AMENDMENT NO. 1 TO SELLER NOTE SUBORDINATION AND INTERCREDITOR AGREEMENT
AMENDMENT
NO. 1
TO
SELLER
NOTE SUBORDINATION AND
INTERCREDITOR
AGREEMENT
This
AMENDMENT NO. 1 (this “Amendment”) is entered into as of this 8th
day of
March, 2006 among CapitalSource Finance LLC (“Senior Lender”), F&L
L.L.P. (f/k/a Oblio Telecom L.L.P.)
(“Subordinated Lender” or “Holder of Subordinated Indebtedness”) and Oblio
Telecom, Inc. (“Company”).
WHEREAS,
as an inducement for Senior Lender to provide or continue to provide a secured
credit facility in favor of Company and its subsidiaries (“Borrower”),
Subordinated Lender entered into the Seller Note Subordination and Intercreditor
Agreement (as
amended, restated, supplemented or otherwise modified from time to time,
the
“Agreement”)
dated as of August 12, 2005 to provide for the subordination of (i) Subordinated
Lender’s right to receive payments on the Subordinated Indebtedness and (ii) the
“Liens” in all assets of Company granted to Subordinated Lender to the “Liens”
in such assets of Company granted to Senior Lender;
WHEREAS,
Company incurred additional Subordinated Indebtedness payable to Subordinated
Lender pursuant to the Additional Subordinated Note (as such term is defined
in
the Agreement);
WHEREAS,
Senior Lender has agreed to waive certain events of default that have occurred
under the Loan Agreement and to make certain amendments to the Loan Agreement
pursuant to Waiver and Amendment No. 2 to Credit and Security Agreement dated
as
of March 8, 2006 (“Amendment No. 2”);
WHEREAS,
to induce Senior Lender to enter into Amendment No. 2 and to provide or continue
to provide the financial accommodations provided therein, Subordinated Lender
has agreed to subordinate its right to payment under the Additional Subordinated
Note and Senior Lender is willing to modify the Agreement to reflect the
change
in amount of Subordinated Indebtedness on the terms and conditions hereafter
set
forth.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties hereto agree as follows:
1.
Definitions.
All
capitalized terms not otherwise defined herein shall have the meanings given
to
them in the Agreement.
2.
Amendments
to Agreement.
The
Agreement is hereby amended in its entirety to provide as follows:
(a)
Section
1.1 of the Agreement is amended by amending the following defined terms to
provide as follows:
“Subordinated
Indebtedness”
shall
mean all principal, interest and other amounts payable or chargeable in
connection with the Subordinated Note and all other obligations of any kind
owed
by Borrower to Subordinated Lender.
“Subordinated
Note”
shall
mean collectively, (i) the Initial Subordinated Note and (ii) the Additional
Subordinated Note.
(b)
Section
1.1 of the Agreement is amended by inserting the following defined terms
in
their appropriate alphabetical order:
“Additional
Subordinated Note”
shall
mean, that certain promissory note in the original principal amount of
$2,322,850
dated as
of December 14, 2005 between Company and Subordinated Lender.
“Permitted
Principal Payment”
shall
have the meaning set forth in Section 2.1(iii) of this Agreement.
“Permitted
Principal Payment Amount”
shall
mean,
for
any Test Period, commencing with the Test Period ending June 30, 2006 and
for
each Test Period thereafter, the lesser of: (x) the amount by which the
Company’s EBITDA for the Test Period divided by 1.5, exceeds the Company’s Fixed
Charges for such Test Period, or (y) the amount by which the Company’s EBITDA
for the Test Period exceeds the minimum EBITDA amount required in paragraph
1 of
Annex I of the Loan Agreement for such Test Period. The amount of any principal
payments previously made to Subordinated Lender under Section 2.1(iii) of
this
Agreement shall be considered a Fixed Charge for purposes of computing the
Permitted Principal Payment Amount for each subsequent Test Period.
“Permitted
Principal Payment Certificate”
shall
mean a certificate of the Company’s chief financial officer in form and
substance satisfactory
to Senior Lender in its sole discretion (A) stating that such person has
reviewed the relevant terms of the Loan Documents and the condition of the
Company, (B) stating that no Default or Event of Default has occurred or
is
continuing, and (C) setting forth the Permitted Principal Payment Amount,
accompanied by detailed calculations thereof, in a form satisfactory to
Lender.
“Initial
Subordinated Note”
shall
mean, the Note and Security Agreement in the original principal amount of
$2,500,000 dated as of August 12, 2005 between Company and Subordinated
Lender.
(c)
Section
2.1 of the Agreement is amended in its entirety to provide as
follows:
“Section
2.1. Payments.
Company
shall make no Distribution on the Subordinated Indebtedness until such time
as
the Senior Indebtedness shall have been paid in full in cash and the Loan
Agreement shall have been irrevocably terminated; provided,
however,
so long
as no Default or Event of Default shall have occurred under the Senior Lending
Agreements or would occur after giving effect to such payment:
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| (i) |
Company
may pay, and the Subordinated Lender may receive and retain, regularly
scheduled quarterly payments of interest on the Initial Subordinated
Note
at a rate not to exceed one percent (1%) per annum;
|
| (ii) |
Company
may pay, and the Subordinated Lender may receive and retain, regularly
scheduled quarterly payments of interest on the Additional Subordinated
Note at a rate not to exceed four percent (4%) per
annum;
|
| (iii) |
Company
may pay, and the Subordinated Lender may receive and retain, payments
of
principal on the Additional Subordinated Note (a “Permitted Principal
Payment”) in an amount not to exceed the
Permitted Principal Payment Amount for the Test Period ended immediately
prior to the date of such proposed principal payment. No
Permitted Principal Payment shall be made earlier than the receipt
by
Senior Lender of the Company’s monthly financial statements required under
and prepared in accordance with Section 6.1(a) of the Loan Agreement
for
the Test Period ending immediately prior to such proposed Permitted
Principal Payment, accompanied by a Permitted Principal Payment
Certificate;
and
|
| (iv) |
Company
may prepay the principal on the Initial Subordinated Note and the
Additional Subordinated Note (in whole or in part) after the payment
in
full in cash of all Senior Indebtedness with respect to the Term
Loan
Facilities.”
|
3.
Representations
and Warranties.
Company
and Subordinated Lender hereby represents and warrants as follows:
(a) This
Amendment and the Agreement, as amended hereby, constitute legal, valid and
binding obligations of Company and Subordinated Lender and are enforceable
against Company and Subordinated Lender in accordance with their respective
terms.
(b) Upon
the
effectiveness of this Amendment, Company and Subordinated Lender hereby
reaffirms all covenants, representations and warranties made in the Agreement
as
amended hereby and agrees that all such covenants, representations and
warranties shall be deemed to have been remade as of the effective date of
this
Amendment.
(c) No
Event
of Default or Default has occurred and is continuing or would exist after
giving
effect to this Amendment.
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(d) Company
and Subordinated Lender have no defense, counterclaim or offset with respect
to
the Agreement.
4.
Effect
on the Agreement.
(a) Upon
the
effectiveness of Section 2 hereof, each reference in the Agreement to “this
Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall mean
and be a reference to the Agreement as amended hereby.
(b) Except
as
specifically amended herein, the Agreement, and all other documents, instruments
and agreements executed and/or delivered in connection therewith, shall remain
in full force and effect, and are hereby ratified and confirmed.
(c) The
execution, delivery and effectiveness of this Amendment shall not operate
as a
waiver of any right, power or remedy of Senior Lender, nor constitute a waiver
of any provision of the Agreement, or any other documents, instruments or
agreements executed and/or delivered under or in connection
therewith.
5.
Governing
Law.
This
Amendment shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns and shall be governed by and
construed in accordance with the laws of the State of Maryland, without regard
to any conflicts of laws principles thereto that would call for the application
of the laws of any other jurisdiction.
6.
Headings.
Section
headings in this Amendment are included herein for convenience of reference
only
and shall not constitute a part of this Amendment for any other
purpose.
7.
Counterparts;
Facsimile.
This
Amendment may be executed by the parties hereto in one or more counterparts,
each of which shall be deemed an original and all of which when taken together
shall constitute one and the same agreement. Any signature delivered by a
party
by facsimile transmission shall be deemed to be an original signature
hereto.
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IN
WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be
executed and delivered by its duly authorized officer as of the date first
set
forth above.
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CAPITALSOURCE
FINANCE LLC, as
Senior Lender
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| By: | /s/ | |
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| Name | ||
| Title | ||
| F&L L.L.P. (f/k/a Oblio Telecom L.L.P.), as Subordinated Lender | ||
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| By: | /s/ | |
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| Name | ||
| Title | ||
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OBLIO
TELECOM INC., as
Company
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| By: | /s/ | |
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| Name | ||
| Title | ||
| ACKNOWLEDGED AND AGREED: | ||
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By:
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/s/ Xxxxx Xxxxxx | |
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| Xxxxx Xxxxxx | ||
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By:
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/s/ Radu Archiriloaie | |
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| Radu Archiriloaie | ||
