1
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Exhibit 10.8
LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
NETWORK PLUS CORP. AND NETWORK PLUS, INC.
AS BORROWER,
GOLDMAN SACHS CREDIT PARTNERS L.P.
AND
FLEET NATIONAL BANK
AS LENDERS,
AND
FLEET NATIONAL BANK
AS AGENT,
AND
GOLDMAN SACHS CREDIT PARTNERS L.P.
AS SYNDICATION & ARRANGEMENT AGENT
DATED AS OF OCTOBER 7, 1998
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TABLE OF CONTENTS
Page
1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions.
1.2 Accounting Terms.
1.3 Code.
1.4 Construction.
1.5 Schedules and Exhibits.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolving Tranche A Advances.
2.2 Revolving Tranche B Advances.
2.3 Borrowing Procedures and Settlements.
2.4 Payments.
2.5 Overadvances.
2.6 Interest: Rates, Payments, and Calculations.
2.7 Collection of Accounts.
2.8 Crediting Payments; Application of Collections.
2.9 Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations.
2.11 Fees.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Advance.
3.2 Conditions Precedent to all Advances.
3.3 Condition Subsequent.
3.4 Term.
3.5 Effect of Termination.
3.6 Early Termination by Borrower.
3.7 [Intentionally Omitted].
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest.
4.2 Negotiable Collateral.
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral.
4.4 Delivery of Additional Documentation Required.
4.5 Power of Attorney.
4.6 Right to Inspect.
5. REPRESENTATIONS AND WARRANTIES.
5.1 No Encumbrances.
5.2 Eligible Accounts.
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5.3 Compliance with Laws, etc.
5.4 Equipment.
5.5 Location of Inventory and Equipment.
5.6 [Intentionally omitted].
5.7 Location of Chief Executive Office; FEIN.
5.8 Due Organization and Qualification; Subsidiaries.
5.9 Due Authorization; No Conflict.
5.10 Litigation.
5.11 No Material Adverse Change.
5.12 Fraudulent Transfer.
5.13 Employee Benefits.
5.14 Environmental Condition.
5.15 Brokerage Fees.
5.16 Year 2000 Compliance.
5.17 Intellectual Property.
5.18 Leases.
5.19 Material Carriers.
6. AFFIRMATIVE COVENANTS.
6.1 Accounting System.
6.2 Collateral Reporting.
6.3 Financial Statements, Reports, Certificates.
6.4 Billing System Conversion.
6.5 [intentionally omitted].
6.6 [intentionally omitted].
6.7 Title to Equipment.
6.8 Maintenance of Equipment.
6.9 Taxes.
6.10 Insurance.
6.11 No Setoffs or Counterclaims.
6.12 Location of Inventory and Equipment.
6.13 Compliance with Laws.
6.14 [Intentionally Omitted.
6.15 Leases.
6.16 Brokerage Commissions.
6.17 Year 2000 Compliance.
6.18 Projections.
6.19 Corporate Existence, etc.
6.20 Disclosure Updates.
6.21 Carrier Agreements.
7. NEGATIVE COVENANTS.
7.1 Indebtedness.
7.2 Liens.
7.3 Restrictions on Fundamental Changes.
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7.4 Disposal of Assets.
7.5 Change Name.
7.6 Guarantee.
7.7 Nature of Business.
7.8 Prepayments and Amendments.
7.9 Change of Control.
7.10 [intentionally omitted].
7.11 Distributions.
7.12 Accounting Methods.
7.13 Investments.
7.14 Transactions with Affiliates.
7.15 Suspension.
7.16 Compensation.
7.17 Use of Proceeds.
7.18 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees.
7.19 [Intentionally Omitted].
7.20 Financial Covenants.
7.21 Capital Expenditures.
7.22 Contracts with Carriers.
7.23 Holding Company.
8. EVENTS OF DEFAULT.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies.
9.2 Remedies Cumulative.
10. TAXES AND EXPENSES.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc.
11.2 The Lender Group's Liability for Collateral.
11.3 Indemnification.
12. NOTICES.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
15. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
15.1 Assignments and Participations.
15.2 Successors.
16. AMENDMENTS; WAIVERS.
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16.1 Amendments and Waivers.
16.2 No Waivers; Cumulative Remedies.
17. AGENT; THE LENDER GROUP.
17.1 Appointment and Authorization of Agent.
17.2 Delegation of Duties.
17.3 Liability of Agent and S&A Agent.
17.4 Reliance by Agent and S&A Agent.
17.5 Notice of Default or Event of Default.
17.6 Credit Decision.
17.7 Costs and Expenses; Indemnification.
17.8 Agent and S&A Agent in Individual Capacity.
17.9 Successor Agent and S&A Agent.
17.10 Withholding Tax.
17.11 Collateral Matters.
17.12 Restrictions on Actions by Lenders; Sharing of Payments.
17.13 Agency for Perfection.
17.14 Payments by Agent to the Lenders.
17.15 Concerning the Collateral and Related Loan Documents.
17.16 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information.
17.17 Several Obligations; No Liability
17.18 Legal Representation of GSCP.
18. GENERAL PROVISIONS.
18.1 Effectiveness.
18.2 Section Headings.
18.3 Interpretation.
18.4 Severability of Provisions.
18.5 Amendments in Writing.
18.6 Counterparts; Telefacsimile Execution.
18.7 Revival and Reinstatement of Obligations.
18.8 Integration.
18.9 GSCP as S&A Agent.
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into
as of October 7, 1998, between and among, on the one hand, the financial
institutions listed 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"),
FLEET NATIONAL BANK, a national banking association, as agent for the Lenders
("Agent"), with a place of business located at One Federal Street, Boston,
Massachusetts 02110, GOLDMAN SACHS CREDIT PARTNERS L.P., a Bermuda limited
partnership, as syndication and arrangement agent for the Lenders ("S&A Agent"),
with a place of business at 85 Broad Street, New York, New York 10004, and, on
the other hand, NETWORK PLUS, INC., a Massachusetts corporation ("NPI"), with
its chief executive office located at 234 Copeland Street. Quincy, Massachusetts
02169, and, NETWORK PLUS CORP., a Delaware corporation ("Holdings"), with its
chief executive office located at 234 Copeland Street. Quincy, Massachusetts
02169.
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, General Intangible, or
Negotiable Collateral.
"Accounts" means all currently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the sale or lease of General
Intangibles relating to the provision of telecommunications services, or the
rendition of services by Borrower, irrespective of whether earned by
performance, and any and all credit insurance, guaranties, or security therefor.
"Advances" means Tranche A Advances or Tranche B Advances, as the
context requires.
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, is under common control with
such Person. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to vote 5% or more of the Stock having
ordinary voting power for the election of directors (or comparable managers) or
the direct or indirect power to direct the management and policies of a Person.
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"Agent" means FNB, 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's Liens" means the Agent's Tranche A Liens and the Agent's
Tranche B Liens.
"Agent-Related Persons" means Agent and any successor agent together
with their respective Affiliates, and the officers, directors, employees,
counsel, agents, and attorneys-in-fact of such Persons and their Affiliates.
"Agents' Side Letter" means a letter agreement, dated as of even
date herewith, between Agent and S&A Agent, in form and substance reasonably
acceptable to Agent and S&A Agent.
"Agent's Tranche A Liens" means the Liens on the Collateral granted
by Borrower to Agent for the benefit of the Tranche A Lenders under this
Agreement and the other Loan Documents.
"Agent's Tranche B Liens" means the Liens on the Collateral granted
by Borrower to Agent for the benefit of the Tranche B Lenders under this
Agreement and the other Loan Documents.
"Agreement" has the meaning set forth in the preamble hereto.
"Assignee" has the meaning set forth in Section 15.1.
"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 Borrower.
"Availability" means the sum of Tranche A Availability plus Tranche
B Availability.
"Average Unused Portion of the Maximum Tranche A Amount" means, as
of any date of determination, (a) the Maximum Tranche A Amount, less (b) the
average Daily Balance of Tranche A Advances that were outstanding during the
immediately preceding month.
"Average Unused Portion of Maximum Tranche B Amount" means, as of
any date of determination, (a) the Maximum Tranche B Amount, less (b) the
average Daily Balance of Tranche B Advances that were outstanding during the
immediately preceding month.
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
Section 101
8
et seq.), as amended, and any successor statute.
"Base Rate" means, as of any date of determination, the variable
rate of interest, per annum, most recently publicly announced by The Chase
Manhattan Bank, or any successor thereto, as its prime lending rate in effect at
its principal office in New York City, irrespective of whether such announced
rate is the best rate available from such financial institution, and such
institution may make loans at rates of interest above, or below any such
announced prime lending rate.
"Bell Atlantic Interconnection Agreement" means that certain
Interconnection Agreement under Sections 251 and 252 of the Telecommunications
Act of 1996, dated as of September 4, 1998, by and between New England Telephone
and Telegraph Company d/b/a Bell Atlantic-Massachusetts and Network Plus, Inc.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which Borrower, any Subsidiary of Borrower, or any ERISA
Affiliate has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"Billing System Conversion" means the development and implementation
by Borrower of a billing system administered wholly or primarily by Borrower,
and the conversion from Borrower's current billing system administered by a
third Person to such billing system administered wholly or primarily by
Borrower.
"Borrower" means NPI and Holdings, individually and collectively,
and jointly and severally.
"Borrower's Books" means all of Borrower's books and records
including: ledgers; records indicating, summarizing, or evidencing Borrower's
properties or assets (including the Collateral) or liabilities; all information
relating to Borrower's business operations or financial condition; and all
computer programs, disk or tape files, printouts, runs, or other computer
prepared information.
"Borrowing" means a borrowing hereunder consisting of Advances made
on the same day by the Lenders, or Agent on behalf thereof, to Borrower.
"Borrowing Base" has the meaning set forth in Section 2.1(a).
"Borrowing Base Certificate" means a certificate in the form of
Exhibit B-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.
"Call Data Record" means a computer record evidencing a telephony or
internet protocol transaction for which Borrower is entitled to receive payment
from its Account Debtors.
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"Capital Expenditures" means expenditures made or liabilities
incurred for the acquisition of fixed assets or improvements, replacements,
substitutions, or additions thereto that are required to be accounted for as
capital expenditures under GAAP, including the total principal portion of
Capitalized Lease Obligations.
"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.
"Carrier" means any provider of long distance telecommunications
access with whom Borrower from time to time does business.
"Carrier Agreement" means each contract or agreement in effect
between Borrower and a Carrier.
"Casualty Loss" means (i) the loss, damage, or destruction of any
asset owned or used by Borrower or any of its Subsidiaries, or (ii) the
condemnation, confiscation, or other taking, in whole or in part, of any such
asset.
"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)(2)
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 25% of the total voting power of all classes of Stock
then outstanding of Holdings entitled to vote in the election of directors; (b)
a majority of members of the board of directors of Holdings shall not be
Continuing Directors; (c) the Permitted Holders shall cease to own and control,
directly and of record, (1) prior to an initial public offering of the capital
Stock of Holdings, more than 75% of the issued and outstanding capital Stock of
Holdings, or (2) from and after an initial public offering of the capital Stock
of Holdings, more than 50% of the issued and outstanding capital Stock of
Holdings; or (d) Holdings shall cease to own and control, directly and of
record, 100% of the issued and outstanding capital Stock of NPI.
"Churn" means, as of any date of determination, the aggregate number
on a consolidated basis, of Customers whose telecommunications service account
with Borrower is deactivated during the immediately preceding one month period,
divided by, the average of the aggregate number of Customers as of the first day
of such one month period and the aggregate number of Customers as of the last
day of such one month period.
"Clearinghouse" means a call transaction billing-and- collection
clearinghouse.
"Closing Date" means the date of the making of the initial Advance.
"Closing Date Business Plan" means the set of Projections of
Borrower for the 3 year period following the Closing Date (on a year by year
basis, and for the 1 year period
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following the Closing Date, on a month by month basis), in form and substance
(including as to scope and underlying assumptions) satisfactory to Agent and S&A
Agent, each in its sole and absolute discretion.
"Code" means the New York Uniform Commercial Code.
"Collateral" means all of Borrower's right, title, and
interest in and to each of the following:
(a) the Accounts
(b) Borrower's 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 Borrower 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
Collateral, and any and all Accounts, Borrower's 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.
"Collateral Access Agreement" means a landlord waiver or consent,
mortgagee waiver or consent, Equipment lessor or Equipment secured financier
waiver or consent, bailee letter, or a similar acknowledgement agreement of any
warehouseman, processor, consignee, or other Person in possession of, having a
Lien upon, or having rights or interests in the Collateral consisting of goods,
or of lessors or secured financiers of Equipment to Borrower, in each case, in
form and substance satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including, insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Commitment" means Tranche A Commitment, Tranche B Commitment, or
Total Commitment, as the context requires.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
"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-1 and delivered by the chief accounting officer of Borrower to
Agent.
"Continuing Director" means, as of any date of determination, a
member of the board of directors of Holdings who (a) was a member of the board
of directors of Holdings on the Closing Date, or (b) was nominated to be a
member of the board of directors of Holdings 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.
"Customer" means, as of any date of determination, each Person
reflected as a direct retail end-user of Borrower's telecommunication services
on Borrower's Books.
"Customer List Escrow Agent" means Data Securities International,
Inc.
"Customer List Escrow Agreement" means that certain Customer List
Escrow Agreement among Borrower, Agent, and Customer List Escrow Agent.
"Daily Balance" means the amount of an Obligation owed at the end of
a given day.
"Debt to Annualized Quarterly Revenue Ratio" means, as of any date
of determination (which shall be the last day of each month), the ratio of (i)
Indebtedness of Borrower to the Lender Group hereunder as of such date, to (ii)
4 times Borrower's revenue for the immediately preceding 3 months as to which
Borrower has delivered its monthly financial statements to Agent pursuant to
Section 6.3 hereof.
"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.
"Designated Account" means account number [**] of Borrower
maintained with Borrower's Designated Account Bank, or such other deposit
account of Borrower (located within the United States) that has been designated,
in writing and from time to time, by Borrower to Agent.
"Designated Account Bank" means FNB, whose office is located at One
Federal Street, Boston, Massachusetts 02110, and whose ABA number is 011000138.
"Dilution" means, in each case based upon the experience of the
immediately prior 90 days, the result of dividing the Dollar amount of (a) bad
debt write-downs, discounts, advertising, promotions, credits, or other dilutive
items with respect to the Accounts (collectively, the "Dilutive Items"), by (b)
Borrower's Collections (excluding extraordinary items) plus the Dollar amount of
clause (a). The foregoing notwithstanding the Dilutive Items shall not include
non-recurring items disclosed to Agent, which, in Agent's reasonable
12
judgment, are not indicative of a trend.
"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 that is billed directly by
Borrower (including Accounts with respect to which the bills are prepared for
Borrower by another Person) and not submitted by Borrower for billing and
collection by any other Person (including such other Persons as LECs or
Clearinghouses).
"Disbursement Letter" means an instructional letter executed and
delivered by Borrower to Agent regarding the extensions of credit to be made on
the Closing Date, the form and substance of which shall be satisfactory to
Agent.
"Dollars" or "$" means United States dollars.
"EBITDA" means, with respect to any fiscal period, the sum of
Borrower's net earnings (or loss) before net interest expense, taxes,
amortization, and depreciation for such period as determined in accordance with
GAAP.
"Eligible Accounts" means those Direct Accounts created by Borrower
in the ordinary course of business, that arise out of NPI's sale of goods, sale
of General Intangibles relating to the providing of telecommunication services,
or rendition of services, that comply with each and all of the representations
and warranties respecting Accounts made by Borrower to Agent in the Loan
Documents, and that are and at all times continue to be acceptable to Agent in
all respects; provided, however, that standards of eligibility may be fixed and
revised from time to time by Agent in Agent's reasonable credit judgment.
Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within 60
days of invoice date, or Accounts that are not invoiced by NPI on its normal
credit cycle;
(b) Accounts with respect to which the Account Debtor is an
Affiliate or agent of Borrower;
(c) Accounts that are not payable in Dollars;
(d) Accounts with respect to which the Account Debtor: (i) does not
maintain a significant business office in the United States, or (ii) is the
government of any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof unless (y) the Account is
supported by an irrevocable letter of credit satisfactory to Agent (as to form,
substance, and issuer or domestic confirming bank) that has been delivered to
Agent and is directly drawable by Agent, or (z) the Account is covered by credit
insurance in form and amount, and by an insurer, satisfactory to Agent;
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(e) 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 NPI has complied,
to the 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);
(f) Accounts with respect to which the Account Debtor is a creditor
of Borrower (to whom Borrower's obligations exceed $2,500), 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 setoff, dispute, or claim;
(g) Accounts with respect to an Account Debtor whose total
obligations to NPI exceed (i) as to those Account Debtors listed on Schedule
E-1, 20% of all Eligible Accounts, or (ii) as to any other Account Debtor, 10%
of all Eligible Accounts, in each case, to the extent of the obligations owing
by such Account Debtor in excess of such percentage;
(h) Accounts with respect to which the Account Debtor is or
reasonably could be expected to become subject to any Insolvency Proceeding, or
becomes insolvent, or goes out of business;
(i) Accounts the collection of which Agent, in its reasonable credit
judgment, believes to be doubtful by reason of the Account Debtor's financial
condition or otherwise;
(j) 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, consumed, or utilized by the Account Debtor, or the Account does not
otherwise represent a final sale;
(k) Accounts with respect to which the Account Debtor is located in
the states of New Jersey, Minnesota, Indiana, or West Virginia (or any other
state that requires a creditor to file a Business Activity Report or similar
document in order to bring suit or otherwise enforce its remedies against such
Account Debtor in the courts or through any judicial process of such state),
unless NPI has qualified to do business in New Jersey, Minnesota, Indiana, West
Virginia, or such other states, or has filed a Notice of Business Activities
Report with the applicable division of taxation, the department of revenue, or
with such other state offices, as appropriate, for the then-current year, or is
exempt from such filing requirement;
(l) Accounts that are not Direct Accounts;
(m) Accounts that have not yet been billed to the Account Debtor
(provided that such Accounts may qualify as Eligible Unbilled Accounts if they
otherwise meet the criteria applicable thereto); and
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(n) Accounts that represent progress payments or other advance
billings that are due prior to the completion of performance by Borrower of the
subject contract for goods or services.
"Eligible Transferee" means: (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000; (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country, and having total
assets in excess of $250,000,000; provided that such bank is acting through a
branch or agency located in the United States; (c) a finance company, insurance
company or other financial institution or fund that is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000; (d) any Affiliate (other than individuals) of a pre-existing
Lender; (e) so long as no Event of Default has occurred and is continuing, any
other Person approved by S&A Agent, Agent, and Borrower; or (f) during the
continuation of an Event of Default, any other Person approved by S&A Agent and
Agent, provided, that neither Agent, S&A Agent, nor the Lender proposing to make
the transfer to such Person knows or reasonably should know that the primary
line of business of such other Person directly competes with the business of
Borrower.
"Eligible Unbilled Account" means, as of any date of determination,
a Direct Account of NPI that (a) resulted from a transaction that occurred prior
to the date of determination and with respect to which NPI has an existing call
transaction record in a format that is capable of being billed by NPI to its
customer in accordance with NPI's usual billing methods for Direct Accounts but
that has not yet been billed and invoiced to such customer, (b) does not relate
to a Call Data Record received by Borrower more than 60 days prior to the date
of determination, and (c) in all other respects would qualify as an Eligible
Account but for the fact that it has not yet been billed and invoiced to NPI's
customer. Eligible Unbilled Accounts shall be net of contra accounts. If an
Account that, immediately prior to being billed and invoiced, was an Eligible
Unbilled Account, then is billed and invoiced, it thereupon shall cease to be an
Eligible Unbilled Account, and it shall become an Eligible Account if it then
meets the criteria applicable thereto.
"Equipment" means all of Borrower's present and hereafter acquired
machinery, machine tools, motors, equipment, furniture, furnishings, fixtures,
vehicles (including motor vehicles and trailers), tools, parts, goods (other
than consumer goods, farm products, or Inventory), wherever located, including,
(a) any assets acquired by Borrower with the proceeds of an Advance, (b) any
interest of Borrower in any of the foregoing, and (c) all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
29 U.S.C. Sections 1000 et seq., amendments thereto, successor statutes,
and regulations or guidance promulgated thereunder.
15
"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).
"Event of Default" has the meaning set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute thereto.
"Existing Lender" means FNB.
"Family Member" means, with respect to any individual, any other
individual having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.
"Family Trusts" means, with respect to any individual, trusts or
other estate planning vehicles established for the benefit of Family Members of
such individual and in respect of which such individual serves as trustee or in
a similar capacity.
"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 S&A Agent, in form and substance reasonably
satisfactory to S&A Agent.
"FEIN" means Federal Employer Identification Number.
"FNB" means Fleet National Bank, a national banking association.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's present and future
general
16
intangibles and other personal property (including contract rights, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, literature, reports, catalogs,
deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than goods, Accounts, and Negotiable Collateral.
"Governing Documents" means, with respect to any person, the
certificate or articles of incorporation, by-laws, or other organizational or
governing 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.
"GSCP" means Goldman Sachs Credit Partners L.P., a Bermuda limited
partnership.
"Hale Subordination Agreement" means a subordination agreement, in
form and substance satisfactory to each Lender, executed by Robert T. Hale, Jr.
and NPI to Agent for the benefit of the Lenders.
"Hales" means, individually and collectively, Robert T. Hale, Sr.
and Robert T. Hale, Jr.
"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.
"Holdings" has the meaning set forth in the preamble to this
Agreement.
"Indebtedness" means: (a) all obligations of Borrower for borrowed
money, (b) all obligations of Borrower evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations of Borrower
in respect of letters of credit, bankers acceptances, interest rate swaps, or
other financial products, (c) all Capitalized
17
Lease Obligations (it being understood that Borrower's obligations under
operating leases shall not be deemed Indebtedness), (d) all obligations or
liabilities of others secured by a Lien on any property or asset of Borrower,
irrespective of whether such obligation or liability is assumed, and (e) any
obligation of Borrower guaranteeing or intended to guarantee (whether
guaranteed, endorsed, co-made, discounted, or sold with recourse to Borrower)
any indebtedness, lease, dividend, letter of credit, or other obligation of any
other Person, to the extent such obligation of such other Person would be
"Indebtedness" pursuant to clauses (a) - (d) of this definition if such
obligation were an obligation of Borrower.
"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 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 subordination
agreement, in form and substance satisfactory to each Lender, executed by
Holdings and NPI to Agent for the benefit of the Lenders.
"Interest Rate or Currency Protection Agreement" of any Person means
any forward contract, futures contract, swap, option, or other financial
arrangement (including caps, floors, collars, and similar arrangements) relating
to, or the value of which is dependent upon, interest rates or currency exchange
rates or indices.
"Inventory" means all present and future inventory in which Borrower
has any interest, including goods held for sale or lease or to be furnished
under a contract of service and all of Borrower's present and future raw
materials, work in process, finished goods, and packing and shipping materials,
wherever located.
"Investments" means, with respect to any Person, all investments 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, Stock, or other securities, and any other items that are or would
be classified as investments on a balance sheet prepared in accordance with GAAP
"Investment Property" means "investment property" as that term is
defined in
18
Section 9-115 of the Code.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"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.
"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 15.1 hereof.
"Lender Group" means, individually and collectively, each of the
individual Lenders, Agent, and S&A Agent.
"Lender Group Expenses" means all: costs or expenses (including
taxes, and insurance premiums) required to be paid by Borrower under any of the
Loan Documents that are paid or incurred by the Lender Group; reasonable fees or
charges paid or incurred by the Lender Group in connection with the Lender
Group's transactions with Borrower, including, fees or charges for photocopying,
notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, and UCC (or equivalent) 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); costs and expenses incurred by Agent
in the disbursement of funds to Borrower (by wire transfer or otherwise);
charges paid or incurred by Agent resulting from the dishonor of checks;
reasonable costs and expenses paid or incurred by the Lender Group to correct
any default or enforce any provision of the Loan Documents, or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated; reasonable costs and
expenses paid or incurred by Agent in examining Borrower's Books; reasonable
costs and expenses of third party claims or any other suit paid or incurred by
the Lender Group in enforcing or defending the Loan Documents or in connection
with the transactions contemplated by the Loan Documents or the Lender Group's
relationship with Borrower (or any of its Subsidiaries party to one or more Loan
Documents); and the Lender Group's reasonable attorneys fees and expenses
incurred in advising, structuring, drafting, reviewing, administering, amending,
terminating, enforcing (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning Borrower 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, counsel, agents,
19
and attorneys-in-fact of such Lender and such Lender's Affiliates.
"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, adverse
claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Disbursement Letter, the
Fee Letter, the Lockbox Agreements, the Suretyship Agreement, the Stock Pledge
Agreement, the Intercompany Subordination Agreement, any note or notes executed
by Borrower and payable to the Lender Group, and any other agreement entered
into, now or in the future, in connection with this Agreement.
"Lockbox Account" shall mean account number [**] maintained at FNB,
as Agent.
"Lockbox Agreements" shall have the meaning ascribed thereto in
Section 2.7.
"Lockbox Bank" means FNB.
"Lockboxes" shall have the meaning ascribed thereto in Section 2.7.
"Material Adverse Change" means (a) a material adverse change in the
business, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Borrower, (b) the material impairment of Borrower's
ability to perform its obligations under the Loan Documents to which it is a
party or of the Lender Group to enforce the Obligations or realize upon the
Collateral, (c) a material adverse effect on the priority of Agent's Liens with
respect to the Collateral, the value of the Collateral, or the amount that the
Lender Group would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of such Collateral.
"Material Carriers" means, as of any date of determination, all
Carriers for whom Borrower's volume of telecommunications traffic (measured in
minutes) through such Carrier for the immediately preceding month exceeds 10% of
the aggregate amount of Borrower's volume of telecommunications traffic
(measured in minutes) through Carriers for such period; provided, however, that
for purposes of this definition, telecommunications traffic shall not include
any tariffed LEC accessed origination or termination minutes.
"Maturity Date" has the meaning set forth in Section 3.4.
20
"Maximum Amount" means the sum of the Maximum Tranche A Amount and
the Maximum Tranche B Amount.
"Maximum Tranche A Amount" means $30,000,000.
"Maximum Tranche B Amount" means $30,000,000.
"Multiemployer Plan" means a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) to which Borrower, any of its Subsidiaries, or any
ERISA Affiliate has contributed, or was obligated to contribute, within the past
six years.
"Negotiable Collateral" means all of a Person's present and future
letters of credit, notes, drafts, instruments, Investment Property, documents,
personal property leases (wherein such Person is the lessor), chattel paper, and
Books relating to any of the foregoing.
"NPI" has the meaning set forth in the preamble to this Agreement.
"Obligations" means all loans, Advances, debts, principal, interest
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), premiums, liabilities (including all amounts charged to
Borrower's Loan Account pursuant hereto), obligations, fees, 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 Borrower to the Lender Group of any
kind and description pursuant to or evidenced by this Agreement or the other
Loan Documents (irrespective of whether for the payment of money), whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including all interest not paid when due and all
Lender Group Expenses that Borrower is required to pay or reimburse by the Loan
Documents, by law, or otherwise.
"Overadvance" has the meaning set forth in Section 2.5.
"Participant" has the meaning set forth in Section 15.1(e).
"Pay-Off Letter" means a letter, in form and substance reasonably
satisfactory to Agent, from Existing Lender respecting the amount necessary to
repay in full all of the obligations of Borrower owing to Existing Lender and
obtain a termination or release of all of the Liens existing in favor of
Existing Lender in and to the properties or assets of Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation as defined in
Title IV of ERISA, or any successor thereto.
"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
21
conducted and to own and use its assets.
"Permitted Disposition" means (a) the sale, exchange, license, lease
or other disposition of telephony services and equipment ancillary thereto, in
the ordinary course of Borrower's business, (b) the sale, exchange, or other
disposition of Borrower's Equipment that is substantially worn, damaged, or
obsolete in the ordinary course of Borrower's business, (c) so long as no Event
of Default has occurred and is continuing or would result therefrom, the sale of
any asset pursuant to a Permitted Sale and Leaseback Transaction, or (d) so long
as no Event of Default has occurred and is continuing or would result therefrom,
other dispositions of Borrower's Equipment with an aggregate value not to exceed
$[**] in any 12 month period.
"Permitted Holders" means the Hales, their respective Family
Members, and their respective Family Trusts.
"Permitted Indebtedness" means Indebtedness of Borrower permitted
pursuant to Section 7.1.
"Permitted Interest Rate or Currency Protection Agreement" of any
Person means any Interest Rate or Currency Protection Agreement entered into
with one or more financial institutions in the ordinary course of business that
is designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Indebtedness of such Person and which
shall have a notional amount not greater than the payments due with respect to
the Indebtedness hedged thereby and not for purposes of speculation.
"Permitted Investments" means (a) direct obligations of the United
States of America, or any agency thereof if backed by the full faith and credit
of the United States of America, or obligations fully guaranteed by the United
States of America, or any agency thereof if backed by the full faith and credit
of the United States of America, in each case denominated in Dollars and
maturing within 1 year from the date of creation thereof, (b) commercial paper,
denominated in Dollars, issued by a corporation (other than Obligors or any
Affiliate of any Obligor) organized under the laws of any State of the United
States of America or the District of Columbia maturing within 1 year from the
date of creation thereof rated in the highest grade by a nationally recognized
credit rating agency, (c) time deposits denominated in Dollars and maturing
within 1 year from the date of creation thereof with, including certificates of
deposit issued by, any office located in the United States of America of any
bank or trust company which is organized under the laws of the United States of
America or any state thereof and has capital, surplus, and undivided profits
aggregating at least $500,000,000, (d) shares of any money market mutual fund
holding only obligations denominated in Dollars rated at least AAA or the
equivalent thereof by Standard & Poor's Corporation or at least Aaa or the
equivalent thereof by Moody's Investors Service, Inc., or (e) loans, advances,
capital contributions, or transfers of property (i) from Holdings to NPI, (ii)
from NPI to Holdings, or (iii) so long as no Event of Default has occurred and
is continuing or would result therefrom, in an aggregate amount not to exceed
$1,000,000 at any one time; provided that such investment shall not be a
Permitted Investment unless the security
22
interests of Agent on behalf of the Lender Group therein are perfected.
"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) are the subject of Permitted Protests, (c) Liens set forth on
Schedule P-1, (d) (i) the interests of lessors under operating leases, and (ii)
the interests of lessors under Capital Leases to the extent that such Capital
Leases are permitted under Section 7.1(e), (e) Purchase Money Liens securing
Purchase Money Indebtedness permitted under Section 7.1(e), provided, that the
Lien only attaches to the asset purchased or acquired and the proceeds thereof
and only secures the purchase price of the asset, (f) Liens arising by operation
of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of business of Borrower
and not in connection with the borrowing of money, and which Liens 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, or leases (to the extent permitted under
this Agreement), incurred in the ordinary course of business of Borrower and not
in connection with the borrowing of money, (i) Liens arising by reason of
security for surety or appeal bonds in the ordinary course of business of
Borrower, (j) Liens of or resulting from any judgment or award that reasonably
could not be expected to result in a Material Adverse Change and as to which the
time for the appeal or petition for rehearing of which has not yet expired, or
in respect of which Borrower is in good faith prosecuting an appeal or
proceeding for a review and in respect of which a stay of execution pending such
appeal or proceeding for review has been secured, (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 Borrower or the value of the Liens of Agent on behalf of the
Lender Group thereon or therein, or materially interfere with the ordinary
conduct of the business of Borrower; and (l) Liens on cash collateral provided
by Borrower to secure its reimbursement obligations relative to outstanding
letters of credit permitted under Section 7.1(h) in an amount not to exceed 102%
of such reimbursement obligations.
"Permitted Preferred Stock" means and refers to: (a) the Series A
Cumulative Preferred Stock, and (b) any other Preferred Stock issued by Holdings
that is not Prohibited Preferred Stock.
"Permitted Protest" means the right of Borrower to protest any Lien
(other than any such Lien that secures the Obligations), tax (other than payroll
taxes or taxes that are the subject of a United States federal tax lien), or
rental payment, provided that (a) a reserve with respect to such obligation is
established on the books of Borrower in such amount as is required under GAAP,
(b) any such protest is instituted and diligently prosecuted by Borrower in good
faith, and (c) Agent is reasonably 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.
23
"Permitted Sales and Leaseback Transaction" means a Sale and
Leaseback Transaction by NPI that (a) is consummated at a time when no Default
or Event of Default has occurred and is continuing or would result therefrom,
(b) is in respect of telecommunications and related Equipment that (i) is first
acquired by NPI after the Closing Date, or (ii) is first acquired by NPI on or
before the Closing Date and is fully described on Schedule P-2, and in each
case, is sold by NPI to a non-Affiliate of NPI under such Sale and Leaseback
Transaction upon fair and reasonable terms, (c) is fully consummated within 12
months following the date of initial acquisition of such Equipment, and (d)
involves the incurrence of Indebtedness that is permitted under the terms of
Section 7.1 hereof.
"Permitted Subordinated Debt" means Indebtedness having a maturity
of at least 6 years, that is subordinated to Borrower's Obligations on terms and
conditions reasonably satisfactory to the Required Lenders, and does not provide
for mandatory cash payments of principal or interest prior to 12 months after
the Maturity Date (other than interest payable from an interest reserve account
established with respect to such Indebtedness).
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Plan" means any employee benefit plan, program, or arrangement
maintained or contributed to by Borrower or with respect to which it may incur
liability.
"Preferred Stock" means, with respect to any Person, any class or
series of equity securities of such Person that is entitled, upon any
distribution of assets of such Person, whether by dividend or by liquidation, to
a preference over another class or series of equity securities of such Person.
"Prohibited Preferred Stock" means any Preferred Stock that by its
terms is mandatorily redeemable or subject to any other payment obligation
(including any obligation to pay dividends, other than dividends of Preferred
Stock of the same class and series payable in kind or dividends of common Stock)
on or before the date that is 12 months following the Maturity Date or, on or
before the date that is 12 months following the Maturity Date, is redeemable at
the option of the holder thereof for cash (or assets or securities other than
distributions in kind of Preferred Stock of the same class and series or of
common Stock).
"Projections" means Borrower's forecasted (a) balance sheets, (b)
profit and loss statements, (c) cash flow statements, and (d) capitalization
statements, all prepared on a consistent basis with Borrower's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.
"Pro Rata Share" means: (a) with respect to a Lender's obligation to
make Tranche A Advances and receive payments of interest and principal with
respect thereto, the percentage obtained by dividing (i) such Lender's Tranche A
Commitment, as set forth on Schedule C-1, by (ii) the Tranche A Commitments of
all Lenders, as set forth on Schedule
24
C-1; (b) with respect to a Lender's obligation to make Tranche B Advances and
receive payments of interest and principal with respect thereto, the percentage
obtained by dividing (i) such Lender's Tranche B Commitment, as set forth on
Schedule C-1, by (ii) the Tranche B Commitments of all Lenders, as set forth on
Schedule C-1; and (c) with respect to all other matters (including the
indemnification obligations arising under Section 17.7), the percentage obtained
by dividing (i) such Lender's Total Commitments, as set forth on Schedule C-1,
by (ii) the aggregate Total Commitments of all Lenders, as set forth on Schedule
C-1; provided, however, that, in each case, in the event all Commitments have
been terminated, Pro Rata Share shall be determined according to the Commitments
in effect immediately prior to such termination and otherwise as set forth
above.
"Purchase Money Indebtedness" means and includes (a) Indebtedness
(other than the Obligations) for the payment of all or any part of the purchase
price of any fixed assets, (b) Indebtedness (other than the Obligations),
including Capitalized Lease Obligations, incurred at the time of or within 10
days prior to or after the acquisition of any fixed assets for the purpose of
financing all or any party of the purchase price thereof, and (c) any renewals,
extensions, or refinancings thereof, but not any increases in the principal
amounts thereof.
"Purchase Money Lien" means, with respect to any fixed asset, a Lien
upon such fixed asset that secures Purchase Money Indebtedness relative to such
fixed asset.
"Qualifying Preferred Stock Offering" means the offering by Holdings
of its Series A Cumulative Preferred Stock .
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by Borrower.
"Reimbursable Agent Expenses" shall have the meaning ascribed
thereto in Section 2.4(b)(i).
"Reimbursable Lender Expenses" shall have the meaning ascribed
thereto in Section 2.4(b)(i).
"Reportable Event" means any of the events described in Section
4043(c) of ERISA or the regulations thereunder other than a Reportable Event as
to which the provision of 30 days notice to the PBGC is waived under applicable
regulations.
"Required Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate 66.67% of the Total Commitments, or if all Commitments have been
terminated irrevocably, 66.67% of the Obligations then outstanding; provided,
however, (a) at any time that there are two or fewer Lenders, and (b) that until
such time as GSCP and its Affiliates shall have less than $40,000,000 of
Commitments, the foregoing percentages shall each be 100%.
"Retiree Health Plan" means an "employee welfare benefit plan"
within the
25
meaning of Section 3(1) of ERISA that provides benefits to individuals after
termination of their employment, other than as required by Section 601 of ERISA.
"Revolving Facility Usage" means, as of any date of determination,
the sum of (a) the aggregate amount of Tranche A Advances outstanding plus (b)
the aggregate amount of Tranche B Advances outstanding.
"S&A Agent" means GSCP, solely in its capacity as syndication and
arrangement agent for the Lenders, and shall include any successor syndication
and arrangement agent.
"S&A Agent-Related Persons" means S&A Agent and any successor
syndication and arrangement agent together with their respective Affiliates, and
the officers, directors, employees, counsel, agents, and attorneys-in-fact of
such Persons and their Affiliates.
"Sales and Leaseback Transaction" means an arrangement with any
third Person providing for the purchase of an asset owned by NPI and the
concurrent leasing of such asset to NPI by such third Person.
"Series A Cumulative Preferred Stock" means those certain 40,000
shares of Holdings' 13-1/2% Stock Due 2009, $0.01 par value per share.
"Settlement Date" has the meaning set forth in Section 2.3(c)(ii).
"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 is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's properties and
assets would constitute unreasonably small capital 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.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or nonvoting, including common
stock, preferred stock, or any other "equity security" (as such term is defined
in Rule 3a11-1 of the General Rules and Regulations promulgated
26
by the SEC under the Exchange Act).
"Stock Pledge Agreement" means a stock pledge agreement, in form and
substance satisfactory to each Lender, executed and delivered by Holdings to
Agent for the benefit of the Lender Group with respect to the pledge of the
capital Stock of NPI.
"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 each Lender, executed and delivered by each Borrower
to Agent for the benefit of the Lender .
"System" means a telecommunications network or system (including
optical fiber networks, telephone switching equipment, and systems ancillary
thereto) constructed, acquired, installed, or operated by Borrower for the
provision of telecommunications services (including the transmission of voice,
video, or data), internet services, or electronic telephone directory services.
"Total Commitment" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading "Total
Commitment" on Schedule C-1 attached hereto or on the signature page of an
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 15.1, as such Total
Commitment may be adjusted from time to time in accordance with Section 15.1,
and "Total Commitments" means. collectively, the aggregate amount of Total
Commitments of all of the Lenders.
"Tranche A Advances" has the meaning set forth in Section 2.1.
"Tranche A Availability" means the amount that Borrower is entitled
to borrow as Tranche A Advances under Section 2.1, such amount being the
difference derived when (a) the aggregate principal amount of Tranche A Advances
then outstanding (including any amounts that the Lender Group may have paid for
the account of Borrower pursuant to any of the Loan Documents and that are
reimbursed by Borrower by being charged to the Loan Account as Tranche A
Advances) is subtracted from (b) the lesser of (i) the Maximum Tranche A Amount,
or (ii) the Borrowing Base.
"Tranche A Commitment" means, at any time with respect to a Lender,
the principal amount set forth beside such Lender's name under the heading
"Tranche A Commitment" on Schedule C-1 attached hereto or on the signature page
of an Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 15.1, as such Tranche A
Commitment may be adjusted from time to time in accordance with the provisions
of Section 15.1, and "Tranche A
27
Commitments" means, collectively, the aggregate amount of Tranche A Commitments
of all of the Lenders.
"Tranche A Lenders" means the Lenders with Tranche A Commitments.
"Tranche A Obligations" means all Obligations in respect of the
Tranche A Advances.
"Tranche B Advances" has the meaning set forth in Section 2.2
"Tranche B Availability" means the amount that Borrower is entitled
to borrow as Tranche B Advances under Section 2.2, such amount being the
difference derived when (a) the aggregate principal amount of Tranche B Advances
then outstanding (including any amounts that the Lender Group may have paid for
the account of Borrower pursuant to any of the Loan Documents and that are
reimbursed by Borrower by being charged to the Loan Account as Tranche B
Advances) is subtracted from (b) the Maximum Tranche B Amount.
"Tranche B Commitment" means, at any time with respect to a Lender,
the principal amount set forth beside such Lender's name under the heading
"Tranche B Commitment" on Schedule C-1 attached hereto or on the signature page
of an Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 15.1, as such Tranche B
Commitment may be adjusted from time to time in accordance with the provisions
of Section 15.1, and "Tranche B Commitments" means, collectively, the aggregate
amount of Tranche B Commitments of all of the Lenders.
"Tranche B Lenders" means the Lenders with Tranche B Commitments.
"Tranche B Obligations" means all Obligations other than Tranche A
Obligations.
"Voidable Transfer" has the meaning set forth in Section 15.8.
"WorldCom Subordination Agreement" means a subordination agreement,
in form and substance satisfactory to each Lender, executed by WorldCom Network
Services, Inc. dba WilTel, Inc. to Agent for the benefit of the Lenders.
"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 dates in and after the year
2000.
1.2 Accounting Terms.
All accounting terms not specifically defined herein shall be
construed in
28
accordance with GAAP. When used herein, the term "financial statements" shall
include the notes and schedules thereto. Whenever the term "Borrower" or
"Holdings" is used in respect of a financial covenant or a related definition,
it shall be understood to mean Holdings 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 Document, as the case may be. An Event of Default shall "continue" or
be "continuing" until such Event of Default has been waived in writing by Agent.
Section, subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. Any reference in this Agreement or in the
Loan Documents to this Agreement or any of the Loan Documents shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable.
1.5 Schedules and Exhibits.
All of the schedules and exhibits attached to this Agreement shall
be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolving Tranche A Advances.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Tranche A Lender severally agrees to
make advances ("Tranche A 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 Tranche A Amount, or (ii) the Borrowing Base. For
purposes of this Agreement, "Borrowing Base", as of any date of determination,
shall mean the result of:
(w) the lesser of
(1) the sum of
(A) 85% of Eligible Accounts, plus
(B) the lesser of (I) 85% of Eligible Unbilled Accounts
and (II) $18,000,000;
minus
(C) the amount, if any, of the Dilution Reserve,
and
(2) an amount equal to NPI's Collections with respect to
Accounts for the immediately preceding 60 day period,
minus
(x) the aggregate amount of reserves, if any, established by
Agent or the Required Lenders pursuant to Section 2.1(b) or Section 10,
minus
(y) the aggregate amount of commissions payable with respect to
Accounts to Persons other than employees of Borrower,
minus
(z) the aggregate amount of deposits received with respect to
Accounts from Account Debtors.
29
(b) Anything to the contrary in this Section 2.1 notwithstanding,
Agent or the Required Lenders shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its reasonable credit
judgment (from the perspective of a secured lender) or the Required Lenders in
their reasonable credit judgment (from the perspective of a secured lender), as
the case may be, shall deem necessary or appropriate, against the Borrowing
Base, including with respect to (i) sums chargeable against the Loan Account as
Advances under any section of this Agreement or any other Loan Document, (ii)
amounts owing by Borrower to any Person to the extent secured by a Lien (other
than Permitted Liens) on, or trust over, any assets of Borrower, and (iii) such
other matters, events, conditions, or contingencies as to which Agent in its
reasonable credit judgment (from the perspective of a secured lender) or the
Required Lenders in their reasonable credit judgment (from the perspective of a
secured lender), as the case may be, determines reserves should be established
from time to time hereunder.
(c) The Lenders shall have no obligation to make further Tranche A
Advances hereunder to the extent such further Advances would cause (i) the
outstanding aggregate amount of Tranche A Advances to exceed the lesser of the
Borrowing Base and the Maximum Tranche A Amount, or (ii) the outstanding
Obligations to exceed the Maximum Amount.
(d) Amounts borrowed pursuant to this Section 2.1 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 Revolving Tranche B Advances.
(a) Subject to the terms and conditions of this Agreement and during
the term of this Agreement, each Tranche B Lender severally agrees to make
advances ("Tranche B Advances") to Borrower in an amount at any one time
outstanding not to exceed such Lender's Pro Rata Share of an amount equal to the
Maximum Tranche B Amount.
(b) The Lenders shall have no obligation to make further Tranche B
Advances hereunder (i) to the extent they would cause (y) the outstanding
aggregate amount of Tranche B Advances to exceed the Maximum Tranche B Amount,
or (z) the outstanding Obligations to exceed the Maximum Amount, or (ii) to the
extent Tranche A Availability exceeds zero (-0-); it being the express
understanding of Borrower, Agent, the Tranche A Lenders, and the Tranche B
Lenders, that (A) at any time that there exists any borrowing availability under
Tranche A, all further Advances first shall be drawn under Tranche A until such
borrowing availability has been exhausted, and (B) if at any time there are
Tranche B Advances outstanding at a time when borrowing availability exists
under Tranche A, such Tranche B Advances automatically shall be deemed repaid
and additional Tranche A Advances created to the extent of such borrowing
availability under Tranche A.
(c) Amounts borrowed pursuant to this Section 2.2 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term
30
of this Agreement.
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made upon
Borrower's irrevocable request therefor delivered to Agent (which notice must be
received by Agent no later than 10:00 a.m. (New York 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. Upon receipt
of each such notice, Agent shall promptly notify each Lender having a Commitment
to make the requested type of Advance and, subject to the terms and conditions
hereof, each Lender shall promptly remit its Pro Rata Share of the requested
Advance to Agent. If and to the extent that Agent receives funds from such
Lenders on a timely basis, it shall remit such funds to Borrower by not later
than 4:00 p.m. (New York time) on the Funding Date; it being the express
understanding of the parties that Agent may, but shall not be obligated to,
advance funds to Borrower on behalf of the Lenders having a Commitment to make a
requested type of Advance and that the only parties having Commitments to make
Advances are Lenders as opposed to Agent (in its capacity as agent).
(b) Disbursement of Funds. Agent, subject to the terms and
conditions herein, may, on behalf of the Lenders, disburse funds to Borrower for
Loans requested. If any Lender fails to pay the amount necessary to adjust such
Lender's actual Pro Rata Share pursuant to Section 2.3(c), Agent shall promptly
notify Borrower, and Borrower shall immediately repay such amount to Agent
(without duplication of amounts received by Agent from such Lender pursuant to
Section 2.3(d)) without set-off, counterclaim, or deduction of any kind together
with interest thereon, for each day from and including the date such amount was
to have been made available to Agent by such Lender to but excluding the date of
payment to Agent, at the interest rate then applicable under this Agreement with
respect to such Advance. Any repayment required pursuant to this Section 2.3(b)
shall be without premium or penalty. Nothing in this Section 2.3(b) or elsewhere
in this Agreement or the other Loan Documents, including the provisions of
Section 2.3(c), shall be deemed to require Agent to advance funds on behalf of
any Lender or to relieve any Lender from its obligation to fulfill its
commitments hereunder or to prejudice any rights that Agent or Borrower may have
against any Lender as a result of any default by such Lender hereunder.
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(c) Settlements.
(i) The Revolving Facility Usage may fluctuate from
day to day through Agent's disbursement of funds to, and receipt of funds from,
Borrower. In order to minimize the frequency of transfers of funds between Agent
and each Lender, at Agent's sole option, Advances and payments may be settled
among Agent and Lenders according to the procedures described in this Section
2.3(c). These procedures notwithstanding, each Lender's obligation to fund its
portion of any Advances made by Agent to Borrower will commence on the date such
Advances are made by Agent. Such payments will be made by such Lender without
set-off, counterclaim or reduction of any kind. Nothing in this Section or
elsewhere in this Agreement or the other Loan Documents, shall be deemed to
require Agent to advance funds on behalf of any Lender or to relieve any Lender
from its obligation to fulfill its commitments hereunder or to prejudice any
rights that Agent or Borrower may have against any Lender as a result of any
default by such Lender hereunder.
(ii) On the 2nd Business Day of each week, or more
frequently (including daily), if Agent so elects (each such day being a
"Settlement Date"), Agent will advise each Lender by telephone or telecopy of
the amount of each such Lender's Pro Rata Share of the Revolving Facility Usage
as of the close of business of the 2nd Business Day immediately preceding the
Settlement Date. In the event that payments are necessary to adjust such
Lender's actual Pro Rata Share of the Revolving Facility Usage as of any
Settlement Date to equal the amount of such Lender's required Pro Rata Share of
the Revolving Facility Usage, the party from which such payment is due will pay
the other, in same day funds, by wire transfer to the other's account not later
than 1:00 p.m. (New York time) on the Business Day immediately following the
Settlement Date.
(d) Availability of Lender's Pro Rata Share.
(i) Unless Agent shall have received notice from a
Lender prior to a Funding Date that such Lender will not make available its Pro
Rata Share of an Advance requested by Borrower, Agent may assume that such
Lender will make such amount available to Agent on the Business Day following
the next Settlement Date. If a Lender does not in fact make its Pro Rata Share
available to the Agent on such date, then such Lender agrees to pay to Agent
forthwith on demand such amount (without duplication of amounts received from
Borrower pursuant to Section 2.5(b)) without set-off, counterclaim or deduction
of any kind, together with interest thereon, for each day from and including the
date such amount was to have been made available to Borrower to but excluding
the date of payment to Agent, at the then prevailing federal funds rate as most
recently announced from time to time by the Federal Reserve Board. Until any
such amount (with interest thereon as aforesaid) is paid to Agent, Agent shall
not be obligated to remit to such defaulting Lender any payment made by Borrower
to Agent with respect to any Loan or any fees or other payments with respect
thereto nor shall Agent be obligated to remit to such defaulting Lender its Pro
Rata Share of Collections and other proceeds in respect of Collateral.
(ii) Nothing contained in this Section 2.3(d) will be
deemed
32
to relieve a Lender of its obligation to fulfill its commitments or to prejudice
any rights Agent or Borrower may have against such Lender as a result of any
such default by such Lender under this Agreement.
(e) Return of Payments
(i) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrower and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender
without set-off, counterclaim or deduction of any kind together with interest
thereon, for each day from and including the date such amount is made available
by Agent to such Lender to but excluding the date of repayment to Agent, at the
then prevailing federal funds rate as most recently announced from time to time
by the Federal Reserve Board, and such payment to such Lender shall be deemed to
not have been made.
(ii) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to Borrower or paid to
any other person pursuant to any requirement at law, court order or otherwise,
then, notwithstanding any other term or condition of this Agreement, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent
has distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
(f) Lenders' Failure to Perform. 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.
(g) Replacement of Defaulting Lender.
(i) If any Lender fails to perform its obligation to
make any Advance hereunder (a "Defaulting Lender"), and as a result of such
failure to perform (A) Borrower does not receive the total amount of an Advance
requested by Borrower, or (B) Borrower is required to repay Agent for amounts
received by Borrower and not paid by such Defaulting Lender, then Borrower may,
upon at least 5 Business Days' prior irrevocable notice to each of such Lender,
Agent, and S&A Agent, permanently replace such Defaulting Lender with one or
more Eligible Transferees (collectively, the "Replacement Lenders"). The notice
from Borrower to replace a Lender shall specify an effective date for such
replacement, which date shall not be later than the tenth Business Day after the
date such notice is given. Prior to such effective date, such Defaulting Lender
and each Replacement Lender shall execute an Assignment and Acceptance
Agreement. The replacement of such Lender shall
33
be made in accordance with the terms of Section 15.1.
(ii) Prior to such effective date, such Defaulting
Lender and each Replacement Lender shall execute an Assignment and Acceptance
Agreement. Until such time as the Replacement Lenders shall have acquired all of
the Obligations, the Commitments, and the other rights and obligations of such
Defaulting Lender hereunder and under the other Loan Documents, such Defaulting
Lender shall remain obligated to make such Defaulting Lender's Pro Rata Share of
Tranche A Advances and Tranche B Advances.
(iii) Nothing contained in this Section 2.3(g) shall
(A) increase any Lender's Tranche A Commitment or Tranche B Commitment, or (B)
be deemed to prejudice any rights Agent or Borrower may have against such
Defaulting Lender as a result of such Defaulting Lender's failure to perform
under this Agreement.
2.4 Payments.
(a) Payments by Borrower.
(i) All payments to be made by Borrower shall be
made without set-off, recoupment, deduction, or counterclaim, except as
otherwise required by law. Except as otherwise expressly provided herein, all
payments by Borrower shall be made to Agent for the account of the Lender Group
at Agent's address set forth in Section 12, and shall be made in immediately
available funds, no later than 2:00 p.m. (New York time) on the date specified
herein. Any payment received by Agent later than 2:00 p.m. (New York 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 such payment in full to Agent on such date in immediately available
funds and Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent Borrower has not made such
payment in full to Agent, each Lender 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.
34
(i) All payments shall be remitted to Agent. So
long as no Event of Default has occurred and is continuing, except as otherwise
provided with respect to defaulting Lenders, such payments shall be applied:
first, ratably, to pay any fees or expense reimbursements then due to Agent or
S&A Agent from Borrower under this Agreement or the other Loan Documents
(collectively, "Reimbursable Agent Expenses"); second, to pay any fees or
expense reimbursements then due to the Lenders from Borrower under this
Agreement or the other Loan Documents (collectively, "Reimbursable Lender
Expenses"); third, to pay interest due in respect of all Advances; fourth, to
pay the outstanding principal of Tranche B Advances; fifth, to pay the
outstanding principal of Tranche A Advances; and sixth, ratably to pay any other
Obligations due to Agent, S&A Agent, or any Lender by Borrower.
(ii) Upon the occurrence and during the continuation
of an Event of Default, except as otherwise provided with respect to defaulting
Lenders, all Collections and other proceeds in respect of Collateral shall be
applied: first, ratably, to pay Reimbursable Agent Expenses; second, to pay the
Reimbursable Lender Expenses; third, to pay interest due in respect of all
Tranche A Advances; fourth, to pay the outstanding principal of all Tranche A
Advances; fifth, to pay interest due in respect of all Tranche B Advances;
sixth, to pay the outstanding principal of Tranche B Advances; and seventh,
ratably to pay any other Obligations due to Agent, S&A Agent, or any Lender by
Borrower.
(iii) All Collections applied pursuant to Subsections
(i) or (ii) above shall, within each category of application, be apportioned
ratably among those Lenders having a Pro Rata Share of the Tranche A Advances or
of the Tranche B Advances, as applicable, to which such amounts are to be
applied (other than fees designated for the sole and separate account of Agent
or S&A Agent).
(iv) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to Borrower or paid to
any other Person pursuant to any requirement at law, court order or otherwise,
then, notwithstanding any other term or condition of this Agreement, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent
previously has distributed to such Lender, together with interest at such rate,
if any, as Agent is required to pay to Borrower or such other Person, without
set-off, counterclaim or deduction of any kind.
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 and 2.2 is greater than
either the Dollar or percentage limitations set forth in Sections 2.1 or 2.2,
(an "Overadvance"), Borrower shall pay to Agent, in cash, the amount of such
excess, without premium or penalty, which amount shall be used by Agent to
reduce the Obligations in accordance with the priority set forth in Section
2.4(b). If such Overadvance is caused by Agent's exercise of its
35
discretionary right to (a) make payments on behalf of Borrower and to charge
such payments to Borrower's Loan Account, or (b) to adjust the Borrowing Base or
Dilution Reserve, then, in either case, Agent shall give Borrower notice of such
Overadvance and Borrower shall make such payment to Agent within 5 Business Days
after Borrower's receipt of such notice; otherwise such payment by Borrower to
Agent shall be made immediately upon the occurrence of the Overadvance. In
connection with any such required notice, Agent shall endeavor to provide
Borrower with reasonable detail concerning any adjustments to the Borrowing Base
or Dilution Reserve that created or contributed to such Overadvance.
2.6 Interest: Rates, Payments, and Calculations.
(a) Interest Rate. Except as provided in clause (c) below, all
Obligations shall bear interest at a per annum rate of 1 percentage point above
the Base Rate.
(b) [intentionally omitted]
(c) Default Rate. Upon the occurrence and during the continuation of
an Event of Default, all Obligations shall bear interest at a per annum rate
equal to 3 percentage points above the per annum rate otherwise applicable
thereto as set forth in Section 2.6(a).
(d) [intentionally omitted]
(e) Payments. Interest payable hereunder shall be due and payable,
in arrears, on the first day of each month during the term hereof. Borrower
hereby authorizes Agent, at its option, without prior notice to Borrower, to
charge such interest, all Lender Group Expenses (as and when incurred), the fees
and charges provided for in Section 2.11 (as and when accrued or incurred), and
all installments or other payments due under any Loan Document to Borrower's
Loan Account, which amounts thereafter shall accrue interest at the rate then
applicable to Advances hereunder. Any interest not paid when due shall be
compounded and shall thereafter accrue interest at the rate then applicable to
Advances hereunder.
(f) Computation. 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. 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.
(g) 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
36
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.
(a) Borrower shall at all times maintain the lockboxes or similar
arrangement (the "Lockboxes") currently in place between Borrower and FNB. The
parties hereto agree that from and after the Closing Date, any and all
agreements between Borrower and FNB with respect to the Lockboxes (collectively,
the "Lockbox Agreements") shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect that FNB is a party to the Lockbox
Agreements in FNB's capacity as Agent. Borrower, Agent, and FNB shall open and
maintain the Lockbox Account for the deposit of Collections.
(b) Borrower shall, immediately after the Closing Date, (a) instruct
all Account Debtors of Borrower to remit all Collections in respect thereof to
such Lockboxes, and (b) deposit all Collections in respect of Accounts received
by Borrower immediately upon receipt in to the Lockbox Accounts. Borrower agrees
that all Collections and other amounts received by Borrower from any Account
Debtor immediately upon receipt shall be deposited into the Lockbox Account.
(c) All amounts received in the Lockbox Account shall be wired each
Business Day into the Designated Account; provided, however, that upon the
occurrence and during the continuance of an Event of Default, all amounts
received in the Lockbox Account shall be wired each Business Day into an account
(the "Agent Account") maintained by Agent at a depositary selected by Agent.
2.8 Crediting Payments; Application of Collections.
The receipt of any Collections by Agent (whether from transfers to
Agent by the Lockbox Banks pursuant to the Lockbox Agreements or otherwise)
shall not be considered a payment on account unless such Collection item is a
wire transfer of immediately available federal funds and is made to the Agent
Account or unless and until such Collection item is honored when presented for
payment. Should any Collection item received by Agent not be honored when
presented for payment, then Borrower shall be deemed not to have made such
payment. Anything to the contrary contained herein notwithstanding, any
Collection item shall be deemed received by Agent only if it is received into
the Agent Account on a Business Day on or before 2:00 p.m. New York time. If any
Collection item is received into the Agent Account on a non-Business Day or
after 2:00 p.m. New York 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.
2.9 Designated Account.
37
Agent and the Lenders are authorized to make the Advances under this
Agreement based upon telephonic or other instructions received from anyone
reasonably believed by Agent to be an Authorized Person, or without instructions
if pursuant to Section 2.6(e). Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrower and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Borrower, any Advance
requested by Borrower and made by 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 all Advances made by
Agent or the Lenders to Borrower or for Borrower's account, including, accrued
interest, Lender Group Expenses, and any other payment Obligations of Borrower.
In accordance with Section 2.8, the Loan Account will be credited with all
payments received by Agent from Borrower or for Borrower's account, including
all amounts received in the Agent Account from any Lockbox Bank. Agent shall
render statements regarding the Loan Account to Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing, and such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrower and the Lender Group unless, within 60 days after
receipt thereof by Borrower, Borrower shall deliver to Agent written objection
thereto describing the error or errors contained in any such statements.
2.11 Fees.
Borrower shall pay to the following fees, which fees shall be
non-refundable when paid:
(a) Unused Line Fees. Payable in arrears and fully earned on the
first day of each month during the term of this Agreement, (i) for the ratable
benefit of the Tranche A Lenders, an unused line fee in an amount equal to 0.5%
per annum times the Average Unused Portion of the Maximum Tranche A Amount, and
(ii) for the ratable benefit of the Tranche B Lenders, an unused line fee in an
amount equal to 0.5% per annum times the Average Unused Portion of the Maximum
Tranche B Amount.
(b) Financial Examination, Documentation, and Valuation Fees.
For the sole and separate accounts of Agent or S&A Agent, as
applicable, (i) a fee of $650 per day per examiner, plus out-of-pocket expenses
for each financial analysis and examination (i.e., audits) of Borrower performed
pursuant to Section 4.6 by the respective personnel employed by Agent, or S&A
Agent, as applicable, and (ii) the actual charges paid or incurred by Agent or
S&A Agent, as applicable, if it elects to employ the services of one or more
third Persons to perform such financial analyses and examinations (i.e., audits)
of Borrower; and (iii) the actual charges paid or incurred by Agent or S&A Agent
to employ the services of one or more third Persons to perform an enterprise
valuation of Borrower
38
pursuant to Section 4.6.
(c) Fee Letter. As and when provided thereunder, the fees payable
under the terms of the Fee Letter.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Advance.
The obligation of the Lender Group (or any member thereof) to make
the initial Advance is subject to the fulfillment, to the satisfaction of Agent,
each Lender, and their respective counsel, of each of the following conditions
on or before the Closing Date:
(a) the Closing Date shall occur on or before October 15, 1998;
(b) Agent shall have received all financing statements and fixture
filings required by the Lender Group, duly executed by Borrower, and Agent shall
have searches reflecting the filing of its financing statements with the
Secretary of the Commonwealth of Massachusetts and the City Clerk of Quincy,
Massachusetts;
(c) Agent shall have received each of the following documents, duly
executed, and each such document shall be in full force and effect:
(i) the Disbursement Letter;
(ii) the Pay-Off Letter;
(iii) the Suretyship Agreement;
(iv) the Fee Letter;
(v) the Agents' Side Letter;
(vi) the Intercompany Subordination Agreement;
(vii) the Stock Pledge Agreement;
(viii) Termination statements relative to all financing
statements filed by Sprint Communications;
(ix) WorldCom Subordination Agreement (or termination
statements relative to all financing statements filed by WorldCom
Network Services, Inc. dba WilTel, Inc.);
(x) the Hale Subordination Agreement;
(xi) the Customer List Escrow Agreement; and
39
(d) Agent shall have received a certificate from the Secretary of
each Borrower attesting to the resolutions of such Borrower's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which such Borrower is a party and authorizing specific
officers of such Borrower to execute the same;
(e) Agent shall have received copies of each Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with respect
to each Borrower, dated as of a date within a reasonable proximity to the
Closing Date, such certificate to be issued by the appropriate officer of the
jurisdiction of organization of such Borrower, which certificate shall indicate
that such Borrower is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status with respect to
each Borrower, each dated as of a date within a reasonable proximity to the
Closing Date, such certificates to be issued by the appropriate officer of the
jurisdictions in which its failure to be duly qualified or licensed would
constitute a Material Adverse Change, which certificates shall indicate that
such Borrower is in good standing in such jurisdictions;
(h) Agent shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.10, the form and
substance of which shall be satisfactory to Agent, each Lender, and their
respective counsel;
(i) Agent shall have received the Closing Date Business Plan
certified by an officer of Borrower as being such officer's good faith best
estimate of the financial performance of Borrower during the period covered
thereby;
(j) Agent shall have received a Collateral Access Agreement relative
to Borrower's location in Quincy, Massachusetts;
(k) Agent shall have received opinions of Borrower's counsel in form
and substance satisfactory to Agent and each Lender in their sole discretion;
(l) Agent and Agent's counsel shall have been provided with a copy
of each Carrier Agreement in respect of a Material Carrier, the Bell Atlantic
Interconnection Agreement, and each agreement in respect of any Indefeasible
Right to Use granted to Borrower, certified by an officer of Borrower as true,
correct, and complete, and Agent shall have had a reasonable opportunity to
review each such Carrier Agreement;
(m) Agent shall have received a certificate from an officer of each
Borrower certifying that all tax returns required to be filed such Borrower have
been timely filed and all taxes upon such Borrower or its properties, assets,
income, and franchises (including real property taxes and payroll taxes) have
been paid prior to delinquency, except
40
such taxes that are the subject of a Permitted Protest;
(n) Agent shall have received a certificate from an officer of each
Borrower certifying that to the best of such Borrower's knowledge there are no
outstanding complaints against any Borrower made to any public utilities
commission in any jurisdiction in which any Borrower operates, except such
complaints that have been fully disclosed to the Lenders and are satisfactory to
Agent and the Lenders;
(o) Agent shall have received a letter from Chase Equipment Leasing,
Inc. ("Chase"), in form and substance satisfactory to each Lender, acknowledging
that Chase's liens in the Equipment leased by Borrower from Chase does not
extend to the Accounts generated by such Equipment;
(p) Agent shall have received payment of all accrued and unpaid
Lender Group Expenses;
(q) Agent shall have received a certificate from an officer of each
Borrower certifying that there has been no Material Adverse Change in the
financial condition of such Borrower or the Collateral since July 31, 1998; and
(r) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent, each
Lender, and their respective counsel.
3.2 Conditions Precedent to all Advances.
The following shall be conditions precedent to all Advances
hereunder:
(a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all respects on and as
of the date of such extension of credit, as though made on and as of such date
(except to the extent that such representations and warranties relate solely to
an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof; and
(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, S&A Agent, any Lender, or any of their Affiliates.
3.3 Condition Subsequent.
As a condition subsequent to initial closing hereunder, Borrower
shall perform or cause to be performed the following (the failure by Borrower to
so perform or cause to be
41
performed constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to Agent the
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by Section 6.10, the form and substance of which shall
be reasonably satisfactory to Agent, each Lender, and their respective counsel.
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 date that is 18 months from the
Closing Date (the "Maturity Date"), unless sooner terminated pursuant to the
terms hereof. The foregoing notwithstanding, the Lender Group, in accordance
with Section 9, shall have the right to terminate its obligations to make
Advances 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
immediately shall become due and payable without notice or demand. No
termination of this Agreement, however, shall relieve or discharge Borrower of
Borrower's 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 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 have
been fully and finally discharged and the Lender Group's obligations to provide
additional credit hereunder have been terminated, Agent shall execute and
deliver any Uniform Commercial Code termination statements, lien releases,
mortgage releases, reassignments of trademarks, discharges of security
interests, and other similar discharge or release documents (and if applicable,
in recordable form) as are reasonably necessary to release, as of record, the
security interests, financing statements, and all other notices of security
interests and liens previously filed by Agent with respect to the Obligations.
3.6 Early Termination by Borrower.
Borrower has the option, at any time upon 45 days prior written
notice to Agent, to terminate this Agreement by paying to Agent for the ratable
benefit of the Lender Group, in cash, the Obligations, without penalty or
premium (other than as provided in the Fee Letter). In the event any such notice
is timely received by Agent, and Borrower thereafter fails to timely pay to
Agent the amount set forth in the immediately preceding sentence, such notice
shall be deemed to never have been given.
3.7 [Intentionally Omitted].
42
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest.
(a) Each Borrower hereby grants to Agent, for the benefit of the
Lender Group, a continuing security interest in all right, title, and interest
of such Borrower in and to all currently existing and hereafter acquired or
arising Collateral in order to secure prompt repayment of any and all Tranche A
Obligations and in order to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents ("Agent's Tranche A Liens"). The
Agent's Tranche A Liens in and to the Collateral shall attach to all Collateral
without further act on the part of the Lender Group or Borrower.
(b) Each Borrower hereby grants to Agent, for the benefit of the
Lender Group, a continuing security interest in all right, title, and interest
of such Borrower in and to all currently existing and hereafter acquired or
arising Collateral in order to secure prompt repayment of any and all Tranche B
Obligations and in order to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents ("Agent's Tranche B Liens"). The
Agent's Tranche B Liens in and to the Collateral shall attach to all Collateral
without further act on the part of the Lender Group or Borrower.
(c) Anything contained in this Agreement or any other Loan Document
to the contrary notwithstanding, except for Permitted Dispositions, Borrower has
no authority, express or implied, to dispose of any item or portion of the
Collateral.
43
4.2 Negotiable Collateral.
In the event that any Collateral, including proceeds, is evidenced
by or consists of Negotiable Collateral, Borrower, immediately upon the request
of Agent, shall endorse and deliver physical possession of such Negotiable
Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral.
At any time after an Event of Default has occurred and is
continuing, Agent or Agent's designee may (a) notify customers or Account
Debtors of Borrower that the Accounts, General Intangibles, or Negotiable
Collateral have been assigned to Agent for the benefit of the Lender Group or
that Agent for the benefit of the Lender Group or that Agent for the benefit of
the Lender Group has a security interest therein, and (b) collect the Accounts,
General Intangibles, and Negotiable Collateral directly and charge the
collection costs and expenses to the Loan Account. Borrower agrees that it will
hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent in their original form as received by Borrower.
4.4 Delivery of Additional Documentation Required.
At any time upon the request of Agent, Borrower shall execute and
deliver to Agent, all financing statements, continuation financing statements,
fixture filings, security agreements, pledges, assignments, endorsements of
certificates of title, applications for title, affidavits, reports, notices,
schedules of accounts, letters of authority, and all other documents that Agent
reasonably may request, in form satisfactory to Agent, to perfect and continue
perfected Agent's Liens on the Collateral (whether now owned or hereafter
arising or acquired), and in order to fully consummate all of the transactions
contemplated hereby and under the other the Loan Documents.
4.5 Power of Attorney.
Borrower hereby irrevocably makes, constitutes, and appoints Agent
(and any of Agent's officers, employees, or agents designated by Agent) as
Borrower's true and lawful attorney, with power to (a) if Borrower refuses to,
or fails timely to execute and deliver any of the documents described in Section
4.4, sign the name of Borrower on any of the documents described in Section 4.4,
(b) at any time that an Event of Default has occurred and is continuing , sign
Borrower's name on any invoice relating to any Account, drafts against Account
Debtors, schedules and assignments of Accounts, verifications of Accounts, and
notices to Account Debtors, (c) send requests for verification of Accounts, (d)
at any time that an Event of Default has occurred and is continuing, endorse
Borrower's name on any Collection item that may come into the Lender Group's
possession, (e) at any time that an Event of Default has occurred and is
continuing, notify the post office authorities to change the address for
delivery of Borrower's mail to an address designated by Agent, to receive and
open all mail addressed to Borrower, and to retain all mail relating to the
Collateral and forward all other mail to Borrower, (f) at any time that an Event
of Default has occurred and is continuing, make, settle, and adjust all claims
under Borrower's policies of insurance and
44
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 reasonably determines to be necessary. The appointment
of Agent as Borrower's attorney, and each and every one of its rights and
powers, being coupled with an interest, is irrevocable until all of the
Obligations have been fully and finally repaid and performed and the Lender
Group's obligations to extend credit hereunder are terminated. With respect to
sending requests for verification of Accounts, Agent shall make reasonable
efforts to respect Borrower's relationship with the Account Debtors.
4.6 Right to Inspect.
(a) Agent and S&A Agent (through any of their respective officers,
employees, or agents) shall have the right, from time to time hereafter and
during normal business hours, (i) to inspect Borrower's Books in order to verify
Borrower's financial condition or any other matter relating to Borrower (an
"Audit"), or (ii) to perform an enterprise valuation of Borrower (a
"Valuation").
(b) So long as no Event of Default has occurred and is continuing,
the party performing such Audit or Valuation shall give reasonable prior notice
to Borrower, and no such Audit or Valuation, in each case, shall be conducted
more often than quarterly. Upon the occurrence and during the continuation of an
Event of Default, prior notice shall not be required prior to the performance of
any such Audit or Valuation, and such Audits or Valuations may be performed more
often than quarterly.
(c) All information developed pursuant to any Audit or Valuation
shall be subject to the confidentiality provisions contained in Section
17.16(d).
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, Borrower makes
the following representations and warranties to the Lender Group which shall be
true, correct, and complete in all respects as of the date hereof, and shall be
true, correct, and complete in all respects as of the Closing Date, and at and
as of the date of the making of each Advance made thereafter, as though made on
and as of the date of such Advance (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 No Encumbrances.
Borrower has good and indefeasible title to the Collateral, free and
clear of Liens except for Permitted Liens.
5.2 Eligible Accounts.
45
The Eligible Accounts are bona fide existing obligations created by
the sale of goods, the sale General Intangibles, or the rendition of services to
Account Debtors in the ordinary course of Borrower's business. Except as set
forth on the applicable Borrowing Base Certificate, (a) the Eligible Accounts
are unconditionally owed to Borrower without defenses, disputes, offsets,
counterclaims, or rights of return or cancellation, (b) (i) the property giving
rise to such Eligible Accounts has been delivered to the Account Debtor, or to
the Account Debtor's agent for immediate shipment to and unconditional
acceptance by the Account Debtor, or (ii) the service giving rise to such
Eligible Accounts has been performed by Borrower for the Account Debtor, and (c)
Borrower has not received notice of actual or imminent bankruptcy, insolvency,
or material impairment of the financial condition of any Account Debtor
regarding any Eligible Account.
5.3 Compliance with Laws, etc.
(a) Each Borrower is in compliance in all material respects with all
applicable laws and regulations, for which such Borrower's non-compliance would
be a Material Adverse Change, including the Communications Act, FCC Rules, and
those relating to telecommunications, copyright, pollution and environmental
control, equal employment opportunity and employee safety, in all jurisdictions
in which any Borrower is currently doing business.
(b) All material Permits are in full force and effect and there are
no pending or 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 Borrower's business
and is fit for such purposes.
5.5 Location of Inventory and Equipment.
The Inventory and Equipment are not stored with a bailee,
warehouseman, or similar party (without Agent's prior written consent) and are
located only at the locations identified on Schedule 6.12 or otherwise permitted
by Section 6.12.
5.6 [Intentionally omitted].
5.7 Location of Chief Executive Office; FEIN.
The chief executive office of Borrower is located at the address
indicated in the preamble to this Agreement and Holding's FEIN is 04-3430576.
5.8 Due Organization and Qualification; Subsidiaries.
(a) Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its incorporation and qualified and
licensed to do business in, and in good standing in, any state where the failure
to be so licensed or qualified reasonably
46
could be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8, is a complete and accurate
description of the authorized capital Stock of Borrower, by class, and, as of
the Closing Date, a description of the number of shares of each such class that
are issued and outstanding and the number of such shares that are held in
Borrower's treasury. All such outstanding shares have been validly issued and,
as of the Closing Date, are fully paid, nonassessable shares free of contractual
preemptive rights. The issuance and sale of all such shares have been in
compliance with all applicable federal and state securities laws. Other than as
described on Schedule 5.8, as of the Closing Date, there are no subscriptions,
options, warrants, or calls relating to any shares of Borrower's capital Stock,
including any right of conversion or exchange under any outstanding security or
other instrument. Borrower is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital Stock or any security convertible into or exchangeable for any of its
capital Stock.
(c) Set forth on Schedule 5.8, is a complete and accurate list of
Borrower's direct and indirect Subsidiaries as of the Closing Date, showing: (i)
the jurisdiction of their incorporation; (ii) the number of shares of each class
of common and preferred Stock authorized for each of such Subsidiaries; and
(iii) the number and the percentage of the outstanding shares of each such class
owned directly or indirectly by Borrower. All of the outstanding capital Stock
of each such Subsidiary has been validly issued and is fully paid and
non-assessable.
(d) Except as set forth on Schedule 5.8, as of the Closing Date, 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 Borrower 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.
5.9 Due Authorization; No Conflict.
(a) The execution, delivery, and performance by Borrower of this
Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary corporate action.
(b) The execution, delivery, and performance by Borrower of this
Agreement and the Loan Documents to which it is a party do not and will not (i)
violate any provision of federal, state, or local law or regulation (including
Regulations T, U, and X of the Federal Reserve Board) applicable to Borrower,
the Governing Documents of Borrower, or any order, judgment, or decree of any
court or other Governmental Authority binding on Borrower, (ii) 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 or material lease of
Borrower, (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of Borrower, other than
Permitted Liens, or (iv) require any approval of stockholders or any approval or
consent of any Person under any material contractual obligation of Borrower.
(c) Other than the filing of appropriate financing statements or
fixture filings, as applicable, the execution, delivery, and performance by
Borrower of this
47
Agreement and the Loan Documents to which Borrower is a party do not and will
not require any registration with, consent, or approval of, or notice to, or
other action with or by, any federal, state, foreign, or other Governmental
Authority or other Person.
(d) This Agreement and the other Loan Documents to which Borrower is
a party, and all other documents contemplated hereby and thereby, when executed
and delivered by Borrower will be the legally valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors' rights generally.
(e) The Agent's Liens granted by Borrower to Agent, for the benefit
of the Lender Group, in and to its properties and 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.
There are no actions or proceedings pending by or against Borrower
before any court or administrative agency and Borrower does not have knowledge
or belief of any pending, threatened, or imminent litigation, governmental
investigations, or claims, complaints, actions, or prosecutions involving
Borrower or any guarantor of the Obligations, except for: (a) ongoing collection
matters in which Borrower is the plaintiff; (b) matters disclosed on Schedule
5.10; and (c) matters that, if decided adversely to Borrower, reasonably could
not be expected to result in a Material Adverse Change.
5.11 No Material Adverse Change.
All financial statements relating to Borrower or any guarantor of
the Obligations that have been delivered by Borrower to the Lender Group have
been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and fairly present Borrower's (or such guarantor's, as
applicable) financial condition as of the date thereof and Borrower's results of
operations for the period then ended. There has not been a Material Adverse
Change with respect to Borrower (or such guarantor, as applicable) since the
date of the latest financial statements submitted to the Lender Group on or
before the Closing Date.
5.12 Fraudulent Transfer.
(a) Borrower is Solvent.
(b) No transfer of property is being made by Borrower and no
obligation is being incurred by Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrower.
5.13 Employee Benefits.
None of Borrower, any of its Subsidiaries, or any of their ERISA
Affiliates maintains or contributes to any Benefit Plan.
5.14 Environmental Condition.
Except as set forth on Schedule 5.14, none of Borrower's properties
or assets has ever been used by Borrower or, to the best of Borrower's
knowledge, by previous owners or operators in the disposal of, or to produce,
store, handle, treat, release, or transport, any Hazardous Materials. None of
Borrower's properties or assets has ever been designated or
48
identified in any manner pursuant to any environmental protection statute as a
Hazardous Materials disposal site, or a candidate for closure pursuant to any
environmental protection statute. No Lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned or operated by Borrower. Borrower has not received a summons,
citation, notice, or directive from the Environmental Protection Agency or any
other federal or state governmental agency concerning any action or omission by
Borrower resulting in the releasing or disposing of Hazardous Materials into the
environment.
5.15 Brokerage Fees.
No brokerage commission or finders fees has or shall be incurred or
payable in connection with or as a result of Borrower's obtaining financing from
the Lender Group under this Agreement, and Borrower has not utilized the
services of any broker or finder in connection with Borrower's obtaining
financing from the Lender Group under this Agreement.
5.16 Year 2000 Compliance.
(a) On the basis of a review and assessment currently being
undertaken by Borrower of Borrower's computer applications utilized by Borrower
or contained in products produced or sold by Borrower, and upon inquiry made of
Borrower's material suppliers and vendors, Borrower's management is of the
considered view that Borrower and its products will be Year 2000 Compliant
before October 1, 1999, and to the best of Borrower's management's knowledge,
that all such suppliers and vendors will be Year 2000 Compliant before October
1, 1999.
(b) Borrower (i) is currently undertaking a review and assessment of
all areas within its business and operations that could be adversely affected by
the failure of Borrower or its products to be Year 2000 Compliant on a timely
basis, (ii) is developing a detailed plan and timeline for becoming Year 2000
Compliant on a timely basis, and (iii) to date, is implementing that plan in
accordance with that timetable in all material respects. Borrower reasonably
anticipates that it will be Year 2000 Compliant on a timely basis.
49
5.17 Intellectual Property.
Borrower and each of its Subsidiaries own, or hold licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and licenses which
are necessary in all material respects to conduct their respective businesses
and to operate their 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 Borrower or any of its Subsidiaries.
5.18 Leases.
Borrower and each of its Subsidiaries enjoy peaceful and undisturbed
possession under all leases material to the business, operations, and financial
condition of Borrower and its Subsidiaries, taken as a whole, to which any of
them is a party or under which any of them is operating. All of such leases are
valid and subsisting (in all material respects) and no material default by
Borrower or any of its Subsidiaries exists under any of them.
5.19 Material Carriers.
Schedule 5.19 contains the names of all Material Carriers. Each
Carrier Agreement in respect of a Material Carrier is in full force and effect
and Borrower is not in default thereunder.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations, and unless the
Lender Group shall otherwise consent in writing, Borrower shall do all of the
following:
6.1 Accounting System.
Maintain a standard and modern 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 may be requested by Agent.
6.2 Collateral Reporting.
(a) Provide Agent with the following documents at the following
times in form satisfactory to Agent: (i) on a monthly basis, as soon as
practicable but in any event by no later than the 30th day of each month during
the term of this agreement, (A) a Borrowing Base Certificate dated as of the
last day of the immediately preceding month (a "Month End Borrowing Base
Certificate"), (B) a report reconciling the balance owing to each Material
Carrier according to Borrower's records with the amount claimed by such Material
Carrier as being owed by Borrower together with a certificate from an officer of
Borrower stating that there are no material disputes with any material carriers
except as are set forth in such certificate, and (C) a calculation of the
Dilution for the prior month; (ii) on a weekly basis, by no later than the 2nd
Business Day following the last day of each week (for which purpose, weeks shall
be deemed to end at the close of business on each Friday) a report detailing
Borrower's available cash, Collections for the then current month, and planned
disbursements for the week following the date of such report; (iii) on a
quarterly basis, a detailed list of Borrower's customers delivered to Customer
List Escrow Agent pursuant to the Customer List Escrow Agreement; and (iv) such
other reports as to the Collateral or the financial condition of Borrower as
Agent may reasonably request from time to time.
(b) If at any time, Availability, as determined based on a Month End
50
Borrowing Base Certificate, is less than $7,500,000, then until such time as
Availability, as determined based on a subsequent Month End Borrowing Base
Certificate exceeds $7,500,000, Borrower shall deliver any and all reports,
certificates, and other information required to be delivered pursuant to Section
6.2(a) on a weekly basis, or as frequently as Agent may otherwise reasonably
request.
6.3 Financial Statements, Reports, Certificates.
Deliver to Agent, with copies to each Lender (a) as soon as
available, but in any event within 45 days after the end of each month during
each of Borrower's fiscal years, a company prepared balance sheet and income
statement, in each case, on a consolidated basis, covering Borrower's operations
during such period; (b) as soon as available, but in any event within 45 days
after the end of each quarter during Borrower's fiscal years, a company prepared
balance sheet, income statement, and statement of cash flows, in each case on a
consolidated basis, covering Borrower's operations during such period; and (c)
as soon as available, but in any event within 90 days after the end of each of
Borrower's fiscal years, financial statements of Borrower on a consolidated
basis 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, together with 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. Such audited financial statements shall include a balance
sheet, profit and loss statement, and statement of cash flow and, if prepared,
such accountants' letter to management.
Together with the above, Borrower also shall deliver to Agent, with
copies to each Lender, Borrower's Form 10-Q Quarterly Reports, Form 10-K Annual
Reports, and Form 8-K Current Reports, and any other filings made by Borrower
with the Securities and Exchange Commission, if any, as soon as the same are
filed, or any other information that is provided by Borrower to its
shareholders, and any other report reasonably requested by the Lender Group
relating to the financial condition of Borrower.
Each month, together with the financial statements provided pursuant
to Section 6.3(a), Borrower shall deliver to Agent, with copies to each Lender a
certificate signed by its chief financial officer to the effect that: (i) with
respect to financial statements, all financial statements delivered or caused to
be delivered to any one or more members of the Lender Group hereunder have been
prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit
adjustments, and in the case of monthly statements for months other than the
last month of a fiscal quarter of Borrower, quarter-end adjustments, and
provided, further, that, with respect to such monthly statements, such
certificate may be qualified by the representation that such financial
statements may not be fully in compliance with GAAP but are in the same form as
is provided internally by Borrower to the senior management of Borrower) and
fairly present the financial condition of Borrower, (ii) 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), (iii)
Borrower is not in default with respect to any of its obligations to any
Material Carrier under any Carrier Agreement, or, if Borrower is in such
default, specifying the details
51
of each such default, (iv) for each month that also is the date on which a
financial covenant in Section 7.20 or 7.21 is to be tested, a Compliance
Certificate demonstrating in reasonable detail compliance at the end of such
period with the applicable financial covenants contained in Section 7.20 or
7.21, and (v) on the date of delivery of such certificate to Agent there does
not exist any condition or event that constitutes a Default or Event of Default
(or, in the case of clauses (i), (ii), (iii), or (iv), 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).
Borrower shall issue, upon the request of Agent, written
instructions to its independent certified public accountants authorizing them to
communicate with Agent and to release to Agent such financial information
concerning Borrower that Agent reasonably may request. Borrower hereby
irrevocably authorizes all auditors, accountants, or other third parties to
deliver to Agent, upon Agent's request, at Borrower's expense, copies of
Borrower's financial statements, papers related thereto.
6.4 Billing System Conversion.
Prior to the Billing System Conversion, Borrower shall employ a
qualified Person, reasonably acceptable to the Lender Group (the "Qualified
Advisor"), to advise Borrower with respect to the Billing System Conversion.
Borrower shall deliver to Agent and S&A Agent a written implementation plan for
the Billing System Conversion (the "Implementation Plan") reviewed by the
Qualified Advisor (or developed by the Qualified Advisor for the purposes of
implementing an industry recognized integration package provided by the
Qualified Advisor). The Qualified Advisor shall communicate with Agent and S&A
Agent regarding the Implementation Plan, and prepare a written assessment of the
Implementation Plan, such assessment to include any and all material
deficiencies identified by the Qualified Advisor in the Implementation Plan.
Prior to the implementation of the Billing System Conversion, Borrower shall
resolve any such material deficiencies identified by the Qualified Advisor.
6.5 [intentionally omitted].
6.6 [intentionally omitted].
6.7 Title to Equipment.
Upon Agent's request, Borrower immediately shall deliver to Agent,
properly endorsed, any and all evidences of ownership of, certificates of title,
or applications for title (as applicable) to any items of Equipment.
6.8 Maintenance of Equipment.
Maintain the Equipment in good operating condition and repair
(ordinary wear and tear excepted), and make all necessary replacements thereto
so that the value and operating efficiency thereof shall at all times be
maintained and preserved. Other than those items of Equipment that constitute
fixtures on the Closing Date or are financed pursuant to Permitted Indebtedness,
Borrower shall not permit any item of Equipment to become a fixture to real
estate or an accession to other property, and such Equipment shall at all times
remain personal property.
6.9 Taxes.
Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower
or any of its property to be paid
52
in full, before delinquency or before the expiration of any extension period,
except to the extent that the validity of such assessment or tax shall be the
subject of a Permitted Protest. Borrower shall make due and timely payment or
deposit of all such federal, state, and local taxes, assessments, or
contributions required of it by law, and will execute and deliver to Agent, on
demand, appropriate certificates attesting to the payment thereof or deposit
with respect thereto. Borrower will make timely payment or deposit of all tax
payments and withholding taxes required of it by applicable laws, including
those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state,
and federal income taxes, and will, upon request, furnish Agent with proof
satisfactory to Agent indicating that Borrower has made such payments or
deposits.
6.10 Insurance.
Borrower agrees to maintain, and to cause each of its Subsidiaries
to maintain, public liability insurance, third party property damage insurance,
and replacement value insurance on the Collateral under such policies of
insurance, with such insurance companies, in such amounts, and covering such
risks, as are at all times satisfactory to Agent in its reasonable judgment
(from the perspective of a secured lender). All policies covering the Collateral
shall name Agent (on behalf of the Lender Group) as an additional insured and
sole loss payee in case of Casualty Loss, and are to contain such other
provisions as Agent reasonably may require to fully protect the Lender Group's
interest in the Collateral and to any payments to be made under such policies,
including a standard form 438BFU (NS) lenders loss payable endorsement, or an
equivalent endorsement satisfactory to Agent. Original policies or certificates
thereof satisfactory to Agent evidencing such insurance shall be delivered to
Agent at least 30 days prior to the expiration of the existing or preceding
policies. Borrower shall not take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section 6.10, unless Agent is included thereon as named insured with the loss
payable to Agent under a standard form 438BFU (NS) lenders loss payable
endorsement, or an equivalent satisfactory to Agent. Borrower immediately shall
notify Agent whenever such separate insurance is taken out, specifying the
insurer thereunder and full particulars as to the policies evidencing the same,
and originals of such policies immediately shall be provided to Agent. If
Borrower fails to provide and pay for such insurance, Agent may, at its option,
but shall not be required to, procure the same and charge Borrower therefor.
Borrower shall deliver to Lender, promptly as rendered, true copies of all
reports made in any reporting forms to insurance companies.
6.11 No Setoffs or Counterclaims.
Make payments hereunder and under the other Loan Documents by or on
behalf of Borrower without setoff or counterclaim and free and clear of, and,
subject to Section 17.10, without deduction or withholding for or on account of,
any federal, state, or local taxes.
6.12 Location of Inventory and Equipment.
(a) Keep the Inventory and Equipment only at the locations
identified on Schedule 6.12; provided, however, that Borrower may amend Schedule
6.12 so long as such amendment occurs by written notice to Agent not more than
30 days after the date on which the Inventory or 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
53
notification, Borrower provides any financing statements or fixture filings
requested by Agent which are reasonably necessary to perfect and continue
perfected the Agent's Liens on such assets and shall use its best efforts to
obtain for Agent a Collateral Access Agreement, if applicable.
6.13 Compliance with Laws.
Comply with the requirements of all applicable laws, rules,
regulations, and orders of any governmental authority, including the Fair Labor
Standards Act and the Americans With Disabilities Act, other than laws, rules,
regulations, 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.
6.14 [Intentionally Omitted.
6.15 Leases.
Pay when due all rents and other amounts payable under any leases to
which Borrower is a party or by which Borrower's properties and assets are
bound, unless such payments are the subject of a Permitted Protest. To the
extent that Borrower fails timely to make payment of such rents and other
amounts payable when due under its leases unless such payments are the subject
of a Permitted Protest, Agent shall be entitled, in its discretion, to reserve
an amount equal to such unpaid amounts against the Borrowing Base.
6.16 Brokerage Commissions.
Pay any and all brokerage commission or finders fees incurred in
connection with or as a result of Borrower's obtaining financing from the Lender
Group under this Agreement. Borrower agrees and acknowledges that payment of all
such brokerage commissions or finders fees shall be the sole responsibility of
Borrower, and Borrower agrees to indemnify, defend, and hold Agent and the
Lender Group harmless from and against any claim of any broker or finder arising
out of Borrower's obtaining financing from the Lender Group under this
Agreement.
6.17 Year 2000 Compliance.
Be Year 2000 Compliant by October 1, 1999.
6.18 Projections.
Not later than 30 days prior to 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) satisfactory to each Lender
in its discretion, for the forthcoming 3 years, year by year, and for the
forthcoming fiscal year, month by month, certified by the chief financial
officer of Borrower as being such officer's good faith best estimate of the
financial performance of Borrower during the period covered thereby.
6.19 Corporate Existence, etc.
At all time preserve and keep in full force and effect Borrower's
valid corporate existence and good standing and any rights and franchises
material to Borrower's businesses.
6.20 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
54
therein or in any Loan Document or in the execution, acknowledgement, filing, or
recordation thereof.
6.21 Carrier Agreements.
From time to time at the request of Agent, deliver to Agent copies
of all Carrier Agreements in effect between Borrower and a Carrier, certified by
a Secretary to be true, correct, and complete.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations, Borrower will not
do (and will not permit any of its Subsidiaries to do) any of the following
without the Lender Group's prior written consent:
7.1 Indebtedness.
Create, incur, assume, permit, guarantee, or otherwise become or
remain, directly or indirectly, liable with respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement;
(b) NPI may be liable for Indebtedness set forth on Schedule 7.1;
(c) NPI may be liable for Indebtedness evidenced by Permitted
Interest Rate or Currency Protection Agreements;
(d) Purchase Money Indebtedness of NPI incurred after the Closing
Date not to exceed $100,000,000 in the aggregate during any fiscal year;
(e) Permitted Subordinated Debt of Holdings;
(f) Indebtedness of NPI to Holdings, or Holdings to NPI, provided
that such Indebtedness shall be the subject of the Intercompany Subordination
Agreement;
(g) Indebtedness of Holdings to Robert T. Hale, Jr. in a principal
amount outstanding, as of the Closing Date, not to exceed $2,000,000, provided
that such Indebtedness shall be the subject of the Hale Subordination Agreement;
(h) Indebtedness for letters of credit in an aggregate amount not to
exceed $3,000,000 at any one time;
(i) Unsecured Indebtedness, not otherwise permitted under this
section, in an aggregate amount outstanding at any one time not to exceed
$2,000,000; and
(j) refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b) through (i) 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.
55
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(j) and so long as the replacement Liens only encumber those assets or
property that secured the original Indebtedness).
7.3 Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation, or recapitalization, or
reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Convey, sell, assign, lease, transfer, or otherwise dispose of,
in one transaction or a series of transactions, all or substantially all of its
property or assets.
7.4 Disposal of Assets.
Sell, lease, assign, transfer, or otherwise dispose (including
pursuant to a Sale and Leaseback Transaction) of any of Borrower's properties or
assets, other than (a) Permitted Dispositions, (b) distributions and dividends
permitted under Section 7.11, (c) Permitted Investments, and (d) so long as no
Event of Default has occurred and is continuing or would result therefrom,
Permitted Sale and Leaseback Transactions.
56
7.5 Change Name.
Change Borrower's name, FEIN, corporate structure (within the
meaning of Section 9-402(7) of the Code), or identity, or add any new fictitious
name, in each case, unless Borrower shall have given Agent written notice of
such change not less than 30 days prior to the date on which change shall be
effective, and at the time of such written notification, Borrower provides any
financing statements or fixture filings requested by Agent which are reasonably
necessary to perfect and continue perfected Agent's Liens.
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 Lockbox Account of Borrower or which are transmitted
or turned over to Agent.
7.7 Nature of Business.
Make any material change in the principal nature of Borrower's
business.
7.8 Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by Section
7.1(j), 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 clauses (b) through (i) of Section 7.1.
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 of Borrower's Stock, of any class, whether now or hereafter outstanding
except (a) distributions or dividends by NPI to Holdings, and (b) so long as no
Event of Default has occurred and is continuing or would result therefrom,
Holdings may repurchase Stock of Holdings owned by employees or former employees
of Borrower who have become permanently disabled, died, or otherwise have
terminated their employment with Borrower, in an aggregate amount not to exceed
$1,000,000 in any 12 month period.
7.12 Accounting Methods.
Modify or change its method of accounting or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrower's accounting records without said accounting firm or
service bureau agreeing to provide Agent information regarding the Collateral or
Borrower's financial condition.
7.13 Investments.
Except for Permitted Investments, directly or indirectly make,
acquire, or incur any liabilities (including contingent obligations) for or in
connection with (a) the acquisition of the securities (whether debt or equity)
of, or other interests in, a Person, (b) loans,
57
advances, capital contributions, or transfers of property to a Person, or (c)
the acquisition of all or substantially all of the properties or assets of a
Person.
7.14 Transactions with Affiliates.
Except as fully disclosed on Schedule 7.14, directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of
Borrower except for transactions that are in the ordinary course of Borrower's
business, upon fair and reasonable terms and that are no less favorable to
Borrower than would be obtained in an arm's length transaction with a
non-Affiliate.
7.15 Suspension.
Suspend or go out of a substantial portion of its business.
7.16 Compensation.
Increase the annual fee or per-meeting fees paid to directors during
any year by more than 15% over the prior year; or pay or accrue total cash
compensation, during any year, to the Hales or any of their Family Members in an
aggregate amount in excess of 150% of that paid or accrued in the prior year;
provided, however, so long as no Event of Default has occurred and is
continuing, Borrower may pay additional amounts to Mr. Robert T. Hale, Jr. in an
amount sufficient to enable him to pay all income taxes attributable to interest
accrued, but not paid in cash, on the Indebtedness referred to in Section
7.1(g).
7.17 Use of Proceeds.
Use the proceeds of the Advances made hereunder for any purpose
other than (i) on the Closing Date, (y) to repay in full the outstanding
principal, accrued interest, and accrued fees and expenses owing to Existing
Lender, and (z) to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, and (ii) 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, Borrower provides any financing
statements or fixture filings requested by Agent that are reasonably necessary
to perfect and continue perfected the Agent's Liens and also shall use its best
efforts to obtain a Collateral Access Agreement with respect to such new
location. The Inventory and Equipment shall not at any time now or hereafter be
stored with a bailee, warehouseman, or similar party without Agent's prior
written consent.
7.19 [Intentionally Omitted].
7.20 Financial Covenants.
Fail to:
(a) Profitability. Achieve EBITDA of not less than the amount shown
below for the period corresponding thereto:
==============================================================================
Period Minimum EBITDA
==============================================================================
the 6 month period on December 31, ($3,800,000)
1998
- ------------------------------------------------------------------------------
the 6 month period ending on March ($3,000,000)
31, 1999
- ------------------------------------------------------------------------------
58
==============================================================================
Period Minimum EBITDA
==============================================================================
the 6 month period ending on June ($1,000,000)
30, 1999
- ------------------------------------------------------------------------------
the 6 month period ending on $3,000,000
September 30, 1999
- ------------------------------------------------------------------------------
the 6 month period ending on $10,700,000
December 31, 1999
- ------------------------------------------------------------------------------
the 6 month period ending on March $18,000,000
31, 2000
==============================================================================
(b) Total Revenues. Achieve total revenues, determined in accordance
with GAAP, of not less than the amount shown below for the period corresponding
thereto:
==============================================================================
Period Minimum Total Revenue
==============================================================================
the 6 month period ending on $47,900,000
December 31, 1998
- ------------------------------------------------------------------------------
the 6 month period ending on March $56,100,000
31, 1999
- ------------------------------------------------------------------------------
the 6 month period ending on June $70,300,000
30, 1999
- ------------------------------------------------------------------------------
the 6 month period ending on $89,300,000
September 30, 1999
- ------------------------------------------------------------------------------
the 6 month period ending on $110,100,000
December 31, 1999
- ------------------------------------------------------------------------------
the 6 month period ending on March $126,800,000
31, 2000
==============================================================================
(c) Maximum Debt to Annualized Quarterly Revenue Ratio. Achieve a
Debt to Annualized Quarterly Revenue Ratio of 27.5% or less, measured on a
monthly basis.
(d) Monthly Churn Rate. Achieve Churn (i) as of November 1, 1998, of
2.5%, or less, (ii) as of December 1, 1998, of 2.55%, or less, (iii) as of
January 1, 1999, of 2.6, or less, (iv) as of February 1, 1999, of 2.65%, or
less, (v) as of March 1, 1999, of 2.7%, or less, (vi) as of April 1, 1999, of
2.75%, or less, (vii) as of May 1, 1999, of %, or less, (viii) as of June 1,
1999, of 2.8%, or less, (ix) as of July 1, 1999, of 2.85%, or less, (x) as of
August 1, 1999, of 2.95%, or less, and (xi) as of September 1, 1999 and as of
the first day of each month thereafter, of 3.0%, or less.
7.21 Capital Expenditures. Expend or commit capital to (a) acquire a new
switch unless Borrower has Customers representing line density sufficient to
utilize 33%, or more, of Borrower's paid for capacity of such switch, or (b)
acquire a new co-location access node unless Borrower has customers representing
225 access lines to be served by that co-location access node.
59
7.22 Contracts with Carriers.
Enter into any new contractual arrangements with Carriers, or
materially amend, modify, or extend existing contractual arrangements with
Carriers, if the effect would be (a) to prohibit (or continue to prohibit) Agent
from having a Lien on the rights of Borrower thereunder, (b) to grant a Lien to
the Carrier on the Collateral unless such Lien is the subject of a subordination
agreement, in form and substance satisfactory to each Lender, among Borrower,
such Carrier, and Agent, or (c) to authorize any Carrier to contact or directly
bill customers of Borrower with respect to services provided by such Carrier to
Borrower for resale to such customers of Borrower.
7.23 Holding Company.
Holdings shall not have any material amount of property or assets or
engage in any material business activity, in each case, other than its ownership
and control of the Stock of NPI and Permitted Investments.
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:
If Borrower 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); (a) If Borrower fails or neglects to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in Sections 6.1
(Accounting System), 6.2 (Collateral Reporting), 6.3 (Financial Statements,
Reports, Certificates), 6.12 (Location of Inventory and Equipment), 6.13
(Compliance with Laws), or 6.14 (Employee Benefits) of this Agreement and such
failure continues for a period of 10 Business Days; (b) if Borrower fails or
neglects to perform, keep, or observe any term, provision, condition, covenant,
or agreement contained in Section 6.15 (Leases) of this Agreement and such
failure continues for a period of 30 days; or (c) if Borrower fails or neglects
to perform, keep, or observe any other term, provision, condition, covenant, or
agreement contained in this Agreement, or in any of the other Loan Documents
(giving effect to any grace periods or required notices, if any, expressly
provided for in such Loan Documents), in each case, other than any such term,
provision, condition, covenant, or agreement that is the subject of another
provision of this Section 8, in which event such other provision of this Section
8 shall govern);
If there is a Material Adverse Change;
If any material portion of Borrower's properties or assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any
60
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 Borrower;
If an Insolvency Proceeding is commenced by Borrower;
If an Insolvency Proceeding is commenced against Borrower and any of
the following events occur: (a) Borrower 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 60 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, Borrower; or (e) an order for relief shall have been issued or
entered therein;
If Borrower is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs;
(a) If a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower's properties or assets by the United States
Government, or any department, agency, or instrumentality thereof, or if any
taxes or debts owing at any time hereafter to any one or more of such entities
becomes a Lien, whether choate or otherwise, upon any of Borrower's properties
or assets and the same is not paid on the payment date thereof; or
(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 Borrower's properties
or assets by any state, county, municipal, or other non-federal governmental
agency, 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,
whether choate or otherwise, upon any of Borrower's properties or assets and the
same is not paid on the payment date thereof and the same is not release,
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 when such
property or asset is subject to being forfeited by Borrower;
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 Borrower's properties
or 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 property or asset is subject to being
forfeited by Borrower;
(a) If there is a default in one or more agreements to which
Borrower is a party with one or more third Persons relative to Borrower's
Indebtedness for money borrowed involving an aggregate amount of $500,000 or
more and such default (i) occurs at the final
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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
Borrower's obligations thereunder to terminate such agreement, or to refuse to
renew such agreement pursuant to an automatic renewal right therein; or
(b) If there is a default in any other material agreement to which
Borrower is a party with one or more third Persons and such default results in a
right by such third Person(s), irrespective of whether exercised, to terminate
such agreement;
If Borrower 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
If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or report made to the
Lender Group by Borrower or any officer, employee, agent, or director of
Borrower, 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 so long as Agent does not reasonably believe such conduct to be unlawful),
all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by
any of the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit
of Borrower under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents as
to any future liability or obligation of the Lender Group, but without affecting
Agent's rights and security interests, for the benefit of the Lender Group, in
the Collateral 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
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such disputed Accounts after deducting all Lender Group Expenses incurred or
expended in connection therewith;
(e) [intentionally omitted];
(f) Without notice to or demand upon Borrower or any guarantor, make
such payments and do such acts as Agent reasonably considers necessary to
protect its security interests in the Collateral. Borrower agrees to assemble
the Collateral if Agent so requires, and to make the Collateral available to
Agent as Agent may designate. Borrower authorizes Agent to enter the premises
where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or Lien that in Agent's determination appears to conflict
with the Agent's Liens and to pay all expenses incurred in connection therewith.
With respect to any of Borrower's owned or leased premises, Borrower hereby
grants Agent a license to enter into possession of such premises and to occupy
the same, without charge, for up to 120 days in order to exercise any of the
Lender Group's rights or remedies provided herein, at law, in equity, or
otherwise;
(g) Without notice to Borrower (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 Account), or (ii)
indebtedness at any time owing to or for the credit or the account of Borrower
held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and deposits of
Borrower held by the Lender Group, and any amounts received in the Lockbox
Account, to secure the full and final repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Collateral. Borrower hereby grants to Agent a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral
and Borrower's rights under all licenses and all franchise agreements shall
inure to the Lender Group's benefit;
(j) Sell the Collateral at either a public or private sale, or both,
by way of one or more contracts or transactions, for cash or on terms, in such
manner and at such places (including Borrower's premises) as Agent determines is
commercially reasonable. It is not necessary that the Collateral be present at
any such sale;
(k) Agent shall give notice of the disposition of the Collateral as
follows:
(i) Agent shall give the applicable Borrower and each holder of
a
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security interest in the Collateral who has filed with Agent a
written request for notice, a notice in writing of the time and
place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the
Collateral, then the time on or after which the private sale or
other disposition is to be made;
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to such Borrower as provided in Section 12, at
least 15 days before the date fixed for the sale, or at least 15
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 such Borrower claiming an interest in the Collateral shall be
sent to such addresses as they have furnished to Agent;
(iii) If the sale is to be a public sale, Agent also shall give
notice of the time and place by publishing a notice one time at
least 15 days before the date of the sale in a newspaper of general
circulation in the county in which the sale is to be held;
(l) The Lender Group may credit bid and purchase at any public sale;
(m) The Lender Group shall have all other rights and remedies
available to it at law or in equity pursuant to any other Loan Documents;
(n) Any deficiency that exists after disposition of the Collateral
as provided above will be paid immediately by Borrower. Any excess will be
promptly returned, without interest and subject to the rights of third Persons,
by Agent to Borrower; and
(o) Require Borrower to deliver to Agent promptly upon demand a
complete list of all end-user customers of Borrower with respect to the
Accounts.
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 continuing waiver. No
delay by the Lender Group shall constitute a waiver, election, or acquiescence
by it.
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10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, to the extent that Agent
determines that such failure by Borrower could result in a Material Adverse
Change, in its reasonable discretion and without prior notice to Borrower, Agent
may do any or all of the following: (a) make payment of the same or any part
thereof; (b) set up such reserves in Borrower's Loan Account as Agent reasonably
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 6.10, and take any action with respect to such policies as Agent deems
prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses.
Any such payments made by Agent shall not constitute an agreement by the Lender
Group to make similar payments in the future or a waiver by the Lender Group of
any Event of Default under this Agreement. Agent need not inquire as to, or
contest the validity of, any such expense, tax, or Lien and the receipt of the
usual official notice for the payment thereof shall be conclusive evidence that
the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc.
To the extent permitted by law and not otherwise required under this
Agreement or any other Loan Document, Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of accounts, documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which Borrower may in any way be liable.
11.2 The Lender Group's Liability for Collateral.
Borrower hereby agrees that: (a) so long as the Lender Group
complies with its obligations, if any, under Section 9-207 of the Code, the
Lender Group shall not in any way or manner be liable or responsible for: (i)
the safekeeping of the Collateral; (ii) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (iii) any diminution in the
value thereof; or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person; and (b) all risk of loss, damage, or
destruction of the Collateral shall be borne by Borrower.
11.3 Indemnification.
Borrower shall pay, indemnify, defend, and hold the Agent-Related
Persons, the S&A Agent-Related Persons, the Lender-Related Persons with respect
to each Lender, each Participant, and each of their respective officers,
directors, employees, counsel, agents, and attorneys-in-fact (each, an
"Indemnified Person") harmless (to the fullest extent permitted
65
by law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, and damages, and all reasonable attorneys fees and
disbursements and other costs and expenses actually incurred in connection
therewith (as and when they are incurred and irrespective of whether suit is
brought), at any time asserted against, imposed upon, or incurred by any of them
in connection with or as a result of or related to the execution, delivery,
enforcement, performance, and administration of this Agreement and any other
Loan Documents or the transactions contemplated herein, and with respect to any
investigation, litigation, or proceeding related to this Agreement, any other
Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event or circumstance in any manner related thereto (all the
foregoing, collectively, the "Indemnified Liabilities"). Borrower shall have no
obligation to any Indemnified Person under this Section 11.3 with respect to any
Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from the gross negligence or willful misconduct of such
Indemnified Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations. If any Indemnified Person makes
any payment to any other Indemnified Person with respect an Indemnified
Liability for which Borrower was required to indemnify the Indemnified Person
receiving such payment, the Indemnified Person making such payment is entitled
to be indemnified and reimbursed by Borrower with respect thereto.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands
by any party relating to this Agreement or any other Loan Document shall be in
writing and (except for financial statements and other informational documents
which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail (postage prepaid, return
receipt requested), overnight courier, or telefacsimile to the relevant party,
as the case may be, at its address set forth below:
If to Borrower: NETWORK PLUS, INC.
234 Copeland Street
Quincy, Massachusetts 02169
Attn: Chief Financial Officer
Fax No. 617.786.4013
with copies to: HALE AND DORR LLP
60 State Street
Boston, Massachusetts 02109
Attn: Jeffrey Carp, Esq.
Fax No. 617.526.5000
If to Agent or FNB: FLEET NATIONAL BANK
One Federal Street
Boston, Massachusetts 02110
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Attn: Raymond C. Hoefling
Fax No. 617.346.0799
with copies to: CHAPPELL, COHEN, DIFRONZO &
ZINNERSHINE
99 Summer Street, 18th Floor
Boston, Massachusetts 02110
Attn: Louis J. DiFronzo, Esq.
Fax No. 617.772.9696
and GOLDMAN SACHS CREDIT PARTNERS L.P.
85 Broad Street
New York, New York 10004
Attn: Mr. Craig F. Noell
Fax No. 212.346.2905
and BROBECK, PHLEGER & HARRISON LLP
550 South Hope Street
Los Angeles, California 90071
Attn: John Francis Hilson, Esq.
Fax No. 213.745.3345
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
all other parties. All notices or demands sent in accordance with this Section
12, other than notices by the Lender Group in connection with Sections 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. Borrower acknowledges
and agrees that notices sent by the Lender Group 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 telefacsimile or
other similar method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
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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
REQUIRED LENDERS' 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. BORROWER AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13.
BORROWER AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWER AND THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
All documents, schedules, invoices, agings, or other papers
delivered to any one or more members of the Lender Group may be destroyed or
otherwise disposed of by such member of the Lender Group 4 months after they are
delivered to or received by such member of the Lender Group, unless Borrower
requests, in writing, the return of said documents, schedules, or other papers
and makes arrangements, at Borrower's expense, for their return.
15. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
15.1 Assignments and Participations.
(a) Any Lender may assign and delegate to one or more Eligible
Transferees (or any other assignee, if such assignment is in connection with a
merger, consolidation, sale, transfer, or other disposition of all or any
substantial portion of the business or loan portfolio of such Lender) (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, however, that
Borrower, Agent, and S&A Agent may continue to deal solely and
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directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to Borrower and Agent by such Lender and the Assignee;
(ii) such Assignee shall have delivered to Agent and Borrower such forms, if
any, that such Assignee is required to deliver pursuant to Section 17.10, and
(iii) such Lender and its Assignee shall have delivered to Borrower and Agent an
Assignment and Acceptance ("Assignment and Acceptance") in form and substance
satisfactory to Agent.
(b) From and after the date that Agent notifies the assignor Lender
that it has received an executed Assignment and Acceptance, (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 to
make Advances under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall effect
a novation between Borrower and the Assignee.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto; (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto; (3)
such Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (4) such Assignee will, independently and without reliance upon
Agent, S&A Agent, such assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (5) such Assignee appoints and authorizes Agent and S&A Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to Agent or S&A Agent, as applicable, by the terms
hereof, together with such powers as are reasonably incidental thereto; (6) such
Assignee has complied, to the extent applicable, with Section 17.10; and (7)
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.
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(d) Immediately upon receipt and acknowledgment by Agent of a fully
executed Assignment and Acceptance, this Agreement shall be deemed to be amended
to the extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of S&A
Agent, sell to one or more commercial banks, financial institutions, or other
Persons (a "Participant") participating interests in the Obligations, the
Commitment, and the other rights and interests of that Lender (the "originating
Lender") hereunder and under the other Loan Documents (provided that no written
consent of S&A Agent shall be required in connection with any sale of any such
participating interests by a Lender to an Eligible Transferee); provided,
however, that (i) the originating Lender's obligations under this Agreement
shall remain unchanged, (ii) the originating Lender shall remain solely
responsible for the performance of such obligations, (iii) Borrower, Agent, and
S&A Agent shall continue to deal solely and directly with the originating Lender
in connection with the originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which such
Participant is participating; (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating; (C) release
all or a material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating; (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender; or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums; (v) such Participant
shall agree to be bound by the confidentiality provisions of Section 17.16(d) as
if such Participant were a party hereto; (vi) no participating interest shall be
sold to any Person if S&A Agent or the originating Lender knows or reasonably
should know that such Person's primary line of business directly competes with
the business of Borrower, (vii) at Borrower's request, each Participant shall
certify that the primary line of business of such Participant does not directly
compete with the business of Borrower, and (viii) all amounts payable by
Borrower hereunder shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
originating Lender with whom such Participant participates and no Participant
shall have any direct rights as to the other Lenders, Agent, S&A Agent,
Borrower, the Collections, the Collateral, or otherwise in respect of the
Obligations. No Participant shall have the right to
70
participate directly in the making of decisions by the Lenders among
themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrower or
Borrower's business.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank
may enforce such pledge or security interest in any manner permitted under
applicable law.
15.2 Successors.
This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties; provided, however, that Borrower
may not assign this Agreement or any rights or duties hereunder without the
Lenders' prior written consent and any prohibited assignment shall be absolutely
void ab initio. No consent to assignment by the Lenders shall release Borrower
from its Obligations. A Lender may assign this Agreement and the other Loan
Documents and its rights and duties hereunder and thereunder pursuant to Section
15.1 hereof and, except as expressly required pursuant to Section 15.1 hereof,
no consent or approval by Borrower is required in connection with any such
assignment.
16. AMENDMENTS; WAIVERS.
16.1 Amendments and Waivers.
No amendment or waiver of any provision of this Agreement or any
other Loan Document, and no consent with respect to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and Borrower and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Lenders and Borrower and acknowledged by Agent, do
any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Lenders (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under any
other Loan Document;
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(d) change the percentage of the Commitments that is required for
the Lenders or any of them to take any action hereunder;
(e) amend this Section or any provision of the Agreement providing
for consent or other action by all Lenders;
(f) release the Agent's Lien for the benefit of the Lender Group on
any Collateral other than as permitted by Section 17.11;
(g) change the definition of "Required Lenders";
(h) release Borrower from any Obligation for the payment of money;
(i) amend Section 2.4(b);
(j) amend any of the provisions of Section 17;
(k) change the definition of Eligible Accounts; or
(l) change the advance rate against Eligible Accounts or otherwise
amend Section 2.1;
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, affect the rights or duties of Agent
under this Agreement or any other Loan Document; and provided further, however,
that no amendment, waiver or consent shall, unless in writing and signed by S&A
Agent, affect the specific rights or duties of S&A Agent under this Agreement or
any other Loan Document. The foregoing notwithstanding, any amendment,
modification, waiver, consent, termination, or release of or with respect to any
provision of this Agreement or any other Loan Document that relates only to the
relationship of the Lender Group among themselves, and that does not affect the
rights or obligations of Borrower, shall not require consent by or the agreement
of Borrower.
16.2 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.
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17. AGENT; THE LENDER GROUP.
17.1 Appointment and Authorization of Agent.
Each Lender hereby designates and appoints FNB and GSCP as its
agents under this Agreement and the other Loan Documents and each Lender hereby
irrevocably authorizes Agent and S&A 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
or S&A Agent, as applicable, it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
and S&A Agent each agrees to act as such on the express conditions contained in
this Section 17. The provisions of this Section 17 are solely for the benefit of
Agent, S&A Agent, and the Lenders, and Borrower shall have no rights as a third
party beneficiary of any of the provisions contained herein; provided, however,
that certain of the provisions of Section 17.10 hereof also shall be for the
benefit of Borrower. Any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document notwithstanding, neither Agent nor S&A
Agent shall have any duties or responsibilities, except those expressly set
forth herein, nor shall Agent nor S&A 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 or S&A
Agent; it being expressly understood and agreed that the use of the words
"Agent" and "S&A Agent" is for convenience only, that FNB and GSCP are merely
the representative of the Lenders, and have only the contractual duties set
forth herein. Except as expressly otherwise provided in this Agreement, Agent
and S&A Agent shall have and may use their sole discretion with respect to
exercising or refraining from exercising any discretionary rights or taking or
refraining from taking any actions which Agent or S&A Agent, as applicable, is
expressly entitled to take or assert under or pursuant to this Agreement and the
other Loan Documents. Without limiting the generality of the foregoing, or of
any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect: (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Advances, the Collateral, the Collections, and related matters; (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents; (c)
make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents; (d) exclusively receive, apply, and distribute the Collections as
provided in the Loan Documents; (e) open and maintain such bank accounts and
lock boxes as Agent reasonably deems necessary and appropriate in accordance
with the Loan Documents for the foregoing purposes with respect to the
Collateral and the Collections; (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Borrower, the
Obligations, the Collateral, the Collections, or otherwise related to any of
same as provided in the Loan Documents; and (g) incur and pay such Lender Group
Expenses as Agent may reasonably deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
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17.2 Delegation of Duties.
Except as otherwise provided in this section, Agent and S&A Agent
may execute any of their respective 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.
Neither Agent nor S&A Agent shall be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects as long as such
selection was made in compliance with this section and without gross negligence
or willful misconduct.
17.3 Liability of Agent and S&A Agent.
None of the Agent-Related Persons, nor the S&A Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by Borrower or any
Subsidiary or Affiliate of Borrower, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent or S&A Agent, as applicable, under or in connection with,
this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of Borrower or any other party to any Loan Document
to perform its obligations hereunder or thereunder. No Agent-Related Person, nor
any S&A 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 properties, books or records of Borrower or any of
Borrower's Subsidiaries or Affiliates.
17.4 Reliance by Agent and S&A Agent.
Agent and S&A 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 reasonably believed by it to be
genuine and correct and to have been signed, sent, or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to Borrower or counsel to any Lender), independent accountants and other experts
selected by Agent or S&A Agent, as applicable. Agent and S&A Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless Agent or S&A Agent, as applicable, shall first
receive such advice or concurrence of the Lenders as it deems appropriate and
until such instructions are received, Agent and S&A Agent shall act, or refrain
from acting, as they deem advisable. If Agent or S&A Agent so requests, Agent or
S&A Agent, as applicable, shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
and S&A Agent shall in
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all cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the requisite Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders. If in the reasonable
opinion of Agent the distribution of any amount received by it in such capacity
hereunder or under any of the other Loan Documents reasonably could be expected
to result in it suffering a liability, Agent may refrain from making
distribution until its right to make distribution shall have been adjudicated by
a court of competent jurisdiction. If a court of competent jurisdiction shall
adjudge that any amount received and distributed by Agent is to be repaid, each
Person to whom any such distribution shall have been made shall either repay to
the Agent its proportionate share of the amount so adjudged or shall pay over
the same in such manner to such Persons as shall be determined by such court.
17.5 Notice of Default or Event of Default.
Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default, except with respect to defaults
in the payment of principal, interest, fees, and expenses required to be paid to
Agent for the account of the Lenders, except with respect to Events of Default
of which Agent has actual knowledge, unless Agent shall have received written
notice from a Lender or Borrower referring to this Agreement, describing such
Default or Event of Default, and stating that such notice is a "notice of
default." Agent promptly will notify the Lenders of its receipt of any such
notice or of any Event of Default of which Agent has actual knowledge. If any
Lender obtains actual knowledge of any Event of Default, such Lender promptly
shall notify the other Lenders and Agent of such Event of Default. Each Lender
shall be solely responsible for giving any notices to its Participants, if any.
Subject to Section 17.4, Agent shall take such action with respect to such
Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 9; provided, however, that unless and until Agent has
received any such request, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable.
17.6 Credit Decision.
Each Lender acknowledges that none of the Agent-Related Persons nor
any of the S&A Agent-Related Persons has made any representation or warranty to
it, and that no act by Agent or S&A Agent hereinafter taken, including any
review of the affairs of Borrower and its Subsidiaries or Affiliates, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
or S&A Agent-Related Person to any Lender. Each Lender represents to Agent and
to S&A Agent that it has, independently and without reliance upon any
Agent-Related Person or any S&A Agent-Related Person and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrower and any other Person (other
than the Lender Group) party to a Loan Document, and all applicable bank
regulatory laws relating to the transactions
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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 or any S&A
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 Borrower and any other Person (other
than the Lender Group) party to a Loan Document. Except for notices, reports and
other documents expressly herein required to be furnished to the Lenders by
Agent or S&A Agent, neither Agent nor S&A Agent, as applicable, shall have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of Borrower and any other Person party
to a Loan Document that may come into the possession of any of the Agent-Related
Persons or the S&A Agent-Related Persons.
17.7 Costs and Expenses; Indemnification.
Agent and S&A Agent may incur and pay Lender Group Expenses to the
extent Agent or S&A Agent, as applicable reasonably deems necessary or
appropriate for the performance and fulfillment of their respective functions,
powers, and obligations pursuant to the Loan Documents, including without
limiting the generality of the foregoing, court costs, reasonable attorneys fees
and expenses, costs of collection by outside collection agencies and auctioneer
fees and costs of security guards or insurance premiums paid to maintain the
Collateral, whether or not Borrower is obligated to reimburse Agent, S&A 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 and S&A Agent, as applicable, for such
out-of-pocket costs and expenses prior to the distribution of any amounts to
Lenders. In the event Agent or S&A Agent is not reimbursed for such costs and
expenses from Collections, each Lender hereby agrees that it is and shall be
obligated to pay to or reimburse Agent or S&A Agent for the amount of such
Lender's Pro Rata Share thereof. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons and the S&A Agent-Related Persons (in each case, to the
extent not reimbursed by or on behalf of Borrower and without limiting the
obligation of Borrower to do so), according to their Pro Rata Shares, from and
against any and all Indemnified Liabilities; provided, however, that no Lender
shall be liable for the payment to the Agent-Related Persons or the S&A
Agent-Related Persons 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 and S&A Agent
upon demand for such Lender's ratable share of any costs or out-of-pocket
expenses (including attorneys fees and expenses) incurred by Agent or S&A Agent,
as applicable, 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
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extent that Agent or S&A Agent, as applicable, is not reimbursed for such
expenses by or on behalf of Borrower. The undertaking in this section shall
survive the payment of all Obligations hereunder and the resignation or
replacement of Agent or S&A Agent, as applicable.
17.8 Agent and S&A Agent in Individual Capacity.
FNB, GSCP, and their 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 FNB were not Agent hereunder, and GSCP were not S&A Agent
hereunder, and, in each case, without notice to or consent of the Lenders. The
Lenders acknowledge that, pursuant to such activities, FNB, GSCP, or their
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 Agent or
S&A Agent, as applicable, will use its reasonable best efforts to obtain),
neither Agent nor S&A Agent shall be under an obligation to provide such
information to them. The terms "Lender" and "Lenders" include FNB in its
individual capacity and GSCP in its individual capacity.
17.9 Successor Agent and S&A Agent.
(a) Agent may resign as Agent upon 45 days notice to the Lenders;
provided, however, that such 45 day notice shall not be required if GSCP
exercises its Purchase Option (as defined in the Agents' Side Letter). 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 17 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor Agent has accepted appointment as
Agent by the date which is 45 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of Agent
hereunder until such time, if any, as the Lenders appoint a successor Agent as
provided for above.
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(b) S&A Agent may resign as S&A Agent upon 45 days notice to the
Lenders. If S&A Agent resigns under this Agreement, the Required Lenders shall
appoint a successor S&A Agent for the Lenders. If no successor S&A Agent is
appointed prior to the effective date of the resignation of S&A Agent, S&A Agent
may appoint, after consulting with the Lenders, a successor S&A Agent. If S&A
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 S&A Agent with a successor S&A Agent from among the
Lenders. In any such event, upon the acceptance of its appointment as successor
S&A Agent hereunder, such successor S&A Agent shall succeed to all the rights,
powers and duties of the retiring S&A Agent and the term "S&A Agent" shall mean
such successor S&A Agent and the retiring S&A Agent's appointment, powers and
duties as S&A Agent shall be terminated. After any retiring S&A Agent's
resignation hereunder as S&A Agent, the provisions of this Section 17 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was S&A Agent under this Agreement. If no successor S&A Agent has accepted
appointment as S&A Agent by the date which is 45 days following a retiring S&A
Agent's notice of resignation, the retiring S&A Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of S&A Agent hereunder until such time, if any, as the Lenders appoint a
successor S&A Agent as provided for above.
17.10 Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrower, to deliver to Agent and
Borrower:
(i) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed
IRS Forms 1001 and W-8 before the payment of any interest in the
first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid
under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year
of such Lender and in each succeeding taxable year of such Lender
during which interest may be paid under this Agreement, and IRS Form
W-9; and
(iii) such other form or forms as may be required under the IRC
or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
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Such Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of Borrower to such Lender, such Lender agrees to
notify Agent of the percentage amount in which it is no longer the beneficial
owner of Obligations of Borrower to such Lender. To the extent of such
percentage amount, Agent will treat such Lender's IRS Form 1001 as no longer
valid.
(c) If any Lender claiming exemption from United States withholding
tax by filing IRS Form 4224 with Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of Borrower to such
Lender, such Lender agrees to undertake sole responsibility for complying with
the withholding tax requirements imposed by Sections 1441 and 1442 of the IRC.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent or 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 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 Borrower, as applicable, under
this section, together with all costs and expenses (including attorneys fees and
expenses). The obligation of the Lenders under this subsection shall survive the
payment of all Obligations and the resignation or replacement of Agent.
17.11 Collateral Matters.
(a) The Lenders hereby irrevocably authorize Agent, at its option
and in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrower
of all Obligations; (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 of
this Agreement or the other Loan Documents (and Agent may rely conclusively on
any such certificate, without further inquiry); (iii) constituting property
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in which Borrower owned no interest at the time the security interest was
granted or at any time thereafter; or (iv) constituting property leased to
Borrower under a lease that has expired or is terminated in a transaction
permitted under this Agreement. Except as provided above, Agent will not execute
and deliver a release of any Lien on any Collateral without the prior written
authorization of (y) if the release is of all or substantially all of the
Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon
request by Agent or Borrower at any time, the Lenders will confirm in writing
Agent's authority to release any such Liens on particular types or items of
Collateral pursuant to this Section 17.11; provided, however, that (1) 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 (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrower in respect of)
all interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders
to assure that the Collateral exists or is owned by Borrower or is cared for,
protected, or insured or has been encumbered, or that the Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.
17.12 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each Lender agrees that: (i) unless an Event of Default has
occurred and is continuing, such Lender shall not without the express consent of
the Required Lenders (but, if an Event of Default has occurred and is
continuing, then to the extent that it is lawfully entitled to do so, such
Lender may, at its election, and shall, upon the request of the Required
Lenders), set off against the Obligations, any amounts owing by such Lender to
Borrower or any accounts of Borrower now or hereafter maintained with such
Lender; (ii) such Lender shall not, without the express consent of all the
Lenders, set off against any Indebtedness (other than Obligations) of Borrower
owing to such Lender any amounts owing by such Lender to Borrower, including any
amounts evidenced by accounts now or hereafter maintained with such Lender; and
(iii) such Lender shall not, without the express consent of all the Lenders,
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. The foregoing
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to the contrary notwithstanding, if any Lender provides Borrower with a letter
of credit and obtains cash collateral to secure Borrower's reimbursement
obligations thereunder, such Lender shall not be restricted by the foregoing
provisions from applying such cash collateral to such reimbursement obligations.
(b) Subject to Section 17.8, if, at any time or times any Lender
shall receive (i) by payment, foreclosure, setoff or otherwise, any proceeds of
Collateral or any payments with respect to the Obligations arising under, or
relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from Agent pursuant to the terms of
this Agreement, or (ii) payments from Agent in excess of such Lender's ratable
portion of all such distributions by Agent, such Lender promptly shall (1) turn
the same over to Agent, in kind, and with such endorsements as may be required
to negotiate the same to Agent, or in same day funds, as applicable, for the
account of all of the Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (2) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received shall
be applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that if all or part of such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
17.13 Agency for Perfection.
Agent and each Lender hereby appoints each other Lender as agent for
the purpose of perfecting the Agent's Liens in assets which, in accordance with
Article 9 of the UCC can be perfected only by possession. Should any Lender
obtain possession of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent's request therefor shall deliver such
Collateral to Agent or in accordance with Agent's instructions.
17.14 Payments by Agent to the Lenders.
All payments to be made by Agent to the Lenders shall be made by
bank wire transfer or internal transfer of immediately available funds pursuant
to such wire transfer instructions as each party may designate for itself by
written notice to Agent. Concurrently with each such payment, Agent shall
identify whether such payment (or any portion thereof) represents principal,
premium or interest on revolving advances or otherwise.
17.15 Concerning the Collateral and Related Loan Documents.
Each member of the Lender Group authorizes and directs Agent to
enter into this Agreement and the other Loan Documents relating to the
Collateral, for the benefit of the Lender Group. Each member of the Lender Group
agrees that any action taken by Agent or all Lenders, as applicable, in
accordance with the terms of this Agreement or the other
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Loan Documents relating to the Collateral and the exercise by Agent or all
Lenders, as applicable, of their respective powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall be
binding upon all of the Lenders.
17.16 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 or S&A Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by
Agent or S&A Agent, as applicable, and Agent or S&A Agent, shall so furnish each
Lender with such Reports;
(b) expressly agrees and acknowledges that neither any other Lender,
S&A Agent, nor Agent (i) makes any representation or warranty as to the accuracy
of any Report, or (ii) shall 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, S&A Agent, or other party
performing any audit or examination will inspect only specific information
regarding Borrower and will rely significantly upon Borrower's books and
records, as well as on representations of Borrower's personnel;
(d) agrees to keep all Reports and other material, non-public
information regarding Borrower and its Subsidiaries and their operations,
assets, and existing and contemplated business plans (collectively, the
"Confidential Information") in a confidential manner; it being understood and
agreed by Borrower that in any event such Lender may make disclosures (a) to
counsel for and other advisors, accountants, and auditors to such Lender, (b)
reasonably required by any bona fide potential or actual Assignee, transferee,
or Participant in connection with any contemplated or actual assignment or
transfer by such Lender of an interest herein or any participation interest in
such Lender's rights hereunder, provided that such potential or Actual Assignee,
transferee, or Participant shall have agreed prior to such disclosure to be
bound by the terms of this Section 17.16(d) as if such potential or actual
Assignee, transferee, or Participant were a party hereto, (c) of information
that has become public by disclosures made by Persons other than such Lender,
its Affiliates, assignees, transferees, or participants, or (d) as required or
requested by any court, governmental or administrative agency, pursuant to any
subpoena or other legal process, or by any law, statute, regulation, or court
order; provided, however, that, unless prohibited by applicable law, statute,
regulation, or court order, such Lender shall notify Borrower of any request by
any court, governmental or administrative agency, or pursuant to any subpoena or
other legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent, S&A Agent, and
any such other
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Lender preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrower, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans of
Borrower; and (ii) to pay and protect, and indemnify, defend and hold Agent, S&A
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses and other amounts
(including, attorney costs) incurred by Agent, S&A Agent, and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) Any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender promptly upon receipt thereof from
Borrower; (y) To the extent that Agent is entitled, under any provision of the
Loan Documents, to request additional reports or information from Borrower, any
Lender may, from time to time, reasonably request Agent to exercise such right
as specified in such Lender's notice to Agent, whereupon Agent promptly shall
request of Borrower the additional reports or information specified by such
Lender, and, upon receipt thereof from Borrower, Agent promptly shall provide a
copy of same to such Lender; and (z) Any time that Agent renders to Borrower a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.
17.17 Several Obligations; No Liability
Notwithstanding that certain of the Loan Documents now or hereafter
may have been or will be executed only by or in favor of Agent in its capacity
as such, and not by or in favor of the Lenders, any and all obligations on the
part of Agent (if any) to make any credit available hereunder shall constitute
the several (and not joint) obligations of the respective Lenders on a ratable
basis, according to their respective Commitments, to make an amount of such
credit not to exceed, in principal amount, at any one time outstanding, the
amount of their respective Commitments. Nothing contained herein shall confer
upon any Lender any interest in, or subject any Lender to any liability for, or
in respect of, the business, assets, profits, losses, or liabilities of any
other Lender. Each Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent any
such notice may be required, and no Lender shall have any obligation, duty, or
liability to any Participant of any other Lender. Except as provided in Section
17.7, no member of the Lender Group shall have any liability for the acts or any
other member of the Lender Group. No Lender shall be responsible to Borrower or
any other Person for any failure by any other Lender to fulfill its obligations
to make credit available hereunder, nor to advance for it or on its behalf in
connection with its Commitment, nor to take any other action on its behalf
hereunder or in connection with the financing contemplated herein.
17.18 Legal Representation of GSCP.
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In connection with the negotiation, drafting, and execution of this
Agreement and the other Loan Documents, or in connection with future legal
representation relating to loan administration, amendments, modifications,
waivers, or enforcement of remedies, Brobeck, Phleger & Harrison LLP ("Brobeck")
only has represented and only shall represent GSCP in its capacity as S&A Agent
and as a Lender. Each other Lender and Agent hereby acknowledges that Brobeck
does not represent any other Lender or Agent in connection with any such
matters.
18. GENERAL PROVISIONS.
18.1 Effectiveness.
This Agreement shall be binding and deemed effective when executed
by Borrower and each member of the Lender Group whose signature is provided for
on the signature pages hereof.
18.2 Section Headings.
Headings and numbers have been set forth herein for convenience
only. Unless the contrary is compelled by the context, everything contained in
each section applies equally to this entire Agreement.
18.3 Interpretation.
Neither this Agreement nor any uncertainty or ambiguity herein shall
be construed or resolved against the Lender Group or Borrower, whether under any
rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the purposes and
intentions of all parties hereto.
18.4 Severability of Provisions.
Each provision of this Agreement shall be severable from every other
provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
18.5 Amendments in Writing.
This Agreement can only be amended by a writing signed by Agent, the
Required Lenders, and Borrower.
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18.6 Counterparts; Telefacsimile Execution.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Delivery of an
executed counterpart of this Agreement by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile also
shall deliver an original executed counterpart of this Agreement but the failure
to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement. The foregoing shall apply
to each other Loan Document mutatis mutandis.
18.7 Revival and Reinstatement of Obligations.
If the incurrence or payment of the Obligations by Borrower 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 liability of Borrower or such guarantor
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
18.8 Integration.
This Agreement, together with the other Loan Documents, reflects the
entire understanding of the parties with respect to the transactions
contemplated hereby and shall not be contradicted or qualified by any other
agreement, oral or written, before the date hereof.
18.9 GSCP as S&A Agent.
GSCP, as Syndication & Arrangement Agent, has performed, and will
continue to perform, important functions with respect to the credit facilities
provided for in the Loan Documents. In recognition of its role, GSCP is
designated Syndication & Arrangement Agent and may so identify itself in public
communications with respect to this credit. The foregoing notwithstanding, GSCP
shall have no duties, responsibilities, obligations, or liabilities except the
right to consent to Eligible Transferees and such, if any, other duties,
responsibilities, obligations, or liabilities as may be set forth expressly in
any Loan Document.
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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.
NETWORK PLUS, INC.,
a Massachusetts corporation
By: James J. Crowley
Title: Executive Vice President
NETWORK PLUS CORP.,
a Delaware corporation
By: James J. Crowley
Title: Executive Vice President
FLEET NATIONAL BANK, a national banking
association, as Agent and a Lender
By: Raymond C. Hoefling
Title: Vice President
GOLDMAN SACHS CREDIT PARTNERS L.P., a Bermuda
limited partnership, as S&A Agent and a Lender
By: Karen Bisgeier
Title: Authorized Signatory