EXECUTION COPY
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TERM LOAN AGREEMENT
dated as of
January 15, 1999
among
FLASHNET COMMUNICATIONS, INC.,
as Borrower
FLASHNET MARKETING, INC.,
and
FLASHNET TELECOM, INC.,
as Guarantors
THE LENDERS NAMED HEREIN,
and
XXXXXXX XXXXX CREDIT PARTNERS L.P.,
as Administrative Agent
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TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.1. DEFINED TERMS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.2. INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE II. THE CREDIT FACILITY. . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.1. COMMITMENTS TO MAKE TERM LOANS. . . . . . . . . . . . . . . . . . . . 11
SECTION 2.2. INTEREST; PAYMENT IN KIND OPTION; AND DEFAULT INTEREST. . . . . . . . 12
SECTION 2.3. MANDATORY PREPAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.4. OPTIONAL PREPAYMENT.. . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.5. EFFECT OF NOTICE OF PREPAYMENT. . . . . . . . . . . . . . . . . . . . 13
SECTION 2.6. PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.7. RIGHT OF SET OFF; SHARING OF PAYMENTS, ETC. . . . . . . . . . . . . . 14
SECTION 2.8. CERTAIN FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . 15
SECTION 3.1. CORPORATE ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.2. QUALIFICATION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.3. CHARTER AND BYLAWS. . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.4. CAPITALIZATION OF THE BORROWER. . . . . . . . . . . . . . . . . . . . 15
SECTION 3.5. AUTHORITY RELATIVE TO THIS AGREEMENT. . . . . . . . . . . . . . . . . 16
SECTION 3.6. NONCONTRAVENTION. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.7. GOVERNMENTAL APPROVALS. . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.8. SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.9. COMMON STOCK PURCHASE OPTION. . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.10. FINANCIAL STATEMENTS.. . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.11. ABSENCE OF UNDISCLOSED LIABILITIES.. . . . . . . . . . . . . . . . . 18
SECTION 3.12. ABSENCE OF CERTAIN CHANGES.. . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.13. TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.14. COMPLIANCE WITH LAWS.. . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.15. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.16. TITLE TO PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.17. SUFFICIENCY AND CONDITION OF PROPERTIES. . . . . . . . . . . . . . . 22
SECTION 3.18. REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.19. TANGIBLE PERSONAL PROPERTY.. . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.20. LEASED PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.21. SPECIAL REPRESENTATION REGARDING SUBSCRIBERS.. . . . . . . . . . . . 24
SECTION 3.22. RECEIVABLES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.23. INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.24. PERMITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.25. AGREEMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.26. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.27. ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.28. LABOR RELATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.29. EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.30. INSIDER INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.31. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.32. FINANCIAL REQUIREMENTS.. . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.33. BANK ACCOUNTS AND POWERS OF ATTORNEY.. . . . . . . . . . . . . . . . 31
SECTION 3.34. INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.35. BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . 31
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SECTION 3.36. ILLEGAL PAYMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.37. PRIVATE OFFERING; RULE 144A MATTERS. . . . . . . . . . . . . . . . . 32
SECTION 3.38. REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.39. BROKERAGE FEES.. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.40. DISCLOSURE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.41. DUE AUTHORIZATION AND ENFORCEABILITY.. . . . . . . . . . . . . . . . 33
SECTION 3.42. NO VIOLATION OF REGULATIONS OF BOARD OF GOVERNORS OF FEDERAL
RESERVE SYSTEM. . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.43. GOVERNMENTAL REGULATIONS.. . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.44. YEAR 2000 COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.1. USE OF PROCEEDS.. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.2. NOTICE OF DEFAULT AND RELATED MATTERS.. . . . . . . . . . . . . . . . 34
SECTION 4.3. MERGER; SALE OF ALL OR SUBSTANTIALLY ALL ASSETS.. . . . . . . . . . . 34
SECTION 4.4. INFORMATION; SEC REPORTS; COMPLIANCE CERTIFICATES.. . . . . . . . . . 34
SECTION 4.5. EXISTENCE; BUSINESS AND PROPERTIES; INSURANCE.. . . . . . . . . . . . 36
SECTION 4.6. COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.7. RESTRICTED PAYMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.8. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM SUBSIDIARIES.. . . . 37
SECTION 4.9. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND ISSUANCE OF
ADDITIONAL PREFERRED STOCK. . . . . . . . . . . . . . . . . . . . 38
SECTION 4.10. LIMITATION ON SALES OF ASSETS, SUBSIDIARY STOCK AND ACQUISITIONS.. . 39
SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES.. . . . . . . . . . . . . 39
SECTION 4.12. LINE OF BUSINESS; LIMITATION ON BORROWER'S ACTIVITIES. . . . . . . . 39
SECTION 4.13. LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.14. STAY, EXTENSION AND USURY LAWS.. . . . . . . . . . . . . . . . . . . 39
SECTION 4.15. OBLIGATIONS AND TAXES. . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.16. SUBSCRIBERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.17. ADDITIONAL GUARANTEES AND SUBSIDIARY PLEDGE AND SECURITY
AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.18. YEAR 2000 COMPLIANCE.. . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.19. MATERIAL CONTRACTS.. . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V. CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.1. CORPORATE AND OTHER PROCEEDINGS; OTHER LOAN DOCUMENTS.. . . . . . . . 40
SECTION 5.2. NO MATERIAL LOSS. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.3. NO EVENT OF DEFAULT.. . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.4. NO CHANGES IN FINANCIAL MARKETS.. . . . . . . . . . . . . . . . . . . 42
SECTION 5.5. DELIVERY OF OPINIONS. . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.6. ADMINISTRATIVE AGENT'S EXPENSES.. . . . . . . . . . . . . . . . . . . 42
SECTION 5.7. FEES AND EXPENSES OF COUNSEL FOR LENDERS. . . . . . . . . . . . . . . 42
SECTION 5.8. CONSENTS AND APPROVALS. . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.9. MARGIN REGULATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VI. TRANSFER OF THE TERM LOANS, THE INSTRUMENTS EVIDENCING SUCH TERM
LOANS AND THE SECURITIES; REPRESENTATIONS OF LENDERS; PARTICIPATIONS . . . . . . . 43
SECTION 6.1. TRANSFER OF THE TERM LOANS, THE INSTRUMENTS EVIDENCING THE TERM
LOANS AND THE SECURITIES.. . . . . . . . . . . . . . . . . . . . 43
SECTION 6.2. PERMITTED ASSIGNMENTS.. . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.3. PERMITTED PARTICIPANTS; EFFECT. . . . . . . . . . . . . . . . . . . . 43
SECTION 6.4. DISSEMINATION OF INFORMATION. . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.5. REPLACEMENT TERM NOTES UPON TRANSFER OR EXCHANGE. . . . . . . . . . . 44
SECTION 6.6. REGISTER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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ARTICLE VII. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.1. EVENTS OF DEFAULT.. . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.2. ACCELERATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.3. RIGHTS AND REMEDIES CUMULATIVE. . . . . . . . . . . . . . . . . . . . 47
SECTION 7.4. DELAY OR OMISSION NOT WAIVER. . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.5. WAIVER OF PAST DEFAULTS.. . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.6. RIGHTS OF LENDERS TO RECEIVE PAYMENT. . . . . . . . . . . . . . . . . 47
ARTICLE VIII. GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.1. THE GUARANTEE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.2. LIMITATION ON LIABILITY.. . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.3. STAY OF ACCELERATION. . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE IX. INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.1. INDEMNIFICATION.. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.2. INDEMNITY NOT AVAILABLE.. . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.3. SETTLEMENT OF CLAIMS. . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.4. APPEARANCE EXPENSES.. . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.5. SURVIVAL OF INDEMNIFICATION.. . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.6. LIABILITY NOT EXCLUSIVE; PAYMENTS.. . . . . . . . . . . . . . . . . . 51
ARTICLE X. THE ADMINISTRATIVE AGENT. . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.1. APPOINTMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.2. DELEGATION OF DUTIES.. . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.3. EXCULPATORY PROVISIONS.. . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.4. RELIANCE BY THE ADMINISTRATIVE AGENT.. . . . . . . . . . . . . . . . 51
SECTION 10.5. NOTICE OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.6. NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND OTHER LENDERS.. . . . . 52
SECTION 10.7. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.8. ADMINISTRATIVE AGENT, IN ITS INDIVIDUAL CAPACITIES.. . . . . . . . . 52
SECTION 10.9. SUCCESSOR ADMINISTRATIVE AGENT.. . . . . . . . . . . . . . . . . . . 53
SECTION 10.10. DUTIES OF ADMINISTRATIVE AGENT. . . . . . . . . . . . . . . . . . . 53
ARTICLE XI. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.1. EXPENSES; DOCUMENTARY TAXES. . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.2. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.3. CONSENT TO AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . 55
SECTION 11.4. PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.5. NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL . . . 56
SECTION 11.6. REPLACEMENT TERM NOTES.. . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.7. APPOINTMENT OF AGENT FOR SERVICE.. . . . . . . . . . . . . . . . . . 56
SECTION 11.8. MARSHALLING; RECAPTURE.. . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.9. LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.10. INDEPENDENCE OF COVENANTS.. . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.11. CURRENCY INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.12. WAIVER OF IMMUNITY. . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.13. FREEDOM OF CHOICE . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.14. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.15. MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.16. SEVERABILITY CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. . . 58
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EXHIBIT A. FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B. FORM OF CO-SALE AGREEMENT
EXHIBIT C. FORM OF EQUITY REGISTRATION RIGHTS AGREEMENT
EXHIBIT D. FORM OF TERM NOTE
EXHIBIT E. FORM OF OPINION OF XXXXXX & HANGER, L.L.P.
SCHEDULE 3.2 QUALIFICATIONS
SCHEDULE 3.6 NONCONTRAVENTIONS
SCHEDULE 3.7 GOVERNMENT APPROVALS
SCHEDULE 3.8 SUBSIDIARIES
SCHEDULE 3.11 LIABILITIES
SCHEDULE 3.12 CERTAIN CHANGES
SCHEDULE 3.13 TAX MATTERS
SCHEDULE 3.14 COMPLIANCE WITH LAWS
SCHEDULE 3.15 LEGAL PROCEEDINGS
SCHEDULE 3.16 ENCUMBRANCES
SCHEDULE 3.18 REAL PROPERTY
SCHEDULE 3.19 PERSONAL PROPERTY
SCHEDULE 3.20 LEASE PROPERTY
SCHEDULE 3.23 INTELLECTUAL PROPERTY
SCHEDULE 3.24 NOTICES OF ALLEGED FAILURES TO HAVE PERMITS
SCHEDULE 3.25 AGREEMENTS
SCHEDULE 3.26 EMPLOYEE BENEFIT PLANS
SCHEDULE 3.27 ENVIRONMENTAL MATTERS
SCHEDULE 3.28 LABOR RELATIONS
SCHEDULE 3.29 DIRECTORS, OFFICERS, EMPLOYEES
SCHEDULE 3.30 INSIDER INTERESTS
SCHEDULE 3.32 DEPOSITS, ETC. WITH GOVERNMENTAL ENTITIES
SCHEDULE 3.33 BANK ACCOUNTS
SCHEDULE 4.11 TRANSACTIONS WITH AFFILIATES
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THIS TERM LOAN AGREEMENT, dated as of January 15, 1999 (as
amended, restated, supplemented and/or otherwise modified from time to time,
this "agreement"), is by and among:
(A) FLASHNET COMMUNICATIONS, INC., a Texas corporation (the
"BORROWER");
(B) FLASHNET MARKETING, INC., a Texas corporation, and FLASHNET
TELECOM, INC., A Texas corporation, as guarantors (each a "GUARANTOR"
and, collectively, the "GUARANTORS");
(C) each of the Lenders; AND
(D) XXXXXXX XXXXX CREDIT PARTNERS L.P., as Administrative Agent.
the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINED TERMS. As used in this Agreement, the
following terms shall have the meanings specified below:
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into, or became a Subsidiary of, such specified Person including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person's merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"ACTION" has the meaning specified in SECTION 9.2.
"ADMINISTRATIVE AGENT" means Xxxxxxx Xxxxx Credit Partners L.P.,
acting as agent pursuant to Article X or any successor or replacement
Administrative Agent, acting in such capacity.
"AFFILIATE OR AFFILIATE" means, with respect to any Person, any
other Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person. For
the purposes of this definition, "control" when used with respect to any Person
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract, or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
PROVIDED that for purposes of SECTION 4.11, beneficial ownership of 10% or more
of the voting securities of a Person shall be deemed to be control. Neither the
Lenders nor any of their Affiliates will be treated as an Affiliate of the
Borrower or any of its Subsidiaries for purposes of this Agreement.
"AFFILIATE TRANSACTION" has the meaning specified in SECTION 4.11.
"AGREEMENT" has the meaning specified in the preamble to this
Agreement.
"APPLICABLE ENVIRONMENTAL LAWS" has the meaning specified in
SECTION 3.27(B).
"APPLICABLE LAW" means any statute, law, rule, or regulation or
any judgment, order, writ, injunction, or decree of any Governmental Entity to
which a specified person or property is subject.
"APPLICABLE REPAYMENT FEE" means a fee that shall be paid by the
Borrower to the Lenders on the date of the payment of any principal of the Term
Loan, which fee shall be calculated as of such date by multiplying the
outstanding principal amount of the Term Loans (including any Capitalized
Interest thereon pursuant to SECTION 2.2(C)) being repaid on such date by the
applicable percentage set forth in the table below:
MONTHS SUCCEEDING CLOSING DATE
------------------------------
REPAYMENT AFTER END BUT NO LATER THAN REPAYMENT FEE
OF MONTH: END OF MONTH: (% OF PRINCIPAL)
--------- ------------- ----------------
-- 3 1.125%
3 4 1.500
4 5 1.875
5 6 2.250
6 7 2.625
7 8 3.000
8 9 3.375
9 10 3.750
10 11 4.125
11 -- 4.500
; PROVIDED, HOWEVER, that the Applicable Repayment Fee shall not be due and
payable by the Borrower or shall be refunded to the Borrower in accordance with
the terms of Section 1 the Common Stock Purchase Option; PROVIDED FURTHER,
solely for purposes of the definition of "Applicable Repayment Fee", the term
"month" or "months" shall mean the period of time from the 15th day of a
calendar month to the 15th day of the next succeeding calendar month.
"ASCEND NOTE" means that certain Secured Promissory Note, dated
December 10, 1997, in an initial principal amount of $6,500,000, made by the
Borrower in favor of Ascend Communications, Inc., as amended, modified,
supplemented or restated from time to time.
"ASSET SALE" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory or equipment in the ordinary
course of business, and (ii) the issue or sale by the Borrower or any of its
Subsidiaries of Equity Interests of any of the Borrower's Subsidiaries.
Notwithstanding the foregoing: (i) a transfer of assets by the Borrower to a
Subsidiary that is a Guarantor and is a party to the Subsidiary Pledge and
Security Agreement or by a Subsidiary to the Borrower or to another Subsidiary
of the Borrower that is a Guarantor and is a party to the Subsidiary Pledge and
Security Agreement, (ii) an issuance of Equity Interests by a Subsidiary to the
Borrower or to another Subsidiary that is a party to the Subsidiary Pledge and
Security Agreement and is a Guarantor hereunder and (iii) a disposition of
dollars in the ordinary course of business shall not be deemed to be an Asset
Sale.
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"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by the
Administrative Agent, in the form of EXHIBIT A or such other form as shall be
approved by the Administrative Agent.
"AUDITED FINANCIAL STATEMENTS" has the meaning specified in
SECTION 3.10.
"BANKRUPTCY LAW" means (i) Title 11 of the U.S. Code (11 U.S.C.
Section 101 ET. SEQ.), as amended from time, and any successor statute or (ii)
any other law of the United States, any political subdivision thereof or any
other jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors.
"BENEFICIAL OWNER" and "BENEFICIAL OWNERSHIP" each has the meaning
as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act.
"BENEFICIAL ARRANGEMENTS" has the meanings specified in SECTION
3.26(D).
"BOARD" means the Board of Governors of the Federal Reserve System
of the United States or any successor.
"BORROWER" has the meaning specified in the preamble to this
Agreement.
"BORROWER PLEDGE AND SECURITY AGREEMENT" means the Borrower Pledge
and Security Agreement dated as of the date hereof between the Borrower and the
Agent, as amended, modified or supplemented from time to time.
"BUSINESS DAY" means each day other than a Saturday, a Sunday or
any other day on which banking institutions in the City of New York, Fort Worth,
Texas or at a place of payment are authorized by law, regulation or executive
order to remain closed.
"CAPITAL LEASE OBLIGATIONS" of any person means the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"CAPITALIZED INTEREST" has the meaning specified in SECTION
2.2(C).
"CAPITAL STOCK" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock and (iii) in the case of a partnership or limited
liability company, partnership interests (whether general or limited) or
membership interests, respectively.
"CHANGE OF CONTROL" means the occurrence of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as such term is defined in Section 13(d)(3) of the
Exchange Act) (other than the holders of the Capital Stock of the Borrower as of
the Closing Date) becomes the beneficial owner, directly or indirectly, of more
than 50% of the Voting Stock of the Borrower.
"CLOSING DATE" means the date on or before January 15, 1999 on
which the Term Loan is funded and the conditions set forth in Article V are
satisfied or waived in accordance with Section 11.3.
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"CODE" means the Internal Revenue Code of 1986, as amended, and
any regulation promulgated thereunder.
"COMMITMENT" means, with respect to any Lenders, the amount set
forth opposite such Xxxxxx's signature on the signature pages of this Agreement.
"COMMON STOCK" has the meaning specified in SECTION 3.4.
"COMMON STOCK PURCHASE OPTION" means the Common Stock Purchase
Option dated the date hereof between the Borrower and Xxxxxxx Xxxxx Credit
Partners L.P., as amended, modified or supplemented from time to time.
"CONVERTIBLE NOTES" means each of the 12% Convertible Notes dated
July 8, 1996 issued pursuant to the terms of a 12% Convertible Notes Purchase
Agreement, dated as of July 8, 1998, between the Borrower and the holder or
holders of such 12% Convertible Notes, as amended, modified, supplemented or
restated from time to time.
"CO-SALE AGREEMENT" means the Second Amendment To Co-Sale
Agreement dated the date hereof among Xxxxxxx Xxxxx Credit Partners L.P. and
each of the other parties listed therein, in the form attached as EXHIBIT B.
"CUSTODIAN" means any receiver, interim receiver, receiver and
manager, trustee, assignee, liquidator, sequestrator, custodian or similar
official under any Bankruptcy Law.
"DEFAULT" means any event that, with the passage of time or the
giving of notice or both, would constitute an Event of Default.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date that is 91 days after the Maturity
Date of the Term Loans.
"DOLLARS" or "$" shall mean lawful money of the United States of
America.
"EMPLOYEE PLANS" has the meaning specified in SECTION 3.26(a).
"ENCUMBRANCES" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on voting,
sale, transfer, disposition, or otherwise), easements, and other encumbrances of
every type and description, whether imposed by law, agreement, understanding, or
otherwise.
"ENVIRONMENT" shall mean ambient air, surface water and
groundwater (including potable water, navigable water and wetlands), the land
surface or subsurface strata, the workplace or as otherwise defined in any
Applicable Environmental Law.
"EQUITY INTERESTS" means, collectively, Capital Stock and all
warrants, options or other rights to acquire Capital Stock (but excluding any
debt security that is convertible into, or exchangeable for, Capital Stock).
4
"EQUITY REGISTRATION RIGHTS AGREEMENT" means the Second Amendment
to Registration Rights Agreement dated the date hereof, between the Borrower,
Xxxxxxx Xxxxx Credit Partners L.P. and each of the other parties listed therein,
in the form attached as EXHIBIT C, as amended, modified or supplemented from
time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any regulation promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Borrower or any of its Subsidiaries is
treated as a single employer under Section 414(b) or (c) of the Code, or solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as
a single employer under Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event," as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan except a reportable event for which the requirement of notice to the PBGC
had been waived; (b) the adoption of any amendment to a Plan that would require
the provision of security pursuant to Section 401(a)(29) of the Code or Section
307 of ERISA; (c) the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (d) the filing pursuant to Section 412(d) of the
Code or Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (e) the incurrence of any liability
in excess of $1,000,000 under Title IV of ERISA with respect to the termination
of any Plan or the withdrawal or partial withdrawal of the Borrower or any of
its Subsidiaries or any of their ERISA Affiliates from any Plan or Multiemployer
Plan; (f) the receipt by the Borrower or any of its Subsidiaries or any ERISA
Affiliate from the PBGC or a plan administrator of a Multiemployer Plan of any
notice relating to the intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (g) the receipt by the Borrower or any of its
Subsidiaries or any ERISA Affiliate of any notice concerning the imposition of
Withdrawal Liability in excess of $1,000,000 or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; (h) the occurrence of a "prohibited
transaction" with respect to which the Borrower or any of its Subsidiaries is a
party to the prohibited transaction and is a "disqualified person" (within the
meaning of Section 4975 of the Code) or with respect to which the Borrower or
any of its Subsidiaries could otherwise be liable; and (i) any other event or
condition with respect to a Plan or Multiemployer Plan that could reasonably be
expected to result in liability of the Borrower or any of its Subsidiaries.
"EVENT OF DEFAULT" means any event specified in SECTION 7.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FINANCIAL STATEMENTS" has the meaning specified in SECTION 3.10.
"GAAP" means with respect to the financial statements or other
financial information of any Person, generally accepted accounting principles in
the United States which are in effect from time to time.
"GOVERNMENTAL ENTITY" means any court or tribunal in any
jurisdiction (domestic or foreign) or any federal, state, municipal, or other
governmental body, agency, authority, department, commission, board, bureau, or
instrumentality (domestic or foreign).
5
"GUARANTEE" means the guarantee by each of the Guarantors pursuant
to Article VIII hereof.
"GUARANTEE" of or by any Person means any obligation, contingent
or otherwise, of such Person guaranteeing (the "primary obligor") or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness or other obligation, (b)
to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment of
such Indebtedness or other obligation or (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation; PROVIDED, HOWEVER, that the term "guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.
"GUARANTEED OBLIGATIONS" has the meaning specified in SECTION 8.1.
"GUARANTOR" and "GUARANTORS" have the meaning specified in the
preamble to this Agreement.
"HAZARDOUS MATERIAL" has the meaning specified in SECTION 3.27(b).
"INDEBTEDNESS" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money (b) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person, (d) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services (excluding trade accounts payable, purchase money security
transactions on equipment that will be paid within sixty days and accrued
obligations incurred in the ordinary course of business), (e) all Indebtedness
of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such Person, whether or not the obligations secured thereby
have been assumed (PROVIDED that, for purposes hereof, the amount of such
Indebtedness shall be limited to the lesser of (x) the principal amount thereof
and (y) the fair market value of such property), (f) all guarantees by such
person of Indebtedness of others, (g) all Capital Lease Obligations of such
Person, (h) all obligations of such Person as an account party in respect of
letters of credit and bankers' acceptances and (i) all obligations of such
person for production payments from property operated by or on behalf of such
person. The Indebtedness of any Person shall include the Indebtedness of any
partnership in which such Person is a general partner
"INDEMNIFIED PARTY" has the meaning specified in SECTION 9.1.
"INDEMNIFYING PARTY" has the meaning specified in SECTION 9.1.
"INTELLECTUAL PROPERTY" means patents, trademarks, service marks,
trade names, service names, brand names, copyrights, trade secrets, know-how,
technology, inventions, computer software (including documentation and object
and source codes), and similar rights, and all registrations, applications,
licenses, and rights with respect to any of the foregoing.
6
"INTEREST PAYMENT DATE" means (i) the 15th day of each month,
commencing February 15, 1999, (ii) the Maturity Date, and (iii) the date of any
prepayment of all or any portion of the principal of the Term Loans.
"INVESTMENTS" means, with respect to any Person, all investments
by such Person in other Persons (including Affiliates) in the form of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"IRS" means the Internal Revenue Service.
"LATEST BALANCE SHEET" has the meaning specified in SECTION 3.10.
"LATEST FINANCIAL STATEMENTS" has the meaning specified in SECTION
3.10.
"LENDERS" shall mean (a) each financial institution that has
executed a counterpart to this Agreement (other than any such financial
institution that has ceased to be a party hereto pursuant to an Assignment and
Acceptance) and (b) any financial institution that has become a party hereto
pursuant to an Assignment and Acceptance.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
capital lease and any other preferential arrangement that has substantially the
same practical effect as a security interest in any asset).
"LIQUIDATED DAMAGES" means any and all liquidated damages then
owing pursuant to any of the Loan Documents.
"LOAN DOCUMENTS" means this Agreement, the Term Notes, the
Security Agreements and the Related Documents.
"LOAN REGISTER" means the register maintained by the
Administrative Agent on behalf of the Borrower pursuant to SECTION 6.6.
"MAJORITY LENDERS" means, at any time, Lenders holding at least a
majority of the then aggregate unpaid principal balance of the Term Loan, or, if
no such principal amount is then outstanding, Lenders having at least a majority
of the total Commitments; PROVIDED that, for purposes hereof, neither the
Borrower nor any of its Affiliates shall be included in (i) the Lenders holding
such amount of the Loans or having such amount of the Commitments or (ii)
determining the aggregate unpaid principal amount of the Loans or the total
Commitments.
"MATERIAL CONTRACT" has the meaning specified in SECTION 3.6.
"MATERIAL ADVERSE EFFECT" means any change, development, or effect
(individually or in the aggregate) which is, or is reasonably likely to be,
materially adverse (i) to the business, assets, results of operations, condition
(financial or otherwise), or prospects of a party, or (ii) to the ability of a
party to perform on a timely basis any material obligation under this Agreement,
any other Loan Document to
7
which such party is a party or any agreement, instrument, or document entered
into or delivered in connection herewith.
"MATURITY DATE" means January 15, 2000.
"MULTIEMPLOYER PLAN" has the meaning specified in SECTION 3.26(b).
"OBLIGATIONS" means all now existing and hereafter arising
obligations and liabilities of any of the Borrower and the Guarantors to any and
all of the Lenders arising under or in connection with the Loan Documents,
whether absolute or contingent, and whether for principal, interest, penalties,
premium, fees, indemnifications, reimbursements, damages (including, if
applicable, Liquidated Damages), Applicable Repayment Fees or otherwise and
specifically including post-petition interest (whether or not an allowable
claim).
"OFFICER" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operation Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of
either the Borrower or any Guarantor by an Officer of the Borrower or any
Guarantor, as the case may be, who must be the principal executive officer, a
vice chairman, the principal financial officer, the treasurer or the principal
accounting officer of the Borrower or any Guarantor, as the case may be.
"OPINION OF COUNSEL" means an opinion from legal counsel of the
Borrower or any Guarantor, which legal counsel is reasonably acceptable to the
Administrative Agent.
"PARTICIPANTS" has the meaning specified in SECTION 6.3.
"PAYMENT DEFAULT" means any Default or Event of Default under
SECTION 7.1(b), (c) or (d) or any matured or unmatured default under the
analogous provisions of the documents governing the Ascend Note.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any of its functions under ERISA.
"PERMITS" has the meaning specified in SECTION 4.5.
"PERMITTED INVESTMENTS" means investments in any Wholly Owned
Subsidiary of the Borrower that is a Guarantor and is a party to the Subsidiary
Pledge and Security Agreement.
"PERMITTED LIENS" means:
(a) Liens for taxes not yet due or which are being contested in
compliance with SECTION 4.15;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business and
securing obligations that are not due and payable or which are being contested
in compliance with SECTION 4.15;
8
(c) pledges and deposits made in the ordinary course of business
in compliance with workmen's compensation, unemployment insurance and other
security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases (other than Capital Lease Obligations),
statutory obligations, surety and appeal bonds, performance bonds, reclamation
bonds and other obligations of a like nature incurred in the ordinary course of
business;
(e) Xxxxx created by or relating to any legal proceeding which at
the time is being contested in good faith by appropriate proceedings; PROVIDED
that, in the case of a Lien consisting of an attachment or judgment Lien, the
judgment it secures shall, within 60 days of entry thereof, have been discharged
or execution thereof stayed pending appeal, or discharged within 60 days after
the expiration of such stay;
(f) zoning restrictions, easements, rights-of-way, restrictions on
use of real property and other similar encumbrances incurred in the ordinary
course of business which, in the aggregate, are not substantial in amount and do
not materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Borrower or any of
its Subsidiaries;
(g) Liens relating to or arising under the Ascend Note and
existing Capital Lease Obligations and Liens specified on SCHEDULE 3.16; and
(h) other liens securing obligations not to exceed, individually
or in the aggregate, $250,000.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
enterprise, unincorporated organization or Governmental Entity.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any of its Subsidiaries or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"PREFERRED STOCK" means the Borrower's Preferred Stock, par value
$1.00 per share.
"PREPAYMENT DATE" has the meaning specified in SECTION 2.5.
"PROCEEDINGS" means all proceedings, actions, claims, suits,
investigations, and inquiries by or before any arbitrator or Governmental
Entity.
"PURCHASERS" has the meaning specified in SECTION 6.2
"REAL PROPERTY" has the meaning specified in SECTION 3.18.
"REGULATION D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
9
"RELATED DOCUMENTS" means the Common Stock Purchase Option, the
Equity Registration Rights Agreement and the Co-Sale Agreement.
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"RESTRICTED INVESTMENT" means any Investment other than a
Permitted Investment.
"RESTRICTED PAYMENTS" has the meaning specified in SECTION 4.7(a).
"SEC" means the Securities and Exchange Commission.
"SECURITY AGREEMENTS" means, collectively, the Borrower Pledge and
Security Agreement, the Subsidiary Pledge and Security Agreement and the
Trademark Security Agreement.
"SECURITIES" means, collectively, the Common Stock Purchase Option
and the Common Stock to be purchased pursuant to the terms of the Common Stock
Purchase Option.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERIES A PREFERRED" means the Series A Convertible Preferred
Stock of the Borrower.
"SHARES" means the shares of Common Stock of the Borrower to be
issued under the Common Stock Purchase Option.
"STATED MATURITY" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"SUBSIDIARY" means any corporation more than 50% of whose
outstanding voting securities, or any general partnership, joint venture, or
similar entity more than 50% of whose total equity interests, is owned, directly
or indirectly, by the Borrower, or any limited partnership of which the Borrower
or any Subsidiary is a general partner.
"SUBSIDIARY PLEDGE AND SECURITY AGREEMENT" means the Subsidiary
Pledge and Security Agreement dated as of the date hereof among FlashNet
Marketing, Inc., FlashNet Telecom Inc., each additional grantor that becomes a
party thereto and the Agent, as amended, modified or supplemented from time to
time.
"TAX RETURN" means any return or report, including any related or
supporting information, with respect to Taxes.
"TAXES" means any income taxes or similar assessments or any
sales, excise, occupation, use, ad valorem, property, production, severance,
transportation, employment, payroll, franchise, or other tax imposed by any
United States federal, state, or local (or any foreign or provincial) taxing
authority, including any interest, penalties, or additions attributable thereto.
10
"TERM LOAN" means a loan made by any Lender to the Borrower
pursuant to SECTION 2.1.
"TERM NOTE" means a promissory note of the Borrower in the form
attached as EXHIBIT D hereto evidencing the Term Loan of any Lender.
"TO THE BEST KNOWLEDGE" of a specified Person (or similar
references to a Person's knowledge) means all information to be attributed to
such Person actually or constructively known to (a) such Person in the case of
an individual or (b) in the case of a corporation or other entity, an executive
officer or employee who devoted substantive attention to matters of such nature
during the ordinary course of his employment by such Person. A Person has
"constructive knowledge" of those matters which the individual involved could
reasonably be expected to have as a result of undertaking an investigation of
such a scope and extent as a reasonably prudent man would undertake concerning
the particular subject matter.
"TRADEMARK SECURITY AGREEMENT" means the Trademark Security
Agreement dated as of the date hereof, between the Borrower and the Agent, as
amended, modified or supplemented from time to time.
"TRANSFEREE" has the meaning specified in SECTION 6.4.
"VOTING STOCK" means, with respect to any Person at any time, the
Capital Stock of such Person that is at such time entitled to vote in the
election of the board of directors of such Person.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such
Person, 100% of the Capital Stock and other Equity Interests of which is owned
directly or indirectly by such Person.
"YEAR 2000 COMPLIANT" has the meaning specified in SECTION 3.44.
"YEAR 2000 PROBLEM" has the meaning specified in SECTION 3.44.
SECTION 1.2. INTERPRETATION. In this Agreement, the singular
includes the plural and the plural includes the singular; words implying any
gender include the other genders; references to any section, exhibit or schedule
are to sections, exhibits or schedules hereto unless otherwise indicated;
references to statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a visible form; "including" following a word or phrase shall not be
construed to limit the generality of such word or phrase; and an accounting term
not otherwise defined has the meaning assigned to it in accordance with GAAP.
ARTICLE II.
THE CREDIT FACILITY
SECTION 2.1. COMMITMENTS TO MAKE TERM LOANS. In reliance upon the
representations and warranties of the Borrower set forth herein and subject to
the terms and conditions herein set forth, each of the Lenders severally agrees
to make a Term Loan to the Borrower on the Closing Date in the amount of such
Xxxxxx's Commitment. The proceeds of each Term Loan shall be disbursed by wire
transfer on the Closing Date as provided in written instructions delivered by
the Borrower to each of the Lenders on the Business Day prior to the Closing
Date. Each Term Loan will mature on the Maturity Date. Except as specified in
Section 1 of the Common Stock Purchase Opsion,
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the Borrower shall pay to the Lenders the Applicable Repayment Fee in connection
with any payment by or on behalf of the Borrower of any principal of the Term
Loans.
SECTION 2.2. INTEREST; PAYMENT IN KIND OPTION; AND DEFAULT
INTEREST.
(a) INTEREST RATE ON TERM LOANS. Subject to SECTION 2.2(c), the
Borrower shall pay to the Lenders interest on the outstanding principal amount
of the Term Loans at a rate PER ANNUM equal to 13%; PROVIDED, HOWEVER, that if
the Term Loans are not paid in full on or prior to the sixth Interest Payment
Date immediately succeeding the Closing Date, interest shall accrue on the
outstanding principal amount of the Term Loans at a rate PER ANNUM equal to
15.5%; PROVIDED, FURTHER, that the rate PER ANNUM equal to 15.5% shall apply
retroactively from such sixth Interest Payment Date to and including the Closing
Date and all Capitalized Interest from and including the Closing Date to such
Interest Payment Date shall be recalculated based upon a PER ANNUM rate of
interest equal to 15.5%.
(b) BASIS OF COMPUTATION OF INTEREST; PAYMENT OF INTEREST. Subject
to SECTION 2.2(a), all interest on the Term Loans shall be computed on the basis
of a 360-day year consisting of twelve 30-day months and shall accrete monthly
in arrears. The payment of interest is to be made not later than 12:00 noon (New
York City time) on each Interest Payment Date by wire transfer of immediately
available funds in accordance with SECTION 2.6.
(c) CAPITALIZED INTEREST. On each of the six Interest Payment
Dates immediately succeeding the Closing Date, the accrued and unpaid interest
that is then due and payable on the Term Loans shall be added to the then
aggregate outstanding principal amount of the Term Loans (such interest added to
the outstanding principal amount of the Term Loans, the "CAPITALIZED INTEREST"),
effective on and as of the applicable Interest Payment Date, and such
Capitalized Interest shall thereafter accrue interest at the applicable rate of
interest on the Term Loans. All references in this Agreement to the principal
amount or principal balance of the Term Loans (or any similar references) shall
include all such Capitalized Interest.
(d) DEFAULT INTEREST. (i) If the Borrower shall default in the
payment of the principal of or interest on any Term Loan or any other Obligation
becoming due hereunder, by acceleration or otherwise, or under any other Loan
Document, the Borrower shall on demand from time to time pay interest, to the
extent permitted by law, on the entire amount to but excluding the date of
actual payment (after as well as before judgment) to the extent lawful on and
after the Maturity Date, at a rate PER ANNUM equal to 450 basis points in excess
of the otherwise applicable interest rate on the Term Loans. In addition, on the
Maturity Date the Applicable Repayment Fee shall be added to the outstanding
principal amount of the Term Loans as of the Maturity Date and, effective on and
as of the Maturity Date, such Applicable Repayment Fee shall accrue interest at
a rate per annum equal to 450 basis points in excess of the otherwise applicable
interest rate on the Term Loans.
SECTION 2.3. MANDATORY PREPAYMENT. Subject to the security
interest granted under the Ascend Note to the extent such security interest is
perfected and not avoided, the Borrower shall prepay the Term Loans ratably in
accordance with the aggregate outstanding principal balances thereof, with any
insurance proceeds relating to the full or partial loss, theft, damage or
destruction of any inventory, equipment or other assets of the Borrower to the
extent that such insurance proceeds are not utilized by Borrower to replace,
repair or restore such inventory, equipment or assets within two (2) months
immediately succeeding the date of such loss, theft, damage or destruction. The
Borrower shall provide the Administrative Agent with an Officer's Certificate
setting forth in reasonable detail a description of any such loss, theft, damage
or destruction, the amount of insurance proceeds received or
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to be received in respect thereof and the disposition, if any, of such insurance
proceeds to replace, repair or restore such inventory, equipment or assets. The
Borrower shall also provide the Administrative Agent with any additional
information, including, but not limited to, copies of bills and invoices, with
respect to the foregoing. On or prior to the Fourth Business Day succeeding the
date of determination that such insurance proceeds are due and payable to the
Lenders in accordance with this SECTION 2.3, the Borrower shall apply such
insurance proceeds to prepay the Loans pursuant to this SECTION 2.3, by paying
to each Lender an amount equal to 100% of such Xxxxxx's PRO RATA share of the
aggregate principal amount of the Term Loans to be prepaid, PLUS accrued and
unpaid interest thereon to the Prepayment Date, PLUS the Applicable Repayment
Fee.
SECTION 2.4. OPTIONAL PREPAYMENT. The Borrower may, upon three
Business Days' prior written notice to each of the Lenders, prepay the Term
Loans at any time, in whole or in part, on a PRO RATA basis, by paying to each
applicable Lender an amount equal to 100% of such Xxxxxx's PRO RATA share of the
aggregate principal amount of Term Loans to be prepaid, PLUS accrued and unpaid
interest thereon to the Prepayment Date, PLUS the Applicable Repayment Fee.
SECTION 2.5. EFFECT OF NOTICE OF PREPAYMENT. The Borrower shall
notify the Lenders in writing at their addresses shown in the Loan Register of
any date set for prepayment (each such day, a "PREPAYMENT DATE") of Term Loans.
Once such notice is sent or mailed, the Term Loans to be prepaid shall become
due and payable on the Prepayment Date set forth in such notice.
Such notice may not be conditional.
SECTION 2.6. PAYMENTS.
(a) WIRE TRANSFER. Except as provided in SECTION 2.2(c) with
respect to Capitalized Interest, the principal of, the Applicable Repayment Fees
and interest on each Term Loan and all other Obligations arising under the Loan
Documents shall be payable by wire transfer in immediately available funds (in
United States dollars) to the Administrative Agent for the respective accounts
of the Lenders set forth below their signatures on the signature pages of this
Agreement or otherwise designated in the Loan Register from time to time to the
Borrower by any Lender by 12 noon, New York City time, on the due date therefor.
(b) PAYMENTS ON BUSINESS DAYS. If any payment to be made hereunder
or under any Term Note shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day (and such extension of
time shall be included in computing interest in connection with such payment).
(c) PARTIAL PREPAYMENTS AND REDEMPTIONS. All partial prepayments
and redemptions of the outstanding principal balance of the Term Loans shall be
made ratably amongst the applicable Lenders in accordance with their respective
shares of the aggregate outstanding principal balance of the Term Loans eligible
for prepayment or redemption.
(d) NO DEFENSE. To the fullest extent permitted by law, the
Borrower and the Guarantors shall make all payments hereunder, under the Term
Notes and under the other Loan Documents regardless of any defense or
counterclaim.
(e) ALLOCATION. Any money paid to, received by, or collected by
the Administrative Agent or any Lenders pursuant to this Agreement or any other
Loan Document, shall be applied in the following order, at the date or dates
fixed by the Administrative Agent:
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FIRST: to any unpaid fees and reimbursement or unpaid
expenses of the Administrative Agent hereunder;
SECOND: to the payment of all costs, expenses, other fees,
commissions and taxes owing to any Lender hereunder;
THIRD: to the indefeasible payment of all accrued interest
to the date of such payment or collection and any Applicable
Repayment Fees;
FOURTH: to the indefeasible payment of the amounts then due and
unpaid under this Agreement, the Term Notes or any other Loan Document
for principal, in respect of which or for the benefit of which such money
has been paid or collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Term Notes for
principal; and
FIFTH: the balance, if any, to the Person lawfully
entitled thereto.
SECTION 2.7. RIGHT OF SET OFF; SHARING OF PAYMENTS, ETC.
(a) RIGHT OF SET-OFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of any Event of
Default or if the Borrower becomes insolvent, however evidenced, the Borrower
authorizes each Lender at any time or from time to time, without presentment,
demand, protest or other notice of any kind to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final, whether or not collected or available) in any currency and
any other indebtedness at any time held or owing by such Lender or any of its
Affiliates (including, without limitation, by branches and agencies of such
Lender wherever located) to or for the credit or the account of the Borrower
against and on account of the Obligations of the Borrower to such Lender under
this Agreement or under any of the other Loan Documents, including, without
limitation, all interests in or participation in the Obligations purchased by
such Lender, and all other claims of any nature or description arising out of or
in connection with this Agreement or any other Loan Document, irrespective of
whether or not such Lender shall have made any demand hereunder and although the
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured. A Lender may exercise such rights notwithstanding that the amounts
concerned may be expressed in different currencies and each Lender is authorized
to effect any necessary conversions at a market rate of exchange reasonably
selected by it. A Lender exercising its rights under this SECTION 2.17(a) shall
provide prompt notice to the Borrower following such exercise.
(b) SHARING. If any Lender shall obtain from the Borrower payment
of any principal of or interest on any Term Loan owing to it or payment of any
other amount under this Agreement, a Loan Document or any Term Note held by it
though the exercise of any right of set-off, banker's lien or counterclaim or
similar right or otherwise (other than from the Administrative Agent as provided
herein) and, as a result of such payment, such Lender shall have received a
greater percentage of the principal of or interest on the Term Loans or such
other amounts then due to such Lender by the Borrower than the percentage
received by any other Lender, it shall promptly purchase from such other Lenders
participations in (or, if and to the extent specified by such Lender, direct
interests in) the Term Loans or such other amounts, respectively, owing to such
other Lenders (or any interest due thereon, as the case may be) in such amounts,
and make such other adjustments from time to time as shall be equitable, to the
end that all the Lenders shall share the benefit of such excess payment (net of
any expenses which may be incurred by such Lender in obtaining or preserving
such excess payment) pro rata in accordance with the
14
unpaid principal of and/or interest on the Term Loans or such other amounts,
respectively, owing to each of the Lenders. To such end all the Lenders shall
make appropriate adjustments among themselves (by the resale of participation
sold or otherwise) if such payment is rescinded or must otherwise be restored.
(c) NO REQUIREMENT. Nothing in this Agreement shall require any
Lender to exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with respect to
any other indebtedness or obligation of the Borrower. If, under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a set-off to which this SECTION 2.7 applies, such Lender shall, to
the extent practicable, exercise its rights in respect of such secured claim in
manner consistent with the rights of the Lenders entitled under this SECTION 2.7
to share in the benefits of any recovery on such secured claim.
SECTION 2.8. CERTAIN FEES. The Borrower agrees to pay to the
Administrative Agent, for its own account, amounts for the Lenders' reasonable
legal and other out-of-pocket expenses incurred in connection with the Term
Loans, the Loan Documents hereunder and all other amounts owing under this
Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
As of the Closing Date, the Borrower and each Guarantor hereby
jointly and severally agrees with, and represents and warrants to, the Lenders
that each of the following representations and warranties is true:
SECTION 3.1. CORPORATE ORGANIZATION. The Borrower is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Texas and has all requisite corporate power and corporate authority to
own, lease, and operate its properties and to carry on its business as now being
conducted. No actions or proceedings to dissolve the Borrower are pending or, to
the best knowledge of the Borrower, threatened.
SECTION 3.2. QUALIFICATION. The Borrower is duly qualified or
licensed to do business as a foreign corporation and is in good standing, or, as
designated on SCHEDULE 3.2, has applied for such qualification or licensing, in
each of the jurisdictions set forth on SCHEDULE 3.2, which are all the
jurisdictions in which it owns, leases, or operates property or in which such
qualification or licensing is required for the conduct of its business.
SECTION 3.3. CHARTER AND BYLAWS. The Borrower has made available
to the Lenders accurate and complete copies of (i) the charter and bylaws of
each of the Borrower and the Subsidiaries as currently in effect, (ii) the stock
records of each of the Borrower and the Subsidiaries, and (iii) the minutes of
all meetings of the respective Boards of Directors of the Borrower and the
Subsidiaries, any committees of such Boards, and the shareholders of the
Borrower and the Subsidiaries (and all consents in lieu of such meetings). Such
records, minutes, and consents accurately reflect the stock ownership of the
Borrower and the Subsidiaries and all actions taken by such Boards of Directors,
committees, and shareholders. Neither the Borrower nor any Subsidiary is in
violation of any provision of its charter or bylaws, other than violations
which, individually or in the aggregate, do not and will not have a Material
Adverse Effect.
SECTION 3.4. CAPITALIZATION OF THE BORROWER. The authorized
Capital Stock of the Borrower consists of 5,000,000 shares of Common Stock, no
par value (the "COMMON STOCK"), of which,
15
as of the date hereof, 1,626,138 shares are outstanding and no shares are held
in the Borrower's treasury, and 2,000,000 shares of preferred stock of which, as
of the date hereof, 1,364,085 shares are outstanding and no shares are held in
the Borrower's treasury. All outstanding shares of Capital Stock of the Borrower
have been validly issued and are fully paid and nonassessable, and no shares of
Capital Stock of the Borrower are subject to, nor have any been issued in
violation of, preemptive or similar rights. Except as set forth on SCHEDULE
3.14, all issuances, sales, and repurchases by the Borrower of shares of its
Capital Stock have been effected in compliance with all Applicable Laws,
including without limitation applicable federal and state securities laws. As of
the date hereof, an aggregate of 244,757 shares of Common Stock of the Borrower
are reserved for issuance and are issuable upon the exercise of stock options
granted under the Borrower's stock option plan (such options currently
outstanding are to purchase a total of 225,180 shares of Common Stock);
furthermore, an aggregate of 502,905 shares of Common Stock of the Borrower are
reserved for issuance and are issuable upon the exercise of outstanding warrants
(subject to certain anti-dilution provisions applicable thereto); furthermore,
an aggregate of 20,130 shares of Common Stock are reserved for issuance and are
issuable upon the conversion of outstanding convertible notes. Except as
disclosed above in this SECTION 3.4, there are outstanding (i) no shares of
Capital Stock or other voting securities of the Borrower, (ii) no securities of
the Borrower convertible into or exchangeable for shares of Capital Stock or
other voting securities of the Borrower, (iii) no options or other rights to
acquire from the Borrower, and no obligation of the Borrower to issue or sell,
any shares of capital stock or other voting securities of the Borrower or any
securities of the Borrower convertible into or exchangeable for such capital
stock or voting securities, and (iv) no equity equivalents, interests in the
ownership or earnings, or other similar rights of or with respect to the
Borrower. There are no outstanding obligations of the Borrower or any Subsidiary
to repurchase, redeem, or otherwise acquire any of the foregoing shares,
securities, options, equity equivalents, interests, or rights, except as
otherwise provided in the Certificate of Designations for the Preferred Stock.
The Borrower is not a party to, and is not aware of, any voting agreement,
voting trust, or similar agreement or arrangement relating to any class or
series of its capital stock.
SECTION 3.5. AUTHORITY RELATIVE TO THIS AGREEMENT. The Borrower
has full corporate power and corporate authority to execute, deliver, and
perform this Agreement and the other Loan Documents to which it is a party and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery, and performance by the Borrower of this Agreement and the other Loan
Documents to which it is a party, and the consummation by it of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate action of the Borrower. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each Loan Document executed or to
be executed by the Borrower has been, or when executed will be, duly executed
and delivered by the Borrower and constitutes, or when executed and delivered
will constitute, valid and legally binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms,
except that such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting creditors'
rights generally and (ii) equitable principles which may limit the availability
of certain equitable remedies (such as specific performance) in certain
instances.
SECTION 3.6. NONCONTRAVENTION. The execution, delivery, and
performance by the Borrower and each of the Guarantors of this Agreement and the
other Loan Documents to which it is a party and the consummation by it of the
transactions contemplated hereby and thereby do not and will not (i) conflict
with or result in a violation of any provision of the charter or bylaws of the
Borrower or any Guarantor, (ii) conflict with or result in a violation of any
provision of, or constitute (with or without the giving of notice or the passage
of time or both) a default under, or give rise (with or without the giving of
notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, or
16
require any consent, approval, authorization or waiver of, or notice to, any
party to, any bond, debenture, note (including, without limitation, the Ascend
Note and the Convertible Notes) mortgage, indenture, lease, contract, agreement,
or other instrument or obligation (each, a "MATERIAL CONTRACT"), to which the
Borrower or any Guarantor is a party or by which the Borrower or any Guarantor
or any of their respective properties may be bound or any Permit held by the
Borrower or any Guarantor, (iii) except with respect to Liens in favor of the
Administrative Agent and the Lenders, result in the creation or imposition of
any Encumbrance upon the properties of the Borrower or any Guarantor, or (iv)
assuming compliance with the matters referred to in SECTION 3.7, violate any
Applicable Law binding upon the Borrower or any Guarantor, except, in the case
of clauses (ii), (iii), and (iv) above, for any such conflicts, violations,
defaults, terminations, cancellations, accelerations, or Encumbrances which
would not, individually or in the aggregate, have a Material Adverse Effect, and
except, in the case of clause (ii) above, for (A) such consents, approvals,
authorizations, and waivers that have been obtained and are unconditional and in
full force and effect and such notices that have been duly given and (B) such
consents, approvals, authorizations, waivers, and notices that are disclosed on
SCHEDULE 3.6.
SECTION 3.7. GOVERNMENTAL APPROVALS. No consent, approval, order,
or authorization of, or declaration, filing, or registration with, any
Governmental Entity is required to be obtained or made by the Borrower or any
Guarantor in connection with the execution, delivery, or performance by the
Borrower and each of the Guarantors of this Agreement and the other Loan
Documents to which it is a party or the consummation by it of the transactions
contemplated hereby or thereby, other than as set forth on SCHEDULE 3.7.
SECTION 3.8. SUBSIDIARIES.
(a) The Borrower does not own, directly or indirectly, any Capital
Stock of, or other equity interest in, any corporation or have any direct or
indirect equity or ownership interest in any other person, other than the
Subsidiaries. SCHEDULE 3.8 lists each Subsidiary, the jurisdiction of
incorporation of each Subsidiary, and the authorized and outstanding Capital
Stock of each Subsidiary. Each Subsidiary is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each Subsidiary has all requisite corporate power and corporate
authority to own, lease, and operate its properties and to carry on its business
as now being conducted. No actions or proceedings to dissolve any Subsidiary are
pending, or to the knowledge of the Borrower, threatened.
(b) Except as otherwise indicated on SCHEDULE 3.8, all the
outstanding Capital Stock or other equity interests of each Subsidiary are owned
directly or indirectly by the Borrower, free and clear of all Encumbrances. All
outstanding shares of Capital Stock of each Subsidiary have been validly issued
and are fully paid and nonassessable. No shares of Capital Stock or other equity
interests of any Subsidiary are subject to, nor have any been issued in
violation of, preemptive or similar rights.
(c) Except as set forth on SCHEDULE 3.8, there are outstanding (i)
no shares of Capital Stock or other voting securities of any Subsidiary, (ii) no
securities of the Borrower or any Subsidiary convertible into or exchangeable
for shares of Capital Stock or other voting securities of any Subsidiary, (iii)
no options or other rights to acquire from the Borrower or any Subsidiary, and
no obligation of the Borrower or any Subsidiary to issue or sell, any shares of
Capital Stock or other voting securities of any Subsidiary or any securities
convertible into or exchangeable for such Capital Stock or voting securities,
and (iv) no equity equivalents, interests in the ownership or earnings, or other
similar rights of or with respect to any Subsidiary. There are no outstanding
obligations of the Borrower or any Subsidiary to
17
repurchase, redeem, or otherwise acquire any of the foregoing shares,
securities, options, equity equivalents, interests, or rights.
SECTION 3.9. COMMON STOCK PURCHASE OPTION. The shares of Common
Stock to be issued by the Borrower pursuant to the Common Stock Purchase Option
have been duly authorized for such issuance and, when issued and delivered by
the Borrower in accordance with the provisions of the Common Stock Purchase
Option, will be validly issued, fully paid, and nonassessable. The issuance of
the Common Stock under the Common Stock Purchase Option is not subject to any
preemptive or similar rights, except for those which are the subject of waivers
that have been obtained and are unconditional and in full force and effect.
SECTION 3.10. FINANCIAL STATEMENTS. The Borrower has delivered to
Lenders accurate and complete copies of (i) the Borrower's audited consolidated
balance sheets as of December 31, 1995, 1996 and 1997, and the related audited
consolidated statements of income, stockholders' equity, and cash flows for each
of the years then ended, and the notes and schedules thereto, together with the
reports thereon of Deloitte & Touche, L.L.P., independent public accountants
(the "AUDITED FINANCIAL STATEMENTS"), and (ii) the Borrower's unaudited
consolidated balance sheet as of September 30, 1998 (the "LATEST BALANCE
SHEET")) and the related unaudited consolidated statements of income,
stockholders' equity, and cash flows for the three-month period then ended
(together with the Latest Balance Sheet, the "LATEST FINANCIAL STATEMENTS"),
certified by the Borrower's chief financial officer (collectively, the
"FINANCIAL STATEMENTS"). The Financial Statements (i) represent actual bona fide
transactions, (ii) have been prepared from the books and records of the Borrower
and its consolidated Subsidiaries in conformity with GAAP applied on a basis
consistent with preceding years throughout the periods involved, except that the
Latest Financial Statements are not accompanied by notes or other textual
disclosure required by GAAP, and (iii) fairly present in all material respects
the Borrower's consolidated financial position as of the respective dates
thereof and its consolidated results of operations and cash flows for the
periods then ended. Except for a $1,000,000 consulting services fee received by
the Borrower in 1997 from American Communications Services, Inc., the statements
of income included in the Financial Statements do not contain any items of
special or nonrecurring income, and the balance sheets included in the Financial
Statements do not reflect any write-up or revaluation increasing the book value
of any assets, nor have there been any transactions since September 30,1998
giving rise to special or nonrecurring income or any such write-up or
revaluation. All financial projections, forecasts, and other forward-looking
information provided by the Borrower to Lenders were, as of their respective
dates, prepared in good faith and on a basis that management of the Borrower
believed to be reasonable.
SECTION 3.11. ABSENCE OF UNDISCLOSED LIABILITIES. To the best
knowledge of the Borrower, neither the Borrower nor any Subsidiary has any
liability or obligation (whether accrued, absolute, contingent, unliquidated, or
otherwise, and whether due or to become due), except (i) liabilities reflected
on the Latest Balance Sheet, (ii) liabilities described in the notes
accompanying the Audited Financial Statements dated as of December 31, 1997,
(iii) liabilities which have arisen since the date of the Latest Balance Sheet
in the ordinary course of business (none of which is a material liability for
breach of contract, breach of warranty, tort, or infringement), (iv) liabilities
arising under executory contracts entered into in the ordinary course of
business (none of which is a material liability for breach of contract), (v)
liabilities specifically set forth on SCHEDULE 3.11, and (vi) other liabilities
which, in the aggregate, are not material to the Borrower and the Subsidiaries
considered as a whole.
SECTION 3.12. ABSENCE OF CERTAIN CHANGES. Except as disclosed on
SCHEDULE 3.12, since September 30, 1998: (i) there has not been any change,
development, or effect, individually or in the aggregate, that has had, or might
reasonably be expected to have, a Material Adverse Effect on the
18
Borrower or a Subsidiary; (ii) the businesses of the Borrower and the
Subsidiaries have been conducted only in the ordinary course consistent with
past practice; (iii) neither the Borrower nor any Subsidiary has incurred any
material liability, engaged in any material transaction, or entered into any
material agreement outside the ordinary course of business consistent with past
practice; (iv) neither the Borrower nor any Subsidiary has suffered any material
loss, damage, destruction, or other casualty to any of its assets (whether or
not covered by insurance); and (v) neither the Borrower nor any Subsidiary has
or has taken action to:
(a) amend its charter or bylaws;
(b) (i) issue, sell, or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase, or otherwise) any shares of its Capital Stock of any class or
any other securities or equity equivalents; or (ii) amend in any respect
any of the terms of any such securities outstanding as of the date
hereof;
(c) (i) split, combine, or reclassify any shares of its Capital
Stock; (ii) declare, set aside, or pay any dividend or other distribution
(whether in cash, stock, or property or any combination thereof) in
respect of its Capital Stock; (iii) repurchase, redeem, or otherwise
acquire any of its securities or any securities of any Subsidiary; or
(iv) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing a liquidation, dissolution, merger,
consolidation, restructuring, recapitalization, or other reorganization
of the Borrower or any Subsidiary;
(d) (i) except in the ordinary course of business consistent with
past practice, create, incur, guarantee, or assume any indebtedness for
borrowed money or otherwise become liable or responsible for the
obligations of any other person; (ii) make any loans, advances, or
capital contributions to, or investments in, any other person (other than
to wholly owned Subsidiaries); (iii) pledge or otherwise encumber shares
of Capital Stock of the Borrower or any Subsidiary; or (iv) except in the
ordinary course of business consistent with past practice, mortgage or
pledge any of its assets, tangible or intangible, or create or suffer to
exist any lien thereupon;
(e) (i) enter into, adopt, or (except as may be required by law)
amend or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase, pension, retirement,
deferred compensation, employment, severance, or other employee benefit
agreement, trust, plan, fund, or other arrangement for the benefit or
welfare of any director, officer, or employee; (ii) except for normal
increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Borrower, increase in any manner
the compensation or fringe benefits of any director, officer, or
employee; or (iii) pay to any director, officer, or employee any benefit
not required by any employee benefit agreement, trust, plan, fund, or
other arrangement as in effect on the date hereof;
(f) acquire, sell, lease, transfer, or otherwise dispose of,
directly or indirectly, any assets outside the ordinary course of
business consistent with past practice or any assets that in the
aggregate are material to the Borrower and the Subsidiaries considered as
a whole;
(g) acquire (by merger, consolidation, or acquisition of stock or
assets or otherwise) any corporation, partnership, or other business
organization or division thereof;
19
(h) make any capital expenditure or expenditures which,
individually, is in excess of $150,000 or, in the aggregate, are in
excess of $750,000;
(i) amend any Tax Return or make any Tax election or settle or
compromise any federal, state, local, or foreign Tax liability material
to the Borrower and the Subsidiaries considered as a whole;
(j) pay, discharge, or satisfy any claims, liabilities, or
obligations (whether accrued, absolute, contingent, unliquidated, or
otherwise, and whether asserted or unasserted), other than the payment,
discharge, or satisfaction in the ordinary course of business consistent
with past practice, or in accordance with their terms, of liabilities
reflected or reserved against in the Financial Statements or incurred
since September 30, 1998 in the ordinary course of business consistent
with past practice;
(k) enter into any lease, contract, agreement, commitment,
arrangement, or transaction outside the ordinary course of business
consistent with past practice;
(l) amend, modify, or change in any material respect any existing
lease, contract, or agreement, other than in the ordinary course of
business consistent with past practice;
(m) waive, release, grant, or transfer any rights of value, other
than in the ordinary course of business consistent with past practice;
(n) lay off any of its employees;
(o) change any of its banking or safe deposit arrangements;
(p) change any of the accounting principles or practices used by
it, except for any change required by reason of a concurrent change in
GAAP and notice of which has been given in writing by the Borrower to the
Administrative Agent; or
(q) authorize or propose, or agree in writing or otherwise to
take, any of the actions described in this Section.
SECTION 3.13. TAX MATTERS. Except as disclosed on SCHEDULE
3.13:
(a) the Borrower and each Subsidiary have duly filed all federal,
state, local, and foreign Tax Returns required to be filed by or with
respect to them with the IRS or other applicable taxing authority, and no
extensions with respect to such Tax Returns have been requested or
granted;
(b) the Borrower and each Subsidiary have paid, or adequately
reserved against in the Financial Statements, all Taxes due, or claimed
by any Taxing authority to be due, from or with respect to them, except
Taxes that are being contested in good faith by appropriate legal
proceedings and for which adequate reserves have been set aside as
disclosed on SCHEDULE 3.13;
(c) there has been no issue raised or adjustment proposed (and
none is pending) by the IRS or any other taxing authority in connection
with any of the Tax Returns;
20
(d) the Borrower and each Subsidiary have made all deposits
required with respect to Taxes;
(e) no waiver or extension of any statute of limitations as to any
federal, state, local, or foreign Tax matter has been given by or
requested from the Borrower or any Subsidiary; and
(f) the Borrower has not filed a consent under Section 341(f) of
the Code.
SECTION 3.14. COMPLIANCE WITH LAWS. Except as disclosed on
SCHEDULE 3.14, to the best knowledge of the Borrower, the Borrower and the
Subsidiaries have complied with all Applicable Laws (including without
limitation Applicable Laws relating to securities, properties, business products
and services, manufacturing processes, advertising and sales practices,
employment practices, terms and conditions of employment, wages and hours,
safety, occupational safety, health, environmental protection, product safety,
and civil rights). Neither the Borrower nor any Subsidiary has received any
written notice, which has not been dismissed or otherwise disposed of, that the
Borrower or any Subsidiary has not so complied. Neither the Borrower nor any
Subsidiary is charged or, to the best knowledge of the Borrower, threatened
with, or, to the best knowledge of the Borrower, under investigation with
respect to, any violation of any Applicable Law relating to any aspect of the
business of the Borrower or any Subsidiary.
SECTION 3.15. LEGAL PROCEEDINGS. There are no Proceedings pending
or, to the best knowledge of the Borrower, threatened against or involving the
Borrower or any Subsidiary (or any of their respective directors or officers in
connection with the business or affairs of the Borrower or any Subsidiary) or
any properties or rights of the Borrower or any Subsidiary, except (i) as
disclosed on SCHEDULE 3.15, (ii) for any Proceedings that pertain to routine
claims by Persons other than Governmental Entities that are fully covered by
insurance (subject to applicable insurance deductibles), (iii) for minor product
or service warranty claims arising in the usual and ordinary course of business
which in the aggregate may be satisfied at nominal cost to the Borrower, and
(iv) for Proceedings which, individually or in the aggregate, if prosecuted to
judgment, would not have a Material Adverse Effect on the Borrower. Except as
disclosed on SCHEDULE 3.15, any and all potential liability of the Borrower and
the Subsidiaries under such Proceedings is adequately covered (except for
standard deductible amounts) by the existing insurance maintained by the
Borrower and the Subsidiaries described in SECTION 3.31. Neither the Borrower
nor any Subsidiary is subject to any judgment, order, writ, injunction, or
decree of any Governmental Entity which has had or is reasonably likely to have
a Material Adverse Effect. There are no Proceedings pending or, to the best
knowledge of the Borrower, threatened seeking to restrain, prohibit, or obtain
damages or other relief in connection with this Agreement or the other Loan
Documents or the transactions contemplated hereby or thereby.
SECTION 3.16. TITLE TO PROPERTIES. Each of the Borrower and the
Subsidiaries has good and indefeasible title, and in the case of real property
insurable title, to all properties (real, personal, and mixed, tangible and
intangible) it owns or purports to own, including without limitation the
properties reflected in its books and records and in the Latest Balance Sheet,
other than those disposed of after the date of such balance sheet in the
ordinary course of business consistent with past practice, free and clear of all
Encumbrances and Liens except Permitted Liens, except: as disclosed on SCHEDULE
3.16, as set forth in the Latest Balance Sheet as securing specific liabilities,
liens for Taxes not yet due and payable, statutory liens (including
materialmen's, mechanic's, repairmen's, landlord's, and other similar liens)
arising in connection with the ordinary course of business securing payments not
yet due and payable, and such imperfections or irregularities of title, if any,
as (A) are not substantial in character, amount, or extent and do not materially
detract from the value of the property subject thereto, (B) do not materially
21
interfere with either the present or intended use of such property, and (C) do
not, individually or in the aggregate, materially interfere with the conduct of
the Borrower's or any Subsidiary's normal operations. Except as disclosed on
SCHEDULE 3.16, no financing statement (or other instrument sufficient or
effective as a financing statement) under the Uniform Commercial Code with
respect to any properties of the Borrower or any Subsidiary has been filed and
is effective in any jurisdiction, and the Borrower and the Subsidiaries have not
signed any such financing statement (or other instrument) or any mortgage or
security agreement authorizing any secured party thereunder to file any such
financing statement (or other instrument).
SECTION 3.17. SUFFICIENCY AND CONDITION OF PROPERTIES. The
properties owned, leased, or used by the Borrower and the Subsidiaries are (i)
in the case of tangible properties, in good operating condition and repair
(ordinary wear and tear excepted) and have been maintained in accordance with
standard industry practice, (ii) suitable for the purposes used, and (iii)
adequate and sufficient for the normal operation of the Borrower's and the
Subsidiaries' businesses, as presently conducted. The Borrower and the
Subsidiaries own or have a valid leasehold interest in, or otherwise have a
valid right to use, all such properties. To the best knowledge of the Borrower,
such properties and their uses conform in all material respects to all
Applicable Laws, and the Borrower has not, nor has any Subsidiary, received any
notice to the contrary. All such tangible properties are in the Borrower's or a
Subsidiary's possession or under their control.
SECTION 3.18. REAL PROPERTY.
(a) Set forth on SCHEDULE 3.18 is a list, by street address and
(in the case of owned real property) deed reference, of all real property owned
or leased by the Borrower or any Subsidiary (for purposes of this Section, the
"REAL PROPERTY"), a summary description of the principal facilities and
structures (if any) located thereon, and, with respect to leased Real Property,
a summary description of the applicable leases and the material terms thereof.
There are no persons (other than the Borrower or a Subsidiary) in possession of
any portion of the Real Property as lessees, tenants at sufferance, or
trespassers, nor does any person (other than the Borrower or a Subsidiary) have
a lease, tenancy, or other right of occupancy or use of any portion of the Real
Property. The Real Property has full and free access to and from public
highways, streets, and roads, and the Borrower has no knowledge of any pending
or threatened Proceeding or any other fact or condition which would limit or
result in the termination of such access. To the best knowledge of the Borrower,
there exists no Proceeding or court order, or building code provision, deed
restriction, or restrictive covenant (recorded or otherwise), or other private
or public limitation, which might in any way impede or adversely affect the
continued use of the Real Property by the Borrower and the Subsidiaries in the
manner it is currently used.
(b) To the best knowledge of the Borrower, all buildings,
improvements, and fixtures situated on the Real Property conform in all material
respects to all Applicable Laws. All the Real Property is zoned for the various
purposes for which such Real Property is being used, and there exists no pending
or, to the best knowledge of the Borrower, threatened Proceeding which might
adversely affect the validity of such zoning.
(c) The Real Property is connected to and serviced by water,
sewage disposal, gas, telephone, and electric facilities which are adequate for
the current use of the Real Property and, to the best knowledge of the Borrower,
are in compliance with all Applicable Laws. To the best knowledge of the
Borrower, all public utilities required for the operation of the Real Property
enter the Real Property through adjoining public streets or, if they pass
through adjoining private land, do so in accordance with
22
valid public easements, and all utility lines and mains located on the Real
Property have been properly dedicated to, and are serviced and maintained by,
the appropriate public or quasi-public entity.
(d) The buildings, improvements, and fixtures situated on the Real
Property are in good condition and repair (excepting ordinary wear and tear and
minor maintenance and repair problems which would normally be associated with
such assets when used in connection with the operation of the Borrower's and the
Subsidiaries' businesses), free of any patent structural defects of a material
nature.
(e) Neither the whole nor any part of the Real Property is subject
to any pending Proceeding for condemnation or other taking by any Governmental
Entity, and, to the best knowledge of the Borrower, no such condemnation or
other taking is contemplated or threatened.
(f) There are no unpaid charges, debts, liabilities, claims, or
obligations incurred by or against the Borrower arising from the construction,
occupancy, ownership, use, or operation of the Real Property, or the buildings,
improvements, or fixtures situated thereon, or the business operated thereon,
which could give rise to any mechanic's or materialmen's or other statutory lien
against the Real Property, or the buildings, improvements, or fixtures situated
thereon, or any part thereof, or for which the Borrower or any Subsidiary will
be responsible.
(g) Except for the Borrower's facility at 0000 xxx 0000 Xxxxx
Xxxxxx Xxxx Xxxxxxxxx xx Xxxx Xxxxx, Xxxxx, the Real Property is not within any
area determined by the Department of Housing and Urban Development to be flood
prone under the Federal Flood Disaster Protection Act of 1973.
(h) The Borrower has made available to the Administrative Agent
accurate and complete copies of all title insurance policies, title reports,
other title documents, surveys, certificates of occupancy, and Permits in the
possession of the Borrower relating to the Real Property or the buildings,
improvements, or fixtures situated thereon.
SECTION 3.19. TANGIBLE PERSONAL PROPERTY. Set forth on SCHEDULE
3.19 is a list, as of the most recent practicable date, of all furniture,
equipment, machinery, computer hardware, materials, motor vehicles, rolling
stock, apparatus, tools, implements, appliances, and other tangible personal
property (other than spare parts, supplies, and inventory) owned, leased, or
used by the Borrower or any Subsidiary, except for items having a value
individually of less than $10,000 which do not, in the aggregate, have a value
exceeding $100,000. The motor vehicles and rolling stock owned or leased by the
Borrower and the Subsidiaries are utilized solely for the transportation by the
Borrower or a Subsidiary, for its own account and not for the account of others,
of inventories, supplies, and other items relating to the operation of the
Borrower's and the Subsidiaries' businesses, and such activities do not require
the obtainment of any Permit.
SECTION 3.20. LEASED PROPERTY. Set forth on SCHEDULE 3.20 is a
list and summary description of the material terms of all leases under which the
Borrower or any Subsidiary is the lessee of real or personal property. Each of
the Borrower and the Subsidiaries has good and valid leasehold interests in all
properties held by it under lease. The lessee under each such lease and its
predecessor under each such lease, if any, has been in peaceable possession (or
remedied any claims relating thereto) of the property covered thereby since the
commencement of the original term of such lease. No waiver, indulgence, or
postponement of the lessee's obligations under any such lease has been granted
by the lessor or of the lessor's obligations thereunder by the lessee. The
lessee under each such lease is not in breach of or in default under such lease,
nor has any event occurred which (with or without the giving of notice or the
passage of time or both) would constitute a default by the lessee under such
lease, and the
23
lessee has not received any notice from, or given any notice to, the lessor
indicating that the lessee or the lessor is in breach of or in default under
such lease. To the best knowledge of the Borrower, none of the lessors under
such leases is in breach thereof or in default thereunder. The lessee under each
such lease has full right and power to occupy or possess, as the case may be,
all the property covered by such lease.
SECTION 3.21. SPECIAL REPRESENTATION REGARDING SUBSCRIBERS. As of
December 31, 1998, the Borrower had a total of approximately 170,000 subscribers
under contract with the Borrower regarding the provision of Internet services.
SECTION 3.22. RECEIVABLES. All receivables (including accounts and
notes receivable, employee advances, and accrued interest receivables) of the
Borrower and the Subsidiaries as reflected on the Latest Balance Sheet or
arising since the date thereof are valid obligations of the respective makers
thereof, have arisen in the ordinary course of business for goods or services
delivered or rendered, are not subject to any valid defenses, counterclaims, or
set offs, and have been collected or are collectible in full at their recorded
amounts in the ordinary course of business without the expectation of the need
to resort to litigation or other extraordinary collection efforts, net of all
cash discounts and doubtful accounts as reflected on the Latest Balance Sheet
(in the case of receivables so reflected) or on the books of the Borrower and
the Subsidiaries (in the case of receivables arising since the date thereof).
The allowances for doubtful accounts reflected on the Latest Balance Sheet and
on the books of the Borrower and the Subsidiaries were determined in accordance
with GAAP and were and are reasonable in light of historical data and other
relevant information.
SECTION 3.23. INTELLECTUAL PROPERTY. Except for the trademarks,
service marks, and trade names set forth on SCHEDULE 3.23, the Borrower and the
Subsidiaries do not own, hold, use, or have pending any Intellectual Property.
The Borrower and the Subsidiaries own or have rights to use all trademarks,
service marks, and trade names, free from burdensome restrictions, that are
necessary for the operation of their respective businesses as presently
conducted. The Borrower and the Subsidiaries have not received any written
notice or claim of any infringement, violation, misuse, or misappropriation by
the Borrower or any Subsidiary of any Intellectual Property owned or purported
to be owned by any other person.
SECTION 3.24. PERMITS. To the best knowledge of the Borrower,
except for qualifications or licenses to do business in the states expressly
listed on SCHEDULE 3.2 as states with which the Borrower has a pending
application for qualification or license, the Borrower and the Subsidiaries hold
all Permits necessary or required for the conduct of the business of the
Borrower and the Subsidiaries as currently conducted. Each of such Permits is in
full force and effect, the Borrower or such Subsidiary is in compliance with all
its obligations with respect thereto, and, to the best knowledge of the
Borrower, no event has occurred which permits, or with or without the giving of
notice or the passage of time or both would permit, the revocation or
termination of any thereof. Except as disclosed on SCHEDULE 3.24, no notice has
been issued by any Governmental Entity and no Proceeding is pending or, to the
best knowledge of the Borrower, threatened with respect to any alleged failure
by the Borrower or a Subsidiary to have any Permit the absence of which would
have a Material Adverse Effect.
SECTION 3.25. AGREEMENTS.
(a) Set forth on SCHEDULE 3.25 is a list of all the following
agreements, arrangements, and understandings (written or oral, formal or
informal) (collectively, for purposes of this Section, "agreements", and each a
Material Contract) to which the Borrower or any Subsidiary is a party or by
which the Borrower or any Subsidiary or any of their respective properties is
otherwise bound:
24
(i) collective bargaining agreements and similar agreements
with employees as a group;
(ii) employee benefit agreements, trusts, plans, funds, or other
arrangements of any nature;
(iii) agreements with any current or former shareholder, director,
officer, employee, consultant, or advisor or any affiliate of any such
person;
(iv) agreements between or among the Borrower and any of the
Subsidiaries;
(v) indentures, mortgages, security agreements, notes, loan or
credit agreements, or other agreements relating to the borrowing of money
by the Borrower or any Subsidiary or to the direct or indirect guarantee
or assumption by the Borrower or any Subsidiary of any obligation of
others, including any agreement that has the economic effect although not
the legal form of any of the foregoing;
(vi) agreements relating to the acquisition or disposition of
assets, other than those entered into in the ordinary course of business
consistent with past practice;
(vii) agreements relating to the acquisition or disposition of any
interest in any business enterprise;
(viii) agreements with respect to the lease of real or personal
property;
(ix) agreements concerning the management or operation of any real
property;
(x) any broker, distributor, dealer, manufacturer's
representative, sales, agency, sales promotion, advertising, market
research, marketing, consulting, research and development, maintenance,
service, or repair agreement involving more than $10,000;
(xi) license, royalty, or other agreements relating to
Intellectual Property;
(xii) partnership, joint venture, and profit sharing agreements
(xiii) agreements with any Governmental Entity;
(xiv) agreements relating to the release or disposal of Hazardous
Material;
(xv) agreements in the nature of a settlement or a conciliation
agreement arising out of any claim asserted by any other person;
(xvi) agreements containing any covenant limiting the freedom of
the Borrower or any Subsidiary to engage in any line of business or
compete with any other person in any geographic area or during any period
of time;
(xvii) powers of attorney granted by the Borrower or any
Subsidiary in favor of any person;
(xviii) agreements not made in the ordinary course of business;
and
25
(xix) other agreements, whether or not made in the ordinary course
of business, that are material to the business, assets, results of
operations, condition (financial or otherwise), or prospects of the
Borrower and the Subsidiaries considered as a whole.
(b) The Borrower has made available to the Lenders accurate and
complete copies of the agreements listed on SCHEDULE 3.25. Each of such
agreements is a valid and binding agreement of the Borrower and the Subsidiaries
(to the extent each is a party thereto) and (to the best knowledge of the
Borrower) the other party or parties thereto, enforceable against the Borrower
and the Subsidiaries (to the extent each is a party thereto) and (to the best
knowledge of the Borrower) such other party or parties in accordance with its
terms. Except as set forth on SCHEDULE 3.25, neither the Borrower nor any
Subsidiary is in breach of or in default under, nor has any event occurred which
(with or without the giving of notice or the passage of time or both) would
constitute a default by the Borrower or any Subsidiary under, any of such
agreements, and neither the Borrower nor any Subsidiary has received any notice
from, or given any notice to, any other party indicating that the Borrower or
any Subsidiary is in breach of or in default under any of such agreements. To
the best knowledge of the Borrower, no other party to any of such agreements is
in breach of or in default under such agreements, nor has any assertion been
made by the Borrower or any Subsidiary of any such breach or default.
(c) Neither the Borrower nor any Subsidiary has received notice of
any plan or intention of any other party to any agreement to exercise any right
of offset with respect to, or any right to cancel or terminate, any agreement,
and neither the Borrower nor any Subsidiary knows of any fact or circumstance
that would justify the exercise by any such other party of such a right other
than the automatic termination of such agreement in accordance with its terms.
Neither the Borrower nor any Subsidiary currently contemplates, or has reason to
believe any other person currently contemplates, any amendment or change to any
agreement, which amendment or change could have a Material Adverse Effect.
SECTION 3.26. ERISA.
(a) Set forth on SCHEDULE 3.26 is a list identifying each
"employee benefit plan", as defined in Section 3(3) of ERISA, (i) which is
subject to any provision of ERISA, (ii) which is maintained, administered, or
contributed to by the Borrower or any affiliate of the Borrower, and (iii) which
covers any employee or former employee of the Borrower or any affiliate of the
Borrower or under which the Borrower or any affiliate of the Borrower has any
liability. The Borrower has made available to the Administrative Agent accurate
and complete copies of such plans (and, if applicable, the related trust
agreements) and all amendments thereto and written interpretations thereof,
together with (i) the three most recent annual reports (Form 5500 including, if
applicable, Schedule B thereto) prepared in connection with any such plan and
(ii) the most recent actuarial valuation report prepared in connection with any
such plan. Such plans are referred to in this Section as the "EMPLOYEE PLANS."
For purposes of this Section only, an "affiliate" of any person means any other
person which, together with such person, would be treated as a single employer
under Section 414 of the Code. The only Employee Plans which individually or
collectively would constitute an "employee pension benefit plan" as defined in
Section 3(2) of ERISA are identified as such on SCHEDULE 3.26.
(b) Except as otherwise identified on SCHEDULE 3.26, (i) no
Employee Plan constitutes a "multiemployer plan", as defined in Section 3(37) of
ERISA (for purposes of this Section, a "MULTIEMPLOYER PLAN"), (ii) no Employee
Plan is maintained in connection with any trust described in Section 501(c)(9)
of the Code, (iii) no Employee Plan is subject to Title IV of ERISA or to the
minimum funding standards of ERISA and the Code, and (iv) during the past five
years, neither the Borrower nor
26
any of its affiliates have made or been required to make contributions to any
Multiemployer Plan. There are no accumulated funding deficiencies as defined in
Section 412 of the Code (whether or not waived) with respect to any Employee
Plan. The fair market value of the assets held with respect to each Employee
Plan which is an employee pension benefit plan, as defined in Section 3(2) of
ERISA, exceeds the actuarially determined present value of all benefit
liabilities accrued under such Employee Plan (whether or not vested) determined
using reasonable actuarial assumptions. Neither the Borrower nor any affiliate
of the Borrower has incurred any material liability under Title IV of ERISA
arising in connection with the termination of, or complete or partial withdrawal
from, any plan covered or previously covered by Title IV of ERISA. The Borrower
and all of the affiliates of the Borrower have paid and discharged promptly when
due all liabilities and obligations arising under ERISA or the Code of a
character which if unpaid or unperformed might result in the imposition of a
lien against any of the assets of the Borrower or any Subsidiary. Nothing done
or omitted to be done and no transaction or holding of any asset under or in
connection with any Employee Plan has or will make the Borrower or any
Subsidiary or any director or officer of the Borrower or any Subsidiary subject
to any liability under Title I of ERISA or liable for any Tax pursuant to
Section 4975 of the Code that could have a Material Adverse Effect. There are no
pending or, to the best knowledge of the Borrower, threatened claims by or on
behalf of the Employee Plans, or by any participant therein, alleging a breach
or breaches of fiduciary duties or violations o Applicable Laws which could
result in liability on the part of the Borrower, its officers or directors, or
such Employee Plans, under ERISA or any other Applicable Law and there is no
basis for any such claim.
(c) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified since the
date of its adoption, and each trust forming a part thereof is exempt from Tax
pursuant to Section 501(a) of the Code. Accurate and complete copies of the most
recent IRS determination letters with respect to any such Plans have been made
available to the Administrative Agent. Each Employee Plan has been maintained in
compliance with its terms and with the requirements prescribed by all Applicable
Laws, including but not limited to ERISA and the Code, which are applicable to
such Plans.
(d) There is set forth on SCHEDULE 3.26 a list of each employment,
severance, or other similar contract, arrangement, or policy and each plan or
arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation rights, or other forms of incentive compensation or post-retirement
insurance, compensation, or benefits which (i) is not an Employee Plan, (ii) is
entered into, maintained, or contributed to, as the case may be, by the Borrower
or any affiliate of the Borrower, and (iii) covers any employee or former
employee of the Borrower or any affiliate of the Borrower or under which the
Borrower or any affiliate of the Borrower has any liability. Such contracts,
plans, and arrangements as are described in the preceding sentence are referred
to for purposes of this Section as the "BENEFIT ARRANGEMENTS." Each Benefit
Arrangement has been maintained in substantial compliance with its terms and
with the requirements prescribed by Applicable Laws.
(e) Neither the Borrower nor any affiliate of the Borrower has
performed any act or failed to perform any act, and there is no contract,
agreement, plan, or arrangement covering any employee or former employee of the
Borrower or any affiliate of the Borrower, that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 162(a)(1) or 280G of the Code, or could give
rise to any penalty or excise Tax pursuant to Section 4980B or 4999 of the Code.
27
(f) Except as disclosed on SCHEDULE 3.26, there has been no
amendment, written interpretation, or announcement (whether or not written) by
the Borrower or any affiliate of the Borrower of or relating to, or change in
employee participation or coverage under, any Employee Plan or Benefit
Arrangement which would increase materially the expense of maintaining such
Employee Plan or Benefit Arrangement above the level of the expense incurred in
respect thereof for the most recent fiscal year.
SECTION 3.27. ENVIRONMENTAL MATTERS.
(a) Except as disclosed on SCHEDULE 3.27:
(i) to the best knowledge of the Borrower, the properties,
operations, and activities of the Borrower and the Subsidiaries comply
with all Applicable Environmental Laws (as defined below);
(ii) the Borrower and the Subsidiaries and the properties,
operations, and activities of the Borrower and the Subsidiaries are not
subject to any existing, pending, or, to the best knowledge of the
Borrower, threatened Proceeding under, or to any remedial obligations
under, any Applicable Environmental Laws;
(iii) to the best knowledge of the Borrower, all Permits, if any,
required to be obtained by the Borrower or any Subsidiary under any
Applicable Environmental Laws in connection with any aspect of the
business of the Borrower or the Subsidiaries, including without
limitation those relating to the treatment, storage, disposal, or release
of a Hazardous Material (as defined below), have been duly obtained and
are in full force and effect, and the Borrower and the Subsidiaries are
in compliance with the terms and conditions of all such Permits;
(iv) to the best knowledge of the Borrower, the Borrower and the
Subsidiaries have satisfied and are currently in compliance with all
financial responsibility requirements applicable to their respective
operations and imposed by any Governmental Entity under any Applicable
Environmental Laws, and the Borrower and the Subsidiaries have not
received any notice of noncompliance with any such financial
responsibility requirements;
(v) to the best knowledge of the Borrower, there are no physical
or environmental conditions existing on any property owned or leased by
the Borrower or any Subsidiary or resulting from the Borrower's or any
Subsidiary's operations or activities, past or present, at any location,
that would give rise to any on-site or off-site remedial obligations
under any Applicable Environmental Laws;
(vi) to the best knowledge of the Borrower, since the effective
date of the requirements of Applicable Environmental Laws, all Hazardous
Materials generated by the Borrower or any Subsidiary or used in
connection with their respective properties, operations, or activities
have been transported only by carriers authorized under Applicable
Environmental Laws to transport such materials, and have been disposed of
only at treatment, storage, and disposal facilities authorized under
Applicable Environmental Laws to treat, store, or dispose of such
materials, and, to the best knowledge of the Borrower, such carriers and
facilities have been and are operating in compliance with such
authorizations and are not the subject of any existing, pending, or
threatened Proceeding in connection with any Applicable Environmental
Laws;
28
(vii) to the best knowledge of the Borrower, there has been no
exposure of any person or property to Hazardous Materials, nor has there
been any release of Hazardous Materials into the environment, by the
Borrower or any Subsidiary or in connection with their respective
properties, operations, or activities that could reasonably be expected
to give rise to any claim for damages or compensation; and
(viii) the Borrower and the Subsidiaries shall make available to
the Administrative Agent all internal and external environmental audits
and studies and all correspondence on substantial environmental matters
in the possession of the Borrower and the Subsidiaries relating to any of
the current or former properties, operations, or activities of the
Borrower and the Subsidiaries, provided that the Borrower and the
Subsidiaries shall not be required to make available any such audits,
studies, or correspondence that may be subject to the attorney-client
privilege or similar privilege.
(b) For purposes of this Agreement, "APPLICABLE ENVIRONMENTAL
LAWS" means any and all Applicable Laws pertaining to health, safety, or the
environment in effect (currently or hereafter) in any and all jurisdictions in
which the Borrower or any Subsidiary has conducted operations or activities or
owned or leased property, including, without limitation, the Clear Air Act, as
amended, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, the Rivers and Harbors Act of 1899, as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976, as amended, the Safe Drinking Water Act, as amended, the Toxic Substances
Control Act, as amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, the Hazardous Materials Transportation Act, as amended, the
Texas Water Code, the Texas Solid Waste Disposal Act, and other environmental
conservation or protection laws. For purposes of this Agreement, the term
"HAZARDOUS MATERIAL" means (i) any substance which is listed or defined as a
hazardous substance, hazardous constituent, or solid waste pursuant to any
Applicable Environmental Laws and (ii) petroleum (including crude oil and any
fraction thereof), natural gas, and natural gas liquids.
(c) The representations and warranties contained in this SECTION
3.27 would continue to be true and correct following disclosure to the
applicable Governmental Entities of all relevant facts, conditions, and
circumstances, if any, pertaining to the properties, operations, and activities
of the Borrower and the Subsidiaries.
SECTION 3.28. LABOR RELATIONS.
(a) Except as disclosed on SCHEDULE 3.28, (i) there are no
collective bargaining agreements or other labor union contracts applicable to
any employees to or by which the Borrower or any Subsidiary is a party or is
bound, no such agreement or contract has been requested by any employee or group
of employees of the Borrower or any Subsidiary, and no discussions have occurred
with respect thereto by management of the Borrower or any Subsidiary with any
such employees; (ii) no employees of the Borrower or any Subsidiary are
represented by any labor organization, collective bargaining representative, or
group of employees; (iii) no labor organization, collective bargaining
representative, or group of employees claims to represent a majority of the
employees of the Borrower or any Subsidiary in an appropriate unit of the
Borrower or any Subsidiary; (iv) neither the Borrower nor any Subsidiary is
aware of or involved with any representational campaign or other organizing
activities by any union or other organization or group seeking to become the
collective bargaining representative of any of its employees; (v) neither the
Borrower nor any Subsidiary is obligated to bargain collectively with respect to
wages, hours, and other terms and conditions of employment with any recognized
or certified labor
29
organization, collective bargaining representative, or group of employees; and
(vi) neither the Borrower nor any Subsidiary has experienced or is aware of any
strikes, work stoppages, work slowdowns, or lockouts or any threats thereof by
or with respect to any of its employees.
(b) To the best knowledge of the Borrower, the Borrower and the
Subsidiaries are in compliance in all material respects with all Applicable Laws
pertaining to employment and employment practices and wages, hours, and other
terms and conditions of employment in respect of their respective employees and
have no accrued liability for any arrears of wages or any Taxes or penalties for
failure to comply with any thereof. To the best knowledge of the Borrower, the
Borrower and the Subsidiaries are not engaged in any unfair labor practices or
unlawful employment practices. There is no pending or, to the best knowledge of
the Borrower, threatened Proceeding against or involving the Borrower or any
Subsidiary by or before, and neither the Borrower nor any Subsidiary is subject
to any judgment, order, writ, injunction, or decree of or inquiry from, the
National Labor Relations Board, the Equal Employment Opportunity Commission, the
Department of Labor, or any other Governmental Entity in connection with any
current, former, or prospective employee of the Borrower or any Subsidiary.
(c) The Borrower believes that relations with the employees of the
Borrower and the Subsidiaries are satisfactory.
SECTION 3.29. EMPLOYEES. Set forth on SCHEDULE 3.29 is a list
of:
(a) all directors and officers of the Borrower and the
Subsidiaries, and
(b) the name, social security number, and dates of employment by
the Borrower or a Subsidiary of each employee, agent, and consultant of
the Borrower and the Subsidiaries as of December 31, 1998, whose annual
rate of compensation in the current fiscal year will equal or exceed
$60,000, together with the total amounts of salary, bonuses, and other
compensation paid or payable by the Borrower or any Subsidiary to each
such person for the current fiscal year and the immediately preceding
fiscal year.
Except as disclosed on SCHEDULE 3.29, no severance payment, stay-on or incentive
payment, or similar obligation will be owed by the Borrower or any Subsidiary to
any of their respective directors, officers, or employees upon consummation of,
or as a result of, the transactions contemplated by this Agreement, nor will any
such director, officer, or employee be entitled to an increase in severance
payments or other benefits as a result of the transactions contemplated by this
Agreement in the event of the subsequent termination of his or her employment.
SECTION 3.30. INSIDER INTERESTS. Except as disclosed on SCHEDULE
3.30 no shareholder, director, officer, or employee of the Borrower or any
Subsidiary or any associate of any such shareholder, director, officer, or
employee is presently, directly or indirectly, a party to any transaction with
the Borrower or any Subsidiary, including, without limitation, any agreement,
arrangement, or understanding, written or oral, providing for the employment of,
furnishing of services by, rental of real or personal property from, or
otherwise requiring payments to any such shareholder, director, officer,
employee, or associate. To the best knowledge of the Borrower, no shareholder,
director, officer, or employee of the Borrower or any Subsidiary or any
associate of any such shareholder, director, officer, or employee owns, directly
or indirectly, any interest in, or serves as a director, officer, or employee
of, any customer, supplier, or competitor of the Borrower or any Subsidiary. For
purposes of this Section only, an "associate" of any shareholder, director,
officer, or employee means (i) a spouse, parent, sibling, child, mother- or
father-in-law, son- or daughter-in-law, or brother- or sister-in-law of such
shareholder,
30
director, officer, or employee or (ii) any corporation, partnership, trust, or
other entity in which such shareholder, director, officer, or employee or
associate thereof has a substantial ownership or beneficial interest (other than
an interest in a public corporation which does not exceed three percent of its
outstanding securities) or is a director, officer, partner, or trustee or person
holding a similar position.
SECTION 3.31. INSURANCE. The Borrower and the Subsidiaries
maintain with sound and reputable insurers, and there are currently in full
force and effect, policies of insurance with respect to their respective assets
and operations against such casualties and contingencies of such types and in
such amounts as are customary for corporations of similar size engaged in
similar lines of business. All premiums due and payable with respect to such
policies have been timely paid. No notice of cancellation of, or indication of
an intention not to renew, any such policy has been received by the Borrower or
any Subsidiary. During the past three years, no application by the Borrower or
any Subsidiary for insurance with respect to its assets or operations has been
denied for any reason.
SECTION 3.32. FINANCIAL REQUIREMENTS. Set forth on SCHEDULE 3.32
is a list and summary description of all bonds, deposits, financial assurance
requirements, and insurance coverage required, to the best knowledge of the
Borrower, to be submitted to Governmental Entities for the continued ownership
and operation of the business and assets of the Borrower and the Subsidiaries.
SECTION 3.33. BANK ACCOUNTS AND POWERS OF ATTORNEY. Set forth on
SCHEDULE 3.33 are: (i) the name and address of each bank or other financial
institution with which the Borrower or any Subsidiary has an account or safe
deposit box or vault, the account and safe deposit box and vault numbers
thereof, the purpose of each thereof, and the names of all persons authorized to
draw thereon or to have access thereto, (ii) the names of all persons authorized
to borrow funds on behalf of the Borrower or any Subsidiary and the names and
addresses of all entities from which they are authorized to borrow funds, and
(iii) the names of all persons, if any, holding proxies, powers of attorney, or
other like instruments from the Borrower or any Subsidiary. No such proxies,
powers of attorney, or other like instruments are irrevocable.
SECTION 3.34. INVESTMENTS. The temporary cash investments
reflected on the balance sheets included in the Financial Statements have
maturities not more than 12 months from the date of acquisition by the Borrower
or a Subsidiary and consist of: (i) securities issued or guaranteed or insured
by the United States of America or any agency or instrumentality thereof; (ii)
time deposit certificates of deposit and banker's acceptances of commercial
banks organized under the laws of the United States of America or any state
thereof with total assets of more than $50,000,000; (iii) commercial paper
issued by any person incorporated in the United States rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Xxxxx'x Investors Service, Inc.; or (iv) shares of money
market funds substantially all of whose assets are comprised of securities or
assets of the type described in clauses (i) through (iii) above.
SECTION 3.35. BOOKS AND RECORDS. All the books and records of the
Borrower and the Subsidiaries, including all personnel files, employee data, and
other materials relating to employees, are substantially complete and correct in
all material respects, have been maintained in accordance with good business
practice and, to the best knowledge of the Borrower, all Applicable Laws, and,
in the case of the books of account, have been prepared and maintained in
accordance with GAAP. Such books and records fairly reflect, in reasonable
detail, all material transactions, revenues, expenses, assets, and liabilities
of the Borrower and the Subsidiaries.
31
SECTION 3.36. ILLEGAL PAYMENTS. To the best knowledge of the
Borrower, none of the Borrower or any Subsidiary or any director, officer,
employee, or agent of the Borrower or any Subsidiary has, directly or
indirectly, paid or delivered any fee, commission, or other sum of money or item
of property however characterized to any broker, finder, agent, government
official, or other person, in the United States or any other country, in any
manner related to the business or operations of the Borrower or any Subsidiary,
which the Borrower or any Subsidiary or any such director, officer, employee, or
agent knows or has reason to believe to have been illegal under any Applicable
Law.
SECTION 3.37. PRIVATE OFFERING; RULE 144A MATTERS.
(a) Based in part on the accuracy of the representations and
warranties of, and compliance with the covenants and agreements by, the Lenders
in Section 6.1, the making of the Term Loans hereunder and the issuance of the
instruments evidencing such Term Loans and the Securities are and will be exempt
from the registration and prospectus delivery requirements of the Securities
Act. Neither the Borrower nor any Guarantor has issued or sold Term Loans, the
instruments evidencing such Term Loans or the Securities to anyone other than
the Lenders. No securities of the same class as the Term Loans, the instruments
evidencing such Term Loans or the Securities have been issued or sold by the
Borrower or any Guarantor within the six-month period immediately prior to the
date hereof. The Borrower and each Guarantor agrees that neither it, nor anyone
acting on its behalf, will (i) offer the Term Loans, the instruments evidencing
such Term Loans or the Securities so as to subject the making, issuance and/or
sale of the Term Loans, the instruments evidencing such Term Loans or the
Securities, to the registration or prospectus delivery requirements of the
Securities Act or (ii) offer any similar securities for issuance or sale to, or
solicit any offer to acquire any of the same from, or otherwise approach or
negotiate with respect to the same with, anyone if the issuance or sale of the
Term Loans, the instruments evidencing such Term Loans, the Securities and any
such securities would be integrated as a single offering for the purposes of the
Securities Act, including without limitation, Regulation D thereunder, in such a
manner as would require registration under the Securities Act thereof. Each Term
Note, and (subject to the terms of the Common Stock Purchase Option) each of the
Shares shall have a legend setting forth the restrictions on the transferability
thereof imposed by the Securities Act for so long as such restrictions apply.
(b) In the case of each offer, sale or issuance of the Term Loans
or the Securities no form of general solicitation or general advertising was or
will be used by the Borrower or any Guarantor or their representatives,
including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(c) The Common Stock Purchase Option, but not the Common Stock,
will be eligible for resale pursuant to Rule 144A under the Securities Act. When
the Common Stock Purchase Option is issued and delivered pursuant to the Loan
Documents, it will not be of the same class (within the meaning of Rule 144A(d)
(3) under the Securities Act) as any other security of the Borrower or any
Guarantor that is listed on a national securities exchange registered under
Section 6 of the Exchange Act or that is quoted in a United States automated
interdealer quotation system.
SECTION 3.38. REGISTRATION RIGHTS. Except for demand and
piggyback registration rights granted to Ascend Communications, Inc.,
"piggy-back" registration rights granted to holders of the Convertible Notes,
and demand and piggy back registration rights granted to purchasers of the
Series A
32
Preferred pursuant to the Registration Rights Agreement dated as of May
7, 1998 and all amendments thereto, the Borrower has no obligation to register
any of its securities under the Securities ACT.
SECTION 3.39. BROKERAGE FEES. Neither the Borrower nor any of its
affiliates has retained any financial advisor, broker, agent, or finder or paid
or agreed to pay any financial advisor, broker, agent, or finder on account of
this Agreement or any transaction contemplated hereby. The Borrower shall
indemnify and hold harmless the Lenders from and against any and all losses,
claims, damages, and liabilities (including legal and other expenses reasonably
incurred in connection with investigating or defending any claims or actions)
with respect to any finder's fee, brokerage commission, or similar payment in
connection with any transaction contemplated hereby asserted by any person on
the basis of any act or statement made or alleged to have been made by the
Borrower or any of its affiliates.
SECTION 3.40. DISCLOSURE. No representation or warranty made by
the Borrower and each of the Guarantors in this Agreement or in any other Loan
Document, and no statement of the Borrower contained in any document,
certificate, or other writing furnished or to be furnished by the Borrower
pursuant hereto or thereto or in connection herewith or therewith, contains or
will contain, at the time of delivery, any untrue statement of a material fact
or omits or will omit, at the time of delivery, to state any material fact
necessary in order to make the statements contained therein, in light of the
circumstances under which they are made, not misleading. The Borrower knows of
no matter (other than matters of a general economic character not relating
solely to the Borrower or any Subsidiary in any specific manner) which has not
been disclosed to the Lenders pursuant to this Agreement which has or is
reasonably likely to have a Material Adverse Effect on the Borrower. The
Borrower has delivered or made available to the Lenders accurate and complete
copies of all agreements, documents, and other writings referred to or listed in
this Article III or any Schedule hereto.
SECTION 3.41. DUE AUTHORIZATION AND ENFORCEABILITY. Each of the
Loan Documents: (i) has been duly authorized, executed and delivered by each
Subsidiary (to the extent each is a party thereto) and (ii) constitutes a valid
and binding obligation of each Subsidiary (to the extent each is a party
thereto) enforceable against each such Person in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforceability
of creditors' rights generally and by general principles of equity (whether
arising under a proceeding at law or in equity).
SECTION 3.42. NO VIOLATION OF REGULATIONS OF BOARD OF GOVERNORS OF
FEDERAL RESERVE SYSTEM. None of the transactions contemplated by this Agreement
(including without limitation the use of the proceeds from the Term Loans) will
violate or result in a violation of Section 7 of the Exchange Act, or any rule
or regulation issued pursuant thereto, including, without limitation,
Regulations T, U and X of the Board.
SECTION 3.43. GOVERNMENTAL REGULATIONS. None of the Borrower or
any of its Subsidiaries is or will be subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935,
as amended, the Federal Power Act, the Interstate Commerce Act or to any other
statute, rule or regulation limiting its ability to incur Indebtedness for
borrowed money.
SECTION 3.44. YEAR 2000 COMPLIANCE. The Borrower has (i) initiated
a review and assessment of all areas within its and each of its Subsidiaries'
business and operations (including those affected by suppliers, vendors and
customers) that could be adversely affected by the "YEAR 2000 PROBLEM" (that is,
the risk that computer applications used by the Borrower or any of its
Subsidiaries (or
33
suppliers, vendors and customers) may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) developed a plan and timeline for addressing the
Year 2000 Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable. Based on the foregoing, the Borrower believes
that all computer applications (including those of its suppliers, vendors and
customers) that are material to its or any of its Subsidiaries' business and
operations are reasonably expected on a timely basis to be able to perform
properly date-sensitive functions for all dates before and after January 1, 2000
(that is, be "YEAR 2000 COMPLIANT"), except to the extent that a failure to do
so could not reasonably be expected to have Material Adverse Effect.
ARTICLE IV.
COVENANTS
So long as any Commitment shall remain outstanding or any
Obligation shall remain unpaid, the Borrower and each Guarantor covenants and
agrees with the Lenders as follows:
SECTION 4.1. USE OF PROCEEDS. The Borrower shall use the
proceeds of the Term Loans for general corporate purposes.
SECTION 4.2. NOTICE OF DEFAULT AND RELATED MATTERS. The Borrower
shall furnish to the Administrative Agent (with copies for each Lender) written
notice, promptly upon becoming aware of the existence of:
(a) any condition or event that constitutes a Default or an Event
of Default, specifying the nature and period of existence thereof and the
action taken or proposed to be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any Person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Entity, against or affecting the Borrower or any of its Subsidiaries or
any of their respective Affiliates that could reasonably be expected to
result in, individually or in the aggregate, a Material Adverse Effect;
and
(c) any development that, individually or in the aggregate, has
resulted in, or could reasonably be expected to have, a Material Adverse
Effect.
SECTION 4.3. MERGER; SALE OF ALL OR SUBSTANTIALLY ALL ASSETS.
(a) The Borrower and each Guarantor shall not consolidate or merge
with or into any other Person or sell, convey, transfer or lease its properties
and assets substantially as an entirety to any Person.
SECTION 4.4. INFORMATION; SEC REPORTS; COMPLIANCE CERTIFICATES.
(a) The Borrower shall, and shall cause each of its Subsidiaries
to, promptly provide such information concerning the businesses, properties,
liabilities and financial condition of the Borrower and such Subsidiaries as any
Lender may from time to time reasonably request. The Borrower shall, and shall
cause each of its respective Subsidiaries to:
34
(i) keep proper books of record and account in which full, true
and correct entries shall be made of all dealings and transactions in
relation to its business and activities,
(ii) permit the Lenders or their representatives to visit and
inspect any of their respective properties, to examine and make abstracts
from any of their respective books and records and to discuss their
respective businesses, finances and accounts with their respective
executive officers and, subject to the right of the Borrower's
representatives to participate in any such discussion, with their
independent public accountants, all upon reasonable notice and at such
reasonable times and as often as may reasonably be desired,
(iii) permit the Lenders or their representatives to consult with
the Borrower and such Subsidiaries with respect to their businesses and
make proposals with respect to such businesses (such proposals not to
impede and may facilitate faster or more secure repayment of the
Obligations), and meet with the respective executive officers of the
Borrower and such Subsidiaries with respect to such proposals,
(iv) provide to Lenders, within 90 days after the end of each
fiscal year of the Borrower, the Borrower's consolidated balance sheet
and related statement of income and cash flows, showing the financial
condition of the Borrower and the Guarantors on a consolidated basis as
of the close of such fiscal year and the results of their respective
operations during such year, to be audited by other independent public
accountants of recognized national standing reasonably acceptable to the
Administrative Agent and accompanied by an opinion of such accountants
(which shall not be qualified in any material respect other than with
respect to the Cases) and to be certified by the chief financial officer
of the Borrower to the effect that such consolidated financial statements
fairly present the financial condition and results of operations of the
Borrower and the Guarantors on a consolidated basis in accordance with
GAAP consistently applied,
(v) provide to Lenders, within 45 days after the end of the first
three fiscal quarters of the Borrower (commencing with the fiscal quarter
ending on or about March 31, 1999), the Borrower's consolidated balance
sheets and related statements of income and cash flows, showing the
financial condition of the Borrower and the Guarantors on a consolidated
basis as of the close of such fiscal quarter and the results of their
respective operations during such fiscal quarter and the then elapsed
portion of the fiscal year, each certified by a Financial Officer as
fairly presenting the financial condition and results of operations of
the Borrower and the Guarantors on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit
adjustments, and
(vi) provide to Lenders, commencing with the fiscal month ending
on or about March 31, 1999, within 30 days of the end of each fiscal
month of the Borrower (or 45 days if such fiscal month end is also the
end of any of the first three fiscal quarters, or 90 days if such fiscal
month end is also the end of the fiscal year), the unaudited monthly
income statement, balance sheet and cash flow report of the Borrower and
the Guarantors on a consolidated basis as of the close of such fiscal
month and the results of their respective operations during such fiscal
period and the then elapsed portion of the fiscal year (and such other
cash flow reports and operating statements as the Administrative Agent
may reasonably request), all certified by the chief financial officer as
fairly presenting the results of operations of the Borrower and the
Guarantors on a consolidated basis subject to normal year-end audit
adjustments.
35
(b) The Borrower shall furnish to the Lenders (i) all quarterly
and annual financial information that would be required to be contained in a
filing with the SEC on Forms 10-Q and 10-K if the Borrower were required to file
such financial information, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" that describes the financial
condition and results of operations of the Borrower and its Subsidiaries and,
with respect to the annual information only, a report thereon by the Borrower's
certified independent public accountants (who shall be a firm of established
national reputation) and (ii) all current reports that would be required to be
filed with the SEC on Form 8-K if the Borrower were required to file such
reports, in each case within the time periods set forth in the SEC's rules and
regulations. In addition, until such time as the Borrower and each of the
Guarantors is subject to Section 13 or 15(d) of the Exchange Act, the Borrower
and each of the Guarantors shall furnish to the Lenders, each holder of
securities and to prospective investors designated by the Lenders or such a
holder, upon their request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
(c) The Borrower shall deliver to the Lenders, within 60 days
after the end of each fiscal quarter, an Officers' Certificate stating that a
review of the activities of the Borrower and its Subsidiaries during the
preceding fiscal quarter (or since the Closing Date in the case of the first
such Officer's Certificate) has been performed with a view to determining
whether the Borrower and its Subsidiaries have kept, observed, performed and
fulfilled their respective Obligations under this Agreement, and further stating
that (i) the Borrower and its Subsidiaries have kept, observed, performed and
fulfilled each and every covenant contained in this Agreement and are not in
default in the performance or observance of any of the terms, provisions or
conditions hereof or under any other mortgage, indenture or debt instrument (or,
if a Default, Event of Default or default under any such mortgage, indenture or
debt instrument shall have occurred, describing all such Defaults, Events of
Default or defaults and what action the Borrower is taking or proposes to take
with respect thereto).
(d) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the annual financial
statements delivered pursuant to paragraph (b) above shall be accompanied by a
written statement of the Borrower's certified independent public accountants
(who shall be from a firm of established national reputation) that, solely in
making the examination necessary for certification of such financial statements
and without independent investigation or inquiry, nothing has come to their
attention that would lead them to believe that the Borrower or any of its
respective Subsidiaries has violated any provisions of Article IV of this
Agreement or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall not
be liable directly or indirectly to any Person for any failure to obtain
knowledge of any such violation.
(e) The Administrative Agent and each Lender covenants and agrees
that any information, financial statements, certificates or documents obtained
pursuant to this SECTION 4.4 shall not be utilized in a manner that violates any
federal or state securities laws.
SECTION 4.5. EXISTENCE; BUSINESS AND PROPERTIES; INSURANCE.
The Borrower shall, and shall cause each of its Subsidiaries to,
(a) do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence, and (b) do or cause to be done all
things necessary to obtain, preserve, renew, extend and keep in full force and
effect the rights, licenses, permits, franchises, consents, approvals,
variances, exemptions, patents, copyrights, trademarks, trade names and other
authorizations of or from Governmental Entities (collectively, "PERMITS") that
are material to the conduct of its business; maintain and operate such business
in
36
substantially the manner in which it is presently conducted and operated and
extensions or ancillary businesses that are not, individually or in the
aggregate, material to the Borrower and its Subsidiaries taken as a whole; and
at all times maintain and preserve all property material to the conduct of such
business and keep such property in good repair, working order and condition and
from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
in all material respects at all times.
The Borrower shall, and shall cause its Subsidiaries, to keep its
insurable properties insured in such amount as are customary for corporations of
similar sizes engaged in similar activities at all times by financially sound
and reputable insurers; maintain such other insurance (including self
insurance), to such extent and against such risks, including fire and other
risks insured against by extended coverage, as is customary with companies in
the same or similar businesses operating in the same or similar locations,
including public liability insurance against claims for personal injury or death
or property damage occurring upon, in, about or in connection with the use of
any properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.
SECTION 4.6. COMPLIANCE WITH LAWS. The Borrower shall, and shall
cause each of its Subsidiaries to, comply in all respects with all applicable
laws, ordinances, rules, regulations and requirements of governmental
authorities (including Applicable Environmental Laws and ERISA and the rules and
regulations thereunder), except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings or where non-compliance
therewith could not reasonably be expected to have a Material Adverse Effect.
SECTION 4.7. RESTRICTED PAYMENTS.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of their respective Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation) to the direct or indirect holders of any of their
respective Equity Interests (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Borrower or payable to
the Borrower or a Subsidiary of the Borrower); (ii) purchase, redeem or
otherwise acquire or retire for value (including without limitation, in
connection with any merger or consolidation) any Equity Interests of the
Borrower or any of its Affiliates (other than any such Equity Interests owned by
the Borrower or any Subsidiary of the Borrower); (iii) make any payment on or
with respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is PARI PASSU or subordinated to the Term Loans,
except a payment of interest or principal at its Stated Maturity or, in the case
of the Ascend Note, upon the occurrence of the consummation of any initial
public offering of the Borrower; or (iv) make any Restricted Investment (all
such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "RESTRICTED PAYMENTS").
SECTION 4.8. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
SUBSIDIARIES. The Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary of the Borrower to (i)(a) pay dividends or make any other
distributions to the Borrower or any of its Subsidiaries (1) on its Capital
Stock or other Equity Interests or (2) with respect to any other interest or
participation in, or measured by, its profits, or (b) pay any Indebtedness owed
to the Borrower or any of its Subsidiaries, (ii) make loans or advances to the
Borrower or any of its Subsidiaries or (iii) transfer any of its properties or
assets to the Borrower or any of its Subsidiaries, except for such
37
encumbrances or restrictions existing under or by reason of (a) the Ascend Note,
(b) this Agreement and the other Loan Documents, (c) applicable law, (d)
restrictions of the nature described in clause (iii) above by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (e) purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired; and (f) any encumbrance or restriction on the transfer of any property
or asset in an agreement relating to the acquisition or creation or disposition
of such property or asset or any Lien on such property or asset that is
otherwise permitted by the terms of this Agreement.
SECTION 4.9. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS
AND ISSUANCE OF ADDITIONAL PREFERRED STOCK.
(a) The Borrower shall not, and shall not permit any of its
respective Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become liable, contingently or otherwise, with
respect to (collectively, "INCUR"), or permit to exist, any Indebtedness
(including Acquired Debt) or any shares of Preferred Stock, except for:
(i) The currently outstanding Series A Preferred and Indebtedness
under the Ascend Note and the Convertible Notes that is outstanding on
the date hereof;
(ii) the Term Loans and the Guarantees;
(iii) the incurrence by any Guarantor or any of its Wholly Owned
Subsidiaries or future Wholly Owned Subsidiaries of intercompany
Indebtedness between or among such Guarantor and any of its Wholly Owned
Subsidiaries or future Wholly Owned Subsidiaries; PROVIDED, HOWEVER, that
(i) if any Guarantor or the Borrower is the obligor on such Indebtedness,
such Indebtedness is expressly subordinated to the prior payment in full
in cash of all Obligations and (ii)(A) any subsequent issuance or
transfer of Equity Interests that results in any such Indebtedness being
held by a Person other than any Guarantor or any of its Wholly Owned
Subsidiaries or future Wholly Owned Subsidiaries and (B) any sale or
other transfer of any such Indebtedness to a Person that is neither a
Guarantor nor one of its Wholly Owned Subsidiaries or future Wholly Owned
Subsidiaries shall be deemed, in each case, to constitute an incurrence
of such Indebtedness by such Guarantor or such Subsidiary or future
Wholly Owned Subsidiary, as the case may be;
(iv) the incurrence by the Borrower or any of its Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding not to exceed $250,000;
(v) Indebtedness outstanding on the date hereof and set forth on
SCHEDULES 3.11, 3.16 OR 3.20; and
(vi) the incurrence by the Borrower or any of its Subsidiaries of
additional Indebtedness under Capital Lease Obligations and/or operating
leases relating to the lease of equipment in an aggregate principal
amount not exceeding $2,000,000.
(b) For purposes of determining compliance with this SECTION 4.9,
accrual of interest, the accretion of accreted value and the payment of interest
by capitalizing the same or issuing additional Indebtedness will not be deemed
to be an incurrence of Indebtedness. In addition, liabilities of the
38
Borrower resulting from prepaid customer accounts and reflected on the
Borrower's financial statements as deferred revenue will not be deemed to be an
incurrence of Indebtedness.
SECTION 4.10. LIMITATION ON SALES OF ASSETS, SUBSIDIARY STOCK AND
ACQUISITIONS. The Borrower shall not, and shall not permit any of its
Subsidiaries to, enter into any agreement with respect to or consummate any
Asset Sale. Borrower shall not, and shall not permit any of its Subsidiaries, to
acquire any assets of any Person, except in the ordinary course of business and
in a manner that is consistent with past practices, or the Capital Stock of any
Person.
SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES. The
Borrower shall not, and shall not permit any of its Subsidiaries to, make any
payment to, or sell, lease, transfer or otherwise dispose of any properties or
assets to, or purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate of any such Person (each of
the foregoing, an "AFFILIATE TRANSACTION"), unless (i) such Affiliate
Transaction is on terms that are no less favorable to the Borrower or the
relevant Subsidiary than those that would have been obtained in a comparable
transaction by the Borrower or such Subsidiary with an unrelated Person on an
"arms-length basis" and (ii) the Borrower delivers to the Lenders with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $250,000, a resolution of its
board of directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of its
board of directors, PROVIDED that the foregoing restrictions shall not apply to
(x) transactions between or among the Borrower and its Subsidiaries not
otherwise prohibited by this Agreement, and (y) transactions pursuant to
agreements entered into or in effect on the Closing Date and set forth in
SCHEDULE 4.11.
SECTION 4.12. LINE OF BUSINESS; LIMITATION ON BORROWER'S
ACTIVITIES. The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, engage to any material extent in any line of
business other than the businesses conducted on the Closing Date and extensions
or ancillary businesses that are not, individually or in the aggregate, material
to the Borrower and its Subsidiaries taken as a whole.
SECTION 4.13. LIENS. The Borrower shall not directly or
indirectly, create, incur, assume or suffer to exist any Lien or Encumbrances on
any asset now owned or hereafter acquired by the Borrower, or any income or
profits therefrom or assign or convey any right to receive income therefrom,
except Permitted Liens.
SECTION 4.14. STAY, EXTENSION AND USURY LAWS. The Borrower and
each of the Guarantors covenants (to the extent that they may lawfully do so)
that it shall not, and shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants in or the performance of this Agreement or any other Loan
Document; and the Borrower waives, and agrees to cause its Subsidiaries to waive
(to the extent that they may lawfully do so), all benefit or advantage of any
such law, and covenants that it shall not, and shall not permit its Subsidiaries
to, by resort to any such law, hinder, delay or impede the execution of any
power herein granted to the Lenders, but shall suffer and permit, and shall
cause its Subsidiaries to suffer and permit, the execution of every such power
as though no such law has been enacted.
SECTION 4.15. OBLIGATIONS AND TAXES. The Borrower shall, and shall
cause its Subsidiaries to, pay its Indebtedness and other Obligations promptly
and in accordance with their terms
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and pay and discharge promptly when due all material taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its property, before the same shall become delinquent or in
default, as well as all material lawful claims for labor, materials and supplies
or otherwise that, if unpaid, might give rise to a Lien or Encumbrance upon such
properties or any part thereof; PROVIDED, HOWEVER, that such payment and
discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and the Borrower shall have
set aside on its books adequate reserves with respect thereto in accordance with
GAAP and such contest operates to suspend collection of the contested
obligation, tax, assessment or charge and enforcement of a Lien or Encumbrance.
SECTION 4.16. SUBSCRIBERS. The Borrower shall maintain a total of
100,000 or more paying dial up subscribers with the Borrower regarding the
provision of any Internet services, in each case, for a customary fee.
SECTION 4.17. ADDITIONAL GUARANTEES AND SUBSIDIARY PLEDGE AND
SECURITY AGREEMENT. If the Borrower or any of its Subsidiaries shall acquire or
create another Subsidiary after the date hereof, then such newly acquired or
created Subsidiary (i) shall become a Guarantor, shall execute and deliver a
notation of Guarantee on the date of such acquisition or creation, as
applicable, and shall become a party to this Agreement by executing a joinder
agreement in form and substance satisfactory to the Administrative Agent, (ii)
shall become a party to the Subsidiary Pledge and Security Agreement or execute
and deliver to the Administrative Agent an agreement similar to the Subsidiary
Pledge and Security Agreement, in form and substance satisfactory to the
Administrative Agent and (iii) in the case of clauses (i) and/or (ii) deliver an
Opinion of Counsel to the Administrative Agent in form and substance
satisfactory to the Administrative Agent.
SECTION 4.18. YEAR 2000 COMPLIANCE. The Borrower shall promptly
notify the Administrative Agent in the event the Borrower discovers or
determines that any computer application (including those of its suppliers,
vendors and customers) that is material to its or any of its Subsidiaries'
business and operations will not be Year 2000 Compliant, except to the extent
that such failure could not reasonably be expected to have a Material Adverse
Effect.
SECTION 4.19. MATERIAL CONTRACTS. The Borrower shall not amend,
modify, supplement or restate any Material Contract.
ARTICLE V.
CONDITIONS
The obligation of each of the Lenders to make Term Loans is
subject to (i) the representations and warranties of the Borrower and each of
the Guarantors in Article III being true, correct and complete in all respects
on and as of the Closing Date to the same extent as though made on and as of the
Closing Date, (ii) on or prior to the Closing Date, the Borrower and each such
Guarantor, as the case may be, having performed and complied with all covenants
and conditions to be performed and observed by it under this Agreement and the
other Loan Documents on or prior to the Closing Date and (iii) the prior or
concurrent satisfaction of each of the following conditions:
SECTION 5.1. CORPORATE AND OTHER PROCEEDINGS; OTHER LOAN
DOCUMENTS. On or before the Closing Date, all corporate and other proceedings
taken or to be taken in connection with this Agreement and the other the Loan
Documents and all documents incidental thereto not previously found acceptable
by the Administrative Agent shall be satisfactory in form and substance to the
Administrative
40
Agent, and the Administrative Agent shall have received on behalf of the Lenders
the following items, each of which shall be in form and substance satisfactory
to the Administrative Agent and, unless otherwise noted, dated the Closing Date:
(a) a certified copy of the Borrower's and each of the Guarantor's
charters, in each case together with a certificate of status, compliance, good
standing or like certificate with respect to the Borrower and each Guarantor
issued by the appropriate government officials of the respective jurisdiction of
its formation, each to be dated a recent date prior to the Closing Date;
(b) a copy of the Borrower's and each of the Guarantor's bylaws,
in each case certified as of the Closing Date by its respective Secretary or one
of its Assistant Secretaries;
(c) resolutions of the Borrower's and each of the Guarantor's
Boards of Directors approving and authorizing the execution, delivery and
performance of this Agreement, each of the other Loan Documents, as applicable,
and any other documents, instruments and certificates required to be executed by
the Borrower or such Guarantor in connection herewith or therewith and approving
and authorizing the execution, delivery and payment of the Term Notes and the
consummation of the transactions contemplated thereby, each certified as of the
Closing Date by its respective Secretary or one of its Assistant Secretaries as
being in full force and effect without modification or amendment;
(d) signature and incumbency certificates of the Borrower's and
each of the Guarantor's Officers executing this Agreement, the Term Notes, the
other Loan Documents to which it is a party and any other documents executed in
connection therewith;
(e) original executed copies of this Agreement and the Term Notes
drawn to the order of the Lenders;
(f) a notation of Guarantee, executed and delivered by each
Guarantor, dated the date of this Agreement, substantially in the form set forth
in EXHIBIT D hereto, as applicable;
(g) an Officers' Certificate from the Borrower and each of the
Guarantors to the effect that (i) the representations and warranties in Article
III are true, correct and complete in all respects on and as of the Closing Date
to the same extent as though made on and as of that date, (ii) on or prior to
the Closing Date, the Borrower or such Guarantor, as the case may be, has
performed and complied with all covenants and conditions to be performed and
observed by it under this Agreement and the other Loan Documents to which it is
a party on or prior to the Closing Date and (iii) all conditions to the
consummation of the transactions contemplated hereby have been satisfied on the
terms set forth in the documentation relating thereto and have not been waived
or amended without the Administrative Agent's prior written consent;
(h) original copies of each of the other Loan Documents executed
by each of the parties thereto; and
(i) original executed copies of the UCC-1's to be filed in
connection with the Security Agreements.
SECTION 5.2. NO MATERIAL LOSS. Neither the Borrower nor any of its
Subsidiaries shall have sustained any loss or interference with respect to its
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding, which loss or interference, in the sole
judgment of the Administrative Agent, has had or is reasonably likely to have a
Material Adverse Effect; there shall not have been, in the sole judgment of the
41
Administrative Agent, any material adverse change, or any development involving
a prospective material adverse change, in the business, condition (financial or
other), results of operations, management, prospects or value of the Borrower
and its Subsidiaries, taken as a whole.
SECTION 5.3. NO EVENT OF DEFAULT. No event shall have occurred and
be continuing or would result from the consummation of the transactions
contemplated hereby that would constitute an Event of Default.
SECTION 5.4. NO CHANGES IN FINANCIAL MARKETS. No material adverse
change in the financial or capital markets shall have occurred which, in the
sole judgment of the Administrative Agent, would make it impractical or
inadvisable to proceed with the funding of the Term Loans, and no banking
moratorium shall have been declared by Federal or New York State banking
officials.
SECTION 5.5. DELIVERY OF OPINIONS. The Administrative Agent shall
have received originally executed copies of one or more favorable written
opinions of (i) Xxxxxx & Hanger, L.L.P., counsel for the Borrower and the
Guarantors, in the form of EXHIBIT E hereto and addressed to the Lenders, and
(ii) such other opinions of counsel and such certificates or opinions of
accountants, appraisers or other professionals as the Administrative Agent shall
have reasonably requested, in the case of clauses (i) and/or (ii) in form and
substance satisfactory to the Administrative Agent.
SECTION 5.6. ADMINISTRATIVE AGENT'S EXPENSES. On or before the
Closing Date, upon receipt of a billing statement on invoice, the Borrower shall
have reimbursed the Administrative Agent for its out-of-pocket costs and
expenses incurred in connection with this Agreement and the other Loan Documents
and in connection with the transactions contemplated hereby and thereby.
SECTION 5.7. FEES AND EXPENSES OF COUNSEL FOR LENDERS. On or
before the Closing Date, upon receipt of a billing statement or invoice, the
Borrower shall have paid the fees and expenses of Xxxxxx & Xxxxxxx, counsel for
the Lenders, incurred in connection with the preparation, negotiation, execution
and delivery of this Agreement, the other Loan Documents, the documents,
certificates and opinions delivered in connection herewith and therewith and in
connection with the transactions contemplated hereby and thereby. Such payment
shall be made by wire transfer of immediately available funds to an account
designated in writing by Xxxxxx & Xxxxxxx.
SECTION 5.8. CONSENTS AND APPROVALS. On or before the Closing
Date, all governmental, shareholder and third-party consents and approvals
necessary or desirable in connection with the transactions contemplated hereby
shall have been obtained, including, but not limited to, the consent and waiver
of Ascend Communications, Inc. relating to the Ascend Note and the consent and
waiver relating to any preemptive rights; all such consents and approvals shall
be in full force and effect; and all applicable waiting periods shall have
expired without any action being taken by any authority that could restrain,
prevent or impose any material adverse conditions on the transactions or that
could seek or threaten any of the foregoing. Copies of all such authorizations,
consents and approvals shall have been delivered to the Administrative Agent on
the Closing Date.
SECTION 5.9. MARGIN REGULATIONS. The making of the Term Loans in
the manner contemplated in this Agreement shall not violate the applicable
provisions of Regulation T, U or X of the Board or any other regulation of the
Board.
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ARTICLE VI.
TRANSFER OF THE TERM LOANS, THE INSTRUMENTS EVIDENCING SUCH TERM
LOANS AND THE SECURITIES; REPRESENTATIONS OF LENDERS; PARTICIPATIONS
SECTION 6.1. TRANSFER OF THE TERM LOANS, THE INSTRUMENTS
EVIDENCING THE TERM LOANS AND THE SECURITIES. Each Lender acknowledges that none
of the Term Loans, the instruments evidencing such Term Loans and the Securities
have been registered under the Securities Act and represents and agrees that it
is acquiring the Term Loans, the instruments evidencing such Term Loans and the
Securities for its own account and that it will not, directly or indirectly,
transfer, sell, assign, pledge or otherwise dispose of its Term Loans, the
instruments evidencing such Term Loans or the Securities (or any interest
therein) unless such transfer, sale, assignment, pledge or other disposition is
made (i) pursuant to an effective registration statement under the Securities
Act or (ii) pursuant to an available exemption from registration under, and
otherwise in compliance with, the Securities Act. Each Lender represents,
warrants, covenants and agrees to and with the Borrower and each Guarantor that
it is either (i) a qualified institutional buyer within the meaning of Rule 144A
under the Securities Act acting for its own account or the account of one or
more other qualified institutional buyers, and is aware that the Borrower and
each Guarantor may rely upon the exemption from the provisions of Section 5 of
the Securities Act provided by Rule 144A thereunder or (ii) an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act. Each Lender acknowledges that the instruments
evidencing the Term Loans and the Securities will bear a legend restricting the
transfer thereof in accordance with the Securities Act.
Subject to the provisions of the previous paragraph, the Borrower
and each Guarantor agrees that, with the consent of the Administrative Agent,
each Lender will be free to sell or transfer all or any part of the Term Loans,
the instruments evidencing the Term Loans or the Securities (including, without
limitation, participation interests in the Term Loans) to any third party and to
pledge any or all of the Securities to any commercial bank or other
institutional lender; provided, however: (i) in no event shall there be more
than five (5) such purchasers, transferees, or participants at any one time; and
(ii) in no event shall any Lender be permitted to make any such sale, transfer
or other disposition to a third party who is not either a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act or
an institutional "accredited investor" within the meaning of Rule 501(a)(1)(2(3)
or (7) under the Securities Act. Any sale, transfer or other disposition by any
Lender shall be exempt from the registration requirements of the Securities Act.
SECTION 6.2. PERMITTED ASSIGNMENTS. Subject to the provisions of
SECTION 6.1, any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time assign to one or more banks or other
entities ("PURCHASERS") all or any part of its rights and obligations hereunder
and under the other Loan Documents. Such assignment shall be made pursuant to an
Assignment and Acceptance substantially in the form of EXHIBIT A or in such
other form as may be agreed to by the parties thereto. The consent of the
Administrative Agent shall be required prior to an assignment becoming effective
with respect to a Purchaser which is not a Lender or an Affiliate thereof. Such
consent shall not be unreasonably withheld or delayed.
SECTION 6.3. PERMITTED PARTICIPANTS; EFFECT. Subject to the
provisions of SECTION 6.1, (a) any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("PARTICIPANTS") participating interests in any Term
Loan owing to such Lender, any Term Note held by such Lender, any Commitment of
such Lender or any other interest of such Lender under the Loan Documents;
PROVIDED that the aggregate amount of such participating interest shall not be
less than $1,000,000. In the event of any such sale by a Lender of
43
participating interests to a Participant, such Lender's obligations under the
Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
such Lender shall remain the owner of its Term Loans and the holder of any Term
Note issued to it in evidence thereof for all purposes under the Loan Documents,
all amounts payable by the Borrower under this Agreement shall be determined as
if such Lender had not sold such participating interests, and the Borrower and
the Administrative Agent shall continue to deal solely and directly with such
Lender in connection with such Xxxxxx's rights and obligations under the Loan
Documents.
(b) Each Lender shall retain the sole right to approve, without
the consent of any Participant, any amendment, modification or waiver of any
provision of the Loan Documents other than any amendment, modification or waiver
with respect to any Term Loan or Commitment in which such Participant has an
interest which forgives principal, interest or fees or reduces the interest rate
or fees payable with respect to any such Term Loan or Commitment, extends the
Maturity Date, postpones any date fixed for any regularly scheduled payment of
principal of, or interest or fees on, any such Term Loan or Commitment or
releases any guarantor of any such Term Loan or releases all or substantially
all of the collateral, if any, securing any such Term Loan.
(c) The Borrower agrees that each Participant shall be deemed to
have the right of setoff provided in SECTION 2.7 in respect of its participating
interest in amounts owing under the Loan Documents to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
the Loan Documents, provided that each Lender shall retain the right of setoff
provided in SECTION 2.7 with respect to the amount of participating interests
sold to each Participant. The Lender agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in SECTION 2.7,
agrees to share with each Lender, any amount received pursuant to the exercise
of its right of setoff, such amounts to be shared in accordance with SECTION 2.7
as if each Participant were a Lender.
SECTION 6.4. DISSEMINATION OF INFORMATION. The Borrower authorizes
each Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"TRANSFEREE") and any prospective Transferee any and all information in such
Xxxxxx's possession concerning the creditworthiness of the Borrower and its
Subsidiaries. Each Lender covenants and agrees that it will obtain the agreement
and covenant of such Transferee or prospective Transferee that such Person shall
not utilize such information in violation of any federal or state securities
laws.
SECTION 6.5. REPLACEMENT TERM NOTES UPON TRANSFER OR EXCHANGE.
Upon surrender of any Term Notes by any Lender in connection with any permitted
transfer or exchange, the Borrower will execute and deliver in exchange therefor
a new Term Note or Term Notes of the same aggregate tenor and principal amount,
payable to the order of such Persons and in such denominations as such Lender
may request. The Borrower may require payment by such Lender of a sum sufficient
to cover any stamp tax or governmental charge imposed in respect of any such
transfer.
SECTION 6.6. REGISTER. The Administrative Agent on behalf of the
Borrower shall maintain a register (the "LOAN REGISTER") of the principal amount
of the Term Loans held by each Lender and any interest due and payable with
respect thereto. The Administrative Agent will allow any Lender to inspect and
copy such register at the Administrative Agent's principal place of business
during normal business hours.
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ARTICLE VII.
EVENTS OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT. The occurrence of any one or more
of the following events shall constitute an "EVENT OF DEFAULT: "
(a) any representation or warranty made or deemed made by the
Borrower or any of its Subsidiaries herein or in any other Loan Document or in
any certificate, document or financial or other statement furnished by any of
them at any time under or in connection with this Agreement or any other Loan
Document shall prove to have been incorrect in any material respect on or as of
the date made or deemed made;
(b) the Borrower defaults in the payment of the principal of or
Applicable Repayment Fee or premium on any of the Term Loans when the same shall
become due and payable, whether at its Maturity Date, upon acceleration, upon
redemption, or otherwise;
(c) the Borrower defaults in the payment of any interest upon any
of the Term Loans when the same becomes due and payable and such default
continues for five calendar days;
(d) the Borrower defaults in the payment of any other Obligations
payable under this Agreement or any of the other Loan Documents and such default
continues for five calendar days following the earlier to occur of (x) discovery
of such default by the Borrower and (y) the date on which notice of such default
is received by the Borrower from the Administrative Agent or any Lender;
(e) the Borrower or any of its Subsidiaries fails to observe or
perform any of its covenants or agreements contained in Article IV and, with
respect to SECTIONS 4.1, 4.2, 4.4, 4.5, 4.6, 4.15, 4.16, 4.17, and 4.18, such
failure continues for a period of 10 days following the earlier to occur of (x)
discovery of such failure by the Borrower and (y) the date on which notice of
such failure is received by the Borrower from the Administrative Agent or any
Lender;
(f) the Borrower or any of its Subsidiaries fails to observe or
perform any of its covenants or agreements (other than those set forth in clause
(e) above) contained in any of the Loan Documents, and such failure continues
for a period of 30 days following the earlier to occur of (x) discovery of such
failure by the Borrower and (y) the date on which notice of such failure is
received by the Borrower from the Administrative Agent;
(g) a default occurs under any mortgage, indenture or instrument
under which there is or may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Borrower or any of its
Subsidiaries (including, without limitation, the Ascend Note and the Convertible
Notes) (or the payment of which is guaranteed by the Borrower or any of its
Subsidiaries), whether such Indebtedness or guarantee now exists, or is created
after the date of this Agreement, which default (i) is caused by a failure to
pay principal of or premium, if any, or interest on such Indebtedness prior to
the expiration of the grace period provided in such Indebtedness on the date of
such default or (ii) results in the acceleration of such Indebtedness prior to
its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a default described in clause (a) above or the
maturity of which has been so accelerated aggregates $500,000;
45
(h) a final judgment or final judgments for the payment of money
are entered by a court or courts of competent jurisdiction against the Borrower
or any of its Subsidiaries and such judgment or judgments remain undischarged
for a period (during which execution shall not be effectively stayed) of 60
days, if the aggregate of all such undischarged judgments exceeds $500,000;
(i) the Borrower or any of its Subsidiaries that, taken as a
whole, would constitute a material subsidiary pursuant to or within the meaning
of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) generally is not paying its debts as they become due; or
(j) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Borrower or any of its Subsidiaries
that, taken as a whole, would constitute a material subsidiary in an
involuntary case;
(ii) appoints a Custodian of the Borrower or any of its
Subsidiaries that, taken as a whole, would constitute a material
subsidiary or for all or substantially all of the property of the
Borrower or any of its Subsidiaries that, taken as a whole, would
constitute a material subsidiary; or
(iii) orders the liquidation of the Borrower or any of its
Subsidiaries that, taken as a whole, would constitute a material
subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days;
(k) Any material covenant, agreement or obligation of the Borrower
or any Guarantor contained in or evidenced by any of the Loan Documents shall
cease to be enforceable, or shall be determined to be unenforceable, in
accordance with its terms; the Borrower or any Guarantor shall deny or disaffirm
in writing its obligations under any of the Loan Documents or any Liens granted
in connection therewith.
(l) the Borrower or any ERISA Affiliate shall fail to pay when
due, after the expiration of any applicable grace period, any installment
payment with respect to its Withdrawal Liability under a Multiemployer Plan;
(ii) the Borrower or any ERISA Affiliate shall fail to satisfy its contribution
requirements under Section 412(c)(11) of the Code, whether or not it has sought
a waiver under Section 412(d) of the Code; (iii) in the case of an ERISA Event
involving the withdrawal from a Plan of a "substantial employer" (as defined in
Section 4001(a)(2) or Section 4062(e) of ERISA), the withdrawing employer's
proportionate share of that Plan's Unfunded Pension Liabilities is more than
$500,000; (iv) in the case of an ERISA Event involving the complete or partial
withdrawal from a Multiemployer Plan, the withdrawing employer has incurred a
withdrawal liability in an aggregate
46
amount exceeding $500,000; (v) in the case of an ERISA Event not described in
clause (iii) or (iv), the Unfunded Pension Liabilities of the relevant Plan or
Plans exceed $500,000; (vi) a Plan that is intended to be qualified under
Section 401(a) of the Code shall lose its qualification, and with respect to
such loss of qualification, the Borrower or ERISA Affiliate can reasonably be
expected to be required to pay (for additional taxes, payments to or on behalf
of Plan participants, or otherwise) an aggregate amount exceeding $500,000; or
(vii) the occurrence of any combination of events listed in clauses (iii)
through (vi) that involves a net increase in aggregate Unfunded Pension
Liabilities and unfunded liabilities in excess of $500,000;
(m) any one of the three following individuals shall either: (i)
become deceased; (ii) become unable to work for a period of two consecutive
months or more; or (iii) cease to be employed by Xxxxxxxx in their respective
capacities as of the Closing Date: X. Xxxxx Xxxxxx, Xxxxxx Xxx Xxxxxxxx and
Xxxxxx X. Xxxx, and a replacement satisfactory to the Majority Xxxxxxx has not
been appointed by Borrower within 30 days; PROVIDED, HOWEVER, that with respect
to Xx. Xxxxxxxx it shall not be an Event of Default hereunder so long as he is
employed by the Borrower in one of the following capacities: the Chairman of the
Board or the Chief Executive Officer; or
(n) a Change of Control shall have occurred.
SECTION 7.2. ACCELERATION. If any Event of Default (other than an
Event of Default specified in SECTION 7.1(I) or 7.1(j)) occurs and is
continuing, the Lenders holding at least 25% in aggregate principal amount of
the then outstanding Term Loans may, by written notice to the Borrower, declare
the unpaid principal of and any accrued and unpaid interest and fees on all of
the Term Loans to be immediately due and payable. Upon such declaration, all
Obligations in respect of the Term Loans shall become immediately due and
payable immediately. If an Event of Default specified in SECTION 7.1(I) or
7.1(j) occurs, all Obligations in respect of the Loans shall IPSO FACTO become
and be immediately due and payable without any declaration, notice or other act
on the part of any Lender.
SECTION 7.3. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Lenders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent or subsequent assertion or employment of any
other appropriate right or remedy.
SECTION 7.4. DELAY OR OMISSION NOT WAIVER. No delay or omission by
any Lender to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article VII or by law to the Lender may be exercised from time to time, and as
often as may be deemed expedient, by the Lender.
SECTION 7.5. WAIVER OF PAST DEFAULTS. Subject to SECTION 11.3, the
Majority Lenders by written notice to the Borrower may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived.
SECTION 7.6. RIGHTS OF LENDERS TO RECEIVE PAYMENT. Notwithstanding
anything to the contrary contained in this Agreement, the right of any Lender to
receive payment of principal of,
47
premium, if any, and interest on the Term Loans and Term Notes held by such
Lender, on or after the respective due dates expressed in this Agreement or the
Term Notes, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Lender.
ARTICLE VIII.
GUARANTEE
SECTION 8.1. THE GUARANTEE.
(a) Each Guarantor hereby absolutely, unconditionally and
irrevocably guarantees the full and punctual payment (whether at the Maturity
Date, upon acceleration or otherwise) of the principal of and interest, fees and
Applicable Repayment Fees on the Term Loans and the Term Notes, and the full and
punctual payment of all other Obligations of the Borrower under this Agreement,
the Term Notes and the other Loan Documents, including all costs of collection
and enforcement thereof and interest thereon which would be owing by the
Borrower but for the effect of any Bankruptcy Law (collectively, the "GUARANTEED
OBLIGATIONS"). Each Guarantor understands, agrees and confirms that each of the
Lenders may enforce this Guarantee up to the full amount guaranteed by each
Guarantor hereunder against each Guarantor without proceeding against any other
obligor or against any security for the Guaranteed Obligations. All payments
made by each Guarantor under this Guarantee shall be paid at the place and in
the manner specified in SECTION 2.6. Each Guarantor agrees that this is a
continuing Guarantee of payment and not merely a Guarantee of collection.
(b) The obligations of each Guarantor hereunder shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any Obligation of the Borrower under this
Agreement, the Term Notes or any other Loan Document, by operation of law
or otherwise;
(ii) any modification or amendment of or restatement of or
supplement to this Agreement, the Term Notes or any of the other Loan
Documents;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for, or any other Person's guarantee of, any of the
Guaranteed Obligations;
(iv) any change in the corporate existence, structure or ownership
of the Borrower or any other guarantor of the Borrower's Obligations, or
any insolvency, bankruptcy, reorganization or other similar proceeding
affecting the Borrower or any obligor or any of their respective assets
or any resulting release or discharge of any Obligation of the Borrower
contained in this Agreement or any other Loan Documents;
(v) the existence of any claim, set-off or other rights which any
obligor may have at any time against the Borrower or any other Person,
whether in connection herewith or with any unrelated transactions,
PROVIDED that nothing herein shall prevent the assertion of any such
claim by separate suit or compulsory counterclaim;
48
(vi) any invalidity or unenforceability relating to or against the
Borrower for any reason of this Agreement, the Term Notes or any other
Loan Document, or any provision of applicable law or regulation
purporting to prohibit the payment by the Borrower of the principal of,
interest, Applicable Repayment Fee, premium or fees on the Term Loans or
any other amount payable by the Borrower under this Agreement, the Term
Notes or any of the other Loan Documents; or
(vii) any other act or omission to act or delay of any kind by the
Borrower or any other Person or any other circumstance whatsoever which
might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of Guaranteed Obligations hereunder.
(c) Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Borrower, any right to require a proceeding first against the Borrower or
another obligor, protest, notice and all demands whatsoever and covenants that,
subject to this Article VIII, this Guarantee shall not be discharged except by
complete payment and performance of all Guaranteed Obligations.
(d) If any Lender is required by any court or otherwise to return
to the Borrower or any Guarantor, or any Custodian for the Borrower or any of
the other obligors or their respective assets, any amount paid to any Lender,
this Guarantee, to the extent of the amount so returned, shall be reinstated in
full force and effect.
(e) Each Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Lenders in respect of any Guaranteed
Obligations until payment in full of all Guaranteed Obligations. Each Guarantor
further agrees that (i) the maturity of the Guaranteed Obligations may be
accelerated as provided in SECTION 7.2 notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Guaranteed
Obligations and (ii) in the event of any declaration of acceleration of such
Guaranteed Obligations as provided in SECTION 7.2, such Guaranteed Obligations
(whether or not due and payable) shall forthwith become due and payable by each
Guarantor for the purpose of this Guarantee.
SECTION 8.2. LIMITATION ON LIABILITY. Each Guarantor and, by its
acceptance of any Term Note, each Lender, hereby confirms that it is the
intention of all such parties that this Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
law to the extent applicable to this Guarantee. To effectuate the foregoing
intention, the Lenders and the Guarantors hereby irrevocably agree that the
Obligations of each Guarantor under this Guarantee shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of each Guarantor that are relevant under such
laws, result in the Obligations of each Guarantor under the Guarantee not
constituting a fraudulent transfer or conveyance.
SECTION 8.3. STAY OF ACCELERATION. In the event that acceleration
of the time for payment of any Guaranteed Obligation is stayed upon insolvency,
bankruptcy or reorganization of the Borrower, all such amounts otherwise subject
to acceleration under the terms of this Agreement and the Term Notes shall
nonetheless by payable by the Guarantors forthwith on demand by any Lender.
49
ARTICLE IX.
INDEMNITY
SECTION 9.1. INDEMNIFICATION. The Borrower and each Guarantor
(each, an "INDEMNIFYING PARTY" and, collectively, the "INDEMNIFYING PARTIES")
jointly and severally agree to indemnify and hold harmless each Lender and their
respective controlling persons and Affected Parties and each director, officer,
employee, affiliate and agent thereof (each, an "INDEMNIFIED PARTY") from and
against any and all losses, claims, damages and liabilities, joint or several,
to which any Indemnified Party may become subject relating to or arising out of
or in connection with the transactions contemplated by this Agreement (including
the use of the proceeds of the Term Loans) or any other Loan Document or the
Transactions contemplated hereby or thereby, and to reimburse each Indemnified
Party, promptly upon demand, for expenses (including counsel fees and expenses)
as they are incurred in connection with the investigation of, preparation for or
defense of any pending or threatened loss, claim, damage or liability, or any
litigation, proceeding or other action in respect thereof, including any amount
paid in settlement of any litigation, proceeding or other action (commenced or
threatened) to which the Indemnifying Parties shall have consented in writing
(such consent not to be unreasonably withheld) whether or not any Indemnified
Party is a party and whether or not liability resulted; PROVIDED, HOWEVER, that
the indemnity contained in this SECTION 9.1 will not apply to any Indemnified
Party with respect to losses, claims, damages, liabilities or related expenses
arising from the willful misconduct or gross negligence of such Indemnified
Party.
SECTION 9.2. INDEMNITY NOT AVAILABLE. If indemnification were for
reason of public policy not to be available, the Indemnifying Parties, on the
one hand, and the Lenders, on the other hand, agree to contribute (in proportion
to their respective Commitments in the case of the Lenders) to the losses,
claims, damages, liabilities or expenses (or any investigation, claim,
litigation, proceeding or other action (collectively, an "ACTION") in respect
thereof) for which such indemnification is held unavailable in such proportion
as is appropriate to reflect the relative benefits to the Indemnifying Parties,
on the one hand, and the Lenders, on the other hand, in connection with the
matter giving rise to such losses, claims, damages, liabilities or expenses (or
actions in respect thereof). The Borrower and each Guarantor agree that for the
purposes of this SECTION 9.2 the relative benefits to the Borrower and its
Subsidiaries on the one hand, and the Indemnified Parties on the other hand, of
the transactions contemplated by this Agreement, including, without limitation,
the Term Loans and the other transactions contemplated by any of the Loan
Documents in any way relating to any Term Loan, including the use of the
proceeds of the Term Loans shall be deemed to be in the same proportion that the
proceeds of all Term Loans made or to be made to the Borrower bears to the
interest and fees paid or to be paid to the Lenders in connection with the Term
Loans; PROVIDED, HOWEVER, that, to the extent permitted by applicable law, in no
event shall the Indemnified Parties be required to contribute an aggregate
amount in excess of the aggregate interest and fees actually paid to the Lenders
in connection with the Term Loans. The foregoing contribution agreement shall be
in addition to any rights that any Indemnified Party may have at common law or
otherwise. No investigation or failure to investigate by any Indemnified Party
shall impair the foregoing indemnification and contribution agreement or any
right an Indemnified Party may have.
SECTION 9.3. SETTLEMENT OF CLAIMS. The Borrower and each Guarantor
agree that, neither it nor any of its Subsidiaries will settle, compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding in respect of which indemnification or contribution could be
sought under SECTION 9.1 or 9.2 (whether or not any indemnified Party is an
actual or potential party to such claim, action or proceeding) without the prior
written consent of the Indemnified Parties, unless such settlement, compromise
or consent includes an unconditional release of each Indemnified
50
Party from all liability arising out of such claim, action or proceeding, which
consent shall not be unreasonably withheld.
SECTION 9.4. APPEARANCE EXPENSES. If an Indemnified Party is
requested or required to appear as a witness in any action brought by or on
behalf of or against the Borrower, any Guarantor or any Affiliate thereof in
which such Indemnified Party is not named as a defendant, the Borrower agrees to
reimburse such Indemnified Party for all reasonable expenses incurred by it in
connection with such Indemnified Party's appearing and preparing to appear as
such a witness, including, without limitation, the reasonable fees and
disbursements of its legal counsel.
SECTION 9.5. SURVIVAL OF INDEMNIFICATION. The provisions contained
in this Article IX shall remain in full force and effect whether or not any of
the transactions contemplated hereby are consummated and notwithstanding the
termination of this Agreement or the payment in full of all Obligations
hereunder.
SECTION 9.6. LIABILITY NOT EXCLUSIVE; PAYMENTS. The agreements of
each Indemnifying Party in this Article IX shall be in addition to any liability
that each may otherwise have. All amounts due under this Article IX shall be
payable as incurred upon written demand therefor.
ARTICLE X.
THE ADMINISTRATIVE AGENT
SECTION 10.1. APPOINTMENT. Each Lender hereby irrevocably
designates and appoints the Administrative Agent as the agent of such Lender
under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the Administrative Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative Agent shall have no duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with 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 the
Administrative Agent.
SECTION 10.2. DELEGATION OF DUTIES. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to the advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care.
SECTION 10.3. EXCULPATORY PROVISIONS. Neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any of its
Subsidiaries or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement, opinion or other
document referred to or provided for in, or received by the Administrative Agent
under or in connection with, this Agreement or any other Loan Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this
51
Agreement or any other Loan Document or for any failure of the Borrower or any
of its Subsidiaries to perform its obligations hereunder or thereunder. The
Administrative Agent shall not 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 properties, books or records of the Borrower or any
of its Subsidiaries.
SECTION 10.4. RELIANCE BY THE ADMINISTRATIVE AGENT. The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Term Note, writing, resolution, notice, consent, certificate,
affidavit, letter, telecopy, telex or teletype message, statement, order or
other document or conversation 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, without limitation, counsel to the
Borrower or any of its Subsidiaries), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of the Term Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Majority Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Majority Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
Section 10.5. Notice of Default. The Administrative Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Administrative Agent has received notice
from a Lender, the Borrower or any of its Subsidiaries referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Majority
Lenders; PROVIDED that unless and until the Administrative Agent shall have
received such directions, the Administrative 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 in the best
interests of the Lenders.
SECTION 10.6. NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND OTHER
LENDERS. Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that no act
by the Administrative Agent hereafter taken, including any review of the affairs
of the Borrower or any of its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition, prospects and credit worthiness of the Borrower
and its Subsidiaries and made its own decision to make its Loans hereunder and
enter into this Agreement. Each Lender confirms that it is a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act.
Each Lender also represents that it will, independently and without reliance
upon the Administrative Agent 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 analysis, appraisals and decisions in taking or not
52
taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition, prospects and credit
worthiness of the Borrower and its Subsidiaries. Except for notices, reports and
other documents expressly required to be furnished to the Lender by the
Administrative Agent hereunder, the Administrative Agent shall have no any duty
or responsibility to provide any Lenders with any credit or other information
concerning the business, operations, property, financial or other condition,
prospects or credit worthiness of the Borrower or any of its Subsidiaries which
may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
SECTION 10.7. INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower or any of its Subsidiaries and without limiting the obligation of
the Borrower and any of its Subsidiaries to do so), ratably according to their
respective Commitments in effect on the date on which indemnification is sought,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (include, without limitation, at any time
following the payment of the Loans) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of, the
Commitments, this Agreement, any other Loan Document or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing, PROVIDED
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Administrative
Agent's gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Loans and all other Obligations
payable hereunder.
SECTION 10.8. ADMINISTRATIVE AGENT, IN ITS INDIVIDUAL CAPACITIES.
The Administrative Agent and its Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower as though
the Administrative Agent were not acting in such capacities hereunder and under
the other Loan Documents. With respect to the Term Loans made or renewed by it
and the Term Note issued to it the Administrative Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not the Administrative Agent,
and the terms "Lender" and "Lenders" shall include the Administrative Agent in
its individual capacity.
SECTION 10.9. SUCCESSOR ADMINISTRATIVE AGENT.
(a) The Administrative Agent may resign as Administrative Agent
upon 30 days' notice to the Lenders. If the Administrative Agent shall resign as
Administrative Agent under this Agreement and the other Loan Documents then the
Majority Lenders shall appoint from among the Lenders a successor agent for the
Lenders, which successor agent, shall succeed to the rights, powers and duties
of the Administrative Agent, hereunder. Effective upon such appointment and
approval, the term "Administrative Agent" shall mean and include such successor
agent, and the former Administrative Agent's rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent any of the parties to this
Agreement or any holders of the Loans. After any retiring Administrative Agent's
resignation as Administrative Agent the provisions of this Article X shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
53
(b) Upon the assignment by Xxxxxxx Xxxxx Credit Partners L.P.,
acting in its capacity as Xxxxxx xxxxxxxxx, of any of its rights and obligations
hereunder to a Purchaser, such Purchaser may simultaneously with such assignment
replace Xxxxxxx Xxxxx Credit Partners L.P., acting in its capacity as
Administrative Agent hereunder, as the Administrative Agent hereunder.
SECTION 10.10. DUTIES OF ADMINISTRATIVE AGENT. Except as expressly
set forth herein, the Administrative Agent, in its capacity as such, shall have
no duties or responsibilities, and shall incur no liabilities, under this
Agreement or the other Loan Documents.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1. EXPENSES; DOCUMENTARY TAXES. The Borrower and the
Guarantors hereby jointly and severally agree to pay (a) all out-of-pocket
expenses (including, without limitation, expenses incurred in connection with
due diligence of the Lenders) associated with the preparation, execution and
delivery, administration, waiver, enforcement or modification and enforcement of
the documentation contemplated hereby and (b) the fees and disbursements of
legal counsel to the Lenders in connection with the transactions contemplated
herein, including in each case those incurred prior to the date hereof. The
Borrower and the Guarantors hereby jointly and severally agree to indemnify the
Lenders against any transfer taxes, documentary taxes, assessments or charges
made by any Governmental Entity by reason of the execution and delivery, or the
terms, of this Agreement or any of the other Loan Documents.
Section 11.2. notices. All notices and other communications
pertaining to this Agreement or any Term Note shall be in writing and shall be
delivered (a) in person (with receipt acknowledged), (b) by facsimile (confirmed
immediately in writing by a copy mailed by registered or certified mail, return
receipt requested, postage prepaid, addressed as hereafter set forth), (c) by
registered or certified mail, return receipt requested, postage prepaid, or (d)
by overnight courier, addressed as follows:
(i) If to the Administrative Agent, to it at:
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx
Telephone: 000-000-0000
Facsimile No.: (000) 000-0000
WITH A SEPARATE COPY TO EACH OF:
Xxxxxxx Xxxxx Credit Partners L.P.
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
Telephone: 000-000-0000
Telefax: 000-000-0000
Xxxxxxx Xxxxx Credit Partners L.P.
00 Xxxxx Xxxxxx, 0xx Xxxxx
54
New York, New York 10004
Attention: Xxxx Xxxxx
Telephone: 000-000-0000
Telefax: 000-000-0000
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Telephone: 000-000-0000
Facsimile No.: (000) 000-0000
(ii) If to any Lenders, to it at its address set forth
on the signature pages hereto:
(iii) If to the Borrower or any Guarantor, to it at:
0000 Xxxxx Xxxxxx Xxxx Xxxx.
Fort Worth, Texas 76102
Attention: X. Xxxxx Xxxxxx, President
Xxxxxxxxx Xx.: (000) 000-0000
WITH A COPY TO:
Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Xxxxxxxxx No.: (000) 000-0000
or to such other Person or address as shall be furnished in writing delivered to
the other parties in compliance with this Section.
SECTION 11.3. CONSENT TO AMENDMENTS AND WAIVERS.
(a) Except as provided in SECTION 11.3(B), this Agreement and the
Term Notes may be amended or supplemented with the consent of the Borrower, each
Guarantor and the Majority Lenders and any existing default or compliance with
any provision of this Agreement or the Term Notes may be waived with the consent
of the Majority Lenders. Term Notes held by the Borrower or any of its
Affiliates will not be deemed to be outstanding for purposes of this SECTION
11.3.
(b) Notwithstanding the provisions of SECTION 11.3(A), without the
consent of each Lender affected thereby, an amendment or waiver may not: (i)
reduce the principal amount of any Term Loan, (ii) change the fixed maturity of
any Term Loan, (iii) reduce the rate of or change the time for payment of
interest on any Term Loan, (iv) waive a Default or Event of Default in the
payment of principal of, Applicable Repayment Fee, or premium, fees or interest,
if any, on the Term Loans or any other amounts payable under any of the Loan
Documents, (v) make any Loan payable in money other than that stated in the
applicable Term Loan, (vi) make any change in the provisions of this Agreement
relating to the rights of Lenders to receive (A) prepayments on, or (B) payments
of principal of,
55
Applicable Repayment Fee, premium, if any, or interest on, the Term Loans, (vii)
release any Guarantor from its Guarantee except as provided herein or (viii)
make any change in the foregoing amendment and waiver provisions.
(c) The Borrower shall not and shall not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Lender for
or as an inducement to any consent, waiver or amendment permitted by SECTION
11.3(A) unless such consideration is offered to be paid and is paid to all
Lenders that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or amendment.
SECTION 11.4. PARTIES. This Agreement shall inure to the benefit
of and be binding upon the Administrative Agent, each Lender, the Borrower, each
Guarantor and each of their respective successors and assigns. Except as
expressly provided in this Agreement, nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other Person any legal
or equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. Except as expressly provided in this Agreement, this
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Affected Parties and their respective
successors and assigns, and for the benefit of no other Person.
SECTION 11.5. NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL. THIS AGREEMENT AND THE TERM NOTES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE BORROWER, EACH
GUARANTOR AND EACH OF THE LENDERS HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY (EACH, A "NEW
YORK COURT") FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THE TERM NOTES, THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE BORROWER, EACH GUARANTOR AND EACH OF THE
LENDERS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE BORROWER,
EACH GUARANTOR AND EACH OF THE LENDERS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE TERM
NOTES, THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 11.6. REPLACEMENT TERM NOTES. If any Term Note becomes
mutilated and is surrendered by the applicable Lender to the Borrower, or if any
Lender claims that any of its Term Notes has been lost, destroyed or wrongfully
taken, the Borrower shall execute and deliver to such Lender a replacement Term
Note, upon the delivery by such Lender of an indemnity to the Borrower to save
it and any agent of it harmless in respect of such loss, destruction or wrongful
taking with respect to such Term Note.
SECTION 11.7. APPOINTMENT OF AGENT FOR SERVICE. The Borrower
designates and appoints CT Corporation System and such other Persons as may
irrevocably agree in writing to serve as their respective agent to receive on
their behalf service of all process in any proceedings in any New
56
York Court, such service being hereby acknowledged by the Borrower to be
effective and binding in every respect. If any agent appointed by a the Borrower
refuses to receive and forward such service, that the Borrower hereby agrees
that service upon it by mail shall constitute sufficient service.
SECTION 11.8. MARSHALLING; RECAPTURE. Neither the Administrative
Agent nor any Lender shall be under any obligation to xxxxxxxx any assets in
favor of the Borrower or any other party or against or in payment of any or all
of the Obligations. To the extent any Lender receives any payment by or on
behalf of the Borrower, which payment or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to the Borrower or its estate, trustee, receiver, custodian or any
other party under any Bankruptcy Law, state or federal law, common law or
equitable cause, then, to the extent of such payment or repayment, the
obligation or part thereof which has been paid, reduced or satisfied by the
amount so repaid shall be reinstated by the amount so repaid and shall be
included within the liabilities of Borrower to such Lenders as of the date such
initial payment, reduction or satisfaction occurred.
SECTION 11.9. LIMITATION OF LIABILITY. No claim may be made by the
Borrower, any Guarantor or any other Person against the Administrative Agent or
any Lender or the Affiliates, directors, officers, employees, attorneys or
agents of any of them for any special, indirect, consequential or punitive
damages in respect of any claim for breach of contract or any theory of
liability arising out of or related to the transactions contemplated by this
Agreement or the other Loan Documents, or any act, omission or event occurring
in connection therewith; and the Borrower and each Guarantor hereby waive,
release and agree not to sue and shall cause each of its respective Subsidiaries
to waive, release or agree not to sue (if required), upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
SECTION 11.10. INDEPENDENCE OF COVENANTS. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default or Event of Default if such action
is taken or condition exists.
SECTION 11.11. CURRENCY INDEMNITY. The Borrower acknowledges and
agrees that this is a credit transaction where specification of dollars is of
the essence and dollars shall be the currency of account and payment in all
events. If, pursuant to a judgment or for any other reason, payment shall be
made in another currency and such payment, after prompt conversion to dollars
and transfer to New York City in accordance with normal banking procedures,
falls short of the sum due the Lenders in dollars, the Borrower shall pay the
Lenders such shortfall and the Lender shall have a separate cause of action for
such amount.
SECTION 11.12. WAIVER OF IMMUNITY. To the extent that the
Borrower or any Guarantor has or hereafter may acquire any immunity from:
(a) the jurisdiction of any court of (i) any jurisdiction in which
the Borrower or any Guarantor owns or leases property or assets or (ii)
the United States, the State of New York or any political subdivision
thereof; or
(b) from any legal process (whether through service of notice,
attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its
57
property and assets, this Agreement, any Loan Document or actions to
enforce judgments in respect of any thereof,
it hereby irrevocably waives such immunity in respect of its obligations under
the above-referenced document.
SECTION 11.13. FREEDOM OF CHOICE. The submission to the
jurisdiction of the courts referred to in this Article XI shall not (and shall
not be construed so as to) limit the right of any Lender to take proceedings
against the Borrower or any Guarantor in the courts of any country in which the
Borrower or such Guarantor has assets or in any other court of competent
jurisdiction nor shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in any other jurisdiction
(whether concurrently or not) if and to the extent permitted by applicable law.
SECTION 11.14. SUCCESSORS AND ASSIGNS. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants and
agreements of the Borrower and each Guarantor in this Agreement shall bind their
respective successors and assigns. Neither the Borrower nor any Guarantor may
assign or transfer any of its rights or obligations hereunder (by operation of
law or otherwise) without the prior written consent of the Majority Lenders. Any
assignment by any Lenders must be made in compliance with Article 6 hereof.
SECTION 11.15. MERGER. This Agreement and the other Loan Documents
constitutes the entire contract among the parties relating to the subject matter
hereof and thereof and supersedes any and all previous agreements among the
parties relating to the subject matter hereof and thereof.
SECTION 11.16. SEVERABILITY CLAUSE. In case any provision in this
Agreement or any Term Note shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby and such
provision shall be ineffective in such jurisdiction only to the extent of such
invalidity, illegality or unenforceability.
SECTION 11.17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO
SURVIVE DELIVERY. All representations, warranties and agreements contained in or
incorporated into this Agreement, or contained in Officers' Certificates
submitted pursuant hereto, shall remain operative and in full force and effect
until all Obligations under all of the Loan Documents have been repaid in full,
regardless of any investigation made by or on behalf of the Lenders or any
controlling Person of the Lenders, or by or on behalf of the Borrower or any
controlling Person of the Borrower, and shall survive delivery of the Term
Notes. Each of the Schedules of this Agreement shall be deemed to include and
incorporate all disclosures made on the other Schedules to this Agreement.
[SIGNATURE PAGES FOLLOW]
58
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
FLASHNET COMMUNICATIONS, INC.,
as Borrower
By: /s/ X. Xxxxx Xxxxxx
------------------------------------
Name: X. Xxxxx Xxxxxx
Title: President and Secretary
FLASHNET MARKETING, INC.,
as Guarantor
By: /s/ X. Xxxxx Xxxxxx
------------------------------------
Name: X. Xxxxx Xxxxxx
Title: President and Treasurer
FLASHNET TELECOM, INC.,
as Guarantor
By: /s/ X. Xxxxx Xxxxxx
------------------------------------
Name: X. Xxxxx Xxxxxx
Title: President
XXXXXXX XXXXX CREDIT PARTNERS L.P.,
as Administrative Agent
By: /s/ Xxxxxxx Xxxx
------------------------------------
Name: Xxxxxxx Xxxx
Title: Authorized Signatory
59
LENDERS:
Commitment Amount:
$5,000,000 XXXXXXX XXXXX CREDIT PARTNERS L.P.
By: /s/ Xxxxxxx Xxxx
--------------------------------------------------
Name: Xxxxxxx Xxxx
Title: Authorized Signatory
Wire Transfer Instructions
Citibank, N.A.
ABA #000000000
Acct. #40717188
Name: Xxxxxxx Xxxxx Credit Partners, L.P.
Ref.: FlashNet
Attn.: Xxxx Xxxxxxxx
Notices and Communications to be Separately Delivered
to Following Parties
Xxxxxxx Xxxxx Credit Partners L.P.
00 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx
Telephone: 000-000-0000
Telefax: 000-000-0000
Xxxxxxx Xxxxx Credit Partners L.P.
00 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
Telephone: 000-000-0000
Telefax: 000-000-0000
Xxxxxxx Xxxxx Credit Partners L.P.
00 Xxxxx Xxxxxx - 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx
Telephone: 000-000-0000
Telefax: 000-000-0000
60
Exhibit A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Term Loan Agreement, dated as of _______,
199_ (as amended, supplemented or otherwise modified from time to time, the
"TERM LOAN AGREEMENT"), by and among FLASHNET COMMUNICATIONS, INC., a Texas
corporation, (the "BORROWER"), FLASHNET MARKETING, INC., a Texas corporation,
and FLASHNET TELECOM, INC., a Texas corporation, as guarantors (each a
"GUARANTOR" and, collectively the "GUARANTORS"), the Lenders named xxxxxxx, and
XXXXXXX XXXXX CREDIT PARTNERS L.P., as Administrative Agent for the Lenders (in
such capacity, the "ADMINISTRATIVE AGENT"). Unless otherwise defined herein,
terms defined in the Term Loan Agreement and used herein shall have the meanings
given to them in the Term Loan Agreement.
The Assignor identified on Schedule I hereto (the "ASSIGNOR") and the
Assignee identified on Schedule I hereto (the "ASSIGNEE") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the percentage interest described in Schedule
1 hereto (the "ASSIGNED INTEREST") in and to the Assignor's rights and
obligations under the Term Loan Agreement (the "ASSIGNED FACILITIES"), in a
principal amount for the Assigned Facilities as set forth on Schedule I hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Term Loan Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Term Loan Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim: (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any of its Subsidiaries or any other
obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Term Loan Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any Term Notes
held by it evidencing the Assigned Facilities and (i) requests that the
Administrative Agent, upon request by the Assignee, exchange the attached Term
Notes for a new Term Note or Term Notes payable to the Assignee and (ii) if the
Assignor has retained any interest in the Assigned Facility, requests that the
Administrative Agent exchange the attached Term Notes for a new Term Note or
Term Notes payable to the Assignor, in each case in amounts which reflect the
assignment being made hereby (and after giving effect to any other assignments
which are effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Term Loan Agreement, and all schedules and exhibits
thereto together with copies of the financial information delivered pursuant to
SECTION 4.4 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (c) agrees that it will, independently and without
reliance upon the Assignor, the Administrative Agent or any other Lenders 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 the Term Loan
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (d) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Term Loan Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Administrative Agent by' the terms thereof,
together with such powers as are incidental thereto; (e) agrees that it will be
bound by the provisions of the Term Loan Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Term
Loan Agreement are required to be performed by it as a Lenders; (f) confirms
that all of the representations and warranties set forth in SECTION 6.1 of the
Term Loan Agreement are true and correct in all material respects as to Assignee
as of the date hereof; and (g) agrees that it shall have no recourse against the
Assignor with respect to any matters relating to the Term Loan Agreement, the
other Loan Documents or any others instrument or documents furnished pursuant
hereto or thereto.
4. [RESERVED]
5. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule I hereto (the "EFFECTIVE
DATE"). Following the execution of this Assignment and Acceptance, it shall be
delivered to the Administrative Agent for acceptance by it and recording by the
Administrative Agent pursuant to SECTION 6.6 of the Term Loan Agreement,
effective as of the Effective Date (which shall not, unless otherwise agreed to
by the Administrative Agent, be earlier than five Business Days after the date
of such acceptance and recording by the Administrative Agent).
6. Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
7. From and after the Effective Date, (a) the Assignee shall be a
party to the Term Loan Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Lender thereunder and under
the other Loan Documents and shall be bound by the provisions thereof and (b)
the Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Term Loan
Agreement.
8. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
2
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule I hereto.
3
Schedule I
to Assignment and Acceptance
Name of Assignor:
----------------------------
Name of Assignee:
----------------------------
Effective Date of Assignment:
-------------------
Principal Commitment
Amount Assigned Commitment Percentage Assigned(1)
-------------------- ---------------------------------
Term Loan $________________ _____ . _________%
----------
(1) Calculate the Commitment Percentage that is assigned to at least 9
decimal places and show as a percentage of the aggregate commitments
of all Lenders.
[Name of Assignee] [Name of Assignor]
By: By:
--------------------------------- -------------------------------
Name Name:
Title: Title:
Accepted:
[NAME OF ADMINISTRATIVE AGENT]
as Administrative Agent
By:
---------------------------------
Name:
Title:
Exhibit B
FORM OF CO-SALE AGREEMENT
Exhibit C
FORM OF EQUITY REGISTRATION RIGHTS AGREEMENT
Exhibit D
THE SECURITY EVIDENCED OR CONSTITUTED HEREBY HAS BEEN ACQUIRED FOR INVESTMENT
AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
SECURITY MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
REGISTRATION PROVISIONS OF SAID ACT (OR AN EXEMPTION THEREFROM) HAVE BEEN
COMPLIED WITH.
No. I-__ New York, New York
$______________ ______________, 199_
FORM OF TERM NOTE
FOR VALUE RECEIVED, the undersigned, FLASHNET COMMUNICATIONS, INC., a
Texas corporation (the "BORROWER"), promises to pay to the order of
_______________________________, or its registered assigns (the "HOLDER"), the
principal sum of the aggregate of (i) __________________ Dollars ($_______) and
(ii) the aggregate amount by which the principal amount of this Term Note is
increased by Capitalized Interest pursuant to Section 2.2(c) of the Term Loan
Agreement referred to below, and to pay interest from the date hereof on the
unpaid principal amount hereof (including any Capitalized Interest) from time to
time outstanding, at the rates PER ANNUM and on the dates specified in that
certain Term Loan Agreement, dated as of _______, 199_, among the Borrower,
FLASHNET MARKETING, INC., a Texas corporation, and FLASHNET TELECOM, INC., a
Texas corporation, as guarantors (each a "GUARANTOR" and, collectively, the
"GUARANTORS"), the Lenders named therein, and XXXXXXX XXXXX CREDIT PARTNERS
L.P., as Administrative Agent (as amended, supplemented, restated and/or
otherwise modified from time to time, the "TERM LOAN AGREEMENT"). Terms used
herein and not otherwise defined have the meanings assigned to them in the Term
Loan Agreement. In the event the principal amount of this Term Note is increased
in accordance with Section 2.2(c) of the Term Loan Agreement, the Holder may
exchange this Term Note for a Term Note definitively stating the aggregate
principal amount hereof pursuant to Section 6.5 of the Term Loan Agreement.
The unpaid principal balance (including any Capitalized Interest) of
this Term Note, together with all accrued and unpaid interest thereon, and the
Applicable Repayment Fee shall become due and payable on the Maturity Date.
The Borrower promises to pay interest on demand, to the extent
permitted by law, on any overdue principal and interest from their due dates at
the rate PER ANNUM as specified in Section 2.2 of the Term Loan Agreement.
All payments of the principal of, Applicable Repayment Fees, and
interest on this Term Note shall be made in money of the United States of
America that at the time of payment is legal tender for the payment of public
and private debts, by transfer of immediately available funds into a bank
account designated by the Holder in writing to the Borrower. The principal
amount of this Term Note is subject to increase in accordance with Section
2.2(c) of the Term Loan Agreement.
The Borrower agrees to pay, upon demand, all reasonable out-of-pocket
expenses (including, without limitation, the reasonable fees and disbursements
of legal counsel to the Holder) associated with the waiver, enforcement or
modification of the Term Loan Agreement or this Term Note.
This Term Note is entitled to the benefits of a joint and several
unconditional and irrevocable guarantee (the "NOTE GUARANTEE") of, INTER ALIA,
the due and punctual payment of the principal of, the Applicable Repayment Fee,
premium (if any) and interest on this Term Note as set forth the Term Loan
Agreement. Each of the Guarantors has acknowledged its liability under the Note
Guarantee by signing this Term Note.
The Borrower hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The nonexercise by the Holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
This Term Note is one of the Term Notes referred to in the Term Loan
Agreement, which Agreement, among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events, for
optional and mandatory prepayment in full of the principal hereof prior to
maturity and for the amendment or waiver of certain provisions of the Term Loan
Agreement, all upon the terms and conditions therein specified. In the event of
any conflict between the provisions of this Term Note and the Term Loan
Agreement, the provisions of the Term Loan Agreement shall govern.
THIS TERM NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
2
IN WITNESS WHEREOF, the Borrower has caused this Term Note to be
signed in its corporate name by its duly authorized officer and to be dated as
of the day and year first above written.
FLASHNET COMMUNICATIONS, INC.,
as Borrower
By:
---------------------------
Name:
Title:
ACKNOWLEDGMENT OF NOTE GUARANTEE:
FLASHNET MARKETING, INC.,
as Guarantor
By:
-------------------------------
Name:
Title:
FLASHNET TELECOM, INC.,
as Guarantor
By:
-------------------------------
Name:
Title:
3
Exhibit E
FORM OF OPINION OF XXXXXX & XXXXXX, L.L.P.
