the purpose of providing Agent access
to such Collateral, in each case as such may be modified, amended or
supplemented from time to time.
"Leasehold Mortgage" shall mean, collectively, the Leasehold Mortgages
executed by the lessor and lessee of any property that is subject to an
Affiliate Lease which grants a security interest in such leases and incorporates
a Landlord Waiver and Consent therein, each in form and substance satisfactory
to Agent in its Permitted Discretion.
"Lender Addition Agreement" shall mean an agreement among Agent, a
Lender and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans and other interests under
this Agreement and the other Loan Documents, in form and substance acceptable to
Agent in its Permitted Discretion, it being agreed and understood that the
consent or approval of any Borrower shall not be required in connection with any
Lender Addition Agreement but may be obtained and shall be given by Borrowers
upon request of Agent.
"Lenders" shall mean the financial institutions, from time to time
named on Schedule A and their respective successors and permitted assigns (but
not, except as expressly set forth herein, any Participant that is not otherwise
a party to this Agreement).
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, transfer or other restriction, lien or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement or any lease in the nature thereof), or any
other arrangement pursuant to which title to the property is retained by or
vested in some other Person for security purposes.
"Life Insurance Policy" shall mean a current, valid and fully paid key
man life insurance policy insuring the life of A. ▇▇▇▇ ▇▇▇▇▇, Jr. (or, in the
case A. ▇▇▇▇ ▇▇▇▇▇, Jr. is no longer the chief executive officer of Covista, his
successor as chief executive officer) in the amount of $1,000,000.00 which,
until indefeasibly paid in full in cash of the Obligations and termination of
the Loan Documents, (i) names Agent, for the benefit of itself and the benefit
of Lenders, as the sole beneficiary, (ii) no other Person has any rights
thereto, (iii) is issued by a carrier and otherwise is in form and substance
acceptable
to Agent in its Permitted Discretion, and (iv) expressly provides that it cannot
be altered, amended or modified in any material respect (including, without
limitation, with respect to amounts of coverage, beneficiaries and/or loss
payees and additional insureds) or canceled without thirty (30) Business Days
prior written notice to Agent and that it inures to the benefit of Agent, for
the benefit of itself and the benefit of Lenders, notwithstanding any action or
omission or negligence of or by any Borrower or any Guarantor, if any, or any
insured thereunder.
"Loan" or "Loans" shall mean, individually and collectively, the
Revolving Facility and all Advances thereunder.
"Loan Documents" shall mean, collectively and each individually, this
Agreement, the Notes, the Security Documents, the Guarantees, if any, the Life
Insurance Policy and Collateral Assignment of Life Insurance Policy, the
Leasehold Mortgage, the Uniform Commercial Code financing statements, the
Landlord Waiver and Consents, the Borrowing Certificates and all other
agreements, documents, instruments and certificates heretofore or hereafter
executed or delivered to Agent or Lenders in connection with any of the
foregoing or the Loans, as the same may be amended, modified or supplemented
from time to time.
"Lockbox Agreement" shall have the meaning assigned to it in Section
2.5 hereof.
"Lockbox Bank" shall have the meaning assigned to it in Section 2.5
hereof.
"▇▇▇▇▇ Subordination Agreement" shall mean that certain subordination
agreement, dated as of the date hereof, between ▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Borrowers,
and Agent.
"Management Fee" shall mean any management or similar fees payable to
any Affiliate of any Borrower that are incurred by any Borrower, and costs and
expenses reimbursable therewith.
"Material Adverse Effect" or "Material Adverse Change" shall mean any
event, condition, obligation, liability, or circumstance or set of events,
conditions, obligations, liabilities or circumstances or any change(s) which (i)
has, had or could reasonably be expected to have any material adverse effect
upon or change in the validity or enforceability of any Loan Document, (ii) has
been or could reasonably be expected to be material and adverse to the value of
any of the Collateral or to the business, operations, properties, assets,
liabilities or condition of Borrowers and/or Guarantors, either individually or
taken as a whole, or (iii) has materially impaired or could reasonably be
expected to materially impair the ability of Borrowers or Guarantor to perform
the Obligations or to consummate the transactions under the Loan Documents
executed by such Person.
"Maturity Date" shall mean the earlier of (i) the occurrence of an
Event of Default if amounts outstanding under the Loan Documents and other
Obligations shall be due and payable in connection therewith or as a result
thereof as required by this Agreement, (ii) Agent's demand upon an Event of
Default of payment of amounts outstanding under the Loan Documents and other
Obligations, and (ii) the last day of the Term.
"Note" shall mean, collectively and each individually, the Revolving
Notes, as the same may be amended, modified, divided, split, supplemented and/or
restated from time to time.
"Obligations" shall mean all present and future obligations,
Indebtedness and liabilities of Borrowers and/or Guarantors to Agent and/or
Lenders at any time and from time to time of every kind, nature and description,
direct or indirect, secured or unsecured, joint and several, absolute or
contingent, due or to become due, matured or unmatured, now existing or
hereafter arising, contractual or tortious, liquidated or unliquidated,
including, without limitation, all of the foregoing under any of the Loan
Documents or otherwise relating to Notes and/or Loans, including, without
limitation, interest, all applicable fees, charges and expenses and/or all
amounts paid or advanced by Agent or Lenders on behalf of or for the benefit of
Borrower and/or any Guarantor for any reason at any time, including in each case
obligations of performance as well as obligations of payment and interest that
accrue after the commencement of any proceeding under any Debtor Relief Law by
or against any such Person.
"Participant" shall have the meaning given such term in Section
12.2(b).
"Patents" shall mean all of Borrowers' now existing or hereafter
acquired right, title and interest in and to: (i) all patents, patent
applications, inventions, invention disclosures and improvements, and all
applications, registrations and recordings relating to the foregoing as may at
any time be filed in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof, any political
subdivision thereof or in any other country, and all research and development
relating to the foregoing; and (ii) the reissues, divisions, continuations,
renewals, extensions and continuations-in-part of any of the foregoing.
"Payment Office" shall mean initially the address set forth beneath
the Agent's name on the signature page of this Agreement, and thereafter, such
other office of Agent, if any, which it may designate by notice to Borrower to
be the Payment Office.
"Permit" shall mean collectively all licenses, leases, powers,
permits, franchises, certificates, authorizations and approvals.
"Permitted Discretion" shall mean a determination or judgment made in
good faith in the exercise of reasonable (from the perspective of a secured
lender) credit or business judgment.
"Permitted Indebtedness" shall mean Indebtedness of Borrowers
permitted under Section 7.2.
"Permitted Liens" shall mean Liens of Borrowers permitted under
Section 7.3.
"Permitted Options" shall mean options to acquire Permitted Securities
of Covista, in an amount not to exceed fifteen percent (15%) of the fully
diluted common stock, par value $0.05 per share, of Covista as of the Closing
Date, issued to employees, non-employee directors, consultants and other
advisors pursuant to the terms of the related employment or other
compensation-related agreements and/or incentive stock plans adopted and
approved by the Board of Directors of Covista.
"Permitted Securities" shall mean any shares, units or interests of
equity securities or ownership interests of Covista that by their terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event or otherwise (A) are not
convertible or exchangeable for Indebtedness or any securities that are not
Permitted Securities, (B) (i) do not mature and (ii) are not putable or
redeemable at the option of the holder thereof, in each case under clause (i) or
(ii) in whole or in part on or prior to the date six (6) months after the
earlier of the end of the Term or the actual payment in full in cash of the
Obligations, (C) do not have payments of dividends on or prior to the date six
(6) months after the earlier of the end of the Term or the actual payment in
full of the Obligations, (D) are unsecured and by operation of law or by legally
binding agreement are subordinated in right of repayment, liens, security and
remedies to all of the Obligations and to all of Agent's and Lenders' rights,
Liens and remedies, and/or (E) do not have any veto or supermajority voting
rights or approval rights with respect to any issues which are more restrictive
than those outstanding as of the Closing Date, whether under contract,
organizational documents or otherwise, and/or (F) are not sold, issued or
otherwise transferred in connection with or as a part of a Public Offering.
"Person" shall mean an individual, a partnership, a corporation, a
limited liability company, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture, a Governmental Authority or any
other entity of whatever nature.
"Pledge Agreement" shall mean collectively and individually, if
applicable, all pledge agreements executed by and between Agent and any Borrower
and/or any Guarantors, in each case as such may be modified, amended, or
supplemented from time to time.
"Prime Rate" shall mean a fluctuating interest rate per annum equal at
all times to the rate of interest announced publicly from time to time by
Citibank, N.A. as its base rate; provided, that such rate is not necessarily the
best rate offered to its customers, and, should Agent be unable to determine
such rate, such other indication of the prevailing prime rate of interest as may
reasonably be chosen by Agent; provided, further, that each change in the
fluctuating interest rate shall take effect simultaneously with the
corresponding change in the Prime Rate.
"Priority Permitted Liens" shall mean Permitted Liens contemplated by
and permitted pursuant to Section 7.3(b), (c)(ii), (d), (e) and/or, to the
extent identified on Schedule 7.3 as Priority Permitted Liens, (g).
"Pro Rata Share" shall mean (a) with respect to matters relating to a
particular Commitment of a Revolving Lender, the percentage obtained by dividing
(i) such Commitment of that Revolving Lender by (ii) all such Commitments of all
Revolving Lenders; provided, however, that if any Commitment of a Revolving
Lender is terminated pursuant to the terms hereof, then "Pro Rata Share" means
the percentage obtained by dividing (x) the aggregate amount of such Revolving
Lender's outstanding Loans related to such Commitment by (y) the aggregate
amount of all outstanding Loans related to such Commitment, and (b) with respect
to all other matters, the percentage obtained by dividing (i) the aggregate
amount of a Lender's Loans outstanding and such Lender's Commitment by (ii) the
aggregate amount of all Lenders' Loans outstanding and all Lender's Commitments;
in any case as such percentage may be adjusted by assignments permitted pursuant
to Section 12.2.
"Public Offering" shall mean any offer or sale of securities pursuant
to any registration statement filed and effective with the Securities and
Exchange Commission or any other Governmental Authority.
"Receipt" shall have the meaning given such term in Section 12.5.
"Requisite Lenders" shall mean Lenders holding or being responsible
for 51% or more of all outstanding Loans and unutilized Commitments.
"Retail Account" shall mean any Account arising in the ordinary course
of any Borrower's business from the sale of goods or rendering of services to,
or out of any other transaction between, among or with, one or residential or
small business customers that are billed directly by any Borrower; provided,
that no Retail Account shall include any KISSLD Account (or any other Account
which is otherwise related to a KISSLD Account).
"Revolving Facility" shall have the meaning given such term in the
recitals of this Agreement.
"Revolving Lenders" shall mean the financial institutions from time to
time named on Schedule A under the heading "Revolving Lenders", their respective
successors and permitted assigns (but not, except as expressly set forth herein,
any Participant that is not otherwise a party to this Agreement).
"Revolving Loans" shall mean, collectively, the Advances made by
Revolving Lenders to Borrowers in the maximum aggregate principal amount equal
to the Facility Cap and all Obligations relating thereto.
"Revolving Note(s)" shall mean, individually and collectively, one or
more Revolving Notes and any additional promissory note(s) payable to the order
of each Revolving Lender executed by Borrowers evidencing the Revolving Facility
and Advances thereunder, as the same may be amended, divided, split, modified,
supplemented and/or restated from time to time.
"Security Documents" shall mean this Agreement, the Notes, the
Intellectual Property Acknowledgement, Guarantees, Pledge Agreements, Collateral
Assignment of Life Insurance Policy, Lockbox Agreements, Uniform Commercial Code
financing statements, Subordination Agreements, agreements related to Accounts,
the Life Insurance Policy and all other documents or instruments necessary to
create or perfect the Liens in the Collateral, as such may be modified, amended
or supplemented from time to time.
"Senior Executive" shall mean any of ▇▇▇▇▇ ▇. ▇▇▇▇▇, III, A. ▇▇▇▇
▇▇▇▇▇, Jr. and ▇▇▇▇▇ ▇▇▇▇▇▇.
"Solvency Certificate" shall have the meaning assigned to it in
Section 4.1(d).
"Subordinated Debt" shall mean any Indebtedness, management fees,
contingent equity or earnout or any other obligation of any Borrower that is
unsecured, subordinated in right of repayment, liens, security and remedies to
all of the Obligations and to all of Agent's and Lenders' rights, Liens and
remedies and in form and substance satisfactory to Agent in its Permitted
Discretion.
"Subordination Agreement" shall mean, individually and collectively,
(i) the ▇▇▇▇▇ Subordination Agreement and (ii) any agreements between the Agent
and holders of Subordinated Debt relating to Subordinated Debt, in each case as
the same may be modified, amended, restated and/or supplemented from time to
time, in each case in form and substance satisfactory to Agent in its Permitted
Discretion.
"Subsidiary" shall mean, (i) as to any Borrower, any Person in which
more than 50% of all equity, membership, partnership or other ownership
interests is owned directly or indirectly by Borrower or one or more of its
Subsidiaries, and (ii) as to any other Person, any Person in which more than 50%
of all equity, membership, partnership or other ownership interests is owned
directly or indirectly by such Person or by one or more of such Person's
Subsidiaries.
"SunTrust Consent" shall mean that certain Consent and Amendment,
dated as of April 4, 2003 by and between Agent, Borrowers and SunTrust Bank.
"SunTrust Agreement" shall mean, individually and collectively, the
(i) Commercial Security Agreement dated June 17 2002, by and between SunTrust
Bank and Covista, (ii) the Commercial Variable Rate Promissory Note dated June
17, 2002, payable to the order of SunTrust Bank as executed and delivered by
Covista, (iii) SunTrust Consent to be delivered by Borrower, and (iv) all other
documentation related to the foregoing.
"Termination Fee" shall mean the amount equal to (i) 3.0% of the
Facility Cap if such Termination is after the Closing Date but on or before the
first anniversary of the Closing Date; (ii) 2.0% of the Facility Cap, if such
Termination is after the first anniversary of the Closing Date but on or before
the second anniversary of the Closing Date; and (iii) $-0- if such Termination
is after the second anniversary of the Closing Date.
"Term" shall mean the period commencing on the Closing Date and ending
on April 16, 2006.
"Trademarks" shall mean all of Borrowers' now existing or hereafter
acquired right, title, and interest in and to: (i) all of Borrowers' trademarks,
trade names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos, other business identifiers, prints
and labels on which any of the foregoing have appeared or appear, all
applications, registrations and recordings relating to the foregoing as may at
any time be filed in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof, any political
subdivision thereof or in any other country, and all research and development
relating to the foregoing; (ii) all renewals thereof; and (iii) all designs and
general intangibles of a like nature.
"Transferee" shall have the meaning assigned to it in Section 12.2
hereof.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of Maryland from time to time.
"▇▇▇▇▇ Fargo" shall mean, collectively, ▇▇▇▇▇ Fargo Credit, Inc.,
▇▇▇▇▇ Fargo Business Credit, Inc., ▇▇▇▇▇ Fargo Financial Leasing, Inc., and any
Affiliate of any of the foregoing.
"Wholesale Account" shall mean each Account which is not a Retail
Account.
"WTC Claim" shall mean that certain claim in the amount of
$4,000,000.00 as submitted on or about November 2001 by Covista to Atlantic
Mutual Insurance Company in relation to the failure of the ▇▇▇▇▇▇ Street switch
in New York, New York, which claim remains pending as of the date hereof.
SCHEDULE A
Lenders/Commitments
Revolving Lenders Revolving Commitment
CapitalSource Finance LLC $8,000,000.00
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Finance Group, Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Wire Instructions:
Bank: Bank of America, Baltimore, MD
Account: 003930559738
ABA: ▇▇▇▇▇▇▇▇▇
Account Name: CapitalSource Funding LLC
Reference: Covista Communications, Inc.
Total: $8,000,000.00
=============