EXHIBIT 10.2
AMENDMENT NUMBER THREE TO
▇▇▇▇.▇▇▇ LOAN DOCUMENTS
(To Restructure Various Aspects of the Credit Facility)
This AMENDMENT NUMBER THREE TO ▇▇▇▇.▇▇▇ LOAN DOCUMENTS (this
"AMENDMENT") is entered into as of February 12, 2002 (the "Amendment Number
Three Closing Date") by and among TALK AMERICA INC. (f/k/a ▇▇▇▇.▇▇▇ Holding
Corp.) ("TALK AMERICA"), and ACCESS ONE COMMUNICATIONS CORP. ("ACCESS ONE"), and
each other Borrower under and as defined in the Credit Agreement (defined below)
(together with Talk America and Access One, the "BORROWERS"), and TALK AMERICA
HOLDINGS, INC. (f/k/a ▇▇▇▇.▇▇▇, Inc.) ("TALK HOLDINGS" and, including any
successor, permitted assignee, executor, administrator or personal
representative thereof, an "Other Primary Obligor") (Borrowers and each Other
Primary Obligor are sometimes referred to herein individually as an "Obligor"
and collectively as the "Obligors"), and THE LENDERS THAT ARE PARTIES HERETO,
and MCG CAPITAL CORPORATION (as assignee of the interest of MCG Finance
Corporation ("MCG"), including any successors, assigns, participants, pledgees
and transferees, "ADMINISTRATIVE AGENT").
R E C I T A L S
WHEREAS, Borrowers, MCG and each Lender are parties to that certain
Credit Facility Agreement executed and effective as of October 20, 2000 (as
amended and modified from time to time prior to the date hereof, the "Original
Credit Agreement"; as amended hereby and as may be further amended and modified
hereafter, the "Credit Agreement"); and
WHEREAS, Borrowers and Guarantor desire to amend the credit facility in
order to restructure various aspects of the credit arrangement; and
WHEREAS, to facilitate the increase and restructuring of the credit
facility, each Borrower and Guarantor desires to correspondingly amend and
modify the Original Credit Agreement and the various related loan documents -
including, without limitation, the promissory notes, the security agreements,
the guaranties, the equity pledge agreements, and the other agreements and
documents executed in connection therewith (collectively, as amended or modified
prior to the date hereof and including the Original Credit Agreement, the
"Original Loan Documents"; as amended hereby and as may be further amended and
modified hereafter, the "Loan Documents"); and
WHEREAS, each Obligor has determined that it is in its best interest to
execute this Amendment inasmuch as each such Obligor will derive substantial
direct and indirect benefits from the amendments contemplated hereby; and
WHEREAS, Lenders are willing to accommodate the Obligors upon and
subject to the terms, conditions and provisions of this Amendment;
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein and in the other Loan Documents, and other good and valuable
consideration (receipt and sufficiency of which are hereby acknowledged), and
intending to be legally bound hereby, each Obligor, Administrative Agent and
each Lender hereby agree as follows:
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ARTICLE 1: THE EXTENSION, AMENDMENT AND SUPPLEMENT
1.1. Supplements to Loan Document Schedules. Within twenty (20)
Business Days of the Amendment Number Three Closing Date, Borrowers shall
deliver to Administrative Agent (a) each of the Schedules required to have been
delivered pursuant to any Loan Document (including the Guaranty), updated to
reflect facts, circumstances and conditions as of the date such updated
Schedules are delivered pursuant to this Section 1.1, and (b) a chart indicating
each of the approvals under applicable state law that Borrowers have been
required to obtain as of and after the Closing Date of the Original Credit
Agreement as a result of the transactions under the Loan Documents (including an
indication of the status of each such required approval) (collectively, the
"Supplements"). Delivery of the Supplements under this Section 1.1 will also
satisfy the Update of Schedules required under Section 2 of that certain Consent
and Amendment to ▇▇▇▇.▇▇▇ Loan Documents dated as of August 10, 2001, and
Administrative Agent and Lenders hereby agree that Borrowers' failure to comply
with such Section 2 has not and will not constitute a Default or Event of
Default under the Credit Agreement provided that delivery of the Supplements is
timely made under this Section 1.1.
1.2. Term Loan Maturity Date - Revised. The phrase "Term Loan Maturity
Date", as defined in Section 1.1.2 of the Original Credit Agreement, is hereby
amended to mean June 30, 2005 (as such date may be further extended from time to
time in Lenders' sole and absolute discretion).
1.3. Line of Credit Maturity Date - Revised. The phrase "Line of Credit
Maturity Date", as defined in Section 1.2.2 of the Original Credit Agreement, is
hereby amended to mean June 30, 2003 (as such date may be further extended from
time to time in Lenders' sole and absolute discretion).
1.4. Applicable Rate Margins - Revised.
1.4.1. Section 1.1.5.5 of the Original Credit Agreement is
hereby amended and restated in its entirety to read as follows:
"1.1.5.5. Applicable Rate Margins. As of and after
January 1, 2002, the Rate Margin applicable to the Term Loan Facility
will be 7.0% for Portions accruing interest at an Adjusted LIBO Rate
and 6.0% for Portions accruing interest at the Prime Rate."
1.4.2. Section 1.2.5.5 of the Original Credit Agreement is
hereby amended and restated in its entirety to read as follows:
"1.2.5.5. Applicable Rate Margins. As of and after
January 1, 2002, the Rate Margin applicable to the Line of Credit
Facility will be 7.0% for Portions accruing interest at an Adjusted
LIBO Rate and 6.0% for Portions accruing interest at the Prime Rate."
1.5. Mandatory Prepayments - Added.
1.5.1. Section 1.1.6.5 of the Original Credit Agreement is
hereby amended by adding the following subsection at the end:
"1.1.6.5.f. Mandatory Prepayments under Term Loan
Facility - Debt or Equity Repurchase. If TALK HOLDINGS redeems,
repurchases, repays or otherwise satisfies any debt or equity
securities (including, but not limited to, the AoL Convertible Notes,
the
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2002 Convertible Notes and the 2004 Convertible Notes) after
December 31, 2001 through any one or more transactions collectively for
an aggregate amount of $10,000,000 or more in cash or other immediately
available funds, then a prepayment must be immediately made on the
outstanding indebtedness under the Term Loan Facility (and such payment
will reduce the amount of the remaining principal payments due under
Section 1.1.6.2 in the inverse order of maturity), unless Lenders
otherwise consent or unless a balance then exists under the Line of
Credit Facility and such prepayment is made under Section 1.2.6.5.f.
The amount of any such mandatory prepayment will equal the total
cumulative amount paid in connection with all such redemptions,
repurchases, repayments and satisfactions in excess of $10,000,000."
1.5.2. Section 1.2.6.5 of the Original Credit Agreement is
hereby amended by adding the following subsection at the end:
"1.2.6.5.f. Mandatory Prepayments Under Line of
Credit Facility - Debt or Equity Repurchase. If TALK HOLDINGS redeems,
repurchases, repays or otherwise satisfies any debt or equity
securities (including, but not limited to, the AoL Convertible Notes,
the 2002 Convertible Notes and the 2004 Convertible Notes) after
December 31, 2001 through any one or more transactions collectively for
an aggregate amount of $10,000,000 or more in cash or other immediately
available funds, then a prepayment must be immediately made on the
outstanding indebtedness under the Line of Credit Facility (and the
Line of Credit Commitment shall be correspondingly reduced), unless
Lenders otherwise consent or unless a balance then exists under the
Term Loan Facility and such prepayment is made under Section 1.1.6.5.f.
The amount of any such mandatory prepayment will equal the total
cumulative amount paid in connection with all such redemptions,
repurchases, repayments and satisfactions in excess of $10,000,000."
1.6. Revised Ratios. Section 4.1 of the Original Credit Agreement is
hereby amended and restated in its entirety as follows:
"4.1. Financial Covenants and Ratios. As of the end of each
fiscal quarter, Borrowers will satisfy each of the following financial ratios
and characteristics, each of which will be determined using GAAP consistently
applied, except as otherwise expressly provided:
4.1.1. Minimum Revenue by Subscriber Type. Bundled
Services Revenue and LD Only Services Revenue for the fiscal quarter
then ended of at least the following amounts during the identified
periods:
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MINIMUM QUARTERLY MINIMUM QUARTERLY
QUARTER ENDING BUNDLED SERVICES REVENUE LD ONLY SERVICES REVENUE
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March 31, 2002 $28 million $38 million
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June 30, 2002 $28 million $32 million
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September 30, 2002 $31 million $28 million
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December 31, 2002 $35 million $23 million
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March 31, 2003 $42 million $20 million
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June 30, 2003 $45 million $18 million
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September 30, 2003 $50 million $16 million
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December 31, 2003 $55 million $15 million
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For the fiscal quarter ending March 31, 2004 and each fiscal quarter
thereafter, Borrowers must have Bundled Services Revenue and LD Only Services
Revenue on a combined basis of at least $75 million.
4.1.2. Maximum Subscriber Acquisition Costs. Subscriber
Acquisition Costs for Bundled Subscribers and for LD Only Subscribers during the
fiscal quarter then ended not to exceed the following during the identified
periods:
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QUARTER ENDING BUNDLED SUBSCRIBERS LD ONLY SUBSCRIBERS
--------------------------------------------------------------------------------
March 31, 2002 $155.00 $140.00
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June 30, 2002 $140.00 $100.00
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September 30, 2002 $125.00 $75.00
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December 31, 2002 $120.00 $62.00
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March 31, 2003 $110.00 $50.00
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June 30, 2003 $100.00 $50.00
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September 30, 2003 and $95.00 $50.00
thereafter
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In addition, (a) so long as Subscriber Acquisition Costs for LD Only Subscribers
during any fiscal quarter is in excess of $100.00, then Borrowers shall not add
more than 12,000 new LD Only Subscribers during such fiscal quarter and (b) so
long as Subscriber Acquisition Costs for LD Only Subscribers during any fiscal
quarter is in excess of $50.00 but not in excess of $100.00, then Borrowers
shall not add more than 17,500 new LD Only Subscribers during such fiscal
quarter.
4.1.3. Minimum Gross Profit Margin. A Gross Profit Margin of
not less than the below indicated percentages during the corresponding below
indicated fiscal quarters periods:
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PERIOD GROSS PROFIT MARGIN
-------------------------------------------------------
12/31/01 thru 9/30/02 44%
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10/1/02 thru 3/31/03 42%
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4/1/03 thru 12/31/03 40%
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1/1/04 thru 12/31/04 38%
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As of and After 37%
1/1/05
-------------------------------------------------------
4.1.4. Interest Coverage Ratio. A ratio of TTM-OCF to Interest
Expense of not less than the following:
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a. 1.7-to-1.0, for fiscal quarter ending March 31, 2002; and
b. 3.0-to-1.0, for fiscal quarters ending June 30, 2002,
September 30, 2002 and December 31, 2002; and
c. 3.5-to-1.0, for fiscal quarter ending March 31, 2003 and
for each fiscal quarter thereafter.
4.1.5. Funded Debt-OCF Leverage Covenant. Beginning June 30,
2002, a ratio of Funded Debt to TTM-OCF as of the end of each fiscal quarter of
not more than the following:
----------------------------------------------------
QUARTER ENDING TTM-OCF
----------------------------------------------------
June 30, 2002 6.0-to-1.0
----------------------------------------------------
September 30, 2002 6.0-to-1.0
----------------------------------------------------
December 31, 2002 5.5-to-1.0
----------------------------------------------------
March 31, 2003 5.0-to-1.0
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June 30, 2003 4.5-to-1.0
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September 30, 2003 4.0-to-1.0
----------------------------------------------------
December 31, 2003 3.5-to-1.0
----------------------------------------------------
As of and After January 1, 2004 3.0-to-1.0
----------------------------------------------------
4.1.6. Liquidity Covenant. At all times from and after the
Amendment Number Three Closing Date, the aggregate outstanding indebtedness of
Borrowers under the Loan Documents must be less than 67% of the sum of the
following amounts: (i) the aggregate accounts receivable of Borrowers for the
provision of telecommunications services to unrelated third party Subscribers
that are 60 calendar days or less past the initial due date therefor (including
unbilled usage or accounts receivable that are less than 30 days old) and (ii)
deposits of immediately available unencumbered funds held in accounts that are
legally titled and beneficially owned solely by one or more Borrowers and/or
Guarantor and that are encumbered with a first priority lien in favor of
Administrative Agent (for the ratable benefit of Lenders) pursuant to a security
agreement and a control agreement that are in form and substance acceptable to
Administrative Agent (in its commercially reasonable discretion).
4.1.7. Minimum OCF. OCF for the immediately preceding fiscal
quarter and four fiscal quarter periods of not less than the following:
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QUARTER ENDING QUARTERLY OCF TTM OCF
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December 31, 2001 $12 million $3.2 million
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March 31, 2002 $9 million $12 million
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June 30, 2002 $7 million $29 million
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September 30, 2002 $7 million $29 million
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December 31, 2002 $6 million $29 million
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March 31, 2003 $7 million $27 million
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June 30, 2003 $8 million $28 million
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September 30, 2003 $9 million $30 million
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December 31, 2003 $9 million $33 million
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March 31, 2004 $10 million $36 million
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June 30, 2004 $10 million $38 million
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September 30, 2004 $10 million $39 million
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December 31, 2004 and $10 million $40 million
thereafter
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1.7. Capital Expenditures. Section 5.1 of the Original Credit Agreement
is hereby amended and restated in its entirety as follows:
"5.1. Capital Expenditures. As of and after the Amendment
Number Three Closing Date, Borrowers (on a consolidated basis) will not
incur Capital Expenditures in any fiscal year in excess of the
following: (a) $6.5 million during fiscal year 2002, (b) $7.0 million
during fiscal year 2003, and (c) $8 million during fiscal year 2004 and
thereafter. Notwithstanding the foregoing, no Borrower may make any
such Capital Expenditure to acquire all or any substantial portion of
the assets or equity of another business enterprise (unless explicitly
permitted by Section 5.7)."
1.8. Additional Indebtedness - Capital Asset and Lease Financing.
Section 5.2 of the Original Credit Agreement is hereby amended by (i) inserting
the amount "$5 million" in place of the amount "$30 million" in Sections 5.2.c
and 5.2.d.
1.9. Cross Default to AoL Agreements and Convertible Notes. Without in
any way limiting or qualifying the scope, application or effect of Section 7.1.6
of the Credit Agreement or any similar provision of any other Loan Document, IF
any event of default (as described or defined therein, which term shall include
any notice and cure periods provided therein) occurs or exists under the
provisions of the 2002 Convertible Notes (or any related agreements governing
the terms or conditions thereof), the 2004 Convertible Notes (or any related
agreements governing the terms or conditions thereof), the AoL Restructuring
Agreement, the AoL Convertible Notes, the AoL Guaranty & Security Agreements
and/or the AoL-MCG Intercreditor Agreement, THEN an immediate Event of Default
shall be deemed to occur and exist under the Loan Documents. NOTWITHSTANDING THE
FOREGOING, with respect to the event of default that may exist as of the date
hereof under the AoL Restructuring Agreement as a result of the failure of Talk
Holdings to obtain the written consent of AoL prior to redeeming $5 million of
2002 Convertible Notes during December 2001 (which was prior to the maturity
date therefore), such event of default thereunder will not constitute an Event
of Default under and as defined in this Section 1.9 hereof but will be subject
to the terms of and cure rights set forth in Section 7.1.6 of the Credit
Agreement (as modified by Section 1.1 of the Consent and Second Amendment dated
as of September 19, 2001) except that the reference in Section 7.1.6.(1)(i)(iv)
to the phrase "in any event within 60 calendar days after the occurrence of such
Default" shall instead for this one event only mean "prior to 11:59 p.m. Eastern
Time on Friday, March 1, 2002".
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1.10. Definitions - Revisions and Additions. The following definitions
are either added to Article 9 of the Original Credit Agreement in alphabetical
order or amended and restated in their entirety:
i. ""2002 Convertible Notes" means those certain
41/2% Convertible Subordinated Notes of Talk America Holdings,
Inc. in an original aggregate amount of $300 million that are
due September 15, 2002 and of which $61.8 MILLION ARE
OUTSTANDING as of January 1, 2002."
ii. ""2004 Convertible Notes" means those certain 5%
Convertible Subordinated Notes of Talk America Holdings, Inc.
in an original aggregate amount of $200 million that are due
December 15, 2004 and of which $18.1 MILLION ARE OUTSTANDING
as of January 1, 2002."
iii. ""Subscriber Acquisition Costs" means, at
the time of measurement, the aggregate marketing,
telemarketing and other acquisition costs associated with
acquiring new Subscribers (including, any commissions paid to
third parties) during the relevant fiscal quarter divided by
the total number of new Subscribers added during such fiscal
quarter."
In addition, the definition of "OCF" in Article 9 of the Original Credit
Agreement is hereby amended to add the following provision to the end thereof:
"NOTWITHSTANDING THE FOREGOING, (a) the following items
deducted in the specified periods from the calculation of net
income MAY BE ADDED-BACK in the calculation of OCF during the
relevant periods:
(1) $168.7 million goodwill write-offs in the last three
fiscal quarters of 2001, and
(2) $2.5 million restructuring charges associated with
the Ft. Lauderdale facility (TTM at 12/31/01), and
(3) $2.4 million unrealized losses on increases in fair
value of contingent redemptions, and
(4) $36.8 million cumulative effect of accounting changes
for contingent redemptions (Implementation of EITF
00-19); AND
(b) the following items included in the specified periods in
the calculation of net income SHALL BE DEDUCTED in the
calculation of OCF during the relevant periods:
(1) $16.8 million gains from the restructure of the AoL
marketing agreement in the third fiscal quarter of
2001, and
(2) $3.8 million gains in the fourth fiscal quarter of
2001 for the repurchase of the 2002 Convertible
Notes, and
(3) $603,000 gains for recovery of restructuring charges.
For avoidance of doubt, except as expressly provided in the
immediately preceding sentence or as may be otherwise
consented to by Lenders, as of and after the Amendment Number
Three Closing Date, all write-offs of bad debt shall be a
direct reduction in the calculation of EBITDA (and not added
back to the calculation of OCF) during the fiscal period in
which such write off is recorded."
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1.11. Waiver of Existing Financial Covenant Defaults. Administrative
Agent and each Lender hereby waives any Default or Event of Default under
Section 7.1.3 of the Credit Agreement resulting from Borrowers' failure to be in
compliance with the financial covenants set forth in Section 4.1.1 (Minimum
Revenue by Subscriber Type), 4.1.4 (Interest Coverage Ratio), 4.1.5 (Total
Charge Coverage Ratio), 4.1.6 (Funded Debt-Revenue Leverage Covenant) or 4.1.7
(Funded Debt-OCF Leverage Covenant) of the Original Credit Agreement with
respect to the period ending December 31, 2001 ONLY. This Section 1.11 hereof is
intended only to waive the expressly identified existing Events of Default under
Section 7.1.3 as a result of the expressly identified compliance violations
under 4.1 of the Original Credit Agreement, and no other term, provision,
covenant or Default in any Loan Document is hereby waived either expressly or by
implication.
1.12. Non-Default Agreement re Going Concern Qualification for 2001
Audit. Administrative Agent and each Lender hereby agree that it shall not
constitute a Default or Event of Default under Section 7.1.4 of the Credit
Agreement to the extent that Talk Holdings and Borrowers fail to be in
compliance with the audit standard as set forth in Section 4.2.2(2) (Annual
Financial Statements) for the FYE 2001 financial statements SOLELY AND
EXCLUSIVELY because (a) the 2002 Convertible Notes are due and payable prior to
March 2003 and/or (b) the "termination of trading clause" contained in the 2004
Convertible Notes may permit the noteholders thereof to accelerate the 2004
Convertible Notes prior to the stated maturity thereof. This Section 1.12 hereof
is intended only to waive the expressly identified expected Event of Default
under Section 7.1.4 as a result of the expressly identified expected compliance
violation under 4.2.2(2) of the Credit Agreement for the FYE 2001 audit, and no
other term, provision, covenant or Default in any Loan Document is hereby waived
either expressly or by implication.
1.13. Post-Closing Item - Control Agreements. Within 30 calendar days
after the Amendment Number Three Closing Date, Borrowers will deliver to
Administrative Agent a fully executed control agreement (in form and substance
reasonably acceptable to Administrative Agent) with respect to each deposit
account of any Borrower that at any time during the 6 calendar months preceding
the Amendment Number 3 Closing Date had a balance in excess of $75,000.
Thereafter, if any Borrower at any time opens or acquires a new deposit account
that at any time has a balance in excess of $75,000, then such Borrower shall
concurrently obtain and deliver to Administrative Agent a fully executed control
agreement (in form and substance reasonably acceptable to Administrative Agent)
with respect to such deposit account.
1.14. Amendment Fee. On the Amendment Number Three Closing Date,
Borrowers shall pay an Amendment Fee in immediately available funds to
Administrative Agent in the amount of $100,000, which amount shall be treated as
prepaid, nonrefundable interest.
1.15. Documentation Fee. On the Amendment Number Three Closing Date,
Borrowers shall pay a Documentation Fee in immediately available funds to
Administrative Agent in the amount of $7,500.00 to cover all fees, costs and
expenses in connection with the preparation and execution of this Amendment
Number Three through the Amendment Number Three Closing Date.
1.16. Reaffirmation of Collateralization Hereunder. To the extent not
otherwise already covered by the Original Loan Documents, each Obligor hereby
grants and pledges to Administrative Agent for the ratable benefit of Lenders a
present, absolute, unconditional and continuing security interest in and pledge
of and collateral assignment of all of the Collateral under and as defined in
the Loan Documents to which such Obligor is a party as collateral security for
funds advanced pursuant to this Amendment, the Credit Agreement and the other
Loan Documents.
1.17. References in Other Loan Documents. In furtherance of the foregoing,
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a. References in the Original Credit Agreement to the
"Agreement" or "Credit Agreement" hereafter mean the Credit Agreement
(as amended hereby). References in the other Original Loan Documents to
the "Credit Agreement" hereafter mean the Credit Agreement (as amended
hereby).
b. References in the Original Loan Documents (including in the
Original Credit Agreement) to the other "Loan Documents" (either as a
group or individually) or to such other documents by their individual
separate titles hereafter mean such Loan Documents (as amended hereby)
as well as the Additional Loan Documents.
1.18. Relationship to Original Loan Documents. This Amendment is an
amendment and supplement to (and not a novation of) the Original Loan Documents
as well as the schedules thereto without any discharge, release or satisfaction
of the existing obligations or indebtedness (or, except to the extent expressly
set forth herein, any guaranty or collateral security therefor), all of which
obligations, indebtedness and security remains outstanding under the Loan
Documents. Except as specifically amended by this Amendment or another document
executed as of the date hereof, the Loan Documents are, and continue to be, in
full force and effect as in effect prior to the date hereof. This Amendment
becomes effective as to any party as of the date of its, his or her execution
hereof, and the failure of any party hereto to execute this Amendment shall in
no way effect the obligations hereunder of the parties hereto that have executed
this Amendment.
1.19. Collateral Agent. Administrative Agent hereby appoints MCG, and
MCG hereby agrees to act, as an additional collateral agent for Administrative
Agent for purposes of perfection or protection of Lenders' interest in any
Collateral and for any other purposes as determined by Administrative Agent. MCG
hereby agrees to give Administrative Agent prior notice of at least 30 calendar
days before resigning as collateral agent. In addition, MCG hereby agrees that
Administrative Agent may terminate the collateral agency role of MCG at any time
upon prior notice of at least 10 calendar days.
ARTICLE 2: MISCELLANEOUS
2.1. Loan Document; Definitions. This Amendment is a Loan Document
executed pursuant to the Credit Agreement and (unless otherwise expressly
indicated herein) is to be construed, administered and applied in accordance
with the terms and provisions thereof. Capitalized terms used herein without
separate definitions have the meaning ascribed to such terms in the Original
Credit Agreement (if such a definition exists therein) or in the other Loan
Documents. The rules of construction and the number and gender provisions under
Article 9 of the Original Credit Agreement are also applicable herein.
2.2. Additional Representations and Covenants. Each Obligor, as of the
Amendment Number Three Closing Date, makes the following representations and
warranties solely with respect to this Amendment and any Original Loan Document
to which such Obligor is a signatory:
2.2.1. Authorization and Enforceability. Each Obligor
represents and warrants (a) that it, he or she (as applicable) has the full
power and authority to enter into, to deliver and to perform this Amendment, the
Credit Agreement and the other Loan Documents to which it, he or she is a party,
and all other agreements and actions required of it, him or her hereunder, and
(b) that all actions necessary or appropriate for such Obligor's execution,
delivery and performance of this Amendment, the Credit Agreement and the other
Loan Documents, and all other agreements and actions required hereunder or
thereunder have been properly and fully taken, and (c) that, upon execution and
delivery, this Amendment as well as the Credit Agreement and the other Loan
Documents will constitute the legal, valid and binding obligations of each party
hereto or thereto enforceable in accordance with the terms hereof or thereof.
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2.2.2. Representations and Warranties. Each Obligor hereby
renews each and all representations and warranties made by it, him or her
contained in the Original Loan Documents (other than in the Original Credit
Agreement), and each Obligor hereby represents and warrants that all such
representations and warranties (as modified by the schedules related thereto)
are true, correct and complete in all material respects on and as of the
Amendment Number Three Closing Date.
2.2.3. No Default. Each Obligor hereby represents and warrants
that no Default or Event of Default under the Loan Documents to which it, he or
she is a party will result from the execution, delivery or performance of this
Amendment.
2.3. Obligor Solvency. Obligors (on a consolidated basis) are not
"insolvent," as such term is defined in Section 101(32) of the Bankruptcy Code
(11 U.S.C. ss. 101(32)). Obligors (on a consolidated basis), by virtue of their
obligations and actions in connection with the Loan Documents, have not engaged
in and are not engaging in any transaction that constitutes a fraudulent
transfer or fraudulent conveyance under applicable federal or state law
(including under Section 548 of the Bankruptcy Code or under the Uniform
Fraudulent Transfer Act or the Uniform Fraudulent Conveyance Act).
2.4. Binding and Governing Law. This Amendment has been delivered by
Borrowers and the other Obligors and has been received by Administrative Agent
in the Commonwealth of Virginia. This Amendment shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs, personal representatives and executors. This Amendment shall be
governed as to its validity, interpretation, construction and effect by the laws
of the Commonwealth of Virginia (without giving effect to the conflicts of law
rules of the Commonwealth of Virginia).
2.5. Survival. All agreements, representations, warranties and
covenants of any Obligor contained herein or in any documentation required
hereunder shall survive the execution and delivery of this Amendment and (except
as otherwise expressly provided herein) will continue in full force and effect
so long as any indebtedness or other obligation of any Borrower or other Obligor
to Administrative Agent or any Lender remains outstanding under any of the Loan
Documents.
2.6. No Waiver; Delay in Acting. To be effective, any waiver by Lenders
must be expressed in a writing executed by Administrative Agent (with approval
by Lenders). The execution, delivery and performance of this Amendment shall not
act as a waiver of any Default or any right, power or remedy of Administrative
Agent or any Lender under any Loan Document or any other agreements and
documents executed in connection herewith or therewith and shall not constitute
a waiver of any provision thereof. If Administrative Agent or any Lender waives
any power, right or remedy arising hereunder or under any applicable law, then
such waiver will not be deemed to be a waiver upon the later occurrence or
recurrence of any events giving rise to the earlier waiver. No failure or delay
by Administrative Agent or any Lender to insist upon the strict performance of
any term, condition, covenant, or agreement of this Amendment or any other Loan
Document, or to exercise any right, power or remedy hereunder or thereunder,
will constitute a waiver of any such term, condition, covenants or agreement or
of any such breach, or preclude Administrative Agent or any Lender from
exercising any such right, power, or remedy at any later time or times. By
accepting payment after the due date of any amount payable under any Loan
Document, neither Administrative Agent nor Lenders will be deemed to have waived
the right either to require prompt payment when due of all other amounts payable
under a Loan Document or to declare an Event of Default for failure to effect
such prompt payment of any such other amount. The remedies provided herein are
cumulative and not exclusive of each other, the remedies provided by law, and/or
the remedies provided by the other Loan Documents.
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2.7. Modification. Except as otherwise provided in this Amendment, no
modification or amendment hereof shall be effective unless made in writing and
signed by Administrative Agent (with approval by Lenders) and any other party
hereto as to which such amendment or modification is applicable.
2.8. Headings. The various headings in this Amendment are inserted for
convenience only and shall not affect the meaning or interpretation of this
Amendment or any provision hereof.
2.9. Prior Agreements. This Amendment shall completely and fully
supersede all other and prior agreements and correspondence (both written and
oral) by and among Obligors, Administrative Agent and Lenders concerning the
terms and conditions of this Amendment.
2.10. Severability. If fulfillment of any provision hereof or any
transaction related hereto or to the other Loan Documents at the time
performance thereof shall be due shall involve transcending the limit of
validity prescribed by law, then ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity. If any clause or provision
herein contained operates or would prospectively operate to invalidate this
Amendment or any other Loan Document, in whole or in part, then such clause or
provision only shall be void, as though not herein or therein contained, and the
remainder of this Amendment and the other Loan Documents shall remain operative
and in full force and effect; provided, however, if any such provision pertains
to the repayment of any indebtedness under the Loan Documents, then the
occurrence of any such invalidity shall constitute an immediate Event of Default
under the Credit Agreement.
2.11. Counterparts. This Amendment may be executed in any number of
counterparts with the same effect as if all the signatures on such counterparts
appeared on one document. Each such counterpart shall be deemed to be an
original, but all such counterparts together shall constitute one and the same
instrument.
2.12. Waiver of Subrogation. Until the indebtedness under the Credit
Agreement is paid in full (unconditionally and indefeasibly) and the Loan
Documents are terminated, each Obligor hereby waives any and all rights of
subrogation, contribution and reimbursement that it, he or she may now have or
hereafter acquire with respect to its, his or her obligations hereunder, under
any Loan Document or under any other agreement that it, he or she may have or
may hereafter enter into with Administrative Agent or any Lender.
2.13. Waiver of Suretyship Defenses. Each Obligor hereby waives any and
all defenses and rights of discharge based upon suretyship or impairment of
collateral (including, without limitation, lack of attachment or perfection with
respect thereto) that it, he or she may now have or may hereafter acquire with
respect to Administrative Agent or any Lender or any of its, his or her
obligations hereunder, under any Loan Document or under any other agreement that
it, he or she may have or may hereafter enter into with Administrative Agent or
any Lender.
2.14. WAIVER OF LIABILITY. EACH OBLIGOR (A) AGREES THAT NEITHER
ADMINISTRATIVE AGENT NOR ANY LENDER (NOR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES OR AGENTS) SHALL HAVE ANY LIABILITY TO ANY OBLIGOR (WHETHER SOUNDING
IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES OR COSTS SUFFERED OR INCURRED BY ANY
OBLIGOR IN CONNECTION WITH OR IN ANY WAY RELATED TO THE TRANSACTIONS
CONTEMPLATED OR THE RELATIONSHIP ESTABLISHED BY ANY LOAN DOCUMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH, EXCEPT FOR
FORESEEABLE ACTUAL LOSSES RESULTING DIRECTLY AND EXCLUSIVELY FROM ADMINISTRATIVE
AGENT'S OR SUCH LENDER'S OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD AND
(B) WAIVES, RELEASES AND AGREES NOT TO ▇▇▇ UPON ANY CLAIM AGAINST ADMINISTRATIVE
AGENT OR ANY LENDER (OR THEIR DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS) WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE, EXCEPT FOR CLAIMS FOR FORESEEABLE
ACTUAL LOSSES RESULTING DIRECTLY AND EXCLUSIVELY FROM ADMINISTRATIVE
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AGENT'S OR SUCH LENDER'S OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD.
MOREOVER, WHETHER OR NOT SUCH DAMAGES ARE RELATED TO A CLAIM THAT IS SUBJECT TO
THE WAIVER EFFECTED ABOVE AND WHETHER OR NOT SUCH WAIVER IS EFFECTIVE, NEITHER
ADMINISTRATIVE AGENT NOR ANY LENDER (NOR THEIR DIRECTORS, OFFICERS, EMPLOYEES OR
AGENTS) SHALL HAVE ANY LIABILITY WITH RESPECT TO (AND EACH OBLIGOR HEREBY
WAIVES, RELEASES AND AGREES NOT TO ▇▇▇ UPON ANY CLAIM FOR) ANY SPECIAL,
INDIRECT, CONSEQUENTIAL, PUNITIVE OR NON-FORESEEABLE DAMAGES SUFFERED BY ANY
OBLIGOR IN CONNECTION WITH OR IN ANY WAY RELATED TO THE TRANSACTIONS
CONTEMPLATED OR THE RELATIONSHIP ESTABLISHED BY ANY LOAN DOCUMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH.
2.15. FORUM SELECTION; CONSENT TO JURISDICTION. ANY LITIGATION IN
CONNECTION WITH OR IN ANY WAY RELATED TO ANY LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OR
INACTIONS OF ADMINISTRATIVE AGENT, ANY LENDER OR ANY OBLIGOR WILL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE COMMONWEALTH OF VIRGINIA OR IN THE
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY OBLIGOR, ANY COLLATERAL
OR ANY OTHER PROPERTY MAY ALSO BE BROUGHT (AT ADMINISTRATIVE AGENT'S AND
LENDERS' OPTION) IN THE COURTS OF ANY OTHER JURISDICTION WHERE SUCH COLLATERAL
OR OTHER PROPERTY MAY BE FOUND OR WHERE ADMINISTRATIVE AGENT OR ANY LENDER MAY
OTHERWISE OBTAIN PERSONAL JURISDICTION OVER SUCH OBLIGOR. EACH OBLIGOR HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
COMMONWEALTH OF VIRGINIA AND OF THE UNITED STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF VIRGINIA FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND NON-APPEALABLE JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH OBLIGOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR OUTSIDE THE COMMONWEALTH OF
VIRGINIA. EACH OBLIGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED
TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT ANY OBLIGOR HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THEN SUCH
OBLIGOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT.
2.16. WAIVER OF JURY TRIAL. ADMINISTRATIVE AGENT, EACH LENDER AND EACH
OBLIGOR EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION (WHETHER AS CLAIM,
COUNTER-CLAIM, AFFIRMATIVE DEFENSE OR OTHERWISE) IN CONNECTION WITH OR IN ANY
WAY RELATED TO ANY OF THE LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OR INACTIONS OF
ADMINISTRATIVE AGENT, ANY LENDER OR ANY OBLIGOR. EACH OBLIGOR ACKNOWLEDGES AND
AGREES (A) THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A
PARTY), AND (B) THAT IT HAS BEEN ADVISED BY LEGAL COUNSEL IN CONNECTION
HEREWITH, AND (C) THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR
ADMINISTRATIVE AGENT AND EACH LENDER ENTERING INTO THE LOAN DOCUMENTS AND
FUNDING ADVANCES THEREUNDER.
2.17. Construction. The language in all parts of this Amendment and the
other Loan Documents in all cases shall be construed as a whole according to its
fair meaning.
[BALANCE OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the undersigned (where appropriate, by
their duly authorized officers) have executed this AMENDMENT NO. 3, as an
instrument under seal (whether or not any such seals are physically attached
hereto), as of the day and year first above written.
ATTEST: TALK AMERICA INC. (f/k/a ▇▇▇▇.▇▇▇
Holding Corp.)
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. Lawn IV
----------------------- ------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. Lawn IV
----------------------- ------------------------
Title: Chief Financial Officer Title: EVP-General Counsel
----------------------- ------------------------
[SEAL]
ATTEST: ACCESS ONE COMMUNICATIONS CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. Lawn IV
----------------------- ------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. Lawn IV
---------------------- ------------------------
Title: Chief Financial Officer Title: EVP-General Counsel
----------------------- ------------------------
[SEAL]
ATTEST: OMNICALL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. Lawn IV
----------------------- ------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. Lawn IV
----------------------- ------------------------
Title: Chief Financial Officer Title: EVP-General Counsel
----------------------- ------------------------
[SEAL]
ATTEST: THE OTHER PHONE COMPANY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. Lawn IV
----------------------- ------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. Lawn IV
----------------------- ------------------------
Title: Chief Financial Officer Title: EVP-General Counsel
----------------------- ------------------------
[SEAL]
[SIGNATURES CONTINUE ON NEXT PAGE]
IN WITNESS WHEREOF, the undersigned (where appropriate, by
their duly authorized officers) have executed this AMENDMENT NO. 3, as an
instrument under seal (whether or not any such seals are physically attached
hereto), as of the day and year first above written.
ATTEST: TALK AMERICA OF VIRGINIA, INC.
(f/k/a Tel-Save Holdings of
Virginia, Inc.)
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. Lawn IV
----------------------- ------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. Lawn IV
----------------------- ------------------------
Title: Chief Financial Officer Title: EVP-General Counsel
----------------------- ------------------------
[SEAL]
ATTEST: TALK AMERICA HOLDINGS, INC.
(f/k/a ▇▇▇▇.▇▇▇, Inc.)
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. Lawn IV
----------------------- ------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. Lawn IV
----------------------- ------------------------
Title: Chief Financial Officer Title: EVP-General Counsel
----------------------- ------------------------
[SEAL]
[SIGNATURES CONTINUE ON NEXT PAGE]
IN WITNESS WHEREOF, the undersigned (where appropriate, by
their duly authorized officers) have executed this AMENDMENT NO. 3, as an
instrument under seal (whether or not any such seals are physically attached
hereto), as of the day and year first above written.
WITNESS: MCG CAPITAL CORPORATION (IN ITS
OWN CAPACITY AS ADMINISTRATIVE
AGENT AND LENDER, AND AS SERVICER
FOR ITS FUNDING AFFILIATES AND
SECURITIZATION VEHICLES)
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------- ------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Title: Managing Director and VP
------------------------