EXHIBIT 10.5
CREDIT AGREEMENT
Dated as of February 19, 2002
among
DAVEL FINANCING COMPANY, L.L.C.,
PHONETEL TECHNOLOGIES, INC.
and
CHEROKEE COMMUNICATIONS, INC.
as Borrowers,
DAVEL COMMUNICATIONS, INC.
and
THE DOMESTIC SUBSIDIARIES OF DAVEL FINANCING COMPANY, L.L.C.
AND DAVEL COMMUNICATIONS, INC.,
as Guarantors,
and
THE LENDERS NAMED HEREIN
TABLE OF CONTENTS
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PAGE
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ARTICLE I - DEFINITIONS...........................................................................................1
SECTION 1.01 Certain Defined Terms.......................................................................1
SECTION 1.02 Computation of Time Periods................................................................19
SECTION 1.03 Terms Generally............................................................................19
ARTICLE II - AMOUNT AND TERMS OF THE LOANS.......................................................................19
SECTION 2.01 The Loans..................................................................................19
SECTION 2.02 Making the Loans...........................................................................19
SECTION 2.03 Interest and Amortization..................................................................20
SECTION 2.04 Prepayments................................................................................20
SECTION 2.05 Payments and Computations..................................................................22
SECTION 2.06 Use of Proceeds............................................................................22
SECTION 2.07 Evidence of Indebtedness; Registered Notes.................................................23
SECTION 2.08 Joint and Several Liability of Borrowers...................................................24
ARTICLE III - GUARANTY...........................................................................................25
SECTION 3.01 Guaranty of Payment........................................................................25
SECTION 3.02 Obligations Unconditional..................................................................26
SECTION 3.03 Modifications..............................................................................26
SECTION 3.04 Waiver of Rights...........................................................................27
SECTION 3.05 Reinstatement..............................................................................27
SECTION 3.06 Remedies...................................................................................27
SECTION 3.07 Limitation of Guaranty.....................................................................28
SECTION 3.08 Rights of Contribution.....................................................................28
ARTICLE IV - CONDITIONS OF LENDING...............................................................................28
SECTION 4.01 Conditions Precedent to the Loans..........................................................28
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES.................................................32
SECTION 5.01 Representations and Warranties of the Credit Parties.......................................32
ARTICLE VI - COVENANTS OF THE CREDIT PARTIES.....................................................................39
SECTION 6.01 Affirmative Covenants......................................................................39
SECTION 6.02 Negative Covenants.........................................................................46
ARTICLE VII - EVENTS OF DEFAULT..................................................................................51
SECTION 7.01 Events of Default..........................................................................51
SECTION 7.02 Acceleration; Remedies.....................................................................53
SECTION 7.03 Allocation of Payments After Event of Default..............................................54
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<Table>
ARTICLE VIII - MISCELLANEOUS.....................................................................................55
SECTION 8.01 Amendments, Etc............................................................................55
SECTION 8.02 Notices, Etc...............................................................................56
SECTION 8.03 No Waiver; Remedies........................................................................56
SECTION 8.04 Right of Set-Off...........................................................................57
SECTION 8.05 Benefit of Agreement.......................................................................58
SECTION 8.06 Payment of Expenses; Indemnification.......................................................60
SECTION 8.07 Counterparts/Telecopy......................................................................60
SECTION 8.08 Headings...................................................................................60
SECTION 8.09 Survival of Indemnification and Representations and Warranties.............................60
SECTION 8.10 Governing Law, Jurisdiction, Waiver of Jury Trial, Etc.....................................61
SECTION 8.11 Time.......................................................................................61
SECTION 8.12 Severability...............................................................................61
SECTION 8.13 Further Assurances.........................................................................61
SECTION 8.14 Confidentiality............................................................................61
SECTION 8.15 Entirety...................................................................................62
SECTION 8.16 Binding Effect; Continuing Agreement.......................................................62
</Table>
Schedules
Schedule 1.01(a) - Domestic Subsidiaries
Schedule 1.01(b) - Existing Investments
Schedule 1.01(c) - Existing Liens
Schedule 1.01(d) - Loan Commitment Percentage
Schedule 2.06(a) - Past Due Obligations
Schedule 2.06(b) Transaction Fees and Expenses and
Other Permitted Use of Proceeds
Schedule 4.01(j) - Officer's Certificates
Schedule 5.01(a) Non-Qualification
Schedule 5.01(f) - Default Under Contracts, Leases, Etc.
Schedule 5.01(h) - Existing Indebtedness
Schedule 5.01(i) - Litigation
Schedule 5.01(l) - ERISA
Schedule 5.01(m) - Subsidiaries
Schedule 5.01(p) - Intellectual Property
Schedule 5.01(q) - Investments
Schedule 5.01(r)(i) - Real Property Locations
Schedule 5.01(r)(ii) - Chief Executive Office; Principal Place of Business
Schedule 5.01(w) - Asset Sales
Schedule 6.01(g) - Insurance
Schedule 6.02(i) - Affiliate Transactions
Exhibits
Exhibit A - Budget
Exhibit 6.01(a) - Form of Officer's Certificate
Exhibit 6.01(k) - Form of Joinder Agreement
Exhibit 8.05(b) - Form of Assignment Agreement
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CREDIT AGREEMENT
CREDIT AGREEMENT dated as of February 19, 2002 among Davel
Financing Company, L.L.C., a Delaware limited liability company (the "Davel
Borrower"), PhoneTel Technologies, Inc., an Ohio corporation ("PhoneTel"),
Cherokee Communications, Inc., a Texas corporation ("Cherokee", and together
with PhoneTel, collectively the "PhoneTel Borrowers" and individually a
"PhoneTel Borrower"), Davel Communications, Inc., a Delaware corporation (the
"Davel Parent"), each of the Domestic Subsidiaries (as defined herein) of any
Borrower or the Davel Parent, Madeleine L.L.C., a Delaware limited liability
company ("Madeleine") and ARK CLO 2000-1, Limited, a Cayman Islands entity
("ARK" and together with Madeleine and each of their respective successors and
permitted assigns, the "Lenders").
RECITALS
The Davel Borrower and the PhoneTel Borrowers (collectively,
the "Borrowers" and individually a "Borrower") and the Guarantors have requested
the Lenders to provide a senior secured credit facility to the Borrowers in the
amount of $10,000,000, a portion of the proceeds of which are to be used for
working capital purposes of the Borrowers and the Guarantors. The Lenders have
agreed to make the requested senior secured credit facility available to the
Borrowers on the terms and conditions hereinafter set forth. Accordingly, in
consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I - DEFINITIONS
SECTION 1.01 Certain Defined Terms. All capitalized terms used
in, or incorporated by reference into, this Agreement but not otherwise defined
herein shall be used herein as set forth below (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Additional Credit Party" means each Person that becomes a
Guarantor after the Closing Date, as provided in Section 6.01(k).
"Adjusted EBITDA" means, for any period, EBITDA for such
period minus all Regulatory Receipts received by any Credit Party with respect
to such period.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by or under direct or
indirect common control with such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power (a) to
vote 10% or more of the securities having ordinary voting power for the election
of directors or trustees of such corporation or (b) to direct or cause direction
of the management and policies of such corporation, whether through the
ownership of voting securities, by contract or otherwise.
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"Approved Fund" means, with respect to any Lender that is a
fund or trust that makes, buys or invests in commercial loans, any other fund or
trust that makes, buys or invests in commercial loans and is managed by the same
investment advisor as such Lender or an Affiliate thereof.
"Asset Disposition" means the disposition of any or all of the
assets of a Credit Party or any of its Subsidiaries whether by sale, lease,
transfer, condemnation or otherwise, other than transfers of assets permitted by
Section 6.02(e).
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from time to
time.
"Budget" means the Credit Parties' projected financial
statements for each year-to-date period ending on the last day of each calendar
month, until the Maturity Date, a copy of which is attached hereto as Exhibit A.
"Borrowers" has the meaning specified in the Recitals to this
Agreement.
"Business Day" means any day other than a Saturday, a Sunday,
a legal holiday or any other day on which banking institutions are required or
authorized by law or other governmental action to be closed in New York City.
"Capital Expenditures" means all expenditures (other than
expenditures incurred in connection with a Permitted Acquisition) of the Credit
Parties and their Subsidiaries which, in accordance with GAAP, would be
classified as capital expenditures, including, without limitation, Capital
Leases.
"Capital Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person and the amount of such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
"Capital Stock" means (a) in the case of a corporation, all
classes of capital stock of such corporation, (b) in the case of a partnership,
partnership interests (whether general or limited), (c) in the case of a limited
liability company, membership interests and (d) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the
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full faith and credit of the United States of America is pledged in support
thereof) having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time and demand deposits and
certificates of deposit of (i) any Lender, (ii) any domestic commercial bank
having capital and surplus in excess of $500,000,000 or (iii) any bank whose
short-term commercial paper rating from S&P is at least A-1 or the equivalent
thereof or from Moody's is at least P-1 or the equivalent thereof (any such bank
being an "Approved Bank"), in each case with maturities of not more than twelve
months from the date of acquisition, (c) commercial paper and variable or fixed
rate notes issued by any Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by, any domestic corporation rated
A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent
thereof) or better by Moody's and maturing within twelve months of the date of
acquisition, (d) repurchase agreements with a bank or trust company (including
any of the Lenders) or recognized securities dealer having capital and surplus
in excess of $500,000,000 for direct obligations issued by or fully guaranteed
by the United States of America in which the Borrower shall have a perfected
first priority security interest (subject to no other Liens) and having, on the
date of purchase thereof, a fair market value of at least 100% of the amount of
the repurchase obligations and (e) Investments, classified in accordance with
GAAP as current assets, in money market investment programs registered under the
Investment Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $500,000,000 and the
portfolios of which are limited to Investments of the character described in the
foregoing subdivisions (a) through (d).
"Cash In Bank" means, with respect to any Person, all cash of
such Person, located in bank accounts (other than the proceeds of the Loans and
cash in accounts securing letter of credit obligations), including without
limitation all cash in any depository account, concentration account or
otherwise in the direct or indirect possession of such Person.
"Change of Control" means any of the following, other than the
Merger: (a) with respect to the Davel Borrower, the Davel Parent shall cease to
own and control 100% of the membership or limited liability company interests of
the Davel Borrower; (b) with respect to the Davel Parent, (i) other than the
Hill Group, Samstock L.L.C., EGI-DM Investments, L.L.C. or any other entity
controlled by Samuel Zell (collectively, the "Davel Investor Group"), any
"person" or "group" (within the meaning of Section 13(d) or 14(d) of the
Exchange Act) shall become, directly or indirectly, the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act except that a Person
shall be deemed to have "beneficial ownership" of all shares that any such
Person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), by way of merger, consolidation or
otherwise, of 30% or more of the Voting Stock of the Davel Parent on a
fully-diluted basis, after giving effect to the conversion and exercise of all
outstanding warrants, options and other securities of the Davel Parent (whether
or not such securities are then currently convertible or exercisable), (ii) the
members of the Davel Investor Group, in the aggregate, shall fail to own more of
the Voting Stock of the Davel Parent than any other Person or (iii) during any
period of two consecutive calendar years, individuals who at the beginning of
such period constituted the board of directors of the Davel Parent shall cease
for any reason to constitute a majority of the directors of the Davel Parent
then in office unless such new directors were elected or designated by the
directors of the Parent who constituted the board of directors of the Davel
Parent at the beginning of such period or such directors were elected by
shareholders to fill vacant seats for resigning or retiring
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directors that were not replaced at the time of such resignation or retirement;
(c) with respect to PhoneTel, (i) other than American Express Financial
Corporation and its Affiliates (collectively the "PhoneTel Investor Group"), any
"person" or "group" (within the meaning of Section 13(d) or 14(d) of the
Exchange Act) shall become, directly or indirectly, the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person
shall be deemed to have "beneficial ownership" of all shares that any such
Person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), by way of merger, consolidation or
otherwise, of 30% or more of the Voting Stock of PhoneTel on a fully-diluted
basis after giving effect to the conversion and exercise of all outstanding
warrants, options and other securities of PhoneTel (whether or not such
securities are then currently convertible or exercisable) or (ii) during any
period of two consecutive calendar years, individuals who at the beginning of
such period constituted the board of directors of PhoneTel shall cease for any
reason to constitute a majority of the directors of PhoneTel then in office
unless such new directors were elected or designated by the directors of
PhoneTel who constituted the board of directors of PhoneTel at the beginning of
such period or such directors were elected by shareholders to fill vacant seats
for resigning or retiring directors that were not replaced at the time of such
resignation or retirement; (d) with respect to Cherokee, PhoneTel shall fail to
own 100% of the Voting Stock of Cherokee; and (e) with respect to any Davel
Guarantor, the Davel Parent or the Davel Borrower, as the case may be, shall
cease to own 100% of the Voting Stock of such Davel Guarantor.
"Cherokee" has the meaning specified in the preamble to this
Agreement.
"Closing Date" means the date on which the Loans are made in
accordance with Article II and Article IV.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute thereto, as interpreted by the rules and regulations
promulgated thereunder, in each case as in effect from time to time. References
to sections of the Code should be construed to also refer to any successor
sections.
"Collateral" has the meaning specified in the Security
Agreement.
"Collateral Agent" has the meaning specified in the Security
Agreement.
"Collateral Documents" means the Security Agreement, and such
other documents executed and delivered in connection with the attachment and
perfection of the Lenders' security interests in the assets of the Credit
Parties, including without limitation, the Mortgage Policies, UCC financing
statements and patent and trademark filings.
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"Commitment" means, with respect to each Lender, the
commitment of such Lender to make a Loan to the Borrowers in a principal amount
equal to such Lender's Loan Commitment Percentage of the Total Commitment.
"Communications Law" means the Communications Act of 1934, as
amended (including, without limitation, the Telecommunications Act of 1996), and
all rules and regulations thereunder, or any successor statute or statutes, and
all rules and regulations of the FCC or any other applicable Governmental
Authority related to the provision of communication or broadcast services, each
as amended or supplemented from time to time.
"Credit Parties" means the Borrowers, the Guarantors and any
Additional Credit Parties.
"Davel Borrower" has the meaning specified in the preamble to
this Agreement.
"Davel Credit Parties" means the Davel Borrower and the Davel
Guarantors.
"Davel Guarantors" means the Davel Parent and each of the
Domestic Subsidiaries of the Davel Borrower and the Davel Parent (other than the
Davel Borrower).
"Davel Lenders" means the Lenders (as defined in the Existing
Davel Credit Agreement).
"Davel Parent" has the meaning specified in the preamble to
this Agreement.
"Debt Issuance" means the issuance of any Indebtedness for
borrowed money by a Credit Party or any of its Subsidiaries, other than
Indebtedness permitted by Section 6.02(a).
"Default" means any Event of Default or any event, act or
condition that would constitute an Event of Default but for the requirement that
notice be given or time elapse or both.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Domestic Subsidiary" means each direct and indirect
Subsidiary of any Borrower that is incorporated or organized under the laws of
any state of the United States or the District of Columbia whether existing as
of the date hereof or hereafter created or acquired. As of the Closing Date, the
Domestic Subsidiaries are as set forth on Schedule 1.01(a).
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"EBITDA" means,
(a) for any period ending on or prior to the
effective date of the Merger, the sum of (i) with respect to the Davel Credit
Parties and their Subsidiaries on a consolidated basis, an amount equal to (A)
Net Income for such period (excluding the effect of any extraordinary or other
non-recurring gains (including any gain from the sale of property not in the
ordinary course of business) or non-cash losses) plus (B) an amount which, in
the determination of Net Income for such period, has been deducted for (1)
Interest Expense (inclusive of amortization of deferred financing fees and any
original issue discount) for such period, (2) total Federal, state, foreign or
other income or franchise taxes for such period, (3) all depreciation and
amortization for such period, all as determined in accordance with GAAP, (4) any
non-cash charges related to the issuance of stock, warrants or options to
management (or the exercise of such warrants or options), (5) any purchase
accounting adjustments required or permitted by FASB 141 and FASB 142 and (6)
other non-cash charges to the extent reflected in Net Income other than
write-offs related to account receivables in connection with dial-around
revenues recognized subsequent to the Closing Date minus (C) any cash
expenditures relating to the non-cash charges set forth in clause (B) above
(whether for such period or a prior period); and
(ii) with respect to the PhoneTel Borrowers
and their Subsidiaries on a consolidated basis, an amount equal to (A) Net
Income for such period (excluding the effect of any extraordinary or other
non-recurring gains (including any gain from the sale of property not in the
ordinary course of business) or non-cash losses) plus (B) an amount which, in
the determination of Net Income for such period, has been deducted for (1)
Interest Expense (inclusive of amortization of deferred financing fees and any
original issue discount) for such period, (2) total Federal, state, foreign or
other income or franchise taxes for such period, (3) all depreciation and
amortization for such period, all as determined in accordance with GAAP, (4) any
non-cash charges related to the issuance of stock, warrants or options to
management (or the exercise of such warrants or options), (5) any purchase
accounting adjustments required or permitted by FASB 141 and FASB 142 and (6)
other non-cash charges to the extent reflected in Net Income other than
write-offs related to account receivables in connection with dial-around
revenues recognized subsequent to the Closing Date minus (C) any cash
expenditures relating to the non-cash charges set forth in clause (B) above
(whether for such period or a prior period); and
(b) for any period beginning on or after the
effective date of the Merger, with respect to the Davel Parent and its
Subsidiaries on a consolidated basis an amount equal to (A) Net Income for such
period (excluding the effect of any extraordinary or other non-recurring gains
(including any gain from the sale of property not in the ordinary course of
business) or non-cash losses) plus (B) an amount which, in the determination of
Net Income for such period, has been deducted for (1) Interest Expense
(inclusive of amortization of deferred financing fees and any original issue
discount) for such period, (2) total Federal, state, foreign or other income or
franchise taxes for such period, (3) all depreciation and amortization for such
period, all as determined in accordance with GAAP, (4) any non-cash charges
related to the issuance of stock, warrants or options to management (or the
exercise of such warrants or options), (5) any purchase accounting adjustments
required or permitted by FASB 141 and FASB 142 and (6) other non-cash charges to
the extent reflected in Net Income other than write-offs
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related to account receivables in connection with dial-around revenues
recognized subsequent to the Closing Date minus (C) any cash expenditures
relating to the non-cash charges set forth in clause (B) above (whether for such
period or a prior period).
"Eligible Assignee" means (a) any Lender; (b) any Approved
Fund of a Lender, (c) an Affiliate of a Lender; (d) 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; (e) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or under the laws of a political subdivision of any
such country and which has total assets in excess of $250,000,000, provided that
such bank is acting through a branch or agency located in the United States; (f)
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; and (g) any other Person
approved by the other Lenders and the Borrowers (such approval not to be
unreasonably withheld or delayed); provided that (i) the Borrowers' consent is
not required during the existence and continuation of an Event of Default and
(ii) approval by the Borrowers shall be deemed given if no objection is received
by the Lenders and from the Borrowers within five Business Days after notice of
such proposed assignment has been received by the Borrowers.
"Environmental Claim" means any written notice, notice of
violation, written demand, written allegation, action, suit, injunction,
judgment, order, consent decree, penalty, fine, lien, proceeding, or written
claim (whether administrative, judicial, or private in nature) arising (a)
pursuant to, or in connection with, an actual or alleged violation of, any
Environmental Law, (b) in connection with any Hazardous Material, (c) from any
assessment, abatement, removal, remedial, corrective, or other response action
in connection with an Environmental Law or (d) from any actual or alleged
damage, injury, threat, or harm to occupational health or safety, natural
resources, or the environment.
"Environmental Laws" means any current or future legal
requirement of any Governmental Authority pertaining to (a) the protection of
occupational health or safety, and the environment, (b) the protection of
natural resources and wildlife, (c) the protection or use of surface water and
groundwater or (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation or handling of, or exposure to, any
hazardous or toxic substance or material or (e) pollution (including any release
to land surface water and groundwater) and includes, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USC
9601 et seq., Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42
USC 6901 et seq., Federal Water Pollution Control Act, as amended by the Clean
Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of 1966, as amended, 42
USC 7401 et seq., Toxic Substances Control Act of 1976, 15 USC 2601 et seq.,
Hazardous Materials Transportation Act, 49 USC App. 1801 et seq., Occupational
Safety and Health Act of 1970, as amended, 29 USC
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651 et seq., Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning
and Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National
Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking Water Act
of 1974, as amended, 42 USC 300(f) et seq., any analogous implementing or
successor law, and any amendment, rule, regulation, order, or directive issued
thereunder.
"Equity Issuance" means any issuance by a Credit Party to any
Person (other than the Hill Group, Samstock L.L.C., EGI-DM Investments, L.L.C.
or their Affiliates or any Credit Party) of (a) shares of its Capital Stock, (b)
any shares of its Capital Stock pursuant to the exercise of options or warrants
or (c) any shares of its Capital Stock pursuant to the conversion of any debt
securities to equity; provided that Equity Issuance shall not include (i) the
issuance of Capital Stock or options as compensation in the ordinary course to
management or pursuant to any director or employee option plan or incentive or
restrictive stock plan or (ii) any issuance of shares of Capital Stock pursuant
to the Exchange Agreement or the Merger Agreements.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by the rules
and regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity, whether or not
incorporated, which is under common control with any Credit Party or any of its
Subsidiaries within the meaning of Section 4001(a)(14) of ERISA, or is a member
of a group which includes any Credit Party or any of its Subsidiaries and which
is treated as a single employer under Sections 414(b), (c), (m), or (o) of the
Code.
"Event of Default" has the meaning specified in Section 7.01.
"Excess Cash Flow" means, for any period, an amount equal to
(a) EBITDA for such period, minus (b) Capital Expenditures for such period,
except to the extent financed with Indebtedness (other than Indebtedness under
the Loan Documents) or pursuant to a Capital Lease, minus (c) cash Interest
Expense of the Credit Parties for such period, minus (d) Federal, state and
other income or franchise taxes actually paid during such period, minus (e)
Principal Amortization Payments made during such period, minus (f) voluntary
prepayments made during such period with respect to the Loans minus (g)
increases in (or plus any decreases in) Working Capital during such period,
minus (h) non-cash charges for non-current liabilities added in calculating
EBITDA for such period in which the cash expenditures in connection with such
non-cash charges are going to be required to be repaid in the immediate
succeeding annual period minus (i) mandatory prepayments made pursuant to
Section 2.04(b)(i), (v) or (vii) during such period with respect to the Loans.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as amended,
modified, succeeded or replaced from time to time.
"Exchange Agreement" means the Exchange Agreement, dated as of
February 19, 2002, between the Davel Parent, the Davel Borrower, DF Merger
Corp., the PhoneTel Borrowers, the Davel Lenders and the PhoneTel Lenders.
"Existing Davel Credit Agreement" means the Credit Agreement,
dated as of December 23, 1998, by and among the Davel Borrower, the Davel
Guarantors, the Existing Davel Lenders, the Administrative Agent, (as defined
therein) and the other parties thereto, as amended and otherwise modified by the
First Amendment to Credit Agreement and Consent and Waiver dated as of April 8,
1999, the Second Amendment to Credit Agreement dated as of March 9, 2000, the
Third Amendment to Credit Agreement dated as of June 22, 2000, the Fourth
Amendment to Credit Agreement dated as of September 28, 2000, the Fifth
Amendment dated as of November 29, 2000, the Sixth Amendment to Credit Agreement
dated as of March 23, 2001 and the Seventh Amendment to Credit Agreement and
Consent and Waiver dated as of February 19, 2002.
"Existing PhoneTel Credit Agreement" means the Loan and
Security Agreement, dated as of November 19, 1999 by and among the PhoneTel
Borrowers, the financial institutions that are signatories thereto and Foothill
Capital Corp. as agent, as amended by Amendment Number One to Loan and Security
Agreement dated as of December 31, 1999, Amendment Number Two to Loan and
Security Agreement dated November 13, 2000, Amendment Number Three to Loan and
Security Agreement dated as of February 1, 2001, Amendment Number Four to Loan
and Security Agreement dated as of March 1, 2001 Amendment Number Five to Loan
and Security Agreement dated as of April 1, 2001, Amendment Number Six to Loan
and Security Agreement dated as of May 1, 2001, Amendment Number Seven to Loan
and Security Agreement dated as of August 13, 2001 and Amendment Number Eight to
Loan and Security Agreement dated as of February 19, 2002.
"FCC License" means any of the licenses, permits or other
authorizations issued by the FCC relating to the Payphones owned and operated by
the Credit Parties and all other licenses, authorizations, waivers and permits
required under Communications Law for the Credit Parties to own and operate such
Payphones and to carry on their business.
"Federal Funds Rate" means for any day the rate of interest
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day; provided that (a) if such day is
not a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day and (b) if no such rate is
so published on such next preceding Business Day, the Federal Funds Rate for
such day shall be the last such rate in effect.
-9-
"First Tier Foreign Subsidiary" means each Foreign Subsidiary
in which any one or more of the Credit Parties owns directly more than 50%, in
the aggregate, of the Voting Stock of such Foreign Subsidiary.
"Foreign Subsidiary" means any Subsidiary of any Borrower or
any other Credit Party that is not a Domestic Subsidiary.
"Funded Debt" means, without duplication, the sum of (a) all
outstanding Indebtedness of the Credit Parties and their Subsidiaries for
borrowed money, (b) all purchase money Indebtedness of the Credit Parties and
their Subsidiaries, (c) the principal portion of all obligations of the Credit
Parties and their Subsidiaries under Capital Leases, (d) all obligations,
contingent or otherwise, relative to the face amount of all letters of credit
(other than letters of credit supporting inventory purchases in the ordinary
course of business), whether or not drawn, and banker's acceptances issued for
the account of a Credit Party or its Subsidiaries (it being understood that, to
the extent an undrawn letter of credit supports another obligation consisting of
Indebtedness, in calculating aggregated Indebtedness only such other obligation
shall be included), (e) all Guaranty Obligations of the Credit Parties and their
Subsidiaries with respect to Funded Debt of another Person, (f) all Funded Debt
of another entity secured by a Lien on any property of the Credit Parties and
their Subsidiaries whether or not such Funded Debt has been assumed by a Credit
Party or any of its Subsidiaries, (g) all Funded Debt of any partnership or
unincorporated joint venture to the extent a Credit Party or one of its
Subsidiaries is legally obligated or has a reasonable expectation of being
liable with respect thereto, net of any assets of such partnership or joint
venture and (h) the principal balance outstanding under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis.
"Governmental Approvals" means all authorizations, consents,
approvals, permits, licenses and exemptions of, registrations and filings with,
and reports to, all Governmental Authorities, including without limitation all
FCC Licenses and State Licenses.
"Governmental Authority" means any Federal, state, local,
provincial or foreign court, governmental agency, authority, instrumentality or
regulatory body, or any securities exchange or self-regulatory organization.
"Guarantors" means the Davel Guarantors, and each Additional
Credit Party which has executed a joinder agreement or otherwise become a
Guarantor hereunder.
-10-
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection and
standard contractual indemnities entered into in the ordinary course of
business) guaranteeing any Indebtedness of any other Person in any manner,
whether direct or indirect, and including without limitation any obligation,
whether or not contingent, (a) to purchase any such Indebtedness or other
obligation or any property constituting security therefor, (b) to advance or
provide funds or other support for the payment or purchase of such Indebtedness
or obligation or to maintain working capital, solvency or other balance sheet
condition of such other Person (including, without limitation, maintenance
agreements, comfort letters, take or pay arrangements, put agreements or similar
agreements or arrangements) for the benefit of the holder of Indebtedness of
such other Person, (c) to lease or purchase property, securities or services
primarily for the purpose of assuring the owner of such Indebtedness or (d) to
otherwise assure or hold harmless the owner of such Indebtedness or obligation
against loss in respect thereof. The amount of any Guaranty Obligation hereunder
shall (subject to any limitations set forth therein) be deemed to be an amount
equal to the outstanding principal amount (or maximum principal amount, if
larger) of the Indebtedness in respect of which such Guaranty Obligation is made
unless such primary obligation in respect of which such Guaranty Obligation is
made is not stated or determinable, in which case the amount of such Guaranty
Obligation shall be the maximum reasonably anticipated liability in respect
thereof (assuming the guaranteeing person is required to perform).
"Hazardous Materials" means any substance, material or waste
defined in or regulated under any Environmental Laws.
"Hill Group" means David R. Hill, his spouse and descendants
and any corporation, partnership, limited liability company, trust or other
entity controlled by David R. Hill and wholly-owned beneficially and of record
by David R. Hill and/or his spouse, children, grandchildren, parents, siblings,
in-laws, nephews and/or nieces or a trust established for any of their benefit,
provided such trust is controlled by David R. Hill or his representative,
principal heir or legatee.
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made (c) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person to the extent of the value of such property (other than
customary reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (d) all obligations, other
than intercompany items, of such Person issued or assumed as the deferred
purchase price of property or services purchased by such Person which would
appear as liabilities on a balance sheet of such Person, (e) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (f) all
Guaranty Obligations of such Person, (g) the principal portion of all
obligations of such Person under (i) Capital Leases and (ii) any synthetic
lease, tax retention operating lease, off-balance sheet loan or
-11-
similar off-balance sheet financing product of such Person where such
transaction is considered borrowed money indebtedness for tax purposes but is
classified as an operating lease in accordance with GAAP, (h) all net
obligations of such Person in respect of hedging agreements, foreign currency
exchange obligations, and commodity futures agreements, (i) the maximum amount
of all performance and standby letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (j) all preferred stock
issued by such Person and required by the terms thereof to be redeemed, or for
which mandatory sinking fund payments are due by a fixed date, (k) the aggregate
amount of uncollected accounts receivable of such Person subject at such time to
a sale of receivables (or similar transaction) regardless of whether such
transaction is effected without recourse to such Person or in a manner that
would not be reflected on the balance sheet of such Person in accordance with
GAAP, and (l) all obligations of such Person to repurchase any securities which
repurchase obligation is related to the issuance thereof, including, without
limitation, obligations commonly known as residual equity appreciation potential
shares. The Indebtedness of any Person shall include the Indebtedness of any
partnership or unincorporated joint venture in which such Person is legally
obligated.
"Intercreditor Agreement" means the Intercreditor and
Subordination Agreement, dated as of February 19, 2002, by and among the
Lenders, the Collateral Agent, the Davel Lenders, the Administrative Agent (as
defined in the Existing Davel Credit Agreement), the PhoneTel Lenders and the
Agent (as defined in the Existing PhoneTel Credit Agreement), and acknowledged
and agreed by the Credit Parties.
"Interest Expense" means, for any period, with respect to any
Person, all interest expense (paid or accrued to be paid), including the
interest component under Capital Leases, of such Person and its Subsidiaries
determined on a consolidated basis in accordance with GAAP.
"Investment" in any Person means (a) the acquisition (whether
for cash, property, services, assumption of Indebtedness, securities or
otherwise) of assets, shares of Capital Stock, bonds, notes, debentures,
partnership, joint ventures or other ownership interests or other securities of
such other Person or (b) any deposit with, or advance, loan or other extension
of credit to, such Person (other than deposits made in connection with the
purchase of equipment or other assets or to secure the performance of leases in
the ordinary course of business) or (c) any other capital contribution to or
investment in such Person, including, without limitation, any Guaranty
Obligation (including any support for a Letter of Credit issued on behalf of
such Person) incurred for the benefit of such Person.
"Joinder Agreement" means a Joinder Agreement substantially in
the form of Exhibit 6.01(k).
"Lender" has the meaning specified in the preamble to this
Agreement.
-12-
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind, including, without
limitation, any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, and any lease in the nature thereof.
"Loan Commitment Percentage" means, with respect to each
Lender, the percentage identified as its Loan Commitment Percentage on Schedule
1.01(d), as such percentage may be modified in connection with any assignment
made in accordance with the provisions of Section 8.05.
"Loan Documents" means this Agreement, the Registered Notes,
if any, the Security Agreement and the Intercreditor Agreement.
"Loans" means the loans made by the Lenders to the Borrowers
pursuant to Article II.
"Location Contract" means an agreement between a Credit Party
and an owner or operator of a facility pursuant to which such Credit Party has
installed one or more Payphones at such facility. All Location Contracts with
the same owner or operator (or any Affiliates or franchises controlled by such
owner or operator thereof) shall be considered to be one Location Contract.
"Material Adverse Effect" means a material adverse effect on
(a) the operations, business, assets or financial condition of the Davel Credit
Parties and their Subsidiaries, taken as a whole or the PhoneTel Borrowers,
taken as a whole, (b) the ability of any of the Credit Parties to perform any of
its obligations under this Agreement or any of the other Loan Documents to which
it is a party, or (c) the validity or enforceability of this Agreement or any of
the other Loan Documents or any of the rights and remedies of the Lenders
hereunder or thereunder taken as a whole, (d) the priority of the Collateral
Agent's Liens with respect to the Collateral as a result of the action or
failure to act of any Credit Party or (e) the value of the Collateral or the
amount the Lenders would be likely to receive after giving consideration to
delays in payment and costs of enforcement as a result of the liquidation of the
Collateral.
"Material First Tier Foreign Subsidiary" means any First Tier
Foreign Subsidiary that, together with its Subsidiaries, owns assets in excess
of $1,000,000.
"Maturity Date" means the earlier of (i) June 30, 2003 and
(ii) the Merger Termination Date.
"Merger" means the business combination, debt exchange and
related transactions contemplated by the Merger Agreements and the Exchange
Agreement.
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"Merger Agreements" means the Agreement and Plan of
Reorganization and Merger dated February 19, 2002, by and among the Davel
Parent, the Davel Borrower, DF Merger Corp., PT Merger Corp. and PhoneTel and
all other agreements, instruments and other documents regarding the Merger
executed and delivered by the Credit Parties pursuant thereto.
"Merger Termination Date" means the earlier of (i) the date
that any Merger Agreement expires by its terms or is otherwise terminated, and
(ii) August 31, 2002, unless the Merger shall have been consummated prior to
such date or such date shall be extended in writing by the Lenders.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the business of rating
securities.
"Multiemployer Plan" means a Plan covered by Title IV of ERISA
which is a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of
ERISA.
"Multiple Employer Plan" means a Single Employer Plan to which
any Credit Party or any of its Subsidiaries or any ERISA Affiliate and at least
one employer other than a Credit Party or any of its Subsidiaries or any ERISA
Affiliate are contributing sponsors.
"Net Cash Proceeds" means the aggregate cash proceeds
(including, without limitation, insurance and condemnation proceeds) received
from an Asset Disposition, an Equity Issuance or a Debt Issuance net of (a)
actual transaction costs payable to third parties, (b) taxes paid or a good
faith estimate of the taxes payable with respect to such proceeds, and (c) in
connection with an Asset Disposition only, (i) any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP; provided that any subsequent reversal or reduction of such reserves shall
constitute additional Net Cash Proceeds, and (ii) any amounts paid to holders of
existing Permitted Liens on any such assets to satisfy and discharge such
Permitted Liens.
"Net Income" means, for any period, with respect to any
Person, the net income after taxes for such period of such Person and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"Notes" means any promissory notes representing or evidencing
the Loans, including any Registered Note.
"Obligations" means any and all indebtedness, obligations and
liabilities of the Borrowers to the Lenders (whether now existing or hereafter
arising, voluntary or involuntary, whether jointly or not jointly owned with
others, direct or indirect, absolute or contingent,
-14-
liquidated or unliquidated, and whether or not from time to time decreased or
extinguished and later increased, created or incurred) arising out of or related
to any or all of the Loan Documents.
"Payphone" means a microprocessor-based, non-cellular
telephone through which a user may initiate a call payable only by coins or by
credit card, collect or third-number billing procedures, which has been
installed for operation and which is owned by a Credit Party.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any successor
thereto.
"Permitted Investments" means Investments which are (a) cash
or Cash Equivalents, (b) accounts receivable created, acquired or made in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms, (c) inventory, raw materials and general intangibles
acquired in the ordinary course of business, (d) Investments by a Credit Party
in or to another Credit Party and Investments by a Foreign Subsidiary in or to
another Foreign Subsidiary, (e) Investments in Capital Expenditures, (f)
investments acquired in the bankruptcy/reorganization of suppliers or customers
of a Credit Party, and (g) Investments existing as of the Closing Date and set
forth on Schedule 1.01(b).
"Permitted Liens" means (a) Liens securing Obligations, (b)
Liens for taxes not yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves determined in accordance
with GAAP have been established (and as to which the property subject to any
such Lien is not yet subject to foreclosure, sale, collection, levy or loss on
account thereof), (c) Liens in respect of property imposed by law arising in the
ordinary course of business such as materialmen's, mechanics', warehousemen's,
carrier's, landlords' and other nonconsensual statutory Liens which are not yet
due and payable or which are being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with GAAP have
been established (and as to which the property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof), (d) pledges or
deposits made in the ordinary course of business to secure payment of worker's
compensation insurance, unemployment insurance, pensions or social security
programs, (e) Liens arising from good faith deposits in connection with or to
secure performance of (i) tenders, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations or (ii)
leases of real property, in each case incurred in the ordinary course of
business (other than obligations in respect of the payment of borrowed money),
(f) Liens arising from good faith deposits in connection with or to secure
performance of statutory obligations and surety and appeal bonds, (g) easements,
rights-of-way, restrictions (including zoning restrictions), matters of plat,
minor defects or irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use of the encumbered
property for its intended purposes, (h) judgment Liens that would not constitute
an Event of Default, (i) Liens in connection with Indebtedness permitted by
Section 6.02(a)(iii), (j) Liens arising by virtue of any statutory or common law
provision relating to banker's liens, rights of setoff or similar rights as to
deposit accounts or other funds maintained with a creditor depository
institution, (k) Liens granted in favor of the collateral agent for the Davel
Lenders pursuant to the Existing Davel Credit Agreement and Liens granted in
favor of the agent for the PhoneTel Lenders pursuant to the
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Existing PhoneTel Credit Agreement, (l) Liens existing on the date hereof and
identified on Schedule 1.1(c); provided that, no such Lien shall extend to any
property other than the property subject thereto on the Closing Date, (m) any
precautionary filings of financing statements under the UCC made in relation to
leases of equipment which leases are otherwise permitted by this Credit
Agreement, (n) Liens of a collecting bank arising under Section 4-210 of the UCC
on items in the course of collection and (o) any interest of a licensor,
licensee, lessor, lessee, sublessor or sublessee in the ordinary course to the
extent such interest could be characterized as a Lien.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust, fund or other
enterprise (whether or not incorporated), or any Governmental Authority.
"Plan" means any defined employee plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which any Credit
Party or any of its Subsidiaries or any ERISA Affiliate is (or, if such plan
were terminated at such time, would under Section 4069 of ERISA be deemed to be)
an "employer" within the meaning of Section 3(5) of ERISA.
"PhoneTel" has the meaning specified in the preamble to this
Agreement.
"PhoneTel Borrowers" has the meaning specified in the preamble
to this Agreement.
"PhoneTel Lenders" means the Lenders (as defined in the
Existing PhoneTel Credit Agreement).
"Principal Amortization Payment" means a principal payment on
the Loans as set forth in Section 2.03(b).
"Principal Amortization Payment Date" means the date a
Principal Amortization Payment is due.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Real Properties" means the real properties that the Credit
Parties may own, operate or lease (as lessee or sublessee) from third parties
from time to time.
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"Regulation D, U, or X" means Regulation D, U or X,
respectively, of the Board of Governors of the Federal Reserve System as from
time to time in effect and any successor to all or a portion thereof.
"Regulatory Receipts" means any and all payments (net of
reasonable costs of recovery not reflected in the Budget) received by any of the
Credit Parties and their Subsidiaries from any judgment or settlement with
respect to, or otherwise in connection with those regulatory actions commonly
referred to as the Dial-Around Compensation Recovery Proceedings, the New
Service Test Proceedings and the End User Common Line Charge Proceedings and any
other similar proceeding resulting in payments to any of the Credit Parties and
their Subsidiaries which are not reflected in the Budget.
"Regulatory Receipts Account" has the meaning specified in
Section 2.04(b).
"Reportable Event" means a "reportable event" as defined in
Section 4043 of ERISA with respect to which the 30-day notice requirements to
the PBGC have not been waived.
"Register" has the meaning specified in Section 2.07(d).
"Registered Loan" has the meaning specified in Section
2.07(d).
"Registered Note" has the meaning specified in Section
2.07(d).
"Required Lenders" means two or more Lenders whose aggregate
Loan Commitment Percentages are equal to at least 66 2/3%.
"Requirement of Law" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or final,
non-appealable determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or to which
any of its material property is subject.
"Responsible Officer" means the chief executive officer,
president, chief financial officer, treasurer, or any other senior officer of a
Credit Party designated as such to the Lenders by such Credit Party.
"S&P" means Standard & Poor's Rating Services, a division of
The McGraw-Hill Companies, Inc. or any successor or assignee of the business of
such division in the business of rating securities.
-17-
"Scheduled Funded Debt Payments" means, as of the end of each
fiscal quarter of the Borrowers, the sum, without duplication, of all scheduled
payments of principal on Funded Debt for the applicable period ending on such
date (including the principal component of payments due on Capital Leases during
the applicable period ending on such date), it being understood that Scheduled
Funded Debt Payments shall not include voluntary prepayments or the mandatory
prepayments required pursuant to Section 2.04.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Security Agreement" means the Security Agreement dated as of
February 19, 2002 made by the Credit Parties to the Collateral Agent.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"State License" means any of the licenses, permits or other
authorizations issued by any state relating to the Payphones owned and operated
by the Credit Parties and all other licenses, authorizations, waivers, and
permits required under state law for the Credit Parties to own and operate such
Payphones and to carry on their business.
"Subsidiary" means, as to any Person, (a) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time, any class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time owned by such Person directly or indirectly
through Subsidiaries, and (b) any partnership, association, joint venture or
other entity in which such person directly or indirectly through Subsidiaries
has more than a 50% equity interest at any time.
"Termination Event" means (a) with respect to any Single
Employer Plan, the occurrence of a Reportable Event or the substantial cessation
of operations (within the meaning of Section 4062(e) of ERISA); (b) the
withdrawal of any Credit Party or any of its Subsidiaries or any ERISA Affiliate
from a Multiple Employer Plan during a plan year in which it was a substantial
employer (as such term is defined in Section 4001(a)(2) of ERISA), or the
termination of a Multiple Employer Plan; (c) the distribution of a notice of
intent to terminate or the actual termination of a Plan pursuant to Section
4041(a)(2) or 4041A of ERISA; (d) the institution of proceedings to terminate or
the actual termination of a Plan by the PBGC under Section 4042 of ERISA; (e)
any event or condition which is reasonably expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; or (f) the complete or partial withdrawal of any Credit
Party or any of its Subsidiaries or any ERISA Affiliate from a Multiemployer
Plan.
-18-
"Total Assets" means, with respect to any Person, all items
which in accordance with GAAP would be classified as assets of such Person and
its Subsidiaries on a consolidated basis.
"Total Commitment" means $10,000,000.
"Voting Stock" of a corporation means all classes of the
capital stock of such corporation then outstanding and normally entitled to vote
in the election of directors.
"Working Capital" means, with respect to any Person, the
excess of current assets (excluding cash and Cash Equivalents and deferred
taxes) of such Person and its Subsidiaries on a consolidated basis over current
liabilities (excluding the current portion of Funded Debt, deferred taxes and
those liabilities listed on Schedule 2.06) of such Person and its Subsidiaries
on a consolidated basis, as determined in accordance with GAAP.
SECTION 1.02 Computation of Time Periods. In this Agreement in
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding."
SECTION 1.03 Terms Generally. Unless the context requires
otherwise;
(a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein);
(b) any reference herein to any Person shall be
construed to include such Person's successors and assigns;
(c) the words "herein", "hereof" and "hereunder", and
words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof; and
(d) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement.
ARTICLE II - AMOUNT AND TERMS OF THE LOANS
SECTION 2.01 The Loans. Each Lender severally agrees, on the
terms and conditions hereinafter set forth, to make a single loan to each
Borrower on the Closing Date in an amount equal to one-half of such Lender's
Commitment. Any amount borrowed under this Section 2.01 and prepaid or repaid
may not be reborrowed.
SECTION 2.02 Making the Loans. The Loans shall be made on
notices by the Borrowers to the Lenders not later than 2:00 p.m. (New York City
time) on the Business Day
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immediately preceding the proposed date of the Loans. Each such notice shall be
irrevocable and binding on the Borrower providing such notice and shall specify
the requested date, amount and the use of the proceeds of the Loans. Each Lender
shall, before 2:00 p.m. (New York City time) on the date of the Loans, upon
fulfillment of the applicable conditions set forth in Article IV, make the
proceeds of its Loans available to the Borrowers, by wire transfer in
immediately available funds, to one or more accounts maintained by the Borrowers
with one or more commercial banks organized under the laws of the United States,
or any State thereof, and designated in such notice by the Borrowers to the
Lenders. No Lender shall be responsible for the failure or delay by any other
Lender in its obligation to make a loan hereunder; provided, however, that the
failure of any Lender to fulfill its obligations hereunder shall not relieve any
other Lender of its obligations hereunder.
SECTION 2.03 Interest and Amortization.
(a) Interest. The Borrowers shall pay interest on the
aggregate unpaid principal amount of the Loans from the date of the Loans until
such aggregate principal amount is paid in full, payable monthly, in arrears, on
the first day of each subsequent month, and on the Maturity Date, at an interest
rate per annum equal at all times to 15%; provided, however, that upon the
occurrence and during the continuance of an Event of Default, any principal of
and, to the fullest extent permitted by law, interest on the Loans and all other
amounts payable hereunder shall bear interest, payable on demand, at an interest
rate per annum equal at all times to 18%.
(b) Amortization. The principal amount of the Loans
shall be repaid in monthly payments on the dates set forth below, with the
remaining outstanding balance of the Loans being due and payable on the Maturity
Date.
<Table>
<Caption>
Principal Amortization Payment Date Principal Amortization Payment Amount
----------------------------------- -------------------------------------
July 31, 2002 $833,333
August 31, 2002 $833,333
September 30, 2002 $833,333
October 31, 2002 $833,333
November 30, 2002 $833,333
December 31, 2002 $833,333
January 31, 2003 $833,333
February 28, 2003 $833,333
March 31, 2003 $833,333
April 30, 2003 $833,333
May 31, 2003 $833,333
June 30, 2003 $833,333
</Table>
SECTION 2.04 Prepayments.
(a) Voluntary prepayments. The Borrowers may, upon at
least one day's notice to the Lenders stating the proposed date and principal
amount of the prepayment, and if such notice is given the Borrowers shall,
prepay the outstanding principal amount of the
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Loans in whole or in part, with accrued interest to the date of such prepayment
on the amount prepaid; provided that each partial prepayment shall be in a
principal amount of not less than $500,000 or an integral multiple of $250,000
in excess thereof.
(b) Mandatory Prepayments.
(i) Regulatory Receipts. Immediately upon
receipt by a Credit Party or any of its Subsidiaries of any Regulatory Receipts
that results in the total amount of Regulatory Receipts received by the Credit
Parties and their Subsidiaries in any month to exceed 120% of the amount set
forth for such category in the Budget for such month, the Borrowers shall
deposit an amount equal to such excess in a deposit account maintained by the
Collateral Agent for such purpose with a commercial bank designated by the
Collateral Agent to the Borrowers (the "Regulatory Receipts Account"). Promptly
after the last day of each of the second and fourth fiscal quarters of each
fiscal year of the Borrowers, the Collateral Agent may, and upon the request of
the Borrowers the Collateral Agent shall, withdraw all amounts then in the
Regulatory Receipts Account that in the aggregate exceed 120% of the amount set
forth for such category in the Budget for such two quarter period and apply such
amounts as a prepayment of the Loans.
(ii) Asset Sales. Immediately upon receipt
by a Credit Party or any of its Subsidiaries of proceeds from any Asset
Disposition, the Borrowers shall forward an amount equal to 100% of the Net Cash
Proceeds of such Asset Disposition to the Lenders as a prepayment of the Loans.
(iii) Issuances of Equity. Immediately upon
receipt by a Credit Party or any of its Subsidiaries of proceeds from any Equity
Issuance, the Borrowers shall forward 75% of the Net Cash Proceeds of such
Equity Issuance to the Lenders as prepayment of the Loans.
(iv) Issuance of Debt. Immediately upon
receipt by a Credit Party or any of its Subsidiaries of proceeds from any Debt
Issuance, the Borrowers shall forward 100% of the Net Cash Proceeds of such Debt
Issuance to the Lenders as a prepayment of the Loans.
(v) Monthly Positive Net Cash. Within thirty
days following the end of each calendar month for which EBITDA exceeds 120% of
the projected EBITDA set forth in the Budget for such calendar month, Borrowers
shall make a prepayment of the Loans in an amount equal to the excess, if any,
of (A) Cash In Bank of the Credit Parties and their Subsidiaries as of the last
day of such calendar month, minus (B) the sum of (1) $1,500,000 and (2) without
duplication to the extent deducted in determining Cash In Bank, the aggregate
amount of checks drawn by Credit Parties and the Subsidiaries as of the last day
of such calendar month but not yet then debited to the deposit accounts on which
such checks were drawn, for the payment of each of Borrower's and their
respective Subsidiaries' liabilities and expenses in accordance with the Budget
(to the extent payment thereof is not prohibited by this Agreement or any other
Loan Document).
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(vi) Excess Cash Flow. Within 30 days after
the end of each of the second and fourth fiscal quarter of each fiscal year of
the Credit Parties, the Borrowers shall make a prepayment of the Loans in an
amount equal to 50% of the Excess Cash Flow with respect to the two immediately
preceding fiscal quarters.
(vii) Extraordinary Receipts, Etc.
Immediately upon receipt by a Credit Party or any of its Subsidiaries of any
cash not in the ordinary course of business and not otherwise included in any of
the foregoing subsections of this Section 2.04, including, without limitation,
tax refunds, indemnity payments, deposits and other payments with respect to
general intangibles, but excluding Regulatory Receipts and the proceeds of
insurance otherwise governed by the Security Agreement (collectively,
"Extraordinary Receipts"), the Borrowers shall forward 100% of such cash
Extraordinary Receipts to the Lenders as a prepayment of the Loans; provided,
however, that so long as no Default shall have occurred and be continuing, the
Borrowers may retain and use such Extraordinary Receipts for general working
capital purposes constituting up to (A) $1,000,000 of New York State tax refunds
and (B) up to $50,000 of all other Extraordinary Receipts. Promptly upon the
determination by any Borrower that any obligation listed on Schedule 2.06 and
designated to be paid out of proceeds of the Loans in any notice of borrowing
delivered pursuant to Section 2.02 shall not be paid by such Borrower for any
reason, such Borrower shall, unless the Lenders otherwise agree to allow the
Borrowers to use such Loan proceeds for another purpose, forward cash in an
amount equal to 100% of the amount of such obligation to the Lenders as a
prepayment of the Loans.
All mandatory prepayments made pursuant to this Section 2.04 shall be applied to
the Loans in inverse order of payment date.
SECTION 2.05 Payments and Computations
(a) The Borrowers shall make each payment hereunder
not later than 2:00 p.m. (New York City time) on the day when due in U.S.
dollars to each of the Lenders at their respective addresses referred to in
Section 8.02 or at accounts maintained by the Lenders with commercial banks
organized under the laws of the United States, or any State thereof, and
designated in writing by the Lenders for such purposes, by wire transfer in
immediately available funds.
(b) All computations of interest shall be made by the
Lenders on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.
(c) Whenever any payment hereunder shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest.
SECTION 2.06 Use of Proceeds. The proceeds of the Loans shall
be available (and each of the Borrowers agrees that it shall use such proceeds)
solely (a) to pay certain past due obligations described on Schedule 2.06(a),
(b) to pay fees and expenses associated with the transactions contemplated by
the Loan Documents and other fees and
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expenses described on Schedule 2.06(b), which Schedule also includes the past
due obligations described in Schedule 2.06(a), and (c) to the extent permitted
by the Lenders, for general working capital requirements of the Borrowers and
the Guarantors other than the payment of such past due obligations.
SECTION 2.07 Evidence of Indebtedness; Registered Notes.
(a) Each Lender shall maintain in accordance with its
usual practice an account or accounts evidencing the Indebtedness of the
Borrowers to such Lender resulting from each Loan made by such Lender, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.
(b) The entries made in the accounts maintained
pursuant to paragraph (a) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein and, absent manifest
error, prima facie evidence of the accuracy of the information recorded therein;
provided that the failure of any Lender to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrowers to repay
the Loans in accordance with the terms of this Agreement.
(c) Any Lender may request that Loans made by it be
evidenced by a promissory note. In such event, each of the Borrowers shall
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) in a form furnished by the Collateral Agent and reasonably acceptable
to the Borrowers. Thereafter, the Loans evidenced by such promissory note and
interest thereon shall at all times (including after assignment pursuant to
Section 8.05) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory note is
a Registered Note, to such payee and its registered assigns).
(d) Each of the Borrowers agrees to record on a
register maintained by it (the "Register") each Loan and each repayment of
principal of and each payment of interest on each Loan. Each Loan recorded on
the Register (a "Registered Loan") may, at the election of any Lender, be
evidenced by a promissory note (a "Registered Note"). Upon the registration of
any Loan, any promissory note (other than a Registered Note) evidencing the same
shall be null and void and shall be promptly returned to such Borrower. Each of
the Borrowers agrees at the request of any Lender, to execute and deliver to
such Lender a Registered Note to evidence such Registered Loan, payable to such
Lender and otherwise duly completed. Once recorded on the Register, the Loan or
Loans evidenced by such promissory note may not be removed from the Register so
long as it remains outstanding, and a Registered Note may not be exchanged for a
promissory note that is not a Registered Note. An assignment pursuant to Section
8.05(b) of a Registered Note may be effected only by the surrender of the
Registered Note by the Assignor to the Borrower issuing such Registered Note and
either the reissuance of the Registered Note to the assignee or by the issuance
of a new Registered Note to the assignee.
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SECTION 2.08 Joint and Several Liability of Borrowers.
(a) Each of Borrowers, in consideration of the
financial accommodations to be provided by the Lenders under this Agreement, for
the mutual benefit, directly and indirectly, of each of Borrowers and in
consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Borrowers, with respect to the
payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this Section 2.08), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Borrower without preferences or distinction among
them.
(b) If and to the extent that any Borrower shall fail
to make any payment with respect to any of the Obligations as and when due or to
perform any of the Obligations in accordance with the terms thereof, then in
each such event the other Borrowers will make such payment with respect to, or
perform, such Obligation.
(c) The Obligations of each Borrower under the
provisions of this Section 2.08 constitute the absolute and unconditional, full
recourse Obligations of each Borrower enforceable against each such Borrower to
the full extent of its properties and assets, irrespective of the validity,
regularity or enforceability of this Agreement or any other circumstances
whatsoever.
(d) Except as otherwise expressly provided in this
Agreement, each Borrower hereby waives notice of acceptance of its joint and
several liability, notice of the occurrence of any Default or Event of Default
after the consummation of the Merger, notice of any demand for any payment under
this Agreement, notice of any action at any time taken or omitted by Lenders
under or in respect of any of the Obligations, any requirement of diligence or
to mitigate damages and, generally, to the extent permitted by applicable law,
all demands, notices and other formalities of every kind in connection with this
Agreement (except as otherwise provided in this Agreement). Each Borrower hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Lenders at any time or times in
respect of any default by any Borrower in the performance or satisfaction of any
term, covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Lenders in respect of any of the Obligations, and the
taking, addition, substitution or release, in whole or in part, at any time or
times, of any security for any of the Obligations or the addition, substitution
or release, in whole or in part, of any Borrower. Without limiting the
generality of the foregoing, each Borrower assents to any other action or delay
in acting or failure to act on the part of any Lender with respect to the
failure by any Borrower to comply with any of its respective Obligations,
including, without limitation, any failure strictly or diligently to assert any
right or to pursue any remedy or to comply fully with applicable laws or
regulations thereunder, which might, but for the provisions of this Section 2.08
afford grounds for terminating, discharging or relieving any Borrower, in whole
or in part, from any of its Obligations under this Section 2.08, it being the
intention of each Borrower that, so long as any of the Obligations hereunder
remain unsatisfied, the Obligations of such Borrower under this Section 2.08
shall not be discharged except by performance and then only to the extent of
such performance. The Obligations of each Borrower under this
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Section 2.08 shall not be diminished or rendered unenforceable by any winding
up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Borrower or any Lender. The joint and several
liability of the Borrowers hereunder shall continue in full force and effect
notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, constitution or place of formation of any of the
Borrowers or any Lender.
(e) The provisions of this Section 2.08 are made for
the benefit of the Lenders and their respective successors and assigns, and may
be enforced by it or them from time to time against any or all Borrowers as
often as occasion therefor may arise and without requirement on the part of any
such Lender, successor or assign first to marshal any of its or their claims or
to exercise any of its or their rights against any Borrower or to exhaust any
remedies available to it or them against any Borrower or to resort to any other
source or means of obtaining payment of any of the Obligations hereunder or to
elect any other remedy. The provisions of this Section 2.08 shall remain in
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by any Lender upon the insolvency, bankruptcy or reorganization of any
Borrower, or otherwise, the provisions of this Section 2.08 will forthwith be
reinstated in effect, as though such payment had not been made.
(f) Each Borrower hereby agrees that, after the
occurrence and during the continuance of any Default or Event of Default, the
payment of any amounts due with respect to the indebtedness owing by any
Borrower to any other Borrower is hereby subordinated to the prior payment in
full in cash of the Obligations. Each Borrower hereby agrees that after the
occurrence and during the continuance of any Default or Event of Default, such
Borrower will not demand, sue for or otherwise attempt to collect any
indebtedness of any other Borrower owing to such Borrower until the Obligations
shall have been paid in full in cash. If, notwithstanding the foregoing
sentence, such Borrower shall collect, enforce or receive any amounts in respect
of such indebtedness, such amounts shall be collected, enforced and received by
such Borrower as trustee for Lenders, and such Borrower shall deliver any such
amounts to Lenders for application to the Obligations in accordance with Section
2.04(b).
(g) The Borrowers agree among themselves that, in
connection with payments made hereunder, each Borrower shall have contribution
rights against the other Borrowers as permitted under applicable law. Such
contribution rights shall be subordinate and subject in right of payment to the
obligations of the Borrowers under the Loan Documents and no Borrower shall
exercise such rights of contribution until all Obligations (other than any such
obligations which by the terms thereof are stated to survive termination of the
Loan Documents) have been paid in full and the Commitments terminated.
ARTICLE III - GUARANTY
SECTION 3.01 Guaranty of Payment. Subject to Section 3.07,
each of the Guarantors hereby, jointly and severally, unconditionally guarantees
to each Lender the prompt payment of the Obligations in full when due (whether
at stated maturity, as a mandatory
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prepayment, by acceleration or otherwise). This guaranty (the "Guaranty") is a
guaranty of payment and not of collection and is a continuing guaranty and shall
apply to all Obligations whenever arising.
SECTION 3.02 Obligations Unconditional. The obligations of the
Guarantors hereunder are absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of any of the Loan
Documents, or any other agreement or instrument referred to therein, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor. Each Guarantor agrees that this
Guaranty may be enforced by the Lenders without the necessity at any time of
resorting to or exhausting any other security or collateral and without the
necessity at any time of having recourse to the Registered Notes or any other of
the Loan Documents or any collateral, if any, hereafter securing the Obligations
or otherwise and each Guarantor hereby waives the right to require the Lenders
to proceed against any Borrower or any other Person (including a co-guarantor)
or to require the Lenders to pursue any other remedy or enforce any other right.
Each Guarantor further agrees that it shall have no right of subrogation,
indemnity, reimbursement or contribution against any Borrower or any other
Guarantor of the Obligations for amounts paid under this Guaranty until such
time as the Lenders have been paid in full, all Commitments under the Credit
Agreement have been terminated and no Person or Governmental Authority shall
have any right to request any return or reimbursement of funds from the Lenders
in connection with monies received under the Loan Documents. Each Guarantor
further agrees that nothing contained herein shall prevent any Lender from suing
on any Registered Notes or any of the other Loan Documents or the Collateral
Agent from foreclosing its security interest in or Lien on any collateral, if
any, securing the Obligations or from exercising any other rights available to
it under this Credit Agreement, the Registered Notes, any other of the Loan
Documents, or any other instrument of security, if any, and the exercise of any
of the aforesaid rights and the completion of any foreclosure proceedings shall
not constitute a discharge of any of any Guarantor's obligations hereunder; it
being the purpose and intent of each Guarantor that its obligations hereunder
shall be absolute, independent and unconditional under any and all
circumstances. Neither any Guarantor's obligations under this Guaranty nor any
remedy for the enforcement thereof shall be impaired, modified, changed or
released in any manner whatsoever by an impairment, modification, change,
release or limitation of the liability of any Borrower or by reason of the
bankruptcy or insolvency of any Borrower. Each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Obligations
and notice of or proof of reliance by the Collateral Agent or any Lender upon
this Guaranty or acceptance of this Guaranty. The Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guaranty. All
dealings between any of the Borrowers and the Guarantors, on the one hand, and
the Collateral Agent and the Lenders, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon this
Guaranty. The Guarantors further agree to all rights of set-off as set forth in
Section 8.04.
SECTION 3.03 Modifications.
Each Guarantor agrees that (a) all or any part of the
Collateral now or hereafter held for the Obligations, if any, may be exchanged,
compromised or surrendered from time to
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time; (b) the Lenders shall not have any obligation to protect, perfect, secure
or insure any such security interests, liens or encumbrances now or hereafter
held, if any, for the Obligations or the properties subject thereto; (c) the
time or place of payment of the Obligations may be changed or extended, in whole
or in part, to a time certain or otherwise, and may be renewed or accelerated,
in whole or in part; (d) any Borrower and any other party liable for payment
under the Loan Documents may be granted indulgences generally; (e) any of the
provisions of the Registered Notes or any of the other Loan Documents may be
modified, amended or waived; (f) any party (including any co-guarantor) liable
for the payment thereof may be granted indulgences or be released; and (g) any
deposit balance for the credit of any Borrower or any other party liable for the
payment of the Obligations or liable upon any security therefor may be released,
in whole or in part, at, before or after the stated, extended or accelerated
maturity of the Obligations, all without notice to or further assent by such
Guarantor, which shall remain bound thereon, notwithstanding any such exchange,
compromise, surrender, extension, renewal, acceleration, modification,
indulgence or release.
SECTION 3.04 Waiver of Rights. Each Guarantor expressly waives
to the fullest extent permitted by applicable law: (a) notice of acceptance of
this Guaranty by the lenders and of all extensions of credit to the Borrowers by
the Lenders; (b) presentment and demand for payment or performance of any of the
Obligations; (c) protest and notice of dishonor or of default (except as
specifically required in this Agreement) with respect to the Obligations or with
respect to any security therefor; (d) notice of the Lenders obtaining, amending,
substituting for, releasing, waiving or modifying any security interest, lien or
encumbrance, if any, hereafter securing the Obligations, or the Lenders'
subordinating, compromising, discharging or releasing such security interests,
liens or encumbrances, if any; (e) all other notices to which such Guarantor
might otherwise be entitled; and (f) demand for payment under this Guaranty.
SECTION 3.05 Reinstatement. The obligations of each Guarantor
under this Article III shall be automatically reinstated if and to the extent
that for any reason any payment by or on behalf of any Person in respect of the
Obligations is rescinded or must be otherwise restored by any holder of any of
the Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
each Lender promptly upon demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by such
Lender in connection with such rescission or restoration, including any such
costs and expenses incurred in defending against any claim alleging that such
payment constituted a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency or similar law. Upon the request of the Borrowers, a
Lender will provide written support for any claim made pursuant to this Section
3.05; provided that failure to provide such written support shall not impair a
Lender's claim hereunder.
SECTION 3.06 Remedies. Each Guarantor agrees that, as between
it, on the one hand, and the Lenders, on the other hand, the Obligations may be
declared to be forthwith due and payable as provided in Section 7.01 (and shall
be deemed to have become automatically due and payable in the circumstances
provided in Section 7.01) notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing such Obligations from
becoming automatically due and payable) as against any other Person and that, in
the event of such declaration (or such Obligations being deemed to have become
automatically
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due and payable), such Obligations (whether or not due and payable by any other
Person) shall forthwith become due and payable by such Guarantor. Each Guarantor
acknowledges and agrees that its obligations hereunder are secured in accordance
with the terms of the Security Agreement and that the Lenders may exercise their
remedies thereunder in accordance with the terms thereof.
SECTION 3.07 Limitation of Guaranty. Notwithstanding any
provision to the contrary contained herein or in any of the other Loan
Documents, to the extent the obligations of any Guarantor shall be adjudicated
to be invalid or unenforceable for any reason (including, without, limitation,
because of any applicable state or federal law relating to fraudulent
conveyances or transfers) then the obligations of such Guarantor hereunder shall
be limited to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the Bankruptcy
Code).
SECTION 3.08 Rights of Contribution. The Credit Parties agree
among themselves that, in connection with payments made hereunder, each Credit
Party shall have contribution rights against the other Credit Parties as
permitted under applicable law. Such contribution rights shall be subordinate
and subject in right of payment to the obligations of the Credit Parties under
the Loan Documents and no Credit Party shall exercise such rights of
contribution until all Obligations (other than any such obligations which by the
terms thereof are stated to survive termination of the Loan Documents) have been
paid in full and the Commitments terminated.
ARTICLE IV - CONDITIONS OF LENDING
SECTION 4.01 Conditions Precedent to the Loans. The obligation
of the Lenders to make the Loans to the Borrowers is subject to the satisfaction
on a date on or before February 22, 2002 of each of the following conditions
precedent:
(a) Executed Loan Documents. Receipt by the Lenders
of duly executed copies of: this Agreement and each of the other Loan Documents,
each in form and substance reasonably acceptable to the Lenders.
(b) Authority Documents.
(i) With respect to each Credit Party that
is a corporation, receipt by the Lenders of the following:
(A) Charter Documents. Copies of
the articles or certificates of incorporation or other charter documents of such
Credit Party certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other jurisdiction of its
incorporation and certified by a secretary or assistant secretary of such Credit
Party to be true and correct as of the Closing Date.
(B) Bylaws. A copy of the bylaws of
such Credit Party certified by a secretary or assistant secretary of such Credit
Party to be true and correct as of the Closing Date.
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(C) Resolutions. Copies of
resolutions of the Board of Directors of such Credit Party approving and
adopting the Loan Documents to which it is a party, the transactions
contemplated therein and authorizing execution and delivery thereof, certified
by a secretary or assistant secretary of such Credit Party to be true and
correct and in force and effect as of the Closing Date.
(D) Good Standing. Copies of
certificates of good standing, existence or its equivalent with respect to such
Credit Party certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation and each other
jurisdiction in which the failure to so qualify and be in good standing could
reasonably be expected to have a Material Adverse Effect on the business or
operations of such Credit Party in such jurisdiction.
(E) Incumbency. An incumbency
certificate of such Credit Party certified by a secretary or assistant secretary
of such Credit Party to be true and correct as of the Closing Date.
(ii) With respect to each Credit Party that
is a limited liability company, receipt by the Lenders of the following:
(A) Certificate of Formation. A
copy of the Certificate of Formation of such Credit Party certified to be true
and complete as of a recent date by the appropriate Governmental Authority of
the state or other jurisdiction of its formation and certified by the sole or
managing member of such Credit Party to be true and correct as of the Closing
Date.
(B) LLC Agreement. A copy of the
limited liability company agreement or operating agreement of such Credit Party
certified by the sole or managing member of such Credit Party to be true and
correct as of the Closing Date.
(C) Resolutions. Copies of
resolutions approving and adopting the Loan Documents to which it is a party,
the transactions contemplated therein and authorizing execution and delivery
thereof, certified by the sole or managing member of such Credit Party to be
true and correct and in force and effect as of the Closing Date.
(D) Good Standing. Copies of
certificates of good standing, existence or its equivalent with respect to such
Credit Party certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation and each other
jurisdiction in which the failure to so qualify and be in good standing could
reasonably be expected to have a Material Adverse Effect on the business or
operations of such Credit Party in such jurisdiction.
(E) Incumbency. An incumbency
certificate of such Credit Party certified by the sole or managing member of
such Credit Party to be true and correct as of the Closing Date.
(c) Opinion of Counsel. Receipt by the Lenders of an
opinion from legal counsel to the Davel Credit Parties with respect to the Davel
Credit Parties and an opinion
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from legal counsel to the PhoneTel Borrowers with respect to the PhoneTel
Borrowers, in each case in form and substance reasonably satisfactory to the
Lenders, addressed to the Lenders and dated the Closing Date.
(d) Financial Statements. Receipt by the Lenders of
such financial information regarding the Credit Parties and their Subsidiaries
as they may request, including, but not limited to, (i) the Form 10-Q filed with
the Securities Exchange Commission by each of (x) the Davel Parent and (y)
PhoneTel, in each case for the nine-month period ended September 30, 2001, (ii)
interim unaudited monthly financial statements for each of (x) the Davel Credit
Parties and (y) the PhoneTel Borrowers, in each case prepared in accordance with
GAAP (subject to normal year-end adjustments and the absence of footnotes), for
the trailing twelve-months ended as of the most recently available month end
prior to the Closing Date, (iii) pro forma projected monthly financial
statements of the Davel Credit Parties and the PhoneTel Borrowers on a combined
basis for the first eighteen (18) months following the Closing Date, which (A)
give effect to the Loans contemplated hereby and (B) reflect estimated
accounting adjustments as a consequence thereof, and (iv) projections of cash
flow for each of the Credit Parties and their Subsidiaries for the thirteen
weeks following the Closing Date, which give effect to the Loans contemplated
hereby.
(e) Ownership and Capital Structure. Receipt of
evidence and information satisfactory to the Lenders regarding (i) the
documentation to be entered into by and among the Credit Parties, their
shareholders, and/or any officers, directors or managers of any Credit Parties
in connection with this Agreement, and (ii) the capital and ownership structure
of the Credit Parties and their Subsidiaries after giving effect to this
Agreement.
(f) Personal Property Collateral. The Collateral
Agent shall have received, in form and substance reasonably satisfactory to the
Collateral Agent:
(i) searches of Uniform Commercial Code
("UCC") filings in the jurisdiction of the chief executive office of each Credit
Party and each jurisdiction where any Collateral is located and where a filing
would need to be made in order to perfect the Lenders' security interest in the
Collateral, copies of the financing statements on file in such jurisdictions and
evidence that no Liens exist other than Permitted Liens;
(ii) duly executed UCC financing statements
for each appropriate jurisdiction as it is necessary, in the Collateral Agent's
sole discretion, to perfect the Lenders' security interest in the Collateral;
(iii) searches of ownership of intellectual
property in the appropriate governmental offices as requested by the Collateral
Agent and such patent, trademark and copyright filings as requested by the
Collateral Agent;
(iv) all certificates evidencing the
collateral pledged to the Collateral Agent pursuant to the Security Agreement,
together with duly executed in blank undated transfer powers attached thereto;
and
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(v) all instruments and chattel paper in the
possession of a Credit Party, as required by the Security Agreement, together
with allonges or assignments as may be necessary to perfect the Lenders'
security interest in such Collateral.
(g) Evidence of Insurance. Receipt by the Collateral
Agent of copies of certificates of insurance of the Credit Parties evidencing
liability and casualty insurance meeting the requirements set forth in the Loan
Documents, including, but not limited to, naming the Collateral Agent as
additional insured or loss payee on behalf of the Lenders.
(h) Consents. Receipt by the Lenders of evidence that
(i) all governmental, shareholder and third party consents and approvals
necessary in connection with the financings and transactions contemplated hereby
have been received, and (ii) no condition or Requirement of Law exists which
could reasonably be likely to restrain, prevent or impose any material adverse
conditions on the financings or other transactions contemplated hereby.
(i) Litigation. Except as set forth on Schedule
5.01(i), there shall not exist any pending or, to the knowledge of any Credit
Party, threatened action, suit, investigation or proceeding against a Credit
Party or any of its Subsidiaries.
(j) Officer's Certificates. The Lenders shall have
received certificates executed by a Responsible Officer of each of the Borrowers
as of the Closing Date stating that, except as set forth on Schedule 4.01(j),
(i) the Credit Parties and each of their Subsidiaries are in compliance with all
existing material financial obligations after giving effect to the transactions
contemplated hereby, (ii) no action, suit, investigation or proceeding is
pending or, to the knowledge of any Credit Party, threatened in any court or
before any arbitrator or governmental instrumentality that purports to affect
the Credit Parties, any of their Subsidiaries or any transaction contemplated by
the Loan Documents, if such action, suit, investigation or proceeding could
reasonably be expected to have a Material Adverse Effect, (iii) the financial
statements and information delivered to the Lenders on or before the Closing
Date were prepared in good faith and in accordance with GAAP (subject, for
financial statements other than year-end financial statements, to normal
year-end adjustments and the absence of footnotes), (iv) since December 31,
2001, there has been no development or event relating to or affecting a Credit
Party or any of its Subsidiaries which has had or would be reasonably expected
to have a Material Adverse Effect; and (v) immediately after giving effect to
this Credit Agreement, the other Loan Documents and all the transactions
contemplated therein to occur on such date, (A) no Default or Event of Default
exists, and (B) all representations and warranties contained herein and in the
other Loan Documents are true and correct in all material respects.
(k) Fees and Expenses. The Borrowers shall have paid
to each Lender a fee equal to 1% of such Lender's Commitment and all fees and
expenses due and payable under Section 8.06.
(l) Material Adverse Effect. Except as set forth on
Schedule 4.01(j), no Material Adverse Effect and no material adverse change in
the facts and information regarding the Credit Parties and their Subsidiaries
provided to the Lenders shall have occurred since December 31, 2001.
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(m) Other. Receipt and satisfactory review by the
Lenders and their counsel of such other documents, instruments, agreements or
information as reasonably and timely requested by any Lender or its counsel,
including, but not limited to, shareholder agreements and information regarding
management of the Credit Parties and their Subsidiaries, litigation, tax,
accounting, labor, insurance, pension liabilities (actual or contingent), real
estate leases, material contracts, debt agreements, property ownership and
contingent liabilities of the Credit Parties and their Subsidiaries.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES
SECTION 5.01 Representations and Warranties of the Credit
Parties. Each of the Credit Parties hereby represents and warrants to the
Lenders as follows with respect to itself and its Subsidiaries:
(a) Organization and Good Standing. Each Credit Party
(i) is a corporation or limited liability company duly incorporated or
organized, validly existing and in good standing under the laws of the State (or
other jurisdiction) of its incorporation or organization, (ii) except as set
forth in Schedule 5.01(a), is duly qualified and in good standing as a foreign
corporation or limited liability company and authorized to do business in every
jurisdiction unless the failure to be so qualified, in good standing or
authorized could reasonably be expected to have a Material Adverse Effect, and
(iii) has the requisite corporate or limited liability company power and
authority to own its properties and to carry on its business as now conducted
and as proposed to be conducted.
(b) Due Authorization. Each Credit Party (i) has the
requisite corporate or limited liability company power and authority to execute,
deliver and perform this Credit Agreement and the other Loan Documents to which
it is a party and to incur the obligations herein and therein provided for and
(i) is duly authorized to, and has been authorized by all necessary corporate or
limited liability company action, to execute, deliver and perform this Credit
Agreement and the other Loan Documents to which it is a party.
(c) No Conflicts. Neither the execution and delivery
of the Loan Documents, nor the consummation of the transactions contemplated
therein, nor performance of and compliance with the terms and provisions thereof
by such Credit Party will (i) violate or conflict with any provision of its
articles or certificate of incorporation, operating agreement, articles of
organization or bylaws, (ii) violate, contravene or materially conflict with any
Requirement of Law or any other law, regulation (including, without limitation,
Regulation U, Regulation T or Regulation X), order, writ, judgment, injunction,
decree or permit applicable to it, (iii) violate, contravene or conflict with
contractual provisions of, or cause an event of default under, any indenture,
loan agreement, mortgage, deed of trust, contract or other agreement or
instrument to which it is a party or by which it may be bound, the violation of
which could reasonably be expected to have a Material Adverse Effect, or (iv)
result in or require the creation of any Lien (other than those contemplated in
or created in connection with the Loan Documents) upon or with respect to its
properties.
(d) Consents. Except for consents, approvals,
authorizations and filings and registrations which have been obtained, no
consent, approval, authorization or order
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of, or filing, registration or qualification with, any court or Governmental
Authority or third party in respect of any Credit Party is required in
connection with the execution, delivery or performance of this Credit Agreement
or any of the other Loan Documents by such Credit Party.
(e) Enforceable Obligations. This Credit Agreement
and the other Loan Documents have been duly executed and delivered and
constitute legal, valid and binding obligations of each Credit Party enforceable
against such Credit Party in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization or moratorium laws or
similar laws relating to or affecting creditors' rights generally or by general
equitable principles.
(f) No Default. Except as set forth on Schedule
5.01(f), no Credit Party, nor any of their Subsidiaries, is in default in any
respect under any contract, lease, loan agreement, indenture, mortgage, security
agreement or other agreement or obligation to which it is a party or by which
any of its properties is bound which default could reasonably be expected to
have a Material Adverse Effect. No Default or Event of Default has occurred or
exists except as previously disclosed in writing to the Lenders.
(g) Ownership. Each Credit Party, and each of its
Subsidiaries, is the owner of, and has good and marketable title to, or has a
valid license or lease to use all of its respective assets (including, without
limitation, its Intellectual Property (as defined in Section 5.01(p))) and none
of such assets is subject to any Lien other than Permitted Liens.
(h) Indebtedness. The Credit Parties and their
Subsidiaries have no Indebtedness except (i) as disclosed in the financial
statements referenced in Section 6.01(a), (ii) as set forth on Schedule 5.01(h)
and (iii) as otherwise permitted by this Credit Agreement.
(i) Litigation. There are no actions, suits or legal,
equitable, arbitration or administrative proceedings, pending or, to the
knowledge of any Credit Party, threatened against, any Credit Party or any of
its Subsidiaries which could reasonably be expected to have a Material Adverse
Effect except as set forth and described on Schedule 5.01(i).
(j) Taxes. Each Credit Party, and each of its
Subsidiaries, has filed, or caused to be filed, all material tax returns
(federal, state, local and foreign) required to be filed and paid or caused to
be paid (i) all material amounts of taxes shown thereon to be due and payable
(including interest and penalties) and (ii) all material other taxes, fees,
assessments and other governmental charges (including mortgage recording taxes,
documentary stamp taxes and intangibles taxes) that are due and payable, except
for such taxes (A) which are not yet delinquent or (B) that are being contested
in good faith and by proper proceedings, and against which adequate reserves are
being maintained in accordance with GAAP. To the knowledge of the Credit
Parties, there are no material amounts claimed to be due against any of them by
any Governmental Authority.
(k) Compliance with Law. Each Credit Party, and each
of its Subsidiaries, is in compliance with all Requirements of Law and all other
laws, rules, regulations, orders and decrees (including without limitation
Environmental Laws) applicable to
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it, or to its properties, unless such failure to comply could not reasonably be
expected to have a Material Adverse Effect.
(l) ERISA. Except as would not result or be
reasonably expected to result in a Material Adverse Effect:
(i) During the five-year period prior to the
date on which this representation is made or deemed made: (A) no Termination
Event has occurred, and, to the knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any Termination Event is
reasonably expected to occur, with respect to any Plan; (B) no "accumulated
funding deficiency," as such term is defined in Section 302 of ERISA and Section
412 of the Code, whether or not waived, has occurred with respect to any Plan;
(C) each Plan has been maintained, operated, and funded in compliance with its
own terms and in material compliance with the provisions of ERISA, the Code, and
any other applicable federal or state laws; and (D) no lien in favor or the PBGC
or a Plan has arisen or is reasonably expected to arise on account of any Plan.
(ii) The actuarial present value of all
"benefit liabilities" (within the meaning of Section 4001 of ERISA) under each
Single Employer Plan (determined, utilizing the actuarial assumptions used to
fund such Plans), whether or not vested, did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the fair market current value as of such date of the assets of such
Plan allocable to such accrued liabilities.
(iii) Except as described in Schedule
5.01(l), none of the Borrowers nor any ERISA Affiliate has incurred, or, to the
knowledge of the Credit Parties, is reasonably expected to incur, any withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer Plan. None
of the Borrowers nor any ERISA Affiliate has received any notification pursuant
to ERISA that any Multiemployer Plan is in reorganization (within the meaning of
Section 4241 of ERISA), is insolvent (within the meaning of Section 4245 of
ERISA), or has been terminated (within the meaning of Title IV of ERISA), and,
to the best knowledge of the Credit Parties, no Multiemployer Plan is reasonably
expected to be in reorganization, insolvent, or terminated.
(iv) No nonexempt prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) or
breach of fiduciary responsibility has occurred with respect to a Plan which has
subjected or is reasonably expected to subject any Borrower or any ERISA
Affiliate to any liability under Sections 406, 409, 502(i), or 502(l) of ERISA
or Section 4975 of the Code, or under any agreement or other instrument pursuant
to which any Borrower or any ERISA Affiliate has agreed or is required to
indemnify any person against any such liability.
(v) The present value of the liability of
each of the Borrowers and their respective Subsidiaries and each ERISA Affiliate
for post-retirement welfare benefits to be provided to their current and former
employees under Plans which are welfare benefit plans (as defined in Section
3(1) of ERISA), net of all assets under all such Plans allocable to such
benefits, are reflected on the Financial Statements in accordance with FASB 106.
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(vi) Each Plan which is a welfare plan (as
defined in Section 3(1) of ERISA) to which Sections 601-609 of ERISA and Section
4980B of the Code apply has been administered in material compliance with such
sections.
(m) Subsidiaries. Set forth on Schedule 5.01(m) is a
complete and accurate list of all Subsidiaries of each Credit Party. Information
on Schedule 5.01(m) includes jurisdiction of incorporation or organization, the
organizational identification number (if available), the number of shares of
each class of Capital Stock or other equity interests outstanding, the number
and percentage of outstanding shares of each class owned (directly or
indirectly) by such Credit Party; and the number and effect, if exercised, of
all outstanding options, warrants, rights of conversion or purchase and all
other similar rights with respect thereto. The outstanding Capital Stock and
other equity interests of all such Subsidiaries is validly issued, fully paid
and, with respect to any Subsidiary that is a corporation, non-assessable and is
owned by each such Credit Party, directly or indirectly, free and clear of all
Liens (other than those arising under or contemplated in connection with the
Loan Documents). Other than as set forth in Schedule 5.01(m), neither any Credit
Party nor any Subsidiary thereof has outstanding any securities convertible into
or exchangeable for its Capital Stock nor does any such Person have outstanding
any rights to subscribe for or to purchase or any options for the purchase of,
or any agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to its Capital Stock.
Schedule 5.01(m) may be updated from time to time by the Borrowers by giving
written notice thereof to the Lenders.
(n) Government Regulation.
(i) No part of the proceeds of the Loans
will be used, directly or indirectly, for the purpose of purchasing or carrying
any "margin stock" within the meaning of Regulation U, or for the purpose of
purchasing or carrying or trading in any securities. If requested by any Lender,
each of the Borrowers will furnish to each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form U-1 referred to in
Regulation U. No Indebtedness being reduced or retired out of the proceeds of
the Loans was or will be incurred for the purpose of purchasing or carrying any
margin stock within the meaning of Regulation U or any "margin security" within
the meaning of Regulation T. "Margin stock" within the meaning of Regulation U
does not constitute more than 25% of the value of the consolidated assets of the
Credit Parties and their Subsidiaries. None of the transactions contemplated by
the Loan Documents (including, without limitation, the direct or indirect use of
the proceeds of the Loans) will violate or result in a violation of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, or regulations issued pursuant thereto, or Regulation T, U or X.
(ii) No Credit Party, nor any of their
Subsidiaries, is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act or the Investment Company Act of 1940, each
as amended. In addition, no Credit Party, nor any of their Subsidiaries, is (A)
an "investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, and is not controlled by such a
company, or (B) a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of
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a "holding company" or of a "subsidiary" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(iii) No director, executive officer or
principal shareholder of any Credit Party or any of their Subsidiaries is a
director, executive officer or principal shareholder of any Lender. For the
purposes hereof the terms "director", "executive officer" and "principal
shareholder" (when used with reference to any Lender) have the respective
meanings assigned thereto in Regulation O issued by the Board of Governors of
the Federal Reserve System.
(iv) Each Credit Party and each Subsidiary
of a Credit Party is current with all material reports and documents, if any,
required to be filed with any state or federal securities commission or similar
agency and is in full compliance in all material respects with all applicable
rules and regulations of such commissions.
(o) Environmental Matters. Except as would not cause
or reasonably be expected to cause a Material Adverse Effect:
(i) Each of the Credit Parties is in
compliance with all applicable Environmental Laws.
(ii) Each of the Real Properties that a
Credit Party owns or leases and all operations at such Real Properties is in
compliance with all applicable Environmental Laws, and there is no violation of
any Environmental Law with respect to such Real Properties or the businesses
operated by the Credit Parties or any of their Subsidiaries (the "Businesses"),
and there are no conditions relating to the Businesses or such Real Properties
that would reasonably be expected to give rise to liability under any applicable
Environmental Laws.
(iii) No Credit Party has received any
written notice of, or inquiry from any Governmental Authority regarding, any
violation, alleged violation, non-compliance, liability or potential liability
regarding Hazardous Materials or compliance with Environmental Laws with regard
to any of the Real Properties or the businesses, nor, to the knowledge of a
Credit Party or any of its Subsidiaries, is any such notice being threatened.
(iv) Hazardous Materials have not been
transported or disposed of from the Real Properties that a Credit Party owns or
leases, or generated, treated, stored or disposed of at, on or under any of such
Real Properties or any other location, in each case by, or on behalf or with the
permission of, a Credit Party or any of its Subsidiaries in a manner that would
give rise to liability under any applicable Environmental Laws.
(v) No judicial proceeding or governmental
or administrative action is pending or, to the knowledge of a Credit Party or
any of its Subsidiaries, threatened, under any Environmental Law to which a
Credit Party or any of its Subsidiaries is or will be named as a party, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to a Credit Party or any of
its Subsidiaries, or the Real Properties.
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(vi) There has been no release (including,
without limitation, disposal) or threat of release of Hazardous Materials at or
from the Real Properties that a Credit Party owns or leases, or arising from or
related to the operations of a Credit Party or any of its Subsidiaries in
connection with such Real Properties or otherwise in connection with the
Businesses where such release constituted a violation of, or would give rise to
liability under, any applicable Environmental Laws.
(vii) None of the Real Properties that a
Credit Party owns or leases contains, or has previously contained, any Hazardous
Materials at, on or under such Real Properties in amounts or concentrations
that, if released, constitute or constituted a violation of, or could give rise
to liability under, Environmental Laws.
(viii) No Credit Party, nor any of its
Subsidiaries, has assumed any liability of any Person (other than another Credit
Party, or one of its Subsidiaries) under any Environmental Law.
(p) Intellectual Property. Each Credit Party owns, or
has the legal right to use, all patents, trademarks, tradenames, copyrights,
technology, know-how and processes (the "Intellectual Property") necessary for
each of them to conduct its business as currently conducted except for those the
failure to own or have such legal right to use would not have or be reasonably
expected to have a Material Adverse Effect. Except as could not reasonably be
expected to have a Material Adverse Effect, (i) no holding, decision or judgment
has been rendered by any Governmental Authority which would limit, cancel or
question the validity of any Intellectual Property and (ii) no action or
proceeding is pending seeking to limit, cancel or question the validity of any
Intellectual Property, or which, if adversely determined, would have a Material
Adverse Effect on the value of any Intellectual Property. Set forth on Schedule
5.01(p) is a list of all patents, registered and material unregistered
trademarks, tradenames and registered copyrights owned by each Credit Party or
that any Credit Party has the right to use. Except as provided on Schedule
5.01(p), no claim has been asserted against any Credit Party or its Subsidiaries
in writing and is pending by any Person challenging a Credit Party's right to
use any Intellectual Property, which is owned by such Credit Party or its
Subsidiaries or that such Credit Party or its Subsidiaries has a right to use,
or the validity of any such Intellectual Property, nor does any Credit Party
have knowledge of any such claim, and to the Credit Parties' knowledge, neither
the Credit Parties nor any of their Subsidiaries infringes any Intellectual
Property of any other Person, except for such claims that in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. Schedule
5.01(p) may be updated from time to time by the Borrowers by giving written
notice thereof to the Lenders.
(q) Investments. All Investments of each Credit Party
and its Subsidiaries are (i) as set forth on Schedule 5.01(q) or (ii) other
Permitted Investments.
(r) Location of Collateral. Set forth on Schedule
5.01(r)(i) is a list of all Real Properties with street address, county and
state where located. Set forth on Schedule 5.01(r)(ii) is a list of the chief
executive office, principal place of business and jurisdiction of organization
of each Credit Party. All personal property of the Credit Parties is located
within the fifty states of the United States and the District of Columbia unless
a Credit Party informs the Lenders in writing otherwise. Schedules 5.01(r)(i)
and 5.01(r)(ii) may be
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updated from time to time by the Borrowers by giving written notice thereof to
the Lenders. As of the Closing Date, none of the Credit Parties owns any Real
Properties.
(s) Disclosure. Neither this Agreement nor any
financial statements delivered to the Lenders nor any other document,
certificate or statement furnished to the Lenders by or on behalf of any Credit
Party in connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained therein or herein, taken as a whole,
not misleading in light of the circumstances under which such information was
provided.
(t) Licenses, etc. The Credit Parties have obtained
and hold in full force and effect, all franchises, licenses, permits,
certificates, authorizations, qualifications, accreditations, easements, rights
of way and other rights, consents and approvals which are necessary for the
operation of their respective businesses as presently conducted, except where
the failure to obtain same could not reasonably be expected to have a Material
Adverse Effect.
(u) Collateral Documents. The Collateral Documents
create valid security interests in, and Liens on, the Collateral purported to be
covered thereby, which security interests and Liens are currently (or will be,
upon the filing of appropriate financing statements in favor of the Lenders)
perfected security interests and Liens, prior to all other Liens other than
Permitted Liens.
(v) Financial Condition. The financial statements
delivered to the Lenders prior to the Closing Date and pursuant to Section
4.01(d): (i) have been prepared in accordance with GAAP (subject, in the case of
financial statements other than year-end financial statements, to normal
year-end adjustments and the absence of footnotes), and (ii) present fairly in
all material respects (on the basis disclosed in the footnotes to such financial
statements, if any) the consolidated and consolidating (as applicable) financial
condition, results of operations and cash flows of each of the Davel Credit
Parties and their Subsidiaries and the PhoneTel Borrowers, as applicable, as of
such date and for such periods.
(w) Sale of Assets. Except as set forth on Schedule
5.01(w), since September 30, 2001, there has been no sale, transfer or other
disposition by any Credit Party or any of their Subsidiaries of any material
part of the business or Property of the Credit Parties, taken as a whole, and no
purchase or other Acquisition by any of them of any business or Property
(including any Capital Stock of any other Person) material in relation to the
consolidated financial condition of the Credit Parties, taken as a whole, in
each case which is not (i) reflected in the most recent financial statements
delivered to the Lenders pursuant to Section 4.01(d) or in the notes thereto or
(ii) otherwise permitted by the terms of this Credit Agreement and communicated
to the Lenders.
(x) Use of Proceeds. The proceeds of the Loans will
be used solely for the purposes specified in Section 2.06.
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ARTICLE VI - COVENANTS OF THE CREDIT PARTIES
SECTION 6.01 Affirmative Covenants. Each Credit Party hereby
covenants and agrees that from the date of this Agreement and, thereafter, so
long as all of the Obligations have not been paid in full:
(a) Information Covenants. The Credit Parties will
furnish, or cause to be furnished, to each of the Lenders:
(i) Annual Financial Statements. As soon as
available, and in any event within 90 days after the close of each fiscal year
of the Borrowers, beginning with the fiscal year ended December 31, 2001, a
consolidated balance sheet and income statement of (A)(1) the Davel Credit
Parties and their Subsidiaries and (2) the PhoneTel Borrowers, or (B) if the
Merger shall have become effective before the beginning of or during such fiscal
year, of the Davel Parent and its Subsidiaries, in each case as of the end of
such fiscal year, together with related consolidated statements of cash flows
for such fiscal year, setting forth in comparative form, if practical,
consolidated figures for the preceding fiscal year, all such consolidated
financial information described above to be in reasonable form and detail and
audited by independent certified public accountants reasonably acceptable to the
Lenders and whose opinion shall be to the effect that such financial statements
have been prepared in accordance with GAAP (except for changes with which such
accountants concur) and shall not be limited as to the scope of the audit or
qualified in any manner (except for the opinions with respect to the fiscal year
2001 financial statements, which may be qualified).
(ii) Interim Financial Statements. As soon
as available, and in any event within 45 days after the close of each fiscal
quarter of the Borrowers and within 30 days after the end of each calendar
month, a consolidated balance sheet and income statement of (A)(1) the Davel
Credit Parties and their Subsidiaries and (2) the PhoneTel Borrowers, or (B) if
the Merger shall have become effective before the end of such fiscal quarter or
such calendar month, as the case may be, of the Davel Parent and its
Subsidiaries, in each case, as of the end of such fiscal quarter or calendar
month, as the case may be, together with related consolidated statements of cash
flows for such fiscal quarter or calendar month, as applicable, in the case of
the income statement and statement of cash flow setting forth in comparative
form, if practical, consolidated figures for the corresponding period of the
preceding fiscal year and in the case of the balance sheet setting forth in
comparative form, if practical, consolidated figures for the corresponding last
date of the prior fiscal year, all such financial information described above to
be in reasonable form and detail and reasonably acceptable to the Lenders, and
accompanied by a certificate of the chief financial officer of the Borrower to
the effect that such quarterly financial statements fairly present in all
material respects the financial condition of the Davel Credit Parties and their
Subsidiaries or the PhoneTel Borrowers, as applicable, and have been prepared in
accordance with GAAP (subject to normal year-end adjustments and the absence of
footnotes).
(iii) Officer's Certificate. At the time of
delivery of the financial statements provided for in Sections 6.01(a)(i) and
6.01(a)(ii) above, a certificate of the chief financial officers or officer of
the Davel Borrower and the PhoneTel Borrowers, substantially in the form of
Exhibit 6.01(a), (i) demonstrating compliance with the financial
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covenants contained in Section 6.01(b) by calculation thereof as of the end of
each such period, (ii) demonstrating compliance with any other terms of this
Credit Agreement as reasonably requested by the Lenders and (iii) stating that
no Default or Event of Default exists, or if any Default or Event of Default
does exist, specifying the nature and extent thereof and what action the
Borrowers propose to take with respect thereto. If necessary, the Borrowers
shall deliver financial statements prepared in accordance with GAAP as of the
Closing Date, to the extent GAAP has changed since the Closing Date, in order to
show compliance with the terms of this Credit Agreement, including Section
6.01(b).
(iv) Annual Business Plan and Budgets. As
soon as available, and in any event within 90 days after the end of each fiscal
year of the Borrowers, an annual business plan and budget of the Credit Parties
and their Subsidiaries on a combined and consolidated basis, as applicable,
containing, among other things, pro forma monthly financial projections for the
next fiscal year.
(v) Accountant's Certificate. Within the
period for delivery of the annual financial statements provided in Section
6.01(a)(i), a certificate of the accountants conducting the annual audit stating
that they have reviewed this Credit Agreement and stating further whether, in
the course of their audit, they have become aware of any Default or Event of
Default of a financial nature and, if any such Default or Event of Default
exists, specifying the nature and extent thereof.
(vi) Auditor's Reports. Promptly upon
receipt thereof, a copy of any "management letter" submitted by independent
accountants to any of the Credit Parties or their Subsidiaries in connection
with any annual, interim or special audit of the books of any such Person.
(vii) Reports. Promptly upon transmission or
receipt thereof, (A) copies of any public filings and registrations with, and
reports to or from, the Securities and Exchange Commission, or any successor
agency, and copies of all financial statements, proxy statements, notices and
reports as any of the Credit Parties and their Subsidiaries shall send to their
shareholders generally in their capacity as shareholders and (b) upon the
written request of the Lenders, all material reports and written information to
and from the United States Environmental Protection Agency, or any state or
local agency responsible for environmental matters, the United States
Occupational Health and Safety Administration, or any state or local agency
responsible for health and safety matters, or any successor agencies or
authorities concerning material environmental, health or safety matters.
(viii) Notices. Promptly (and in any event
within five Business Days) after a Responsible Officer of a Credit Party obtains
knowledge thereof, notice of (A) the occurrence of an event or condition
consisting of a Default or Event of Default, specifying the nature and existence
thereof and what action the Credit Parties propose to take with respect thereto,
and (B) the occurrence of any of the following with respect to a Credit Party or
any Subsidiary of a Credit Party: (1) the pendency or commencement of any
litigation, arbitral or governmental proceeding against a Credit Party or any of
its Subsidiaries which if adversely determined could reasonably be expected to
have a Material Adverse Effect, (2) the institution of any proceedings against a
Credit Party or any of its Subsidiaries with respect to, or the receipt of
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written notice by such Person of potential liability or responsibility for
violation, or alleged violation of any federal, state or local law, rule or
regulation (including but not limited to, Environmental Laws) the violation of
which could reasonably be expected to have a Material Adverse Effect, (3) any
loss of or damage to any Property of a Credit Party or its Subsidiaries or the
commencement of any proceeding for the condemnation or other taking of any
Property of a Credit Party or its Subsidiaries, if such loss, damage or
proceeding has had or could reasonably be expected to have a Material Adverse
Effect, (4) if it could cause or be reasonably expected to cause a Material
Adverse Effect, any (x) non-renewal, cancellation, termination, revocation,
suspension, impairment or material modification of any FCC License or State
License or the occurrence of any event or the existence of any circumstances
which, in the reasonable judgment of a Credit Party, is likely to lead to any
non-renewal, cancellation, termination, revocation, suspension, impairment or
material modification of any FCC License or State License, (y) default or
forfeiture with respect to any FCC License or State License or (z) hearing
designation order concerning any FCC or State application filed by any Credit
Party or any FCC License or State License held by any Credit Party or (5) any
order or decision by the FCC that would have a significant impact on the
business of the Credit Parties and their Subsidiaries, taken as a whole.
(ix) ERISA. Promptly (and in any event
within five Business Days) after any of the Credit Parties or any of their
Subsidiaries or any ERISA Affiliate obtains knowledge thereof, notice of (A) any
event or condition, including, but not limited to, any Reportable Event, that
constitutes, or is reasonably expected to result in, a Termination Event; (B)
with respect to any Multiemployer Plan, the receipt of notice as prescribed in
ERISA or otherwise of any withdrawal liability assessed against the Credit
Parties or any of their Subsidiaries or any of their ERISA Affiliates, or of a
determination that any Multiemployer Plan is in reorganization or insolvent
(both within the meaning of Title IV of ERISA); (C) the failure to make full
payment on or before the due date (including extensions) thereof of all amounts
which a Credit Party or any of its Subsidiaries or any of its ERISA Affiliates
is required to contribute to each Plan pursuant to such Plan's terms and as
required to meet the minimum funding standard set forth in Section 302 of ERISA
and Section 412 of the Code with respect thereto; or (D) any change in the
funding status of any Plan that could have a Material Adverse Effect; together,
with a description of any such event or condition or a copy of any such notice
and a statement by the principal financial officer of the Borrowers briefly
setting forth the details regarding such event, condition, or notice, and the
action, if any, which has been or is being taken or is proposed to be taken by
the Credit Parties or any of their Subsidiaries with respect thereto. Promptly
upon request, the Credit Parties or any of their Subsidiaries shall furnish each
of the Lenders with such additional information concerning any Plan as may be
reasonably requested by the Lenders, including, but not limited to, copies of
each annual report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA and the Code, respectively, for each
"plan year" (within the meaning of Section 3(39) of ERISA).
(x) Environmental.
(A) Subsequent to a notice from any
Governmental Authority where the subject matter of such notice could reasonably
be expected to have a Material Adverse Effect, or during the existence of an
Event of Default, upon the reasonable written request of Lenders, furnish, at
the Credit Parties' expense, a report of an environmental
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assessment of reasonable scope, form and depth, including, where appropriate,
invasive soil or groundwater sampling, by a consultant reasonably acceptable to
the Lenders addressing the subject of such notice or, if during the existence of
an Event of Default, regarding any release or threat of release of Hazardous
Materials on any Real Property and the compliance by the Credit Parties with
Environmental Laws. If the Credit Parties fail to deliver such an environmental
report within sixty (60) days after receipt of such written request, then the
Lenders may arrange for same, and the Credit Parties hereby grant to the Lenders
and its representatives reasonable access to the Real Properties and a license
of a scope reasonably necessary to undertake such an assessment (including,
where appropriate, invasive soil or groundwater sampling). The reasonable cost
of any assessment arranged for by the Lenders pursuant to this provision will be
payable by the Credit Parties on demand and added to the obligations secured by
the Collateral Documents.
(B) Each Credit Party will conduct
and complete all investigations, studies, sampling, and testing and all
remedial, removal, and other actions required under the Environmental Laws to
address all Hazardous Materials on, from, or affecting any Real Property to the
extent necessary to be in compliance with all Environmental Laws and all other
applicable federal, state and local laws, regulations, rules and policies and
with the orders and directives of all Governmental Authorities exercising
jurisdiction over such real property to the extent any failure would have or be
reasonably expected to have a Material Adverse Effect.
(xi) Coin Volume Report. Within 30 days
after the end of each month, a report showing the total coin volume and the
average coin volume by phone for the prior month, together with a comparison of
such total coin volume and individual coin volume for the same month during the
prior fiscal year, in each case in a form reasonably acceptable to the Lenders.
(xii) Bi-Weekly Cash Flow Forecasts. On the
fifth Business Day of every other week, a week-by-week forecast of the projected
cash flows of the Credit Parties and their Subsidiaries on a consolidated and
combined basis, as applicable, for the thirteen (13) week period commencing as
of the first Business Day of such week, including without limitation, (A) the
total coin volume and (B) weighted-average coin volume by phone (in each case,
based on daily bank deposits) for such period and cumulative from January 1,
2002, together with a statement of the historical cash flows of the Credit
Parties and their Subsidiaries including without limitation, (A) the total coin
volume and (B) weighted-average coin volume by phone for such period and
cumulative from January 1, 2002 (in each case, based on daily bank deposits),
and a reconciliation to the then most recently delivered forecast pursuant to
this clause for the period commencing on the first Business Day of such recently
delivered forecast and ending on the last Business Day of the then most recently
ended week, each such forecast, historical cash flow statement and
reconciliation report to be in a form reasonably acceptable to the Lenders.
(xiii) Other Information. With reasonable
promptness upon any such request, such other information regarding the business,
properties or financial condition of the Credit Parties and their Subsidiaries
as the Lenders may reasonably request.
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(b) Financial Covenants.
(i) Budget Compliance. The Credit Parties
shall not pay expenses in cash, nor shall they permit their Subsidiaries to pay
expenses in cash, during any year-to-date period ending as of the last day of
any calendar month, in amounts which would cause the aggregate amount of
expenses paid for in cash with respect to any category set forth in the Budget
for such year-to-date period to exceed the amount set forth in the Budget
(designated therein as "Cumulative") and corresponding to such category for such
period by an amount in excess of 10% of such amount set forth in the Budget.
(ii) Minimum EBITDA. The Credit Parties
shall not permit EBITDA for any fiscal period beginning, in each case, on
January 1, 2002 and ending on the last day of each month set forth below, taken
as one accounting period, to be less than the amount set forth opposite such
month below:
<Table>
<Caption>
Period Ending EBITDA
- ------------- --------------
January, 2002 $ (850,000)
February, 2002 (1,000,000)
March, 2002 (600,000)
April, 2002 924,000
May, 2002 1,597,000
June, 2002 2,236,000
July, 2002 3,504,000
August, 2002 4,833,000
September, 2002 8,074,000
October, 2002 9,183,000
November, 2002 10,054,000
December, 2002 15,779,000
January, 2003 16,668,000
February, 2003 17,415,000
March, 2003 18,522,000
April, 2003 19,147,000
May, 2003 19,764,000
June, 2003 21,666,000
July, 2003 21,885,000
</Table>
(iii) Minimum Adjusted EBITDA. The Credit
Parties shall not permit Adjusted EBITDA for any fiscal period beginning, in
each case, on January 1, 2002 and ending on the last day of each month set forth
below, taken as one accounting period, to be less than the amount set forth
opposite such month below:
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<Table>
<Caption>
Period Ending EBITDA
- ------------- -----------
January, 2002 $ (850,000)
February, 2002 (1,000,000)
March, 2002 (600,000)
April, 2002 74,000
May, 2002 747,000
June, 2002 536,000
July, 2002 1,804,000
August, 2002 3,133,000
September, 2002 4,391,000
October, 2002 5,500,000
November, 2002 6,371,000
December, 2002 7,596,000
January, 2003 8,614,000
February, 2003 9,431,000
March, 2003 10,255,000
April, 2003 10,880,000
May, 2003 11,497,000
June, 2003 13,116,000
</Table>
(c) Preservation of Existence and Franchises. Each of
the Credit Parties will do all things necessary to preserve and keep in full
force and effect its existence, rights, franchises and authority except as
permitted by Section 6.02(d).
(d) Books and Records. Each of the Credit Parties
will, and will cause its Subsidiaries to, keep complete and accurate books and
records of its transactions in accordance with GAAP (including the establishment
and maintenance of appropriate reserves).
(e) Compliance with Law and Licenses. Each of the
Credit Parties will, and will cause its Subsidiaries to, (i) comply with all
laws, rules, regulations and orders, and all applicable restrictions imposed by
all Governmental Authorities, applicable to it and its property (including,
without limitation, Environmental Laws), and (b) comply with and maintain all
FCC Licenses and State Licenses, unless such noncompliance or nonmaintenance
could not reasonably be expected to have a Material Adverse Effect.
(f) Payment of Taxes and Claims. Each of the Credit
Parties will pay, settle or discharge (i) all taxes, assessments and
governmental charges or levies imposed upon it, or upon its income or profits,
or upon any of its properties, before they shall become delinquent and (ii) all
lawful claims (including claims for labor, materials and supplies) which, if
unpaid, might give rise to a Lien upon any of its properties; provided, however,
that a Credit Party shall not be required to pay any such tax, assessment,
charge, levy, claim or Indebtedness which is being contested in good faith by
appropriate proceedings and as to which adequate reserves therefor have been
established in accordance with GAAP, unless the failure to make any such payment
(A) would give rise to an immediate right to foreclose or collect on a Lien
securing such amounts or (B) could reasonably be expected to have a Material
Adverse Effect.
(g) Insurance. Each of the Credit Parties will at all
times maintain in full force and effect insurance (including worker's
compensation insurance, liability insurance, casualty insurance and business
interruption insurance) from insurance companies having a rating of at least A
by Best's Rating Services, in such amounts, covering such risks and liabilities
and with such deductibles or self-insurance retentions as are in accordance with
normal industry
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practice. The present insurance coverage of the Credit Parties and their
Subsidiaries is outlined as to carrier, policy number, expiration date, type and
amount on Schedule 6.01(g). Schedule 6.01(g) shall be amended and updated by the
Credit Parties on an annual basis or upon the request of the Lenders.
(h) Maintenance of Property. Each of the Credit
Parties will maintain and preserve its properties and equipment in good repair,
working order and condition, normal wear and tear excepted (subject to casualty
events), and will make, or cause to be made, in such properties and equipment
from time to time all repairs, renewals, replacements, extensions, additions,
betterments and improvements thereto as may be needed or proper, to the extent
and in the manner customary for companies in similar businesses.
(i) Collateral.
(i) If, subsequent to the Closing Date, a
Credit Party shall (A) acquire any real property, any patented, registered or
applied for intellectual property or any securities or (B) acquire any other
personal property required to be delivered to the Collateral Agent as Collateral
hereunder or under any of the Collateral Documents, the Borrowers shall
immediately notify the Collateral Agent of same.
(ii) Each Credit Party shall (within 30 days
of such request) take such action, as reasonably requested by the Collateral
Agent and at its own expense, to ensure that the Lenders have a perfected Lien
in all owned real property and such personal property of the Credit Parties as
set forth in the Security Agreement (whether now owned or hereafter acquired),
subject only to Permitted Liens. Such actions to be required by the Collateral
Agent may include, but are not limited to, delivery of mortgages, real estate
title insurance policies, surveys, flood certificates, zoning certificates,
environmental reports, valuations, UCC financing statements, patent, trademark
or copyright filings and legal opinions with respect thereto. Upon the request
of the Collateral Agent, the Borrowers shall provide such information as to the
location of the personal property of the Credit Parties as reasonably requested
by the Collateral Agent.
(j) Audits/Inspections. Upon reasonable notice and
during normal business hours, each Credit Party will permit representatives
appointed by Lenders, including, without limitation, independent accountants,
agents, attorneys and appraisers to visit and inspect such Credit Party's
property, including its books and records, its accounts receivable and
inventory, its facilities and its other business assets, and to make photocopies
or photographs thereof and to write down and record any information such
representative obtains and shall permit the Lenders or its representatives to
investigate and verify the accuracy of information provided to the Lenders,
including, without limitation, the performance of collateral valuation reviews
from time to time and to discuss all such matters with the officers, employees
and representatives of the Credit Parties. The Credit Parties shall reimburse
the Lenders for all costs and expenses actually incurred by it in conducting
each such review; provided that, if an Event of Default has not occurred, the
Credit Parties shall not be required to reimburse the Lenders more than, in any
one fiscal year, the lesser of $7,500 per year or $500 per person per day plus
actual out of pocket expenses.
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(k) Additional Credit Parties. At the time any Person
becomes a Subsidiary of a Credit Party, the Borrowers shall so notify the
Lenders and promptly thereafter (but in any event within 30 days after the date
thereof) shall cause such Person to (i) if it is a Domestic Subsidiary, execute
a Joinder Agreement, (ii) cause all of the Capital Stock of such Person (if it
is a Domestic Subsidiary) or 65% of the Capital Stock of such Person (if it is a
Material First Tier Foreign Subsidiary) to be delivered to the Collateral Agent
(together with undated stock powers signed in blank) and pledged to the
Collateral Agent pursuant to an appropriate pledge agreement (or a joinder to
the existing Security Agreement) and otherwise in a form reasonably acceptable
to the Collateral Agent, (iii) if such Person is a Domestic Subsidiary, pledge
all of its assets to the Collateral Agent pursuant to a security agreement in
substantially the form of the Security Agreement (or a joinder to the existing
Security Agreement) and otherwise in a form reasonably acceptable to the
Collateral Agent, (iv) if such Person is a Domestic Subsidiary and has any
Subsidiaries, (A) deliver all of the Capital Stock of such Domestic Subsidiaries
owned by it and 65% of the stock of the Material First Tier Foreign Subsidiaries
owned by it (together with undated stock powers signed in blank) to the
Collateral Agent and (B) execute a pledge agreement (or a joinder to the
existing Security Agreement) and otherwise in a form acceptable to the
Collateral Agent, (v) if such Person is a Domestic Subsidiary and owns or leases
any real property, execute any and all necessary mortgages, deeds of trust,
deeds to secure debt or other appropriate real estate collateral documentation
in a form acceptable to the Collateral Agent (or, if reasonably requested by the
Collateral Agent, cause to be delivered in a commercially reasonable manner a
landlord waiver or estoppel letter with respect thereto in a form acceptable to
the Collateral Agent), (vi) deliver such other documentation as the Collateral
Agent may reasonably request in connection with the foregoing, including,
without limitation, appropriate UCC-1 financing statements, real estate title
insurance policies, surveys, environmental reports, valuations, flood
certificates, zoning certificates, certified resolutions and other
organizational and authorizing documents of such Person and favorable opinions
of counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to
above), all in form, content and scope reasonably satisfactory to the Collateral
Agent and (vii) provide to the Lenders (x) a new Schedule 5.01(m) which shall
reflect the information regarding such new Subsidiary required by Section
5.01(m), and (y) if applicable, a new Schedule to the Security Agreement which
shall reflect the pledge of the Capital Stock of such new Subsidiary.
(l) Location Contracts. The Borrowers shall notify
the Collateral Agent if at any time a Location Contract evidences more than
seven and one-half percent (7 1/2%) of the consolidated revenues of the Credit
Parties and their Subsidiaries. The Borrowers shall take such action as
reasonably requested by the Collateral Agent to ensure that either (a) any such
Location Contract is assignable or (b) the land owner or operator that is party
to such Location Contract has consented in writing to the security interest of
the Lenders therein.
SECTION 6.02 Negative Covenants. Each Credit Party hereby
covenants and agrees that from the date of this Agreement and, thereafter, so
long as all amounts under this Agreement and the Registered Note have not been
paid in full:
(a) Indebtedness. No Credit Party will, nor will it
permit any of its Subsidiaries to, contract, create, incur, assume or permit to
exist any Indebtedness, except:
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(i) Indebtedness arising under this Credit
Agreement and the other Loan Documents;
(ii) Indebtedness existing as of the Closing
Date as referenced in Section 5.01(h) (and renewals, refinancings, replacements
or extensions thereof on terms and conditions no more favorable, in the
aggregate, to such creditor than such existing Indebtedness and in a principal
amount not in excess of that outstanding as of the date of such renewal,
refinancing, replacement or extension);
(iii) purchase money Indebtedness (including
Capital Leases) to finance the purchase of fixed assets (including equipment);
provided that (i) the total of all such Indebtedness for all such Persons taken
together shall not exceed an aggregate principal amount of $2,000,000 at any one
time outstanding (in addition to any such Indebtedness referred to in subsection
(ii) above); (ii) such Indebtedness when incurred shall not exceed the purchase
price of the asset(s) financed; and (iii) no such Indebtedness shall be
refinanced for a principal amount in excess of the principal balance outstanding
thereon at the time of such refinancing;
(iv) Indebtedness in respect of current
accounts payable and accrued expenses incurred in the ordinary course of
business and to the extent not current, accounts payable and accrued expenses
that are subject to bona fide dispute;
(v) Indebtedness owing by (A) a Credit Party
to another Credit Party, (B) a Credit Party to a Foreign Subsidiary, (C) a
Foreign Subsidiary to another Foreign Subsidiary or (D) a Foreign Subsidiary to
a Credit Party if it constitutes a Permitted Investment;
(vi) Indebtedness arising from judgments
that do not cause an Event of Default; and
(vii) Indebtedness evidencing the financing
of insurance premiums not to exceed $1,000,000 at any one time.
(b) Liens. No Credit Party will, nor will it permit
any of its Subsidiaries to, contract, create, incur, assume or permit to exist
any Lien with respect to any of its property or assets of any kind (whether real
or personal, tangible or intangible), whether now owned or after acquired,
except for Permitted Liens.
(c) Nature of Business. No Credit Party will, nor
will it permit any of its Subsidiaries to, alter the character of its business
from that conducted as of the Closing Date or engage in any business other than
the business conducted as of the Closing Date and activities which are
substantially similar or related thereto or logical extensions thereof.
(d) Consolidation and Merger. No Credit Party will,
nor will it permit any of its Subsidiaries to, enter into any transaction of
merger or consolidation or liquidate, wind up or dissolve itself; provided that
a Credit Party or a Subsidiary of a Credit Party may (i) enter into the Merger
Agreements and consummate the Merger or (ii) merge or consolidate with or into
another Credit Party if the following conditions are satisfied:
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(A) the Lenders are given prior
written notice of such action;
(B) if the merger or consolidation
involves a Credit Party, the Person formed by such consolidation or into which a
Credit Party is merged shall either (A) be such Credit Party or (B) be a
Domestic Subsidiary and expressly assume in writing all of the obligations of
such Credit Party under the Loan Documents; provided that if the transaction is
between either Borrower and another Person, such Borrower must be the surviving
entity;
(C) the Credit Parties execute and
deliver such documents, instruments and certificates as the Lenders may
reasonably request (including, if necessary, to maintain its perfection and
priority in the Collateral pledged pursuant to the Collateral Documents);
(D) immediately after giving effect
to such transaction, no Default or Event of Default shall have occurred and be
continuing; and
(E) the Borrowers deliver to the
Lenders an officer's certificate demonstrating compliance with clause (ii) or
(iii) above, as applicable, and an opinion of counsel stating that such
consolidation or merger and any written agreement entered into in connection
therewith, comply with this Section 6.02(d).
(e) Sale or Lease of Assets. No Credit Party will,
nor will it permit any of its Subsidiaries to, convey, sell, lease, transfer or
otherwise dispose of, in one transaction or a series of transactions, all or any
part of its business or assets whether now owned or hereafter acquired,
including, without limitation, inventory, receivables, equipment, real property
interests (whether owned or leasehold), and securities, other than (i) any
inventory sold or otherwise disposed of in the ordinary course of business; (ii)
the sale, lease, transfer or other disposal by a Credit Party (other than the
Borrowers and the Davel Parent) of any or all of its assets to another Credit
Party; (iii) obsolete, slow-moving, idle or worn-out assets no longer used or
useful in its business or the trade in of equipment for equipment in better
condition or of better quality, in each case in the ordinary course of business
and consistent with prior practices of the Borrowers and their respective
Subsidiaries; (iv) the transfer of assets which constitute a Permitted
Investment; (v) subject to the prepayment provisions in Section 2.04, the
issuance of Capital Stock by a Credit Party; (vi) the lease or sublease of real
property interests in the ordinary course of business; (vii) the license of
intellectual property in the ordinary course of business; and (viii) the
discount in the ordinary course of business of an account receivable from an
account debtor of a Credit Party.
Upon a sale of assets permitted by this
Section 6.02(e), the Collateral Agent shall promptly deliver to the Borrowers,
upon the Borrowers' request and at the Borrowers' expense, such documentation as
is reasonably necessary to evidence the release of the Lenders' security
interest in such assets, including, without limitation, amendments or
terminations of UCC financing statements and if applicable, the return of such
assets if they are in the possession of the Collateral Agent.
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(f) Sale Leasebacks. No Credit Party will, nor will
it permit any of its Subsidiaries to, directly or indirectly become or remain
liable as lessee or as guarantor or other surety with respect to any lease of
any property (whether real or personal or mixed), whether now owned or hereafter
acquired, (i) which such Credit Party or its Subsidiary has sold or transferred
or is to sell or transfer to any other Person other than a Credit Party or (ii)
which such Credit Party or its Subsidiary intends to use for substantially the
same purpose as any other property which has been sold or is to be sold or
transferred by such Credit Party to any Person in connection with such lease.
(g) Investments. No Credit Party will, nor will it
permit any of its Subsidiaries to, make any Investments except for Permitted
Investments.
(h) Restricted Payments. No Credit Party will, nor
will it permit any of its Subsidiaries to, directly or indirectly, (i) declare
or pay any dividends or make any other distribution upon any shares of its
Capital Stock of any class (other than dividends payable solely in Capital
Stock), (ii) purchase, redeem or otherwise acquire or retire or make any
provisions for redemption, acquisition or retirement of any shares of its
Capital Stock of any class or any warrants or options to purchase any such
shares; provided that (x) any Subsidiary of either Borrower may pay dividends to
its parent, (y) the Davel Borrower may pay dividends to the Davel Parent (A) for
general and administrative expenses in the ordinary course and (B) for the
payment of taxes, and (z) a Credit Party may redeem the Capital Stock of a
member of management in the case of death, disability or termination of such
member of management, not to exceed, in the aggregate, $2,500,000 during the
term of this Credit Agreement or (iii) make any prepayment of Indebtedness
(except in connection with refinancing such Indebtedness) other than
Indebtedness arising under this Credit Agreement and the other Loan Documents.
(i) Transactions with Affiliates. Except as set forth
on Schedule 6.02(i) and other than transactions between or among Credit Parties,
no Credit Party will, nor will it permit any of its Subsidiaries to, enter into
any transaction or series of transactions, whether or not in the ordinary course
of business, with any officer, director, shareholder, Subsidiary or Affiliate
other than on terms and conditions substantially as favorable as would be
obtainable in a comparable arm's-length transaction with a Person other than an
officer, director, shareholder, Subsidiary or Affiliate.
(j) Fiscal Year; Organizational Documents. No Credit
Party will, nor will it permit any of its Subsidiaries to, (i) change its fiscal
year or (ii) in any manner that would reasonably be likely to materially
adversely affect the rights of the Lenders, change its articles or certificate
of incorporation, operating agreement, articles of organization or its bylaws.
(k) No Limitations. No Credit Party will, nor will it
permit any of its Subsidiaries to, directly or indirectly, create or otherwise
cause, incur, assume, suffer or permit to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any such
Person to (i) pay dividends or make any other distribution on any of such
Person's Capital Stock, (ii) pay any Indebtedness owed to any other Credit
Party, (iii) make loans or advances to any other Credit Party or (iv) transfer
any of its property to any other Credit Party, except for encumbrances or
restrictions existing under or by reason of (u) applicable law, (v) customary
restrictions restricting assignment of any licensing agreement, (w) customary
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non-assignment or net worth provisions in any lease governing a leasehold
interest, (x) any agreement or other instrument of a Person existing at the time
it becomes a Subsidiary of a Credit Party; provided that such encumbrance or
restriction is not applicable to any other Person, or any property of any other
Person, other than such Person becoming a Subsidiary of a Credit Party and was
not entered into in contemplation of such Person becoming a Subsidiary of a
Credit Party, (y) customary financial covenant provisions in any agreement
entered into in connection with the Indebtedness permitted by Section
6.02(a)(iii) as long as such financial covenants are not more restrictive than
the financial covenants set forth in this Credit Agreement and (z) this Credit
Agreement and the other Loan Documents.
(l) No Other Negative Pledges. No Credit Party will,
nor will it permit any of its Subsidiaries to, enter into, assume or become
subject to any agreement prohibiting or otherwise restricting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired, or requiring the grant of any security for such obligation
if security is given for some other obligation except (i) as set forth in the
Loan Documents and (ii) agreements entered into in connection with Indebtedness
permitted by Section 6.01(a)(iii) as long as such agreements do not prohibit
Liens in favor of the Lenders.
(m) Limitation on Foreign Operations. The Credit
Parties will not, nor will they permit any of their Subsidiaries to, allow the
Foreign Subsidiaries to own assets which in the aggregate constitute more than
five percent (5%) of Total Assets of the Davel Credit Parties at any time.
(n) Capital Expenditures. The Credit Parties will not
permit Capital Expenditures for any period set forth below to exceed the
applicable maximum amount set forth in the Budget for such period.
(o) Maximum Cumulative Capital Expenditures. For any
month, the Credit Parties will not permit cumulative Capital Expenditures for
any period commencing February 1, 2002 and ending on the last day of such month
to exceed the applicable maximum amount projected in the Budget.
(p) Davel Parent. The Davel Parent will not, except
to the extent necessary to consummate the Merger in accordance with the Merger
Agreements, engage in any business activity or operation other than (i) owning
and holding the Capital Stock of the Davel Borrower, (ii) guaranteeing the
Obligations, (iii) pledging all of its Property (including without limitation
the Capital Stock of the Davel Borrower) to the Collateral Agent, on behalf of
the Lenders, pursuant to the Collateral Documents, (iv) incurring and holding
the Davel Parent PIK Debt, (v) issuing equity securities, (vi) preparing filings
required by the Securities Act or the Exchange Act, (vii) preparing tax filings
required by federal or state law and (viii) other miscellaneous legal, tax and
accounting activities related to the foregoing. Furthermore, the Davel Parent
will not, except to the extent necessary to consummate the Merger in accordance
with the Merger Agreements, (A) sell, transfer or otherwise dispose of any
shares of Capital Stock of the Davel Borrower, (B) merge with or into any other
Person, (C) hold any Property other than (x) the Capital Stock of the Davel
Borrower, and (y) such amounts allowed to be transferred to the Davel Parent
pursuant to Section 6.02(h), or (D) possess any liabilities other
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than the liabilities under the Loan Documents, the Davel Parent PIK Debt, tax
liabilities and other liabilities in the ordinary course of business.
ARTICLE VII - EVENTS OF DEFAULT
SECTION 7.01 Events of Default. An Event of Default shall
exist upon the occurrence, and during the continuance, of any of the following
specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall default in the
payment (i) when due of any principal of the Loan or (ii) within three Business
Days of when due of any interest on the Loans or any fees or other amounts owing
hereunder, under any of the other Loan Documents or in connection herewith.
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party herein, in any of the
other Loan Documents, or in any statement or certificate delivered or required
to be delivered pursuant hereto or thereto shall prove untrue in any material
respect on the date as of which it was made or deemed to have been made.
(c) Covenants. Any Credit Party shall:
(i) default in the due performance or
observance of any term, covenant or agreement contained in Sections 6.01(b),
(c), (e), (i), (j), (k) or Section 6.02;
(ii) default in the due performance or
observance by it of any term, covenant or agreement contained in Section 6.01(a)
or (l) and such default shall continue unremedied for a period of five Business
Days;
(iii) default in the due performance or
observance by it of any term, covenant or agreement (other than those referred
to in subsections (a), (b) or (c)(i) or (ii) of this Section 7.01) contained in
this Credit Agreement and such default shall continue unremedied for a period of
at least 30 days after the earlier of a Credit Party becoming aware of such
default or a Credit Party's receipt of notice thereof from any Lender.
(d) Other Loan Documents. (i) Any Credit Party shall
default in the due performance or observance of any term, covenant or agreement
in any of the other Loan Documents and such default shall continue unremedied
for a period of at least 30 days after the earlier of a Credit Party becoming
aware of such default or notice thereof given by any Lender, or (ii) other than
because of acts or failure to act by any Lender or the Collateral Agent, any
Loan Document shall fail to be in full force and effect or any Credit Party
shall so assert or any Loan Document shall fail to give the Collateral Agent or
any Lender the security interests, liens, rights, powers and privileges
purported to be created thereby.
(e) Guaranties. The Guaranty given by the Credit
Parties hereunder or by any Additional Credit Party hereafter or any provision
thereof shall cease to be in full force and effect, or any guarantor thereunder
or any Person acting by or on behalf of such guarantor shall deny or disaffirm
such Guarantor's obligations under such Guaranty.
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(f) Bankruptcy, etc. The occurrence of any of the
following: (i) a court or governmental agency having jurisdiction in the
premises shall enter a decree or order for relief in respect of any Credit Party
or any of its Subsidiaries in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of any Credit Party or any of its Subsidiaries or for any
substantial part of its property or ordering the winding up or liquidation of
its affairs; or (ii) an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect is commenced against
any Credit Party or any of its Subsidiaries and such petition remains unstayed
and in effect for a period of 60 consecutive days; or (iii) any Credit Party or
any of its Subsidiaries shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consent to the entry of an order for relief in an involuntary case under any
such law, or consent to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
such Person or any substantial part of its property or make any general
assignment for the benefit of creditors; or (iv) any Credit Party or any of its
Subsidiaries shall admit in writing its inability to pay its debts generally as
they become due or any action shall be taken by such Person in furtherance of
any of the aforesaid purposes.
(g) Defaults under Other Agreements.
(i) An Event of Default (as defined in the
Existing Davel Credit Agreement or the Existing PhoneTel Credit Agreement) shall
occur or exist or a Default (as defined in the Existing Davel Credit Agreement
or the Existing PhoneTel Credit Agreement) shall occur or exist;
(ii) A Credit Party or any of its
Subsidiaries shall default in the due performance or observance (beyond the
applicable grace period with respect thereto) of any material obligation or
condition of any other contract or lease to which it is a party (excluding any
default under the Loan Documents, the Existing Davel Credit Agreement or the
Existing PhoneTel Credit Agreement and any default in existence prior to the
Closing Date under any contract or Lease listed on Schedule 5.01(f)), and such
default could reasonably be expected to have a Material Adverse Effect; or
(iii) With respect to any Indebtedness
(other than Indebtedness outstanding under this Credit Agreement, the Existing
Davel Credit Agreement or the Existing PhoneTel Credit Agreement) of a Credit
Party or any of its Subsidiaries in a principal amount in excess of $100,000
individually, or $250,000 in the aggregate (A) such Person shall (x) default in
any payment (beyond the applicable grace period with respect thereto, if any)
with respect to any such Indebtedness, or (y) default (after giving effect to
any applicable grace period) in the observance or performance relating to such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event or condition shall occur or condition
exist, the effect of which default or other event or condition is to cause or
permit the holder or holders of such Indebtedness (or trustee or agent on behalf
of such holders) to cause (determined without regard to whether any notice or
lapse of time is required) any such Indebtedness to become due prior to its
stated maturity; or (B) any such Indebtedness shall be declared due and payable,
or required to be prepaid other than by a regularly scheduled required
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prepayment prior to the stated maturity thereof; or (C) any such Indebtedness
shall mature and remain unpaid.
(h) Judgments. One or more judgments, orders, or
decrees (including, without limitation, any judgment, order, or decree with
respect to any litigation disclosed pursuant to the Loan Documents) shall be
entered against any one or more of the Credit Parties and its Subsidiaries
involving a liability of $250,000 or more, in the aggregate, (to the extent not
paid or covered by insurance provided by a carrier who has acknowledged
coverage) and such judgments, orders or decrees (i) are the subject of any
enforcement proceeding commenced by any creditor or (ii) shall continue
unsatisfied, undischarged and unstayed for a period ending on the first to occur
of (A) the last day on which such judgment, order or decree becomes final and
unappealable or (B) 60 days.
(i) ERISA. The occurrence of any of the following
events or conditions which could reasonably be expected to have a Material
Adverse Effect: (A) any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether or not
waived, shall exist with respect to any Plan, or any Lien shall arise on the
assets of any Credit Party or any ERISA Affiliate in favor of the PBGC or a
Plan; (B) a Termination Event shall occur with respect to a Single Employer
Plan, which is likely to result in the termination of such Plan for purposes of
Title IV of ERISA; (C) a Termination Event shall occur with respect to a
Multiemployer Plan or Multiple Employer Plan, which is likely to result in (i)
the termination of such Plan for purposes of Title IV of ERISA, or (ii) any
Credit Party or any ERISA Affiliate incurring any liability in connection with a
withdrawal from, reorganization of(within the meaning of Section 4241 of ERISA),
or insolvency (within the meaning of Section 4245 of ERISA) of such Plan; or (D)
any prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) or breach of fiduciary responsibility shall occur
which may subject any Credit Party or any ERISA Affiliate to any liability under
Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or
under any agreement or other instrument pursuant to which any Credit Party or
any ERISA Affiliate has agreed or is required to indemnify any person against
any such liability.
(j) Ownership. There shall occur a Change of Control
(other than as a result of the Merger).
(k) Material Loss of Collateral. There shall occur
any loss, theft, damage or destruction of any item or items of Collateral which
either (i) has had or is reasonably expected to have a Material Adverse Effect
or (ii) materially and adversely affects the operation of the Credit Parties'
business, taken as a whole, and is not covered by insurance as required herein.
SECTION 7.02 Acceleration; Remedies. Upon the occurrence and
during the continuance of an Event of Default and at any time thereafter unless
and until such Event of Default has been waived in writing by the Required
Lenders (or all of the Lenders as may be required hereunder), the Required
Lenders may, by written notice to the Borrowers, take the following actions:
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(a) Termination of Commitments. Declare the
Commitments terminated whereupon the Commitments shall be immediately
terminated.
(b) Acceleration of Loans. Declare the unpaid
principal of and any accrued interest on the Loans and any and all other
indebtedness or obligations of any and every kind owing by a Credit Party to any
of the Lenders hereunder to be due whereupon the same shall be immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Credit Parties.
(c) Enforcement of Rights. Enforce any and all rights
and interests created and existing under the Loan Documents, including, without
limitation, all rights and remedies existing under the Security Agreement, all
rights and remedies against a Guarantor and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default
specified in Section 7.01(f) shall occur, then the Commitments shall
automatically terminate and all Loans, all accrued interest thereon, and all
accrued and unpaid fees and other indebtedness or obligations owing to the
Lenders hereunder shall immediately become due and payable without the giving of
any notice or other action by the Lenders, which notice or other action is
expressly waived by the Credit Parties.
Each Lender has, to the extent permitted by law, a separate
right of payment and shall be considered a separate 'creditor' holding a
separate 'claim' within the meaning of Section 101(5) of the Bankruptcy Code or
any other insolvency statute.
SECTION 7.03 Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Agreement, after
the occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Collateral Agent or any Lender on account of
amounts outstanding under any of the Loan Documents or in respect of the
Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation reasonable attorneys' fees) of
the Collateral Agent and the Lenders in connection with enforcing the rights of
the Collateral Agent and the Lenders under the Loan Documents and any protective
advances made by the Collateral Agent or any of the Lenders with respect to the
Collateral under or pursuant to the terms of the Collateral Documents;
SECOND, to payment of any fees owed to any Lender
under the Loan Documents;
THIRD, to the payment of all accrued interest payable
to the Lenders hereunder and all other obligations (other than those obligations
to be paid pursuant to clause "FOURTH" below) which shall have become due and
payable under the Loan Documents and not repaid pursuant to clauses "FIRST" and
"SECOND" above;
FOURTH, to the payment of the outstanding principal
amount of the Loans, pro rata as set forth below; and
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FIFTH, the payment of the surplus, if any, to whoever
may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be
applied in the numerical order provided until exhausted prior to application to
the next succeeding category; and (b) each of the Lenders shall receive an
amount equal to its pro rata share (based on the proportion that the then
outstanding Loans held by such Lender bears to the aggregate then outstanding
Loans) of amounts available to be applied.
ARTICLE VIII - MISCELLANEOUS
SECTION 8.01 Amendments, Etc. Neither this Agreement nor any
other Loan Document nor any of the terms hereof or thereof may be amended,
changed, waived, discharged or terminated unless such amendment, change, waiver,
discharge or termination is in writing and signed by the Required Lenders and
the Borrowers; provided that no such amendment, change, waiver, discharge or
termination shall without the consent of each Lender:
(a) extend the Maturity Date or postpone or extend or
waive any principal amortization payment of any Loan or any portion thereof;
(b) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or fees hereunder;
(c) reduce or waive the principal amount of any Loan;
(d) increase or extend any Commitment of a Lender (it
being understood and agreed that a waiver of any Default or Event of Default or
a waiver of any mandatory reduction in the Commitments shall not constitute a
change in the terms of any Commitment of any Lender);
(e) release all or substantially all of the
Collateral securing the Obligations hereunder (provided that the Collateral
Agent may, without consent from any other Lender, release any Collateral that is
sold or transferred by a Credit Party in conformance with Section 6.02(e));
(f) release any of the Borrowers from their
obligations or release all or substantially all of the other Credit Parties from
their respective obligations under the Loan Documents;
(g) amend, modify or waive any provision of this
Section;
(h) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders; or
(i) consent to the assignment or transfer by any of
the Borrowers of any of their rights and obligations under (or in respect of)
the Loan Documents.
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Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any reorganization plan that affects the Loans, and each
Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy
Code supersede the unanimous consent provisions set forth herein and (y) the
Required Lenders may consent to allow a Credit Party to use cash collateral in
the context of a bankruptcy or insolvency proceeding.
SECTION 8.02 Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopier
and telegraphic communication) and mailed, telecopied or delivered, if to a
Davel Credit Party, at its address at 10120 Windhorst Road, Tampa, Florida
33619, Telecopy: (813) 740-9406; Attention: President; and if to a PhoneTel
Borrower, at its address at North Point Tower, 7th Floor, 1001 Lakeside Avenue,
Cleveland, Ohio 44114, Telecopy: (216) 875-4339, Attention: President and CEO;
if to a Lender, at its address set forth below or, at its address set forth in
the applicable assignment agreement pursuant to Section 8.05(b) hereof:
Madeleine L.L.C.
c/o Cerberus Capital Management, L.P.
450 Park Avenue, 28th Floor
New York, New York 10022
Telecopy: (212) 891-1541
Attention: Kevin Genda
ARK CLO 2000-1
c/o Patriarch Partners, L.L.C.
112 South Tryon Street, Suite 700
Charlotte, North Carolina 28284
Telecopy: (704) 375 0358
Attention: Thomas McDonnell
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party. All such notices and communications
shall, when mailed, telecopied, telegraphed, telexed or cabled, be effective
when deposited in the mails, telecopied, delivered to the telegraph company,
confirmed by telex answerback or delivered to the cable company, respectively,
except that notices to any Lender pursuant to the provisions of Article II shall
not be effective until received by such Lender.
SECTION 8.03 No Waiver; Remedies. No failure on the part of
any Lender to exercise, and no delay in exercising, any right, power or
privilege hereunder or under any other Loan Document and no course of dealing
between any Borrower or any Credit Party and any Lender shall operate as a
waiver thereof; nor shall any single or partial exercise of any other right,
power or privilege hereunder or under any other Loan Document preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The remedies herein provided are cumulative
and not exclusive of any rights or remedies which any Lender would otherwise
have. No notice to or demand on any Credit Party in any case shall entitle any
Credit Party to any other or further notice or demand in similar or
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other circumstances or constitute a waiver of the rights of any Lender to any
other or further action in any circumstances without notice or demand.
SECTION 8.04 Right of Set-Off.
(a) In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default and the commencement of
remedies described in Section 7.02, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Lender (including, without
limitation, branches, agencies or Affiliates of such Lender wherever located) to
or for the credit or the account of any Credit Party against obligations and
liabilities of such Credit Party to the Lenders hereunder, under the Notes, the
other Loan Documents or otherwise, irrespective of whether the Lenders shall
have made any demand hereunder and although such obligations, liabilities or
claims, or any of them, may be contingent or unmatured, and any such set-off
shall be deemed to have been made immediately upon the occurrence of an Event of
Default even though such charge is made or entered on the books of such Lender
subsequent thereto. The Credit Parties hereby agree that any Person purchasing a
participation in the Loans and Commitments hereunder pursuant to Section 8.05(c)
may exercise all rights of set-off with respect to its participation interest as
fully as if such Person were a Lender hereunder.
(b) The Lenders agree among themselves that, except
to the extent otherwise provided herein, in the event that any Lender shall
obtain payment in respect of any Loan or any other obligation owing to such
Lender under this Agreement through the exercise of a right of setoff, banker's
lien or counterclaim, or pursuant to a secured claim under Section 506 of the
Bankruptcy Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, in excess
of its pro rata share of such payment as provided for in this Agreement, such
Lender shall promptly pay in cash or purchase from the other Lenders a
participation in such Loans and other obligations in such amounts, and make such
other adjustments from time to time, as shall be equitable to the end that all
Lenders share such payment in accordance with their respective ratable shares as
provided for in this Agreement. The Lenders further agree among themselves that
if payment to a Lender obtained by such Lender through the exercise of a right
of setoff, banker's lien, counterclaim or other event as aforesaid shall be
rescinded or must otherwise be restored, each Lender which shall have shared the
benefit of such payment shall, by payment in cash or a repurchase of a
participation theretofore sold, return its share of that benefit (together with
its share of any accrued interest payable with respect thereto) to each Lender
whose payment shall have been rescinded or otherwise restored. Each Credit Party
agrees that any Lender so purchasing such a participation may, to the fullest
extent permitted by law, exercise all rights of payment, including setoff,
banker's lien or counterclaim, with respect to such participation as fully as if
such Lender were a holder of such Loan or other obligation in the amount of such
participation. Except as otherwise expressly provided in this Agreement, if any
Lender shall fail to remit to any other Lender an amount payable by such Lender
to such other Lender pursuant to this Agreement on the date when such amount is
due, such payments shall be made together with interest thereon for each date
from the date such amount is due until the date such amount is paid to such
other
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Lender at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section 8.04(b) applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders under this
Section 8.04(b) to share in the benefits of any recovery on such secured claim.
SECTION 8.05 Benefit of Agreement.
(a) Generally. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that none of the Credit Parties may
assign and transfer any of its interests without the prior written consent of
the Lenders; and provided further that the rights of each Lender to transfer,
assign or grant participations in its rights and/or obligations hereunder shall
be limited as set forth below in this Section 8.05.
(b) Assignments. Each Lender may assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its Loans,
its Notes, and its Commitments); provided, however, that:
(i) each such assignment shall be to an
Eligible Assignee;
(ii) except in the case of an assignment to
another Lender or an Approved Fund of any Lender or an assignment of all of a
Lender's rights and obligations under this Agreement, any such partial
assignment shall be in an amount at least equal to $1,000,000 (or, if less, the
remaining amount of the Commitment being assigned by such Lender) or an integral
multiple of $500,000 in excess thereof;
(iii) each such assignment by a Lender shall
be of a constant, and not varying, percentage of all of its rights and
obligations under this Agreement and the Notes; and
(iv) the parties to such assignment shall
execute and deliver to the remaining Lenders an assignment agreement in the form
attached as Exhibit 8.05(b) hereto.
Upon execution, delivery and acceptance of such assignment
agreement, the assignee thereunder shall be a party hereto and, to the extent of
such assignment, have the obligations, rights, and benefits of a Lender
hereunder and the assigning Lender shall, to the extent of such assignment,
relinquish its rights and be released from its obligations under this Agreement.
Upon the consummation of any assignment pursuant to this Section 8.05(b), the
assignor, the Lenders and the Borrowers shall make appropriate arrangements so
that, if requested by such assigning Lender or its assignee, new Notes are
issued to the assignor and the assignee. If the assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall
deliver to the Borrowers and the Lenders certification as to exemption from
deduction or withholding of taxes.
By executing and delivering an assignment agreement in
accordance with this Section 8.05, the assigning Lender thereunder and the
assignee thereunder shall be deemed to confirm to and agree with each other and
the other parties hereto as follows: (A) such assigning
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Lender warrants that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim and the assignee warrants
that it is an Eligible Assignee; (B) except as set forth in clause (A) above,
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, any of the other Loan Documents or
any other instrument or document furnished pursuant hereto or thereto, or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any of the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto or the financial condition of any
Credit Party or the performance or observance by any Credit Party of any of its
obligations under this Agreement, any of the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (C) such assignee
represents and warrants that it is legally authorized to enter into such
assignment agreement; (D) such assignee confirms that it has received a copy of
this Agreement, the other Loan Documents and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such assignment agreement; (E) such assignee will
independently and without reliance upon 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 and the other Loan Documents; and (F) such assignee
agrees that it will perform in accordance with their terms all the obligations
which by the terms of this Agreement and the other Loan Documents are required
to be performed by it as a Lender.
(c) Participations. Each Lender may sell
participations to one or more Persons in all or a portion of its rights,
obligations or rights and obligations under this Agreement (including all or a
portion of its Commitments and its Loans); provided, however, that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participant shall be entitled to the
benefit of the right of set-off contained in Section 8.04 and (iv) the Borrowers
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement, and such Lender shall
retain the sole right to enforce the obligations of the Borrowers relating to
their Loans and to approve any amendment, modification, or waiver of any
provision of this Agreement (other than amendments, modifications, or waivers
decreasing the amount of principal of or the rate at which interest is payable
on such Loans, extending any scheduled principal payment date or date fixed for
the payment of interest on such Loans, or extending its Commitment).
(d) Nonrestricted Assignments. Notwithstanding any
other provision set forth in this Agreement, (i) any Lender may at any time
assign and pledge all or any portion of its Loans to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank and (ii) any Lender which is an investment fund
that invests in Loans may assign or pledge all or any portion of its Loans or
the other Obligations owed to such Lender to its trustee or any other
representative of holders of obligations owed or securities issued by such
Lender as security for such obligations or securities. The foregoing assignments
and pledges shall not be subject to the provisions of Section 8.05(b). No such
assignment or pledge shall release the assigning Lender from its obligations
hereunder.
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(e) Information. Any Lender may furnish any
information concerning the Borrowers or any of their Subsidiaries in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants), subject, however, to the
provisions of Section 8.14.
SECTION 8.06 Payment of Expenses; Indemnification. The Credit
Parties agree to: (a) pay all reasonable out-of-pocket costs and expenses of the
Lenders (including, without limitation, the reasonable fees and expenses of
Schulte Roth & Zabel LLP, special counsel to Madeleine, and any other special
counsel to Madeleine) in connection with (i) the negotiation, preparation,
execution and delivery and administration of this Agreement and the other Loan
Documents and the documents and instruments referred to therein, (ii) any
amendment, waiver or consent relating hereto and thereto including, but not
limited to, any such amendments, waivers or consents resulting from or related
to any work-out, renegotiation or restructure relating to the performance by the
Credit Parties under this Agreement, (iii) enforcement of the Loan Documents and
the documents and instruments referred to therein; and (iv) any bankruptcy or
insolvency proceeding of a Credit Party or any of its Subsidiaries and (b)
indemnify each Lender, its officers, directors, trustees, investment advisors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred by
any of them as a result of, or arising out of, or in any way related to, or by
reason of, any investigation, litigation or other proceeding (whether or not any
Lender is a party thereto) related to (i) the entering into and/or performance
of any Loan Document or the use of proceeds of any Loans (including other
extensions of credit) hereunder or the consummation of any other transactions
contemplated in any Loan Document, including, without limitation, the reasonable
fees and disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding, (ii) any Environmental Claim, and
(iii) any claims for Non-Excluded Taxes (but excluding in the case of (i), (ii)
and (iii) above, any such losses, liabilities, claims, damages or expenses to
the extent it is finally judicially determined that such losses, liabilities,
claims, damages or expenses were incurred by reason of bad faith, gross
negligence or willful misconduct on the part of the Person to be indemnified).
SECTION 8.07 Counterparts/Telecopy. This Agreement may be
executed in any number of counterparts, each of which where so executed and
delivered shall be an original, but all of which shall constitute one and the
same instrument. Delivery of executed counterparts by telecopy shall be as
effective as an original and shall constitute a representation that an original
will be delivered.
SECTION 8.08 Headings. The headings of the sections and
subsections hereof are provided for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.
SECTION 8.09 Survival of Indemnification and Representations
and Warranties. All indemnities set forth herein and all representations and
warranties made herein shall survive the execution and delivery of this
Agreement, the making of the Loans, and the repayment of the Loans and other
obligations and the termination of the Commitments hereunder.
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SECTION 8.10 Governing Law, Jurisdiction, Waiver of Jury
Trial, Etc.
(a) This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to the Loan Documents, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement or the Note in the courts of any
jurisdiction.
(c) Each of the parties hereto irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the Note in any New York State or federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(d) Each of the Credit Parties and the Lenders hereby
irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to the Loan Documents or the actions of the Lender in the negotiation,
administration, performance or enforcement thereof.
SECTION 8.11 Time. All references to time herein shall be
references to Eastern Standard Time or Eastern Daylight Time, as the case may
be, unless specified otherwise.
SECTION 8.12 Severability. If any provision of any of the Loan
Documents is determined to be illegal, invalid or unenforceable, such provision
shall be fully severable and the remaining provisions shall remain in full force
and effect and shall be construed without giving effect to the illegal, invalid
or unenforceable provisions.
SECTION 8.13 Further Assurances. The Credit Parties agree,
upon the request of the Lenders, to promptly take such actions, as reasonably
requested, as is necessary to carry out the intent of this Agreement and the
other Loan Documents, including, but not limited to, such actions as are
necessary to ensure that the Lenders have a perfected security interest in the
Collateral subject to no Liens other than Permitted Liens.
SECTION 8.14 Confidentiality. Each Lender agrees that it will
use its reasonable best efforts to keep confidential any non-public information
from time to time supplied to it under any Loan Document; provided, however,
that nothing herein shall prevent the disclosure of any such information to (a)
the extent a Lender in good faith believes such
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disclosure is required by Requirement of Law, (b) counsel for a Lender or to its
accountants, (c) bank examiners or auditors or comparable Persons, (d) any
affiliate of a Lender, (e) any other Lender, or any assignee, transferee or
participant, or any potential assignee, transferee or participant, of all or any
portion of any Lender's rights under this Agreement who is notified of the
confidential nature of the information and agrees to be bound by the provisions
of this Section 8.14, (f) any other Person in connection with any litigation to
which any one or more of the Lenders is a party, provided that such Lender takes
reasonable steps to obtain the agreement of such person or a protective order
requiring such person to maintain confidentiality of such information, or (g) to
any direct or indirect contractual counterparty in any swap agreement or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterparty agrees to
be bound by the provisions of this Section 8.14); and provided further that no
Lender shall have any obligation under this Section 8.14 to the extent any such
information becomes available on a non-confidential basis from a source other
than a Credit Party or that any information becomes publicly available other
than by a breach of this Section 8.14 by any Lender or representative thereof.
SECTION 8.15 Entirety. This Agreement together with the other
Loan Documents represent the entire agreement of the parties hereto and thereto,
and supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Loan
Documents or the transactions contemplated herein and therein.
SECTION 8.16 Binding Effect; Continuing Agreement.
(a) This Agreement shall become effective at such
time when all of the conditions set forth in Section 4.01 have been satisfied or
waived by the Required Lenders and it shall have been executed by the Borrowers,
the Guarantors and the Lenders, and thereafter this Agreement shall be binding
upon and inure to the benefit of the Borrowers, the Guarantors, and each Lender
and their respective successors and assigns.
(b) This Agreement shall be a continuing agreement
and shall remain in full force and effect until all Loans, interest, fees and
other Obligations (other than any obligations which by the terms thereof are
stated to survive the termination of the Loan Documents) have been paid in full
and all Commitments have been terminated. Upon termination, the Credit Parties
shall have no further obligations (other than the indemnification provisions
that survive) under the Loan Documents and the Collateral Agent shall, at the
request and expense of the Borrowers, deliver all Collateral in its possession
to the Borrowers and release all Liens on Collateral; provided that should any
payment, in whole or in part, of the Obligations be rescinded or otherwise
required to be restored or returned by any Lender, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, then the Loan
Documents shall automatically be reinstated and all Liens of the Lenders shall
reattach to the Collateral and all amounts required to be restored or returned
and all costs and expenses incurred by the Collateral Agent or any Lender in
connection therewith shall be deemed included as part of the Obligations.
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IN WITNESS WHEREOF, each of the Credit Parties and the Lenders
has caused this Agreement to be executed by its officer thereunto duly
authorized, as of the date first above written.
BORROWERS: DAVEL FINANCING COMPANY, L.L.C.,
a Delaware limited liability company
By: DAVEL COMMUNICATIONS, INC.,
its sole managing member
By: /s/ Bruce W. Renard
-------------------------------
Name: Bruce W. Renard
Title: President
PHONETEL TECHNOLOGIES, INC.,
an Ohio corporation
By: /s/ John D. Chichester
-------------------------------------
Title: President & Chief Executive Officer
CHEROKEE COMMUNICATIONS, INC.,
a Texas corporation
By: /s/ John D. Chichester
-------------------------------------
Name: John D. Chichester
Title: President & Chief Executive Officer
DAVEL PARENT GUARANTOR: DAVEL COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Bruce W. Renard
-------------------------------------
Name: Bruce W. Renard
Title: President
SUBSIDIARY GUARANTORS: DAVEL COMMUNICATIONS GROUP, INC.,
an Illinois corporation
ADTEC COMMUNICATIONS, INC.,
a Florida corporation
CENTRAL PAYPHONE SERVICES, INC.,
a Georgia corporation
COMMUNICATIONS CENTRAL INC.,
a Georgia corporation
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COMMUNICATIONS CENTRAL OF GEORGIA, INC.,
a Georgia corporation
DAVEL COMMUNICATIONS GROUP, INC.,
an Illinois corporation
DAVEL MEDIA, INC.,
a Delaware corporation
DAVEL MEXICO, LTD.,
an Illinois corporation
DAVELTEL, INC.,
An Illinois corporation
DF MERGER CORP.,
a Delaware corporation
INTERSTATE COMMUNICATIONS, INC.,
a Georgia corporation
INVISION TELECOM, INC.,
a Georgia corporation
PEOPLES ACQUISITION CORPORATION,
a Pennsylvania corporation
PEOPLES COLLECTORS, INC.,
a Delaware corporation
PEOPLES TELEPHONE COMPANY, INC.,
a New York corporation
PEOPLES TELEPHONE COMPANY, INC.,
a New Hampshire corporation
PT MERGER CORP.,
an Ohio corporation
PTC CELLULAR, INC.,
a Delaware corporation
PTC SECURITY SYSTEMS, INC.,
a Florida corporation
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SILVERADO COMMUNICATIONS CORP.,
a Colorado corporation
TELALEASING ENTERPRISES, INC.,
an Illinois corporation
T.R.C.A., INC.
an Illinois corporation
By: /s/ Bruce W. Renard
-------------------------------------
Name: Bruce W. Renard
Title: President
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LENDERS: MADELEINE L.L.C.
By: /s/ Kevin Genda
-------------------------------------
Name: Kevin Genda
Title: Vice President
ARK CLO 2000-1, LIMITED
BY: PATRIARCH PARTNERS, LLC
ITS COLLATERAL MANAGER
By: /s/ Lynn Tilton
-------------------------------------
Name: Lynn Tilton
Title: Authorized Signatory
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