LOAN AND SECURITY AGREEMENT
This Agreement is between the undersigned Borrower and the undersigned
Lender concerning loans and other credit accommodations to be made by Lender to
Borrower.
SECTION 1. PARTIES
1.1 The "Borrower" is the person, firm, corporation or other entity,
identified as the Borrower in Section 10.6(c) and its successors and assigns. If
more than one Borrower is specified in Section 10.6(c), all references to
Borrower shall mean each of them, jointly and severally, individually and
collectively, and the successors and assigns of each.
1.2 The "Lender" is The CIT Group/Credit Finance, Inc. and its successors
and assigns.
SECTION 2. LOANS AND OTHER CREDIT ACCOMMODATIONS
2.1 Revolving Loans. Lender shall, subject to the terms and conditions
contained herein, make revolving loans to Borrower ("Revolving Loans") in
amounts requested by Borrower from time to time, but not in excess of the Net
Availability existing immediately prior to the making of the requested loan and
provided the requested loan would not cause the outstanding Obligations to
exceed the Maximum Credit.
(a) The "Maximum Credit" is set forth in Section 10.1(a) hereof.
(b) The "Gross Availability" shall be calculated at any time as the product
obtained by multiplying the outstanding amount of Eligible Accounts, net of all
taxes, discounts, allowances and credits given or claimed, by the Eligible
Accounts Percentage set forth in Section 10.1(b) minus Reserves.
(c) The "Net Availability" shall be calculated at any time as an amount
equal to the Gross Availability minus the aggregate amount of all
then-outstanding Obligations to Lender other than the then outstanding principal
balance of the Term Loan, if any.
(d) "Eligible Accounts" are accounts created by Borrower in the ordinary
course of its business which are and remain acceptable to Lender for lending
purposes. General criteria for Eligible Accounts are set forth below but may be
revised from time to time by Lender, in its sole judgment, on fifteen (15) days'
prior written notice to Borrower. Lender shall, in general, deem the accounts
set forth below to be Eligible Accounts, in each case a receivable due from an
account debtor arising in connection with:
(x) 1+ Direct Dial Long Distance Service Accounts;
(y) 1+ Coin Sent Paid Long Distance Accounts; and
(z) Dial Around Pay Phone Compensation Plan Accounts.
All of which accounts Lender, in its sole judgment, deems to be an Eligible
Account, provided, however, that no such account shall be an Eligible Account
if: (i) the Dial Around Pay Phone Compensation Plan Accounts are more than one
hundred eighty (180) days past invoice date; (ii) the 1+ Coin Sent Paid Long
Distance Accounts and the 1+ Direct Dial Long Distance Service Accounts are more
than ninety (90) days past invoice date; (iii) the account is billed more than
sixty (60) days past the origination call; (iv) such account arises out of the
rendering of services to an Affiliate of Borrower or to a Person controlled by
an Affiliate of Borrower; or (v) such account is unpaid more than the number of
days set forth above; or (vi) any covenant, representation or warranty contained
in this Agreement with respect to such account has been breached; or (vii) the
account debtor has disputed liability with respect to a receivable or has made
any claim with respect to any other account due to Borrower, to the extent of
any dispute or claim, or (viii) such account is due from or processed by an
account debtor that has commenced a voluntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or made assignment for the
benefit of creditors, or a decree or order for relief has been entered by a
court having jurisdiction over such account debtor in an involuntary case under
the federal bankruptcy laws, as now constituted or hereafter amended, or any
other petition or other application for relief under the federal bankruptcy laws
has been filed against the account debtor, or if the account debtor has failed,
suspended business, ceased to be solvent, or consented to or suffered a
receiver, trustee, liquidator, or custodian to be appointed for it or for all or
a significant portion of its assets or affairs; or (ix) Lender believes, in its
reasonable judgment, that collection of such Account is insecure or that payment
thereof is doubtful or will be delayed by reason of another account debtor's
financial condition; or (x) the account is subject to a lien other than
Lender's; or (xi) the account is evidenced by chattel paper or an instrument (as
defined in the Uniform Commercial Code) or has been reduced to judgment; or
(xii) Borrower has made any agreement with another account debtor(s) for any
deduction therefrom, except for post-billing adjustments which are made in the
ordinary course of business and except as provided in the applicable agreement
for billing services, but only to the extent of such deduction; or (xiii)
Borrower has made an agreement with the account debtor to extend the time of
payment thereof, unless, notwithstanding such agreement, payment is made within
ninety (90) days of the applicable invoice date; or (xiv) such account is
subject to setoff, carve-out or other adjustment; or (xv) such account is a
duplicate billing; (xvi) such accounts have dilution rates (as set forth in
sections 10.1(b)(i) and (ii) hereof) which are unacceptable to Lender; (xvii)
such accounts are not accounts with respect to which the account debtor is the
United States or any State or political subdivision thereof or any department,
agency or instrumentality of the United States, any State or political
subdivision, unless there has been compliance with the Assignment of Claims Act
or any similar State or local law, if applicable; (xviii) Borrower has delivered
to Lender or Lender's representative such documents as Lender may have requested
in connection with such accounts and Lender shall have received a verification
of such account, satisfactory to it, if sent to the account debtor or any other
obligor or any bailee; (xix) there are no facts existing or threatened which
might result in any adverse change in the account debtor's financial condition;
(xx) such accounts owed by a single account debtor or its affiliates do not
represent more than thirty five percent (35%) (or in the event the account
debtor is AT&T, does not exceed fifty percent (50%)) of all otherwise Eligible
Accounts provided however, that accounts excluded from Eligible Accounts solely
by reason of this subsection (xx) shall nevertheless be considered Eligible
Accounts to the extent of the amount of such accounts which does not exceed
thirty five percent (35%) (or in the event the account debtor is AT&T, does not
exceed fifty percent (50%)) of all otherwise Eligible Accounts; (xxi) such
accounts are not owed by an account debtor who is or whose Affiliates are past
due upon other accounts owed to Borrower comprising more than fifty percent
(50%) of the accounts of such account debtor or its affiliates owed to Borrower;
(xxii) such accounts are owed by account debtors whose total indebtedness to
Borrower does not exceed the amount of any customer credit limits as
established, and changed, from time to time by Lender on notice to Borrower
(accounts excluded from Eligible Accounts solely by reason of this subsection
(xxii) shall nevertheless be considered Eligible Accounts to the extent the
amount of such accounts does not exceed such customer credit limit); or (xxiii)
such accounts are owed by account debtors deemed creditworthy at all times by
Lender.
(e) "Eligible Inventory" is inventory owned by Borrower which is and
remains acceptable to Lender for lending purposes and is located at one of the
addresses set forth in Section 10.6(e).
(f) Lender shall have a continuing right to deduct reserves in determining
the Gross Availability ("Reserves"), and to increase and decrease such Reserves
from time to time, if and to the extent that, in Lender's sole judgment, such
Reserves are necessary to protect Lender against any state of facts which does,
or would, with notice or passage of time or both, constitute an Event of Default
or have an adverse effect on any Collateral. Lender may, at its option,
implement Reserves by designating as ineligible a sufficient amount of accounts
or inventory which would otherwise be Eligible Accounts or Eligible Inventory so
as to reduce Gross Availability by the amount of the intended Reserve.
(g) Subject to the terms and conditions hereof, including but not limited
to the existence of sufficient Gross Availability and Net Availability, Borrower
agrees to borrow sufficient amounts from time to time so that the outstanding
Revolving Loan or the Term Loan, shall at all times equal or exceed the
principal amount set forth in Section 10.1(d) as the Minimum Borrowing;
provided, that if Borrower fails to do so, interest shall nevertheless accrue on
the Obligations as if Borrower had at all times borrowed such amounts as would
have been sufficient to maintain the outstanding Revolving Loans and Term Loan
at an amount equal to the Minimum Borrowing (and Lender shall have the right to
charge Borrower's loan account for such additional interest), and provided
further that such accrual shall not impose upon Lender any obligation to make
loans to Borrower to increase the outstanding Revolving Loans or Term Loan to
such Minimum Borrowing.
2.2 Term Loan. Any term loan and the terms of such loan, made by Lender to
Borrower are set forth in Section 10.2 ("Term Loan").
2.3 Accommodations.
(a) Lender may, in its sole discretion, issue or cause to be issued, from
time to time at Borrower's request and on terms and conditions and for purposes
satisfactory to Lender, credit accommodations consisting of letters of credit,
bankers' acceptances, merchandise purchase guaranties or other guaranties or
indemnities for Borrower's account ("Accommodations"). Borrower shall execute
and perform additional agreements relating to the Accommodations in form and
substance acceptable to Lender and the issuer of any Accommodations, all of
which shall supplement the rights and remedies granted herein. Any payments made
by Lender or any affiliate of Lender in connection with the Accommodations shall
constitute additional Revolving Loans to Borrower.
(b) In addition to the fees and costs of any issuer in connection with
issuing or administering Accommodations, Borrower shall pay monthly to Lender,
on the first day of each month, a charge on open Accommodations at the rate per
annum set forth in Section 10.3 (the "Accommodation Charges").
(c) No Accommodation will be issued unless the full amount of the
Accommodation requested, plus fees and costs for issuance, is less than the Net
Availability existing immediately prior to the issuance of the requested
Accommodation, or if the requested Accommodation would cause the outstanding
Obligations to exceed the Maximum Credit, or cause the open amount of
Accommodations to exceed, at any time, the Accommodation sublimit set forth in
Section 10.3.
(d) All indebtedness, liabilities and obligations of any sort whatsoever,
however arising, whether present or future, fixed or contingent, secured or
unsecured, due or to become due, paid or incurred, arising or incurred in
connection with any Accommodation shall be included in the term "Obligations",
as defined herein, and shall include, without limitation, (i) all amounts due or
which may become due under any Accommodation; (ii) all amounts charged or
chargeable to Borrower or to Lender by any bank, other financial institution or
correspondent bank which opens, issues or is involved with such Accommodations;
(iii) Lender's Accommodation Charges and all fees, costs and other charges of
any issuer of any Accommodation; and (iv) all duties, freight, taxes, costs,
insurance and all such other charges and expenses which may pertain directly or
indirectly to any Obligations or Accommodations or to the goods or documents
relating thereto.
(e) Borrower unconditionally agrees to indemnify and hold Lender harmless
from any and all loss, claim or liability (including reasonable attorneys' fees)
arising from any transactions or occurrences relating to any Accommodation
established or opened for Borrower's account, the Collateral relating thereto
and any drafts or acceptances thereunder, including any such loss or claim due
to any action taken by an issuer of any Accommodation. Borrower further agrees
to indemnify and hold Lender harmless for any errors or omissions in connection
with the Accommodations, whether caused by Lender, by the issuer of any
Accommodation or otherwise. Borrower's unconditional obligation to indemnify and
hold Lender harmless under this provision shall not be modified or diminished
for any reason or in any manner whatsoever, except for Lender's willful
misconduct. Borrower agrees that any charges made to Lender by any issuer of any
Accommodation shall be conclusive on Borrower and may be charged to Borrower's
account.
(f) Lender shall not be responsible for: the conformity of any services to
the documents presented; the validity or genuineness of any documents; delay,
default, or fraud by the Borrower or anyone else in connection with the
Accommodations or any underlying transaction.
(g) Borrower agrees that any action taken by Lender, if taken in good
faith, or any action taken by an issuer of any Accommodation, under or in
connection with any Accommodation, shall be binding on Borrower and shall not
create any resulting liability to Lender. In furtherance thereof, Lender shall
have the full right and authority to clear and resolve any questions of
non-compliance of documents; to give any instructions as to acceptance or
rejection of any documents or goods; to execute fo Borrower's account any and
all applications for steamship or airway guarantees, indemnities or delivery
orders; to grant any extensions of the maturity of, time of payment for, or time
of presentation of, any drafts, acceptances, or documents; and to agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications or Accommodations. All of
the foregoing actions may be taken in Lender's sole name, and the issuer thereof
shall be entitled to comply with and honor any and all such documents or
instruments executed by or received solely from Lender, all without any notice
to or any consent from Borrower. None of the foregoing actions described in this
subsection (g) may be taken by Borrower without Lender's express written
consent.
SECTION 3. INTEREST AND FEES
3.1 Interest. (a) Interest on the Revolving Loans and Term Loans shall be
payable by Borrower on the first day of each month, calculated upon the closing
daily balances in the loan account of Borrower for each day during the
immediately preceding month, at the per annum rate set forth as the Interest
Rate in Section 10.4(a). The interest rate shall increase or decrease by an
amount equal to each increase or decrease, respectively, in the Prime Rate (as
defined below), effective as of the date of each such change. On and after any
Event of Default or termination or non-renewal hereof, interest on all unpaid
Obligations shall accrue at a rate equal to two percent (2%) per annum in excess
of the Prime Rate otherwise payable until such time as all Obligations are
indefeasibly paid in full (notwithstanding entry of any judgment against
Borrower or the exercise of any other right or remedy by Lender), and all such
interest shall be payable on demand. Interest shall in no month be less than the
interest rate multiplied by the Minimum Borrowing. In no event shall charges
constituting interest exceed the rate permitted under any applicable law or
regulation, and if any provision of this Agreement is in contravention of any
such law or regulation, such provision shall be deemed amended to conform
thereto.
(b) The "Prime Rate" is the rate of interest publicly announced by The
Chase Manhattan Bank in New York, New York, or its successors, and assigns from
time to time as its prime rate (the prime rate is not intended to be the lowest
rate of interest charged by The Chase Manhattan Bank to its borrowers).
3.2 Closing Facility Fee. Borrower shall have paid Lender the Closing
Facility Fee set forth in Section 10.4(b) hereof which fee is fully earned and
payable as of the date hereof.
3.3 Annual Facility Fee. Borrower shall pay Lender on each anniversary of
the date hereof, an Annual Facility Fee in the amount set forth in Section
10.4(c), which fee is fully earned as of the date hereof, for each year in the
initial Term, and shall be fully earned for each year in any renewal Term,
effective upon the first day of such renewal Term.
3.4 Minimum Borrowing Fee. Borrower shall pay Lender the Minimum Borrowing
Fee set forth in Section 10.4(d) hereof.
3.5 Unused Line Fee. Borrower shall pay Lender monthly, on the first day of
each month, in arrears, an Unused Line Fee for each month during the initial and
each renewal Term at the rate per annum set forth in Section 10.4(e), calculated
upon the amount, if any, by which the Maximum Credit exceeds the greater of (i)
the average outstanding daily principal balance during the preceding month of
all Revolving Loans or (ii) $2,500,000.
3.6 Account Servicing Collateral Handling Fee. Borrower shall pay Lender
monthly, on the first day of each month during the initial and each renewal Term
an Account Servicing Fee for the immediately preceding month (or part thereof)
in the amount set forth in Section 10.4(f).
3.7 Charges to Loan Account. At Lender's option, all payments of principal,
interest, fees, costs, expenses and other charges provided for in this
Agreement, or in any other agreement now or hereafter existing between Lender
and Borrower, may be charged on the date when due, as principal to any loan
account of Borrower maintained by Lender. Interest, fees for Accommodations, the
Unused Line Fee and any other amounts payable by Borrower to Lender based on a
per annum rate shall be calculated on the basis of actual days elapsed over a
360-day year.
SECTION 4. GRANT OF SECURITY INTEREST
4.1 Grant of Security Interest. To secure the payment and performance in
full of all Obligations, Borrower hereby grants to Lender a continuing security
interest in and lien upon, and a right of setoff against, and Borrower hereby
assigns and pledges to Lender, all of the Collateral (as defined below),
including any Collateral not deemed eligible for lending purposes.
4.2 "Obligations" shall mean any and all Revolving Loans, Term Loans,
Accommodations and all other indebtedness, liabilities and obligations of every
kind, nature and description owing by Borrower to Lender and/or its affiliates,
including principal, interest, charges, fees and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, whether arising
under this Agreement or otherwise, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal Term or after
the commencement of any case with respect to Borrower under the United States
Bankruptcy Code or any similar statute, whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, original, renewed or extended and whether
arising directly or howsoever acquired by Lender including from any other entity
outright, conditionally or as collateral security, by assignment merger with any
other entity, participations or interests of Lender in the obligations of
Borrower to others, assumption, operation of law, subrogation or otherwise and
shall also include all amounts chargeable to Borrower under this Agreement or in
connection with any of the foregoing.
4.3 "Collateral" shall mean all of the following property of Borrower:
All now owned and hereafter acquired right, title and interest of Borrower
in, to and in respect of all accounts receivable including but not limited to:
(i) 1+ Coin Sent Paid Long Distance Services Accounts; (ii) Dial Around Pay
Phone Compensation Plan Accounts; and (iii) 1+ Direct Dial Long Distance
Services Accounts, but expressly excluding (a) those accounts receivable derived
from 0+/0- Operator Services Accounts which are sold to and /or financed by OAN
Services, Inc., Zero Plus Dialing, Inc., or any other third party billing agent
(by whatever name, and inclusive of any successor or assignee thereto or
thereof); (b) all commissions receivable on non-coin revenues and any coin
revenues derived from pay telephones and related equipment which are pledged as
collateral to Lyon Credit Corporation, Southbridge Financial Corp., or any other
third party equipment financing source (by whatever name, and inclusive of any
participant, successor or assignee thereto or thereof); and (c) all accounts
receivable derived from the sale or lease of any pay telephones and related
equipment or any other equipment pledged as collateral to any third party, or
derived from the sale or lease of any chattel paper evidencing such collateral
(items (a), (b) and (c) being hereinafter collectively referred to as the
"Excluded Accounts" or "Excluded Accounts Receivable"), and, expressly
including, interests in goods (excluding equipment) represented by accounts
other than the Excluded Accounts, returned, reclaimed or repossessed goods
(excluding equipment) with respect to accounts other than the Excluded Accounts
and rights as an unpaid vendor; contract rights other than those relating to or
arising out of 0+/0- Operator Services Accounts or pay telephone location lease,
license, placement or similar agreements (collectively, the "Excluded
Contracts"); chattel paper; investment property; general intangibles other than
the Excluded Contracts including, but not limited to, tax and duty refunds,
registered and unregistered patents, trademarks, service marks, copyrights,
trade names, applications for the foregoing, trade secrets, goodwill, processes,
drawings, blueprints, customer lists, licenses, whether as licensor or licensee,
choses in action and other claims, and existing and future leasehold interests
in real property; documents other than the Excluded Contracts; instruments;
letters of credit, bankers' acceptances or guaranties; cash monies, deposits,
securities, bank accounts, deposit accounts, credits and other property now or
hereafter held in any capacity by Lender, its affiliates or any entity which, at
any time, participates in Lender's financing of Borrower or at any other
depository or other institution; agreements or property securing or creating
entitlements to any of the items referred to above other than the Excluded
Contracts or the Excluded Accounts Receivable.
All now owned and hereafter acquired right, title and interest of Borrower
in, to and in respect of:
All inventory, wherever located, whether now owned or hereafter acquired,
of whatever kind, nature or description, including all raw materials,
work-in-process, finished goods (excluding equipment), and materials to be used
or consumed in Borrower's business; and all names or marks affixed to or to be
affixed thereto for purposes of selling same by the seller, manufacturer, lessor
or licensor thereof;
All motor vehicles, furniture wherever located, and any and all additions,
substitutions, replacements, and accessions thereof and thereto;
Any personal property in or upon which Lender has or may hereafter have a
security interest, lien or right of setoff;
All present and future books and records relating to any of the above other
than the Excluded Contracts or the Excluded Accounts Receivable, including,
without limitation, all computer programs (other than those installed in or
maintained in connection with any pay telephones and related equipment),
computer discs, Billing Tapes, printed output and computer readable data in the
possession or control of the Borrower or Borrower's agents, licensees, or any
computer service bureau or other third party; and
All products and proceeds of the foregoing other than the Excluded
Contracts or the Excluded Accounts Receivable, in whatever form and wherever
located, including, without limitation, all insurance proceeds, if any, and all
claims against third parties, if any, for loss, impairment, or destruction of or
damage to any of the foregoing.
SECTION 5. COLLECTION AND ADMINISTRATION
5.1 Collections. Borrower shall, at Borrower's expense and in the manner
requested by Lender from time to time, direct that remittances and all other
proceeds of accounts and other Collateral shall be sent to a lock box designated
by and/or maintained in the name of Lender, and deposited into a bank account
now or hereafter selected by Lender and maintained in the name of Lender under
arrangements with the depository bank under which all funds deposited to such
bank account are required to be transferred solely to Lender. Borrower shall
bear all risk of loss of any funds deposited into such account. In connection
therewith, Borrower shall execute such lock box and bank account agreements as
Lender shall specify. Any collections or other proceeds received by Borrower
shall be held in trust for Lender and immediately remitted to Lender in kind.
5.2 Payments. All Obligations shall be payable at Lender's office set forth
below or at Lender's bank designated in Section 10.6(b) or at such other bank or
place as Lender may expressly designate from time to time for purposes of this
Section. Lender shall apply all proceeds of accounts or other Collateral
received by Lender and all other payments in respect of the Obligations to the
Revolving Loans whether or not then due or to any other Obligations then due, in
whatever order or manner Lender shall determine. For purposes of determining
Gross and Net Availability and for the calculation of Minimum Borrowings,
remittances and other payments with respect to the Collateral and Obligations
will be treated as credited to the loan account of Borrower maintained by Lender
and Collateral balances to which they relate, upon the date of Lender's receipt
of advice from Lender's bank that such remittances or other payments have been
credited to Lender's account or in the case of remittances or othe payments
received directly in kind by Lender, upon the date of Lender's deposit thereof
at Lender's bank, subject to final payment and collection. In computing interest
charges, the loan account of Borrower maintained by Lender will be credited with
remittances and other payments three (3) Business Days after the day Lender has
received advice of receipt of remittances in Lender's account at Lender's Bank.
For purposes of this Agreement, "Business Day" shall mean any day other than a
Saturday, Sunday or any other day on which banks located in states where Lender
has its offices, are authorized to close.
5.3 Loan Account Statements. Lender shall render to Borrower monthly a loan
account statement. Each statement shall be considered correct and binding upon
Borrower as an account stated, except to the extent that Lender receives, within
sixty (60) days after the mailing of such statement, written notice from
Borrower of any specific exceptions by Borrower to that statement.
5.4 Direct Collections. Lender may, at any time, whether or not an Event of
Default has occurred, without notice to or assent of Borrower, (a) notify any
account debtor that the accounts and other Collateral which includes a monetary
obligation have been assigned to Lender by Borrower and that payment thereof is
to be made to the order of and directly to Lender, (b) send, or cause to be sent
by its designee, requests (which may identify the sender by a pseudonym) for
verification of accounts and other Collateral directly to any account debtor or
any other obligor or any bailee with respect thereto, and (c) demand, collect or
enforce payment of any accounts or such other Collateral, but without any duty
to do so, and Lender shall not be liable for any failure to collect or enforce
payment thereof. At Lender's request, all invoices and statements sent to any
account debtor, other obligor or bailee, shall state that the accounts and such
other Collateral have been assigned to Lender and are payable directly and only
to Lender.
5.5 Attorney-in-Fact. Borrower hereby appoints Lender and any designee of
Lender as Borrower's attorney-in-fact and authorizes Lender or such designee, at
Borrower's sole expense, to exercise at any times in Lender's or such designee's
discretion all or any of the following powers, which powers of attorney, being
coupled with an interest, shall be irrevocable until all Obligations have been
paid in full: (a) receive, take, endorse, assign, deliver, accept and deposit,
in the name of Lender o Borrower, any and all cash, checks, commercial paper,
drafts, remittances and other instruments and documents relating to the
Collateral or the proceeds thereof, (b) transmit to account debtors, other
obligors or any bailees notice of the interest of Lender in the Collateral or
request from account debtors or such other obligors or bailees at any time, in
the name of Borrower or Lender or any designee of Lender, information concerning
the Collateral and any amounts owing with respect thereto, (c) notify account
debtors or other obligors to make payment directly to Lender, or notify bailees
as to the disposition of Collateral, (d) take or bring, in the name of Lender or
Borrower, all steps, actions, suits or proceedings deemed by Lender necessary or
desirable to effect collection of or other realization upon the accounts and
other Collateral, (e) after an Event of Default, change the address for delivery
of mail to Borrower and to receive and open mail addressed to Borrower, (f)
after an Event of Default, extend the time of payment of, compromise or settle
for cash, credit, return of merchandise, and upon any terms or conditions, any
and all accounts or other Collateral which includes a monetary obligation and
discharge or release the account debtor or other obligor, without affecting any
of the Obligations, and (g) execute in the name of Borrower and file against
Borrower in favor of Lender financing statements or amendments with respect to
the Collateral.
5.6 Liability. Borrower hereby releases and exculpates Lender, its
officers, employees and designees, from any liability arising from any acts
under this Agreement or in furtherance thereof, whether as attorney-in-fact or
otherwise, whether of omission or commission, and whether based upon any error
of judgment or mistake of law or fact, except for gross negligence or willful
misconduct. In no event will Lender have any liability to Borrower for lost
profits or other special or consequential damages.
5.7 Administration of Accounts. After written notice by Lender to Borrower
and automatically, without notice, after an Event of Default, Borrower shall
not, without the prior written consent of Lender in each instance, (a) grant any
extension of time of payment of any of the accounts or any other Collateral
which includes a monetary obligation, (b) compromise or settle any of the
accounts or any such other Collateral for less than the full amount thereof, (c)
release in whole or in part any account debtor or other person liable for the
payment of any of the accounts or any such other Collateral, or (d) grant any
credits, discounts, allowances, deductions, return authorizations or the like
with respect to any of the accounts or any such other Collateral; provided,
however, that this restriction shall not limit Borrower=s ability to comply
fully with all applicable laws, rules and regulations of any governmental
authority relating to Borrower's business, including all rules and regulations
promulgated by the Federal Communication Commission.
5.8 Documents. At such times as Lender may request and in the manner
specified by Lender, Borrower shall deliver to Lender or Lender's
representative, as Lender shall designate, copies or original invoices,
agreements, proofs of rendition of services and delivery of goods and other
documents evidencing or relating to the transactions which gave rise to accounts
or other Collateral, together with customer statements, schedules describing the
accounts or other Collateral and/or statements of account and confirmatory
assignments to Lender of the accounts or other Collateral, in form and substance
satisfactory to Lender and duly executed by Borrower. Without limiting the
provisions of Section 5.7, Borrower's granting of credits, discounts,
allowances, deductions, return authorizations or the like will be promptly
reported to Lender in writing. In no event shall any such schedule or
confirmatory assignment (or the absence thereof or omission of any of the
accounts or other Collateral therefrom) limit or in any way be construed as a
waiver, limitation or modification of the security interests or rights of Lender
or the warranties, representations and covenants of Borrower under this
Agreement. Any documents, schedules, invoices or other paper delivered to Lender
by Borrower may be destroyed or otherwise disposed of by Lender six (6) months
after receipt by Lender, unless Borrower requests their return in writing in
advance and makes prior arrangements for their return at Borrower's expense. All
documents delivered by Borrower to Lender pursuant to this provision or any
other provision in this Agreement are subject to the Non-Disclosure and
Confidentiality Agreements between Borrower and Lender, which agreements are
being executed simultaneously with this Agreement.
5.9 Access. From time to time as requested by Lender, at the sole expense
of Borrower, Lender or its designee shall have access, prior to an Event of
Default during reasonable business hours and on or after an Event of Default at
any time, to all of the premises where Collateral is located for the purposes of
inspecting the Collateral, and all Borrower's books and records, and Borrower
shall permit Lender or its designee to make such copies of such books and
records or extracts therefrom as Lender may request. Without expense to Lender,
Lender may use such of Borrower's personnel, equipment, including computer
equipment, programs, printed output and computer readable media, supplies and
premises for the collection of accounts and realization on other Collateral as
Lender, in its sole discretion, deems appropriate. Borrower hereby irrevocably
authorizes all accountants and third parties to disclose and deliver to Lender
at Borrower's expense all financial information, books and records, work papers,
management reports and other information in their possession regarding Borrower.
5.10 Environmental Audits. From time to time, as requested by Lender, at
the sole expense of Borrower, Borrower shall provide Lender, or its designee,
complete access to all of Borrower's facilities for the purpose of conducting an
environmental audit of such facilities as Lender or its designees may deem
necessary. Borrower agrees to cooperate with Lender with respect to any
environmental audit conducted by Lender or its designee pursuant to this Section
5.10.
5.11 Compliance with Laws. In exercising its rights and remedies pursuant
to this Section 5, Lender shall comply with the requirements of all laws, rules,
regulations and orders of any governmental authority relating to Borrower=s
business, including all rules and regulations promulgated by the Federal
Communications Commission as same apply.
SECTION 6. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Borrower hereby represents, warrants and covenants to Lender the following,
the truth and accuracy of which, and compliance with which, shall be continuing
conditions of the making of loans or other credit accommodations by Lender to
Borrower:
6.1 Financial and Other Reports. Borrower shall keep and maintain its books
and records in accordance with generally accepted accounting principles,
consistently applied. Borrower shall, at its expense, deliver to Lender: (a)
true and complete monthly agings of accounts receivable, accounts payable and
notes payable on or before the fifteenth (15th) day of the month following the
month they reflect; (b) true and complete financial statements certified by an
officer of Borrower on or before the thirtieth (30th) day of each month
following the month they reflect; (c) quarterly financials reviewed by
independent certified public accountants acceptable to Lender and certified by
an officer of Borrower on or before the fifteenth (15th) day following the
filing of such financials with the Securities and Exchange Commission ("SEC");
and (d) annually audited financial statements of Borrower accompanied by the
report and opinion thereon of independent certified public accountants
acceptable to Lender, as soon as available, but in no event later than fifteen
(15) days following the filing of such audited annual financial statements with
the SEC. Borrowers and Guarantor shall also forward copies of all filings made
with the SEC. All of the foregoing shall be in such form and together with such
information with respect to the business of Borrower or any Guarantor, as Lender
may in each case request.
6.2 Trade Names. Borrower may from time to time render invoices to account
debtors under its trade names set forth in Section 10.6(g) after Lender has
received prior written notice from Borrower of the use of such trade names and
as to which, Borrower agrees that: (a) the trade name "Coastal Payphones, Inc."
has been obtained from the Secretary of State of the State of New Jersey and
Borrower shall maintain same, (b) Borrower and its related corporate entities
have the right to use the registered federal service xxxx "AMNEX", (c) all
accounts and proceeds thereof invoiced by Borrower under either of the foregoing
trade names are owned exclusively by Borrower and are subject to the security
interest of Lender and the other terms of this Agreement, (d) all schedules of
accounts and confirmatory assignments by Borrower, including any sales made or
services rendered by Borrower using either of the foregoing trade names shall,
to the extent feasible and permitted by applicable law, show Borrower's name as
assignor, and (e) Lender is authorized to receive, endorse and deposit to any
loan account of Borrower maintained by lender all checks or other remittances
made payable to any such trade name of Borrower representing payment with
respect to such sales or service.
6.3 Losses. Borrower shall promptly notify Lender in writing of any loss,
damage, investigation, action, suit, proceeding or claim relating to a material
portion of the Collateral or which may result in any material adverse change in
Borrower's business, assets, liabilities or condition, financial or otherwise.
6.4 Books and Records. Borrower's books and records concerning accounts are
and shall be maintained only at the addresses set forth in Section 10.6(d).
Borrower's only other places of business and the only other locations of
Collateral, if any, are and shall be the addresses set forth in Section 10.6(f)
hereof, except Borrower may change such locations or open a new place of
business after thirty (30) days prior written notice to Lender. Prior to any
change in location or opening of any new place of business, Borrower shall
execute and deliver or cause to be executed and delivered to Lender such
financing statements, financing documents and security and other agreements as
Lender may reasonably require, including, without limitation, those described in
Section 6.14.
6.5 Title. Borrower has and at all times will continue to have good and
marketable title to all of the Collateral, free and clear of all liens, security
interests, claims or encumbrances of any kind except in favor of Lender and
except, if any, those set forth on Schedule A hereto.
6.6 Disposition of Assets. Borrower shall not directly or indirectly: (a)
sell, lease, transfer, assign, abandon or otherwise dispose of any part of the
Collateral or any material portion of its other assets or; (b) consolidate with
or merge with or into any other entity, or permit any other entity to
consolidate with or merge with or into Borrower without Lender's prior written
consent, which consent will not be unreasonably withheld provided such
consolidation or merger will not impair Borrower's ability o comply with the
terms of this Agreement or; (c) form or acquire any interest in any firm,
corporation or other entity or permit any other entity to consolidate with or
merge with or into Borrower without Lender's prior written consent, which
consent will not be unreasonably withheld provided such formation or acquisition
will not impair Borrower's ability to comply with the terms of this Agreement.
6.7 Insurance. Borrower shall at all times maintain, with financially sound
and reputable insurers, insurance (including, without limitation, at the option
of Lender, earthquake insurance) with respect to the Collateral and other
assets. All such insurance policies shall be in such form, substance, amounts
and coverage as may be satisfactory to Lender and shall provide for thirty (30)
days' prior written notice to Lender of cancellation or reduction of coverage.
Borrower hereby irrevocably appoints Lender and any designee of Lender as
attorney-in-fact for Borrower to obtain at Borrower's expense, any such
insurance should Borrower fail to do so and, after an Event of Default, to
adjust or settle any claim or other matter under or arising pursuant to such
insurance or to amend or cancel such insurance. Borrower shall deliver to Lender
evidence of such insurance and a lender's loss payable endorsement satisfactory
to Lender as to all existing and future insurance policies with respect to the
Collateral. Borrower shall deliver to Lender, in kind, all instruments
representing proceeds of insurance received by Borrower. Lender may apply any
insurance proceeds received at any time to the cost of repairs to or replacement
of any portion of the Collateral and/or, at Lender's option, to payment of or as
security for any of the Obligations, whether or not due, in any order or manner
as Lender determines.
6.8 Compliance With Laws. Borrower is and at all times will continue to be
in compliance with the requirements of all material laws, rules, regulations and
orders of any governmental authority relating to its business (including those
promulgated by the Federal Communications Commission and those laws, rules,
regulations and orders relating to taxes, payment and withholding of payroll
taxes, employer and employee contributions and similar items, securities,
employee retirement and welfare benefits, employee health and safety, or
environmental matters) and all material agreements or other instruments binding
on Borrower or its property. All of Borrower's inventory shall be produced in
accordance with the requirements of the Federal Fair Labor Standards Act of
1938, as amended and all rules, regulations and orders related thereto. Borrower
shall pay and discharge all taxes, assessments and governmental charges against
Borrower or any Collateral prior to the date on which penalties are impose or
liens attach with respect thereto, unless the same are being contested in good
faith and, at Lender's option, Reserves are established for the amount contested
and penalties which may accrue thereon.
6.9 Accounts. With respect to each account deemed an Eligible Account,
except as reported in writing to Lender, Borrower has no knowledge that any of
the criteria for eligibility are not or are no longer satisfied. As to each
account, except as disclosed in writing to Lender at the time such account
arises (a) each is valid and legally enforceable and represents an undisputed
bona fide indebtedness incurred by the account debtor for the sum reported to
Lender, (b) each arises from a completed rendition of services, (c) each is not,
at the time such account arises, subject to any defense, offset, dispute, contra
relationship, counterclaim, or any given or claimed credit, allowance or
discount, and (d) all statements made and all unpaid balances and other
information appearing in the invoices, agreements, proofs of rendition of
services and delivery of goods and other documentation relating to the accounts,
and all confirmatory assignments, schedules, statements of account and books and
records with respect thereto, are true and correct and in all respects what they
purport to be.
6.10 Equipment. With respect to Borrower's equipment, Borrower shall keep
the equipment in good order and repair, and in running and marketable condition,
ordinary wear and tear excepted.
6.11 Financial Covenants. Borrower shall at all times: (i) maintain working
capital and net worth (each as determined in accordance with generally accepted
accounting principles, in effect on the date hereof, consistently applied
("GAAP")) in the amounts set forth in Section 10.5 and Borrower shall not,
directly or indirectly, expend or commit to expend, for fixed or capital assets
(including capital lease obligations) an amount in excess of the capital
expenditure limit set forth in Section 10.5 in any fiscal year of Borrower; and
(ii) not suffer net losses as reflected in Borrower's audited fiscal year end
financial statements submitted pursuant to Section 6.1(d).
6.12 Affiliated Transactions. Borrower will not, directly or indirectly:
(a) without Lender's prior written consent, which consent will not be
unreasonably withheld provided same will not impair Borrower=s ability to meet
its Obligations hereunder, lend or advance money or property to, guarantee or
assume indebtedness of, or invest (by capital contribution or otherwise) in any
person, firm, corporation or other entity in excess of $6,000,000.00 in the
aggregate per annum; or (b) declare, pay or make any dividend, redemption or
other distribution on account of any shares of any class of stock of Borrower
now or hereafter outstanding; or (c) without Lender's prior written consent,
which consent will not be unreasonably withheld provided same will not impair
Borrower's ability to meet its Obligations hereunder make any payment of the
principal amount of or interest on any indebtedness owing to any officer,
director, shareholder, or affiliate of Borrower in excess of $3,800,000.00 in
the aggregate per annum; or (d) without Lender's prior written consent, which
consent will not be unreasonably withheld provided same will not impair
Borrower's ability to meet its Obligations hereunder make any loans or advances
to any officer, director, employee, shareholder or affiliate of Borrower, in
excess of $200,000.00 in the aggregate per annum; or (e) enter into any sale,
lease or other transaction with any officer, director, employee, shareholder or
affiliate of Borrower on terms that are less favorable to Borrower than those
which might be obtained at the time from persons who are not an officer,
director, employee, shareholder or affiliate of Borrower.
6.13 Fees and Expenses. Borrower shall pay, on Lender's demand, all costs,
expenses, filing fees and taxes payable in connection with the preparation,
execution, delivery, recording, administration, collection, liquidation,
enforcement and defense of the Obligations, Lender's rights in the Collateral,
this Agreement and all other existing and future agreements or documents
contemplated herein or related hereto, including any amendments, waivers,
supplements or consents which may hereafter be mad or entered into in respect
hereof, or in any way involving claims or defense asserted by Lender or claims
or defense against Lender asserted by Borrower, any guarantor or any third party
directly or indirectly arising out of or related to the relationship between
Borrower and Lender or any guarantor and Lender, including, but not limited to
the following, whether incurred before, during or after the initial or any
renewal Term or after the commencement of any case with respect to Borrower or
any guarantor under the United States Bankruptcy Code or any similar statute:
(a) all costs and expenses of filing or recording (including Uniform Commercial
Code financing statement filing taxes and fees, documentary taxes, intangibles
taxes and mortgage recording taxes and fees, if applicable); (b) all title
insurance and other insurance premiums, appraisal fees, fees incurred in
connection with any environmental report, audit or survey and search fees; (c)
all fees as then in effect relating to the wire transfer of loan proceeds and
other funds and fees then in effect for returned checks and credit reports; (d)
all expenses and costs heretofore and from time to time hereafter incurred by
Lender during the course of periodic field examinations of the Collateral and
Borrower's operations, plus a per diem charge at the rate set forth in Section
10.4(g) for Lender's examiners in the field and office; and (e) the costs, fees
and disbursements of in-house and outside counsel to Lender, including but not
limited to such fees and disbursements incurred as a result of litigation
between the parties hereto, any third party and in any appeals arising
therefrom.
6.14 Further Assurances. At the request of Lender, at any time and from
time to time, at Borrower's sole expense, Borrower shall execute and deliver or
cause to be executed and delivered to Lender, such agreements, documents and
instruments, including waivers, consents and subordination agreements from
mortgagees or other holders of security interests or liens, landlords or
bailees, and do or cause to be done such further acts as Lender, in its
discretion, deems necessary or desirable to create, preserve, perfect or
validate any security interest of Lender or the priority thereof in the
Collateral and otherwise to effectuate the provisions and purposes of this
Agreement. Borrower hereby authorizes Lender to file financing statements or
amendments against Borrower in favor of Lender with respect to the Collateral,
without Borrower's signature and to file as financing statements any carbon,
photographic or other reproductions of this Agreement or any financing
statements signed by Borrower.
6.15 Revolving Loan. The Revolving Loan will not at any time exceed the
Gross Availability unless Lender has consented.
6.16 Environmental Condition. None of Borrower's properties or assets has
ever been designated or identified in any manner pursuant to any environmental
protection statute as a hazardous waste or hazardous substance disposal site, or
a candidate for closure pursuant to any environmental protection statute. No
lien arising under any environmental protection statute has attached to any
revenues or to any real or personal property owned by Borrower. Borrower has not
received a summons, citation, notice, or directive from the Environmental
Protection Agency or any other federal or state governmental agency any action
or omission by Borrower resulting in the releasing, or otherwise exposing of
hazardous waste or hazardous substances into the environment. Borrower is in
compliance (in all material respects) with all statutes, regulations, ordinances
and other legal requirements pertaining to the production, storage, handling,
treatment, release, transportation or disposal of any hazardous waste or
hazardous substance.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES
7.1 Events of Default. All Obligations shall be immediately due and
payable, without notice or demand, and any provisions of this Agreement as to
future loans and credit accommodations by Lender shall terminate automatically,
upon the termination or non-renewal of this Agreement or, at Lender's option,
upon or at any time after the occurrence or existence of any one or more of the
following "Events of Default":
(a) Borrower fails to pay when due any of the Obligations (or any portion
thereof) or fails to perform any of the terms of this Agreement or any other
existing or future financing, security or other agreement between Borrower and
Lender or any affiliate of Lender;
(b) Any representation, warranty or statement of fact made by Borrower to
Lender in this Agreement or any other agreement, schedule, confirmatory
assignment or otherwise, or to any affiliate of Lender, shall prove inaccurate
or misleading;
(c) Any guarantor revokes, terminates, attempts to revoke or terminate, or
fails to perform any of the terms of any guaranty, endorsement or other
agreement of such party in favor of Lender or any affiliate of Lender;
(d) Any judgment or judgments aggregating in excess of $250,000 or any
injunction or attachment is obtained against Borrower or any guarantor which
remains unstayed for a period of ten (10) days or is enforced;
(e) Borrower or any guarantor or a general partner of a guarantor or
Borrower (which is a partnership), being a natural person, dies, or Borrower or
any guarantor which is a partnership or corporation, is dissolved, or Borrower
or any guarantor which is a corporation fails to maintain its corporate
existence in good standing, or the usual business of Borrower or any guarantor
ceases or is suspended;
(f) Any change in the controlling ownership of Borrower;
(g) Borrower or any guarantor becomes insolvent, makes an assignment for
the benefit of creditors, makes or sends notice of a bulk transfer or calls a
general meeting of its creditors or principal creditors;
(h) Any petition or application for any relief under the bankruptcy laws of
the United States now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed by or against Borrower or any guarantor and, in the case of
an involuntary filing, is not discharged within sixty (60) days, during which
time Lender shall have no obligation to fund;
(i) The indictment or threatened indictment of Borrower or any guarantor
under any criminal statute, or commencement or threatened commencement of
criminal or civil proceedings against Borrower or any guarantor, pursuant to
which statute or proceedings the penalties or remedies sought or available
include forfeiture of any of the property of Borrower or such guarantor;
(j) Any default or event of default occurs on the part of Borrower under
any agreement, document or instrument to which Borrower is a party or by which
Borrower or any of its property is bound, creating or relating to any
indebtedness of Borrower to any person or entity other than Lender in an amount
exceeding $250,000, if the effect of such default is to accelerate, or to permit
the acceleration of, the maturity of all or any part of such indebtedness, or
all or any part of any such indebtedness shall be declared to be due and payable
or required to be prepaid or any other reason, in either event prior to the
stated maturity thereof;
(k) Lender in good faith believes that either (i) the prospect of payment
or performance of the Obligations is impaired or (ii) the Collateral is not
sufficient to secure fully the Obligations; and
(l) Any material change occurs in the nature or conduct of Borrower's
business.
7.2 Remedies. Upon the occurrence of an Event of Default and at any time
thereafter, Lender shall have all rights and remedies provided in this
Agreement, any other agreements between Borrower and Lender, the Uniform
Commercial Code or other applicable law, all of which rights and remedies may be
exercised without notice to Borrower, all such notices being hereby waived,
except such notice as is expressly provided for hereunder or is not waivable
under applicable law. All rights and remedies of Lender are cumulative and not
exclusive and are enforceable, in Lender's discretion, alternatively,
successively, or concurrently on any one or more occasions and in any order
Lender may determine. Without limiting the foregoing, Lender may (a) accelerate
the payment of all Obligations and demand immediate payment thereof to Lender,
(b) with or without judicial process or the aid or assistance of others, enter
upon any premises on or in which any of the Collateral may be located and take
possession of the Collateral or complete processing, manufacturing and repair of
all or any portion of the Collateral, (c) require Borrower, at Borrower's
expense, to assemble and make available to Lender any part or all of the
Collateral at any place and time designated by Lender, (d) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (e) extend
the time of payment of, compromise or settle for cash, credit, return of
merchandise, and upon any terms or conditions, any and all accounts or other
Collateral which includes a monetary obligation and discharge or release the
account debtor or other obligor, without affecting any of the Obligations, (f)
sell, lease, transfer, assign, deliver or otherwise dispose of any and all
Collateral (including, without limitation, entering into contracts with respect
thereto, by public or private sales at any exchange, broker's board, any office
of Lender or elsewhere) at such prices or terms as Lender may deem reasonable,
for cash, upon credit or for future delivery, with the Lender having the right
to purchase the whole or any part of the Collateral at any such public sale, all
of the foregoing being free from any right or equity of redemption of Borrower,
which right or equity of redemption is hereby expressly waived and released by
Borrower. If any of the Collateral is sold or leased by Lender upon credit terms
or for future delivery, the Obligations shall not be reduced as a result thereof
until payment therefor is finally collected by Lender. If notice of disposition
of Collateral is required by law, seven (7) days prior notice by Lender to
Borrower designating the time and place of any public sale or the time after
which any private sale or other intended disposition of Collateral is to be
made, shall be deemed to be reasonable notice thereof and Borrower waives any
other notice. In the event Lender institutes an action to recover any Collateral
or seeks recovery of any Collateral by way of prejudgment remedy, Borrower
waives the posting of any bond which might otherwise be required.
7.3 Application of Proceeds. Lender may apply the cash proceeds of
Collateral actually received by Lender from any sale, lease, foreclosure or
other disposition of the Collateral to payment of any of the Obligations, in
whole or in part (including reasonable attorneys' fees and legal expenses
incurred by Lender with respect thereto or otherwise chargeable to Borrower) and
in such order as Lender may elect, whether or not then due. Borrower shall
remain liable to Lender for the payment of any deficiency together with interest
at the highest rate provided for herein and all costs and expenses of collection
or enforcement, including reasonable attorneys' fees and legal expenses.
7.4 Lender's Cure of Third Party Agreement Default. Lender may, at its
option, cure any default by Borrower under any agreement with a third party or
pay or bond on appeal any judgment entered against Borrower, discharge taxes,
liens, security interests or other encumbrances at any time levied on or
existing with respect to the Collateral and pay any amount, incur any expense or
perform any act which, in Lender's sole judgment, is necessary or appropriate to
preserve, protect, insure, maintain, or realize upon the Collateral. Lender may
charge Borrower's loan account for any amounts so expended, such amounts to be
repayable by Borrower on demand. Lender shall be under no obligation to effect
such cure, payment, bonding or discharge, and shall not, by doing so, be deemed
to have assumed any obligation or liability of Borrower.
SECTION 8. JURY TRIAL WAIVER; CERTAIN OTHER WAIVERS AND CONSENTS
8.1 JURY TRIAL WAIVER. BORROWER AND LENDER EACH WAIVE ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING INSTITUTED BY EITHER OF THEM AGAINST THE
OTHER WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE OBLIGATIONS,
THE COLLATERAL, ANY ALLEGED TORTUOUS CONDUCT BY BORROWER OR LENDER, OR, IN ANY
WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP
BETWEEN BORROWER AND LENDER. IN NO EVENT WILL LENDER BE LIABLE FOR LOST PROFITS
OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
8.2 Counterclaims. Borrower waives all rights to interpose any claims,
deductions, setoffs or counterclaims of any kind, nature or description in any
action or proceeding instituted by Lender with respect to this Agreement, the
Obligations, the Collateral or any matter arising therefrom or relating thereto,
except compulsory counterclaims.
8.3 Jurisdiction. Borrower hereby irrevocably submits and consents to the
nonexclusive jurisdiction of the State and Federal Courts located in the State
in which the office of Lender designated in Section 10.6(a) is located and any
other State where any Collateral is located with respect to any action or
proceeding arising out of this Agreement, the Obligations, the Collateral or any
matter arising therefrom or relating thereto. In any such action or proceeding,
Borrower waives personal service of the summons and complaint or other process
and papers therein and agrees that the service thereof may be made by mail
directed to Borrower at its chief executive office set forth herein or other
address thereof of which Lender has received notice as provided herein, service
to be deemed complete five (5) days after mailing, or as permitted under the
rules of either of said Courts. Any such action or proceeding commenced by
Borrower against Lender will be litigated only in a Federal Court located in the
district, or a State Court in the State and County, in which the office of
Lender designated in Section 10.6(a) is located and Borrower waives any
objection based on forum non conveniens and any objection to venue in connection
therewith.
8.4 No Waiver by Lender. Lender shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its rights or
remedies unless such waiver shall be in writing and signed by an authorized
officer of Lender. A waiver by Lender of any right or remedy on any one occasion
shall not be construed as a bar to or waiver of any such right or remedy which
Lender would otherwise have on any future occasion, whether similar in kind or
otherwise.
SECTION 9. TERM OF AGREEMENT; MISCELLANEOUS
9.1 Term. This Agreement shall only become effective upon execution and
delivery by Borrower and Lender and shall continue in full force and effect for
a term of three (3) years from the date hereof and shall be deemed automatically
renewed for successive terms of two (2) years thereafter unless terminated as of
the end of the initial or any renewal term (each a "Term") by either party
giving the other written notice at least sixty (60) days' prior to the end of
the then-current Term.
9.2 Early Termination. Borrower may also terminate this Agreement by giving
Lender at least thirty (30) days prior written notice at any time upon payment
in full of all of the Obligations as provided herein, including the early
termination fee provided below. Lender shall also have the right to terminate
this Agreement at any time upon or after the occurrence of an Event of Default.
If Lender terminates this Agreement upon or after the occurrence of an Event of
Default, or if Borrower shall terminate this Agreement as permitted herein
effective prior to the end of the then-current Term, in addition to all other
Obligations, Borrower shall pay to Lender, upon the effective date of
termination, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Lender's lost profits, an early termination fee equal
to:
(a) five percent (5%) of the Maximum Credit during the first (1st) year of
the initial Term hereof;
(b) three percent (3%) of the Maximum Credit during the second (2nd) year
of the initial Term hereof; and
(c) one percent (1%) of the Maximum Credit during the third (3rd) year of
the initial Term hereof and during any year of any renewal Term thereafter.
9.3 Termination Indemnity Deposit. Upon termination of this Agreement by
Borrower, as permitted herein, in addition to payment of all Obligations which
are not contingent, Borrower shall deposit such amount of cash collateral as
Lender determines is necessary to secure Lender from loss, cost, damage or
expense, including reasonable attorneys' fees, in connection with any open
Accommodations or remittance items or other payments provisionally credited to
the Obligations and/or to which Lender has not yet received final and
indefeasible payment.
9.4 Notices. Except as otherwise provided, all notices, requests and
demands hereunder shall be (a) made to Lender at its address set forth in
Section 10.6(a) and to Borrower at its chief executive office set forth in
Section 10.6(c), or to such other address as either party may designate by
written notice to the other in accordance with this provision, and (b) deemed to
have been given or made: if by hand, immediately upon delivery; if by telex,
telegram or telecopy (fax), immediately upon receipt; if by overnight delivery
service, one day after dispatch; and if by first class or certified mail, three
(3) days after mailing.
9.5 Severability. If any provision of this Agreement is held to be invalid
or unenforceable, such provision shall not affect this Agreement as a whole, but
this Agreement shall be construed as though it did not contain the particular
provision held to be invalid or unenforceable.
9.6 Entire Agreement; Amendments; Assignments. This Agreement and the
agreements referred to herein contain the entire agreement of the parties as to
the subject matter hereof, all prior commitments, proposals and negotiations
concerning the subject matter hereof being merged herein. Neither this Agreement
nor any provision hereof shall be amended, modified or discharged orally or by
course of conduct, but only by a written agreement signed by an authorized
officer of each of Borrower and Lender. This Agreement shall be binding upon and
inure to the benefit of each of the parties hereto and their respective
successors and assigns, except that any obligation of Lender under this
Agreement shall not be assignable nor inure to the successors and assigns of
Borrower.
9.7 Discharge of Borrower. No termination of this Agreement shall relieve
or discharge Borrower of its Obligations, grants of Collateral, duties and
covenants hereunder or otherwise until such time as all Obligations to Lender
have been indefeasibly paid and satisfied in full, including, without
limitation, the continuation and survival in full force and effect of all
security interests and liens of Lender in and upon all then existing and
thereafter-arising or acquired Collateral and all warranties and waivers of
Borrower.
9.8 Usage. All terms used herein which are defined in the Uniform
Commercial Code shall have the meanings given therein unless otherwise defined
in this Agreement and all references to the singular or plural herein shall also
mean the plural or singular, respectively.
9.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State in which the office of Lender set forth in
Section 10.6(a) below is located.
SECTION 10. ADDITIONAL DEFINITIONS AND TERMS
10.1 (a) Maximum Credit: Five Million Dollars ($5,000,000.00)
(b) Gross Availability Formulas:
Eligible Accounts Percentage:
(i) Fifty five percent (50%) of Dial Around Pay Phone
Compensation Plan Accounts;
(ii) Eighty five percent (85%) of the 1+ Coin Sent Paid Long
Distance Services Accounts so long as the Dilution Percentage of such
accounts (ADilution Percentage@ is defined as the sum of all credits,
discounts, allowances, write-offs, contra-accounts, and other offsets
which reduce the value of accounts receivable, as determined by Lender
in its sole discretion, divided by the gross sales), as calculated on
a rolling 90 day basis, remains less than or equal to five percent
(5%). If the Dilution Percentage is greater than five percent (5%)
then the advance formula will be decreased by one percentage point for
each percentage point or fraction thereof that such dilution
percentage exceeds five percent (5%);
(iii) Eighty percent (80%) of 1+ Direct Dial Long Distance
Services Accounts so long as the Dilution Percentage of such accounts,
as calculated on a rolling 90 day basis, remains less than or equal to
ten percent (10%). If the Dilution Percentage is greater than ten
percent (10%) then the advance formula will be decreased by one
percentage point for each percentage point or fraction thereof that
such dilution percentage exceeds ten percent (10%); and
(iv) The above sections 10.1(b)(i), (ii) and (iii)
notwithstanding, without in any way limiting Lender's right to
institute other Reserves from time to time during the Term of the
Revolving Loans, Lender may establish such Reserves in amounts as it
shall deem appropriate from Gross Availability, including but not
limited to, a reserve for federal excise taxes, state taxes, public
utility charges, commissions due agents or sales persons, billing and
collection charges, a reserve for commissions due to NYNEX of at least
fifty-five percent (55%) of amounts due with respect to prepaid
calling cards, and a reserve of at least five percent (5%) for all 1+
Coin Sent Paid Long Distance Services Accounts and Dial Around Pay
Phone Compensation Plan Accounts.
Eligible Inventory Percentages:
Finished Goods: Not Applicable
Raw Materials: Not Applicable
(c) Sublimits: Not Applicable
(d) Minimum Borrowing: Two Million Five Hundred Thousand Dollars
($2,500,000)
10.2 Term Loan: Not Applicable.
10.3 Accommodations: None.
10.4 Interest, Fees and Charges :
(a) Interest Rate: Prime Rate plus one percent (1.0%) per annum;
(b) Closing Facility Fee: Eighteen Thousand Seven Hundred Fifty
Dollars ($18,750) earned and payable in full at Closing;
(c) Annual Facility Fee: Three quarters of one percent (.75%) per
annum of the Maximum Credit.
(d) Minimum Borrowing Fee: If the average monthly loan balance is
below Two Million Five Hundred Thousand Dollars ($2,500,000) ("Minimum
Borrowing") Lender shall receive a fee equal to the interest on the
difference between the actual average monthly loan balance and the
Minimum Borrowing, payable monthly;
(e) Unused Line Fee: (.25%) per annum.;
(f) Account Servicing Collateral Handling Fee: None; and
(g) Field Examinations: $650.00 per examiner per day.
10.5 Financial Covenants: None, except as set forth in Section
6.11(ii).
10.6 (a) Lender's Office: The CIT Group/Credit Finance, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telecopier: (000) 000-0000 Attn.:
Xxxxxx X. Xxxxxxxx, Vice President
(b) Lender's Bank: The Chase Manhattan Bank
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
With a copy to: Blank Rome Xxxxxxx & XxXxxxxx
Woodland Falls Corporate Park
000 Xxxx Xxxxx Xxxx
Xxxxxx Xxxx, XX 00000
Attn.: Xxxxx X. Xxxxxxxxxx, Esquire
(c) Borrowers: American Network Exchange, Inc.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attn.: Xxx Xxxxx, Esquire
Crescent Public Communications Inc.
0 Xxxxxx Xxxxx, Xxxxxxxx X
Xxxx Xxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attn.: Xxxxx Xxxxxxxx, Esquire
(d) Borrower's Locations of Books and Records of Account:
000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
0 Xxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
0000 Xxxxxxx 00 Xxxxx
Xxxxxxxxxxx, XX 00000
(e) Locations of Eligible Inventory Collateral:
Not Applicable.
(f) Borrower's Other Offices and Locations of Collateral:
0000 X. Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
000 Xxxxxx Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
(g) Borrower's Trade Names for Invoicing:
1. AMNEX
2. Coastal Payphones, Inc.
(h) Subsidiary of Borowers
1. Suntel, Inc.
10.7 Term: Three (3) years.
IN WITNESS WHEREOF, Borrower and Lender have duly executed this Agreement
this _____ day of September, 1997.
LENDER: BORROWERS:
THE CIT GROUP/CREDIT FINANCE, INC. AMERICAN NETWORK EXCHANGE, INC.
By: ________________________________ By: _____________________________
Xxxxxx X. Xxxxxxxxxxx, Vice President
CRESCENT PUBLIC COMMUNICATIONS INC.
By: ______________________________
SCHEDULE A
First lien and security interest of OAN Services, Inc. in, to and in
respect of accounts receivable derived from 0+/0- Operator Services Accounts of
American Network Exchange, Inc. other than those of such accounts receivable
which are sold to and/or financed by OAN Services, Inc., Zero Plus Dialing, Inc.
or any other third party billing agent (by whatever name, and inclusive of any
successor or assignee thereto to thereof).
