Exhibit 10
CREDIT AGREEMENT
BETWEEN
KLT TELECOM INC.
AS LENDER,
AND
DIGITAL TELEPORT, INC.
AS BORROWER
DATED AS OF SEPTEMBER 25, 2001
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of September 25, 2001, is
between Digital Teleport, Inc., a Missouri corporation (the
"Borrower"), and KLT Telecom Inc., a Missouri corporation (the
"Lender").
WHEREAS, the Borrower wishes to obtain, and the Lender is
willing to make, a certain term loan on the terms and conditions
set forth herein, such indebtedness to be evidenced by one or
more Notes.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Definitions as used in this
Agreement:
"Action" means any action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental
Authority.
"Advance" means a borrowing hereunder by the Borrower.
"Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended,
as such Rule is in effect on the date of this Agreement.
"Aggregate Available Commitment" means, at any time, the
Aggregate Commitment at such time, MINUS the aggregate amount of
all Advances.
"Aggregate Commitment" means the total amount which the
Lender is obligated to advance under SECTION 2.04 below.
"Agreement" means this Credit Agreement, as it may be
amended, modified or restated and in effect from time to time.
"Article" means an article of this Agreement unless another
document is specifically referenced.
"Authorized Officer" means any of the chairman, chief
executive officer or chief financial officer of the Borrower, or
any other officer of the Borrower they or any of them designate
to the Lender.
"Borrower" means Digital Teleport, Inc., a Missouri
corporation, and its successors and permitted assigns.
"Borrowing Date" means a date on which an Advance is made
hereunder.
"Borrower Material Adverse Effect" has the meaning set forth
in SECTION 11.13.
"Borrowing Notice" is defined in SECTION 2.05.
"Business Day" means with respect to any borrowing or
payment, a day (other than a Saturday or Sunday) on which banks
generally are open in Kansas City, Missouri for the conduct of
substantially all of their commercial lending activities.
"Business Plan" has the meaning set forth in SECTION 6.02.
"Capitalized Lease" of a Person means any lease of Property
by such Person as lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of such Person under Capitalized Leases which
would be shown as a liability on a balance sheet of such Person
prepared in accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Collateral" means Borrower's Property which is subject to a
security interest held by the Lender pursuant to the Loan
Documents.
"Condemnation" is defined in SECTION 7.08.
"Consolidated" or "consolidated", when used in connection
with any calculation, means a calculation to be determined on a
consolidated basis (as determined in accordance with GAAP) for
the Borrower.
"Consolidated Person" means, for the taxable year of
reference, each Person which is a member of the affiliated group
of which the Borrower is a member if consolidated returns are or
shall be filed for such affiliated group for federal income tax
purposes or any combined or unitary group of which the Borrower
is a member for state income tax purposes.
"Contingent Obligation" of a Person means any agreement,
undertaking or arrangement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide
funds for the payment of, or otherwise becomes or is contingently
liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any
creditor of such other Person against loss, including, without
limitation, any operating agreement or take-or-pay contract or
application for a letter of credit.
"Controlled Group" means all members of a controlled group
of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of
the Code.
"Default" means any event or condition the occurrence of
which would, with the passage of time or the giving of notice, or
both, constitute an Event of Default.
"Encumbrance" means any charge, claim, community property
interest, equitable interest lien, tax lien, option, pledge,
security interest, right of first refusal or restriction of any
kind, including any restriction on transfer, receipt of income or
exercise of any other attribute of ownership.
"Environment" means soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters,
streams, ponds, drainage basins, and wetlands), groundwaters,
drinking water supply, stream sediments, ambient air (including
indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental Law" means any Law that requires or relates
to protection of human health or the Environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any rule or regulation
issued thereunder.
"Event of Default" is defined in ARTICLE VII.
"Facility Termination Date" is defined in SECTION 2.02.
"Fair Market Value" means the amount which a willing buyer
would pay a willing seller in an arm's-length transaction.
"Fiscal Quarter" means one of the four consecutive three-
month accounting periods beginning on the first day of each
Fiscal Year.
"Fiscal Year" means the twelve-month accounting period
ending on December 31 of each year.
"GAAP" means generally accepted accounting principles,
consistently applied.
"Governmental Authority" means any federal, state, foreign
or local government, any of its subdivisions, administrative
agencies, authorities, commissions, boards or bureaus, any
federal, state, foreign or local court or tribunal and any
arbitrator.
"Indebtedness" of a Person means such Person's (a)
obligations for borrowed money, (b) obligations representing the
deferred purchase price of Property or services (other than
accounts payable arising in the ordinary course of such Person's
business), (c) obligations, whether or not assumed, secured by
Liens or payable out of the proceeds or production from Property
now or hereafter owned or acquired by such Person, (d)
obligations which are evidenced by notes, acceptances, or other
instruments, (e) Capitalized Lease Obligations, (f)
Contingent Obligations, (g) Rate Hedging Obligations, and (h)
repurchase obligations or liabilities of such Person with respect
to accounts receivable or notes receivable sold by such Person.
"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees
made in the ordinary course of business), extension of credit
(other than accounts receivable arising in the ordinary course of
business), or contribution of capital by such Person to any other
Person or any investment in, or purchase or other acquisition of,
the stock, partnership interests, notes, debentures, other
securities or other indebtedness of any other Person made by such
Person.
"Knowledge," in the case of an individual, means that such
individual will be deemed to have "Knowledge" of a particular
fact or other matter if (i) such individual is actually aware of
such fact or other matter or (ii) a prudent individual could be
expected to discover or otherwise become aware of such fact or
other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact
or other matter; and, in the case of the Borrower, "Knowledge"
means that the Borrower will be deemed to have "Knowledge" of a
particular fact or other matter if any one or more of the
following individuals had knowledge of such fact or other matter:
Xxxxxx X. Xxxxx, Xxxx Xxxxxxxx, Xxxxxx Xxxxxxx and Xxxx Xxxxxxx.
"Law" means any federal, state, local, municipal, foreign,
international, multinational, or other judicial or administrative
order, judgment, decree, constitution, law, ordinance, common law
of Missouri, regulation, statute, or treaty.
"Lender" means KLT Telecom Inc., a Missouri corporation, and
its successors and assigns.
"Lien" means any lien, pledge, claim, security interest or
Encumbrance whatsoever, including any mortgage, deed of trust,
security interest (including any Capitalized Lease or other title
retention agreement), charge, pledge, retention of title
agreement, easement, encroachment, condition, reservation,
covenant, lis pendens lien, claim of lien, adverse claim,
restriction on attributes of ownership, or other Encumbrance
affecting title.
"Loan" means the aggregate of all Advances.
"Loan Documents" means this Agreement, the Notes, the
Security Documents and the other documents and agreements
contemplated by this Agreement and executed by the Borrower in
favor of the Lender in connection with this Agreement.
"Margin Stock" has the meaning assigned to that term under
Regulation G of the Board of Governors of the Federal Reserve.
"Material Adverse Effect" means a material adverse effect on
(i) the business, Property, condition (financial or otherwise),
results of operations, or prospects of the Borrower taken as a
whole, (ii) the ability of the Borrower to perform its
obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents
or the rights and remedies of the Lender thereunder.
"Multiemployer Plan" means a Plan coming within Section
4001(a)(3) of ERISA.
"Net Income" means, for any computation period, with respect
to the Borrower on a consolidated basis with its Subsidiaries
(other than any Subsidiary which is restricted from declaring or
paying dividends or otherwise advancing funds to its parent
whether by contract or otherwise), cumulative net income earned
during such period in accordance with GAAP.
"Note" and "Notes" means one or more of the Promissory Notes
substantially in the form attached hereto as EXHIBIT A each
evidencing an Advance (including any such Promissory Notes issued
in exchange or substitution).
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Notes, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and any and all other
obligations of any kind of the Borrower to the Lender, including,
without limitation, those arising under the Loan Documents.
"Ordinary Course of Business" means an action taken by a
Person will be deemed to have been taken in the "Ordinary Course
of Business" only if:
(a) such action is consistent with the past practices
of such Person and is taken in the ordinary course of the
normal day-to-day operations of such Person; and
(b) such action is not required to be authorized by
the board of directors of such Person (or by any Person or
group of Persons exercising similar authority);
"Party" and "Parties" shall mean individually a party to
this Agreement and collectively all of the parties to this
Agreement.
"Payment Date" means February 1, 2002 and any other date on
which any payment of principal and/or interest is due hereunder
or under any Note.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Telecommunication Asset Sale" means any
Telecommunication Asset Sale approved in advanced in writing by
the Lender.
"Person" means any natural person, corporation, limited
liability company, firm, joint venture, partnership, association,
enterprise, trust or other entity or organization, or any
government or political subdivision or any agency, department,
division or instrumentality of any of the foregoing.
"Plan" means an employee pension benefit plan, as defined in
Section 3(2) of ERISA, as to which the Borrower or any member of
the Controlled Group has any liability.
"Property" of a Person means any and all property, whether
real, personal, tangible, intangible, or mixed, of such Person,
or other assets owned, leased or operated by such Person.
"Purchase" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement,
by which the Borrower or any of its Subsidiaries (a) acquires any
business or all or substantially all of the assets of any other
Person, whether through purchase of assets, merger or otherwise,
or (b) directly or indirectly acquires (in one transaction or as
the most recent transaction in a series of transactions) at least
a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of
directors (other than securities having such power only by reason
of the happening of a contingency) or a majority in interest (by
percentage or voting power) of the outstanding interests of any
other Person.
"Rate Hedging Obligations" of a Person means any and all
obligations of such Person, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all agreements,
devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange
rates or forward rates applicable to such party's assets,
liabilities or exchange transactions, including, but not limited
to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or
interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments
of any of the foregoing.
"Release" is defined in the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C.
9601 ET SEQ.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such
section, with respect to a Plan, excluding, however, such events
as to which the PBGC has by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event; PROVIDED, that a failure to meet
the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of
the issuance of any such waiver of the notice requirement in
accordance with Section 4043(a) of ERISA.
"Returns" means all tax returns that must be filed with any
federal, state or local taxing authority.
"SEC" means the Securities and Exchange Commission of the
United States Government.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Security Documents" means and includes all assignments,
deeds of trust, mortgages, security agreements, and pledge
agreements, and any other agreement or instrument evidencing,
pledging or granting a security interest in any property or
assets to secure the Loan and the
Obligations, as may from time to time be executed and delivered
to or in favor of Lender by Borrower.
"Single Employer Plan" means a Plan subject to Title IV of
ERISA, other than a Multiemployer Plan.
"Subsidiary" of any Person means any corporation or other
entity of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or
indirectly, by such Person. Unless otherwise expressly provided,
all references herein to a "Subsidiary" shall mean a Subsidiary
of the Borrower.
"Substantial Portion" means, with respect to the Property of
the Borrower and its Subsidiaries, Property which (a) represents
more than 10% of the consolidated assets of the Borrower, as
would be shown in the consolidated financial statements of the
Borrower as at the end of the Fiscal Quarter next preceding the
date on which such determination is made, or (b) is responsible
for more than 10% of the consolidated net sales or of the Net
Income of the Borrower for the 12-month period ending as of the
end of the Fiscal Quarter next preceding the date of
determination.
"Tax" or "Taxes" means all income, profits, franchise, gross
receipts, capital, sales, use, withholding, value added, ad
valorem, transfer, employment, social security, disability,
occupation, property, severance, production, excise and other
taxes, duties and similar governmental charges and assessments
imposed by or on behalf of any Governmental Authority (including
interest and penalties thereon).
"Telecommunication Asset Sale" means any transfer,
conveyance, sale, lease or other disposition of assets, rights
(contractual or otherwise) and properties, whether tangible or
intangible, used or intended for use in connection with the
Borrower's business; provided that such assets are accounted for
as "property, plant and equipment" on the Borrower's consolidated
balance sheet in accordance with GAAP, the proceeds of which are
treated as revenues (including deferred revenues) by the Borrower
in accordance with GAAP.
"Termination Event" means, with respect to a Plan which is
subject to Title IV of ERISA, (a) a Reportable Event, (b) the
withdrawal of the Borrower or any other member of the Controlled
Group from such Plan during a plan year in which the Borrower or
any other member of the Controlled Group was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed
such under Section 4066 of ERISA, (c) the termination of such
Plan or the filing of a notice of intent to terminate such Plan
under Section 4041 of ERISA, or (d) the institution by the PBGC
of proceedings to terminate such Plan or the occurrence of any
event or condition which constitutes grounds under Section 4042
of ERISA for the termination of, or appointment of a trustee to
administer, such Plan.
"Threatened" means any demand or statement that has been
made in writing that would lead a prudent person to conclude that
a claim, proceeding, dispute, Action, or other matter is likely
to be asserted, commenced, taken, or otherwise pursued in the
future.
"Unfunded Liability" means the amount (if any) by which the
present value of all vested and unvested accrued benefits under a
Single Employer Plan exceeds the fair market value of assets
allocable to such benefits, all determined as of the then most
recent valuation date for such Plan using PBGC actuarial
assumptions for single employer plan terminations.
The foregoing definitions shall be equally applicable to
both the singular and plural forms of the defined terms.
ARTICLE II
THE CREDITS
SECTION 2.01. ADVANCES.
(a) From and including the date of this Agreement and prior
to the Facility Termination Date, the Lender agrees, on the terms
and subject to the conditions set forth in this Agreement, to
make Advances to the Borrower from time to time in amounts not to
exceed the Aggregate Available Commitment existing at such time.
Lender agrees that the initial Advance to Borrower pursuant to
the terms of this Agreement shall be in the amount of $1,500,000
and shall be made within one (1) business day of the date of this
Agreement. Although the Borrower may obtain multiple Advances
hereunder, this is not a revolving line of credit and Advances
may not be repaid and re-advanced. Prepayment may only be made
in accordance with ARTICLE III.
(b) The Borrower agrees that if at any time the outstanding
balance of the Loan exceeds the Aggregate Commitment, the
Borrower shall repay immediately the then outstanding Loan
balance in such amount as is necessary to eliminate such excess.
(c) The Borrower's obligation to pay the principal of, and
interest on, each Advance shall be evidenced by a Note executed
by the Borrower in the principal amount equal to such Advance and
dated the date of such Advance.
Each Advance shall mature, and the principal amount thereof and
any unpaid accrued interest thereon shall be due and payable, on
February 1, 2002 (or as otherwise provided in the related Note).
SECTION 2.02. FACILITY TERMINATION DATE. The Facility
Termination Date is the date after which the Lender is no longer
obligated to make Advances hereunder and shall occur upon the
earlier of:
(a) February 1, 2002; or
(b) Acceleration by the Lender in accordance with the
provisions of ARTICLE VIII.
Such termination of the credit facility shall not affect in any
way the Lender's rights, including the rights to accelerate the
Loans, under this Agreement and the Notes.
SECTION 2.03. MINIMUM AMOUNT AND MAXIMUM AMOUNT OF EACH
ADVANCE. After the initial Advance, each Advance shall be in the
minimum amount of $500,000 (and in multiples of $50,000 if in
excess thereof) and in the maximum amount of $1,000,000.
SECTION 2.04. AGGREGATE COMMITMENT. The Lender shall not be
obligated to make any Advance prior to the date of this
Agreement. From and after the date of this Agreement the
"Aggregate Commitment" shall be $5,000,000.
SECTION 2.05. BORROWING NOTICES FOR NEW ADVANCES. After
the initial Advance, Borrower shall give the Lender irrevocable
notice containing the following information (the "Borrowing
Notice") not later than 10:00 a.m. (Kansas City time) at least
three (3) Business Days and not more than twenty (20) Business
Days before the proposed Borrowing Date of each Advance:
(a) the proposed Borrowing Date, which shall be a
Business Day, of such Advance;
(b) the aggregate amount of such Advance;
(c) a statement to the effect that all of the
representations and warranties of the Borrower contained herein
and in the Loan Documents are true and correct (i) as of the
date referred to in any representation or warranty that
addresses a matter as of a particular date and (ii) as to
all other representations and warranties as of the date of
such Borrowing Notice;
(d) a description of any Default that exists as to which
the proviso of clause (f) in ARTICLE IV may apply;
(e) a statement that the then applicable financial
milestones set forth in SCHEDULE 2.05(E) hereto ("Financial
Milestones") have been achieved; and
(f) a statement that the then applicable contractual and
operational milestones set forth in SCHEDULE 2.05(F) hereto
("Contractual and Operational Milestones") have been achieved.
Subject to the terms hereof and subject to the satisfaction of
the conditions set forth in ARTICLE IV, the Lender shall, not
later than noon (Kansas City time) on each Borrowing Date, make
available to Borrower immediately available funds in the amount
of the Advance requested to be made on such Borrowing Date.
Notwithstanding anything to the contrary contained herein,
Borrower shall not give Lender a Borrowing Notice until all
previous Borrowing Notices are either funded or denied pursuant
to the terms of this Agreement.
SECTION 2.06. RATES APPLICABLE AFTER AN EVENT OF DEFAULT.
During the continuance of an Event of Default, the Lender may, at
its option, by notice to the Borrower (which notice may be
revoked at the option of the Lender), declare that for the
duration of time during which such Event of Default shall be
continuing, the outstanding balance of the Loan shall bear
interest at a rate equal to twelve and one-half percent (12.5%)
per annum calculated for actual days elapsed on the basis of a
360-day year.
SECTION 2.07. METHOD OF PAYMENT. All payments of the
Obligations hereunder shall be made, without setoff, deduction or
counterclaim, in immediately available funds to the Lender
pursuant to wire transfer instructions provided to the Borrower
by a duly authorized executive officer of the Lender, or absent
such instructions, at the Lender's address specified pursuant to
SECTION 11.01, on the date when due. If the Borrower shall be
required by law to deduct any such amounts from or in respect of
any sum payable hereunder to the Lender, then the sum payable
hereunder shall be increased so that, after making all required
deductions, the Lender receives an amount equal to the sum it
would have received had no such deduction been made, and the
Borrower shall indemnify the Lender for taxes, assessments and
governmental charges imposed by any jurisdiction on account of
amounts paid or payable pursuant to this sentence. Within 30
days after the date of any payment of any such amount withheld by
either Borrower in respect of any payment to the Lender, the
Borrower shall furnish to the Lender the original or certified
copy of a receipt evidencing payment thereof.
SECTION 2.08. NOTES. Upon receipt of a Borrowing Notice,
the Lender shall promptly deliver to the Borrower a Note for
execution by the Borrower; PROVIDED, HOWEVER, that the Lender may
refuse to deliver such Note if the Lender is not obligated to
make an Advance hereunder.
SECTION 2.09. INTEREST RATE; PAYMENT DATES; INTEREST AND
FEE BASIS. Interest on principal shall be payable at a rate
equal to nine and one-half percent (9.5%) per annum, provided,
however, such interest rate may be increased as provided in this
Agreement under certain circumstances to 12.5% per annum. The
principal amount of each Advance, and all interest accrued on
each Advance, shall be payable on the Payment Date. Interest
accrued on each Advance shall be payable on any date on which
principal is prepaid, whether due to acceleration or otherwise.
Interest shall be calculated for actual days elapsed on the basis
of a 360-day year. Interest shall be payable for the day an
Advance is made but not for the day of any payment on the amount
paid if payment is received prior to noon (Kansas City time) at
the place of payment. If any payment of principal of or interest
on an Advance shall become due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business
Day and, in the case of a principal payment, such extension of
time shall be included in computing interest in connection with
such payment.
SECTION 2.10. SECURITY. As security for the repayment of
the Obligations and for the payment and performance of all other
obligations of the Borrower to the Lender, Borrower shall cause
the following documents, all in form and content acceptable to
the Lender, to be executed and delivered to the Lender, and
Borrower shall cooperate with Lender to cause all filings,
recordings and other actions to be taken, all at no cost to the
Lender, as reasonably required by the Lender to establish of
record and to perfect the Lender's security interests or Liens to
the satisfaction of the Lender: (i) the Security Agreement
attached hereto as EXHIBIT C and (ii) such other and additional
instruments and reports as may reasonably be required in the
opinion of the Lender to validate and perfect its security
interest or lien and enable it to exercise and enforce its rights
under this Agreement or the Security Documents executed and
delivered to the Lender as security for the Obligations.
ARTICLE III
PREPAYMENT
The Borrower may at any time and from time to time prepay
the Loan, in full or in part, without penalty or premium. All
prepayments made, whether a scheduled installment, prepayment, or
payment as a result of acceleration, shall be allocated first to
accrued but unpaid interest on all outstanding Notes, next to any
costs of collection, and then to installments of principal
remaining outstanding on the Notes, first to principal amounts
overdue then to principal amounts currently due and then to
installments of principal due in the future in the inverse order
of their maturity. In the event that the Borrower prepays a Note
in part, the Borrower, at Lender's option, shall execute and
deliver to the Lender a new Note in a principal amount equal to
the principal remaining outstanding.
ARTICLE IV
ADVANCE CONDITIONS
The Lender shall not be required to make a requested
Advance, if on the proposed Borrowing Date for such Advance:
(a) All representations and warranties of the Borrower
contained herein and in the Loan Documents are not true and
correct (i) as of the date referred to in any representation
or warranty that addresses a matter as of a particular date
and (ii) as to all other representations and warranties as
of the date of such proposed Advance;
(b) An accurate and complete Borrowing Notice shall not
have been properly submitted with respect to such Advance;
(c) A duly executed Note representing the Advance has
not been received by the Lender;
(d) A Security Agreement, in the form of EXHIBIT C
hereto, duly executed by an Authorized Officer of the Borrower
has not been received by the Lender;
(e) The Facility Termination Date shall have occurred;
(f) A Default or Event of Default has occurred and is
continuing or will exist as a result of the requested
Advance; provided, however, this clause (f) shall not apply
to any Default, the facts of which have been specifically
disclosed to the Lender in the Borrowing Notice for such
Advance and as to which the Lender has, within five (5)
Business Days after the Lender's receipt of the Borrowing
Notice, neither advised the Borrower of its intent to
declare an Event of Default nor, advised the Borrower that
it intends to exercise its rights in this clause (f) and not
make the requested Advance (as is the Lender's right,
exercising such right in its sole discretion);
(g) An Event of Force Majeure (as defined in Section
11.13 of this Agreement) has occurred; or
(h) The applicable Financial Milestones or the applicable
Contractual and Operational Milestones have not been achieved.
Each Borrowing Notice with respect to each such Advance shall
constitute a representation and warranty by the Borrower that the
conditions contained in this ARTICLE IV have been satisfied. The
Lender may require a duly completed compliance certificate (dated
the Borrowing Date) in substantially the form of EXHIBIT B hereto
as a condition to making an Advance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
SECTION 5.01. ORGANIZATION, STANDING AND POWER. The
Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is
incorporated and has all requisite power and authority to own,
lease and operate its properties and to carry on its business as
now being conducted. The Borrower is duly qualified or licensed
to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) would
not have a Material Adverse Effect.
SECTION 5.02. AUTHORITY; NONCONTRAVENTION. The Borrower
has the requisite corporate power and authority to enter into
this Agreement and perform its obligations hereunder and under
the Loan Documents and the same have been duly authorized by all
necessary corporate action on the part of the Borrower, and
assuming this Agreement constitutes the valid and binding
agreement of the Lender, constitute valid and binding obligations
of the Borrower enforceable against the Borrower, in accordance
with its terms, except to the extent that the enforcement thereof
may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general
principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law. Except as set
forth on the attached SCHEDULE 5.02, the execution and delivery
of this Agreement by the Borrower did not, and the consummation
of the transactions contemplated by this Agreement will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to
a right of termination, cancellation or acceleration of any
obligation or to loss by the Borrower of a material benefit
under, or result in the creation of any Lien upon any of the
properties or assets of the Borrower under, (i) the articles of
incorporation or bylaws of the Borrower, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit or license applicable to the
Borrower or its properties or assets or (iii) subject to any
required governmental filings, any law applicable to the Borrower
or its properties or assets, other than any such conflicts,
violations, defaults, rights or Liens that individually or in the
aggregate would not (x) have a Material Adverse Effect,
(y) materially impair the ability of the Borrower to perform its
obligations under this Agreement or (z) prevent the consummation
of any of the transactions contemplated by this Agreement.
SECTION 5.03. TAXES. The Borrower has timely filed all
Returns and reports required to be filed by it, except where
failure to timely file would not have a Material Adverse Effect.
All such Returns and reports are complete and accurate except
where the failure to be complete or accurate would not have a
Material Adverse Effect. The Borrower has paid or has set up an
adequate reserve for the payment of all Taxes shown as due on
such Returns except where the failure to do so would not have a
Material Adverse Effect. No deficiencies for any Taxes have been
asserted, proposed or assessed against the Borrower that have not
been paid or otherwise settled or reserved against, except for
deficiencies the assertion, proposing or assessment of which
would not have a Material Adverse Effect, and no requests for
waivers of the time to assess any such taxes are pending. There
are no material Liens for Taxes (other than for current taxes not
yet due and payable) on the assets of the Borrower.
SECTION 5.04. COMPLIANCE WITH LAWS. The Borrower has in
effect all permits from approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits, variances,
exemptions, orders and rights ("Permits") necessary for it to
own, lease or operate its properties and assets and to carry on
its business as now conducted, and there has not occurred any
default under any Permit, except for the absence of Permits and
for defaults under Permits that, individually or in the
aggregate, have not had a Material Adverse Effect. The Borrower
is in compliance with all applicable Law, except where failures
to so comply, individually or in the aggregate, would not have a
Material Adverse Effect.
SECTION 5.05. ENVIRONMENTAL MATTERS. The Borrower is and
at all times has been in full compliance with, and has not been
and is not in violation of or liable under, any Environmental Law
(which compliance includes the possession by the Borrower of all
Permits required under applicable Environmental Law and
compliance with the terms and conditions thereof), except for
such failure to be in compliance which, individually or in the
aggregate, would not have a Material Adverse Effect. There are
no pending or, to the Knowledge of the Borrower, Threatened
claims, orders, notices, administrative or judicial actions, or
Encumbrances, relating to environmental, health, and safety
liabilities arising under or pursuant to any federal, state or
local Environmental Laws, with respect to or affecting any of the
properties and assets (whether real, personal, or mixed) in which
the Borrower has an interest, except for any such claim, order,
notice, administrative or judicial action, Encumbrance or other
restriction that would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 5.06. INTELLECTUAL PROPERTY. Except as set forth
in the attached SCHEDULE 5.06, the Borrower owns sufficient
right, title and interest in and to, or has valid licenses of
sufficient scope and duration for, all patents, patent rights,
copyrights, trademarks, service marks, trade names, software,
trade secrets, confidential information and other intellectual
property material to the operation of the business of the
Borrower as currently conducted and as proposed to be conducted
(the "Intellectual Property Assets"). The Intellectual Property
Assets are free and clear of all Liens which would materially
impair the Borrower's ability to use the Intellectual Property
Assets in the business of the Borrower as currently conducted or
proposed to be conducted. The Borrower has not granted any third
party any rights in and to the Intellectual Property Assets. No
Intellectual Property Assets of the Borrower infringes, or
conflicts with, or to the Knowledge of the Borrower, is alleged
to infringe upon or conflict with the intellectual property
rights of any third party. The Borrower has no Knowledge that
any of its employees performing or managing key functions of the
Borrower is obligated under any contract
(including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the
use of such employee's best efforts to promote the interests of
the Borrower or that would conflict with the Borrower's business
as proposed to be conducted. To the Knowledge of the Borrower,
neither the execution nor delivery of this Agreement, nor the
carrying on of the Borrower's business by the employees of the
Borrower, nor the conduct of the business of the Borrower as
proposed, will conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such
employees is now obligated, which conflict or breach would have a
Material Adverse Effect. The Borrower does not utilize nor
intends to utilize any inventions of any of its employees (or
people it currently intends to hire) made prior to their
employment by the Borrower.
SECTION 5.07. CERTAIN PAYMENTS. Neither the Borrower, nor
any of the directors, officers, agents, or employees of the
Borrower, nor to the Knowledge of the Borrower, any other Person
associated with or acting for or on behalf of the Borrower, has
directly or indirectly (a) made any contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or other payment to
any Person, private or public, regardless of form, whether in
money, property, or services (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for
business secured, (iii) to obtain special concessions or for
special concessions already obtained, for or in respect of the
Borrower or any Affiliate of the Borrower, (b) established or
maintained any fund or asset that has not been appropriately
recorded in the books and records of the Borrower, which in the
case of either clause (a) or (b) would be in violation of Law or
would have a Material Adverse Effect.
SECTION 5.08. SECURITY DOCUMENTS. The provisions of each
Security Document providing for any Lien will be effective to
create in favor of the Lender a legal, valid and enforceable Lien
in all right, title and interest of the Borrower in the
collateral described therein. When financing statements have
been duly filed and, when appropriate, possession or control of
such collateral has been taken by the Lender, each Security
Document providing for the creation of a security interest shall
constitute a fully perfected security interest in all right,
title and interest of the Borrower in such collateral, subject
only to any (i) prior Liens held by Lender and (ii) any Liens
expressly permitted under the terms of such Security Document and
set forth on SCHEDULE 5.08 attached hereto (but only to the
extent such Liens are perfected or otherwise have priority over
the Lien created by the Security Documents).
SECTION 5.09. BUSINESS PLAN MILESTONES. The Financial
Milestones and the Contractual and Operational Milestones have
been derived from the Business Plan and each of them have been
prepared in good faith with a reasonable basis.
SECTION 5.10. ACCURACY OF INFORMATION. All information,
exhibits or reports with respect to Debtor that has been or is
hereafter furnished by or on behalf of Debtor to Secured Party is
or will be, as of the date furnished to Secured Party, accurate,
correct and complete in all material respects.
SECTION 5.11. MATERIAL AGREEMENTS. Except as set forth in
the attached SCHEDULE 5.11, the Borrower is not in default in the
performance, observance of fulfillment of any of the
obligations, covenants or conditions contained in any agreement
or instrument to which Borrower is a party, which default could
reasonably be expected to have a Material Adverse Effect.
SECTION 5.12. LITIGATION. Except as set forth in the
attached SCHEDULE 5.12, there is no litigation, arbitration,
governmental investigation, proceeding or inquiry pending or, to
Borrower's Knowledge, threatened against or affecting the
Borrower which could have a Material Adverse Effect.
ARTICLE VI
COVENANTS
So long as any Note remains unpaid, unless the Lender shall
otherwise consent in writing:
SECTION 6.01. FINANCIAL REPORTING. The Borrower will
maintain a system of accounting established and administered in
accordance with GAAP, and furnish to the Lender:
(a) Within 90 days after the close of each of its Fiscal
Years, an audit report certified by independent certified
public accountants, acceptable to the Lender, prepared in
accordance with GAAP for itself, including balance sheets as
of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of
cash flows, accompanied by (a) any management letter prepared
by said accountants, and (b) a certificate of said accountants
that, in the course of their examination necessary for their
certification of the foregoing, they have obtained no
knowledge of any Default or Event of Default, or if, in the
opinion of such accountants, any Default or Event of Default
shall exist, stating the nature and status thereof.
(b) Within 45 days after the close of the first three
quarterly periods of each of its Fiscal Years, unaudited
balance sheets as at the close of each such period and
profit and loss and reconciliation of surplus statements and
a statement of cash flows for the period from the beginning
of such Fiscal Year to the end of such quarter, all certified
by its President or the Chief Financial Officer.
(c) As soon as available, but in any event within 60
days after the beginning of each Fiscal Year of the Borrower,
a copy of the plan and forecast (including a projected
consolidated and consolidating balance sheet, income statement
and funds flow statement and updated projections) of the
Borrower for such Fiscal Year.
(d) Together with the financial statements required
hereunder, a compliance certificate in substantially the form
of EXHIBIT B hereto signed by its chief financial officer
showing the calculations necessary to determine compliance
with this Agreement and stating that no Default or Event of
Default exists, or if any Default or Event of Default exists,
stating the nature and status thereof.
(e) Within 270 days after the close of each Fiscal Year,
a statement of the
Unfunded Liabilities of each Single Employer Plan, certified
as correct by an actuary enrolled under ERISA.
(f) As soon as possible and in any event within ten (10) days
after the Borrower knows that any event has occurred which is a
Termination Event with respect to any Plan which is subject to
Title IV of ERISA, a statement, signed by the chief financial
officer of the Borrower, describing said Termination Event and
any action which the Borrower proposes to take with respect
thereto.
(g) As soon as possible and in any event within ten (10) days
after receipt by the Borrower, a copy of (i) any notice, claim,
complaint or order to the effect that the Borrower is or may be
liable to any Person as a result of the release by the Borrower
or any other Person of any Hazardous Materials into the
Environment or requiring that action be taken by the Borrower to
respond to or clean up a Release of Hazardous Materials into the
Environment, and (ii) any notice, complaint or citation alleging
any violation of any Environmental Law or environmental permit by
the Borrower. Within ten (10) days after the Borrower having
Knowledge of the proposal, enactment or promulgation of any
Environmental Law which would have a Material Adverse Effect, the
Borrower shall provide the Lender with written notice thereof.
(h) Promptly upon the furnishing thereof to the stockholders of
Borrower, copies of all financial statements, reports and proxy
statements so furnished.
(i) Promptly, and in any event within five (5) days after the
filing thereof, copies of any reports which the Borrower files
with the SEC.
(j) Such other information (including non-financial information)
as the Lender may from time to time reasonably request.
SECTION 6.02. USE OF PROCEEDS. The Borrower will use the
proceeds of the Advances for working capital and general
corporate purposes in accordance with the Borrower's August 2001
business plan, dated August 12, 2001, prepared by management of
the Borrower which includes financial projections and budgeted
capital expenditures (the "Business Plan"). The Business Plan is
the most current Business Plan prepared by management of the
Borrower and presented to Borrower's board of directors. A copy
of the Business Plan was delivered to the Lender prior to the
date of this Agreement. The Borrower will not use any
identifiable portion of the Advances to purchase or carry any
Margin Stock.
SECTION 6.03. NOTICE OF DEFAULT The Borrower will give
prompt notice in writing to the Lender of the occurrence of any
Default or Event of Default and of any other development relating
to the Borrower, financial or other, which could reasonably be
expected to have a Material Adverse Effect.
SECTION 6.04. CONDUCT OF BUSINESS. The Borrower will carry
on and conduct its business in generally the same manner and in
generally the same fields of enterprise as it is presently
conducted and to do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic
corporation in its jurisdiction of incorporation and, except
where the failure to do so would not have a Material Adverse
Effect, maintain all requisite authority to conduct its business
in each jurisdiction in which its business is conducted.
SECTION 6.05. TAXES. The Borrower will timely file
complete and correct United States federal and applicable
foreign, state and local tax returns required by applicable law
and pay when due all taxes, assessments and governmental charges
and levies upon it or its income, profits or Property, except
those which are being diligently contested in good faith by
appropriate proceedings and with respect to which adequate
reserves have been set aside.
SECTION 6.06. INSURANCE. The Borrower will maintain with
financially sound and reputable insurance companies insurance on
all its Property in such amounts and covering such risks as is
consistent with sound business practice, and will furnish to the
Lender upon request full information as to the insurance carried.
SECTION 6.07. COMPLIANCE WITH LAWS. The Borrower will
comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be
subject, the failure to comply with which would have a Material
Adverse Effect.
SECTION 6.08. MAINTENANCE OF PROPERTIES. The Borrower will
do all things necessary and consistent with sound business
practices to maintain, preserve, protect and keep its Property in
good repair, working order and condition, and, consistent with
sound business practices, make all necessary and proper repairs,
renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
SECTION 6.09. INSPECTION. The Borrower will permit the
Lender, by its representatives and agents, to inspect any of the
Property, corporate books and financial records of the Borrower,
to examine and make copies of the books of accounts and other
financial records of the Borrower, and to discuss the affairs,
finances and accounts of the Borrower with, and to be advised as
to the same by, their respective officers at such reasonable
times and intervals as the Lender may designate.
SECTION 6.10. INVESTMENTS AND PURCHASES. The Borrower will
not make or suffer to exist any Investments or commitments
therefor, or become or remain a partner in any partnership or
joint venture, or make any Purchase of any Person.
SECTION 6.11. LIENS. The Borrower will not create, incur,
or suffer to exist any Lien in, of or on the Property of the
Borrower, except:
(a) Liens for taxes, assessments or governmental charges or
levies on its Property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have
been set aside on its books;
(b) Liens imposed by law, such as landlords', carriers',
warehousemen's and mechanics' liens and other similar liens
arising in the ordinary course of business which secure payment
of obligations not more than 60 days past due or which are being
contested in good faith by appropriate proceedings and for which
adequate reserves in
accordance with GAAP shall have been set aside on its books;
(c) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar
legislation;
(d) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar
character and which do not in any material way adversely affect
the marketability of the same or interfere with the use thereof
in the business of the Borrower;
(e) Liens existing on the date hereof as disclosed on
SCHEDULE 5.08;
(f) Liens on Property in existence at the time of
acquisition of such Property by the Borrower;
(g) Deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds, and
other obligations of a like nature incurred in the ordinary
course of business by the Borrower;
(h) Liens created by the Loan Documents; and
(i) Liens arising from or in connection with a
Permitted Telecommunication Asset Sale.
SECTION 6.12. AFFILIATES. The Borrower shall not enter
into any transaction (including, without limitation, the purchase
or sale of any Property or service) with, or make any payment or
transfer to, any other Affiliate except in the Ordinary Course of
Business and pursuant to the reasonable requirements of the
Borrower's business and upon fair and reasonable terms no less
favorable to the Borrower than the Borrower would obtain in a
comparable arms-length transaction.
SECTION 6.13. CHANGE IN CORPORATE STRUCTURE; FISCAL YEAR.
The Borrower shall not (a) permit any amendment or modification
to be made to its certificate of incorporation or bylaws which is
adverse to the interests of the Lender or (b) subject to the
Lender's consent (which consent shall not be unreasonably
withheld), change its Fiscal Year to end on any date other than
December 31 of each year.
SECTION 6.14. INCONSISTENT AGREEMENTS. The Borrower shall
not enter into any indenture, agreement, instrument or other
arrangement which contains any provision which would be violated
or breached by the making of Advances or by the performance by
the Borrower of any of the Borrower's obligations under any Loan
Document.
SECTION 6.15. ASSET SALES. The Borrower will not, directly
or indirectly, assign, license, sell or transfer any of the
Borrower's Property other than in the ordinary course of
business. In addition, Borrower will not engage in any
Telecommunication Asset Sale involving
Property which is part of Borrower's "metro" or "regional"
business (as described in the Business Plan), whether or not such
Telecommunication Asset Sale is in the ordinary course of
business, without first obtaining the Lender's written consent to
such sale. All cash proceeds from the sale of Collateral,
including cash proceeds from a Permitted Telecommunication Asset
Sale, shall be used to prepay the Loan in accordance with
ARTICLE III hereof.
SECTION 6.16. FURTHER ASSURANCES. The Borrower shall
execute and file all such further instruments and perform such
other acts as the Lender may determine are necessary or advisable
to maintain the first priority of the Liens and security
interests created by the Security Documents in all property
subject thereto or otherwise to carry out the purposes of this
Agreement.
ARTICLE VII
EVENTS OF DEFAULT
The occurrence of any one or more of the following events
shall constitute an Event of Default:
SECTION 7.01. Any representations or warranties of the
Borrower made or deemed made by or on behalf of the Borrower to
the Lender under or in connection with this Agreement, any
Advance, or in any certificate or information delivered in
connection with this Agreement or any other Loan Document are not
true and correct (i) as of the date referred to in such
representations or warranties that addresses a matter as of a
particular date and (ii) as to all other representations and
warranties as of the date of such representation or warranty.
SECTION 7.02. Nonpayment of principal of any Note when due,
or nonpayment of interest upon a Note or other obligations under
any of the Loan Documents within five (5) days after the same
becomes due.
SECTION 7.03. The breach by the Borrower of any of the
terms or provisions of SECTIONS 6.02, 6.11, 6.13 or 6.14.
SECTION 7.04. The breach by the Borrower (other than a
breach which constitutes a Default under SECTION 7.01, 7.02 or
7.03) of any of the terms or provisions of this Agreement, in any
such case, which is not remedied within five (5) days after
written notice to the Borrower from the Lender.
SECTION 7.05. Failure of the Borrower to pay any
Indebtedness when due; or the default by the Borrower in the
performance of any term, provision or condition contained in any
agreement under which any Indebtedness was created or is
governed, or any other event shall occur or condition exist, the
effect of any of which is to cause, or to permit the holder or
holders of such Indebtedness to cause, such Indebtedness to
become due prior to its stated maturity; or any such Indebtedness
of the Borrower shall be declared to be due and payable or
required to be prepaid (other than by a regularly scheduled
payment) prior to the stated maturity thereof; or the Borrower
shall not pay, or admit in writing its inability to pay, its
debts generally as they become due.
SECTION 7.06. The Borrower shall (a) have an order for
relief entered with respect to it under the Federal bankruptcy
laws as now or hereafter in effect, (b) make an assignment for
the benefit of creditors, (c) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any
Substantial Portion of its Property, (d) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as
now or hereafter in effect or seeking to adjudicate it a bankrupt
or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or
its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, (e) take any corporate
action to authorize or effect any of the foregoing actions set
forth in this SECTION 7.06, (f) fail to contest in good faith any
appointment or proceeding described in SECTION 7.07 or (g) become
unable to pay, not pay, or admit in writing its inability to pay,
its debts generally as they become due.
SECTION 7.07. Without the application, approval or consent
of the Borrower, a receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Borrower or any
Substantial Portion of its Property, or a proceeding described in
SECTION 7.06(D) shall be instituted against the Borrower, and
such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of thirty (30)
consecutive days.
SECTION 7.08. Any Governmental Authority shall condemn,
seize or otherwise appropriate, or take custody or control of
(each a "CONDEMNATION"), all or any portion of the Property of
the Borrower which, when taken together with all other Property
of the Borrower so condemned, seized, appropriated, or taken
custody or control of, during the twelve-month period ending with
the month in which any such Condemnation occurs, constitutes a
Substantial Portion.
SECTION 7.09. The Borrower shall fail within thirty (30)
days to pay, bond or otherwise discharge any judgments or orders
for the payment of money in an aggregate amount in excess of
$100,000, which are not stayed on appeal or otherwise being
appropriately contested in good faith.
SECTION 7.10. The Unfunded Liabilities of all Single
Employer Plans shall exceed in the aggregate $100,000 or any
Reportable Event shall occur in connection with any Plan.
SECTION 7.11. The Borrower or any other member of the
Controlled Group shall have been notified by the sponsor of a
Multiemployer Plan that it has incurred withdrawal liability to
such Multiemployer Plan in an amount which, when aggregated with
all other amounts required to be paid to Multiemployer Plans by
the Borrower or any other member of the Controlled Group as
withdrawal liability (determined as of the date of such
notification), exceeds $100,000.
SECTION 7.12. The Borrower or any other member of the
Controlled Group shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of
Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of the Borrower
and the other members of the Controlled Group (taken as a whole)
to all Multiemployer Plans which are then in reorganization or
being terminated have been or will be increased over the amounts
contributed to such Multiemployer Plans for the respective plan
years of each such
Multiemployer Plan immediately preceding the plan year in which
the reorganization or termination occurs by an amount exceeding
$100,000.
SECTION 7.13. The Borrower shall be the subject of any
proceeding or investigation pertaining to the release by the
Borrower or any other Person of any toxic or hazardous waster or
substance into the Environment, or any violation of any federal,
state or local environmental, health or safety law or regulation,
which, in either case, could reasonably be expected to have a
Material Adverse Effect.
SECTION 7.14. The failure of any Security Document, for any
reason, to be in full force and effect.
SECTION 7.15. The occurrence of a default or Event of
Default under any other agreement, instrument and/or document
between Lender and Borrower, including, without limitation, any
Note or Security Document, which is not cured within the time, if
any, specified therefor in such other agreement, instrument
and/or document.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
SECTION 8.01. ACCELERATION. If any Event of Default
described in SECTION 7.06 or 7.07 occurs with respect to the
Borrower, the obligations of the Lender to make Advances
hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action
on the part of the Lender. If any other Event of Default occurs,
the Lender may terminate or suspend the obligations of the Lender
to make Advances hereunder, or declare the Obligations to be due
and payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest
or notice of any kind, all of which each of the Borrower hereby
expressly waives.
Within ten (10) Business Days after acceleration of the
maturity of the Obligations or termination of the obligations of
the Lender to make Advances hereunder as a result of any Event of
Default (other than any Event of Default as described in SECTION
7.06 or 7.07 with respect to the Borrower) and before any
judgment or decree for the payment of the Obligations due shall
have been obtained or entered, the Lender may (in its sole
discretion), by notice to the Borrower, rescind and annul such
acceleration and/or termination.
SECTION 8.02. AMENDMENTS. Subject to the provisions of
this ARTICLE VIII, the Lender and the Borrower may enter into
agreements supplemental hereto for the purpose of adding or
modifying any provisions to the Loan Documents or changing in any
manner the rights of the Lender or the Borrower hereunder or
waiving any Default hereunder.
SECTION 8.03. PRESERVATION OF RIGHTS. No delay or omission
of the Lender to exercise any right under the Loan Documents
shall impair such right or be construed to be a waiver of any
Default or an acquiescence therein, and the making of an Advance
notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such Advance
shall not constitute any waiver or acquiescence. Any single or
partial exercise of any such right
shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other
variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in contained in a
writing signed by the Lender, and then only to the extent set
forth in such writing. All remedies contained in the Loan
Documents or afforded by law shall be cumulative and all shall be
available to the Lender until the Obligations have been paid in
full.
ARTICLE IX
SETOFF
In addition to, and without limitation of, any rights of the
Lender under applicable law, if any Default or Event of Default
occurs, any and all deposits (including all account balances,
whether provisional or final and whether or not collected or
available) and any other Indebtedness at any time held or owing
by the Lender or any Affiliate of the Lender to or for the credit
or account of the Borrower may be offset and applied toward the
payment of the Obligations owing to the Lender or such Affiliate
of the Lender, whether or not the Obligations, or any part
hereof, shall then be due or have matured.
ARTICLE X
BENEFIT OF AGREEMENT; ASSIGNMENTS
SECTION 10.01. SUCCESSORS AND ASSIGNS. The terms and
provisions of the Loan Documents shall be binding upon and inure
to the benefit of the Borrower and the Lender and their
respective successors and assigns, except that (a) the Borrower
shall not have the right to assign any rights or obligations
under the Loan Documents, and (b) any assignment by the Lender
must be made in compliance with SECTION 10.02. Any assignee or
transferee of any Note agrees by acceptance thereof to be bound
by all the terms and provisions of the Loan Documents. Any
request, authority or consent of any Person, who at the time of
making such request or giving such authority or consent is the
holder of the Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any
note or notes issued in exchange therefor.
SECTION 10.02. ASSIGNMENTS BY THE LENDER.
10.02.1. ASSIGNMENTS OF THIS AGREEMENT AND THE
OBLIGATIONS THEREUNDER. An Assignment or transfer of this
Agreement may be made without the prior consent of the Borrower
(i) by the Lender to any of its Affiliates, provided that any
such assignment or transfer to such Affiliate shall not release
the Lender from the obligations of the Lender under this
Agreement, or (ii) pursuant to any merger or sale of
substantially all of the assets or stock of the Lender or such
Affiliates (or any transaction having such effect) that is
pursuant to an agreement entered into after the date of this
Agreement and pursuant to which in the case of a purchase of
substantially all of the assets or stock of the Lender or such
Affiliates, the party purchasing such assets or stock of the
Lender or such Affiliates assumes the obligations of the Lender
under this Agreement.
10.02.2. TRANSFERS OF THE NOTES. The Lender may in
accordance with applicable law and without the prior consent of
the Borrower, at any time, transfer and assign all or part of the
Notes to one or more Persons ("Transferees"). In the case of
such an assignment or transfer, the Lender shall surrender the
Notes subject to such assignment to the Borrower prior to the
transfer and assignment being effective and the Borrower shall,
simultaneously with such surrender, reissue and deliver new Notes
in the same aggregate outstanding principal amount as the
surrendered Note in the name of such holders as requested by the
Lender. On or after the effective date of such transfer and
assignment, (a) each such Transferee shall acquire all of the
rights of the Lender in the Notes assigned to such Transferee,
and (b) the Lender shall remain subject to the Aggregate
Commitment and Loans.
10.02.3. ADMINISTRATION. As a condition to any
transfer or assignment of the Notes pursuant to SECTION 10.02.2,
each Transferee shall appoint the Lender (or any other Person to
whom this Agreement has been assigned in accordance with SECTION
10.02.1 or with the consent of the Borrower) (the "Agent") to act
as agent of such Transferee, provided that the Agent shall not
have a fiduciary relationship in respect of the Borrower or any
Transferee of the Notes. The Agent shall exclusively exercise
such powers under this Agreement as are specifically delegated to
the Lender by the terms hereof, including the right to receive
notices, requests, waivers, instructions, information regarding
the Borrower, consents and other documents which the Borrower may
be required to deliver pursuant to this Agreement. The Agent
shall have no implied duties to the Transferees, or any
obligation to the Transferees to take any action thereunder.
SECTION 10.03. DISSEMINATION OF INFORMATION. The Borrower
authorizes the Lender to disclose to any Person to whom this
Agreement is being assigned pursuant to SECTION 10.02.1 or
Transferees under SECTION 10.02.2 any and all information in the
Lender's possession concerning the creditworthiness of the
Borrower, subject however, to the Lender obtaining an appropriate
confidentiality agreement respecting such information.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. NOTICES. Unless otherwise provided herein,
any notice, request, waiver, instruction, consent or document or
other communication required or permitted to be given by this
Agreement shall be effective only if it is in writing and (a)
delivered by hand or sent by certified mail, return receipt
requested, (b) if sent by a nationally-recognized overnight
delivery service with delivery confirmed, or (c) if telexed or
telecopied, with receipt confirmed as follows:
The Borrower: Digital Teleport, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
with a copy to: Digital Teleport, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attn: CFO
Facsimile: (000) 000-0000
and a copy to: Digital Teleport, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attn: General Counsel
Facsimile: (000) 000-0000
The Lender: KLT Telecom Inc.
00000 Xxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
with a copy to: KLT Inc.
00000 Xxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
The Parties shall promptly notify each other of any change in
their respective addresses or facsimile numbers or of the Person
or office to receive notices, requests or other communications
under this SECTION 11.01. Notice shall be deemed to have been
given as of the date when so personally delivered, when actually
delivered by the U.S. Postal Service at the proper address, the
next day when delivered during business hours to an overnight
delivery service properly addressed or when receipt of a telex or
telecopy is confirmed, as the case may be, unless the sending
party has actual Knowledge that such notice was not received by
the intended recipient.
SECTION 11.02. ENTIRE AGREEMENT. This Agreement, together
with all Loan Documents, Schedules and Exhibits hereto, and a
certain letter agreement between the Parties concerning SCHEDULE
5.02, embody the entire agreement and understanding of the
Parties in respect to the matters contemplated hereby and
supersedes and renders null and void all other prior agreements
and understandings, written and oral, with respect to the subject
matters hereof, PROVIDED that this provision shall not abrogate
any other written agreement between the Parties executed
simultaneously with this Agreement. No Party shall be liable or
bound to any other Party in any manner by any promises,
conditions, representations, warranties, covenants, agreements
and understandings, except as specifically set forth herein or
therein.
SECTION 11.03. WAIVER. Except as otherwise permitted in
this Agreement, the terms or conditions of this Agreement may not
be waived unless set forth in a writing signed by the Party
entitled to the benefits thereof. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute
a waiver of such provision at any time in the future or a waiver
of any other provision hereof. The rights and remedies of the
Parties are cumulative and not alternative.
Except as otherwise provided in this Agreement, neither the
failure nor any delay by any Party in exercising any right, power
or privilege under this Agreement, or the documents referred to
in this Agreement or therein will operate as a waiver of such
right, power or privilege, and no single or partial exercise of
any such right, power or privilege will preclude any other or
further exercise of such right, power or privilege or the
exercise of any other right, power or privilege.
SECTION 11.04. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Missouri, without regard to conflict of laws principles.
SECTION 11.05. SEVERABILITY. If any term or provision of
this Agreement or the application thereof to either party or set
of circumstances shall, in any jurisdiction and to any extent, be
finally held invalid or unenforceable, such term or provision
shall only be ineffective as to such jurisdiction, and only to
the extent of such invalidity or unenforceability, without
invalidating or rendering unenforceable any other terms or
provisions of this Agreement or under any other circumstances,
and the parties shall negotiate in good faith a substitute
provision which comes as close as possible to the invalidated or
unenforceable term or provision, and which puts each party in a
position as nearly comparable as possible to the position it
would have been in but for the finding of invalidity or
unenforceability, while remaining valid and enforceable.
SECTION 11.06. COUNTERPARTS. This Agreement may be executed
in one or more counterparts each of which when so executed and
delivered shall for all purposes be deemed to be an original but
all of which, when taken together, shall constitute one and the
same Agreement.
SECTION 11.07. HEADINGS. The table of contents, captions
and headings used in this Agreement are inserted for convenience
only and shall not be deemed to constitute part of this Agreement
or to affect the construction or interpretation hereof.
SECTION 11.08. NO THIRD-PARTY BENEFICIARIES. Nothing in
this Agreement, express or implied, shall create or confer upon
any Person (including but not limited to any employees), other
than the Parties or their respective successors and permitted
assigns, any legal or equitable rights, remedies, obligations,
liabilities or claims under or with respect to this Agreement,
except as expressly provided herein.
SECTION 11.09. INTERPRETATION.
(a) Unless specifically stated otherwise, references to
Articles, Sections, Exhibits and Schedules refer to Articles,
Sections, Exhibits and Schedules in this Agreement. References
to "includes" and "including" mean "includes without limitation"
and "including without limitation." Whenever the context may
require, any pronoun shall include the corresponding masculine
feminine and neuter forms. Unless the context shall otherwise
require or provide, any reference to any agreement or other
instrument or statute or regulation is to such agreement,
instrument statute or regulation as amended and supplemented from
time to time (and, in the case of a statute or regulation, to any
successor provision).
(b) Each Party is a sophisticated legal entity that was
advised by experienced counsel and, to the extent it deemed
necessary, other advisors in connection with this Agreement.
Accordingly, each Party hereby acknowledges that no Party has
relied or will rely in respect of this Agreement or the
transactions contemplated hereby upon any document or written or
oral information previously furnished to or discovered by it or
its representatives, other than this Agreement or the documents
and instruments delivered on the date of this Agreement.
(c) No provision of this Agreement shall be interpreted in
favor of, or against, any of the Parties by reason of the extent
to which any such Party or its counsel participated in the
drafting thereof or by reason of the extent to which any such
provision is inconsistent with any prior draft hereof or thereof.
SECTION 11.10. INCLUSION OF INFORMATION IN SCHEDULES. The
inclusion of any information in any Schedule (i) shall not be
deemed an admission that any such information is material for
purposes of the representation and warranty to which it relates
or any other representation and warranty or for any other purpose
related to this Agreement or the transactions contemplated
hereby, including for purposes of any covenants, closing
conditions or any other remedies the Parties may have, and
(ii) shall not be used or interpreted in any manner to create a
standard of materiality for any such purpose.
SECTION 11.11. AMENDMENT. No amendment, modification or
alteration of the terms or provisions of this Agreement,
including any Schedules and Exhibits hereto or thereto, shall be
binding unless the same shall be in writing and duly executed by
the Party against whom such amendment, modification or alteration
is sought to be enforced.
SECTION 11.12. EFFECTIVENESS OF AGREEMENT. This Agreement
shall become effective as of the date of this Agreement.
SECTION 11.13. FORCE MAJEURE. The Lender shall have no
obligation to make any further Advances under, or otherwise be
obligated to perform, carry out or observe any of the terms,
conditions or covenants set forth in, this Agreement at any time
subsequent to the occurrence of an Event of Force Majeure (as
hereinafter defined). The term "Event of Force Majeure" as used
in this Agreement shall mean and include any of the following
which occurs after the date of this Agreement or, in the case of
any of the following which exist as of the date of this
Agreement, a material acceleration or worsening thereof: (i) any
general suspension or material limitation of trading in, or any
limitation on prices for, securities on any United States
national securities exchange, the NASDAQ Stock Market or in the
over-the-counter market; (ii) the declaration of a banking
moratorium or any suspension of payments in respect of banks in
the United States or a moratorium or suspension in foreign
exchange trading declared by major international banks or any
governmental authority; (iii) the commencement or escalation of a
war, armed hostilities, national emergency, international or
national crisis or calamity, acts of a public enemy, riot,
sabotage, insurrection, blockade or embargo, in any such case
directly or indirectly involving the United States; (iv) any
limitation (whether or not mandatory) by any Governmental
Authority on, or any other event which could, in the sole
judgment of the Lender, affect the extension of credit by banks
or other lending institutions in the United States; (v) any
change in the general political, market, economic or financial
conditions in the United States or abroad that could, in the sole
judgment of the Lender, have a material adverse effect on the
business, condition (financial or otherwise), results of
operations, prospects, operations or assets of the Borrower and
its subsidiaries, taken as a whole, or otherwise could, in the
sole judgment of the Lender, materially impair in any way the
contemplated future conduct of the business of the Borrower or
any of its subsidiaries, or materially impair the contemplated
benefits to the Lender of this Agreement (any such effect is
referred to hereinafter as a "Borrower Material Adverse Effect"),
(vi) the enactment, publication, decree, or other promulgation of
any statute, rule, regulation, or order of any Governmental
Authority which, in the sole judgment of the Lender, could have a
Borrower Material Adverse Effect, (vii) the taking of any action
by Governmental Authority in respect of monetary or (including,
without limitation, a devaluation of currency) which could, in
the sole judgment of the Lender, have a material adverse effect
on the securities markets in the United States, (viii) fire,
storm, flood, earthquake, explosion, or other acts of nature, God
or public enemy that could, in the sole judgment of the Lender,
have a Borrower Material Adverse Effect, (ix) labor strikes,
disputes, lockouts or other labor troubles causing cessation,
slowdown or interruptions of work that could, in the sole
judgment of the Lender, have a Borrower Material Adverse Effect,
or (x) shortages or delays in obtaining adequate labor, raw
materials, equipment or transportation, interruption of utility
services or accidents that could, in the sole judgment of the
Lender, have a Borrower Material Adverse Effect.
SECTION 11.14. EXPENSES; INDEMNIFICATION. The Borrower
shall reimburse the Lender for any costs, internal charges and
out-of-pocket expenses (including attorneys' fees and time
charges of attorneys for the Lender, which attorneys may be
employees of the Lender) paid or incurred by the Lender in
connection with the preparation, negotiation, execution,
delivery, review, amendment, modification, and administration of
the Loan Documents. The Borrower also agrees to reimburse the
Lender for any costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the
Lender, which attorneys may be employees of the Lender) paid or
incurred by the Lender in connection with the collection and
enforcement of the Loan Documents. The Borrower further agrees
to indemnify the Lender, its directors, officers and employees
against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all
expenses of litigation or preparation therefor whether or not the
Lender is a party thereto) which any of them may pay or incur
arising out of or relating to this Agreement, the other Loan
Documents, the transactions contemplated hereby or the direct or
indirect application or proposed application of the proceeds of
any Advance hereunder except to the extent such obligations arise
from the gross negligence or willful misconduct of the Lender.
The obligations of the Borrower under this Section shall survive
the termination of this Agreement.
SECTION 11.15. EXCLUSIVE JURISDICTION AND CONSENT TO SERVICE
OF PROCESS. THE PARTIES AGREE THAT ANY ACTION ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE NOTES, THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY SHALL BE INSTITUTED IN A FEDERAL
COURT SITTING IN MISSOURI OR STATE COURT SITTING IN MISSOURI,
WHICH SHALL BE THE EXCLUSIVE VENUE OF ANY SUCH ACTION. EACH
PARTY WAIVES ANY OBJECTION WHICH SUCH PARTY MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION, AND IRREVOCABLY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY SUCH COURT (AND
THE APPROPRIATE APPELLATE COURTS) IN ANY SUCH ACTION. ANY AND
ALL SERVICE OF PROCESS
AND ANY OTHER NOTICE IN ANY SUCH ACTION SHALL BE EFFECTIVE
AGAINST SUCH PARTY WHEN TRANSMITTED IN ACCORDANCE WITH SECTION
11.01. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO AFFECT THE
RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED BY
LAW.
SECTION 11.16. WAIVER OF JURY TRIAL. THE PARTIES HERETO
MUTUALLY, EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL
BY JURY FOR ANY PROCEEDINGS ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, OR ANY OTHER DOCUMENT ENTERED
INTO BY BORROWER AND LENDER IN CONNECTION WITH THIS TRANSACTION,
OR ANY CONDUCT RELATING TO THIS AGREEMENT OR THE LOANS MADE
HEREUNDER OR THE DEBTOR-CREDITOR RELATIONSHIP ESTABLISHED HEREBY,
INCLUDING WITH REGARD TO ANY COUNTERCLAIMS, CAUSES OF ACTION, AND
DEFENSES WHETHER BASED IN CONTRACT OR TORT OR OTHERWISE. THIS
WAIVER IS GRANTED IN THE INTEREST OF AVOIDING DELAYS AND EXPENSES
ASSOCIATED WITH JURY TRIALS. THE PARTIES HERETO ACKNOWLEDGE
THAT THEY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT IN PART
BY THE PROVISIONS OF THIS PARAGRAPH.
[THE BALANCE OF THIS PAGE LEFT BLANK INTENTIONALLY]
NOTICE TO DEBTOR
NO ORAL AGREEMENTS; ENTIRE AGREEMENT. ORAL AGREEMENTS OR
COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND
OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT YOU,
THE BORROWER, AND US, THE LENDER, FROM MISUNDERSTANDING OR
DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE
AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT
AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
The Lender: /s/ MRS
Initials
The Borrower: /s/ GWD
Initials
IN WITNESS WHEREOF, The Borrower and the Lender have
executed this Agreement as of the date first above written.
DIGITAL TELEPORT, INC
By: /s/ Xxxx X. Xxxxxxxx
Print Name: Xxxx X. Xxxxxxxx
Title: SVP & CFO
KLT TELECOM INC.
By: /s/ Xxxx X. Xxxxxxxxx
Print Name: Xxxx X. Xxxxxxxxx
Title: President
SIGNATURE PAGE FOR CREDIT AGREEMENT
