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LOAN AND SECURITY AGREEMENT
Dated as of August 29, 1997
among
ILD TELESERVICES, INC.
and
INTELLICALL OPERATOR SERVICES, INC.
(the Borrowers)
and
NATIONSBANK, N.A.
(the Lender)
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78369
TABLE OF CONTENTS1
Page
ARTICLE 1 - DEFINITIONS.......................................................1
Section 1.01 Definitions............................................1
Section 1.02 Other Referential Provisions..........................21
Section 1.03 Exhibits and Schedules................................23
ARTICLE 2 - REVOLVING CREDIT FACILITY........................................23
A. REVOLVING CREDIT FACILITY......................................23
Section 2A.1 Revolving Credit Loans......................23
Section 2A.2 Manner of Borrowing Revolving Credit Loans..23
Section 2A.3 Repayment of Revolving Credit Loans.........24
Section 2A.4 Revolving Credit Note.......................24
Section 2A.5 Extension of Facility.......................24
B. TERM LOAN FACILITY.............................................25
Section 2B.1 Term Loan...................................25
Section 2B.2 Manner of Borrower and Disbursing Term Loan.25
Section 2B.3 Repayment of Term Loan; Required Prepayments25
Section 2B.4 Term Note...................................25
ARTICLE 3 - GENERAL LOAN PROVISIONS..........................................25
Section 3.01 Interest.....................................25
Section 3.02 Choice of Interest Rate; LIBOR Provisions....27
Section 3.03 Fees.........................................29
Section 3.04 Manner of Payment............................30
Section 3.05 Statements of Account........................30
Section 3.06 Termination of Agreement.....................30
Section 3.07 Increased Costs and Reduced Returns..........31
Section 3.08 Joint and Several Liability..................31
Section 3.09 Obligations Absolute.........................32
Section 3.10 Waiver of Suretyship Defenses................32
ARTICLE 4 - CONDITIONS PRECEDENT............................................33
Section 4.01 Conditions Precedent to Initial Loan.........33
Section 4.02 All Loans....................................37
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1 This Table of Contents is included for reference purposes only and does
not constitute part of the Loan and Security Agreement.
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ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE BORROWER...................38
Section 5.01 Representations and Warranties...............38
Section 5.02 Survival of Representations and
Warranties, Etc.....................................44
ARTICLE 6 - SECURITY INTEREST................................................44
Section 6.01 Security Interest............................44
Section 6.02 Continued Priority of Security Interest......45
ARTICLE 7 - COLLATERAL COVENANTS.............................................46
Section 7.01 Collection of Receivables....................46
Section 7.02 Verification and Notification................46
Section 7.03 Disputes, Returns and Adjustments............47
Section 7.04 Invoices.....................................47
Section 7.05 Delivery of Instruments......................47
Section 7.06 Sales of Inventory...........................47
Section 7.07 Returned Goods...............................47
Section 7.08 Ownership and Defense of Title...............47
Section 7.09 Insurance....................................48
Section 7.10 Location of Offices and Collateral...........49
Section 7.11 Records Relating to Collateral...............49
Section 7.12 Inspection...................................49
Section 7.13 Information and Reports......................50
Section 7.14 Power of Attorney............................51
Section 7.15 Equipment....................................51
Section 7.16 Billing and Collection Agreements............51
ARTICLE 8 - AFFIRMATIVE COVENANTS............................................51
Section 8.01 Preservation of Corporate Existence and
Similar Matters.....................................51
Section 8.02 Compliance with Applicable Law...............51
Section 8.03 Conduct of Business..........................52
Section 8.04 Payment of Taxes and Claims..................52
Section 8.05 Accounting Methods and Financial Records.....52
Section 8.06 Use of Proceeds..............................52
Section 8.07 Hazardous Waste and Substances; Environmental
Requirements........................................52
Section 8.08 Accuracy of Information......................53
Section 8.09 Revisions or Updates to Schedules............53
Section 8.10 Covenants in WorldCom Acquisition Documents..53
ARTICLE 9 - INFORMATION.....................................................53
Section 9.01 Financial Statements.........................54
Section 9.02 Accountants' Certificate.....................54
Section 9.03 Officer's Certificate........................55
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Section 9.04 Management Reports...........................55
Section 9.05 Copies of Other Reports. ....................55
Section 9.06 Notice of Litigation and Other Matters.......55
Section 9.07 ERISA........................................56
ARTICLE 10 - NEGATIVE COVENANTS..............................................57
Section 10.01 Financial Ratios............................57
Section 10.02 Indebtedness................................58
Section 10.03 Guaranties..................................58
Section 10.04 Investments.................................58
Section 10.05 Capital Expenditures........................58
Section 10.06 Restricted Distributions and Payments.......58
Section 10.07 Merger, Consolidation and Sale of Assets....58
Section 10.08 Affiliate Transactions......................58
Section 10.09 Liens.......................................58
Section 10.10 No Negative Pledges.........................59
Section 10.11 Operating Leases............................59
Section 10.12 Benefit Plans...............................59
Section 10.13 Sales and Leasebacks........................59
Section 10.14 Amendments of Other Agreements..............59
Section 10.15 Minimum Availability........................59
Section 10.16 Net Income..................................59
ARTICLE 11 - DEFAULT.........................................................59
Section 11.01 Events of Default...........................59
Section 11.02 Remedies....................................63
Section 11.03 Application of Proceeds.....................65
Section 11.04 Power of Attorney...........................66
Section 11.05 Miscellaneous Provisions Concerning
Remedies............................................66
Section 11.06 Trademark License...........................67
ARTICLE 12 - MISCELLANEOUS...................................................67
Section 12.01 Notices.....................................67
Section 12.02 Expenses....................................69
Section 12.03 Stamp and Other Taxes.......................70
Section 12.04 Setoff......................................70
Section 12.05 Litigation..................................70
Section 12.06 Waiver of Rights............................71
Section 12.07 Reversal of Payments........................71
Section 12.08 Injunctive Relief...........................72
Section 12.09 Accounting Matters..........................72
Section 12.10 Assignment; Participation ..................72
Section 12.11 Amendments..................................72
Section 12.12 Performance of Borrowers' Duties............72
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Section 12.13 Indemnification ............................72
Section 12.14 All Powers Coupled with Interest............73
Section 12.15 Survival....................................73
Section 12.16 Severability of Provisions..................73
Section 12.17 Governing Law...............................73
Section 12.18 Counterparts................................73
Section 12.19 Reproduction of Documents...................73
Section 12.20 Funds Transfer Services.....................74
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EXHIBITS AND SCHEDULES
EXHIBIT A FORM OF REVOLVING CREDIT NOTE
EXHIBIT B FORM OF TERM NOTE
EXHIBIT C FORM OF BORROWING BASE CERTIFICATE
SCHEDULE 5.01(a) JURISDICTIONS IN WHICH EITHER BORROWER IS
QUALIFIED AS A FOREIGN CORPORATION
SCHEDULE 5.01(b) BORROWERS' CAPITAL STOCK
SCHEDULE 5.01(e) BORROWERS' BUSINESS
SCHEDULE 5.01(f) EXCEPTIONS TO GOVERNMENTAL APPROVALS
SCHEDULE 5.01(g) NON LIEN TITLE EXCEPTIONS AND DEFECTS AND
PROPERTY DISPOSED OF OUT OF ORDINARY COURSE OF
BUSINESS
SCHEDULE 5.01(h) LIENS
SCHEDULE 5.01(i) INDEBTEDNESS FOR MONEY BORROWED AND
GUARANTIES
SCHEDULE 5.01(j) LITIGATION
SCHEDULE 5.01(k) TAX RETURNS AND PAYMENTS
SCHEDULE 5.01(o) ERISA
SCHEDULE 5.01(t) LOCATION OF CHIEF EXECUTIVE OFFICE(S)
SCHEDULE 5.01(u) LOCATIONS OF INVENTORY
SCHEDULE 5.01(v)(I) CORPORATE AND FICTITIOUS NAMES OF BORROWERS
SCHEDULE 5.01(v)(II) CORPORATE AND FICTITIOUS NAMES TRANSFERRED
TO BORROWERS
SCHEDULE 5.01(v)(III) NAMES UNDER WHICH BORROWERS CREATE
RECEIVABLES
SCHEDULE 5.01(z) EMPLOYEE RELATIONS
SCHEDULE 5.01(aa) INTELLECTUAL PROPERTY
SCHEDULE 5.01(bb) BANK ACCOUNTS
SCHEDULE 5.01(dd) BROKER'S FEES
SCHEDULE 8.06 USE OF PROCEEDS
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LOAN AND SECURITY AGREEMENT
Dated as of August 29, 1997
ILD TELESERVICES, INC., a Delaware corporation ("ILD"), INTELLICALL
OPERATOR SERVICES, INC. ("IOS") (ILD and IOS are each referred to herein
individually as a "Borrower" and collectively as the "Borrowers"), and
NATIONSBANK, N.A., a national banking association ("Lender"), agree as follows:
RECITALS: ILD has entered into that certain Asset Purchase Agreement, dated as
of February 27, 1997, with WorldCom, Inc., as amended by that certain Amendment
No. 1 dated August 29, 1997 (as so amended, the "WorldCom Agreement"), pursuant
to which ILD will purchase certain assets and contracts relating to the operator
services business of WorldCom, Inc. (the "WorldCom Acquisition") to be utilized,
in part, in connection with the WorldCom Acquisition.
The Borrowers have requested that Lender make a revolving credit
facility available to the Borrowers in an amount up to $20,000,000 and make a
$5,000,000 term loan to the Borrowers. The Borrowers' business is a mutual and
collective enterprise, and the Borrowers believe that the consolidation of all
loans and other accommodations under this Agreement will enhance the Borrowers'
aggregate borrowing power, simplify and facilitate the process of allocating
certain resources between the Borrowers to the mutual advantage of both
Borrowers and the distinct individual advantage of each Borrower, and enhance
the administration of their individual and collective relationships with the
Lender, all to the Borrowers' individual and mutual advantage.
ARTICLE - DEFINITIONS
Section Definitions. For the purposes of this Agreement:
"Account Debtor" means a Person who is obligated on a Receivable.
"Acquire" or "Acquisition", as applied to any Business Unit or
Investment, means the acquisition of such Business Unit or Investment by
purchase, exchange, issuance of stock or other securities, or by merger,
reorganization or any other method.
"Advance(s)" means any and all Prime Rate Advances and LIBOR Advances.
"Affiliate" means, with respect to a Person, (a) any officer, director,
employee or managing agent of such Person, (b) any spouse, parents, brothers,
sisters, children and grand-
children of such Person, (c) any association, partnership, trust, entity or
enterprise in which such Person is a director, officer or general partner, (d)
any other Person that, (i) directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such given Person, (ii) directly or indirectly beneficially owns or holds
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10% or more of any class of voting stock or partnership or other interest
of such Person or any Subsidiary of suchPerson, or (iii) 10% or more of the
voting stock or partnership or other interest of which is directly or indirectly
beneficially owned or held by such Person or a Subsidiary of such Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities or partnership or other
interests, by contract or otherwise.
"Agreement" means this Agreement, including the Exhibits and Schedules
hereto, and all amendments, modifications and supplements hereto and thereto and
restatements hereof and thereof.
"Agreement Date" means the date as of which this Agreement is dated.
"Applicable Law" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and of all
order and decrees of all courts and arbitrators, including without limitation,
Environmental Laws.
"Applicable Margin" shall mean with respect to the Revolving Credit
Facility, the percentage per annum set forth below opposite the ratio of Senior
Funded Debt/EBITDA, to be determined as of the last business day of each year,
commencing with the financial results reflected in the audited financial
statements delivered to Lender with respect to Borrower's 1998 fiscal year:
Applicable Margin
-----------------
Senior Funded Debt/EBITDA Prime Rate Advance(s) LIBOR Advance(s)
------------------------- --------------------- ----------------
Greater than 3.25 to
1.0 .50% 2.75%
Greater than or equal to
2.75 to 1.0 and less than
3.25 to 1.0 .25% 2.50%
Less than 2.75 to 1.0 .00% 2.25%
"Applicable Spread" shall mean with respect to the Revolving Credit
Facility, .50% per annum in the case of Prime Rate Advance(s), and, 2.75% per
annum in the case of LIBOR Advance(s).
"Asset Disposition" means the disposition of any or all assets of
either of the Borrowers, whether by sale, lease, transfer, loss, damage,
destruction, condemnation or otherwise, other than sales of Inventory in the
ordinary course of business.
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"Availability" means as of the date of determination, the amount of
Revolving Credit Loans available to be borrowed collectively by the Borrowers
hereunder in accordance with Section 2.A1, less the sum of the outstanding
principal balance of all Revolving Credit Loans hereunder as of such date.
"Benefit Plan" means an employee benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan) in respect of which a Person or any
Related Company is, or within the immediately preceding 6 years was, an
"employer" as defined in Section 3(5) of ERISA, including such plans as may be
established after the Agreement Date.
"Borrowers" means, collectively, ILD and IOS, and "Borrower" means any such
person individually, and its or their respective successors and permitted
assignees.
"Borrowing Base" means at any time an amount equal to the sum of:
85% (or such lesser percentage as the Lender may in its reasonable credit
judgment determine from time to time) of the face value of Eligible Receivables
due and owing at such time, minus
$250,000, held as a concentration reserve until and unless Receivables
billed by Network Operator Services, Inc. as of the Effective Date are billed
directly by a Borrower, minus
(c) $250,000, held as a reserve until and unless Receivables currently
billed on behalf of Borrowers by Integretel, Incorporated are converted to ILD's
billing system, minus
(d) a reserve to be calculated by Lender, in its sole discretion, from time
to time upon notice from a Borrower that such Borrower owes any Wholesale
Billing and Collection Customer (including, without limitation, WorldCom) more
money than that Borrower currently is holding in its possession on behalf of
such Wholesale Billing and Collection Customer, minus
(e) beginning November 1, 1997, a dilution reserve in an amount equal to
two and one-half percent (2.5%) of Eligible Receivables; minus
(f) such other reserves as Lender may determine from time to time in the
exercise of its reasonable credit judgment.
"Borrowing Base Certificate" means a certificate duly executed by an
authorized officer of ILD appropriately completed and in the form of Exhibit C
attached hereto.
"Business Day" means (a) any day other than a Saturday, Sunday or other day
on which banks in the city in which the principal office of the Lender is
located are authorized to close, and (b) with respect to all notices,
determinations, fundings and payments in connection
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with a LIBOR Advance, any day that is a Business Day described in clause(a)
and that is also a day for trading by and between banks in Dollar deposits in
the applicable interbank market.
"Business Unit" means the assets constituting the business, or a
division or operating unit thereof, of any Person.
"Capital Expenditures" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets (other
than assets which constitute a Business Unit) which are not, in accordance with
GAAP, treated as expense items for such Person in the year made or incurred or
as a prepaid expense applicable to a future year or years.
"Capitalized Lease" means a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the capitalized amount of such obligations determined in accordance with
GAAP.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means and includes the total of all of each Borrower's
right, title and interest in and to each of the following, wherever located and
whether now or hereafter existing or now owned or hereafter acquired or arising:
(a) all Receivables,
(b) all Inventory,
(c) all Contract Rights,
(d) all General Intangibles,
(e) all Equipment,
(f) all Deposit Accounts,
(g) all Real Estate,
(h) all goods and other property, whether or not delivered, (i)
the sale or lease of which gives or purports to give rise to any Receivable,
including, but not limited to, all merchandise returned or rejected by or
repossessed from customers, or (ii) securing any Receivable, including, without
limitation, all rights as an unpaid vendor or lienor (including, without
limitation, stoppage in transit, replevin and reclamation) with respect to such
goods and other properties,
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(i) all services which have been performed, the performance of
which gives or purports to give rise to any Receivable, whether or not invoiced
by or on behalf of any Person,
(j) all mortgages, deeds to secure debt and deeds of trust on
personal property, guaranties, leases, security agreements and other agreements
and property which secure or relate to any Receivable or other Collateral or are
acquired for the purpose of securing and enforcing any item thereof,
(k) all documents of title, policies and certificates of
insurance, securities, chattel paper and other documents and instruments
evidencing or pertaining to any and all items of Collateral,
(l) all files, correspondence, computer programs, tapes, disks and
related data processing software which contain information identifying or
pertaining to any of the Collateral or any Account Debtor or showing the amounts
thereof or payments thereon or otherwise necessary or helpful in the realization
thereon or the collection thereof,
(m) all cash deposited with the Lender or any Affiliate thereof or
which the Lender is entitled to retain or otherwise possess as collateral
pursuant to the provisions of this Agreement or any of the Security Documents,
and
(n) any and all products and cash and non-cash proceeds of the
foregoing (including, but not limited to, any claims to any items referred to in
this definition and any claims against third parties for loss of, damage to or
destruction of any or all of the Collateral or for proceeds payable under or
unearned premiums with respect to policies of insurance) in whatever form,
including, but not limited to, cash, negotiable instruments and other
instruments for the payment of money, chattel paper, security agreements and
other documents.
"Contract Rights" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising rights under
contracts not yet earned by performance and not evidenced by an instrument or
chattel paper, to the extent that the same may lawfully be assigned.
"Contribution Documents" means (a) collectively all stock certificates
or other documentation evidencing the Contributions, and (b) collectively all of
the agreements, instruments and documents executed in connection with the
Contributions.
"Contributions" means the contribution as of the Effective Date by
certain new or existing shareholders of ILD of not less than $1,600,000 to the
capital of ILD, at least $500,000 of which shall be contributed to the capital
of ILD by WorldCom.
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"Default" means any of the events specified in Section 11.01 that, with
the passage of time or giving of notice or both, would constitute an Event of
Default.
"Default Margin" means two percent (2%) per annum.
"Deposit Accounts" means any demand, time, savings, passbook or like
account maintained with a bank, savings and loan association, credit union or
like organization, other than an account evidenced by a certificate of deposit
that is an instrument under the UCC.
"Disbursement Account" means the account maintained by and in the name
of the Borrowers (or in the name of either Borrower designated by the Borrowers)
with the Lender for the purpose of disbursing Revolving Credit Loan proceeds and
amounts credited thereto pursuant to Sections 2.A2(b)(i) and the cash management
system maintained by the Borrowers pursuant to 7.01.
"Dollar" and "$" means freely transferable United States dollars.
"EBITDA" means, for any period, the Borrowers' and their consolidated
Subsidiaries' Net Income for such period before deduction of interest, taxes
depreciation and amortization expense, all on a consolidated basis, determined
in accordance with GAAP, less (a) non-cash credits increasing Borrowers' Net
Income, less (b) cash dividends or distributions made by Borrowers.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
all regulations promulgated thereunder, as in effect from time to time, and any
successor statute or regulations.
"Effective Date" means the later of (a) the Agreement Date, and (b) the
first date on which all of the conditions set forth in Section 4.01 shall have
been fulfilled or waived by the Lender.
"Effective Interest Rate" means the rate of interest per annum on the
Loans in effect from time to time pursuant to the provisions of Section 3.01(a),
(b) and (c).
"Eligible Receivables" means the total of all of the unpaid portions of
any Receivables (other than Wholesale Billing and Collection Receivables)
payable in Dollars to a Borrower by a Person whose principal place of business
is in the United States of America or Canada, net of any taxes, holdbacks,
returns, discounts, claims, credits, charges or other allowances, commissions,
offsets, deductions, counterclaims, disputes or other defenses and reduced by
the aggregate amount of all reserves, limits and deductions provided for in this
definition and elsewhere in this Agreement which is deemed by the Lender in the
exercise of its reasonable credit judgment to be eligible for inclusion in the
calculation of the Borrowing Base. Unless otherwise approved in writing by the
Lender, no Receivable of either Borrower shall be deemed an Eligible Receivable
unless it also meets all of the following requirements: (a) such
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Receivable is owned by a Borrower and represents a complete bona fide
transaction which requires no further act under any circumstances on the part of
such Borrower to make such Receivable payable by the Account Debtor; (b) such
Receivable is not unpaid more than 90 days after the date of creation of the
original call detail record with respect to such call or past due more than 44
days after its invoice due date, which shall not be later than 45 days after the
creation of the original call detail record with respect to such call; (c) such
Receivable does not arise out of any transaction with any Subsidiary, Affiliate
(excluding WorldCom), creditor, lessor or supplier of such Borrower; (d) such
Receivable is not owing by an Account Debtor more than fifty percent (50%) of
whose then-existing accounts owing to either of the Borrowers do not meet the
requirements set forth in clause (b) above; (e) Accounts due from an Account
Debtor which Lender has notified Borrowers has an unsatisfactory credit standing
as determined by Lender in its reasonable credit judgment; (f) such Receivable
is not subject to the Assignment of Claims Act of 1940, as amended from time to
time, or any applicable law now or hereafter existing similar in effect thereto,
as determined in the sole discretion of the Lender, or to any provision
prohibiting its assignment or requiring notice of or consent to such assignment;
(g) such Borrower is not in breach of any express or implied representation or
warranty with respect to the goods or services the sale or performance of which
gave rise to such Receivable; (h) the Account Debtor with respect to such
Receivable is not insolvent or the subject of any bankruptcy or insolvency
proceedings of any kind or of any other proceeding or action, threatened or
pending, which might, in the Lender's sole judgment, have a Materially Adverse
Effect on such Account Debtor; (i) the goods or services the sale or performance
of which gave rise to such Receivable were shipped, delivered or provided to the
Account Debtor on an absolute sale basis and not on a xxxx and hold sale basis,
a consignment sale basis, a guaranteed sale basis, a sale or return basis or on
the basis of any other similar understanding, and such goods or services have
not been returned or rejected; (j) such Receivable is not owing by an Account
Debtor who individually or together with a group of affiliated Account Debtors
has then-existing accounts owing to such Borrower which exceed in face amount
twenty-five percent (25%) of such Borrower's total Eligible Receivables (other
than as to WorldCom); (k) such Receivable is evidenced by call detail record or
other documentation in form acceptable to the Lender containing only terms
normally offered by such Borrower, and dated no later than 45 days after
completion of the services giving rise to such Receivable; (l) such Receivable
is a valid, legally enforceable obligation of the Account Debtor with respect
thereto and is not subject to any present, or contingent (and no facts exist
which are the basis for any future), offset, deduction or counterclaim, dispute
or other defense on the part of such Account Debtor; (m) such Receivable is not
evidenced by chattel paper or an instrument of any kind, unless such chattel
paper or instrument has been delivered and endorsed and/or assigned to the
Lender; (n) if such Receivable arises from the performance of services, such
services have been fully performed, and if the billing and collection for such
service is being undertaken by a third party, all required verification, rating
and processing has been performed and the call detail records have been received
by the billing and collection agent (other than in the case of otherwise
Eligible Receivables to be processed by Sprint Communications or Network
Operator Services, Inc. (collectively, "Sprint/NOS Receivables"), in which case
the eligible portion of such Receivables shall equal ILD's good faith estimate,
based on historical traffic
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patterns and as specifically identified in the Borrowing Base Certificate
including such Receivables, of the amount of such Receivables, provided that
such call detail records shall have been transmitted for collection within
twenty (20) days after the last day of the immediately preceding month); (o)
such Receivable, if it arises in connection with a LEC Payment, (i) is the
subject of an agreement between the applicable LEC and WorldCom, which agreement
has been validly assigned to ILD by WorldCom (such assignment having been
acknowledged by the applicable LEC), or (ii) is the subject of a valid, first
priority Lien granted by WorldCom in favor of ILD and assigned to Lender; (p)
such Receivable is subject to the Security Interest, which is perfected as to
such Receivable, and is subject to no other Lien whatsoever other than a
Permitted Lien and the goods giving rise to such Receivable were not, at the
time of the sale thereof, subject to any Lien other than a Permitted Lien; (q)
such Receivable is not a duplicate billing; and (r) such Receivable, if billed
on behalf of Borrower by a third-party, has been confirmed by or on behalf of
the billing agent (other than Sprint/NOS Receivables which shall not be subject
to this condition).
"Environmental Laws" means all federal, state, local and foreign laws
now or hereafter in effect relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water or land) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport or handling of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes, and any and all
regulations, notices or demand letters issued, entered, promulgated or approved
thereunder.
"Equipment" means and includes, as to any Person, all of such Person's
then owned or existing and future acquired or arising machinery, apparatus,
equipment, motor vehicles, tractors, trailers and other tangible personal
property (other than Inventory) of every kind and description used in such
Person's business operations or owned by such Person or in which such Person has
an interest and all parts, accessories and special tools and all increases and
accessions thereto and substitutions and replacements therefor.
"Event of Default" means any of the events specified in Section 11.01.
"Financing Statements" means the Uniform Commercial Code financing
statements executed and delivered by each of the Borrowers to the Lender, naming
the Lender as secured party and each such Borrower as debtor, in connection with
this Agreement.
"Fixed Charge Coverage Ratio" means, for any period, (a) EBITDA, minus
unfunded Capital Expenditures and income taxes actually paid divided by (b)
Fixed Charges.
"Fixed Charges" means, for any period, (a) Interest Expense, plus (b)
scheduled payments of principal due with respect to Indebtedness, including,
without limitation,
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scheduled principal payments under the Term Loan, the Sirrom Subordinated
Indebtedness and payments with respect to Capitalized Leases.
"GAAP" means generally accepted accounting principles consistently
applied and maintained throughout the period indicated and consistent with the
prior financial practice of the Person referred to.
"General Intangibles" means, as to any Person, all of such Person's
then owned or existing and future acquired or arising general intangibles,
chooses in action and causes of action and all other intangible personal
property of such Person of every kind and nature (other than Receivables),
including, without limitation, Intellectual Property, corporate or other
business records, inventions, designs, blueprints, plans, specifications, trade
secrets, goodwill, computer software, customer lists, registrations, licenses,
franchises, tax refund claims, reversions or any rights thereto and any other
amounts payable to such Person from any Benefit Plan, Multi-
employer Plan or other employee benefit plan, rights and claims against carriers
and shippers, rights to indemnification, business interruption insurance and
proceeds thereof, property, casualty or any similar type of insurance and any
proceeds thereof, proceeds of insurance covering the lives of key employees on
which such Person is beneficiary and any letter of credit, guarantee, claims,
security interest or other security held by or granted to such Person to secure
payment by an Account Debtor of any of the Receivables.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
governmental bodies, whether federal, state, local, foreign national or
provincial, and all agencies thereof.
"Governmental Authority" means any government or political subdivision
or any agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Guaranty", "Guaranteed" or to "Guarantee," as applied to any
obligation of another Person shall mean and include
(a) a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), directly or
indirectly, in any manner, of any part or all of such obligation of such other
Person, and
(b) an agreement, direct or indirect, contingent or otherwise, and
whether or not constituting a guaranty, the practical effect of which is to
assure the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation of such other Person
whether by (i) the purchase of securities or obligations, (ii) the purchase,
sale or lease (as lessee or lessor) of property or the purchase or sale of
services primarily for the purpose of enabling the obligor with respect to such
obligation to make any payment or performance (or payment of damages in the
event of nonperformance) of or on account of any
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part or all of such obligation or to assure the owner of such obligation
against loss, (iii) the supplying of funds to, or in any other manner investing
in, the obligor with respect to such obligation, (iv) repayment of amounts drawn
down by beneficiaries of letters of credit, or (v) the supplying of funds to or
investing in a Person on account of all or any part of such Person's obligation
under a guaranty of any obligation or indemnifying or holding harmless, in any
way, such Person against any part or all of such obligation.
"Indebtedness" of any Person means, without duplication, (a)
Liabilities, (b) all obligations for money borrowed or for the deferred purchase
price of property or services or in respect of reimbursement obligations under
letters of credit, (c) all obligations represented by bonds, debentures, notes
and accepted drafts that represent extensions of credit, (d) Capitalized Lease
Obligations, (e) all obligations (including, during the noncancellable term of
any lease in the nature of a title retention agreement, all future payment
obligations under such lease discounted to their present value in accordance
with GAAP) secured by any Lien to which any property or asset owned or held by
such Person is subject, whether or not the obligation secured thereby shall have
been assumed by such Person, (f) all obligations of other Persons which such
Person has Guaranteed, including, but not limited to, all obligations of such
Person consisting of recourse liability with respect to accounts receivable sold
or otherwise disposed of by such Person, and (g) without duplication of any of
the foregoing, in the case of any Borrower, any Loan.
"Initial Loan" means the Revolving Credit Loan and the Term Loan made
to the Borrowers on the Effective Date.
"Intellectual Property" means, as to any Person, all of such Person's
then owned existing and future acquired or arising patents, patent rights,
copyrights, works which are the subject of copyrights, trademarks, service
marks, trade names, trade styles, patent, trademark and service xxxx
applications, and all licenses and rights related to any of the foregoing and
all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations and continuations-in-part of any of the foregoing and
all rights to xxx for past, present and future infringements of any of the
foregoing.
"Interest Expense" means interest on Indebtedness, including the
interest portion of Capitalized Leases, during the period for which computation
is being made, all as determined in accordance with GAAP, excluding (a) the
amortization of fees and costs incurred with respect to the closing of loans
which may be capitalized as transaction costs in accordance with GAAP, and (b)
interest paid in kind.
"Interbank Offered Rate" means, with respect to any LIBOR Advance for
the Interest Period applicable thereto, the average (rounded upward to the
nearest one-sixteenth of one percent) per annum rate of interest determined by
the office of the Lender then determining such rate (each such determination to
be conclusive and binding) as of two (2) Business Days prior to the first day of
such Interest Period, as the effective rate at which deposits in immediately
available funds in Dollars are being, have been, or would be offered or quoted
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by the Lender to major banks in the applicable interbank market for LIBOR
deposits at any time during the Business Day which is the second (2nd) Business
Day immediately preceding the first day of such Interest Period, for a term
comparable to such Interest Period and in the amount of the requested Advance.
If no such offers or quotes are generally available for such amount, then the
Lender shall be entitled to determine the LIBOR by estimating in its reasonable
judgment the per annum rate (as described above) that would be applicable if
such quotes or offers were generally available.
"Interest Period" means, in connection with any LIBOR Advance, the term
selected by the Borrowers or otherwise determined in accordance with this
Agreement, which may have a duration of one (1), three (3) or six (6) months.
Notwithstanding the foregoing, however, (a) any applicable Interest Period which
would otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day, (b) any applicable Interest Period which begins on a day for which
there is no numerically corresponding day in the calendar month during which
such Interest Period is to end shall (subject to clause (a) above) end on the
last day of such calendar month, and (c) no Interest Period shall extend beyond
the Termination Date, or such earlier date as would interfere hereunder with the
repayment obligations of the Borrowers.
"Inventory" means and includes, as to any Person, all of such Person's
then owned or existing and future acquired or arising (a) goods intended for
sale or lease or for display or demonstration, (b) work in process, (c) raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, packing, shipping,
advertising, selling, leasing or furnishing of goods or otherwise used or
consumed in the conduct of business, and (d) documents evidencing and general
intangibles relating to any of the foregoing.
"Investment" means, with respect to any Person: (a) the direct or
indirect purchase or acquisition of any beneficial interest in, including stock,
partnership interests or other securities of, evidence of Indebtedness of or
other security issued by any other Person, (b) any loan, advance or extension of
credit to, or contribution to the capital of, any other Person, excluding
advances to employees in the ordinary course of business for business expenses,
(c) any Guaranty of the obligations of any other Person, or (d) any commitment
or option to take any of the actions described in clauses (a), (b) or (c) above.
"LEC" means any Regional Xxxx Operating Company, independent local
exchange company, credit card company or provider of local telephone service
which is a party to (whether by assignment or otherwise) a billing and
collection agreement.
"LEC Payment" means all amounts received from a LEC in connection with
any billing and collection agreement.
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"Lender" means NationsBank, N.A., a national banking association, and
its successors and assigns.
"Lender's Office" means the office of the Lender specified in or
determined in accordance with the provisions of Section 12.01(c).
"Liabilities" means all liabilities of a Person determined in
accordance with GAAP and includable on a balance sheet of such Person prepared
in accordance with GAAP.
"LIBOR" means, with respect to the Interest Period applicable thereto,
a simple per annum interest rate determined pursuant to the following formula:
LIBOR = Interbank Offered Rate
----------------------------
1 - LIBOR Reserve Percentage
The LIBOR shall be adjusted automatically as of the effective date of any change
in the LIBOR Reserve Percentage.
"LIBOR Advance" means any Loan which bears interest at the time in
question based on LIBOR.
"LIBOR Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System, as such regulation may
be amended from time to time, or any successor regulation, as the maximum
reserve requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable to any member bank with
respect to Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by reference to
which the interest rate of the LIBOR Advances is determined), whether or not
Lender has any Eurocurrency liabilities subject to such reserve requirement at
that time. The LIBOR Advances shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements without
the benefit of credits for proration, exceptions or offsets that may be
available from time to time to Lender.
"Lien" as applied to the property of any Person means: (a) any
mortgage, deed to secure debt, deed of trust, lien, pledge, charge, lease
constituting a Capitalized Lease Obligation, conditional sale or other title
retention agreement, or other security interest, security title or encumbrance
of any kind in respect of any property of such Person or upon the income or
profits therefrom, (b) any arrangement, express or implied, under which any
property of such Person is transferred, sequestered or otherwise identified for
the purpose of subjecting the same to the payment of Indebtedness or performance
of any other obligation in priority to the payment of the general, unsecured
creditors of such Person, (c) any Indebtedness which is unpaid more than 30 days
after the same shall have become due and payable and which if unpaid might by
law (including, but not limited to, bankruptcy and
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insolvency laws) or otherwise be given any priority whatsoever over general
unsecured creditors of such Person, and (d) the filing of, or any agreement to
give, any financing statement under the UCC or its equivalent in any
jurisdiction.
"Loan" means any Revolving Credit Loan or the Term Loan, as well as all
such Loans collectively, and shall include, without, limitation Prime Rate
Advances and LIBOR Advances.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Security Documents and each other instrument, agreement and document executed
and delivered by either
Borrower in connection with this Agreement and each other instrument, agreement
or document referred to herein or therein or contemplated hereby or thereby.
"Materially Adverse Effect" means any act, omission, event or
undertaking which would, singly or in the aggregate, have a materially adverse
effect upon (a) the business, assets, properties, liabilities, condition
(financial or otherwise), results of operations or business prospects of either
Borrower or any of their respective Subsidiaries, (b) the respective ability of
either Borrower or any of their respective Subsidiaries to perform any
obligations under this Agreement or any other Loan Document to which it is a
party, or (c) the legality, validity, binding effect, enforceability or
admissibility into evidence of any Loan Document or the ability of Lender to
enforce any rights or remedies under or in connection with any Loan Document; in
any case, whether resulting from any single act, omission, situation, status,
event, or undertaking, together with other such acts, omissions, situations,
statuses, events, or undertakings.
"Money Borrowed" means, as applied to Indebtedness, (a) Indebtedness
for money borrowed, (b) Indebtedness, whether or not in any such case the same
was for money borrowed, (i) represented by notes payable and drafts accepted,
that represent extensions of credit, (ii) constituting obligations evidenced by
bonds, debentures, notes or similar instruments, or (iii) upon which interest
charges are customarily paid (other than trade Indebtedness) or that was issued
or assumed as full or partial payment for property, (c) Indebtedness that
constitutes a Capitalized Lease Obligation, and (d) Indebtedness that is such by
virtue of clause (f) of the definition thereof, but only to the extent that the
obligations Guaranteed are obligations that would constitute Indebtedness for
Money Borrowed.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which a Borrower or a Related Company is required to
contribute or has contributed within the immediately preceding 6 years.
"Net Income" or "Net Loss" means, as applied to any Person, the net
income (or net loss) of such Person for the period in question after giving
effect to deduction of or provision for all operating expenses, all taxes and
reserves (including reserves for deferred taxes and all other proper
deductions), all determined in accordance with GAAP, provided that there shall
be excluded: (a) the net income (or net loss) of any Person accrued prior to the
date it
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13
becomes a Subsidiary of, or is merged into or consolidated with, the Person
whose Net Income is being determined or a Subsidiary of such Person, (b) the net
income (or net loss) of any Person in which the Person whose Net Income is being
determined or any Subsidiary of such Person has an ownership interest, except,
in the case of net income, to the extent that any such income has actually been
received by such Person or such Subsidiary in the form of cash dividends or
similar distributions, (c) any restoration of any contingency reserve, except to
the extent that provision for such reserve was made out of income during such
period, (d) any net gains or losses on the sale or other disposition, not in the
ordinary course of business, of Investments, Business Units and other capital
assets, provided that there shall also be excluded any related charges for taxes
thereon, (e) any net gain arising from the collection of the proceeds of any
insurance policy, (f) any write-up of any asset, and (g) any other extraordinary
item.
"Net Proceeds" means proceeds received by either of the Borrowers or
any of their respective Subsidiaries in cash from any Asset Disposition
(including payments under notes or other debt securities received in connection
with any Asset Disposition as and when received and insurance proceeds and
awards of condemnation), net of (a) the costs of such sale, lease, transfer or
other disposition (including customary costs incurred in anticipation of the
sale and reasonable legal, advisory and other fees and expenses including
mortgage title and recording expenses associated therewith) and (b) amounts
applied to repayment of Indebtedness (other than the Secured Obligations)
secured by a lien, security interest, claim or encumbrance on the asset or
property disposed.
"Net Worth" of any Person means, as of any date of determination, the
total shareholders' equity (including capital stock, additional paid-in capital
and retained earnings, after deducting treasury stock) which would appear as
such on a balance sheet of such Person prepared in accordance with GAAP.
"Notes" means collectively the Revolving Credit Note and the Term Note.
"Obligor" means both of the Borrowers, each party to the Security
Documents (other than the Lender), and each other party at any time primarily or
secondarily, directly or indirectly, liable on any of the Secured Obligations.
"Operating Lease" means any lease (other than a lease constituting a
Capitalized Lease Obligation) of real or personal property.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Permitted Asset Dispositions" shall mean and include the sale by ILD
of its operations associated with prisons and correctional facilities for not
less than $1,000,000, which sale shall only be permitted hereunder in the event
that no Event of Default has occurred hereunder and that after giving effect to
the consummation of such a sale an Event of Default shall not occur hereunder;
provided, however, that the first $500,000 of the Net
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14
Proceeds of such sale shall be applied to the outstanding principal and
interest due under the Term Note and the second $500,000 of the Net Proceeds of
such sale shall be applied to the Sirrom Subordinated Indebtedness, with the
remainder of such Net Proceeds being applied to the outstanding principal and
interest due under the Revolving Credit Note.
"Permitted Distributions" means dividends declared by Borrowers with
respect to such Borrower's capital stock together with scheduled payments of
interest due in connection with the Shareholder Subordinated Indebtedness, in
the aggregate, in an amount not to exceed $700,000 for fiscal year 1997, and in
an amount not to exceed $1,500,000 in any fiscal year thereafter.
"Permitted Guaranties" means only such guaranties, if any, as are set
forth and disclosed in Schedule 5.01(i) attached hereto and incorporated herein.
"Permitted Indebtedness for Money Borrowed" means Indebtedness for
Money Borrowed which is not secured by a Lien other than a Permitted Lien and
which, in an aggregate amount as to both Borrowers, does not at any time exceed
$250,000.
"Permitted Investments" means Investments of either of the Borrowers
in: (a) negotiable certificates of deposit, time deposits and banker's
acceptances issued by the Lender or any Affiliate of the Lender or by any United
States bank or trust company having capital, surplus and undivided profits in
excess of $250,000,000, (b) any direct obligation of the United States of
America or any agency or instrumentality thereof which has a remaining maturity
at the time of purchase of not more than one year and repurchase agreements
relating to the same, (c) sales on credit in the ordinary course of business on
terms customary in the industry, and (d) notes, accepted in the ordinary course
of business, evidencing overdue accounts receivable arising in the ordinary
course of business.
"Permitted Liens" means: (a) Liens securing taxes, assessments and
other governmental charges or levies (excluding any Lien imposed pursuant to any
of the provisions of ERISA) or the claims of materialmen, mechanics, carriers,
warehousemen or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, but (i) in all cases, only if payment shall not
at the time be required to be made in accordance with Section 8.04, and (ii) in
the case of warehousemen or landlords controlling locations where Inventory is
located, only if such liens have been waived or subordinated to the Security
Interest in a manner satisfactory to the Lender; (b) Liens consisting of
deposits or pledges made in the ordinary course of business in connection with,
or to secure payment of, obligations under workers' compensation, unemployment
insurance or similar legislation or under surety or performance bonds, in each
case arising in the ordinary course of business; (c) Liens constituting
encumbrances in the nature of zoning restrictions, easements and rights or
restrictions of record on the use of the Real Estate, which in the sole judgment
of the Lender do not materially detract from the value of such Real Estate or
impair the use thereof in the business of the Borrower which owns such Real
Estate; (d) Purchase Money Liens securing Permitted Purchase Money Indebtedness;
(e) Liens of the Lender arising under this Agreement
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and the other Loan Documents; (f) Liens arising out of or resulting from
any judgment or award, the time for the appeal or petition for rehearing of
which shall not have expired, or in respect of which any subject Borrower is
fully protected by insurance or in respect of which any such Borrower shall in
good faith be prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or proceeding for review shall
have been secured, and as to which appropriate reserves have been established on
the books of any such Borrower; and (g) Liens under the Sirrom Subordinated
Indebtedness.
"Permitted Purchase Money Indebtedness" means Purchase Money Indebtedness
secured only by Purchase Money Liens and Capitalized Lease Obligations, incurred
by either or both Borrowers after the Agreement Date, up to an aggregate amount
outstanding (as to both Borrowers) at any time equal to $1,000,000.
"Person" means an individual, corporation, partnership, association, trust
or unincorporated organization or a government or any agency or political
subdivision thereof.
"Prepayment Premium" means an amount equal to (i) $750,000, in the event
Borrowers terminate the Revolving Credit Facility during the twelve (12) month
period immediately following the Effective Date, (ii) $300,000, in the event
Borrowers terminate the Revolving Credit Facility during the twelve (12) month
period following the first (1st) anniversary of the Effective Date, or (iii)
$100,000, in the event Borrowers terminate the Revolving Credit Facility at any
time thereafter other than on the Termination Date; provided, however, that no
amount will be due under this subclause (iii) in the event the Revolving Credit
Facility is terminated by Borrowers and replaced by a facility with NationsBank
Capital Markets, Inc.
"Prime Rate" means during the period from the Effective Date through the
last day of the month in which the Effective Date falls, the per annum rate of
interest publicly announced by the Lender at its principal office as its "prime
rate" as in effect on the Effective Date, and thereafter during each succeeding
calendar month, means such "prime rate" as in effect on the last Business Day of
the immediately preceding calendar month. Any change in an interest rate
resulting from a change in the Prime Rate shall become effective as of 12:01
a.m. on the first day of the month following the month in which such change was
announced. The Prime Rate is a reference used by the Lender in determining
interest rates on certain loans and is not intended to be the lowest rate of
interest charged on any extension of credit to any debtor.
"Prime Rate Advance" means any Loan which bears interest at the time in
question based on the Prime Rate.
"Purchase Money Indebtedness" means Indebtedness created to finance the
payment of all or any part of the purchase price (not in excess of the fair
market value thereof) of any tangible asset (other than Inventory) and incurred
at the time of or within 10 days prior to or after the acquisition of such
tangible asset.
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"Purchase Money Lien" means any Lien securing Purchase Money Indebtedness,
but only if such Lien shall at all times be confined solely to the tangible
asset (other than Inventory) the purchase price of which was financed through
the incurrence of the Purchase Money Indebtedness secured by such Lien.
"Real Estate" means all of each Borrower's now-owned and hereafter acquired
interests in real property.
"Receivables" means and includes, as to any Person, all of such Person's
then owned or existing and future acquired or arising (a) rights to the payment
of money or other forms of consideration of any kind (whether classified under
the UCC as accounts, contract rights, chattel paper, general intangibles or
otherwise) including, but not limited to, accounts receivable, letters of credit
and the right to receive payment thereunder, chattel paper, tax refunds,
insurance proceeds, Contract Rights, notes, drafts, instruments, documents,
acceptances and all other debts, obligations and liabilities in whatever form
from any Person and guaranties, security and Liens securing payment thereof, (b)
goods, whether now owned or hereafter acquired, and whether sold, delivered,
undelivered, in transit or returned, which may be represented by, or the sale or
lease of which may have given rise to, any such right to payment or other debt,
obligation or liability, including, without limitation, call detail records
(whether or not validated, rated or otherwise processed in form for delivery to
a billing and collection agent), and (c) cash and non-cash proceeds of any of
the foregoing.
"Related Company" means, as to any Person, any (a) corporation which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as such Person, (b) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with such Person, or (c) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
such Person or any corporation described in clause (a) above or any partnership,
trade or business described in clause (b) above.
"Related Transaction Documents" means the WorldCom Acquisition Documents,
the Contribution Documents, the Subordination Documents and the Loan Documents.
"Related Transactions" means the WorldCom Acquisition, the Contributions
and the issuance of ILD capital stock in connection therewith, the execution and
delivery of the Related Transactions Documents, the performance of the other
transactions contemplated thereby, the funding of the Term Loan and each
borrowing under the Revolving Loan on the Effective Date.
"Restricted Distribution" by any Person means (a) its retirement,
redemption, purchase, or other acquisition for value of any capital stock or
other equity securities or partnership interests issued by such Person, (b) the
declaration or payment of any dividend or distribution on or with respect to any
such securities or partnership interests, (c) any loan or advance by such Person
to, or other investment by such Person in, the holder of any of such securities
or
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partnership interests, (d) any other payment by such Person in respect of
such securities or partnership interests, and (e) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options or rights to
acquire any shares of capital stock of such Person now or hereafter outstanding.
"Restricted Payment" means (a) any redemption, repurchase or prepayment
or other retirement, prior to the stated maturity thereof or prior to the due
date of any regularly scheduled installment or amortization payment with respect
thereto, of any Indebtedness of a Person (other than the Secured Obligations and
trade debt), and (b) the payment by any Person of the principal amount of or
interest on any Indebtedness (other than trade debt) owing to an Affiliate of
such Person.
"Revolving Credit Facility" means the facility for the Revolving Credit
Loans in the principal sum of up to $20,000,000.
"Revolving Credit Loan" means any loan made to the Borrowers pursuant
to Section 2A.1. Each and all Revolving Credit Loans made to one or more
Borrowers shall be deemed made to both Borrowers, irrespective of whether the
proceeds of same are initially or ultimately distributed to a single Borrower or
to more than one Borrower.
"Revolving Credit Note" means the Revolving Credit Note made by the
Borrowers payable to the order of the Lender evidencing the joint and several
obligation of the Borrowers to pay the aggregate unpaid principal amount of all
Revolving Credit Loans made to them by the Lender (and any promissory note or
notes that may be issued from time to time in substitution, renewal, extension,
replacement or exchange therefor, whether payable to the Lender or a different
lender, whether issued in connection with a Person becoming a lender after the
Effective Date or otherwise), substantially in the form of Exhibit A hereto,
with all blanks properly completed.
"Schedule of Receivables" means the schedule delivered by each Borrower
to the Lender pursuant to the provisions of Section 7.13(a).
"Secured Obligations" means, in each case whether now in existence or
hereafter arising, (a) the principal of and interest and premium, if any, on the
Loans, and (b) all indebtedness, liabilities, obligations, overdrafts, covenants
and duties of both of the Borrowers or either of the Borrowers to the Lender or
any Affiliate of the Lender of every kind, nature and description, direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated and whether or not evidenced by any note and whether
or not for the payment of money under or in respect of this Agreement, any Note
or any of the other Loan Documents.
"Security Documents" means each of (a) the Financing Statements, and
(b) each other writing executed and delivered by any Person securing the Secured
Obligations or evidencing such security.
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"Security Interest" means the Liens of the Lender on and in the
Collateral effected hereby or by any of the Security Documents or pursuant to
the terms hereof or thereof.
"Senior Funded Debt" means collectively, the Secured Obligations,
Capitalized Leases and all other senior Indebtedness of the Borrowers.
"Shareholder Subordinated Indebtedness" means the Indebtedness (not to
exceed $2,000,000 in the aggregate) owed by ILD to each of Intellicall, Inc.,
Triad-ILD Partners, L.P. and Xxxxxx Telecommunications, LLC.
"Sirrom Subordinated Indebtedness" means the Indebtedness (not to
exceed $7,000,000) owed by Borrowers to Sirrom Capital Corporation and Xxxxx
River Ventures Limited Partnership, pursuant to that certain Loan and Security
Agreement, dated May 13, 1996, among Sirrom Capital Corporation, Xxxxx River
Ventures Limited Partnership and the Borrowers.
"Sirrom Subordination Agreement" means a Subordination Agreement in
form and substance satisfactory to Lender in its sole discretion whereby Sirrom
Capital Corporation and Xxxxx River Ventures Limited Partnership agrees to
subordinate the Sirrom Subordinated Indebtedness to the Secured Obligations.
"Subordinated Indebtedness" means any Indebtedness for money borrowed
of a Borrower which is subordinated to the Secured Obligations on terms and
conditions acceptable to the Lender in its sole discretion, including, without
limitation, the Sirrom Subordinated Indebtedness and the Shareholder
Subordinated Indebtedness.
"Subordination Documents" shall mean and include the Sirrom
Subordination Agreement and the subordination agreements, in form and substance
satisfactory to Lender in its sole discretion, wherein each of Intellicall,
Inc., Triad-ILD Partners, L.P. and Xxxxxx Telecommunications, LLC have
subordinated any and all Indebtedness owing by ILD to each of them to the
Secured Obligations.
"Subsidiary" when used to determine the relationship of a Person to
another Person, means a Person of which an aggregate of 50% or more of the stock
of any class or classes or 50% or more of other ownership interests is owned of
record or beneficially by such other Person or by one or more Subsidiaries of
such other Person or by such other Person and one or more Subsidiaries of such
Person, (i) if the holders of such stock or other ownership interests (A) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or other individuals performing similar
functions) of such Person, even though the right so to vote has been suspended
by the happening of such a contingency, or (B) are entitled, as such holders, to
vote for the election of a majority of the directors (or individuals performing
similar functions) of such Person, whether or not the right so to vote exists by
reason of the happening of a contingency, or (ii) in the case of such other
ownership interests, if such ownership interests constitute a majority voting
interest.
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"Switches" shall refer to those two (2) certain DEX 600 telecom switches
and those two (2) certain Xxxxxx switches, which may be subject to a
sale-leaseback transaction, which transaction shall be acceptable in form and
substance to Lender in its sole discretion.
"Term Loan" means the term loan made to the Borrowers pursuant to Section
2B.1 hereof in an amount not to exceed $5,000,000.
"Term Note" means the Term Note made by the Borrowers payable to the order
of the Lender evidencing the joint and several obligation of the Borrowers to
pay the aggregate unpaid principal amount of the Term Loan made to them by the
Lender (and any promissory note or notes that may be issued from time to time in
substitution, renewal, extension, replacement or exchange therefor, whether
payable to the Lender or a different Lender, whether issued in connection with a
Person becoming a Lender after the Effective Date or otherwise), substantially
in the form of Exhibit B hereto.
"Termination Date" means the earliest of (i) February 13, 2001, or (ii)
such later date to which the termination of the Revolving Credit Facility shall
be extended pursuant to Section 2A.5.
"Termination Event" means (a) a "Reportable Event" as defined in Section
4043(b) of ERISA, but excluding any such event as to which the provision for 30
days' notice to the PBGC is waived under applicable regulations, (b) the filing
of a notice of intent to terminate a Benefit Plan or the treatment of a Benefit
Plan amendment as a termination under Section 4041 of ERISA, or (c) the
institution of proceedings to terminate a Benefit Plan by the PBGC under Section
4042 of ERISA or the appointment of a trustee to administer any Benefit Plan.
"Total Liabilities" means the aggregate of both Borrower's Liabilities
(excluding Subordinated Indebtedness).
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of Georgia.
"Unfunded Capital Expenditures" means Capital Expenditures which are paid
for by a Person other than with the proceeds of Indebtedness for Money Borrowed
(other than the Loans) incurred to finance such Capital Expenditures and other
than those represented by Capitalized Lease Obligations.
"Unfunded Vested Accrued Benefits" means, with respect to any Benefit Plan
at any time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Benefit Plan exceeds (b) the fair market
value of all Benefit Plan assets allocable to such benefits, as determined using
such reasonable actuarial assumptions and methods as are specified in the
Schedule B (Actuarial Information) to the most recent Annual Report (Form 5500)
filed with respect to such Benefit Plan.
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"Wholesale Billing and Collection Customer" shall mean and refer to those
customers of each Borrower for whom such Borrower solely provides billing and
collection services and shall not include those customers of a Borrower that,
pursuant to the agreement between such Borrower and such customer, a Borrower
purchases title to the Receivables that are being collected in connection
therewith.
"Wholesale Billing and Collection Receivable(s)" shall mean and include all
Receivables for which a Borrower acts as collection and billing agent for a
Wholesale Billing and Collection Customer, other than that portion of such
Receivable that is due and owing to such Borrower by such Wholesale Billing and
Collection Customer for services rendered by such Borrower pursuant to the terms
of the agreement between such Borrower and such Wholesale Billing and Collection
Customer.
"WorldCom" means WorldCom, Inc.
"WorldCom Acquisition" has the meaning ascribed to that term in the
Recitals hereof.
"WorldCom Acquisition Documents" means collectively the WorldCom Agreement
and all other agreements, instruments and documents executed in connection with
the WorldCom Acquisition, excluding the Loan Documents, the Contribution
Documents and documents which address only the Switches or the premises for the
Switches.
"WorldCom Agreement" has the meaning ascribed to that term in the Recitals.
Section 1.02 Other Referential Provisions.
(a) All terms in this Agreement, the Exhibits and Schedules hereto
shall have the same defined meanings when used in any other Loan Documents,
unless the context shall require otherwise.
(b) Except as otherwise expressly provided herein, all accounting
terms not specifically defined or specified herein shall have the meanings
generally attributed to such terms under GAAP including, without limitation,
applicable statements and interpretations issued by the Financial Accounting
Standards Board and bulletins, opinions, interpretations and statements issued
by the American Institute of Certified Public Accountants or its committees.
(c) All personal pronouns used in this Agreement, whether used in
the masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the singular. In
any circumstance where use of the term "Borrower" as opposed to the term
"Borrowers," or vice versa, would limit, diminish or otherwise impair or
negatively affect any of Lender's rights hereunder, the plural shall be
substituted for the singular, or vice versa, in such manner as will result in
the maintenance or enlargement of Lender's rights hereunder or pursuant hereto.
By way of example, but not in
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limitation, if a reference to "Borrowers' property" would otherwise be
construed as referring only to property which is jointly owned by both
Borrowers, such reference shall instead be construed as referring to the
aggregate total of all of each Borrower's property.
(d) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provisions of this Agreement.
(e) Titles of Articles and Sections in this Agreement are for
convenience only, do not constitute part of this Agreement and neither limit nor
amplify the provisions of this Agreement, and all references in this Agreement
to Articles, Sections, Subsections, paragraphs, clauses, subclauses, Schedules
or Exhibits shall refer to the corresponding Article, Section, Subsection,
paragraph, clause or subclause of, or Schedule or Exhibit attached to, this
Agreement, unless specific reference is made to the articles, sections or other
subdivisions or divisions of, or to schedules or exhibits to, another document
or instrument.
(f) Each definition of a document in this Agreement shall include
such document as amended, modified, supplemented or restated from time to time
in accordance with the terms of this Agreement.
(g) Except where specifically restricted, reference to a party to
a Loan Document includes that party and its successors and assigns permitted
hereunder or under such Loan Document.
(h) Unless otherwise specifically stated, whenever a time is
referred to in this Agreement or in any other Loan Document, such time shall be
the local time in the city in which the principal office of Lender is located.
(i) Whenever the phrase "to the knowledge of the Borrower" or
words of similar import relating to the knowledge of either Borrower are used
herein, such phrase shall mean and refer to (i) the actual knowledge of the
Chairman, President or chief financial officer of a Borrower or (ii) the
knowledge that such officers would have obtained if they had engaged in good
faith in the diligent performance of their duties, including the making of such
reasonable specific inquiries as may be necessary of the appropriate persons in
a good faith attempt to ascertain the accuracy of the matter to which such
phrase relates.
(j) The terms accounts, chattel paper, documents, equipment,
instruments, general intangibles and inventory, as and when used (without being
capitalized) in this Agreement or the Security Documents, shall have the
meanings given those terms in the UCC.
(k) All references herein to specific times of day shall refer to
Eastern Standard Time, whether during daylight savings time or otherwise.
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Section 1.03 Exhibits and Schedules. All Exhibits and Schedules attached
hereto are by reference made a part hereof.
ARTICLE 2 - REVOLVING CREDIT FACILITY
A. REVOLVING CREDIT FACILITY
----------------------------
Section 2A.1 Revolving Credit Loans. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, the Lender shall make Revolving Credit Loans to the
Borrowers from time to time from the Effective Date to the Termination Date, as
requested by the Borrowers in accordance with the terms of Section 2A.2, in an
aggregate principal amount outstanding not to exceed at any time the lesser of
(a) the Revolving Credit Facility and (b) the Borrowing Base, minus, in each
case, the outstanding principal amount of all outstanding Revolving Credit
Loans. It is expressly understood and agreed that the Lender may and at present
intends to use the lesser of the amounts referred to in the foregoing subclauses
(a) and (b) as a maximum ceiling on Revolving Credit Loans; provided, however,
that it is agreed that should Revolving Credit Loans exceed the ceiling so
determined or any other limitation set forth in this Agreement, such Revolving
Credit Loans shall nevertheless constitute Secured Obligations and, as such,
shall be entitled to all benefits thereof and security therefor. The principal
amount of any Revolving Credit Loan which is repaid may be reborrowed by the
Borrowers in accordance with the terms of this Article 2A. The Lender is hereby
authorized to record each repayment of principal of the Revolving Credit Loans
in its books and records, such books and records constituting prima facie
evidence of the accuracy of the information contained therein.
Section 2A.2 Manner of Borrowing Revolving Credit Loans. Borrowings of the
Revolving Credit Loans shall be made as follows:
(a) Requests for Borrowing. A request for a borrowing shall be made, or
shall be deemed to be made, in the following manner:
(i) with respect to the Revolving Credit Loan to be made
to the Borrowers on the Effective Date, the Borrowers shall give the
Lender at least two Business Days' prior written notice of the
Effective Date, which notice shall be irrevocable, and, as to
subsequent Revolving Credit Loans, the Borrowers may give the Lender
notice, before 1:00 p.m. on the proposed borrowing date (unless the
proposed borrowing date is the last Business Day of the month, in which
case notice shall be given before 12:00 noon) of its intention to
borrow specifying the amount of the proposed borrowing and the proposed
borrowing date; provided, however, that if any notice referred to in
this clause (a)(i) is received after 1:00 p.m. or 12:00 noon, as
applicable, the proposed borrowing will be postponed automatically to
the next Business Day;
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(ii) whenever a check is presented to the Lender for
payment against the Disbursement Account in an amount greater than the
then available balance in such account, such presentation shall be
deemed to be a request for a borrowing on the date of such notice in an
amount equal to the excess of such check over such available balance;
and
(iii) unless payment is otherwise made by the Borrowers,
the maturity of any Secured Obligation required to be paid shall be
deemed to be a request for a borrowing on the due date in the amount
required to pay such Secured Obligation.
(b) Disbursement of Loans. The Borrowers hereby irrevocably
authorize the Lender to disburse the proceeds of each borrowing requested, or
deemed to be requested, pursuant to this Section 2A.2 as follows: (i) the
proceeds of each borrowing requested under Section 2A.2(a)(i) or (ii) shall be
disbursed by the Lender in lawful money of the United States of America in
immediately available funds, (A) in the case of the initial borrowing, in
accordance with the terms of the letter from the Borrowers to the Lender
referred to in Section 4.01(a)(12), and (B) in the case of each subsequent
borrowing, by credit to the Disbursement Account or to such other account as may
be agreed upon by the Borrowers and the Lender from time to time; and (ii) the
proceeds of each borrowing requested under Section 2A.2(a)(iii) shall be
disbursed by the Lender by way of direct payment of the relevant principal,
interest or other Secured Obligation, as the case may be.
Section 2A.3 Repayment of Revolving Credit Loans. The Revolving Credit
Loans will be repaid as follows: (a) whether or not any Default or Event of
Default has occurred, the outstanding principal amount of all the Revolving
Credit Loans is due and payable, and shall be repaid by the Borrowers in full
together with accrued and unpaid interest on the amount repaid to the date of
repayment, on the Termination Date; (b) if at any time the aggregate unpaid
principal amount of the Revolving Credit Loans then outstanding exceeds the
lesser of the amounts referred to in clauses (a) and (b) of Section 2.A1, the
Borrowers shall repay the Revolving Credit Loans in an amount sufficient to
reduce the aggregate unpaid principal amount of such Loans by an amount equal to
such excess, together with accrued and unpaid interest on the amount repaid to
the date of repayment; and (c) the Borrowers hereby instruct the Lender to repay
the Revolving Credit Loans outstanding on any day in an amount equal to the
amount received by the Lender on such day pursuant to the cash management system
maintained by Borrower pursuant to Section 7.01.
Section 2A.4 Revolving Credit Note. The Lender's Revolving Credit Loans
and the obligation of the Borrowers to repay such Loans shall also be evidenced
by a single Revolving Credit Note payable to the order of the Lender. Such Note
shall be dated the Effective Date and be duly and validly executed and delivered
by the Borrowers.
Section 2A.5 Extension of Facility. The Termination Date shall be
automatically extended for successive one-year periods (up to a maximum
cumulative term of up to twenty
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(20) years) unless either the Lender or the Borrowers provides to the other
written notice of termination not less than 60 days prior to the then effective
Termination Date.
B. TERM LOAN FACILITY
---------------------
Section 2B.1 Term Loan. Upon the terms and subject to the conditions
of, and in reliance upon the representations and warranties made under, this
Agreement, the Lender agrees to make the Term Loan to the Borrowers on the
Effective Date in the amount of $5,000,000.
Section 2B.2 Manner of Borrower and Disbursing Term Loan. Provided that
the Borrowers have given the Lender at least two (2) Business Days' prior
written notice of the occurrence of the Effective Date, upon satisfaction of the
applicable conditions set forth in Article 4, the Lender shall make the amount
of the Term Loan available to the Borrowers on the Effective Date in same day
funds in accordance with the instructions set forth in the letter from the
Borrowers to the Lender referred to in Section 4.01(a)(12).
Section 2B.3 Repayment of Term Loan; Required Prepayments. In addition
to the mandatory reduction of the Term Note required pursuant to Section
11.01(t), the outstanding principal balance of the Term Loan is due and payable
in (i) eight (8) consecutive quarterly installments in an amount equal to
$300,000 each, commencing on the last day of the first (1st) fiscal quarter of
1998 and continuing on the last day of each and every fiscal quarter thereafter
through and including the last fiscal quarter in 1999, and (ii) four (4)
consecutive quarterly installments in an amount equal to $420,000 each,
commencing on the last day of the first (1st) fiscal quarter of 2000 through and
including the last fiscal quarter of 2000 and (iii) one (1) final installment in
an amount equal to $420,000 on the earlier to occur of (A) the Termination Date
or (B) the last day of the first (1st) fiscal quarter of 2001. Any portion of
the Term Loan repaid may not be reborrowed.
Section 2B.4 Term Note. The Term Loan and the joint and several
obligation of the Borrowers to repay such Loan shall be evidenced by a single
Term Note payable to the order of the Lender. Such Note shall be dated the
Effective Date and be duly and validly executed and delivered by the Borrowers.
ARTICLE 3 - GENERAL LOAN PROVISIONS
Section Interest. (a) The Borrowers shall pay interest on the unpaid
principal amount of each Loan for each day from the day such Loan is made until
the date on which such Loan is due (whether at maturity, by reason of
acceleration or otherwise) (i) at a rate per annum equal, (w) in the case of
Prime Rate Advances made prior to December 30, 1998, to the sum of the Prime
Rate plus the Applicable Spread, (x) in the case of Prime Rate Advances made on
or after December 31, 1998, to the sum of the Prime Rate plus the Applicable
Margin, (y) in the case of LIBOR Advances made prior to December 30, 1998, to
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the sum of LIBOR plus the Applicable Spread, and (z) in the case of LIBOR
Advances made on or after December 31, 1998, to
the sum of LIBOR plus the Applicable Margin, and (ii) at a rate per annum
equal, in the case of the Term Loan, (as identified pursuant to Section 3.02(b))
either (y) to a fixed rate equal to 11.5% per annum, or (z) to the Prime Rate
plus 2.5% per annum.
(b) The Borrowers shall pay interest on the unpaid principal
amount of each Secured Obligation other than a Loan for each day from the day
such Secured Obligation becomes due and payable until such Secured Obligation is
paid at the rate per annum applicable to Revolving Credit Loans and the Term
Loan, payable monthly in arrears on the first (1st) day of each month following
the Effective Date.
(c) From and after the occurrence of an Event of Default, the
unpaid principal amount of each Secured Obligation shall bear interest until
paid in full (or, if earlier, until such Event of Default is cured, or waived in
writing by the Lender) at a rate per annum equal to the Default Margin plus the
rate otherwise in effect under Section 3.01(a) or (b), payable on demand. The
interest rate provided for in this Section 3.01(c) shall to the extent permitted
by applicable law apply to and accrue on the amount of any judgment entered with
respect to any Secured Obligation and shall continue to accrue at such rate
during any proceeding described in Section 11.01(g) or (h).
(d) The interest rates provided for in Sections 3.01(a), (b) and
(c) shall be computed on the basis of a year of 360 days and the actual number
of days elapsed.
(e) It is not intended by the Lender, and nothing contained in
this Agreement or any Note shall be deemed, to establish or require the payment
of a rate of interest in excess of the maximum rate permitted by applicable law
(the "Maximum Rate"). If, in any month, the Effective Interest Rate, absent such
limitation, would have exceeded the Maximum Rate, then the Effective Interest
Rate for that month shall be the Maximum Rate, and if, in future months, the
Effective Interest Rate would otherwise be less than the Maximum Rate, then the
Effective Interest Rate shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amount of interest which would have
been paid if the same had not been limited by the Maximum Rate. In this
connection, in the event that, upon payment in full of the Secured Obligations,
the total amount of interest paid or accrued under the terms of this Agreement
is less than the total amount of interest which would have been paid or accrued
if the Effective Interest Rate had at all times been in effect, then the
Borrowers shall, to the extent permitted by applicable law, pay to the Lender an
amount equal to the difference between (i) the lesser of (A) the amount of
interest which would have been charged if the Maximum Rate had, at all times,
been in effect and (B) the amount of interest which would have accrued had the
Effective Interest Rate, at all times, been in effect, and (ii) the amount of
interest actually paid or accrued under this Agreement. In the event the Lender
receives, collects or applies as interest any sum in excess of the Maximum Rate,
such excess amount shall be applied to the reduction of the principal balance of
the applicable Secured
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Obligation, and, if no such principal is then outstanding, such excess or
part thereof remaining shall be paid to the Borrowers.
Section 3.02 Choice of Interest Rate; LIBOR Provisions.
(a) Revolving Credit Loans.
(i) Choice of Interest Rate. Each Advance shall, at the
option of the Borrowers, be made as a Prime Rate Advance or a LIBOR
Advance. Any notice given to the Lenders in connection with a requested
Advance hereunder shall be given prior to 12:00 noon in order for such
Business Day to count toward the minimum number of Business Days
required. If the Borrowers fail to give the Lender timely notice of
their selection of a LIBOR Advance, or if for any reason a
determination of LIBOR for any advance is not timely concluded, the
Prime Rate shall apply to such Advance.
(ii) Prime Rate Advances.
(A) Initial Advances. The Borrowers shall give the
Lender, in the case of Prime Rate Advances, irrevocable written notice
(or telephonic notice from an officer of ILD confirmed immediately in
writing) of their election of a Prime Rate Advance; provided, however,
that the failure by the Borrowers to confirm any telephonic notice with
a written notice shall not invalidate any telephonic notice so given.
Lender shall not incur any liability to Borrowers in acting upon any
telephonic notice referred to above that Lender believes in good faith
to have been given by a duly authorized officer or other person
authorized to act on behalf of Borrowers.
(B) Repayments and Reborrowings. The Borrowers may repay
a Prime Rate Advance at any time and (a) reborrow all or a portion of
the principal amount thereof as one or more Prime Rate Advances or
LIBOR Advances, or (b) not reborrow all or any portion of such Prime
Rate Advance.
(C) Prepayment. The principal amount of any Prime Rate
Advance may be repaid in full or in part at any time without penalty.
(iii) LIBOR Advances.
(A) Initial Advances. The Borrowers shall give the
Lender, in the case of LIBOR Advances, at least two (2) Business Days
irrevocable written notice (or telephonic notice from an officer of ILD
confirmed immediately in writing) of their election of a LIBOR Advance;
provided, however, that the failure by the Borrowers to confirm any
telephonic notice with a written notice shall not invalidate any
telephonic notice so given. The Lender, whose determination shall be
conclusive, shall determine the available LIBOR and shall notify the
Borrowers of such LIBOR.
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Lender shall not incur any liability to Borrowers in acting upon
any telephonic notice referred to above that Lender believes in good
faith to have been given by a duly authorized officer or other person
authorized to act on behalf of Borrowers.
(B) Repayment and Reborrowings. At least two(2)Business Days
prior to the end of the Interest Period for a LIBOR Advance, the
Borrowers shall give the Lender written notice (or telephonic notice
from a Borrower Representative confirmed immediately in writing)
specifying whether all or a portion of any LIBOR Advance outstanding
on such maturity date (a) is to be repaid and then reborrowed in whole
or in part as a Prime Rate Advance, or (c) is to be repaid and not
reborrowed; provided, however, that the failure by the Borrowers to
confirm any telephonic notice with a written notice shall not
invalidate any telephonic notice so given. The Borrowers' failure to
give a proper notice shall be deemed a request to reborrow the entire
maturing amount as a Prime Rate Advance. Upon the end of such Interest
Period such LIBOR Advance will, subject to the provisions hereof, be
so repaid and, as applicable, reborrowed.
(C) Limitation on LIBOR Advances. Each LIBOR Advance shall be in
an amount of $500,000 or an integral multiple thereof. Notwithstanding
anything to the contrary contained herein, the Borrowers shall not
request, and the Lender shall not make, additional LIBOR Advances so
long as there remains outstanding more than two (2) prior LIBOR
Advances under this Agreement. It is the express intent of the parties
hereto that no more than three (3) LIBOR Advances may be outstanding
under this Agreement at any one time.
(D) Prepayment. LIBOR Advances may be prepaid prior to the
applicable maturity date upon four (4) Business Days prior written
notice to the Lender, provided that the Borrowers shall reimburse the
Lender, on the earlier of demand or the Termination Date, for any loss
or out-of-pocket expenses incurred by the Lender in connection with
such prepayment. Any notice of prepayment of a LIBOR Advance shall be
irrevocable.
(b) Term Loan. The Borrowers shall give the Lender at least two
(2) Business Days' prior to the Effective Date, irrevocable written notice (or
telephonic notice from a Borrower Representative confirmed immediately in
writing) of the applicable interest rate for the Term Loan.
(c) Prepayment of Term Loan. Immediately upon receipt by either
Borrower or any Subsidiary of the Net Proceeds of any Permitted Asset
Disposition, such Borrower or Subsidiary shall pay such the first $500,000 of
the Net Proceeds to Lender.
(d) LIBOR
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(i) Determined Inadequate or Unfair. Notwithstanding
anything contained herein to the contrary, if with respect to any
proposed LIBOR Advance for any Interest Period the Lender determines
that deposits in Dollars (in the applicable amount) are not being
offered to the Lender in the relevant market for such Interest Period
on a basis sufficient to permit a fair establishment of LIBOR, the
Lender shall forthwith give notice to the Borrowers, whereupon until
the Lender notifies the Borrowers that the circumstances giving rise to
such situation no longer exist, and the obligation of the Lender to
make LIBOR Advances shall be suspended.
(ii) Illegality. If any Applicable Law, or any change
therein, or any interpretation or change in interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by the Lender with any request or directive
(whether or not having the force of law) of any such authority, central
bank or comparable agency, shall make it unlawful or impossible for the
Lender to make, maintain or fund the LIBOR Advances, the Lender shall
so notify the Borrowers. Upon receipt of such notice, notwithstanding
anything contained in Section 3.01 hereof, Borrowers shall repay in
full the then outstanding principal amount of each affected LIBOR
Advance, together with accrued interest thereon, either (y) on the last
day of the then current Interest Period applicable to such LIBOR
Advance if the Lender may lawfully continue to maintain and fund such
LIBOR Advance to such day, or (z) immediately if the Lender may not
lawfully continue to fund and maintain such LIBOR Advance, whereupon
the Borrowers shall borrow a Prime Rate Advance from the Lender, and
the Lender shall make such Advance, in the amount of the LIBOR Advances
to be repaid.
(e) Early Termination of the Revolving Credit Facility. Borrowers
may terminate the Revolving Credit Facility and prepay the Term Loan at any time
prior to the Termination Date or any renewal thereof; provided, however, (i) if
the Borrowers choose to terminate the Revolving Credit Facility, Borrowers must
pay in full all amounts due and owing pursuant to the Term Loan, and (ii) any
due and owing Prepayment Premium.
Section 3.03 Fees.
(a) Closing Fee. On the Effective Date, the Borrowers shall pay to
the Lender a closing fee in the amount of ________ in connection with the
establishment of the Revolving Credit Facility, the making of the Term Loan and
in consideration of the making of Loans under this Agreement and in order to
compensate the Lender for the costs associated with structuring, processing,
approving and closing the Revolving Credit Facility and the Loans, but excluding
expenses for which the Borrowers have agreed elsewhere in this Agreement to
reimburse the Lender.
(b) Administrative Fee. On the Effective Date and on each
anniversary thereof for so long as the Loans are outstanding, the Borrowers
shall pay to Lender an annual servicing
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fee of $25,000 in consideration of the Lender's administration of the
Revolving Credit Facility and the Term Loan.
(c) Unused Line Fee. As additional compensation for the costs and
risks in making the Loans available to Borrowers, the Borrowers agree, jointly
and severally, to pay to Lender, in arrears, on the first (1st) Business Day of
each month with respect to the immediately prior month, prior to the Termination
Date and on the Termination Date, a fee for Borrowers' non-use of available
funds in an amount equal to one-quarter of one percent (0.25%) per annum of the
difference between (i) $20,000,000 and (ii) the average daily outstanding
balances of the Revolving Credit Loans during the period for which the unused
line fee is due.
(d) General. All fees shall be fully earned by the Lender when due
and payable and, except as otherwise set forth herein, shall not be subject to
refund or rebate. All fees are for compensation for services and are not, and
shall not be deemed to be, interest or a charge for the use of money.
Section 3.04 Manner of Payment. (a) Each payment (including prepayments) by
the Borrowers on account of the principal of or interest on the Loans or of any
fee or other amounts payable to the Lender under this Agreement or any Note
shall be made not later than 1:30 p.m. on the date specified for payment under
this Agreement (or if such day is not a Business Day, the next succeeding
Business Day) to the Lender at the Lender's Office, in Dollars, in immediately
available funds and shall be made without any setoff, counterclaim or deduction
whatsoever.
(b) Each of the Borrowers hereby irrevocably authorizes the Lender
and each Affiliate of the Lender to charge any account of such Borrower
maintained with the Lender or such Affiliate with such amounts as may be
necessary from time to time to pay any Secured Obligations which are not paid
when due.
Section 3.05 Statements of Account. The Lender will account to the
Borrowers within 30 days after the end of each calendar month with a statement
of Loans, charges and payments made pursuant to this Agreement during such
calendar month, and such account rendered by the Lender shall be deemed an
account stated as between the Borrowers and the Lender and shall be deemed
final, binding and conclusive unless the Lender is notified by the Borrowers in
writing to the contrary within 90 days after the date such account is delivered
to the Borrowers, save for manifest error. Any such notice shall be deemed an
objection only to those items specifically objected to therein. Failure of the
Lender to render such account shall in no way affect its rights hereunder.
Section 3.06 Termination of Agreement. On the Termination Date the
Borrowers shall pay to the Lender, in same day funds, an amount equal to the
aggregate amount of all Loans outstanding on such date, together with accrued
interest thereon, the Prepayment Premium, if any, all fees payable pursuant to
Section 3.03 accrued from the date last paid
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through the effective date of termination, any amounts payable to the
Lender pursuant to the other provisions of this Agreement, including, without
limitation, Sections 11.02, 12.12 and 12.13, any and all other Secured
Obligations then outstanding, and provide the Lender with an indemnification
agreement in form and substance reasonably satisfactory to the Lender with
respect to returned and dishonored items and such other matters as the Lender
shall require, and Lender shall promptly deliver to the Borrowers the Notes
marked "canceled" and shall prepare for filing and execute appropriate Lien
releases.
Section 3.07 Increased Costs and Reduced Returns. The Borrowers agree that
if any law now or hereafter in effect and whether or not presently applicable to
Lender or any request, guideline or directive of any Governmental Authority
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) or the interpretation or administration thereof by
any Governmental Authority, shall either (a)(i) impose, affect, modify or deem
applicable any reserve, special deposit, capital maintenance or similar
requirement against any Loan, (ii) impose on the Lender any other condition
regarding any Loan, this Agreement, the Notes or the facilities provided
hereunder, or (iii) result in any requirement regarding capital adequacy
(including any risk-based capital guidelines) affecting Lender being imposed or
modified or deemed applicable to Lender or (b) subject Lender to any taxes on
the recording, registration, notarization or other formalization of the Loans or
the Notes, and the result of any event referred to in clause (a) or (b) above
shall be to increase the cost to the Lender of making, funding or maintaining
any Loan or to reduce the amount of any sum receivable by Lender or Lender's
rate of return on capital with respect to any Loan to a level below that which
the Lender could have achieved but for such imposition, modification or deemed
applicability (taking into consideration Lender's policies with respect to
capital adequacy) by an amount deemed by Lender (in the exercise of its
discretion) to be material, then, upon demand by the Lender, Borrowers shall
immediately pay to the Lender additional amounts which shall be sufficient to
compensate the Lender for such increased cost, tax or reduced rate of return. A
certificate of the Lender to the Borrowers claiming compensation under this
Section 3.07 shall be final, conclusive and binding on all parties for all
purposes in the absence of manifest error. Such certificate shall set forth the
nature of the occurrence giving rise to such compensation, the additional amount
or amounts to be paid to it hereunder and the method by which such amounts were
determined. In determining such amount, the Lender may use any reasonable
averaging and attribution methods. In the event such compensation is required to
be paid by Borrowers pursuant to this Section 3.07, Lender shall give the
Borrowers thirty (30) days notice thereof and Lender shall at all times act in a
commercially reasonable manner.
Section 3.08 Joint and Several Liability. Each of the Borrowers shall be
jointly and severally liable with the other Borrower for the Secured Obligations
and each of the Secured Obligations shall be secured by all of the Collateral.
Each Borrower acknowledges that it is a co- borrower hereunder and is jointly
and severally liable under this Agreement. All loan advances made hereunder
through a Borrower or requested by a Borrower shall be deemed to be a borrowing
by each of the Borrowers, and each Borrower hereby authorizes the other Borrower
to effectuate borrowings on such Borrower's behalf hereunder. Notwithstanding
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anything to the contrary contained in this Agreement, the Lender shall be
entitled to rely upon any telephonic request for borrowings received by it from
either Borrower on behalf of both Borrowers, shall be entitled to rely upon any
other request, notice or other communication received by it from either Borrower
on behalf of both Borrowers, and shall be entitled to treat its giving of any
notice hereunder pursuant to Section 12.01 hereof as notice to each and all
Borrowers.
Section 3.09 Obligations Absolute. Each Borrower agrees that the Secured
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Lender with
respect thereto. All Secured Obligations shall be conclusively presumed to have
been created in reliance hereon. The liabilities of each Borrower under this
Agreement shall be absolute and unconditional irrespective of:
(a) any change in the time, manner or place of payment of, or in any other
term of, all or any part of the Secured Obligations, or any other amendment or
waiver thereof or any consent to departure therefrom, including, but not limited
to, any increase in the Secured Obligations resulting from the extension of
additional credit to either Borrower or otherwise;
(b) any taking, exchange, release or non-perfection of any Collateral or
any other collateral securing the Secured Obligations, or any release, amendment
or waiver of, or consent to or departure from, any guaranty for all or any of
the Secured Obligations;
(c) any change, restructuring or termination of the corporate structure or
existence of either Borrower; or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, either Borrower or any Obligor, other than
payment or satisfaction of the Secured Obligations or the gross negligence or
willful misconduct of the Lender.
Section 3.10 Waiver of Suretyship Defenses. Each Borrower agrees that the
joint and several liability of the Borrowers provided for in Section 3.08 shall
not be impaired or affected by any modification, supplement, extension or
amendment or any contract or Agreement to which the other Borrower may hereafter
agree (other than an Agreement signed by the Lender specifically releasing such
liability), nor by any delay, extension of time, renewal, compromise or the
indulgence granted by the Lender with respect to any of the Secured Obligations,
nor by any other agreements or arrangements whatever with the other Borrower or
with anyone else, and each Borrower hereby waives all notice of such delay,
extension, release, substitution, renewal, compromise or other indulgence,
hereby consenting to be bound thereby as fully and effectually as if it had
expressly agreed thereto in advance. The liability of each Borrower is direct
and unconditional as to all of the Secured Obligations, and may be enforced
without requiring the Lender first to resort to any other right, remedy or
security. Each Borrower hereby expressly waives promptness, diligence, notice of
acceptance
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and any other notice with respect to any of the Secured Obligations,
the Revolving Credit Note, the Term Note, this Agreement, or any other Loan
Document, and any requirement that the Lender protect, secure, xxxxxxxx, perfect
or insure any lien or any property subject thereto (except to the extent
required by Applicable Law) or exhaust any right or take any action against
either Borrower or any other Person or any collateral, including any rights
either Borrower may otherwise have under O.C.G.A. ss. 10-7-24.
ARTICLE 4 - CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Initial Loan. Notwithstanding any
other provision of this Agreement, the Lender's obligation to make the Initial
Loan is subject to the fulfillment of each of the following conditions prior to
or contemporaneously with the making of such Loan:
(a) Closing Documents. The Lender shall have received each of the following
documents, all of which shall be satisfactory in form and substance to the
Lender and its counsel:
(1) this Agreement, duly executed and delivered by the Borrowers;
(2) the Notes, dated the Effective Date and duly executed and
delivered by the Borrowers;
(3) certified copies of the articles of incorporation and by-laws
of each Borrower as in effect on the Effective Date;
(4) certified copies of all corporate action, including
stockholder approval, if necessary, taken by each Borrower to
authorize the execution, delivery and performance of this Agreement
and the other Loan Documents and the borrowings under this Agreement;
(5) certificates of incumbency and specimen signatures with
respect to each of the officers of each Borrower who is authorized to
execute and deliver this Agreement or any other Loan Document on
behalf of such Borrower or any document, certificate or instrument to
be delivered in connection with this Agreement or the other Loan
Documents and to request borrowings under this Agreement;
(6) a certificate evidencing the good standing of each Borrower
in the jurisdiction of its incorporation and in each other
jurisdiction in which it is qualified as a foreign corporation to
transact business;
(7) the Financing Statements duly executed and delivered by the
respective Borrowers, and evidence satisfactory to the Lender that the
Financing Statements have
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been filed in each jurisdiction where such filing may be
necessary or appropriate to perfect the Security Interest prior to any
other interest other than Permitted Liens;
(8) all landlord's waiver and consent agreements duly executed on
behalf of each landlord of real property (other than that in Las
Vegas, Nevada) on which any Collateral is located that can be obtained
by Borrowers through the exercise of their reasonable best efforts and
sublandlord's waiver and consent agreements duly executed on behalf of
WorldCom for each sublease between a Borrower and WorldCom;
(9) Schedule of Receivables from and for each of the Borrowers
each prepared as of a recent date not earlier than June 30, 1997;
(10) certificates or binders of insurance relating to each of the
policies of insurance covering any of the Collateral together with
loss payable clauses which comply with the terms of Section 7.09(b);
(11) a Borrowing Base Certificate prepared as of the Effective
Date duly executed and delivered by the Chairman or President of ILD;
(12) a letter from ILD, on behalf of the Borrowers, to the Lender
requesting the Initial Loan and specifying the method of disbursement;
(13) copies of all the financial statements referred to in
Section 5.01(m) and meeting the requirements thereof;
(14) a balance sheet of the Borrowers, on a consolidated and
consolidating basis, as at June 30, 1997, prepared by the Borrowers on
a pro forma basis, giving effect to the transactions contemplated by
this Agreement and setting forth the assumptions on which such balance
sheet was prepared; forecasted consolidated financial statements
consisting of balance sheets, cash flow statements and income
statements of the Borrowers, giving effect to the transactions
contemplated by this Agreement and reflecting projected borrowings
hereunder and setting forth the assumptions on which such forecasted
financial statements were prepared, covering the three-year period
commencing on January 1, 1998, and prepared on a quarterly basis for
the first 12 months and on an annual basis for each year thereafter;
and such other evidence as the Lender shall require supporting the
representation and warranty of the Borrowers set forth in Section
5.01(r);
(15) a certificate of the President of each Borrower stating
that, to the best of his knowledge and based on an examination
sufficient to enable him to make an informed statement, (a) all of the
representations and warranties made or deemed to be made under this
Agreement are true and correct as of the Effective Date, both with and
without giving effect to the Loans to be made at such time and the
application of the proceeds thereof, and (b) no Default or Event of
Default exists;
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(16) an executed Sirrom Subordination Agreement, in form and
substance satisfactory to Lender, in its sole discretion, pursuant to
which Sirrom Capital Corporation and Xxxxx River Ventures Limited
Partnership subordinate the Sirrom Subordinated Indebtedness to the
Secured Obligations;
(17) the balance sheet delivered to Lender pursuant to Section
4.01(a)(14) shall reflect (i) not less than $2,100,000 of
shareholders' equity ($500,000 of which shall be contributed by
WorldCom), and (ii) not less than $2,000,000 in cash, held by ILD;
(18) a signed opinion of Xxxxxx, Xxxxxx & Xxxxxxx, counsel for
the Borrowers, and such local counsel as the Lender shall deem
necessary or desirable, opining as to such matters in connection with
this Agreement as the Lender or its counsel may reasonably request;
(19) within twenty (20) days after the Effective Date, an
executed original of a Letter Agreement from First Union National Bank
of North Carolina, in form and substance satisfactory to Lender,
wherein First Union agrees to discontinue sweeping of the account into
which all LEC Payments are received on behalf of WorldCom and agrees
that beginning October 1, 1997 all monies received into such account
shall be swept into an account with Lender;
(20) evidence satisfactory to Lender that a notice has been sent
to each LEC instructing each LEC that, beginning no later than
November 1, 1997, all LEC Payments will be directed to that Borrowers'
account with Lender;
(21) executed subordination agreements, in form and substance
satisfactory to Lender in its sole discretion, pursuant to which each
of Intellicall, Inc., Triad-ILD Partners, L.P. and Xxxxxx
Telecommunications, LLC subordinate any and all Indebtedness owed by
ILD to each of them to the Secured Obligations;
(22) no later than thirty (30) days after the Effective Date,
forecasted financial statements for the fiscal year 2000, prepared by
the Borrowers, consisting of balance sheets, cash flow statements and
income statements of the Borrowers, reflecting projected borrowings
hereunder and setting forth the assumptions upon which such forecasted
financial statements were prepared;
(23) no later than thirty (30) days after the Effective Date, a
landlord's waiver for the leased premises located in Las Vegas,
Nevada;
(24) no later than thirty (30) days following the Effective Date,
ILD shall have entered into a customer service agreement, in form and
substance satisfactory to Lender, with WorldCom; and
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(25) copies of each of the other Loan Documents duly executed by
the parties thereto with evidence satisfactory to the Lender and its
counsel of the due authorization, binding effect and enforceability of
each such Loan Document on each such party and such other documents
and instruments as the Lender may reasonably request.
(b) WorldCom Acquisition Documents, Contribution Documents, Sirrom
Subordination Documents. On the Effective Date: (1) Lender shall have received
executed or conformed copies of the WorldCom Acquisition Documents, the
Contribution Documents and Subordination Documents; (2) each of the WorldCom
Acquisition Documents, the Contribution Documents and the Subordination
Documents shall be in full force and effect and no material representation,
warranty, covenant or condition thereof shall have been amended, modified or
waived after the execution thereof except with the prior written consent of
Lender which consent shall not be unreasonably withheld, conditioned or delayed;
(3) none of the parties to the WorldCom Acquisition Documents, the Contribution
Documents or the Subordination Documents shall have failed to perform any
material obligation or covenant required by the WorldCom Acquisition Documents,
the Contribution Documents or the Subordination Documents to be performed or
complied with by it on or before the Effective Date; (4) all representation and
warranties of all parties to the WorldCom Acquisition Documents and the
Contribution Documents shall be true and correct in all material respects,
except to the extent such representations and warranties relate specifically to
another date; (5) Lender shall receive assignments of the WorldCom Acquisition
Documents in favor of Lender, as Lender shall request in its sole discretion;
and (6) Lender shall have received a certificate from the President of ILD
certifying to the compliance with the conditions set forth in clauses (1), (2)
and (3) above and, with respect to clause (4), certifying that, to the best
knowledge of Borrowers, such condition has been satisfied. In addition, all
legal opinions delivered in connection with the WorldCom Acquisition Documents
and the Contribution Documents shall be addressed to Lender or accompanied by a
written authorization from the Person delivering such legal opinion stating that
Lender may rely on such opinions as though it were addressed to Lender.
(c) Availability. The Lender shall be provided with evidence satisfactory
to it that, as of the Effective Date, after giving effect to the Initial Loan,
Availability will be not less than $1,000,000.
(d) Fees. Borrowers shall have paid the fees payable on the Closing Date
referred to in Section 3.03.
(e) No Injunctions, Etc. No action, proceeding, investigation, regulation
or legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or prohibit
or to obtain substantial damages in respect of or which is related to or arises
out of this Agreement or the consummation of the
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transactions contemplated hereby or which, in the Lender's sole discretion,
would make it inadvisable to consummate the transactions contemplated by this
Agreement.
(f) Material Adverse Change. As of the Effective Date, there shall not have
occurred any change which, in the Lender's sole discretion, has had or may have
a Materially Adverse Effect as compared to the condition of the Borrowers
presented by the most recent unaudited financial statements of the Borrowers
described in Section 5.01(m).
(g) Solvency. The Lender shall have received evidence satisfactory to it
that, after giving effect to consummation of the transaction contemplated by the
WorldCom Acquisition Documents and the Initial Loan (i) each Borrower has assets
(excluding goodwill and other intangible assets not capable of valuation) having
value, both at fair value and at present fair saleable value, greater than the
amount of liabilities, and (ii) each Borrower's assets are sufficient in value
to provide such Borrower with sufficient aggregate working capital to enable it
to profitably operate its business and to meet its obligations as they become
due, and (iii) each Borrower has capital to conduct the business in which it is
and proposes to be engaged.
(h) Release of Security Interests. The Lender shall have received evidence
satisfactory to it of the release and termination of all Liens other than
Permitted Liens.
(i) Certain Agreements. Lender shall have received (i) an agreement, in
form and substance acceptable to Lender, executed by WorldCom irrevocably
agreeing for the period any Secured Obligation remains outstanding that the
Borrowers may affect any offsets, deductions, charges or other allowances with
respect to (A) any Receivable due and owing from either Borrower to WorldCom and
(B) any sums held by either Borrower for or on behalf of WorldCom, (ii) the
Billing and Collection Agreement, in form and substance acceptable to Lender,
between ILD and WorldCom, as referenced in the WorldCom Agreement, (iii) an
agreement, in form and substance acceptable to Lender, executed by WorldCom,
wherein WorldCom agrees in the event that the assignment of one or more of the
LEC billing and collection agreements from WorldCom to ILD is not accepted by
the applicable LEC that WorldCom will continue to provide such services to
Borrowers in a manner which provides Borrowers with substantially the same
economic benefit as if such assignment had been accepted by the applicable LEC
and wherein WorldCom grants to ILD a first priority security interest in all
Receivables processed pursuant to such agreements, and (iv) a letter, in form
and substance satisfactory to Lender, from WorldCom to each LEC, wherein
WorldCom informs each LEC that the redirection of funds from WorldCom's account
with First Union National Bank of North Carolina to the Borrowers' account with
Lender is irrevocable.
Section 4.02 All Loans. At the time of making of each Loan, including the
Initial Loan:
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(a) all of the representations and warranties made or deemed to be made
under this Agreement shall be true and correct at such time both with and
without giving effect to the Loans to be made at such time and the application
of the proceeds thereof, except that representations and warranties which, by
their terms, are applicable only to the Effective Date shall be required to be
true and correct only as of the Effective Date,
(b) the corporate actions of the Borrowers referred to in Section
4.01(a)(4) shall remain in full force and effect and the incumbency of officers
shall be as stated in the certificates of incumbency delivered pursuant to
Section 4.01(a)(5) or as subsequently modified and reflected in a certificate of
incumbency delivered to the Lender, and
(c) the Lender may, without waiving either condition, consider the
conditions specified in Sections 4.02(a) and (b) fulfilled and a representation
by the Borrowers to such effect made if no written notice to the contrary is
received by the Lender from the Borrowers prior to the making of the Loans then
to be made.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Section 5.01 Representations and Warranties. Each Borrower represents and
warrants to the Lender (each of which representations and warranties is hereby
deemed material and upon which Lender is entitled to rely) as follows:
(a) Organization; Power; Qualification. Each Borrower is a corporation,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its properties and to carry on its business as now being and hereafter proposed
to be conducted and is duly qualified and authorized to do business in each
jurisdiction in which failure to be so qualified and authorized would have a
Materially Adverse Effect. The jurisdictions in which each Borrower is qualified
to do business as a foreign corporation are listed on Schedule 5.01(a).
(b) Subsidiaries and Ownership of the Borrowers. Except as disclosed on
Schedule 5.01(b), neither Borrower has any Subsidiaries. The outstanding capital
stock of Borrower has been duly and validly issued and is fully paid and
nonassessable by each Borrower and the number and owners of such shares of
capital stock of each Borrower are set forth on Schedule 5.01(b).
(c)Authorization of Agreement, Note, Loan Documents and Borrowing. Each
Borrower has the right and power and has taken all necessary action to authorize
it to execute, deliver and perform this Agreement and each of the other Loan
Documents to which it is a party in accordance with their respective terms and
to borrow hereunder. This Agreement and each of the other Loan Documents to
which it is a party have been duly executed and delivered by the duly authorized
officers of each Borrower and each is, or when executed and
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delivered in accordance with this Agreement will be, a legal, valid and
binding obligation of each Borrower, enforceable in accordance with its terms.
(d) Compliance of Agreement, Note, Loan Documents and Borrowing with Laws,
Etc. The execution, delivery and performance of this Agreement and each of the
other Loan Documents to which each Borrower is a party in accordance with their
respective terms and the borrowings hereunder do not and will not, by the
passage of time, the giving of notice or otherwise,
(i) require any Governmental Approval or violate any Applicable Law
relating to such Borrower or any of its Affiliates,
(ii) conflict with, result in a breach of or constitute a default
under (A) the articles or certificate of incorporation or by-laws of such
Borrower, (B) any indenture, agreement or other instrument to which such
Borrower is a party or by which any of its property may be bound or (C) any
Governmental Approval relating to such Borrower, or,
(iii) result in or require the creation or imposition of any Lien upon
or with respect to any property now owned or hereafter acquired by such
Borrower other than the Security Interest.
(e) Business. The Borrowers are engaged principally in the business
described in Schedule 5.01(e).
(f) Compliance with Law; Governmental Approvals. Except as set forth in
Schedule 5.01(f), each Borrower (i) has all Governmental Approvals, including
permits relating to federal, state and local Environmental Laws, ordinances and
regulations required by any applicable law for it to conduct its business, each
of which is in full force and effect, is final and not subject to review on
appeal and is not the subject of any pending or, to the knowledge of such
Borrower, threatened attack by direct or collateral proceeding, and (ii) is in
compliance with each Governmental Approval applicable to it and in compliance
with all other applicable laws relating to it, including, without being limited
to, all Environmental Laws and all occupational health and safety laws
applicable to such Borrower or its properties, except for instances of
noncompliance which would not, singly or in the aggregate, cause a Default or
Event of Default or have a Materially Adverse Effect and in respect of which
adequate reserves have been established on the books of such Borrower.
(g) Titles to Properties. Except as set forth in Schedule 5.01(g), each
Borrower has good and marketable title to or a valid leasehold interest in all
its Real Estate and valid and legal title to or a valid leasehold interest in
all personal property and assets used in or necessary to the conduct of such
Borrower's business, including, but not limited to, those reflected on the
balance sheet of the Borrowers delivered pursuant to Section 5.01(m)(ii).
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(h) Liens. Except as set forth in Schedule 5.01(h), none of the properties
and assets of either Borrower is subject to any Lien, except Permitted Liens.
Other than the Financing Statements, no financing statement under the Uniform
Commercial Code of any state which names such Borrower as debtor and which has
not been terminated has been filed in any state or other jurisdiction, and such
Borrower has not signed any such financing statement or any security agreement
authorizing any secured party thereunder to file any such financing statement,
except to perfect those Liens listed in Schedule 5.01(h) and Permitted Liens.
(i) Indebtedness and Guaranties. Set forth in Schedule 5.01(i) is a
complete and correct listing of all of each Borrower's (i) Indebtedness for
Money Borrowed and (ii) Guaranties. No Borrower is in default of any material
provision of any agreement evidencing or relating to such any such Indebtedness
or Guaranty.
(j) Litigation. Except as set forth in Schedule 5.01(j), there are no
actions, suits or proceedings pending (nor, to the knowledge of either Borrower,
are there any actions, suits or proceedings threatened, nor is there any basis
therefor) against or in any other way relating adversely to or affecting either
Borrower or any of its property in any court or before any arbitrator of any
kind or before or by any governmental body, which individually is in excess of
$250,000 or, when combined with all other such actions, suits or proceedings
against both Borrowers, is in excess of $500,000 in the aggregate.
(k) Tax Returns and Payments. Except as set forth in Schedule 5.01(k), all
United States federal, state and local and foreign national, provincial and
local and all other tax returns of each Borrower required by applicable law to
be filed have been duly filed, and all United States federal, state and local
and foreign national, provincial and local and all other taxes, assessments and
other governmental charges or levies, including without limitation, excise taxes
charged in connection the with provision of telecommunications services, upon
such Borrower and its property, income, profits and assets which are due and
payable have been paid, except any such nonpayment which is at the time
permitted under Section 8.04. The charges, accruals and reserves on the books of
each Borrower in respect of United States federal, state and local taxes and
foreign national, provincial and local taxes for all fiscal years and portions
thereof since the organization of each Borrower are in the judgment of the
Borrowers adequate, and the Borrowers know of no reason to anticipate any
additional assessments for any of such years which, singly or in the aggregate,
might have a Materially Adverse Effect.
(l) Burdensome Provisions. No Borrower is a party to any indenture,
agreement, lease or other instrument, or subject to any charter or corporate
restriction, Governmental Approval or applicable law, compliance with the terms
of which might have a Materially Adverse Effect.
(m) Financial Statements. The Borrowers have furnished to the Lender a copy
of (i) their audited balance sheet as at December 31, 1996, and the related
statements of income,
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cash flow and retained earnings for the year then ended and (ii) their
unaudited consolidated and consolidating balance sheet as at June 30, 1997, and
the related statement of income for the six-month period then ended. Such
financial statements are complete and correct and present fairly and in all
material respects in accordance with GAAP (except the financial statements in
subparagraph (ii) have no footnotes and are subject to normal year-end audit
adjustments which will not deviate materially from such statements), the
financial position of the Borrowers as at the dates thereof and the results of
operations of the Borrowers for the periods then ended. Except as disclosed or
reflected in such financial statements, the Borrowers had no material
liabilities, contingent or otherwise, and there were no material unrealized or
anticipated losses of the Borrowers.
(n) Adverse Change. Since the date of the financial statements described in
clause (i) of Section 5.01(m), (i) no change in the business, assets,
liabilities, condition (financial or otherwise), results of operations or
business prospects of the Borrowers has occurred that has had, or may have, a
Materially Adverse Effect, and (ii) no event has occurred or failed to occur
which has had or may have, a Materially Adverse Effect.
(o) ERISA. No Borrower nor any Related Company maintains or contributes to
any Benefit Plan other than those listed in Schedule 5.01(o). Each Benefit Plan
is in substantial compliance with ERISA, and no Borrower nor any Related Company
has received any notice asserting that a Benefit Plan is not in compliance with
ERISA. No material liability to the PBGC or to a Multiemployer Plan has been, or
is expected by the Borrowers to be, incurred by the Borrowers or any Related
Company.
(p) Absence of Defaults. No Borrower is in default under its articles or
certificate of incorporation or by-laws, and no event has occurred which has not
been remedied, cured or waived (i) that constitutes a Default or an Event of
Default or (ii) that constitutes or that, with the passage of time or giving of
notice, or both, would constitute a default or event of default by such Borrower
under any material agreement (other than this Agreement) or judgment, decree or
order to which such Borrower is a party or by which such Borrower or any of its
properties may be bound or which would require such Borrower to make any payment
thereunder prior to the scheduled maturity date therefor.
(q) Accuracy and Completeness of Information. All written information,
reports and other papers and data produced by or on behalf of the Borrowers and
furnished to the Lender were, at the time the same were so furnished, complete
and correct in all material respects to the extent necessary to give the
recipient a true and accurate knowledge of the subject matter, no fact is known
to any Borrower which has had, or may in the future have (so far as any Borrower
can foresee), a Materially Adverse Effect which has not been set forth in the
financial statements or disclosure delivered prior to the Effective Date, in
each case referred to in Section 5.01(m), or in such written information,
reports or other papers or data or otherwise disclosed in writing to the Lender
prior to the Effective Date. No document furnished or written statement made to
the Lender by either Borrower in connection with the negotiation, preparation or
execution of this Agreement or any of the Loan Documents
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contains or will contain any untrue statement of a fact material to the
creditworthiness of either Borrower or omits or will omit to state a material
fact necessary in order to make the statements contained therein not misleading.
(r) Solvency. In each case after giving effect to the Indebtedness
represented by the Loans outstanding and to be incurred and the transactions
contemplated by this Agreement, (i) each Borrower has assets (excluding goodwill
and other intangible assets not capable of valuation) having value, both at fair
value and at present fair saleable value, greater than the amount of
liabilities, and (ii) each Borrower's assets are sufficient in value to provide
such Borrower with sufficient aggregate working capital to enable it to
profitably operate its business and to meet its obligations as they become due,
and (iii) each Borrower has capital to conduct the business in which it is and
proposes to be engaged.
(s) Status of Receivables. Each Receivable reflected in the computations
included in any Borrowing Base Certificate meets the criteria enumerated in
clauses (a) through (o) of the definition of Eligible Receivables, except as
disclosed in such Borrowing Base Certificate or as disclosed in a timely manner
in a subsequent Borrowing Base Certificate or otherwise in writing to the
Lender.
(t) Chief Executive Office. The respective chief executive offices of the
Borrowers and the books and records relating to the Receivables are located at
the address or addresses set forth on Schedule 5.01(t); except as set forth in
Schedule 5.01(t), no Borrower has maintained its chief executive office or the
books and records relating to any Receivables at any other address at any time
during the five years immediately preceding the Agreement Date.
(u) Status of Inventory. All Inventory is in good condition, meets all
standards imposed by any governmental agency or department or division thereof
having regulatory authority over such goods, their use or sale, and is currently
either usable or saleable in the normal course of the Borrowers' business,
except to the extent reserved against in the financial statements delivered
pursuant to Article 9. Set forth in Schedule 5.01(u) is the (i) address
(including street, city, county and state) of each facility at which Inventory
is located, (ii) the approximate quantity in Dollars of the Inventory
customarily located at each such facility, and (iii) if the facility is leased
or is a third party warehouse or processor location, the name of the landlord or
such third party warehouseman or processor. All Inventory is located on the
premises set forth in Schedule 5.01(u) or is in transit to one of such
locations, except as otherwise disclosed in writing to the Lender; the Borrowers
have not located Inventory at premises other than those set forth in Schedule
5.01(u) at any time during the four months immediately preceding the Agreement
Date.
(v) Corporate and Fictitious Names; Trade Names. Except as otherwise
disclosed in Schedule 5.01(v)(I), during the one-year period preceding the
Agreement Date, no Borrower has been known as or used any corporate or
fictitious name other than the corporate name of such Borrower on the Effective
Date. Schedule 5.01(v)(II) sets for the identity,
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including any corporate or fictitious names, of any entity owning or having
an interest in any assets transferred to Borrowers pursuant to the WorldCom
Acquisition Documents. All trade names or styles under which such Borrower sells
Inventory or creates Receivables, or to which instruments in payment of
Receivables are made payable, are listed in Schedule 5.01(v)(III).
(w) Federal Regulations. No Borrower is engaged, principally or as one of
its important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" (as each of the quoted terms is
defined or used in Regulations G and U of the Board of Governors of the Federal
Reserve System).
(x) Investment Company Act. No Borrower is an "investment company" or a
company "controlled" by an "investment company" (as each of the quoted terms is
defined or used in the Investment Company Act of 1940, as amended).
(y) Public Utility Holding Company Act. No Borrower is a "holding company"
or a "subsidiary company" of a "holding company" or an affiliate of a "holding
company" (as each of the quoted terms is defined or used in the Public Utility
Holding Company Act of 1935, as amended).
(z) Employee Relations. No Borrower is, except as set forth in Schedule
5.01(z), party to any collective bargaining agreement nor has any labor union
been recognized as the representative of its employees; no Borrower knows of
pending, threatened or contemplated strikes, work stoppage or other labor
disputes involving its employees or those of its Subsidiaries.
(aa) Intellectual Property. Each Borrower owns or possesses all
Intellectual Property required to conduct its business as now and presently
planned to be conducted without, to its knowledge, conflict with the rights of
others, and Schedule 5.01(aa) lists all Intellectual Property owned by such
Borrower.
(bb) Bank Accounts. As of the Closing Date and after giving effect to the
consummation of the WorldCom Acquisition, Schedule 5.01(bb) sets forth the
account numbers and location of all bank accounts of the Borrowers. Each
Borrower shall give Lender prompt notice of any new accounts established by any
Borrowers.
(cc) Representations and Warranties from the Related Transaction Documents
(i) Each of the representations and warranties given by such Borrower
in the Related Transaction Documents is true and correct in all material
respects as of the date hereof, and such representations and warranties are
hereby incorporated herein by this reference as of such date with the same
effect as though set forth in their entirety herein.
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(ii) Notwithstanding anything in the Related Transaction Documents to
the contrary, the representations and warranties of each Borrower in the Related
Transaction Documents incorporated in this Agreement by Section 5.01(cc)(i)
shall, solely for the purposes of this Agreement, survive the execution and
delivery of the Related Transaction Documents, the execution and delivery of
this Agreement, the making of the Loans hereunder, and the execution and
delivery of the Notes.
(dd) Broker's Fees. Except as set forth in Schedule 5.01(dd), no broker's
or finder's fee or commission will be payable by Borrowers with respect to the
issuance and sale of the ILD capital stock, or otherwise in connection with the
WorldCom Transactions or any of the other transactions contemplated hereby or by
the Related Transaction Documents. Borrowers shall indemnify, pay and hold
Lender harmless from and against any claim, demand or liability for broker's or
finder's fees alleged to have been incurred in connection with any such offer,
issuance and sale or any of the other transactions contemplated hereby or by the
Related Transaction Documents and any expenses, including reasonable attorneys'
fees, arising in connection with any such claim, demand or liability. No other
similar fees or commission will be payable for any other services rendered to
Borrowers ancillary to the transactions contemplated hereby including the
WorldCom Transactions.
Section 5.02 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article 5 and all statements
contained in any certificate, financial statement or other instrument delivered
by or on behalf of the Borrowers pursuant to or in connection with this
Agreement or any of the Loan Documents (including, but not limited to, any such
representation, warranty or statement made in or in connection with any
amendment thereto) shall constitute representations and warranties made under
this Agreement. All representations and warranties made under this Agreement
shall be made or deemed to be made at and as of the Agreement Date, at and as of
the Effective Date and at and as of the date of each Loan, except that
representations and warranties which, by their terms are applicable only to one
such date shall be deemed to be made only at and as of such date. All
representations and warranties made or deemed to be made under this Agreement
shall survive and not be waived by the execution and delivery of this Agreement,
any investigation made by or on behalf of the Lender or any borrowing hereunder.
ARTICLE 6 - SECURITY INTEREST
Section 6.01 Security Interest. (a) To secure the payment, observance and
performance of the Secured Obligations, the Borrowers hereby mortgage, pledge
and assign all of the Collateral to the Lender for itself and as agent for any
Affiliate of the Lender and grant to the Lender for itself and as agent for any
Affiliate of the Lender a continuing security interest in, and a continuing Lien
upon, all of the Collateral; provided, however, that the Lien created hereby
shall not apply to those Receivables and call detail records that are sold to
and accepted by a LEC pursuant to billing and collection agreement that has been
approved by Lender, in its sole discretion, from and after the time such a sale
occurs.
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(b) As additional security for all of the Secured Obligations, the
Borrowers grant to the Lender for itself and as agent for any Affiliate of the
Lender a security interest in, and assigns to the Lender for itself and as agent
for any Affiliate of the Lender all of the Borrowers' right, title and interest
in and to, any deposits or other sums at any time credited by or due from the
Lender and each Affiliate of the Lender to the Borrowers, with the same rights
therein as if the deposits or other sums were credited by or due from the
Lender.
(c) In the event the Switches become the subject of a sale-leaseback
transaction on or prior to October 2, 1997, which sale is in form and substance
reasonably acceptable to Lender, Lender will release its security interest in
and to the Switches.
Section 6.02 Continued Priority of Security Interest. (a) The Security
Interest granted by the Borrowers shall at all times be a valid, perfected,
first-priority, enforceable Security Interest against the Borrowers and all
third parties in accordance with the terms of this Agreement, as security for
the Secured Obligations, and the Collateral shall not at any time be subject to
any Liens that are prior to, on a parity with or junior to the Security
Interest, other than Permitted Liens.
(b) The Borrowers shall, at their sole cost and expense, take all action
that may be necessary or desirable, or that the Lender may request, so as at all
times to maintain the validity, perfection, enforceability and rank of the
Security Interest in the Collateral in conformity with the requirements of this
Section 6.02(b) or to enable the Lender to exercise or enforce its rights
hereunder, including, but not limited to: (i) paying all taxes, assessments and
other claims lawfully levied or assessed on any of the Collateral, except to the
extent that such taxes, assessments and other claims constitute Permitted Liens,
(ii) diligently seeking to obtain, after the Agreement Date, landlords',
mortgagees' or mechanics' releases, subordinations or waivers, (iii) delivering
to the Lender, endorsed or accompanied by such instruments of assignment as the
Lender may specify, and stamping or marking in such manner as the Lender may
specify, any and all chattel paper, instruments, letters and advices of guaranty
and documents evidencing or forming a part of the Collateral, and (iv) executing
and delivering financing statements, ledgers, designations, hypothecations,
notices and assignments, in each case in form and substance satisfactory to the
Lender, relating to the creation, validity, perfection, maintenance or
continuation of the Security Interest under the UCC or other applicable law.
(c) The Lender is hereby authorized to file one or more financing or
continuation statements or amendments thereto without the signature of or in the
name of the Borrowers for any purpose described in Section 6.02(b). A carbon,
photographic or other reproduction of this Agreement or of any of the Security
Documents or of any financing statement filed in connection with this Agreement
is sufficient as a financing statement, to the extent permitted by applicable
law.
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(d) Upon the specific request of Lender, the Borrowers shall xxxx their
books and records as may be necessary or appropriate to evidence, protect and
perfect the Security Interest and shall cause its financial statements to
reflect the Security Interest.
ARTICLE 7 - COLLATERAL COVENANTS
Until the Revolving Credit Facility has been terminated and all the Secured
Obligations have been indefeasibly paid in full, unless the Lender shall
otherwise consent in the manner provided in Section 12.11:
Section 7.01 Collection of Receivables. The Borrowers will cause all
moneys, checks, notes, drafts and other payments relating to or constituting
proceeds of Receivables, or of any other Collateral, to be collected in
accordance with a cash management system, acceptable to Lender in its sole
discretion (the "Cash Management System"). The Cash Management System shall
include a mechanism, acceptable to Lender in its sole discretion, whereby
immediately upon each receipt by Lender, on behalf of a Borrower, of a LEC
Payment, Borrowers shall provide Lender a good faith written estimate of the
amount of such LEC Payment believed in its reasonable judgment to be owed to
Wholesale Billing and Collection Customers (the "Wholesale Portion"), which
Wholesale Portion plus an additional percentage of the Wholesale Portion (to be
determined in Lender's sole discretion), shall be transferred to an investment
account with Lender, held in the name of a Borrower (the "Investment Account").
For the twelve (12) months following the Effective Date, no later than thirty
(30) days after the receipt of each LEC Payment, and at all times thereafter, no
later than five (5) days after the receipt of each LEC Payment, Borrowers shall
provide to Lender the back-up data evidencing the exact amount of each such LEC
Payment which is owed to Wholesale Billing and Collection Customers. In the
event such amount is less than that which was transferred to the Investment
Account, Lender agrees to transfer the excess for application to the Revolving
Loans. Borrowers hereby covenant and agree that the only disbursements that will
be made from the Investment Account will be to Wholesale Billing and Collection
Customers for sums owed by Borrowers to such entity in accordance with any
written billing and collection agreement (and the distribution of any sums shall
be deemed a representation and warranty of Borrowers that such disbursement has
been made in accordance with this Section 7.01); provided, however, that if an
Event of Default has occurred hereunder, Borrowers hereby covenant and agree
that no disbursements of any kind will be made from the Investment Account
without the prior written consent of Lender.
Section 7.02 Verification and Notification. The Lender shall have the right
(a) at any time and from time to time, in the name of the Lender or in the name
of either of the Borrowers, to verify the validity, amount or any other matter
relating to any Receivables by mail, telephone, telegraph or otherwise, and (b)
after an Event of Default, to notify the Account Debtors or obligors under any
Receivables of the assignment of such Receivables to the Lender and to direct
such Account Debtor or obligors to make payment of all amounts due or to become
due thereunder directly to the Lender and, upon such notification and at the
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expense of the Borrowers, to enforce collection of any such Receivables and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as the Borrowers might have done.
Section 7.03 Disputes, Returns and Adjustments. (a) In the event amounts
due and owing under any Receivable in excess of $300,000 are in dispute between
the Account Debtor and the Borrowers, the Borrowers shall provide the Lender
with prompt written notice thereof.
(b) The Borrowers shall notify the Lender promptly of all material returns,
credits, offsets or charges in excess of $250,000 in respect of any Receivable,
which notice shall specify the Receivables affected.
(c) The Borrowers may, in the ordinary course of business and prior to a
Default or an Event of Default, grant any extension of time for payment of any
Receivable or compromise, compound or settle the same for less than the full
amount thereof or release wholly or partly any Person liable for the payment
thereof or allow any credit or discount whatsoever thereon; provided that (i) no
such action results in the reduction of more than $100,000 in the amount payable
with respect to any Receivable of more than $300,000 with respect to all
Receivables in any fiscal year of the Borrowers, and (ii) the Lender is promptly
notified of the amount of such adjustments and the Receivable(s) affected
thereby.
Section 7.04 Invoices. Upon the request of the Lender, the Borrowers shall
deliver to the Lender, at the Borrowers' expense, copies of customers' invoices
or the equivalent, original call detail records, the original copy of all
documents, including, without limitation, repayment histories and present status
reports, relating to Receivables and such other documents and information
relating to the Receivables as the Lender shall specify.
Section 7.05 Delivery of Instruments. In the event any Receivable in an
amount in excess of $100,000 is, or Receivables in excess of $250,000 in the
aggregate are, at any time evidenced by a promissory note or notes, trade
acceptance or any other instrument for the payment of money, the Borrowers will
immediately thereafter deliver such instruments to the Lender, appropriately
endorsed to the Lender.
Section 7.06 Sales of Inventory. All sales of Inventory will be made in
compliance with all requirements of applicable law.
Section 7.07 Returned Goods. The Security Interest in the Inventory shall,
without further act, attach to the cash and non-cash proceeds resulting from the
sale or other disposition thereof and to all Inventory which is returned to the
Borrowers by customers or is otherwise recovered.
Section 7.08 Ownership and Defense of Title. (a) Except for Permitted
Liens, the Borrowers shall at all times be the sole owner of each and every item
of Collateral and shall not create any Lien on, or sell, lease, exchange,
assign, transfer, pledge, hypothecate, grant a
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security interest or security title in or otherwise dispose of, any of the
Collateral or any interest therein, except for sales of Inventory in the
ordinary course of business, for cash or on open account or on terms of payment
ordinarily extended to its customers and except as otherwise expressly
contemplated herein. The inclusion of "proceeds" of the Collateral under the
Security Interest shall not be deemed a consent by the Lender to any other sale
or other disposition of any part or all of the Collateral.
(b) The Borrowers shall defend their title in and to the Collateral and
shall defend the Security Interest in the Collateral against the claims and
demands of all Persons.
(c) In addition to, and not in derogation of, the foregoing and the
requirements of any of the Security Documents, the Borrowers shall (i) protect
and preserve all properties material to its business, including Intellectual
Property and maintain all tangible property in good and workable condition in
all material respects, with reasonable allowance for wear and tear, and (ii)
from time to time make or cause to be made all needed and appropriate repairs,
renewals, replacements and additions to such properties necessary for the
conduct of its business, so that the business carried on in connection therewith
may be properly and advantageously conducted at all times.
Section 7.09 Insurance. (a) The Borrowers shall at all times maintain
insurance on the Collateral against loss or damage by fire, theft, burglary,
pilferage, loss in transit and such other hazards as the Lender shall reasonably
specify, in amounts and under policies issued by insurers acceptable to the
Lender. All premiums on such insurance shall be paid by the Borrowers and copies
of the policies delivered to the Lender. The Borrowers will not use or permit
the Collateral to be used in violation of any applicable law or in any manner
which might render inapplicable any insurance coverage.
(b) All insurance policies required under Section 7.09(a) shall name the
Lender as an additional named insured and shall contain "New York standard" loss
payable clauses in the form submitted to the Borrowers by the Lender, or
otherwise in form and substance satisfactory to the Lender, naming the Lender as
loss payee as its interests may appear, and providing that (i) all proceeds
thereunder shall be payable to the Lender, (ii) no such insurance shall be
affected by any act or neglect of the insured or owner of the property described
in such policy, and (iii) such policy and loss payable clauses may not be
canceled, amended or terminated unless at least 30 days' prior written notice is
given to the Lender.
(c) Any proceeds of insurance referred to in this Section 7.09 which are
paid to the Lender shall be, at the option of the Lender in its sole discretion,
either (i) applied to rebuild, restore or replace the damaged or destroyed
Collateral, or (ii) applied to the payment or prepayment of the Secured
Obligations.
(d) The Borrowers shall at all times maintain, in addition to the insurance
required by Section 7.09(a) or any of the Security Documents, insurance with
responsible insurance companies against such risks and in such amounts as is
customarily maintained by similar
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businesses or as may be required by applicable law, including such public
liability, products liability, third party property damage and business
interruption insurance as is consistent with reasonable industry practices, and
from time to time deliver to the Lender upon its request a detailed list of the
insurance then in effect, stating the names of the insurance companies, the
amounts and rates of the insurance, the dates of the expiration thereof and the
properties and risks covered thereby.
Section 7.10 Location of Offices and Collateral. (a) The Borrowers will not
change the location of either of their respective chief executive offices or the
place where they keep their respective books and records relating to the
Collateral or change their respective names, identity or corporate structure
without giving the Lender 30 days' prior written notice thereof.
All Collateral, other than Inventory in transit to any such location, will at
all times be kept by the Borrowers at one of the locations set forth in
Schedules 5.01(t) and 5.01(u), respectively, and shall not, without the prior
written consent of the Lender, be removed therefrom except, so long
as no Event of Default shall have occurred and be continuing, for sales of
Inventory permitted under Section 7.06.
(b) If any Collateral is in the possession or control of any of the
Borrowers' agents or processors, the Borrowers shall notify such agents or
processors of the Security Interest and, upon the occurrence of an Event of
Default, shall instruct them (and cause them to acknowledge such instruction) to
hold all such Collateral for the account of the Lender, subject to the
instructions of the Lender.
Section 7.11 Records Relating to Collateral. (a) The Borrowers will at all
times keep complete and accurate records of Collateral on a basis consistent
with past practices of the Borrowers, itemizing and describing the kind, type
and quantity of Collateral and the Borrowers' cost therefor and a current price
list for such Collateral.
(b) Upon the request of Lender, the Borrowers will take a physical listing
of all Inventory and Equipment, wherever located.
Section 7.12 Inspection. The Lender (by any of its officers, employees or
agents shall have the right, to the extent that the exercise of such right shall
be within the control of the Borrowers, at any time or times to (a) visit the
properties of the Borrowers, inspect the Collateral and the other assets of the
Borrowers and their Subsidiaries and inspect and make extracts from the books
and records of the Borrowers and their Subsidiaries, including, but not limited
to, management letters prepared by independent accountants, all during customary
business hours at such premises, (b) discuss the Borrowers' business, assets,
liabilities, financial condition, results of operations and business prospects,
insofar as the same are reasonably related to the rights of the Lender hereunder
or under any of the Loan Documents, with the Borrowers' and their Subsidiaries'
(i) principal officers, (ii) independent accountants and other professionals
providing services to the Borrowers, and (iii) any other Person (except
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that any such discussion with any third parties shall be conducted only in
accordance with the Lender's standard operating procedures relating to the
maintenance of confidentiality of confidential information of borrowers), and
(c) verify the amount, quantity, value and condition of, or any other matter
relating to, any of the Collateral and in this connection to review, audit and
make extracts from all records and files related to any of the Collateral. The
Borrowers will deliver to the Lender any instrument necessary to authorize an
independent accountant or other professional to have discussions of the type
outlined above with the Lender or for the Lender to obtain records from any
service bureau maintaining records on behalf of the Borrowers.
Section 7.13 Information and Reports.
(a) Schedule of Receivables. Each Borrower shall deliver to the Lender (i)
on or before the Effective Date, a Schedule of Receivables as of a date not more
than three (3) Business Days prior to the Effective Date setting forth a
detailed aged trial balance of all of its then existing Receivables, specifying
the name of and the balance due from (and any rebate due to) each Account Debtor
obligated on a Receivable so listed, and (ii) no later than 20 Business Days
after the end of each accounting month of such Borrower for the months beginning
with the month during which the Effective Date occurs and continuing through and
including March, 1998 and no later than 10 Business Days after the end of each
accounting month of such Borrower for all subsequent months, a Schedule of
Receivables as of the last Business Day of such Borrower's immediately preceding
accounting month setting forth (A) a detailed aged trial balance of all such
Borrower's then existing Receivables, specifying the name of and the balance due
from (and any rebate due to) each Account Debtor obligated on a Receivable so
listed and (B) a reconciliation to the Schedule of Receivables delivered in
respect of the next preceding accounting month.
(b) Borrowing Base Certificate. The Borrowers shall deliver to the Lender
not later than two (2) Business Days after the last day of each accounting week
of the Borrowers a Borrowing Base Certificate prepared as of the close of
business on the last Business Day of such accounting week.
(c) Notice of Diminution of Value. The Borrowers shall give prompt notice
to the Lender of any matter or event which has resulted in, or may result in,
the actual or potential diminution in excess of $400,000 in the value of any of
its Collateral, except for any diminution in the value of any Receivables or
Inventory in the ordinary course of business which has been appropriately
reserved against, as reflected in the financial statements previously delivered
to the Lender pursuant to Article 9.
(d) Certification. Each of the schedules delivered to the Lender pursuant
to this Section 7.14 shall be certified by the Chairman, President, Vice
President, Treasurer or Secretary of ILD to be true, correct and complete as of
the date indicated thereon.
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(e) Other Information. The Lender may, in its discretion, from time to time
require the Borrowers to deliver the schedules described in Section 7.14(a), (b)
and (c) more or less often and on different schedules than specified in such
Section, and the Borrower will comply with such requests. The Borrowers shall
also furnish to the Lender such other information with respect to the Collateral
as the Lender may from time to time reasonably request.
Section 7.14 Power of Attorney. The Borrowers hereby individually and
jointly appoint the Lender as their respective and collective attorney, with
power (a) to endorse the name of any Borrower on any checks, notes, acceptances,
money orders, drafts or other forms of payment or security that may come into
the Lender's possession, and (b) to sign the name of either Borrower on any
invoice or xxxx of lading relating to any Receivables, Inventory, Equipment or
other Collateral, on any drafts against customers related to letters of credit,
on schedules and assignments of Receivables furnished to the Lender by such
Borrower, on notices of assignment, financing statements and other public
records relating to the perfection or priority of the Security Interest or
verifications of account and on notices to or from customers.
Section 7.15 Equipment. Each Borrower shall keep its Equipment in good,
working order, ordinary wear and tear excepted.
Section 7.16 Billing and Collection Agreements. Borrowers will submit (i)
any and all proposed billing and collection agreements (other than as related to
Wholesale Billing and Collection Customers) to Lender for Lender's written
approval prior to the execution of any such agreement by Borrowers and (ii) for
each month, no later than the tenth (10th) day of the following month, a list of
all Wholesale Billing and Collection Customers.
ARTICLE 8 - AFFIRMATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the Secured
Obligations have been indefeasibly paid in full, unless the Lender shall
otherwise consent in the manner provided for in Section 12.11, each Borrower
will:
Section 8.01 Preservation of Corporate Existence and Similar Matters.
Preserve and maintain its corporate existence, rights, franchises, licenses and
privileges in the jurisdiction of its incorporation and qualify and remain
qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization.
Section 8.02 Compliance with Applicable Law. Comply with all Applicable
Laws relating to such Borrower.
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Section 8.03 Conduct of Business. Engage only in businesses in
substantially the same fields as the businesses conducted on the Effective Date.
Section 8.04 Payment of Taxes and Claims. Pay or discharge when due (a) all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or upon any properties belonging to it, and (b) all lawful
claims of materialmen, mechanics, carriers, warehousemen and landlords for
labor, materials, supplies and rentals which, if unpaid, might become a Lien on
any properties of such Borrower or any Subsidiary, except that this Section 8.04
shall not require the payment or discharge of any such tax, assessment, charge,
levy or claim which is being contested in good faith by appropriate proceedings
and for which adequate reserves have been established on the appropriate books.
Section 8.05 Accounting Methods and Financial Records. Maintain a system of
accounting, and keep such books, records and accounts (which shall be true and
complete), as may be required or as may be necessary to permit the preparation
of financial statements in accordance with GAAP consistently applied.
Section 8.06 Use of Proceeds. (a) Use the proceeds of (i) the Initial Loan
to consummate the WorldCom Acquisition, and (ii) all subsequent Revolving Credit
Loans only for working capital and general business purposes, and
(b) not use any part of such proceeds to purchase or carry, or to reduce or
retire or refinance any credit incurred to purchase or carry, any margin stock
(within the meaning of Regulation G or U of the Board of Governors of the
Federal Reserve System) or for any other purpose which would involve a violation
of such Regulation G or U or Regulation T or X of such Board of Governors or for
any other purpose prohibited by law or by the terms and conditions of this
Agreement.
Section 8.07 Hazardous Waste and Substances; Environmental Requirements.
(a) In addition to, and not in derogation of, the requirements of Section 8.02
hereof, comply with all laws, governmental standards and regulations applicable
to the Borrowers or to any of their assets in respect of occupational health and
safety laws, rules and regulations and Environmental Laws, promptly notify the
Lender of its receipt of any notice of a violation of any such law, rule,
standard or regulation and indemnify and hold the Lender harmless from all loss,
cost, damage, liability, claim and expense incurred by or imposed upon the
Lender on account of the Borrowers' failure to perform its obligations under
this Section 8.07.
(b) Whenever the Borrowers give notice to the Lender pursuant to this
Section 8.07 with respect to a matter that reasonably could be expected to
result in liability to the Borrowers in excess of $250,000 in the aggregate, the
Borrowers shall, at the Lender's request and the Borrowers' expense, (i) cause
an independent environmental engineer acceptable to the Lender to conduct such
tests of the site where the noncompliance or alleged noncompliance with
Environmental Laws has occurred and prepare and deliver to the Lender a report
setting forth the results of such tests, a proposed plan to bring the Borrowers
into
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compliance with such Environmental Laws and an estimate of the costs
thereof, and (ii) provide to the Lender a supplemental report of such engineer
whenever the scope of the noncompliance or the response thereto or the estimated
costs thereof shall materially change.
Section 8.08 Accuracy of Information. All written information, reports,
statements and other papers and data furnished to the Lender, whether pursuant
to Article 9 or any other provision of this Agreement or any of the other Loan
Documents, shall be, at the time the same is so furnished, complete and correct
in all material respects to the extent necessary to give the Lender true and
accurate knowledge of the subject matter.
Section 8.09 Revisions or Updates to Schedules. Should any of the
information or disclosures provided on any of the Schedules originally attached
hereto become outdated or incorrect in any material respect (other than in the
case of Schedule 5.01(h), with respect to liens which constitute Permitted Liens
pursuant to this Agreement), the Borrowers shall provide promptly to the Lender
such revisions or updates to such Schedule(s) as may be necessary or appropriate
to update or correct such Schedule(s); provided that no such revisions or
updates to any Schedule(s) shall be deemed to have cured any breach of warranty
or representation resulting from the inaccuracy or incompleteness of any such
Schedule(s) unless and until the Lender, in its sole discretion, shall have
accepted in writing such revisions or updates to such Schedule(s).
Section 8.10 Covenants in WorldCom Acquisition Documents. At all times
prior to the effective date of the WorldCom Acquisition, ILD shall comply with
its covenants under the WorldCom Acquisition Documents in all material respects.
ILD shall not amend, supplement or otherwise modify or waive rights under, and
shall not consent to or permit the amendment, supplement or other modification
or waiver of rights under, any WorldCom Acquisition Documents without the
consent of Lender (which consent shall not be unreasonably withheld, conditioned
or delayed) if the effect of such amendment, supplement or other modification or
waiver of right would materially and adversely affect the rights and claims of
any party under any WorldCom Acquisition Documents. ILD shall at all times
diligently pursue and enforce all material rights and material claims (after
taking into account any applicable deductibles) under any WorldCom Acquisition
Documents (including, without limitation, any material right to any
indemnification).
ARTICLE 9 - INFORMATION
Until the Revolving Credit Facility has been terminated and the Term
Loan and all the Secured Obligations have been indefeasibly paid in full, unless
the Lender shall otherwise consent in the manner set forth in Section 12.11, the
Borrowers will furnish to the Lender at the Lender's Office:
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Section 9.01 Financial Statements.
(a) Audited Year-End Statements. As soon as available, but in any event
within 120 days after the end of each fiscal year of the Borrowers, copies of
the consolidated balance sheet of the Borrowers at the end of such fiscal year
and the related statements of income, shareholders' equity and cash flow for
such fiscal year, in each case setting forth in comparative form the figures for
the previous year of the Borrowers and reported on, without qualification, by
Price Waterhouse LLP or other independent certified public accountants selected
by the Borrowers and acceptable to the Lender.
(b) Monthly Financial Statements. As soon as available, but in any event
within 30 days after the end of each accounting month of the Borrowers, copies
of the unaudited consolidated balance sheet of the Borrowers as at the end of
such month and the related unaudited income statement for the Borrowers for such
month and for the portion of the fiscal year of the Borrowers through such
month, certified by the Chairman, President or chief financial officer of the
ILD to the best of his knowledge as presenting fairly the financial condition
and results of operations of the Borrowers as at the date thereof and for the
periods ended on such date, subject to normal year end adjustments.
(c) Projected Financial Statements. As soon as available, but in any event
within 30 days prior to the end of each fiscal year of the Borrowers, forecasted
financial statements, prepared by the Borrowers, consisting of balance sheets,
cash flow statements and income statements of the Borrowers, reflecting
projected borrowings hereunder and setting forth the assumptions on which such
forecasted financial statements were prepared, covering the one-year period
until the next fiscal year end.
All such financial statements shall be complete and correct in all material
respects and all such financial statements referred to in clauses (a) and (b)
shall be prepared in accordance with GAAP (except, with respect to interim
financial statements, for the omission of footnotes) applied consistently
throughout the periods reflected therein.
Section 9.02 Accountants' Certificate. Together with each delivery of
financial statements required by Section 9.01(a), a certificate of the
accountants who performed the audit in connection with such statements (a)
stating that they have reviewed this Agreement and that, in making the audit
necessary to the issuance of a report on such financial statements, they have
obtained no knowledge of any Default or Event of Default or, if such accountants
have obtained knowledge of a Default or Event of Default, specifying the nature
and period of existence thereof, and (b) setting forth the calculations
necessary to establish whether or not the Borrowers were in compliance with the
covenants contained in Sections 10.01, 10.02, and 10.05 as of the date of such
statements.
The Borrowers authorize the Lender to discuss the financial condition of the
Borrowers with the Borrowers' independent certified public accountants and
agrees that such discussion or communication shall be without liability to
either the Lender or the Borrowers' independent
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certified public accountants. The Borrowers shall deliver a letter
addressed to such accountants authorizing them to comply with the provisions of
this Section 9.02.
Section 9.03 Officer's Certificate. Together with each delivery of
financial statements required by Section 9.01(a) and (b), a certificate of the
ILD's Chairman, President or chief financial officer (a) stating that, based on
an examination sufficient to enable him to make an informed statement, no
Default or Event of Default exists or, if such is not the case, specifying such
Default or Event of Default and its nature, when it occurred, whether it is
continuing and the steps being taken by the Borrowers with respect to such
Default or Event of Default, and (b) setting forth the calculations necessary to
establish whether or not the Borrowers were in compliance with the covenants
contained in Sections 10.01, 10.02, and 10.05 as of the date of such statements.
Section 9.04 Management Reports. Together with each delivery of financial
statements required pursuant to Section 9.01(a) or on a quarterly basis with
respect to those required under Section 9.01(b), Borrower will deliver a
management report (a) describing the operations and financial condition of
Borrowers for the quarter then ended and the portion of the current fiscal year
then elapsed; (b) setting forth in comparative form the corresponding figures in
the most recently delivered projection for the current fiscal year delivered to
Lender pursuant to Section 9.01(c); and (c) discussing the reasons for any
significant variations. The information above shall be presented in reasonable
detail and shall be certified by the chief financial officer of ILD to the
effect that such information fairly presents the results of operations and
financial condition of Borrowers as at the dates and for the periods indicated.
Section 9.05 Copies of Other Reports. (a) Promptly upon receipt thereof,
copies of all reports, if any, submitted to the Borrowers or their Board of
Directors by its independent public accountants, including, without limitation,
all management reports.
(b) From time to time and promptly upon each request, such forecasts, data,
certificates, reports, statements, opinions of counsel, documents or further
information regarding the business, assets, liabilities, financial condition,
results of operations or business prospects of the Borrowers as the Lender may
reasonably request. The rights of the Lender under this Section 9.04(b) are in
addition to and not in derogation of its rights under any other provision of
this Agreement or any Loan Document.
(c) If requested by the Lender, statements in conformity with the
requirements of Federal Reserve Form G-1 or U-1 referred to in Regulations G and
U, respectively, of the Board of Governors of the Federal Reserve System.
Section 9.06 Notice of Litigation and Other Matters. Prompt notice of:
(a) the commencement, to the extent that either of the Borrowers are aware
of the same, of all proceedings and investigations by or before any governmental
or nongovernmental body and all actions and proceedings in any court or before
any arbitrator
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against or in any other way relating adversely to, or adversely affecting,
the Borrowers or any Affiliate of the Borrowers or any of their respective
property, assets or businesses which might, singly or in the aggregate, cause a
Default or an Event of Default or have a Materially Adverse Effect,
(b) any amendment of the articles of incorporation or by-laws of the
Borrowers,
(c) the cancellation or termination of any LEC billing and collection
agreement,
(d) any change in the business, assets, liabilities, financial condition,
results of operations or business prospects of either of the Borrowers or any
Affiliate of either of the Borrowers which has had or may have any Materially
Adverse Effect and any change in the executive officers of either of the
Borrowers, and
(e) any (i) Default or Event of Default, or (ii) event that constitutes or
that, with the passage of time or giving of notice or both, would constitute a
default or event of default by the Borrowers under any material agreement (other
than this Agreement) to which either Borrower is a party or by which either
Borrower or any of its property may be bound if the exercise of remedies
thereunder by the other party to such agreement would have, either individually
or in the aggregate, a Materially Adverse Effect.
Section 9.07 ERISA. As soon as possible and in any event within 30 days
after either of the Borrowers know, or have reason to know, that:
(a) any Termination Event with respect to a Benefit Plan has occurred or
will occur,
(b) the aggregate present value of the Unfunded Vested Accrued Benefits
under all plans has increased to an amount in excess of $0, or
(c) either of the Borrowers are in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan required
by reason of its complete or partial withdrawal (as described in Section 4203 or
4205 of ERISA) from such Multiemployer Plan,
a certificate of the Chairman, President or the chief financial officer of ILD
setting forth the details of such of the events described in clauses (a) through
(c) as applicable and the action which is proposed to be taken with respect
thereto and, simultaneously with the filing thereof, copies of any notice or
filing which may be required by the PBGC or other agency of the United States
government with respect to such of the events described in clauses (a) through
(c) as applicable.
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ARTICLE 10 - NEGATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and the Term
Loan and all the Secured Obligations have been indefeasibly paid in full, unless
the Lender shall otherwise consent in the manner set forth in Section 12.11, the
Borrowers will not directly or indirectly:
Section 10.01 Financial Ratios.
(a) Senior Funded Debt to EBITDA. Permit the ratio of the Borrowers Senior
Funded Debt to their aggregate EBITDA for the four (4) most recently completed
fiscal quarters, as measured quarterly, at any time:
(i) from December 31, 1997 through and including June 30, 1998, to be
greater than 6.5 to 1.0;
(ii) from July 1, 1998 through and including March 30, 1999, to be
greater than 5.0 to 1.0;
(iii) from March 31, 1999 through and including March 30, 2000, to be
greater than 3.5 to 1.0;
(iv) from March 31, 2000 and at all times thereafter, to be greater
than 3.0 to 1.0.
(b) Minimum Net Worth. Permit the aggregate Net Worth of the Borrowers, as
measured quarterly, at any time:
(i) from the Effective Date through and including the date which is
six (6) months after the Effective Date, to be less than $15,500,000;
(ii) for each six (6) month period thereafter, to be less than the
minimum Net Worth as required hereunder for the immediately preceding six
(6) month period plus seventy-five percent (75%) of the Net Income of
Borrowers during such period.
(c) Minimum Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage
Ratio, as measured quarterly for the four (4) most recently completed fiscal
quarters, as measured quarterly, at any time:
(i) from December 31, 1997 through and including June 29, 1998, to be
less than 1.05 to 1.0;
(ii) from June 30, 1998 through and including December 30, 1998, to be
less than 1.10 to 1.0;
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(iii) from December 31, 998 through and including December 30, 1999,
to be less than 1.20 to 1.0; and
(iv) from December 31, 1999 and at all times thereafter, to be less
than 1.35 to 1.0.
Section 10.02 Indebtedness. Create, assume, or otherwise become or remain
obligated in respect of, or permit or suffer to exist or to be created, assumed
or incurred or to be outstanding any Indebtedness for Money Borrowed, except for
Permitted Indebtedness for Money Borrowed and the Sirrom Subordinated
Indebtedness.
Section 10.03 Guaranties. Become or remain liable with respect to any
Guaranty of any obligation of any other Person, except for Permitted Guaranties.
Section 10.04 Investments. Acquire, after the Agreement Date, any Business
Unit or Investment or, after such date, permit any Investment to be outstanding,
other than Permitted Investments; provided, however, that in the event there is
not Event of Default hereunder, either Borrower may (i) acquire, through an
asset purchase transaction, the assets of another entity for a total purchase
price (whether consisting of cash, notes or other consideration) equal to or
less than $2,000,000, and (ii) acquire, through an equity or pooling basis, an
interest in another entity for an amount not to exceed $4,000,000; provided,
further, however, that (i) any such acquisition shall be consummated by a
Borrower or another entity which shall, prior to any such acquisition, become a
Borrower hereunder, and (ii) after giving effect to any such transaction there
must be no Event of Default hereunder and Borrowers must have Availability of at
least $1,500,000.
Section 10.05 Capital Expenditures. Make or incur any Capital Expenditures,
except that the Borrowers may make or incur Capital Expenditures in an amount
not to exceed, in the aggregate, $2,500,000 for fiscal year 1997, and
$1,500,000, for each other fiscal year during the term hereof.
Section 10.06 Restricted Distributions and Payments. Declare or make any
Restricted Distribution or Restricted Payment, other than Permitted Dividends.
Section 10.07 Merger, Consolidation and Sale of Assets. Merge or
consolidate with any other Person or sell, lease or transfer or otherwise
dispose of all or a substantial portion of their assets to any Person other than
the Permitted Distributions and Permitted Asset Dispositions.
Section 10.08 Affiliate Transactions. Effect any transaction with any
Affiliate on a basis less favorable to the Borrowers or their Subsidiaries than
would be the case if such transaction had been effected with a Person not an
Affiliate.
Section 10.09 Liens. Create, assume or permit or suffer to exist or to be
created or assumed any Lien on any of the property or assets of the Borrowers,
real, personal or mixed, tangible or intangible, except for Permitted Liens.
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Section 10.10 No Negative Pledges. Enter into or assume any agreement
(other than the documents evidencing the Sirrom Subordinated Indebtedness, as
unamended, and the Loan Documents) prohibiting the creation or assumption of any
Lien upon its properties or assets, whether nor owned or hereafter acquired
other than in connection with the Purchase Money Indebtedness, provided any such
agreement prohibiting the creation or assumption of any Lien entered into in
connection with any purchase shall extend only to the assets so purchased and
shall in no event extend to the Collateral.
Section 10.11 Operating Leases. Enter into any lease other than a
Capitalized Lease (excluding the leases for the Switches) which would cause the
annual aggregate payment obligations of the Borrowers under all leases (other
than leases of real property in effect on the Effective Date (and renewals and
substitutions therefor)) to exceed $750,000 in the aggregate.
Section 10.12 Benefit Plans. Permit, or take any action which would result
in, the aggregate present value of the Unfunded Vested Accrued Benefits under
all Benefit Plans of the Borrowers to exceed $0.
Section 10.13 Sales and Leasebacks. Except for the leases for the Switches,
enter into any arrangement with any Person providing for the leasing from such
Person of real or personal property which has been or is to be sold or
transferred, directly or indirectly, by the Borrowers to such Person.
Section 10.14 Amendments of Other Agreements. Amend in any way the interest
rate or principal amount or schedule of payments of principal and interest with
respect to any Indebtedness (other than the Secured Obligations) other than to
reduce the interest rate or extend the schedule of payments with respect
thereto.
Section 10.15 Minimum Availability. Permit Availability to be less than
$500,000 at any time.
Section 10.16 Net Income. Incur aggregate pre-tax Net Income in the
Borrowers' 1997 fiscal year of less than $1.00.
ARTICLE 11 - DEFAULT
Section 11.01 Events of Default. Each of the following shall constitute an
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or nongovernmental body:
(a) Default in Payment of Loans. Either Borrower shall default in any
payment of principal of, or interest on any Loan or either Note when and as due
(whether at maturity, by reason of acceleration or otherwise).
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(b) Other Payment Default. Either Borrower shall default in the payment, as
and when due, of principal of or interest on, any other Secured Obligation, and
such default shall continue for five days after written notice thereof has been
given to either Borrower by the Lender.
(c) Misrepresentation. Any representation or warranty made or deemed to be
made by either Borrower under this Agreement or any other Loan Document or any
amendment hereto or thereto shall at any time prove to have been incorrect or
misleading in any material respect when made.
(d) Default in Performance. Either Borrower shall default in the
performance or observance of any term, covenant, condition or agreement
contained in (i) Articles 6, 7, 8, 9 or 10 or (ii) any other provision of this
Agreement (other than as specifically provided for otherwise in this Section
11.01) and such default shall continue for a period of 30 days after written
notice thereof has been given to either Borrower by the Lender.
(e) Indebtedness Cross-Default. (i) A Borrower shall fail to pay when due
and payable the principal of or interest on the Sirrom Subordinated
Indebtedness, the Shareholder Subordinated Indebtedness or any other
Indebtedness (other than the Loans or Notes) where the principal amount of such
Indebtedness is in excess of $50,000, or (ii) the maturity of any such
Indebtedness shall have (A) been accelerated in accordance with the provisions
of any indenture, contract or instrument providing for the creation of or
concerning such Indebtedness, or (B) been required to be prepaid prior to the
stated maturity thereof, or (iii) any event shall have occurred and be
continuing which, with or without the passage of time or the giving of notice,
or both, would permit any holder or holders of such Indebtedness, any trustee or
agent acting on behalf of such holder or holders or any other Person so to
accelerate such maturity.
(f) Other Cross-Defaults. A Borrower shall default in the payment when due
or in the performance or observance of any material obligation or condition of
any agreement, contract or lease (other than the Security Documents or any such
agreement, contract or lease relating to Indebtedness), if the exercise of
remedies thereunder by the other party to such agreement could have a Materially
Adverse Effect.
(g) Voluntary Bankruptcy Proceeding. Any Obligor shall (i) commence a
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (ii) commence a proceeding seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or composition for adjustment of debts, (iii) consent to or fail to contest
in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws, (iv) apply for or
consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of a substantial part of its property, domestic or
foreign, (v) admit in writing its inability to pay its debts as they become due,
(vi) make a general assignment for the benefit of creditors, or (vii) take any
corporate action for the purpose of authorizing any of the foregoing.
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(h) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be
commenced against any Obligor in any court of competent jurisdiction seeking (i)
relief under the federal bankruptcy laws (as now or hereafter in effect) or
under any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts, or (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of any Obligor or of all or
any substantial part of the assets, domestic or foreign, of any Obligor, and
such case or proceeding shall continue undismissed or unstayed for a period of
60 consecutive calendar days, or an order granting the relief requested in such
case or proceeding against any Obligor (including, but not limited to, an order
for relief under such federal bankruptcy laws) shall be entered.
(i) Loan Documents. Any default or Event of Default (or similar term
representing a default with no right to cure) under any other Loan Document
shall occur or any Obligor shall default in the performance or observance of any
material term, covenant, condition or agreement contained in, or the payment of
any other sum covenanted to be paid by any Obligor under, any such Loan Document
(which continues after any applicable cure period); or any provision of this
Agreement, or of any other Loan Document after delivery thereof hereunder, shall
for any reason cease to be valid and binding, other than a nonmaterial provision
rendered unenforceable by operation of law, or any Obligor or other party
thereto (other than the Lender) shall so state in writing; or this Agreement or
any other Loan Document, after delivery thereof hereunder, shall for any reason
(other than any action taken independently by the Lender and except to the
extent permitted by the terms thereof) cease to create a valid, perfected and,
except as otherwise expressly permitted herein, first priority Lien on, or
security interest in, any of the Collateral purported to be covered thereby.
(j) Judgment. One or more judgments or orders for the payment of money
which individually or in the aggregate exceed $250,000 in amount shall be
entered against any Obligor by any court and any such judgment or order shall
continue undischarged or unstayed for 30 days, unless bonded for appeal.
(k) Attachment. One or more warrants or writs of attachment or execution or
similar process which individually or in the aggregate exceed $250,000 in value
shall be issued against any property of any Obligor and any such warrant or
process shall continue undischarged or unstayed for 30 days.
(l) ERISA. (i) Any Termination Event with respect to a Benefit Plan shall
occur that, after taking into account the excess, if any, of (A) the fair market
value of the assets of any other Benefit Plan with respect to which a
Termination Event occurs on the same day (but only to the extent that such
excess is the property of a Borrower) over (B) the present value on such day of
all vested nonforfeitable benefits under such other Benefit Plan, results in an
Unfunded Vested Accrued Benefit in excess of $0, (ii) any Benefit Plan shall
incur an "accumulated funding deficiency" (as defined in Section 412 of the Code
or Section 302 of ERISA) for which a waiver has not been obtained in accordance
with the applicable provisions of the Code and ERISA, or (iii) a Borrower is in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan resulting from a
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Borrower's complete or partial withdrawal (as described in Section 4203 or
4205 of ERISA) from such Multiemployer Plan.
(m) Qualified Audits. The independent certified public accountants retained
by the Borrowers shall refuse to deliver an opinion in accordance with Section
9.01(a) with respect to the annual financial statements of the Borrowers.
(n) Change of Control. If (i) any one Person or group of Persons has
"beneficial ownership" (within the meaning Section 13(d) of the Securities
Exchange Act of 1934, as amended), of 49% (on a fully-diluted basis) of all
classes of capital stock of ILD entitled to vote in elections of directors of
ILD, (ii) ILD shall cease to own, beneficially and of record, at least 55% of
the outstanding capital stock of IOS or such ownership shall cease to vest in
ILD voting control of IOS or (iii) there shall be any amendment to Article III
of that certain Amended and Restated Shareholders' Agreement to be dated as of
August 31, 1997, by and among ILD and the shareholders of ILD as of the date
hereof.
(o) Material Adverse Change. There occurs any act, omission, event,
undertaking or circumstance or series of acts, omissions, events, undertakings
or circumstances which have a Materially Adverse Effect.
(p) Change in Management. Xx. Xxxxxxx X. Xxxxx shall for any reason cease
to be the Chairman of ILD and/or Xx. Xxxxxx X. Xxxxxxxxxxxx shall for any reason
cease to be the President of ILD and 120 days shall have elapsed during which
time no replacement(s) satisfactory to the Lender shall have been appointed.
(q) Invalidity of Related Transactions Documents. Any of the Related
Transactions Documents for any reason, other than a partial or full release or
termination in accordance with the terms thereof, ceases to be in full force and
effect or is declared to be null and void, or the validity or enforceability
thereof or any Related Transaction shall be contested or challenged by any party
thereto or any of such parties' respective shareholders or any Governmental
Authority, or any Obligor denies that it has any further liability under any
Loan Documents to which it is party, or gives notice to such effect.
(r) LEC Payments. If on or before November 1, 1997, any and all LEC
Payments to be received by a Borrower have not been redirected from a WorldCom
account with First Union National Bank of North Carolina (or another similar
account of a party other than a Borrower with a lending institution other than
Lender) to Borrowers' account with Lender.
(s) ILD Preferred Stock. WorldCom, for any reason, exercises its right to
require ILD to repurchase the Preferred Stock Portion (as that term is defined
in the Related Transactions Documents) of the consideration it receives in
connection with the Related Transactions at any time prior to the Termination
Date.
(t) Reduction of Term Note. If on or before March 31, 1998, the Term Note
shall not have been reduced by at least $500,000 from (a) the payment to Lender
of the Net Proceeds of a Permitted Asset Disposition or (b) the proceeds of
certain additional capital
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contribution by the existing shareholders of ILD in addition to those
contributions required pursuant to subsection (u) of this Section.
(u) ILD Capital. If on or before September 16, 1997, there shall not have
been a contribution (in addition to the Contributions) by certain new or
existing shareholders of ILD of not less than $1,650,000 to the capital of ILD.
(v) Sale-Leaseback. If on or prior to October 2, 1997, Borrower shall not
have (i) consummated a sale-leaseback of the Switches, and/or (ii) a
contribution by certain new or existing shareholders of ILD to the capital of
ILD which, in the aggregate, total at least $1,000,000.
(w) Network Services Agreement. If on or prior to the date which is
seventy-five (75) days following the Effective Date, Borrowers shall not have
entered into a Network Services Agreement, in form and substance satisfactory to
Lender in its sole discretion, with WorldCom.
Section 11.02 Remedies.
(a) Automatic Acceleration and Termination of Facilities. Upon the
occurrence of an Event of Default specified in Section 11.01(g) or (h), (i) the
principal of and the interest on the Loans and the Notes at the time
outstanding, and all other amounts owed to the Lender under this Agreement or
any of the Loan Documents and all other Secured Obligations, shall thereupon
become due and payable without presentment, demand, protest or other notice of
any kind, all of which are expressly waived, anything in this Agreement or any
of the Loan Documents to the contrary notwithstanding, and (ii) the Revolving
Credit Facility, the Term Loan and the commitment of the Lender to make advances
thereunder or under this Agreement shall immediately terminate.
(b) Other Remedies. If any Event of Default (other than as specified in
Section 11.01(g) or (h)) shall have occurred and be continuing, the Lender, in
its sole and absolute discretion, may do any of the following:
(i) declare the principal of and interest on the Loans and the Notes
at the time outstanding, and all other amounts owed to the Lender under
this Agreement or any of the Loan Documents and all other Secured
Obligations, to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand, protest or
other notice of any kind, all of which are expressly waived, anything in
this Agreement or the Loan Documents to the contrary notwithstanding;
(ii) terminate the Revolving Credit Facility, the Term Loan and any
commitment of the Lender to make advances hereunder;
(c) Further Remedies. If any Event of Default shall have occurred and be
continuing, the Lender, in its sole and absolute discretion, may do any of the
following:
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(i) notify, or request both of the Borrowers to notify, in writing or
otherwise, any Account Debtor or obligor with respect to any one or more of
the Receivables to make payment to the Lender or any agent or designee of
the Lender, at such address as may be specified by the Lender, and, if,
notwithstanding the giving of any notice, any Account Debtor or other such
obligor shall make payments either Borrower, such Borrower shall hold all
such payments it receives in trust for the Lender, without commingling the
same with other funds or property of, or held by, such Borrower and shall
deliver the same to the Lender or any such agent or designee immediately
upon receipt by such Borrower in the identical form received, together with
any necessary endorsements;
(ii) settle or adjust disputes and claims directly with Account
Debtors and other obligors on Receivables for amounts and on terms which
the Lender considers advisable and in all such cases only the net amounts
received by the Lender in payment of such amounts, after deductions of
costs and attorneys' fees, shall constitute Collateral, and the Borrowers
shall have no further right to make any such settlements or adjustments or
to accept any returns of merchandise;
(iii) enter upon any premises on which Collateral may be located and,
without resistance or interference by the Borrowers, take physical
possession of any or all thereof and maintain such possession on such
premises or move the same or any part thereof to such other place or places
as the Lender shall choose, without being liable to the Borrowers on
account of any loss, damage or depreciation that may occur as a result
thereof, so long as the Lender shall act reasonably and in good faith;
(iv) require the Borrowers to and the Borrowers shall, without charge
to the Lender, assemble the Collateral and maintain or deliver it into the
possession of the Lender or any agent or representative of the Lender at
such place or places as the Lender may designate;
(v) at the expense of the Borrowers, cause any of the Collateral to be
placed in a public or field warehouse, and the Lender shall not be liable
to the Borrowers on account of any loss, damage or depreciation that may
occur as a result thereof, so long as the Lender shall act reasonably and
in good faith;
(vi) without notice, demand or other process, and without payment of
any rent or any other charge, enter any of the Borrowers' premises and,
without breach of the peace, until the Lender completes the enforcement of
its rights in the Collateral, take possession of such premises or place
custodians in exclusive control thereof, remain on such premises and use
the same and any of the Equipment, for the purpose of (A) completing any
work in process, preparing any Collateral for disposition and disposing
thereof, and (B) collecting any Receivable, and the Lender is hereby
granted a license or sublicense and all other rights as may be necessary,
appropriate or desirable to use the Intellectual Property in connection
with the foregoing, and the rights of the Borrowers under all licenses and
franchise agreements shall inure to the
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Lender's benefit (provided, however, that any use of any federally
registered trademarks as to any goods shall be subject to the control as to
the quality of such goods of the owner of such trademarks and the goodwill
of the business symbolized thereby);
(vii) exercise any and all of its rights hereunder and under any and
all of the Security Documents;
(viii) apply any cash Collateral to the payment of the Secured
Obligations in any order in which the Lender may elect or use such cash in
connection with the exercise of any of its other rights hereunder or under
any of the Security Documents;
(ix) establish or cause to be established one or more Lockboxes or
other arrangement for the deposit of proceeds of Receivables, and, in such
case, the Borrowers shall cause to be forwarded to the Lender at the
Lender's Office, on a daily basis, copies of all checks and other items of
payment and deposit slips related thereto deposited in such Lockboxes,
together with collection reports in form and substance satisfactory to the
Lender; and
(x) exercise all of the rights and remedies of a secured party under
the UCC (whether or not the UCC is applicable) and under any other
applicable law, including, without limitation, the right, without notice
except as specified below and with or without taking the possession
thereof, to sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any location chosen by the Lender, for cash,
on credit or for future delivery and at such price or prices and upon such
other terms as the Lender may deem commercially reasonable. The Borrowers
agree that, to the extent notice of sale shall be required by law, at least
10 days' notice to the Borrowers of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notice, but notice given in any other reasonable manner or at
any other reasonable time shall also constitute reasonable notification.
The Lender shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. The Lender may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
Section 11.03 Application of Proceeds. All proceeds from each sale of, or
other realization upon, all or any part of the Collateral following an Event of
Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses incurred in connection
with such sale or other realization, including reasonable attorneys' fees
actually incurred,
(b) Second: to the payment of the Secured Obligations (with the Borrowers
remaining liable for any deficiency) in any order which the Lender may elect,
and
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(c) Third: the balance (if any) of such proceeds shall be paid to the
Borrowers or, subject to any duty imposed by law or otherwise, to whomsoever is
entitled thereto.
The Borrowers shall remain liable and will pay, on demand, any deficiency
remaining in respect of the Secured Obligations, together with interest thereon
at a rate per annum equal to the highest rate then payable hereunder on such
Secured Obligations, which interest shall constitute part of the Secured
Obligations.
Section 11.04 Power of Attorney. In addition to the authorizations granted
to the Lender under Section 7.15 or under any other provision of this Agreement
or any of the Loan Documents, upon and after an Event of Default, each Borrower
hereby irrevocably designates, makes, constitutes and appoints the Lender (and
all Persons designated by the Lender from time to time) as such Borrower's true
and lawful attorney and agent in fact, and the Lender or any agent of the Lender
may, without notice to such Borrower, and at such time or times as the Lender or
any such agent in its sole discretion may determine, in the name of such
Borrower or the Lender,
(a) demand payment of the Receivables, enforce payment thereof by legal
proceedings or otherwise, settle, adjust, compromise, extend or renew any or all
of the Receivables or anylegal proceedings brought to collect the Receivables,
discharge and release the Receivables or any of them and exercise all of the
Borrowers' individual or collective rights and remedies with respect to the
collection of Receivables,
(b) prepare, file and sign the name of either of the Borrowers on any proof
of claim in bankruptcy or any similar document against any Account Debtor or any
notice of Lien, assignment or satisfaction of Lien or similar document in
connection with any of the Collateral,
(c) endorse the name of either of the Borrowers upon any chattel paper,
document, instrument, notice, freight xxxx, xxxx of lading or similar document
or agreement relating to the Receivables, the Inventory or any other Collateral,
(d) use the stationery of either of the Borrowers, open either of the
Borrowers' mail, notify the post office authorities to change the address for
delivery of either of the Borrowers' mail to an address designated by the Lender
and sign the name of either of the Borrowers to verifications of the Receivables
and on any notice to the Account Debtors,
(e) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Receivables,
Inventory, Equipment or other Collateral to which either of the Borrowers or any
Subsidiary of the Borrowers has access.
Section 11.05 Miscellaneous Provisions Concerning Remedies.
(a) Rights Cumulative. The rights and remedies of the Lender under this
Agreement, the Notes and each of the Loan Documents shall be cumulative and not
exclusive
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of any rights or remedies which it or they would otherwise have. In
exercising such rights and remedies, the Lender may be selective and no failure
or delay by the Lender in exercising any right shall operate as a waiver of such
right nor shall any single or partial exercise of any power or right preclude
its other or further exercise or the exercise of any other power or right.
(b) Waiver of Marshaling. The Borrowers hereby waive any right to require
any marshaling of assets and any similar right.
(c) Limitation of Liability. Nothing contained in this Article 11 or
elsewhere in this Agreement or in any of the Loan Documents shall be construed
as requiring or obligating the Lender or any agent or designee of the Lender to
make any demand or to make any inquiry as to the nature or sufficiency of any
payment received by it or to present or file any claim or notice or take any
action with respect to any Receivable or any other Collateral or the moneys due
or to become due thereunder or in connection therewith or to take any steps
necessary to preserve any rights against prior parties, and neither the Lender
nor any of its agents or designees shall have any liability to either of the
Borrowers for actions taken pursuant to this Article 11, any other provision of
this Agreement or any of the Loan Documents, so long as the Lender or such agent
or designee shall act reasonably and in good faith.
(d) Appointment of Receiver. In any action under this Article 11, the
Lender shall be entitled to the appointment of a receiver, without notice of any
kind whatsoever, to take possession of all or any portion of the Collateral and
to exercise such power as the court shall confer upon such receiver.
Section 11.06 Trademark License. Each of the Borrowers hereby grants to the
Lender the nonexclusive right and license to use any trademark then used by
either of the Borrowers, for the purposes set forth in Section 11.02(c)(vi) and
for the purpose of enabling the Lender to realize on the Collateral and to
permit any purchaser of any portion of the Collateral through a foreclosure sale
or any other exercise of the Lender's rights and remedies under the Loan
Documents to use, sell or otherwise dispose of the Collateral bearing any such
trademark. Such right and license is granted free of charge, without the
requirement that any monetary payment whatsoever be made to either of the
Borrowers or any other Person by the Lender. The Borrowers hereby represent,
warrant, covenant and agree that it presently has, and shall continue to have,
the right, without the approval or consent of others, to grant the license set
forth in this Section 11.06.
ARTICLE 12 - MISCELLANEOUS
Section 12.01 Notices.
(a) Method of Communication. Except as specifically provided in this
Agreement or in any of the Loan Documents, all notices and the communications
hereunder and thereunder shall be in writing or by telephone subsequently
confirmed in writing. Notices in
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writing shall be delivered personally or sent by overnight courier service,
by certified or registered mail, postage pre-paid, or by facsimile transmission
and shall be deemed received, in the case of personal delivery, when delivered,
in the case of overnight courier service, on the next Business Day after
delivery to such service, in the case of mailing, on the third day after mailing
(or, if such day is a day on which deliveries of mail are not made, on the next
succeeding day on which deliveries of mail are made) and, in the case of
facsimile transmission, upon transmittal; provided that in the case of notices
to the Lender, the Lender shall be charged with knowledge of the contents
thereof only when such notice is actually received by the Lender. A telephonic
notice to the Lender as understood by the Lender will be deemed to be the
controlling and proper notice in the event of a discrepancy with or failure to
receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at the
following addresses, or any other address of which all the other parties are
notified in writing.
If to the Borrowers: ILD Teleservices, Inc.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxx Xxxxxxxxxxxx
Facsimile No.: (000) 000-0000
and
ILD Teleservices, Inc.
13000 Sawgrass Xxxxxxx Xxxxxx
Xxxxx 0
Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
with a copy to Xxxxxx, Xxxxxx & Xxxxxxx
Two Midtown Plaza, Suite 1900
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attn: C. Read Xxxxxx, Jr.
Facsimile No.: (000) 000-0000
If to the Lender: NationsBank, N.A.
c/o NationsBank Business Credit
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Ms. Xxxxxx Xxxxxxxx Xxxxx
Facsimile No.: (000) 000-0000
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with a copy to: Xxxxx, Xxxxxxxx & Xxxxxxx, XXX
Xxxxxxxxx XX, Xxxxx 0000
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Xx., Esq.
Facsimile No.: (000) 000-0000
(c) Lender's Office. The Lender hereby designates its office located at 000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxx 00000, or any subsequent office
which shall have been specified for such purpose by written notice to the
Borrowers, as the office to which payments due are to be made and at which Loans
will be disbursed.
Section 12.02 Expenses. The Borrowers agree to pay or reimburse on demand
all costs and expenses incurred by the Lender, including, without limitation,
the reasonable and actual fees and disbursements of counsel, in connection with
(a) the negotiation, preparation, execution, delivery, administration,
enforcement and termination of this Agreement and each of the other Loan
Documents, whenever the same shall be executed and delivered, including, without
limitation, (i) the out-of-pocket costs and expenses incurred in connection with
the administration and interpretation of this Agreement and the other Loan
Documents, (ii) the costs and expenses of appraisals of the Collateral, (iii)
taxes, fees and other charges of filing the Financing Statements and
continuations and the costs and expenses of taking other actions to perfect,
protect, and continue the Security Interest; (b) the preparation, execution and
delivery of any waiver, amendment, supplement or consent by the Lender relating
to this Agreement or any of the Loan Documents; (c) sums paid or obligations
incurred in connection with the payment of any amount or taking any action
required of the Borrowers under the Loan Documents that the Borrowers fail to
pay or take; (d) costs of inspections and verifications of the Collateral,
including, without limitation, standard per diem fees charged by the Lender,
travel, lodging, and meals for inspections of the Collateral and the Borrowers'
operations and books and records by the Lender's agents whenever an Event of
Default exists; (e) costs and expenses of forwarding loan proceeds, collecting
checks and other items of payment, and establishing and maintaining the cash
management system; (f) costs and expenses of preserving and protecting the
Collateral; (g) after the occurrence of a Default, consulting with and obtaining
opinions and appraisals from one or more Persons, including real estate and
personal property appraisers, accountants and lawyers, concerning the value of
any Collateral for the Secured Obligations or related to the nature, scope or
value of any right or remedy of the Lender hereunder or under any of the Loan
Documents, including any review of factual matters in connection therewith,
which expenses shall include the fees and disbursements of such Persons; and (h)
costs and expenses paid or incurred to obtain payment of the Secured
Obligations, enforce the Security Interest, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
prosecute or defend any claim in any way arising out of, related to or connected
with, this Agreement or any of the Loan Documents, which expenses shall include
the reasonable fees and disbursements of counsel and of experts and other
consultants retained by the Lender.
The foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by the Borrowers. The
Borrowers hereby authorize
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the Lender to debit the Borrowers' loan accounts (by increasing the
principal amount of the Revolving Credit Loan) in the amount of any such costs
and expenses owed by the Borrowers when due.
Section 12.03 Stamp and Other Taxes. The Borrowers will pay any and all
stamp, registration, recordation and similar taxes, fees or charges and shall
indemnify the Lender against any and all liabilities with respect to or
resulting from any delay in the payment or omission to pay any such taxes, fees
or charges, which may be payable or determined to be payable in connection with
the execution, delivery, performance or enforcement of this Agreement and any of
the Loan Documents or the perfection of any rights or security interest
thereunder.
Section 12.04 Setoff. In addition to any rights now or hereafter granted
under applicable law, and not by way of limitation of any such rights, upon and
after the occurrence of any Default or Event of Default, the Lender and any
participant with the Lender in the Loans are hereby authorized by the Borrowers
at any time or from time to time, without notice to the Borrowers or to any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, time or
demand, including, but not limited to, indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other indebtedness at any time
held or owing by the Lender or any participant to or for the credit or the
account of the Borrowers against and on account of the Secured Obligations
irrespective or whether or not (a) the Lender shall have made any demand under
this Agreement or any of the Loan Documents, or (b) the Lender shall have
declared any or all of the Secured Obligations to be due and payable as
permitted by Section 11.02 and although such Secured Obligations shall be
contingent or unmatured.
Section 12.05 Litigation. EACH OF THE LENDER AND THE BORROWERS HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY BE
COMMENCED BY OR AGAINST EITHER OF THE BORROWERS OR THE LENDER ARISING OUT OF
THIS AGREEMENT, THE COLLATERAL OR ANY ASSIGNMENT THEREOF OR BY REASON OF ANY
OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN EITHER OF THE BORROWERS AND THE LENDER
OF ANY KIND OR NATURE. THE BORROWERS AND THE LENDER HEREBY AGREE THAT THE
FEDERAL COURT OF THE NORTHERN DISTRICT OF GEORGIA OR, AT THE OPTION OF THE
LENDER, ANY COURT IN WHICH THE LENDER SHALL INITIATE LEGAL OR EQUITABLE
PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN
CONTROVERSY AND WHICH SITS IN A JURISDICTION IN WHICH EITHER OF THE BORROWERS
TRANSACT BUSINESS SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE
ANY CLAIMS OR DISPUTES BETWEEN EITHER OF THE BORROWERS AND THE LENDER,
PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR THE LOAN DOCUMENTS OR TO
ANY MATTER ARISING THEREFROM. BOTH OF THE BORROWERS EXPRESSLY SUBMIT AND CONSENT
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING
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COMMENCED IN SUCH COURTS, HEREBY WAIVING PERSONAL SERVICE OF THE SUMMONS
AND COMPLAINT OR OTHER PROCESS OR PAPERS ISSUED THEREIN AND AGREEING THAT
SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BOTH OF THE BORROWERS AT THE ADDRESS
SET FORTH IN SECTION 12.01(b), WHICH SERVICE SHALL BE DEEMED MADE UPON RECEIPT
THEREOF. THE NON-EXCLUSIVE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT
BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR
THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE THE SAME IN ANY
APPROPRIATE JURISDICTION.
Section 12.06 Waiver of Rights. BOTH OF THE BORROWERS HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WAIVE ALL RIGHTS WHICH EITHER OF THE BORROWERS
HAVE UNDER CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY
SIMILAR PROVISION OF APPLICABLE LAW TO NOTICE AND TO A JUDICIAL HEARING PRIOR TO
THE ISSUANCE OF A WRIT OF POSSESSION ENTITLING THE LENDER, ITS SUCCESSORS AND
ASSIGNS TO POSSESSION OF THE COLLATERAL UPON DEFAULT OR EVENT OF DEFAULT.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING AND WITHOUT LIMITING ANY OTHER
RIGHT WHICH THE LENDER MAY HAVE, BOTH OF THE BORROWERS CONSENT THAT, IF THE
LENDER FILES A PETITION FOR AN IMMEDIATE WRIT OF POSSESSION IN COMPLIANCE WITH
SECTIONS 00-00-000 AND 00-00-000 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY
SIMILAR PROVISION OF APPLICABLE LAW AND THIS WAIVER OR A COPY HEREOF IS ALLEGED
IN SUCH PETITION AND ATTACHED THERETO, THE COURT BEFORE WHICH SUCH PETITION IS
FILED MAY DISPENSE WITH ALL RIGHTS AND PROCEDURES HEREIN WAIVED AND MAY ISSUE
FORTHWITH AN IMMEDIATE WRIT OF POSSESSION IN ACCORDANCE WITH CHAPTER 14 OF TITLE
44 OF THE OFFICIAL CODE OF GEORGIA OR IN ACCORDANCE WITH ANY SIMILAR PROVISION
OF APPLICABLE LAW, WITHOUT THE NECESSITY OF AN ACCOMPANYING BOND AS OTHERWISE
REQUIRED BY SECTION 00-00-000 OF THE OFFICIAL CODE OF GEORGIA OR IN ACCORDANCE
WITH ANY SIMILAR PROVISION OF APPLICABLE LAW. EACH OF THE BORROWERS HEREBY
ACKNOWLEDGES THAT IT HAS READ AND FULLY UNDERSTANDS THE TERMS OF THIS WAIVER AND
THE EFFECT HEREOF.
Section 12.07 Reversal of Payments. To the extent the Borrowers make a
payment or payments to the Lender or the Lender receives any payment or proceeds
of the Collateral for the Borrowers' benefit, which payment(s) or proceeds or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then, the Lender shall have the continuing and exclusive right
to apply, reverse and re-apply any and all payments to any portion of the
Secured Obligations, and, to the extent of such payment or proceeds received,
the Secured Obligations or part
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thereof intended to be satisfied shall be revived and continued in full
force and effect, as if such payment or proceeds had not been received by the
Lender.
Section 12.08 Injunctive Relief. The Borrowers recognize that, in the event
the Borrowers fail to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy of law may prove to be inadequate
relief to the Lender; therefore, the Borrowers agree that the Lender, at the
Lender's option, shall be entitled to temporary and permanent injunctive relief
in any such case without the necessity of proving actual damages.
Section 12.09 Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by the
Borrowers to determine whether they are in compliance with any covenant
contained herein, shall, unless there is an express written direction or consent
by the Lender to the contrary, be performed in accordance with GAAP.
Section 12.10 Assignment; Participation. All the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that neither of the
Borrowers may assign or transfer any of its or their rights under this
Agreement. The Lender may assign to one or more Persons, or sell participations
to one or more Persons in, all or a portion of its rights and obligations
hereunder and under the Notes and, in connection with any such assignment or
sale of a participation, may assign its rights and obligations under the
Security Documents. The Lender may, in connection with any assignment or
proposed assignment or sale or proposed sale of a participation, disclose to the
assignee or proposed assignee or participant or proposed participant any
information relating to the Borrowers furnished to the Lender by or on behalf of
the Borrowers.
Section 12.11 Amendments. Any term, covenant, agreement or condition of
this Agreement or any of the other Loan Documents may be amended or waived and
any departure therefrom may be consented to if, but only if, such amendment,
waiver or consent is in writing signed by the Lender and, in the case of an
amendment, by the Borrowers. Unless otherwise specified in such waiver or
consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.
Section 12.12 Performance of Borrowers' Duties. The Borrowers' obligations
under this Agreement and each of the Loan Documents shall be performed by the
Borrowers at their sole cost and expense. If one or more of the Borrowers shall
fail to do any act or thing which it or they have covenanted to do under this
Agreement or any of the Loan Documents, the Lender may (but shall not be
obligated to) do the same or cause it to be done either in the name of the
Lender or in the name and on behalf of one or more of the Borrowers, and the
Borrowers hereby irrevocably authorize the Lender so to act.
Section 12.13 Indemnification. The Borrowers agree to reimburse the Lender
for all reasonable costs and expenses, including reasonable counsel fees
actually incurred and disbursements, incurred and to indemnify and hold the
Lender harmless from and against all losses suffered by the Lender, other than
losses resulting from the Lender's gross negligence or willful misconduct, in
connection with (a) the exercise by the Lender of any right or
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remedy granted to it under this Agreement or any of the Loan Documents, (b)
any claim, and the prosecution or defense thereof, arising out of or in any way
connected with this Agreement or any of the Loan Documents, except in the case
of a dispute between the Borrowers and the Lender in which the Borrowers prevail
in a final unappealed or unappealable judgment, and (c) the collection or
enforcement of the Secured Obligations or any of them.
Section 12.14 All Powers Coupled with Interest. All powers of attorney and
other authorizations granted to the Lender and any Persons designated by the
Lender pursuant to any provisions of this Agreement or any of the Loan Documents
shall be deemed coupled with an interest and shall be irrevocable so long as any
of the Secured Obligations or the Term Loan remain unpaid or unsatisfied or the
Revolving Credit Facility has not been terminated.
Section 12.15 Survival. Notwithstanding any termination of this Agreement,
(a) until the Term Loan and all Secured Obligations have been paid in full and
the Revolving Credit Facility terminated, the Lender shall retain its Security
Interest and shall retain all rights under this Agreement and each of the
Security Documents with respect to the Collateral as fully as though this
Agreement had not been terminated, and (b) the indemnities to which the Lender
is entitled under the provisions of this Article 12 and any other provision of
this Agreement and the LoanDocuments shall continue in full force and effect and
shall protect the Lender against events arising after such termination as well
as before.
Section 12.16 Severability of Provisions. Any provision of this Agreement
or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 12.17 Governing Law. This Agreement and the Notes shall be
construed in accordance with and governed by the law of the State of Georgia.
Section 12.18 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and shall be binding
upon all parties, their successors and assigns, and all of which taken together
shall constitute one and the same agreement.
Section 12.19 Reproduction of Documents. This Agreement, each of the Loan
Documents and all documents relating thereto, including, without limitation, (a)
consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Lender, and (c) financial statements, certificates and
other information previously or hereafter furnished to the Lender, may be
reproduced by the Lender by any photographic, photostatic, microcard, microfilm,
miniature photographic or other similar process, and the Lender may destroy any
original document so reproduced. Each party hereto stipulates that, to the
extent permitted by applicable laws any such reproduction shall be as admissible
in evidence as the
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original itself in any judicial or administrative proceeding (whether or
not the original shall be in existence and whether or not such reproduction was
made by such Lender in the regular course of business), and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
Section 12.20 Funds Transfer Services.
(a) Each Borrower acknowledges that the Lender has made available to it a
description of security procedures regarding funds transfers executed by the
Lender or an affiliate bank at the request of such Borrower (the "Security
Procedures"). Each Borrower and the Lender agree that the Security Procedures
are commercially reasonable. Each Borrower further acknowledges that the full
scope of the Security Procedures which the Lender or such affiliate bank offers
and strongly recommends for funds transfers is available only if such Borrower
communicates directly with the Lender or such affiliate bank as applicable in
accordance with said procedures. If either Borrower attempts to communicate by
any other method or otherwise not in accordance with the Security Procedures,
the Lender or such affiliate bank, as applicable, shall not be required to
execute such instructions, but if the Lender or such affiliate bank, as
applicable, does so, such Borrower will be deemed to have refused the Security
Procedures that the Lender or such affiliate bank, as applicable, offers and
strongly recommends, and such Borrower will be bound by any funds transfer,
whether or not authorized, which is issued in such Borrower's name and accepted
by the Lender or such affiliate bank, as applicable, in good faith. The Lender
or such affiliate bank, as applicable, may modify the Security Procedures at
such time or times and in such manner as the Lender or such affiliate bank, as
applicable, in its sole discretion, deems appropriate to meet prevailing
standards of good banking practice. By continuing to use the Lender's or such
affiliate bank's, as applicable, wire transfer services after receipt of any
modification of the Security Procedures, each Borrower agrees that the Security
Procedures, as modified, are likewise commercially reasonable. Each Borrower
further agrees to establish and maintain procedures to safeguard the Security
Procedures and any information related thereto.
(b) The Lender or such affiliate bank, as applicable, will generally use
the Fedwire funds transfer system for domestic funds transfers, and the funds
transfer system operated by the Society for Worldwide International Financial
Telecommunication (SWIFT) for international funds transfers. International funds
transfers may also be initiated through the Clearing House InterBank Payment
System (CHIP) or international cable. However, the Lender or such affiliate
bank, as applicable, may use any means and routes that the Lender or such
affiliate bank, as applicable, in its sole discretion, may consider suitable for
the transmission of funds. Each payment order, or cancellation thereof, carried
out through a funds transfer system or a clearing house will be governed by all
applicable funds transfer system rules and clearing house rules and clearing
arrangements, whether or not the Lender or such affiliate bank, as applicable,
is a member of the system, clearing house or arrangement and each Borrower
acknowledges that the Lender's or such affiliate bank's, as applicable, right to
reverse, adjust, stop payment or delay posting of an executed payment order is
subject to the laws, regulations, rules, circulars and arrangements described
herein.
78369
74
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers in several counterparts all as of the
day and year first written above.
BORROWERS:
ILD TELESERVICES, INC.
Attest: By: /s/ Xxxxxx Xxxxxxxxxxxx
-----------------------------
Name:_____________________________
Title:____________________________
Name:______________________________
Title:_____________________________
[CORPORATE SEAL]
INTELLICALL OPERATOR SERVICES,
INC.
Attest: By:/s/ Xxxxxx Xxxxxxxxxxxx
-------------------------------
Name:_______________________________
Title:______________________________
Name:_______________________________
Title:______________________________
[CORPORATE SEAL]
LENDER:
NATIONSBANK, N.A.
By:______________________________
Name:______________________________
Title:_____________________________
78369
75
EXHIBIT "A"
REVOLVING CREDIT NOTE
$20,000,000.00 ________________, 1997
FOR VALUE RECEIVED, on ______________, 2001, the undersigned promise to
pay to the order of NationsBank, N.A. (hereinafter, together with any holder
hereof, called "Holder") at Atlanta, Georgia (or at such other place as the
Holder may designate in writing to the undersigned) the principal amount of
$20,000,000.00 or so much thereof as has been advanced hereunder.
The undersigned shall pay interest as provided in that certain Loan and
Security Agreement between the undersigned and Holder dated ______________, 1997
(the "Loan Agreement").
It is contemplated that the principal sum evidenced by this Note may be
reduced from time to time and that additional advances may be made from time to
time, as provided in the Loan Agreement; provided, however, that the outstanding
principal amount evidenced by this Note shall not exceed the maximum amount
provided in the Loan Agreement.
This Note is subject to the terms and conditions to the Loan Agreement.
No delay or failure on the part of the Holder in the exercise of any
right or remedy hereunder, under the Loan Agreement, the Security Documents or
at law or in equity, shall operate as a waiver thereof, and no single or partial
exercise by the Holder of any right or remedy hereunder, under the Loan
Agreement, the Security Documents, or at law or in equity shall preclude or
estop another or further exercise thereof or the exercise of any other right or
remedy.
Principal and interest on this Note shall be payable and paid in lawful
money of the United States of America
Time is of the essence of this Note and, in case this Note is collected
by law or through an attorney at law, or under advice therefrom, the undersigned
agrees to pay all costs of collection, including reasonable attorneys' fees
actually incurred if collected by or through an attorney.
The provisions of this Note shall be construed and interpreted and all
rights and obligations of the parties hereunder determined in accordance with
the laws of the State of Georgia.
78369
IN WITNESS WHEREOF, the undersigned have caused this Note to be
executed, sealed and delivered in Atlanta, Georgia, in their corporate names, by
and through their respective duly authorized officers, as of the day and year
first above written.
ILD TELESERVICES, INC.
Attest: By:________________________________
Name:______________________________
Title:_____________________________
Name:______________________________
Title:_____________________________
[CORPORATE SEAL]
INTELLICALL OPERATOR SERVICES,
INC.
Attest: By:________________________________
Name:______________________________
Title:_____________________________
Name:______________________________
Title:_____________________________
[CORPORATE SEAL]
78369
2
EXHIBIT "B"
TERM NOTE
$5,000,000.00 ________________,
1997
FOR VALUE RECEIVED, on ______________, 2001, the undersigned promise to
pay to the order of NationsBank, N.A. (hereinafter, together with any holder
hereof, called "Holder") at Atlanta, Georgia (or at such other place as the
Holder may designate in writing to the undersigned) the principal amount of
$5,000,000.00 or so much thereof as has been advanced hereunder.
The undersigned shall pay principal and interest as provided in that
certain Loan and Security Agreement between the undersigned and Holder dated
______________, 1997 (the "Loan Agreement").
It is contemplated that the principal sum evidenced by this Note shall
be reduced from time to time, as provided in the Loan Agreement.
This Note is subject to the terms and conditions to the Loan Agreement.
No delay or failure on the part of the Holder in the exercise of any
right or remedy hereunder, under the Loan Agreement, the Security Documents or
at law or in equity, shall operate as a waiver thereof, and no single or partial
exercise by the Holder of any right or remedy hereunder, under the Loan
Agreement, the Security Documents, or at law or in equity shall preclude or
estop another or further exercise thereof or the exercise of any other right or
remedy.
Principal and interest on this Note shall be payable and paid in lawful
money of the United States of America
Time is of the essence of this Note and, in case this Note is collected
by law or through an attorney at law, or under advice therefrom, the undersigned
agrees to pay all costs of collection, including reasonable attorneys' fees
actually incurred if collected by or through an attorney.
The provisions of this Note shall be construed and interpreted and all
rights and obligations of the parties hereunder determined in accordance with
the laws of the State of Georgia.
78369
IN WITNESS WHEREOF, the undersigned have caused this Note to be
executed, sealed and delivered in Atlanta, Georgia, in their corporate names, by
and through their respective duly authorized officers, as of the day and year
first above written.
ILD TELESERVICES, INC.
Attest: By:________________________________
Name:______________________________
Title:_____________________________
Name:______________________________
Title:_____________________________
[CORPORATE SEAL]
INTELLICALL OPERATOR SERVICES,
INC.
Attest: By:________________________________
Name:______________________________
Title:_____________________________
Name:______________________________
Title:_____________________________
[CORPORATE SEAL]
78369
2
EXHIBIT "C"
BORROWING BASE CERTIFICATE
[See Attached.]
78369
3
