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LOAN AND SECURITY AGREEMENT
BY AND AMONG
STAR TELECOMMUNICATIONS, INC.
AND CERTAIN OF ITS SUBSIDIARIES
AS THE OBLIGORS,
AND
THE FINANCIAL INSTITUTIONS THAT ARE IDENTIFIED HEREIN
AS THE LENDERS,
AND
FOOTHILL CAPITAL CORPORATION
AS AGENT
DATED AS OF JUNE 9, 1999
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION. . . . . . . . . . . . . . . . . . . . .1
1.1 Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Accounting Terms.. . . . . . . . . . . . . . . . . . . . . . 27
1.3 Code.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1.4 Construction . . . . . . . . . . . . . . . . . . . . . . . . 27
1.5 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . 28
2. LOAN AND TERMS OF PAYMENT.. . . . . . . . . . . . . . . . . . . . . 28
2.1 Revolver Advances. . . . . . . . . . . . . . . . . . . . . . 28
2.2 Term Loan. . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.3 Borrowing Procedures and Settlements . . . . . . . . . . . . 30
2.4 Payments.. . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.5 Overadvances.. . . . . . . . . . . . . . . . . . . . . . . . 40
2.6 Interest and Letter of Credit Fees: Rates, Payments,
and Calculations.. . . . . . . . . . . . . . . . . . . . . . 40
2.7 Collection of Accounts . . . . . . . . . . . . . . . . . . . 41
2.8 Crediting Payments; Float Charge . . . . . . . . . . . . . . 42
2.9 Designated Account . . . . . . . . . . . . . . . . . . . . . 42
2.10 Maintenance of Loan Account; Statements of Obligations.. . . 43
2.11 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.12 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . 43
2.13 LIBOR Option.. . . . . . . . . . . . . . . . . . . . . . . . 46
2.14 F/X Line.. . . . . . . . . . . . . . . . . . . . . . . . . . 49
3. CONDITIONS; TERM OF AGREEMENT.. . . . . . . . . . . . . . . . . . . 52
3.1 Conditions Precedent to the Initial Extension of Credit.. . . . . . 52
3.2 Conditions Subsequent to the Initial Extension of Credit.. . 55
3.3 Conditions Precedent to all Extensions of Credit.. . . . . . 56
3.4 Term.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
3.5 Effect of Termination. . . . . . . . . . . . . . . . . . . . 56
3.6 Early Termination by Borrower. . . . . . . . . . . . . . . . 57
4. CREATION OF SECURITY INTEREST.. . . . . . . . . . . . . . . . . . . 57
4.1 Grants of Security Interests. . . . . . . . . . . . . . . . . . . . 57
4.2 Negotiable Collateral. . . . . . . . . . . . . . . . . . . . 58
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral.. . . . . . . . . . . . . . . . . . . . . . . . . 58
4.4 Delivery of Additional Documentation Required; New Subsidiaries;
Star Operating Sub; Allstar. . . . . . . . . . . . . . . . . 59
4.5 Power of Attorney. . . . . . . . . . . . . . . . . . . . . . 59
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4.6 Right to Inspect.. . . . . . . . . . . . . . . . . . . . . . 60
4.7 Control Agreements.. . . . . . . . . . . . . . . . . . . . . 60
5. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . 61
5.1 No Encumbrances.. . . . . . . . . . . . . . . . . . . . . . . . . . 61
5.2 Eligible Accounts. . . . . . . . . . . . . . . . . . . . . . 61
5.3 Compliance With Laws, Etc. . . . . . . . . . . . . . . . . . 63
5.4 Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.5 Location of Inventory and Equipment. . . . . . . . . . . . . 63
5.6 EBITDA for the 3 Month Period Ended April 30, 1999.. . . . . 63
5.7 Location of Chief Executive Office; FEIN.. . . . . . . . . . 63
5.8 Due Organization and Qualification; Subsidiaries.. . . . . . 63
5.9 Due Authorization; No Conflict.. . . . . . . . . . . . . . . 64
5.10 Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . 65
5.11 No Material Adverse Change.. . . . . . . . . . . . . . . . . 65
5.12 Fraudulent Transfer. . . . . . . . . . . . . . . . . . . . . 66
5.13 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . 66
5.14 Environmental Condition. . . . . . . . . . . . . . . . . . . 66
5.15 Brokerage Fees.. . . . . . . . . . . . . . . . . . . . . . . 66
5.16 Year 2000 Compliance.. . . . . . . . . . . . . . . . . . . . 66
5.17 Intellectual Property. . . . . . . . . . . . . . . . . . . . 67
5.18 Cable Agreements, IRUs, Leases, and Licenses.. . . . . . . . 67
5.19 Material Agreements. . . . . . . . . . . . . . . . . . . . . 67
5.20 Switching Standards. . . . . . . . . . . . . . . . . . . . . 68
6. AFFIRMATIVE COVENANTS.. . . . . . . . . . . . . . . . . . . . . . . 68
6.1 Accounting System.. . . . . . . . . . . . . . . . . . . . . . . . . 68
6.2 Collateral Reporting.. . . . . . . . . . . . . . . . . . . . 68
6.3 Financial Statements, Reports, Certificates. . . . . . . . . 69
6.4 Structuring Transactions.. . . . . . . . . . . . . . . . . . 71
6.5 Return.. . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.6 Title to Equipment.. . . . . . . . . . . . . . . . . . . . . 71
6.7 Maintenance of Equipment.. . . . . . . . . . . . . . . . . . 71
6.8 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.9 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.10 No Setoffs or Counterclaims. . . . . . . . . . . . . . . . . 73
6.11 Location of Equipment. . . . . . . . . . . . . . . . . . . . 73
6.12 Compliance with Laws.. . . . . . . . . . . . . . . . . . . . 73
6.13 Consents to Assignment Agreements. . . . . . . . . . . . . . 73
6.14 Carrier Agreements, Cable Agreements, IRUs, Leases, and
Licenses.. . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.15 Brokerage Commissions. . . . . . . . . . . . . . . . . . . . 74
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6.16 Year 2000 Compliance.. . . . . . . . . . . . . . . . . . . . 74
6.17 Projections. . . . . . . . . . . . . . . . . . . . . . . . . 74
6.18 Corporate Existence, etc.. . . . . . . . . . . . . . . . . . 74
6.19 Disclosure Updates.. . . . . . . . . . . . . . . . . . . . . 75
6.20 Material Agreements. . . . . . . . . . . . . . . . . . . . . 75
7. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 75
7.1 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
7.2 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.3 Restrictions on Fundamental Changes. . . . . . . . . . . . . 76
7.4 Disposal of Assets.. . . . . . . . . . . . . . . . . . . . . 77
7.5 Change Name. . . . . . . . . . . . . . . . . . . . . . . . . 77
7.6 Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . 77
7.7 Nature of Business.. . . . . . . . . . . . . . . . . . . . . 77
7.8 Prepayments and Amendments.. . . . . . . . . . . . . . . . . 77
7.9 Change of Control. . . . . . . . . . . . . . . . . . . . . . 77
7.10 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . 77
7.11 Distributions. . . . . . . . . . . . . . . . . . . . . . . . 78
7.12 Accounting Methods.. . . . . . . . . . . . . . . . . . . . . 78
7.13 Investments. . . . . . . . . . . . . . . . . . . . . . . . . 78
7.14 Transactions with Affiliates.. . . . . . . . . . . . . . . . 78
7.15 Suspension.. . . . . . . . . . . . . . . . . . . . . . . . . 78
7.16 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . 78
7.17 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . 78
7.18 Change in Location of Chief Executive Office; Inventory
and Equipment with Bailees.. . . . . . . . . . . . . . . . . 79
7.19 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . 79
7.20 Financial Covenants. . . . . . . . . . . . . . . . . . . . . 79
7.21 Capital Expenditures.. . . . . . . . . . . . . . . . . . . . 81
7.22 Securities Accounts. . . . . . . . . . . . . . . . . . . . . 81
7.23 New Material Contracts.. . . . . . . . . . . . . . . . . . . 81
8. EVENTS OF DEFAULT.. . . . . . . . . . . . . . . . . . . . . . . . . 82
9. THE LENDER GROUP'S RIGHTS AND REMEDIES. . . . . . . . . . . . . . . 84
9.1 Rights and Remedies. . . . . . . . . . . . . . . . . . . . . 84
9.2 Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . 87
10. TAXES AND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . 87
11. WAIVERS; INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . 88
11.1 Demand; Protest; etc.. . . . . . . . . . . . . . . . . . . . 88
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11.2 The Lender Group's Liability for Collateral. . . . . . . . . 88
11.3 Indemnification. . . . . . . . . . . . . . . . . . . . . . . 88
12. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. . . . . . . . . . . . . 90
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS. . . . . . . . . . . . . 90
14.1 Assignments and Participations.. . . . . . . . . . . . . . . 90
14.2 Successors.. . . . . . . . . . . . . . . . . . . . . . . . . 93
15. AMENDMENTS; WAIVERS.. . . . . . . . . . . . . . . . . . . . . . . . 94
15.1 Amendments and Waivers.. . . . . . . . . . . . . . . . . . . 94
15.2 No Waivers; Cumulative Remedies. . . . . . . . . . . . . . . 95
16. AGENT; LENDER GROUP.. . . . . . . . . . . . . . . . . . . . . . . . 95
16.1 Appointment and Authorization of Agent.. . . . . . . . . . . 95
16.2 Delegation of Duties.. . . . . . . . . . . . . . . . . . . . 96
16.3 Liability of Agent - Related Persons.. . . . . . . . . . . . 96
16.4 Reliance by Agent. . . . . . . . . . . . . . . . . . . . . . 97
16.5 Notice of Default or Event of Default. . . . . . . . . . . . 97
16.6 Credit Decision. . . . . . . . . . . . . . . . . . . . . . . 98
16.7 Costs and Expenses; Indemnification. . . . . . . . . . . . . 98
16.8 Agent in Individual Capacity.. . . . . . . . . . . . . . . . 99
16.9 Successor Agent. . . . . . . . . . . . . . . . . . . . . . . 99
16.10 Lender in Individual Capacity. . . . . . . . . . . . . . . .100
16.11 Withholding Tax. . . . . . . . . . . . . . . . . . . . . . .100
16.12 Collateral Matters.. . . . . . . . . . . . . . . . . . . . .102
16.13 Restrictions on Actions by Lenders; Sharing of Payments. . .103
16.14 Agency for Perfection. . . . . . . . . . . . . . . . . . . .103
16.15 Payments by Agent to the Lenders.. . . . . . . . . . . . . .103
16.16 Concerning the Collateral and Related Loan Documents.. . . .104
16.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information. . . .104
16.18 Several Obligations; No Liability. . . . . . . . . . . . . .105
17. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . .106
17.1 Effectiveness. . . . . . . . . . . . . . . . . . . . . . . .106
17.2 Successors and Assigns.. . . . . . . . . . . . . . . . . . .106
17.3 Section Headings.. . . . . . . . . . . . . . . . . . . . . .106
17.4 Interpretation.. . . . . . . . . . . . . . . . . . . . . . .106
17.5 Severability of Provisions.. . . . . . . . . . . . . . . . .106
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17.6 Amendments in Writing. . . . . . . . . . . . . . . . . . . .106
17.7 Counterparts; Telefacsimile Execution. . . . . . . . . . . .107
17.8 Revival and Reinstatement of Obligations.. . . . . . . . . .107
17.9 Integration. . . . . . . . . . . . . . . . . . . . . . . . .107
17.10 Appointment of Swing Lender. . . . . . . . . . . . . . . . .107
17.11 Star as Agent for Borrower . . . . . . . . . . . . . . . . .107
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SCHEDULES AND EXHIBITS
Schedule A-1 Approved Billing Services Agreement
Schedule C-1 Commitments
Schedule N-1 Non-Material Subsidiaries
Schedule P-1 Liens
Schedule 5.7 Chief Executive Offices
Schedule 5.8 Capitalization; Subsidiaries
Schedule 5.10 Litigation
Schedule 5.17 Permits
Schedule 5.19 Material Contracts
Schedule 6.11 Locations of Inventory and Equipment
Schudule 7.1 Indebtedness
Schedule 16.15 Lender Wiring Instructions
Exhibit A-1 Form of Assignment and Acceptance Agreement
Exhibit C-2 Form of Compliance Certificate
Exhibit F-1 F/X Bank Parameters Agreement
Exhibit F-2 F/X Reserve Reduction Certificate
Exhibit F-3 F/X Reserve Increase Certificate
Exhibit L-1 Form of LIBOR Notice
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered
into as of June 9, 1999, by and among: (i) the financial institutions
identified on the signature pages hereof (such financial institutions,
together with their respective successors and assigns, are referred to
hereinafter each individually as a "Lender" and collectively as the
"Lenders"); (ii) FOOTHILL CAPITAL CORPORATION, a California corporation, as
agent for the Lenders ("Agent"); and (iii) STAR TELECOMMUNICATIONS, INC., a
Delaware corporation ("Star"), CEO TELECOMMUNICATIONS, INC., a California
corporation ("CEO"), CEO CALIFORNIA TELECOMMUNICATIONS, INC., a California
corporation ("CEO California"), PT-1 COMMUNICATIONS, INC., a New York
corporation ("PT-1"), PT-1 LONG DISTANCE, INC., a Delaware corporation ("PT-1
Long Distance"), XXXXXX COM, INC., a Delaware corporation ("Xxxxxx"), LUCIUS
ENTERPRISES, INC., a California corporation ("Lucius"), AS
TELECOMMUNICATIONS, INC., an Arizona corporation ("Allstar"), PT-1
TECHNOLOGIES, INC., a Delaware corporation ("Phonetime"), PT-1 HOLDINGS I,
INC., a Delaware corporation ("PT-1 HI"), PT-1 HOLDINGS II, INC., a Delaware
corporation ("PT-1 HII"), NATIONWIDE DISTRIBUTORS, INC., a Delaware
corporation ("Nationwide"), TECHNOLOGY LEASING, INC., a Delaware corporation
("Technology Leasing"), PT-1 PHONECARD, L.P., a Texas limited partnership
("PT-1 Phonecard"), PLATFORM SERVICES, L.P., a Delaware limited partnership
("Platform"), PT-1 COMMUNICATIONS PUERTO RICO, INC., a Delaware corporation
("PT-1 Puerto Rico"), and INVESTMENT SERVICES, INC., a Delaware corporation
("Investment Services").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS.
As used in this Agreement, the following terms shall have the
following definitions:
"ACCOUNT DEBTOR" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, a General
Intangible, Investment Property, or Negotiable Collateral. With respect to
any LEC Account, "Account Debtor" refers to the LEC obligated with respect
thereto rather than the end-user, unless the context in which such term is
used requires otherwise.
"ACCOUNTS" means all of the Obligors' currently existing and
hereafter arising accounts, contract rights, and all other forms of
obligations owing to an Obligor arising out of the sale or lease of goods,
the sale or lease of General Intangibles relating to the provision of
telecommunications services, or the rendition of services by an Obligor,
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irrespective of whether earned by performance, and any and all credit
insurance, guaranties, or security therefor.
"ADMINISTRATIVE BORROWER" has the meaning set forth in SECTION
17.11.
"ADVANCES" has the meaning set forth in SECTION 2.1.
"AFFILIATE" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means
the possession, directly or indirectly, of the power to direct the management
and policies of a Person, whether through the ownership of Stock, by
contract, or otherwise.
"AGENCY FEE AMOUNT" means, as of any date of determination, the
then outstanding amount of the "Agency Fee" (as such term is defined in the
Fee Letter).
"AGENT" means Foothill Capital Corporation, a California
corporation, solely in its capacity as agent for the Lenders, and shall
include any successor agent.
"AGENT ACCOUNT" has the meaning set forth in SECTION 2.7.
"AGENT ADVANCES" has the meaning set forth in SECTION 2.3(e)(i).
"AGENT'S LIENS" has the meaning set forth in SECTION 4.1(a).
"AGENT'S TERM LOAN LIENS" has the meaning set forth in SECTION
4.1(b).
"AGENT-RELATED PERSONS" means Agent together with its
Affiliates, officers, directors, employees, and agents.
"AGREEMENT" has the meaning set forth in the preamble hereto.
"ALLSTAR" has the meaning set forth in the preamble hereto.
"APPLICABLE PREPAYMENT PREMIUM" means, as of any date of
determination, an amount equal to (a) during the period of time commencing on
the date of the execution and delivery of this Agreement and ending on the
date 8 months following the Closing Date, 2.0% times the Maximum Amount, and
(b) during the period of time thereafter (other than on the Maturity Date
pursuant to SECTION 3.4), 1.0% TIMES the Maximum Amount.
"APPLICABLE REPORTING WINDOW" means: (a) with respect to the
month that is the last month of Borrower's fiscal year, 90 days following the
end of such month; (b) with respect to any month that is the last month of
any fiscal quarter of Borrower (other than the month described in clause (a)
above), 45 days following the end of such month; and (c) with respect to any
other month, 30 days following the end of such month.
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"APPROVED BILLING AGENT" means a billing services agent party
to an Approved Billing Services Agreement.
"APPROVED BILLING SERVICES AGREEMENT" means a Billing Services
Agreement, a true and complete copy of which previously has been provided to
Agent and Agent's counsel for review, that is in form and substance
satisfactory to Agent in its Permitted Discretion, with respect to which the
billing services agent party thereto has delivered a Consent to Assignment
Agreement, and with respect to which the rights of the Borrower party thereto
may be the subject of attached, enforceable, and perfected Liens in favor of
Agent. SCHEDULE A-1 identifies all Approved Billing Services Agreements as
of the Closing Date, which schedule may be amended from time to time in
writing by Administrative Borrower with the written approval of Agent in its
Permitted Discretion.
"ASSIGNEE" has the meaning set forth in SECTION 14.1.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance
in the form of EXHIBIT A-1 attached hereto.
"AUTHORIZED PERSON" means any officer or other employee of
Administrative Borrower.
"AVAILABILITY" means, as of any date of determination, the
amount that Borrower is entitled to borrow as Advances under SECTION 2.1,
such amount being the difference derived when (a) the sum of the principal
amount of Advances (including Agent Advances and Swing Loans) then
outstanding (including any amounts that the Lender Group may have paid for
the account of the Obligors pursuant to any of the Loan Documents and that
have not been reimbursed by the Obligors), is subtracted from (b) the lesser
of (i) the Maximum Revolver Amount less the Agency Fee Amount, the Letter of
Credit Usage, and the F/X Reserve, and (ii) the Borrowing Base less the
Letter of Credit Usage and the F/X Reserve.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, as
amended, and any successor statute.
"BASE LIBOR RATE" means the rate per annum (rounded upwards, if
necessary, to the next 1/16%) at which United States dollar deposits are
offered to major banks in the London interbank market on or about 11:00 a.m.
(California time) 2 Business Days prior to the commencement of the applicable
Interest Period, for a term and in amounts comparable to the Interest Period
and amount of the LIBOR Rate Advance requested by Borrower in accordance with
this Agreement.
"BASE RATE" means, the rate of interest announced within Xxxxx
Fargo Bank, N.A. at its principal office in San Francisco as its "prime
rate", with the understanding that the "prime rate" is one of Xxxxx Fargo's
base rates (not necessarily the lowest of such rates) and serves as the basis
upon which effective rates of interest are calculated for those loans
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making reference thereto and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Xxxxx Fargo may
designate.
"BASE RATE ADVANCE" means each Advance, or portion thereof,
bearing interest at a rate determined by reference to the Base Rate.
"BENEFIT PLAN" means a "defined benefit plan" (as defined in
SECTION 3(35) of ERISA) for which Borrower or any Subsidiary or ERISA
Affiliate of Borrower has been an "employer" (as defined in Section 3(5) of
ERISA) within the past six years.
"BILLING SERVICES AGREEMENT" means a billing services agreement
or similar agreement that has been entered into and is in full force and
effect between Borrower and any third Person relative to LEC Accounts.
"BOOKS" means all of the Obligors' books and records (including
all of its records indicating, summarizing, or evidencing its assets
(including the Collateral) or liabilities, all of its information relating to
its business operations or financial condition, and all of its computer
programs, disks, files, printouts, runs, or other computer prepared
information).
"BORROWER" means, individually and collectively, and jointly
and severally, Star, CEO, PT-1, and PT-1 Long Distance, and any other
Subsidiary of Borrower that in the future executes and delivers a joinder to
this Agreement as a Borrower with the written concurrence of the Required
Lenders.
"BORROWING" means a borrowing hereunder consisting of Advances
made to Administrative Borrower on the same day by the Lenders, or Agent on
behalf thereof, or by Swing Lender in the case of a Swing Loan, or by Agent
in the case of an Agent Advance.
"BORROWING BASE" has the meaning set forth in SECTION 2.1.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close in
California or New York, and, with respect to provisions of the Agreement
dealing with LIBOR Rate Advances, also means a day on which banks in London,
England are open for the transaction of banking business.
"CABLE AGREEMENT" means an agreement for the construction and
maintenance of one or more fiber optic or other cable networks for
telecommunications transmission (including the transmission of voice, video,
or data) and the allocation of capacity and other rights in respect of such
networks among the parties thereto.
"CAPITAL LEASE" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATION" means any Indebtedness
represented by obligations under Capital Lease.
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"CARRIER" means any provider of long distance
telecommunications access with whom an Obligor from time to time does
business.
"CARRIER ACCOUNT" means an Account owed by an Account Debtor
that is a Carrier pursuant to the Carrier Agreement in effect between the
relevant Obligor and such Carrier.
"CARRIER AGREEMENT" means each contract or agreement in effect
between an Obligor and a Carrier.
"CARRIER DEFAULT NORM" means, as of any date of determination:
(a) with respect to the amount of the Obligors' obligations involved in a
dispute by the Obligors under a Carrier Agreement, the average amount of such
obligations involved in all disputes by the Obligors under Carrier Agreements
during the past 3 years; and (b) with respect to the length of time for a
dispute by the Obligors under a Carrier Agreement to be resolved without the
Carrier party thereto exercising its remedies thereunder consisting of
accelerating all obligations thereunder, indefinitely suspending its services
thereunder to the Obligors, or terminating the Carrier Agreement, the average
length of time for all such disputes by the Obligors under Carrier Agreements
to be so resolved during the past 3 years.
"CEO" has the meaning set forth in the preamble hereto.
"CEO CALIFORNIA" has the meaning set forth in the preamble
hereto.
"CHANGE OF CONTROL" shall be deemed to have occurred at such
time as: (a) a "person" or "group" (within the meaning of Sections 13(d) and
14(d) of the Exchange Act), other than Permitted Holders, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 40% of the total voting power of all
classes of Stock then outstanding of Star entitled to vote in the election of
directors; (b) less than 100% of the issued and outstanding Stock of each
Obligor other than Star shall be owned and controlled, beneficially,
directly, and of record, by the Obligors; or (c) a majority of members of the
board of directors of Star are not Continuing Directors.
"CLOSING DATE" means the date of the making of the initial
Advance (or other extension of credit) hereunder.
"CLOSING DATE ASSIGNMENTS" means, collectively, (a) the
Assignment and Acceptance to be executed and delivered on or about the
Closing Date between Foothill, on the one hand, and one or more of Ableco
Finance LLC and its Affiliates, on the other hand, relative to the Term Loan
Amount; and (b) the Assignment and Acceptance to be executed and delivered on
or about the Closing Date between Foothill, on the one hand,
-5-
and one or more of the Affiliates of Foothill, on the other hand, relative to
the Term Loan Amount.
"CLOSING DATE BUSINESS PLAN" means the set of Projections of
Borrower for the 2 year period following the Closing Date (on a year by year
basis, and for the 1 year period following the Closing Date, on a month by
month basis), in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent.
"CODE" means the New York Uniform Commercial Code.
"COLLATERAL" means all of Obligors' right, title, and interest
in and to each of the following:
(a) the Accounts,
(b) the Books,
(c) the Equipment,
(d) the General Intangibles,
(e) the Inventory,
(f) the Investment Property,
(g) the Negotiable Collateral,
(h) any money, or other assets of any Obligor that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(i) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment,
General Intangibles, Inventory, Investment Property, Negotiable Collateral,
Real Property, money, deposit accounts, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition
of any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof.
"COLLECTIONS" means ALL cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of the Obligors.
"COMMITMENT" means, with respect to each Lender, its Revolving
Credit Commitment, Term Loan Commitment, Letter of Credit Sub-Commitment, F/X
Undertaking Sub-Commitment, or Total Commitment, as the context requires and,
with respect to all Lenders, their Revolving Credit Commitments, Term Loan
Commitments, Letter of Credit Sub-Commitment, F/X Undertaking Sub-Commitment,
or Total Commitments, as the context requires, in each case as such Dollar
amounts are set forth beside such Lender's
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name under the applicable heading on SCHEDULE C-1 attached hereto or on the
signature page of the Assignment and Acceptance pursuant to which such Lender
became a Lender hereunder in accordance with the provisions of SECTION 14.1.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as
amended, 47 U.S.C. sec. 151 et seq.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of EXHIBIT C-2 delivered by the chief financial officer of
Administrative Borrower to Agent.
"CONSENT TO ASSIGNMENT AGREEMENT" means, with respect to any
Person, a consent by such Person, in form and substance satisfactory to
Agent, to the collateral assignment by Borrower in favor of Agent of all of
Borrower's right, title, and interest in, to, and under the subject agreement
between Borrower and such Person.
"CONTINGENT SURVIVING OBLIGATIONS" means all contingent
Obligations of the Obligors to indemnify Lender Group under this Agreement or
the other Loan Documents.
"CONTINUING DIRECTOR" means, as of any date of determination, a
member of the board of directors of Star who (a) was a member of the board of
directors of Star on the Closing Date, or (b) was nominated to be a member of
the board of directors of Star by a majority of the Continuing Directors then
in office to fill a vacancy left by the death, expiration of term, permanent
disability, or resignation of a Continuing Director.
"CONTROL AGREEMENT" means a control agreement, in form and
substance reasonably satisfactory to Agent, among the applicable Obligors,
Agent, and the applicable securities intermediary with respect to the
applicable Securities Account and related Investment Property.
"COPYRIGHT" shall have the meaning ascribed to such term in the
United States Copyright Act of 1976 (as amended), and includes unregistered
copyrights.
"COPYRIGHT SECURITY AGREEMENT" means that certain Copyright
Security Agreement, dated as of even date herewith, between the Obligors and
Agent, in form and substance satisfactory to Agent in its Permitted
Discretion.
"DAILY BALANCE" means, with respect to each day during the term
of this Agreement, the amount of an Obligation owed at the end of such day.
"DEFAULT" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"DEFAULTING LENDER" means any Lender that fails to make any
Advance that it is required to make hereunder on any Funding Date and that
has not cured such failure by making such Advance within 1 Business Day after
written demand upon it by Agent to do so.
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"DEFAULTING LENDER RATE" means the Base Rate for the first 3
days from and after the date the relevant payment is due and, thereafter, at
that interest rate equal to the GREATER OF (a) the interest rate then
applicable to Base Rate Advances, and (b) the Base Rate.
"DESIGNATED ACCOUNT" means account number 0000000000 of
Administrative Borrower maintained with Administrative Borrower's Designated
Account Bank, or such other deposit account of Administrative Borrower
(located within the United States) that has been designated as such, in
writing, by Administrative Borrower to Agent.
"DESIGNATED ACCOUNT BANK" means Bank of America, whose office
is located at 000 X. Xxxx Xxxxxx, Xxxxxx, XX 00000, and whose ABA number is
000-000-000.
"DILUTION" means, as of any date of determination, a
percentage, based upon the experience of the immediately prior 180 days, that
is the result of dividing the Dollar amount of (a) bad debt write-downs,
discounts, advertising allowances, returns, credits, or other dilutive items
with respect to the Accounts, by (b) Borrower's Collections with respect to
Accounts (excluding extraordinary items) PLUS the Dollar amount of clause (a).
"DILUTION RESERVE" means, as of any date of determination, an
amount sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of
5%.
"DIRECT ACCOUNT" means an Account (other than Carrier Accounts
and LEC Accounts) that is billed directly by Borrower and not submitted by
Borrower for billing and collection by any other Person (including such other
Persons as LECs).
"DISBURSEMENT LETTER" means an instructional letter executed
and delivered by Administrative Borrower to Agent regarding the extensions of
credit to be made on the Closing Date, the form and substance of which shall
be reasonably satisfactory to Agent.
"DOLLARS" or "$" means United States dollars.
"DOMESTIC ACCOUNTS" means Accounts other than Foreign Accounts.
"EBITDA" means, with respect to any fiscal period, Star's
consolidated earnings before all interest expenses, taxes, depreciation and
amortization expenses for such period, determined in accordance with GAAP.
"ELIGIBLE ACCOUNTS" means those Carrier Accounts created by
Star, those LEC Accounts created by CEO, and those LEC Accounts and Direct
Accounts created by PT-1 or PT-1 Long Distance, in each case created in the
ordinary course of business, that arise out of the applicable Borrower's
provision of telecommunication services, that comply with each and all of the
representations and warranties respecting Eligible Accounts made by Borrower
to Agent in the Loan Documents, and that are not excluded as ineligible by
virtue of one or more of the criteria set forth below. In determining the
amount to be included, Eligible Accounts shall be calculated net of any
applicable sales taxes, excise taxes,
-8-
and telecommunications taxes. Except as otherwise determined by Agent in its
Permitted Discretion, Eligible Accounts shall not include the following:
(a) (i) Accounts that the Account Debtor has failed to pay
within 90 days of original invoice date or Accounts with selling terms of
more than 60 days; or (ii) with respect to Accounts billed by HBS on behalf
of Borrower under the Billing Services Agreement with HBS, (y) all such
Accounts identified in the applicable Accounts aging as outstanding for more
than 60 days from original invoice date, and (z) all such Accounts identified
in the applicable Accounts aging as outstanding for between 31 and 60 days
from original invoice date (such Accounts, the "HBS 31-60 Day Accounts") in
excess of 25% of the HBS 31-60 Day Accounts;
(b) (i) Accounts owed by an Account Debtor (or its
Affiliates) where 50% or more of all Accounts owed by that Account Debtor (or
its Affiliates) are deemed ineligible under clause (a)(i) above, or (ii)
Accounts billed by HBS on behalf of Borrower under the Billing Services
Agreement with HBS, if 60% or more of all such Accounts are deemed ineligible
under clause (a)(ii)(y) above;
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of any Obligor;
(d) Accounts arising in a transaction wherein goods are
placed on consignment or were sold pursuant to a guaranteed sale, a sale or
return, a sale on approval, a xxxx and hold, or any other terms by reason of
which the payment by the Account Debtor may be conditional;
(e) Accounts that are not payable in Dollars, except for
Accounts owed by British Telecom (and any other Account Debtor located in
Great Britain approved in writing by Agent in its Permitted Discretion) that
are payable in British pounds sterling and converted at Borrower's cost into
Dollars pursuant to a Permitted F/X Contract;
(f) Accounts arising from the sale of prepaid calling cards;
(g) Accounts with respect to which the telecommunications
services giving rise to such Account have not been provided to and utilized
by the Account Debtor, or any services giving rise to such Account have not
been performed by the applicable Obligor or accepted by the Account Debtor,
or the Account does not otherwise represent a final sale;
(h) Accounts that have not yet been billed to the Account
Debtor;
(i) Accounts with respect to which the applicable Borrower
received from the Account Debtor a customer deposit, to the extent of such
customer deposit;
(j) LEC Accounts (i) that are not covered by a LEC
Confirmation Statement received by the applicable Borrower from the
applicable LEC or an Approved Billing Agent in respect of such LEC, or (ii)
that are covered by a LEC Confirmation
-9-
Statement received by the applicable Borrower from the applicable LEC or an
Approved Billing Agent in respect of such LEC to the extent of (without
duplication) reductions of or offsets against amounts otherwise payable with
respect thereto by reason of up-front LEC rejects or credits deducted from
net confirmed revenues on such LEC Confirmation Statement;
(k) Accounts with respect to which any commissions are owed
to any Persons, to the extent of such commissions;
(l) Accounts that have been transferred to an Obligor's
legal or collection department;
(m) Accounts with respect to which the Account Debtor is
either (i) the United States or any department, agency, or instrumentality of
the United States (exclusive, however, of Accounts with respect to which
Borrower has complied, to the reasonable satisfaction of Agent, with the
Assignment of Claims Act, 31 U.S.C. Section 3727), or (ii) any State of the
United States (exclusive, however, of Accounts owed by any State that does
not have a statutory counterpart to the Assignment of Claims Act);
(n) Accounts with respect to which the Account Debtor is a
creditor of Borrower, has or has asserted a right of setoff, has disputed its
liability, or has made any claim with respect to the Account, to the extent
of such claim, right of offset, assertion, or dispute;
(o) Accounts with respect to an Account Debtor whose total
obligations owing to Borrower exceed 10% of all Eligible Accounts, to the
extent of the obligations owing by such Account Debtor in excess of such
percentage;
(p) (i) with respect to any billing services agent party to
a Billing Service Agreement (other than HBS), Accounts billed by such billing
services agent on behalf of Borrower in excess of 10% of all Eligible
Accounts; or (ii) Accounts billed by HBS on behalf of Borrower in excess of
20% of all Eligible Accounts;
(q) Accounts with respect to which the Account Debtor is
subject to an Insolvency Proceeding, is not Solvent, or goes out of business;
(r) Accounts the collection of which Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition; and
(s) Accounts that represent the right to receive progress
payments or other advance xxxxxxxx that are due prior to the completion of
performance by Borrower of the subject contract for goods or services.
"ELIGIBLE DIRECT ACCOUNTS" means, as of any date of
determination, an Eligible Account that is a Direct Account qualifying as an
Eligible Account.
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"ELIGIBLE DOMESTIC ACCOUNTS" means, as of any date of
determination, an Eligible Account that is a Domestic Account qualifying as
an Eligible Account.
"ELIGIBLE FOREIGN ACCOUNTS" means, as of any date of
determination, an Eligible Account that is a Foreign Account qualifying as an
Eligible Account and, with respect to an Eligible Account that is an Account
described in clause (iii) of the definition of Foreign Account, Borrower has
complied, to the reasonable satisfaction of Agent, with the relevant foreign
equivalent of the Assignment of Claims Act, 31 U.S.C. Section 3727.
"ELIGIBLE LEC ACCOUNTS" means, as of any date of determination,
an Eligible Account that is a LEC Account qualifying as an Eligible Account
"ELIGIBLE TRANSFEREE" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $100,000,000, (b) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country
and which has total assets in excess of $100,000,000, provided that such bank
is acting through a branch or agency located in the United States, (c) a
finance company, insurance company, or other financial institution or fund
that is engaged in making, purchasing, or otherwise investing in commercial
loans in the ordinary course of its business and having (together with its
Affiliates) total assets in excess of $50,000,000, (d) any Affiliate (other
than individuals) of a pre-existing Lender, (e) so long as no Event of
Default has occurred and is continuing, any other Person approved by Agent
and Borrower, and (f) during the continuation of an Event of Default, any
other Person approved by Agent.
"EQUIPMENT" means all of Obligors' present and hereafter
acquired machinery, machine tools, motors, equipment, furniture, furnishings,
fixtures, vehicles (including motor vehicles and trailers), tools, parts,
goods (other than consumer goods, farm products, or Inventory), wherever
located, including all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA AFFILIATE" means (a) any corporation subject to ERISA
whose employees are treated as employed by the same employer as the employees
of Borrower under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Borrower under IRC Section 414(c), (c) solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, any organization subject to
ERISA that is a member of an affiliated service group of which Borrower is a
member under IRC Section 414(m), or (d) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any party subject to ERISA that is a party
to an arrangement with Borrower and whose employees are aggregated with the
employees of Borrower under IRC Section 414(o).
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"EUROPEAN SPIN OFF" means the distribution by Star to Star's
stockholders, to be consummated not later than March 31, 2000 and for no
consideration to any Obligor, of all of the Stock of a special-purpose
Subsidiary whose sole assets consist of the Stock of the European
Subsidiaries and whose sole business activity consists of owning the Stock of
the European Subsidiaries and certain Permits related to the business
operations of the European Subsidiaries (and not materially related to the
business operations of the Obligors).
"EUROPEAN SUBSIDIARIES" means all or substantially all of the
Subsidiaries of Star organized under the laws of any jurisdiction in Europe
(including the United Kingdom).
"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.
"EXCESS AVAILABILITY" means the amount, as of the date any
determination thereof is to be made, equal to Availability MINUS the
aggregate amount, if any, of all trade payables of Borrower aged in excess of
their historical levels with respect thereto and all book overdrafts in
excess of their historical practices with respect thereto, in each case as
determined by Agent in its Permitted Discretion.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
"EXISTING LENDER" means, collectively, Sanwa Bank California,
The Chase Manhattan Bank, and Xxxxx Fargo Bank, National Association.
"FCC" means the Federal Communications Commission or any
governmental body or agency succeeding to the functions thereof.
"FCC RULES" means Title 47 of the Code of Federal Regulations,
as amended at any time and from time to time, and FCC decisions issued
pursuant to the adoption of such regulations.
"FEE LETTER" means that certain fee letter, dated as of even
date herewith, between Borrower and Agent, in form and substance satisfactory
to Agent in its Permitted Discretion.
"FEIN" means Federal Employer Identification Number.
"FOOTHILL" means Foothill Capital Corporation, a California
corporation.
"FOREIGN ACCOUNTS" means Accounts with respect to which any one
or more of the following is true: (i) the Account Debtor does not maintain
its chief executive office in the United States, or (ii) the Account Debtor
is not organized under the laws of the United States or any State thereof, or
(iii) the Account Debtor is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or
other instrumentality thereof.
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"FOREIGN ACCOUNTS RESERVE" means, as of any date of
determination, an amount equal to 15% of the amount of all Eligible Foreign
Accounts.
"FUNDING DATE" means the date on which a Borrowing occurs.
"F/X BANK" means Norwest Bank Minnesota, N.A. or Xxxxx Fargo
Bank, N.A., or any successor thereto.
"F/X BANK PARAMETERS AGREEMENT" means an agreement between F/X
Bank and Borrower, in form and substance satisfactory to Agent in its
Permitted Discretion and to be attached hereto as EXHIBIT F-1, regarding the
parameters under which F/X Bank provides foreign exchange currency services
to Borrower.
"F/X RESERVE" means, as of any date of determination, a reserve
equal to the maximum amount of obligations of the Lender Group to provide F/X
Undertakings. As of the Closing Date, the amount of the F/X Reserve is $-0-.
"F/X UNDERTAKING" has the meaning set forth in SECTION 2.14.
"F/X UNDERTAKING SUB-COMMITMENT" means, for each Lender, the
Dollar amount of the obligation of such Lender to participate in any F/X
Obligations (in an aggregate amount at one time outstanding), as such amount
is set forth opposite the name of such Lender under the caption F/X
Undertaking Sub-Commitment on SCHEDULE C-1.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"GENERAL INTANGIBLES" means all of the Obligors' present and
future general intangibles and other personal property (including Permits,
contract rights, rights arising under common law, statutes, or regulations,
choses or things in action, goodwill, patents, trade names, trademarks,
servicemarks, copyrights, blueprints, drawings, purchase orders, customer
lists, monies due or recoverable from pension funds, route lists, rights to
payment and other rights under any royalty or licensing agreements,
infringement claims, computer programs, information contained on computer
disks or tapes, literature, reports, catalogs, money, deposit accounts,
insurance premium rebates, tax refunds, and tax refund claims), other than
goods, Accounts, Investment Property, and Negotiable Collateral.
"GOVERNING DOCUMENTS" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, local,
or other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration
panel, commission, or other similar dispute-resolving panel or body.
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"GUARANTORS" means, individually and collectively, jointly and
severally, CEO California, Xxxxxx, Xxxxxx, Allstar, Phonetime, PT-1HI,
PT-1HII, Nationwide, Technology Leasing, PT-1 Phonecard, Platform, PT-1
Puerto Rico, and Investment Services, and any other Subsidiary of Borrower
that in the future executes and delivers a joinder to this Agreement or any
other Loan Document as a Guarantor.
"GUARANTY" means a General Continuing Guaranty, in form and
substance satisfactory to Agent in its Permitted Discretion, executed by each
Guarantor in favor of Agent for the benefit of the Lender Group.
"HAZARDOUS MATERIALS" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define,
list, or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive
toxicity, or "EP toxicity", (b) oil, petroleum, or petroleum derived
substances, natural gas, natural gas liquids, synthetic gas, drilling fluids,
produced waters, and other wastes associated with the exploration,
development, or production of crude oil, natural gas, or geothermal
resources, (c) any flammable substances or explosives or any radioactive
materials, and (d) asbestos in any form or electrical equipment that contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of 50 parts per million.
"HBS" means HOLD Billing Services Ltd., a Texas limited
partnership.
"XXXXXX" has the meaning set forth in the preamble hereto.
"INDEBTEDNESS" means (a) all obligations of one or more
Obligors for borrowed money, (b) all obligations of one or more Obligors
evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations of one or more Obligors in respect of
letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations of one or more Obligors under Capital
Leases in an amount equal to the principal balance of such Capital Leases
calculated in accordance with GAAP, (d) all obligations or liabilities of
others secured by a Lien on any property or asset of one or more Obligors,
irrespective of whether such obligation or liability is assumed (and, if such
obligation or liability is non-recourse to the Obligors, then only in an
amount equal to the lesser of the fair market value of such property or asset
and the principal amount of such obligation or liability), and (e) any
obligation of one or more Obligors guaranteeing or intended to guarantee
(whether guaranteed, endorsed, co-made, discounted, or sold with recourse to
one or more Obligors) any obligation of any other Person.
"INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION
11.3.
"INDEMNIFIED PERSON" has the meaning set forth in SECTION 11.3.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any
other bankruptcy or
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insolvency law, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.
"INTANGIBLE ASSETS" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be
treated as intangibles under GAAP.
"INTERCOMPANY SUBORDINATION AGREEMENT" means a intercompany
subordination agreement, in form and substance satisfactory to Agent in its
Permitted Discretion, executed and delivered by each of the Obligors in favor
of Agent.
"INTEREST PERIOD" means, with respect to each LIBOR Rate
Advance, a period commencing on the date of the making of such LIBOR Rate
Advance and ending 1, 2, or 3 months thereafter; PROVIDED, HOWEVER, that (a)
if any Interest Period would end on a day that is not a Business Day, such
Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue from and including
the first day of each Interest Period to, but excluding, the day on which any
Interest Period expires, (c) any Interest Period that would end on a day that
is not a Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in another calendar month, in which case such
Interest Period shall on the next preceding Business Day, (d) with respect to
an Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, or 3 months
after the date on which the Interest Period began, as applicable, and (e)
Borrower may not elect an Interest Period which will end after the Maturity
Date.
"INVENTORY" means all present and future inventory in which the
Obligors have any interest, including goods held for sale or lease or to be
furnished under a contract of service and all of the Obligors' present and
future raw materials, work in process, finished goods, and packing and
shipping materials, wherever located.
"INVESTMENT" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of
loans, guarantees, advances, or capital contributions (excluding (a)
commission, travel, and similar advances to officers and employees of such
Person made in the ordinary course of business, and (b) bona fide accounts
receivable arising from the sale of goods or services in the ordinary course
of business consistent with past practice), purchases or other acquisitions
for consideration of Indebtedness or Stock, and any other items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP; PROVIDED, HOWEVER, that, the term "Investment" shall not include
any transmission of money, in the ordinary course of business, by any Obligor
to any Non-Material Subsidiary for the sole purpose of enabling such
Non-Material Subsidiary to remit payment to the trade creditors of such
Obligor (and not such Non-Material Subsidiary).
-15-
"INVESTMENT PROPERTY" means "investment property" as that term
is defined in of the Code, whether now owned or hereafter acquired by the
Obligors.
"INVESTMENT SERVICES" has the meaning set forth in the preamble
hereto.
"IRC" means the Internal Revenue Code of 1986, as amended, and
any successor statute.
"IRU" means a so-called "Indefeasible Right of Use" with
respect to a fiber optic or other cable network for telecommunications
transmission (including the transmission of voice, video, or data).
"L/C" has the meaning set forth in SECTION 2.12(a).
"L/C UNDERTAKING" has the meaning set forth in SECTION 2.12(a).
"LEC" means a local exchange carrier or telephone company that
provides "basic" (as defined by the FCC) telecommunications services to its
customers and from whom Borrower may receive payments with respect to
Accounts.
"LEC ACCOUNT" means an Account owed by an Account Debtor that
is a LEC, as clarified by the second sentence of the definition of "Account
Debtor".
"LEC AGREEMENT" means each contract or agreement in effect
between an Obligor and a LEC.
"LEC CONFIRMATION STATEMENT" means (a) a written confirmation
statement sent to the applicable Borrower by a LEC, or (b) (i) a written
confirmation statement sent by a LEC to an Approved Billing Agent, together
with (ii) a written confirmation statement sent by such Approved Billing
Agent to the applicable Borrower, reflecting such LEC's acceptance of such
Borrower's call transaction records and such LEC's agreement to pay on
account of such accepted call transaction records.
"LEGAL REQUIREMENTS" means all applicable international,
foreign, federal, state, and local laws, judgments, decrees, orders,
statutes, ordinances, rules, regulations, or Permits.
"LENDER" and "LENDERS" have the respective meanings set forth
in the preamble to this Agreement, and shall include any other Person made a
party to this Agreement in accordance with the provisions of SECTION 14.1
hereof.
"LENDER GROUP" means, individually and collectively, each of
the Lenders, and Agent.
"LENDER GROUP EXPENSES" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by any Obligor
under any of the Loan
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Documents that are paid or incurred by the Lender Group, (b) fees or charges
paid or incurred by one or members of the Lender Group in connection with one
or members of the Lender Group's transactions with any Obligor, including,
fees or charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, litigation,
and UCC searches and including searches with the patent and trademark office,
the copyright office, or the department of motor vehicles), filing,
recording, publication, appraisal (including periodic Collateral appraisals),
real estate surveys, real estate title policies and endorsements, and
environmental audits, (c) costs and expenses incurred by one or members of
the Lender Group in the disbursement of funds to Borrower (by wire transfer
or otherwise), (d) charges paid or incurred by one or members of the Lender
Group resulting from the dishonor of checks, (e) reasonable costs and
expenses paid or incurred by one or members of the Lender Group to correct
any default or enforce any provision of the Loan Documents, or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated, (f) reasonable costs
and expenses paid or incurred by one or members of the Lender Group in
examining the Books, (g) reasonable costs and expenses of third party claims
or any other suit paid or incurred by one or members of the Lender Group in
enforcing or defending the Loan Documents or in connection with the
transactions contemplated by the Loan Documents or one or members of the
Lender Group's relationship with any Obligor or any guarantor, and (h)
reasonable fees and expenses (including attorneys fees) incurred by one or
more members of the Lender Group in advising, structuring, drafting,
reviewing, administering, amending, terminating, enforcing (including
attorneys fees and expenses, and expenses of third party consultants or
advisors, incurred in connection with a "workout," a "restructuring," or an
Insolvency Proceeding concerning any Obligor or any guarantor of the
Obligations), defending, or concerning the Loan Documents, irrespective of
whether suit is brought.
"LENDER-RELATED PERSON" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, and agents of such Lender.
"LETTER OF CREDIT" means an L/C or an L/C Undertaking, as the
context requires.
"LETTER OF CREDIT SUB-COMMITMENT" means, for each Lender, the
Dollar amount of the obligation of such Lender to participate in any Letters
of Credit (in an aggregate amount at one time outstanding), as such amount is
set forth opposite the name of such Lender under the caption Letter of Credit
Sub-Commitment on SCHEDULE C-1.
"LETTER OF CREDIT USAGE" means, as of any date of
determination, the aggregate undrawn amount of all outstanding Letters of
Credit.
"LIBOR NOTICE" means a written notice in the form of EXHIBIT
L-1 attached hereto.
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"LIBOR RATE" means, for each Interest Period for each LIBOR
Rate Advance, the rate per annum (rounded upwards, if necessary, to the next
1/16%) determined by dividing (a) the Base LIBOR Rate for such Interest
Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall be
adjusted on and as of the effective day of any change in the Reserve
Percentage.
"LIBOR RATE ADVANCE" means each Advance, or portion thereof,
bearing interest at a rate determined by reference to the LIBOR Rate.
"LIEN" means any interest in property securing an obligation
owed to, or a claim by, any Person other than the owner of the property,
whether such interest shall be based on the common law, statute, or contract,
whether such interest shall be recorded or perfected, and whether such
interest shall be contingent upon the occurrence of some future event or
events or the existence of some future circumstance or circumstances,
including the lien or security interest arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
security agreement, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property.
"LIQUIDATION VALUE" means the net orderly liquidation value of
Borrower's international long distance business, as determined by Ernst &
Young LLP or any other qualified auctioneering or appraisal company selected
by the Lenders that have a Term Loan Commitment.
"LOAN ACCOUNT" has the meaning set forth in SECTION 2.10.
"LOAN DOCUMENTS" means this Agreement, the Disbursement Letter,
the Fee Letter, the Lockbox Agreements, the Letters of Credit, the F/X
Undertakings, the Pledge Agreement, the Copyright Security Agreement, the
Trademark Security Agreement, the Guaranty, the Suretyship Agreement, the
Intercompany Subordination Agreements, the Control Agreements (if any), any
note or notes executed by Borrower in connection with this Agreement and
payable to a member of the Lender Group, and any other agreement entered
into, now or in the future, by Borrower and the Lender Group in connection
with this Agreement.
"LOCKBOX ACCOUNT" shall mean a depositary account established
pursuant to one of the Lockbox Agreements.
"LOCKBOX AGREEMENTS" means those certain lockbox agreements and
those certain depository agreements, in form and substance reasonably
satisfactory to Agent, each of which is among Borrower, Agent, and one of the
Lockbox Banks.
"LOCKBOX BANKS" means Bank of America, The Chase Manhattan
Bank, and NationsBank (or such other banks as may be agreed to by Agent and
Borrower from time to time).
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"LOCKBOXES" has the meaning set forth in SECTION 2.7.
"LUCIUS" has the meaning set forth in the preamble hereto.
"MATERIAL ADVERSE CHANGE" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of the Obligors, taken as a
whole, (b) the material impairment of any Obligor's ability to perform its
obligations under the Loan Documents to which it is a party or of the Lender
Group to enforce the Obligations or realize upon the Collateral, or (c) a
material impairment of the priority of the Agent's Liens or Agent's Term Loan
Liens with respect to the Collateral as a result of an action or failure to
act on the part of any Obligor.
"MATURITY DATE" has the meaning set forth in SECTION 3.4.
"MAXIMUM AMOUNT" means $100,000,000.
"MAXIMUM REVOLVER AMOUNT" means $75,000,000.
"NATIONWIDE" has the meaning set forth in the preamble hereto.
"NEGOTIABLE COLLATERAL" means all of the Obligors' now owned
and hereafter acquired letters of credit, notes, drafts, instruments,
security certificates, documents, and chattel paper.
"NON-MATERIAL SUBSIDIARIES" means, individually and
collectively, the Subsidiaries of Star identified on SCHEDULE N-1, which
schedule Administrative Borrower may amend in writing from time to time with
the written approval of Agent in its Permitted Discretion.
"OBLIGATIONS" means all loans (including the Term Loan),
Advances, debts, principal, interest (including any interest that, but for
the provisions of the Bankruptcy Code, would have accrued), contingent
reimbursement obligations under any outstanding Letters of Credit or F/X
Undertakings, premiums, liabilities (including all amounts charged to
Borrower's Loan Account pursuant hereto), obligations, fees (including the
fees provided for in the Fee Letter), charges, costs, or Lender Group
Expenses (including any fees or expenses that, but for the provisions of the
Bankruptcy Code, would have accrued), lease payments, guaranties, covenants,
and duties owing by the Obligors to the Lender Group of any kind and
description pursuant to or evidenced by the Loan Documents, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising.
"OBLIGORS" means, individually and collectively, Borrower and
Guarantors.
"OVERADVANCE" has the meaning set forth in SECTION 2.5.
"PARTICIPANT" has the meaning set forth in SECTION 14.1(e).
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"PAYABLES RESERVE" means, as of any date of determination, a
reserve equal to the sum of (a) the aggregate amount of obligations of the
Obligors for a month with respect to all Cable Agreements, IRUs, leases, and
licenses to which any one or more of the Obligors is party, and (b) the
aggregate amount of net obligations of the Obligors for a month with respect
to each of the Carrier Agreements.
"PAY-OFF LETTER" means a letter, in form and substance
reasonably satisfactory to Agent, from each Existing Lender to Agent
respecting the amount necessary to repay in full all of the obligations of
Borrower owing to such Existing Lender and obtain a release of all of the
Liens existing in favor of such Existing Lender in and to the assets of
Borrower.
"PERMITS" of a Person shall mean all rights, franchises,
permits, authorities, licenses, certificates of approval or authorizations,
including licenses and other authorizations issuable by a Governmental
Authority, which pursuant to applicable Legal Requirements are necessary to
permit such Person lawfully to conduct and operate its business as currently
conducted and to own and use its assets.
"PERMITTED DISCRETION", with respect to any determination by a
member of the Lender Group, means a determination made in good faith and in
the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"PERMITTED DISPOSITIONS" means (a) sales or other dispositions
of Equipment that is substantially worn, damaged, or obsolete, or is
otherwise replaced, in the ordinary course of the Obligors' business, (b) the
use or transfer of money, or cash equivalents by an Obligor in a manner that
is not prohibited by the terms of this Agreement or the other Loan Documents,
(c) the European Spin Off, and (d) the sale of Equipment having a fair market
value of not more than $1,000,000 in the aggregate in any consecutive 12
month period.
"PERMITTED F/X CONTRACTS" means foreign currency exchange
contracts between F/X Bank and Borrower that: (a) are in respect of
marked-to-market risk on foreign exchange future trades or options; (b) are
entered into by Borrower in the ordinary course of its business; (c) are
entered into in connection with the operational needs of Borrower's business
and not for speculative purposes; (d) do not have a maturity date that is
after the date five (5) Business Days prior to the Maturity Date; and (e) are
provided by F/X Bank pursuant to the F/X Bank Parameters Letter.
"PERMITTED HOLDER" means a "person" or "group" (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act) that, as of the
Closing Date, is the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, 15% or more of the total voting power
of all classes of Stock then outstanding of Star entitled to vote in the
election of directors.
"PERMITTED INVESTMENTS" means, collectively: (a) direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America with a maturity
not exceeding one year; (b) certificates of
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deposit, time deposits, banker's acceptances or other instruments of a bank
having a combined capital and surplus of not less than $500,000,000 with a
maturity not exceeding one year, (c) investments in commercial paper rated at
least A-1 or P-1 maturing within one year after the date of acquisition
thereof; (d) money market accounts maintained at a bank having combined
capital and surplus of no less than $500,000,000 or at any other financial
institution reasonably satisfactory to Agent; (e) money market funds invested
in one or more of the Investments described in items (a), (b), (c), and (d)
above; (f) loans and advances to officers and employees of Borrower in the
ordinary course of business in an aggregate amount at any one time
outstanding not to exceed $500,000; (g) investments in negotiable instruments
for collection; (h) advances made in connection with purchases of goods or
services in the ordinary course of business; (i) Investments made by any
Borrower, Allstar, or CEO California in any other Borrower, Allstar, or CEO
California; (j) Investments made by any Guarantor in any Borrower; (k) until
the earlier to occur of March 31, 2000 and the consummation of the European
Spin Off, (1) if and to the extent Excess Availability is not less than
$3,000,000 after giving effect to any such Investment, Investments made from
time to time by any Borrower in the European Subsidiaries in an aggregate
amount not to exceed (x) during the period commencing on the Closing Date and
ending on the earlier to occur of September 30, 1999 and the consummation of
the European Spin Off, $3,333,333.34, (y) if the European Spin Off has not
been consummated on or before September 30, 1999, then, during the period
commencing on October 1, 1999 and ending on the earlier to occur of December
31, 1999 and the consummation of the European Spin Off, $3,333,333.33 plus
the amount permitted but not invested under clause (x) above, and (z) if the
European Spin Off has not been consummated on or before December 31, 1999,
then, during the period commencing on January 1, 2000 and ending on the
earlier to occur of March 31, 2000 and the consummation of the European Spin
Off, $3,333,333.33 plus the amount permitted but not invested under clauses
(x) and (y) above, and (2) the transmssion of money, in the ordinary course
of business, by any Obligor to Star's primary German Subsidiary, Star
Telecommunications GmbH ("Star GmbH"), for the sole purpose of enabling Star
GmbH to remit payment of Star GmbH's trade obligations owing to Deutsche
Telekom; (l) Investments made by any Borrower in the Guarantors and the
Non-Material Subsidiaries, so long as the aggregate outstanding amount of
such Investments do not exceed $1,000,000 at any time; (m) Investments in the
Stock of Persons owning telecommunications switching Equipment, fiber optic
cable networks, IRUs, and similar telecommunications infrastructure items, so
long as such Investments are made solely with the proceeds of Permitted
Subordinated Debt; and (n) Investments other than as described in items (a)
through (m) above, so long as the aggregate outstanding amount of such
Investments does not exceed $1,000,000 at any time.
"PERMITTED LIENS" means (a) Liens held by Agent for the benefit
of the Lender Group, (b) Liens for unpaid taxes that either (i) are not yet
due and payable or (ii) do not constitute an Event of Default hereunder and
are the subject of Permitted Protests, (c) Liens set forth on SCHEDULE P-1,
(d) the interests of lessors under operating leases, (e) purchase
-21-
money Liens or the interests of lessors under Capital Leases to the extent
that such Liens or interests secure Permitted Purchase Money Indebtedness and
so long as the Lien attaches only to the asset purchased or acquired and the
proceeds thereof, (f) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business of the applicable
Obligor and not in connection with the borrowing of money, and which Liens
either (i) are for sums not yet due and payable, or (ii) are the subject of
Permitted Protests, (g) Liens arising from deposits made in connection with
obtaining worker's compensation or other unemployment insurance, (h) Liens or
deposits to secure performance of bids, tenders, leases, or other agreements
incurred in the ordinary course of business of the applicable Obligor and not
in connection with the borrowing of money, (i) Liens arising by reason of
security for surety or appeal bonds in the ordinary course of business of the
applicable Obligor, (j) Liens resulting from any judgment or award that is
not an Event of Default hereunder, and (k) with respect to any Real Property,
easements, rights of way, zoning and similar covenants and restrictions, and
similar encumbrances that customarily exist on properties of Persons engaged
in similar activities and similarly situated and that in any event do not
materially interfere with or impair the use or operation of the Collateral by
the Obligors or the value of any of the Agent's Liens or Agent's Term Loan
Liens thereon or therein for the benefit of the Lender Group, or materially
interfere with the ordinary conduct of the business of the Obligors.
"PERMITTED PROTEST" means the right of an Obligor to protest
any Lien (other than any such Lien that secures the Obligations), tax (other
than payroll taxes or taxes that are the subject of a United States federal
tax lien), or rental or license payment, provided that (a) a Reserve with
respect to such obligation is established on the Books in such amount as is
required under GAAP, (b) any such protest is instituted and diligently
prosecuted by the such Obligor in good faith, and (c) Agent is satisfied
that, while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Liens of Agent on behalf
of the Lender Group in and to the Collateral, or any collateral provided by
any other Obligor.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" means, as of any date
of determination, Purchase Money Indebtedness incurred after the Closing Date
in an aggregate amount outstanding at any one time not to exceed the lesser
of (a) $125,000,000 and (b) the maximum cumulative amount then permitted
under SECTION 7.21.
"PERMITTED SUBORDINATED DEBT" means unsecured Indebtedness of
Star, in an amount (but in any event not less than $50,000,000) and on terms
and conditions (including relative to the subordination of such Indebtedness
to the Obligations) satisfactory to all Lenders.
"PERSON" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
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"PHONETIME" has the meaning set forth in the preamble hereto.
"PLATFORM" has the meaning set forth in the preamble hereto.
"PLEDGE AGREEMENT" means a pledge agreement, in form and
substance satisfactory to Agent in its Permitted Discretion, executed and
delivered by each Obligor to Agent with respect to the pledge of the Stock of
each of each Obligor's Subsidiaries.
"PROJECTIONS" means Borrower's forecasted (a) balance sheets,
(b) income statements, and (c) cash flow statements, all prepared on a
consistent basis with Borrower's historical financial statements, together
with appropriate supporting details and a statement of underlying assumptions.
"PRO RATA SHARE" means:
(a) with respect to a Lender's obligation to make Advances
and receive payments of interest, fees, and principal with respect thereto,
the percentage obtained by dividing (i) such Lender's Revolving Credit
Commitment, by (ii) the aggregate amount of all Lenders' Revolving Credit
Commitments,
(b) with respect to a Lender's obligation to participate in
Letters of Credit, and receive payments with respect thereto, the percentage
obtained by dividing (i) such Lender's Letters of Credit Sub-Commitment, by
(ii) the aggregate amount of all Lenders' Letters of Credit Sub-Commitments,
(c) with respect to a Lender's obligation to participate in
F/X Undertakings, and receive payments with respect thereto, the percentage
obtained by dividing (i) such Lender's F/X Undertakings Sub-Commitment, by
(ii) the aggregate amount of all Lenders' F/X Undertakings Sub-Commitments,
(d) with respect to a Lender's obligation to make the Term
Loan and receive payments of interest, fees, and principal with respect
thereto, the percentage obtained by dividing (i) such Lender's Term Loan
Commitment, by (ii) the aggregate amount of all Lenders' Term Loan
Commitments, and
(e) with respect to all other matters (including the
indemnification obligations arising under SECTION 16.7), the percentage
obtained by dividing (i) such Lender's Total Commitment, by (ii) the
aggregate amount of all Lenders' Total Commitments.
"PT-1" has the meaning set forth in the preamble hereto.
"PT-1 HI" has the meaning set forth in the preamble hereto.
"PT-1 HII" has the meaning set forth in the preamble hereto.
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"PT-1 LONG DISTANCE" has the meaning set forth in the preamble
hereto.
"PT-1 PHONECARD" has the meaning set forth in the preamble
hereto.
"PT-1 PUERTO RICO" has the meaning set forth in the preamble
hereto.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at
the time of, or within 120 days after, the acquisition of any fixed assets
for the purpose of financing all or any part of the acquisition cost thereof,
together with any cost of installation thereof, shipping thereof, and sales
tax with respect thereto, so long as the amount of such Indebtedness does not
exceed 110% of the purchase price for the applicable fixed assets.
"REAL PROPERTY" means any estates or interests in real property
now owned or hereafter acquired by one or more of the Obligors.
"REQUIRED LENDERS" means, at any time, Lenders whose Pro Rata
Shares aggregate 51% of the Total Commitments, or if the Commitments have
been terminated irrevocably, 51% of the Obligations then outstanding.
"RESERVES" means the Payables Reserve and any other reserves
that may be established under this Agreement.
"RESERVE PERCENTAGE" means, on any day, that percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor Governmental Authority) for determining the reserve requirements
(including any basic, supplemental, marginal, or emergency reserves) that is
in effect on such date with respect to deposits of Dollars in a non-United
States or an international banking office of a bank used to fund a LIBOR Rate
Advance.
"REVOLVING CREDIT COMMITMENT" means, for each Lender, the
Dollar amount of the obligation of such Lender to make Advances (in an
aggregate amount at one time outstanding), as such amount is set forth
opposite the name of such Lender under the caption Revolving Credit
Commitment on SCHEDULE C-1.
"REVOLVER USAGE" means, as of any date of determination, the
sum of (a) the aggregate amount of Advances outstanding, PLUS (b) the amount
of the Letter of Credit Usage and the F/X Reserve.
"RISK PARTICIPATION LIABILITY" means: (a) as to each Letter of
Credit, all reimbursement obligations of Borrower to the issuer of an L/C or
to the issuer of a letter of credit with respect to the transaction for which
an L/C Undertaking was executed and delivered (to the extent such
reimbursement obligations are subject to such L/C Undertaking), consisting of
(i) the amount available to be drawn or which may become available to be
drawn, (ii) all amounts which have been paid and made available by the
issuing bank to the extent not reimbursed by Borrower, whether by the making
of an
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Advance or otherwise, and (iii) all accrued and unpaid interest, fees, and
expenses payable with respect thereto; and (b) as to each F/X Undertaking,
all reimbursement obligations of Borrower to F/X Bank with respect to the
transaction for which an F/X Undertaking was executed and delivered (to the
extent such reimbursement obligations are subject to such F/X Undertaking),
consisting of (i) the amount available to be drawn or which may become
available to be drawn, (ii) all amounts which have been paid and made
available by Agent thereunder to the extent not reimbursed by Borrower,
whether by the making of an Advance or otherwise, and (iii) all accrued and
unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"SECURITIES ACCOUNT" means a "securities account" as that term
is defined in Section 8-501 of the Code.
"SETTLEMENT" has the meaning set forth in SECTION 2.3(f)(i).
"SETTLEMENT DATE" has the meaning set forth in SECTION
2.3(f)(i).
"SOLVENT" means, with respect to any Person on a particular
date, that on such date (a) at fair valuations, all of the properties and
assets of such Person are greater than the sum of the debts, including
contingent liabilities, of such Person, (b) the present fair salable value of
the properties and assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (c) such Person is able to realize upon its
properties and assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it
will, incur debts beyond such Person's ability to pay as such debts mature,
and (e) such Person has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to
engage, after giving due consideration to the prevailing practices in the
industry in which such Person is engaged. In computing the amount of
contingent liabilities at any time, it is intended that such liabilities will
be computed at the amount that, in light of all the facts and circumstances
existing at such time, represents the amount that reasonably can be expected
to become an actual or matured liability.
"STAR" has the meaning set forth in the preamble hereto.
"STAR OPERATING SUB" has the meaning set forth in the
definition of "Structuring Transactions".
"STOCK" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in
a Person, whether voting or nonvoting, including common stock, preferred
stock, or any other "equity security" (as such term is
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defined in Rule 3a11-1 of the General Rules and Regulations promulgated by
the SEC under the Exchange Act).
"STRUCTURING TRANSACTIONS" means the following transactions:
(a) the creation by Star of one or more (but no more than 4) new wholly-owned
direct Subsidiaries (organized under the laws of one of the states of the
United States) of Star (individually and collectively, "Star Operating Sub");
(b) the transfer by Star of all of its assets to Star Operating Sub, and the
assumption by Star Operating Sub of all of Star's liabilities (other than the
Obligations), as consideration for the issuance by Star Operating Sub to Star
of all issued and outstanding Stock of Star Operating Sub; and (c) the
execution and delivery of all documents set forth in SECTION 4.4(b) in
connection with Star Operating Sub becoming an additional "Borrower" under
this Agreement and the other Loan Documents.
"SUBSIDIARY" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power
to elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or
other entity.
"SURETYSHIP AGREEMENT" means a Suretyship Agreement, in form
and substance satisfactory to Agent in its Permitted Discretion, executed and
delivered by each Borrower to Agent for the benefit of the Lender Group.
"SWING LENDER" means any Lender appointed by the Agent in
writing, and which appointment has been accepted by such Lender in writing,
as the "Swing Lender".
"SWING LOAN" has the meaning set forth in SECTION 2.3(d)(i).
"SWITCH FINANCING PARTY" means any Person that provides
financing or other financial accommodations to any Obligor for the purchase
or lease of telecommunications switching Equipment.
"TANGIBLE NET WORTH" means, as of any date of determination,
the difference of (a) Star's total stockholder's equity, MINUS (b) the sum
of: (i) all Intangible Assets of Star, (ii) all of Star's prepaid expenses,
and (iii) all amounts due to Star from Affiliates.
"TECHNOLOGY LEASING" has the meaning set forth in the preamble
hereto.
"TERM LOAN" has the meaning set forth in SECTION 2.2.
"TERM LOAN AMOUNT" means, as of any date of determination, the
outstanding principal amount of the Term Loan.
"TERM LOAN COMMITMENT" means, for each Lender, (a) prior to the
funding of the Term Loan, the Dollar amount of the obligation of such Lender
to make its portion of the Term Loan, as such amount is set forth opposite
the name of such Lender under the caption
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Term Loan Commitment on SCHEDULE C-1, and (b) thereafter, such Lender's Pro
Rata Share of the then outstanding principal amount of the Term Loan; it
being understood that, as of any date of determination from and after the
funding of the Term Loan, the total Term Loan Commitments for all Lenders
shall be the then outstanding aggregate principal amount of the Term Loan.
"TERM LOAN EXTENSION FEE" means a fee, payable to Agent for its
sole and separate account and not for the account of any Lender, in the
amount of 2% of the original principal amount of the Term Loan.
"TOTAL COMMITMENT" means, for each Lender, the sum of such
Lender's Revolving Credit Commitment (inclusive, without duplication, of such
Lender's Letter of Credit Sub-Commitment and such Lender's F/X Undertaking
Sub-Commitment) and such Lender's Term Loan Commitment, as such amount is set
forth opposite the name of such Lender under the caption Total Commitment on
SCHEDULE C-1.
"TRADEMARK SECURITY AGREEMENT" means that certain Trademark
Security Agreement, dated as of even date herewith, between the Obligors and
Agent, in form and substance satisfactory to Agent in its Permitted
Discretion.
"VOIDABLE TRANSFER" has the meaning set forth in SECTION 17.7.
"YEAR 2000 COMPLIANT" means, with regard to any Person, that
all software in goods produced or sold by, or utilized by and material to the
business operations or financial condition of, such Person are able to
interpret and manipulate data on and involving all calendar dates correctly
and without causing any abnormal ending scenario, including in relation to
dates on and after the year 2000.
1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein,
the term "financial statements" shall include the notes and schedules
thereto. Whenever the term "Star" or "Borrower" or the "Obligors" is used in
respect of a financial covenant or a related definition, it shall be
understood to mean the Star and its Subsidiaries on a consolidated basis
unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Code unless otherwise
defined herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any
other Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the term
"including" is not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The
words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular
provision of this Agreement or such other Loan
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Document, as the case may be. Section, subsection, clause, schedule, and
exhibit references herein are to this Agreement unless otherwise specified.
Any reference in this Agreement or in the Loan Documents to this Agreement or
any of the Loan Documents shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders,
and supplements, thereto and thereof, as applicable.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement,
and during the term of this Agreement, each Lender with a Revolving Credit
Commitment agrees to make advances ("ADVANCES") to Borrower in an amount at
any one time outstanding not to exceed such Lender's Pro Rata Share of an
amount equal to THE LESSER OF (i) the Maximum Revolver Amount LESS the Agency
Fee Amount, the Letter of Credit Usage, and the F/X Reserve, or (ii) the
Borrowing Base LESS the Letter of Credit Usage and the F/X Reserve. For
purposes of this Agreement, "BORROWING BASE," as of any date of
determination, shall mean the result of:
(y) THE LESSER OF
(i) the result of (A) the sum of (1)
from and after the date that Agent shall have
completed an audit of Borrower's Foreign
Accounts, the results of which shall be
satisfactory to Agent in its Permitted
Discretion, the lesser of (W) $7,500,000, and
(X) the result of (I) 85% of the amount of
Eligible Foreign Accounts, MINUS (II) the
Foreign Accounts Reserve, PLUS (2) 85% of the
amount of Eligible Domestic Accounts, MINUS
(B) the amount, if any, of the Dilution
Reserve, and
(ii) the greater of (y) zero (-0-) and
(z) an amount equal to 100% Borrower's
Collections with respect to Eligible Accounts
for the immediately preceding 60 day period,
less the Term Loan Amount,
MINUS
(z) the aggregate amount of Reserves, if any, established by
Agent under SECTION 2.1(b).
(b) Anything to the contrary in this SECTION 2.1
notwithstanding, Agent shall have the right to establish reserves (without
duplication) in such amounts, and
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with respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) the Payables Reserve, (ii) variances in Borrower's Accounts
with respect to Borrower's general ledger, (iii) sums that the Obligors are
required to pay (such as taxes, assessments, insurance premiums, or, in the
case of leased assets, rents or other amounts payable under such leases) and
have failed to pay under any Section of this Agreement or any other Loan
Document, and (iv) amounts owing by an Obligor to any Person to the extent
secured by a Lien on, or trust over, any of the Collateral, which Lien or
trust, in the reasonable determination of Lender (from the perspective of an
asset-based lender), would be likely to have a priority superior to the Liens
of Agent, for the benefit of the Lender Group (such as landlord liens, ad
valorem taxes, or sales or excise taxes where given priority under applicable
law) in and to such item of the Collateral.
(c) The Lenders shall have no obligation to make further
Advances hereunder to the extent such further Advances would cause the
Revolver Usage to exceed the Maximum Revolver Amount less the Agency Fee
Amount, the Letter of Credit Usage, and the F/X Reserve.
(d) Amounts borrowed pursuant to this Section may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
2.2 TERM LOAN. Subject to the terms and conditions of this
Agreement, each Lender with a Term Loan Commitment agrees, severally and not
jointly, to make a term loan on the Closing Date (collectively, the "Term
Loan") to Borrower in the original principal amount equal to its Pro Rata
Share of $25,000,000. The outstanding unpaid principal balance and all
accrued and unpaid interest under the Term Loan Amount shall be due and
payable upon the earliest of (a) the first anniversary of the Closing Date
(or on the Maturity Date, if (i) Agent receives, on or before the date that
is 270 days following the Closing Date, (y) from Borrower the Term Loan
Extension Fee and (z) from Administrative Borrower written notice of
Borrower's election (which election shall be irrevocable) to extend the
scheduled maturity of the Term Loan Amount from the first anniversary of the
Closing Date to the Maturity Date, and (ii) no Event of Default has occurred
and is continuing at the time of such election), or (b) the termination of
this Agreement, whether by its terms, by prepayment, by acceleration, or
otherwise; PROVIDED, HOWEVER, that, without the written consent of the
Required Lenders, no principal payment in respect of the Term Loan Amount
shall be made unless and to the extent that, after giving effect thereto,
Excess Availability is not less than $15,000,000. The unpaid principal
balance of the Term Loan Amount may be prepaid, without payment of any
premium or penalty, in whole or in part at any time during the term of this
Agreement upon 30 days prior written notice by Administrative Borrower to
Agent (a copy of which notice Agent shall provide promptly upon its receipt
to each Lender with a Term Loan Commitment); PROVIDED, HOWEVER, that, no such
prepayment of the Term Loan Amount shall be made
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unless and to the extent that, after giving effect thereto, Excess
Availability is not less than $15,000,000. All amounts outstanding under the
Term Loan shall constitute Obligations.
2.3 BORROWING PROCEDURES AND SETTLEMENTS
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made
by an irrevocable written request by an Authorized Person delivered to Agent
(which notice must be received by Agent no later than 11:00 a.m. (California
time) on the Business Day immediately preceding the requested Funding Date);
PROVIDED, HOWEVER, that in the case of a request for Swing Loan in an amount
of $5,000,000, or less, such notice will be timely received if it is received
by Agent no later than 11:00 a.m. (California time) on the Business Day that
is the requested Funding Date) specifying (i) the amount of such Borrowing,
and (ii) the requested Funding Date, which shall be a Business Day. At
Agent's election, in lieu of delivering the above-described written request,
any Authorized Person may give Agent telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing within
24 hours of the giving of such notice.
(b) AGENT'S ELECTION. Promptly after receipt of a request
for a Borrowing pursuant to SECTION 2.3(a), Agent shall elect, in its
discretion, (i) to have the terms of SECTION 2.3(c) apply to such requested
Borrowing, or (ii) to request Swing Lender to make a Swing Loan pursuant to
the terms of SECTION 2.3(d) in the amount of the requested Borrowing;
PROVIDED, HOWEVER, that if Swing Lender declines in its sole discretion to
make a Swing Loan pursuant to SECTION 2.3(d), Agent shall elect to have the
terms of SECTION 2.3(c) apply to such requested Borrowing.
(c) MAKING OF ADVANCES.
(i) In the event that Agent shall elect to have the terms of
this SECTION 2.3(c) apply to a requested Borrowing as described in
SECTION 2.3(b), then promptly after receipt of a request for a Borrowing
pursuant to SECTION 2.3(a), Agent shall notify the Lenders, not later
than 1:00 p.m. (California time) on the Business Day immediately
preceding the Funding Date applicable thereto, by telecopy, telephone, or
other similar form of transmission, of the requested Borrowing. Each
Lender shall make the amount of such Lender's Pro Rata Share of the
requested Borrowing available to Agent in immediately available funds, to
such account of Agent as Agent may designate, not later than 10:00 a.m.
(California time) on the Funding Date applicable thereto. After Agent's
receipt of the proceeds of such Advances, Agent shall make the proceeds
of such Advances available to Borrower on the applicable Funding Date by
transferring same day funds equal to the proceeds of such Advances
received by Agent to Borrower's Designated Account; PROVIDED, HOWEVER,
that, subject to the provisions of SECTION 2.3(i), Agent shall not
request any Lender to make, and no Lender shall make, any Advance if
Agent shall have received written notice from any Lender, or otherwise
has actual knowledge, that (1) one or more of the applicable conditions
precedent set forth in SECTION
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3 will not be satisfied on the requested Funding Date for the applicable
Borrowing (unless such condition has been waived in accordance herewith),
or (2) the requested Borrowing would exceed the Availability of Borrower
on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing
Date, at least 1 Business Day prior to the date of such Borrowing, that
such Lender will not make available (as and when required hereunder to
Agent for the account of Borrower) the amount of that Lender's Pro Rata
Share of the Borrowing, Agent may assume that each Lender has made or
will make such amount available to Agent in immediately available funds
on the Funding Date and Agent may (but shall not be so required), in
reliance upon such assumption, make available to Borrower on such date a
corresponding amount. If and to the extent any Lender shall not have
made its full amount available to Agent in immediately available funds
and Agent in such circumstances has made available to Borrower such
amount, that Lender shall on the Business Day following such Funding Date
make such amount available to Agent, together with interest at the
Defaulting Lender Rate for each day during such period. A notice
submitted by Agent to any Lender with respect to amounts owing under this
subsection shall be conclusive, absent manifest error. If such amount is
so made available, such payment to Agent shall constitute such Lender's
Advance on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to Agent on the Business Day following
the Funding Date, Agent will notify Borrower of such failure to fund and,
upon demand by Agent, Borrower shall pay such amount to Agent for Agent's
account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing such Borrowing. The
failure of any Lender to make any Advance on any Funding Date shall not
relieve any other Lender of any obligation hereunder to make an Advance
on such Funding Date, but no Lender shall be responsible for the failure
of any other Lender to make the Advance to be made by such other Lender
on any Funding Date.
(iii) Agent shall not be obligated to, and without Borrower's
prior written consent shall not, transfer to a Defaulting Lender any
payments made by Borrower to Agent for the Defaulting Lender's benefit,
and in the absence of such consent Agent shall transfer any such payments
to each other non-Defaulting Lender member of the Lender Group ratably in
accordance with their Revolving Credit Commitments (but only to the
extent that such Defaulting Lender's Advance was funded by the other
members of the Lender Group) or, if so directed by Borrower and if no
Default or Event of Default had occurred and is continuing (and to the
extent such Defaulting Lender's Advance was not funded by the Lender
Group), retain same to be re-advanced to Borrower as if such Defaulting
Lender had made Advances to Borrower;
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nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder. Amounts payable to a Defaulting Lender shall
instead be paid to or retained by Agent as permitted herein.
Subject to the foregoing, Agent may hold and, in its Permitted
Discretion, re-lend to Borrower for the account of such Defaulting
Lender the amount of all such payments received or retained by it for
the account of such Defaulting Lender. Solely for the purposes of
voting or consenting to matters with respect to the Loan Documents and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not
to be a "Lender" and such Lender's Commitment shall be deemed to be zero
(-0-). This section shall remain effective with respect to such Lender
until (x) the Obligations under this Agreement shall have been declared
or shall have become immediately due and payable, (y) the requisite
non-Defaulting Lenders and Agent shall have waived such Lender's default
in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the
Advance and pays to Agent all amounts owing by Defaulting Lender in
respect thereof. The operation of this section shall not be construed to
increase or otherwise affect the Commitment of any Lender, to relieve or
excuse the performance by such Defaulting Lender or any other Lender of
its duties and obligations hereunder or to relieve or excuse the
performance by Borrower of its duties and obligations hereunder to Agent
or to Lenders other than such Defaulting Lender. Any such failure to
fund by any Defaulting Lender shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Borrower at its
option, upon written notice to Agent, to arrange for a substitute Lender
to assume the Commitment of such Defaulting Lender, such substitute
Lender to be acceptable to Agent, such consent not to be unreasonably
withheld. In connection with the arrangement of such a substitute
Lender, the Defaulting Lender shall have no right to refuse to be
replaced hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance Agreement in favor of the substitute Lender
(and agrees that it shall be deemed to have executed and delivered such
document if it fails to do so) subject only to being repaid its share of
the outstanding Obligations (including an assumption of its Risk
Participation Liability) without any premium or penalty of any kind
whatsoever; PROVIDED FURTHER, HOWEVER, that any such assumption of the
Commitment of such Defaulting Lender shall not be deemed to constitute a
waiver of any of Borrower's rights or remedies against any such
Defaulting Lender's arising out of or in relation to such failure to
fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the consent of Swing
Lender, as a Lender, to have the terms of this SECTION 2.3(d) apply to a
requested Borrowing as described in SECTION 2.3(b), Swing Lender as a
Lender shall make an Advance in the amount of such Borrowing (any such
Advance made solely by Swing Lender as a Lender pursuant to this SECTION
2.3(d) being referred to as a "Swing Loan" and such Advances being
referred to
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collectively as "Swing Loans") available to Borrower on the Funding
Date applicable thereto by transferring same day funds to Borrower's
Designated Account. Each Swing Loan is an Advance hereunder and shall
be subject to all the terms and conditions applicable to other Advances,
except that all payments thereon shall be payable to Swing Lender as a
Lender solely for its own account (and for the account of the holder
of any participation interest with respect to such Advance). Subject
to the provisions of SECTION 2.3(i), Agent shall not request Swing
Lender as a Lender to make, and Swing Lender as a Lender shall not
make, any Swing Loan if Agent shall have received written notice from any
Lender, or otherwise has actual knowledge, that (i) one or more of the
applicable conditions precedent set forth in SECTION 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing
(unless such condition has been waived in accordance herewith), or (ii)
the requested Borrowing would exceed the Availability of Borrower on such
Funding Date. Swing Lender as a Lender shall not otherwise be required
to determine whether the applicable conditions precedent set forth in
SECTION 3 have been satisfied on the Funding Date applicable thereto
prior to making, in its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens on
the Collateral, shall constitute Advances and Obligations hereunder, and
shall bear interest at the rate applicable from time to time to Advances
pursuant to SECTION 2.6 hereof.
(e) AGENT ADVANCES.
(i) Subject to the limitations set forth in the proviso
contained in this SECTION 2.3(e), Agent hereby is authorized by Borrower
and the Lenders, from time to time in Agent's sole discretion, (1) after
the occurrence and during the continuance of a Default or an Event of
Default, or (2) at any time that any of the other applicable conditions
precedent set forth in SECTION 3 have not been satisfied, to make
Advances to Borrower on behalf of the Lenders that Agent, in its
Permitted Discretion, deems necessary or desirable (A) to preserve or
protect the Collateral, or any portion thereof, (B) to enhance the
likelihood of repayment of the Obligations, or (C) to pay any other
amount chargeable to Borrower pursuant to the terms of this Agreement,
including Lender Group Expenses and the costs, fees, and expenses
described in SECTION 10 (any of the Advances described in this SECTION
2.3(e) being hereinafter referred to as "Agent Advances"); PROVIDED,
HOWEVER, that the Required Lenders may at any time revoke Agent's
authorization contained in this SECTION 2.3(e) to make Agent Advances,
any such revocation to be in writing and to become effective from and
after Agent's receipt thereof.
(ii) Agent Advances shall be repayable on demand, shall be
secured by the Agent's Liens on the Collateral, shall constitute Advances
and
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Obligations hereunder, and shall bear interest at the rate applicable
from time to time to the Advances pursuant to SECTION 2.6 hereof.
(f) SETTLEMENT. It is agreed that each Lender's funded
portion of the Advances is intended by the Lenders to equal, at all times,
such Lender's Pro Rata Share of the outstanding Advances. Such agreement
notwithstanding, Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of, or enforceable by, Borrower) that,
in order to facilitate the administration of this Agreement and the other
Loan Documents, settlement among them as to the Advances, the Swing Loans,
and the Agent Advances shall take place on a periodic basis in accordance
with the following provisions:
(i) Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined
by Agent, (1) on behalf of Swing Lender, with respect to each outstanding
Swing Loan, (2) for itself, with respect to each Agent Advance, and (3)
with respect to Collections received, as to each by notifying the Lenders
by telecopy, telephone, or other similar form of transmission, of such
requested Settlement, no later than 2:00 p.m. (California time) on the
Business Day immediately prior to the date of such requested Settlement
(the date of such requested Settlement being the "Settlement Date").
Such notice of a Settlement Date shall include a summary statement of the
amount of outstanding Advances, Swing Loans, and Agent Advances for the
period since the prior Settlement Date, the amount of repayments received
in such period, and the amounts allocated to each Lender of the interest,
fees, and other charges for such period. Subject to the terms and
conditions contained herein (including SECTION 2.3(c)(iii)): (y) if a
Lender's outstanding balance of the Advances, Swing Loans, and Agent
Advances exceeds such Lender's Pro Rata Share of the Advances, Swing
Loans, and Agent Advances as of a Settlement Date, then Agent shall by no
later than 12:00 p.m. (California time) on the Settlement Date transfer
in immediately available funds to the account of such Lender as such
Lender may designate, an amount such that such Lender shall, upon its
receipt of such amount, have as of the Settlement Date, its Pro Rata
Share of the Advances, Swing Loans, and Agent Advances; and (z) if a
Lender's balance of the Advances, Swing Loans, and Agent Advances is less
than such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent
Advances as of a Settlement Date, such Lender shall no later than 12:00
p.m. (California time) on the Settlement Date transfer in immediately
available funds to such account of Agent as Agent may designate, an
amount such that such Lender shall, upon Agent's receipt of such amount,
have as of the Settlement Date, its Pro Rata Share of the Advances, Swing
Loans, and Agent Advances. Such amounts made available to Agent under
clause (z) of the immediately preceding sentence shall be applied against
the amounts of the applicable Swing Loan or Agent Advance and, together
with the portion of such Swing Loan or Agent Advance representing Swing
Lender's Pro Rata Share thereof, shall constitute Advances of such
Lenders. If any such amount
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is not made available to Agent by any Lender on the Settlement Date
applicable thereto to the extent required by the terms hereof, Agent
shall be entitled to recover for its account such amount on demand
from such Lender together with interest thereon at the Defaulting
Lender Rate.
(ii) In determining whether a Lender's outstanding balance of
the Advances, Swing Loans, and Agent Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Swing Loans,
and Agent Advances as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments
actually received in good funds by Agent or Swing Lender with respect to
principal, interest, fees payable by Borrower and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a net
amount is owed to any Lender after such application, such net amount
shall be distributed by Agent or Swing Lender to that Lender as part of
such Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing Lender any
payments received by Agent, that in accordance with the terms of this
Agreement would be applied to the reduction of the Advances, for
application to Swing Lender's Pro Rata Share of the Advances. If, as of
any Settlement Date, Collections received since the then immediately
preceding Settlement Date have been applied to Swing Lender's Pro Rata
Share of the Advances other than to Swing Loans or Agent Advances, as
provided for in the previous sentence, Swing Lender shall pay to Agent
for the accounts of the Lenders, and Agent shall pay to the Lenders, to
be applied to the outstanding Advances of such Lenders, an amount such
that each Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Advances. During the period
between Settlement Dates, Swing Lender with respect to Swing Loans, Agent
with respect to Agent Advances, and each Lender with respect to the
Advances other than Swing Loans and Agent Advances, shall be entitled to
interest at the applicable rate or rates payable under this Agreement on
the daily amount of funds employed by Swing Lender, Agent, or the
Lenders, as applicable.
(g) NOTATION. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting rebuttably presumptive evidence,
absent manifest error, of the accuracy of the information contained therein.
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(h) LENDERS' FAILURE TO PERFORM. All Advances (other than
Swing Loans and Agent Advances) shall be deemed made by the Lenders
simultaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Advances hereunder, nor shall any Commitment
of any Lender be increased or decreased as a result of any failure by any other
Lender to perform its obligation to make any Advances hereunder, and (ii) no
failure by any Lender to perform its obligation to make any Advances hereunder
shall excuse any other Lender from its obligation to make any Advances
hereunder.
(i) OPTIONAL OVERADVANCES.
(i) Any contrary provision of this Agreement
notwithstanding, if the condition precedent set forth in
SECTION 3.3(d) will not be satisfied in respect to a
particular Borrowing, the Lenders nonetheless hereby
authorize Agent or Swing Lender, as applicable, and Agent
or Swing Lender, as applicable, may, but is not obligated
to, knowingly and intentionally continue to make Advances
(including Swing Loans) to Borrower such failure of
condition notwithstanding, so long as, at any time, (y) the
outstanding Revolver Usage does not exceed the Borrowing
Base by more than 10%, and (z) the outstanding Revolver
Usage (except for and excluding amounts charged to the Loan
Account for interest, fees, or Lender Group Expenses) does
not exceed the Maximum Revolver Amount less the Agency Fee
Amount. The foregoing provisions are for the sole and
exclusive benefit of Agent, Swing Lender, and the Lenders
and are not intended to benefit the Obligors in any way.
The Advances and Swing Loans, as applicable, that are made
pursuant to this SECTION 2.3(i) shall be subject to the
same terms and conditions as any other Advance or Swing
Loan, as applicable, except that the rate of interest
applicable thereto shall be the rates set forth in SECTION
2.6(c) hereof without regard to the presence or absence of
a Default or Event of Default; PROVIDED, HOWEVER, that the
Required Lenders may, at any time during the continuance of
an Event of Default, revoke Agent's authorization contained
in this SECTION 2.3(i) to make Overadvances (except for and
excluding amounts charged to the Loan Account for interest,
fees, or Lender Group Expenses), any such revocation to be
in writing and to become effective from and after Agent's
receipt thereof.
(ii) In the event Agent obtains actual knowledge
that the Revolver Usage exceeds the amounts permitted by
the preceding paragraph, regardless of the amount of or
reason for such excess, Agent shall notify Lenders as soon
as practicable (and prior to making
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any (or any further) intentional Overadvances (except
for and excluding amounts charged to the Loan Account
for interest, fees, or Lender Group Expenses) unless
Agent determines that prior notice would result in
imminent harm to the Collateral or its value), and the
Lenders thereupon shall, together with Agent, jointly
determine the terms of arrangements that shall be
implemented with Borrower intended to reduce, within a
reasonable time, the outstanding principal amount of the
Advances to an amount permitted by the preceding
paragraph. In the event any Lender disagrees over the
terms of reduction or repayment of any Overadvance, the
terms of reduction or repayment thereof shall be
implemented according to the determination of the
Required Lenders.
(iii) Each Lender shall be obligated to settle with
Agent as provided in SECTION 2.3(f) for the amount of such
Lender's Pro Rata Share of any unintentional Overadvances
by Agent reported to such Lender, any intentional
Overadvances made as permitted under this SECTION 2.3(i),
and any Overadvances resulting from the charging to the
Loan Account of interest, fees, or Lender Group Expenses.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWER.
(i) All payments to be made by Borrower shall be made without
set-off, recoupment, deduction, or counterclaim, except as otherwise
required by law. Except as otherwise expressly provided herein, all
payments by Borrower shall be made to Agent for the account of the Lender
Group at an account identified by Agent to Administrative Borrower, and
shall be made in immediately available funds, no later than 11:00 a.m.
(California time) on the relevant payment date. Any payment received by
Agent later than 11:00 a.m. (California time), at the option of Agent,
shall be deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue until such
following Business Day.
(ii) Whenever any payment is due on a day other than a Business
Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(iii) Unless Agent receives notice from Borrower prior to the
date on which any payment is due to the Lenders that Borrower will not
make such payment in full as and when required, Agent may assume that
Borrower has made (or will make) such payment in full to Agent on such
date in immediately available funds and Agent may (but shall not be so
required), in
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reliance upon such assumption, distribute to each Lender on such due
date an amount equal to the amount then due such Lender. If and to
the extent Borrower does not make such payment in full to Agent on the
date when due, each Lender severally shall repay to Agent on demand
such amount distributed to such Lender, together with interest thereon
at the Base Rate for each day from the date such amount is distributed
to such Lender until the date repaid.
(b) APPORTIONMENT, APPLICATION, AND REVERSAL OF PAYMENTS. (i)
Except as otherwise provided with respect to Defaulting Lenders, aggregate
principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Obligations to which such
payments relate held by each individual Lender) and payments of fees (other than
fees designated for Agent's sole and separate account) shall, as applicable, be
apportioned ratably among the Lenders (in accordance with their applicable Pro
Rata Shares). All payments shall be remitted to Agent and all such payments not
relating to principal or interest of specific Obligations (other than payments
constituting payment of specific fees), and all proceeds of Collateral received
by Agent, shall be applied:
first, to pay any fees or Lender Group Expenses then due to Agent from
Borrower until paid in full,
second, to pay any fees or Lender Group Expenses then due to Lenders
from Borrower,
third, to pay interest due in respect of all Swing Loans and Agent
Advances until paid in full,
fourth, to pay interest due in respect of all Advances (other than Swing
Loans and Agent Advances) until paid in full,
fifth, so long as no Event of Default has occurred and is continuing
or, if an Event of Default has occurred and is continuing and Agent
agrees in its sole discretion, to pay interest due in respect of the
Term Loan until paid in full (if an Event of Default has occurred and
is continuing and Agent has not so agreed, the priority of such
amounts is deferred to item "tenth" below),
sixth, to pay principal of Swing Loans and Agent Advances until paid in
full, such payment to be made, first, to the outstanding Base Rate
Advances and, second, to the outstanding LIBOR Rate Advances (in the
order of their maturity),
seventh, ratably to pay principal of the Advances (other than Swing
Loans and Agent Advances), such payment to be made, first, to the
outstanding Base Rate Advances and, second, to the outstanding LIBOR
Rate Advances,
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eighth, to be held by Agent, for the ratable benefit of Agent and
those Lenders having a Letter of Credit Sub-Commitment, as cash
collateral in an amount equal to 105% of the maximum amount of the
Lender Group's obligations under Letters of Credit until paid in full,
ninth, to be held by Agent, for the ratable benefit of Agent and those
Lenders having an F/X Undertaking Sub-Commitment, as cash collateral
in an amount equal to 105% of the maximum amount of the Lender Group's
obligations under F/X Undertakings until paid in full,
tenth, to pay interest due in respect of the Term Loan until paid in
full,
eleventh, if and to the extent due and payable, to pay in cash the
principal of the Term Loan until paid in full, and
twelfth, ratably to pay any other Obligations due to Agent, or any
Lender by Borrower.
Agent shall promptly distribute to each Lender, pursuant to the
applicable wire transfer instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided in SECTION 2.3(f).
(ii) In each instance so long as no Event
of Default has occurred and is continuing, SECTION 2.4(b)(i) shall not be deemed
to apply to any payment by Borrower specified by Administrative Borrower to
Agent to be for the payment of Obligations relating to the Term Loan when due
and payable under any provision of this Agreement or the prepayment of all or
part of the principal of the Term Loan pursuant to SECTION 2.2.
(iii) For purposes of the foregoing, "paid
in full" with respect to interest shall include interest accrued after the
commencement of any Insolvency Proceeding irrespective of whether a claim for
such interest is allowable in such Insolvency Proceeding.
(iv) In the event of a direct conflict
between the priority provisions of this Section 2.4(b) and other provisions
contained in any other Loan Document, it is the intention of the parties hereto
that both such priority provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each other. In
the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.4(b) shall control and
govern.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrower to the Lender Group pursuant to SECTIONS 2.1, 2.12,
OR 2.14 is greater than either the Dollar or percentage limitations set forth in
SECTION 2.1, 2.12, OR 2.14, (an
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"OVERADVANCE"), and unless such Overadvance was made by Agent pursuant to
SECTION 2.3(i), Borrower immediately shall pay to Agent, in cash, the amount
of such excess, which amount shall be used by Agent to reduce the Obligations
in accordance with the priority set forth in SECTION 2.4(b). In addition,
Borrower hereby promises to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full to the Lender Group
as and when due and payable under the terms of this Agreement and the other
Loan Documents.
2.6 INTEREST AND LETTER OF CREDIT FEES: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below,
(i) all Obligations (except for undrawn Letters
of Credit and F/X Undertakings, and the Term Loan)
that have been charged to the Loan Account pursuant
to the terms hereof shall bear interest on the Daily
Balance thereof as follows (y) if a LIBOR Rate
Advance, at a per annum rate of 3.00 percentage
points above the LIBOR Rate, and (z) otherwise at a
per annum rate of 0.75 percentage point above the
Base Rate, and
(ii) the Term Loan Amount shall bear interest on
the amount thereof from time to time outstanding at
a per annum rate of 6 percentage points above the
Base Rate.
(b) LETTER OF CREDIT FEE; F/X UNDERTAKING FEE. (i) Borrower
shall pay Agent a fee (in addition to the charges, commissions, fees, and costs
set forth in SECTION 2.12(e)) equal to 2% per annum times the aggregate undrawn
amount of all outstanding Letters of Credit. (ii) Borrower shall pay Agent a
fee (in addition to the charges, commissions, fees, and costs set forth in
SECTION 2.14(d)) equal to 2% per annum times the aggregate undrawn amount of all
outstanding F/X Undertakings.
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default,
(i) all Obligations (except for undrawn Letters of
Credit and undrawn F/X Undertakings) that have been
charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance
thereof at a per annum rate equal to 2 percentage
points above the per annum rate otherwise applicable
hereunder.
(ii) the Letter of Credit fee and the F/X
Undertaking fee provided for above shall be
increased to 2 percentage points above the per annum
rate otherwise applicable hereunder.
(d) PAYMENTS. Interest, Letter of Credit fees, and F/X
Undertaking fees payable hereunder shall be due and payable, in arrears, on the
first day of each month during
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the term hereof. Borrower hereby authorizes Agent, without prior notice to
Borrower, to charge such interest, Letter of Credit fees, and F/X Undertaking
fees, all Lender Group Expenses (as and when incurred), the charges,
commissions, fees, and costs provided for in SECTION 2.12(e) (as and when
accrued or incurred), the fees, premiums and charges provided for in SECTION
2.11 (as and when accrued or incurred), and all installments or other
payments due in respect of the Term Loan or under any Loan Document to
Borrower's Loan Account, which amounts thereafter shall accrue interest at
the rate then applicable to Base Rate Advances hereunder (or, in the case of
the Term Loan, at the rate then applicable thereto). Any interest not paid
when due shall be compounded and shall thereafter accrue interest at the rate
then applicable to Base Rate Advances hereunder (or, in the case of interest
in respect of the Term Loan, at the rate then applicable thereto).
(e) COMPUTATION. All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the applicable rates of interest hereunder automatically and
immediately shall be increased or decreased by an amount equal to such change in
the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrower and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto as of the date of this Agreement, Borrower is and shall be
liable only for the payment of such maximum as allowed by law, and payment
received from Borrower in excess of such legal maximum, whenever received, shall
be applied to reduce the principal balance of the Obligations to the extent of
such excess.
2.7 COLLECTION OF ACCOUNTS. The Obligors shall at all times maintain
lockboxes (the "Lockboxes") and, immediately after the Closing Date, shall
instruct all Account Debtors to remit all amounts owed by them to one of such
Lockboxes. The Obligors, Agent, and the Lockbox Banks shall enter into the
Lockbox Agreements, which among other things shall provide for the opening of a
Lockbox Account for the deposit of Collections at the applicable Lockbox Bank.
The Obligors agree that all Collections received by the Obligors from any
Account Debtor or any other source immediately upon receipt shall be deposited
into a Lockbox Account. No Lockbox Agreement or other arrangement contemplated
hereby shall be modified by the Obligors without the prior written consent of
Agent and the Required Lenders. Upon the terms and subject to the conditions
set forth in the Lockbox Agreements, all amounts received in each Lockbox
Account shall be wired directly or indirectly each Business Day into (a) so long
as no Event of Default has occurred and is continuing and the Revolver Usage
equals zero (-0-) for not less than 7 consecutive days (or lesser period in
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Agent's Permitted Discretion), the Designated Account, and (b) otherwise, an
account (the "Agent's Account") maintained by Agent at a depository selected by
Agent.
2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt by Agent of any
payment (whether from transfers to Agent by the Lockbox Banks pursuant to the
Lockbox Agreements or otherwise) immediately shall be applied provisionally to
the Obligations in accordance with SECTION 2.4(b), but shall not be considered a
payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Agent Account or unless and until such
payment item is honored when presented for payment. Should any payment item not
be honored when presented for payment, then the Obligors shall be deemed not to
have made such payment and interest shall be calculated accordingly. Anything
to the contrary contained herein notwithstanding, any payment item shall be
deemed received by Agent only if it is received into the Agent Account on a
Business Day on or before 11:00 a.m. (California time). If any Collection item
is received into the Agent Account on a non-Business Day or after 11:00 a.m.
(California time) on a Business Day, it shall be deemed to have been received by
Agent as of the opening of business on the immediately following Business Day.
From and after the Closing Date, Agent shall be entitled to charge the Obligors
for 1 Business Day of `clearance' or `float' at the rate applicable to Advances
set forth in SECTION 2.6(a)(i)(z) or SECTION 2.6(c)(i), as applicable, on all
Collections that are received by the Obligors (regardless of whether forwarded
by the Lockbox Banks to Agent). This across-the-board 1 Business Day clearance
or float charge on all Collections is acknowledged by the parties to constitute
an integral aspect of the pricing of the financing of Borrower and shall apply
irrespective of whether or not there are any outstanding monetary Obligations;
the effect of such clearance or float charge being the equivalent of charging 1
Business Day of interest on such Collections. The parties further acknowledge
and agree that the economic benefit of the foregoing provisions of this SECTION
2.8 shall accrue to the sole and exclusive benefit of Agent.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances, the
Term Loan, and issue Letters of Credit and F/X Undertakings under this Agreement
based upon telephonic or other instructions received from anyone purporting to
be an Authorized Person, or without instructions if pursuant to SECTION 2.6(d).
Administrative Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by Administrative Borrower and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Administrative
Borrower, any Advance, Agent Advance, or Swing Loan requested by Administrative
Borrower and made by Agent, Swing Lender, or the Lenders hereunder shall be made
to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of Borrower (the "Loan
Account") on which Borrower will be charged with the Term Loan Amount and all
Advances made by Agent, Swing Lender, or the Lenders to Borrower or for
Borrower's account, including, accrued interest, Lender Group Expenses, and any
other payment Obligations. In accordance with SECTION 2.8, the Loan Account
will be credited with all payments received by Agent from
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Borrower or for Borrower's account, including all amounts received in the
Agent Account from any Lockbox Bank. Agent shall render statements regarding
the Loan Account to Administrative Borrower, including principal, interest,
fees, and including an itemization of all charges and expenses constituting
Lender Group Expenses owing, and such statements shall be conclusively
presumed to be correct and accurate (except to the extent of any manifest
error contained therein) and constitute an account stated between Borrower
and the Lender Group unless, within 30 days after receipt thereof by
Administrative Borrower, Administrative Borrower shall deliver to Agent
written objection thereto describing the error or errors contained in any
such statements.
2.11 FEES Borrower shall pay to Agent the fees provided in the Fee
Letter. In addition, Borrower shall pay to Agent the following fees, which fees
shall be non-refundable when paid:
(a) FINANCIAL EXAMINATION, VALUATION, AND APPRAISAL FEES. (i)
For the sole and separate account of Agent, a separate fee of $750 per day, per
examiner, plus out-of-pocket expenses for each financial analysis and
examination (i.e., audits) of the Obligors performed by personnel employed by
Agent; PROVIDED, HOWEVER, that, so long as no Event of Default has occurred and
is continuing, Borrower shall not be obligated to pay such fees and expenses in
respect of more than 4 such audits in any year; and (ii) from and after the
occurrence and during the continuation of an Event of Default, for the sole and
separate accounts of Agent and each Lender that exercises its rights under
SECTION 4.6, the actual charges paid or incurred by Agent or any Lender if it
elects to employ the services of one or more third Persons to perform such
audits of the Obligors or the Books thereof, to appraise the Collateral, or to
assess the Obligors' business valuation.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement,
Agent agrees, on behalf of the Lenders with a Letter of Credit Sub-Commitment,
to issue letters of credit for the account of Borrower (each, an "L/C") or to
purchase participations, or execute indemnities or reimbursement obligations
(each such undertaking, an "L/C UNDERTAKING") with respect to letters of credit
issued by an issuing bank for the account of Borrower. Agent shall have no
obligation to issue an L/C or L/C Undertaking if any of the following would
result:
(i) the Letter of Credit Usage would exceed
the Borrowing Base less the amount of outstanding
Advances and the F/X Reserve,
(ii) the Letter of Credit Usage would exceed
$10,000,000, or
(iii) the Revolver Usage would exceed the
Maximum Revolver Amount less the Agency Fee Amount.
Each of Borrower and the Lender Group acknowledge and agree that certain of the
letters of credit that are to be the subject of L/C Undertakings may be
outstanding on the Closing Date.
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Each Letter of Credit shall have an expiry date no later than 30 days prior
to the Maturity Date (without regard to any potential renewal term) and all
such Letters of Credit shall be in form and substance acceptable to Agent (in
the exercise of its Permitted Discretion). If Agent is obligated to advance
funds under a Letter of Credit, the amount so advanced immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter,
shall bear interest at the rate then applicable to Base Rate Advances under
SECTION 2.6. Anything herein to the contrary notwithstanding, Agent shall
not issue a Letter of Credit if Agent shall have received written notice from
any Lender, or otherwise has actual knowledge, that (1) one or more of the
applicable conditions precedent set forth in SECTION 3 will not be satisfied
on the requested Funding Date for the applicable Letter of Credit (unless
such condition has been waived in accordance herewith), or (2) the requested
Letter of Credit would exceed the Availability of Borrower on such Funding
Date.
(b) Each Lender agrees to fund its Pro Rata Share of any
Advance deemed made pursuant to the foregoing subsection. Each Lender with a
Pro Rata Share of the Letters of Credit shall be deemed to have purchased a
participation in each Letter of Credit, in an amount equal to its Pro Rata Share
of the Risk Participation Liability of such Letter of Credit, and each Lender
agrees to pay to Agent such Lender's Pro Rata Share of any payments made by
Agent under such Letter of Credit. The obligation of each Lender to deliver to
Agent an amount equal to its respective Pro Rata Share pursuant to the preceding
two sentences shall be absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuation of an Event of Default or
Default or the failure to satisfy any condition set forth in SECTION 3 hereof.
If any Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of any payments made by Agent in respect of such Letter of Credit as
provided in this Section, Agent shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the Base Rate until
paid in full.
(c) Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless from any loss, cost, expense, or liability, expenses,
and reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit. Borrower agrees to be bound by the
issuing bank's regulations and interpretations of any letter of credit that is
the subject of an L/C Undertaking and opened to or for Borrower's account or by
Agent's interpretations of any L/C issued by Agent to or for Borrower's account,
even though this interpretation may be different from Borrower's own, and
Borrower understands and agrees that the Lender Group shall not be liable for
any error, negligence, or mistake, whether of omission or commission, in
following Borrower's instructions or those contained in the Letter of Credit or
any modifications, amendments, or supplements thereto. Borrower understands
that the L/C Undertakings may require Agent to indemnify the issuing bank for
certain costs or liabilities arising out of claims by Borrower against such
issuing bank. Borrower hereby agrees to indemnify, save, defend, and hold the
Lender Group harmless with respect to any loss, cost, expense (including
reasonable attorneys fees), or liability incurred by the Lender Group under any
L/C Undertaking as a result of the Lender Group's indemnification of any such
issuing bank.
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(d) Borrower hereby authorizes and directs any bank that issues
a letter of credit that is the subject of an L/C Undertaking to deliver to Agent
all instruments, documents, and other writings and property received by the
issuing bank pursuant to such letter of credit, and to accept and rely upon
Agent's instructions with respect to all matters arising in connection with such
letter of credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred
by Agent or Lender Group relating to the letters of credit that are the subject
of an L/C Undertaking shall be considered Lender Group Expenses for purposes of
this Agreement and immediately shall be reimbursable by Borrower to Agent.
(f) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by Agent, the issuing
bank, or the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(y) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letters of Credit issued
hereunder, or
(z) there shall be imposed on the issuing bank or the Lender
Group any other condition regarding any L/C or L/C Undertaking
issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Agent, issuing bank, or Lender Group of issuing, making, guaranteeing, or
maintaining any L/C or L/C Undertaking or to reduce the amount receivable in
respect thereof by the Agent, issuing bank, or Lender Group, then, and in any
such case, Agent may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify
Administrative Borrower, and Borrower shall pay on demand such amounts Agent may
specify to be necessary to compensate the Lender Group for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Base Rate
Advances hereunder. The determination by Agent of any amount due pursuant to
this Section, as set forth in a certificate setting forth the calculation
thereof in reasonable detail, shall, in the absence of manifest or demonstrable
error, be final and conclusive and binding on all of the parties hereto. In
determining such amount, Agent may use any reasonable averaging and attribution
methods.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having
interest charged at the rate based upon the Base Rate, Borrower shall have the
option (the "LIBOR Option") to have interest on a portion of the Advances be
charged at the LIBOR Rate.
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Interest on LIBOR Rate Advances shall be payable on the last day of each
Interest Period applicable thereto. On the last day of each applicable
Interest Period, unless Borrower has properly exercised the LIBOR Option with
respect thereto, the interest rate applicable to such LIBOR Rate Advances
automatically shall convert to the rate of interest then applicable to Base
Rate Advances under SECTION 2.6 hereof. At any time that an Event of Default
has occurred and is continuing, Agent shall have the right to convert the
interest rate on all outstanding LIBOR Rate Advances to the rate then
applicable to Base Rate Advances under SECTION 2.6 hereof.
(b) LIBOR ELECTION.
(i) Borrower may, at any time and from time to time, so long as
no Event of Default has occurred and is continuing, elect to exercise the
LIBOR Option by notifying Lender prior to 11:00 a.m. (California time) at
least 3 Business Days prior to the commencement of the proposed Interest
Period (the "LIBOR Deadline"). Notice of Borrower's election of the
LIBOR Option for a permitted portion of the Advances and an Interest
Period pursuant to this Section shall be made by delivery to Lender of a
LIBOR Notice received by Agent before the LIBOR Deadline, or by
telephonic notice received by Agent before the LIBOR Deadline (to be
confirmed by delivery to Agent of a LIBOR Notice received by Lender prior
to 5:00 p.m. (California time) on the same day; PROVIDED, HOWEVER, that
Borrower's failure to deliver such confirming LIBOR Notice shall not
affect the applicability of such rate if Borrower's election is
implemented by Agent.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrower. In connection with each LIBOR Rate Advance, Borrower shall
indemnify, defend, and hold the Lender Group harmless against any loss,
cost, or expense incurred by Lender as a result of any failure to
fulfill, on or before the date specified in the LIBOR Notice, the
applicable conditions set forth herein or the termination, prior to the
end of the applicable Interest Period, of the applicability of interest
at the LIBOR Rate, as provided hereunder, including any loss (including
loss of anticipated profits), cost, or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired or
committed to be acquired by the Lender Group or any participants thereof
to fund the requested LIBOR Rate Advances that, as a result of such
failure, are not so employed on such date (such losses, costs, and
expenses, collectively, "Funding Losses").
(iii) Borrower shall have not more than 5 Interest Periods in
effect at any given time. Borrower only may exercise the LIBOR Option
for LIBOR Rate Advances of at least $5,000,000 and integral multiples of
$1,000,000 in excess thereof.
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(c) PREPAYMENTS. Borrower may prepay LIBOR Rate Advances at
any time; PROVIDED, HOWEVER, that in the event that Advances are prepaid on any
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections or for any other reason,
including early termination of the term of this Agreement or acceleration of the
Obligations pursuant to the terms hereof, Borrower shall indemnify, defend, and
hold the Lender Group and participants thereof harmless against any and all
Funding Losses that arise in connection with such prepayment.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent on a prospective
basis to take into account any additional or increased costs to the
Lender Group of maintaining or obtaining any eurodollar deposits or
increased costs due to changes in applicable law occurring subsequent to
the commencement of the then applicable Interest Period, including but
not limited to changes in tax laws (except changes of general
applicability in corporate income tax laws) and changes in the reserve
requirements imposed by the Board of Governors of the Federal Reserve
System (or any successor), excluding the Reserve Percentage, which
additional or increased costs would increase the cost of funding loans
bearing interest at the LIBOR Rate. Agent shall give Borrower notice of
such a determination and adjustment and Borrower may, by notice to Agent
(y) require Agent to furnish to Borrower a statement setting forth the
basis for adjusting such LIBOR Rate and the method for determining the
amount of such adjustment, or (z) repay the LIBOR Rate Advances with
respect to which such adjustment is made.
(ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the date
hereof, in the reasonable opinion of Lender, make it unlawful or
impractical for Agent or the Lender Group to fund or maintain LIBOR Rate
Advances or to continue such funding or maintaining, or to determine or
charge interest rates at the LIBOR Rate, Agent shall give notice of such
changed circumstances to the Borrower and (y) in the case of any LIBOR
Rate Advances that are outstanding, the date specified in Agent's notice
shall be deemed to be the last day of the Interest Period of such LIBOR
Rate Advances, and interest upon the LIBOR Rate Advances then outstanding
shall thereafter accrue as provided in SECTION 1.3 hereof, and (z)
Borrower shall not be entitled to elect the LIBOR Option until Agent
determines that it would no longer be unlawful or impractical to do so.
(iii) Agent and each Lender agree that, as promptly as
practicable after the officer of Agent or such Lender responsible for
administering the extension of credit to Borrower by Agent or such
Lender, as the case may be, becomes aware of the occurrence of an event
or the existence of a condition
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that would make it unlawful or impractical for Agent or such Lender,
as the case may be, to fund or maintain LIBOR Rate Advances or to
continue such funding or maintaining, or to determine or charge
interest rates at the LIBOR Rate, or that would entitle Agent or such
Lender, as the case may be, to receive payments under SECTION
2.13(d)(i), Agent or such Lender, as the case may be, to the extent
not inconsistent with the internal policies of Agent or such Lender,
as the case may be, and any applicable legal or regulatory
restrictions, will use reasonable efforts (y) to make or maintain
LIBOR Rate Advances of Agent or such Lender, as the case may be,
through another lending office of Agent or such Lender, as the case
may be, or (z) take such other measures as Agent or such Lender, as
the case may be, may deem reasonable, if (1) as a result thereof the
circumstances which would make it unlawful or impractical for Agent or
such Lender, as the case may be, to fund or maintain LIBOR Rate
Advances or to continue such funding or maintaining, or to determine
or charge interest rates at the LIBOR Rate, would cease to exist or
the additional amounts which would otherwise be required to be paid to
Agent or such Lender, as the case may be, pursuant to SECTION
2.13(d)(i) would be materially reduced, and (2) as determined by Agent
or such Lender, as the case may be, in its sole discretion, the making
or maintaining of such Advances through such other lending office or
in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect the rights or interests of Agent
or such Lender, as the case may be, with respect to the Advances or
the Revolving Credit Commitment; PROVIDED, HOWEVER, that Agent or such
Lender, as the case may be, will not be obligated to utilize such
other lending office pursuant to this SECTION 2.13(d)(iii) unless
Borrower agrees to pay all incremental expenses incurred by Agent or
such Lender, as the case may be, as a result of utilizing such other
lending office. A certificate as to the amount of any such expenses
payable by Borrower pursuant to this SECTION 2.13(d)(iii) (setting
forth in reasonable detail the basis for requesting such amount)
submitted by Agent or such Lender, as the case may be, (with a copy to
Agent) shall be conclusive absent manifest error.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the
contrary contained herein notwithstanding, none of Agent, the Lender Group, or
any participant thereof is required actually to acquire eurodollar deposits to
fund or otherwise match fund any Advances as to which interest accrues at the
LIBOR Rate. The provisions of this Section shall apply as if Agent, the Lender
Group, and the participants thereof had match funded any Advances as to which
interest is accruing at the LIBOR Rate by acquiring eurodollar deposits for each
Interest Period in the amount of the LIBOR Rate Advances.
(f) CAPITAL REQUIREMENTS. If after the date hereof any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline announced after the date hereof regarding capital requirements for
banks or bank holding companies, or any change in the interpretation or
application thereof by any Governmental
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Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive announced after the date hereof of any such entity regarding
capital adequacy (whether or not having the force of law), would have the
effect of reducing the return on such Lender's or such holding company's
capital as a consequence of such Lender's Commitment to make Advances
hereunder to a level below that which such Lender or such holding company
could have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then
such Lender may notify Borrower and the Agent thereof. Borrower agrees to
pay such Lender the amount of such reduction of return of capital as and when
such reduction is determined, payable within 90 days after presentation by
such Lender of a statement in the amount and setting forth in reasonable
detail such Lender's calculation thereof and the assumptions upon which such
calculation was based (which statement shall be deemed true and correct
absent manifest error); provided, that Borrower shall not be liable for any
amounts relating to periods more than 180 days prior to the date of such
statement. In determining such amount, such Lender may use any reasonable
averaging and attribution methods.
2.14 F/X LINE.
(a) Borrower shall execute and deliver, and Agent agrees to use
reasonable best efforts to cause F/X Bank to execute and deliver, the F/X
Parameters Agreement within 2 weeks following the Closing Date. From and after
the execution and delivery of the F/X Parameters Agreement, and subject to the
terms and conditions of this Agreement and if requested to do so by Borrower,
Agent agrees, on behalf of the Lenders with an F/X Undertaking Sub-Commitment,
to purchase participations, or execute indemnities or reimbursement obligations,
with respect to losses or expenses incurred by F/X Bank in connection with
Permitted F/X Contracts (each such undertaking, an "F/X Undertaking") in an
aggregate amount not to exceed the F/X Reserve, notwithstanding any objections
by Borrower as to the amount of such losses or expenses. Agent shall have no
obligation to issue an F/X Undertaking if any of the following would result:
(i) 105% of the maximum aggregate amount of Agent's
obligations under the F/X Undertakings would exceed the lesser
of (y) $2,000,000, and (z) Borrowing Base less the amount of
outstanding Advances and the Letter of Credit Usage, or
(ii) the Revolver Usage would exceed the Maximum Revolver
Amount less the Agency Fee Amount.
If Agent is obligated to advance funds under an F/X Undertaking, Borrower
immediately shall reimburse such amount to Agent and, in the absence of such
reimbursement, the amount so advanced immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Base Rate
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Advances under SECTION 2.6. If, upon the maturity date of any Permitted F/X
Contract, Borrower does not have Availability in an amount sufficient to pay
the full amount of Borrower's obligations to F/X Bank under such contract,
Agent may, in its sole discretion, instruct F/X Bank to liquidate such
Permitted F/X Contract, at Borrower's sole expense, and to apply any amounts
thereunder that would have been payable to Borrower against the amounts owed
to F/X Bank by Borrower. Any amounts paid by Agent to F/X Bank and any other
costs or expenses incurred by the Agent in connection with any such Permitted
F/X Contracts shall constitute Advances, shall be secured by all of the
Collateral, and thereafter shall be payable by Borrower to Agent together
with interest as provided for herein. Anything herein to the contrary
notwithstanding, Agent shall not issue an F/X Undertaking if Agent shall have
received written notice from any Lender, or otherwise has actual knowledge,
that (1) one or more of the applicable conditions precedent set forth in
SECTION 3 will not be satisfied on the requested Funding Date for the
applicable F/X Undertaking (unless such condition has been waived in
accordance herewith), or (2) the requested F/X Undertaking would exceed the
Availability of Borrower on such Funding Date.
(b) Each Lender agrees to fund its Pro Rata Share of any
Advance deemed made pursuant to the foregoing subsection. Each Lender with a
Pro Rata Share of the F/X Undertakings shall be deemed to have purchased a
participation in each F/X Undertaking, in an amount equal to its Pro Rata Share
of the Risk Participation Liability of such F/X Undertaking, and each Lender
agrees to pay to Agent such Lender's Pro Rata Share of any payments made by
Agent under such F/X Undertaking. The obligation of each Lender to deliver to
Agent an amount equal to its respective Pro Rata Share pursuant to the preceding
two sentences shall be absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuation of an Event of Default or
Default or the failure to satisfy any condition set forth in SECTION 3 hereof.
If any Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of any payments made by Agent in respect of such F/X Undertaking as
provided in this Section, Agent shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the Base Rate until
paid in full.
(c) Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless from any loss, cost, expense, or liability, including
payments made by the Lender Group, expenses, and reasonable attorneys fees
incurred by the Lender Group arising out of or in connection with any F/X
Undertaking.
(d) Any and all charges, commissions, fees, and costs incurred
by Agent or the Lender Group relating to Permitted F/X Contracts that are the
subject of an F/X Undertaking shall be considered Lender Group Expenses for
purposes of this Agreement and immediately shall be reimbursable by Borrower to
Agent.
(e) Immediately upon the termination of this Agreement,
Borrower agrees to either (i) provide cash collateral to be held by Agent in an
amount equal to 105% of
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the maximum amount of the Lender Group's obligations under the F/X
Undertakings, or (ii) cause to be delivered to Agent releases of all of
Agent's obligations under outstanding F/X Undertakings. At Agent's
discretion, any proceeds of Collateral received by Agent after the occurrence
and during the continuation of an Event of Default may be held as the cash
collateral required by this SECTION 2.14(E).
(f) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by Agent, the issuing
bank, or the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(y) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any F/X Untertaking issued
hereunder, or
(z) there shall be imposed on the issuing bank or the Lender
Group any other condition regarding any F/X Undertaking issued
pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Agent, F/X Bank, or Lender Group of issuing, making, guaranteeing, or
maintaining any Permitted F/X Contract or F/X Undertaking or to reduce the
amount receivable in respect thereof by the Agent, F/X Bank, or Lender Group,
then, and in any such case, Agent may, at any time within a reasonable period
after the additional cost is incurred or the amount received is reduced, notify
Administrative Borrower, and Borrower shall pay on demand such amounts Agent may
specify to be necessary to compensate the Lender Group for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Base Rate
Advances hereunder. The determination by Agent of any amount due pursuant to
this Section, as set forth in a certificate setting forth the calculation
thereof in reasonable detail, shall, in the absence of manifest or demonstrable
error, be final and conclusive and binding on all of the parties hereto.
(g) The amount of the F/X Reserve may be reduced (but in any
event to not less than the maximum amount of outstanding obligations of the
Lender Group to provide F/X Undertakings) from time to time by Agent upon the
receipt and written acceptance by Agent of an F/X Reserve Reduction Certificate,
in the form of that attached hereto as EXHIBIT F-2, duly executed by both
Administrative Borrower and F/X Bank, not less than 2 Business Days prior to the
requested effective date of such reduction.
(h) So long as no Event of Default has occurred and is
continuing or would result therefrom, the amount of the F/X Reserve may be
increased from time to time by Agent in its sole discretion, but in any event to
an amount not greater than $2,000,000, upon the receipt and written acceptance
by Foothill of an F/X Reserve Increase Certificate, in
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the form of that attached hereto as EXHIBIT F-3, duly executed by both
Borrower and F/X Bank, not less than 2 Business Days prior to the requested
effective date of such increase.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance, the Term Loan, or issue the initial Letters of Credit or F/X
Undertakings (or otherwise to extend any credit provided for hereunder), is
subject to the fulfillment, to the reasonable satisfaction of Agent and the
Lenders, of each of conditions precedent set forth below:
(a) the Closing Date shall occur on or before June 15, 1999;
(b) Agent shall have received all financing statements required
by Agent, duly executed by the Obligors, and Agent shall have received searches
reflecting the filing of such financing statements in the jurisdictions in which
the chief executive office of Xxxxxx and each Borrower is located);
(c) Agent shall have received each of the following documents,
in form and substance satisfactory to Agent, duly executed, and each such
document shall be in full force and effect:
(i) this Agreement;
(ii) the Fee Letter;
(iii) the Lockbox Agreements;
(iv) the Disbursement Letter;
(v) the Copyright Security Agreement; together with (y)
satisfactory evidence that all existing copyrights of Borrower relative
to its proprietary computer software that are capable of being registered
pursuant to Section 6(a) of the Copyright Security Agreement have been
promptly filed for registration with the United States Copyright Office,
and that all such copyrights and any proceeds thereof are specifically
encumbered by the Copyright Security Agreement, or (z) a letter of advice
from Borrower's intellectual property counsel, in form and substance
satisfactory to Agent, that all existing copyrights of Borrower relative
to its proprietary computer software are not registerable under the
United States Copyright Act of 1976 (as amended);
(vi) the Trademark Security Agreement;
(vii) the Guaranty;
(viii) the Suretyship Agreement;
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(ix) the Pledge Agreement, together with all originals of
certificates or other instruments (if any) evidencing the Stock pledged
pursuant to the Pledge Agreement, as well as Stock powers with respect
thereto endorsed in blank;
(x) the Intercompany Subordination Agreement;
(xi) the Pay-Off Letters; together with (y) UCC termination
statements and other documentation evidencing the termination by each
Existing Lender of its Liens in and to the properties and assets of the
Obligors, and (z) (1) UCC termination statements and other documentation
evidencing the termination of Liens (other than Permitted Liens) in and
to the properties and assets of the Obligors, and (2) a certificate of an
authorized officer of Borrower, together with supporting evidence
satisfactory to Agent in its Permitted Discretion, that certain tax or
judgment Liens (which Liens shall not constitute Permitted Liens)
reflected in searches do not relate to Borrower or its assets;
(xii) the Closing Date Assignments;
(d) Agent shall have received a certificate from the Secretary
of each Obligor attesting to the resolutions of such Obligor's Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Obligor is a party and authorizing
specific officers of such Obligor to execute the same;
(e) Agent shall have received copies of each Obligor's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of the applicable Obligor;
(f) Agent shall have received a certificate of status with
respect to each Obligor, dated or "brought down" (via so-called "bring down
certificates") to a date on or before the Closing Date acceptable to Agent in
its Permitted Discretion, such certificate to be issued by the appropriate
officer of the jurisdiction of organization of such Obligor, which certificate
shall indicate that such Obligor is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status with
respect to each Obligor, each dated or "brought down" (via so-called "bring down
certificates") to a date on or before the Closing Date acceptable to Agent in
its Permitted Discretion, such certificates to be issued by the appropriate
officer of the jurisdictions in which such Obligor conducts a material amount of
business or has a material amount of assets, which certificates shall indicate
that such Obligor is in good standing in such jurisdictions;
(h) Agent shall have received a certificate of insurance,
together with the endorsements thereto, in each case, as are required by SECTION
6.9, the form and substance of which shall be reasonably satisfactory to Agent
and its counsel;
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(i) Agent shall have received (1) Consent to Assignment
Agreements from such third persons as Agent may require, including with respect
to the Billing Service Agreement with HBS (and acknowledged in writing by its
secured creditor), the Billing Service Agreement with Billing Concepts, Inc.
(dba U.S. Billing or USBI), and each other Billing Service Agreement that
Borrower wishes to submit for qualification as an Approved Billing Services
Agreement, and (2) a notice of collateral assignment to Qwest Communications, in
form and substance satisfactory to Agent, duly executed by Agent and Xxxxxx
relative to the IRU granted by Qwest Communications to Xxxxxx;
(j) Agent shall have received opinions of the Obligors' counsel
in form and substance satisfactory to Agent in its Permitted Discretion;
(k) Agent shall have received a certificate from the chief
financial officer of Administrative Borrower, certifying that all tax returns
required to be filed by each Obligor have been timely filed and all taxes upon
such Obligor or its properties, assets, income, and franchises (including real
property taxes and payroll taxes) have been paid prior to delinquency, except
such taxes that are the subject of a Permitted Protest;
(l) Borrower shall have unrestricted cash or Excess
Availability after giving effect to the initial Revolver Usage, of at least
$20,000,000;
(m) Agent and each Lender shall have completed its business,
legal, and collateral due diligence, including (i) a collateral audit and review
of the Obligors' Books and verification of the Obligors' representations and
warranties to the Lender Group, the results of which shall be reasonably
satisfactory to each Lender, and (ii) a review of all regulatory matters
relative to the Obligors' business, the results of which shall be satisfactory
to each Lender;
(n) Agent shall have completed reference checks with respect to
the Obligors' senior management, the results of which are satisfactory to Agent
and each Lender in their sole discretion;
(o) Agent and each Lender with a Term Loan Commitment shall
have received a Liquidation Value appraisal of the Obligors' international long
distance business, the results of which are satisfactory to Agent and such
Lenders in their sole discretion;
(p) Agent shall have received Borrower's Closing Date Business
Plan;
(q) Borrower shall pay all Lender Group Expenses, if and to the
extent invoiced as of the Closing Date, incurred by Agent or any other Lender in
connection with the consummation of the transactions contemplated in this
Agreement and the other Loan Documents;
(r) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or
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recorded and shall be in form and substance satisfactory to Agent and each
Lender in their Permitted Discretion.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances or to issue Letters of Credit or F/X Undertakings is subject to the
fulfillment, on or before the date applicable thereto, of each of the conditions
subsequent set forth below (the failure by Borrower to so perform or cause to be
performed constituting an Event of Default except to the extent expressly
otherwise stated):
(a) within 30 days of the Closing Date, deliver to Agent the
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by SECTION 6.9, the form and substance of which shall
be reasonably satisfactory to Agent and its counsel.
(b) within 30 days of the Closing Date, deliver to Agent
opinions of Allstar's Arizona counsel in form and substance satisfactory to
Agent in its Permitted Discretion.
(c) within 45 days of the Closing Date, deliver to Agent the
absolute assignment of life insurance policy, together with proof of the
acceptance thereof by the issuer thereof, in each case, as are required by
SECTION 6.9, the form and substance of which shall be reasonably satisfactory to
Agent and its counsel.
(d) within 2 weeks following Borrower's receipt thereof, and in
any event not later than July 31, 1999, deliver to Agent a copy of the
management letter issued by Xxxxxx Xxxxxxxx to Star in respect of Star's fiscal
year 1998.
(e) within 60 days of the Closing Date, deliver to Agent
Consent to Assignment Agreements with respect to such IRUs as Agent may require
in its Permitted Discretion.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation
of the Lender Group (or any member thereof) to make all Advances or to issue
Letters of Credit or F/X Undertakings (and to make any other extensions of
credit provided for hereunder) shall be subject to the following conditions
precedent:
(a) the representations and warranties of each Obligor
contained in this Agreement and the other Loan Documents shall be true and
correct in all material respects on and as of the date of such extension of
credit, as though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date),
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall any Default or
Event of Default result from the making thereof,
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(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
Borrower, Agent, any Lender, or any of their Affiliates, and
(d) after giving effect to any proposed Borrowing, the amount
the Availability is greater than zero (0).
The foregoing conditions precedent are not conditions to each
Lender (i) with a Letter of Credit Sub-Commitment participating in or
reimbursing Agent for such Lenders' Pro Rata Share of any drawings under the
Letters of Credit as provided herein, (ii) with an F/X Undertaking
Sub-Commitment participating in or reimbursing Agent for such Lenders' Pro
Rata Share of any drawings under the F/X Undertakings as provided herein, or
(iii) with a Revolving Credit Commitment participating in or reimbursing
Swing Lender or the Agent for such Lenders' Pro Rata Share of any Swing Loan
or Agent Advance as provided herein.
3.4 TERM. This Agreement shall become effective upon the execution
and delivery hereof by Borrower and the Lender Group and shall continue in full
force and effect for a term ending on the second anniversary of the Closing Date
(the "MATURITY DATE"). The foregoing notwithstanding, the Lender Group shall
have the right to terminate its obligations under this Agreement immediately and
without notice upon the occurrence and during the continuation of an Event of
Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including all contingent reimbursement
obligations of Borrower with respect to any outstanding Letters of Credit or
F/X Undertakings, but excluding any Contingent Surviving Obligations)
immediately shall become due and payable without notice or demand. No
termination of this Agreement, however, shall relieve or discharge the
Obligors of their duties, Obligations, or covenants hereunder. Continuing
security interests in the Collateral, for the benefit of the Lender Group,
shall remain in effect until all Obligations (other than Contingent Surviving
Obligations) have been fully and finally discharged and the Lender Group's
obligations to provide additional credit hereunder have been terminated.
Upon termination of this Agreement and after all Obligations (other than
Contingent Surviving Obligations) have been fully and finally discharged and
the Lender Group's obligations to provide additional credit under the Loan
Documents have been terminated irrevocably, Agent will, at Borrower's sole
expense, execute and deliver any Uniform Commercial Code termination
statements, lien releases, mortgage releases, re-assignments of trademarks,
discharges of security interests, and other similar discharge or release
documents (and, if applicable, in recordable form) as are necessary or
reasonably requested to release, as of record, the security interests,
financing statements, and all other notices of security interests and liens
previously filed by Agent for the benefit of the Lender Group with respect to
the Obligations.
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3.6 EARLY TERMINATION BY BORROWER. Borrower has the option, at any
time upon 30 days prior written notice to Agent, to terminate this Agreement by
paying to Agent, for the benefit of the Lender Group, in cash, the Obligations
(including either (i) providing cash collateral to be held by Agent for the
benefit of the Lender Group in an amount equal to 105% of the maximum amount of
the Lender Group's obligations under outstanding Letters of Credit and F/X
Undertakings, or (ii) causing the original Letters of Credit and F/X
Undertakings to be returned to Agent), in full, together with the Applicable
Prepayment Premium. If the obligations of the Lender Group to extend credit
hereunder are terminated as a result of the occurrence of an Event of Default,
then, in view of the impracticality and extreme difficulty of ascertaining
actual damages and by mutual agreement of the parties as to a reasonable
calculation of the Lender Group's lost profits as a result thereof, Borrower
shall pay to the Agent for the ratable benefit of the Lender Group upon the
effective date of such termination, an early termination premium in an amount
equal to the Applicable Prepayment Premium. The Applicable Prepayment Premium
shall be presumed to be the amount of damages sustained by the Lender Group as a
result of the early termination hereof and each Obligor agrees that it is a
reasonable estimation thereof under the circumstances existing as of the Closing
Date. The Applicable Prepayment Premium provided for in this SECTION 3.6 shall
be deemed included in the Obligations.
4. CREATION OF SECURITY INTEREST.
4.1 GRANTS OF SECURITY INTERESTS.
(a) Each Obligor hereby grants to Agent, for the benefit of the
Lender Group continuing security interests in all currently existing and
hereafter acquired or arising Collateral in order to secure prompt repayment of
any and all of its Obligations (other than in respect of the Term Loan Amount)
and in order to secure prompt performance by such Obligor of each of its
covenants and duties under the Loan Documents (the "Agent's Liens"). The
Agent's Liens in and to the Collateral shall attach to all Collateral without
further act on the part of the Lender Group or any Obligor. Anything contained
in this Agreement or any other Loan Document to the contrary notwithstanding,
except for Permitted Dispositions, no Obligor has authority, express or implied,
to dispose of any item or portion of the Collateral. Subject to SECTION 2.4(b),
the secured claims of the Lender Group with respect to the Obligations (other
than in respect of the Term Loan Amount) secured by the Collateral shall be of
equal priority, and ratable according to the respective Obligations (other than
in respect of the Term Loan Amount) due each member of the Lender Group.
(b) Each Obligor hereby grants to Agent, for the benefit of the
Lender Group continuing security interests in all currently existing and
hereafter acquired or arising Collateral in order to secure prompt repayment of
any and all of its Obligations in respect of the Term Loan Amount (the "Agent's
Term Loan Liens"). The Agent's Term Loan Liens in and to the Collateral shall
attach to all Collateral without further act on the part of the Lender Group or
any Obligor. Anything contained in this Agreement or any other Loan
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Document to the contrary notwithstanding, except for Permitted Dispositions,
no Obligor has authority, express or implied, to dispose of any item or
portion of the Collateral. Subject to SECTION 2.4(B), the secured claims of
the Lender Group with respect to the Obligations in respect of the Term Loan
Amount secured by the Collateral shall be of equal priority, and ratable
according to the respective Obligations in respect of the Term Loan Amount
due each member of the Lender Group.
(c) The Agent's Liens shall have priority over the Agent's Term
Loan Liens.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that perfection or priority of Agent's security interests is
dependent on possession, the applicable Obligor, immediately upon the request of
Agent, shall endorse and deliver physical possession of such Negotiable
Collateral to Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify customers or Account
Debtors of any Obligor that the Accounts, General Intangibles, or Negotiable
Collateral have been assigned to Agent for the benefit of the Lender Group or
that Agent for the benefit of the Lender Group has security interests therein,
or (b) collect the Accounts, General Intangibles, and Negotiable Collateral
directly and charge the collection costs and expenses to the Loan Account. Each
Obligor hereby agrees that it will hold in trust for the Lender Group, as the
Lender Group's trustee, any Collections that it receives and immediately will
deliver said Collections to Agent in their original form as received by such
Obligor.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED; NEW SUBSIDIARIES;
STAR OPERATING SUB; ALLSTAR.
(a) At any time upon the request of Agent, each Obligor shall
execute and deliver to Agent, all financing statements, fixture filings,
security agreements, pledges, assignments, endorsements of certificates of
title, and all other documents that Agent reasonably may request, in form and
substance reasonably satisfactory to Agent, to perfect and continue perfected
Agent's Liens and Agent's Term Loan Liens in the Collateral (whether now owned
or hereafter arising or acquired), and in order to fully consummate all of the
transactions contemplated hereby and under the other Loan Documents. Without
limiting the generality of the foregoing, the Obligors shall execute and deliver
to Agent all financing statements that Agent reasonably may request and shall
cause to be executed and delivered such intercreditor agreements from lessors or
secured financers of the Obligors' switching Equipment, if and as required by
Agent.
(b) At any time on or after the Closing Date that any Person
becomes a Subsidiary (organized under the laws of one of the states of the
United States) of one or more Obligors (other than a Subsidiary to be directly
or indirectly spun off as part of the European
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Spin Off), the Obligors shall cause each of the following to be satisfied as
promptly as possible and in any event within 5 Business Days following the
date such Person becomes such a Subsidiary: (i) cause such Subsidiary to
execute and deliver all appropriate joinder documents to make it a Guarantor
(or, with the prior written consent of Agent and the Required Lenders, to
make it a Borrower) under the Loan Documents and all appropriate UCC-1
financing statements, fixture filings, and other Loan Documents or
supplements thereto or amendments thereof; (ii) cause the execution and
delivery by the applicable Obligors of appropriate supplements to the Pledge
Agreement, and the delivery to Agent of possession of the original
certificates, respecting all of the issued and outstanding Stock of such
Subsidiary, together with stock powers with respect thereto endorsed in
blank; and (iii) cause the applicable Obligors and such Subsidiary to deliver
to Agent an opinion of their counsel in form and substance satisfactory to
Agent in its Permitted Discretion.
(c) Without limiting the generality of SECTION 4.4(a), at such
time, if ever, that Allstar becomes an additional Borrower with the written
approval of the Required Lenders in their sole discretion, Borrower shall
deliver to Agent all UCC termination statements and any other documents
necessary to terminate all purchase, financing, and security documents relative
to the Accounts of Allstar and all Liens thereunder and to vest good and
marketable title in and to such Accounts in favor of Allstar, free and clear of
Liens (other than Liens in favor of the Lender Group).
4.5 POWER OF ATTORNEY. Each Obligor hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Obligor's true and lawful attorney, with
power to (a) if the applicable Obligor refuses to, or fails timely to execute
and deliver any of the documents described in SECTION 4.4, sign the name of such
Obligor on any of the documents described in SECTION 4.4, (b) at any time that
an Event of Default has occurred and is continuing, sign such Obligor's name on
any invoice or xxxx of lading relating to any Account, drafts against Account
Debtors, and notices to Account Debtors, (c) send requests for verification of
Accounts (and, in connection therewith, such true and lawful attorney shall use
reasonable efforts not to disturb the Obligors' business relationship with the
relevant Account Debtor), (d) endorse such Obligor's name on any Collection item
that may come into the Lender Group's possession, (e) at any time that an Event
of Default has occurred and is continuing, notify the post office authorities to
change the address for delivery of such Obligor's mail to an address designated
by Agent, to receive and open all mail addressed to such Obligor, and to retain
all mail relating to the Collateral and forward all other mail to such Obligor,
(f) at any time that an Event of Default has occurred and is continuing, make,
settle, and adjust all claims under such Obligor's policies of insurance and
make all determinations and decisions with respect to such policies of
insurance, and (g) at any time that an Event of Default has occurred and is
continuing, settle and adjust disputes and claims respecting the Accounts
directly with Account Debtors, for amounts and upon terms that Agent determines
to be reasonable, and Agent may cause to be executed and delivered any documents
and releases that Agent determines to be necessary. The appointment of Agent as
the Obligors' attorney, and each and every one of its rights and powers, being
coupled with an interest, is irrevocable until all
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of the Obligations have been fully and finally repaid and performed and the
Lender Group's obligations to extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT.
(a) So long as no Event of Default has occurred and is
continuing, Agent and each Lender (through any of their respective officers,
employees, or agents) shall have the right, from time to time hereafter during
normal business hours, to inspect the Books and to check, test, and appraise the
Collateral in order to verify each Obligor's financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.
(b) Agent and each Lender (through any of their respective
officers, employees, or agents) shall have the right, from time to time
hereafter and at any time or times during the existence of an Event of Default,
to inspect the Books and to check, test, and appraise the Collateral in order to
verify each Obligor's financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral.
4.7 CONTROL AGREEMENTS. Each Obligor agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under SECTION 7.22
and, if to another securities intermediary, unless each of such Obligor, Agent,
and the substitute securities intermediary have entered into a Control
Agreement. No arrangement contemplated hereby or by any Control Agreement in
respect of any Securities Accounts or other investment property shall be
modified by the Obligors without the prior written consent of Agent. Upon the
occurrence and during the continuance of a Default or Event of Default, Agent
may notify any securities intermediary to liquidate or transfer the applicable
Securities Account or any related investment property maintained or held thereby
and remit the proceeds thereof to the Agent Account.
5. REPRESENTATIONS AND WARRANTIES. In order to induce the Lender Group
to enter into this Agreement, each Obligor makes the following
representations and warranties to the Lender Group which shall be true,
correct, and complete, in all material respects, as of the date hereof, and
shall be true, correct, and complete in all material respects as of the
Closing Date, and at and as of the date of the making of each Advance (or
other extension of credit) made thereafter, as though made on and as of the
date of such Advance (or other extension of credit) (except to the extent
that such representations and warranties relate solely to an earlier date)
and such representations and warranties shall survive the execution and
delivery of this Agreement:
5.1 NO ENCUMBRANCES. Each Obligor has good and indefeasible title to
the Collateral, free and clear of Liens except for Permitted Liens.
5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide existing
payment obligations created by the sale and delivery of Inventory or the
rendition of services to Account Debtors in the ordinary course of Borrower's
business, owed to Borrower (net of
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reserves) without defenses, disputes, offsets, counterclaims, or rights of
return or cancellation. As to each Eligible Account, such Account is (1)
subject to a valid and perfected first priority security interest in favor of
Agent for the benefit of the Lender Group, and (2) is not:
(a) owed by an employee, Affiliate, or agent of any Obligor,
(b) on account of a transaction wherein goods were placed on
consignment or were sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a xxxx and hold, or on any other terms by reason of which the
payment by the Account Debtor may be conditional,
(c) payable in a currency other than Dollars, except for
Accounts owed by British Telecom (and any other Account Debtor located in Great
Britain approved in writing by Agent in its Permitted Discretion) that are
payable in British pounds sterling and converted at Borrower's cost into Dollars
pursuant to a Permitted F/X Contract,
(d) an Account arising from the sale of prepaid calling cards,
(e) an Account with respect to which the telecommunications
services giving rise to such Account have not been provided to and utilized by
the Account Debtor, or any services giving rise to such Account have not been
performed, consumed, or utilized by the Account Debtor, or the Account does not
otherwise represent a final sale,
(f) an Account that has not yet been billed to the Account
Debtor,
(g) an Account with respect to which the applicable Borrower
received from the Account Debtor a customer deposit, to the extent of such
customer deposit,
(h) a LEC Account (i) that is not covered by a LEC Confirmation
Statement received by the applicable Borrower from the applicable LEC or an
Approved Billing Agent in respect of such LEC, or (ii) that is covered by a LEC
Confirmation Statement received by the applicable Borrower from the applicable
LEC or an Approved Billing Agent in respect of such LEC to the extent of
(without duplication) reductions of or offsets against amounts otherwise payable
with respect thereto by reason of up-front LEC rejects or credits deducted from
net confirmed revenues on such LEC Confirmation Statement,
(i) an Account with respect to which any commissions are owed
to any Persons, to the extent of such commissions,
(j) an Account that has been transferred to an Obligor's legal
or collection department,
(k) an Account with respect to which the Account Debtor is
either (i) the United States or any department, agency, or instrumentality of
the United States
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(exclusive, however, of Accounts with respect to which
Borrower has complied, to the reasonable satisfaction of Agent, with the
Assignment of Claims Act, 31 U.S.C. Section 3727), or (ii) any State of the
United States (exclusive, however, of Accounts owed by any State that does not
have a statutory counterpart to the Assignment of Claims Act),
(l) an Account with respect to which the Account Debtor is a
creditor of Borrower, has or has asserted a right of setoff, has disputed its
liability, or has made any claim with respect to the Account, to the extent of
such claim, right of offset, assertion, or dispute,
(m) an Account with respect to which, to the Obligors'
knowledge, the Account Debtor is subject to an Insolvency Proceeding, is not
Solvent, or is going or has gone out of business,
(n) an Account the collection of which Borrower reasonably
believes to be doubtful by reason of the Account Debtor's financial condition,
and
(o) a right to receive progress payments or other advance
xxxxxxxx that are due prior to the completion of performance by Borrower of the
subject contract for goods or services.
5.3 COMPLIANCE WITH LAWS, ETC. (a) Each Obligor is in
compliance in all material respects with all applicable laws and regulations,
with which such Obligor's non-compliance reasonably could be expected to
result in a Material Adverse Change, including the Communications Act, FCC
Rules, the Foreign Corrupt Practices Act, and those relating to
telecommunications, copyright, pollution and environmental control, and equal
employment opportunity and employee safety, in all jurisdictions in which any
Obligor is currently doing a material level of business.
(b) All material Permits are in full force and effect and there
are no pending or, to the Obligors' knowledge, threatened material complaints,
investigations, inquiries or proceedings by or before the FCC or other
Governmental Authority or any actions or events that (i) could result in the
revocation, cancellation, adverse modification or non-renewal of any material
Permit or the imposition of a material fine or forfeiture, or (ii) otherwise
result in a Material Adverse Change.
5.4 EQUIPMENT. All of the Equipment is used or held for use in
Obligors' business, is fit for such purposes, and is personal property.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and Equipment
are not stored with a bailee, warehouseman, or similar party and are located
only at the locations identified on SCHEDULE 6.11 permitted by SECTION 6.11.
5.6 EBITDA FOR THE 3 MONTH PERIOD ENDED APRIL 30, 1999. Star's
consolidated EBITDA for the 3 month period ended April 30, 1999 was not less
than $3,900,000
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5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive
office of each Obligor is located at the address indicated in SCHEDULE 5.7 and
each such Obligor's FEIN (or, if applicable, any foreign equivalent) is
identified in SCHEDULE 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Obligor is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in each state where the failure to be so qualified reasonably could
be expected to result in a Material Adverse Change.
(b) Set forth on SCHEDULE 5.8, is a complete and accurate
description of the authorized capital Stock of Star, by class, and, as of the
Closing Date, a description of the number of shares of each such class that are
issued and outstanding. All such shares have been validly issued and, as of the
Closing Date, are fully paid, non-assessable shares free of contractual
preemptive rights. Other than as described on SCHEDULE 5.8, (i) there are no
subscriptions, options, warrants, or calls relating to any shares of Star's
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument, and (ii) Star is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on SCHEDULE 5.8, is a complete and accurate list
of each Obligor's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their incorporation; (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries; and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by such Obligor. All of the issued and outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.
(d) Except as set forth on SCHEDULE 5.8, no capital Stock (or
any securities, instruments, warrants, options, purchase rights, conversion or
exchange rights, calls, commitments or claims of any character convertible into
or exercisable for Stock) of any direct or indirect Subsidiary of any Obligor is
subject to the issuance of any security, instrument, warrant, option, purchase
right, conversion or exchange right, call, commitment or claim of any right,
title, or interest therein or thereto.
(e) Each Non-Material Subsidiary (i) does not individually own
any property or assets with a book value in excess of $50,000 or, together with
all other Non-Material Subsidiaries, own any property or assets with a book
value in excess of $100,000 in the aggregate, and (ii) does not engage in any
material business activity.
(f) SCHEDULE 5.8 identifies, by Obligor, (i) all former legal
names used by such Obligor within the past
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5 years, and (ii) the names of all Persons either (y) all or a substantial
portion of the assets of which have been acquired by such Obligor within the
past 5 years, or (z) that have been merged with and into such Obligor, with
such Obligor as the surviving entity of such merger, within the past 5 years.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) The execution, delivery, and performance by each Obligor of
this Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Obligor.
(b) The execution, delivery, and performance by each Obligor of
this Agreement and the Loan Documents to which it is a party do not and will not
(i) violate any provision of federal, state, or local law or regulation
applicable to such Obligor, the Governing Documents of such Obligor, or any
order, judgment, or decree of any court or other Governmental Authority binding
on such Obligor, (ii) conflict with, result in a breach of, or constitute (with
due notice or lapse of time or both) a default under any material contractual
obligation of such Obligor, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
such Obligor, other than Permitted Liens, or (iv) require any approval of
stockholders or any approval or consent of any Person under any material
contractual obligation of such Obligor.
(c) Other than the filing of financing statements, fixture
filings, the Trademark Security Agreement, and the Copyright Security Agreement,
the execution, delivery, and performance by each Obligor of this Agreement and
the Loan Documents to which such Obligor is a party do not and will not require
any registration with, consent, or approval of, or notice to, or other action
with or by, any Governmental Authority or (except to the extent permitted under
SECTION 3.2(b)) any other Person.
(d) As to each Obligor, this Agreement and the other Loan
Documents to which each such Obligor is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Obligor
will be the legally valid and binding obligations of such Obligor, enforceable
against such Obligor in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Agent's Liens and the Agent's Term Loan Liens granted
by each Obligor to Agent, for the benefit of the Lender Group, in and to its
assets pursuant to this Agreement and the other Loan Documents are validly
created, perfected, and first priority Liens, subject only to Permitted Liens.
5.10 LITIGATION. Other than those matters disclosed on SCHEDULE
5.10, there are no actions, suits, or proceedings pending or, to the best
knowledge of any Obligor, threatened against Borrower, or any of its
Subsidiaries, as applicable, except for matters arising after the Closing Date
that, if decided adversely to any Obligor, or any of its
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Subsidiaries, as applicable, reasonably could not be expected to result in a
Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All historical financial statements
relating to the Obligors that have been delivered by the Obligors to the Lender
Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to a
year-end audit and normal year-end adjustments) and fairly present, in all
material respects, the Obligors' financial condition on a consolidated basis as
of the date thereof and results of operations for the period then ended. There
has not been a Material Adverse Change with respect to any Obligor since the
date of the latest financial statements submitted to the Lender Group on or
before the Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) Each Obligor is Solvent.
(b) No transfer of property is being made by any Obligor and no
obligation is being incurred by any Obligor in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of any Obligor.
5.13 EMPLOYEE BENEFITS. None of the Obligors, any of its Subsidiaries,
or any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. None of the Obligors' properties or
assets has ever been used by any Obligor or, to the best of Obligors' knowledge,
by previous owners or operators in the disposal of, or to produce, store,
handle, treat, release, or transport, any Hazardous Materials. To the best of
the Obligors' knowledge, none of Obligors' properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, or a candidate for closure
pursuant to any environmental protection statute. No Lien arising under any
environmental protection statute has attached to any revenues or to any real or
personal property owned or operated by any Obligor. No Obligor has received a
written summons, citation, notice, or directive from the Environmental
Protection Agency or any other similar federal or state governmental agency
concerning any action or omission by any Obligor resulting in the releasing or
disposing of Hazardous Materials into the environment.
5.15 BROKERAGE FEES. No Obligor has utilized the services of any
broker or finder in connection with Borrower's obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders fee is
payable in connection herewith.
5.16 YEAR 2000 COMPLIANCE. On the basis of a comprehensive inventory,
review, and assessment currently being undertaken by the Obligors of the
Obligors' computer applications utilized by the Obligors, and upon inquiry made
of the Obligors' material vendors, the Obligors' management is of the considered
view that: (a) each Obligor and all
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such vendors will be Year 2000 Compliant in all material respects, and the
Obligors' licensed IX-Plus software-based billing and collections system
shall be in full operation parallel to the Obligors' owned proprietary
software-based call reconciliation and validation system, on or before July
31, 1999 and at all times thereafter; and (b) each Obligor and all such
vendors will be Year 2000 Compliant on or before September 30, 1999 and at
all times thereafter. The Obligors (i) have undertaken a detailed inventory,
review, and assessment of all areas within its business and operations that
could be materially and adversely affected by the failure of the Obligors to
be Year 2000 Compliant on a timely basis, (ii) are developing a detailed plan
and timeline for becoming Year 2000 Compliant in all material respects on a
timely basis, and (iii) to date, is implementing that plan in accordance with
that timetable in all material respects. The Obligors reasonably anticipate
that the Obligors will be Year 2000 Compliant on a timely basis.
5.17 INTELLECTUAL PROPERTY. Schedule 5.17 contains a list of all
Permits, together with a description of each Permit. Each Obligor owns, or
holds licenses in, all Permits, trademarks, trade names, copyrights, patents,
patent rights, and licenses which are necessary in all material respects to
conduct the Obligors' respective businesses and to operate the Obligors'
respective properties as now conducted and operated. The consummation of the
transactions contemplated by this Agreement and the Loan Documents will not
alter or impair, in any material respect, any of such rights of any Obligor.
5.18 CABLE AGREEMENTS, IRUS, LEASES, AND LICENSES. Each Obligor enjoys
peaceful and undisturbed possession or right to use, as the case may be, under
all Cable Agreements, IRUs, leases, and licenses that are material to the
business of such Obligor and to which it is a party or under which it is
operating. Except as disclosed on SCHEDULE 5.10, all of such Cable Agreements,
IRUs, leases, and licenses are valid and subsisting and no material default by
any Obligor exists under any of them.
5.19 MATERIAL AGREEMENTS. SCHEDULE 5.19 identifies all material
Carrier Agreements, all material leases (with respect to real and personal
property) or licenses, all Cable Agreements, all IRUs, all material Billing
Services Agreements, all material LEC Agreements, and all other material
agreements to which an Obligor is party or by which its assets are bound. Each
agreement identified on SCHEDULE 5.19 is in full force and effect and no Obligor
is in material default thereunder.
5.20 SWITCHING STANDARDS. All telecommunications switching Equipment
of the Obligors is fully compliant with international C-7 and domestic SS-7
signaling standards.
6. AFFIRMATIVE COVENANTS.
Each Obligor, jointly and severally, covenants and agrees that, so long as any
credit hereunder shall be available and until full and final payment of the
Obligations, each Obligor shall do all of the following:
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6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent.
6.2 COLLATERAL REPORTING. Provide Agent with the following documents
at the following times in form reasonably satisfactory to Agent:
(a) on a weekly basis,
(i) a sales journal, collection journal, and credit
register since the last such schedule and a calculation of
the Borrowing Base as of such date,
(ii) a report detailing contra Accounts with respect to
each of Eligible Direct Accounts and Eligible LEC Accounts,
(iii) notice of all returns, disputes, or claims,
(iv) so-called "par" (i.e., "purchase of accounts
receivable") LEC Confirmation Statements, and
(v) copies of all reports by billing services agents
delivered to the Obligors pursuant to or in connection with any Billing
Services Agreement.
(b) promptly upon receipt,
(i) copies of all LEC Confirmation Statements relative to
LEC Accounts of CEO and PT-1 received by the Obligors since the
immediately prior delivery of materials under this SECTION 6.2(B),
together with any Obligor-prepared summary or report in respect of such
LEC Confirmation Statements,
(c) on a monthly basis and, in any event, by no later than the
25th day of each month during the term of this Agreement,
(i) a detailed calculation of the Borrowing Base,
(ii) a detailed aging, by total, of the Accounts, together
with a reconciliation to the detailed calculation of the
Borrowing Base previously provided to Agent,
(iii) a summary aging, by vendor, of the Obligors' accounts
payable and any book overdraft,
(iv) a calculation of Dilution for the prior month, and
(v) a summary aging, by administrator, lessor, grantor, or
licensor, of the Obligors' obligations due and payable
under all Carrier
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Agreements, Cable Agreement, IRUs, leases, and licenses to
which any one or more of the Obligors is party.
(d) upon request of Agent,
(i) copies of invoices in connection with the Accounts,
customer statements, credit memos, remittance advices and reports,
deposit slips, shipping and delivery documents in connection with
the Accounts and for Inventory and Equipment acquired by Borrower,
purchase orders and invoices,
(ii) such other reports as to the Collateral or the
financial condition of Borrower as Agent reasonably may request
from time to time.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent,
with copies to each Lender:
(a) as soon as available, but in any event within the Applicable
Reporting Window during each of Borrower's fiscal years,
(i) a company prepared balance sheet, income statement, and
statement of cash flow covering Borrower's operations during such
period,
(ii) a certificate signed by its chief financial officer or
chief accounting officer to the effect that:
(A) the financial statements delivered hereunder
have been prepared in accordance with GAAP (except for the
lack of footnotes and being subject to a year-end audit and
normal year-end adjustments) and fairly present in all
material respects the financial condition of Borrower,
(B) the representations and warranties of Borrower
contained in this Agreement and the other Loan Documents
are true and correct in all material respects on and as of
the date of such certificate, as though made on and as of
such date (except to the extent that such representations
and warranties relate solely to an earlier date),
(C) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the
extent of any non-compliance, describing such
non-compliance as to which he or she may have knowledge and
what action Borrower has taken, is taking, or proposes to
take with respect thereto),
(iii) for each month that is the date on which a financial
covenant in SECTION 7.20 is to be tested, a Compliance Certificate
demonstrating, in
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reasonable detail, compliance at the end of such
period with the applicable financial covenants contained in
SECTION 7.20,
(iv) a company prepared report detailing all amounts
payable pursuant to all of the agreements identified on SCHEDULE
5.19; each report shall identify (A) all amounts owing by the
applicable Obligor, under each agreement, to each other signatory
thereto, (B) all amounts due from each signatory other than an
Obligor to an Obligor, and (C) whether any portion of the amounts
payable under either clause (A) or (B) are subject to dispute.
(b) as soon as available, but in any event within 90 days after
the end of each of Borrower's fiscal years,
(i) financial statements of Borrower for each such fiscal
year, audited by independent certified public accountants
reasonably acceptable to Agent and certified, without any
qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include
a balance sheet, income statement, and statement of cash flow and,
if prepared, such accountants' letter to management), and
(ii) a certificate of such accountants addressed to Agent
stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under SECTIONS 7.20
OR 7.21; PROVIDED, HOWEVER, that such accountants shall not be
liable by reason of any failure to obtain knowledge of any such
Default or Event of Default that would not be disclosed in the
course of their audit examination,
(c) if and when filed by any Obligor,
(i) Form 10-Q quarterly reports, Form 10-K annual reports,
and Form 8-K current reports,
(ii) any other filings made by any Obligor with the SEC,
and
(iii) any other information that is provided by any Obligor
to its shareholders generally or its other securitiesholders
generally,
(d) upon the request of Agent,
(i) any other report reasonably requested relating to the
financial condition of any Obligor.
The Obligors agree to deliver financial statements prepared on
both a consolidated and consolidating basis. The Obligors agrees that their
independent certified public accountants are authorized to communicate with
Agent and to release to Agent whatever financial information concerning the
Obligors that Agent reasonably may request.
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6.4 STRUCTURING TRANSACTIONS. If the issuance and sale by Star of the
Permitted Subordinated Debt is not consummated within 270 days following the
Closing Date or if an Event of Default has occurred and is continuing, the
Obligors shall consummate promptly the Structuring Transactions (including
obtaining all necessary regulatory approvals with respect thereto), Star
Operating Sub immediately shall become an additional Borrower, and the Obligors
shall satisfy promptly the requirements of SECTIONS 4.4(a) AND 4.4(b) in respect
thereof.
6.5 RETURN. Cause returns and allowances, if any, as between any
Obligor and its Account Debtors to be on the same basis and in accordance with
the usual customary practices of such Obligor, as they exist at the time of the
execution and delivery of this Agreement.
6.6 TITLE TO EQUIPMENT. Upon Agent's request, immediately deliver to
Agent, properly endorsed, any and all evidences of ownership of, certificates of
title, or applications for title to any items of Equipment.
6.7 MAINTENANCE OF EQUIPMENT. Maintain the Equipment in good
operating condition and repair (ordinary wear and tear excepted), and make all
necessary replacements thereto so that the operating efficiency thereof shall at
all times be maintained and preserved in all material respects. Other than
those items of Equipment that constitute fixtures on the Closing Date, Borrower
shall use reasonable best efforts to not permit any item of Equipment to become
a fixture to real estate or an accession to other property, and such Equipment
shall at all times remain personal property.
6.8 TAXES. Cause all assessments and taxes, whether real, personal,
or otherwise, due or payable by, or imposed, levied, or assessed against any
Obligor or any of its property to be paid in full, before delinquency or before
the expiration of any extension period, except to the extent that the validity
of such assessment or tax shall be the subject of a Permitted Protest. Each
Obligor will make timely payment or deposit of all tax payments and withholding
taxes required of it by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, federal and foreign
income taxes, and will, upon request, furnish Agent with proof reasonably
satisfactory to Agent indicating that such Obligor has made such payments or
deposits. Each Obligor shall deliver reasonably satisfactory evidence of
payment of applicable excise taxes in each jurisdictions in which (a) such
Obligor conducts a material amount of business or is required to pay any such
excise tax, (b) such Obligor's failure to pay any such applicable excise tax
would result in a Lien on a material portion of the properties or assets of such
Obligor, or (c) such Obligor's failure to pay any such applicable excise tax
would constitute a Material Adverse Change.
6.9 INSURANCE.
(a) At the expense of the Obligors, maintain insurance
respecting the Collateral wherever located and with respect to the Obligors'
business, covering loss or damage by fire, theft, explosion, and all other
hazards and risks as ordinarily are insured
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against by other Persons engaged in the same or similar businesses. Each
Obligor also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny,
embezzlement, and criminal misappropriation All such policies of insurance
shall be in such amounts and with such insurance companies as shall be
customary for corporations similarly situated in the telecommunications
industry and are reasonably satisfactory to Agent. Borrower shall deliver
copies of all such policies to Agent with 438 BFU lender's loss payable
endorsements or other reasonably satisfactory lender's loss payable
endorsements, naming Agent as sole loss payee or additional insured, as
appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Agent in the event of cancellation of the policy for any reason whatsoever.
If any Obligor fails to provide and pay for such insurance, Agent may, at its
option, but shall not be required to, procure the same and charge Borrower's
Loan Account therefor.
(b) Give Agent prompt notice of any loss in excess of
$1,000,000 covered by such insurance. Agent shall have the exclusive right to
adjust any losses payable under any such insurance policies in excess of
$3,000,000, without any liability to any Obligor whatsoever in respect of such
adjustments. Any monies received as payment for any loss under any insurance
policy mentioned above (other than liability insurance policies) or as payment
of any award or compensation for condemnation or taking by eminent domain, shall
be paid over to Agent to be applied at the option of the Required Lenders either
to the prepayment of the Obligations without premium, in such order or manner as
the Required Lenders may elect, or shall be disbursed to the applicable Obligor
under staged payment terms reasonably satisfactory to the Required Lenders for
application to the cost of repairs, replacements, or restorations.
(c) At the expense of Borrower, maintain key man life insurance
policies with respect to the following individual and in the following amounts:
Name: Amount:
Xx. Xxxxxxxxxxx X. Xxxxxxxx $10,000,000
Borrower shall furnish to Agent for the benefit of the Lender Group an "Absolute
Assignment" of such life insurance policy, shall record such "Absolute
Assignment" with the issuer of the life insurance policy, and shall furnish
proof of such issuer's acceptance of such assignment. All proceeds payable
under such life insurance policy shall be payable to Agent for the benefit of
the Lender Group to be applied on account of the Obligations.
6.10 NO SETOFFS OR COUNTERCLAIMS. Make payments hereunder and under
the other Loan Documents by or on behalf of any Obligor without setoff or
counterclaim and free and clear of, and without deduction or withholding for or
on account of, any federal, state, or local taxes.
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6.11 LOCATION OF EQUIPMENT. Keep the Equipment, including any new
telecommunications switching Equipment, only at the locations identified on
SCHEDULE 6.11; provided, however, that the Obligors may amend SCHEDULE 6.11 so
long as such amendment occurs by written notice to Agent not less than 30 days
prior to the date on which the Equipment, including any existing or new
telecommunications switching Equipment, is moved to such new location, so long
as such new location is within the continental United States, and so long as, at
the time of such written notification, the applicable Obligor provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens and the Agent's Term Loan Liens on such assets.
6.12 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act, the Americans With Disabilities Act, the
Communications Act, the FCC Rules, and the Foreign Corrupt Practices Act, other
than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably could not
be expected to result in a Material Adverse Change.
6.13 CONSENTS TO ASSIGNMENT AGREEMENTS. Use reasonable best efforts to
cause Consents to Assignment Agreements to be executed and delivered in respect
of all applicable IRUs, LEC Agreements, and Billing Service Agreements;
PROVIDED, HOWEVER, that, in the case of any LEC Agreement or Billing Service
Agreement, all LEC Accounts billed or collected thereunder shall not otherwise
qualify as an Eligible Account unless and until such Consent to Assignment
Agreement has been delivered to Agent.
6.14 CARRIER AGREEMENTS, CABLE AGREEMENTS, IRUS, LEASES, AND LICENSES.
Pay when due all rents, royalties, and other amounts payable under any Carrier
Agreements, Cable Agreements, IRUs, leases, or licenses to which any Obligor is
a party or by which a material portion of any Obligor's properties and assets
are bound, unless such payments are the subject of a Permitted Protest. To the
extent that any Obligor fails timely to make payment of such rents, royalties,
and other amounts payable when due under its Carrier Agreements, Cable
Agreements, IRUs, leases, or licenses, Agent shall be entitled, in its
discretion but without duplication of the Payables Reserve, to reserve an amount
equal to such unpaid amounts against the Borrowing Base.
6.15 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrower's obtaining
financing from the Lender Group under this Agreement. Each Obligor agrees and
acknowledges that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrower, and Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrower's obtaining financing from the
Lender Group under this Agreement.
6.16 YEAR 2000 COMPLIANCE. (a) Be Year 2000 Compliant in all material
respects, and the Obligors' licensed IX-Plus software-based billing and
collections system shall be in full operation parallel to the Obligors' owned
proprietary software-based call reconciliation
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and validation system, on or
before July 31, 1999 and at all times thereafter; and (b) be Year 2000 Compliant
on or before September 30, 1999 and at all times thereafter.
6.17 PROJECTIONS. Not later than 60 days after the end of each fiscal
year of Borrower, deliver to Agent Projections of Borrower, in form and
substance (including as to scope and underlying assumptions) reasonably
satisfactory to Agent, for the period through the fiscal years in which the
Maturity Date occurs, year by year, and for the forthcoming fiscal year, month
by month, certified by the chief financial officer of Star as being such
officer's good faith best estimate of the financial performance of Borrower
during the period covered thereby.
6.18 CORPORATE EXISTENCE, ETC. At all time preserve and keep in full
force and effect each Obligors' valid corporate existence and good standing and
any rights and franchises material to the Obligors' businesses; PROVIDED,
HOWEVER, that, upon not less than 30 days prior written notice to Agent: (a) any
Guarantor may be merged with and into any other Guarantor; (b) any Guarantor may
be merged with and into any Borrower, with such Borrower as the surviving entity
of such merger; and (c) any Borrower (other than Star or, from and after the
consummation of the Structuring Transactions (if ever), Star Operating Sub) may
be merged with and into any other Borrower (other than, from and after the
consummation of the Structuring Transactions (if ever), Star Operating Sub),
with such other Borrower as the surviving entity of such merger.
6.19 DISCLOSURE UPDATES. Promptly and in no event later than 5
Business Days after obtaining knowledge thereof, (i) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (ii) correct any defect or error that may
be discovered therein or in any Loan Document or in the execution,
acknowledgement, filing, or recordation thereof.
6.20 MATERIAL AGREEMENTS. From time to time at the reasonable request
of Agent, deliver to Agent, copies (to the extent Agent has not previously
received such copies) of (a) all Carrier Agreements, (b) all material leases
(whether in respect of real or personal property), (c) all agreements evidencing
IRUs, (d) all material LEC Agreements, (e) all Billing Services Agreements, and
(f) all Cable Agreements, in each case certified by a Secretary of the
applicable Obligor to be true, correct, and complete copies thereof.
7. NEGATIVE COVENANTS.
Each Obligor, jointly and severally, covenants and agrees that, so long as any
credit hereunder shall be available and until full and final payment of the
Obligations, no Obligor will do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
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(a) Indebtedness evidenced by this Agreement or the other Loan
Documents, together with Indebtedness to issuers of letters of credit that are
the subject of L/C Undertakings and Indebtedness to F/X Bank under Permitted F/X
Contracts;
(b) Indebtedness set forth on Schedule 7.1;
(c) Permitted Purchase Money Indebtedness;
(d) Indebtedness owed by any Obligor to any other Obligor, if
and to the extent such Indebtedness is and remains subject to the Intercompany
Subordination Agreement;
(e) Star may incur Permitted Subordinated Debt;
(f) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b), (c), (d), and (e) of this SECTION 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings, renewals, or extensions do
not materially impair the prospects of repayment of the Obligations by Borrower,
(ii) the net cash proceeds of such refinancings, renewals, or extensions do not
result in an increase in the aggregate principal amount of the Indebtedness so
refinanced, renewed, or extended, (iii) such refinancings, renewals, refundings,
or extensions do not result in a shortening of the average weighted maturity of
the Indebtedness so refinanced, renewed, or extended, and (iv) to the extent
that Indebtedness that is refinanced was subordinated in right of payment to the
Obligations, then the subordination terms and conditions of the refinancing
Indebtedness must be at least as favorable to the Lender Group as those
applicable to the refinanced Indebtedness; and
(g) unsecured Indebtedness other than as described in items (a)
through (f) above, so long as the aggregate outstanding amount of such
Indebtedness does not exceed $2,000,000 at any time.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its property or assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced under
SECTION 7.1(f) and so long as the replacement Liens only encumber those assets
or property that secured the original Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger (except as permitted under SECTION
6.18), consolidation, reorganization (other than the European Spin Off), or
recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution), except to the extent permitted under SECTION 6.18.
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(c) Convey, sell, assign, lease, transfer, or otherwise dispose
of, in one transaction or a series of transactions, all or any substantial part
of its property or assets, other than the European Spin Off.
(d) Cause, suffer, or permit any Non-Material Subsidiary to (i)
engage in any material business activity, (ii) individually own any property or
assets with a book value in excess of $50,000, or (iii) together with all other
Non-Material Subsidiaries, own any property or assets with a book value in
excess of $100,000 in the aggregate.
7.4 DISPOSAL OF ASSETS. Sell, lease, assign, transfer, or otherwise
dispose of any of Obligors' properties or assets, other than pursuant to
Permitted Dispositions.
7.5 CHANGE NAME. Change any Obligor's name (unless Administrative
Borrower has provided 30 days prior written notification thereof to Agent and so
long as, at the time of such written notification, the applicable Obligor
provides any financing statements or fixture filings or amendments thereto
necessary to perfect and continue perfected the Agent's Liens and Agent's Term
Loan Liens), FEIN (or, if applicable, the foreign equivalent thereof), corporate
structure (within the meaning of SECTION 9-402(7) of the Code), or identity, or
add any new fictitious name.
7.6 GUARANTEE. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of the Obligors or
which are transmitted or turned over to Agent.
7.7 NATURE OF BUSINESS. Make any change in the principal nature of
Obligors' business, as presently conducted, other than the European Spin Off.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing permitted by
SECTION 7.1(f), prepay, redeem, retire, defease, purchase, or otherwise acquire
any Indebtedness owing to any third Person, other than the Obligations in
accordance with this Agreement, and
(b) Directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under SECTIONS 7.1(b), (c), (d), (e), or (f).
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10 [INTENTIONALLY OMITTED].
7.11 DISTRIBUTIONS. Make any distribution or declare or pay any
dividends (in cash or other property, other than Stock) on, or purchase,
acquire, redeem, or retire any Stock of any Obligor, of any class, whether now
or hereafter outstanding; provided, however, that any
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Obligor may make such distributions to any other Obligor owning any Stock of
such Obligor.
7.12 ACCOUNTING METHODS. Except as required or permitted by GAAP,
modify or change its method of accounting or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage of
Obligors' accounting records without said accounting firm or service bureau
agreeing to provide Agent information regarding the Collateral or the Obligors'
financial condition. Each Obligor hereby waives the right to assert a
confidential relationship, if any, it may have with any accounting firm or
service bureau in connection with any information requested by Agent pursuant to
or in accordance with this Agreement, and agrees that Agent may contact directly
any such accounting firm or service bureau in order to obtain such information.
7.13 INVESTMENTS. Except for Permitted Investments, directly or
indirectly make, acquire, or incur any liabilities (including contingent
obligations) for or in connection with any Investment.
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into
or permit to exist any material transaction with any Affiliates of the Obligors,
except for transactions that are in the ordinary course of the applicable
Obligor's business, that are upon fair and reasonable terms, that are fully
disclosed to Agent (except that the Obligors need not fully disclose to Agent
any such individual transaction or series of related transactions that involves
less than $500,000), and that are no less favorable to such Obligor than would
be obtained in an arm's length transaction with a non-Affiliate; PROVIDED,
HOWEVER, that the foregoing restrictions shall not apply to any transaction
solely between any Obligor and any other Obligor.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business, except for the European Spin Off.
7.16 [Intentionally Omitted]
7.17 USE OF PROCEEDS. Use the proceeds of the Advances and the Term
Loan for any purpose other than (a) on the Closing Date, (i) to repay in full
the outstanding principal, accrued interest, and accrued fees and expenses owing
to each Existing Lender, and (ii) to pay transactional fees, costs, and expenses
incurred in connection with this Agreement, and (b) thereafter, consistent with
the terms and conditions hereof, for its lawful and permitted corporate
purposes.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without providing 30 days prior written notification thereof to Agent and so
long as, at the time of such written notification, the applicable Obligor
provides any financing statements or fixture filings necessary to perfect and
continue perfected the Agent's Liens and Agent's Term Loan Liens.
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The Inventory and Equipment shall not at any time now or hereafter be stored
with a bailee, warehouseman, or similar party without Agent's prior written
consent.
7.19 [INTENTIONALLY OMITTED]
7.20 FINANCIAL COVENANTS. Fail to maintain:
(a) EBITDA. EBITDA for each of the following periods of not
less than the amount shown below for the period corresponding thereto in (i)
Column A, if the European Spin Off was not consummated on or before the last day
of such period, or (ii) Column B, if the European Spin Off was consummated on or
before the last day of such period:
PERIOD "COLUMN A" MINIMUM EBITDA "COLUMN B" MINIMUM EBITDA
------ ------------------------- -------------------------
the 3 month period
ending on or about
6/30/99 $ 4,900,000 $ 7,700,000
the 6 month period
ending on or about
9/30/99 $ 15,000,000 $ 22,000,000
the 9 month period
ending on or about
12/31/99 $ 36,000,000 $ 44,900,000
the 12 month period
ending on or about
3/31/00 $ 58,000,000 $ 68,500,000
the 12 month period
ending on or about
6/30/00 $ 86,000,000 $ 93,000,000
the 12 month period
ending on or about
9/30/00 $114,000,000 $113,000,000
the 12 month period
ending on or about
12/31/00 $114,000,000 $125,000,000
the 12 month period
ending on or about
3/31/01 $114,000,000 $125,000,000
the 12 month period
ending on or about
6/30/01 $114,000,000 $125,000,000
(b) Tangible Net Worth. Tangible Net Worth for each of the
following periods, measured as of the last day of such period, of not less than
the amount shown below
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for the period corresponding thereto in (i) Column A, if the European Spin
Off was not consummated on or before the last day of such period, or (ii)
Column B, if the European Spin Off was consummated on or before the last day
of such period:
"COLUMN A" MINIMUM "COLUMN B" MINIMUM
PERIOD TANGIBLE NET WORTH TANGIBLE NET WORTH
------ ------------------ ------------------
fiscal quarter
ending on or about
6/30/99 $ 87,397,000 $ 76,000,000
fiscal quarter
ending on or about
9/30/99 $ 79,793,000 $ 78,000,000
fiscal quarter
ending on or about
12/31/99 $ 86,434,000 $ 85,000,000
fiscal quarter
ending on or about
3/31/00 $ 92,812,000 $ 91,000,000
fiscal quarter
ending on or about
6/30/00 $103,850,000 $103,000,000
fiscal quarter
ending on or about
9/30/00 $116,115,000 $115,000,000
fiscal quarter
ending on or about
12/31/00 $116,115,000 $127,000,000
fiscal quarter
ending on or about
3/31/01 $116,115,000 $127,000,000
fiscal quarter
ending on or about
6/30/01 $116,115,000 $127,000,000
7.21 CAPITAL EXPENDITURES. Other than solely with the proceeds of the
Permitted Subordinated Debt, make capital expenditures: (a) in excess of
$45,000,000 during the period commencing on the Closing Date and ending on
December 31, 1999 or in excess of 40% of $45,000,000 in any one fiscal quarter
during such period; and (b) in excess of $55,000,000 during any fiscal year
thereafter or in excess of 40% of $55,000,000 in any one fiscal quarter during
such fiscal year. For purposes of this Section, capital expenditures not
identified in Star's applicable filings with the SEC as having been made with
the proceeds of the Permitted Subordinated Debt shall be deemed to have been
made with funds other than the proceeds of the Permitted Subordinated Debt.
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7.22 SECURITIES ACCOUNTS. The Obligors shall not establish or maintain
any Securities Account unless Agent shall have received a Control Agreement,
duly executed and in full force and effect, in respect of such Securities
Account. The Obligors agree not to transfer assets out of any Securities
Accounts; PROVIDED, HOWEVER, that, so long as no Event of Default has occurred
and is continuing or would result therefrom, the Obligors may use such assets to
the extent permitted by this Agreement.
7.23 NEW MATERIAL CONTRACTS.
(a) The Obligors shall use reasonable best efforts to not enter
into any new Cable Agreements, leases, licenses, Carrier Agreements, LEC
Agreements, or Billing Services Agreements, or materially amend, modify, or
extend existing Cable Agreements, IRUs, leases, licenses, Carrier Agreements,
LEC Agreements, or Billing Services Agreements, if the effect would be to
prohibit (or continue to prohibit) Agent from having a Lien on the rights of any
Obligor thereunder or to prohibit disclosure of the terms thereof to Agent.
(b) The Obligors shall not enter into any new IRUs, unless any
necessary Consent to Assignment Agreement in respect thereof is executed and
delivered to Agent concurrently with the execution and delivery of such IRUs.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "EVENT OF DEFAULT") under this Agreement:
8.1 If any Obligor, or any of its Subsidiaries, fails to pay when due
and payable or when declared due and payable, any portion of the Obligations
(whether of principal, interest (including any interest which, but for the
provisions of the Bankruptcy Code, would have accrued on such amounts), fees and
charges due the Lender Group, reimbursement of Lender Group Expenses, or other
amounts constituting Obligations); PROVIDED, HOWEVER, that in the case of
Overadvances that are caused by the charging of interest, fees, or Lender
Expenses to the Loan Account, such event shall not constitute an Event of
Default if, within 3 Business Days of Borrower's receipt of telephonic or other
notice of such Overadvance, Borrower eliminates such Overadvance;
8.2 (a) If any Obligor fails to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in SECTIONS 6.2
[COLLATERAL REPORTING], 6.3 [FINANCIAL STATEMENTS, REPORTS, CERTIFICATES], 6.11
[LOCATION OF EQUIPMENT], 6.12 [COMPLIANCE WITH LAWS], AND 6.14 [CARRIER
AGREEMENTS, CABLE AGREEMENTS, IRUS, LEASES, AND LICENSES] hereof and such
failure or neglect continues for a period of 5 days after the date on which such
failure or neglect first occurs; (b) If any Obligor fails to perform, keep, or
observe any term, provision, condition, covenant, or agreement contained in
SECTIONS 2 [LOANS AND TERMS OF PAYMENT], 6 [AFFIRMATIVE COVENANTS] (OTHER
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THAN A SUBSECTION OF SECTION 6 THAT IS DEALT WITH ELSEWHERE IN THIS SECTION
8), 7 [NEGATIVE COVENANTS], AND 11.3 [INDEMNIFICATION] of this Agreement or
any comparable provision contained in any of the other Loan Documents; or (c)
If any Obligor fails to perform, keep, or observe any term, provision,
condition, covenant, or agreement contained in any Section of this Agreement
(other than a Section that is expressly dealt with elsewhere in this SECTION
8) or the other Loan Documents (other than a Section of such other Loan
Documents dealt with elsewhere in this Section 8) and such failure or neglect
is not cured within 15 days after the date on which such failure or neglect
first occurs.
8.3 If there is a Material Adverse Change;
8.4 (a) If any portion of (i) an Obligor's fixed assets, with a value
not greater than $5,000,000 individually or in the aggregate, or (ii) an
Obligor's property or assets other than fixed assets, with a value not greater
than $100,000 individually or in the aggregate, is attached, seized, subjected
to a writ or distress warrant, or is levied upon, or comes into the possession
of any third Person and the same is not discharged before the earlier of 30 days
after the date it first arises or 5 days prior to the date on which such
property or asset is subject to forfeiture by such Obligor; or
(b) If any portion of (i) an Obligor's fixed assets, with a value
greater than $5,000,000 individually or in the aggregate, or (ii) an Obligor's
property or assets other than fixed assets, with a value greater than $100,000
individually or in the aggregate, is attached, seized, subjected to a writ or
distress warrant, or is levied upon, or comes into the possession of any third
Person;
8.5 If an Insolvency Proceeding is commenced by any Obligor;
8.6 If an Insolvency Proceeding is commenced against any Obligor and
any of the following events occur: (a) such Obligor consents to the institution
of the Insolvency Proceeding against it; (b) the petition commencing the
Insolvency Proceeding is not timely controverted; (c) the petition commencing
the Insolvency Proceeding is not dismissed within 45 calendar days of the date
of the filing thereof; provided, however, that, during the pendency of such
period, Agent (including any successor agent) and each other member of the
Lender Group shall be relieved of its obligation to extend credit hereunder;
(d) an interim trustee is appointed to take possession of all or a substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, such Obligor; or (e) an order for relief shall have
been issued or entered therein;
8.7 If any Obligor is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs;
8.8 (a) If a notice of Lien, levy, or assessment is filed of record
with respect to any of any Obligor's properties or assets by the United States,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or
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if any taxes or debts owing at any time hereafter to any one or more of such
entities becomes a Lien, whether xxxxxx or otherwise, upon any of such
Obligor's properties or assets and the same is not paid on the payment date
thereof;
(b) If a notice of Lien, levy, or assessment in excess of
$1,000,000 in the aggregate is filed of record with respect to any of any
Obligor's assets by any state, county, municipal, or other non-federal
Governmental Authority, or if any taxes or debts owing at any time hereafter to
any one or more of such entities in excess of $1,000,000 in the aggregate
becomes a Lien upon any of any Obligor's assets and the same is not paid and the
same is not released, discharged, or bonded against before the earlier of 30
days after the date it first arises or 5 days prior to the date when such asset
is subject to being forfeited by such Obligor;
8.9 If one or more judgments or other claims involving an aggregate
amount of $1,000,000, or more, in excess of the amount covered by insurance,
becomes a Lien or encumbrance upon any material portion of any Obligor's assets
and the same is not released, discharged, bonded against, or stayed pending
appeal before the earlier of 30 days after the date it first arises or 5 days
prior to the date on which such asset is subject to being forfeited by such
Obligor;
8.10 (a) If there is a default in any Carrier Agreement to which an
Obligor is a party with one or more third Persons, such default involves
obligations in an amount materially greater than the Carrier Default Norm or is
not resolved within a period materially greater than the Carrier Default Norm,
and such default (i) occurs at the final maturity of the obligations thereunder,
or (ii) results in a right by such third Person(s), irrespective of whether
exercised, to accelerate the maturity of such Obligor's obligations thereunder,
or (iii) results in the termination of such agreement;
(b) If there is a default in any agreement to which an Obligor is
a party with one or more third Persons under which Indebtedness of such Obligor
involving not less than $2,000,000 is owing to such third Person(s) and such
default (i) occurs at the final maturity of the obligations thereunder, or (ii)
results in a right by such third Person(s), irrespective of whether exercised,
to accelerate the maturity of such Obligor's obligations thereunder, or (iii)
results in the termination of such agreement;
(c) If there is a default in any other material agreement to
which an Obligor is a party with one or more third Persons under which
obligations involving not less than $5,000,000 is owing to such third Person(s)
and such default (i) occurs at the final maturity of the obligations thereunder,
or (ii) results in a right by such third Person(s), irrespective of whether
exercised, to accelerate the maturity of such Obligor's obligations thereunder,
or (iii) results in the indefinite suspension of services by such third Person
or the termination of such agreement;
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8.11 If any Obligor makes any payment on account of Indebtedness that
has been contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness; or
8.12 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or report made to the
Lender Group by an Obligor, its Subsidiaries, or any officer, employee, agent,
or director of an Obligor or any of its Subsidiaries, or if any such warranty or
representation is withdrawn.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may, except to the
extent otherwise expressly provided or required below, authorize and instruct
Agent to do any one or more of the following on behalf of the Lender Group (and
Agent, acting upon the instructions of the Required Lenders, shall do the same
on behalf of the Lender Group), all of which are authorized by each of the
Obligors:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement, under any of the Loan Documents, or
under any other agreement between an Obligor and the Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting Agent's rights and security interests, for the benefit of the
Lender Group, in the Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Agent considers advisable, and in such
cases, Agent will credit Borrower's Loan Account with only the net amounts
received by Agent in payment of such disputed Accounts after deducting all
Lender Group Expenses incurred or expended in connection therewith;
(e) Cause the Obligors to hold all returned Inventory in trust
for the Lender Group, segregate all returned Inventory from all other property
of the Obligors or in the Obligors' possession and conspicuously label said
returned Inventory as the property of the Lender Group;
(f) Without notice to or demand upon any Obligor or any
guarantor, make such payments and do such acts as Agent considers necessary or
reasonable to protect its security interests in the Collateral. The Obligors
agree to assemble the Collateral if Agent so requires, and to make the
Collateral available to Agent as Agent may designate. The
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Obligors authorize Agent to enter the premises where the Collateral is
located, to take and maintain possession of the Collateral, or any part of
it, and to pay, purchase, contest, or compromise any encumbrance, charge, or
Lien that in Agent's determination appears to conflict with the Agent's Liens
or the Agent's Term Loan Liens and to pay all expenses incurred in connection
therewith. With respect to any of any Obligor's owned or leased premises,
the applicable Obligor hereby grants Agent a license to enter into possession
of such premises and to occupy the same, without charge, for up to 120 days
in order to exercise any of the Lender Group's rights or remedies provided
herein, at law, in equity, or otherwise;
(g) Without notice to any Obligor (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of Section 9-505 of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of Borrower held
by the Lender Group (including any amounts received in the Lockbox Accounts), or
(ii) indebtedness at any time owing to or for the credit or the account of such
Obligor held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and deposits
of any Obligor held by the Lender Group, and any amounts received in the Lockbox
Accounts, to secure the full and final repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Each Obligor hereby grants to Agent a license or other
right to use, without charge, such Obligor's Permits, labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, as
it pertains to the Collateral, in completing production of, advertising for
sale, and selling any Collateral and such Obligor's rights under all licenses
and all franchise agreements shall inure to the Lender Group's benefit;
(j) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including the Obligors' premises) as Agent
determines is commercially reasonable. It is not necessary that the Collateral
be present at any such sale;
(k) Agent shall give notice of the disposition of the
Collateral as follows:
(i) Agent shall give the Obligor with rights in the applicable
Collateral and each holder of a security interest in the Collateral who
has filed with Agent a written request for notice, a notice in writing of
the time and place of public sale, or, if the sale is a private sale or
some other disposition other than a public sale is to be made of the
Collateral, then the time on or after which the private sale or other
disposition is to be made;
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(ii) The notice shall be personally delivered or mailed, postage
prepaid, to the Obligor with rights in the applicable Collateral as
provided in SECTION 12, at least 5 days before the date fixed for the
sale, or at least 5 days before the date on or after which the private
sale or other disposition is to be made; no notice needs to be given
prior to the disposition of any portion of the Collateral that is
perishable or threatens to decline speedily in value or that is of a type
customarily sold on a recognized market. Notice to Persons other than
the Obligor claiming an interest in the Collateral shall be sent to such
addresses as they have furnished to Agent;
(l) The Lender Group may credit bid and purchase at any public
sale;
(m) Require each Obligor to deliver to Agent a complete list of
all Account Debtors of such Obligor, with respect to all Accounts of such
Obligor, or any reasonably designated portion thereof, which the Obligors shall
deliver to Agent promptly upon demand by Agent;
(n) Agent may, at its option, require Borrower to deposit with
Agent funds in an amount equal to the F/X Reserve, and, if Borrower fails to
make such deposit promptly, Agent may advance such amount as an Advance (whether
or not an Overadvance is created thereby). Any such deposit or the proceeds of
such Advance shall be held by Agent as a reserve to fund F/X Undertaking
obligations owing to F/X Bank. At such time (if ever) as all such indemnity
obligations have been paid or terminated, any amounts remaining in such reserve
shall be applied against any outstanding Obligations or, if all Obligations have
been indefeasibly paid in full, returned to Borrower.
(o) The Lender Group shall have all other rights and remedies
available to it at law or in equity pursuant to any other Loan Documents; and
(p) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower. Any excess
will be returned, without interest and subject to the rights of third Persons,
by Agent to Borrower.
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
waiver of any other Event of Default. No delay by the Lender Group shall
constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Obligor fails to pay any monies (including any amounts
owing under any of the agreements identified on SCHEDULE 5.19, and including any
taxes, assessments, insurance premiums, or, in the case of leased properties or
assets, rents or other amounts
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payable under such leases) due to third Persons (including any Switch
Financing Party), or fails to make any deposits or furnish any required proof
of payment or deposit, all as required under the terms of this Agreement,
then, to the extent that Agent determines that such failure by such Obligor
could result in a Material Adverse Change, in its discretion and without
prior notice to any Obligor, Agent for the benefit of the Lender Group may do
any or all of the following: (a) make payment of the same or any part
thereof; (b) set up such reserves in Borrower's Loan Account as Agent deems
necessary to protect the Lender Group from the exposure created by such
failure; or (c) obtain and maintain insurance policies of the type described
in SECTION 6.9 and take any action with respect to such policies as Agent
deems prudent. Any such amounts paid by Agent shall constitute Lender Group
Expenses. Any such payments made by Lender Group shall not constitute an
agreement by Lender Group to make similar payments in the future or a waiver
by Lender Group of any Event of Default under this Agreement. Agent need not
inquire as to, or contest the validity of, any such expense, tax, or Lien and
the receipt of the usual official notice for the payment thereof shall be
conclusive evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Each Obligor hereby waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of accounts, documents, instruments, chattel paper, and guarantees at
any time held by Lender Group on which any Obligor may in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. So long as Lender
Group complies with its obligations, if any, under Section 9-207 of the Code,
Lender Group shall not in any way or manner be liable or responsible for: (a)
the safekeeping of the Collateral; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any diminution in the value
thereof; or (d) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person. All risk of loss, damage, or destruction of
the Collateral shall be borne by the Obligors.
11.3 INDEMNIFICATION. Borrower shall pay, indemnify, defend, and hold
each Agent-Related Persons, the Lender-Related Persons with respect to each
Lender, each Participant, and each of their respective officers, directors,
employees, and agents (each, an "INDEMNIFIED PERSON") harmless (to the fullest
extent permitted by law) from and against any and all claims, demands, suits,
actions, investigations, proceedings, and damages, and all reasonable attorneys
fees and disbursements and other costs and expenses actually incurred in
connection therewith (as and when they are incurred and irrespective of whether
suit is brought), at any time asserted against, imposed upon, or incurred by any
of them in connection with or as a result of or related to the execution,
delivery, enforcement, performance, and administration of this Agreement and any
other Loan Documents or the transactions contemplated herein, and with respect
to any investigation, litigation, or proceeding related to this Agreement, any
other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party
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thereto), or any act, omission, event or circumstance in any manner related
thereto (all the foregoing, collectively, the "INDEMNIFIED LIABILITIES").
The Obligors shall not have any obligation to any Indemnified Person under
this SECTION 11.3 with respect to any Indemnified Liability that a court of
competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person. This provision
shall survive the termination of this Agreement and the repayment of the
Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability for which any
Borrower was required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by such Borrower with respect thereto.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other Loan Document shall
be in writing and (except for financial statements and other informational
documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by registered or certified mail (postage prepaid,
return receipt requested), overnight courier, or telefacsimile to Administrative
Borrower, or the Agent, as the case may be, at its address set forth below:
If to an Obligor: c/o STAR TELECOMMUNICATIONS, INC.
000 Xxxx Xx Xx Xxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxx X. Xxxxxxxx
Fax No. 000.000.0000
with copies to: XXXXXXX & XXXXXXXX
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax No. 000.000.0000
If to Agent: FOOTHILL CAPITAL CORPORATION
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Business Finance Division Manager
Fax No. 000.000.0000
with copies to: XXXXXXX, PHLEGER & XXXXXXXX LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx Hilson, Esq.
Fax No. 000.000.0000
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other. All notices or
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demands sent in accordance with this SECTION 12, other than notices by the
Agent in connection with Sections 9-504 or 9-505 of the Code, shall be deemed
received on the earlier of the date of actual receipt or 3 days after the
deposit thereof in the mail. Each Obligor acknowledges and agrees that
notices sent by the Agent in connection with Sections 9-504 or 9-505 of the
Code shall be deemed sent when deposited in the mail or personally delivered,
or, where permitted by law, transmitted by telefacsimile or other similar
method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS AND TO THE EXTENT EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN
DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF,
AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED
UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION,
IN THE COURTS OF ANY JURISDICTION WHERE THE REQUIRED LENDERS ELECT TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OBLIGOR
AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
13.
EACH OBLIGOR, AGENT, AND EACH LENDER HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH OBLIGOR, AGENT, AND EACH LENDER REPRESENTS
THAT IT HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
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14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may, with the written consent of Agent,
assign and delegate to one or more assignees (provided that no written
consent of Agent shall be required in connection with any assignment and
delegation by a Lender to an Eligible Transferee) (each an "ASSIGNEE") all,
or any ratable part of all, of the Obligations, the Commitments and the other
rights and obligations of such Lender hereunder and under the other Loan
Documents, in a minimum amount of $5,000,000 (provided that no such minimum
amount shall be required in the case of an Assignee that is an Affiliate of
the assigning Lender); provided, however, that, except with respect to the
Closing Date Assignments, Borrower, Guarantor, and Agent may continue to deal
solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses and related information with respect to
the Assignee, shall have been given to Administrative Borrower (for the
benefit of the Obligors) and Agent by such Lender and the Assignee; (ii) such
Lender and its Assignee shall have delivered to Borrower and Agent an
Assignment and Acceptance in the form of EXHIBIT A-1; and (iii) other than
with respect to the Closing Date Assignments or an assignment by an existing
Lender to any Affiliate of such Lender, the assignor Lender or Assignee has
paid to Agent for Agent's sole and separate account a processing fee in the
amount of $2,500. Anything contained herein to the contrary notwithstanding,
the consent of Agent shall not be required (and payment of any fees shall not
be required) if such assignment is in connection with any merger,
consolidation, sale, transfer, or other disposition of all or any substantial
portion of the business or loan portfolio of such Lender.
(b) From and after the date that Agent notifies the assignor
Lender that it has received a fully executed Assignment and Acceptance and
payment (if applicable) of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assignor Lender shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to SECTION 11.3 hereof) and be released from
its obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement and the other Loan Documents,
such Lender shall cease to be a party hereto and thereto), and such
assignment shall effect a novation among the Obligors, the assignor Lender,
and the Assignee.
(c) By executing and delivering an Assignment and
Acceptance, the assignor Lender thereunder and the Assignee thereunder
confirm to and agree with each other and the other parties hereto as follows:
(1) other than as provided in such Assignment and Acceptance, such assignor
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties, or representations made in or in
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connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement or any
other Loan Document furnished pursuant hereto; (2) such assignor Lender makes
no representation or warranty and assumes no responsibility with respect to
the financial condition of any Obligor or the performance or observance by
any Obligor of any of its obligations under this Agreement or any other Loan
Document furnished pursuant hereto; (3) such Assignee confirms that it has
received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (4) such Assignee
will, independently and without reliance upon Agent, such assignor Lender or
any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (5) such Assignee appoints
and authorizes Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to Agent, by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (6) such Assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing
fee payment under the Assignment and Acceptance (if applicable) and receipt
and acknowledgment by Agent of such fully executed Assignment and Acceptance,
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments of the assignor Lender and Assignee arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assignor Lender pro tanto.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "PARTICIPANT") participating
interests in the Obligations owing to such Lender, such Lender's Commitment,
and the other rights and interests of that Lender (the "ORIGINATING LENDER")
hereunder and under the other Loan Documents (provided that no written
consent of Agent shall be required in connection with any sale of such
participating interests by a Lender to an Eligible Transferee); provided,
however, that (i) the Originating Lender's obligations under this Agreement
shall remain unchanged, (ii) the Originating Lender shall remain solely
responsible for the performance of such obligations, (iii) Borrower and Agent
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or
grant any participating interest under which the Participant has the right to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment to,
or consent or waiver with respect to this Agreement or of any other Loan
Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating; (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating; (C) release all or a material portion of the Collateral or
guaranties (except to the extent expressly provided
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herein or in any of the Loan Documents) supporting the Obligations hereunder
in which such Participant is participating; (D) postpone the payment of, or
reduce the amount of, the interest or fees hereunder in which such
Participant is participating; or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums in respect of the
Obligations hereunder in which such Participant is participating; or (F)
subordinate the Liens of Agent for the benefit of the Lender Group to the
Liens of any other creditor of any Obligor; and (v) all amounts payable by
Borrower hereunder shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall be
deemed to have the right of set-off in respect of its participating interest
in amounts owing under this Agreement to the same extent as if the amount of
its participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant shall only be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any direct rights as to the other Lenders, Agent,
Borrower, the Collections, the Cllateral, or otherwise in respect of the
Obligations. No Participant shall have the right to participate directly in
the making of decisions by Lenders among themselves. The provisions of this
Section 14.1(e) are solely for the benefit of Lender Group, and no Borrower
shall have any rights as a third party beneficiary of any of such provisions.
(f) In connection with any such assignment or participation
or proposed assignment or participation, subject to Section 16.17(d), a
Lender may disclose to a third party all documents and information which it
now or hereafter may have relating to any Borrower's business.
(g) Any other provision in this Agreement notwithstanding,
any Lender may at any time create a security interest in, or pledge, all or
any portion of its rights under and interest in this Agreement in favor of
any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Bank or U.S. Treasury Regulation 31 CFR Section 203.14, and such
Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
(h) Agent and Foothill, in its capacity as a Lender, on the
one hand, and one or more of Ableco Finance LLC and its Affiliates and the
Affiliates of Foothill, as an Assignee, on the other hand, have executed and
delivered the Closing Date Assignments as of the Closing Date, pursuant to
which Agent, Foothill, in its capacity as a Lender, and such Assignees have
agreed, among other things, to certain voting arrangements relative to
matters requiring the approval of the Lender Group. The rights and duties of
Agent, of Foothill as a Lender, and of any other Assignee of Foothill as a
Lender, are subject to the Closing Date Assignments.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of each of the parties hereto;
PROVIDED, HOWEVER, that no Obligor may assign this Agreement or any other
Loan Document or any rights or duties
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hereunder or thereunder without the Lenders' prior written consent and any
prohibited assignment shall be absolutely void AB INITIO. No consent to
assignment by Lenders shall release any Borrower from the Obligations. A
Lender may assign this Agreement and the other Loan Documents and its rights
and duties hereunder and thereunder pursuant to SECTION 14.1 and, except as
expressly required pursuant to SECTION 14.1, no consent or approval by any
Borrower is required in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by Borrower therefrom, shall be effective unless the
same shall be in writing and signed by the Required Lenders (or by Agent at
the written request of the Required Lenders) and each Borrower and then any
such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; PROVIDED, HOWEVER, that no such
waiver, amendment, or consent shall, unless in writing and signed by all
Lenders and each Borrower, and acknowledged by Agent, do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Advance, the Term Loan, or any fees or other amounts
payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or the
percentage of the aggregate unpaid principal amount of the Obligations, as
the case may be, which is required for Lenders or any of them to take any
action hereunder;
(e) increase the advance rate with respect to Advances
(except for the restoration of an advance rate after the prior reduction
thereof), change the definition of Eligible Accounts, or change Section
2.1(b);
(f) amend this Section 15.1 or any provision of this
Agreement providing for consent or other action by all Lenders;
(g) release Collateral other than as permitted by SECTION
16.12;
(h) increase the sublimit for credit available against
Eligible Foreign Accounts (currently contained in clause (y) of SECTION
2.1(a));
(i) change the definition of "Required Lenders" or "Pro Rata
Share";
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(j) release a Borrower or a Guarantor from any Obligation
for the payment of money;
(k) amend any of the provisions of SECTION 15 or SECTION
2.1(i); or
(l) subordinate the Liens of Agent for the benefit of the
Lender Group to the Liens of any other creditor of a Borrower.
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by Agent, affect the rights or duties of Agent under this
Agreement or any other Loan Document. The limitation contained in clause (e)
above shall not be deemed to limit the ability of Agent to make Advances or
Agent Advances (or elect to have Swing Lender make Swing Loans) in accordance
with the provisions of Sections 2.3(b), (c), (d), (e), or (i). The foregoing
notwithstanding any amendment, modification, waiver, consent, termination, or
release of or with respect to any provision of this Agreement or any other
Loan Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of any
Borrower, shall not require consent by or the agreement of Borrower.
15.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any
Lender to exercise any right, remedy, or option under this Agreement, any
other Loan Document, or any present or future supplement hereto or thereto,
or in any other agreement between or among Borrower and Agent or any Lender,
or delay by Agent or any Lender in exercising the same, will operate as a
waiver thereof. No waiver by Agent or any Lender will be effective unless it
is in writing, and then only to the extent specifically stated. No waiver by
Agent or the Lenders on any occasion shall affect or diminish Agent's and
each Lender's rights thereafter to require strict performance by Borrower of
any provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive
of any other right or remedy which Agent or any Lender may have.
16. AGENT; LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints Foothill as its Agent under this Agreement and the
other Loan Documents. Each Lender hereby irrevocably authorizes the Agent to
take such action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to Agent by the terms of this Agreement or any
other Loan Document, together with such powers as are reasonably incidental
thereto. Agent agrees to act as such on the express conditions contained in
this SECTION 16. The provisions of this SECTION 16 are solely for the benefit
of Agent and Lenders, and, accordingly, the Obligors shall not have any
rights as a third party beneficiary of any of the provisions contained
herein; provided, however, that the provisions of SECTIONS 16.11, 16.12, AND
16.17(d) hereof also shall be for the benefit of Obligors. Any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein,
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nor shall Agent have or be deemed to have 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 Agent; it being expressly understood
and agreed that the use of the word "Agent" is for convenience only, that
Foothill is merely the representatives of the Lenders, and has only the
contractual duties set forth herein. Except as expressly otherwise provided
in this Agreement, Agent shall have and may use its sole discretion with
respect to exercising or refraining from exercising any discretionary rights
or taking or refraining from taking any actions which Agent is expressly
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents, including making the determinations contemplated by Section
2.1(b). Without limiting the generality of the foregoing, or of any other
provision of the Loan Documents that provides rights or powers to Agent,
Lenders agree that Agent shall have the right to exercise, and to delegate
the exercise of any such powers to any subagent of Agent, the following
powers as long as this Agreement remains in effect: (a) maintain, in
accordance with its customary business practices, ledgers and records
reflecting the status of the Advances, the Term Loan Amount, the other
Obligations, the Collateral, the Collections, and related matters; (b)
execute and/or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim
for Lenders, notices and other written agreements with respect to the Loan
Documents; (c) make Advances and the Term Loan, for itself or on behalf of
Lenders as provided in the Loan Documents; (d) receive, apply, and distribute
the Collections as provided in the Loan Documents; (e) open and maintain such
bank accounts and lock boxes as Agent deems necessary and appropriate in
accordance with the Loan Documents for the foregoing purposes with respect to
the Collateral and the Collections; (f) perform, exercise, and enforce any
and all other rights and remedies of Lender Group with respect to the
Obligors, the Advances, the Term Loan, the other Obligations, the Collateral,
the Collections, or otherwise related to any of same as provided in the Loan
Documens; and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.
16.2 DELEGATION OF DUTIES. Except as otherwise provided in this
SECTION 16.2, Agent may execute any of its duties under this Agreement or any
other Loan Document by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to
such duties. Agent shall not be responsible for the negligence or misconduct
of any agent or attorney-in-fact that it selects as long as such selection
was made in compliance with this SECTION 16.2 and without gross negligence or
willful misconduct.
16.3 LIABILITY OF AGENT - RELATED PERSONS. None of the
Agent-Related Persons shall (i) be liable for any action taken or omitted to
be taken by any of them under or in connection with this Agreement or any
other Loan Document or the transactions contemplated hereby (except for its
own gross negligence or willful misconduct), or, (ii) be responsible in any
manner to any of Lenders for any recital, statement, representation or
warranty made by any Obligor, or any Subsidiary or Affiliate of any Obligor,
or any officer or director thereof, contained in this Agreement or in any
other Loan Document, or in any
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certificate, report, statement, or other document referred to or provided for
in, or received by any Agent under or in connection with, this Agreement or
any other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document,
or for any failure of an Obligor or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person
shall be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
Books or properties of an Obligor, or the books or records or properties of
an Obligor's Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex, or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to the Obligors or counsel to any Lender), independent accountants,
and other experts selected by Agent. Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless Agent shall first receive such advice or concurrence of
Required Lenders, or all Lenders, as applicable, as is required by this
Agreement and, absent such a requirement, and until such instructions are
received, Agent shall act, or refrain from acting, as it deems advisable. If
Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of Required Lenders or all Lenders, as applicable, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event
of Default, except with respect to defaults in the payment of principal,
interest, fees, and expenses required to be paid to Agent for the account of
Agent or Lenders, except in the case of the Agent with respect to actual
knowledge of the existence of an Overadvance, and except with respect to
Defaults and Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring
to this Agreement, describing such Default or Event of Default, and stating
that such notice is a "notice of default." Agent promptly will notify the
Lenders of its receipt of any such notice or of any Event of Default of which
Agent has actual knowledge. If any Lender obtains actual knowledge of any
Event of Default, such Lender promptly shall notify the other Lenders and
Agent of such Event of Default. Each Lender shall be solely responsible for
giving any notices to its Participants, if any. Subject to SECTION 16.4,
Agent shall take such action with respect to such Default or Event of Default
as may be requested by the Required Lenders in accordance with SECTION 9;
provided, however, that unless and until Agent has received any such request,
Agent may (but shall not be obligated to) take such action, or refrain from
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taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by Agent hereinafter taken, including any review of the affairs of
each Obligor and its respective Subsidiaries or Affiliates, shall be deemed
to constitute any representation or warranty by any Agent-Related Person to
any Lender. Each Lender represents to Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial
and other condition, and creditworthiness of any Obligor and any other Person
(other than Lender Group) party to a Loan Document, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to
Borrower. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents
and information as it shall deem appropriate at the time, continue to make
its own credit analysis, appraisals, and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition, and
creditworthiness of any Obligor, and any other Person (other than Lender
Group) party to a Loan Document. Except for notices, reports, and other
documents expressly herein required to be furnished to Lenders by Agent,
Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects,
operations, property, financial and other condition, or creditworthiness of
any Obligor, and any other Person party to a Loan Document that may come into
the possession of any of Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including without limiting the
generality of the foregoing, but subject to any requirements of the Loan
Documents that it obtain any applicable consents or engage in any required
consultation, court costs, reasonable attorneys fees and expenses, costs of
collection by outside collection agencies and auctioneer fees and costs of
security guards or insurance premiums paid to maintain the Collateral,
whether or not the Obligors are obligated to reimburse Agent or Lenders for
such expenses pursuant to the Loan Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from
Collections to reimburse Agent for such out-of-pocket costs and expenses
prior to the distribution of any amounts to Lenders. In the event Agent is
not reimbursed for such costs and expenses from Collections, each Lender
hereby agrees that it is and shall be obligated to pay to or reimburse such
Agent for the amount of such Lender's Pro Rata Share thereof. Whether or not
the transactions contemplated hereby are consummated, Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of the Obligors and without limiting the obligation of the Obligors to
do so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall
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be liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence,
or willful misconduct. Without limitation of the foregoing, each Lender
shall reimburse Agent upon demand for such Lender's ratable share of any
costs or out-of-pocket expenses (including attorney fees and expenses)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect
of rights or responsibilities under, this Agreement, any other Loan Document,
or any document contemplated by or referred to herein, to the extent that
Agent is not reimbursed for such expenses by or on behalf of the Obligors.
The undertaking in this SECTION 16.7 shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of
banking, lending, trust, financial advisory, underwriting or other business
with any Borrower and its Subsidiaries and Affiliates and any other Person
party to any Loan Documents as though Foothill were not Agent hereunder, and,
in each case, without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, Foothill or its Affiliates may
receive information regarding an Obligor and its Affiliates and any other
Person (other than the Lender Group) party to any Loan Documents that is
subject to confidentiality obligations in favor of such Obligor or such other
Person and that prohibit the disclosure of such information to Lenders, and
Lenders acknowledge that, in such circumstances (and in the absence of a
waiver of such confidentiality obligations, which waiver Agent will use its
reasonable best efforts to obtain), Agent shall not be under any obligation
to provide such information to them. The terms "Lender" and "Lenders" include
Foothill in its individual capacity. With respect to Swing Loans, Agent, in
its individual capacity, shall, if it is a Lender hereunder, have the same
rights and powers under this Agreement as any other Lender and may exercise
the same as though it were not Agent, and the terms "Lender" and "Lenders"
shall, in each case, include Agent in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days
notice to the Lenders. If Agent resigns under this Agreement, the Required
Lenders shall appoint a successor Agent for the Lenders. If no successor
Agent is appointed prior to the effective date of the resignation of Agent,
Agent may appoint, after consulting with the Lenders, a successor Agent. If
Agent has materially breached or failed to perform any material provision of
this Agreement or of applicable law, the Required Lenders may agree in
writing to remove and replace Agent with a successor Agent from among the
Lenders. In any such event, upon the acceptance of its appointment as
successor Agent hereunder, such successor Agent shall succeed to all the
rights, powers and duties of the retiring Agent and the term "Agent" shall
mean such successor Agent and the retiring Agent's appointment, powers, and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this SECTION 16 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no
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successor Agent has accepted appointment as Agent by the date which is 45
days following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Lenders
shall perform all of the duties of Agent hereunder until such time, if any,
as the Lenders appoint a successor Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business
with Borrower and its Subsidiaries and Affiliates and any other Person (other
than the Lender Group) party to any Loan Documents as though such Lender were
not the agent of Agent hereunder without notice to or consent of the Lenders.
The Lenders acknowledge that, pursuant to such activities, such Lender and
its respective Affiliates may receive information regarding Borrower or its
Affiliates and any other Person (other than the Lender Group) party to any
Loan Documents that is subject to confidentiality obligations in favor of
Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances,
Swing Lender shall have the same rights and powers under this Agreement as
any other Lender and may exercise the same as though it were not the
sub-agent of the Agent.
16.11 WITHHOLDING TAX.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption from,
or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the
IRC, such Lender agrees with and in favor of Agent and Borrower, to deliver
to Agent and Administrative Borrower:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any
interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which
interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it
is effectively connected with a United States trade or business
of such Lender, two properly completed and executed copies of
IRS Form 4224 before the payment of any interest is due in the
first taxable year of such Lender and in each succeeding taxable
year of such Lender during which interest may be paid under this
Agreement, and IRS Form W-9; and
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(iii) such other form or forms as may be required under the IRC
or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of
any change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations, such Lender agrees to notify Agent
and Administrative Borrower of the percentage amount in which it is no longer
the beneficial owner of Obligations to such Lender. To the extent of such
percentage amount, Agent and Borrower will treat such Lender's IRS Form 1001
as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations to
such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the IRC.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, Agent or Borrower, as the case may be, may
withhold from any interest payment to such Lender an amount equivalent to the
applicable withholding tax after taking into account such reduction. If the
forms or other documentation required by subsection (a) of this SECTION 16.11
are not delivered to Agent, then Agent or Borrower, as the case may be, may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent or a Borrower
did not properly withhold tax from amounts paid to or for the account of any
Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify Agent and such Borrower of
a change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender shall
indemnify Agent and Borrower fully for all amounts paid, directly or
indirectly, by Agent or Borrower as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent or a Borrower under this SECTION 16.11, together with all
costs and expenses (including attorneys fees and expenses). The obligation
of Lenders under this subsection shall survive the payment of all Obligations
and the resignation or replacement of Agent.
16.12 COLLATERAL MATTERS.
(a) Lenders hereby irrevocably authorize Agent to release any
Lien on any Collateral (i) upon the termination of the Commitments and payment
and satisfaction in
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full by or on behalf of the Obligors of all Obligations; and upon such
termination and payment Agent shall deliver to Borrower, at Borrower's sole
cost and expense, all UCC termination statements and any other documents
necessary to terminate the Loan Documents and release the Liens with respect
to the Collateral; (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if Borrower
certifies to Agent that the sale or disposition is permitted under SECTION
7.4 of this Agreement or the other Loan Documents (and Agent may rely
conclusively on any such certificate, without further inquiry); (iii)
constituting property in which the Obligors do not own an interest at the
time the Lien was granted or at any time thereafter; or (iv) constituting
property leased to an Obligor under a lease that has expired or been
terminated in a transaction permitted under this Agreement. Except as
provided above, Agent will not release any Lien on any Collateral without the
prior written authorization of (y) if the release is of all or a material
portion of the Collateral, all Lenders or (z) otherwise, of the Required
Lenders. Upon request by Agent or Borrower at any time, the Lenders will
confirm in writing Agent's authority to release any such Liens on particular
types or items of Collateral pursuant to this SECTION 16.12; provided,
however, that (i) the Agent shall not be required to execute any document
necessary to evidence such release on terms that, in Agent's opinion, would
expose Agent to liability or create any obligation or entail any consequence
other than the release of such Lien without recourse, representation, or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens (other than those expressly being
released) upon (or obligations of the Obligors in respect of) all interests
retained by the Obligors, including, the proceeds of any sale, all of which
shall continue to constitute part of the Collateral.
(b) Agent shall not have any obligation whatsoever to any
Lender to assure that the Collateral exists or is owned by an Obligor, is
cared for, protected, or insured or has been encumbered, or that the Liens of
Agent (for the benefit of the Lender Group) have been properly or
sufficiently or lawfully created, perfected, protected, or enforced or are
entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure, or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to the Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission
or event related thereto, subject to the terms and conditions contained
herein, the Agent may act in any manner it may deem appropriate, absent the
Agent's gross negligence or willful misconduct, in its sole discretion given
the Agent's own interest in the Collateral in their capacity as Lenders and
that the Agent shall have no other duty or liability whatsoever to any Lender
as to any of the foregoing, except as otherwise provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without
the express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the
Obligations, any amounts owing by such Lender to an Obligor or any accounts
of an Obligor now or hereafter maintained with such Lender. Each of Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent,
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take or cause to be taken any action, including the commencement of any legal
or equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral the purpose of which is, or could
be, to give such Lender any preference or priority against the other Lenders
with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or
payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender's Pro Rata
Share of all such distributions by Agent, such Lender shall promptly (1) turn
the same over to Agent, in kind, and with such endorsements as may be
required to negotiate the same to Agent, or in same day funds, as applicable,
for the account of all of Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (2) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received
shall be applied ratably as among Lenders in accordance with their Pro Rata
Shares; provided, however, that if all or part of such excess payment
received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor
shall be returned to such purchasing party, but without interest except to
the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
16.14 AGENCY FOR PERFECTION. Agent and each Lender hereby appoints
each other Lender as agent for the purpose of perfecting the Liens of Lender
Group in assets which, in accordance with Article 9 of the Code can be
perfected only by possession. Should any Lender obtain possession of any
such Collateral, such Lender shall notify Agent thereof, and, promptly upon
Agent's request therefor shall deliver such Collateral to Agent or in
accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer
of immediately available funds pursuant to the instructions set forth on
SCHEDULE 16.15, or pursuant to such other wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium or interest on Advances or the Term
Loan Amount or otherwise.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each
member of Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents relating to the Collateral, for the
ratable benefit of Lender Group. Each member of Lender Group agrees that any
action taken by Agent, Required Lenders, or all Lenders, as applicable, in
accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent, Required Lenders, or
all Lenders, as
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applicable, of their respective powers set forth therein or herein, together
with such other powers that are reasonably incidental thereto, shall be
binding upon all of Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION.
By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "REPORT" and collectively, "REPORTS") prepared by
or at the request of Agent, and Agent shall so furnish each Lender with such
Reports;
(b) and Agent expressly agrees and acknowledges that neither
Agent nor any other Lender (i) makes any representation or warranty as to the
accuracy of any Report, and (ii) shall not be liable for any information
contained in any Report;
(c) expressly agrees and acknowledges that the Reports are
not comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific information
regarding the Obligors and will rely significantly upon the Books, as well as
on representations of the Obligors' personnel;
(d) agrees to keep all Reports and other material,
non-public information regarding the Obligors and their Subsidiaries and
their operations, assets, and existing and contemplated business plans in a
confidential manner; it being understood and agreed by the Obligors that in
any event such Lender may make disclosures (i) to counsel for and other
advisors, accountants, and auditors to such Lender, (ii) reasonably required
by any bona fide potential or actual Assignee, transferee, or Participant in
connection with any contemplated or actual assignment or transfer by such
Lender of an interest herein or any participation interest in such Lender's
rights hereunder, provided that such potential or actual Assignee, transferee
or Participant agrees to comply with this SECTION 16.17(d) as if it were a
Lender hereunder, (iii) of information that has become public by disclosures
made by Persons other than such Lender, its Affiliates, assignees,
transferees, or participants, or (iv) as required or requested by any court,
governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; provided,
however, that, unless prohibited by applicable law, statute, regulation, or
court order, such Lender shall notify Borrower for the benefit of the
applicable Obligors of any request by any court, governmental or
administrative agency, or pursuant to any subpoena or other legal process for
disclosure of any such non-public material information concurrent with, or
where practicable, prior to the disclosure thereof; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold
Agent or any other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach
or draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may
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make to the Obligors, or the indemnifying Lender's participation in, or the
indemnifying Lender's purchase of, a loan or loans of to Borrower; and (ii)
to pay and protect, and indemnify, defend, and hold any Agent, or such other
Lender preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses and other amounts (including, attorney
costs) incurred by Agent or such other Lender preparing a Report as the
direct or indirect result of any third parties who might obtain all or part
of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request
of Agent in writing that Agent provide to such Lender a copy of any report or
document provided by any Obligor to Agent, and, upon receipt of such request,
Agent shall provide a copy of same to such Lender promptly upon receipt
thereof; (y) to the extent that Agent is entitled, under any provision of the
Loan Documents, to request additional reports or information from the
Obligors, any Lender may, from time to time, reasonably request Agent to
exercise such right as specified in such Lender's notice to Agent, whereupon
Agent promptly shall request of the Obligors the additional reports or
information specified by such Lender, and, upon receipt thereof, Agent
promptly shall provide a copy of same to such Lender; and (z) any time that
Agent renders to Borrower a statement regarding the Loan Account, Agent shall
send a copy of such statement to each Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that
certain of the Loan Documents now or hereafter may have been or will be
executed only by or in favor of Agent in its capacity as such, and not by or
in favor of Lenders, any and all obligations on the part of Agent (if any) to
make any credit available hereunder shall constitute the several (and not
joint) obligations of the respective Lenders on a ratable basis, according to
their respective Commitments, to make an amount of such credit not to exceed,
in principal amount, at any one time outstanding, the amount of their
respective Commitments. Nothing contained herein shall confer upon any Lender
any interest in, or subject any Lender to any liability for, or in respect
of, the business, assets, profits, losses, or liabilities of any other
Lender. Each Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent any
such notice may be required, and no Lender shall have any obligation, duty,
or liability to any Participant of any other Lender. Except as provided in
SECTION 16.7, no member of the Lender Group shall have any liability for the
acts or any other member of the Lender Group. No Lender shall be responsible
to any Borrower or any other Person for any failure by any other Lender to
fulfill its obligations to make credit available hereunder, nor to advance
for it or on its behalf in connection with its Commitment, nor to take any
other action on its behalf hereunder or in connection with the financing
contemplated herein.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by each Obligor, the Agent, and each of the Lenders.
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17.2 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their successors and
assigns to the extent set forth in SECTION 14.
17.3 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each section applies equally to this entire
Agreement.
17.4 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
any member thereof or any Obligor, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by all parties
and shall be construed and interpreted according to the ordinary meaning of
the words used so as to fairly accomplish the purposes and intentions of all
parties hereto.
17.5 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the
purpose of determining the legal enforceability of any specific provision.
17.6 AMENDMENTS IN WRITING. This Agreement can only be amended by a
writing signed in accordance with SECTION 15.
17.7 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to
be an original, and all of which, when taken together, shall constitute but
one and the same Agreement. Delivery of an executed counterpart of this
Agreement by telefacsimile shall be equally as effective as delivery of an
original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile also shall deliver an
original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability,
and binding effect of this Agreement. The foregoing shall apply to each
other Loan Document MUTATIS MUTANDIS.
17.8 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Obligor or any guarantor of the Obligations
or the transfer by either or both of such parties to the Lender Group of any
property of either or both of such parties should for any reason subsequently
be declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, and other voidable or recoverable
payments of money or transfers of property (collectively, a "VOIDABLE
TRANSFER"), and if the Lender Group is required to repay or restore, in whole
or in part, any such Voidable Transfer, or elects to do so upon the
reasonable advice of its counsel, then, as to any such Voidable Transfer, or
the amount thereof that the Lender Group is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of the
Lender Group related thereto, the
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liability of the Obligors or such guarantor automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.
17.9 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to
the transactions contemplated hereby and shall not be contradicted or
qualified by any other agreement, oral or written, before the date hereof.
17.10 APPOINTMENT OF SWING LENDER. Agent hereby appoints Foothill as
the Swing Lender, and Foothill hereby accepts such appointment.
17.11 STAR AS AGENT FOR BORROWER. Each Borrower hereby irrevocably
appoints Star as the borrowing agent and attorney-in-fact Borrower (the
"Administrative Borrower"), which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed
by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower, and authorizes the
Administrative Borrower (i) to provide Agent with all notices with respect to
Advances, Letters of Credit, F/X Undertakings, and the Term Loan obtained for
the benefit of any Borrower and all other notices and instructions under this
Agreement, and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances, Letters of Credit, F/X
Undertakings, and the Term Loan and to exercise such other powers as are
reasonably incidental thereto to carry out the purposes of this Agreement.
It is understood that the handling of the Loan Account and Collateral of
Borrower in a combined fashion, as more fully set forth herein, is done
solely as an accommodation to Borrower in order to utilize the collective
borrowing powers of Borrower in the most efficient and economical manner and
at their request, and that Lender Group shall not incur liability to Borrower
as a result thereof. Each Borrower expects to derive benefit, directly or
indirectly, from the handling of the Loan Account and the Collateral in a
combined fashion since the successful operation of each Borrower is dependent
on the continued successful performance of the integrated group. To induce
Lender Group to do so, and in consideration thereof, each Borrower hereby
jointly and severally agrees to indemnify Lender Group and hold Lender Group
harmless against any and all liability, expense, loss, or claim of damage or
injury, made against Lender Group by any Borrower or by any third party
whosoever, arising from or incurred by reason of (a) the handling of the Loan
Account and Collateral of Borrower as herein provided, (b) Lender Group's
relying on any instructions of the Administrative Borrower, or (c) any other
action taken by Lender Group hereunder or under the other Loan Documents,
except that Borrower will have no liability to the relevant Agent-Related
Person or Lender-Related Person under this SECTION 17.10 with respect to any
liability that has been finally determined by a court of competent
jurisdiction to have resulted solely from the gross negligence or willful
misconduct of such Agent-Related Person or Lender-Related Person, as the case
may be.
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[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
"Obligors" STAR TELECOMMUNICATIONS, INC.,
a Delaware corporation
By: /s/
------------------------------
Title:
CEO TELECOMMUNICATIONS, INC.,
a California corporation
By: /s/
------------------------------
Title:
CEO CALIFORNIA TELECOMMUNICATIONS, INC.,
a California corporation
By: /s/
----------------------------------------
Title:
PT-1 COMMUNICATIONS, INC.,
a New York corporation
By: /s/
----------------------------------------
Title:
PT-1 LONG DISTANCE, INC.,
a New York corporation
By: /s/
----------------------------------------
Title:
S-1
XXXXXX COM, INC.,
a Delaware corporation
By: /s/
----------------------------------------
Title:
LUCIUS ENTERPRISES, INC.,
a California corporation
By: /s/
----------------------------------------
Title:
AS TELECOMMUNICATIONS, INC.,
an Arizona corporation
By: /s/
----------------------------------------
Title:
PT-1 TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/
----------------------------------------
Title:
PT-1 HOLDINGS I, INC.,
a Delaware corporation
By: /s/
----------------------------------------
Title:
S-2
PT-1 HOLDINGS II, INC.,
a Delaware corporation
By: /s/
----------------------------------------
Title:
NATIONWIDE DISTRIBUTORS, INC.,
a Delaware corporation
By: /s/
----------------------------------------
Title:
TECHNOLOGY LEASING, INC., a Delaware
corporation
By: /s/
----------------------------------------
Title:
PT-1 PHONECARD, L.P.,
a Texas limited partnership
By: /s/
----------------------------------------
Title:
PLATFORM SERVICES, L.P.,
a Delaware limited partnership
By: /s/
----------------------------------------
Title:
S-3
PT-1 COMMUNICATIONS PUERTO RICO, INC.,
a Delaware corporation
By: /s/
----------------------------------------
Title:
INVESTMENT SERVICES, INC.,
a Delaware corporation
By: /s/
----------------------------------------
Title:
"Lender Group" FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as
a Lender
By: /s/
----------------------------------------
Title:
S-4
SCHEDULE C-1
COMMITMENTS
[AFTER GIVING EFFECT TO CLOSING DATE ASSIGNMENTS]
LENDER REVOLVING CREDIT (LETTER OF CREDIT (F/X UNDERTAKING TERM LOAN TOTAL COMMITMENT
COMMITMENT SUB-COMMITMENT) SUB-COMMITMENT) COMMITMENT
================================================================================================================================
Foothill Capital $75,000,000 ($10,000,000) ($2,000,000) -0- $75,000,000
Corporation
================================================================================================================================
Ableco Finance LLC -0- -0- -0- $15,000,000 $15,000,000
================================================================================================================================
Foothill Partners III -0- -0- -0- $10,000,000 $10,000,000
L.P.
================================================================================================================================
All Lenders $75,000,000 ($10,000,000) ($2,000,000) $25,000,000 $100,000,000
===================================================================================================================================
1
SCHEDULE N-1
NON-MATERIAL SUBSIDIARIES
STAR TELECOMMUNICATIONS AUSTRALIA PTY. LTD, a corporation organized under the
laws of Australia
GRUPO INDUSTRIAL XXXXXXX X.X. DE C.V., a corporation organized under the laws
of the Republic of Mexico
SERVICIOS SUMOSIERRA S.A. DE C.V., a corporation organized under the laws of
the Republic of Mexico
GRUPO BUNDEN, S.A. DE C.V., a corporation organized under the laws of the
Republic of Mexico
GRUPO XXXXXXX-XXXXXX, X.X. DE C.V., a corporation organized under the laws of
the Republic of Mexico
MORNINGSIDE, S.A. DE C.V., a corporation organized under the laws of the
Republic of Mexico
XXXXXXXX, X.X. DE C.V., a corporation organized under the laws of the
Republic of Mexico
PT-1 COMMUNICATIONS CANADA, INC., a corporation organized under the laws of
Canada
BAYONNE, S.A. DE C.V., a corporation organized under the laws of the Republic
of Mexico
STAR JAPAN, INC., a corporation organized under the laws of Japan
ASIAN DATANET, INC., a corporation organized under the laws of Japan
1
