EXHIBIT 7
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (this "GUARANTY"), dated as of December 27,
2002, is executed by each of the undersigned (each such entity and each entity
which hereafter executes and delivers a Subsidiary Joinder in substantially the
form of Attachment 1 hereto to be referred to herein as a "SUBSIDIARY
GUARANTOR"), in favor of (i) VANTAGEPOINT VENTURE PARTNERS III (Q), L.P., as
administrative agent for itself and the other Guarantors which are or may become
parties to the Reimbursement Agreement ("AGENT") and (ii) each of the
Guarantors.
RECITALS
A. Reference is made to that certain Revolving Credit and Term Loan
Agreement, dated as of December 13, 2002 (as amended and in effect from time to
time, the "CREDIT AGREEMENT"), by and between Fleet National Bank ("LENDER") and
XXX.xxx, Inc. ("BORROWER").
B. It is a condition precedent to the extension of credit by Lender under
the Credit Agreement that the Guarantors party to the Reimbursement Agreement
enter into guaranties (as amended and in effect from time to time, the "CREDIT
GUARANTIES" and each a "CREDIT GUARANTY") to guaranty certain of the obligations
of Borrower to Lender under the Credit Agreement.
C. In order to induce Guarantors to enter into the Credit Guaranty: (i)
Borrower has agreed to enter into a Reimbursement Agreement, dated as of the
date hereof (as amended and in effect from time to time, the "REIMBURSEMENT
AGREEMENT") with the Guarantors and Agent, (ii) Borrower's subsidiaries party
hereto have agreed to enter into this Guaranty to guaranty Borrower's
obligations to Agent and Guarantors under the Reimbursement Agreement and (iii)
Borrower and Subsidiary Guarantors have agreed to enter into a Security
Agreement, dated as of the date hereof, to secure their respective obligations
under the Reimbursement Agreement and this Guaranty.
D. Each of the undersigned Subsidiary Guarantors is a subsidiary of
Borrower and expects to derive substantial direct and indirect benefit from the
transactions contemplated by the Credit Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each Subsidiary Guarantor, each Guarantor and Agent hereby agree
as follows:
1. DEFINITIONS AND INTERPRETATION.
(a) DEFINITION. When used in this Guaranty, the following terms shall have
the following respective meanings:
"ADJUSTED MAXIMUM GUARANTY AMOUNT" shall mean, with respect to any
Subsidiary Guarantor, the maximum liability of such Subsidiary Guarantor under
this Guaranty, limited to the extent provided in SECTION 2(d) hereof (except
that, for purposes of calculating the Adjusted Maximum Guaranty Amount of a
Subsidiary Guarantor only, any assets or liabilities of such Subsidiary
Guarantor arising under SECTION 8 hereof shall be ignored).
"AGENT" shall have the meaning given to that term in the introductory
paragraph hereof.
"AGGREGATE GUARANTY PAYMENTS" shall mean, with respect to any Subsidiary
Guarantor at any time, the aggregate net amount of all payments made by such
Subsidiary Guarantor under this Guaranty (including, without limitation, under
SECTION 8 hereof) at or prior to such time.
"BORROWER" shall have the meaning given to that term in RECITAL A hereof.
"CLOSING DATE" shall mean the date of this Guaranty.
"CREDIT AGREEMENT" shall have the meaning given to that term in RECITAL A
hereof.
"DISALLOWED POST-COMMENCEMENT INTEREST AND EXPENSES" shall mean interest
computed at the rate provided in the Reimbursement Agreement and claims for
reimbursement, costs, expenses or indemnities under the terms of any of the
Operative Documents accruing or claimed at any time after the commencement of
any Insolvency Proceeding, if the claim for such interest, reimbursement, costs,
expenses or indemnities is not allowable, allowed or enforceable against
Borrower in such Insolvency Proceeding.
"EXEMPT SUBSIDIARY GUARANTOR" shall mean DSLnet Communications Puerto Rico,
Inc. and DSLnet Communications VA, Inc.
"FAIR SHARE" shall mean, with respect to any Subsidiary Guarantor at any
time, an amount equal to (i) a fraction, the numerator of which is the Adjusted
Maximum Guaranty Amount of such Subsidiary Guarantor and the denominator of
which is the aggregate Adjusted Maximum Guaranty Amounts of all Subsidiary
Guarantors, multiplied by (ii) the aggregate amount paid by all Funding
Subsidiary Guarantors under this Guaranty at or prior to such time.
"FAIR SHARE SHORTFALL" shall mean, with respect to any Subsidiary Guarantor
at any time, the amount, if any, by which the Fair Share of such Subsidiary
Guarantor at such time exceeds the Aggregate Guaranty Payments of such
Subsidiary Guarantor at such time.
"FUNDING SUBSIDIARY GUARANTOR" shall have the meaning given to that term in
SECTION 8 hereof.
"GUARANTEED OBLIGATIONS" shall mean the Obligations.
"INSOLVENCY PROCEEDING" shall mean any case or proceeding under the United
States Bankruptcy Code or any other similar law, rule or regulation of the
United States or any jurisdiction or any other action or proceeding for the
reorganization, liquidation, appointment of a receiver, rearrangement of debts,
marshalling of assets or similar action relating to Borrower or any Subsidiary
Guarantor, their respective creditors or any substantial part of their
respective assets, whether or not any such case, proceeding or action is
voluntary or involuntary.
"OPERATIVE DOCUMENTS" shall have the meaning given to that term in the
Reimbursement Agreement.
"PERSON" shall mean and include an individual, a partnership, a
corporation, a business trust, a joint stock company, a limited liability
company, an unincorporated association or other entity and any domestic
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or foreign national, state or local government, any political subdivision
thereof, and any department, agency, authority or bureau of any of the
foregoing.
"SOLVENT" shall mean, with respect to any Person on any date, that on such
date (a) the present fair saleable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, and (b) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature.
"SUBORDINATED OBLIGATIONS" shall have the meaning given to that term in
Section 6 hereof.
"SUBSIDIARY GUARANTOR" shall have the meaning given to that term in the
introductory paragraph hereof.
"SUBSIDIARY JOINDER" shall mean an agreement substantially in the form of
ATTACHMENT 1 hereto.
Unless otherwise defined herein, all other capitalized terms used herein
and defined in the Reimbursement Agreement shall have the respective meanings
given to those terms in the Reimbursement Agreement.
(b) OTHER INTERPRETIVE PROVISIONS. The rules of construction set forth in
the Reimbursement Agreement shall, to the extent not inconsistent with the terms
of this Guaranty, apply to this Guaranty and are hereby incorporated by
reference. Each Subsidiary Guarantor acknowledges receipt of copies of the
Reimbursement Agreement and the other Operative Documents.
2. GUARANTY.
(a) PAYMENT GUARANTY. Each Subsidiary Guarantor (jointly and severally with
the other Subsidiary Guarantors) unconditionally guarantees and promises to pay
and perform as and when due, whether at stated maturity, upon acceleration or
otherwise, any and all of the Guaranteed Obligations. If any Insolvency
Proceeding relating to Borrower is commenced, each Subsidiary Guarantor (jointly
and severally with the other Subsidiary Guarantors) further unconditionally
guarantees and promises to pay and perform, upon the demand of Agent, at the
direction of Required Guarantors, any and all of the Guaranteed Obligations
(including any and all Disallowed Post-Commencement Interest and Expenses) in
accordance with the terms of the Operative Documents, whether or not such
obligations are then due and payable by Borrower and whether or not such
obligations are modified, reduced or discharged in such Insolvency Proceeding.
This Guaranty is a guaranty of payment and not of collection.
(b) CONTINUING GUARANTY. This Guaranty is an irrevocable continuing
guaranty of the Guaranteed Obligations which shall continue in effect until all
obligations of Lender to extend credit to Borrower have terminated and all of
the Guaranteed Obligations have been fully, finally and indefensibly paid or
until the Credit Guaranties are terminated. If any payment on any Guaranteed
Obligation is set aside, avoided or rescinded or otherwise recovered from Agent,
such recovered payment shall constitute a Guaranteed Obligation hereunder and,
if this Guaranty was previously released or terminated, it automatically shall
be fully reinstated, as if such payment was never made.
(c) INDEPENDENT OBLIGATION. The liability of each Subsidiary Guarantor
hereunder is independent of the Guaranteed Obligations and of the obligations of
each other Subsidiary Guarantor hereunder, and a separate action or actions may
be brought and prosecuted against each Subsidiary Guarantor irrespective of
whether action is brought against Borrower, any other Subsidiary Guarantor or
any other guarantor of the
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Guaranteed Obligations or whether Borrower, any other Subsidiary Guarantor or
any other guarantor of the Guaranteed Obligations is joined in any such action
or actions.
(d) FRAUDULENT TRANSFER LIMITATION. If, in any action to enforce this
Guaranty, any court of competent jurisdiction determines that enforcement
against any Subsidiary Guarantor for the full amount of the Guaranteed
Obligations is not lawful under or would be subject to avoidance under Xxxxxxx
000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code or any applicable provision of any
comparable law of any state or other jurisdiction, the liability of such
Subsidiary Guarantor under this Guaranty shall be limited to the maximum amount
lawful and not subject to such avoidance.
(e) TERMINATION. Notwithstanding any termination of this Guaranty in
accordance with SECTION 6 hereof, this Guaranty shall continue to be in full
force and effect and applicable to any Guaranteed Obligations arising thereafter
which arise because prior payments of Guaranteed Obligations are rescinded or
otherwise required to be surrendered by Agent after receipt.
3. REPRESENTATIONS AND WARRANTIES. Each Subsidiary Guarantor makes the following
representations and warranties to Agent and Guarantors:
(a) DUE INCORPORATION, QUALIFICATION, ETC. Such Subsidiary Guarantor and
its Subsidiaries (i) are duly organized, validly existing and in good standing
under the laws of their state of incorporation or formation; (ii) have the power
and authority to own, lease and operate their properties and carry on their
business as now conducted; and (iii) are duly qualified, licensed to do business
and in good standing as foreign corporations in each jurisdiction where the
failure to be so qualified or licensed could reasonably be expected to have a
Material Adverse Effect.
(b) AUTHORITY. The execution, delivery and performance by such Subsidiary
Guarantor of each Operative Document to be executed by such Subsidiary Guarantor
and the consummation of the transactions contemplated thereby (i) are within the
power of such Subsidiary Guarantor and (ii) have been duly authorized by all
necessary actions on the part of such Subsidiary Guarantor.
(c) ENFORCEABILITY. Each Operative Document executed, or to be executed,
by such Subsidiary Guarantor has been, or will be, duly executed and delivered
by such Subsidiary Guarantor and constitutes, or will constitute, a legal, valid
and binding obligation of such Subsidiary Guarantor, enforceable against such
Subsidiary Guarantor in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and general principles
of equity.
(d) NON-CONTRAVENTION. The execution and delivery by such Subsidiary
Guarantor of the Operative Documents executed by such Subsidiary Guarantor and
the performance and consummation of the transactions contemplated thereby do not
and will not (i) violate the certificate of incorporation or bylaws or
comparable formation documents of such Subsidiary Guarantor or any material
judgment, order, writ, decree, statute, rule or regulation applicable to such
Subsidiary Guarantor; (ii) violate any provision of, or result in the breach or
the acceleration of, or entitle any other Person to accelerate (whether after
the giving of notice or lapse of time or both), any material mortgage,
indenture, agreement, instrument or contract to which such Subsidiary Guarantor
is a party or by which it is bound; or (iii) result in the creation or
imposition of any Lien upon any property, asset or revenue of such Subsidiary
Guarantor (other than any Lien arising under the Operative Documents) or the
suspension, revocation, impairment, forfeiture, or nonrenewal of any material
permit, license, authorization or approval applicable to such Subsidiary
Guarantor, its business or operations, or any of its assets or properties.
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(e) APPROVALS. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
Person (including, without limitation, the shareholders of any Person) is
required in connection with the execution and delivery of the Operative
Documents executed by such Subsidiary Guarantor and the performance and
consummation of the transactions contemplated thereby.
(f) NO VIOLATION OR DEFAULT. Neither such Subsidiary Guarantor nor such
Subsidiary Guarantor's Subsidiaries is in violation of or in default with
respect to (i) its certificate of incorporation or bylaws or comparable
formation documents or any material judgment, order, writ, decree, statute, rule
or regulation applicable to such Person; (ii) any material mortgage, indenture,
agreement, instrument or contract to which such Person is a party or by which it
is bound (nor is there any waiver in effect which, if not in effect, would
result in such a violation or default), where, in each case, such violation or
default, individually, or together with all such violations or defaults, could
reasonably be expected to have a Material Adverse Effect. No default under this
Guaranty has occurred and is continuing.
(g) LITIGATION. No actions (including, without limitation, derivative
actions), suits, proceedings or investigations are pending or, to the knowledge
of such Subsidiary Guarantor, threatened against such Subsidiary Guarantor or
such Subsidiary Guarantor's Subsidiaries at law or in equity in any court or
before any other governmental authority which if adversely determined (i) would
(alone or in the aggregate) have a Material Adverse Effect or (ii) seeks to
enjoin, either directly or indirectly, the execution, delivery or performance by
such Subsidiary Guarantor of the Operative Documents or the transactions
contemplated thereby.
(h) OTHER REGULATIONS. Neither such Subsidiary Guarantor nor its
Subsidiaries is subject to regulation under the Investment Company Act of 1940,
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code or to any federal or
state statute or regulation limiting its ability to incur Indebtedness.
(i) GOVERNMENTAL CHARGES. Each of such Subsidiary Guarantor and its
Subsidiaries has filed or caused to be filed all tax returns which are required
to be filed by it. Such Subsidiary Guarantor and such Subsidiary Guarantor's
Subsidiaries have paid, or made adequate reserves (determined in accordance with
GAAP) for the payment of, all taxes and other levies, assessments, fees, claims
or other charges imposed by any governmental authority which have or may have
become due pursuant to said returns, except such taxes, levies, assessments,
fees, claims or other charges, if any, which are being contested in good faith
and as to which adequate reserves (determined in accordance with GAAP) have been
provided or which could not reasonably be expected to have a Material Adverse
Effect if unpaid.
(j) SUBSIDIARIES, ETC. Except as set forth in the Disclosure Schedule
attached hereto (setting forth the jurisdiction of incorporation or formation,
capital structure and percentage ownership of each shareholder), such Subsidiary
Guarantor has no Subsidiaries, is not a partner in any partnership, a member of
any limited liability company or a joint venturer in any joint venture.
(k) SOLVENCY, ETC. Such Subsidiary Guarantor (other than an Exempt
Subsidiary Guarantor) is Solvent and, after the execution and delivery of the
Operative Documents and the consummation of the transactions contemplated
thereby, such Subsidiary Guarantor (other than an Exempt Subsidiary Guarantor)
will be Solvent.
4. COVENANTS. Until all obligations of Lender to extend credit to Borrower have
terminated and all of the Guaranteed Obligations have been fully, finally and
indefensibly paid, each Subsidiary Guarantor shall comply with the following
covenants:
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(a) FINANCIAL STATEMENTS, REPORTS, ETC. Such Subsidiary Guarantor shall
furnish to Agent such financial statements, certificates, opinions, statements,
documents and information relating to the operations or condition (financial or
otherwise) of such Subsidiary Guarantor or its Subsidiaries, and compliance by
Borrower and such Subsidiary Guarantor with the terms of the Operative Documents
as Agent may from time to time reasonably request.
(b) INSPECTIONS. Such Subsidiary Guarantor and its Subsidiaries shall
permit any Person designated by Agent, upon reasonable prior notice and during
normal business hours, to visit and inspect any of the properties and offices of
such Subsidiary Guarantor and its Subsidiaries, to examine the books and records
of such Subsidiary Guarantor and its Subsidiaries and make copies thereof and to
discuss the affairs, finances and accounts of such Subsidiary Guarantor and its
Subsidiaries with, and to be advised as to the same by, their officers, auditors
and accountants, all at such times and intervals as Agent may reasonably
request.
(c) INSURANCE. Such Subsidiary Guarantor and its Subsidiaries shall
maintain the insurance required to be maintained under the Reimbursement
Agreement.
(d) GOVERNMENTAL CHARGES. To the extent failure to do so could reasonably
be expected to have a Material Adverse Effect, such Subsidiary Guarantor and its
Subsidiaries shall promptly pay and discharge all taxes and other charges
imposed by any government authority upon such Subsidiary Guarantor or its
Subsidiaries or their property as and when they become due.
(e) GENERAL BUSINESS OPERATIONS. To the extent failure to do so could
reasonably be expected to have a Material Adverse Effect, such Subsidiary
Guarantor and its Subsidiaries shall (i) maintain its corporate existence and
all rights, privileges and franchises necessary for the conduct of its business
and (ii) comply with any material judgment, order, writ, decree, statute, rule
or regulation applicable to such Person and any material mortgage, indenture,
agreement, instrument or contract to which such Person is a party or by which it
is bound.
5. AUTHORIZATIONS, WAIVERS, ETC.
(a) AUTHORIZATIONS. Each Subsidiary Guarantor authorizes Agent and
Guarantors, in their discretion, without prior notice to such Subsidiary
Guarantor, irrespective of any change in the financial condition of Borrower,
such Subsidiary Guarantor, any other Subsidiary Guarantor or any other guarantor
of the Guaranteed Obligations since the date hereof, and without affecting or
impairing in any way the liability of such Subsidiary Guarantor hereunder, from
time to time to:
(i) Create new Guaranteed Obligations and renew, compromise,
extend, accelerate or otherwise change the time for payment or performance of,
or otherwise amend or modify the Operative Documents or change the terms of the
Guaranteed Obligations or any part thereof, including increase or decrease of
the rate of interest thereon; and
(ii) Assign the Guaranteed Obligations, this Guaranty or the other
Operative Documents in whole or in part to the extent provided in the
Reimbursement Agreement and the other Operative Documents.
(b) AUTHORIZATIONS. Each Subsidiary Guarantor authorizes Agent, in its
discretion, without prior notice to such Subsidiary Guarantor, irrespective of
any change in the financial condition of Borrower, such Subsidiary Guarantor,
any other Subsidiary Guarantor or any other guarantor of the Guaranteed
Obligations since the date hereof, and without affecting or impairing in any way
the liability of such Subsidiary Guarantor hereunder, from time to time to:
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(i) Take and hold security for the payment or performance of the
Guaranteed Obligations and exchange, enforce, waive or release any such
security; apply such security and direct the order or manner of sale thereof;
and purchase such security at public or private sale;
(ii) Otherwise exercise any right or remedy they may have against
Borrower, such Subsidiary Guarantor, any other Subsidiary Guarantor, any other
guarantor of the Guaranteed Obligations or any security, including, without
limitation, the right to foreclose upon any such security by judicial or
nonjudicial sale; and
(iii) Settle, compromise with, release or substitute any one or more
makers, endorsers or guarantors of the Guaranteed Obligations.
(c) WAIVERS. To the extent permitted by applicable law, each Subsidiary
Guarantor hereby waives:
(i) Any right to require Agent and Guarantors to (A) proceed
against Borrower, any other Subsidiary Guarantor or any other guarantor of the
Guaranteed Obligations, (B) proceed against or exhaust any security received
from Borrower, such Subsidiary Guarantor, any other Subsidiary Guarantor or any
other guarantor of the Guaranteed Obligations or otherwise marshal the assets of
Borrower, such Subsidiary Guarantor, any other Subsidiary Guarantor or any other
guarantor of the Guaranteed Obligations or (C) pursue any other remedy in
Agent's or Guarantors' power whatsoever;
(ii) Any defense arising by reason of the application by Borrower
of the proceeds of any borrowing;
(iii) Any defense resulting from the absence, impairment or loss of
any right of reimbursement, subrogation, contribution or other right or remedy
of Subsidiary Guarantor against Borrower, any other Subsidiary Guarantor, any
other guarantor of the Guaranteed Obligations or any security, whether resulting
from an election by Agent to foreclose upon security by nonjudicial sale, or
otherwise;
(iv) Any setoff or counterclaim of Borrower or any defense which
results from any disability or other defense of Borrower or the cessation or
stay of enforcement from any cause whatsoever of the liability of Borrower
(including, without limitation, the lack of validity or enforceability of any of
the Operative Documents);
(v) Any defense based upon any law, rule or regulation which
provides that the obligation of a surety must not be greater or more burdensome
than the obligation of the principal;
(vi) Until all obligations of Lender to extend credit to Borrower
have terminated and all of the Guaranteed Obligations have been fully, finally
and indefensibly paid, any right of subrogation, reimbursement, indemnification
or contribution and other similar right to enforce any remedy which Agent or any
Guarantor or any other Person now has or may hereafter have against Borrower on
account of the Guaranteed Obligations, and any benefit of, and any right to
participate in, any security now or hereafter received by Agent or any Guarantor
or any other Person on account of the Guaranteed Obligations;
(vii) All presentments, demands for performance, notices of
nonperformance, notices delivered under the Operative Documents, protests,
notice of dishonor, and notices of acceptance of this Guaranty and of the
existence, creation or incurring of new or additional Guaranteed Obligations and
notices of any public or private foreclosure sale;
(viii) The benefit of any statute of limitations to the extent
permitted by law;
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(ix) Any appraisement, valuation, stay, extension, moratorium
redemption or similar law or similar rights for marshalling;
(x) Any right to be informed by Agent or any Guarantor of the
financial condition of Borrower, any other Subsidiary Guarantor or any other
circumstances bearing upon the risk of nonpayment or nonperformance of the
Guaranteed Obligations;
(xi) Until all obligations of Lender to extend credit to Borrower
have terminated and all of the Guaranteed Obligations have been fully, finally
and indefensibly paid, any right to revoke this Guaranty;
(xii) Any defense arising from an election for the application of
Section 1111(b)(2) of the United States Bankruptcy Code which applies to the
Guaranteed Obligations;
(xiii) Any defense based upon any borrowing or grant of a security
interest under Section 364 of the United States Bankruptcy Code; and
(xiv) Any right it may have to a fair value hearing to determine the
size of a deficiency judgment following any foreclosure on any security for the
Guaranteed Obligations.
Without limiting the scope of any of the foregoing provisions of this Section 5,
to the extent permitted by applicable law, each Subsidiary Guarantor hereby
further waives (A) all rights and defenses arising out of an election of
remedies by Agent, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a Guaranteed Obligation, has destroyed
such Subsidiary Guarantor's rights of subrogation and reimbursement against
Borrower by the operation of Section 580d of the Code of Civil Procedure or
otherwise, (B) all rights and defenses such Subsidiary Guarantor may have by
reason of protection afforded to Borrower with respect to the Guaranteed
Obligations pursuant to the antideficiency or other laws of California limiting
or discharging the Guaranteed Obligations, including, without limitation,
Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure, and
(C) all other rights and defenses available to such Subsidiary Guarantor by
reason of Sections 2787 to 2855, inclusive, Section 2899 or Section 3433 of the
California Civil Code or Section 3605 of the California Commercial Code.
(d) FINANCIAL CONDITION OF BORROWER, ETC. Each Subsidiary Guarantor is
fully aware of the financial condition and affairs of Borrower. Each Subsidiary
Guarantor has executed this Guaranty without reliance upon any representation,
warranty, statement or information concerning Borrower furnished to such
Subsidiary Guarantor by Agent or any Guarantor and has, independently and
without reliance on Agent or any Guarantor and based on such documents and
information as it has deemed appropriate, made its own appraisal of the
financial condition and affairs of Borrower and of other circumstances affecting
the risk of nonpayment or nonperformance of the Guaranteed Obligations. Each
Subsidiary Guarantor is in a position to obtain, and assumes full responsibility
for obtaining, any additional information about the financial condition and
affairs of Borrower and of other circumstances affecting the risk of nonpayment
or nonperformance of the Guaranteed Obligations and will, independently and
without reliance upon Agent or any Guarantor, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
appraisals and decisions in taking or not taking action in connection with this
Guaranty.
6. SUBORDINATION. Each Subsidiary Guarantor hereby subordinates any and all
debts, liabilities and obligations owed to such Subsidiary Guarantor by Borrower
or any Subsidiary of Borrower (the "SUBORDINATED OBLIGATIONS") to the Guaranteed
Obligations as provided in this SECTION 6.
(a) PROHIBITED PAYMENTS, ETC. Except during the existence of an Event of
Default or any default by any Subsidiary Guarantor hereunder, each Subsidiary
Guarantor and its Subsidiaries may receive regularly
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scheduled payments from Borrower on account of Subordinated Obligations. During
the existence of any Event of Default or any default by any Subsidiary Guarantor
hereunder (including the commencement and continuation of any Insolvency
Proceeding relating to Borrower), however, unless Agent otherwise requests, such
Subsidiary Guarantor shall not, nor shall it permit any of its Subsidiaries to,
demand, accept or take any action to collect any payment on account of the
Subordinated Obligations.
(b) PRIOR PAYMENT OF GUARANTEED OBLIGATION. In any Insolvency Proceeding
relating to Borrower, each Subsidiary Guarantor agrees that Agent and Guarantors
shall be entitled to receive payment of all Guaranteed Obligations (including
any and all Disallowed Post-Commencement Interest and Expenses) before such
Subsidiary Guarantor or any of its Subsidiaries receives payment of any
Subordinated Obligations.
(c) TURN-OVER. During the existence of any Event of Default (including the
commencement and continuation of any Insolvency Proceeding relating to
Borrower), each Subsidiary Guarantor and its Subsidiaries shall, if Agent so
requests, collect, enforce and receive payments on account of the Subordinated
Obligations as trustee for Agent and deliver such payments to Agent on account
of the Guaranteed Obligations (including any and all Disallowed
Post-Commencement Interest and Expenses), together with any necessary
endorsements or other instruments of transfer, but without reducing or affecting
in any manner the liability of such Subsidiary Guarantor under the other
provisions of this Guaranty.
(d) AGENT AUTHORIZATION. During the existence of any Event of Default or
any default by a Subsidiary Guarantor hereunder (including the commencement and
continuation of any Insolvency Proceeding relating to Borrower), Agent is
authorized and empowered (but without any obligation to so do), in its
discretion, (i) in the name of each Subsidiary Guarantor and its Subsidiaries,
to collect and enforce, and to submit claims in respect of, Subordinated
Obligations and to apply any amounts received thereon to the Guaranteed
Obligations (including any and all Disallowed Post-Commencement Interest and
Expenses), and (ii) to require each Subsidiary Guarantor (A) to collect and
enforce, and to submit claims in respect of, Subordinated Obligations and (B) to
pay any amounts received on such obligations to Agent for application to the
Guaranteed Obligations (including any and all Disallowed Post-Commencement
Interest and Expenses).
7. GENERAL PLEDGE; SETOFF.
(a) PLEDGE. In addition to all liens upon and rights of setoff against the
property of any Subsidiary Guarantor given to Agent or any Guarantor by law or
separate agreement to secure the liabilities of any Subsidiary Guarantor
hereunder, to the extent permitted by law, each Subsidiary Guarantor hereby
grants to Agent for the benefit of the Guarantors and itself, as security for
such Subsidiary Guarantor's obligations hereunder, a security interest in all
monies, securities and other property of such Subsidiary Guarantor now or
hereafter in the possession of Agent or any Guarantor; and Agent shall have all
rights and remedies of a secured party with respect to such property.
(b) SETOFF. In addition to any rights and remedies of Agent or Guarantors
provided by law, Agent shall have the right, without prior notice to any
Subsidiary Guarantor, any such notice being expressly waived by each Subsidiary
Guarantor to the extent permitted by applicable law, during the existence of an
Event of Default, to set-off and apply against the Guaranteed Obligations then
due and payable any amount owing from Agent or any Guarantor to such Subsidiary
Guarantor.
(c) NONWAIVER. No security interest or right of setoff shall be deemed to
have been waived by any act or conduct on the part of Agent or by any failure to
exercise such right of setoff or to enforce such
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security interest, or by any delay in so doing; and every right of setoff and
security interest shall continue in full force and effect until such right of
setoff or security interest is specifically waived or released by an instrument
in writing executed by Agent.
8. CONTRIBUTION AMONG SUBSIDIARY GUARANTORS. The Subsidiary Guarantors desire to
allocate among themselves, in a fair and equitable manner, their rights of
contribution from each other when any payment is made by any Subsidiary
Guarantor under this Guaranty. Accordingly, if any payment is made by any
Subsidiary Guarantor under this Guaranty (a "FUNDING SUBSIDIARY GUARANTOR"')
that exceeds its Fair Share, the Funding Subsidiary Guarantor shall be entitled
to a contribution from each other Subsidiary Guarantor in the amount of such
other Subsidiary Guarantor's Fair Share Shortfall, so that all such
contributions shall cause each Subsidiary Guarantor's Aggregate Guaranty
Payments to equal its Fair Share. The amounts payable as contributions hereunder
shall be determined by the Funding Subsidiary Guarantor as of the date on which
the related payment or distribution is made by the Funding Subsidiary Guarantor,
and such determination shall be binding on the other Subsidiary Guarantors
absent manifest error. The allocation and right of contribution among the
Subsidiary Guarantors set forth in this Section 8 shall not be construed to
limit in any way the liability of any Subsidiary Guarantor under this Guaranty
or the amount of the Guaranteed Obligations.
9. MISCELLANEOUS.
(a) NOTICES. Except as otherwise provided herein, all notices, requests,
demands, consents, instructions or other communications to or upon any
Subsidiary Guarantor or Agent under this Guaranty or the other Operative
Documents to which a Subsidiary Guarantor is a party shall be in writing and
fixed, mailed or delivered, if to a Subsidiary Guarantor or Agent, at its
respective facsimile number or address set forth below or in the respective
Subsidiary Joinder for such Subsidiary Guarantor (or to such other facsimile
number or address for any party as indicated in any notice given by that party
to the other parties). All such notices and communications shall be effective
(i) when sent by overnight service of recognized standing, on the second
Business Day following the deposit with such service; (ii) when mailed, first
class postage prepaid and addressed as aforesaid through the United States
Postal Service, upon receipt; (iii) when delivered by hand, upon delivery; and
(iv) when faxed, upon confirmation of receipt.
Subsidiary
Guarantor: DSLnet Communications Puerto Rico, Inc.
DSLnet Communications VA, Inc.
Tycho Networks, Inc.
Vector Networks, Inc.
c/o XXX.xxx, Inc.
000 Xxxx Xxxxx Xxxxx
0xx Xxxxx
Xxx Xxxxx, XX 00000
Attention: General Counsel
Facsimile: 000-000-0000
Telephone: 000-000-0000
Agent VANTAGEPOINT VENTURE PARTNERS III (Q), L.P., as Agent
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
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(b) PAYMENTS. Each Subsidiary Guarantor shall make all payments required
hereunder to Agent, or its order, at Agent's office located at the address set
forth in SECTION 9(a) hereof, or at such other office as Agent may designate, on
demand, in U.S. dollars. If any amounts required to be paid by a Subsidiary
Guarantor under this Guaranty are not paid when due, such Subsidiary Guarantor
shall pay interest on the aggregate, outstanding balance of such amounts from
the date due until those amounts are paid in full at a per annum rate equal to
ten percent (10%).
(c) EXPENSES. Each Subsidiary Guarantor shall pay on demand (i) all
reasonable fees and expenses, including reasonable attorneys' fees and expenses,
incurred by Agent and Guarantors in connection with the preparation, execution
and delivery of, and the exercise of its duties under, this Guaranty and the
preparation, execution and delivery of amendments and waivers hereunder and (ii)
all reasonable fees and expenses, including reasonable attorneys' fees and
expenses, incurred by Agent and Guarantors in connection with the enforcement or
attempted enforcement of this Guaranty or any of the Guaranteed Obligations or
in preserving any of Agent's and Guarantors' rights and remedies (including,
without limitation, all such fees and expenses incurred in connection with any
"workout" or restructuring affecting the Operative Documents or the Guaranteed
Obligations or any bankruptcy or similar proceeding involving Subsidiary
Guarantor, any other Subsidiary Guarantor, Borrower or any of their Affiliates).
(d) WAIVERS, AMENDMENTS. This Guaranty may not be amended or modified, nor
may any of its terms be waived, except by written instruments signed by each
Subsidiary Guarantor and Required Guarantors. Each waiver or consent under any
provision hereof shall be effective only in the specific instances for the
purpose for which given. No failure or delay on Agent's or any Guarantors' part
in exercising any right hereunder shall operate as a waiver thereof or of any
other right nor shall any single or partial exercise of any such right preclude
any other further exercise thereof or of any other right.
(e) ASSIGNMENT. This Guaranty shall be binding upon and inure to the
benefit of Agent, each Guarantor and the Subsidiary Guarantors and their
respective successors and assigns; PROVIDED, HOWEVER, that no Subsidiary
Guarantor may assign or transfer any of its rights and obligations under this
Guaranty without the prior written consent of Required Guarantors, and,
PROVIDED, FURTHER, that Agent may sell, assign and delegate their respective
rights and obligations hereunder only as permitted by the Reimbursement
Agreement. All references in this Guaranty to any Person shall be deemed to
include all permitted successors and assigns of such Person.
(f) CUMULATIVE RIGHTS, ETC. The rights, powers and remedies of Agent and
Guarantors under this Guaranty shall be in addition to all rights, powers and
remedies given to Agent and Guarantors by virtue of any applicable law, rule or
regulation of any governmental authority, the Reimbursement Agreement, any other
Operative Document or any other agreement, all of which rights, powers, and
remedies shall be cumulative and may be exercised successively or concurrently
without impairing Agent's and Guarantors' rights hereunder. Each Subsidiary
Guarantor waives any right to require Agent or Guarantors to proceed against any
Person or to exhaust any Collateral or to pursue any remedy in Agent's or
Guarantors' power.
(g) PAYMENTS FREE OF TAXES, ETC. All payments made by each Subsidiary
Guarantor under this Guaranty shall be made by each Subsidiary Guarantor free
and clear of and without deduction for any and all present and future taxes,
levies, charges, deductions and withholdings. In addition, each Subsidiary
Guarantor shall pay upon demand any stamp or other taxes, levies or charges of
any jurisdiction with respect to the execution, delivery, registration,
performance and enforcement of this Guaranty. If any taxes, levies, charges or
other amounts are required to be withheld from any amounts payable to Agent,
hereunder, the amounts so payable to Agent shall be increased to the extent
necessary to yield to Agent (after payment of all such amounts) any such amounts
payable hereunder in the amounts, specified in this Guaranty. Upon reasonable
request by Agent, each Subsidiary Guarantor shall furnish evidence satisfactory
to Agent that all
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requisite authorizations and approvals by, and notices to and filings with,
governmental authorities and regulatory bodies have been obtained and made and
that all requisite taxes, levies and charges have been paid.
(h) PARTIAL INVALIDITY. If at any time any provision of this Guaranty is or
becomes illegal, invalid or unenforceable in any respect under the law or any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions of this Guaranty nor the legality, validity or enforceability of such
provision under the law of any other jurisdiction shall in any way be affected
or impaired thereby.
(i) JOINT AND SEVERAL OBLIGATION. The obligations of the Subsidiary
Guarantors under this Guaranty are joint and several obligations of each
Subsidiary Guarantor and may be freely enforced against each Subsidiary
Guarantor, for the full amount of the Guaranteed Obligations, without regard to
whether enforcement is sought or available against any other Subsidiary
Guarantor.
(j) GOVERNING LAW. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REFERENCE TO ITS CHOICE OF
LAWS PROVISIONS).
(k) JURY TRIAL. EACH SUBSIDIARY GUARANTOR, AGENT AND EACH GUARANTOR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY.
(l) LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY ANY SUBSIDIARY
GUARANTOR AGAINST AGENT OR ANY GUARANTOR OR THE MEMBERS, AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES OR ATTORNEYS OF AGENT OR ANY GUARANTOR FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM (WHETHER
BASED UPON ANY BREACH OF CONTRACT, TORT, BREACH OF STATUTORY DUTY OR ANY OTHER
THEORY OF LIABILITY) ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED
BY THIS GUARANTY, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH AND EACH GUARANTOR HEREBY WAIVES, RELEASES AND AGREES NOT TO XXX UPON
ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT NOW ACCRUED AND WHETHER OR NOT
KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
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IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this Guaranty to
be executed as of the day and year first above written.
DSLNET COMMUNICATIONS PUERTO RICO, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: President
----------------------------------
DSLNET COMMUNICATIONS VA, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: President
----------------------------------
TYCHO NETWORKS, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: President
----------------------------------
VECTOR INTERNET SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: President
----------------------------------
Signature Page to Subsidiary Guaranty
DISCLOSURE SCHEDULE
None.
ATTACHMENT 1
SUBSIDIARY JOINDER
THIS SUBSIDIARY JOINDER (this "AGREEMENT"), dated as of __________, ____,
is executed by [NEW SUBSIDIARY], a ___________ [corporation] [partnership]
[etc.] ("NEW SUBSIDIARY"), in favor of VANTAGEPOINT VENTURE PARTNERS III (Q),
L.P. as administrative agent for itself and the other Guarantors which are or
may become parties to the Reimbursement Agreement (the "AGENT").
RECITALS
A. Reference is made to that certain Revolving Credit and Term Loan
Agreement, dated as of ________, 2002 (the "CREDIT AGREEMENT"), by and between
Fleet National Bank ("LENDER") and XXX.xxx, Inc. ("BORROWER").
B. Each Guarantor has entered into a Guaranty, dated as of ________, 2002
(the "CREDIT GUARANTY"), to guaranty certain of the obligations of Borrower
under the Credit Agreement.
C. In order to induce Guarantors to enter into the Credit Guaranty, (i)
Borrower entered into a Reimbursement Agreement, dated as of ________, 2002 (the
"REIMBURSEMENT AGREEMENT") with Agent and Guarantors, (ii) certain of Borrower's
subsidiaries ("SUBSIDIARY GUARANTORS") entered into a Subsidiary Guaranty, dated
as of __________, 2002 (the "GUARANTY"), to guaranty Borrower's obligations to
Agent and Guarantors under the Reimbursement Agreement and (iii) Borrower and
Subsidiary Guarantors entered into a Security Agreement, dated as of _______,
2002 (the "SECURITY AGREEMENT"), to secure their respective obligations under
the Reimbursement Agreement and the Guaranty.
D. New Subsidiary is a [new] Subsidiary of Borrower and expects to derive
substantial direct and indirect benefit from the transactions contemplated by
the Reimbursement Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, New Subsidiary hereby agrees with Agent and each Guarantor, as
follows:
1. DEFINITIONS AND INTERPRETATION. Unless otherwise defined herein,
all capitalized terms used herein and defined in the Guaranty shall have the
respective meanings given to those terms in the Guaranty. New Subsidiary
acknowledges receipt of copies of the Guaranty, the Security Agreement, the
Credit Agreement and the other Operative Documents.
2. REPRESENTATIONS AND WARRANTIES. On and as of the date of this
Agreement (the "EFFECTIVE DATE") and for the benefit of Agent, New Subsidiary
hereby makes each of the representations and warranties made by each Subsidiary
Guarantor in the Guaranty.
3. AGREEMENT TO BE BOUND. New Subsidiary agrees that, on and as of the
Effective Date, it shall become a Subsidiary Guarantor under the Guaranty and a
Grantor (as such term is defined in the Security Agreement) under the Security
Agreement and shall be bound by all the provisions of the Guaranty and the
Security Agreement to the same extent as if New Subsidiary had executed the
Guaranty and the Security Agreement on the Closing Date.
4. WAIVER. Without limiting the generality of the waivers in the
Guaranty, New Subsidiary specifically agrees to be bound by the Guaranty and the
Security Agreement and waives any right to notice of acceptance of its execution
of this Agreement and of its agreement to be bound by the Guaranty and the
Security Agreement.
5. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, New Subsidiary has caused this Agreement to be executed
by its duly authorized officer.
[NEW SUBSIDIARY]
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
Address:
[_______________________________]
[_______________________________]
[_______________________________]
Attn:
----------------------
Telephone:
-----------------
Facsimile:
-----------------
