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Exhibit 10.1
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LOAN AND SECURITY AGREEMENT
BY AND AMONG
PHONETEL TECHNOLOGIES, INC.
AND
CHEROKEE COMMUNICATIONS, INC.
AS BORROWER,
AND
THE FINANCIAL INSTITUTIONS THAT ARE SIGNATORIES HERETO
AND
FOOTHILL CAPITAL CORPORATION
AS AGENT
DATED AS OF 7/14/99
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION.............................................................................2
1.1 Definitions.....................................................................................2
1.2 Accounting Terms...............................................................................18
1.3 Code...........................................................................................18
1.4 Construction...................................................................................19
1.5 Schedules and Exhibits.........................................................................19
2. LOAN AND TERMS OF PAYMENT...............................................................................19
2.1 Revolver Advances..............................................................................19
2.2 [Intentionally Omitted.].......................................................................19
2.3 Borrowing Procedures and Settlements...........................................................19
2.4 Payments.......................................................................................26
2.5 Overadvances...................................................................................28
2.6 Interest and Letter of Credit Fees: Rates, Payments, and Calculations.........................28
2.7 Collection of Accounts.........................................................................30
2.8 Crediting Payments; Float Charge...............................................................30
2.9 Designated Account.............................................................................31
2.10 Maintenance of Loan Account; Statements of Obligations.........................................31
2.11 Fees...........................................................................................31
2.12 Letters of Credit..............................................................................32
2.13 Budget Approval Process........................................................................34
3. CONDITIONS; TERM OF AGREEMENT...........................................................................35
3.1 Conditions Precedent to the Initial Extension of Credit........................................35
3.2 Conditions Subsequent to the Initial Extension of Credit.......................................37
3.3 Conditions Precedent to all Extensions of Credit...............................................37
3.4 Term...........................................................................................38
3.5 Effect of Termination..........................................................................38
3.6 Pre-Petition Early Termination Fee.............................................................39
4. CREATION OF SECURITY INTEREST...........................................................................39
4.1 Grant of Security Interest.....................................................................39
4.2 Negotiable Collateral..........................................................................40
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral.........................40
4.4 Delivery of Additional Documentation Required..................................................40
4.5 Power of Attorney..............................................................................40
4.6 Right to Inspect...............................................................................41
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5. REPRESENTATIONS AND WARRANTIES..........................................................................41
5.1 No Encumbrances................................................................................41
5.2 Eligible Accounts..............................................................................41
5.3 [intentionally omitted]........................................................................42
5.4 Equipment......................................................................................42
5.5 Location of Equipment..........................................................................42
5.6 [intentionally omitted]........................................................................42
5.7 Location of Chief Executive Office; FEIN.......................................................42
5.8 Due Organization and Qualification; Subsidiaries...............................................42
5.9 Due Authorization; No Conflict.................................................................42
5.10 Litigation.....................................................................................43
5.11 No Material Adverse Change.....................................................................43
5.12 Fraudulent Transfer............................................................................44
5.13 Employee Benefits..............................................................................44
5.14 Environmental Condition........................................................................44
5.15 Brokerage Fees.................................................................................44
5.16 Year 2000 Compliance...........................................................................45
5.17 Intellectual Property..........................................................................45
5.18 Leases.........................................................................................45
6. AFFIRMATIVE COVENANTS...................................................................................45
6.1 Accounting System..............................................................................45
6.2 Collateral Reporting...........................................................................45
6.3 Financial Statements, Reports, Certificates....................................................45
6.4 [intentionally omitted]........................................................................47
6.5 Telephone Placement Agreements.................................................................47
6.6 Title to Equipment.............................................................................47
6.7 Maintenance of Equipment.......................................................................47
6.8 Taxes..........................................................................................47
6.9 Insurance......................................................................................47
6.10 No Setoffs or Counterclaims....................................................................48
6.11 Location of Equipment..........................................................................48
6.12 Compliance with Laws...........................................................................48
6.13 Employee Benefits..............................................................................49
6.14 Leases.........................................................................................49
6.15 Brokerage Commissions..........................................................................50
6.16 [intentionally omitted]........................................................................50
6.17 [intentionally omitted]........................................................................50
6.18 Corporate Existence, etc.......................................................................50
6.19 Disclosure Updates.............................................................................50
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7. NEGATIVE COVENANTS......................................................................................50
7.1 Indebtedness...................................................................................50
7.2 Liens..........................................................................................51
7.3 Restrictions on Fundamental Changes............................................................51
7.4 Disposal of Assets.............................................................................51
7.5 Change Name....................................................................................51
7.6 Guarantee......................................................................................51
7.7 Nature of Business.............................................................................52
7.8 Prepayments and Amendments.....................................................................52
7.9 [intentionally omitted]........................................................................52
7.10 [intentionally omitted]........................................................................52
7.11 Distributions..................................................................................52
7.12 Accounting Methods.............................................................................52
7.13 Investments....................................................................................52
7.14 Transactions with Affiliates...................................................................52
7.15 Suspension.....................................................................................53
7.16 Compensation...................................................................................53
7.17 Use of Proceeds................................................................................53
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees.............53
7.19 No Prohibited Transactions Under ERISA.........................................................53
7.20 [Intentionally Omitted]........................................................................54
7.21 Capital Expenditures...........................................................................54
7.22 [intentionally omitted]........................................................................54
8. EVENTS OF DEFAULT.......................................................................................54
9. THE LENDER GROUP'S RIGHTS AND REMEDIES..................................................................57
9.1 Rights and Remedies............................................................................57
9.2 Remedies Cumulative............................................................................59
10. TAXES AND EXPENSES......................................................................................60
11. WAIVERS; INDEMNIFICATION................................................................................60
11.1 Demand; Protest; etc...........................................................................60
11.2 The Lender Group's Liability for Collateral....................................................60
11.3 Indemnification................................................................................60
12. NOTICES. 61
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..............................................................62
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14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS..............................................................63
14.1 Assignments and Participations.................................................................63
14.2 Successors.....................................................................................65
15. AMENDMENTS; WAIVERS.....................................................................................66
15.1 Amendments and Waivers.........................................................................66
15.2 No Waivers; Cumulative Remedies................................................................67
16. AGENT; THE LENDER GROUP.................................................................................67
16.1 Appointment and Authorization of Agent.........................................................67
16.2 Delegation of Duties...........................................................................68
16.3 Liability of Agent.............................................................................68
16.4 Reliance by Agent..............................................................................68
16.5 Notice of Default or Event of Default..........................................................69
16.6 Credit Decision................................................................................69
16.7 Costs and Expenses; Indemnification............................................................70
16.8 Agent in Individual Capacity...................................................................70
16.9 Successor Agent................................................................................71
16.10 Lender in Individual Capacity..................................................................71
16.11 Withholding Tax................................................................................72
16.12 Collateral Matters.............................................................................73
16.13 Restrictions on Actions by Lenders; Sharing of Payments........................................74
16.14 Agency for Perfection..........................................................................75
16.15 Payments by Agent to the Lenders...............................................................75
16.16 Concerning the Collateral and Related Loan Documents...........................................75
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports
and Information................................................................................75
16.18 Several Obligations; No Liability..............................................................77
16.19 Legal Representation of Agent..................................................................77
17. GENERAL PROVISIONS......................................................................................77
17.1 Effectiveness..................................................................................77
17.2 Section Headings...............................................................................78
17.3 Interpretation.................................................................................78
17.4 Severability of Provisions.....................................................................78
17.5 Amendments in Writing..........................................................................78
17.6 Counterparts; Telefacsimile Execution..........................................................78
17.7 [intentionally omitted]........................................................................78
17.8 Integration....................................................................................78
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LOAN AND SECURITY AGREEMENT
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THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of July
__, 1999, between and among, on the one hand, the financial institutions
identified on the signature pages hereof (such financial institutions, together
with their respective successors and assigns, are referred to hereinafter each
individually as a "Lender" and collectively as the "Lenders"), FOOTHILL CAPITAL
CORPORATION, a California corporation, as agent for the Lenders ("Agent"), and,
on the other hand, PHONETEL TECHNOLOGIES, INC., an Ohio corporation, and
CHEROKEE COMMUNICATIONS, INC., an Ohio corporation (collectively, "Borrower").
WITNESSETH:
WHEREAS, Original Lenders (as hereinafter defined) and
Borrower are parties to that certain Credit Agreement, dated May 30, 1997, (the
"Original Loan Agreement") as amended by the First Amendment to Credit Agreement
dated as of February 24, 1998, and as further amended by the Second Amendment to
the Credit Agreement and Waiver dated as of March 31, 1998, and further amended
by the Third Amendment to Credit Agreement dated as of May 8, 1998 to include
Agent as the "Agent" and a "Lender" thereunder, (said amendments, together with
the Original Loan Agreement and all related documents, the "Pre-Petition Loan
Agreement");
WHEREAS the Borrower contemplates that on or about July __,
1999 (the "Filing Date"), the Borrower will file a voluntary petition for relief
under Chapter 11 of Title 11 of the United States Code in the United States
Bankruptcy Court for the Southern District of New York;
WHEREAS, as of the Filing Date, the amount of the Pre-Petition
Obligations (as hereinafter defined) owing to the Original Lenders by the
Borrower exceeded $42,500,000 plus additional accrued interest, fees and
expenses through the Filing Date;
WHEREAS the Pre-Petition Loan Agreement is secured by a valid,
enforceable first priority security interest in substantially all of the
Borrower's property as of the Filing Date;
WHEREAS, an immediate and on-going need exists for the
Borrower to obtain additional funds in order to continue the operation of its
business as a debtor-in-possession under chapter 11 of the Bankruptcy Code (as
hereinafter defined) and, accordingly, the Borrower has requested that the
Lenders extend post-petition financing and make revolving credit advances, and
the Lenders are willing to provide such post-petition financing and incur such
additional obligations pursuant to Section 364(c)(1),
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(c)(2), (c)(3) and 364(d)(1) of the Bankruptcy Code (as hereinafter defined),
but only for the purposes and upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any loans or extensions of credit heretofore, now or hereafter
made to or for the benefit of the Borrower, the parties hereto hereby agree as
follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS.
As used in this Agreement, the following terms shall have
the following definitions:
"ACCOUNT DEBTOR" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, a General
Intangible, Investment Property, or Negotiable Collateral.
"ACCOUNTS" means all currently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower,
whether or not yet due and payable, arising out of the sale or lease of goods,
the sale or lease of General Intangibles relating to the provision of
telecommunications services, or the rendition of services by Borrower,
irrespective of whether earned by performance, and any and all credit insurance,
guaranties, or security therefor.
"ADVANCES" has the meaning set forth in SECTION 2.1.
"AFFILIATE" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to vote 5% or more of the
securities having ordinary voting power for the election of directors or the
direct or indirect power to direct the management and policies of a Person.
"AGENT" means Foothill Capital Corporation, a California
corporation, solely in its capacity as agent for the Lenders, and shall include
any successor agent.
"AGENT ACCOUNT" has the meaning set forth in SECTION 2.7.
"AGENT ADVANCES" has the meaning set forth in SECTION
2.3(e)(i).
"AGENT'S LIENS" has the meaning set forth in SECTION 4.1.
"AGENT-RELATED PERSONS" means Agent together with its
Affiliates, officers, directors, employees, counsel, and agents.
"AGREED BUDGET" has the meaning set forth in SECTION 2.13.
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"AGREEMENT" has the meaning set forth in the preamble hereto.
"ASSIGNEE" has the meaning set forth in SECTION 14.1.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance
in the form of EXHIBIT A-1 attached hereto.
"AUTHORIZED PERSON" means any officer, other employee of
Borrower, or other person who, in each case, has been authorized by the board of
directors of the Borrower to act for Borrower under this Agreement.
"AVAILABILITY" means the amount that Borrower is entitled to
borrow as Advances under SECTION 2.1, such amount being the difference derived
when (a) the sum of the principal amount of Advances (including Agent Advances
and Swing Loans) then outstanding (including any amounts that the Lender Group
may have paid for the account of Borrower pursuant to any of the Loan Documents
and that have not been reimbursed by Borrower) is subtracted from the Maximum
Revolver Amount.
"BANKRUPTCY CODE" means the title 11 of the United States
Code, as amended, and any successor statute.
"BANKRUPTCY COURT" means the United States Bankruptcy Court
for the Southern District of New York or such other court having original
jurisdiction over Borrower's Chapter 11 Case.
"BANKRUPTCY RECOVERIES" means all actions, causes of action,
and proceeds thereof arising from or related to the assertion by Borrower, its
successors (including, but not limited to any bankruptcy trustee), of any claims
under Sections 541, 542, 543 and 553 of the Bankruptcy Code but excluding
Sections 544, 547, 548, 549 or 550 of the Bankruptcy Code.
"BASE RATE" means, the rate of interest announced within Xxxxx
Fargo Bank, N.A. as its "reference rate", with the understanding that the
"reference rate" is one of Xxxxx Fargo Bank's base rates (not necessarily the
lowest of such rates) and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto and is
evidenced by the recording thereof after its announcement in such internal
publication or publications as Xxxxx Fargo Bank may designate.
"BENEFIT PLAN" means a "defined benefit plan" (as defined in
SECTION 3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate
of Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"BOND INDENTURE" means the Indenture dated as of December 18,
1996, as amended, relating to Borrower's 12% Senior Notes due 2006.
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"BOOKS" means all of Borrower's books and records (including
all of its records indicating, summarizing, or evidencing its assets (including
the Collateral) or liabilities, all of its information relating to its business
operations or financial condition, and all of its computer programs, disks,
files, printouts, runs, or other computer prepared information).
"BORROWER" has the meaning set forth in the preamble to this
Agreement.
"BORROWING" means a borrowing hereunder consisting of Advances
made on the same day by the Lenders, or Agent on behalf thereof, to Borrower, or
by Swing Lender in the case of a Swing Loan, or by Agent in the case of an Agent
Advance.
"BORROWING BASE CERTIFICATE" has the meaning set forth in
SECTION 6.2.
"BUDGET APPROVAL PROCESS" means the Borrower's weekly
submission of its Proposed Budget for the approval of Agent as described in
SECTION 2.13.
"BUSINESS DAY" means any day that is not a Saturday, Sunday,
or other day on which national banks are authorized or required to close.
"CAPITALIZED LEASE" OR "CAPITAL LEASE" means, with respect to
any Person, any lease of real or personal property by such Person as lessee
which is required under GAAP to be capitalized on the balance sheet of such
Person.
"CAPITALIZED LEASE OBLIGATION" means any Indebtedness
represented by obligations under a Capital Lease.
"CARVE-OUT EXPENSES" means the sum of the Professional Fees
Amount, the fees of the Office of the United States Trustee, and the fees of the
clerk of the Bankruptcy Court.
"CARVE-OUT RESERVE" means $400,000.
"CHAPTER 11 CASE" means Borrower's chapter 11 bankruptcy
proceedings that are pending as Case No. 99-_____ in the United States
Bankruptcy Court for the Southern District of New York.
"CLOSING DATE" means the date of the making of the Initial
Advances (or other initial extension of credit) hereunder.
"CODE" means the New York Uniform Commercial Code.
"COLLATERAL" means all of Borrower's right, title, and
interest in and to each of the following:
(a) the Accounts,
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(b) the Bankruptcy Recoveries,
(c) the Books,
(d) the Equipment,
(e) the General Intangibles,
(f) the Inventory,
(g) the Investment Property,
(h) the Negotiable Collateral,
(i) [intentionally omitted]
(j) any money, or other assets of Borrower that now
or hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(k) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Bankruptcy Recoveries,
Books, Equipment, General Intangibles, Inventory, Investment Property,
Negotiable Collateral, money, deposit accounts, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition of
any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof.
"COLLATERAL ACCESS AGREEMENT" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance reasonably satisfactory to Agent.
"COLLECTIONS" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrower.
"COMMITMENT" means, with respect to each Lender, its Revolving
Credit Commitment or Total Commitment, as the context requires and, with respect
to all Lenders, their Revolving Credit Commitments or Total Commitments, as the
context requires, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on SCHEDULE C-1 attached hereto or on
the signature page of the Assignment and Acceptance pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of SECTION
14.1.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as
amended, 47 U.S.C. Section 151, et seq.
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"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of EXHIBIT C-2 delivered by an Authorized Person of Borrower to Agent.
"CONCENTRATION ACCOUNT" means a deposit account of Borrower
(located in the United States) into which cash received in the other Lockbox
Accounts is wire transferred as provided in SECTION 2.7.
"DAILY BALANCE" means, with respect to each day during the
term of this Agreement, the amount of an Obligation owed at the end of such day.
"DEFAULT" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"DEFAULTING LENDER" means any Lender that fails to make any
Advance that it is required to make hereunder on any Funding Date and that has
not cured such failure by making such Advance within 1 Business Day after
written demand upon it by Agent to do so.
"DEFAULTING LENDERS RATE" means the Base Rate for the first 3
days from and after the date the relevant payment is due and, thereafter, at
that interest rate equal to the GREATER OF (a) the interest rate then applicable
to Advances, and (b) the Base Rate.
"DESIGNATED ACCOUNT" means account number 394854091 of
Borrower maintained with Borrower's Designated Account Bank, or such other
deposit account of Borrower (located within the United States) that has been
designated as such, in writing, by Borrower to Agent.
"DESIGNATED ACCOUNT BANK" means National City Bank, N.A.,
whose office is located in Cleveland, Ohio, and whose ABA number is 04100124.
"DISBURSEMENT LETTER" means an instructional letter executed
and delivered by Borrower to Agent regarding the extensions of credit to be made
on the Closing Date, the form and substance of which shall be reasonably
satisfactory to Agent.
"DOLLARS" or "$" means United States dollars.
"ELIGIBLE ACCOUNTS" means those Accounts created by Borrower
in the ordinary course of its business, that arise out of Borrower's sale of
goods or rendition of services, that in accordance with GAAP are or should be
included in current assets and/or non-delinquent accounts receivable.
"ELIGIBLE PAY TELEPHONES" means only those Telephones (a) in
which the Agent, for its benefit and the ratable benefit of the Lenders, has a
first priority security interest, (b)which are located in the continental United
States, (c) which are identified on the Borrowing Base Certificate most recently
delivered by the Borrower, (d) which are in full operation, (e) which, in the
opinion of the Required Lenders, are in good operating
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condition and are not obsolete or unmerchantable, and (f) which are subject to a
valid and assignable Telephone Placement Agreement and a valid and assignable
OSP Agreement, PROVIDED, HOWEVER, that a Telephone shall not be deemed to be an
Eligible Pay Telephone if the Required Lenders, in their reasonable judgment,
determine that such Telephone should not be included in such definition
regardless of whether such Telephone meets the requirements of clauses (a)
through (f).
"ELIGIBLE TRANSFEREE" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $250,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having (together with its Affiliates) total
assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of
a pre-existing Lender, (e) so long as no Event of Default has occurred and is
continuing, any other Person approved by Agent and Borrower, and (f) during the
continuation of an Event of Default, any other Person approved by Agent.
"EQUIPMENT" means all of Borrower's present and hereafter
acquired machinery, machine tools, motors, equipment, furniture, furnishings,
fixtures, vehicles (including motor vehicles and trailers), tools, parts, goods
(other than consumer goods, farm products, or Inventory), wherever located,
including all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA AFFILIATE" means (a) any corporation subject to ERISA
whose employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any party subject to ERISA that is a party to an arrangement
with Borrower and whose employees are aggregated with the employees of Borrower
under IRC Section 414(o).
"ERISA EVENT" means (a) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan, (b) the withdrawal of Borrower, any of its
Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in which
it was a "substantial employer" (as defined in Section 4001(a)(2) of ERISA), (c)
the providing of notice of intent to terminate a
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Benefit Plan in a distress termination (as described in Section 4041(c) of
ERISA), (d) the institution by the PBGC of proceedings to terminate a Benefit
Plan or Multiemployer Plan, (e) any event or condition (i) that provides a basis
under Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan,
or (ii) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA, (f) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of Borrower, any of its Subsidiaries
or ERISA Affiliates from a Multiemployer Plan, or (g) providing any security to
any Plan under Section 401(a)(29) of the IRC by Borrower or its Subsidiaries or
any of their ERISA Affiliates.
"ESTIMATED BORROWING NEED" is the amount by which estimated
expenses exceed the estimated revenues as reflect in the Agreed Budget.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
"EXISTING LENDER" means the lenders party to the Pre-Petition
Loan Agreement.
"EXIT FINANCING" means a borrowing facility providing Borrower
with funding through which Borrower emerges from its Chapter 11 Case.
"FCC" means the Federal Communications Commission or any
governmental body or agency succeeding to the functions thereof.
"FCC RULES" means Title 47 of the Code of Federal Regulations,
as amended at any time and from time to time, and FCC decisions issued pursuant
to the adoption of such regulations.
"FEIN" means Federal Employer Identification Number.
"FILING DATE" has the meaning set forth in the preamble to
this Agreement.
"FINAL BANKRUPTCY COURT ORDER" means an order of the
Bankruptcy Court, in a form acceptable to Lenders, which on a final basis (a)
authorizes and approves the use of credit by the Borrower under this Agreement,
(b) explicitly finds that credit provided by Lenders under this Agreement is
being extended in good faith by the Lenders and (c) contains all other
provisions required by Lenders and their counsel in their sole discretion,
reasonably exercised.
"FINAL ORDER ENTRY DATE" means the date on which the
Bankruptcy Court enters the Final Bankruptcy Court Order on the docket of the
Bankruptcy Court following
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the conclusion of the final hearing on Borrower's motion for authority to incur
the Obligations.
"FUNDING DATE" means the date on which a Borrowing occurs.
"FOOTHILL" means Foothill Capital Corporation, a California
corporation.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"GENERAL INTANGIBLES" means all of Borrower's present and
future general intangibles and other personal property (including contract
rights, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, infringement claims, computer
programs, information contained on computer disks or tapes, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), other than goods, Accounts, Investment Property, and
Negotiable Collateral.
"GOVERNING DOCUMENTS" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, local,
or other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"HAZARDOUS MATERIALS" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"INDEBTEDNESS" means (a) all obligations of Borrower for
borrowed money, (b) all obligations of Borrower evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other obligations
of Borrower in respect of letters of credit, bankers acceptances, interest rate
swaps, or other financial products, (c) all obligations
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of Borrower under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any property or asset of Borrower, irrespective of whether
such obligation or liability is assumed, and (e) any obligation of Borrower
guaranteeing or intended to guarantee (whether guaranteed, endorsed, co-made,
discounted, or sold with recourse by Borrower) any obligation of any other
Person, except for endorsement of instruments or items of payment for deposit to
the account of Borrower or which are transmitted to or turned over to Agent.
"INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION
11.3.
"INDEMNIFIED PERSON" has the meaning set forth in SECTION
11.3.
"INITIAL ADVANCES" has the meaning set forth in SECTION 2.1.
"INSOLVENCY PROCEEDING" means any proceeding, other than the
Chapter 11 Case, commenced by or against any Person under any provision of the
United States Bankruptcy Code or under any other bankruptcy or insolvency law,
assignments for the benefit of creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
"INTERIM BANKRUPTCY COURT ORDER" means an order of the
Bankruptcy Court, substantially in the form attached hereto as Exhibit D-1 which
(a) authorizes and approves the interim use of credit by the Borrower under this
Agreement, (b) explicitly finds that credit provided by Lenders under this
Agreement is being extended in good faith by the Lenders and (c) contains all
other provisions required by Lenders and their counsel in their sole discretion,
reasonably exercised.
"INTERIM ORDER ENTRY DATE" means the date on which the
Bankruptcy Court enters its Interim Bankruptcy Court Order on the docket of the
Bankruptcy Court.
"INVENTORY" means all present and future inventory in which
Borrower has any interest, including goods held for sale or lease or to be
furnished under a contract of service and all of Borrower's present and future
raw materials, work in process, finished goods, and packing and shipping
materials, wherever located.
"INVESTMENT" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide accounts receivable arising
from the sale of goods or services in the ordinary course of business consistent
with past practice), purchases or other acquisitions for consideration of
Indebtedness or Stock, and any other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.
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"INVESTMENT PROPERTY" means "investment property" as that term
is defined in of the Code, whether now owned or hereafter acquired.
"IRC" means the Internal Revenue Code of 1986, as amended, and
any successor statute.
"L/C" has the meaning set forth in SECTION 2.12(a).
"L/C UNDERTAKING" has the meaning set forth in SECTION
2.12(a). "LENDER" and "LENDERS" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of SECTION 14.1 hereof.
"LENDER GROUP" means, individually and collectively, each of
the Lenders, and Agent.
"LENDER GROUP EXPENSES" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by Borrower under
any of the Loan Documents that are paid or incurred by the Lender Group, (b)
reasonable fees or charges paid or incurred by the Lender Group in connection
with the Lender Group's transactions with Borrower, including, fees or charges
for photocopying, notarization, couriers and messengers, telecommunication,
public record searches (including tax lien, litigation, and UCC searches and
including searches with the patent and trademark office, the copyright office,
or the department of motor vehicles), filing, recording, publication, appraisal
(including periodic Collateral appraisals), real estate surveys, real estate
title policies and endorsements, and environmental audits, (c) costs and
expenses incurred by Agent in the disbursement of funds to Borrower (by wire
transfer or otherwise), (d) charges paid or incurred by Agent resulting from the
dishonor of checks, (e) reasonable costs and expenses paid or incurred by the
Lender Group to correct any default or enforce any provision of the Loan
Documents, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) reasonable costs and expenses paid or incurred by the Lender
Group in examining the Books, (g) reasonable costs and expenses of third party
claims or any other suit paid or incurred by the Lender Group in enforcing or
defending the Loan Documents or in connection with the transactions contemplated
by the Loan Documents or the Lender Group's relationship with Borrower or any
guarantor, (h) each of the Lenders' reasonable fees and expenses (including
attorneys fees) incurred in advising, structuring, drafting, reviewing,
administering, amending, terminating, enforcing, defending, or concerning the
Loan Documents, irrespective of whether suit is brought, and (i) each of the
Lenders' reasonable fees and expenses (including attorneys fees) incurred in
terminating, enforcing (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning Borrower), or defending the Loan Documents, irrespective of whether
suit is brought.
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"LENDER-RELATED PERSON" means, with respect to any Lender,
such Lender, together with such Lender's Affiliates, and the officers,
directors, employees, counsel, and agents of such Lender.
"LETTER OF CREDIT" means an L/C or an L/C Undertaking, as the
context requires.
"LETTER OF CREDIT USAGE" means, as of any date of
determination the aggregate undrawn amount of all outstanding L/C Undertakings.
"LIEN" means any interest in property securing an obligation
owed to, or a claim by, any Person other than the owner of the property, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes.
"LOAN ACCOUNT" has the meaning set forth in SECTION 2.10.
"LOAN DOCUMENTS" means this Agreement, the Disbursement
Letter, the Letters of Credit, the Lockbox Agreements, the Interim Bankruptcy
Court Order as entered by the Bankruptcy Court, the Final Bankruptcy Court Order
as entered by the Bankruptcy Court, any note or notes executed by Borrower in
connection with this Agreement and payable to a member of the Lender Group, and
any other agreement entered into, now or in the future, by Borrower and the
Lender Group in connection with this Agreement.
"LOCKBOX ACCOUNT" shall mean a depositary account established
pursuant to one of the Lockbox Agreements.
"LOCKBOX AGREEMENTS" means those certain lockbox agreements
and those certain depository agreements, in form and substance reasonably
satisfactory to Agent, each of which is among Borrower, Agent, and one of the
Lockbox Banks.
"LOCKBOX BANKS" means any financial institution at which
Borrower maintains a Lockbox Account.
"LOCKBOXES" has the meaning set forth in SECTION 2.7.
"MATERIAL ADVERSE CHANGE" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrower, (b) the material
impairment of Borrower's ability to perform its obligations under the Loan
Documents to which it is a party or of the Lender Group to enforce the
Obligations or realize upon the Collateral, (c) a material impairment of the
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priority of the Agent's Liens with respect to the Collateral as a result of an
action or failure to act on the part of Borrower, or (d) a material adverse
effect on the value of the Collateral or the amount that the Lenders would be
likely to receive after giving consideration to delays in payment and costs of
enforcement as a result of the liquidation of such Collateral.
"MATURITY DATE" has the meaning set forth in SECTION 3.4.
"MAXIMUM AMOUNT" means $45,900,000.
"MAXIMUM REVOLVER AMOUNT" means the lesser of (i) the Maximum
Amount, minus the amount of the Carve-Out Reserve, minus the amount of Other
Reserves, and minus the Letter of Credit Usage, and (ii) $1,300 multiplied by
the number of pay telephones owned by the Borrower determined to be Eligible Pay
Telephones, plus 80% of the net amount of Eligible Accounts; minus the Carve-Out
Reserve, minus Other Reserves, and minus the Letter of Credit Usage.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" (as defined
in Section 4001(a)(3) of ERISA) to which Borrower, any of its Subsidiaries, or
any ERISA Affiliate has contributed, or was obligated to contribute, within the
past six years.
"NEGOTIABLE COLLATERAL" means all of Borrower's now owned and
hereafter acquired letters of credit, notes, drafts, instruments, security
certificates, and chattel paper.
"OBLIGATIONS" means all loans, Advances, debts, principal,
interest, contingent reimbursement obligations under any outstanding Letters of
Credit, premiums, liabilities (including all amounts charged to Borrower's Loan
Account pursuant hereto), obligations, fees, charges, costs, or Lender Group
Expenses, lease payments, guaranties, covenants, and duties owing by Borrower to
the Lender Group of any kind and description (whether pursuant to or evidenced
by the Loan Documents or pursuant to any other agreement between the Lender
Group and Borrower, and irrespective of whether for the payment of money),
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all interest not paid when due and
all Lender Group Expenses that Borrower is required to pay or reimburse by the
Loan Documents, by law, or otherwise.
"ORIGINAL LENDERS" means the Persons other than the Borrower
who are parties to the Original Loan Agreement.
"ORIGINAL LOAN AGREEMENT" shall have the meaning set forth in
the preamble to this Agreement.
"OSP AGREEMENT" means any agreement with an operator service
provider pursuant to which commissions, fees or surcharges are to be paid to the
Borrower or one of its Subsidiaries on all or a portion of the long distance
traffic relating to any pay telephones owned or leased by or to the Borrower or
one of its Subsidiaries.
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"OTHER RESERVES" means such other reserves in such amounts as
Agent may deem necessary or appropriate from time to time in its sole
discretion, reasonably exercised, based upon Agent's customary credit
considerations.
"OVERADVANCE" has the meaning set forth in SECTION 2.5.
"PARTICIPANT" has the meaning set forth in SECTION 14.1(e).
"PAY-OFF LETTER" means a letter, in form and substance
reasonably satisfactory to Agent, from Existing Lender to Agent respecting the
amount necessary to repay in full all of the obligations of Borrower owing to
Existing Lender with the exception of the Pre-Petition Early Termination Fee.
"PBGC" means the Pension Benefit Guaranty Corporation as
defined in Title IV of ERISA, or any successor thereto.
"PERMITTED DISCRETION", with respect to any determination by a
member of the Lender Group, means a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured asset-based lender)
business judgment.
"PERMITTED DISPOSITIONS" means (a) sales or other dispositions
of Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of Borrower's business, (b) sales of Inventory to buyers in the ordinary
course of Borrower's business, (c) the use or transfer of money, or cash
equivalents by Borrower in a manner that is not prohibited by the terms of this
Agreement or the other Loan Documents, and (d) the licensing by Borrower, on a
non-exclusive basis, of patents, trademarks, copyrights, and other intellectual
property rights in the ordinary course of Borrower's business.
"PERMITTED LIENS" means (a) Liens held by Agent for the
benefit of the Lender Group, (b) Liens for unpaid taxes that either (i) are not
yet due and payable or (ii) do not constitute an Event of Default hereunder and
are the subject of Permitted Protests, (c) Liens set forth on SCHEDULE P-1, (d)
the interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Purchase Money Indebtedness permitted under SECTION 7.1 hereof
and so long as the Lien attaches only to the asset purchased or acquired and the
proceeds thereof, (f) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business of Borrower and not in
connection with the borrowing of money, and which Liens (i) are for sums not yet
due and payable, (ii) are for sums which have not been due and payable for more
than thirty (30) days and are not material in amount, or (iii) are the subject
of Permitted Protests, (g) Liens arising from deposits made in connection with
obtaining worker's compensation or other unemployment insurance, (h) Liens or
deposits to secure performance of bids, tenders, or leases incurred in the
ordinary course of business of Borrower and not in connection with the borrowing
of money, (i) Liens arising by reason of security for surety or appeal bonds in
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the ordinary course of business of Borrower, and (j) Liens resulting from any
judgment or award that is not an Event of Default hereunder.
"PERMITTED PROTEST" means the right of Borrower to protest any
Lien (other than any such Lien that secures the Obligations), tax (other than
payroll taxes or taxes that are the subject of a United States federal tax
lien), or rental payment, provided that (a) a reserve with respect to such
obligation is established on the Books in such amount as is required under GAAP,
(b) any such protest is instituted and diligently prosecuted by Borrower in good
faith, and (c) Agent is satisfied that, while any such protest is pending, there
will be no impairment by reason of non-payment of such Lien during such protest
of the enforceability, validity, or priority of any of the Liens of Agent on
behalf of the Lender Group in and to the Collateral subject to the Lien being
protested.
"PERSON" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"PLAN" means any employee benefit plan, program, or
arrangement maintained or contributed to by Borrower or with respect to which it
may incur liability.
"POST-TERMINATION OBLIGATIONS" means those Obligations under
SECTION 11.3 which survive the termination of this Agreement, including but not
limited to such Indemnified Liabilities falling within the description contained
in SECTION 11.3, but not including such indemnified liabilities which are fixed,
liquidated or matured as of the Termination Date.
"PRE-PETITION EARLY TERMINATION FEE" has the meaning set forth
in SECTION 3.6.
"PRE-PETITION LOAN AGREEMENT" has the meaning set forth in the
preamble to this Agreement.
"PRE-PETITION OBLIGATIONS" means any and all "Obligations", as
that term is defined in the Pre-Petition Loan Agreement, owing by Borrower to
Original Lenders under the Pre-Petition Loan Agreement.
"PRO RATA SHARE" means:
(a) with respect to a Lender's obligation to make
Advances and receive payments of interest, fees, and principal with respect
thereto, the percentage obtained by dividing (i) such Lender's Revolving Credit
Commitment, by (ii) the aggregate amount of all Lenders' Revolving Credit
Commitments,
(b) with respect to a Lender's obligation to
participate in Letters of Credit, and receive payments of fees with respect
thereto, the percentage obtained by
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dividing (i) such Lender's sub-portion of its Revolving Credit Commitment to
participate in Letters of Credit, as set forth on SCHEDULE C-1, by (ii) the
aggregate amount of all Lenders' sub-portions of their Revolving Credit
Commitments to participate in Letters of Credit, as set forth on SCHEDULE C-1,
(c) [intentionally omitted], and
(d) with respect to all other matters (including the
indemnification obligations arising under SECTION 16.7), the percentage obtained
by dividing (i) such Lender's Total Commitment, by (ii) the aggregate amount of
all Lenders' Total Commitments.
"PROFESSIONAL FEES" means compensation and reimbursement of
fees and expenses allowed and payable under sections 330 and 331 of the
Bankruptcy Code for professionals retained by Borrower or any statutory
committee under Section 327 or 1103 of the Bankruptcy Code.
"PROFESSIONAL FEES AMOUNT" means $400,000.
"PROJECTIONS" means Borrower's forecasted (a) balance sheets,
(b) profit and loss statements, (c) cash flow statements, and (d) capitalization
statements, all prepared on a consistent basis with Borrower's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.
"PROPOSED BUDGET" means a detailed six-week budget prepared by
Borrower reflecting all of the most current projections of anticipated revenues
and expenses as Agent may reasonably request.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"QUALIFIED LOCAL DEPOSIT ACCOUNT" has the meaning set forth in
SECTION 2.7.
"REQUIRED LENDERS" means, at any time, Lenders whose Pro Rata
Shares aggregate 53% of the Total Commitments, or if the Commitments have been
terminated irrevocably, 53% of the Obligations then outstanding.
"REPORTABLE EVENT" means any of the events described in
Section 4043(c) of ERISA or the regulations thereunder other than a Reportable
Event as to which the provision of 30 days notice to the PBGC is waived under
applicable regulations.
"REVOLVING CREDIT COMMITMENT" means, for each Lender, the
Dollar amount of the obligation of such Lender to make Advances (in an aggregate
amount at one time
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outstanding), as such amount is set forth opposite the name of such Lender under
the caption Revolving Credit Commitment on SCHEDULE C-1.
"REVOLVER USAGE" means, as of any date of determination, the
aggregate amount of Advances outstanding.
"RISK PARTICIPATION LIABILITY" means, as to each Letter of
Credit, all reimbursement obligations of Borrower to the issuer of an L/C or to
the issuer of a letter of credit with respect to the transaction for which an
L/C Undertaking was executed and delivered (to the extent such reimbursement
obligations are subject to such L/C Undertaking), consisting of (a) the amount
available to be drawn or which may become available to be drawn, (b) all amounts
which have been paid and made available by the issuing bank to the extent not
reimbursed by Borrower, whether by the making of an Advance or otherwise, and
(c) all accrued and unpaid interest, fees, and expenses payable with respect
thereto.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"SECURITIES ACCOUNT" means a "securities account" as that term
is defined in Section 8501 of the Code.
"SENIOR PERMITTED LIENS" means Permitted Liens listed on
SCHEDULE P-2.
"SETTLEMENT" has the meaning set forth in SECTION 2.3(f)(i).
"SETTLEMENT DATE" has the meaning set forth in SECTION
2.3(f)(i).
"SETTLEMENT REQUEST DATE" has the meaning set forth in SECTION
2.3(f)(i).
"STOCK" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"STOCK PLEDGE AGREEMENT" means a stock pledge agreement, in
form and substance reasonably satisfactory to Agent, executed and delivered by
Borrower to Agent with respect to the pledge of the capital Stock of each of
Borrower's Subsidiaries.
"SUBSIDIARY" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
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"SWING LENDER" means any Lender appointed by the Agent in
writing, and which appointment has been accepted by such Lender in writing, as
the "Swing Lender".
"SWING LOAN" has the meaning set forth in SECTION 2.3(d)(i).
"TELEPHONE" means a microprocessor-based non-cellular
telephone through which a user may initiate a call payable only by coins or by
credit card, collect or third-number billing procedures and which has been
installed for operation.
"TELEPHONE PLACEMENT AGREEMENT" means any agreement between
the Borrower or one of its Subsidiaries and another Person pursuant to which the
Borrower or other such Subsidiary installs one or more Telephones on property or
properties owned, leased or operated by such Person and pays such Person a fee
or percentage of revenues earned from such Telephones, and such other
compensation as may be provided pursuant thereto, in return for such
installation right.
"TOTAL COMMITMENT" means, for each Lender, the Dollar amount
of the obligation of such Lender to make Advances and to make its portion of the
Advances, as such amount is set forth opposite the name of such Lender under the
caption Total Commitment on SCHEDULE C-1.
"TOTAL EXPENSES" means the actual calculation of such amount
in the same manner as contemplated in the line item labeled such on the Agreed
Budget.
"TRIGGERING EVENT" means the (a) conversion of any of the
Chapter 11 Cases to a proceeding under Chapter 7 of the Bankruptcy Code, (b)
appointment of a trustee under Section 1104(a) of the Bankruptcy Code in any of
the Chapter 11 Cases, or (c) dismissal of any of the Chapter 11 Cases, unless
such dismissal provides for the concurrent payment in full in cash of all of the
Obligations.
"UCC" means the New York Uniform Commercial Code.
"WEEKLY CONFERENCE CALL" means a conference in person, by
telephone, or by video conference scheduled for 10:00 (California Time) on
Friday of each week, or at any other such time as Agent may reasonably request,
during the period in which any Obligations are outstanding.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower on a consolidated basis
unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
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1.4 CONSTRUCTION. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. An Event of Default shall
"continue" or be "continuing" until such Event of Default has been cured or
waived in writing by Agent. Section, subsection, clause, schedule, and exhibit
references herein are to this Agreement unless otherwise specified. Any
reference in this Agreement or in the Loan Documents to this Agreement or any of
the Loan Documents shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES. Subject to the terms and conditions of this
Agreement, and during the term of this Agreement, each Lender agrees to make
advances ("ADVANCES") to Borrower in an amount at any one time outstanding not
to exceed such Lender's Pro Rata Share of an amount equal to the Maximum Amount
except that during the period between the entry of the Interim Bankruptcy Court
Order and the Final Bankruptcy Court Order, Lenders agree to make Advances only
in the amount authorized by the Bankruptcy Court (the "Initial Advances").
(a) The Lenders shall have no obligation to make
further Advances hereunder to the extent such further Advances would cause the
Revolver Usage to exceed the Maximum Revolver Amount.
(b) Amounts borrowed pursuant to this Section may be
repaid and, subject to the terms and conditions of this Agreement, reborrowed at
any time during the term of this Agreement.
2.2 [INTENTIONALLY OMITTED.]
2.3 BORROWING PROCEDURES AND SETTLEMENTS Notwithstanding anything to
the contrary in this Section 2.3, the sole methods for Borrower to request a
Borrowing hereunder shall be as follows: (i) as to Initial Advances, the entry
of the Interim Bankruptcy Court Order shall constitute a request for Borrowing
in the amount authorized by the Bankruptcy Court in the Interim Bankruptcy Court
Order; and (ii) thereafter, if Borrower desires to make a Borrowing, Borrower's
Proposed Budget delivered to Lenders pursuant to the Budget Approval Process set
forth in Section 2.13 shall incorporate such
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request for a Borrowing for the immediately following week and specifying the
day during the immediately following week in which Borrower requests that the
Advance, if any, be made by Lenders.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be
made by an irrevocable written request by an Authorized Person delivered to
Agent (which notice must be received by Agent no later than 10:00 a.m.
(California time) on the Business Day that is the requested Funding Date)
specifying (i) the amount of such Borrowing (in no event to exceed the Estimated
Borrowing Need), and (ii) the requested Funding Date, which shall be a Business
Day; PROVIDED, HOWEVER, that in the case of a request for Swing Loan in an
amount of $1,000,000, or less, such notice will be timely received if it is
received by Agent no later than 10:00 a.m. (California time) on the Business Day
that is the requested Funding Date) specifying (i) the amount of such Borrowing,
and (ii) the requested Funding Date, which shall be a Business Day. At Agent's
election, in lieu of delivering the above-described written request, any
Authorized Person may give Agent telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing within 24
hours of the giving of such notice.
(b) AGENT'S ELECTION. Promptly after receipt of a
request for a Borrowing pursuant to SECTION 2.3(a), Agent shall elect, in its
discretion, (i) to have the terms of SECTION 2.3(c) apply to such requested
Borrowing, or (ii) to request Swing Lender to make a Swing Loan pursuant to the
terms of SECTION 2.3(d) in the amount of the requested Borrowing; provided,
however, that if Swing Lender declines in its sole discretion to make a Swing
Loan pursuant to SECTION 2.3(d), Agent shall elect to have the terms of SECTION
2.3(c) apply to such requested Borrowing.
(c) MAKING OF ADVANCES.
(i) In the event that Agent shall elect to have the
terms of this SECTION 2.3(c) apply to a requested Borrowing as
described in SECTION 2.3(b), then promptly after receipt of a
request for a Borrowing pursuant to SECTION 2.3(a), Agent
shall notify the Lenders, not later than 1:00 p.m. (California
time) on the Business Day immediately preceding the Funding
Date applicable thereto, by telecopy, telephone, or other
similar form of transmission, of the requested Borrowing. Each
Lender shall make the amount of such Lender's Pro Rata Share
of the requested Borrowing available to Agent in immediately
available funds, to such account of Agent as Agent may
designate, not later than 10:00 a.m. (California time) on the
Funding Date applicable thereto. After Agent's receipt of the
proceeds of such Advances, upon satisfaction of the applicable
conditions precedent set forth in SECTION 3 hereof, Agent
shall make the proceeds of such Advances available to Borrower
on the applicable Funding Date by transferring same day funds
equal to the proceeds of such Advances received by Agent to
Borrower's Designated Account; PROVIDED, HOWEVER, that,
subject to the provisions of SECTION 2.3(i), Agent shall not
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request any Lender to make, and no Lender shall make, any
Advance if Agent shall have received written notice from any
Lender, or otherwise has actual knowledge, that (1) one or
more of the applicable conditions precedent set forth in
SECTION 3 will not be satisfied on the requested Funding Date
for the applicable Borrowing unless such condition has been
waived, or (2) the requested Borrowing would exceed the
Availability of Borrower on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing
after the Closing Date, at least 1 Business Day prior to the
date of such Borrowing, that such Lender will not make
available as and when required hereunder to Agent for the
account of Borrower the amount of that Lender's Pro Rata Share
of the Borrowing, Agent may assume that each Lender has made
or will make such amount available to Agent in immediately
available funds on the Funding Date and Agent may (but shall
not be so required), in reliance upon such assumption, make
available to Borrower on such date a corresponding amount. If
and to the extent any Lender shall not have made its full
amount available to Agent in immediately available funds and
Agent in such circumstances has made available to Borrower
such amount, that Lender shall on the Business Day following
such Funding Date make such amount available to Agent,
together with interest at the Defaulting Lenders Rate for each
day during such period. A notice submitted by Agent to any
Lender with respect to amounts owing under this subsection
shall be conclusive, absent manifest error. If such amount is
so made available, such payment to Agent shall constitute such
Lender's Advance on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to Agent
on the Business Day following the Funding Date, Agent will
notify Borrower of such failure to fund and, upon demand by
Agent, Borrower shall pay such amount to Agent for Agent's
account, together with interest thereon for each day elapsed
since the date of such Borrowing, at a rate per annum equal to
the interest rate applicable at the time to the Advances
composing such Borrowing. The failure of any Lender to make
any Advance on any Funding Date shall not relieve any other
Lender of any obligation hereunder to make an Advance on such
Funding Date, but no Lender shall be responsible for the
failure of any other Lender to make the Advance to be made by
such other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrower to Agent for
the Defaulting Lender's benefit; nor shall a Defaulting Lender
be entitled to the sharing of any payments hereunder. Amounts
payable to a Defaulting Lender shall instead be paid to or
retained by Agent. Agent may hold and, in its discretion,
re-lend to Borrower the amount of all such payments received
or retained by it for the account of
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such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents and
determining Pro Rata Shares, such Defaulting Lender shall be
deemed not to be a "Lender" and such Lender's Commitment shall
be deemed to be zero (-0-). This section shall remain
effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or
shall have become immediately due and payable or (y) the
requisite non-Defaulting Lenders and Agent shall have waived
such Lender's default in writing. The operation of this
section shall not be construed to increase or otherwise affect
the Commitment of any Lender, or relieve or excuse the
performance by Borrower of its duties and obligations
hereunder.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the consent
of Swing Lender, as a Lender, to have the terms of this
SECTION 2.3(d) apply to a requested Borrowing as described in
SECTION 2.3(b), Swing Lender as a Lender shall make an Advance
in the amount of such Borrowing (any such Advance made solely
by Swing Lender as a Lender pursuant to this SECTION 2.3(d)
being referred to as a "SWING LOAN" and such Advances being
referred to collectively as "SWING LOANS") available to
Borrower on the Funding Date applicable thereto by
transferring same day funds to Borrower's Designated Account.
Each Swing Loan is an Advance hereunder and shall be subject
to all the terms and conditions applicable to other Advances,
except that all payments thereon shall be payable to Swing
Lender as a Lender solely for its own account (and for the
account of the holder of any participation interest with
respect to such Advance). Subject to the provisions of SECTION
2.3(i), Agent shall not request Swing Lender as a Lender to
make, and Swing Lender as a Lender shall not make, any Swing
Loan if Agent shall have received written notice from any
Lender, or otherwise has actual knowledge, that (i) one or
more of the applicable conditions precedent set forth in
SECTION 3 will not be satisfied on the requested Funding Date
for the applicable Borrowing unless such condition has been
waived, or (ii) the requested Borrowing would exceed the
Availability of Borrower on such Funding Date. Swing Lender as
a Lender shall not otherwise be required to determine whether
the applicable conditions precedent set forth in SECTION 3
have been satisfied on the Funding Date applicable thereto
prior to making, in its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the
Collateral and shall constitute Advances and Obligations
hereunder, and shall bear interest at the rate applicable from
time to time to Advances pursuant to SECTION 2.6 hereof.
(e) AGENT ADVANCES.
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(i) Subject to the limitations set forth in the
proviso contained in this SECTION 2.3(e), Agent hereby is
authorized by Borrower and the Lenders, from time to time in
Agent's sole discretion, (1) after the occurrence and during
the continuance of a Default or an Event of Default, or (2) at
any time that any of the other applicable conditions precedent
set forth in SECTION 3 have not been satisfied, to make
Advances to Borrower on behalf of the Lenders that Agent, in
its reasonable business judgment, deems necessary or
desirable, in any event in an amount not to exceed $100,000
(A) to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of repayment of the
Obligations, or (C) to pay any other amount chargeable to
Borrower pursuant to the terms of this Agreement, including
Lender Group Expenses and the costs, fees, and expenses
described in SECTION 10 (any of the Advances described in this
SECTION 2.3(e) being hereinafter referred to as "AGENT
ADVANCES"); provided, that the Required Lenders may at any
time revoke Agent's authorization contained in this SECTION
2.3(e) to make Agent Advances, any such revocation to be in
writing and to become effective upon Agent's receipt thereof.
(ii) Agent Advances shall be repayable on demand and
secured by the Collateral, shall constitute Advances and
Obligations hereunder, and shall bear interest at the rate
applicable from time to time to the Advances pursuant to
SECTION 2.6 hereof.
(f) SETTLEMENT. It is agreed that each Lender's
funded portion of the Advances is intended by the Lenders to equal, at all
times, such Lender's Pro Rata Share of the outstanding Advances. Such agreement
notwithstanding, Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrower) that in
order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Advances, the Swing Loans, and the
Agent Advances shall take place on a periodic basis in accordance with the
following provisions:
(i) Agent shall request settlement ("SETTLEMENT")
with the Lenders on a weekly basis, or on a more frequent
basis if so determined by Agent, (1) on behalf of Swing
Lender, with respect to each outstanding Swing Loan, (2) for
itself, with respect to each Agent Advance, and (3) with
respect to Collections received, as to each by notifying the
Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 1:00
p.m. (California time) on the Business Day that is five
Business Days prior to the date of such requested Settlement
(the "SETTLEMENT REQUEST DATE")(the date of such requested
Settlement being the "SETTLEMENT DATE"). Such notice of a
Settlement Date shall include a summary statement of the
amount of outstanding Advances, Swing Loans, and Agent
Advances for the period since the last Settlement Request Date
until the current Settlement
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Request Date, the amount of repayments received in such
period, and the amounts allocated to each Lender of the
interest, fees, and other charges for such period. Subject to
the terms and conditions contained herein (including SECTION
2.3(c)(iii)): (y) if a Lender's balance of the Advances, Swing
Loans, and Agent Advances exceeds such Lender's Pro Rata Share
of the Advances, Swing Loans, and Agent Advances as of a
Settlement Request Date, then Agent shall by no later than
1:00 p.m. (California time) on the Settlement Date transfer in
immediately available funds to the account of such Lender as
such Lender may designate, an amount such that each such
Lender shall, upon receipt of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances, Swing
Loans, and Agent Advances; and (z) if a Lender's balance of
the Advances, Swing Loans, and Agent Advances is less than
such Lender's Pro Rata Share of the Advances, Swing Loans, and
Agent Advances as of a Settlement Request Date, such Lender
shall no later than 1:00 p.m. (California time) on the
Settlement Date transfer in immediately available funds to
such account of Agent as Agent may designate, an amount such
that each such Lender shall, upon transfer of such amount,
have as of the Settlement Date, its Pro Rata Share of the
Advances, Swing Loans, and Agent Advances. Such amounts made
available to Agent under clause (z) of the immediately
preceding sentence shall be applied against the amounts of the
applicable Swing Loan or Agent Advance and, together with the
portion of such Swing Loan or Agent Advance representing Swing
Lender's Pro Rata Share thereof, shall constitute Advances of
such Lenders. If any such amount is not made available to
Agent by any Lender on the Settlement Date applicable thereto
to the extent required by the terms hereof, Agent shall be
entitled to recover for its account such amount on demand from
such Lender together with interest thereon at the Defaulting
Lenders Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal
to, or greater than such Lender's Pro Rata Share of the
Advances, Swing Loans, and Agent Advances as of a Settlement
Request Date, Agent shall, as part of the relevant Settlement,
apply to such balance the portion of payments actually
received in good funds by Agent or Swing Lender with respect
to principal, interest, fees payable by Borrower and allocable
to the Lenders hereunder, and proceeds of Collateral. To the
extent that a net amount is owed to any such Lender after such
application, such net amount shall be distributed by Agent or
Swing Lender to that Lender as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent
no Agent Advances or Swing Loans are outstanding, may pay over
to Swing Lender any payments received by Agent, that in
accordance with the terms of this Agreement would be applied
to the reduction of the Advances, for application
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to Swing Lender's Pro Rata Share of the Advances. If, as of
any Settlement Date, Collections received since the then
immediately preceding Settlement Date have been applied to
Swing Lender's Pro Rata Share of the Advances other than to
Swing Loans or Agent Advances, as provided for in the previous
sentence, Swing Lender shall pay to Agent for the accounts of
the Lenders, and Agent shall pay to the Lenders, to be applied
to the outstanding Advances of such Lenders, an amount such
that each Lender shall, upon receipt of such amount, have, as
of such Settlement Date, its Pro Rata Share of the Advances.
During the period between Settlement Dates, Swing Lender with
respect to Swing Loans, Agent with respect to Agent Advances,
and each Lender with respect to the Advances other than Swing
Loans and Agent Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the
daily amount of funds employed by Swing Lender, Agent, or the
Lenders, as applicable.
(g) NOTATION. Agent shall record on its books the
principal amount of the Advances owing to each Lender, including the Swing Loans
owing to Swing Lender, and Agent Advances owing to Agent, and the interests
therein of each Lender, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment of principal of such Lender's Advances in its books and records,
including computer records, such books and records constituting rebuttably
presumptive evidence, absent manifest error, of the accuracy of the information
contained therein.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other
than Swing Loans and Agent Advances) shall be made by the Lenders simultaneously
and in accordance with their Pro Rata Shares. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advances hereunder, nor shall any Commitment of any
Lender be increased or decreased as a result of any failure by any other Lender
to perform its obligation to make any Advances hereunder, and (ii) no failure by
any Lender to perform its obligation to make any Advances hereunder shall excuse
any other Lender from its obligation to make any Advances hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary provision of
this Agreement notwithstanding, if the condition for borrowing under SECTION
3.3(d) cannot be fulfilled, the Lenders nonetheless hereby authorize Agent or
Swing Lender, as applicable, and Agent or Swing Lender, as applicable, may, but
is not obligated to, knowingly and intentionally continue to make Advances
(including Swing Loans) to Borrower such failure of condition notwithstanding,
so long as, at any time the outstanding Revolver Usage (except for and excluding
amounts charged to the Loan Account for interest, fees, or Lender Group
Expenses) does not exceed the Maximum Revolver Amount and the aggregate amount
of such Advances does not in any event exceed $100,000. The foregoing provisions
are for the sole and exclusive benefit of Agent, Swing Lender, and the Lenders
and are not intended to
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benefit Borrower in any way. The Advances and Swing Loans, as applicable, that
are made pursuant to this SECTION 2.3(i) shall be subject to the same terms and
conditions as any other Advance or Swing Loan, as applicable, except that the
rate of interest applicable thereto shall be the rates set forth in SECTION
2.6(c) hereof without regard to the presence or absence of a Default or Event of
Default; provided, that the Required Lenders may, at any time during the
continuance of an Event of Default or if Borrower fails to satisfy any other
material lending condition, revoke Agent's authorization contained in this
SECTION 2.3(i) to make Overadvances (except for and excluding amounts charged to
the Loan Account for interest, fees, or Lender Group Expenses), any such
revocation to be in writing and to become effective upon Agent's receipt
thereof.
(i) In the event Agent obtains actual knowledge that
the Revolver Usage exceeds the amount permitted by the
preceding paragraph, regardless of the amount of or reason for
such excess, Agent shall notify Lenders as soon as practicable
(and prior to making any (or any further) intentional
Overadvances (except for and excluding amounts charged to the
Loan Account for interest, fees, or Lender Group Expenses)
unless Agent determines that prior notice would result in
imminent harm to the Collateral or its value), and the Lenders
thereupon shall, together with Agent, jointly determine the
terms of arrangements that shall be implemented with Borrower
intended to reduce, within a reasonable time, the outstanding
principal amount of the Advances to Borrower to an amount
permitted by the preceding paragraph. In the event any Lender
disagrees over the terms of reduction and/or repayment of any
Overadvance, the terms of reduction and/or repayment thereof
shall be implemented according to the determination of the
Required Lenders.
(ii) Each Lender shall be obligated to settle with
Agent as provided in SECTION 2.3(f) for the amount of such
Lender's Pro Rata Share of any unintentional Overadvances by
Agent reported to such Lender, any intentional Overadvances
made as permitted under this SECTION 2.3(i), and any
Overadvances resulting from the charging to the Loan Account
of interest, fees, or Lender Group Expenses.
(j) [INTENTIONALLY OMITTED.]
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWER.
(i) All payments to be made by Borrower
shall be made without set-off, recoupment, deduction, or
counterclaim, except as otherwise required by law. Except as
otherwise expressly provided herein, all payments by Borrower
shall be made to Agent for the account of the Lender Group at
Agent's address set forth in SECTION 12, and shall be made in
immediately
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available funds, no later than 11:00 a.m. (California time)
on the date specified herein. Any payment received by Agent
later than 11:00 a.m. (California time), at the option of
Agent, shall be deemed to have been received on the
following Business Day and any applicable interest or fee
shall continue to accrue until such following Business Day.
(ii) Whenever any payment is due on a day
other than a Business Day, such payment shall be made on the
following Business Day, and such extension of time shall in
such case be included in the computation of interest or fees,
as the case may be.
(iii) Unless Agent receives notice from
Borrower prior to the date on which any payment is due to the
Lenders that Borrower will not make such payment in full as
and when required, Agent may assume that Borrower has made (or
will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to
each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent Borrower does not
make such payment in full to Agent on the date when due, each
Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at
the Base Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) APPORTIONMENT, APPLICATION, AND REVERSAL OF
PAYMENTS. Except as otherwise provided with respect to Defaulting Lenders,
principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Obligations to which such
payments relate held by each individual Lender) and payments of fees (other than
fees designated for Agent's sole and separate account) shall, as applicable, be
apportioned ratably among the Lenders having a Pro Rata Share of the type of
credit facility as to which the particular fee is applicable. All payments shall
be remitted to Agent and all such payments not relating to principal or interest
of specific Obligations or not constituting payment of specific fees, and all
proceeds of Collateral received by Agent, shall be applied as in the following
order:
(i) to pay any fees or expense reimbursements then
due to Agent from Borrower,
(ii) to pay any fees or expense reimbursements then
due to the Lenders from Borrower,
(iii) to pay interest due in respect of all
outstanding Advances (including Swing Loans and Agent
Advances),
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(iv) to pay fees, charges, commissions, and costs in
respect of all outstanding Letters of Credit,
(v) [intentionally omitted]
(vi) to pay or prepay principal of Swing Loans and
Agent Advances (in the order of their maturity),
(vii) to pay principal of all outstanding Advances
(other than Swing Loans and Agent Advances),
(viii) [intentionally omitted]
(ix) provide cash collateral to be held by Agent, for
the ratable benefit of those Lenders having a Pro Rata Share
of the Letters of Credit, in an amount equal to 105% of the
maximum amount of the Lender Group's obligations under Letters
of Credit; and
(x) to pay any other Obligations due to Agent, or any
Lender by Borrower.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrower to the Lender Group pursuant to SECTION 2.1 is
greater than the limitations set forth in SECTION 2.1, (an "OVERADVANCE"),
Borrower immediately shall pay to Agent, in cash, the amount of such excess,
which amount shall be used by Agent to reduce the Obligations in accordance with
the priority set forth in SECTION 2.4(b). In addition, Borrower hereby promises
to pay the Obligations (including principal, interest, fees, costs, and
expenses) in Dollars in full to the Lender Group as and when due and payable
under the terms of this Agreement and the other Loan Documents.
2.6 INTEREST AND LETTER OF CREDIT FEES: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c)
below, all Obligations (except for undrawn Letters of
Credit) that have been charged to the Loan Account
pursuant to the terms hereof shall bear interest on
the Daily Balance thereof at a per annum rate of 3.0
percentage points above the Base Rate through and
including the date that is 120 days after the first
day following the date upon which Borrower files its
Chapter 11 case, and at a per annum rate of 3.75
percentage points above the Base Rate thereafter.
(b) LETTER OF CREDIT FEE. Borrower shall pay Agent a
fee (in addition to the charges, commissions, fees,
and costs set forth in SECTION 2.12(e)) equal to 2.0%
per annum times the aggregate undrawn amount of all
outstanding Letters of Credit.
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(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default,
(i) all Obligations (except for undrawn
Letters of Credit) that have been charged to the Loan
Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof at a per annum
rate equal to 2 percentage points above the per annum
rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for
above shall be increased to 2 percentage points above
the per annum rate otherwise applicable hereunder.
(d) PAYMENTS. Interest and Letter of Credit fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month during the term hereof. Borrower hereby authorizes Agent, without prior
notice to Borrower, to charge such interest and Letter of Credit fees, all
Lender Group Expenses (as and when incurred), the charges, commissions, fees,
and costs provided for in SECTION 2.12(e) (as and when accrued or incurred), the
fees and charges provided for in SECTION 2.11 (as and when accrued or incurred),
and all installments or other payments due under any Loan Document to Borrower's
Loan Account, which amounts thereafter shall accrue interest at the rate then
applicable to Advances hereunder. Agent shall give written notice to Borrower if
and when Lender charges Lender Group Expenses, or amounts under Sections 2.11
and 2.12(e), to Borrower's Loan Account. Any interest not paid when due shall be
compounded and shall thereafter accrue interest at the rate then applicable to
Advances hereunder.
(e) COMPUTATION. All interest and fees chargeable
under the Loan Documents shall be computed on the basis of a 360 day year for
the actual number of days elapsed. In the event the Base Rate is changed from
time to time hereafter, the applicable rates of interest hereunder automatically
and immediately shall be increased or decreased by an amount equal to such
change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE.
In no event shall the interest rate or rates payable under this Agreement, plus
any other amounts paid in connection herewith, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable. Borrower and the Lender Group, in
executing and delivering this Agreement, intend legally to agree upon the rate
or rates of interest and manner of payment stated within it; provided, however,
that, anything contained herein to the contrary notwithstanding, if said rate or
rates of interest or manner of payment exceeds the maximum allowable under
applicable law, then, ipso facto as of the date of this Agreement, Borrower is
and shall be liable only for the payment of such maximum as allowed by law, and
payment received from Borrower in excess of such legal maximum, whenever
received, shall be applied to reduce the principal balance of the Obligations to
the extent of such excess.
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2.7 COLLECTION OF ACCOUNTS. Upon the occurrence and pendancy of an
Event of Default, Agent may require Borrower to maintain lockboxes (the
"Lockboxes") and instruct all Account Debtors to remit all amounts owed by them
to one of such Lockboxes. Borrower, Agent, and the Lockbox Banks shall enter
into the Lockbox Agreements, which among other things shall provide for the
opening of a Lockbox Account for the deposit of Collections at the applicable
Lockbox Bank. Notwithstanding the Borrower's cure of any Events of Default,
Agent may continue to require Borrower to comply with the provisions of this
section. Borrower agrees that all Collections received by Borrower while the
provisions of this section are in effect from any Account Debtor or any other
source immediately upon receipt shall be deposited into a Lockbox Account or
into deposit accounts that are not the subject of a Lockbox Agreement and from
which Borrower shall remit all funds contained therein to one of the Lockbox
Accounts (any such deposit account, a "Qualified Local Deposit Account");
PROVIDED, HOWEVER, Borrower shall maintain no more than 50 Qualified Local
Deposit Accounts; PROVIDED FURTHER, HOWEVER, that all Collections received into
such Qualified Local Deposit Accounts shall be wired directly or indirectly no
less frequently than weekly to the Concentration Account. No Lockbox Agreement
or other arrangement contemplated thereby shall be modified by Borrower without
the prior written consent of Agent. Upon the terms and subject to the conditions
set forth in the Lockbox Agreements, all amounts received in each Lockbox
Account shall be wired directly or indirectly each Business Day into the
Concentration Account. All amounts received in the Concentration Account shall
be wired each Business Day into an account (the "Agent's Account") maintained by
Agent at a depository selected by Agent.
2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt of any payment by
Agent (whether from transfers to Agent by the Lockbox Banks pursuant to the
Lockbox Agreements or otherwise) shall not be considered a payment on account
unless such payment item is a wire transfer of immediately available federal
funds made to the Agent Account or unless and until such payment item is honored
when presented for payment. Should any payment item not be honored when
presented for payment, then Borrower shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent Account on a Business Day on or
before 11:00 a.m. (California time). If any Collection item is received into the
Agent Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day. From and after
the Closing Date, Agent shall be entitled to charge Borrower for two Business
Days of `clearance' or `float' at the rate applicable to Advances set forth in
SECTION 2.6(a)(i) or SECTION 2.6(c)(i), as applicable, on all Collections that
are received by Borrower (regardless of whether forwarded by the Lockbox Banks
to Agent). This across-the-board two Business Day clearance or float charge on
all Collections is acknowledged by the parties to constitute an integral aspect
of the pricing of the financing of Borrower and shall apply irrespective of
whether or not there are any outstanding monetary Obligations; the effect of
such clearance or float charge being the equivalent of charging two Business
Days
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of interest on such Collections. Anything contained herein to the contrary
notwithstanding, the economic benefit of such clearance or float charge shall be
shared ratably by all Lenders. On a monthly basis, Borrower shall report to
Agent such information as is reasonably required by Agent to enable Agent to
calculate such clearance or float charges payable under this section.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances and
issue the Letters of Credit under this Agreement based upon telephonic or other
instructions received from an Authorized Person, or without instructions if
pursuant to SECTION 2.6(d). Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrower and made by Agent or the
Lenders hereunder. Unless otherwise agreed in writing by Agent and Borrower, any
Advance, Agent Advance, or Swing Loan requested by Borrower and made by Agent or
the Lenders hereunder shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of Borrower (the "LOAN
ACCOUNT") on which Borrower will be charged and all Advances made by Agent or
the Lenders to Borrower or for Borrower's account, including, accrued interest,
Lender Group Expenses, and any other payment Obligations of Borrower. In
accordance with SECTION 2.8, the Loan Account will be credited with all payments
received by Agent from Borrower or for Borrower's account, including all amounts
received in the Agent Account from any Lockbox Bank. Agent shall render monthly
statements regarding the Loan Account to Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing, and such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrower and the Lender Group unless, within 45 days after
receipt thereof by Borrower, Borrower shall deliver to Agent written objection
thereto describing the error or errors contained in any such statements.
2.11 FEES. Borrower shall pay to Agent the following fees, which fees
shall be non-refundable when paid:
(a) UNUSED LINE FEE. To the Agent, for the Pro Rata
benefit of each Lender with a Revolving Credit Commitment, on the first day of
each month during the term of this Agreement, an unused line fee calculated on a
monthly basis and in an amount equal to .50% divided by twelve then multiplied
by the result of (a) the Maximum Amount, less (b) the sum of (i) the result of
the total Daily Balances of Advances in the immediately preceding month divided
by the actual number of days in the immediately preceding month, plus (ii) the
result of the total Daily Balances of the Letter of Credit Usage divided by the
actual number of days in the immediately preceding month,
(b) SERVICING FEE. To the Agent, a Servicing Fee of
$5,000 per month for each month during which any Obligations remain unpaid, and
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(c) FINANCIAL EXAMINATION, VALUATION, AND APPRAISAL
FEES. For the sole and separate account of Agent, a separate fee of $650 per
day, per examiner, a separate fee of $1500 per day, per appraiser, plus
out-of-pocket expenses for each financial analysis and examination (i.e.,
audits) of Borrower performed by personnel employed by Agent; and, in addition
the charges actually paid or actually incurred by Agent or any Lender in its or
their sole discretion, reasonably exercised, of one or more third Persons to
perform such financial analyses and examinations (i.e., audits) of Borrower or
to appraise the Collateral.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this
Agreement, Agent agrees to issue letters of credit for the account of Borrower
(each, an "L/C") or to purchase participations, or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C UNDERTAKING") with
respect to letters of credit issued by an issuing bank for the account of
Borrower. Agent shall have no obligation to issue a Letter of Credit, Agent
shall not request any Lender to issue a Letter of Credit, and no Lender shall
issue a Letter of Credit if any of the following would result:
(i) the Letter of Credit Usage plus the Revolver
Usage would exceed the Maximum Amount,
(ii) the Letter of Credit Usage would exceed
$5,000,000, or
(iii) the Revolver Usage would exceed the Maximum
Revolver Amount.
Borrower and Agent acknowledge and agree that certain of the letters of credit
that are to be the subject of L/C Undertakings may be outstanding on the Closing
Date. Each Letter of Credit shall have an expiry date no later than 30 days
prior to the Maturity Date (without regard to any potential renewal term) and
all such Letters of Credit shall be in form and substance acceptable to Agent
(in the exercise of its Permitted Discretion). If Agent is obligated to advance
funds under a Letter of Credit, Borrower immediately shall reimburse such amount
to Agent and, in the absence of such reimbursement, the amount so advanced
immediately and automatically shall be deemed to be an Advance hereunder and,
thereafter, shall bear interest at the rate then applicable to Advances under
SECTION 2.6. Anything herein to the contrary notwithstanding, Agent shall not
issue a Letter of Credit if Agent shall have received written notice from any
Lender, or otherwise has actual knowledge, that one or more of the applicable
conditions precedent set forth in SECTION 3 will not be satisfied on the
requested issuance date for the applicable Letter of Credit (unless such
condition has been waived in accordance herewith).
(b) Each Lender agrees to fund its Pro Rata Share of
any Advance deemed made pursuant to the foregoing subsection on the same terms
and conditions as if Borrower had requested such Advance. Each Lender with a Pro
Rata Share of the Letters of
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Credit shall be deemed to have purchased a participation in each Letter of
Credit, in an amount equal to its Pro Rata Share of the Risk Participation
Liability of such Letter of Credit, and each Lender agrees to pay to Agent such
Lender's Pro Rata Share of any payments made by Agent under such Letter of
Credit. The obligation of each Lender to deliver to Agent an amount equal to its
respective Pro Rata Share pursuant to the preceding two sentences shall be
absolute and unconditional and such remittance shall be made notwithstanding the
occurrence or continuation of an Event of Default or Default or the failure to
satisfy any condition set forth in SECTION 3 hereof. If any Lender fails to make
available to Agent the amount of such Lender's Pro Rata Share of any payments
made by Agent in respect of such Letter of Credit as provided in this Section,
Agent shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Base Rate until paid in full.
(c) Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless from any loss, cost, expense, or
liability, expenses, and reasonable attorneys fees incurred by the Lender Group
arising out of or in connection with any Letter of Credit, except that Borrower
shall have no indemnification obligation to the Lender Group with respect to any
of the foregoing that a court of competent jurisdiction finally determines to
have resulted from the gross negligence or willful misconduct of the Lender
Group. Borrower agrees to be bound by the issuing bank's regulations and
interpretations of any letter of credit that is the subject of an L/C
Undertaking and opened to or for Borrower's account or by Agent's
interpretations of any L/C issued by Agent to or for Borrower's account, even
though this interpretation may be different from Borrower's own, and Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrower's instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Borrower understands that the
L/C Undertakings may require Agent to indemnify the issuing bank for certain
costs or liabilities arising out of claims by Borrower against such issuing
bank. Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless with respect to any loss, cost, expense (including reasonable
attorneys fees), or liability incurred by the Lender Group under any L/C
Undertaking as a result of the Lender Group's indemnification of any such
issuing bank.
(d) Borrower hereby authorizes and directs any bank
that issues a letter of credit that is the subject of an L/C Undertaking to
deliver to Agent all instruments, documents, and other writings and property
received by the issuing bank pursuant to such letter of credit, and to accept
and rely upon Agent's instructions with respect to all matters arising in
connection with such letter of credit and the related application.
(e) Any and all reasonable charges, commissions,
fees, and costs incurred by Agent relating to the letters of credit that are the
subject of an L/C Undertaking shall be considered Lender Group Expenses for
purposes of this Agreement and immediately shall be reimbursable by Borrower to
Agent.
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(f) If by reason of (i) any change in any applicable
law, treaty, rule, or regulation or any change in the interpretation or
application thereof by any Governmental Authority, or (ii) compliance by the
issuing bank or the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is
or shall be imposed or modified in respect of any Letters of
Credit issued hereunder, or
(ii) there shall be imposed on the issuing bank or
the Lender Group any other condition regarding any Letter of
Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or
indirectly, the cost to the Lender Group of issuing, making, guaranteeing, or
maintaining any Letter of Credit or to reduce the amount receivable in respect
thereof by the Lender Group, then, and in any such case, Agent may, at any time
within a reasonable period after the additional cost is incurred or the amount
received is reduced, notify Borrower, and Borrower shall pay on demand such
amounts Agent may specify to be necessary to compensate the Lender Group for
such additional cost or reduced receipt, together with interest on such amount
from the date of such demand until payment in full thereof at the rate then
applicable to Advances hereunder. The Lender Group shall take such steps as are
commercially reasonable under the circumstances to mitigate such additional
costs or reduced receipts. The determination by Agent of any amount due pursuant
to this Section, as set forth in a certificate setting forth the calculation
thereof in reasonable detail, shall, in the absence of manifest or demonstrable
error, be final and conclusive and binding on all of the parties hereto.
2.13 BUDGET APPROVAL PROCESS.
(a) Borrower agrees to provide to Lender Group its
Proposed Budget no later than two Business Days before the Weekly Conference
Call. Borrower further agrees to make available for the Weekly Conference Call
such representatives as Agent may reasonably request to review the items listed
on the Proposed Budget.
(b) In the event that no Lender within three Business
Days of the Weekly Conference Call disapproves in writing of a line item on the
Proposed Budget to be incurred during the following week, such line item shall
become part of an agreed budget ("Agreed Budget"). The Borrower shall provide a
copy of the Agreed Budget to each Lender. The fact that Lenders do not object to
an expense that is projected to be paid by Borrower in the second through sixth
week as shown on the Proposed Budget, Agent shall not be precluded in any manner
from objecting to such expense at any other time.
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3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make the Initial
Advances (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the reasonable satisfaction of Agent, of each of
conditions precedent set forth below:
(a) the Closing Date shall occur on or before
[_______];
(b) [intentionally omitted];
(c) Agent shall have received each of the following
documents, in form and substance satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) this Agreement;
(ii) [intentionally omitted];
(iii) [intentionally omitted];
(iv) the Disbursement Letter;
(v) [intentionally omitted];
(vi) the Pay-Off Letter;
(d) Agent shall have received a certificate from
the Secretary of Borrower attesting to the resolutions of Borrower's Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which Borrower is a party and authorizing
specific officers of Borrower to execute the same;
(e) Agent shall have received copies of Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of Borrower;
(f) Agent shall have received a certificate of status
with respect to Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of Borrower, which certificate shall indicate that Borrower is in
good standing in such jurisdiction;
(g) Agent shall have received certificates of status
with respect to Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions in
which its failure to be duly qualified or licensed
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would constitute a Material Adverse Change, which certificates shall indicate
that Borrower is in good standing in such jurisdictions;
(h) Agent shall have received a certificate of
insurance, together with the endorsements thereto, as are required by SECTION
6.9, the form and substance of which shall be satisfactory to Agent and its
counsel;
(i) [intentionally omitted];
(j) Agent shall have received such Collateral Access
Agreements from lessors, warehousemen, bailees, and other third persons as Agent
may reasonably require;
(k) Agent shall have received an opinion of
Borrower's counsel in form and substance satisfactory to Agent in its Permitted
Discretion;
(l) Agent shall have received satisfactory evidence
that all tax returns required to be filed by Borrower have been timely filed and
all taxes upon Borrower or its properties, assets, income, and franchises
(including real property taxes and payroll taxes) have been paid prior to
delinquency, except such taxes that are the subject of a Permitted Protest;
(m) [intentionally omitted];
(n) Agent shall have completed its business, legal,
and collateral due diligence, including
but not limited to a collateral audit and review of Borrower's books and records
and verification of Borrower's representations and warranties to the Lender
Group, the results of which shall be reasonably satisfactory to each Lender;
(o) [intentionally omitted];
(p) [intentionally omitted];
(q) Agent shall have received Borrower's Proposed
Budget;
(r) Borrower shall pay all Lender Group Expenses
incurred by Agent or any other Lender in
connection with the entry of Agent and the Lenders into this Agreement;
(s) [intentionally omitted].
(t) all other documents and legal matters in
connection with the transactions contemplated by this Agreement deemed to be
reasonable and necessary in Agent's sole discretion, reasonably exercised, shall
have been delivered, executed, or recorded and shall be in form and substance
satisfactory to Agent and its counsel.
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3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances or to issue Letters Of Credit is subject to the fulfillment, on or
before the date applicable thereto, of each of the conditions subsequent set
forth below (the failure by Borrower to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to
Agent the certified copies of the policies of insurance, together with the
endorsements thereto, as are required by SECTION 6.9, the form and substance of
which shall be satisfactory to Agent and its counsel; and
(b) [intentionally omitted].
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
the Lender Group (or any member thereof) to make all Advances, Swing Loans, or
to issue Letters of Credit (and to make any other extensions of credit provided
for hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in
this Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of such extension of credit, as though
made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date),
(b) no Default or Event of Default shall have
occurred and be continuing on the date of such extension of credit, nor shall
either result from the making thereof;
(c) no injunction, writ, restraining order, or other
order of any nature prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental Authority
against Borrower, Agent, any Lender, or any of their Affiliates;
(d) the amount the Availability is greater than zero
(0).
(e) in the sole and absolute judgment of the Lenders,
no Material Adverse Change in the condition (financial or otherwise) of any
Person composing Borrower or the Collateral shall have occurred (other than the
voluntary commencement of the Chapter 11 Case by the Borrower);
(f) with respect to Advances authorized on an interim
basis by the Bankruptcy Court, the Interim Bankruptcy Court Order shall have
been entered on the docket of the Bankruptcy Court within four Business Days of
the Filing Date (or as soon thereafter as the Bankruptcy Court will consider
such matters, but in any event, not later than six Business Days after the
Filing Date) and shall not have been reversed, vacated, modified,
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amended or stayed (or any application therefor filed), except for amendments and
modifications that are acceptable to the Lenders;
(g) with respect to Advances authorized on a final
basis by the Bankruptcy Court, the Final Bankruptcy Court Order shall have been
entered on the docket of the Bankruptcy Court within twenty-two days of the
Filing Date (or as soon thereafter as the Bankruptcy Court will consider such
matters, but in any event, not later than twenty-eight days after the Filing
Date) and shall not have been reversed, vacated, modified, amended or stayed (or
any application therefor filed), except for amendments and modifications that
are acceptable to the Lenders;
(h) the Bankruptcy Court shall have granted the
Lenders a lien on all of the Collateral that is senior to all other liens other
than Senior Permitted Liens and which shall secure all Obligations;
(i) no action or legal proceeding of any kind shall
have been commenced (i) to contest in any manner the validity or enforceability
of any provision of the Pre-Petition Loan Agreement or this Agreement or any
liens or security interests granted thereunder or (ii) to assert in any manner
that Borrower has no further obligation or liability under the Pre-Petition Loan
Agreement or this Agreement; and
(j) Borrower shall be up-to-date in all material
respects of the Budget Approval Process.
The foregoing conditions precedent are not conditions to each
Lender (i) participating in or reimbursing Agent for such Lenders' Pro Rata
Share of any drawings under Letters of Credit as provided herein, or (ii)
participating in or reimbursing Swing Lender or the Agent for such Lenders' Pro
Rata Share of any Swing Loan or Agent Advance as provided herein.
3.4 TERM. This Agreement is in all respects subject to approval of the
Bankruptcy Court having jurisdiction of Borrower's Chapter 11 case. This
Agreement shall continue in full force and effect until the earliest of: (i)
Borrower's emergence from its Chapter 11 Case; (ii) conversion of the Chapter 11
Case to a case under chapter 7 of the Bankruptcy Code; (iii) November 15, 1999;
and (iv) 6 months after the entry by the Bankruptcy Court of its order approving
the Initial Advances (the "MATURITY DATE"). The foregoing notwithstanding, the
Lender Group shall have the right to terminate its obligations under this
Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations, other than Post-Termination Obligations, immediately
shall become due and payable without notice or demand. No termination of this
Agreement, however, shall relieve or discharge Borrower of Borrower's
Obligations under this Agreement, and the security interests
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in the Collateral for the benefit of the Lender Group shall remain in effect
until all Obligations, except the Post-Termination Obligations, have been fully
and finally paid and the Lender Group's obligations to provide additional credit
under this Agreement have been terminated. Upon termination of this Agreement
and after all Obligations, other than Post-Termination Obligations, have been
fully and finally paid and the Lender Group's obligations to provide additional
credit under the Loan Documents have been terminated irrevocably, subject to the
provisions of this Section 3.5, Agent will, at Borrower's sole expense, execute
and deliver any Uniform Commercial Code termination statements, lien releases,
mortgage releases, re-assignments of trademarks, discharges of security
interests, and other similar discharge or release documents (and, if applicable,
in recordable form) as are reasonably necessary to release, as of record, the
security interests, financing statements, and all other notices of security
interests and liens previously filed by Agent for the benefit of the Lender
Group with respect to the Obligations. In the event that Agent determines in the
exercise of its reasonable discretion that (i) ongoing events have given, or
will give, rise to a claim for Indemnified Liabilities by an Indemnified Person
and (ii) Borrower's Obligations with respect to such Indemnified Liabilities
cannot be discharged prior to the termination of this Agreement, Agent may
require Borrower to secure the payment of such Indemnified Liabilities with
collateral in form and amount reasonably determined by Agent to be acceptable
for such purpose and if Borrower does not do so prior to termination of this
Agreement, Agent may retain such security interests in the Collateral as it
determines in its reasonable discretion are necessary to secure such Indemnified
Liabilities until such time as Borrower makes available other collateral
acceptable to Agent or such Indemnified Liabilities are fully and finally
discharged.
3.6 PRE-PETITION EARLY TERMINATION FEE. Borrower hereby expressly
agrees, acknowledges and confirms that Borrower continues to be obligated to
Lenders in the amount of $800,000 as a result of the early termination of the
Pre-Petition Loan Agreement (the "Pre-Petition Early Termination Fee"), that the
Pre-Petition Early Termination Fee remains secured by the security interest
granted under the Pre-Petition Loan Agreement. In the event that Borrower and
Lenders agree to terms for Exit Financing, and in the event that Lenders
actually provide such Exit Financing for the Borrower, the Original Lenders
agree to waive payment of the Pre-Petition Early Termination Fee. Borrower and
the Original Lenders agree that interest shall not accrue on the Pre-Petition
Early Termination Fee until the Maturity Date and that such fee shall not be
payable until the Maturity Date. In addition the Original Lenders agree that the
execution, delivery and performance by Borrower of this Agreement shall not
constitute a Default or Event or Default for any purpose under the Pre-Petition
Loan Agreement.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Agent, for
the benefit of the Lender Group a continuing security interest in all currently
existing and hereafter acquired or arising Collateral in order to secure prompt
repayment of any and all Obligations and in order to secure prompt performance
by Borrower of each of its covenants and duties under the Loan Documents
("AGENT'S LIENS"). The Agent's Liens in and to the Collateral
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shall attach to all Collateral without further act on the part of the Lender
Group or Borrower and, pursuant to Sections 364(c)(1), 364(c)(2), 364(c)(3) and
364(d) of the Bankruptcy Code, the Agent's Liens on the Collateral shall be
senior to all other liens and claims (other than Senior Permitted Liens and the
Carve Out Expenses). Due to the great expense and time involved in redocumenting
the perfection of the security interests in favor of the Lenders, Borrower and
the Lenders have agreed to seek provisions in the Interim Bankruptcy Court Order
and the Final Bankruptcy Court Order authorizing the utilization of the
financing statements, fixture filings and the like that have been filed or
recorded in connection with the Pre-Petition Loan Agreement and providing that
the same may remain in place and unterminated and shall constitute evidence and
notice of the perfection of Lenders' liens and security interests in the
Collateral provided hereunder. Anything contained in this Agreement or any other
Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, Borrower has no authority, express or implied, to dispose of any
item or portion of the Collateral except upon the consent of the Lenders.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, Borrower,
immediately upon the request of Agent, shall endorse and deliver physical
possession of such Negotiable Collateral to Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify customers or Account
Debtors of Borrower that the Accounts, General Intangibles, or Negotiable
Collateral have been assigned to Agent for the benefit of the Lender Group or
that Agent for the benefit of the Lender Group has a security interest therein,
and (b) collect the Accounts, General Intangibles, and Negotiable Collateral
directly and charge the collection costs and expenses to the Loan Account.
Borrower agrees that it will hold in trust for the Lender Group, as the Lender
Group's trustee, any Collections that it receives and immediately will deliver
said Collections to Agent in their original form as received by Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time upon the
request of Agent, Borrower shall execute and deliver to Agent, all financing
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents that Agent
reasonably may request, in form and substance reasonably satisfactory to Agent,
to perfect and continue perfected Agent's Liens in the Collateral (whether now
owned or hereafter arising or acquired), and in order to fully consummate all of
the transactions contemplated hereby and under the other the Loan Documents.
4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes, constitutes,
and appoints Agent (and any of Agent's officers, employees, or agents designated
by Agent) as Borrower's true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in SECTION 4.4, sign the name of
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Borrower on any of the documents described in SECTION 4.4, (b) at any time that
an Event of Default has occurred and is continuing, sign Borrower's name on any
invoice or xxxx of lading relating to any Account, drafts against Account
Debtors, and notices to Account Debtors, (c) at any time that an Event of
Default has occurred and is continuing, send requests for verification of
Accounts, (d) at any time that an Event of Default has occurred and is
continuing, endorse Borrower's name on any Collection item that may come into
the Lender Group's possession, (e) at any time that an Event of Default has
occurred and is continuing, notify the post office authorities to change the
address for delivery of Borrower's mail to an address designated by Agent, to
receive and open all mail addressed to Borrower, and to retain all mail relating
to the Collateral and promptly forward all other mail to Borrower, (f) at any
time that an Event of Default has occurred and is continuing, make, settle, and
adjust all claims under Borrower's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, and (g)
at any time that an Event of Default has occurred and is continuing, settle and
adjust disputes and claims respecting the Accounts directly with Account
Debtors, for amounts and upon terms that Agent determines to be reasonable, and
Agent may cause to be executed and delivered any documents and releases that
Agent determines to be necessary in connection therewith. The appointment of
Agent as Borrower's attorney, and each and every one of its rights and powers,
being coupled with an interest, is irrevocable until all of the Obligations have
been fully and finally repaid and performed and the Lender Group's obligations
to extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter, on reasonable notice and during business hours, to inspect the
Books and to check, test, and appraise the Collateral in order to verify
Borrower's financial condition or the amount, quality, value, condition of, or
any other matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES. In order to induce the Lender Group to enter
into this Agreement, Borrower, and each of its Subsidiaries, as applicable,
makes the following representations and warranties to the Lender Group which
shall be true, correct, and complete, in all material respects, as of the date
hereof, and shall be true, correct, and complete in all respects as of the
Closing Date, and at and as of the date of the making of each Advance (or other
extension of credit) made thereafter, as though made on and as of the date of
such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 NO ENCUMBRANCES. Borrower has good and indefeasible title to the
Collateral, free and clear of Liens except for Permitted Liens and prior to all
liens except for Senior Permitted Liens.
5.2 ELIGIBLE ACCOUNTS.(a) Except as set forth on Schedule 5.2, the
Eligible Accounts are bona fide existing payment obligations created by the sale
and delivery of
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Inventory or the rendition of services to Account Debtors in the ordinary course
of Borrower's business, owed to Borrower without defenses, disputes, offsets,
counterclaims, or rights of return or cancellation. Any goods or services giving
rise to such Eligible Accounts have been provided to the Account Debtor.
5.3 [INTENTIONALLY OMITTED].
5.4 EQUIPMENT. All of the Equipment is used or held for use in
Borrower's business and is fit for such purposes.
5.5 LOCATION OF EQUIPMENT. The Equipment not installed and in operation
at a third party location pursuant to a Telephone Placement Agreement is not
stored with a bailee, warehouseman, or similar party and is located only at the
locations identified on SCHEDULE 6.11 permitted by SECTION 6.11.
5.6 [INTENTIONALLY OMITTED].
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive
office of Borrower is located at the address indicated in SCHEDULE 5.7 and
Borrower's FEIN is identified in SCHEDULE 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.(a) Borrower is
duly organized and existing and in good standing under the laws of the
jurisdiction of its organization and qualified to do business in any state where
the failure to be so qualified reasonably could be expected to result in a
Material Adverse Change.
(b) Set forth on SCHEDULE 5.8, is a complete and
accurate description of the authorized capital Stock of Borrower, by class, and,
as of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Except as set forth on SCHEDULE 5.8, Borrower
is not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital Stock or any security
convertible into or exchangeable for any of its capital Stock.
(c) Set forth on SCHEDULE 5.8, is a complete and
accurate list of Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their incorporation; (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries; and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by Borrower. All of the outstanding capital Stock of each
such Subsidiary has been validly issued and is fully paid and non-assessable.
5.9 DUE AUTHORIZATION; NO CONFLICT.
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(a) The execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of Borrower.
(b) The execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which it is a party do not
and will not (i) violate any provision of federal, state, or local law or
regulation applicable to Borrower, the Governing Documents of Borrower, or any
order, judgment, or decree of any court or other Governmental Authority binding
on Borrower, (ii) except for the Bond Indenture, conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation of Borrower, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of Borrower, other than Permitted Liens, or (iv) require
any approval of stockholders or any approval or consent of any Person under any
material contractual obligation of Borrower except for the Bond Indenture.
(c) Other than the Bankruptcy Court's entry of the
Interim Bankruptcy Court Order and the Final Bankruptcy Court Order, the
execution, delivery, and performance by Borrower of this Agreement and the Loan
Documents to which Borrower is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority or other Person.
(d) This Agreement and the other Loan Documents to
which Borrower is a party, and all other documents contemplated hereby and
thereby, when executed and delivered by Borrower will be the legally valid and
binding obligations of Borrower, enforceable against Borrower in accordance with
their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors' rights generally.
(e) After the Entry of the Interim Bankruptcy Court
Order, the Agent's Liens granted by Borrower to Agent, for the benefit of the
Lender Group, in and to its assets pursuant to this Agreement and the other Loan
Documents will be validly created and perfected Liens having the priority
provided for in Section 4.1.
5.10 LITIGATION. Other than those matters disclosed on SCHEDULE 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrower, threatened against Borrower, or any of its Subsidiaries, as
applicable, except for matters arising after the Closing Date that, if decided
adversely to Borrower, or any of its Subsidiaries, as applicable, reasonably
could not be expected to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrower or any guarantor of the Obligations that have been delivered by
Borrower to the Lender Group have been prepared in accordance with GAAP (except,
in the case of unaudited
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financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and fairly present Borrower's (or such guarantor's, as
applicable) financial condition as of the date thereof and results of operations
for the period then ended. There has not been a Material Adverse Change with
respect to Borrower (or such guarantor, as applicable) since the date of the May
31st financial statements submitted to the Lender Group.
5.12 FRAUDULENT TRANSFER.
(a) [intentionally omitted.]
(b) No transfer of property is being made by Borrower
and no obligation is being incurred by Borrower in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of
Borrower.
5.13 EMPLOYEE BENEFITS. Neither Borrower, any of its Subsidiaries, or
any of their ERISA Affiliates maintains or contributes to any Benefit Plan,
other than those listed on SCHEDULE 5.13. Borrower, each of its Subsidiaries and
each ERISA Affiliate have satisfied the minimum funding standards of ERISA and
the IRC with respect to each Benefit Plan to which it is obligated to
contribute, if any. No ERISA Event has occurred nor has any other event occurred
that may result in an ERISA Event that reasonably could be expected to result in
a Material Adverse Change. Neither Borrower nor any of its Subsidiaries, any
ERISA Affiliate, or any fiduciary of any Plan is currently subject to any direct
or indirect liability with respect to any Plan under any applicable law, treaty,
rule, regulation, or agreement. Neither Borrower nor any of its Subsidiaries or
any of their ERISA Affiliates is required to provide security to any Plan under
Section 401(a)(29) of the IRC.
5.14 ENVIRONMENTAL CONDITION. None of Borrower's properties or assets
has ever been used by Borrower or, to the best of Borrower's knowledge, by
previous owners or operators in the disposal of, or to produce, store, handle,
treat, release, or transport, any Hazardous Materials in violation of any
applicable laws or regulations. None of Borrower's properties or assets has ever
been designated or identified in any manner pursuant to any environmental
protection statute as a Hazardous Materials disposal site, or a candidate for
closure pursuant to any environmental protection statute. No Lien arising under
any environmental protection statute has attached to any revenues or to any real
or personal property owned or operated by Borrower. Borrower has not received a
summons, citation, notice, or directive from the Environmental Protection Agency
or any other federal or state governmental agency concerning any action or
omission by Borrower resulting in the releasing or disposing of Hazardous
Materials into the environment.
5.15 BROKERAGE FEES. Borrower has not utilized the services of any
broker or finder in connection with Borrower's obtaining financing from the
Lender Group under
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this Agreement and no brokerage commission or finders fee is payable in
connection herewith.
5.16 YEAR 2000 COMPLIANCE. The Borrower's status and plans concerning
its "Year 2000 Compliance" are accurately described in its Disclosure Statement
dated May 11, 1999, a copy of which has been supplied to Agent. There have been
no material changes in such status and plans since the date of the Disclosure
Statement.
5.17 INTELLECTUAL PROPERTY. Borrower owns, or holds licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and licenses that
are necessary to the conduct of its business as currently conducted.
5.18 LEASES. Borrower enjoys peaceful and undisturbed possession under
all leases material to the business of Borrower and to which it is a party or
under which it is operating. All of such leases are valid and subsisting and no
material default by Borrower exists under any of them.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations owing upon, or as
a result of, termination of this Agreement, Borrower or its Subsidiaries, as
applicable, shall do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent.
6.2 COLLATERAL REPORTING. Provide Agent with: (i) the same quantity,
quality and frequency of information with respect to the Collateral and the
business operations of Borrower, as Borrower provided to the Original Lenders
under the Pre-Petition Loan Agreement, including but not limited to, a
"Borrowing Base Certificate" (as defined under the Pre-Petition Loan Agreement),
an Accounts Payable Summary, an Accounts Payable and Accrued Liabilities
Summary, and a Phone Count State Summary Report; (ii) all financial and
operating reports and information provided to the United States Trustees Office;
(iii) copies of all pleadings filed in the Chapter 11 Case, whether by Borrower
or a third-party; and (iv) such other reports as to the Collateral or the
financial condition of Borrower as Agent reasonably may request from time to
time.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 45 days
after the end of each month during each of Borrower's fiscal years,
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(i) a company prepared balance sheet, income
statement, and statement of cash flow covering Borrower's
operations during such period,
(ii) a certificate signed by its chief financial
officer to the effect that:
(A) the financial statements delivered
hereunder have been prepared in accordance with GAAP
(except for the lack of footnotes and being subject
to year-end audit adjustments) and fairly present the
financial condition of Borrower,
(B) the representations and warranties of
Borrower contained in this Agreement and the other
Loan Documents are true and correct in all material
respects on and as of the date of such certificate,
as though made on and as of such date (except to the
extent that such representations and warranties
relate solely to an earlier date),
(C) there does not exist any condition or
event that constitutes a Default or Event of Default
(or, to the extent of any non-compliance, describing
such non-compliance as to which he or she may have
knowledge and what action Borrower has taken, is
taking, or proposes to take with respect thereto),
(b) as soon as available, but in any event within 90 days
after the end of each of Borrower's fiscal years, financial statements
of Borrower for each such fiscal year, audited by independent certified
public accountants reasonably acceptable to Agent (Agent agrees that
BDO Xxxxxxx is acceptable) and certified, without any qualifications,
by such accountants to have been prepared in accordance with GAAP (such
audited financial statements to include a balance sheet, income
statement, and statement of cash flow and, if prepared, such
accountants' letter to management),
(c) if and when filed by Borrower,
(i) form 10-Q quarterly reports, Form 10-K annual
reports, and Form 8-K current reports,
(ii) any other filings made by Borrower with the SEC,
and
(iii) any other information that is provided by
Borrower to its shareholders generally,
(d) upon the request of Agent,
(i) any other report reasonably requested relating to
the financial condition of Borrower.
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If Borrower is a parent company of one or more Subsidiaries,
then, in addition to the financial statements referred to above, Borrower agrees
to deliver, if requested by Agent, financial statements prepared on both a
consolidated and consolidating basis. Borrower agrees that its independent
certified public accountants are authorized to communicate with Agent and to
release to Agent whatever financial information concerning Borrower that Agent
reasonably may request.
6.4 [INTENTIONALLY OMITTED].
6.5 TELEPHONE PLACEMENT AGREEMENTS.Cause all Telephone Placement
Agreements entered into, renewed, or extended after the Closing Date to be
substantially in a form approved by Agent.
6.6 TITLE TO EQUIPMENT. Upon Agent's request, immediately deliver to
Agent, properly endorsed, any and all evidences of ownership of, certificates of
title, or applications for title to any items of Equipment.
6.7 MAINTENANCE OF EQUIPMENT. Maintain the Equipment in good operating
condition and repair (ordinary wear and tear excepted), and make all necessary
replacements thereto so that the value and operating efficiency thereof shall at
all times be maintained and preserved. Other than those items of Equipment that
constitute fixtures on the Closing Date, Borrower shall not permit any item of
Equipment to become a fixture to real estate or an accession to other property,
and such Equipment shall at all times remain personal property.
6.8 TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower
or any of its property to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrower
will make timely payment or deposit of all tax payments and withholding taxes
required of it by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon request, furnish Agent with proof satisfactory to Agent indicating
that Borrower has made such payments or deposits. Upon Agent's request, Borrower
shall deliver satisfactory evidence of payment of applicable excise taxes in
each jurisdictions in which (a) Borrower conducts business or is required to pay
any such excise tax, (b) where Borrower's failure to pay any such applicable
excise tax would result in a Lien on the properties or assets of Borrowers, or
(c) where Borrower's failure to pay any such applicable excise tax would
constitute a Material Adverse Change.
6.9 INSURANCE.
(a) At its expense, maintain insurance respecting the
Collateral wherever located and with respect to Borrower's business, covering
loss or damage by fire, theft, explosion, and all other hazards and risks as
ordinarily are insured against by other
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Persons engaged in the same or similar businesses. Borrower also shall maintain
business interruption, public liability, and product liability insurance, as
well as insurance against larceny, embezzlement, and criminal misappropriation
All such policies of insurance shall be in such amounts and with such insurance
companies as are reasonably satisfactory to Agent. Borrower shall deliver the
originals of all such policies to Agent with 438 BFU lender's loss payable
endorsements or other reasonably satisfactory lender's loss payable
endorsements, naming Agent as loss payee or additional insured, as appropriate,
as Lenders' interests may appear. Each policy of insurance or endorsement shall
contain a clause requiring the insurer to give not less than 30 days prior
written notice to Agent in the event of cancellation of the policy for any
reason whatsoever. If Borrower fails to provide and pay for such insurance,
Agent may, at its option, but shall not be required to, procure the same and
charge Borrower's Loan Account therefor.
(b) Borrower shall give Agent prompt notice of any
loss covered by such insurance. Agent shall have the exclusive right to adjust
any losses payable under any such insurance policies in excess of $500,000,
without any liability to Borrower whatsoever in respect of such adjustments. Any
monies received as payment for any loss under any insurance policy mentioned
above (other than liability insurance policies) or as payment of any award or
compensation for condemnation or taking by eminent domain, shall be paid over to
Agent to be applied at the option of the Required Lenders either to the
prepayment of the Obligations without premium, in such order or manner as the
Required Lenders may elect, or shall be disbursed to Borrower under staged
payment terms reasonably satisfactory to the Required Lenders for application to
the cost of repairs, replacements, or restorations.
6.10 NO SETOFFS OR COUNTERCLAIMS. Make payments hereunder and under the
other Loan Documents by or on behalf of Borrower without setoff or counterclaim
and free and clear of, and without deduction or withholding for or on account
of, any federal, state, or local taxes, except as required by law.
6.11 LOCATION OF EQUIPMENT. Keep the Equipment not installed and in
operation at a third party location pursuant to a Telephone Placement Agreement
only at one of the locations identified on SCHEDULE 6.11; provided, however,
that Borrower may amend SCHEDULE 6.11 so long as such amendment occurs by
written notice to Agent not less than 30 days prior to the date on which the
Equipment is moved to such new location, so long as such new location is within
the continental United States, and so long as, at the time of such written
notification, Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected the Agent's Liens on such assets and
also provides to Agent a Collateral Access Agreement.
6.12 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any governmental authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations,
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and orders the non-compliance with which, individually or in the aggregate,
would not result in a Material Adverse Change.
6.13 EMPLOYEE BENEFITS.
(a) Cause to be delivered to Agent, each of the
following: (i) promptly, and in any event within 10 Business Days after Borrower
or any of its Subsidiaries knows or has reason to know that an ERISA Event has
occurred that reasonably could be expected to result in a Material Adverse
Change, a written statement of the chief financial officer of Borrower
describing such ERISA Event and any action that is being taking with respect
thereto by Borrower, any such Subsidiary or ERISA Affiliate, and any action
taken or threatened by the IRS, Department of Labor, or PBGC (Borrower or such
Subsidiary, as applicable, shall be deemed to know all facts known by the
administrator of any Benefit Plan of which it is the plan sponsor), (ii)
promptly, and in any event within 3 Business Days after the filing thereof with
the IRS, a copy of each funding waiver request filed with respect to any Benefit
Plan and all communications received by Borrower, any of its Subsidiaries or, to
the knowledge of Borrower, any ERISA Affiliate with respect to such request, and
(iii) promptly, and in any event within 3 Business Days after receipt by
Borrower, any of its Subsidiaries or, to the knowledge of Borrower, any ERISA
Affiliate, of the PBGC's intention to terminate a Benefit Plan or to have a
trustee appointed to administer a Benefit Plan, copies of each such notice.
(b) Cause to be delivered to Agent, upon Agent's
request, each of the following: (i) a copy of each Plan (or, where any such plan
is not in writing, complete description thereof) (and if applicable, related
trust agreements or other funding instruments) and all amendments thereto, all
written interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of Borrower or its Subsidiaries;
(ii) the most recent determination letter issued by the IRS with respect to each
Benefit Plan; (iii) for the three most recent plan years, annual reports on Form
5500 Series required to be filed with any governmental agency for each Benefit
Plan; (iv) all actuarial reports prepared for the last three plan years for each
Benefit Plan; (v) a listing of all Multiemployer Plans, with the aggregate
amount of the most recent annual contributions required to be made by Borrower
or any ERISA Affiliate to each such plan and copies of the collective bargaining
agreements requiring such contributions; (vi) any information that has been
provided to Borrower or any ERISA Affiliate regarding withdrawal liability under
any Multiemployer Plan; and (vii) the aggregate amount of the most recent annual
payments made to former employees of Borrower or its Subsidiaries under any
Retiree Health Plan.
6.14 LEASES. Pay when due all rents and other amounts payable under any
leases to which Borrower is a party or by which Borrower's properties and assets
are bound, unless such payments are the subject of a Permitted Protest. To the
extent that Borrower fails timely to make payment of such rents and other
amounts payable when due under its leases,
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Agent shall be entitled, in its discretion, to reserve an amount equal to such
unpaid amounts against the Maximum Amount.
6.15 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrower's obtaining
financing from the Lender Group under this Agreement. Borrower agrees and
acknowledges that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrower, and Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrower's obtaining financing from the
Lender Group under this Agreement.
6.16 [INTENTIONALLY OMITTED].
6.17 [INTENTIONALLY OMITTED].
6.18 CORPORATE EXISTENCE, ETC. At all times preserve and keep in full
force and effect Borrower's valid corporate existence and good standing and any
rights and franchises material to Borrower's businesses.
6.19 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (i) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (ii) correct any defect or error that may
be discovered therein or in any Loan Document or in the execution,
acknowledgement, filing, or recordation thereof.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations owing upon, or as
a result of termination of this Agreement, neither Borrower nor any of its
Subsidiaries will do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement,
together with Indebtedness to issuers of letters of credit that are the subject
of L/C Undertakings;
(b) Indebtedness set forth on Schedule 7.1;
(c) Purchase Money Indebtedness;
(d) refinancings, renewals, or extensions of
Indebtedness permitted under clauses (b) and (c) of this SECTION 7.1 (and
continuance or renewal of any Permitted
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Liens associated therewith) so long as: (i) the terms and conditions of such
refinancings, renewals, or extensions do not materially impair the prospects of
repayment of the Obligations by Borrower, (ii) the net cash proceeds of such
refinancings, renewals, or extensions do not result in an increase in the
aggregate principal amount of the Indebtedness so refinanced, renewed, or
extended, (iii) such refinancings, renewals, refundings, or extensions do not
result in a shortening of the average weighted maturity of the Indebtedness so
refinanced, renewed, or extended, and (iv) to the extent that Indebtedness that
is refinanced was subordinated in right of payment to the Obligations, then the
subordination terms and conditions of the refinancing Indebtedness must be at
least as favorable to the Lender Group as those applicable to the refinanced
Indebtedness; and
(e) Obligations that constitute Indebtedness solely
by virtue of being secured by Permitted Liens under clause (f) of the definition
of Permitted Liens.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its property or assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced under
SECTION 7.1(d) and so long as the replacement Liens only encumber those assets
or property that secured the original Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer
any liquidation or dissolution).
(c) Convey, sell, assign, lease, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its property or assets.
7.4 DISPOSAL OF ASSETS. Sell, lease, assign, transfer, or otherwise
dispose of any of Borrower's properties or assets, other than pursuant to
Permitted Dispositions.
7.5 CHANGE NAME. Change Borrower's name, FEIN, corporate structure
(within the meaning of SECTION 9402(7) of the Code), or identity, or add any new
fictitious name.
7.6 GUARANTEE. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrower or which
are transmitted or turned over to Agent and except for Permitted Liens under
clause (f) of the definition of Permitted Liens.
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7.7 NATURE OF BUSINESS. Make any change in the principal nature of
Borrower's business.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except for scheduled payments under any
Indebtedness permitted by Section 7.1, and except in connection with a
refinancing permitted by SECTION 7.1(d), prepay, redeem, retire, defease,
purchase, or otherwise acquire any Indebtedness owing to any third Person, other
than the Obligations and Pre-Petition Obligations in accordance with this
Agreement, and
(b) Directly or indirectly, amend, modify, alter,
increase, or change in any material way any of the terms or conditions of any
agreement, instrument, document, indenture, or other writing evidencing or
concerning Indebtedness permitted under SECTIONS 7.1(b), (c), or (d).
7.9 [INTENTIONALLY OMITTED].
7.10 [INTENTIONALLY OMITTED].
7.11 DISTRIBUTIONS. Make any distribution or declare or pay any
dividends (in cash or other property, other than Stock) on, or purchase,
acquire, redeem, or retire any of Borrower's Stock, of any class, whether now or
hereafter outstanding.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting or
enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into with any third party accounting firm or service
bureau for the preparation or storage of Borrower's accounting records without
said accounting firm or service bureau agreeing to provide Agent information
regarding the Collateral or Borrower's financial condition. Borrower waives the
right to assert a confidential relationship, if any, it may have with any
accounting firm or service bureau in connection with any information requested
by Agent pursuant to or in accordance with this Agreement, and agrees that Agent
may contact directly any such accounting firm or service bureau in order to
obtain such information.
7.13 INVESTMENTS. Directly or indirectly make, acquire, or incur any
liabilities (including contingent obligations) for or in connection
with (a) the acquisition of the securities (whether debt or equity) or,
or other interests in, a Person, (b) loans, advances, capital
contributions, or transfers of property to a Person, or (c) the
acquisition of all or substantially all of the properties or assets of
a Person.
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower except
for transactions that are in the ordinary course of Borrower's business, upon
fair and reasonable terms, that are fully
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disclosed to Agent, and that are no less favorable to Borrower than would be
obtained in an arm's length transaction with a non-Affiliate.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.16 COMPENSATION. Increase the annual fee or per-meeting fees paid to
directors during any year by more than 15% over the prior year; pay or accrue
total cash compensation, during any year, to officers and senior management
employees in an aggregate amount in excess of 115% of that paid or accrued in
the prior year, other than in connection with the retention by the Borrower of a
new chief executive officer in April of 1999.
7.17 USE OF PROCEEDS. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, (i) to repay in full the outstanding
principal, accrued interest, and accrued fees and expenses owing to Existing
Lender, and (ii) to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, and (b) thereafter for its lawful and permitted
corporate purposes.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without providing 30 days prior written notification thereof to Agent and so
long as, at the time of such written notification, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens and also provides to Agent a Collateral Access
Agreement with respect to such new location. The Inventory and Equipment shall
not at any time now or hereafter be stored with a bailee, warehouseman, or
similar party without Agent's prior written consent.
7.19 NO PROHIBITED TRANSACTIONS UNDER ERISA. Directly or indirectly:
(a) engage, or permit any Subsidiary of Borrower to
engage, in any prohibited transaction which is reasonably likely to result in a
civil penalty or excise tax described in Sections 406 of ERISA or 4975 of the
IRC for which a statutory or class exemption is not available or a private
exemption has not been previously obtained from the Department of Labor;
(b) permit to exist with respect to any Benefit Plan
any accumulated funding deficiency (as defined in Sections 302 of ERISA and 412
of the IRC), whether or not waived;
(c) fail, or permit any Subsidiary of Borrower to
fail, to pay timely required contributions or annual installments due with
respect to any waived funding deficiency to any Benefit Plan;
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(d) terminate, or permit any Subsidiary of Borrower
to terminate, any Benefit Plan where such event would result in any liability of
Borrower, any of its Subsidiaries or any ERISA Affiliate under Title IV of
ERISA;
(e) fail, or permit any Subsidiary of Borrower to
fail, to make any required contribution
or payment to any Multiemployer Plan;
(f) fail, or permit any Subsidiary of Borrower to
fail, to pay any required installment or any other payment required under
Section 412 of the IRC on or before the due date for such installment or other
payment;
(g) amend, or permit any Subsidiary of Borrower to
amend, a Plan resulting in an increase in current liability for the plan year
such that either of Borrower, any Subsidiary of Borrower or any ERISA Affiliate
is required to provide security to such Plan under Section 401(a)(29) of the
IRC; or
(h) withdraw, or permit any Subsidiary of Borrower to
withdraw, from any Multiemployer Plan where such withdrawal is reasonably likely
to result in any liability of any such entity under Title IV of ERISA; which,
individually or in the aggregate, results in or reasonably would be expected to
result in a claim against or liability of Borrower, any of its Subsidiaries or
any ERISA Affiliate in excess of $500,000.
7.20 [INTENTIONALLY OMITTED].
7.21 CAPITAL EXPENDITURES. Make no capital expenditures without the
prior express written consent of Required Lenders other than capital
expenditures that are included within an Agreed Budget.
7.22 [INTENTIONALLY OMITTED].
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "EVENT OF DEFAULT") under this Agreement:
8.1 If Borrower fails to pay when due and payable or when declared due
and payable, any portion of the Obligations (whether of principal, interest,
fees and charges due the Lender Group, reimbursement of Lender Group Expenses,
or other amounts constituting Obligations);
8.2 If Borrower (a) fails to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in Sections 6.1
[Accounting System], 6.2 [Collateral Reporting], 6.3 [Financial Statement,
Reports, Certificates], 6.5 [Telephone Placement Agreements], 6.7 [Maintenance
of Equipment], 6.8 [Taxes], 6.9 [Insurance], 6.11 [Location of Equipment], and
6.14 [Leases] and such failure continues for a period of
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10 days after Borrower receives notice thereof from Agent; or (b) fails to
perform, keep, or observe any other term, provision, condition, covenant, or
agreement contained in this Agreement and any of the Loan Documents or in any
other present or future agreement between Borrower and the Lender Group (giving
effect to any such grace periods, cure periods, or required notices, if any,
expressly provided for in such Loan Documents or agreement); provided that,
during any period of time that any such failure exists, even if such failure is
not yet an Event of Default by virtue of the existence of a grace or cure period
or the pre-condition of giving notice, Agent and Lenders shall not be required
during such period to make Advances to Borrower or issue an L/C or enter into an
L/C undertaking for account of Borrower;
8.3 If there is a Material Adverse Change and, in the case of a
Material Adverse Change which can be cured, such Material Adverse Change
continues uncured for a period of 10 days;
8.4 If any third Person obtains from the Bankruptcy Court relief from
the automatic stay under the Bankruptcy Code to permit such person to attach,
seize, subject to a writ or distress warrant, or levy upon, or obtain a writ of
possession of, a material portion of Borrower's Collateral in connection with a
claim of such Person of $100,000 or more;
8.5 If Borrower fails to comply with the Agreed Budget or fails to
remain up-to-date in any material respect with the Budget Approval Process;
8.6 If Borrower fails to pay the Pre-Petition Obligations in accordance
with the Terms of this Agreement;
8.7 If Borrower or any of its Subsidiaries is enjoined, restrained, or
in any way prevented by court order from continuing to conduct all or any
material part of its business affairs;
8.8 If a notice of Lien or levy is filed of record with respect to any
of Borrower's or any of its Subsidiaries' properties or assets by the United
States Government, or any department, agency, or instrumentality thereof, or by
any state, county, municipal, or governmental agency, or if any taxes or debts
owing at any time hereafter to any one or more of such entities becomes a Lien,
whether xxxxxx or otherwise, upon any of Borrower's or any of its Subsidiaries'
properties or assets and the same is not paid on the payment date thereof or is
not the subject of a Permitted Protest;
8.9 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of Borrower's or any of its Subsidiaries' properties or assets;
8.10 If there is a default in any material agreement to which Borrower
or any of its Subsidiaries is a party with one or more third Persons (with the
exception of the Bond
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Indenture) and such default (a) occurs at the final maturity of the obligations
thereunder, or (b) results in a right by such third Person(s), irrespective of
whether exercised, to accelerate the maturity of Borrower's or any of its
Subsidiaries' obligations thereunder to terminate such agreement, or to refuse
to renew such agreement pursuant to an automatic renewal right therein;
8.11 If Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.12 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or report made to the
Lender Group by Borrower, its Subsidiaries, or any officer, or director of
Borrower or any of its Subsidiaries, or if any such warranty or representation
is withdrawn; or
8.14 If the Final Bankruptcy Court Order is not entered on or before
twenty-eight days after the Filing Date;
8.15 If either the Interim Bankruptcy Court Order or the Final
Bankruptcy Court Order is reversed, vacated, modified, amended or stayed,
whether or not sustained on appeal or stayed during any appeal period;
8.16 If any provision of the Interim Bankruptcy Court Order, the Final
Bankruptcy Court Order or this Agreement shall for any reason cease to be valid
and binding or enforceable against the Borrower, or the Borrower so states in
writing;
8.17 If the Borrower commences or joins in any legal proceeding (a) to
contest in any manner the validity or enforceability of any provision of the
Interim Bankruptcy Court Order, the Final Bankruptcy Court Order or this
Agreement or (b) to assert in any manner that the Borrower has no further
obligation or liability under the Interim Bankruptcy Court Order, the Final
Bankruptcy Court Order or this Agreement;
8.18 If any action or any motion is filed by any party and is not
opposed by Borrower within ten days of such filing, or such earlier date as the
Bankruptcy Court designates as the deadline to respond, that seeks to avoid,
challenge or subordinate the liens and/or the claims authorized or created under
the Interim Bankruptcy Court Order, the Final Bankruptcy Court Order or this
Agreement, or notwithstanding the Borrower's opposition to such foregoing action
or motion, the Bankruptcy Court or a federal court of appeal grants such action
or motion;
8.19 If a Triggering Event occurs;
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8.20 If an examiner is appointed under section 1106(b) of the
Bankruptcy Code with enlarged powers beyond those set forth in paragraphs (3)
and (4) of Section 1106(a) of the Bankruptcy Code;
8.21 If a chapter 11 plan is filed by any party (whether or not with
the support of the Borrower) that provides Lenders (a) with respect to the
Borrower's Obligations under this Agreement, with any treatment other than
payment in full in cash on or prior to the Maturity Date and/or (b) with respect
to the Borrower's Obligations under the Pre-Petition Loan Agreement, any
treatment to which the Lenders do not consent;
8.22 If any of the Borrower's exclusive periods under section 1121 of
the Bankruptcy Code, as extended by the Bankruptcy Court, is terminated; or
8.23 If an application is filed by the Borrower for the approval of, or
there shall arise, any other claim or expense which is an administrative expense
having priority over any or all administrative expenses of the kind specified in
sections 503(b) or 507(b) of the Bankruptcy Code.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may, except to the
extent otherwise expressly provided or required below, authorize and instruct
Agent to do any one or more of the following on behalf of the Lender Group (and
Agent, acting upon the instructions of the Required Lenders, shall do the same
on behalf of the Lender Group), all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) Cease advancing money or extending credit to or
for the benefit of Borrower under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other
Loan Documents as to any future liability or obligation of the Lender Group, but
without affecting Agent's rights and security interests, for the benefit of the
Lender Group, in the Collateral without affecting the Obligations;
(d) Require Borrower to remit all Collections to a
Lockbox Account as provided in SECTION 2.7;
(e) [intentionally omitted];
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(f) Without notice to or demand upon Borrower or any
guarantor, make such payments and do such acts as Agent considers necessary or
reasonable to protect its security interests in the Collateral. Borrower agrees
to assemble the Collateral if Agent so requires, and to make the Collateral
available to Agent as Agent may designate. Borrower authorizes Agent to enter
the premises where the Collateral is located, to take and maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any encumbrance, charge, or Lien that in Agent's determination appears to
conflict with the Agent's Liens and to pay all expenses incurred in connection
therewith. With respect to any of Borrower's owned or leased premises, Borrower
hereby grants Agent a license to enter into possession of such premises and to
occupy the same, without charge, for up to 120 days in order to exercise any of
the Lender Group's rights or remedies provided herein, at law, in equity, or
otherwise;
(g) Apply to the Bankruptcy Court, upon 5 Business
Days notice to Borrower, Borrower's counsel, counsel for the official creditors
committee in such case, and the United States Trustee (which 5 Business Days
notice hereby conclusively is agreed to be sufficient notice), for one or more
of the following forms of relief: (a) appointment of an examiner for Borrower;
(b) appointment of a trustee for Borrower; (c) conversion of a Chapter 11 case
to a case under Chapter 7 of the Bankruptcy Code; or (d) dismissal of the
Chapter 11 case. Borrower hereby expressly agrees that 5 Business Days notice
shall be adequate notice for the requesting of the foregoing specified forms of
relief in the event of the occurrence and continuation of an Event of Default
hereunder, and Borrower expressly waives any right to object to the adequacy of
notice in connection with a request for any of the foregoing specified forms of
relief if such 5 Business Days notice is given and an Event of Default is found
to exist. Nothing in this paragraph shall limit the right of Agent to apply to
the Bankruptcy Court for such other or further relief as may be justified and
appropriate, and nothing in this paragraph shall limit the other rights and
remedies of Agent provided for elsewhere in this Agreement or in any other Loan
Document;
(h) Hold, as cash collateral, any and all balances
and deposits of Borrower held by the Lender Group, and any amounts received in
the Lockbox Accounts, to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Borrower is hereby grants to Agent a license or
other right to use, without charge, Borrower's labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks, service
marks, and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for sale,
and selling any Collateral and Borrower's rights under all licenses and all
franchise agreements shall inure to the Lender Group's benefit;
(j) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such
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places (including Borrower's premises) as Agent determines is commercially
reasonable. It is not necessary that the Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the
Collateral as follows:
(i) Agent shall give Borrower and each holder of a
security interest in the Collateral who has filed with Agent a
written request for notice, a notice in writing of the time
and place of public sale, or, if the sale is a private sale or
some other disposition other than a public sale is to be made
of the Collateral, then the time on or after which the private
sale or other disposition is to be made;
(ii) The notice shall be personally delivered or
mailed, postage prepaid, to Borrower as provided in SECTION
12, at least 10 days before the date fixed for the sale, or at
least 10 days before the date on or after which the private
sale or other disposition is to be made; no notice needs to be
given prior to the disposition of any portion of the
Collateral that is perishable or threatens to decline speedily
in value or that is of a type customarily sold on a recognized
market. Notice to Persons other than Borrower claiming an
interest in the Collateral shall be sent to such addresses as
they have furnished to Agent;
(iii) If the sale is to be a public sale, Agent also
shall give notice of the time and place by publishing a notice
one time at least 10 days before the date of the sale in a
newspaper of general circulation in the county in which the
sale is to be held;
(l) Setoff all amounts received in the Lockbox
Accounts against the Obligations;
(m) The Lender Group may credit bid and purchase at
any public sale; and
(n) The Lender Group shall have all other rights and
remedies available to it at law or in equity pursuant to any other Loan
Documents; and
(o) Any deficiency that exists after disposition of
the Collateral as provided above will be paid immediately by Borrower. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Agent to Borrower.
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided
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under the Code, by law, or in equity. No exercise by the Lender Group of one
right or remedy shall be deemed an election, and no waiver by the Lender Group
of any Event of Default shall be deemed a continuing waiver. No delay by the
Lender Group shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, to the extent that Agent
determines in its Permitted Discretion that such failure by Borrower could
result in a Material Adverse Change, and without prior notice to Borrower, Agent
may do any or all of the following: (a) make payment of the same or any part
thereof; (b) set up such reserves in Borrower's Loan Account as Agent deems
necessary to protect the Lender Group from the exposure created by such failure;
or (c) obtain and maintain insurance policies of the type described in SECTION
6.9 and take any action with respect to such policies as Agent deems prudent.
Any such amounts paid by Agent shall constitute Lender Group Expenses. Any such
payments made by Agent shall not constitute an agreement by the Lender Group to
make similar payments in the future or a waiver by the Lender Group of any Event
of Default under this Agreement. Agent need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of accounts, documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which Borrower may in any way be liable, provided,
however that Borrower does not hereby waive any notices expressly provided for
in this Agreement.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Borrower hereby
agrees that: (a) so long as the Lender Group complies with its obligations, if
any, under Section 9207 of the Code, the Lender Group shall not in any way or
manner be liable or responsible for: (i) the safekeeping of the Collateral; (ii)
any loss or damage thereto occurring or arising in any manner or fashion from
any cause; (iii) any diminution in the value thereof; or (iv) any act or default
of any carrier, warehouseman, bailee, forwarding agency, or other Person; and
(b) prior to the Lender Group taking actual physical possession of the
Collateral, all risk of loss, damage, or destruction of the Collateral shall be
borne by Borrower.
11.3 INDEMNIFICATION. Borrower shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons with respect to each
Lender, each Participant,
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and each of their respective officers, directors, employees, counsel, agents,
and attorneys-in-fact (each, an "INDEMNIFIED PERSON") harmless (to the fullest
extent permitted by law) from and against any and all claims, demands, suits,
actions, investigations, proceedings, and damages, and all reasonable attorneys
fees and disbursements and other costs and expenses actually incurred in
connection therewith (as and when they are incurred and irrespective of whether
suit is brought), at any time asserted against, imposed upon, or incurred by any
of them in connection with or as a result of or related to the execution,
delivery, enforcement, performance, and administration of this Agreement and any
other Loan Documents or the transactions contemplated herein, and with respect
to any investigation, litigation, or proceeding related to this Agreement, any
other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event or circumstance in any manner related thereto (all the
foregoing, collectively, the "INDEMNIFIED LIABILITIES"). Borrower shall have no
obligation to any Indemnified Person under this SECTION 11.3 with respect to any
Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from the gross negligence or willful misconduct of such
Indemnified Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations. If any Indemnified Person makes
any payment to any other Indemnified Person with respect to an Indemnified
Liability for which Borrower was required to indemnify the Indemnified Person
receiving such payment, the Indemnified Person making such payment is entitled
to be indemnified and reimbursed by Borrower with respect thereto.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other Loan Document shall
be in writing and (except for financial statements and other informational
documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by registered or certified mail (postage prepaid,
return receipt requested), overnight courier, or telefacsimile to the relevant
party, as the case may be, at its address set forth below:
If to Borrower: PHONETEL TECHNOLOGIES, INC.
Xxxxx Xxxxx Xxxxx, 0xx Xxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Xx. Xxxx Xxxxxxxxxx, President
Fax No. (000) 000-0000
with copies to: Xxxx Xxxxxx & Parks LLP
0000 XX Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attn: F. Xxx X'Xxxxx, Esq.
Fax No. (000) 000-0000
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If to Agent: FOOTHILL CAPITAL CORPORATION
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Business Finance Division Manager
Fax No. 000.000.0000
with copies to: XXXXXXX, XXXXXXX & XXXXXXXX LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx Hilson, Esq.
Fax No. 000.000.0000
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
all other parties. All notices or demands sent in accordance with this SECTION
12, other than notices by the Lender Group in connection with Sections 9504 or
9505 of the Code, shall be deemed received on the earlier of the date of actual
receipt or 3 days after the deposit thereof in the mail. Borrower acknowledges
and agrees that notices sent by the Lender Group in connection with Sections
9504 or 9505 of the Code shall be deemed sent when deposited in the mail or
personally delivered, or, where permitted by law, transmitted by telefacsimile
or other similar method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE BANKRUPTCY COURT. BORROWER AND THE LENDER GROUP WAIVE, TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13.
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BORROWER AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. BORROWER AND THE LENDER GROUP REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may, with the written consent of
Agent, assign and delegate to one or more assignees (provided that no written
consent of Agent shall be required in connection with any assignment and
delegation by a Lender to an Eligible Transferee) (each an "ASSIGNEE") all, or
any ratable part of all, of the Obligations, the Commitments and the other
rights and obligations of such Lender hereunder and under the other Loan
Documents, in a minimum amount of $5,000,000 except that such minimum amount
shall not apply to Affiliates of Lenders; provided, however, that Borrower and
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to Borrower and
Agent by such Lender and the Assignee; (ii) such Lender and its Assignee shall
have delivered to Borrower and Agent an Assignment and Acceptance in form and
substance satisfactory to Agent; and (iii) the assignor Lender or Assignee has
paid to Agent for Agent's sole and separate account a processing fee in the
amount of $2,500. Anything contained herein to the contrary notwithstanding, the
consent of Agent shall not be required (and payment of any fees shall not be
required) if such assignment is in connection with any merger, consolidation,
sale, transfer, or other disposition of all or any substantial portion of the
business or loan portfolio of such Lender.
(b) From and after the date that Agent notifies the
assignor Lender (with a copy to Agent) that it has received an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
(except with respect to
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SECTION 11.3 hereof) and be released from its obligations under this Agreement
(and in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement and
the other Loan Documents, such Lender shall cease to be a party hereto and
thereto), and such assignment shall effect a novation between Borrower and the
Assignee.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (1) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto; (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto; (3)
such Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (4) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement; (5)
such Assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto; and (6) such Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its
processing fee payment under the Assignment and Acceptance and receipt and
acknowledgment by Agent of such fully executed Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written
consent of Agent, sell to one or more commercial banks, financial institutions,
or other Persons not Affiliates of such Lender (a "PARTICIPANT") participating
interests in the Obligations, the Commitment, and the other rights and interests
of that Lender (the "ORIGINATING LENDER") hereunder and under the other Loan
Documents (provided that no written consent of Agent shall be required in
connection with any sale of any such participating interests by a Lender to an
Eligible Transferee); provided, however, that (i) the Originating Lender's
obligations under this
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Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrower,
Agent, and Agent shall continue to deal solely and directly with the Originating
Lender in connection with the Originating Lender's rights and obligations under
this Agreement and the other Loan Documents, (iv) no Lender shall transfer or
grant any participating interest under which the Participant has the right to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment to, or
consent or waiver with respect to this Agreement or of any other Loan Document
would (A) extend the final maturity date of the Obligations hereunder in which
such Participant is participating; (B) reduce the interest rate applicable to
the Obligations hereunder in which such Participant is participating; (C)
release all or a material portion of the Collateral or guaranties (except to the
extent expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating; (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender; or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums; and (v) all amounts
payable by Borrower hereunder shall be determined as if such Lender had not sold
such participation; except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any direct rights as to the other Lenders, Agent, Borrower, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves.
(f) In connection with any such assignment or
participation or proposed assignment or participation, a Lender may disclose all
documents and information which it now or hereafter may have relating to
Borrower or Borrower's business.
(g) Any other provision in this Agreement
notwithstanding, any Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Bank or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; PROVIDED, HOWEVER,
that Borrower may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent
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to assignment by the Lenders shall release Borrower from its Obligations. A
Lender may assign this Agreement and the other Loan Documents and its rights and
duties hereunder and thereunder pursuant to SECTION 14.1 hereof and, except as
expressly required pursuant to SECTION 14.1 hereof, no consent or approval by
Borrower is required in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Borrower and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; PROVIDED, HOWEVER, that no such waiver, amendment, or consent
shall, unless in writing and signed by all the Lenders and Borrower and
acknowledged by Agent, do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees or other amounts due to the Lenders (or any of them) hereunder or under any
other Loan Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or any fees or other amounts payable hereunder or
under any other Loan Document;
(d) change the percentage of the Commitments that is
required for the Lenders or any of them to take any action hereunder;
(e) amend this Section or any provision of the
Agreement providing for consent or other action by all Lenders;
(f) release Collateral other than as permitted by
SECTION 16.12;
(g) change the definition of "Required Lenders";
(h) release Borrower from any Obligation for the
payment of money; or
(i) amend any of the provisions of SECTION 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, affect the rights or duties of Agent
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of or with
respect to any provision of this Agreement or any
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other Loan Document that relates only to the relationship of the Lender Group
among themselves, and that does not affect the rights or obligations of
Borrower, shall not require consent by or the agreement of Borrower.
15.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement, any other Loan
Document, or any present or future supplement hereto or thereto, or in any other
agreement between or among Borrower and Agent or any Lender, or delay by Agent
or any Lender in exercising the same, will operate as a waiver thereof. No
waiver by Agent or any Lender will be effective unless it is in writing, and
then only to the extent specifically stated. No waiver by Agent or the Lenders
on any occasion shall affect or diminish Agent's and each Lender's rights
thereafter to require strict performance by Borrower of any provision of this
Agreement. Agent's and each Lender's rights under this Agreement and the other
Loan Documents will be cumulative and not exclusive of any other right or remedy
which Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints Foothill as its agent under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this SECTION 16. The
provisions of this SECTION 16 are solely for the benefit of Agent, and the
Lenders, and Borrower shall have no rights as a third party beneficiary of any
of the provisions contained herein; provided, however, that certain of the
provisions of SECTION 16.10 hereof also shall be for the benefit of Borrower.
Any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have
or be deemed to have any fiduciary relationship with each other or any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent; it being expressly understood and agreed that the
use of the word "Agent" is for convenience only, that Foothill is merely the
representatives of the Lenders, and has only the contractual duties set forth
herein. Except as expressly otherwise provided in this Agreement, Agent shall
have and may use its sole discretion with respect to exercising or refraining
from exercising any discretionary rights or taking or refraining from taking any
actions which Agent is expressly entitled to take or assert under or pursuant to
this Agreement and the other Loan Documents. Without limiting the generality of
the foregoing, or of any other provision of the Loan Documents that provides
rights or powers to Agent, Lenders agree that Agent shall have the right to
exercise the following powers as long as this Agreement remains in effect: (a)
maintain, in
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accordance with its customary business practices, ledgers and records reflecting
the status of the Advances, the Collateral, the Collections, and related
matters; (b) execute or file any and all financing or similar statements or
notices, amendments, renewals, supplements, documents, instruments, proofs of
claim, notices and other written agreements with respect to the Loan Documents;
(c) make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents; (d) exclusively receive, apply, and distribute the Collections as
provided in the Loan Documents; (e) open and maintain such bank accounts and
lock boxes as Agent deems necessary and appropriate in accordance with the Loan
Documents for the foregoing purposes with respect to the Collateral and the
Collections; (f) perform, exercise, and enforce any and all other rights and
remedies of the Lender Group with respect to Borrower, the Obligations, the
Collateral, the Collections, or otherwise related to any of same as provided in
the Loan Documents; and (g) incur and pay such Lender Group Expenses as Agent
may deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.
16.2 DELEGATION OF DUTIES. Except as otherwise provided in this
section, Agent may execute any of its duties under this Agreement or any other
Loan Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects as long as such selection was made in
compliance with this section and without gross negligence or willful misconduct.
16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Borrower or any Subsidiary or
Affiliate of Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrower or the books or
records or properties of any of Borrower's Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation
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believed by it to be genuine and correct and to have been signed, sent, or made
by the proper Person or Persons, and upon advice and statements of legal counsel
(including counsel to Borrower or counsel to any Lender), independent
accountants and other experts selected by Agent. Agent shall be fully justified
in failing or refusing to take any action under this Agreement or any other Loan
Document unless Agent shall first receive such advice or concurrence of the
Lenders as it deems appropriate and until such instructions are received, Agent
shall act, or refrain from acting, as it deems advisable. If Agent so requests,
it shall first be indemnified to its reasonable satisfaction by Lenders against
any and all liability and expense that may be incurred by it by reason of taking
or continuing to take any such action. Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Lenders and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except with respect to Events of Default of which Agent has actual knowledge,
unless Agent shall have received written notice from a Lender or Borrower
referring to this Agreement, describing such Default or Event of Default, and
stating that such notice is a "notice of default." Agent promptly will notify
the Lenders of its receipt of any such notice or of any Event of Default of
which Agent has actual knowledge. If any Lender obtains actual knowledge of any
Event of Default, such Lender promptly shall notify the other Lenders and Agent
of such Event of Default. Each Lender shall be solely responsible for giving any
notices to its Participants, if any. Subject to SECTION 16.4, Agent shall take
such action with respect to such Default or Event of Default as may be requested
by the Required Lenders in accordance with SECTION 9; provided, however, that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrower
and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
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and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrower and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including without limiting the
generality of the foregoing, court costs, reasonable attorneys fees and
expenses, costs of collection by outside collection agencies and auctioneer fees
and costs of security guards or insurance premiums paid to maintain the
Collateral, whether or not Borrower is obligated to reimburse Agent or Lenders
for such expenses pursuant to the Loan Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from Collections
to reimburse Agent for such out-of-pocket costs and expenses prior to the
distribution of any amounts to Lenders. In the event Agent is not reimbursed for
such costs and expenses from Collections, each Lender hereby agrees that it is
and shall be obligated to pay to or reimburse Agent for the amount of such
Lender's Pro Rata Share thereof. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrower
and without limiting the obligation of Borrower to do so), according to their
Pro Rata Shares, from and against any and all Indemnified Liabilities; provided,
however, that no Lender shall be liable for the payment to any Agent-Related
Person of any portion of such Indemnified Liabilities resulting solely from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender shall reimburse Agent upon demand for such Lender's
ratable share of any costs or out-of-pocket expenses (including attorneys fees
and expenses) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that Agent is not reimbursed for such expenses by or on behalf of Borrower. The
undertaking in this section shall survive the payment of all Obligations
hereunder and the resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and
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generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with Borrower and its Subsidiaries and Affiliates and any
other Person (other than the Lender Group) party to any Loan Documents as though
Foothill were not Agent hereunder, and, in each case, without notice to or
consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding
Borrower or its Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this SECTION 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with Borrower
and its Subsidiaries and Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents as though such Lender were not the agent of
Agent hereunder without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, such Lender and its respective
Affiliates may receive information regarding Borrower or its Affiliates and any
other Person (other than the Lender Group) party to any Loan Documents that is
subject to confidentiality obligations in favor of Borrower or such other Person
and that prohibit the disclosure of such information to the Lenders, and the
Lenders acknowledge that, in such
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circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
16.11 WITHHOLDING TAX.
(a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the IRC and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the IRC, such Lender agrees with and in favor of Agent and Borrower, to
deliver to Agent and Borrower:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax
treaty, properly completed IRS Forms 1001 and W-8 before the
payment of any interest in the first calendar year and before
the payment of any interest in each third succeeding calendar
year during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade
or business of such Lender, two properly completed and
executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Lender and
in each succeeding taxable year of such Lender during which
interest may be paid under this Agreement, and IRS Form W-9;
and
(iii) such other form or forms as may be required
under the IRC or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Such Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction
of, withholding tax under a United States tax treaty by providing IRS Form 1001
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrower to such Lender, such Lender
agrees to notify Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of Borrower to such Lender. To the extent of
such percentage amount, Agent will treat such Lender's IRS Form 1001 as no
longer valid.
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(c) If any Lender claiming exemption from United
States withholding tax by filing IRS Form 4224 with Agent sells, assigns, grants
a participation in, or otherwise transfers all or part of the Obligations of
Borrower to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the IRC.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of
the United States or other jurisdiction asserts a claim that Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Lender shall indemnify Agent fully for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent,
at its option and in its sole discretion, to release any Lien on any Collateral
(i) upon the termination of the Commitments and payment and satisfaction in full
by Borrower of all Obligations other than Post-Termination Obligations; (ii)
constituting property being sold or disposed of if a release is required or
desirable in connection therewith and if Borrower certifies to Agent that the
sale or disposition is permitted under SECTION 7.4 of this Agreement or the
other Loan Documents (and Agent may rely conclusively on any such certificate,
without further inquiry); (iii) constituting property in which Borrower owned no
interest at the time the security interest was granted or at any time
thereafter; or (iv) constituting property leased to Borrower under a lease that
has expired or is terminated in a transaction permitted under this Agreement.
Except as provided above, Agent will not execute and deliver a release of any
Lien on any Collateral without the prior written authorization of (y) if the
release is of all or a material portion of the Collateral, all of the Lenders,
or (z) otherwise, the Required Lenders. Upon request by Agent or Borrower at any
time, the Lenders will confirm in writing Agent's authority to release any such
Liens on particular types or items of Collateral pursuant to this SECTION 16.12;
provided, however, that (1) Agent shall not be required to execute any
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document necessary to evidence such release on terms that, in Agent's opinion,
would expose Agent to liability or create any obligation or entail any
consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrower in respect of) all
interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any
of the Lenders to assure that the Collateral exists or is owned by Borrower or
is cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not,
without the express consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of Agent, set off against the
Obligations, any amounts owing by such Lender to Borrower or any accounts of
Borrower now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral the purpose of which is, or
could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive
(i) by payment, foreclosure, setoff or otherwise, any proceeds of Collateral or
any payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in same day funds, as applicable, for the account of all of
the Lenders and for application to the Obligations in accordance with the
applicable provisions of this Agreement, or (2) purchase, without recourse or
warranty, an undivided interest and
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participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; provided, however, that if all or part of such
excess payment received by the purchasing party is thereafter recovered from it,
those purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the
recovery of the excess payment.
16.14 AGENCY FOR PERFECTION. Agent and each Lender hereby appoints each
other Lender as agent for the purpose of perfecting the Agent's Liens in assets
which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender obtain possession of any such Collateral, such
Lender shall notify Agent thereof, and, promptly upon Agent's request therefor
shall deliver such Collateral to Agent or in accordance with Agent's
instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium or interest on Advances or otherwise.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member
of the Lender Group authorizes and directs Agent to enter into this Agreement
and the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent or all Lenders, as applicable, in accordance with the terms of this
Agreement or the other Loan Documents relating to the Collateral and the
exercise by Agent or all Lenders, as applicable, of their respective powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION.
By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish
such Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "REPORT" and collectively, "REPORTS") prepared by
Agent, and Agent shall so furnish each Lender with such Reports;
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(b) expressly agrees and acknowledges that Agent does
not (i) make any representation or warranty as to the accuracy of any Report,
and (ii) shall not be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the
Reports are not comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific information
regarding Borrower and will rely significantly upon the Books, as well as on
representations of Borrower's personnel;
(d) agrees to keep all Reports and other material,
non-public information regarding Borrower and its Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner; it being understood and agreed by Borrower that in any
event such Lender may make disclosures (a) to counsel for and other advisors,
accountants, and auditors to such Lender, (b) reasonably required by any bona
fide potential or actual Assignee, transferee, or Participant in connection with
any contemplated or actual assignment or transfer by such Lender of an interest
herein or any participation interest in such Lender's rights hereunder, (c) of
information that has become public by disclosures made by Persons other than
such Lender, its Affiliates, assignees, transferees, or participants, or (d) as
required or requested by any court, governmental or administrative agency,
pursuant to any subpoena or other legal process, or by any law, statute,
regulation, or court order; provided, however, that, unless prohibited by
applicable law, statute, regulation, or court order, such Lender shall notify
Borrower of any request by any court, governmental or administrative agency, or
pursuant to any subpoena or other legal process for disclosure of any such
non-public material information concurrent with, or where practicable, prior to
the disclosure thereof; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrower, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Borrower; and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses and
other amounts (including, attorney costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) Any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender promptly upon receipt thereof from
Borrower; (y) To the extent that Agent is entitled, under
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any provision of the Loan Documents, to request additional reports or
information from Borrower, any Lender may, from time to time, reasonably request
Agent to exercise such right as specified in such Lender's notice to Agent,
whereupon Agent promptly shall request of Borrower the additional reports or
information specified by such Lender, and, upon receipt thereof from Borrower,
Agent promptly shall provide a copy of same to such Lender; and (z) Any time
that Agent renders to Borrower a statement regarding the Loan Account, Agent
shall send a copy of such statement to each Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in SECTION 16.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to Borrower or any other Person for any failure by
any other Lender to fulfill its obligations to make credit available hereunder,
nor to advance for it or on its behalf in connection with its Commitment, nor to
take any other action on its behalf hereunder or in connection with the
financing contemplated herein.
16.19 LEGAL REPRESENTATION OF AGENT. In connection with the
negotiation, drafting, and execution of this Agreement and the other Loan
Documents, or in connection with future legal representation relating to loan
administration, amendments, modifications, waivers, or enforcement of remedies,
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP ("XXXXXXX") only has represented and only shall
represent Foothill in its capacity as Agent and as a Lender. Each other Lender
hereby acknowledges that Xxxxxxx does not represent any other Lender in
connection with any such matters.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrower and each member of the Lender Group whose
signature is provided for on the signature pages hereof and upon approval of the
Bankruptcy Court having jurisdiction over Borrower's Chapter 11 Case.
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17.2 SECTION HEADINGS. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrower, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 AMENDMENTS IN WRITING. This Agreement can only be amended by a
writing signed by Agent, the Required Lenders, and Borrower.
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 [INTENTIONALLY OMITTED].
17.8 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
PHONETEL TECHNOLOGIES, INC.,
an Ohio corporation
By: /s/ Xxxxx Xxxxxx
-----------------------------
Title: Corporate Secretary
CHEROKEE COMMUNICATIONS, INC.,
-----------------------------
an Ohio corporation
By: /s/ Xxxxx Xxxxxx
-----------------------------
Title: Corporate Secretary
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------
Title: Vice President
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