Exhibit 10.3
LOAN AND SECURITY AGREEMENT
Dated as of August 20, 1998
between
▇▇▇▇▇▇▇ NATIONAL LIFE INSURANCE COMPANY,
by
PPM FINANCE, INC.,
as its attorney-in-fact,
as Lender,
and
CRESCENT PUBLIC COMMUNICATIONS INC.
and
SUN TEL NORTH AMERICA, INC.,
as Borrowers
RE:
$40,000,000 CREDIT FACILITY
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement is made as of this 20th day of August
1998 (this "Agreement"), by and among ▇▇▇▇▇▇▇ National Life Insurance
Company, a Michigan insurance company, as lender ("Lender"), by PPM Finance,
Inc., a Delaware corporation, as Lender's attorney-in-fact, and Crescent
Public Communications Inc., a New York corporation ("Borrower"), and Sun Tel
North America, Inc., a Delaware corporation and a subsidiary of Borrower
("Borrowing Subsidiary"), as borrowers.
W I T N E S S E T H :
WHEREAS, from time to time Borrower and Borrowing Subsidiary may
request Lender to make loans and advances to and extend certain credit
accommodations to Borrower or Borrowing Subsidiary, and the parties wish to
provide for the terms and conditions upon which such loans, advances and
credit accommodations shall be made;
NOW, THEREFORE, in consideration of any loans, advances and credit
accommodations (including any loans by renewal or extension) hereafter made
to Borrower or Borrowing Subsidiary by Lender, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Borrower and Borrowing Subsidiary, the parties agree as
follows:
1. DEFINITIONS.
1.1 General Definitions. When used in this Agreement, the following
terms have the following meanings:
"Account" means all present and future rights of any Loan Party to
payment for goods sold or leased or for services rendered, which are not
evidenced by Instruments or Chattel Paper, and whether or not earned by
performance.
"Additional Eligible Payphones" means, at the time of determination,
80% of all Payphones owned by the Loan Parties that (i) are not operated
under a valid, enforceable and unexpired contract with the property owner of
the premises on which such Payphone is located and (ii) satisfy the
requirements set forth in clauses (i), (iv) and (v) of the definition of
"Eligible Payphones."
"Advance" means any loan made to any Loan Party by Lender pursuant to
paragraph 2.1 or otherwise in accordance with this Agreement.
"Affiliate" means any Person who owns at least 5% of the outstanding
capital stock of a Loan Part y or any Person directly or indirectly
controlling, controlled by or under common control with a Loan Party
"Agreement" has the meaning specified in the preamble.
"AMNEX" means AMNEX, Inc., a New York corporation and the parent
company of Borrower.
"Availability Reserves" means, as of any date of determination, such
amounts as Lender may from time to time establish and revise in good faith
reducing the amount of Advances which would otherwise be available to any
Loan Party under the lending formula(s) provided for herein (i) to reflect
events, conditions, contingencies or risks which, as determined by Lender in
good faith, do or may affect either (a) the Collateral or any other property
which is security for the obligations hereunder or its value, (b) the
assets, business or prospects of any Loan Party or (c) the Security
Interests and other rights of Lender in the Collateral (including the
enforceability, perfection and priority thereof), (ii) to reflect Lender's
good faith belief that any collateral report or financial information
furnished by or on behalf of any Loan Party to Lender is or may have been
incomplete, inaccurate or misleading in any material respect or (iii) in
respect of any state of facts which Lender determines in good faith
constitutes an Event of Default or may, with notice or passage of time or
both, constitute an Event of Default.
"Base Rate" means the highest prime or equivalent rate of interest
(expressed as an annual rate) publicly announced by The Chase Manhattan
Bank, N.A. or Bank of America National Trust and Savings Association (and
any successor by merger) from time to time as its "prime rate", each change
in such a rate to take effect on the date of effective change of such prime
rate. The Base Rate is not intended to be the lowest rate of interest
charged by Lender to its borrowers.
"Base Rate Loan" means any Loan bearing interest based on the Base
Rate.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Blocked Account" has the meaning specified in paragraph 6.
"Borrower" has the meaning specified in the preamble.
"Borrowing Base" means, for each Loan Party as at any date at which the
same is to be determined, the availability existing for revolving loan
Advances, as determined by Lender, in an amount equal to the sum of clauses
(a), (b) and (c) below minus any Availability Reserves:
(a) an amount equal to the lesser of (i) $2,500,000 and (ii)
up to 60% of the amount of Eligible Accounts;
(b) an amount equal to the lesser of (i) $500,000 and (ii)
(A) up to 50% of the value of Eligible Inventory consisting
of uninstalled pay telephone circuit boards and new
uninstalled pay telephones, plus (B) up to 20% of the value
of Eligible Inventory consisting of used uninstalled pay
telephones, plus (C) up to 10% of the value of Eligible
Inventory consisting of fully repaired, usable and
uninstalled booths, enclosures, pedestals, fixtures, coin
mechanisms, locks and other equipment physically connected or
installed, or to be connected or installed, therein or
thereon; and
(c) an amount equal to $1,750 multiplied by the number of
Eligible Payphones.
Lender may, in its commercially reasonable discretion, at any time or times
upon three Business Days' prior notice to the Loan Parties, increase or
decrease the ratio or dollar amounts, as applicable, of the advances against
Eligible Accounts or Eligible Inventory or the dollar amount applicable to
Eligible Payphones, or all of the foregoing, and, in the event that any such
ratio or amount is decreased for any reason, such decrease shall become
effective immediately for purposes of calculating a Borrowing Base. Lender
may, in its commercially reasonable discretion, from time to time establish
any Availability Reserves upon not less than one day's prior notice to the
Loan Parties.
"Borrowing Subsidiary" has the meaning specified in the preamble.
"Business Day" means any day other than a Saturday, Sunday, or such
other day as banks in Chicago, Illinois are authorized or required to be
closed for business, a day on which Lender is open for the transaction of
business and, when used with reference to provisions pertaining to the
Eurocurrency Rate, a day on which banks are also open for business and
dealing in United States dollar deposits in London, England.
"Capital Expenditures" means, with respect to any period, the aggregate
of all expenditures (whether paid in cash, in kind or accrued as liabilities
and including Capital Lease obligations during such period that are required
by GAAP to be included or reflected in the property, plant or equipment or
similar fixed asset accounts (or in intangible accounts subject to
amortization)) on a balance sheet; provided, that Capital Expenditures will
not include costs and expenses incurred, or the assets acquired, in a
Permitted Acquisition.
"Capital Lease" means any lease of Property required to be reflected as
a liability on the Loan Parties' balance sheets.
"CERCLA" means the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, 42
U.S.C. ss. 9601 et seq.
"Change of Control" means any transaction or event as a result of which
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended) other than the Loan
Parties or AMNEX is or becomes the beneficial owner, directly or indirectly,
of more than 20% of the issued and outstanding shares of the capital stock
of any Loan Party.
"Charges" has the meaning specified in paragraph 9.1(g).
"Closing Date" means the date upon which the initial Loan is made.
"Collateral" means, collectively, (i) all property referred to in
paragraph 3, wherever located and whether now existing or hereafter
acquired, in which any Loan Party now has or may hereafter acquire any
interest, (ii) any other property of any Loan Party of any kind or nature
coming into Lender's possession, custody or control and (iii) all other
property and interests in property, real or personal, now owned or leased or
hereafter acquired or leased, now or hereafter pledged or assigned as
collateral security for payment of any of the Obligations.
"Convert," "Conversion," and "Converted" each mean a conversion of Base
Rate Loans to Eurocurrency Loans or vice versa under paragraph 2.5.
"Commission" means the Securities and Exchange Commission or any other
federal agency then administering the Securities Act of 1933, as amended,
and other federal securities laws.
"Debt Service Coverage Ratio" means, for any period without
duplication, the ratio of (i) an amount equal to the sum of the following
for such period: (a) earnings before interest expense and income taxes plus
(b) depreciation, amortization and other non-cash charges deducted in
determining earnings before interest and income taxes minus (c) Capital
Expenditures (including Capital Leases) plus (d) proceeds of third party
financings to fund Capital Expenditures minus (e) cash income taxes paid
minus (f) cash dividends paid to shareholders to (ii) the sum of all
principal payments on Indebtedness for such period.
"Default" means any event, condition or default which with the giving
of notice, the lapse of time or both would be an Event of Default.
"Default Rate" has the meaning specified in paragraph 2.3.
"EBITDA" means, with respect to any period, net income after taxes for
such period (excluding (i) any after-tax gains or losses on the sale of
assets other than in the ordinary course of business and (ii) other
after-tax extraordinary gains or losses) plus interest expense, income tax
expense, depreciation and amortization for such period, less gains and
losses attributable to any fixed asset sales made during such period, plus
or minus any other non-cash charges or gains which have been subtracted or
added in calculating net income after taxes for such period.
"Eligible Account" means a bona fide outstanding Account of a Loan
Party which arose in the ordinary course of business and constitutes a "Dial
Around Receivable" due to a Loan Party from an interexchange carrier or
payor or processor on behalf thereof, less all finance charges, late fees,
and other fees, as to which Lender has a first priority perfected security
interest under the UCC and as to which all applicable services have been
duly performed and acknowledged and accepted by the Account Debtor. Eligible
Accounts shall not include any Accounts:
(i) which have either remained unpaid for more than 120 days
after the original invoice date;
(ii) owed by an Account Debtor which collectively has more
than (50%) of the aggregate amount of its Accounts unpaid
more than 120 days from its original invoice date;
(iii) where (a) the aggregate amount of all otherwise
Eligible Accounts owed by the Account Debtor, together with
all Accounts owed by its Affiliates, exceeds 20% of the
aggregate amount of all Eligible Accounts at such time (or,
(i) in the case of Accounts owed by AT&T, 80% of the
aggregate amount of all Eligible Accounts at such time and
(ii) in the case of Accounts owed by MCI and Worldcom (after
the merger thereof), 37% of the aggregate amount of all
Eligible Accounts at such time), but only to the extent of
such excess or (b) 20% or more of the aggregate dollar amount
of outstanding Accounts owed at such time by the Account
Debtor, together with all Accounts owed by its Affiliates
(or, (i) in the case of Accounts owed by AT&T, 80% or more of
the aggregate dollar amount of such outstanding Accounts owed
at such time, together with all Accounts owed by its
Affiliates and (ii) in the case of Accounts owed by MCI and
Worldcom (after the merger thereof), 37% or more of the
aggregate dollar amount of such outstanding Accounts owed at
such time, together with all Accounts owed by its
Affiliates), is ineligible under the other criteria set forth
herein;
(iv) as to which any representation, warranty or covenant
contained in this Agreement and the Other Agreements with
respect to such Account has been breached;
(v) with respect to which a check, promissory note, draft,
trade acceptance or other instrument for the payment of money
has been received, presented for payment and returned
uncollected for any reason;
(vi) which relates to a sale which is subject to any
repurchase obligation or return right, such as a consignment
sale, ▇▇▇▇-and-hold sale, guaranteed sale, sale on approval
or sale or return arrangement;
(vii) which is evidenced by a promissory note or other
instrument or by chattel paper or is not payable in United
States dollars;
(viii) as to which any Loan Party has extended the time for
payment without the consent of Lender or which is for goods
sold or leased or services rendered under a contract or
agreement pursuant to which the Account Debtor's obligation
to pay such invoice is conditioned upon any Loan Party's
completion of any further performance under the contract or
agreement;
(ix) owed by an Account Debtor as to which an Insolvency
Proceeding has commenced or, in the case of an individual, as
to whom death or a judicial declaration of incompetency has
occurred;
(x) owed by an Account Debtor which (a) is an Affiliate of a
Loan Party, (b) does not maintain its chief executive office
in the United States, (c) is not organized under the laws of
the United States or any state thereof or (d) is the
government of any foreign country or sovereign state, or of
any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof; except to the
extent that such Account is secured or payable by a letter of
credit or acceptance, or insured under foreign credit
insurance, on terms and conditions satisfactory to Lender in
its discretion;
(xi) as to which either the perfection, enforceability, or
validity of Lender's Security Interest in such Account or
Lender's right or ability to obtain direct payment to Lender
of the Proceeds of such Account, is governed by any federal,
state or local statutory requirements other than those of the
UCC;
(xii) is not a valid, legally enforceable and unconditional
obligation of the Account Debtor or is subject to setoff,
counterclaim, credit, allowance or adjustment by the Account
Debtor, or to any claim by such Account Debtor denying
liability thereunder in whole or in part; provided, that such
Account shall be an Eligible Account under this clause (xii)
to the extent that such Account exceeds the amount of any
such setoff, counterclaim, credit, allowance or adjustment;
(xiii) which is owed by the government of the United States
of America, or any department, agency, public corporation, or
other instrumentality thereof, unless the applicable Loan
Party has assigned its right to payment of such Account to
Lender in full compliance with the Federal Assignment of
Claims Act of 1940, as amended;
(xiv) which is owed by any state, municipality, or other
political subdivision of the United States of America, or any
department, agency, public corporation, or other
instrumentality thereof and as to which Lender determines
that its Security Interest therein is not or cannot be
perfected;
(xv) which is owed by an Account Debtor located in a state
which requires a Loan Party, in order to commence or maintain
an action in the courts of that state, to either have
qualified to do business and be in good standing in such
state or file a notice of business activities report or
similar report with such state's taxing authority, unless
such Loan Party has either complied with such requirement or
is exempt from any such requirement;
(xvi) which (i) arises out of a contract or order which fails
in any material respect to comply with any requirement of
applicable law, (ii) which is not fully enforceable by any
Loan Party in the courts of the jurisdiction of the Account
Debtor's residence (subject to applicable bankruptcy,
insolvency, reorganization or other similar laws affecting
creditors' rights and remedies generally and general
principles of equity, whether at law or in equity) or (iii)
is subject to a first, valid and enforceable fully perfected
security interest in favor of Lender; or
(xvii) which are otherwise unacceptable to Lender in its
commercially reasonable discretion as collateral for lending
purposes.
"Eligible Inventory" means, at the time of determination, Inventory or
Equipment owned by any Loan Party located at premises listed on Schedule
9.1(h) in which Lender has a first priority Security Interest under the UCC
which meets all of the following criteria:
(i) meets all applicable standards imposed by any
governmental or other regulatory authority over such
Inventory;
(ii) is not in transit or subject to any other assignment,
bailment, consignment, claim, lien, charge, encumbrance,
third party dispute, offset or counterclaim;
(iii) does not fail in any material respect to comply with
any requirement of applicable law;
(iv) as to which all applicable representations, warranties
or covenants of any Loan Party to Lender are true and correct
or have been performed and complied with; and
(v) is otherwise acceptable to Lender in its commercially
reasonable discretion as collateral for lending purposes.
For purposes of this Agreement, Eligible Inventory shall be valued in
accordance with GAAP at the lower of cost, calculated on a first-in,
first-out basis, or market. Lender, at Loan Parties' sole cost and expense,
may obtain appropriate inventory appraisals.
"Eligible Payphones" means, at the time of determination, all Payphones
owned by a Loan Party that:
(i) have reported Gross Revenue (with all non-coin "Dial
Around Receivables" from Payphones being determined on a per
Payphone basis), minus telephone bills, commissions and
Payphone related maintenance expenses greater than $1 during
the preceding twelve months;
(ii) are operated under a valid, enforceable and unexpired
contract with the property owner of the premises on which
such Payphone is located;
(iii) are Additional Eligible Payphones or Seasonal Eligible
Payphones;
(iv) are not listed as "out of service" or otherwise
inoperable; and
(v) are otherwise acceptable to Lender in its commercially
reasonable discretion as collateral for lending purposes.
"Environmental Laws" means all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety, hazardous substances, and environmental
matters applicable to the Loan Parties' business and facilities (whether or
not owned by it) as any of the same may be from time to time hereafter
amended.
"Equipment" means all of each Loan Party's now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements thereof,
wherever located.
"Eurocurrency Loan" means any Loan bearing interest based on the
Eurocurrency Rate.
"Eurocurrency Reserve Requirement" means, with respect to an Interest
Period, the stated maximum rate (expressed as a decimal) at which reserves
(including all basic, supplemental, marginal or emergency reserves) are
required to be maintained by Lender during such Interest Period under
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor) against "Eurocurrency liabilities" (as such term is defined in
Regulation D), but without benefit or credit of proration, exemptions or
offsets that might otherwise be available to Lender from time to time under
Regulation D.
"Eurocurrency Rate" means, for any Interest Period for each
Eurocurrency Loan, the rate of interest per annum determined by dividing (a)
the annual rate of interest, rounded up to the nearest 1/16th of 1%,
determined by Lender at which deposits in U.S. Dollars are offered in
London, England to The Chase Manhattan Bank, N.A. by prime banks in the
London interbank market at 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period for a period equal to such Interest
Period and in an amount approximately equal to the Eurocurrency Loan to be
outstanding during such Interest Period, as quoted by Lender by (b) a
percentage equal to 100% minus the Eurocurrency Reserve Requirement for such
Interest Period.
"Event of Default" has the meaning specified in paragraph 11.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
"Excess Availability" means, as of any date of determination by Lender,
the sum of (i) the excess, if any, of (a) the Borrowing Base for Borrower
over (b) the outstanding Advances of Borrower plus (ii) the excess, if any,
of (a) the Borrowing Base for Borrowing Subsidiary over (b) the outstanding
Advances of Borrowing Subsidiary, in each case as of the close of business
on such date.
"Facility" means the credit facility extended to the Loan Parties
hereunder in the maximum principal amount of $40,000,000.
"Financials" means those consolidated financial statements of AMNEX and
its Subsidiaries described on Schedule 9.1(o)(1), all of which financial
statements have been certified as accurate and complete by the chief
financial officer of AMNEX and with respect to Fiscal Year end Financials,
certified by AMNEX's independent certified public accounting firm, which
firm is reasonably acceptable to Lender.
"Fiscal Quarter" means each of the 4 three-month calendar quarters in a
Fiscal Year.
"Fiscal Year" means the twelve month period ending on December 31.
"GAAP" means generally accepted accounting principles and practices as
in effect from time to time, consistently applied during each interval and
from interval to interval.
"Gross Revenue" means the sum of (i) all coin revenue from Payphones,
plus (ii) all non-coin assisted operator service revenue from Payphones,
plus (iii) all non-coin "Dial Around Receivables" from Payphones.
"Guarantors" means, collectively, AMNEX, each Loan Party (in their
capacity as guarantors under the guaranties described in paragraph 12.4(i))
and each of the Loan Parties' Affiliates who have executed a guaranty in
favor of Lender and any other Person who has or may hereafter guarantee
payment or performance of the whole or any part of the Obligations.
"Hazardous Substances" means all materials, substances, compounds and
solutions the use, transportation, storage, generation or disposal of which
are regulated by any Environmental Law. Without limiting the generality of
the foregoing, Hazardous Substances shall include (a) "hazardous
substances", as defined in CERCLA 42 U.S.C. ss. 9601 (14), (b) "petroleum"
as defined in RCRA 42 U.S.C. ss. 6991(2)(B), and (c) "pollutant" and
"contaminant", each as defined in CERCLA 42 U.S.C. ss. 9601 (33).
"Indebtedness" means all liabilities, obligations and indebtedness of
any and every kind an nature, including, without limitation, the Obligations
and all obligations to trade creditors whether heretofore, now or hereafter
owing, arising, due, or payable from any Loan Party to any Person and
howsoever evidenced, created, incurred, acquired, or owing, whether primary,
secondary, direct, contingent, fixed, or otherwise. Without in any way
limiting the generality of the foregoing, Indebtedness specifically includes
(i) all obligations or liabilities of any Person that are secured by any
lien, claim, encumbrance, or security interest upon property owned by any
Loan Party, even though such Loan Party has not assumed or become liable for
the payment thereof, (ii) obligations or liabilities created or arising
under any lease of real or personal property or conditional sale or other
title retention agreement with respect to property used or acquired by a
Loan Party, even though the rights and remedies of the lessor, seller or
lender thereunder are limited to repossession of such property, (iii) all
unfunded pension fund obligations and liabilities and (iv) all deferred or
accrued taxes.
"Indemnified Party" has the meaning specified in paragraph 13.
"Insolvency Proceeding" means, with respect to the Person in question,
the commencement or filing by or against it of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication
as a bankrupt, winding-up, or other similar relief under the bankruptcy,
insolvency, or similar laws of the United States, any state or territory
thereof, or any foreign jurisdiction, now or hereafter in effect; the making
of any general assignment for the benefit of creditors; the appointment of a
receiver,
trustee or custodian for it or for any of its assets; the institution by or
against it of any of the foregoing or of any formal or informal proceeding
for the dissolution or liquidation of, settlement of claims against, or
winding up of its affairs; the sale, assignment, or transfer of all or any
material part of its assets; the nonpayment generally of its debts as they
become due; or the cessation of its business as a going concern.
"Intercompany Notes" means, collectively, the promissory note from
Borrower to Borrowing Subsidiary and the promissory note from Borrowing
Subsidiary to Borrower, each made as of the Closing Date and in the form of
Exhibit D.
"Interest Coverage Ratio" means, for any period, the ratio of (i)
EBITDA to (ii) gross interest expense (including all commissions, discounts,
fees and other charges in connection with standby letters of credit and
similar instruments) of the Loan Parties during such period, determined in
accordance with GAAP, excluding any non-cash interest income attributable to
swap agreements or other agreements or arrangements designed to provide
protection against fluctuations in interest or currency exchange rates.
"Interest Period" means, for each Eurocurrency Loan, (i) initially, the
period commencing on the date of such Eurocurrency Loan or the date of the
Conversion of any Base Rate Loan into a Eurocurrency Loan and ending on the
last day of the period selected by the requesting Loan Party under the
provisions below and (ii) thereafter, if such Eurocurrency Loan is
continued, in whole or in part, as a Eurocurrency Loan, a period commencing
on the last day of the immediately preceding Interest Period and ending on
the last day of the period selected by the requesting Loan Party under the
provisions below. The duration of each such Interest Period will be one,
two, three or six months, in each case as the requesting Loan Party may,
upon notice received by Lender not later than 11:00 a.m. (Central Standard
time) on the third Business Day prior to the first day of such Interest
Period, select; provided, that:
(a) the Loan Parties may not select any Interest Period for any
Eurocurrency Loan which ends after the Original Term or any
Renewal Term; and
(b) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of
such Interest Period will be extended to occur on the next
succeeding Business Day, unless the result of such extension
would be to extend such Interest Period into another calendar
month, in which event such Interest Period ends on the
immediately preceding Business Day.
Each Interest Period will start on one day in a calendar month and end on
(but exclude) a numerically corresponding day in the first, second, third or
sixth month thereafter, as the case may be; provided, that if an Interest
Period begins on the last day of a month or if there is no numerically
corresponding day in the month in which an Interest Period is to end, then
such Interest Period ends on the last Business Day of such month.
"Inventory" means with respect to all Loan Parties, all inventory,
whether now owned or hereafter acquired including, but not limited to, all
goods intended for sale or lease by such Loan Party, or for display or
demonstration; all work in process; all raw materials and other materials
and supplies of every nature and description used or which might be used in
connection with the manufacturer, printing, packing, shipping, advertising,
selling, leasing or furnishing of such goods or otherwise used or consumed
in the business of each Loan Party; and all documents evidencing any General
Intangibles relating to any of the foregoing, whether now owned or hereafter
acquired by each Loan Party.
"Lender" has the meaning specified in the preamble.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including any
conditional sale or other title retention agreement. "Lien" includes
reservations, exceptions, easements, leases and other restrictions and
encumbrances affecting real property. For purposes hereof a Person shall be
deemed to own property acquired or held pursuant to a conditional sale or
similar security arrangement.
"Loan Documents" means this Agreement and the Other Agreements.
"Loan Parties" means, collectively, Borrower and Borrowing Subsidiary.
"Loans" collectively means the Term Loans and the revolving loan
Advances.
"Lock Box" has the meaning specified in paragraph 6.
"Material Adverse Effect" means with respect to any event, act,
condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration or governmental investigation
or proceeding), whether singly or in conjunction with any other event or
events, act or acts, condition or conditions, occurrence or occurrences,
whether or not related, a material adverse change in, or a material adverse
effect upon, any of the business, property, assets, operations, condition
(financial or otherwise) or prospects of the Loan Parties, taken as a whole.
"Net Income" means, with respect to any fiscal period of each Loan
Party, the net income after the provision for income and franchise taxes for
such fiscal period of each Loan Party, as determined in accordance with
GAAP.
"Notes" means, collectively, the Revolving Note and the Term Notes.
"Obligations" means and includes the aggregate of the unpaid principal
balance of the Term Loans and all revolving loan Advances and all accrued
interest on all thereof and all other loans, indebtedness, debts,
liabilities, obligations, interest, fees, premiums, guarantees, covenants
and duties owing by any Loan Party to Lender, of every kind and description
(whether or not evidenced by any note or other instrument and whether or not
for the payment of money), direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising under the Other
Agreements. "Obligations" includes (i) all interest, fees, charges or other
costs and payments that any Loan Party is required to pay to Lender under or
as a result of the Loan Documents or by law and (ii) all fees, costs and
expenses described in paragraph 14.2 or otherwise required to be paid by any
Loan Party to Lender pursuant to any Loan Document.
"Original Term" has the meaning specified in paragraph 8.
"Other Agreements" means all agreements, instruments and documents
including, without limitation, guaranties, mortgages, trust deeds, pledges,
powers of attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements and all other writings heretofore,
now or from time to time hereafter executed by or on behalf of any Loan
Party or any other Person and delivered to Lender or to any parent,
affiliate or subsidiary of Lender in connection with the Facility or the
transactions contemplated hereby.
"Over Advance" has the meaning specified in paragraph 2.1(b).
"Payphones" means all installed pay telephones.
"Permitted Acquisitions" means an acquisition of additional operating
Payphone routes or the stock or assets of another Person engaged in
substantially the same business as the Loan Parties; provided, that (i) such
acquisition involves Payphone routes located in States that the Loan Parties
have Payphone routes on the Closing Date and States that are adjacent
thereto (other than States adjacent to the State of Florida), (ii)
immediately after giving effect to such an acquisition, the Loan Parties
will have Excess Availability of at least $1,000,000, (iii) the Loan Parties
have completed a satisfactory (in Lender's sole discretion) field exam in
connection with such an acquisition, (iv) immediately after giving effect to
such an acquisition, no Default or Event of Default will have occurred or be
continuing, (v) Lender is granted a valid and perfected first priority
Security Interest in the assets acquired by the Loan Parties under such
acquisition, subject only to Permitted Liens and (vi) the Loan Parties
provide Lender with pro forma financial statements for the
Loan Parties that show, after giving effect to such an acquisition, that
each of the financial covenants set forth in paragraph 10.3 will not be
violated by such an acquisition.
"Permitted Liens" means (i) Liens for taxes not yet payable or being
contested in good faith and by appropriate proceedings diligently pursued,
provided that the reserve or other appropriate provision, if any, as shall
be required by GAAP shall have been made therefor, (ii) deposits or pledges
to secure the payment of workmen's compensation, unemployment insurance, old
age pensions or other social security benefits or obligations, (iii)
deposits or pledges to secure the performance of bids, tenders, contracts,
leases, public or statutory obligations, surety or appeal bonds, or other
deposits or pledges for purposes of a like general nature made or given in
the ordinary course of business and not in connection with the borrowing of
money, (iv) Liens in favor of Lender, (v) such utility, access and other
easements, rights of way, restrictions, exceptions, minor defects or
irregularities in or clouds on title or encumbrances not arising out of the
borrowing of money or the securing of advances or credit, and which will not
interfere with or impair in any respect the utility, operation or value of
any properties of any Loan Party and (vi) Liens described in detail on
Schedule 9.1(b).
"Person" means any individual, trust, firm, partnership, limited
liability company, corporation or any other form of public, private or
governmental entity or authority.
"Proceeds" means all products and proceeds (as defined in the UCC) of
any Collateral, and all proceeds of any such proceeds, including all cash,
credit balances and all payments under any indemnity, warranty, or guaranty
payable with respect to any Collateral, all awards for taking by eminent
domain, all proceeds of fire or other insurance and all proceeds obtained as
a result of any legal action or proceeding with respect to any Collateral.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Release" has the meanings assigned to such term in CERCLA 42 U.S.C.
ss. 9601(22).
"Renewal Term" has the meaning specified in paragraph 8.
"Reportable Event" has the meaning specified in paragraph 9.1(f).
"Revolving Loan Commitment" means the sum of $30,000,000.
"Revolving Note" means the promissory note substantially in the form of
Exhibit A-1 in the original principal amount of $30,000,000, executed by
Borrower and Borrowing Subsidiary to the order of Lender, dated as of the
Closing Date.
"Seasonal Payphones" means, at the time of determination, those pay
telephones owned by the Loan Parties that (i) are installed, removed and
reinstalled on the same premises from time to time depending on seasonal
needs, (ii) satisfy the requirements set forth in clauses (i), (ii) and (v)
of the definition of "Eligible Payphones" and (iii) satisfy such other
eligibility criteria that Lender may determine.
"Security Interest" means, collectively, the liens and security
interests created for the benefit of Lender pursuant to the Loan Documents.
"Special Collateral" has the meaning specified in paragraph 3.
"Solvent" means, when used with respect to any Person, that:
(a) the fair value and present fair salable value of such
Person's assets is in excess of the total amount of such
Person's debts including contingent liabilities;
(b) the present fair salable value of such Person's assets is in
excess of the amount that will be required to pay such
Person's probable liability on such Person's debts as they
become absolute and mature;
(c) such Person does not have unreasonably small capital to carry
on the business in which such Person is engaged and all
businesses in which such Person is about to engage; and
(d) such Person has not incurred debts beyond such Person's
ability to pay such debts as they mature.
"Subordinated Debt" means Indebtedness of any Loan Party which is
subordinated to the Obligations in a manner satisfactory in form and
substance to Lender.
"Subsidiary" means any corporation of which more than 50% of the
outstanding stock having by its terms the ordinary voting power to elect a
majority of the board of directors, managers or trustees of such corporation
is at the time, directly or indirectly through one or more intermediaries,
owned or controlled by a Loan Party and/or one or more of its Subsidiaries,
irrespective of whether or not, at the time, stock of any other class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency.
"Term Loans" has the meaning specified in paragraph 2.2.
"Term Loan Commitment" means an amount equal to the lesser of (i)
$10,000,000 and (ii) an amount equal to $750 multiplied by the number of
Eligible Payphones; provided, that the amount set forth in clause (i) above
will automatically reduce on a permanent basis on a dollar for dollar basis
for each Term Loan made under paragraph 2.2.
"Term Loan Obligations" means, collectively, all Obligations which
arise under or in connection with the Term Loans, including the outstanding
principal thereof, accrued but unpaid interest thereon, all fees and
premiums payable in connection with either and any costs and expenses
incurred by Lender in collecting the Term Loan Obligations and enforcing the
Term Notes.
"Term Notes" mean, collectively, each promissory note substantially in
the form of Exhibit A-2 in the original principal amount equal to the amount
of each Term Loan, executed by Borrower and Borrowing Subsidiary to the
order of Lender and dated as of the date such Term Loan is made.
"UCC" means the Uniform Commercial Code (or any successor statute) of
the State of Illinois or of any other state the laws of which are required
by Section 9-103 of the UCC of Illinois to be applied in connection with the
issue of perfection of security interests.
1.2 Others Terms Defined in the UCC. All other terms contained in this
Agreement (and which are not otherwise specifically defined in the
Agreement) have the meanings provided by the UCC to the extent the same are
used or defined in the UCC.
1.3 Other Definitional Conventions. The words "hereof", "herein",
"hereunder" and "hereto" and words of similar import when used in this
Agreement refer to this Agreement as a whole and not any particular
provision of this Agreement, and paragraph, section, subsection, clause,
exhibit and schedule references are to this Agreement, unless otherwise
specified. All terms defined in this Agreement in the singular have
comparable meanings when used in the plural and vice versa, unless otherwise
specified.
2. LOANS AND TERMS OF PAYMENT.
2.1 Revolving Loan Advances. (a) On the terms and subject to the
conditions contained in this Agreement, including, without limitation,
paragraphs 12.6 and 12.7, upon either Loan Party's request made during the
Original Term and any Renewal Term, Lender will make revolving loan Advances
to such Loan Party in an aggregate principal amount at any time outstanding
not in excess of such Loan Party's Borrowing Base; provided, that the
aggregate amount of all Advances outstanding at any time for all Loan
Parties may not exceed the Revolving Loan Commitment. Each Loan Party has
the right to repay and reborrow any of the Advances; provided, that all of
the conditions to borrowing set forth in paragraph 12.7 have been satisfied
or waived.
(b) A Loan Party shall request each Advance not later than 11:00 a.m.
(Central Standard time) on (i) the Business Day on which any proposed Base
Rate Advance is to be made or (ii) at least three Business Days prior to any
proposed Eurocurrency Rate Advance is to be made, in each case by telephone
or facsimile transmission and shall specify the requested date, the amount
of such Advance, whether such Advance is to be a Base Rate Loan or a
Eurocurrency Loan and, if such Advance is to be a Eurocurrency Loan, the
Interest Period for such Advance. Each such notice shall be irrevocable.
Each oral request for an Advance shall be conclusively presumed to be made
by a person authorized by such Loan Party to do so. The Advances shall be
evidenced by the Revolving Notes. All Advances shall be repaid in full upon
the earlier to occur at (i) the end of the Original Term or any Renewal
Term, if this Agreement is terminated at such time pursuant to paragraph 8
and (ii) the acceleration of the Obligations pursuant to paragraph 11. If,
at any time and for any reason, the amount of unpaid Advances to a Loan
Party exceeds such Loan Party's Borrowing Base or if all of the Obligations
other than Term Loan Obligations (including, without limitation, any
Advances made pursuant to this paragraph 2.1 or pursuant to any note or
notes), at any time and for any reason, exceed $30,000,000 (such amount, an
"Over Advance"), then each Loan Party, upon Lender's election and demand,
shall be jointly and severally obligated to immediately pay to Lender, in
cash, the amount of such excess. The Loan Parties authorize Lender to charge
any of the Loan Party's accounts to make any payments of principal or
interest or any fees or other charges authorized or required by this
Agreement and any such payments shall be deemed to be an Advance hereunder.
2.2 Term Loans. On the terms and subject to the conditions contained in
this Agreement, including, without limitation, paragraph 12.8, Lender agrees
to make term loans to a Loan Party (collectively, the "Term Loans") from
time to time in an aggregate principal amount not to exceed the Term Loan
Commitment in effect as of such time. Each Term Loan shall be in a minimum
principal amount of $1,000,000 and shall be evidenced by a Term Note.
Principal payable on account of any Term Loan shall be payable in successive
quarterly installments (i) payable on the first day of each Fiscal Quarter,
the first of which installments shall be due and payable on the first day of
the Fiscal Quarter immediately following the Fiscal Quarter in which such
Term Loan is made and (ii) based on an amortization schedule consisting of
20 equal quarterly payments; provided, that the entire unpaid principal
balance of the Term Loans shall be due and payable in full upon the
expiration of the Original Term of this Agreement or, in the event that the
Original Term of this Agreement is renewed in accordance with
paragraph 8, then the Loan Parties shall continue to make such installment
payments, with a final installment equal to the unpaid principal balance and
any other amounts outstanding due and payable upon the expiration of the
Renewal Term. Notwithstanding anything hereinabove to the contrary, the
entire unpaid principal balance of all Term Loans, and any accrued and
unpaid interest thereon, shall be immediately due and payable upon the
earlier to occur of (i) the last day of the Original Term or the last day of
any Renewal Term, if either Lender or the Loan Parties elect to terminate
this Agreement as of the end of any such Original or Renewal Term and (ii)
the acceleration of the Obligations pursuant to paragraph 11. The Loan
Parties may prepay the principal amount of any Term Loan in whole or in part
without premium or penalty (other than costs contemplated by paragraph 2.7),
and any such prepayment will be applied ratably to the remaining payments
owing on such Term Loan.
2.3 Interest.
(a) The Loan Parties will pay interest to Lender on the unpaid
principal amount of each Advance at a fluctuating rate per annum equal to
(i) during such periods as such Advance is a Base Rate Loan, 0.25% per annum
in excess of the Base Rate and (ii) during such periods as such Advance is a
Eurocurrency Loan, 3.25% per annum in excess of the Eurocurrency Rate. The
Loan Parties will pay interest to Lender on the unpaid principal amount of
each Term Loan at a fluctuating rate per annum equal to (i) during such
periods as such Loan is a Base Rate Loan, 0.75% in excess of the Base Rate
and (ii) during such periods as such Loan is a Eurocurrency Loan, 3.75% per
annum in excess of the Eurocurrency Rate. The fluctuating rate of interest
provided for above shall increase or decrease by an amount equal to any
increase or decrease in the Base Rate or Eurocurrency Rate, as applicable,
effective as of the opening of business on the day that any such change in
the Base Rate or Eurocurrency Rate occurs. Interest will be calculated with
respect to the outstanding principal balance of the Loans at the close of
each day computed on the basis of the actual number of days elapsed over a
360-day year and all payment items which Lender receives shall be credited
to the principal balance of the Obligations, subject to collection, on the
first Business Day after Lender receives good funds therefor at its account
designated by Lender. Without affecting each Loan Party's obligation to
immediately repay to Lender the amount of any and all Over Advances in
accordance with the provisions of paragraph 2.1, at any time when any Over
Advance exists, the Over Advance shall bear interest, on the daily balance
thereof owing, at 4.00% per annum in excess of the rate otherwise applicable
to such Obligations as set forth above (the "Over Advance Rate"). At any
time when an Event of Default has occurred and is continuing, the unpaid
principal amount of all Obligations shall bear interest at 4.00% per annum
in excess of the rate otherwise applicable to such Obligations as set forth
above (the "Default Rate"). All interest on Base Rate Loans payable by each
Loan Party shall be due and payable in arrears on the first Business Day of
each calendar month during the term of this Agreement and all interest on
Eurocurrency Loans payable by each Loan Party shall be due and payable on
the last day of the applicable Interest Period and, if the applicable
Interest Period is greater than three months, at the end of each three-month
period following the commencement of such Interest Period. Lender may, at
its option, charge such interest to a Loan Party's account with Lender as an
Advance.
(b) It is the intent of the parties that the rate of interest and the
other charges to the Loan Parties under this Agreement shall be lawful;
therefore, if for any reason the interest or other charges payable under
this Agreement are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which Lender may lawfully charge the Loan
Parties (the "Highest Lawful Rate"), then the obligation to pay interest and
other charges shall automatically be reduced to such limit and, if any
amount in excess of such limit shall have been paid, then such amount shall
be refunded to the Loan Parties. To the extent permitted by applicable law,
any subsequent reductions in the interest rates under this Agreement shall
not reduce the effective interest rate below the Highest Lawful Rate
applicable to Lender until the total amount of interest accrued under this
Agreement equals the amount of interest which would have accrued if the
interest rate from time to time applicable under this Agreement had at all
times been in effect under the other provisions of this Agreement and if
Lender had collected all such amounts called for under this Agreement and
the Notes. To the extent permitted by applicable law, if at the end of the
Original Term or any Renewal Term, the total amount of interest accrued
under this Agreement is less than the total amount of interest that would
have accrued if the interest rate or interest rates under this Agreement
from time to time outstanding had at all times been in effect pursuant to
the other provisions of this Agreement, then the
Loan Parties agree, to the fullest extent permitted by the laws applicable
to Lender, to pay to Lender an amount equal to the difference between (i)
the lesser of (1) the amount of interest that would have accrued under this
Agreement if the Highest Lawful Rate had at all times been in effect or (2)
the amount of interest that would have accrued under this Agreement if the
interest rate or interest rates under this Agreement from time to time
outstanding had at all times been in effect pursuant to the other provisions
of this Agreement less (ii) the amount of interest actually accrued under
this Agreement.
2.4 Fees.The Loan Parties will pay the fees described below to Lender
during the term of this Agreement.
(a) A nonrefundable closing fee or $200,000 payable to Lender on the
Closing Date.
(b) An unused line fee of 0.25% per annum on the difference between the
Revolving Loan Commitment and the average unpaid monthly balance of the
revolving loan Advances outstanding under the Facility, payable monthly in
arrears on the first day of each month.
(c) An examination fee of $700 per person, per day, plus applicable
expenses, for each examination performed by or at Lender's direction of the
Loan Parties' books and records and Collateral and such other matters as
Lender shall deem appropriate in its commercially reasonable judgment, each
such fee to be paid upon the completion of each such examination.
(d) An early termination fee if the Original Term ends for any reason
prior to the End of the Original Term or prior to the end of any Renewal
Term, determined with reference to the date on which the Original Term or
Renewal Term, as applicable, ends in relation to the anniversaries of the
Closing Date indicated below:
3.00% of the Facility through the first anniversary;
2.00% of the Facility through the second anniversary; and
1.00% of the Facility thereafter or during any Renewal Term.
(e) A monthly monitoring fee of $1,000 payable monthly in arrears on
the first Business Day of each calendar month.
(f) Such other fees that are agreed upon in writing among the Loan
Parties, Lender and any other Person pursuant on the Closing Date.
2.5 Voluntary Conversion of Loans. Each Loan Party may on any Business
Day, upon notice given to Lender not later than 11:00 a.m. (Central Standard
time) on the third Business Day prior to the date of the proposed Conversion
and subject to the provisions of paragraphs 2.6 and 2.7, Convert Base Rate
Loans to Eurocurrency Loans or vice versa; provided, that each such
Conversion of Base Rate Loans to Eurocurrency Loans must be in integral
multiples of $1,000,000; provided, further, that any Conversion of any
Eurocurrency Loans into Base Rate Loans must be made on, and only on, the
last day of an Interest Period for such Eurocurrency Loans; provided,
further, that no Conversion of Base Rate Loans into Eurocurrency Loans will
be made upon the occurrence and continuance of an Event of Default. Each
such notice of a Conversion shall be irrevocable and must, within the
restrictions specified above, specify (i) the date of such Conversion, (ii)
the Loans to be Converted and (iii) if such Conversion is into Eurocurrency
Loans, the duration of the Interest Period for each such Eurocurrency Loan.
Each Loan Party will use its best efforts to maintain a sufficient amount of
Base Rate Loans so that application of the proceeds of Collateral in
accordance with paragraph 6 (based on historical collections by the Loan
Parties) or the making of payments on the Term Loans in accordance with the
terms of this Agreement will not necessitate a payment of a Eurocurrency
Loan on a day other than the last day of the Interest Period applicable to
such Eurocurrency Loan; it being understood that the Loan Parties remain
liable under paragraph 2.7 for any costs incurred by Lender due to the
failure of the Loan Parties to so maintain sufficient Base Rate Loans under
this paragraph 2.5.
2.6 Automatic Conversion.If a Loan Party fails to select the duration
of any Interest Period for any Eurocurrency Loans in accordance with the
provisions contained in the definition of "Interest Period," Lender will so
notify such Loan Party and such Eurocurrency Loans will automatically, on
the last day of the then existing Interest Period for such Eurocurrency
Loans, Convert into Base Rate Loans.
2.7 Increased Costs; Funding Indemnity; Capital Adequacy.
(a) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation applicable to Lender or (ii)
compliance with any guideline or request from any central bank or other
governmental authority applicable to Lender (whether or not having the force
of law), there is any increase in the cost to Lender of agreeing to make or
making, funding or maintaining any Eurocurrency Loans, written notice of
which is given by Lender to Borrower promptly after Lender becomes aware of
any such introduction, change or increase, then the Loan Parties will from
time to time, upon demand by Lender, pay to Lender additional amounts
sufficient to compensate Lender for such increased cost. A certificate as to
the amount of such increased cost, submitted to Borrower by Lender, will be
conclusive and binding for all purposes, absent manifest error. Lender
agrees to use reasonable commercial efforts to minimize costs and expenses
incurred by them and payable by the Loan Parties under this paragraph 2.7(a)
as promptly as practical after Lender becomes aware of any of the
circumstances referred to above. If the Loan Parties so notify Lender within
ten Business Days after Lender notifies Borrower of any increased cost under
the foregoing provisions of this paragraph 2.7(a), the Loan Parties may
either (i) prepay in full all Eurocurrency Loans of Lender then outstanding
and, additionally, reimburse Lender for such increased cost in accordance
with this paragraph 2.7(a) or (ii) Convert all Eurocurrency Loans then
outstanding into Base Rate Loans, in accordance with paragraph 2.5 and,
additionally, reimburse Lender for such increased cost in accordance with
this paragraph 2.7(a).
(b) In the event Lender incurs any loss, cost or expense (including,
without limitation, any loss, cost or expense incurred by reason of the
liquidation or re-employment of deposits or other funds acquired by Lender
to fund or maintain any Eurocurrency Loan or the relending or reinvesting of
such deposits or amounts paid or prepaid to Lender and any loss of profit)
as a result of (i) any payment or prepayment of a Eurocurrency Loan on a
date other than the last day of its Interest Period for any reason, whether
before or after the occurrence of a Default, and whether or not such payment
is required by any of the provisions of this Agreement, (ii) any failure
(because of a failure to meet the conditions of paragraph 12 or otherwise)
by any Loan Party to create, continue or affect by Conversion a Eurocurrency
Loan on the date specified in a notice given under this Agreement or (iii)
any failure by any Loan Party to make any payment of principal on any
Eurocurrency Loan when due (whether by acceleration, mandatory prepayment or
otherwise), then, upon the demand of Lender, the Loan Parties will pay to
Lender such amount as will reimburse Lender for such loss, cost or expense.
If Lender makes such a claim for compensation, it will provide to Borrower a
certificate executed by an officer of Lender setting forth the amount of
such loss, cost or expense in reasonable detail (including an explanation of
the basis for the computation of such loss, cost or expense) and such
certificate will be deemed prima facie correct.
(c) In the event that (i) the adoption or implementation after the
Closing Date of any applicable law, treaty, governmental (or
quasi-governmental) rule, regulation, order or guideline applicable to
Lender, including, without limitation, with respect to capital adequacy or
reserve requirements, or any change therein or any change in the
interpretation or application thereof or (ii) compliance by Lender with any
request or directive regarding capital adequacy (whether or not having the
force of law and whether or not failure to comply therewith would be
unlawful) from any domestic or foreign central bank or governmental agency
or body having jurisdiction, has the effect of reducing the rate of return
on Lender's capital as a consequence of its obligations under this Agreement
or increases the cost to Lender of funding or maintaining the Facility, then
from time to time, within five Business Days after demand from Lender
(including a certificate setting forth in reasonable detail the manner of
calculation of the reduction in the rate of return on Lender's capital and
claiming compensation under this paragraph 2.7(c)), the Loan Parties will
pay to Lender such additional amount or amounts as will compensate Lender
for such reduction or increase in cost. A certificate as to the amount of
such compensation, submitted to Borrower by Lender will, absent manifest
error, be final, conclusive and binding for all purposes. In determining
such amount, Lender may use any averaging and attribution method.
3. GRANT OF SECURITY INTEREST TO LENDER.
(a) As security for the payment of all Loans now or in the future made
by Lender to the Loan Parties hereunder and for the payment or other
satisfaction of all other Obligations, each Loan Party assigns to Lender and
grants to Lender a continuing security interest in the following property of
each Loan Party, whether now or hereafter owned, existing, acquired or
arising and wherever now or hereafter located:
(i) all Accounts and all Goods whose sale, lease or other
disposition by such Loan Party has given rise to Accounts and have
been returned to or repossessed or stopped in transit by such Loan
Party;
(ii) all Chattel Paper, Instruments, Documents and General
Intangibles (including, without limitation, all patents, patent
applications, trademarks, trademark applications, tradenames,
trade secrets, goodwill, copyrights, registrations, licenses,
franchises, customer lists, tax refund claims, claims against
carriers and shippers, guarantee claims, contracts rights,
security interests, security deposits and any rights to
indemnification);
(iii) all Inventory, including, without limitation, all
telephone circuit boards, uninstalled booths, enclosures,
pedestals, fixtures, coin mechanisms, locks and other equipment
physically connected or installed, or to be connected or
installed, therein or thereon;
(iv) all Goods including, without limitation, vehicles and
fixtures;
(v) all Equipment, including, without limitation, all
Payphones and uninstalled pay telephones (new or used);
(vi) all deposits and cash and any other property of such
Loan Party now or hereafter in the possession, custody or control
of Lender or any agent or any parent, affiliate or subsidiary of
Lender or any participant with Lender in the Loans for any purpose
(whether for safekeeping, deposit, collection, custody, pledge,
transmission or otherwise);
(vii) all deposit accounts and monies, including, without
limitation, all cash in such Loan Party's Payphones;
(viii) all real property;
(ix) all actions with respect to preferential transfers,
fraudulent conveyances and other avoidance power claims and any
recoveries of cash or proceeds or property representing recoveries
under 11 U.S.C. ▇▇.▇▇. 544, 547, 548, 549, 550 or 553; and
(x) all additions and accessions to, substitutions for, and
replacements, products and Proceeds of the foregoing property,
including, without limitation, proceeds of all insurance policies
insuring the foregoing property, and all of such Loan Party's
books and records relating to any of the foregoing and to such
Loan Party's business.
(b) Immediately upon a Loan Party's receipt of that portion of the
Collateral which is or becomes evidenced by an agreement, instrument and/or
document, including, without limitation, promissory notes, trade
acceptances, documents of title and warehouse receipts (the "Special
Collateral"), such Loan Party shall deliver the original thereof to Lender,
together with appropriate endorsements or other specific evidence (in form
and substance acceptable to Lender) of assignment thereof to Lender. If an
endorsement or assignment of any such items shall not be made for any
reason, Lender is hereby irrevocably authorized, as such Loan Party's
attorney and agent-in-fact, to endorse or assign the same on such Loan
Party's behalf.
(c) To secure its Obligations, each Loan Party grants, mortgages,
hypothecates and pledges to Lender a continuing lien upon and security
interest in (i) all of the outstanding shares of capital stock of any
Subsidiary existing on the Closing Date and created and owned by such Loan
Party after the Closing Date (collectively, the "Pledged Stock"), (ii) any
securities, dividends or distributions and any other right or property at
any time and from time to time receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Stock and any other
property substituted or exchanged for the Pledged Stock, (iii) all of the
promissory notes described on Schedule 3(c), if any, including any
amendment, modification, renewal or replacement of any such notes and any
future promissory notes held by such Loan Party or its Subsidiaries
(collectively, the "Pledged Notes") and (iv) any and all products or
proceeds of the foregoing. Each Loan Party will deliver to Lender the
certificates representing the Pledged Stock endorsed in blank or accompanied
by appropriate instruments of transfer or assignment in blank and the
Pledged Notes, duly endorsed in blank. Lender will not have any duty to
assure that all certificates representing the Pledged Stock or instruments
representing the Pledged Notes have been delivered to it or any obligation
whatsoever with respect to the care, custody or protection of any
certificates or instruments which may be delivered to it except only to
exercise the same care in physically safekeeping such certificates or
instruments as it would exercise in the ordinary course of its own business.
Lender will not be obligated to preserve or protect any rights with respect
to the Pledged Stock or Pledged Notes or to receive or give any notice with
respect to such Pledged Stock or Pledged Notes whether or not Lender is
deemed to have knowledge of such matters.
4. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN. Each Loan Party shall, at Lender's request, at any time and from
time to time, execute and deliver to Lender such financing statements,
documents and other agreements and instruments (and pay the cost of filing
or recording the same in all public offices deemed reasonably necessary or
desirable by Lender) and do such other acts and things as Lender may deem
necessary or desirable in order to establish and maintain a valid, attached
and perfected security interest in the Collateral in favor of Lender (free
and clear of all other liens, claims and rights of third parties whatsoever,
whether voluntarily or involuntarily created, except Permitted Liens) to
secure payment of the Obligations and in order to facilitate the collection
of the Collateral. Each Loan Party irrevocably hereby makes, constitutes and
appoints Lender (and all Persons designated by Lender for that purpose) as
such Loan Party's true and lawful attorney and agent-in-fact to execute such
financing statements, documents and other agreements and instruments and do
such other acts and things as may be necessary to preserve and perfect
Lender's security interest in the Collateral. Each Loan Party further agrees
that a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement shall be sufficient as a financing
statement.
5. POSSESSION OF COLLATERAL AND RELATED MATTERS. Until an Event of
Default has occurred, each Loan Party shall have the right, except as
otherwise provided in this Agreement, in the ordinary course of each Loan
Party's business, to sell, lease or furnish under contracts of service any
of such Loan Party's Inventory normally held by it for any such purpose and
use and consume any raw materials, work in process or other materials
normally held by such Loan Party for such purpose; provided, that a sale in
the ordinary course of business shall not include any transfer or sale in
satisfaction, partial or complete, of a debt owed by any Loan Party.
(b) If any Loan Party sells any Collateral (other than as set forth in
paragraph 5(a)) or if any of the Collateral is damaged, destroyed or taken
by condemnation, the Loan Parties shall pay to Lender, unless otherwise
specifically provided herein or otherwise agreed to by Lender, as and when
received by the Loan Parties and as a mandatory prepayment of the Term
Loans, if any, to be applied against the last maturing installments of
principal thereof, in the inverse order thereof, or to Advances (or, at
Lender's option, such of the other Obligations of the Loan Parties as Lender
may elect), a sum equal to the proceeds received from (i) such sale or (ii)
such damage, destruction or condemnation; provided, that without Lender's
consent, unless and until an Event of Default has occurred and is
continuing:
(i) obsolete or worn out Equipment may be sold or otherwise
disposed of by a Loan Party and the proceeds thereof may be
retained by such Loan Party, so long as the fair market value of
any such Equipment sold or otherwise disposed of in any single
transaction is less than $15,000 and
the fair market value, in the aggregate, of all such Equipment
sold or otherwise disposed of by such Loan Party during any
twelve-month period is less than $150,000; and
(ii) proceeds of Collateral arising from the damage, destruction or
condemnation thereof may be retained by a Loan Party and used by such Loan
Party to repair, restore or replace such Collateral, as the case may be, so
long as the fair market value of any such Collateral damaged, destroyed or
condemned in any single incident is less than $15,000 and the fair market
value, in the aggregate, of all such Collateral owned by the Loan Parties
during any twelve-month period is less than $150,000.
6. COLLECTIONS.
(a) Subject to the last sentence of this paragraph 6(a), each Loan
Party shall establish an account or accounts (each, a "Blocked Account") in
Lender's name for the benefit of each Loan Party with a financial
institution acceptable to Lender, into which each Loan Party will
immediately deposit (i) all coin collections from Payphones, (ii) all
payments made on Accounts by an Account Debtor and (iii) all payments made
for Inventory or services sold or rendered by such Loan Party, in each case
as received by it in the identical form in which such collections and
payments were made, whether by cash or check. If any Loan Party, any
Affiliate or Subsidiary of a Loan Party, or any shareholder, officer,
director, employee or agent of a Loan Party or any Affiliate or Subsidiary,
or any other Person acting for or in concert with a Loan Party shall receive
any monies, checks, notes, drafts or other payments relating to or as
proceeds of Accounts or other Collateral, each Loan Party and each such
Person shall receive all such items in trust for, and as the sole and
exclusive property of, Lender and, immediately upon receipt thereof, shall
remit the same (or cause the same to be remitted) in kind to the Blocked
Account. Each financial institution with which a Blocked Account is
established shall acknowledge and agree, in a manner satisfactory to Lender,
that the amounts on deposit in such Blocked Account are the sole and
exclusive property of Lender, that such financial institution has no right
to setoff against such Blocked Account or against any other account
maintained by such financial institution into which the contents of such
Blocked Account are transferred, and that such financial institution shall
wire, or otherwise transfer in immediately available funds in a manner
satisfactory to Lender, funds deposited in the Blocked Account in a manner
satisfactory to Lender in its sole discretion as such funds are collected.
Each Loan Party agrees that all payments made to the Blocked Account
established by the Loan Parties or otherwise received by Lender, whether in
respect of the Accounts of a Loan Party or as proceeds of other Collateral
of the Loan Parties or otherwise, will be applied on account of the
Obligations of the Loan Parties in accordance with the terms of this
Agreement. Each Loan Party agrees to pay all fees, costs and expenses which
the Loan Parties incur in connection with opening and maintaining a Blocked
Account. All of such fees, costs and expenses which remain unpaid pursuant
to any Blocked Account Agreement with the Loan Parties, to the extent same
shall have been paid by Lender hereunder, shall constitute Advances
hereunder, shall be payable to Lender by the Loan Parties upon demand, and,
until paid, shall bear interest at the highest rate then applicable to
Advances hereunder. All checks, drafts, instruments and other items of
payment or proceeds of Collateral delivered to Lender in kind shall be
endorsed by the requisite Loan Party, to Lender, and, if that endorsement of
any such item shall not be made for any reason, Lender is irrevocably
authorized to endorse the same on such Loan Party's behalf. For the purpose
of this paragraph, each Loan Party irrevocably makes, constitutes and
appoints Lender (and all Persons designated by Lender for that purpose) as
such Loan Party's true and lawful attorney and agent-in-fact to endorse such
Loan Party's name upon said items of payment and/or proceeds of Collateral
of the Loan Parties and upon any Chattel Paper, document, instrument,
invoice or similar document or agreement relating to any Account of a Loan
Party or goods pertaining thereto, to take control in any manner of any item
of payment or proceeds thereof, to have access to any lock box or postal box
into which any of the Loan Parties' mail is deposited and open and process
all mail addressed to any Loan Party and deposited therein; provided, that
Lender shall not exercise any such powers described in clauses (i) and (ii)
above (except for routine Lock Box payments/proceeds) unless and until an
Event of Default has occurred and is continuing. Notwithstanding anything in
this paragraph 6(a) to the contrary, the Loan Parties agree that should any
Loan Party begin to receive thirteen or more checks per month from Account
Debtors in payment of Accounts, such Loan Party shall, at the request of
Lender, direct all of its Account Debtors to make all payments on the
Accounts directly to a post office box ("Lock Box") with a financial
institution acceptable to, and in the name and under exclusive control of,
Lender. Such Lock Box shall be established under an agreement satisfactory
to Lender in its sole discretion.
(b) Lender may, at any time and from time to time after the occurrence
and during the continuation of an Event of Default, whether before or after
notification to any Account Debtor and whether before or after the maturity
of any of the Obligations, enforce collection of any of the Loan Parties'
Accounts or contract rights by suit or otherwise, exercise all of the Loan
Parties' rights and remedies with respect to proceedings brought to collect
any Accounts, surrender, release or exchange all or any part of any Accounts
of the Loan Parties, or compromise or extend or renew for any period
(whether or not longer than the original period) any indebtedness
thereunder, sell or assign any Account of a Loan Party upon such terms, for
such amount and at such time or times as Lender deems advisable, prepare,
file and sign the requisite Loan Party's name on any proof of claim in
bankruptcy or other similar document against any
Account Debtor indebted on an Account of such Loan Party and do all other
acts and things which are necessary, in Lender's sole discretion, to fulfill
each Loan Party's obligations under this Agreement and to allow Lender to
collect the Accounts. In addition to any other provision hereof, Lender may
at any time on or after the occurrence and during the continuation of an
Event of Default, at the Loan Parties' sole expense, notify any parties
obligated on any of the Accounts of the Loan Parties to make payment
directly to Lender of any amounts due or to become due thereunder.
(c) For the purpose of determining the Borrowing Base hereunder, Lender
shall, upon receipt by Lender of cash or other immediately available funds
from collections of items of payment and proceeds of any Collateral under
this Agreement, apply the whole or any part of such collections or proceeds
against the Advances, until reduced to zero, and then to all other
Obligations (other than Term Loan Obligations) in such order as Lender shall
determine in its sole discretion or such order as may be required by
applicable law; provided, that after the occurrence and during the
continuation of an Event of Default, Lender may, in its discretion, apply
the whole or any part of such collections or proceeds against the Term Loan
Obligations in addition to the other Obligations described above.
7. SCHEDULES AND REPORTS.
(a) Borrower shall deliver to Lender by mail daily (or any other
frequency agreed to by Lender) other than on a day which is not a Business
Day, a report of each Loan Party's cash receipts and copies of all checks
and other payments received from Account Debtors on account of Accounts.
(b) Within five days after the close of each calendar week, and at such
other times as may be requested by Lender from time to time hereafter, each
Loan Party shall deliver to Lender a Borrowing Base certificate for such
week, which shall include calculations of the Borrowing Base (excluding
reserves but including calculations of Eligible Payphones, Eligible Accounts
and Eligible Inventory) and shall otherwise be in form and substance
satisfactory to Lender, together with an aged trial balance of each Loan
Party's Accounts as of the end of such week, along with any adjustments to
such Accounts, a schedule identifying by age each Account a reconciliation
thereof to the above Borrowing Base calculations, and copies of the invoices
when requested by Lender pertaining to each such Account, for the week (or
other applicable period) immediately preceding, (iii) the polling report for
the Payphones, which report sets forth the amount of coins collected from
the Payphones for such week and identifies which Payphones are "out of
service" or otherwise inoperable, (iv) a schedule showing the variance of
the actual amount of coins collected from the Payphones (on a route by route
basis) for the previous week versus the amount of coins reported as
collected from such Payphones for such week, (v) copies of all deposit slips
with respect to the Blocked Accounts and (vi) a Waterfall report and a
PMM/Elcotel report. At such times as may be requested by Lender from time to
time hereafter, each Loan Party shall deliver to Lender (i) such additional
schedules, certificates, reports and information with respect to the
Collateral as Lender may from time to time require and (ii) a collateral
assignment of any or all items of Collateral to Lender. Lender, through its
officers, employees or agents, shall have the right, at any time and from
time to time in Lender's name, in the name of a nominee of Lender or in a
Loan Party's name, to verify the validity, amount or any other matter
relating to any of the Accounts, by mail, telephone, telegraph or otherwise.
Each Loan Party shall reimburse Lender, on demand, for all costs, fees and
expenses incurred by Lender in this regard.
(c) Without limiting the generality of the foregoing, each Loan Party
shall deliver to Lender, at least once a month within ten days after the
close of each fiscal month (or more frequently when requested by Lender), a
report with respect to each Loan Party's Inventory, including a
reconciliation thereof to the above Borrowing Base calculations and
designations of balances. Each Loan Party shall immediately notify Lender of
any event causing loss or depreciation in value of such Inventory (other
than normal depreciation occurring in the ordinary course of business).
(d) Each Loan Party shall deliver to Lender, at lease once a month
within ten days after the close of each fiscal month (or more frequently
when requested by Lender), (i) the results of each monthly physical
inventory performed by or on behalf of the Loan Parties, (ii) bank
statements for each deposit or other account maintained by the Loan Parties
(including, without limitation, the Blocked Accounts), (iii) the
polling report for the Payphones for such month (substantially the same as
the polling report delivered weekly under paragraph 7(b)), (iv) a Waterfall
report, a PMM/Elcotel report and MIST (Management Information Systems
Technology) report, (v) an aged trial balance of each Loan Party's Accounts
(including a reconciliation of such aged trial balance to such Loan Party's
general ledger and financial statements delivered under paragraph 10.1(a))
and accounts payable as of the end of such month, (vi) a schedule of
Eligible Accounts accruals, (vii) a schedule of (a) intercompany receivables
(including, without limitation, the amount outstanding under any
Intercompany Note) owing from Affiliates, (b) amounts paid to Affiliates
(including amounts paid on intercompany Indebtedness and dividends) and (c)
Indebtedness accrued to an Affiliate, (viii) calculations of Eligible
Inventory, (ix) spreadsheets showing all daily deposits of coins made by
Brinks or other similar collectors and (x) calculations (and backup
information) showing Gross Revenue (with all non-coin "Dial Around
Receivables" from Payphones being determined on a per Payphone basis), minus
telephone bills, commissions and Payphone related maintenance expenses per
Payphone for the immediately preceding twelve months, along with a master
list of Payphones with Gross Revenue (as described above) of less than $1
for such period. In addition, within ten days after the end of each Fiscal
Quarter, the Loan Parties will provide Lender with a master list of
locations for all of the Loan Parties' Payphones.
(e) All schedules, certificates, reports and assignments and other
items delivered by a Loan Party to Lender hereunder shall be executed by an
authorized representative of such Loan Party and shall be in such form and
contain such information as Lender shall reasonably request. Each Loan Party
shall deliver from time to time such other schedules and reports pertaining
to the Collateral as Lender may reasonably request.
8. TERMINATION. (a) This Agreement shall be in effect from the Closing
Date until the fifth anniversary of the Closing Date (the "Original Term")
and shall automatically renew itself from year to year thereafter (each such
one year renewal being referred to herein as a "Renewal Term") unless (i)
the due date of the Obligations is accelerated pursuant to paragraph 11.2 or
(ii) Borrower elects or Lender elects to terminate this Agreement at the end
of the Original Term or at the end of any Renewal Term by giving the other
party written notice of such election at least 90 days prior to the end of
the Original Term or the then current Renewal Term, in which case the Loan
Parties shall pay all of the Obligations in full on the last day of such
term. If one or more of the events specified in clause (i) or (ii) above
occurs, this Agreement shall terminate on the date thereafter that the
Obligations are paid in full; provided, that the security interests and
liens created under the Loan Documents shall survive such termination until
the date upon which payment and satisfaction in full of the Obligations
shall have occurred. At such time as the Loan Parties have repaid all of the
Obligations and this Agreement has terminated, (i) each Loan Party shall
deliver to Lender a release, in form and substance reasonably satisfactory
to Lender, of all obligations and liabilities of Lender and its officers,
directors, employees, agents, parents, subsidiaries and affiliates to the
Loan Parties, and if the Loan Parties are obtaining new financing from
another lender, each Loan Party shall deliver such Loan Party's
indemnification of Lender, in form and substance satisfactory to Lender, for
checks which Lender has credited to each Loan Party's account, but which
subsequently are dishonored for any reason and (ii) upon the Loan Parties'
request, Lender shall deliver to the Loan Parties a release in form and
substance reasonably satisfactory to the Loan Parties.
9. WARRANTIES AND REPRESENTATIONS.
9.1 General Warranties and Representations. Each Loan Party warrants
and represents that at all times during the Original Term and any Renewal
Term of this Agreement:
(a) Each Loan Party is a corporation duly organized and existing and in
good standing under the laws of the state of its incorporation and is
qualified or licensed to do business in all other countries, states and
provinces the laws of which require such Loan Party to be so qualified or
licensed;
(b) Each Loan Party has good, indefeasible and merchantable title to
and ownership of the Collateral, free and clear of Liens, except those of
Lender and Permitted Liens; the Equipment is in good operating condition and
repair (other than ordinary wear and tear);
(c) Except as set forth in Schedule 9.1(c), no Loan Party is a party to
any contract, lease, license agreement or other agreement or subject to any
charge, corporate restriction, judgment, decree or order which could
reasonably be expected to have a Material Adverse Effect, and is not a party
to any labor dispute, and there are no strikes or walkouts relating to any
labor contract, and no such contract is scheduled to expire during the
Original Term; each material license is in full force and effect and no
event has occurred or failed to occur which with the giving of notice or
passage of time or both would constitute a default under any such license;
(d) Except as set forth in Schedule 9.1(d), no Loan Party is in
violation of any applicable statute, regulation or ordinance of any
governmental entity, or of any agency thereof, which could reasonably be
expected to have a Material Adverse Effect;
(e) No Loan Party is in default with respect to any indenture, loan
agreement, mortgage, deed or any other material agreement or lease to which
it is a party or by which it is bound;
(f) No Loan Party has received any notice to the effect that it is not
in full compliance with any of the requirements of ERISA, and the
regulations promulgated thereunder and, to the best knowledge of each Loan
Party's executive officers, there exists no event described in Section
4043(b)(3) thereof ("Reportable Event");
(g) Except as set forth on Schedule 9.1(g), each Loan Party has filed
all federal, state and local tax returns and other reports it is required by
law to file and has paid, to the extent due and payable, all taxes, levies,
assessments, charges, liens, claims or encumbrances upon or relating to the
Collateral, the Obligations, its employees, payroll, income, and gross
receipts, its ownership or use of any of its assets, and any other aspect of
its business (collectively, the "Charges"), other than (i) those that are
being contested as set forth in paragraph 10.4(b) and (ii) those that do
not, in the aggregate, relate to an amount in excess of $10,000;
(h) The offices or locations where each Loan Party keeps the Collateral
and books and records concerning the Collateral, including, without
limitation, computer programs, printouts and other computer materials, are
at the locations set forth on Schedule 9.1(h);
(i) The addresses specified on Schedule 9.1(h) include and designate
each Loan Party's chief executive office, chief place of business and other
offices and places of business and are the Loan Parties' sole offices and
places of business;
(j) No Loan Party has, during the preceding five years, been known as
or used any other corporate, trade or fictitious name, except as disclosed
on Schedule 9.1(j);
(k) Each Loan Party has the right and power and is duly authorized and
empowered to enter into, execute, deliver and perform this Agreement and the
other Agreements, and its officers executing and delivering the Loan
Documents are duly authorized and empowered to do so;
(l) The execution, delivery and performance by each Loan Party of the
Loan Documents shall not, by the lapse of time, the giving of notice or
otherwise, constitute a violation of any applicable law or a breach of any
provision contained in its articles or certificate of incorporation or
by-laws or contained in any agreement, instrument or document to which it is
now a party or by which it is bound;
(m) Except as set forth on Schedule 9.1(m), each Loan Party has, and is
current and in good standing with respect to, all governmental approvals,
permits, certificates, inspections, consents and franchises necessary to
continue to conduct its business as heretofore conducted, and to own or
lease and operate the properties now owned or leased by it, other than those
approvals, permits, certificates, inspections, consents and franchises of
which the failure to obtain would not be reasonably likely to have a
Material Adverse Effect;
(n) After giving effect to the initial Advance, the transactions
contemplated by the Loan Documents and the payment of all estimated legal,
accounting and other fees related hereto and thereto, the Loan Parties, on a
consolidated basis, will be Solvent as of the date of the initial Advance
and at all times thereafter;
(o) The Financials as set forth on Schedule 9.1(o)(1) have been
prepared in accordance with GAAP and fairly present the assets, liabilities
and financial condition and results of operations of the Loan Parties and
such other Persons described therein as of the dates thereof; there are no
omissions or other facts or circumstances which are or may be material and
no event has occurred since the date of the Financials and is continuing
which could reasonably be expected to have a Material Adverse Effect; there
exists no equity or long term investments in, or outstanding advances to,
any Person not reflected in the Financials on the Closing Date; except for
trade payables arising in the ordinary course of its business since the
dates reflected in the Financials and except as disclosed on Schedule
9.1(o)(2) and in the Financials, on the Closing Date no Loan Party has any
actions or proceedings pending or has any Indebtedness or has guaranteed the
obligations of any other Person;
(p) The execution and delivery of the Loan Documents by each Loan Party
does not directly or indirectly violate or result in a violation of Section
7 of the Securities and Exchange Act of 1934, as amended, or any regulations
issued pursuant thereto, including, without limitation, Regulations U, T and
X of the Board of Governors of the Federal Reserve System, and no Loan Party
owns or intends to purchase or carry any "margin security" as defined in
said Regulations;
(q) No Loan Party is in default in the payment when due of any
Indebtedness;
(r) Each Loan Party has sufficient personnel and possesses adequate
assets, licenses, patents, patent applications, copyrights, trademarks and
trade names to continue to conduct its business as heretofore conducted by
it, and all such licenses, patents, patent applications, copyrights,
trademarks and trade names are listed on Schedule 9.1(r);
(s) Schedule 9.1(s) lists all owned and leased real property, and,
except as described in Schedule 9.1(s), no Loan Party is a party to any
contract or agreement for the sale, transfer, assignment or other
disposition of the real property or any portion thereof or interest therein;
(t) The Liens granted to Lender pursuant to this Agreement are fully
perfected first priority Liens in and to the Collateral, subject only to
Permitted Liens;
(u) No event has occurred since May 31, 1998, and is continuing which
has had or could reasonably be expected to have a Material Adverse Effect;
(v) All premises and facilities owned, leased, used or operated by any
Loan Party or any Subsidiary of a Loan Party or, to the knowledge of any of
the Loan Parties' executive officers, after a reasonable investigation, any
predecessor in interest, have been, and continue to be, owned, leased, used
or operated in compliance in all material respects with all applicable
Environmental Laws. With respect to each Loan Party and each Subsidiary of
each Loan Party, or, to the knowledge of any of the Loan Parties' executive
officers, after a reasonable investigation, any predecessor in interest (i)
no environmental audits, assessments or occupational health studies have
been undertaken by, or at the direction of, governmental agencies, (ii)
there has been no claim or complaint concerning environmental matters and
(iii) no permits are necessary under any Environmental Laws;
(w) No broker or finder acting on behalf of any Loan Party brought
about the obtaining, making or closing of the loans pursuant to this
Agreement and no Loan Party has any obligation to any other Person in
respect of any finder's or brokerage fees in connection with the loans
contemplated by this Agreement;
(x) There has been no material change in the credit terms or policies
which any Loan Party offers to its customers from those disclosed to Lender
prior to the date of this Agreement;
(y) No information contained in the Loan Documents, the Financials or
any written statement furnished by or on behalf of any Loan Party pursuant
to the terms of this Agreement, which has previously been delivered to
Lender, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein
not misleading at the time and in light of the circumstances under which
made; and
(z) Except as set forth on Schedule 9.1(z), there are no actions,
suits, claims, investigations or proceedings which are pending or, to the
best knowledge of the Loan Parties' executive officers, threatened, against
or affecting any Loan Party, its assets, goodwill or business or any other
Person which could reasonably be expected to have a Material Adverse Effect
or would impair ability of any Loan Party to perform its obligations under
the Loan Documents or would impair Lender's ability to enforce any
Obligations or realize upon any Collateral.
9.2 Account Warranties and Representations. With respect to its
Accounts, each Loan Party warrants and represents to Lender that Lender may
rely, in determining which Accounts listed on any schedule of Accounts are
Eligible Accounts, on all statements or representations made by any Loan
Party on or with respect to any such schedule and, unless otherwise
indicated in writing by such Loan Party, that:
(a) They are genuine, are in all respects what they purport to be, are
not evidenced by a judgment and are evidenced by executed original
instruments, agreements, contracts, or documents, which will be delivered to
Lender upon request therefor;
(b) They represent undisputed bona fide transactions completed in
accordance with the terms and provisions contained in any documents related
thereto;
(c) The face amounts shown on any schedule of Accounts provided to
Lender and all invoices and statements delivered to Lender with respect to
any Account are actually and absolutely owing to a Loan Party and are not
contingent for any reason;
(d) To the best knowledge of the Loan Parties' executive officers,
there are no setoffs, counterclaims or disputes existing or asserted with
respect thereto and no Loan Party has made any agreement with any Account
Debtor thereunder for any deduction therefrom, except discounts or
allowances allowed by such Loan Party in the ordinary course of its business
for prompt payment, all of which discounts and allowances are either (i)
reflected in the calculation of the face amount of the invoices to which
such discounts or allowances relate or (ii) evidenced on a general ledger
account of such Loan Party;
(e) To the best knowledge of the Loan Parties' executive officers,
there are no facts, events or occurrences which in any way impair the
validity or enforcement thereof or tend to reduce the amount payable
thereunder from the invoice face amount shown on any schedule of Accounts
and on all contracts, invoices and statements delivered to Lender with
respect thereto;
(f) To the best knowledge of the Loan Parties' executive officers, all
Account Debtors thereunder (i) had the capacity to contract at the time any
contract or other document giving rise to the Account was executed and (ii)
are Solvent;
(g) They are not subject to any Liens, except for Permitted Liens;
(h) No executive officer of any Loan Party has knowledge of any fact or
circumstance which would impair the validity or collectability thereof;
(i) To the best knowledge of the Loan Parties' executive officers,
there are no proceedings or actions which are threatened or pending against
any Account Debtor thereunder which could reasonably be expected to have a
Material Adverse Effect;
(j) The goods giving rise thereto are not, and were not at the time of
the sale thereof, subject to any Liens, except Permitted Liens and those
removed or terminated prior to the date hereof; and
(k) They comply in all respects with all applicable laws and
regulations, including, but not limited to, truth-in-lending and consumer
credit disclosure laws and regulations and, in the case of Account Debtors
who are subject to section 524(c) of the Bankruptcy Code.
9.3 Inventory Warranties and Representations. With respect to its
Inventory, each Loan Party warrants and represents to Lender that Lender may
rely, in determining which items of Inventory listed on any Schedule of
Inventory are Eligible Inventory, on all statements or representations made
by each Loan Party or with respect to any such Schedule and, unless
otherwise indicated in writing by a Loan Party that:
(a) All Inventory is located on premises listed on Schedule 9.1(h);
(b) No Inventory is now, or shall at any time or times hereafter be,
stored with a bailee, warehouseman or similar party without Lender's prior
written consent and if Lender gives such consent, a Loan Party will
concurrent therewith, cause any such bailee, warehouseman or similar party
to issue and deliver to Lender, in form and substance acceptable to Lender,
warehouse receipts therefor in Lender's name;
(c) No Inventory is under consignment to any Person; and
(d) All Inventory is currently usable or currently salable in the
normal course of a Loan Party's business.
9.4 Year 2000 Problem. The Loan Parties and their respective
Subsidiaries have reviewed the areas within their business and operations
which could be adversely affected by, and have developed or are developing a
program to address on a timely basis, the "Year 2000 Problem" (specifically,
the risk that the computer applications used by the Loan may be unable to
recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999). Based on such review
and program, the Loan Parties reasonably believe that the "Year 2000
Problem" will not have a Material Adverse Effect.
9.5 Warranty and Reaffirmation of Warranties and Representations;
Survival of Warranties and Representations.Each request for an Advance or a
Term Loan made by Borrower pursuant to the Loan Documents shall constitute
(i) a warranty and representation by each Loan Party to Lender that there
does not then exist an Event of Default or a Default, except as otherwise
notified in writing to Lender by a Loan Party and (ii) a reaffirmation as of
the date of said request of the representations and warranties of the Loan
Parties contained in paragraphs 9.1, 9.2, 9.3 and 9.4. All representations
and warranties of the Loan Parties contained in the Loan Documents shall
survive the execution, delivery and acceptance thereof by the parties
thereto and the closing of the transactions described therein or related
thereto.
10. COVENANTS AND CONTINUING AGREEMENTS.
10.1 Affirmative Covenants. Each Loan Party covenants that it shall:
(a) Keep books of account and prepare financial statements and shall
cause to be furnished to Lender the following (all of the foregoing and
following to be kept and prepared in accordance with GAAP):
(i) as soon as available, but not later than 90 days after
the close of each Fiscal Year of the Loan Parties hereafter,
audited consolidated financial statements (including, without
limitation, profit and loss statements, balance sheets, cash flow
statements and reconciliations of retained earnings) of the Loan
Parties and their Subsidiaries as at the end of such year
certified by a firm of independent certified public accountants of
recognized standing, reasonably acceptable to Lender and selected
by the Loan Parties (and which has acknowledged a letter of the
type referred to in paragraph 12.4(l)), together with any
management letter or other letters or certificates supplied by the
Loan Parties to such accountants;
(ii) concurrently with the delivery of the financial
statements described in clause (ii) above, (A) a statement in
reasonable detail showing the calculations used in determining the
financial covenants and (B) a certificate of such certified public
accountants certifying to Lender that, based upon their
examination of the affairs of the Loan Parties performed in
connection with the preparation of said financial statements, they
are not aware of the existence of any condition or event which
constitutes or would, upon notice or lapse of time or both,
constitute an Event of Default or, if they are aware of such
condition or event, the nature thereof;
(iii) as soon as available, but not later than 25 days after
the end of each month thereafter, unaudited interim internal,
consolidating and consolidated income statements, an unaudited
internal consolidated balance sheet and an unaudited internal
consolidated statement of cash flows of the Loan Parties and their
Subsidiaries as at the end of the portion of the Loan Parties'
Fiscal Year then elapsed, together with (A) a statement in
reasonable detail showing the calculations used in determining the
financial covenants and dividends paid and (B) the certification
of each Loan Party's principal financial officer that all such
financial statements were prepared in accordance with GAAP
(subject to normal year-end adjustments and the absence of
footnotes) and fairly present the financial position and results
of operations of the Loan Parties for such period;
(iv) as soon as possible, but not later than 30 days
following the beginning of each Fiscal Year, a copy of the Loan
Parties operating plan for such Fiscal Year, as approved by the
board of directors of each Loan Party, which shall include (a)
monthly profit and loss, balance sheet and cash flow projections,
(b) projected compliance with financial covenants and (c)
projected Excess Availability for each month during such Fiscal
Year, in each case for the Loan Parties and operating groups on a
consolidating and consolidated basis, and a Capital Expenditure
budget, all in reasonable detail;
(v) such other data and information (financial and otherwise)
as Lender, from time to time, may reasonably request, bearing upon
or related to the Collateral, each Loan Party's financial
condition or results of operations;
(b) Promptly upon, but in no event later than three Business Days
after, any Loan Party learning thereof, inform Lender, in writing, of (i)
any material delay in a Loan Party's performance of any of its obligations
to any Account Debtor and of any assertion of any material claims, offsets
or counterclaims by any Account Debtor and of any material allowances,
credits or other monies granted by any Loan Party to any Account Debtor,
(ii) all material adverse information relating to the financial condition of
any Account Debtor, (iii) any facts relating to any Account or Inventory
which would render untrue any representation or warranty made pursuant to
paragraphs 9.2 or 9.3 hereof with respect to such Account or Inventory and
(iv) any litigation affecting any Loan Party, whether or not the claim is
considered by a Loan Party to be covered by insurance, and of the
institution of any suit or administrative proceeding which litigation, suit
or administrative proceeding could reasonably be expected to have a Material
Adverse Effect;
(c) Keep and maintain the Equipment in good operating condition and
repair (ordinary wear and tear excepted); make all necessary replacements
thereof so that the value and operating efficiency thereof shall at all
times be maintained and preserved; promptly inform Lender of any material
additions to or deletions from
the Payphones; on a monthly basis inform Lender of any additions to or
deletions from Equipment (other than Payphones); and prevent any such
Equipment from becoming a fixture to real estate or accession to other
personal property;
(d) Pay, and cause its Subsidiaries to pay, promptly when due, all of
the Charges and promptly discharge any Liens, encumbrances or other claims
against the Collateral, other than Permitted Liens;
(e) Maintain, and cause each Subsidiary to maintain, such insurance as
may be required by law and such other insurance to such extent and against
such hazards and liabilities as is customarily maintained by companies
similarly situated and (i) include Lender as an additional insured on all
liability policies and (ii) provide Lender with a loss payee endorsement in
favor of Lender satisfactory to Lender;
(f) Comply, and cause each Subsidiary to comply with all applicable
Environmental Laws, other than those Environmental Laws of which the failure
to comply with would not be reasonably likely to have a Material Adverse
Effect. Each Loan Party covenants that it will notify Lender, and cause each
Subsidiary to notify Lender, promptly in the event of any Release of any
Hazardous Substance reportable under Section 103 of CERCLA upon any premises
owned or operated by any Loan Party or any Subsidiary, and promptly forward,
and cause each Subsidiary to promptly forward, to Lender a copy of any
order, notice, permit, application, or any other communication or report in
connection with any such Release of any Hazardous Substance or any other
matter relating to the Environmental Laws as they may affect such premises.
The Loan Parties shall indemnify Lender and hold Lender harmless from and
against any loss, liability, damage or expense, including attorneys' fees,
suffered or incurred by Lender, whether as mortgagee pursuant to any
mortgage or leasehold mortgage, as mortgagee in possession, or as successor
in interest to any Loan Party or any of its Subsidiaries as owner or lessee
of any premises by virtue of foreclosure or acceptance of deed in lieu of
foreclosure (i) under or on account of the Environmental Laws, including the
assertion of any lien thereunder and (ii) with respect to any Release of any
Hazardous Substance whether or not reportable under Section 103 of CERCLA
affecting such premises or facility, whether or not the same originates or
emanates from such premises or any contiguous real estate, including any
loss of value of such premises as a result of a Release of any Hazardous
Substance; provided, that the Loan Parties will not be liable for such
indemnification to Lender to the extent that any such loss, liability,
damage or expense results from the gross negligence or willful misconduct of
the Person who would otherwise be entitled to be indemnified pursuant to
this paragraph 10.1(f);
(g) Keep or cause to be kept in full force and effect each material
license of any Loan Party;
(h) Furnish to Lender (i) promptly after the filing thereof with the
Commission, a copy of each report, notice or other filing, if any, by any
Loan Party with the Commission and (ii) a copy of each written communication
received by any Loan Party from or delivered by any Loan Party to the
Commission, promptly after such receipt or delivery;
(i) Permit representatives of Lender, from time to time and, absent the
continuation of an Event of Default, during normal business hours, as often
as may be reasonably requested, to visit and inspect all properties of the
Loan Parties for all reasonable purposes to protect the interests, financial
or otherwise, of Lender under the Loan Documents;
(j) Provide Lender with a landlord agreement duly executed by the
lessor of any new real property that a Loan Party leases after the Closing
Date; and
(k) By September 30, 1998, provide Lender with a letter from each Loan
Party to its independent certified public accountant advising that each Loan
Party intends Lender to rely on the opinions and reports of such accountants
described in paragraph 10.1(a)(i) and (ii).
10.2 Negative Covenants. Without Lender's prior written consent, which
Lender may or may not in its sole discretion give, each Loan Party covenants
that it shall not:
(a) Merge or consolidate with or acquire any Person other than pursuant
to a Permitted Acquisition; provided, that if a Loan Party is not the
surviving entity in any Permitted Acquisition that is a merger, the
surviving entity must expressly assume this Agreement and the Obligations in
a written instrument acceptable to Lender;
(b) Make any investment other than in the ordinary course of its
business other than pursuant to a Permitted Acquisition;
(c) Declare or pay dividends upon any of its capital stock or make any
distributions of its property or assets; provided, that (i) Borrowing
Subsidiary may declare or pay dividends upon its stock to Borrower and its
other shareholders and (ii) Borrower may declare or pay dividends upon its
stock to AMNEX in an amount not to exceed $100,000 in any month so long as
no Default or Event of Default has occurred and is continuing and the Loan
Parties' Debt Coverage Ratio (measured on a consolidated basis) will not be
less that 1.3:1.0 after giving effect to such dividend for (i) the period
from January 1, 1998, to the date of measurement, if such dividend is paid
on or before December 31, 1998, and (ii) the immediately preceding 12 months
if such dividend is paid after December 31, 1998;
(d) Redeem, retire, purchase or otherwise acquire, directly or
indirectly, any of its capital stock, or make any material change in its
capital structure (including, without limitation, issuing additional stock)
or in any of its business objectives, purposes and operations which might in
any way adversely affect the repayment of the Obligations;
(e) Enter into, or be a party to, any transaction with any Affiliate,
except in the ordinary course of and pursuant to the reasonable requirements
of its business and upon fair and reasonable terms which are fully disclosed
to Lender and are no less favorable to such Loan Party than would be
obtained in a comparable arm's length transaction with a Person not an
Affiliate;
(f) Guarantee or otherwise, in any way, become liable with respect to
the obligations or liabilities of any Person except (i) its Affiliates'
obligations to Lender and (ii) by endorsement of instruments or items of
payment for deposit to its general account or for delivery to Lender on
account of the Obligations;
(g) Except as otherwise expressly permitted in the Loan Documents,
encumber, pledge, mortgage, grant a security interest in, assign, sell
(except for the sale of inventory and property in the ordinary course of
business), lease or otherwise dispose of or transfer, whether by sale,
merger, consolidation, liquidation, dissolution, or otherwise, any of its
assets;
(h) Make any loans or advances of money to any Person, including,
without limitation, its employees or Affiliates, other than (i) salary and
routine travel or expense account advances made in the ordinary course of
business and (ii) the loans between Borrower and Borrowing Subsidiary
evidenced by the Intercompany Notes;
(i) Permit the annual salary and bonus, including any stock option or
incentive plans, to its executive officers to exceed the terms agreed upon
and disclosed to Lender in writing prior to the Closing except as such
amounts and all other direct and indirect remuneration may be adjusted for
cost of living increases, without the prior written consent of Lender;
(j) Make Capital Expenditures (including Capital Leases) during any
Fiscal Year, which, in the aggregate, exceed $1,440,000;
(k) Remove its books and records and/or the Collateral from the
locations set forth in Schedule 9.1(h) or keep any of such books and records
and/or the Collateral at any other office(s) or location(s) unless (i) Loan
Parties give Lender written notice thereof and of the new location of said
books and records and/or the Collateral at least 30 days prior thereto and
(ii) the other office or location is within the continental United States of
America;
(l) Create, incur, assume or have outstanding any Indebtedness, except
(i) Indebtedness owing to Lender, (ii) Indebtedness incurred by it in the
ordinary course of business, other than Indebtedness for borrowed money,
(iii) Indebtedness evidenced by the Intercompany Notes; provided, that such
Indebtedness consist only of the proceeds of Advances, (iv) Indebtedness
incurred in connection with Permitted Acquisitions; provided, that such
Indebtedness (a) is owing to the seller or transferor in such Permitted
Acquisition, (b) is unsecured and (c) is subordinated to the Obligations in
a manner satisfactory to Lender in its sole discretion, (v) Indebtedness
owing to AMNEX or its Affiliates in connection with expenses of the Loan
Parties paid for by such Person so long as such Indebtedness is reasonable
and supported by appropriate documentation or (vi) Indebtedness existing on
the date hereof and set forth on Schedule 9.1(o); provided, that
notwithstanding anything in the foregoing to the contrary, Borrowing
Subsidiary will not allow any Indebtedness permitted under clauses (ii),
(iv) and (vi) to exceed $250,000 in the aggregate at any one time
outstanding;
(m) (i) Make any payments on Indebtedness in an amount of $2,393,880
owing to American Network Exchange, Inc., an Affiliate of the Loan Parties,
other than (a) a $1,000,000 payment on or promptly after the Closing Date
and (b) payments in excess of $250,000 during any Fiscal Quarter until such
Indebtedness is paid in full and (ii) allow payments to be made on
Indebtedness described in paragraph 10.2(l)(v) by setoff, intercompany
reconciliation or in any manner other than the actual transfer of funds;
(n) Create or permit any Lien on any of its properties or assets except
(i) presently existing or hereinafter created Liens in favor of Lender and
(ii) Permitted Liens;
(o) Enter into any contract with its customers after the Closing Date
that is in a form that differs from the form submitted to Lender prior to
the Closing Date (other than contracts acquired in a Permitted Acquisition),
unless Lender approves such other form; or
(p) Create any new Subsidiaries.
10.3 Financial Covenants.
(a) The Loan Parties will not permit their Debt Service Coverage Ratio
to be, on a consolidated basis, less than 1.1:1.0 (i) as of August 31, 1998,
for the eight immediately preceding months ended on such date, (ii) as of
September 30, 1998, for the nine immediately preceding months ended on such
date, (iii) as of October 31, 1998, for the ten immediately preceding months
ended on such date, (iv) as of November 30, 1998, for the eleven immediately
preceding months ended on such date and (v) as of December 31, 1998, and at
the end of each month thereafter for the immediately preceding 12 months;
(b) The Loan Parties will not permit their Interest Coverage Ratio to
be, on a consolidated basis, less than 1.5:1.0 (i) as of August 31, 1998,
for the eight immediately preceding months ended on such date, (ii) as of
September 30, 1998, for the nine immediately preceding months ended on such
date, (iii) as of October 31, 1998, for the ten immediately preceding months
ended on such date, (iv) as of November 30, 1998, for the eleven immediately
preceding months ended on such date and (v) as of December 31, 1998, and at
the end of each month thereafter for the immediately preceding 12 months;
(c) The Loan Parties will not permit their EBITDA divided by the number
of their installed and operating Payphones to be, on a consolidated basis,
less than (i) $40 (a) as of August 31, 1998, for the eight immediately
preceding months ended on such date, (b) as of September 30, 1998, for the
nine immediately preceding months ended on such date, (c) as of October 31,
1998, for the ten immediately preceding months ended on such date, (d) as of
November 30, 1998, for the eleven immediately preceding months ended on such
date and (e) at the end of each month commencing December 31, 1998, and
ending on July 31, 1999, for the immediately preceding 12 months and (ii)
$50 on August 31, 1999, and at the end of each month thereafter for the
immediately preceding 12 months; and
(d) The Loan Parties will not permit their Gross Revenue divided by the
number of their installed and operating Payphones to be, on a consolidated
basis, less than (i) $180 (a) as of August 31, 1998, for the eight
immediately preceding months ended on such date, (b) as of September 30,
1998, for the nine immediately preceding months ended on such date, (c) as
of October 31, 1998, for the ten immediately preceding months ended on such
date, (d) as of November 30, 1998, for the eleven immediately preceding
months ended on such date and (e) as of December 31, 1998, and January 31,
1999, for the immediately preceding 12 months, (ii) $190 at the end of each
month commencing February 28, 1999, and ending on July 31, 1999, for the
immediately preceding 12 months and (iii) $200 on August 31, 1999, and at
the end of each month thereafter for the immediately preceding 12 months;
10.4 Payment of Charges and Claims.
(a) If any Loan Party, at any time or times hereafter, shall fail to
pay the Charges when due or promptly obtain the discharge of such Charges or
of any Lien against the Collateral, subject to the provisions of paragraph
10.4(b), Lender may, without waiving or releasing any obligation or
liability of the Loan Parties hereunder or any Event of Default, in its sole
discretion, at any time or times thereafter, make such payment, or any part
thereof, or obtain such discharge and take any other action with respect
thereto which Lender deems advisable. All sums so paid by Lender and any
expenses, including reasonable attorneys' fees, court costs, expenses and
other charges relating thereto, shall be payable, upon demand, by the Loan
Parties to Lender and shall be additional Obligations hereunder secured by
the Collateral.
(b) Any Loan Party may in good faith contest, by proper legal actions
or proceedings, the validity or amount of any Charges or claims, and
provided that such Loan Party gives Lender advance notice of its intention
to contest the validity or amount of any such Charge or claim, Lender will
forebear from making any payment or otherwise obtaining the discharge of
such Charge or claim if at the time of the commencement of any such action
or proceeding, and during the pendency thereof (i) reserves with respect
thereto are maintained on the books of such Loan Party in an amount
acceptable to Lender, (ii) such contest operates to suspend collection of
the contested Charges or claims and is maintained and prosecuted
continuously with diligence, (iii) none of the Collateral will be subject to
forfeiture or loss of any Lien in favor of Lender by reason of the
institution or prosecution of such contest, (iv) no Lien shall exist for
such Charges or claims during such action or proceeding, (v) such Loan Party
shall promptly pay or discharge such contested Charges and all additional
charges, interests, penalties and expenses, if any, and shall deliver to
Lender evidence acceptable to Lender of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to such
Loan Party and (vi) Lender has not advised such Loan Party in writing that
Lender reasonably believes that non-payment or non-discharge thereof would
have a Material Adverse Effect.
11 EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.
11.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) Any Loan Party fails to pay the Obligations when due and payable or
declared due and payable;
(b) Lender notifies the Loan Parties that the outstanding balance of
the Advances exceeds the limitation set forth under paragraph 2.1(a) and
such condition is not corrected within two Business Days after such notice;
(c) Any Loan Party fails or neglects to perform, keep or observe any of
the provisions of paragraphs 10.2 and 10.3;
(d) Any Loan Party or any Affiliate or any Guarantor of the Obligations
fails to perform, keep or observe any other term, provision, condition or
covenant contained in the Loan Documents, which is required to be performed,
kept or observed by such Loan Party, Guarantor or Affiliate, and such
failure is
not cured to Lender's satisfaction within 15 days after the sooner to occur
of the Loan Parties' receipt of notice of such failure from Lender or the
date on which such failure becomes known to any officer of a Loan Party but
provided such failure is capable of being cured within such 15 day period;
(e) Any representation or warranty now or hereafter made by any Loan
Party or any Affiliate or any Guarantor of the Obligations under this
Agreement or any other Loan Document is untrue or incorrect in any material
respect when made;
(f) A default shall occur under any agreement, document or instrument,
other than the Loan Documents, to which any Loan Party or Guarantor is a
party, the consequences of which could reasonably be expected to have a
Material Adverse Effect;
(g) Any statement, report, financial statement or certificate made or
delivered by a Loan Party, or any of its officers, employees or agents, to
Lender is untrue, incomplete or incorrect in any material respect;
(h) There shall occur any material uninsured damage to, or loss, theft
or destruction of, any of the Collateral;
(i) The Collateral or any other assets of any Loan Party are attached,
seized, levied upon or subjected to a writ or distress warrant, or come
within the possession of any receiver, trustee, custodian or assignee for
the benefit of creditors and the same is not cured within 45 days
thereafter; an application is made by any Person, other than a Loan Party,
for the appointment of a receiver, trustee, or custodian for any assets of
any Loan Party and the same is not dismissed within 45 days after the
application therefor;
(j) A Loan Party or Guarantor is the subject of an Insolvency
Proceeding;
(k) Any Loan Party or Guarantor ceases to conduct its business as now
conducted or is enjoined, restrained or in any way prevented by court order
from conducting all or any material part of its business affairs; a petition
under any section or chapter of the Bankruptcy Code or any similar law or
regulation is filed against such Loan Party or Guarantor or any case or
proceeding is filed against such Loan Party or Guarantor for its dissolution
or liquidation, and such injunction, restraint or petition is not dismissed
within 45 days after the entry or filing thereof;
(l) A notice of lien, levy or assessment is filed of record with
respect to all or any assets of any Loan Party or any Guarantor by the
United States, or any department, agency or instrumentality thereof, or by
any state, county, municipal or other governmental agency, including,
without limitation, the Pension Benefit Guaranty Corporation, or if any
taxes or debts owing at any time or times hereafter to any one of these
becomes a lien or encumbrance upon any assets of any Loan Party or Guarantor
and the same is not released within 30 days after the same becomes a lien or
encumbrance; provided, that such Loan Party shall have the right to contest
in good faith and by appropriate proceedings any such lien, levy or
assessment if such Loan Party or Guarantor provides Lender with a bond or
indemnity satisfactory to Lender assuring the payment of such lien, levy or
assessment;
(m) A Loan Party or Guarantor fails to remain Solvent;
(n) A Loan Party fails to (i) furnish Lender, within 15 days
thereafter, with written notice upon the occurrence of any of the following
events: (a) the happening of a Reportable Event with respect to any pension
plan of such Loan Party governed by ERISA; (b) the termination of any such
plan; (c) the appointment of a trustee by an appropriate United States
District Court to administer any such plan; or (d) the institution of any
proceedings by the Pension Benefit Guaranty Corporation to terminate any
such plan or to appoint a trustee to administer any such plan or (ii) notify
Lender promptly upon receipt by any Loan Party of any notice of the
institution of any proceeding or other action which may result in the
termination of such plan;
(o) A default shall occur under any other agreement, document or
instrument to which a Loan Party is a party and such default is not cured
within any applicable grace period, waived in writing or being contested
pursuant to the provisions of paragraph 10.4 and such default (i) involves
the failure to make any payment when due in respect of any Indebtedness
(other than the Obligations) of the Loan Parties in excess of $150,000 in
the aggregate, (ii) causes such Indebtedness or a portion thereof in excess
of $250,000 in the aggregate to become due prior to its stated maturity or
prior to its regularly scheduled dates of payment or (iii) permits any
holder of such Indebtedness or a trustee to cause such Indebtedness or a
portion thereof in excess of $250,000 in the aggregate to become due prior
to its stated maturity or prior to the regularly scheduled dates of payment
and such default is not cured or waived within 30 days after the occurrence
thereof;
(p) Any judgment for the payment of money is rendered against any Loan
Party or any Guarantor in excess of $150,000 in any one case (or, in the
case of AMNEX, in excess of $500,000 in any one case) or in excess of
$250,000 in the aggregate (or, in the case of AMNEX, in excess of $1,500,000
in the aggregate) and shall remain undischarged or unvacated for a period in
excess of 30 days or execution shall at any time not be effectively stayed,
or any judgment other than for the payment of money, or injunction,
attachment, garnishment or execution is rendered against the Loan Parties or
any of their assets;
(q) Any Change of Control shall occur; or
(r) Any event shall have occurred and be continuing that Lender has
determined has a Material Adverse Effect.
11.2 Acceleration of the Obligations. Upon the occurrence and
continuation of an Event of Default, all of the Obligations may, at the
option of Lender and without demand, notice, or legal process of any kind,
be declared, and immediately shall become, due and payable; provided, that
upon the occurrence of any Event of Default described in paragraph 11.1(i),
all Obligations shall automatically become immediately due and payable.
11.3 Remedies. Upon the occurrence and during the continuation of an
Event of Default, Lender shall have the following rights and remedies:
(a) The right to terminate the financing arrangements under the Loan
Documents;
(b) In addition to any other rights and remedies contained in the Loan
Documents, all of the rights and remedies under all applicable law and all
of the rights and remedies of a secured party under the UCC or other
applicable law, all of which rights and remedies shall be cumulative and
non-exclusive, to the extent permitted by law, and may be exercised, in
Lender's discretion, alternatively, successively, or concurrently on any one
or more occasions and shall include, without limitation, the right to apply
to a court of equity for an injunction to restrain a breach or threatened
breach by any Loan Party of this Agreement or any of the other Loan
Documents. Lender may, at any time or times, proceed directly against any
Loan Party or any obligor to collect the Obligations without prior recourse
to the Collateral;
(c) The right to open any Loan Party's mail and collect any and all
amounts due the Loan Parties from Account Debtors;
(d) The right to (i) enter upon the premises of each Loan Party,
without any obligation to pay rent to such Loan Party, through self-help and
without judicial process, without first obtaining a final judgment or giving
such Loan Party notice and opportunity for a hearing on the validity of
Lender's claim, or any other place or places where the Collateral is located
and kept, and remove the Collateral therefrom to the premises of Lender or
any agent of Lender, for such time as Lender may desire, in order to
effectively collect or liquidate the Collateral or (ii) require the Loan
Parties, at their expense, to assemble the Collateral and make it available
to Lender at a place to be designated by Lender, in its sole discretion;
(e) The right to (i) sell or to otherwise dispose of all or any
Collateral at public or private sale or sales, with such notice as may be
required by law, in lots or in bulk, for cash or on credit, all as Lender,
in its sole discretion, may deem advisable, (ii) adjourn such sales from
time to time with or without notice and (iii) conduct such sales on any Loan
Party's premises or elsewhere and use any Loan Party's premises without
charge for such sales for such time or times as Lender may see fit. Lender
is hereby granted a license or other right to use, without charge, each Loan
Party's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks and advertising matter, or any property of
a similar nature, as it pertains to the Collateral, in advertising for sale
and selling any Collateral and each Loan Party's rights under all licenses
and all franchise agreements shall inure to Lender's benefit. Lender shall
have the right to sell, lease or otherwise dispose of the Collateral, or any
part thereof, for cash, credit or any combination thereof, and Lender may
purchase all or any part of the Collateral at public or, if permitted by
law, private sale and, in lieu of actual payment of such purchase price, may
setoff the amount of such price against the Obligations. The proceeds
realized from the sale of any Collateral shall be applied first to the
reasonable costs, expenses and attorneys' fees and expenses incurred by
Lender for collection and for acquisition, completion, protection, removal,
storage, sale and delivery of the Collateral; second to interest due upon
any of the Obligations; and third to the principal of the Obligations;
provided, that if applicable law requires otherwise, such proceeds shall be
applied in the order applicable law requires. If any deficiency shall arise,
the Loan Parties shall remain liable to Lender therefor with interest at the
highest rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys' fees and legal expenses.
11.4 Notice. Any notice required to be given by Lender of a sale, lease
or other disposition of the Collateral, if given ten days prior to such
proposed action, shall constitute commercially reasonable and fair notice
thereof to the Loan Parties.
11.5 Marshaling; Payments Set Aside. Lender shall be under no
obligation to ▇▇▇▇▇▇▇▇ any assets in favor of the Loan Parties or any other
party or against or in payment of any or all of the Obligations. To the
extent that the Loan Parties make a payment or payments to Lender or Lender
enforces its security interests or exercises its rights of set-off, and such
payment or payments or the proceeds of such enforcement or set-off or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set-aside and/or required to be repaid to a trustee, receiver
or any other party under any bankruptcy law, state or federal law, common
law or equitable cause, then to the extent of such recovery, the Obligations
or part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or
such enforcement or set-off had not occurred.
12. CONDITIONS PRECEDENT. This Agreement shall become effective upon
the satisfaction of the following conditions precedent:
12.1 Excess Revolving Loan. Lender shall have determined, in its sole
discretion, that immediately after Lender has made the initial loans and
advances to the Loan Parties contemplated hereby, Excess Availability will
not be less than $2,000,000.
12.2 Financial Statements. Lender shall have received and reviewed the
unaudited consolidated financial statements of the Loan Parties and their
Subsidiaries as at June 30, 1998, as certified as true, correct, complete
and accurate by the chief financial officer of such Loan Parties, and such
financial statements shall be satisfactory to Lender in its sole discretion.
12.3 Execution and Delivery of Agreement. This Agreement or
counterparts thereof shall have been duty executed by, and delivered to the
Loan Parties and Lender.
12.4 Loan Documents. Lender shall have received all of the following,
each in form and substance satisfactory to Lender:
(a) The Notes;
(b) A Certificate of the Secretary of each Loan Party, together with
true and correct copies of the articles or certificate of incorporation and
by-laws of each Loan Party, and all amendments thereto, and correct copies
of the resolutions of the board of directors of each Loan Party authorizing
or ratifying the execution, delivery and perform of the Loan Documents to be
executed by each Loan Party, and the names of the officer or officers of
each Loan Party authorized to sign such documents, together with a sample of
true signature of each such officer;
(c) The Opinion of, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP, addressed to Lender, covering the matters set forth on Exhibit B;
(d) Articles or certificate of incorporation of each Loan Party,
certified by the Secretary of State of the jurisdiction of incorporation of
such Loan Party;
(e) Good standing certificates for each Loan Party from the Secretaries
of State of each state in which such Loan Party is authorized to do
business;
(f) UCC lien search reports of filings against each Loan Party and tax
lien and judgment searches relating to each Loan Party for such
jurisdictions as Lender deems appropriate;
(g) UCC financing statements filed against each Loan Party in respect
to the locations listed in paragraph 9.1 (h);
(h) a guaranty of AMNEX;
(i) a guaranty of each Loan Party;
(j) A security agreement with respect to those copyrights, patents,
trademarks, trade names and all related applications, licenses and such
other materials as described on Schedule 9.1(r)
(k) A pledge agreement executed by AMNEX with respect to the issued and
outstanding capital stock of Borrower, along with the original certificates
evidencing such stock with undated stock powers signed in blank;
(l) the Pledged Stock and the Pledged Notes, along with the original
certificates and instruments evidencing such stock and notes with undated
stock and note powers signed in blank;
(m) Agreements with all financial institutions with which any Loan
Party maintains an account regarding Lender's rights in such accounts,
including, without limitation, the Blocked Accounts, in form and substance
satisfactory to Lender;
(n) Duly executed landlord waivers from the lessor of the Loan Parties'
Lake Success, New York location;
(o) Originals or copies of each policy of insurance, and evidence of
payment of all premiums therefor, together with a properly executed Lender's
Loss Payee Endorsement;
(p) Officer's Solvency Certificates in the form of Exhibit C from each
Loan Party's chief financial officer;
(q) Pay-off letters and releases and UCC termination statements with
respect to any and all existing liens and encumbrances affecting the
Collateral; and
(r) Any other Loan Documents and such additional materials as Lender
may reasonably request.
12.5 Absence of Material Adverse Change. As of the date hereof, since
May 31, 1998, there shall have been no material adverse change in the
business, financial or other condition of the Loan Parties or their
Subsidiaries or in the Collateral or in the prospects or projections of the
Loan Parties and their Subsidiaries, no material increase in the
Indebtedness of any Loan Party or any Subsidiary, whether or not disclosed
or required to be reserved against on any pro forma balance sheet and no
material decrease in the assets of the Loan Parties or its Subsidiaries nor
any distribution by any Loan Party either by dividends or otherwise, except
such distributions as would be permitted by paragraph 10.2. As of the date
hereof, no litigation against any Loan Party or any of its Subsidiaries
shall have been commenced or threatened which, if successful, would be
materially adverse to the Loan Parties and their Subsidiaries or challenge
any transaction contemplated by this Agreement, and the financing
contemplated by this Agreement would not violate any agreement of any Loan
Party or any of their Subsidiaries or any law, statute, court order,
administrative rule or regulation by which any Loan Party or any of their
Subsidiaries are bound. The Loan Parties and their Subsidiaries shall have
paid their Indebtedness in accordance with good business and historical
practices. As of the date hereof, no Default or Event of Default shall
exist.
12.6 Conditions to the Initial Advance. It shall be a condition to the
initial Advance that the conditions contained in paragraphs 12.1, 12.2,
12.3, 12.4 and 12.5 have been fulfilled and that the Loan Parties shall have
delivered to Lender a Borrowing Base Certificate (as of the day immediately
preceding the day of the requested initial Advance).
12.7 Conditions to Each Advance. It shall be a further condition to the
funding of each initial Advance and each subsequent Advance after the
initial Advance that the following statements shall be true on the date of
each such advance or issuance:
(i) All of the representations and warranties of each Loan
Party contained in the Loan Documents shall be correct in all
material respects on and as of the date of each such Advance as
though made on and as of such date, except (A) to the extent that
any such representation or warranty expressly relates to an
earlier date and (B) for changes therein permitted or contemplated
by this Agreement.
(ii) No event shall have occurred and be continuing, or would
result from the funding of the Advance, which constitutes or would
constitute a Default or an Event of Default.
(iii) (a) The sum of the aggregate unpaid principal amount of
all Advances to such Loan Party, after giving effect to such
Advance, shall not exceed such Loan Party's Borrowing Base and (b)
The sum of the aggregate unpaid principal amount of all Advances,
after giving effect to such Advance, shall not exceed the
Revolving Loan Commitment.
(b) The acceptance by the Loan Parties of the proceeds of any Advance
shall be deemed to constitute, as of the date of such acceptance, (i) a
representation and warranty by the Loan Parties that the conditions in this
paragraph 12.6 have been satisfied and (ii) a confirmation by the Loan
Parties of the granting and continuance of Lender's Lien pursuant hereto.
12.8 Conditions to Term Loans. It shall be a condition to any Term Loan
that the conditions contained in paragraphs 12.1, 12.2, 12.3, 12.4 and 12.5
have been fulfilled and the following additional conditions have been
satisfied:
(a) the proceeds of such Term Loan will be used solely in connection
with a Permitted Acquisition; such acquisition complies with the
requirements set forth in paragraph 10.2(a) and the criteria set forth in
the definition of "Permitted Acquisition"; Lender has received all such
information as it requests regarding such acquisition, has had a reasonable
time to review such documentation, has been provided an opportunity to
discuss such acquisition with its professionals and the Loan Parties and has
approved, in its sole discretion, the terms and conditions of such
acquisition; provided, that Lender may waive this condition with respect to
any Term Loan made on the Closing Date;
(b) the Loan Parties provide the Lender with a written request for such
Term Loan at least five Business Days prior to the making of such Term Loan,
which request will state the date of such Term Loan, the amount of such Term
Loan, whether such Term Loan will be a Base Rate Loan or a Eurocurrency Loan
and, if such Term Loan is a Eurocurrency Loan, the Interest Period
applicable to such Term Loan; and
(c) the amount of the Term Loan requested plus all outstanding Term
Loans does not exceed the Term Loan Commitment, as in effect at such time.
13. INDEMNIFICATION. Each Loan Party agrees to defend (with counsel
reasonably satisfactory to Lender), protect, indemnify and hold harmless (to
the fullest extent permitted by law) Lender, each affiliate or subsidiary of
Lender, and each of their respective officers, directors, employees,
attorneys, agents and attorneys-in-fact (each an "Indemnified Party") from
and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature (including, without limitation, the
disbursements and the reasonable fees of counsel for each Indemnified Party
in connection with any investigative, administrative or judicial proceeding,
whether or not the Indemnified Party shall be designated a party thereto),
which may be imposed on, incurred by, or asserted against, any Indemnified
Party (whether direct, indirect or consequential and whether based on any
federal, state or local laws or regulations including, without limitation,
securities, environmental and commercial laws and regulations, under common
law or in equity, or based on contract or otherwise) in any manner relating
to or arising out of the execution, delivery, enforcement, performance and
administration of any Loan Document, or any act, event, transaction or
omission, related or attendant thereto, the making and the management of the
Loans or the use or intended use of the proceeds of the Loans and with
respect to any investigation, litigation or proceeding related to the Loan
Documents; provided, that the Loan Parties shall not have any obligation
hereunder to any Indemnified Party with respect to matters caused by or
resulting from the willful misconduct or gross negligence of such
Indemnified Party. To the extent that the undertaking to indemnify set forth
in the preceding sentence may be unenforceable because it is violative of
any law or public policy, each Loan Party shall satisfy such undertaking to
the maximum extent permitted by applicable law. Any liability, obligation,
loss, damage, penalty, cost or expense covered by this indemnity shall be
paid to each Indemnified Party on demand, and, failing prompt payment,
shall, together with interest thereon at the highest rate then applicable to
Advances hereunder from the date incurred by each Indemnified Party until
paid by the Loan Parties, be added to the Obligations of the Loan Parties
and be secured by the Collateral. The provisions of this paragraph 13 shall
survive the satisfaction and payment of the Obligations and the termination
of this Agreement.
14. MISCELLANEOUS.
14.1 Modification of Agreement; Sale of Interest. The Loan Documents
may not be modified, altered or amended, except by an agreement in writing
signed by each Loan Party and Lender. The Loan Parties may not sell, assign
or transfer the Loan Documents or any portion thereof, including, without
limitation, their rights, title, interests, remedies, powers, and/or duties
hereunder or thereunder. Each Loan Party hereby consents to Lender's
participation, sale, assignment, transfer or other disposition, at any time
or times hereafter, of the Loan Documents, or of any portion hereof or
thereof, including, without limitation, Lender's rights, title, interests,
remedies, powers, and/or duties hereunder or thereunder; provided, that,
absent the occurrence and continuation of an Event of Default, Lender may
not participate, sell, assign, transfer or otherwise dispose of the Loan
Documents to a Person that is not a domestic financial or similar
institution without the Loan Parties' consent (which consent will not be
unreasonably withheld).
14.2 Expenses (Including Attorneys' Fees). Each Loan Party shall
reimburse Lender on demand for all of its expenses (including, but not
limited to, reasonable attorneys' fees) of, or incidental to:
(a) The preparation of, amendment of, modification of, or enforcement
of the Loan Documents;
(b) Any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Lender, a Loan Party or any other Person) in any way
relating to the Collateral, the Loan Documents or any Loan Party's affairs;
(c) Any Default or Event of Default or advice or any action in
connection with any Default or Event of Default, or any attempt to enforce
any rights of Lender or any participant or assignee of Lender against any
Loan Party or any other Person which may be obligated to Lender by virtue of
the Loan Documents, including, without limitation, the Account Debtors;
(d) Any attempt to inspect, verify, protect, collect, sell, liquidate
or otherwise dispose of the Collateral; and/or
(e) Examination of each Loan Party's books and records and the
Collateral, including auditor fees of $700 per auditor per day plus
expenses.
Such expenses shall be additional Obligations hereunder secured by the
Collateral. Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include: paralegal fees, costs and expenses;
accountants' fees, costs and expenses; court costs and expenses;
photocopying and duplicating expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; telegram
charges; secretarial over-time charges; and expenses for travel, lodging and
food.
14.3 Waiver by Lender. Lender's failure, at any time or times
hereafter, to require strict performance by any of the Loan Parties of any
provision of this Agreement shall not waive, affect or diminish any right of
Lender thereafter to demand strict compliance and performance. Any
suspension or waiver by Lender of an Event of Default by any Loan Party
under the Loan Documents shall not suspend, waive or affect any other Event
of Default by any Loan Party under the Loan Documents, whether the same is
prior or subsequent thereto and whether of the same or of a different type.
None of the undertakings, agreements, warranties, covenants and
representations of the Loan Parties contained in the Loan Documents and no
Event of Default by any Loan Party under the Loan Documents shall be deemed
to have been suspended or waived by Lender, unless such suspension or waiver
is by an instrument in writing signed by an officer of Lender and directed
to each Loan Party specifying such suspension or waiver.
14.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law. If, however, any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement, unless the ineffectiveness of such provision materially and
adversely alters the benefits accruing to either party hereunder.
14.5 Parties. The Loan Documents shall be binding upon and inure to the
benefit of the successors and assigns of each Loan Party. This provision,
however, shall not be deemed to modify paragraph 14.1.
14.6 Rights of Contribution.
(a) Each Loan Party states and acknowledges that (i) it has determined
that it will benefit specifically and materially from the advances of credit
contemplated by this Agreement, (ii) it is both a condition precedent to the
obligations of Lender hereunder and a desire of each Loan Party that each
Loan Party execute and deliver to Lender the Loan Documents and (iii) the
Loan Parties have requested and bargained for the structure and terms of
security for the advances contemplated by this Agreement.
(b) Each Loan Party hereby irrevocably and unconditionally (i) agrees
to fully and promptly perform all of its obligations hereunder with respect
to each advance of credit hereunder and (ii) agrees as a primary obligation
to indemnify Lender on demand for and against any loss incurred by Lender as
a result of any of the obligations of the Loan Parties being or becoming
void, voidable, unenforceable or ineffective for any reason whatsoever,
whether or not known to Lender or any Person, the amount of such loss being
the amount which Lender would otherwise have been entitled to recover from
any Loan Party.
(c) Notwithstanding anything herein, it is the desire and intent of
each of the parties hereto that this Agreement shall be enforced against
each Loan Party to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought. If,
however, and to the extent that, the obligations of each Loan Party under
this Agreement shall be adjudicated to be invalid or unenforceable for any
reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers), then the
amount of the Obligations of such Loan Party shall be deemed to be reduced
and such Loan Party shall pay the maximum amount of the Obligations which
would be permissible under applicable law.
14.7 Conflict of Terms. The Other Agreements and all Schedules and
Exhibits hereto are incorporated in this Agreement by this reference
thereto. Except as otherwise provided in this Agreement and except as
otherwise provided in the Other Agreements by specific reference to the
applicable provision of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in the
Other Agreements, the provision contained in this Agreement shall govern and
control.
14.8 Waivers by Loan Parties. Except as otherwise provided for in this
Agreement, each Loan Party waives (i) presentment, demand and protest and
notice of presentment, protest, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Lender on which a Loan Party may in any way
be liable and hereby ratifies and confirms whatever Lender may do in this
regard, (ii) all rights to notice of a hearing prior to Lender's taking
possession or control of, or to Lender's replevy, attachment or levy upon,
the Collateral or any bond or security which might be required by any court
prior to allowing Lender to exercise any of Lender's remedies and (iii) all
actions with respect to preferential transfers, fraudulent conveyances and
other avoidance power claims and any recoveries of cash or proceeds or
property representing recoveries under 11 U.S.C. ▇▇.▇▇. 544, 547, 548, 549,
550 or 553. Each Loan Party acknowledges that it has been advised by counsel
with respect to this Agreement and the transactions evidenced by this
Agreement.
14.9 Remedies. Lender's rights and remedies under this Agreement shall
be cumulative and nonexclusive of any other rights and remedies which Lender
may have under any other agreement, including without limitation, the Other
Agreements, by operation of law or otherwise. Recourse to the Collateral
shall not be required.
14.10 Power of Attorney. Each Loan Party acknowledges and agrees that
its appointment of Lender as its attorney and agent-in-fact for the purposes
specified in this Agreement is an appointment coupled with an interest and
shall be irrevocable until all of the Obligations are paid in full and this
Agreement is terminated. Lender agrees that such appointments may not be
exercised prior to the occurrence of an Event of Default.
14.11 Mutual Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES
WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF
THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT
TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THE LOAN DOCUMENTS.
14.12 Governing Law. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL
BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS,
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. LENDER AND EACH
LOAN PARTY AGREE TO SUBMIT TO PERSONAL JURISDICTION AND TO WAIVE ANY
OBJECTION AS TO VENUE IN ▇▇▇▇ COUNTY, ILLINOIS OR NEW YORK COUNTY, NEW YORK.
EACH LOAN PARTY AGREES THAT LENDER HAS THE RIGHT TO PROCEED AGAINST THE LOAN
PARTIES OR THEIR PROPERTY IN A COURT IN ANY LOCATION TO ENABLE LENDER TO
REALIZE ON SUCH PROPERTY (INCLUDING, WITHOUT LIMITATION, THE COLLATERAL) OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF LENDER. EACH
LOAN PARTY AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN
ANY PROCEEDING BROUGHT BY LENDER TO REALIZE ON PROPERTY OF THE LOAN PARTIES
(INCLUDING, WITHOUT LIMITATION, THE COLLATERAL) OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF LENDER. EACH LOAN PARTY WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH LENDER HAS COMMENCED
A PROCEEDING DESCRIBED ABOVE. SERVICE OF PROCESS ON A LOAN PARTY OR LENDER
IN ANY ACTION ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS SHALL BE
EFFECTIVE IF MAILED TO SUCH PARTY AT THE ADDRESS LISTED IN PARAGRAPH 14.13.
EACH LOAN PARTY HEREBY IRREVOCABLY APPOINTS CT CORPORATION SYSTEM AS ITS
AGENT FOR THE PURPOSE OF ACCEPTING THE SERVICE OF ANY PROCESS WITHIN THE
STATES OF ILLINOIS OR NEW YORK. EACH LOAN PARTY AND LENDER AGREE THAT
NOTHING HEREIN SHALL PRECLUDE LENDER OR ANY LOAN PARTY FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION.
14.13 Notice. Except as otherwise provided herein, any notice or demand
which, by the provisions hereof, is required or which may be given to or
served upon any Loan Party or Lender shall be in writing and, if by
telecopy, shall be deemed to have been validly served, given or delivered
when transmitted and confirmed by telecopy answerback, if by personal
delivery, shall be deemed to have been validly served, given or delivered
upon actual delivery, if by overnight air courier, shall be deemed to have
been validly served, given or delivered one Business Day after delivery to
the overnight air courier, and, if mailed, shall be deemed to have been
validly served, given or delivered three Business Days after deposit in the
United States mails, as registered or certified mail, with proper postage
prepaid and addressed to-the party to be notified, at the following
addresses (or such other addressees) as a party may designate for itself by
like notice):
(a) If to Lender, at
▇▇▇▇▇▇▇ National Life Insurance Company
c/o PPM Finance, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to any Loan Party, at:
Crescent Public Communications Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
AMNEX, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ III, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
14.14 Section Titles. The section and paragraph titles contained in this
Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties
hereto.
14.15 Entire Agreement. The Loan Documents set forth the entire
agreement of the parties hereto with respect to the matters addressed herein
and therein, and the Loan Documents supersede all prior written or oral
agreements, documents or instruments respecting such matters.
14.16 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and
the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
LENDER:
▇▇▇▇▇▇▇ NATIONAL LIFE INSURANCE COMPANY
By: PPM FINANCE, INC.,
Attorney-in-Fact
By:
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Title:
BORROWER:
CRESCENT PUBLIC COMMUNICATIONS INC.
By:
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Title:
BORROWING SUBSIDIARY:
SUN TEL NORTH AMERICA, INC.
By:
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Title: