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EXHIBIT C-4.
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U.S. $37,250,000
CREDIT AGREEMENT
DATED AS OF MARCH 15, 1996
AMONG
PHONETEL TECHNOLOGIES, INC.
AS THE BORROWER,
VARIOUS LENDERS
AND
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION,
AS THE AGENT FOR THE LENDERS
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TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.3. Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1.4. Accounting and Financial Determinations . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 2. COMMITMENTS
2.1. Loan Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.1.1. Revolving A Loan Commitment . . . . . . . . . . . . . . . . . . . . . 27
2.1.2. Revolving B Loan Commitment . . . . . . . . . . . . . . . . . . . . . 27
2.1.3. Term Loan Commitment . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.1.4. Agent and Lenders Not Required to Extend
Credit under Revolving Loan Commitment . . . . . . . . . . . . . . . . . . . . . . . . 28
2.2. Changes in Advance Formula; Establishment
of Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.2.1. Advance Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.2.2. Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.3. Commitment and Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.4. Increased Costs; Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.5. Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 3. LOANS AND NOTES
3.1. Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.2. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.3. Principal Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.3.1. Repayments and Prepayments . . . . . . . . . . . . . . . . . . . . . . 33
3.3.2. Prepayment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.3.3. Revolving Loans on Borrower's Behalf . . . . . . . . . . . . . . . . . 36
3.3.4 Reduction of Revolving Loan Commitment . . . . . . . . . . . . . . . . 36
3.4. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.4.1. Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.4.2. Post-Default Rates . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.4.3. Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.4.4. Rate Determinations . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.5. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.6. Payments, Interest Rate Computations, Other
Computations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.7. Proration of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.8. Setoff... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.9. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 4. CONDITIONS TO LOANS
4.1. Initial Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.1.1. Resolutions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.1.2. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.1.3. Borrowing Base Certificate . . . . . . . . . . . . . . . . . . . . . . 43
4.1.4. Additional Equity, etc. . . . . . . . . . . . . . . . . . . . . . . . 43
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4.1.5. Release of Liens on Assets . . . . . . . . . . . . . . . . . . . . . . 43
4.1.6. No Contest, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.1.7. Certificate as to Completed Conditions,
Warranties, No Default, etc. . . . . . . . . . . . . . . . . . . . . . 43
4.1.8. Documents Relating to Equity Investments . . . . . . . . . . . . . . . 44
4.1.9. Compliance with Requirements of Law . . . . . . . . . . . . . . . . . 44
4.1.10. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.1.11. Closing Fees, Expenses, etc. . . . . . . . . . . . . . . . . . . . . . 44
4.1.12. Subsidiary Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.1.13. Security Documents and Perfection . . . . . . . . . . . . . . . . . . 45
4.1.14. Employment Agreements; Compensation . . . . . . . . . . . . . . . . . 45
4.1.15. Pension and Welfare Liabilities . . . . . . . . . . . . . . . . . . . 46
4.1.16. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.1.17. Financial Information, etc. . . . . . . . . . . . . . . . . . . . . . 46
4.1.18. Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.1.19. Review of Borrower's Operations . . . . . . . . . . . . . . . . . . . 47
4.1.20. Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.1.21. Other Documents, Certificates, etc. . . . . . . . . . . . . . . . . . 47
4.1.22. Letter to Accountants . . . . . . . . . . . . . . . . . . . . . . . . 47
4.2. All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.2.1. Compliance with Warranties,
No Default, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.2.2. Borrowing Request, etc. . . . . . . . . . . . . . . . . . . . . . . . 48
4.2.3. Satisfactory Legal Form . . . . . . . . . . . . . . . . . . . . . . . 49
4.2.4. Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.2.5. Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.2.6. Change in Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 5. WARRANTIES, ETC.
5.1. Organization, Power, Authority, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.2. Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.3. Validity, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.4. Financial Information; Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.5. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.6. Absence of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.7. Litigation, Legislation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.8. Regulations G, T, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.9. Government Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.10. Taxes..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.11. Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.12. Labor Controversies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.13. Ownership of Properties; Collateral . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.14. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.15. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.16. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.17. Certain Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.18. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.19. No Burdensome Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.20. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.21. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.22. Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
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5.23. Condition of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.24. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.25. Acquisition Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.26. Trade Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.27. Absence of Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.28. Communications Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.29. Capitalization and Ownership of the Borrower . . . . . . . . . . . . . . . . . . . . . 59
5.30. Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
5.31. No Integration of Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
5.32. No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 6. COVENANTS
6.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.1.1. Financial Information, etc. . . . . . . . . . . . . . . . . . . . . . 61
6.1.2. Maintenance of Corporate Existence, etc. . . . . . . . . . . . . . . . 63
6.1.3. Foreign Qualification . . . . . . . . . . . . . . . . . . . . . . . . 63
6.1.4. Payment of Taxes, etc. . . . . . . . . . . . . . . . . . . . . . . . . 64
6.1.5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
6.1.6. Notice of Default, Litigation, etc. . . . . . . . . . . . . . . . . . 65
6.1.7. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.1.8. Maintenance of Properties, etc. . . . . . . . . . . . . . . . . . . . 67
6.1.9. Maintenance of Licenses and Permits . . . . . . . . . . . . . . . . . 67
6.1.10. Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.1.11. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.1.12. Interest Rate Protection . . . . . . . . . . . . . . . . . . . . . . . 67
6.1.13. Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.1.14. Government Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.1.15. Antitakeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . 68
6.1.16. Telephone Placement Agreements . . . . . . . . . . . . . . . . . . . . 68
6.1.17. Cash Management System . . . . . . . . . . . . . . . . . . . . . . . . 68
6.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.2.1. Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.2.2. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.2.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.2.4. Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.2.5. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . 75
6.2.6. Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 75
6.2.7. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
6.2.8. Restricted Payments, etc. . . . . . . . . . . . . . . . . . . . . . . 76
6.2.9. Take or Pay Contracts; Sale/Leasebacks . . . . . . . . . . . . . . . . 77
6.2.10. Consolidation, Merger, Subsidiaries, etc. . . . . . . . . . . . . . . 77
6.2.11. Asset Dispositions, etc. . . . . . . . . . . . . . . . . . . . . . . . 78
6.2.12. Modification of Organic Documents, etc. . . . . . . . . . . . . . . . 78
6.2.13. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . 78
6.2.14. Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . 79
6.2.15. Change in Accounting Method . . . . . . . . . . . . . . . . . . . . . 79
6.2.16. Change in Fiscal Year End . . . . . . . . . . . . . . . . . . . . . . 79
6.2.17. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . 79
6.2.18. Limitation on Restrictions on
Subsidiary Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 79
6.2.19. Communications Laws . . . . . . . . . . . . . . . . . . . . . . . . . 79
6.2.20. Issuance of Series B Special Preferred
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Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE 7. EVENTS OF DEFAULT
7.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.1.1. Non-Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . 80
7.1.2. Non-Performance of Certain Covenants . . . . . . . . . . . . . . . . . 80
7.1.3. Defaults Under Other Loan Documents
Non-Performance of Other Obligations . . . . . . . . . . . . . . . . . 80
7.1.4. Bankruptcy, Insolvency, etc. . . . . . . . . . . . . . . . . . . . . . 80
7.1.5. Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.1.6. Default on Other Indebtedness, etc. . . . . . . . . . . . . . . . . . 81
7.1.7. Failure of Valid, Perfected
Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.1.8. Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.1.9. Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.1.10. Loss of Permits, etc. . . . . . . . . . . . . . . . . . . . . . . . . 82
7.1.11. Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . 83
7.1.12. 10% Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 83
7.2. Action if Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
7.3. Action if Other Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE 8. CONVERSION
8.1. Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.2. Conversion Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.3. Effect on Reclassification, Consolidation,
Merger or Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.4. Taxes on Shares Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.5. Reservation of Shares; Shares to be Fully Paid;
Compliance with Government Requirements;
Listing of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.6. Notice to Lenders Prior to Certain Actions . . . . . . . . . . . . . . . . . . . . . . 86
ARTICLE 9. THE AGENT
9.1. Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
9.2. Funding Reliance, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
9.3. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
9.4. Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
9.5. Loans by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
9.6. Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
9.7. Copies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE 10. MISCELLANEOUS
10.1. Waivers, Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
10.2. Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
10.3. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
10.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
10.5. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
10.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
10.7. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
10.8. Counterparts, Effectiveness, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 95
10.9. Governing Law; Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
10.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
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10.11. Sale and Transfers, Participations, etc. . . . . . . . . . . . . . . . . . . . . . . . 96
10.12. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
10.13. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
10.14. Change in Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
10.15. Waiver of Jury Trial, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
10.16. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
10.17. Usury Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
10.18. Conflict in Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
SCHEDULES AND EXHIBITS
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Schedule 1 - Disclosure Schedule
Schedule 2 - Form of Telephone Placement Agreement
Schedule 3 - Cash Management System
Schedule 4 - Ineligible Telephones
Exhibit A-1 - Revolving A Note
Exhibit A-2 - Revolving B Note
Exhibit A-3 - Term Note
Exhibit B - Borrowing Base Certificate
Exhibit C - Borrowing Request
Exhibit D - Compliance Certificate
Exhibit E - Transfer Supplement
Exhibit F - Joinder for Interest Rate Contract Counterparty
Exhibit G - Notice of Conversion
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of March 15, 1996, among PHONETEL
TECHNOLOGIES, INC., an Ohio corporation (the "BORROWER"), various lenders as
are, or may become, parties hereto (individually a "LENDER" and, collectively,
the "LENDERS"), and INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, a
Delaware corporation, as Agent for the Lenders.
W I T N E S S E T H:
- ------------------------------------------------
RECITALS.
- --------
A. The Borrower desires to obtain from the Lenders (i) a
Revolving A Loan Commitment in an aggregate amount of up to Six Million Dollars
($6,000,000), (ii) a Revolving B Loan Commitment in an aggregate amount of up
to Two Million Two Hundred Fifty Thousand Dollars ($2,250,000), and (iii) a
Term Loan of up to Twenty-Nine Million Dollars ($29,000,000) in the aggregate;
and
B. The Lenders are willing, on the terms and conditions
hereinafter set forth (including, without limitation, ARTICLES 2 and 4), to
extend such credit facilities; and
C. The Loans will be used in the manner described in SECTION 3.9
below;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE 1.
DEFINITIONS
SECTION 1.1. DEFINED TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"ACCOUNT" means any "account" (as such term is defined in
Section 9-106 of the UCC) of the Borrower or any of its Subsidiaries arising
from the sale or lease of goods or providing of services.
"ACCOUNT DEBTOR" means any Person who is or may become
obligated to the Borrower or any of its Subsidiaries under, with respect to, or
on account of, an Account.
"ACQUISITION AGREEMENTS" means, collectively, (a) the
IPP-South Carolina Acquisition Agreement, (b) the IPP-Tennessee
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Acquisition Agreement and (c) the PCS Acquisition Agreement.
"ACQUISITIONS" means, collectively, (a) the IPP-South Carolina
Acquisition, (b) the IPP-Tennessee Acquisition and (c) the PCS Acquisition.
"AFFECTED LENDER" has the meaning set forth in clause (f) of
SECTION 2.4.
"AFFILIATE" of any Person means any other Person which,
directly or indirectly, controls or is controlled by or under common control
with such Person (excluding any trustee under, or any committee with
responsibility for administering, any Plan). A Person shall be deemed to be
"controlled by" any other Person if such other Person possesses, directly or
indirectly, power:
(a) to vote 5% or more of the securities having ordinary
voting power for the election of directors of such Person; or
(b) to direct or cause the direction of the management or
policies of such Person whether by contract or otherwise;
PROVIDED, HOWEVER, that for purposes of this Agreement no Lender (solely
because of its status as a Lender under this Agreement or by virtue of holding
any warrants or non-voting Stock) shall be deemed to be an Affiliate of the
Borrower.
"AGENT" means ING as agent for the Lenders pursuant hereto, or
such other Person as shall have subsequently been appointed as the successor
agent pursuant to SECTION 9.4.
"AGREEMENT" means, on any date, this Credit Agreement as
originally in effect on the Closing Date and as thereafter from time to time
amended, supplemented, amended and restated, or otherwise modified and in
effect.
"APPROVAL" means each and every approval, consent, filing and
registration by or with any federal, state or other regulatory authority
(domestic or foreign) necessary to authorize or permit the execution, delivery
or performance of this Agreement, the Notes or any other Loan Document, for the
granting of any security contemplated hereby or thereby, for the validity or
enforceability hereof or thereof, or for the consummation of the transactions
contemplated by the Loan Documents, including, without limitation, the
Acquisitions.
"AUTHORIZED OFFICER" means, relative to any Loan Party, those
officers of such Loan Party whose signatures, incumbency and authority shall
have been certified to the Agent and the Lenders pursuant to SECTION 4.1.1 or
which may be certified after the Closing Date in a certificate conforming to
the requirements of SECTION 4.1.1(A).
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"AVERAGE NUMBER OF TELEPHONES" means, with respect to all
Telephones during any period, (a) the sum of the number of days each of such
Telephones is operational during such period DIVIDED BY (b) the number of days
in such period.
"BLOCKED ACCOUNTS" is defined in SCHEDULE 3.
"BORROWER" has the meaning set forth in the preamble to this
Agreement.
"BORROWER PLEDGE AGREEMENT" means the Stock and Notes Pledge
Agreement, dated as of the date hereof, pursuant to which the Borrower will
pledge to the Agent, for itself and the ratable benefit of the Lenders, all of
the issued and outstanding stock of its Subsidiaries and all Subsidiary Notes
issued to it by its Subsidiaries, as security for the Obligations, as such
agreement may be amended, supplemented or otherwise modified from time to time.
"BORROWING" means the Loans or portions thereof made by the
Lenders on the same Business Day pursuant to the same Borrowing Request in
accordance with SECTION 3.1.
"BORROWING BASE" means, as of any date, (a) with respect to
Revolving A Loans and the Term Loan, (i) the number of Eligible Telephones at
such date MULTIPLIED BY the lesser of (x) $2,000 or (y) the Eligible Telephone
Average Present Value as of such date, MINUS (ii) reserves established from
time to time pursuant to SECTION 2.2.2 hereof, and (b) with respect to
Revolving B Loans, the number of Eligible Telephones at such date MULTIPLIED BY
$125. Notwithstanding the previous sentence, the Borrowing Base with respect
to Revolving A Loans and the Term Loan for the period beginning on the Closing
Date and ending on the first date after April 30, 1996 on which the Borrower is
required to deliver a Borrowing Base Certificate pursuant to SECTION 6.1(G)
shall be the number of Eligible Telephones MULTIPLIED BY $2,000.
"BORROWING BASE CERTIFICATE" means a certificate of the chief
executive, accounting or financial Authorized Officer of the Borrower in the
form of EXHIBIT B attached hereto.
"BORROWING REQUEST" means a loan request and certificate duly
executed by an Authorized Officer of the Borrower in the form of EXHIBIT C
attached hereto.
"BUSINESS DAY" means any day which is neither a Saturday or
Sunday nor a legal holiday on which banks are authorized or required to be
closed in New York, New York.
"CAPITALIZED LEASE LIABILITIES" means all monetary obligations
of the Borrower and its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, are or would
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be classified as capitalized leases.
"CASH EQUIVALENT INVESTMENT" means, at any time:
(a) any direct obligation issued or guaranteed by the
United States of America or any agency or instrumentality thereof and backed by
the full faith and credit of the United States of America, or issued by any
state or political subdivision or public instrumentality thereof, (i) which
has a remaining maturity at the time of purchase of not more than one year or
(ii) which is subject to a repurchase agreement with any Lender or any Eligible
Lending Institution exercisable within six months from the time of purchase so
long as such direct obligation remains in the possession of the Borrower or in
the possession of any Lender and (iii) which, in the case of obligations of any
state or political subdivision or public instrumentality thereof, is rated AA
or better by Moody's Investors Service, Inc.;
(b) certificates of deposit, time deposits, demand
deposits and bankers' acceptances, having a remaining maturity at the time of
purchase of not more than one year, issued by any Lender or by any Eligible
Lending Institution;
(c) corporate obligations rated Prime-1 by Moody's
Investors Service, Inc. or A-1 by Standard & Poor's Corporation, having a
remaining maturity at the time of purchase of not more than one year; and
(d) shares of funds registered under the Investment
Company Act of 1940, as amended, having assets of at least $100,000,000 which
invest only in obligations described above and which shares are rated by
Moody's Investors Service, Inc. or Standard & Poor's Corporation in one of the
two highest rating categories assigned by such agencies for obligations of such
nature.
"CASH FLOW" means, for any period, an amount equal to (without
duplication) the consolidated Net Income of the Borrower and its Subsidiaries,
PLUS depreciation, amortization and other non-cash charges (including, without
limitation, provision for Taxes) of the Borrower and its Subsidiaries, MINUS
non-cash credits and revenues of the Borrower and its Subsidiaries, PLUS
decreases in the Borrower's and its Subsidiaries' working capital (excluding
changes in cash, Cash Equivalent Investments and current maturities of
Indebtedness), MINUS increases in the Borrower's and its Subsidiaries' working
capital (excluding changes in cash, Cash Equivalent Investments and current
maturities of Indebtedness).
"CERTIFICATE OF AMENDMENT" means the Certificate of Amendment
to the Articles of Incorporation of the Borrower filed with the Secretary of
State of Ohio on March 13, 1996 relating to the Series B Special Preferred
Stock.
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"CHANGE IN CONTROL" means the occurrence of any of the
following: (a) any Person or group of Persons shall have acquired beneficial
ownership of more than 25% of the outstanding Stock of the Borrower (within the
meaning of Section 13(d) or 14(d) of the Securities and Exchange Act of 1934,
as amended, and the applicable rules and regulations thereunder) other than as
a result of (i) the conversion of Term Notes into Stock of the Borrower or (ii)
any other acquisition of Stock of the Borrower by any Lender; (b) during any
period of 12 consecutive months (whether commencing before or after the Closing
Date), individuals who on the first day of such period were directors of the
Borrower (together with any replacement or additional directors who were
nominated or elected by a majority of directors then in office) cease to
constitute a majority of the Board of Directors of the Borrower; (c) the
failure of Peter G. Graf to be the Chairman of the Board of Directors of the
Borrower and to be actively involved in the management of the Borrower; or (d)
the failure of Peter G. Graf to own at least 70% of the Stock of the Borrower
which he owns on the Closing Date.
"CHARGES" means all federal, state, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC) (a)
taxes at the time due and payable and (b) levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) the Collateral, (ii) the
Obligations, (iii) the Borrower's and its Subsidiaries' employees, payroll,
income or gross receipts, (iv) the Borrower's and its Subsidiaries' ownership
or use of their assets, or (v) any other aspect of the Borrower's and its
Subsidiaries' business.
"CLOSING DATE" means the date of the initial Borrowing
hereunder.
"COLLATERAL" means all property and interests in property and
proceeds thereof now owned or hereafter acquired by the Borrower or any
Subsidiary in and upon which a Lien is granted to the Agent, for its benefit
and the ratable benefit of the Lenders, under any of the Loan Documents.
"COLLECTION ACCOUNT" shall mean an account of the Agent
specified from time to time to the Borrower into which amounts on deposit in
the Borrower's Concentration Accounts shall be swept on a daily basis in
accordance with the terms of the cash management system required to be
maintained by the Borrower under SECTION 6.1.17.
"COMMITMENT" means, collectively, the Lenders' Revolving Loan
Commitments as the same may be reduced from time to time pursuant to the terms
of this Agreement.
"COMMON STOCK" means shares now or hereafter authorized of any
class of common stock of the Borrower and any other capital stock of the
Borrower, however designated, that has the right
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(subject to any prior rights of any other class or series of stock of the
Borrower) to participate in any distribution of assets upon voluntary or
involuntary liquidation, dissolution or winding up of the Borrower and in the
earnings of the Borrower without limit as to per share amount, and shall
include, without limitation, the presently authorized 22,250,000 shares of
Common Stock, $0.01 par value per share, of the Borrower.
"COMMONLY CONTROLLED ENTITY" means an entity or trade or
business, whether or not incorporated, which is from time to time a member of a
controlled group or a group under common control with the Borrower within the
meaning of Sections 414(b), 414(c), 414(m) or 414(o) of the IRC or Section
4001(a)(14) of ERISA.
"COMPLIANCE CERTIFICATE" means a certificate duly executed by
the chief executive, accounting or financial Authorized Officer of the Borrower
in the form of EXHIBIT D attached hereto, together with such changes as the
Required Lenders may from time to time reasonably request through the Agent for
purposes of monitoring the Borrower's compliance herewith.
"CONCENTRATION ACCOUNT" is defined in SCHEDULE 3.
"CONFIDENTIAL INFORMATION" has the meaning set forth in
SECTION 10.13 of this Agreement.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period,
without duplication, the sum of:
(a) the gross dollar amount of additions and capital
repairs during such period to property, plant, equipment and other fixed assets
of the Borrower and its Subsidiaries, including those additions and capital
repairs made in the ordinary course of business,
plus
----
(b) the aggregate amount of Capitalized Lease Liabilities
incurred during such period by the Borrower and its Subsidiaries.
"CONTRACTUAL OBLIGATION" means, relative to any Person, any
provision of any security issued by such Person or of any Instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound, excluding, in the case of the Borrower and any of its
Subsidiaries, the Loan Documents.
"CONVERSION RATE" is defined in SECTION 8.1.
"COST SAVINGS FACTOR" means, on any date of calculation, a
number added to Telephone Average EBITDA for the purpose of calculating
Eligible Telephone Average Present Value. The Cost
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Savings Factor on any date of calculation shall be equal to the amount set
forth below opposite the period below during which such date of calculation
occurs:
Cost Savings
Period Factor
------ ------------
Closing Date through June 30, 1996 $300
July 1, 1996 through September 30, 1996 290
October 1, 1996 through December 31, 1996 260
January 1, 1997 through March 31, 1997 200
April 1, 1997 through June 30, 1997 125
July 1, 1997 through September 30, 1997 60
October 1, 1997 through December 31, 1997 20
January 1, 1998 through Stated Maturity Date 0
"CURRENT RATIO" means, at any date, the ratio at such date of
(A) current assets at such date, to (B) current liabilities at such date,
determined on a consolidated basis for the Borrower and its Subsidiaries in
accordance with GAAP.
"DEFAULT" means any Event of Default or any condition or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"DESIGNATED REMAINING YEARS" means, with respect to any
Telephone Placement Agreement at any date, a number equal to the lesser of (a)
10 years or (b) the sum of (i) the number of years (rounded to the nearest
whole year) from such date until the date of expiration for such Telephone
Placement Agreement plus (ii) 5 years.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached
hereto as SCHEDULE 1, as it may be amended, supplemented or otherwise modified
from time to time by the Borrower with the consent of the Required Lenders as
provided in SECTION 4.2.2.
"DOLLAR" and the sign "$" mean lawful money of the United
States.
"EBITDA" means, for any period, an amount equal to Net Income
PLUS (to the extent deducted in determining Net Income) interest expense,
provisions for income taxes, depreciation, amortization of intangible assets
and other non-cash charges, MINUS (to the extent included in determining Net
Income) non-cash credits and revenues, in each case for the Borrower and its
Subsidiaries on a consolidated basis.
"ELIGIBLE LENDING INSTITUTION" means a financial institution
having a branch or office in the United States and having capital and surplus
and undivided profits aggregating at least $100,000,000 and rated Prime-1 or
better by Moody's Investors
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Service, Inc. or A-1 or better by Standard & Poor's Corporation.
"ELIGIBLE TELEPHONE AVERAGE PRESENT VALUE" means, as of any
date, the quotient of (i) the aggregate of the amounts calculated with respect
to each Eligible Telephone equal to the product of (x) Periodic Telephone
Income MULTIPLIED BY (y) the Designated Remaining Years for the Telephone
Placement Agreement relating to such Eligible Telephone (such Periodic
Telephone Income and Designated Remaining Years determined as of the last day
of the calendar month most recently ended for which financial statements are
required to have been delivered pursuant to SECTION 6.1.1(B)), discounted at
the rate of 20% per annum (with reference to the number of years constituting
such Designated Remaining Years), DIVIDED BY (ii) the number of Eligible
Telephones on such date.
"ELIGIBLE TELEPHONES" means only those Telephones (a) in which
the Agent, for its benefit and the ratable benefit of the Lenders, has a first
priority security interest, (b) which are located in the continental United
States, (c) which are identified on the Borrowing Base Certificate most
recently delivered by the Borrower pursuant to SECTION 6.1.1(G), (d) which are
in full operation, (e) which, in the opinion of the Required Lenders, are in
good operating condition and are not obsolete or unmerchantable, and (f) which
are subject to a valid Telephone Placement Agreement and a valid OSP Agreement,
PROVIDED, HOWEVER, that a Telephone shall not be deemed to be an Eligible
Telephone if the Required Lenders, in their reasonable judgment, determine that
such Telephone should not be included in such definition regardless of whether
such Telephone meets the requirements of clauses (a) through (f).
Notwithstanding the foregoing, for purposes of calculating the Borrowing Base,
Eligible Telephones shall be deemed to include the 518 Telephones owned by the
Borrower or one of its Subsidiaries as of the Closing Date which do not meet
one or more of the requirements of eligibility set forth above as more
particularly described SCHEDULE 4, provided that each such Telephone shall
either (i) meet each of the requirements of eligibility set forth above or (ii)
be replaced by a new Eligible Telephone installed by the Borrower or one of its
Subsidiaries after the Closing Date, before any new Eligible Telephones shall
increase the number of Eligible Telephones used to calculate the Borrowing
Base.
"ENVIRONMENT" means soil, surface waters, ground waters, land,
streams, sediments, surface or subsurface strata and ambient air.
"ENVIRONMENTAL LAWS" means all federal, state, local and
foreign laws or regulations, codes, common law, consent agreements, orders,
decrees, judgments or injunctions issued, promulgated, approved or entered
thereunder relating to pollution or protection of the Environment, natural
resource or occupational health and safety.
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"ENVIRONMENTAL LIABILITIES AND COSTS" means all liabilities,
obligations, responsibilities, remedial actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all reasonable fees, disbursements and expenses of counsel, expert and
consulting fees and costs of investigation and feasibility studies), fines,
penalties, settlement costs, sanctions and interest incurred as a result of any
claim or demand, by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute, any
Environmental Law, permit, order, variance or agreement with a Governmental
Authority or other Person, arising from or related to the administration of any
Environmental Law or arising from environmental, health or safety conditions or
a release or threatened release resulting from the past, present or future
operations of the Borrower or its Subsidiaries or affecting any of their
properties, or any release or threatened release for which the Borrower or any
of its Subsidiaries is otherwise responsible under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with
the regulation thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"EVENT OF DEFAULT" means any of the events set forth in
SECTION 7.1.
"EXCESS CASH FLOW" means, for any period, the sum of (A) Cash
Flow for such period, PLUS (B) the amount of principal repayments received by
the Borrower or any of its Subsidiaries during such period in respect of notes
receivable held by the Borrower or any of its Subsidiaries, MINUS (C) the sum
of (x) repayments of the Loans pursuant to SECTION 3.3.1(I) and scheduled
repayments of other Indebtedness (including Capitalized Lease Obligations)
during such period and (y) actual payments of Taxes during such period, MINUS
(D) the lesser of (x) the amount of Consolidated Capital Expenditures made by
the Borrower and its Subsidiaries during such period and (y) the amount of
Consolidated Capital Expenditures permitted to be made by the Borrower and its
Subsidiaries during such period under SECTION 6.2.5.
"FACILITY FEE LETTER" means that certain letter agreement
dated as of the date hereof between the Lenders party to this Agreement on the
Closing Date and the Borrower.
"FAIR SALEABLE VALUE BALANCE SHEETS" means a hypothetical
consolidated balance sheet of the Borrower and its Subsidiaries and a
hypothetical balance sheet of each Subsidiary of the Borrower, in each case,
prepared by the Borrower or its Subsidiaries based on the respective Pro Forma
Balance Sheets and setting forth (a) in the case of the Borrower, (i) the
consolidated assets of the
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Borrower and its Subsidiaries (restated at the fair saleable value thereof),
(ii) the consolidated liabilities of the Borrower and its Subsidiaries
(including all liabilities and obligations of the Borrower and its
Subsidiaries, fixed or contingent, direct or indirect, disputed or undisputed,
and whether or not required to be reflected on a balance sheet prepared in
accordance with GAAP), and (iii) the excess of such assets over such
liabilities and (b) in the case of each Subsidiary of the Borrower, (i) the
assets of such Subsidiary (restated at the fair saleable value thereof), (ii)
the liabilities of such Subsidiary (including all liabilities and obligations
of such Subsidiary, fixed or contingent, direct or indirect, disputed or
undisputed, and whether or not required to be reflected on a balance sheet
prepared in accordance with GAAP), and (iii) the excess of such assets over
such liabilities.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to:
(a) the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York; or
(b) if such rate is not so published for any day which is
a Business Day, the arithmetic average of the quotations for such transactions
received by the Agent, in its sole discretion, either from (i) three federal
funds brokers of recognized standing selected by the Agent in its sole
discretion or (ii) the Reference Lenders.
"FINANCING STATEMENTS" means the financing statements under
the Uniform Commercial Codes of the applicable jurisdictions, filed with
respect to the Security Documents pursuant to clause (e) of SECTION 4.1.13.
"FISCAL QUARTER" means any quarter of a Fiscal Year.
"FISCAL YEAR" means, subject to SECTIONS 6.2.16 and 10.14,
each twelve month accounting period of the Borrower ending on December 31st
thereafter; references to a Fiscal Year with a number corresponding to any
calendar year (E.G., the "1996 Fiscal Year") refer to the Fiscal Year ending on
December 31st in such calendar year.
"FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio
of (a) an amount equal to EBITDA to (b) Borrower's Fixed Charges during such
period.
"FIXED CHARGES" means, for any period, the sum of (a) Interest
Expense during such period, PLUS (b) scheduled principal repayments of
Indebtedness (including, without limitation,
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scheduled payments of principal in respect of Capitalized Lease Liabilities but
excluding scheduled repayments of the Obligations) during such period, PLUS (c)
Consolidated Capital Expenditures by the Borrower and its Subsidiaries during
such period, PLUS (d) provisions for taxes for such period, MINUS (e)
decreases in the Borrower's and its Subsidiaries' working capital (excluding
changes in cash, Cash Equivalent Investments and current maturities of
Indebtedness) during such period, and PLUS (f) increases in Borrower's and its
Subsidiaries' working capital (excluding changes in cash, Cash Equivalent
Investments and current maturities of Indebtedness) during such period.
"FOREIGN LENDER" means any Lender organized under the laws of
a jurisdiction outside the United States.
"F.R.S. BOARD" means the Board of Governors of the Federal
Reserve System (or any successor).
"GAAP" means generally accepted accounting principles in
effect from time to time in the United States.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms
contained in this Agreement or any other Loan Document refer to this Agreement
or such other Loan Document, as the case may be, as a whole and not to any
particular Section, clause or provision of this Agreement or such other Loan
Document.
"HSR ACT" has the meaning set forth in SECTION 6.1.14.
"INCLUDING" means including without limiting the generality of
any description preceding such term.
"INDEBTEDNESS" of any Person means, without duplication,
(a) all obligations of such Person for borrowed money
(including all notes payable and drafts accepted representing extensions of
credit) and all obligations evidenced by bonds, debentures, notes or other
similar instruments on which interest charges are customarily paid;
(b) all obligations, contingent or otherwise, relative to
the face amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all Capitalized Lease Liabilities of such Person (to
the extent required by GAAP to be included on the balance sheet of such
Person);
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(d) whether or not so included as liabilities in
accordance with GAAP:
(i) all obligations of such Person to pay the deferred
purchase price of property or services (excluding trade accounts
payable for other than borrowed money arising in the ordinary course
of business) and indebtedness secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited
in recourse; and
(ii) all obligations of such Person in respect of, and
obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise assure a creditor against loss in respect of,
Indebtedness of another Person of the type described in clause (a),
(b), (c) or (d)(i), above, or clause (e) below;
(e) net obligations under Interest Rate Contracts; and
(f) all obligations of such Person to redeem, purchase or
otherwise retire or extinguish any of its Stock at a fixed or determinable date
(whether by operation of a sinking fund or otherwise), at another's option or
upon the occurrence of a condition not solely with the control of such Person
(E.G., redemption from future earnings).
"INDEMNIFIED LIABILITIES" means any and all actions, causes of
action, suits, losses, costs, liabilities, damages and expenses incurred by or
asserted or awarded against any Lender Party and against which the Borrower has
indemnified the Lender Parties as provided in SECTION 10.4.
"ING" means Internationale Nederlanden (U.S.) Capital
Corporation.
"ING ALTERNATE BASE RATE" means a fluctuating rate of interest
per annum equal to the higher of:
(a) the arithmetic average of rates of interest announced
by each of the Reference Lenders from time to time at such Reference Lender's
principal New York City office as its prime (or base) rate for U.S. domestic
commercial loans; and
(b) the Federal Funds Rate from time to time in effect
plus 1/2 of 1% (0.50%).
Changes in the rate of interest on Loans shall take effect on the date of each
change in the ING Alternate Base Rate. The Agent shall give notice promptly to
the Borrower and the Lenders of
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changes in the ING Alternate Base Rate.
"INSOLVENCY" or "INSOLVENT" means, at any particular time, a
Multiemployer Pension Plan is insolvent within the meaning of Section 4245 of
ERISA.
"INSTRUMENT" means any contract, agreement, letter of credit,
indenture, mortgage, warrant, deed, certificate of title, document or writing
(whether by formal agreement, letter or otherwise) under which any obligation
is evidenced, assumed or undertaken, any Lien (or right or interest therein) is
granted or perfected, or any property (or right or interest therein) is
conveyed.
"INTELLECTUAL PROPERTY" means, collectively, (a) patents,
patent rights and patent applications, copyrights and copyright applications,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights, applications for registration of trademarks, trade names
and service marks, fictitious names registrations and trademark, trade name and
service mark registrations, including, without limitation, the name "PhoneTel
Technologies", and all derivations thereof, and (b) patent licenses, trademark
licenses, copyright licenses and other licenses to use any of the items
described in clause (a), and any other items necessary to conduct or operate
the business of the Borrower and its Subsidiaries.
"INTEREST EXPENSE" means, for any period, the Borrower's
consolidated interest expense accrued during such period in respect of all
Indebtedness of the Borrower and its Subsidiaries PROVIDED, HOWEVER, the effect
of the accretion, if any, of the right to put any warrants for Stock and the
effect of original issue discount, if any, which is attributable to
Indebtedness as a result of the issuance of warrants in connection therewith
shall not be taken into account when calculating Interest Expense.
"INTEREST RATE CONTRACT" means any interest rate cap
agreement, interest rate collar agreement, interest rate swap agreement or
other agreement or arrangement designed to protect against fluctuations in
interest rates.
"INTEREST RATE CONTRACT COUNTERPARTY" means any counterparty
to an Interest Rate Contract which the Borrower is required to enter into
pursuant to SECTION 6.1.12.
"INTERNAL REVENUE SERVICE" means the Internal Revenue Service
of the United States of America.
"INVESTMENT" means, relative to any Person:
(a) any loan or advance made by such Person to any other
Person (excluding commission, travel and similar advances to
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officers and employees made in the ordinary course of business);
(b) any ownership or similar interest held by such Person
in any other Person; and
(c) the purchase of any debt or equity securities or
instruments issued by any other Person (including, without limitation, Stock,
notes, debentures, drafts and acceptances, trust certificates, partnership
interests or units or membership interests in limited liability companies).
The amount of any Investment of the nature referred to in clause (a) or (b)
shall be the original principal or capital amount thereof less all returns of
principal or equity thereon (and without adjustment by reason of the financial
condition of such other Person) and shall, if made by the transfer or exchange
of property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such property.
"IPP-SOUTH CAROLINA" means International Pay Phones, Inc., a
South Carolina Corporation.
"IPP-SOUTH CAROLINA ACQUISITION" means the acquisition by the
Borrower of IPP-South Carolina pursuant to a merger of IPP-South Carolina into
the Borrower in exchange for the "Consideration" (as such term is defined in
the IPP-South Carolina Acquisition Agreement) pursuant to the terms and
conditions of the IPP-South Carolina Acquisition Agreement.
"IPP-SOUTH CAROLINA ACQUISITION AGREEMENT" means that certain
Agreement and Plan of Merger, dated November 22, 1995, among Borrower,
IPP-South Carolina and the "Sellers" identified therein and any amendments or
other modifications related to the foregoing.
"IPP-TENNESSEE" means International Pay Phones, Inc., a
Tennessee Corporation.
"IPP-TENNESSEE ACQUISITION" means the acquisition by the
Borrower of IPP-Tennessee pursuant to a merger of IPP-Tennessee into the
Borrower in exchange for the "Consideration" (as such term is defined in the
IPP-Tennessee Acquisition Agreement) pursuant to the terms and conditions of
the IPP-Tennessee Acquisition Agreement.
"IPP-TENNESSEE ACQUISITION AGREEMENT" means that certain
Agreement and Plan of Merger, dated November 22, 1995, among Borrower,
IPP-Tennessee and the "Sellers" identified therein and any amendments or other
modifications related to the foregoing.
"IRC" means the Internal Revenue Code of 1986, as
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amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of the IRC also refer to any successor sections.
"LENDER" means (a) any of the various lenders as are, or may
become, parties hereto, and (b) each Interest Rate Contract Counterparty that
is a Lender pursuant to clause (a) of this definition and has executed and
delivered a joinder agreement in the form of EXHIBIT F attached hereto, duly
executed by such Interest Rate Contract Counterparty and delivered to the
Agent.
"LENDER PARTIES" means, collectively, the Agent and each
Lender, and each of their respective successors and assigns, and each of the
respective officers, directors, employees, attorneys and agents of the Agent
and each Lender and of each of their respective successors and assigns,
indemnified by the Borrower as provided in SECTION 10.4.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, lien (statutory or other), adverse
claim or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any financing lease involving substantially
the same economic effect as any of the foregoing and the filing of any
financing statement under the UCC or comparable law of any jurisdiction).
"LOAN" means, as the context may require, any Revolving Loan
or all or any portion of the Term Loan.
"LOANS" means the Revolving Loans and the Term Loan.
"LOAN DOCUMENTS" means, collectively, this Agreement, the
Notes, each Security Document, the Facility Fee Letter, the Subsidiary
Guaranty, each Borrowing Request, any Interest Rate Contract entered into by
the Borrower with a Lender, and each other Instrument executed and delivered by
the Borrower or any of its Subsidiaries, as of the date hereof or at any time
thereafter, in connection with the transactions contemplated by this Agreement,
in each case, as amended, modified or supplemented from time to time.
"LOAN PARTY" means any of the Borrower, the Borrower's
Subsidiaries and any Affiliate of any of them which is a party to any of the
Loan Documents.
"LOSS" means any loss, damage, destruction, theft, or seizure
of, or any other casualty with respect to, or any condemnation of, any property
or asset of any Person in an amount in excess of $50,000 individually or
$100,000 in the aggregate for any Fiscal Year; and the "AMOUNT" of any Loss
means (i) if such
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asset or property is repaired or replaced, the greater of (A) the cost to
repair or replace the property or asset that was the subject of such Loss and
(B) the amount of insurance proceeds or condemnation awards payable as a result
of such Loss, and (ii) if such asset or property is not repaired or replaced,
the amount of insurance proceeds or condemnation awards payable as a result of
such loss.
"MATERIAL ADVERSE CHANGE" means a material adverse change in
(a) the condition (financial or otherwise), operations, performance, business,
properties or prospects of the Borrower and its Subsidiaries taken as a whole;
or (b) the rights and remedies of the Lenders or the Agent under the Loan
Documents; or (c) the ability of the Borrower to repay the Obligations or of
the Borrower or any Subsidiary to perform their respective obligations under
the Loan Documents; or (d) the legality, validity or enforceability of any Loan
Document; or (e) the Liens granted the Agent for the benefit of the Lenders
pursuant to the Security Documents.
"MATURITY" means relative to any Loan or portion thereof, the
earlier of such Loan's Stated Maturity Date or such other date when such Loan
or portion thereof shall be or become due and payable in accordance with the
terms of this Agreement, whether by required repayment, prepayment,
declaration, acceleration or otherwise.
"MAXIMUM OVERHEAD EXPENSE" means, for any period, all expenses
of the Borrower and its Subsidiaries for such period classified as "Other
Operating Expenses" and "Sales, General and Administrative Expense", determined
on a consolidated basis in accordance with GAAP and as reported by the Borrower
for such period on a basis consistent with the financial statements referenced
in clauses (i) and (ii) in SECTION 5.4(A).
"MINIMUM GROSS MARGIN PERCENTAGE - NON-COIN CALLS" means, for
any period, a number (expressed as a percentage) equal to (a) "Non-Coin
Revenue" plus commissions minus "O/S Processing Expense" as reported by the
Borrower for such period on a basis consistent with the financial statements
referenced in clauses (i) and (ii) of SECTION 5.4(A) DIVIDED BY (b) "Non-Coin
Revenue" (to the extent included in clause (a)).
"MONTHLY PAYMENT DATE" means the last day of each calendar
month or, if such day is not a Business Day, the immediately preceding Business
Day.
"MULTIEMPLOYER PENSION PLAN" means a Multiemployer Plan which
is subject to Subtitle E of Title IV of ERISA.
"MULTIEMPLOYER PLAN" means a Plan which is a "multiemployer
plan" within the meaning of Section 3(37) of ERISA.
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"NET BALANCE" is defined in SCHEDULE 3.
"NET CASH PROCEEDS" means, with respect to any sale or
disposition of assets, (A) the gross cash proceeds received from such sale or
disposition MINUS (B) the sum of (x) all reasonable out-of-pocket fees and
expenses incurred in connection with such sale or disposition PLUS (y) all
taxes incurred in connection with such sale or disposition PLUS (z) the
outstanding principal amount of Indebtedness (other than the Loan) required to
be repaid under the terms thereof as a result of such sale or disposition,
PROVIDED, HOWEVER, that nothing contained in this definition shall be deemed
to be a consent to any sale or disposition that is not otherwise permitted by
the Loan Documents.
"NET INCOME" means, as to any Person, for any period, the net
income (or loss) of such Person for such period, determined in accordance with
GAAP, but excluding extraordinary gains or losses for such period.
"NET WORTH" means, at any time, the total shareholder's equity
of the Borrower and its Subsidiaries as determined on a consolidated basis in
accordance with GAAP, PROVIDED, HOWEVER, the effect of the accretion, if any,
of the right to put any warrants for Stock and the effect of original issue
discount, if any, which is attributable to Indebtedness as a result of the
issuance of warrants in connection therewith shall not be taken into account
when calculating Net Worth.
"NOTE" means, as the context may require, any Term Note or any
Revolving Note.
"NOTES" means, collectively, all of the Term Notes and all of
the Revolving Notes.
"OBLIGATIONS" means all obligations of the Borrower with
respect to the repayment or performance of any obligations (monetary or
otherwise) of the Borrower arising under or in connection with this Agreement,
the Notes and the other Loan Documents.
"ORGANIC DOCUMENT" means, relative to any Person, its articles
or certificate of incorporation or certificate of limited partnership or
organization, its bylaws, partnership or operating agreement or other
organizational documents, and all stockholders agreements, voting trusts and
similar arrangements applicable to any of its Stock or partnership interests or
other ownership interests.
"OSP AGREEMENT" means any agreement with an operator service
provider pursuant to which commissions, fees or surcharges are to be paid to
the Borrower or one of its Subsidiaries on all or a portion of the long
distance traffic relating to any pay
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telephones owned or leased by or to the Borrower or one of its Subsidiaries.
"PARTICIPANT" means the banks or other entities that purchase
participating interests in any Loan, Note, Revolving Loan Commitment or other
interest hereunder, as provided in clause (a) of SECTION 10.11.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"PCS" means Paramount Communications Systems, Inc., a Florida
corporation.
"PCS ACQUISITION" means the acquisition by the Borrower from
all of the shareholders of PCS of 100% of the issued and outstanding Stock of
PCS in exchange for the "Consideration" (as such term is defined in the PCS
Acquisition Agreement) pursuant to the terms and conditions of the PCS
Acquisition Agreement.
"PCS ACQUISITION AGREEMENT" means that certain Share Purchase
Agreement, dated November 16, 1995, among the Borrower, PCS and the "Sellers"
identified therein and any amendments or other modifications related to the
foregoing.
"PENSION PLAN" means any Plan which is subject to the
provisions of Title IV of ERISA, or to the provisions of Section 302 of ERISA
or Section 412 of the IRC.
"PERIODIC TELEPHONE INCOME" means, as of any date, the sum of
(i) Telephone Average EBITDA for the most recent three-month period ending on
or prior to such date MULTIPLIED BY four (4), PLUS (ii) the Cost Savings Factor
as of such date, PROVIDED, HOWEVER, that notwithstanding anything contained in
this definition to the contrary, as of any date prior to June 30, 1996 the
Telephone Average EBITDA shall be equal to (a) the Telephone Average EBITDA
from April 1, 1996 until the last day of the calendar month ending on or prior
to such date and (b) such Telephone Average EBITDA for such period shall not be
multiplied by four (4) but shall be multiplied by (i) twelve (12) if such date
is prior to May 30, 1996, and (ii) six (6) if such date is after May 30, 1996
prior to June 30, 1996.
"PERSON" means any natural person, corporation, partnership,
limited liability company, firm, association, government, governmental agency
or any other entity, whether acting in an individual, fiduciary or other
capacity.
"PLAN" shall mean, at a particular time, any employee benefit
plan (within the meaning of Section 3(3) of ERISA), which is covered by ERISA
and in respect of which the Borrower, a Subsidiary or a Commonly Controlled
Entity is (or, if such plan
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were terminated at such time, would under Section 4069 of ERISA be deemed to
be) an "employer" as defined in Section 3(5) of ERISA.
"POST-DEFAULT RATE" means (a) in the case of each Loan, the
sum of the rate per annum otherwise applicable to such Loan from time to time
PLUS two percent (2%) per annum and (b) in the case of all other Obligations,
the ING Alternate Base Rate PLUS seven percent (7%) per annum; PROVIDED,
HOWEVER, that in all cases where the Post-Default Rate is being applied as a
result of an Event of Default under SECTION 7.1.1 then in such cases the
Post-Default Rate shall mean a rate of interest equal to twenty-one percent
(21%) per annum.
"PREFERRED STOCK" means shares now or hereafter authorized of
any class of capital stock of the Borrower other than Common Stock, and shall
include, without limitation, the presently authorized 2,500,000 shares of
Preferred Stock, $.01 par value, of which (i) 2,125 shares have been designated
Preferred Stock, $100 par value, of which no shares are outstanding, (ii) 6,500
shares have been designated Convertible Preferred Stock, without par value,
$100 stated value, cumulative and redeemable, of which no shares are
outstanding, (iii) 3,880 shares have been designated Preferred Stock, without
par value, $1,000 stated value, cumulative and redeemable, of which no shares
are outstanding, (iv) 16,000 shares have been designated 8% Preferred Stock,
without par value, $100 stated value, cumulative and redeemable, of which no
shares are outstanding, (v) 2,500 shares have been designated 7% Convertible
Preferred Stock, without par value, $100 stated value, cumulative and
redeemable, of which no shares are outstanding, (vi) 550,000 shares have been
designated 10% Preferred Stock, without par value, $10 stated value,
cumulative, of which 530,534 shares are outstanding, (vii) 250,000 shares have
been designated Series A Special Convertible Preferred Stock, $.20 par value,
of which no shares are outstanding, (viii) 250,000 shares have been designated
Series B Special Convertible Preferred Stock, $.20 par value, of which no
shares are outstanding, (ix) 200,000 shares have been designated 14%
Convertible Preferred Stock, without par value, $60 stated value, of which
107,918 shares are outstanding and (x) 1,218,995 shares are undesignated and
unissued.
"PREPAYMENT FEE" means the fee payable by the Borrower to the
Lenders prior to or concurrently with any prepayment as required under SECTION
3.3.2.
"PRO FORMA BALANCE SHEETS" means, collectively, (a) the
consolidated PRO FORMA balance sheet of the Borrower and its Subsidiaries as of
the Closing Date, prepared by the Borrower based on the financial statements
described in clauses (i) and (ii) of SECTION 5.4 and after giving effect to the
consummation of the transactions contemplated by the Acquisition Agreements and
the consummation of the transactions contemplated hereby, including the making
of the initial Loans on the Closing Date and (b) the PRO
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FORMA balance sheet of each of the Borrower's Subsidiaries as of the Closing
Date, prepared by such Subsidiaries based on the financial statements described
in clause (ii) of SECTION 5.4 and after giving effect to the consummation of
the transactions contemplated by the Acquisition Agreements and the
consummation of the transactions contemplated hereby, including the making of
the initial Loans on the Closing Date.
"PROJECTIONS" means, collectively, (a) the statements of
operations of the Borrower for the Fiscal Years 1996-2000 inclusive, dated
March 14, 1996, prepared by the Borrower on a monthly basis for the 1996 Fiscal
Year and on a quarterly basis for all Fiscal Years thereafter, together with
supporting details and a statement of underlying assumptions, and (b) the
projected balance sheets, statements of operations and changes in cash flows
of the Borrower for the Fiscal Years 1996-2000 inclusive, dated March 12, 1996,
prepared by Brenner Securities Corporation on an annual basis, together with
supporting details and a statement of underlying assumptions, all of which have
been delivered to the Lenders prior to the Closing Date.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness incurred to
finance part or all of (but not more than) the purchase price of equipment in
which neither the Borrower nor any of its Subsidiaries had at any time prior to
such purchase an interest.
"PURCHASING LENDER" means any Person purchasing all or any
part of the rights and obligations under this Agreement and the Notes of any
Lender pursuant to a Transfer Supplement in accordance with SECTION 10.11.
"QUARTERLY PAYMENT DATE" means the last day of each March,
June, September and December, or, if such day is not a Business Day, the
immediately preceding Business Day.
"QUOTED PRICE" of Common Stock for each day means the last
reported sales price of Common Stock on such day as reported by NASDAQ or, if
Common Stock is listed on a national security exchange, the last reported sales
price of Common Stock on such exchange (which shall be for consolidated trading
if applicable to such exchange) on such day, or if not so reported or listed,
the average of the last reported bid and ask prices of Common Stock on such
day, in each case as appropriately adjusted for any stock splits or reverse
stock splits occurring after the Closing Date.
"REFERENCE LENDERS" means, collectively, The Chase Manhattan
Bank, N.A. (or any successor thereto), Citibank, N.A. and Morgan Guaranty Trust
Company of New York.
"REGISTER" means the register for the recordation of the names
and addresses of the Lenders and the Revolving Loan Commitment of, and the
principal amounts of the Loans owing to,
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each Lender from time to time, as provided in clause (c) of SECTION 10.11.
"REGISTRATIONS RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated of even date herewith, between the Borrower and the Lenders,
as in effect on the date hereof and as hereafter amended, supplemented,
restated or otherwise modified.
"REGULATORY CHANGE" means, as to any or all of the Lenders or
the Agent, any change (including, without limitation, any change in the
interpretation) occurring after the Closing Date in any (or the adoption after
such date of any new):
(a) United States federal or state law or foreign law
applicable to the Agent or such Lender; or
(b) regulation, interpretation, directive, guideline or
request (whether or not having the force of law) applicable to the Agent or
such Lender of any court or Governmental Authority charged with the
interpretation or administration of any law referred to in clause (a) or of any
central bank or fiscal, monetary or other authority having jurisdiction over
the Agent or such Lender.
"REORGANIZATION" means with respect to any Multiemployer
Pension Plan, the condition that such plan is in reorganization within the
meaning of such term as used in Section 4241 of ERISA.
"REPLACEMENT LENDER" has the meaning set forth in clause (f)
of SECTION 2.4 of this Agreement.
"REPORTABLE EVENT" means (i) a reportable event described in
Section 4043 of ERISA and regulations thereunder (other than any Reportable
Event described in Section 4043(b)(2) or (7)), (ii) a withdrawal by a
"substantial employer" (within the meaning of Section 4001(a)(2) of ERISA) from
a Single Employer Plan to which more than one employer contributes, as referred
to in Section 4063(b) of ERISA, or (iii) a cessation of operations at a
facility causing more than twenty percent (20%) of participants under a Single
Employer Plan to be separated from employment, as referred to in Section
4062(e) of ERISA.
"REQUIRED LENDERS" means, (a) Lenders having, in the
aggregate, 66-2/3% or more of the aggregate of the Revolving Loan Commitment
plus the outstanding principal amount of the Term Loan or (b) if the Revolving
Loan Commitments shall have been terminated, whether pursuant to this Agreement
or otherwise, Lenders having, in the aggregate, 66-2/3% of the aggregate of the
outstanding principal amount of the Loans.
"REQUIREMENTS OF LAW" means, as to any Person, the Organic
Documents of such Person, and all federal, state and local laws, rules,
regulations, orders, decrees or other determinations
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of an arbitrator, court or other Governmental Authority, including, without
limitation, all disclosure and other requirements of ERISA, the requirements of
Environmental Laws and Environmental Permits, the requirements of OSHA, in each
case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"RESPONSIBLE OFFICER" means the Chief Executive Officer, the
President, the Chief Financial Officer, the Treasurer or the Director of
Accounting of the Borrower.
"REVOLVING A LOAN" means relative to any Lender, any loan made
by such Lender to the Borrower pursuant to SECTION 2.1.1.
"REVOLVING A LOAN AVAILABILITY" means, on any date, the excess
of (a) the lesser of (i) the Revolving A Loan Commitment Amount or (ii) the
excess of (x) the Borrowing Base for Revolving A Loans and Term Loan minus (y)
the outstanding principal balance of the Term Loan, MINUS (b) the then
aggregate principal amount of all outstanding Revolving A Loans.
"REVOLVING A LOAN COMMITMENT" means the collective commitments
of the Lenders to make Revolving A Loans pursuant to SECTION 2.1.1.
"REVOLVING A LOAN COMMITMENT AMOUNT" means $6,000,000 as such
amount may be reduced from time to time pursuant to SECTION 3.3.4.
"REVOLVING A LOAN COMMITMENT TERMINATION DATE" means the
earliest of:
(a) the applicable Stated Maturity Date;
(b) immediately and without further action upon the
occurrence of any Event of Default described in SECTION 7.1.4;
(c) immediately when any other Event of Default shall
have occurred and be continuing and either:
(i) any Loans shall be declared to be due and
payable pursuant to SECTION 7.3; or
(ii) in the absence of such declaration, the
Agent, acting at the direction of the Required Lenders, shall give
notice to the Borrower that the Revolving A Loan Commitment has been
terminated; and
(d) immediately upon the occurrence of a Change in
Control.
"REVOLVING A NOTE" means a promissory note of the
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Borrower dated the date hereof and substantially in the form of EXHIBIT A-1
attached hereto, and shall also refer to all other promissory notes accepted
from time to time in substitution therefor or renewal thereof.
"REVOLVING B LOAN" means relative to any Lender, any Loan made
by such Lender to the Borrower pursuant to SECTION 2.1.2.
"REVOLVING B LOAN AVAILABILITY" means, on any date, the excess
of (a) the lesser of (i) the Revolving B Loan Commitment Amount or (ii) the
Borrowing Base for Revolving B Loans MINUS (b) the then aggregate principal
amount of all outstanding Revolving B Loans.
"REVOLVING B LOAN COMMITMENT" means the collective commitments
of the Lenders to make Revolving B Loans pursuant to SECTION 2.1.2.
"REVOLVING B LOAN COMMITMENT AMOUNT" means $2,250,000 as such
amount may be reduced from time to time pursuant to SECTION 3.3.4.
"REVOLVING B LOAN COMMITMENT TERMINATION DATE" means the
earliest of:
(a) the applicable Stated Maturity Date;
(b) immediately and without further action upon the
occurrence of any Event of Default described in SECTION 7.1.4;
(c) immediately when any other Event of Default shall
have occurred and be continuing and either:
(i) any Loans shall be declared to be due and
payable pursuant to SECTION 7.3; or
(ii) in the absence of such declaration, the
Agent, acting at the direction of the Required Lenders, shall give
notice to the Borrower that the Revolving B Loan Commitment has been
terminated; and
(d) immediately upon the occurrence of a Change in
Control.
"REVOLVING B NOTE" means a promissory note of the Borrower
dated the date hereof and substantially in the form of EXHIBIT A-2 attached
hereto, and shall also refer to all other promissory notes accepted from time
to time in substitution therefor or renewal thereof.
"REVOLVING LOAN COMMITMENT AMOUNT" means, collectively, the
Revolving A Loan Commitment Amount and the Revolving B Loan
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Commitment Amount.
"REVOLVING LOAN COMMITMENT" means, collectively, the Revolving
A Loan Commitment and the Revolving B Loan Commitment.
"REVOLVING LOANS" means relative to any Lender, any Loans made
by such Lender to the Borrower pursuant to SECTION 2.1.1 or SECTION 2.1.2.
"REVOLVING NOTES" means, collectively, all of the Revolving A
Notes and all of the Revolving B Notes.
"REVOLVING PERCENTAGE" of any Lender means, at any time, in
respect of the Revolving Loan Commitment and the Revolving Loans, the
percentage set forth opposite such Lender's signature hereto under the caption
"Percentage", as the same may be adjusted pursuant to SECTION 10.11.
"SECURITIES LEGEND" is defined in clause (j) of SECTION 10.11.
"SECURITY AGREEMENT" means the Security Agreement, dated as of
the date hereof, made by the Borrower and each of its Subsidiaries in favor of
the Agent, for its benefit and the benefit of the Lenders, as such agreement
may be amended, supplemented or otherwise modified from time to time.
"SECURITY DOCUMENTS" means, collectively, the Security
Agreement, the Trademark Assignments, the assignment of "key-man" life
insurance described in SECTION 6.1.5 and of the Interest Rate Contracts
described in SECTION 6.1.12 to the extent that the Interest Rate Contract
Counterparty is a Lender, the Borrower Pledge Agreement, the Subsidiary Pledge
Agreement, the Assignment of Rights under Acquisition Agreements described in
clause (b) of SECTION 4.1.13, and each other Instrument at any time delivered
in connection with this Agreement to secure the Obligations.
"SENIOR INTEREST COVERAGE RATIO" means, for any period, the
ratio of (a) EBITDA for such period to (b) Interest Expense for such period.
"SERIES B SPECIAL PREFERRED STOCK" means the 250,000 shares of
Series B Special Convertible Preferred Stock of the Borrower, $0.20 par value
per share, authorized pursuant to the Certificate of Amendment, of which no
shares are outstanding as of the Closing Date.
"SINGLE EMPLOYER PLAN" means any Plan which is covered by
Title IV of ERISA, other than a Multiemployer Plan.
"SOLVENT" means, with respect to any Person on a particular
date, that on such date (i) the fair value of the assets
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of such Person (both at fair valuation and at present fair saleable value) is,
on the date of determination, greater than the total amount of liabilities,
including, without limitation, contingent and unliquidated liabilities, of such
Person, (ii) such Person is able to pay all liabilities of such Person as they
mature, and (iii) such Person does not have unreasonably small capital with
which to carry on its business. In computing the amount of contingent or
unliquidated liabilities at any time, such liabilities will be computed at the
amount which, in light of all the facts and circumstances existing at such
time, represents the amount that can reasonably be expected to become an actual
or matured liability.
"STATED MATURITY DATE" means:
(a) with respect to the Revolving A Loans, June 30, 1999;
(b) with respect to the Revolving B Loans, March 31,
1997; and
(c) with respect to the Term Loan, June 30, 1999.
"STOCK" means all shares of capital stock of or in a
corporation, whether voting or non-voting, and including, without limitation,
common stock and preferred stock.
"SUBSIDIARY" of any corporation means any other corporation,
partnership or limited liability company greater than 50% of the outstanding
shares of Stock or other ownership interests having ordinary voting power for
the election of directors (or others serving equivalent functions) is owned
directly or indirectly by such corporation, and, except as otherwise indicated
herein, references to Subsidiaries shall refer to Subsidiaries of the Borrower.
"SUBSIDIARY GUARANTY" means the Guaranty of all the
Obligations, dated as of the date hereof, made by the Borrower's Subsidiaries,
jointly and severally, in favor of the Agent and the Lenders.
"SUBSIDIARY NOTE" means each promissory note executed by a
Subsidiary of the Borrower payable to the order of the Borrower, each in the
amount of Twenty Million Dollars ($20,000,000), as amended, supplemented,
restated or otherwise modified from time to time.
"SUBSIDIARY PLEDGE AGREEMENT" means the Stock and Notes Pledge
Agreement, dated as of the date hereof, pursuant to which World Communications,
Inc., a Missouri corporation and a wholly owned Subsidiary of the Borrower,
will pledge to the Agent, for its benefit and the ratable benefit of the
Lenders, all of the issued
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and outstanding stock of its Subsidiaries, as such agreement may be amended,
supplemented or otherwise modified from time to time.
"TANGIBLE NET WORTH" means, at any time, Net Worth less all
intangible assets, as determined for the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP, with such intangible assets to
include, in any event, goodwill.
"TAXES" means all taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, EXCLUDING, in the
case of each Lender and the Agent, taxes imposed on its net income and
franchise taxes imposed on it.
"TELEPHONE" shall mean 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 and which has been
installed for operation.
"TELEPHONE AVERAGE EBITDA" means, with respect to any period,
the quotient of (a) the aggregate EBITDA during such period DIVIDED BY (b) the
Average Number of Telephones during such period.
"TELEPHONE PLACEMENT AGREEMENT" shall mean any agreement
between the Borrower or one of its Subsidiaries and another Person pursuant to
which the Borrower or such Subsidiary installs one or more Telephones on
property or properties owned, leased or operated by such Person and pays to
such Person a fee or percentage of revenues earned from such Telephone(s), and
such other compensation as may be provided pursuant thereto, in return for such
installation right.
"TERM LOAN" means, collectively, the loans, in an aggregate
principal amount of $29,000,000, made by the Lenders on the Closing Date to the
Borrower pursuant to SECTION 2.1.3.
"TERM NOTE" means a promissory note of the Borrower dated the
date hereof and substantially in the form of EXHIBIT A-3 attached hereto, and
shall refer to all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"TERM PERCENTAGE" of any Lender means, at any time, in respect
of the Term Loan, the percentage set forth opposite such Lender's signature
hereto under the caption "Percentage", as the same may be adjusted pursuant to
SECTION 10.11.
"TERM NOTE SHARES" is defined in clause (j) of SECTION 10.11.
"TRADEMARK ASSIGNMENTS" means the Collateral Assignment and
Security Agreements (Trademarks), each dated as of the date hereof, made by the
Borrower and certain of its Subsidiaries in
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favor of the Agent, for its benefit and the ratable benefit of the Lenders.
"TRANSFER SUPPLEMENT" means a Transfer Supplement,
substantially in the form of EXHIBIT E, executed pursuant to SECTION 10.11.
"UCC" means the Uniform Commercial Code of the State of New
York, as in effect from time to time.
"UNITED STATES" or "U.S." means the United States of America,
its 50 States and the District of Columbia.
"WRITTEN" or "IN WRITING" means any form of written
communication or a communication by means of telex, telecopier device,
telegraph or cable.
SECTION 1.2. USE OF DEFINED TERMS. Unless otherwise
defined or the context otherwise requires, terms for which meanings are
provided in this Agreement shall have such meanings when used in the Disclosure
Schedule and each Note, Borrowing Base Certificate, Borrowing Request,
Compliance Certificate, notice and other communication delivered from time to
time in connection with this Agreement or any other Loan Document.
SECTION 1.3. CROSS-REFERENCES. Unless otherwise
specified, references in this Agreement and in each other Loan Document to any
Article or Section are references to such Article or Section of this Agreement
or such other Loan Document, as the case may be, and unless otherwise
specified, references in any Article, Section, or definition to any clause are
references to such clause of such Section, Article or definition.
SECTION 1.4. ACCOUNTING AND FINANCIAL DETERMINATIONS.
Unless otherwise specified, all accounting terms used herein or in any other
Loan Document shall be interpreted, all accounting determinations and
computations hereunder or thereunder shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared
in accordance with GAAP.
ARTICLE 2.
COMMITMENTS
SECTION 2.1. LOAN COMMITMENTS. Subject to the terms and
conditions of this Agreement (including ARTICLE 4), each Lender severally and
for itself alone agrees to provide: (a) its Revolving Percentage of the
Revolving A Loan Commitment; (b) its Revolving Percentage of the Revolving B
Loan Commitment; and (c) its Term Percentage of the Term Loan, each as more
fully described in this SECTION 2.1.
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SECTION 2.1.1. REVOLVING A LOAN COMMITMENT. Subject to the
limitations set forth in SECTION 2.1.4, each Lender will from time to time on
any Business Day occurring during the period commencing on the Closing Date and
continuing to (but not including) the Revolving A Loan Commitment Termination
Date, make Revolving A Loans, in amounts not to exceed when aggregated with all
such Lender's Revolving A Loans such Lender's Revolving Percentage of the
Revolving A Loan Commitment Amount, to the Borrower equal to its Revolving
Percentage of the aggregate amount of any Borrowing of Revolving A Loans
requested by the Borrower to be made on such Business Day in accordance with
SECTION 3.1.
SECTION 2.1.2. REVOLVING B LOAN COMMITMENT. Subject to the
limitations set forth in SECTION 2.1.4, each Lender will from time to time on
any Business Day occurring during the period commencing on the Closing Date and
continuing to (but not including) the Revolving B Loan Commitment Termination
Date, make Revolving B Loans, in amounts not to exceed when aggregated with all
such Lender's Revolving B Loans such Lender's Revolving Percentage of the
Revolving B Loan Commitment Amount, to the Borrower equal to its Revolving
Percentage of the aggregate amount of any Borrowing of Revolving B Loans
requested by the Borrower to be made on such Business Day in accordance with
SECTION 3.1.
SECTION 2.1.3. TERM LOAN COMMITMENT. On the Closing Date,
each Lender will make a single Term Loan to the Borrower equal to such Lender's
respective Term Percentage of $29,000,000.
SECTION 2.1.4. AGENT AND LENDERS NOT REQUIRED TO EXTEND
CREDIT UNDER REVOLVING LOAN COMMITMENT. No Lender shall be required to make
any Revolving Loan, if after giving effect thereto:
(a) the then aggregate outstanding principal amount of
all Revolving A Loans and the then aggregate outstanding principal amount of
the Term Loan would exceed the Borrowing Base for Revolving A Loans and Term
Loan; or
(b) the then aggregate outstanding principal amount of
all Revolving B Loans would exceed the Borrowing Base for Revolving B Loans; or
(c) the then aggregate outstanding principal amount of
all Revolving A Loans or all Revolving B Loans would exceed the Revolving A
Loan Commitment Amount or the Revolving B Loan Commitment Amount, respectively;
or
(d) the then aggregate outstanding principal amount of
such Lender's Revolving Loans would exceed its Revolving Percentage of the
Revolving Loan Commitment Amount; or
(e) the then aggregate outstanding principal amount of
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such Lender's Revolving A Loans or Revolving B Loans would exceed its Revolving
Percentage of the Revolving A Loan Commitment Amount or the Revolving B Loan
Commitment Amount, respectively.
Subject to the terms hereof, the Borrower may from time to time borrow, repay
and reborrow Revolving A Loans and Revolving B Loans, in all cases pursuant to
the Revolving A Loan Commitment or the Revolving B Loan Commitment,
respectively. The Term Loan or any portion thereof once repaid may not be
reborrowed.
SECTION 2.2. CHANGES IN ADVANCE FORMULA; ESTABLISHMENT OF
RESERVES.
SECTION 2.2.1. ADVANCE RATIOS. The Borrower acknowledges
that the advance formula provided for in the definition of "Borrowing Base" in
SECTION 1.1 has been established based upon the Required Lenders' determination
of the loan value of the Eligible Telephones as of the date of this Agreement.
Upon the occurrence and during the continuance of an Event of Default, based on
the Required Lenders' customary credit considerations, the Required Lenders, in
their sole discretion, may decrease the advance ratios against Eligible
Telephones, and any such decrease shall become effective immediately upon the
Agent's giving notice thereof to the Borrower, and shall remain in effect for
so long as such Event of Default continues.
SECTION 2.2.2. RESERVES. The Agent shall have the right to
establish, in such amounts, and with respect to such matters, as the Agent,
based on the Agent's customary credit considerations, shall deem necessary or
appropriate, reserves with respect to (i) Charges and Liens; (ii) Environmental
Liabilities and Costs; and (iii) sums as to which the Agent and the Lenders are
permitted to make Revolving Loans on the Borrower's behalf under SECTION 3.3.3
of this Agreement.
SECTION 2.3. COMMITMENT AND AGENT'S FEE.
(a) (i) The Borrower agrees to pay to the Agent for the
account of each Lender, a nonrefundable fee for the period from the Closing
Date to and including the Revolving A Loan Commitment Termination Date equal to
such Lender's Revolving Percentage of 1/2 of 1% (0.50%) per annum on the
difference between (A) the Revolving A Loan Commitment Amount and (B) the
average daily aggregate outstanding principal amount of all Revolving A Loans.
The commitment fee described in this subclause (i) shall be calculated on a
daily basis and shall be payable by the Borrower in arrears on each Monthly
Payment Date and on the Revolving A Loan Commitment Termination Date.
(ii) The Borrower agrees to pay to the Agent for the
account of each Lender, a nonrefundable fee for the period from the Closing
Date to and including the Revolving B Loan Commitment
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Termination Date equal to such Lender's Revolving Percentage of 1/2 of 1%
(0.50%) per annum on the difference between (A) the Revolving B Loan Commitment
Amount and (B) the average daily aggregate outstanding principal amount of all
Revolving B Loans. The commitment fee described in this subclause (ii) shall
be calculated on a daily basis and shall be payable by the Borrower in arrears
on each Monthly Payment Date and on the Revolving B Loan Commitment Termination
Date.
(b) The Borrower agrees to pay to the Agent, for its
account, an agent's fee of $35,000 per Fiscal Year. The agent's fee described
in this clause (b) shall be payable in advance on the Closing Date and on the
first day of each Fiscal Year thereafter prior to the Stated Maturity Date.
One-quarter (25%) of the agent's fee described in this clause (b) in respect of
each Fiscal Year shall be fully earned and nonrefundable on the first day of
each Fiscal Quarter of such Fiscal Year (except in the case of the 1996 Fiscal
Year where such percentage shall be fully earned and nonrefundable on the
Closing Date) such that the entire agent's fee in respect of any Fiscal Year
shall be fully earned and nonrefundable on the first day of the last Fiscal
Quarter of such Fiscal Year. Subject to SECTION 3.8, upon repayment in full of
all the Loans and termination of the Commitment, any portion of the agent's fee
which is then unearned shall be promptly refunded to the Borrower.
SECTION 2.4. INCREASED COSTS; CAPITAL ADEQUACY.
(a) The Borrower shall pay to each Lender from time to time
on demand such amounts as such Lender may determine to be reasonably necessary
to compensate it or its holding company for any costs which such Lender
determines are attributable to its making or maintaining Loans, or maintaining
Commitments hereunder or its obligation to make any such Loans hereunder, or
any reduction in any amount receivable by such Lender hereunder in respect of
any such Loans, Commitments or obligation, resulting from any Regulatory Change
which: (i) changes the basis of taxation of any amounts payable to such Lender
under this Agreement in respect of any of such Loans or Commitments (other than
taxes imposed on the overall net income of such Lender); or (ii) imposes or
modifies any reserve, special deposit, deposit insurance or assessment, minimum
capital, capital ratio or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, such
Lender or any holding company of such bank (including, without limitation, a
request or requirement which affects the manner in which any Lender or the
holding company of any thereof allocates capital resources to commitments,
including the Commitments and obligations of such Lender hereunder). Each
Lender will notify the Borrower of any event occurring after the date of this
Agreement which will entitle such Lender to compensation pursuant to this
clause (a) as promptly as practicable after it obtains knowledge thereof and
determines to
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request such compensation.
(b) Without limiting the effect of the foregoing
provisions of this SECTION 2.4 (but without duplication), the Borrower shall
pay to each Lender from time to time upon demand by such Lender such amounts as
the Lender may determine to be reasonably necessary to compensate such Lender
for any costs which it determines are attributable to the maintenance by it or
its holding company, pursuant to any law or regulation of any jurisdiction or
any interpretation, directive or request (whether or not having the force of
law) of any court or governmental or monetary authority, whether in effect on
the date of this Agreement or thereafter, of capital in respect of its Loans or
its obligation to make the Loans hereunder (such compensation to include,
without limitation, an amount equal to any reduction in return on assets or
equity of such Lender or its holding company to a level below that which it
could have achieved but for such law, regulation, interpretation, directive or
request). The Lender will notify the Borrower with a copy to the Agent) if it
is entitled to compensation pursuant to this clause (b) as promptly as
practicable after it determines to request such compensation.
(c) Each notice delivered by any Lender pursuant to this
SECTION 2.4 shall contain a statement of such Lender as to any such additional
amount or amounts (including calculations thereof in reasonable detail) which
shall, in the absence of manifest error, be conclusive of the matters stated
therein and be binding upon the Borrower. In determining such amount, any
Lender may use any method of averaging and attribution that it in good faith
shall deem applicable.
(d) Without prejudice to the survival of any other
agreement of the Borrower hereunder or under any other Loan Document, the
agreements and obligations of the Borrower contained in this SECTION 2.4 shall
survive the payment in full of principal, interest and other amounts payable
hereunder and under the Notes and the other Loan Documents.
(e) Notwithstanding anything in this SECTION 2.4 to the
contrary, to the extent that notice is given by any Lender to the Borrower of
any additional amount owing to such Lender under this SECTION 2.4 more than 360
days after the occurrence of the event giving rise to such obligation, such
Lender shall not be entitled to compensation under this SECTION 2.4 for any
amounts incurred or accruing 360 days prior to the giving of such notice to
Borrower.
(f) Upon the receipt by the Borrower from any Lender (an
"AFFECTED LENDER") of a claim for compensation pursuant to this SECTION 2.4 or
SECTION 3.5, the Borrower may (i) request one or more of the Lenders to acquire
all or part of such Affected Lender's Loans and Revolving Loan Commitment
(provided that no such other Lender shall have any obligation to so acquire or
assume all
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or any part of such Affected Lender's Loans and Revolving Loan
Commitment), or (ii) designate a Replacement Lender reasonably satisfactory to
the Agent. Any such designation of a Replacement Lender under clause (ii)
shall be subject to the prior written consent of the Agent, which consent shall
not be unreasonably withheld.
SECTION 2.5. INVESTMENT REPRESENTATIONS. Each Lender
represents and warrants that it is holding its Notes for its own account, for
investment purposes and not with a view to distribution thereof; PROVIDED,
HOWEVER, that the foregoing representation shall not be construed as imposing
any limitation on such Lender's right to transfer or sell any Loans or Notes
that is not otherwise expressly set forth in this Agreement or required under
applicable law. Each Lender agrees that it will not, directly or indirectly,
offer, transfer, sell, assign, pledge; hypothecate or otherwise dispose of any
of the Notes, any shares of Series B Preferred Stock or any Common Stock (or
solicit any offers to buy, purchase or otherwise acquire or take a pledge of
Notes, Series B Preferred Stock or Common Stock), except in compliance with the
Securities Act of 1933, as amended or otherwise modified from time to time.
Each Lender agrees that it will not transfer, sell, assign, pledge, hypothecate
or otherwise dispose of any Notes, Series B Preferred Stock or Common Stock if
any such disposition would cause the Borrower to be required to register any of
the foregoing pursuant to Section 12(g) of the Securities Exchange Act of 1934,
as amended or otherwise modified from time to time.
ARTICLE 3.
LOANS AND NOTES
SECTION 3.1. BORROWING PROCEDURE. By delivering a
Borrowing Request to the Agent at the Agent's Atlanta Office on or before 11:00
a.m., New York City time, on a Business Day, the Borrower may from time to
time request, (i) in the case of Revolving A Loans, on not less than two (2)
Business Days' nor more than three (3) Business Days' notice and (ii) in the
case of Revolving B Loans, on not less than one (1) Business Day notice, that a
Borrowing of Revolving Loans be made on the Business Day specified in such
Borrowing Request. The Borrowing Request shall specify whether such Borrowing
is to be made as Revolving A Loans or Revolving B Loans. Borrowings of
Revolving A Loans shall be in a minimum aggregate amount equal to $250,000 and
in integral multiples of $50,000 or, if less, the amount of the Revolving A
Loan Availability immediately prior to
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such Borrowing. Borrowings of Revolving B Loans shall be in a minimum
aggregate amount equal to $50,000 and in integral multiples of $50,000 or, if
less, the amount of the Revolving B Loan Availability immediately prior to such
Borrowing. Each Revolving Loan shall be made on the Business Day specified in
the Borrowing Request therefor (including the initial Revolving Loans to be
made on the Closing Date). On the day prior to such Business Day specified by
the Borrower, each Lender shall, on or before 2:00 p.m., New York City time,
deposit same day funds with the Agent in an amount equal to such Lender's
Revolving Percentage of the requested Borrowing, such deposit to be made to
such account as the Agent shall specify from time to time by notice to the
Lenders. On the Business Day specified by the Borrower in the Borrowing
Request, the proceeds of all Borrowings shall be made available to the Borrower
by wire transfer of such proceeds to such transferees, or to such accounts of
the Borrower, as the Borrower shall have specified in the Borrowing Request
therefor; PROVIDED, HOWEVER, that in each case the Agent shall be required to
make available to the Borrower the proceeds of any Borrowing only to the extent
received by it in same day funds from the Lenders. No Lender's obligation to
make any Loan shall be affected by any other Lender's failure to make any Loan.
SECTION 3.2. NOTES. All Loans made by each Lender shall
be evidenced:
(a) in the case of such Lender's portion of the Term
Loan, by a Term Note payable to the order of such Lender in a principal amount
equal to such Lender's Term Percentage of the Term Loan;
(b) in the case of such Lender's Revolving A Loans, by a
Revolving A Note payable to the order of such Lender in a principal amount
equal to such Lender's Revolving Percentage of the Revolving A Loan Commitment
Amount; and
(c) in the case of such Lender's Revolving B Loans, by a
Revolving B Note payable to the order of such Lender in a principal amount
equal to such Lender's Revolving Percentage of the Revolving B Loan Commitment
Amount.
The Borrower hereby irrevocably authorizes each Lender to make (or cause to be
made) appropriate notations on a grid schedule attached to such Lender's Notes
(or on a continuation of any such grid attached to any Note and made a part
thereof), which notations shall evidence, INTER ALIA, the date and outstanding
principal amount of the Loans evidenced thereby. The notations on any such
grid (and on any such continuation) indicating the outstanding principal amount
of such Lender's Loans shall be presumptive evidence of the principal amount
thereof owing and unpaid, but the failure to record any such amount on any such
grid (or on any such continuation) shall not limit or otherwise affect the
obligations of the Borrower hereunder or under such Note to make payments of
principal of or interest on such Loans when due.
SECTION 3.3. PRINCIPAL PAYMENTS. Repayments and
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prepayments of principal of the Loans shall be made in accordance with this
SECTION 3.3.
SECTION 3.3.1. REPAYMENTS AND PREPAYMENTS. The Borrower
will make payment in full of all unpaid principal of each Loan at its Stated
Maturity Date (or such earlier date as such Loan may become or be declared due
and payable pursuant to ARTICLE 7). Prior thereto, the Borrower:
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding principal amount
of any Loans; PROVIDED, HOWEVER, that (i) all such voluntary prepayments shall
be in a minimum amount of $50,000 (subject to the Borrower's right to prepay in
full the entire unpaid principal amount of the Loans), (ii) such prepayment
shall require (x) in the case of Revolving Loans, at least five (5) Business
Days prior written notice to the Agent or (y) in the case of the Term Loan, at
least thirty (30) days prior written notice to the Agent, (iii) the Borrower
pays to the Lenders any Prepayment Fee required to be paid pursuant to SECTION
3.3.2, (iv) the Borrower may only prepay the Term Loan if the Revolving Loan
Commitment has been irrevocably terminated and there are no Revolving Loans
outstanding (unless all outstanding Revolving Loans are fully repaid and the
Revolving Loan Commitment is irrevocably terminated simultaneously with a
prepayment on the Term Loan), and (v) the Borrower may not prepay the Revolving
A Loans if there are any Revolving B Loans outstanding (unless all outstanding
Revolving B Loans are fully repaid simultaneously with a prepayment of the
Revolving A Loans);
(b) (i) shall, on any Business Day on which the sum
of (A) the aggregate outstanding principal amount of all Revolving A Loans and
(B) the aggregate outstanding principal amount of the Term Loan exceeds the
Borrowing Base for Revolving A Loans and Term Loan, make a mandatory prepayment
of the outstanding principal amount of Revolving A Loans and the Term Loan in
an amount equal to such excess amount (such prepayment to be applied first to
all of the Revolving A Loans until paid in full and then to the Term Loan);
(ii) shall, on any Business Day on which the
aggregate outstanding principal amount of all Revolving B Loans exceeds the
Borrowing Base for Revolving B Loans, make a mandatory prepayment of the
outstanding principal amount of the Revolving B Loans in an amount equal to
such excess amount;
(iii) shall, on any Business Day on which the aggregate
outstanding principal amount of all Revolving A Loans exceeds the Revolving A
Loan Commitment Amount, make a mandatory prepayment of the outstanding
principal amount of the Revolving A Loans in an amount equal to such excess
amount; and
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(iv) shall, on any Business Day on which the aggregate
outstanding principal amount of all Revolving B Loans exceeds the Revolving B
Loan Commitment Amount, make a mandatory prepayment of the outstanding
principal amount of the Revolving B Loans in an amount equal to such excess
amount;
(c) shall, concurrently with receipt by the Borrower or
any Subsidiary or the Agent of any condemnation awards with respect to any
Loss, make a mandatory prepayment of the Loans in an amount equal to such
condemnation awards;
(d) shall, within 180 days after receipt by the Borrower
or any Subsidiary or the Agent of any insurance proceeds with respect to any
Loss resulting from a casualty, make a mandatory prepayment of the Loans in an
amount by which such insurance proceeds exceed the actual cost incurred by the
Borrower or such Subsidiary to repair or replace the property or asset which
was the subject of the Loss or deemed Loss giving rise to such insurance
proceeds;
(e) shall, within 180 days after receipt by the Borrower
or any Subsidiary or the Agent of any insurance proceeds with respect to any
Loss resulting from a liability, make a mandatory prepayment of the Loans in an
amount by which such insurance proceeds exceed the amount of the liability to
be satisfied with such proceeds (to the extent such liability is so satisfied);
(f) shall, unless the Required Lenders shall have
otherwise agreed, concurrently with the receipt by the Borrower of any proceeds
of the life insurance policies described in clause (c) of SECTION 6.1.5, make a
mandatory prepayment of the Loans in an amount equal to the amount of such
insurance proceeds;
(g) shall prepay the entire outstanding principal amount
of the Loans together with accrued and unpaid interest and all of the
outstanding Obligations hereunder upon the occurrence of a Change in Control;
(h) shall, concurrently with the delivery of the
financial statements required to be delivered under SECTION 6.1.1(A),
commencing with the financial statements required to be delivered in respect of
the earliest of (x) the Fiscal Year ending December 31, 1997 or (y) the first
Fiscal Year during which an Event of Default shall have occurred, and
continuing thereafter with the delivery of such financial statements in respect
of each successive Fiscal Year (but in no event later than the date on which
such financial statements are required to be delivered pursuant to SECTION
6.1.1(A)), make a mandatory prepayment of the outstanding principal amount of
the Loans in an amount equal to the Excess Cash Flow with respect to such
Fiscal Year; and
(i) shall, beginning on September 30, 1997 and for each
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Quarterly Payment Date thereafter, make a mandatory prepayment of the Revolving
A Loans and the Term Loan in an amount equal to that percentage set forth
opposite such Quarterly Payment Date below MULTIPLIED BY the sum of (x) the
aggregate outstanding principal amount of the Revolving A Loans as of September
15, 1996, plus (y) the aggregate outstanding principal amount of the Term Loan
as of September 15, 1996, plus (z) the Revolving A Loan Availability (if any):
QUARTERLY PAYMENT DATE IN: PERCENTAGE
September, 1997 1.75%
December, 1997 1.75%
March, 1998 3.00%
June, 1998 3.00%
September, 1998 3.00%
December, 1998 3.00%
March, 1999 3.50%.
(j) shall, in accordance with the terms of the cash
management system required to be maintained by the Borrower under SECTION
6.1.17, make mandatory prepayments of the Revolving A Loans and the Revolving B
Loans in such amounts and at such times as are required pursuant to such cash
management system, whether by virtue of cash sweeps from Blocked Accounts and
Concentration Accounts into the Collection Account or as a result of Net
Balances of the Borrower and its Subsidiaries exceeding $150,000 on any
Business Day or otherwise (such mandatory prepayments to be applied first to
the payment in full of all outstanding Revolving B Loans, and thereafter to the
payment in full of all outstanding Revolving A Loans).
Unless expressly set forth to the contrary in this SECTION 3.3.1 or elsewhere
in the Agreement, any payments required to be made by the Borrower pursuant to
this SECTION 3.3.1 shall be applied to principal in the following order:
(i) FIRST, to the payment in full of all outstanding
Revolving A Loans,
(ii) SECOND, to the payment in full of all outstanding
Revolving B Loans, and
(iii) FINALLY, to the payment in full of the outstanding balance
of the Term Loan.
SECTION 3.3.2. PREPAYMENT FEE. Upon any prepayment of any
Loans on or prior to the later of (x) the date on which the Shelf Registration
Statement (as such term is defined in the Registration Rights Agreement) is
declared effective by the Securities and Exchange Commission or (y) the first
anniversary of Closing Date, whether in full or in part, in each case utilizing
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the proceeds of borrowed funds or the issuance of debt securities, the Borrower
shall be required to pay to the Lenders prior to or concurrently with such
prepayment a Prepayment Fee in an amount equal to one percent (1%) of the
amount of the Loans as of the date of the prepayment. Any Prepayment Fee shall
be paid by the Borrower to the Lenders as liquidated damages for the loss of
the bargain and shall not constitute a penalty.
SECTION 3.3.3. REVOLVING LOANS ON BORROWER'S BEHALF. The
Lenders are authorized to, and at their option may, make Revolving Loans on
behalf of the Borrower for payment of all fees, expenses, charges, costs,
principal and interest owed by the Borrower to the Lenders or the Agent under
this Agreement and the other Loan Documents. Such Revolving Loans shall be
made when and as the Borrower fails promptly to pay same, and all such
Revolving Loans shall constitute Revolving Loans made to the Borrower and
shall be secured by all of the Collateral. Following the making of any
Revolving Loans pursuant to this SECTION 3.3.3, such Lender shall promptly
notify the Borrower of the making of such Revolving Loans on the Borrower's
behalf and the aggregate principal amount of such Loans; PROVIDED THAT the
failure by any Lender to give such notice shall not affect the Borrower's
obligations under this Agreement or with respect to such Revolving Loans.
SECTION 3.3.4. REDUCTION OF REVOLVING LOAN COMMITMENT.
(a) The Borrower shall have the right, upon at least
thirty (30) days notice to the Agent, to reduce in whole or in part (ratably as
to all Lenders) the Revolving A Loan Commitment Amount and the Revolving B Loan
Commitment Amount, PROVIDED, HOWEVER, that the Revolving A Loan Commitment
Amount and the Revolving B Loan Commitment Amount of the Lenders shall not be
reduced to an amount which is less than the aggregate amount of the Revolving A
Loans and Revolving B Loans, respectively, then outstanding after giving effect
to any prepayments made in connection with such reduction, PROVIDED, FURTHER,
HOWEVER, that each partial reduction of the Revolving A Loan Commitment Amount
or the Revolving B Loan Commitment Amount shall be in an aggregate amount of
$1,000,000 or an integral multiple of $500,000 in excess thereof (or, if less,
the entire amount thereof), and the Borrower shall pay any Prepayment Fee
required under SECTION 3.3.2. Any notice given pursuant to this clause (a) of
SECTION 3.3.4 shall be irrevocable, and once the Revolving A Loan Commitment
Amount or the Revolving B Loan Commitment Amount, as the case may be, is
reduced pursuant to this clause (a) of SECTION 3.3.4, such amount thereafter
may not be reinstated or increased. The Borrower shall not be permitted to
reduce the Revolving B Loan Commitment Amount unless the Revolving A Loan
Commitment Amount has been reduced to zero in accordance with the terms hereof.
(b) The Revolving A Loan Commitment (and the Revolving A
Loan Commitment Amount) and the Revolving B Loan Commitment (and
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the Revolving B Loan Commitment Amount) shall be permanently reduced by the
amount of Net Cash Proceeds received by the Borrower or any of its Subsidiaries
in connection with any sale or disposition of assets to the extent the net book
value of the asset(s) sold or disposed together with the net book value of all
other assets sold or disposed during the term of this Agreement exceeds
$250,000. Any reduction pursuant to this clause (b) shall be applied first to
the Revolving A Loan Commitment Amount and then to the Revolving B Loan
Commitment Amount.
(c) On September 15, 1996, the Revolving A Loan
Commitment (and the Revolving A Loan Commitment Amount) shall be permanently
reduced (ratably as to all Lenders) by an amount equal to the difference
between the Revolving A Loan Commitment Amount and the amount of Revolving A
Loans outstanding on such date.
(d) The Revolving A Loan Commitment (and the Revolving A
Loan Commitment Amount) and the Revolving B Loan Commitment (and Revolving B
Loan Commitment Amount) shall be permanently reduced by the amount of any
prepayments required under clauses (c), (d), (e), (f), (g), (h) or (i) of
SECTION 3.3.1. Any reduction pursuant to this clause (d) shall be applied
first to the Revolving A Loan Commitment Amount and then to the Revolving B
Loan Commitment Amount.
SECTION 3.4. INTEREST. Interest on the outstanding
principal amount of the Loans and other outstanding Obligations shall accrue
and be payable in accordance with this SECTION 3.4.
SECTION 3.4.1. RATES. Subject to SECTION 3.4.3, Borrowings
shall accrue interest at the ING Alternate Base Rate as in effect from time to
time PLUS 5.00%.
SECTION 3.4.2. POST-DEFAULT RATES. From and after the
occurrence of an Event of Default and during the continuance thereof, the
Borrower shall pay interest (after as well as before judgment) on the
outstanding principal amount of all Loans and other Obligations at a rate per
annum equal to the Post-Default Rate applicable to such Loans and Obligations.
SECTION 3.4.3. PAYMENT DATES. Accrued interest on the Loans
shall be payable, without duplication:
(a) on Maturity;
(b) with respect to any portion of any Loan prepaid or
repaid pursuant to SECTION 3.3.1, on the date of such prepayment or repayment
is due as provided in SECTION 3.3.1 and, in the case of a voluntary prepayment,
on the date set forth in any notice required for such prepayment; and
(c) on each Monthly Payment Date, commencing with the
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first such day following the Closing Date.
Interest accruing at any Post-Default Rate and, to the extent permitted by
applicable law, interest on overdue amounts (including overdue interest), shall
be payable upon demand.
SECTION 3.4.4. RATE DETERMINATIONS. All determinations by
the Agent of the rate of interest applicable to any Loan shall be conclusive in
the absence of manifest error.
SECTION 3.5. TAXES. (a) Any and all payments by the
Borrower hereunder or under the Notes or any other Loan Document shall be made,
in accordance with this SECTION 3.5, free and clear of and without deduction
for any and all present or future Taxes. If the Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or
under any Note to any Lender or the Agent, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this SECTION
3.5), such Lender or the Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law;
(b) In addition, the Borrower agrees to pay any present
or future stamp or documentary taxes or intangibles taxes or any other excise
or property taxes, transfer taxes, charges or similar levies which arise from
any payment made hereunder or under the Notes or from the execution, delivery
or registration of, or otherwise with respect to this Agreement, the Notes, or
any other Loan Document;
(c) The Borrower will indemnify each Lender and the Agent
for the full amount of the taxes, charges and levies described in clauses (a)
and (b) of this SECTION 3.5 (including, without limitation, any such taxes,
charges and levies imposed by any jurisdiction on amounts payable under this
SECTION 3.5) paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such taxes, charges and levies were
correctly or legally asserted. Payment under this clause (c) shall be made
within 10 days from the date such Lender or the Agent (as the case may be)
makes written demand therefor;
(d) Within 10 days after the date of any payment of
Taxes, the Borrower will furnish to the Agent, at its address referred to in
SECTION 10.2, the original or a certified copy of any receipt received by the
Borrower evidencing payment thereof;
(e) On or prior to the Closing Date and on or prior to
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the first Business Day of each calendar year thereafter, each Foreign Lender
shall provide the Agent and the Borrower with two properly executed original
Forms 4224 and 1001 (or any successor form) prescribed by the Internal Revenue
Service or other documents satisfactory to the Borrower and the Agent, and
properly executed Internal Revenue Service Forms W-8 or W-9, as the case may
be, certifying (i) as to such Foreign Lenders's status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to such Foreign Lender hereunder and under the Notes or
(ii) that all payments to be made to such Foreign Lender hereunder and under
the Notes are subject to such taxes at a rate reduced to zero by an applicable
tax treaty. Each Foreign Lender agrees to provide the Agent and the Borrower
with new forms prescribed by the Internal Revenue Service upon the expiration
or obsolescence of any previously delivered form, or after the occurrence of
any event requiring a change in the most recent forms delivered by it to the
Agent and the Borrower;
(f) In the event that the Agent or any Lender receives a
refund of any taxes paid on its behalf by the Borrower in accordance with this
SECTION 3.5, the Agent or such Lenders, as the case may be, shall pay such
refund to the Borrower; and
(g) Without prejudice to the survival of any other
agreement hereunder, the agreements and obligations contained in this SECTION
3.5 shall survive the payment in full of principal and interest hereunder and
under the Notes.
SECTION 3.6. PAYMENTS, INTEREST RATE COMPUTATIONS, OTHER
COMPUTATIONS, ETC. All payments by the Borrower pursuant to this Agreement,
the Notes or any other Loan Document, in respect of principal or interest on
the Notes shall be made by the Borrower to the Agent for the account of the
Lenders, PRO RATA according to their respective unpaid principal amounts of the
Notes. The payment of the commitment fee referred to in SECTION 2.3 shall be
made by the Borrower to the Agent for the account of the Lenders PRO RATA
according to their respective Revolving Percentages. All other amounts payable
to the Agent or any Lender under this Agreement or any other Loan Document
(except under SECTION 2.4) shall be paid to the Agent for the account of the
Person entitled thereto. All such payments required to be made to the Agent
shall be made, without setoff, deduction or counterclaim, not later than 2:00
p.m., New York City time, on the date due, in immediately available funds, to
the Collection Account. Funds received after that time shall be deemed to have
been received by the Agent on the next following Business Day. The Agent shall
promptly remit in the type of funds received to each Lender notified to the
Agent its share, if any, of such payments received by the Agent for the account
of such Lender or holder. All interest and fees shall be computed on the basis
of the actual number of days (including the first day but excluding the last
day) occurring during the period for which such interest or fee is payable over
a year comprised of
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360 days. Whenever any payment to be made shall otherwise be due on a day
which is not a Business Day, such payment shall be made on the immediately
preceding Business Day. For purposes of determining the Revolving A Loan
Availability and the Revolving B Loan Availability (a) all payments (including
cash sweeps) consisting of cash, wire, or electronic transfers in immediately
available funds shall be deemed received by the Agent on the day of deposit in
the Collection Account and notice to the Agent of such deposit, and (b) all
payments consisting of checks, drafts, or similar noncash items shall be deemed
received on the day of receipt of good funds following deposit in the
Collection Account (together with notice to the Agent of such deposit). For
the purposes of computing interest and fees hereunder, all payments received in
the form of cash sweeps from the Concentration Accounts will be credited on the
Business Day following the day on which such payments are deemed received for
purposes of the preceding sentence.
SECTION 3.7. PRORATION OF PAYMENTS. If any Lender shall
obtain any payment or other recovery (whether voluntary, involuntary, by
application of setoff or otherwise) on account of principal of or interest on
any Loan or other Obligations in excess of such Lender's or holder's PRO RATA
share of payments then or therewith obtained thereon by all Lenders, such
Lender which has received in excess of its PRO RATA share shall purchase from
the other Lenders such participations in such Notes or other Obligations held
by them as shall be necessary to cause such purchaser to share the excess
payment or other recovery ratably with each of them; PROVIDED, HOWEVER, that if
all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing holder, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this SECTION 3.7 may, to the fullest extent permitted by
law, exercise all its rights of payment (including pursuant to SECTION 3.8)
with respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. 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 3.7 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 3.7 to share in the benefits of any recovery on such secured claim.
SECTION 3.8. SETOFF. In addition to and not in limitation
of any rights of any Lender under applicable law, each Lender shall, upon the
occurrence and during the continuance of any Event of Default, have the right
to appropriate and apply to the payment of the Obligations owing to it (whether
or not then due), and (as security for such Obligations) the Borrower hereby
grants to each Lender, a continuing security interest in, any and all
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balances, credits, deposits, accounts or moneys of the Borrower then or
thereafter maintained with such Lender; PROVIDED, HOWEVER, that any such
appropriation and application shall be subject to the provisions of SECTION
3.7. Following any such appropriation and application pursuant to this SECTION
3.8, such Lender shall promptly provide the Borrower with notice of such
appropriation and application and the amount applied, provided, that the
failure by any Lender to give any such notice shall not affect the obligations
of the Borrower or impair any right of any Lender under this Agreement or
subject any Lender to any liability.
SECTION 3.9. USE OF PROCEEDS.
(a) The Borrower shall use the proceeds of the Term Loan
and the Revolving A Loans and Revolving B Loans made on the Closing Date (i) to
pay a portion of the "Consideration" (as such term is defined in each of the
Acquisition Agreements), (ii) to pay costs and expenses arising in connection
with the transactions contemplated hereby which are set forth in ITEM 1
("Transaction Costs") of the Disclosure Schedule (subject to the Required
Lenders' approval of such costs and expenses), (iii) to refinance certain
existing Indebtedness as listed on ITEM 3 ("Indebtedness to be Refinanced") of
the Disclosure Schedule, all as more specifically described in ITEM 2 ("Sources
and Uses") of the Disclosure Schedule, and (iv) to finance its general working
capital needs.
(b) The Borrower shall use the proceeds of (i) the
Revolving A Loans made after the Closing Date to finance acquisitions
(PROVIDED, HOWEVER, that this clause (i) shall not be construed to permit any
acquisitions which are otherwise prohibited by the terms of this Agreement or
the other Loan Documents), and (ii) the Revolving B Loans made after the
Closing Date to finance its continuing working capital needs; PROVIDED,
HOWEVER, that the Revolving B Loans shall not be used to repay any other
outstanding Loan.
(c) No part of the proceeds of any Loans shall be used
for any purpose which violates Regulations G, T, U or X of the F.R.S. Board.
ARTICLE 4.
CONDITIONS TO LOANS
SECTION 4.1. INITIAL LOANS. The obligations of the
Lenders to fund the initial Borrowings of Loans on the Closing Date, shall be
subject to the prior or concurrent satisfaction of each of the conditions
precedent set forth in this SECTION 4.1, except as the Required Lenders shall
otherwise consent.
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SECTION 4.1.1. RESOLUTIONS, ETC. The Agent shall have
received:
(a) a certificate, dated the date hereof, with
counterparts for each Lender, of the Secretary or an assistant secretary of
each Loan Party as to:
(i) resolutions of its Board of Directors, then in full
force and effect authorizing the execution, delivery and performance
of the Loan Documents to which such Loan Party is a party and the
related transactions contemplated thereby, and
(ii) the incumbency and signatures of those of its
officers authorized to act with respect to the Loan Documents to which
it is party, upon which certificate each Lender may conclusively rely
until it shall have received further certificates of the Secretary or
an assistant secretary of such Loan Party cancelling or amending such
prior certificates;
(b) copies of the Organic Documents of each Loan Party
certified by, in the case of the charters, the appropriate Governmental
Authority of the State of such Loan Party's incorporation and, in the case of
its other Organic Documents, such Loan Party's Secretary or assistant
secretary, which documents shall be satisfactory to the Agent;
(c) a so-called "good standing" certificate with respect
to each Loan Party from the appropriate Governmental Authority of the State of
its incorporation;
(d) evidence of qualification of each Loan Party to do
business in each other jurisdiction in which such Loan Party is required to
qualify; and
(e) such other documents (certified if requested) as any
Lender may reasonably request, with respect to this Agreement, the Notes, any
other Loan Document, the transactions contemplated hereby and thereby, or any
Organic Document, Contractual Obligation of the Borrower or any of its
Subsidiaries, or Approval.
SECTION 4.1.2. NOTES. The Agent shall have received for the
account of each Lender, such Lender's Notes, in each case duly executed and
delivered pursuant to clauses (a), (b) and (c) of SECTION 3.2.
SECTION 4.1.3. BORROWING BASE CERTIFICATE. The Agent shall
have received a Borrowing Base Certificate dated as of the Closing Date from
the chief financial Authorized Officer of the Borrower.
SECTION 4.1.4. ADDITIONAL EQUITY, ETC. The Borrower
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shall have issued shares of 14% PIK Preferred Stock for an aggregate issue
price, net of commissions, of not less than $3,795,000, and, after giving
effect to such issuance, as of the Closing Date, the Borrower's Net Worth shall
be not less than $17,796,000.
SECTION 4.1.5. RELEASE OF LIENS ON ASSETS. All Indebtedness
of the Borrower and any other Loan Party described in ITEM 3 ("Indebtedness to
be Refinanced") of the Disclosure Schedule shall have been repaid in full and
all holders of such Indebtedness shall have acknowledged such repayment,
released Borrower and its Subsidiaries from any liability in respect of such
Indebtedness, and released all Liens on the assets securing such Indebtedness
pursuant to UCC-3 termination statements and other Instruments as shall be
suitable or appropriate in connection therewith.
SECTION 4.1.6. NO CONTEST, ETC. On the Closing Date, no
litigation, arbitration, governmental investigation, injunction, proceeding or
inquiry shall be pending or, to the knowledge of the Borrower, threatened
which:
(a) seeks to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of, the transactions
contemplated by or in connection with the Acquisition Agreements, this
Agreement or any Loan Document; or
(b) would, in the reasonable opinion of the Required
Lenders, be materially adverse to any of the parties hereto with respect to the
transactions contemplated hereby;
No litigation set forth in ITEM 4 ("Litigation") of the Disclosure Schedule in
the reasonable opinion of the Agent, could reasonably result in a Material
Adverse Change or give rise to any liability on the part of the Agent or any
Lender in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby.
SECTION 4.1.7. CERTIFICATE AS TO COMPLETED CONDITIONS,
WARRANTIES, NO DEFAULT, ETC. The Agent shall have received a certificate,
dated the Closing Date, with counterparts for each Lender, of the chief
financial Authorized Officer of the Borrower, to the effect that:
(a) all conditions precedent set forth in this SECTION
4.1 have been satisfied;
(b) all representations and warranties set forth in
ARTICLE 5 are true and correct in all material respects;
(c) all representations and warranties set forth in the
Loan Documents are true and correct in all material respects; and
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(d) no Default or Event of Default has occurred and is
continuing.
SECTION 4.1.8. DOCUMENTS RELATING TO EQUITY INVESTMENTS.
The terms and conditions of each of the stock subscription agreements pursuant
to which the 14% PIK Preferred Stock of the Borrower was issued shall in each
case be satisfactory in all respects to the Agent, and the Agent shall have
received copies of each of the foregoing documents certified as true and
correct by an Authorized Officer of the Borrower.
SECTION 4.1.9. COMPLIANCE WITH REQUIREMENTS OF LAW. The
Agent shall have received evidence satisfactory to it that the Borrower is in
compliance in all material respects with all other Requirements of Law and has
obtained and maintains in full force and effect (a) all licenses, permits and
approvals issued by Governmental Authorities necessary to carry on its business
(except where the failure to have any such license, permit or approval could
not result in a Material Adverse Change), and (b) all Approvals.
SECTION 4.1.10. OPINIONS OF COUNSEL. The Agent shall have
received opinion letters, dated the Closing Date and addressed to the Agent and
all Lenders, from Skadden, Arps, Slate, Meagher & Flom, counsel to the Borrower
and its Subsidiaries, in form and substance satisfactory to the Agent, and (b)
such other local counsel as requested by the Agent and covering such matters as
the Agent may reasonably request, including, without limitation, the
Acquisitions and the issuance of the additional equity required under SECTION
4.1.4; and
SECTION 4.1.11. CLOSING FEES, EXPENSES, ETC. The Agent shall
have received, for its own account, the facility fee payable pursuant to the
Facility Fee Letter and all costs and expenses which have been invoiced and are
payable upon the initial Borrowing pursuant to SECTION 10.3.
SECTION 4.1.12. SUBSIDIARY GUARANTY. The Agent shall have
received the Subsidiary Guaranty, duly executed by Authorized Officers of the
Loan Parties that are a party thereto.
SECTION 4.1.13. SECURITY DOCUMENTS AND PERFECTION. The Agent
shall have received:
(a) The Security Agreement, duly executed by an
Authorized Officer of the Borrower and each of its Subsidiaries (including,
without limitation, those Persons that shall become Subsidiaries of the
Borrower on the Closing Date);
(b) A satisfactory collateral assignment to the Agent,
for its benefit and the ratable benefit of the Lenders, of the Borrower's
rights under the Acquisition Agreements and all other
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documents executed or delivered pursuant to the Acquisition Agreements, duly
consented to by the "Sellers" under each of such Acquisition Agreements;
(c) The Borrower Pledge Agreement, duly executed by the
chief executive Authorized Officer of the Borrower;
(d) The Subsidiary Pledge Agreement, duly executed by the
chief executive Authorized Officer of World Communications, Inc.;
(e) Evidence of all filings of the Financing Statements
with respect to the Security Agreement and other Security Documents; searches
or other evidence as to the absence of any Liens (except those previously
disclosed to and consented to by the Lenders and those to be released in
accordance with SECTION 4.1.5); and evidence that all other actions (including
all actions necessary such that the Trademark Assignment is acceptable for
filing in the United States Patent and Trademark Office and the payment of all
documentary, intangibles, filing and recording taxes and fees) with respect to
the Liens created by the Security Documents have been taken as are necessary or
appropriate to perfect such Liens;
(f) All (i) stock certificates and undated stock powers
duly executed in blank relating thereto with respect to the pledged securities
under the Borrower Pledge Agreement, which pledged securities shall constitute
all outstanding Stock of the Borrower's Subsidiaries; (ii) Subsidiary Notes
pledged under the Borrower Pledge Agreement duly endorsed in blank; and (iii)
stock certificates and undated stock powers duly executed in blank relating
thereto with respect to the pledged securities under the Subsidiary Pledge
Agreement.
SECTION 4.1.14. EMPLOYMENT AGREEMENTS; COMPENSATION. The
Agent shall have received copies of all employment agreements to which the
Borrower is a party, and the Agent shall be reasonably satisfied in all
respects with the levels of compensation (including, without limitation, fees,
wages, salaries, deferred payment arrangements, stock options, incentive plans
and pension or employee benefit contributions) paid to key members of
management.
SECTION 4.1.15. PENSION AND WELFARE LIABILITIES. The Agent
shall have received, with counterparts for each of the Lenders (i) the most
recent actuarial valuation report, if any, for each Single Employer Plan, if
any, and a copy of Schedule B to the Annual Report on Form 5500 of the Internal
Revenue Service, if any, for each Single Employer Plan, if any, most recently
filed with the Internal Revenue Service, and (ii) a report prepared by the
Borrower in form and substance satisfactory to the Agent and each Lender
detailing any liabilities of the Borrower and each Subsidiary and Commonly
Controlled Entity for post-retirement
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benefits under Plans which are welfare benefit plans.
SECTION 4.1.16. INSURANCE. The Agent shall have received
evidence satisfactory to it that the insurance maintained by the Borrower and
its Subsidiaries is issued by an insurance company with a Best's rating of "A"
or better and a financial size category of not less than XII, is in amounts
reasonably satisfactory to the Agent, under policies naming the Agent, for its
benefit and the ratable benefit of the Lenders, as loss payee (in the case of
casualty insurance policies) and as additional insured (in the case of
liability policies), and otherwise complies with the requirements of this
Agreement and the Security Documents.
SECTION 4.1.17. FINANCIAL INFORMATION, ETC. The Agent shall
have received for each Lender, the historical financial statements referred to
in SECTION 5.4, the PRO FORMA Balance Sheets, the Fair Saleable Value Balance
Sheets and the Projections, and the Agent shall be satisfied in all respects
with such materials. Additionally, the Agent shall be satisfied in all
respects with materials contained on the Disclosure Schedule, including,
without limitation, the information contained on ITEM 1 ("Transaction Costs")
and ITEM 2 ("Sources and Uses").
SECTION 4.1.18. ACQUISITIONS. The Acquisition Agreements
shall be in full force and effect and shall not have been amended, modified or
supplemented without the Required Lenders' prior written consent; all
conditions precedent to the consummation by the Borrower of the transactions
contemplated by the Acquisition Agreements shall have been fully satisfied or,
with the prior written consent of the Required Lenders, waived; the Borrower
shall have delivered to the Agent evidence satisfactory to the Agent that the
Acquisitions shall be consummated simultaneously with the initial Borrowings in
accordance with the terms of the Acquisition Agreements; and the Borrower shall
have delivered to the Agent each of the following:
(a) resolutions of the boards of directors and, to the
extent required, the stockholders of the Borrower, certified by the Secretary
or an assistant secretary of the Borrower, to be duly adopted and in full force
and effect on the Closing Date, authorizing the execution, delivery and
performance by the Borrower of the Acquisition Agreements;
(b) resolutions of the boards of directors and, to the
extent required, the stockholders of IPP-South Carolina, IPP- Tennessee and
PCS, certified by the Secretary or an assistant secretary of the such Persons,
to be duly adopted and in full force and effect on the Closing Date,
authorizing the execution, delivery and performance by the such Persons of the
Acquisition Agreements;
(c) certified copies of all documents evidencing any
other necessary corporate action, consents and governmental
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approvals with respect to the consummation of the transactions contemplated by
the Acquisition Agreements;
(d) copies of all legal opinions delivered in connection
with each of the Acquisitions, if any, along with reliance letters in favor of
the Agent and the Lenders; and
(e) a certificate from the Chief Executive Officer of the
Borrower to the effect that attached thereto are true and correct copies of the
Acquisition Agreements and each of the material documents, instruments and
agreements executed and delivered pursuant to the Acquisition Agreements and
making such statements of fact concerning the Acquisitions and the other
transactions consummated pursuant to such agreements as the Agent shall
request.
SECTION 4.1.19. REVIEW OF BORROWER'S OPERATIONS. The Agent
or its representatives shall have completed their review of the Borrower's
management information systems, accounting, financial reporting and cash
management systems as well as the legal structure of each Loan Party and the
nature of each Loan Party's asset composition and contingent liabilities, and
the Agent shall be satisfied in all respects with the results of such review.
SECTION 4.1.20. MATERIAL CONTRACTS. The Agent shall have
received a certificate from an Authorized Officer of the Borrower to the effect
that attached thereto are true and correct copies of each of the items listed
on ITEM 14 ("Contracts") of the Disclosure Schedule, and the Agent shall be
satisfied in all respects with terms of such items.
SECTION 4.1.21. OTHER DOCUMENTS, CERTIFICATES, ETC. The
Agent shall have received such other documents, certificates, opinions of
counsel or other materials as it reasonably requests from any Loan Party.
SECTION 4.1.22. LETTER TO ACCOUNTANTS. The Agent shall have
received satisfactory evidence that the Borrower has delivered a letter to its
independent public accountants authorizing such public accountants to discuss
the Borrower's financial matters with the Agent and each Lender or any of their
respective representatives whether or not a representative of the Borrower is
present.
SECTION 4.2. ALL LOANS. Without duplication of any
conditions precedent required to be satisfied pursuant to SECTION 4.1, the
obligations of the Lenders to make any Loans, shall be subject to the
satisfaction of each of the additional conditions precedent set forth in this
SECTION 4.2.
SECTION 4.2.1. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC.
The representations and warranties set forth in ARTICLE 5
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shall have been true and correct in all material respects as of the date
initially made, and both before and after giving effect to the making of any
such Loan (except to the extent expressly stated to be as of an earlier date),
(a) such representations and warranties shall be true and
correct in all material respects with the same effect as if then made (except
to the extent expressly stated to be as of an earlier date);
(b) all representations and warranties set forth in the
Security Documents shall be true and correct in all material respects with the
same effect as if then made (except to the extent expressly stated to be as of
an earlier date);
(c) no material adverse development shall have occurred
in any such litigation, arbitration or governmental investigation or proceeding
so disclosed pursuant to SECTION 5.7 which renders such litigation, arbitration
or governmental investigation or proceeding likely to succeed in the reasonable
opinion of the Required Lenders and, if successful, could result in a Material
Adverse Change; and
(d) no Default or Event of Default shall have occurred
and be continuing.
SECTION 4.2.2. BORROWING REQUEST, ETC. The Agent shall have
received a duly completed Borrowing Request. The delivery of any such
Borrowing Request, and the acceptance by the Borrower of the proceeds of the
Loan requested thereby, shall constitute a representation and warranty by the
Borrower that on the date of such request, and before and after giving effect
to the making of such Loans and the application of any proceeds of such Loans,
all statements set forth in SECTION 4.2.1 are true and correct. In the event
that, in connection with the delivery of any such Borrowing Request the
Borrower is required to amend any Item of the Disclosure Schedule in order that
the statement set forth in clause (a) or (b) of SECTION 4.2.1 shall be true and
correct, the Borrower shall deliver to the Agent at least five (5) Business
Days prior to the date of the Borrowing requested or to be requested, a request
that such Item of the Disclosure Schedule be amended, and the Agent shall
promptly forward such request to the Lenders. To the extent that the Required
Lenders agree to such requested amendment or otherwise agree to make any Loans
after receipt of such request, the representations and warranties proposed to
be amended by such requested amendment to the Disclosure Schedule will be
deemed amended for purposes of this Agreement.
SECTION 4.2.3. SATISFACTORY LEGAL FORM. All documents
executed or submitted by or on behalf of the Borrower or any other Loan Party
shall be satisfactory in form and substance to the Agent and its counsel; the
Required Lenders shall have received all
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information, and such counterpart originals or such certified or other copies
of such Instruments, as the Required Lenders may reasonably request; and all
legal matters incident to the transactions contemplated by this Agreement shall
be satisfactory to the Required Lenders.
SECTION 4.2.4. MARGIN REGULATIONS. The making of such Loan
and the use of the proceeds thereof shall not violate Regulations G, T, U and X
of the F.R.S. Board.
SECTION 4.2.5. ADVERSE CHANGE. In the reasonable judgment
of the Required Lenders, no Material Adverse Change shall have occurred since
the Closing Date.
SECTION 4.2.6. CHANGE IN LAW. On the date of such
Borrowing, no change shall have occurred in applicable law, or in applicable
regulations thereunder or in interpretations thereof by any court or
Governmental Authority which, in the opinion of any Lender, would make it
illegal for such Lender to make the Loan required to be made on such date.
ARTICLE 5.
WARRANTIES, ETC.
In order to induce the Lenders and the Agent to enter into
this Agreement, to engage in the transactions contemplated herein and in the
other Loan Documents and to make the Loans, the Borrower represents and
warrants to the Agent and each Lender as set forth in this ARTICLE 5. Each and
all of the representations and warranties set forth in this ARTICLE 5 shall be
true and correct, assuming and after giving effect to the consummation of the
Acquisitions and the consummation of the other transactions contemplated by
this Agreement and the other Loan Documents.
SECTION 5.1. ORGANIZATION, POWER, AUTHORITY, ETC. Each of
the Borrower and its Subsidiaries (i) is a corporation validly organized and
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified to do business and is in good standing as
a foreign corporation in each jurisdiction where the failure to so qualify
could result in a Material Adverse Change, and (iii) has full power and
authority, and, except as set forth in ITEM 5 ("Governmental Licenses") of the
Disclosure Schedule, holds all governmental licenses, permits, registrations
and other approvals required under all Requirements of Law, to own and hold
under lease its property and to conduct its business as conducted prior to the
Closing Date and as contemplated to be conducted subsequent to the consummation
of the Acquisitions, including, without limitation, all Approvals. The
Borrower has full power and authority to enter into and perform its Obligations
under this Agreement, the Notes and each other Loan Document
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executed or to be executed by it and to obtain Loans hereunder.
SECTION 5.2. DUE AUTHORIZATION.
(a) The execution and delivery by the Borrower of this
Agreement, the Notes and each other Loan Document executed or to be executed by
it, and the incurrence and performance by the Borrower of the Obligations have
been duly authorized by all necessary corporate action, do not require any
Approval (except those Approvals already obtained), do not and will not
conflict with, result in any violation of, or constitute any default under, any
provision of any Organic Document or Contractual Obligation of any Loan Party
or any law or governmental regulation or court decree or order, and will not
result in or require the creation or imposition of any Lien on any Loan Party's
properties pursuant to the provisions of any Contractual Obligation of any Loan
Party other than the Loan Documents.
(b) The Certificate of Amendment has been duly adopted
pursuant to applicable law, has been duly filed with the Ohio Secretary of
State and is in full force and effect.
(c) No vote (including any vote under the rules of any
securities exchange or trading system or market on which any of the Borrower's
securities are listed or traded) on the part of the stockholders of the
Borrower is required to approve or authorize the Certificate of Amendment, any
of the transactions contemplated by this Agreement or any of the other Loan
Documents or the authorization or the issuance of the Series B Special
Preferred Stock pursuant to Article 8 or of Common Stock issuable upon
conversion of the Series B Special Preferred Stock.
(d) The issuance of the shares of Series B Special
Preferred Stock has been duly authorized and, when issued upon exercise of any
Lender's conversion rights under Article 8, such shares will have been validly
issued and will be fully paid and nonassessable and the issuance thereof will
not give rise to any preemptive rights. The issuance of the shares of Common
Stock issuable upon conversion of the Series B Special Preferred Stock has been
duly authorized and, when issued upon conversion of the Series B Special
Preferred Stock, such shares will have been validly issued and will be fully
paid and nonassessable and the issuance thereof will not give rise to any
preemptive rights. 250,000 shares of Series B Special Preferred Stock have
been duly reserved for issuance upon conversion of Term Notes pursuant to
Article 8 and 5,000,000 shares of Common Stock have been duly reserved for
issuance upon conversion of the Series B Special Preferred Stock. Except as
set forth in the Registration Rights Agreement and as set forth in ITEM 26
("Registration Rights") of the Disclosure Schedule, no Person has the right to
demand or any other right to cause the Borrower to file any registration
statement under the Securities Act relating to any securities of
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the Borrower or any right to participate in the any such registration.
SECTION 5.3. VALIDITY, ETC. This Agreement is, and the
Notes and each other Loan Document executed by the Borrower will upon the due
execution and delivery thereof constitute, the legal, valid and binding
obligations of the Borrower, enforceable in accordance with their respective
terms subject to the effect of any applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally, and the
effect of general principles of equity (regardless of whether considered in a
proceeding in equity or at law).
SECTION 5.4. FINANCIAL INFORMATION; SOLVENCY.
(a) Except as disclosed in ITEM 6 ("Exceptions to GAAP")
of the Disclosure Schedule, all balance sheets, all statements of operations,
stockholders' equity and cash flows, and all other financial information of the
Borrower which have been or shall hereafter be furnished by or on behalf of the
Borrower to each Lender and the Agent for the purposes of or in connection with
this Agreement or any transaction contemplated hereby, including:
(i)(A) the consolidated audited balance sheets of the
Borrower as of December 31, 1992, December 31, 1993 and December 31,
1994, and the related consolidated statements of income and cash flows
for each of the three (3) fiscal years of the Borrower ending December
31, 1992, December 31, 1993 and December 31, 1994, together with the
opinion thereon of Price Waterhouse LLP and unaudited statements of
income and cash flow of the Borrower for the nine-month period ending
September 30, 1995;
(B) the unaudited consolidated balance sheets of the
Borrower as of December 31, 1995 and the related consolidated
statements of income and cash flows for the Fiscal Year ending
December 31, 1995;
(ii) the Form 8-K of the Borrower as filed with the
Securities and Exchange Commission for the period ending June 30, 1995;
(iii)(A) the audited balance sheet of IPP-South
Carolina as of December 31, 1994 and the related statements of income
and cash flows for the fiscal year of IPP-South Carolina then ended;
together with the unaudited statements of income and cash flow of
IPP-South Carolina for the nine-month period ending September 30,
1995;
(B) the audited balance sheet of IPP-Tennessee as of
December 31, 1994 and the related statements of income and cash flows
for the fiscal year of IPP-Tennessee then ended;
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together with the audited statements of income and cash flow of
IPP-Tennessee for the nine-month period ending September 30, 1995;
(C) the audited balance sheets of PCS as of December 31,
1992, December 31, 1993 and December 31, 1994, and the related
consolidated statements of income and cash flows for each of the three
(3) fiscal years of PCS ending December 31, 1992, December 31, 1993,
and December 31, 1994; together with the unaudited statements of
income and cash flow of PCS for the nine-month period ending September
30, 1995;
(iv) the PRO FORMA Balance Sheets; and
(v) the Projections;
have been prepared in accordance with GAAP consistently applied (except to the
extent items in the Projections are based upon estimates) throughout the
periods involved and present fairly in all material respects the matters
reflected therein subject, in the case of unaudited statements, to changes
resulting from normal year-end audit adjustments and except as to the absence
of footnotes. As of the date hereof, neither the Borrower nor any of its
Subsidiaries has material contingent liabilities or material liabilities for
taxes, long-term leases or unusual forward or long-term commitments which are
not reflected in the financial statements described in clauses (i), (ii) and
(iii).
(b) Giving effect to the consummation of the transactions
contemplated by the Acquisition Agreements, the consummation of the
transactions contemplated by this Agreement and the other Loan Documents
(including the making of Loans), the Borrower and each of its Subsidiaries is
Solvent.
SECTION 5.5. MATERIAL ADVERSE CHANGE. Since December 31,
1994, there has been no Material Adverse Change and there has been no Material
Adverse Change in any industry in which the Borrower or any of its Subsidiaries
is engaged.
SECTION 5.6. ABSENCE OF DEFAULT. Neither the Borrower nor
any Subsidiary is in default in the payment of (or in the performance of any
obligation applicable to) any Indebtedness, or is in material default under any
regulation of any Governmental Agency or court decree or order, or is in
default under any Requirements of Law which default could result in a Material
Adverse Change.
SECTION 5.7. LITIGATION, LEGISLATION, ETC. Except as
disclosed in ITEM 4 ("Litigation") of the Disclosure Schedule, there is no
pending or, to the knowledge of the Borrower, threatened litigation,
arbitration or governmental investigation, proceeding or inquiry which, if
adversely determined, could result
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in a Material Adverse Change; and none of the proceedings set forth in such
ITEM 4 seeks to amend, modify or enjoin the transactions contemplated hereby
or, if adversely determined, could result in a Material Adverse Change. There
is no legislation, governmental regulation or judicial decision that could
result in a Material Adverse Change.
SECTION 5.8. REGULATIONS G, T, U AND X. Neither the
Borrower nor any Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying Margin Stock (as defined in F.R.S. Board Regulation G or U), and no
assets of the Borrower or any Subsidiary consist of Margin Stock. The Loans
hereunder will not be used for a purpose which violates, or would be
inconsistent with, F.R.S. Board Regulation G, T, U or X.
SECTION 5.9. GOVERNMENT REGULATION. Neither the Borrower
nor any Subsidiary is an "investment company" within the meaning of the
Investment Holding Company Act of 1940, as amended, or a "holding company," or
a "subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended, or
subject to regulation under the Federal Power Act, the Interstate Commerce Act
or any other federal or state law limiting its ability to incur Indebtedness or
to execute, deliver or perform the Loan Documents to which it is party.
SECTION 5.10. TAXES. Each of the Borrower and its present
or past Subsidiaries has filed all tax returns and reports required by law to
have been filed by it and has paid all taxes and Charges thereby shown to be
owing, except any such taxes or Charges which are being diligently contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
SECTION 5.11. PENSION AND WELFARE PLANS. Except as
disclosed in ITEM 7 ("Benefit Plans") of the Disclosure Schedule,
(a) neither the Borrower nor any Subsidiary or Commonly
Controlled Entity has assumed any liability under (i) any employee benefit
plan, fund, program, arrangement, agreement or commitment disclosed in Schedule
5.17(a) of the Acquisition Agreements, or (ii) any other employee benefit plan,
fund, program, arrangement, agreement or commitment maintained by or on behalf
of or contributed to by or on behalf of any entity or trade or business which,
together with any of such corporations, is treated as a single employer under
Sections 414(b), (c), (m) or (o) of the IRC. Neither the Borrower nor any
Subsidiary or Commonly Controlled Entity shall be subject (directly or
indirectly) to any liability, tax or penalty whatsoever to any person
whomsoever with respect to any employee benefit plan, fund, program,
arrangement, agreement
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or commitment described in clause (i) or (ii) of the immediately preceding
sentence.
(b) No Reportable Event which could result in a Material
Adverse Change has occurred during the six-year period prior to the date on
which this representation is made or deemed made with respect to any Single
Employer Plan. The Borrower, each Commonly Controlled Entity, each Subsidiary,
each Plan, and each trust maintained pursuant to any such Plan have complied in
all material respects with the applicable provisions of ERISA, the IRC, and any
other applicable laws. Except as disclosed in ITEM 7 ("Benefit Plans") of the
Disclosure Schedule, the present value of all "benefit liabilities" (within the
meaning of Section 4001(a)(16) of ERISA) under each Single Employer Plan
maintained by the Borrower, any Subsidiary or any Commonly Controlled Entity
(based on those assumptions that would be used in a termination of each such
Plan) did not, as of the last annual valuation date for which an actuarial
valuation report has been done, exceed the value of the assets of such Plan as
of such date. Except as disclosed in such ITEM 7, neither the Borrower nor any
Commonly Controlled Entity or Subsidiary has incurred any liability to the PBGC
or to any other Person under Section 4062, 4063 or Section 4064 of ERISA on
account of the termination of, or its withdrawal from, a Single Employer Plan,
and no Lien has been imposed on the assets of the Borrower or any Commonly
Controlled Entity or Subsidiary under Section 4068 of ERISA. To the knowledge
of the Borrower and any Commonly Controlled Entities and Subsidiaries, there
does not exist any event or condition which would permit the institution of
proceedings to terminate any Single Employer Plan pursuant to Section 4042 of
ERISA. Except as disclosed in ITEM 7 of the Disclosure Schedule, no
"accumulated funding deficiency" (as defined in Section 302 of ERISA or Section
412 of IRC), whether or not waived, exists with respect to any Pension Plan.
The Borrower and each Commonly Controlled Entity and Subsidiary have timely
made in full each quarterly installment payment to any Pension Plan required
under Section 302(e) of ERISA or Section 412(m) of the IRC and have also made
full and timely payment of any other costs or expenses related to such a Plan.
The Borrower and all Commonly Controlled Entities and Subsidiaries have made
full and timely payment of all contributions to Multiemployer Plans required
under ERISA, the IRC or applicable collective bargaining agreements. Neither
the Borrower nor any Commonly Controlled Entity or Subsidiary has had a
complete or partial withdrawal from any Multiemployer Pension Plan and the
liability to which the Borrower or any Commonly Controlled Entity or Subsidiary
would become subject under ERISA if the Borrower or any such Commonly
Controlled Entity or Subsidiary were to withdraw completely from all
Multiemployer Pension Plans as of the valuation date most closely preceding the
date hereof is not in excess of $100,000. No such Multiemployer Pension Plan
has been terminated or is in Reorganization or Insolvent, nor, to the knowledge
of the Borrower and any Commonly Controlled Entities and Subsidiaries, is any
such
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Multiemployer Pension Plan likely to be terminated or to become in
Reorganization or Insolvent. To the knowledge of the Borrower and any
Commonly Controlled Entities and Subsidiaries, no "accumulated funding
deficiency" (as defined in Section 302 of ERISA or Section 412 of the IRC),
whether or not waived, exists with respect to any Multiemployer Plan. The
present value (determined using assumptions which are reasonable in respect of
the benefits provided and the employees participating) of the aggregate
liability of the Borrower and each Subsidiary and Commonly Controlled Entity
for post-retirement 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) is not in excess of $100,000. No written notice of liability
has been received with respect to the Borrower, any of its Subsidiaries, or any
Plan for any "prohibited transaction" (within the meaning of Section 4975 of
the IRC or Section 406 of ERISA), nor has any such prohibited transaction
resulting in material liability to the Borrower, any of its Subsidiaries
occurred. Neither the Borrower nor any Subsidiary or Commonly Controlled
Entity will, as a result of consummating the transactions contemplated by this
Agreement (pursuant to the provisions of the Agreement, by operation of law or
otherwise) (i) have incurred or become liable for any tax assessed by the
Internal Revenue Service for any alleged violations of Section 4975 of the IRC
or any civil penalty imposed by the Department of Labor for any alleged
violations of Section 406 of ERISA, (ii) have caused or permitted to occur any
"prohibited transaction" within the meaning of such Section 4975 of the IRC or
Section 406 of ERISA with respect to any Plan for which no exemption is
available or (iii) have incurred any liability to the PBGC (other than ordinary
and usual PBGC premium liability) or any liability for complete or partial
withdrawal to any Multiemployer Plan. Neither the Borrower nor any Subsidiary
is subject (directly or indirectly) to, and no facts exist which could subject
the Borrower or any Subsidiary (directly or indirectly) to, any other
liability, penalty, tax or lien whatsoever, which could result in a Material
Adverse Change and which is directly or indirectly related to any Plan,
including, but not limited to, liability for any damages or penalties arising
under Title I or Title IV of ERISA, liability for any tax or penalty resulting
from a loss of deduction under Section 404 or 419 of the IRC, any tax or
penalty under chapter 43 of the IRC, or any taxes or penalties under any other
applicable law, but excluding any liability to make contributions or pay
premiums to or under an ongoing Plan before the last due date on which such
contributions or premiums could be paid or made without penalty or to pay
benefits when due in accordance with Plan terms.
SECTION 5.12. LABOR CONTROVERSIES. Except as disclosed in
ITEM 8 ("Labor Controversies") of the Disclosure Schedule, there are no labor
controversies pending or, to the best knowledge of the Borrower, threatened,
relating to the Borrower or any Subsidiary. There is (i) no unfair labor
practice complaint pending against the
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Borrower, or any of its Subsidiaries or, to the best knowledge of the Borrower,
threatened against any of them, before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against any
of them, (ii) no strike, labor dispute, slowdown or stoppage is pending against
the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against the Borrower or any of its Subsidiaries and (iii)
no union representation question existing with respect to the employees of the
Borrower or any of its Subsidiaries. Each of the Borrower and its Subsidiaries
is in compliance in all material respects with all collective bargaining
agreements to which it is subject.
SECTION 5.13. OWNERSHIP OF PROPERTIES; COLLATERAL.
(a) Each of the Borrower and its Subsidiaries shall own good
title to all of its material personal properties and assets of any nature
whatsoever, free and clear of all Liens except as permitted pursuant to SECTION
6.2.3.
(b) Except to the extent otherwise consented to in
writing by the Required Lenders, the provisions of the Security Agreement are
effective to create in favor of the Agent for the benefit of the Agent and the
Lenders, a legal, valid and enforceable security interest in all right, title
and interest of the Loan Parties in the Collateral described therein, and, upon
the filing of the Financing Statements and any required filing in the United
States Patent and Trademark Office pursuant to SECTION 4.1.13, the Security
Documents will create a fully perfected first priority security interest in all
right, title and interest of the Loan Parties in all of the Collateral
described therein, to the extent that a security interest therein can be
perfected by such a filing, subject to no other Liens other than Liens
permitted by SECTION 6.2.3.
SECTION 5.14. INTELLECTUAL PROPERTY. Each of the Borrower
and its Subsidiaries owns or licenses all such Intellectual Property, and has
obtained assignments of all licenses and other rights, as the Borrower
considers necessary for or as are otherwise material to the conduct of the
business of the Borrower and its Subsidiaries as now conducted without,
individually or in the aggregate, any infringement upon rights of other Persons
which could result in a Material Adverse Change. All Intellectual Property
owned or licensed from third Persons described in this SECTION 5.14 is set
forth in ITEM 9 ("Intellectual Property") of the Disclosure Schedule.
SECTION 5.15. ACCURACY OF INFORMATION. All factual
information heretofore or contemporaneously furnished by or on behalf of the
Borrower in writing to the Agent or any Lender for
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purposes of or in connection with this Agreement or any transaction
contemplated hereby is true and accurate in every material respect on the date
as of which such information is dated or certified and as of the date of
execution and delivery of this Agreement by the Agent or such Lender and such
information is not incomplete by omitting to state any material fact necessary
to make such information not misleading. Neither this Agreement nor any
document or statement furnished to the Agent or any of the Lenders by or on
behalf of the Borrower contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the statements
contained herein or therein not materially misleading.
SECTION 5.16. INSURANCE. All policies of insurance in
effect of any kind or nature owned by or issued to the Borrower and its
Subsidiaries, including policies of life, fire, theft, product liability,
public liability, property damage, other casualty, employee fidelity, workers'
compensation, property and liability insurance, (a) as of the Closing Date are
listed in ITEM 10 ("Insurance") of the Disclosure Schedule, (b) are, together
with all policies of employee health and welfare and title insurance, in full
force and effect, (c) comply in all respects with the applicable requirements
set forth herein and in the Security Documents and (d) are of a nature and
provide such coverage as is customarily carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which the
Borrower and its Subsidiaries operate. Neither the Borrower nor any of its
Subsidiaries provides any of its insurance through self-insurance except as
disclosed in ITEM 10 of the Disclosure Schedule.
SECTION 5.17. CERTAIN INDEBTEDNESS. ITEM 11
("Indebt-edness") of the Disclosure Schedule specifies all Indebtedness of the
Borrower and its Subsidiaries as of the Closing Date which (a) is for borrowed
money, or (b) is not incurred in the ordinary course of the business of the
Borrower or any Subsidiary in a manner and to the extent consistent with past
practice, or (c) is material to the financial condition, operations,
businesses, properties or prospects of the Borrower or any Subsidiary.
SECTION 5.18. ENVIRONMENTAL MATTERS. Except as disclosed
in ITEM 12 ("Environmental Matters") of the Disclosure Schedule to the best of
the Borrower's knowledge, the Borrower and each of its Subsidiaries are in
compliance in all material respects with all applicable Environmental Laws, and
there are no conditions or circumstances associated with the currently or
previously owned, operated, used or leased properties or current or past
operations of the Borrower or any Subsidiary which may give rise to
Environmental Liabilities and Costs which could result in a Material Adverse
Change or which may give rise to any Environmental Lien.
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SECTION 5.19. NO BURDENSOME AGREEMENTS. Neither the
Borrower nor any Subsidiary is a party to or has assumed any indenture, loan or
credit agreement or any lease or other agreement or instrument or subject to
any charter or other corporate restriction that could result in a Material
Adverse Change.
SECTION 5.20. CONSENTS. Except as disclosed in ITEM 13
("Consents") of the Disclosure Schedule the Borrower and its Subsidiaries have
all material permits and governmental consents and approvals necessary under
Requirements of Law or, in the reasonable business judgment of the Borrower,
deemed advisable under Requirements of Law, in connection with the transactions
contemplated hereby and the ongoing business and operations of the Borrower and
its Subsidiaries.
SECTION 5.21. CONTRACTS. Set forth in ITEM 14
("Contracts") of the Disclosure Schedule is an accurate and complete list of
all material Contractual Obligations of the Borrower and its Subsidiaries.
Each such material Contractual Obligation is in full force and effect in
accordance with the terms thereof. There are no material defaults by the
Borrower or any Subsidiary or, to the Borrower's knowledge after due inquiry,
any other default in existence under any such material Contractual Obligations,
in each case that could result in a Material Adverse Change.
SECTION 5.22. EMPLOYMENT AGREEMENTS. Set forth in ITEM 15
("Employment Contracts") of the Disclosure Schedule is a complete and accurate
list of each employment agreement to which the Borrower or any Subsidiary is a
party, or by which it is bound.
SECTION 5.23. CONDITION OF PROPERTY. All of the assets and
properties owned by, leased to or used by the Borrower and its Subsidiaries
material to the conduct of their business are in adequate operating condition
and repair, ordinary wear and tear excepted, and are free and clear of known
defects except for defects which do not substantially interfere with the use
thereof in the conduct of normal operations.
SECTION 5.24. SUBSIDIARIES. ITEM 16 ("Subsidiaries") of
the Disclosure Schedule sets forth all Subsidiaries of the Borrower as of the
Closing Date.
SECTION 5.25. ACQUISITION AGREEMENTS. The closing of the
transactions contemplated by the Acquisition Agreements shall occur on the
Closing Date simultaneously with the making of the initial Borrowings, and
Borrower has not waived or in any way amended, without the prior written
consent of the Required Lenders, any condition to the obligations to consummate
the Acquisitions. A true and complete copy of the Acquisition Agreements
(including all exhibits, schedules and amendments thereto) has been delivered
to the Agent. Borrower is not in default under the Acquisition
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Agreements or under any instrument or document to be delivered in connection
therewith. The representations and warranties made in the Acquisition
Agreements by Borrower and the other Persons which are parties thereto are true
and correct in all material respects on and as of the Closing Date as though
made on and as of such date.
SECTION 5.26. TRADE RELATIONS. Except as disclosed in ITEM
17 ("Termination of Material Contracts") of the Disclosure Schedule, as of the
Closing Date, there exists no actual or, to the best of Borrower's knowledge,
threatened termination, cancellation or limitation of, or any modification or
change in, the business relationship of the Borrower with any customer or group
of customers of the Borrower.
SECTION 5.27. ABSENCE OF TAKEOVER STATUTES. The Board of
Directors of the Borrower has approved for purposes of Chapter 1704 of the Ohio
Revised Code (Transactions Involving Interested Shareholders) the transactions
contemplated by this Agreement and the other Loan Documents and the issuance of
the Series B Special Preferred Stock upon conversion of the Term Notes pursuant
to Article 8 or the issuance of any shares of Common Stock upon conversion of
any Series B Special Preferred Stock. The provisions of Ohio Revised Code
Section 1707.041 with respect to "control bids" as defined in Ohio Revised Code
Section 1707.01(V)(1) do not apply to transactions contemplated by the Loan
Documents or the issuance of any shares of Series B Special Preferred Stock to
be issued pursuant to this Agreement or upon conversion of such shares. No
other "fair price," "moratorium," "control share acquisition," "business
combination," "shareholder protection," or similar antitakeover statute will
apply to the Agent or any Lender as a result of this Agreement or any of the
other Loan Documents or the authorization or issuance of Series B Special
Preferred Stock upon conversion of Notes pursuant to Article 8 or any shares of
Common Stock to be issued upon conversion of shares of Series B Special
Preferred Stock.
SECTION 5.28. COMMUNICATIONS ACT. None of the Borrower and
its Subsidiaries holds any licenses or conducts any business which would result
in the application of Section 310 of the Communications Act of 1934 as a result
of this Agreement or any of the other Loan Documents or the authorization or
issuance of any shares of capital stock to be issued upon conversion of Term
Notes pursuant to Article 8 of this Agreement or the authorization of Common
Stock upon conversion of the Series B Preferred Stock.
SECTION 5.29. CAPITALIZATION AND OWNERSHIP OF THE BORROWER.
On the Closing Date, the authorized capital stock of the Borrower consists of
22,500,000 shares of Common Stock, par value $0.01 per share, 2,780,017 of
which will be outstanding; 2,500,000 shares of Preferred Stock, $0.01 par
value, of which (i) 2,125 shares have been designated Preferred Stock, $100 par
value, of
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which no shares will be outstanding, (ii) 6,500 shares have been designated
Convertible Preferred Stock, without par value, $100 stated value, cumulative
and redeemable, of which no shares will be outstanding, (iii) 3,880 shares have
been designated Preferred Stock, without par value, $1,000 stated value,
cumulative and redeemable, of which no shares will be outstanding, (iv) 16,000
shares have been designated 8% Preferred Stock, without par value, $100 stated
value, cumulative and redeemable, of which no shares will be outstanding, (v)
2,500 shares have been designated 7% Convertible Preferred Stock, without par
value, $100 stated value, cumulative and redeemable, of which no shares will be
outstanding, (vi) 550,000 shares have been designated 10% Preferred Stock,
without par value, $10 stated value, cumulative, of which 530,534 shares will
be outstanding, (vii) 250,000 shares have been designated Series A Special
Convertible Stock, $.20 par value, of which no shares will be outstanding, and
(viii) 250,000 shares have been designated Series B Special Convertible
Preferred Stock, $.20 par value, of which no shares will be outstanding, (ix)
200,000 shares have been designated 14% Convertible Preferred Stock, without
par value, $60 stated value, of which 107,918 shares will be outstanding, and
(x) 1,218,995 shares are undesignated and unissued. All outstanding shares of
capital stock of the Borrower are duly authorized, validly issued, fully paid
and nonassessable, and are not, and will not have been, issued in violation of
any preemptive rights. Except as set forth in Item 24 (Preemptive Rights,
Options, Warrants) of the Disclosure Schedule, no issued, no authorized but
unissued and no treasury shares of capital stock of the Borrower are subject to
any preemptive right, option, warrant, right of conversion or purchase or any
similar right issued or granted by the Borrower or, to the knowledge of the
Borrower, by any of its shareholders. Except as set forth in the Organic
Documents of the Borrower, or in Item 25 (Voting and Transfer Agreements) of
the Disclosure Schedule, there are no agreements or understandings with respect
to the voting, sale or transfer of any shares of stock of the Borrower to which
the Borrower or any of its Subsidiaries is a party.
SECTION 5.30. SECURITIES LAWS. In reliance on the
investment representations contained in SECTION 2.5, the issuance and delivery
of Series B Special Preferred Stock upon the conversion of the Notes by the
Lenders and the issuance and delivery of Common Stock to the Lenders upon the
conversion of the Series B Special Preferred Stock, are and will be exempt from
the registration requirements of the Securities Act and all applicable state
securities laws, as such laws are currently in effect.
SECTION 5.31. NO INTEGRATION OF ISSUE. Neither the
Borrower nor any Person authorized or employed by the Borrower as agent, broker
or otherwise in connection with the offering of the Notes has offered the Notes
for sale to, or solicited any offers to buy the Notes from, or otherwise
approached or negotiated or communicated in respect thereof with, anyone other
than Lenders.
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Neither the Borrower nor any Person acting on behalf of the Borrower will sell
or offer any class of securities to, or solicit any offers to buy any class of
securities from, or otherwise approach, negotiate or communicate in respect
thereof with, any Person so as to require the registration of the Notes under
the Securities Act or any applicable state securities laws.
SECTION 5.32. NO CONFLICT. None of the transactions
contemplated by this Agreement or any of the other Loan Documents (including
the issuance of shares of Series B Special Preferred Stock upon conversion of
Notes or shares of Common Stock upon conversion of the Series B Special
Preferred Stock) will give rise to any payment or the acceleration of any
obligation (whether with or without the passage of time or upon the occurrence
of any event) to any director, officer or employee of the Borrower or any
Subsidiary.
ARTICLE 6.
COVENANTS
SECTION 6.1. AFFIRMATIVE COVENANTS. The Borrower agrees
with each Lender that until the Revolving Loan Commitment has terminated and
all Loans and Obligations (other than Obligations that expressly survive the
termination of this Agreement pursuant to SECTION 10.5) have been paid and
performed in full, the Borrower will perform the Obligations set forth in this
SECTION 6.1.
SECTION 6.1.1. FINANCIAL INFORMATION, ETC. The Borrower
will furnish, or will cause to be furnished, to each Lender and to the Agent
copies of its financial statements, reports and information:
(a) (i) promptly when available and in any event within
ninety (90) days after the close of each Fiscal Year, a consolidated
and consolidating balance sheet at the close of such Fiscal Year, and
related consolidated and consolidating statements of operations,
retained earnings, and cash flows for such Fiscal Year, of Borrower
and its Subsidiaries (with comparable information at the close of and
for the prior Fiscal Year), certified (in the case of consolidated
statements) without qualification by Price Waterhouse LLP or other
independent public accountants reasonably satisfactory to the Agent,
together with a report containing a description of projected business
prospects (including capital expenditures) and management's discussion
and analysis of financial condition and results of operation of
Borrower and its Subsidiaries;
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(ii) promptly when available and in any event
within ninety (90) days after the close of each Fiscal
Year, a letter report of such independent public
accountants at the close of such Fiscal Year to the effect
that they have reviewed the provisions of this Agreement
and the most recent Compliance Certificate being furnished
pursuant to clause (a)(iii) and are not aware of any
miscalculation in such Compliance Certificate relating to
the financial tests set forth in SECTION 6.2.4 or of any
default in the performance by the Borrower or any of its
Subsidiaries to be performed by such Loan Parties hereunder
or under any other Loan Document, except such
miscalculation or default, if any, as may be disclosed in
such statement; and
(iii) promptly when available and in any event within
ninety (90) days after the close of each Fiscal Year, a Compliance
Certificate calculated as of the computation date at the close of such
Fiscal Year; and
(b) promptly when available and in any event within (x)
forty-five (45) days after the close of each calendar month of the 1996 Fiscal
Year, or (y) thirty (30) days after the close of each calendar month of each
Fiscal Year other than the 1996 Fiscal Year:
(i) consolidated and consolidating balance sheets at the
close of such month, and consolidated and consolidating statements of
operations, retained earnings, and cash flows for such month and for
the period commencing at the close of the previous Fiscal Year and
ending with the close of such month, of Borrower and Subsidiaries
(with comparable information at the close of and for the corresponding
month of the prior Fiscal Year and for the corresponding portion of
such prior Fiscal Year and with comparable information set forth in
the Projections for the relevant period, PROVIDED, HOWEVER, that the
Borrower shall not be required to deliver comparisons to the prior
Fiscal Year for all financial statements relating to a calendar month
ending on or prior to December 31, 1996), certified by the principal
accounting or chief financial Authorized Officer of the Borrower,
together with a description of projected business prospects (including
Consolidated Capital Expenditures) and a brief report containing
management's discussion and analysis of the financial condition and
results of operations of the Borrower and its Subsidiaries (including
a discussion and analysis of any changes compared to prior results and
the Projections);
(ii) updates to the business plan described in clause
(e) hereof for the remaining term of Borrower's then current Fiscal
Year; and
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(c) within thirty (30) days after the close of each
Fiscal Quarter, a Compliance Certificate calculated as of the computation date
at the close of such month;
(d) promptly upon receipt thereof, copies of all detailed
financial and management reports submitted to Borrower by its independent
public accountants in connection with each annual or interim audit made by such
independent public accountants of the books of Borrower or any Subsidiary;
(e) within ten (10) days prior to the end of each Fiscal
Year of the Borrower, a business plan of the Borrower and its Subsidiaries, in
form, scope and detail reasonably satisfactory to the Required Lenders, for the
twelve (12) months following the end of such Fiscal Year, including
consolidated and consolidating operating budgets prepared on a monthly basis
for such Fiscal Year, which budgets shall include estimated Consolidated
Capital Expenditures and other costs to be incurred by the Borrower and its
Subsidiaries, on a consolidated and consolidating basis, during the applicable
Fiscal Year, in each case, with accompanying detail, together with a report
containing management's discussion and analysis of the projected financial
condition and results of operations of the Borrower and its Subsidiaries;
(f) promptly after approved by the Borrower's Board of
Directors, any updates or revisions to any business plan described in the
preceding clause (e), in addition to those described in clause (b)(ii) above;
(g) (i) not later than Friday of each calendar week, a
Borrowing Base Certificate as of the last day of the preceding calendar week
and (ii) following a request by the Agent, within one (1) Business Day, a
Borrowing Base Certificate as of the day of such request;
(h) promptly upon the sending or filing thereof, copies
of all reports that the Borrower or any of its Subsidiaries sends to its
security holders generally, and copies of all reports and registration
statements that the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission or any national securities exchange;
(i) within sixty (60) days after the Closing Date, the
audited balance sheets of IPP-South Carolina, IPP-Tennessee and PSC as at the
Closing Date, certified without qualification by independent public accountants
acceptable to the Required Lenders, and in form and scope reasonably
satisfactory to the Required Lenders;
(j) no later than Thursday of each calendar week, a
detailed aged schedule, in a form satisfactory to the Required Lenders, of all
accounts payable of the Borrower and its
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Subsidiaries as of the last Business Day of the prior week; and
(k) such other information with respect to the financial
condition, business, property, assets, revenues and operations of the Borrower
and any Subsidiary as any Lender may (through the Agent) from time to time
reasonably request.
SECTION 6.1.2. MAINTENANCE OF CORPORATE EXISTENCE, ETC.
Except as permitted by SECTION 6.2.10, the Borrower will cause to be done at
all times all things necessary to maintain and preserve the corporate
existences of the Borrower and each Subsidiary.
SECTION 6.1.3. FOREIGN QUALIFICATION. The Borrower will,
and will cause each Subsidiary to, cause to be done at all times all things
necessary to be duly qualified to do business and be in good standing as a
foreign corporation in each jurisdiction where the failure to so qualify could
result in a Material Adverse Change. The Borrower will cause each of its
agents, if any, to be duly qualified to do business in, and at all times comply
with all applicable Requirements of Law of each jurisdiction where the failure
to so qualify or comply could result in a Material Adverse Change.
SECTION 6.1.4. PAYMENT OF TAXES, ETC. The Borrower will,
and will cause each Subsidiary to, pay and discharge, as the same become due
and payable, (a) all Charges against it or on any of its property, as well as
claims of any kind which, if unpaid, might become a Lien upon any one of its
properties, and (b) all lawful claims for labor, materials, supplies, services
or otherwise before any thereof become a default; PROVIDED, HOWEVER, that the
foregoing shall not require the Borrower or any Subsidiary to pay or discharge
any such Charge or claim so long as it shall be diligently contesting the
validity thereof in good faith by appropriate proceedings and shall have set
aside on its books adequate reserves in accordance with GAAP with respect
thereto.
SECTION 6.1.5. INSURANCE. In addition to any insurance
required to be maintained pursuant to any other Loan Document, the Borrower
will, and (with respect to the insurance described in clauses (a) and (b)
below) will cause each Subsidiary to, maintain or cause to be maintained with
insurance companies with a Best's rating of "A" or better:
(a) insurance with respect to its properties and business
against such casualties, contingencies and liabilities (including, without
limitation, business interruption insurance) and of such types and in such
amounts as is acceptable to the Agent and the Lenders and will furnish to the
Agent, annually at the policy renewal date, a certificate of an Authorized
Officer setting forth the nature and extent of all insurance maintained by the
Borrower and its Subsidiaries in accordance with this Section;
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(b) within 60 days after the Closing Date and at all
times thereafter, a "key-man" life insurance policy from a reputable insurance
provider acceptable to the Required Lenders on the life of the Person that
serves as Chief Operating Officer, President or similar position within the
Borrower's organizational structure, which policy shall (i), at all times after
the date of its issuance, have a minimum face value of not less than $3,000,000
in the aggregate and (ii) be assigned to the Agent, for its benefit and the
ratable benefit of the Lenders. Further, the Borrower shall deliver to the
Agent such assignments, acknowledgments or other instruments as the Required
Lenders shall reasonably request in order to perfect the Agent's interest in
such policy.
Each such policy shall be issued by an insurance company with a Best's rating
of "A" or better and a financial size category of not less than XII, shall be
in effect on the Closing Date and the premiums for each such policy shall be
paid as such premiums shall come due. All policies of casualty insurance shall
contain an endorsement, in the form submitted to the Borrower by the Agent,
showing loss payable to the Agent, for its benefit and the ratable benefit of
the Lenders, as their interests may appear. All policies of liability
insurance, including, without limitation, all primary and umbrella liability
policies, shall name the Agent, for its benefit and the ratable benefit of the
Lenders, as additional insureds. The Borrower shall retain all the incidents
of ownership of the insurance maintained pursuant to this SECTION 6.1.5, but
shall not borrow upon or otherwise impair its right to receive the proceeds of
such insurance, other than customary financing of annual premiums. Subject to
clauses (d) and (e) of SECTION 3.3.1, so long as no Event of Default has
occurred and is continuing, the Borrower and its Subsidiaries shall have the
right to use the proceeds of casualty insurance to repair or replace damaged or
destroyed property and shall have the right to use the proceeds of business
interruption insurance for its ongoing business needs.
SECTION 6.1.6. NOTICE OF DEFAULT, LITIGATION, ETC. Upon a
Responsible Officer learning thereof, the Borrower will give prompt written
notice (with a description in reasonable detail) to the Agent of:
(a) the occurrence of any Default;
(b) the occurrence of any litigation, arbitration or
governmental investigation or proceeding not previously disclosed in writing by
the Borrower to the Lenders which has been instituted or, to the knowledge of
the Borrower, is threatened against, the Borrower or any Subsidiary or to which
any of its properties, assets or revenues is subject which, if adversely
determined, could result in a Material Adverse Change;
(c) any material development which shall occur in any
litigation, arbitration or governmental investigation or proceeding
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previously disclosed by the Borrower to the Lenders pursuant to SECTION 5.7
which could result in a Material Adverse Change;
(d) the occurrence of any other circumstance which could
result in a Material Adverse Change;
(e) the occurrence of any Loss; and
(f) (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Single Employer Plan, or any withdrawal
from, or the termination, Reorganization or Insolvency of any Multiemployer
Pension Plan, (ii) the institution of proceedings or the taking of any other
action by the PBGC or the Borrower or any Commonly Controlled Entity or
Subsidiary or any Multiemployer Pension Plan with respect to the withdrawal
from, or the termination, Reorganization or Insolvency of, any Single Employer
Plan or Multiemployer Pension Plan, or the receipt of notice by the Borrower or
any Commonly Controlled Entity or Subsidiary that the institution of any such
proceedings or the taking of any such action is under consideration or
anticipated, (iii) the institution of any proceedings or other action by the
Internal Revenue Service or the Department of Labor with respect to the minimum
funding requirements of any Pension Plan, or the receipt of notice by the
Borrower or any Commonly Controlled Entity or Subsidiary that the institution
of any such proceedings or the taking of any such action is under consideration
or anticipated, (iv) the occurrence or expected occurrence of any event which
could result in the incurrence of unpredictable contingent event benefits under
Section 302 of ERISA or Section 412 of the IRC with respect to any Pension
Plan, (v) any event or condition which could increase the liability of the
Borrower or any Commonly Controlled Entity or Subsidiary with respect to
post-retirement welfare benefits under any Plan, or (vi) the occurrence of any
other event or condition with respect to any Plan which could subject the
Borrower or any Subsidiary (directly or indirectly) to any tax, penalty or
liability under Title I or Title IV of ERISA, Section 404 or 419 and Chapter 43
of the IRC, or any other applicable laws, and in each case in clauses (i)
through (vi) above, such event or condition, together with all other events or
conditions, if any, could subject the Borrower or any Subsidiary (directly or
indirectly) to any tax, fine, penalty, or other liabilities in amounts which in
the aggregate could result in a Material Adverse Change. The Borrower will
deliver to each of the Lenders a true and complete copy of each annual report
(Form 5500) of each Plan (other than a Multi-Employer Plan) required to be
filed with the Internal Revenue Service, promptly after the filing thereof; and
(g) the condemnation or threat of condemnation with
respect to any property used or necessary in the conduct of the businesses of
the Borrower or any of its Subsidiaries.
SECTION 6.1.7. BOOKS AND RECORDS. The Borrower will, and
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will cause each Subsidiary to, keep books and records reflecting all of its
business affairs and transactions in accordance with GAAP and permit the Agent
and each Lender or any of their respective representatives, at reasonable times
and reasonable intervals upon one Business Day's notice, to visit all of its
offices, to discuss its financial matters with its officers and independent
public accountants and to examine (and, at the expense of the Borrower,
photocopy extracts from) any of its books or other corporate records. The
Borrower shall pay any fees and expenses, including, without limitation, any
fees of its independent public accountants incurred in connection with the
Agent's or any Lender's exercise of its rights pursuant to this SECTION 6.1.7,
PROVIDED, HOWEVER, that unless an Event of Default has occurred and is
continuing the Borrower shall be required to pay such fees for not more than
two visits and examinations in each Fiscal Year.
SECTION 6.1.8. MAINTENANCE OF PROPERTIES, ETC. The Borrower
will: (a) maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, all of its properties (real and personal and including all
intangible assets), except obsolete properties, which are used or necessary in
the conduct of its business in good working order and condition, ordinary wear
and tear excepted, except that this clause (a) shall not apply to any
circumstance where noncompliance, together with all other noncompliances, could
not reasonably result in a Material Adverse Change; and (b) to the extent
Borrower deems advisable in its reasonable business judgment, forthwith repair
or replace, at its own expense, any such property or asset that suffers a Loss.
SECTION 6.1.9. MAINTENANCE OF LICENSES AND PERMITS. The
Borrower will maintain and preserve, and will cause each of its Subsidiaries to
maintain and preserve, all Intellectual Property, rights, permits, licenses,
approvals and privileges issued under or arising under any Requirements of Law,
except that this SECTION 6.1.9 shall not apply to any circumstance where
noncompliance, together with all other noncompliances, could not result in a
Material Adverse Change.
SECTION 6.1.10. EMPLOYEE PLANS. The Borrower will at all
times comply in all material respects with the provisions of ERISA and the IRC
which are applicable to any of the Plans, and cause each of its Subsidiaries so
to do.
SECTION 6.1.11. COMPLIANCE WITH LAWS. The Borrower will, and
will cause each Subsidiary to, comply with all applicable Requirements of Law;
PROVIDED, HOWEVER, that this SECTION 6.1.11 shall not apply to any circumstance
of noncompliance that together with all other noncompliances could not result
in a Material Adverse Change.
SECTION 6.1.12. INTEREST RATE PROTECTION. Within 180 days
after the Closing Date, the Borrower shall obtain and
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thereafter maintain in full force and effect, from ING, or from an Eligible
Lending Institution, one or more Interest Rate Contracts, protecting the
Borrower against increases in the ING Alternate Base Rate in excess of 100
basis points above the ING Alternate Base Rate on the Closing Date for an
aggregate notional amount equal to at least $20,000,000, for a term of at least
three (3) years. ING shall make available to the Borrower various proposals
for Interest Rate Contracts. Should the Borrower obtain any proposal for
Interest Rate Contracts from a source other than ING, the Borrower agrees that
ING shall have a right to provide such Interest Rate Contracts on the same
terms as those set forth in such proposal. The Borrower will collaterally
assign such Interest Rate Contracts to the Agent, for its benefit and the
ratable benefit of the Lenders, pursuant to documentation acceptable to the
Agent, and the Borrower may secure any net obligations of the Borrower under
any such Interest Rate Contracts on a PARI PASSU basis with the Obligations.
SECTION 6.1.13. REAL ESTATE. If the Borrower or any of its
Subsidiaries shall acquire a fee or leasehold interest (other than office
leases) in real estate which the Required Lenders determine to be material to
the Borrower or such Subsidiary, the Borrower or such Subsidiary, as the case
may be, will execute a first priority mortgage, deed of trust or deed to secure
debt or leasehold mortgage, leasehold deed of trust or leasehold deed to secure
debt, as appropriate, in form and substance reasonably satisfactory to the
Required Lenders, in favor of the Agent, for its benefit and the ratable
benefit of the Lenders, and shall use its best efforts to deliver to the Agent
such title insurance policies, surveys and landlords' estoppel agreements with
respect thereto as the Required Lenders shall request.
SECTION 6.1.14. GOVERNMENTAL APPROVALS. The Borrower will
secure, and will cooperate with the Lenders in any case to secure, all
necessary consents, approvals, authorizations and exemptions from all
governmental authorities, (including the making of all filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT")) in connection with any conversion of Term Notes pursuant to Article 8
and the issuance of shares of Series B Special Preferred Stock in connection
therewith, and the issuance of shares of Common Stock upon the conversion of
such shares of Series B Special Preferred Stock. The Borrower shall be
responsible for the payment of all expenses with respect to all filings under
the HSR Act in connection with the foregoing, including but not limited to the
filing fees and the fees and expenses of counsel to each Lender in connection
therewith.
SECTION 6.1.15. ANTITAKEOVER STATUTES. The Borrower shall
take all action necessary to avoid the application of any "fair price,"
"moratorium," "control share acquisition," "business combination," "shareholder
protection" or similar antitakeover
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statute to the transactions contemplated by this Agreement or any of the other
Loan Documents.
SECTION 6.1.16. TELEPHONE PLACEMENT AGREEMENTS. With respect
to Telephone Placement Agreements entered into or renewed or extended after the
Closing Date, the Borrower shall only utilize and execute Instruments which are
in the form of Schedule 2 attached hereto.
SECTION 6.1.17. CASH MANAGEMENT SYSTEM. On or prior to April
15, 1996, the Borrower will establish and thereafter maintain at all times the
cash management system described in SCHEDULE 3.
SECTION 6.2. NEGATIVE COVENANTS. The Borrower agrees with
each Lender that until all Commitments have terminated and all Obligations
(other than Obligations that expressly survive the termination of this
Agreement pursuant to SECTION 10.5) have been paid and performed in full, the
Borrower will perform the Obligations set forth in this SECTION 6.2.
SECTION 6.2.1. BUSINESS ACTIVITIES. The Borrower will not,
and will not permit any Subsidiary to, engage in any business activity, except
those in which the Borrower is engaged on the Closing Date and such activities
as may be incidental or related thereto.
SECTION 6.2.2. INDEBTEDNESS. The Borrower will not, and
will not permit any Subsidiary to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness other than:
(a) Indebtedness in respect of the Loans and other
Obligations;
(b) Indebtedness in respect of the Interest Rate
Contracts required pursuant to SECTION 6.1.12 to the extent such do not
constitute Obligations;
(c) obligations that constitute Indebtedness solely by
virtue of being secured by Liens permitted under SECTION 6.2.3;
(d) Indebtedness in respect of liabilities resulting from
(i) endorsements of negotiable instruments in the ordinary course of business;
and (ii) surety bonds issued for the account of the Borrower or any of its
Subsidiaries in the ordinary course of business;
(e) Indebtedness existing on the Closing Date and set
forth in ITEM 18 ("Existing Indebtedness") of the Disclosure Schedule;
(f) Indebtedness of any Subsidiary owing to the
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Borrower, provided that such Indebtedness is evidenced by a demand promissory
note that is pledged to the Agent, for its benefit and the benefit of the
Lenders, as security for the Obligations pursuant to the Borrower Pledge
Agreement;
(g) Capitalized Lease Liabilities PROVIDED that (i) the
aggregate amount thereof which in accordance with GAAP is attributable to
principal, together with the aggregate outstanding principal amount of all
Purchase Money Indebtedness of the Borrower and its Subsidiaries, does not
exceed $100,000 at any one time outstanding, (ii) payments under each
capitalized lease giving rise to such Capitalized Lease Liabilities shall be
made in equal periodic installments, (iii) such Capitalized Lease Liabilities
are not incurred to finance the purchase of Telephones and related equipment,
and (iv) the Consolidated Capital Expenditures financed by such Capitalized
Lease Liabilities are permitted under SECTION 6.2.5;
(h) Purchase Money Indebtedness PROVIDED that (i) the
amount of such Indebtedness, together with the amount of any outstanding
Capitalized Lease Liabilities of the Borrower and its Subsidiaries that in
accordance with GAAP are attributable to principal, does not exceed $100,000 at
any one time outstanding, (ii) such Indebtedness provides for the payment of
principal in equal periodic installments, (iii) such Purchase Money
Indebtedness is not incurred to finance the purchase of Telephones and related
equipment, and (iv) the Consolidated Capital Expenditures financed by such
Purchase Money Indebtedness are permitted under SECTION 6.2.5;
(i) extensions, refinancings, replacements and renewals
of any of the foregoing items described in clauses (a) through (h) above,
provided that the principal amount thereof is not increased or the terms
thereof are not modified to impose more burdensome covenants, rates of
interest, repayment terms or events of default upon the Borrower or its
Subsidiaries, as the case may be; and
(j) other Indebtedness not otherwise covered by clauses
(a) through (i) above not to exceed $100,000 in aggregate amount outstanding at
any time during the term of this Agreement.
SECTION 6.2.3. LIENS. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or suffer to exist any Lien
upon any of its property, revenues or assets, whether now owned or hereafter
acquired, except:
(a) Liens in favor of the Agent or the Lenders granted
pursuant to any Loan Document;
(b) Liens identified in ITEM 19 ("Permitted Liens") of
the Disclosure Schedule evidencing rights of lessors in leased equipment and/or
purchase money liens on specific items of
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equipment;
(c) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter payable with penalty
or being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books;
(d) Liens of carriers, warehousemen, mechanics, and
materialmen incurred in the ordinary course of business for sums not overdue or
being contested in good faith by appropriate proceedings (which proceedings
have the effect of preventing the forfeiture or sale of the asset subject to
such Lien) and for which adequate reserves in accordance with GAAP shall have
been set aside on its books;
(e) Liens (other than Liens arising under ERISA or
Section 412(n) of the Code) incurred in the ordinary course of business in
respect of deposits made in connection with workmen's compensation,
unemployment insurance or other forms of governmental insurance or benefits,
or to secure performance of tenders, statutory obligations, leases and
contracts (other than for borrowed money) entered into in the ordinary course
of business or to secure obligations on surety or appeal bonds;
(f) judgment Liens with respect to judgments to the
extent such judgments do not constitute an Event of Default described in
SECTION 7.1.9;
(g) Liens which arise by operation of law under Article 2
of the UCC in favor of unpaid sellers of goods, or liens in items or any
accompanying documents or proceeds of either arising by operation of law under
Article 4 of the UCC in favor of a collecting bank;
(h) easements (including, without limitation, reciprocal
easement agreements and utility agreements), rights-of-way, covenants,
consents, reservations, encroachments, variations and other restrictions,
charges or encumbrances (whether or not recorded) affecting the use of
property, which do not materially detract from the value of such property or
impair the use thereof;
(i) Liens securing Indebtedness permitted under clauses
(g) or (h) of SECTION 6.2.2;
(j) Leases and subleases granted to others in the
ordinary course of business not interfering in any material respect with any
business of the Borrower or any of its Subsidiaries;
(k) Liens which constitute rights of set-off of a
customary nature or bankers' liens with respect to amounts on deposit, whether
arising by operation of law or by contract, in
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connection with deposit accounts established with banks in the ordinary course
of business; and
(l) extensions, renewals or replacements of any Lien
referred to in paragraphs (a) through (k) above, provided that the principal
amount of the obligation secured thereby is not increased and that any such
extension, renewal or replacement is limited to the property originally
encumbered thereby.
SECTION 6.2.4. FINANCIAL CONDITION. The Borrower hereby
covenants and agrees as set forth below:
(a) FIXED CHARGE COVERAGE RATIO. The Borrower will not
permit its Fixed Charge Coverage Ratio for the twelve-month period ending on
the last day of any Fiscal Quarter to be less than the ratio set forth opposite
such Fiscal Quarter (for each Fiscal Quarter ending prior to March 31, 1997,
such ratio to be calculated as provided in clause (h) of this SECTION 6.2.4):
FISCAL QUARTER ENDING: RATIO
---------------------- -----
June 30, 1996 0.4
September 30, 1996 0.8
December 31, 1996 1.0
March 31, 1997 1.1
June 30, 1997 1.5
September 30, 1997 1.8
December 31, 1997 2.3
March 31, 1998 2.5
June 30, 1998 2.7
September 30, 1998 3.0
December 31, 1998 3.3
March 31, 1999 3.3
June 30, 1999 2.9
(b) EBITDA. The Borrower will not permit EBITDA of the
Borrower and its Subsidiaries for the twelve-month period ending on the last
day of any Fiscal Quarter to be less than the amount set forth opposite such
Fiscal Quarter (for each Fiscal Quarter ending prior to March 31, 1997, such
amount to be calculated as provided in clause (h) of this SECTION 6.2.4):
FISCAL QUARTER ENDING: AMOUNT
---------------------- ------
June 30, 1996 $ 875,000
September 30, 1996 3,028,000
December 31, 1996 5,589,000
March 31, 1997 8,036,000
June 30, 1997 11,170,000
September 30, 1997 13,317,000
December 31, 1997 16,521,000
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March 31, 1998 16,914,000
June 30, 1998 17,458,000
September 30, 1998 18,017,000
December 31, 1998 18,704,000
March 31, 1999 19,130,000
June 30, 1999 19,739,000
(c) CURRENT RATIO. The Borrower will not permit the
Current Ratio of the Borrower and its Subsidiaries on the last day of any
Fiscal Quarter to be less than 0.6.
(d) TANGIBLE NET WORTH. The Borrower will not permit its
Tangible Net Worth on the last day of any Fiscal Quarter to be less than the
amount set forth opposite such Fiscal Quarter:
FISCAL QUARTER ENDING: AMOUNT
---------------------- ------
June 30, 1996 ($ 9,775,000)
September 30, 1996 (9,170,000)
December 31, 1996 (8,149,000)
March 31, 1997 (7,455,000)
June 30, 1997 (5,157,000)
September 30, 1997 (2,535,000)
December 31, 1997 1,616,000
March 31, 1998 3,051,000
June 30, 1998 6,211,000
September 30, 1998 9,655,000
December 31, 1998 14,640,000
March 31, 1999 16,188,000
June 30, 1999 18,890,000
(e) SENIOR INTEREST COVERAGE RATIO. The Borrower will
not permit the Senior Interest Coverage Ratio of the Borrower and its
Subsidiaries for the twelve-month period ending on the last day of any Fiscal
Quarter to be less than the ratio set forth opposite such Fiscal Quarter (for
each Fiscal Quarter ending prior to March 31, 1997, such ratio to be calculated
as provided in clause (h) of this SECTION 6.2.4):
FISCAL QUARTER ENDING: RATIO
---------------------- -----
June 30, 1996 0.9
September 30, 1996 1.6
December 31, 1996 2.0
March 31, 1997 2.3
June 30, 1997 3.4
September 30, 1997 4.4
December 31, 1998 5.8
March 31, 1998 6.9
June 30, 1998 8.4
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September 30, 1998 10.6
December 31, 1998 14.3
March 31, 1999 18.2
June 30, 1999 24.8
(f) MINIMUM GROSS MARGIN PERCENTAGE - NON-COIN CALLS.
The Borrower will not permit the Minimum Gross Margin Percentage - Non-Coin
Calls for the twelve-month period ending on the last day of any Fiscal Quarter
to be less than the percentage set forth opposite such Fiscal Quarter (for each
Fiscal Quarter ending prior to March 31, 1997, such percentage to be
calculated as provided in clause (h) of this SECTION 6.2.4):
FISCAL QUARTER ENDING: PERCENTAGE
---------------------- ----------
June 30, 1996 55.2%
September 30, 1996 55.2
December 31, 1996 55.2
March 31, 1997 54.2
June 30, 1997 54.4
September 30, 1997 54.7
December 31, 1997 56.0
March 31, 1998 56.2
June 30, 1998 56.4
September 30, 1998 56.6
December 31, 1998 56.8
March 31, 1999 56.7
June 30, 1999 56.7
(g) MAXIMUM OVERHEAD EXPENSE. The Borrower will not
permit Maximum Overhead Expense of the Borrower and its Subsidiaries for the
twelve-month period ending on the last day of any Fiscal Quarter to be more
than the amount set forth opposite such Fiscal Quarter (for each Fiscal Quarter
ending prior to March 31, 1997, such amount to be calculated as provided in
clause (h) of this SECTION 6.2.4):
FISCAL QUARTER ENDING: AMOUNT
---------------------- ------
June 30, 1996 $ 3,989,000
September 30, 1996 6,862,000
December 31, 1996 9,717,000
March 31, 1997 12,885,000
June 30, 1997 12,119,000
September 30, 1997 12,524,000
December 31, 1997 13,002,000
March 31, 1998 13,279,000
June 30, 1998 13,554,000
September 30, 1998 13,830,000
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December 31, 1998 14,104,000
March 31, 1999 14,392,000
June 30, 1999 14,679,000
(h) CALCULATIONS FOR STUB PERIODS. Notwithstanding any
thing contained herein to the contrary, for any period ending prior to March
31, 1997, calculation of all items relating to income or expense (including,
without limitation, EBITDA) and increases or decreases in working capital)
shall be made for the period commencing on the Closing Date and ending on the
date of determination.
SECTION 6.2.5. CAPITAL EXPENDITURES. The Borrower will not,
and will not permit any Subsidiary to, make or commit to make Consolidated
Capital Expenditures, except that the Borrower and its Subsidiaries may make
Consolidated Capital Expenditures during any Fiscal Year provided (x) no
Default or Event of Default has occurred and is continuing and (y) the
aggregate amount of Consolidated Capital Expenditures made during such Fiscal
Year does not exceed the amount set forth below opposite such Fiscal Year (in
the case of the 1996 Fiscal Year, for the period commencing on the Closing Date
to the end of such Fiscal Year):
FISCAL YEAR: AMOUNT
1996 $ 3,300,000
1997 4,000,000
1998 4,250,000
1999 4,325,000
PROVIDED, HOWEVER, that the Borrower and its Subsidiaries shall not make or
incur Consolidated Capital Expenditures prior to May 1, 1996 in excess of
$350,000 in the aggregate; PROVIDED, FURTHER HOWEVER, that the Borrower and its
Subsidiaries may not make or incur Consolidated Capital Expenditures in the
calendar month immediately following any calendar month where the Borrower and
its Subsidiaries experience negative cash flow on a consolidated basis (I.E.,
cash expenditures exceed cash revenues during such calendar month); PROVIDED,
FURTHER HOWEVER, that expenditures from insurance proceeds received upon the
occurrence of a Loss which are made to replace or repair damaged or destroyed
assets will not be included in the foregoing calculation for the Fiscal Year
such replacement or repair was made.
SECTION 6.2.6. LEASE OBLIGATIONS. The Borrower will not,
and will not permit any Subsidiary to, create or suffer to exist any obligation
for the payment of rent for any property under any operating lease or agreement
to lease having a term of one year or more, except for (a) leases in existence
on the Closing Date and described in ITEM 20 ("Leases") of the Disclosure
Schedule, and (b) any lease of real property entered into by the Borrower or
any
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Subsidiary after the Closing Date in the ordinary course of business; PROVIDED,
HOWEVER, that no such lease shall, to the best of the Borrower's knowledge,
subject the Borrower or any Subsidiary to Environmental Liabilities and Costs
and that the aggregate amount of payments due from the Borrower and its
Subsidiaries for all leases referred to in this SECTION 6.2.6, during each
Fiscal Year set forth below, is less than the amount set forth below opposite
such Fiscal Year (in the case of the 1996 Fiscal Year, for the period
commencing on the Closing Date to the end of such Fiscal Year):
FISCAL YEAR: AMOUNT
1996 $ 100,000
1997 100,000
1998 100,000
1999 100,000
SECTION 6.2.7. INVESTMENTS. The Borrower will not, and will
not permit any Subsidiary to, make, incur, assume or suffer to exist any
Investment in any other Person except:
(a) Cash Equivalent Investments;
(b) deposits for utilities, security deposits under
leases and similar prepaid expenses;
(c) Accounts arising in the ordinary course of business;
(d) Investments existing on the Closing Date and
disclosed in ITEM 21 ("Existing Investments") of the Disclosure Schedule;
(e) Investments by the Borrower in its Subsidiaries to
the extent such Investments are evidenced by demand promissory notes in
principal amounts equal to the amount of such Investments, payable to the
Borrower and pledged by the Borrower in favor of the Agent pursuant to the
Borrower Pledge Agreement;
(f) Investments arising under Interest Rate Contracts; and
(g) Investments consisting of deposit accounts of the
Borrower and its Subsidiaries maintained with banks in the ordinary course of
business.
SECTION 6.2.8. RESTRICTED PAYMENTS, ETC. The Borrower will
not declare, pay or make any dividend or distribution (in cash, property or
obligations) on any shares of any class of Stock (now or hereafter outstanding)
of the Borrower or on any warrants, options or other rights in respect of any
class of Stock (now or hereafter outstanding) of the Borrower or apply, or
permit any
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Subsidiary to apply, any of its funds, property or assets to the purchase,
redemption, sinking fund or other retirement of any shares of any class of
Stock (now or hereafter outstanding) of the Borrower or any rights, options or
warrants to subscribe for or purchase any shares of any class of Stock of the
Borrower, or make any deposit for any of the foregoing.
SECTION 6.2.9. TAKE OR PAY CONTRACTS; SALE/LEASEBACKS.
(a) Except as set forth on ITEM 23 ("Take or Pay
Contracts") of the Disclosure Schedule, the Borrower will not, and will not
permit any Subsidiary to, enter into or be a party to any arrangement for the
purchase of materials, supplies, other property or services if such arrangement
by its express terms requires that payment be made by the Borrower or such
Subsidiary regardless of whether or not such materials, supplies, other
properties or services are delivered or furnished to it; and
(b) The Borrower will not enter into, or permit any
Subsidiary to enter into, any arrangement with any Person providing for the
leasing by the Borrower or one or more Subsidiaries of any property or assets,
which property or assets has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person.
SECTION 6.2.10. CONSOLIDATION, MERGER, SUBSIDIARIES, ETC.
(a) The Borrower will not, and will not permit any
Subsidiary to, liquidate or dissolve, consolidate with, or merge into or with,
any other corporation, or purchase or otherwise acquire all or substantially
all of the assets of any Person (or of any division or business unit thereof),
except that any such Subsidiary may liquidate or dissolve voluntarily into, and
may merge with and into, the Borrower or any other wholly-owned Subsidiary (so
long as the Borrower or such wholly-owned Subsidiary is the surviving
corporation), PROVIDED, HOWEVER, that the Borrower shall be permitted to merge
with and into a Delaware corporation for the sole purpose of changing its state
of incorporation to the State of Delaware provided that (i) the shareholders of
the surviving corporation immediately after such merger are the shareholders of
the Borrower immediately prior to such merger, (ii) the number of authorized
and issued and authorized and unissued shares, and the respective classes and
series, of capital stock of the surviving corporation shall be the same as the
number of authorized and issued and authorized and unissued shares, and the
respective classes and series of capital stock of the Borrower immediately
prior to such merger, (iii) the voting powers, designations, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations and restrictions of all classes and series of capital stock of the
surviving corporation shall be identical to the voting powers,
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designations, preferences (including, without limitation, stated values and
liquidation preferences) and relative, participating, optional or other special
rights, and qualifications, limitations and restrictions of the respective
classes and series of the capital stock of the Borrower as in effect
immediately prior to such merger, (iv) the Lenders shall have received (A) an
assumption agreement in form and substance satisfactory to the Required
Lenders, duly executed by the surviving corporation and pursuant to which the
surviving corporation shall expressly assume all of the obligations of the
Borrower under this Agreement and the other Loan Documents, and (B) such
acknowledgments, certificates, instruments and legal opinions relating to such
merger and assumption agreement as the Required Lenders shall reasonably
request, and (v) the provisions of Section 203 of the Delaware General
Corporation Law would not apply to the Borrower, the Agent or any Lender, this
Agreement, any of the other Loan Documents or the authorization or the issuance
of the shares of capital stock to be issued pursuant to the Loan Documents or
upon conversion of such shares; and
(b) The Borrower will not, and will not permit any
Subsidiary to, create any Subsidiary or transfer any assets to any Subsidiary.
SECTION 6.2.11. ASSET DISPOSITIONS, ETC. The Borrower will
not, and will not permit any Subsidiary to, sell, transfer, lease or otherwise
dispose of, or grant options, warrants or other rights with respect to, any of
its assets (including Accounts and Stock of Subsidiaries) to any Person,
unless:
(a) such disposition constitutes a disposition of
obsolete or retired assets not used in the business of the Borrower and its
Subsidiaries; or
(b) the disposition is in the ordinary course of business
and the net book value of the asset to be disposed of does not exceed $100,000,
and together with the net book value of all other assets disposed of by the
Borrower or any Subsidiary pursuant to this clause (b) during the term of this
Agreement does not exceed $250,000, and solely cash is received therefor.
SECTION 6.2.12. MODIFICATION OF ORGANIC DOCUMENTS, ETC. The
Borrower will not consent to any amendment, supplement or other modification of
any of the terms or provisions contained in, or applicable to, the Certificate
of Incorporation or the By-Laws of the Borrower, except for any amendment,
supplement or other modification which does not adversely affect the Borrower's
ability to pay or perform the Obligations.
SECTION 6.2.13. TRANSACTIONS WITH AFFILIATES. Except as set
forth on Item 22 ("Transaction with Affiliates") of the Disclosure Schedule,
the Borrower will not, and will not permit any Subsidiary to, enter into, or
cause, suffer or permit to exist:
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(a) any management contract or arrangement, consulting
agreement or arrangement, contract or arrangement relating to the allocation of
revenues, expenses or similar contract or arrangement requiring any payments to
be made by the Borrower or any Subsidiaries to any Affiliate; and
(b) any other transaction, arrangement or contract with
any of its other Affiliates which is on terms which are less favorable than are
obtainable from any Person which is not one of its Affiliates.
SECTION 6.2.14. INCONSISTENT AGREEMENTS. The Borrower will
not, and will not permit any Subsidiary to, enter into any material agreement
containing any provision which would be violated or breached in any material
respect by any Loan or by the performance by the Borrower or any Subsidiary of
its obligations hereunder or under any Loan Document.
SECTION 6.2.15. CHANGE IN ACCOUNTING METHOD. The Borrower
will not, and will not permit any Subsidiary to, make any change in accounting
treatment and reporting practices except as required by GAAP.
SECTION 6.2.16. CHANGE IN FISCAL YEAR END. The Borrower will
not change its Fiscal Year end without the Required Lenders' prior written
consent, which consent will not be unreasonably withheld but will not be given
with respect to more than one such change during the term of this Agreement.
SECTION 6.2.17. COMPLIANCE WITH ERISA. The Borrower shall
not, and shall not permit any Subsidiary to take, or fail to take, any action
with respect to a Plan, including, but not limited to, establishing, amending,
or terminating or withdrawing from any Plan, without first obtaining the
Required Lenders' written approval, where such action or failure to act could
result in any liabilities under the IRC, ERISA, or any other applicable law
which individually or in the aggregate could reasonably result in a Material
Adverse Change.
SECTION 6.2.18. LIMITATION ON RESTRICTIONS ON SUBSIDIARY
DIVIDENDS. The Borrower will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any such
Subsidiary to (a) pay dividends or make other distributions on its Stock or
other interests or participations in profits owned by Borrower or any
Subsidiary of Borrower or pay any Indebtedness owed to Borrower or any
Subsidiary of Borrower, (b) make loans or advances to Borrower or any
Subsidiary of Borrower or (c) transfer any of its property or assets to
Borrower or any Subsidiary of Borrower, except for such encumbrances and
restrictions existing under or by reason of this Agreement and the other Loan
Documents.
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SECTION 6.2.19. COMMUNICATIONS LAWS. Neither the Borrower nor
any of its Subsidiaries will acquire any licenses or conduct any business which
would result in the application of Section 310 of the Communications Act of
1934 as a result of this Agreement or any of the other Loan Documents or the
authorization or issuance of the Notes or any shares of capital stock to be
issued pursuant to the Loan Documents, or upon conversion of the Series B
Special Preferred Stock.
SECTION 6.2.20. ISSUANCE OF SERIES B SPECIAL PREFERRED STOCK.
The Borrower shall not issue any shares of Series B Special Preferred Stock
other than pursuant to the conversion of Term Notes in accordance with Article
8.
ARTICLE 7.
EVENTS OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT. The term "EVENT OF
DEFAULT" shall mean any of the events set forth in this SECTION 7.1.
SECTION 7.1.1. NON-PAYMENT OF OBLIGATIONS. The Borrower
shall default:
(a) in the payment or prepayment when due of any
principal of any Loan; or
(b) in the payment when due of the interest payable in
respect of any Loan, the fees provided for in SECTION 2.3 hereof or any other
Obligations and such default shall continue unremedied for a period of five
days.
SECTION 7.1.2. NON-PERFORMANCE OF CERTAIN COVENANTS. The
Borrower shall default in the due performance and observance of any of its
obligations under SECTION 6.1 and such default shall continue unremedied for a
period of 10 Business Days after notice thereof shall have been given to the
Borrower by the Agent, or shall default in the due performance or observation
of any of its obligations under SECTION 6.2.
SECTION 7.1.3. DEFAULTS UNDER OTHER LOAN DOCUMENTS;
NON-PERFORMANCE OF OTHER OBLIGATIONS. Any "Event of Default" shall occur under
the other Loan Documents; or the Borrower or any Subsidiary shall default in
the due performance and observance of any other obligation, covenant or
agreement contained herein or in any other Loan Document and such default shall
continue unremedied for a period of ten (10) Business Days after notice thereof
shall have been given to the Borrower by the Agent.
SECTION 7.1.4. BANKRUPTCY, INSOLVENCY, ETC. The Borrower
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or any Subsidiary shall:
(a) become insolvent or generally fail to pay, or admit
in writing its inability to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian for the
Borrower or any Subsidiary or any property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for the Borrower or any Subsidiary or for a
substantial part of the property of any thereof, and such trustee, receiver,
sequestrator or other custodian shall not be discharged within sixty (60) days;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or proceeding under
any bankruptcy or insolvency law, or any dissolution, winding up or liquidation
proceeding, in respect of the Borrower or any Subsidiary, and, if such case or
proceeding is not commenced by the Borrower or such Subsidiary, such case or
proceeding shall be consented to or acquiesced in by the Borrower or such
Subsidiary or shall result in the entry of an order for relief or shall remain
for sixty (60) days undismissed; or
(e) take any corporate action authorizing, or in
furtherance of, any of the foregoing.
SECTION 7.1.5. BREACH OF WARRANTY. Any representation or
warranty of the Borrower or any Subsidiary hereunder or in any other Loan
Document or in any other writing furnished by or on behalf of the Borrower or
such Subsidiary to the Agent or any Lender for the purposes of or in connection
with this Agreement or any such Loan Document is or shall be incorrect when
made in any material respect.
SECTION 7.1.6. DEFAULT ON OTHER INDEBTEDNESS, ETC. (a) Any
Indebtedness of the Borrower or any Subsidiary in an aggregate principal amount
exceeding $100,000 (i) shall be duly declared to be or shall become due and
payable prior to the stated maturity thereof, or (ii) shall not be paid as and
when the same becomes due and payable including any applicable grace period; or
(b) there shall occur and be continuing any event which constitutes an event of
default under any Instrument relating to any Indebtedness of the Borrower or
any Subsidiary in an aggregate principal amount exceeding $100,000, the effect
of which is to permit the holder or holders of such Indebtedness, or a trustee,
agent or other representative on behalf of such holder or holders, to cause
such Indebtedness to become due prior to its stated maturity.
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SECTION 7.1.7. FAILURE OF VALID, PERFECTED SECURITY
INTEREST. The security interest or Lien in the Collateral and all proceeds
thereof, securing the Obligations shall cease to be valid or perfected at any
time after the Closing Date PROVIDED, HOWEVER, that the failure of the Agent or
any Lender to file any necessary UCC continuation statements shall not be
deemed to constitute an Event of Default under this SECTION 7.1.7.
SECTION 7.1.8. EMPLOYEE PLANS. Any of the following events
shall occur with respect to any Plan: (i) any Person shall engage in any
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan and such "prohibited transaction" could result in
a Material Adverse Change, (ii) any "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA) not disclosed in
ITEM 7 ("Benefit Plans") of the Disclosure Schedule, whether or not waived,
shall exist with respect to any Single Employer Plan, (iii) a Reportable Event
shall occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required Lenders,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) a notice of intent to terminate any Single Employer Plan for
purposes of Title IV of ERISA is issued by the plan administrator thereof
without the prior written consent of the Required Lenders, or the PBGC shall
commence proceedings to terminate any Single Employer Plan, (v) the Borrower or
any Commonly Controlled Entity or Subsidiary shall, or in the reasonable
opinion of the Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency, Reorganization or termination of, a
Multiemployer Plan, (vi) the Borrower or any Commonly Controlled Entity or
Subsidiary shall fail to make any quarterly installment payment to a Pension
Plan required under Section 302(e) of ERISA or Section 412(m) of the Code,
(vii) the Borrower or any Commonly Controlled Entity or Subsidiary shall fail
to make any contribution to a Multiemployer Plan which is required under ERISA,
the Code or applicable collective bargaining agreements, or (viii) any other
event or condition shall occur or exist with respect to a Plan; and in each
case in clauses (i) through (viii) above, such event or condition, together
with all other such events or conditions, if any, could subject the Borrower or
any Subsidiary (directly or indirectly) to any tax, penalty or other
liabilities under Title I or Title IV of ERISA, Section 404 or 419 and Chapter
43 of the IRC or any other applicable law which in the aggregate could result
in a Material Adverse Change.
SECTION 7.1.9. JUDGMENTS. A final judgment which, with
other such outstanding final judgments against the Borrower and its
Subsidiaries (in each case to the extent not covered by insurance), exceeds an
aggregate of $250,000, shall be entered against the
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Borrower or any of its Subsidiaries and, within 30 days after entry thereof,
such judgment shall not have been discharged or execution thereof stayed
pending appeal, or, within 30 days after the expiration of any such stay, such
judgment shall not have been discharged.
SECTION 7.1.10. LOSS OF PERMITS, ETC. The expiration, loss,
termination, cancellation, revocation, forfeiture, suspension, diminution,
impairment of or failure to renew any Intellectual Property, right, permit,
license or approval which could result in a Material Adverse Change; or the
entry of any order of a court enjoining, restraining or otherwise preventing
the Borrower or any Subsidiary from conducting all or any material part of its
business affairs; or the cessation of business or dissolution of the Borrower.
SECTION 7.1.11. MATERIAL ADVERSE CHANGE. A Material Adverse
Changes occurs with respect to the Borrower or any of its Subsidiaries.
SECTION 7.1.12. 10% PREFERRED STOCK. The Borrower's 10%
Preferred Stock, without par value, $10 stated value, shall not be convertible
into Common Stock at any time after September 30, 1996 or such Preferred Stock
otherwise shall be subject to redemption by the Borrower at the option of the
holders thereof at any time after such date.
SECTION 7.2. ACTION IF BANKRUPTCY. If any Event of
Default described in SECTION 7.1.4 shall occur, the outstanding principal
amount of all outstanding Loans and all other Obligations shall automatically
be and become immediately due and payable, without notice or demand, and the
Agent, upon the direction of the Required Lenders, shall exercise any and all
rights and remedies available under this Agreement or any other Loan Document,
or available at law or in equity, at any time, in any order and in any
combination.
SECTION 7.3. ACTION IF OTHER EVENT OF DEFAULT. If any
Event of Default (other than any Event of Default described in SECTION 7.1.4)
shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Agent may, and upon the direction of the Required Lenders,
shall upon notice or demand, (a) declare all or any portion of the outstanding
principal amount of the Loans to be due and payable and any or all other
Obligations to be due and payable, whereupon the full unpaid amount of such
Loans and any and all other Obligations which shall be so declared due and
payable shall be and become immediately due and payable, without further
notice, demand, or presentment, and to the extent paid by the Borrower shall
constitute a prepayment under this Agreement and (b) exercise any and all
rights and remedies available under this Agreement or any other Loan Document,
or available at law or in equity, at any time, in any order and in any
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combination. Notwithstanding anything to the contrary set forth in this
SECTION 7.3, the Agent is permitted to act without the consent of the Required
Lenders pursuant to this SECTION 7.3, only if (a) the Agent reasonably believes
it should exercise the rights afforded to it under this SECTION 7.3 to protect
the interests of the Lenders, (b) the Agent shall have made due inquiry of each
Lender (i) having more than 33-1/3% of the aggregate of the Revolving Loan
Commitments plus the outstanding principal amount of the Term Loan or (ii) if
the Revolving Loan Commitments shall have been terminated, having more than
33-1/3% of the aggregate of the outstanding principal amount of the Loans as
to whether the Agent should act under this SECTION 7.3, and (c) such Lender(s)
fail(s) to respond to the Agent's inquiry within a reasonable period of time.
ARTICLE 8.
CONVERSION
SECTION 8.1. CONVERSION PRIVILEGE. Each Lender may, at
such Lender's option, any time prior to the satisfaction in full of all of the
outstanding principal under and accrued interest on such Lender's Term Note or
Term Notes, convert its Term Note or Term Notes, in whole or in part (in
amounts of $100,000 or integral multiples thereof), at 100% of the amount so
converted, into fully paid and non-assessable shares of Series B Special
Preferred Stock at a rate (the "CONVERSION RATE") of 833.3333 shares of Series
B Special Preferred Stock for each $100,000 of outstanding principal and
accrued interest so converted. All outstanding principal under and accrued
interest on the Term Notes may be converted as provided herein.
SECTION 8.2. CONVERSION PROCEDURE.
(a) To convert a Term Note or portion thereof, a Lender
must (i) complete and sign the notice set forth as Exhibit G hereto, (ii)
surrender such Term Note to the Borrower and (iii) furnish appropriate
endorsements and transfer documents if reasonably required by the Borrower.
(b) As promptly as practicable after the surrender of a
Term Note in compliance with this SECTION 8.2, the Borrower shall issue and
deliver to the Lender so surrendering such Term Note, or on such Lender's
written order, a certificate of certificates for the number of whole and
fractional shares of Series B Special Preferred Stock issuable upon the
conversion of such Term Note or portion thereof in accordance with the
provisions of this Article 8. If a Term Note shall be surrendered for partial
conversion, the Borrower shall execute and deliver to the Lender so
surrendering such Term Note without charge to such Lender, a new Term Note in
an
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aggregate principal amount equal to the unconverted portion of the surrendered
Term Note with no other changes in or to the terms thereof.
(c) Each conversion shall be deemed to have been effected
on the date on which the Term Note shall have been surrendered in compliance
with this SECTION 8.2, and the Person in whose name any certificate or
certificates issuable upon such conversion shall be deemed to have become on
said date the holder of record of the shares represented thereby; provided,
however, that any such surrender on any date when the stock transfer books of
the Borrower shall be closed shall constitute the Person in whose name the
certificates are to be issued as the record holder thereof for all purposes on
the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
the Term Note shall have been surrendered. The Borrower shall deliver
certificates for shares of Series B Special Preferred Stock reflecting such
conversion as directed by the converting Lender not later than 48 hours after
the surrender of the Term Note in accordance herewith.
SECTION 8.3. EFFECT ON RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE. In the event of (i) any reclassification or change of
outstanding shares of Borrower Common Stock (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of subdivision or combination), (ii) any consolidation, merger or
combination of the Borrower with another corporation or entity as a result of
which holders of shares of Borrower Common Stock shall be entitled to receive
securities or other property (including cash) with respect to or in exchange
for such shares or (iii) any sale or conveyance of the property of the Borrower
as, or substantially as, an entirety to any other corporation or entity as a
result of which holders of shares of Common Stock shall be entitled to receive
securities or other property (including cash) with respect to or in exchange
for such shares, then the Borrower or the successor or purchasing corporation
or entity, as the case may be, shall enter into a supplemental agreement
providing that the Term Notes shall be convertible into the kind and amount of
securities or other property (including cash) receivable upon such
reclassification, exchange, consolidation, merger, combination, sale or
conveyance by a holder of a number of shares issuable upon conversion of the
Term Notes immediately prior to such reclassification, exchange, consolidation,
merger, combination, sale or conveyance. Such supplemental agreement shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 8. The above
provision of this SECTION 8.3 shall similarly apply to successive
reclassifications, exchanges, consolidations, mergers, combinations, sales or
conveyances.
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SECTION 8.4. TAXES ON SHARES ISSUED. The issuance of stock
certificates on conversions of the Term Notes shall be made without charge to
the converting Lender for any tax in respect of the issuance thereof. The
Borrower shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of a stock
certificate in any name other than that of the converting Lender.
SECTION 8.5. RESERVATION OF SHARES; SHARES TO BE FULLY
PAID; COMPLIANCE WITH GOVERNMENT REQUIREMENTS; LISTING OF SHARES.
(a) The Borrower shall reserve, out of its authorized but
unissued shares or its shares held in treasury, sufficient shares of Series B
Special Preferred Stock to provide for the conversion in full of all Term
Notes that may be outstanding under this Agreement.
(b) The Borrower covenants that all shares of Series B
Special Preferred Stock which may be issued upon conversion of Term Notes will
upon issuance be fully paid and nonassessable by the Borrower and free from all
taxes, liens and charges with respect to the issue thereof.
(c) The Borrower covenants that if any shares to be
provided for the purpose of conversion of Term Notes require registration with
or approval of any governmental authority under any applicable federal or state
law (excluding federal or state securities laws) before such shares may be
validly issued upon conversion, the Borrower will in good faith and as
expeditiously as possible endeavor to secure such registration or approval, as
the case may be.
(d) The Borrower covenants that if at any time shares of
Common Stock shall be listed on the New York Stock Exchange or any other
national securities exchange or on the Nasdaq Stock Market, the Borrower will,
if permitted by the rules of such exchange or market list and keep listed so
long as the shares shall be so listed on such exchange or market, all shares of
Common Stock into which Series B Special Preferred Stock may be converted.
SECTION 8.6. NOTICE TO LENDERS PRIOR TO CERTAIN ACTIONS.
In the event:
(a) the Borrower shall declare a dividend (or any other
distribution) on its shares (other than in cash out of retained earnings); or
(b) the Borrower shall authorize the granting to the
holders of its shares generally of rights or warrants to subscribe for or
purchase any shares of any class of its Stock or any other rights or warrants;
or
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(c) of any reclassification of shares of the Borrower
(other than a subdivision or combination of its outstanding shares, or a change
in par value, or from par value to no par value, or from par value to par
value), or of any consolidation or merger to which the Borrower is a party and
for which approval of any shareholders of the Borrower is required, or of the
sale or transfer of all or substantially all of the assets of the Borrower or;
(d) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Borrower;
then in each such case, the Borrower shall cause to be mailed to each Lender,
as promptly as possible but in any event at least fifteen (15) days prior to
the applicable date hereinafter specified, a notice prepared by the Borrower
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, rights or warrants, or if a record is not to be taken,
the date as of which the holders of shares of record to be entitled to such
dividend, distribution, rights or warrants are to be determined, or (y) the
date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective or
occurring and the date as of which it is expected that holders of shares of
record shall be entitled to exchange their shares for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up.
ARTICLE 9.
THE AGENT
SECTION 9.1. ACTIONS. Each Lender and the holder of each
Note authorize the Agent to act on behalf of such Lender or holder under this
Agreement and any other Loan Document and, in the absence of other written
instructions from the Required Lenders received from time to time by the Agent
(with respect to which the Agent agrees that it will, subject to the last two
sentences of this SECTION 9.1, comply, except as otherwise reasonably advised
by counsel), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto.
Each Lender (including, without limitation, ING in its capacity as a Lender)
agrees (which agreement shall survive any termination of this Agreement) to
indemnify the Agent, severally but not jointly PRO RATA according to such
Lender's aggregate percentage of the Revolving Loan Commitments and the
principal amount of outstanding Term Loans, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any
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kind or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of this
Agreement, the Notes, or any other Loan Document, including the reimbursement
of the Agent for all out-of-pocket expenses (including attorneys' fees)
incurred by the Agent hereunder or in connection herewith or in enforcing the
Obligations of the Borrower under this Agreement or any other Loan Document, in
all cases as to which the Agent is not reimbursed by the Borrower; PROVIDED
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements determined by a court of competent
jurisdiction in a final proceeding to have resulted primarily from the Agent's
gross negligence or wilful misconduct. Notwithstanding any other provision of
this Agreement to the contrary, the Agent shall not be required to take any
action hereunder or under any other Loan Document, or to prosecute or defend
any suit in respect of this Agreement or any other Loan Document, unless it is
indemnified to its reasonable satisfaction by the Lenders against loss, costs,
liability and expense. If any indemnity in favor of the Agent shall become
impaired, it may call for additional indemnity and cease to do the acts
indemnified against until such additional indemnity is given.
SECTION 9.2. FUNDING RELIANCE, ETC. Unless the Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
5:00 p.m., New York City time, on the day prior to a Borrowing that such Lender
will not make available the amount which would constitute its Revolving
Percentage of such Borrowing on the date specified therefor, the Agent may
assume that such Lender has made such amount available to the Agent and, in
reliance upon such assumption, make available to the Borrower a corresponding
amount; PROVIDED, HOWEVER, that the Agent shall have no obligation to do so.
If such amount is made available by such Lender to the Agent on a date after
the date of such Borrowing, such Lender shall pay to the Agent on demand
interest on such amount at the Federal Funds Rate for the number of days from
and including the date of such Borrowing to the date on which such amount
becomes immediately available to the Agent, together with such other
compensatory amounts as may be required to be paid by such Lender to the Agent
pursuant to the Rules for Interbank Compensation of the Council on
International Banking or the Clearinghouse Compensation Committee, as the case
may be, as in effect from time to time. A statement of the Agent submitted to
any Lender with respect to any amounts owing under this SECTION 9.2 shall be
conclusive, in the absence of manifest error. If such amount is not in fact
made available to the Agent by such Lender within three Business Days after the
date of such Borrowing, the Agent shall be entitled to recover such amount,
with interest thereon at the rate per annum then applicable to the Loans
comprising such Borrowing, within five Business Days after demand, from the
Borrower.
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SECTION 9.3. EXCULPATION. Neither the Agent nor any of
its directors, officers, employees or agents shall be liable to any Lender for
any action taken or omitted to be taken by it under this Agreement, the Notes,
or any Loan Document, or in connection herewith or therewith, except for its
own wilful misconduct or gross negligence. The Agent shall not be responsible
to any Lender for any recitals, statements, representations or warranties
herein or in any certificate or other document delivered in connection herewith
or for the authorization, execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, or sufficiency of any of the Loan
Documents, the financial condition of the Borrower or any Subsidiary or the
condition or value of any of the Collateral, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of any of the Loan Documents, the financial condition of the
Borrower or any Subsidiary or the existence or possible existence of any
Default. The Agent shall be entitled to rely upon advice of counsel
concerning legal matters and upon any notice, consent, certificate, statement
or writing which it believes to be genuine and to have been presented by a
proper Person.
SECTION 9.4. SUCCESSOR. The Agent may resign as such at
any time upon at least thirty (30) days' prior notice to the Borrower and all
Lenders, such resignation not to be effective until a successor Agent is in
place. The Agent shall be required to resign, upon the written request of the
Required Lenders, if it holds less than $10,000,000 of the Loans and
Commitments outstanding; PROVIDED, HOWEVER, that the Agent shall not be
required to resign pursuant to the terms of this sentence if the Agent's
Revolving Percentage plus its Term Percentage is equal to or greater than that
of each other Lender. If the Agent at any time resigns, the Required Lenders
may appoint another Lender as a successor Agent which shall thereupon become
the Agent hereunder. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent's giving notice of resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be
one of the Lenders or a financial institution reasonably acceptable to the
Borrower organized under the laws of the United States and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
be entitled to receive from the retiring Agent such documents of transfer and
assignment as such successor Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement and the other Loan Documents.
SECTION 9.5. LOANS BY THE AGENT. The Agent shall have the
same rights and powers with respect to (a) the Loans made by it
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or any of its Affiliates and (b) the Notes held by it or any of its Affiliates,
as any Lender and may exercise the same as if it were not the Agent.
SECTION 9.6. CREDIT DECISIONS. Each Lender acknowledges
that it has, independently of the Agent and each other Lender, and based on
such financial information and such other documents, information and
investigations as it has deemed appropriate, made its own credit decision to
extend its Commitments, and to make the Loans. Each Lender also acknowledges
that it will, independently of the Agent and each other Lender, and based on
such other documents, information and investigations as it shall deem
appropriate at any time, continue to make its own credit decisions as to
exercising or not exercising from time to time any rights and privileges
available to it under this Agreement or any other Loan Document.
SECTION 9.7. COPIES, ETC. The Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Agent by the Borrower pursuant to the terms of this Agreement.
The Agent will distribute to each Lender each Instrument received for its
account and copies of all other communications received by the Agent from the
Borrower for distribution to the Lenders by the Agent in accordance with the
terms of this Agreement. Notwithstanding anything herein contained to the
contrary, all notices to and communications with the Borrower under this
Agreement and the other Loan Documents shall be effected by the Lenders through
the Agent.
ARTICLE 10.
MISCELLANEOUS
SECTION 10.1. WAIVERS, AMENDMENTS, ETC.
(a) The provisions of this Agreement and of each Loan
Document may from time to time be amended, modified or waived, if such
amendment, modification or waiver is in writing and, (x) in the case of an
amendment or modification, is consented to by the Borrower and the Required
Lenders or (y) in the case of a waiver of any obligation of the Borrower or
compliance with any prohibition contained in this Agreement, is consented to by
the Required Lenders; PROVIDED, HOWEVER, that no such amendment, modification
or waiver:
(i) which would modify any requirement hereunder that any
particular action be taken by all the Lenders or by the Required
Lenders shall be effective unless consented to by each Lender;
(ii) which would modify this SECTION 10.1, change the
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definition of "Required Lenders," increase the Revolving Loan Commitment Amount
or change any Revolving Percentage or Term Percentage for any Lender, reduce
any fees payable to the Lenders described in ARTICLE 2 and ARTICLE 3, extend
the Revolving Loan Commitment Termination Date or subject any Lender to any
additional obligations shall be made without the consent of each Lender;
(iii) which would extend the due date for, or reduce the
amount of, any payment or prepayment of principal of or interest on
any Loan (or reduce the principal amount of or rate of interest on any
Loan) shall be made without the consent of the holder of the Note
evidencing such Loan; or
(iv) which would affect adversely the interests, rights,
compensation or obligations of the Agent QUA the Agent shall be made
without consent of the Agent.
(b) No failure or delay on the part of the Agent, any
Lender or the holder of any Note in exercising any power or right under this
Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
No notice to or demand on the Borrower in any case shall entitle it to any
notice or demand in similar or other circumstances. No waiver or approval by
the Agent, any Lender, or the holder of any Note under this Agreement or any
other Loan Document shall, except as may be otherwise stated in such waiver or
approval, be applicable to subsequent transactions. No waiver or approval
hereunder shall require any similar or dissimilar waiver or approval thereafter
to be granted hereunder.
(c) Neither any Lender nor the Agent shall be under any
obligation to marshal any assets in favor of the Borrower or any other party or
against or in payment of any or all of the Obligations. Recourse for security
shall not be required at any time. To the extent that the Borrower makes a
payment or payments to the Agent or the Lenders, or the Agent or the Lenders
enforce their security interests or exercise their rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently for any reason invalidated, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
SECTION 10.2. NOTICES. All notices hereunder shall be
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in writing or by telecopy and shall be sufficiently given to the Agent, the
Lenders or the Borrower if addressed or delivered to them at the following
addresses:
If to the Agent: ING
135 East 57th Street
New York, New York 10022
Attention: Chief Credit Officer
Telecopier No.: (212) 750-8935
with copies to: ING
Atlanta Office
200 Galleria Parkway
Suite 950
Atlanta, Georgia 30339
Telecopier No.: (770) 951-1005
and a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Hector E. Llorens, Jr. Esq.
Telecopier No.: (404) 572-5100
If to any other Lender: At its address set forth beneath its name on the
signature pages hereof
If to the Borrower: PhoneTel Technologies, Inc.
650 Statler Office Tower
1127 Euclid Avenue
Cleveland, Ohio 44115
Attention: Chief Executive Officer,
Chief Financial Officer and
General Counsel
Telecopier No.: (216) 241-2574
with a copy to: Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Stephen M. Banker, Esq.
Telecopier No.: (212) 735-2000
or at such other address as any party may designate to any other party by
written notice. All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; when
received, if deposited in the mail, postage prepaid; when transmission is
verified, if telecopied; and on the next Business Day, if timely delivered to
an air courier guaranteeing overnight delivery.
SECTION 10.3. COSTS AND EXPENSES. The Borrower agrees to
pay all reasonable out-of-pocket expenses of the Agent and the Lenders party to
this Agreement on the Closing Date for the
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negotiation, preparation, execution, and delivery of this Agreement and each
other Loan Document, including schedules and exhibits, and any amendments,
waivers, consents, supplements, terminations, releases or other modifications
to this Agreement or any other Loan Document as may from time to time hereafter
be required (including the reasonable fees and expenses of counsel for the
Agent and the Lenders party to this Agreement on the Closing Date, or of any
consultants or other experts retained by the Agent and the Lenders party to
this Agreement on the Closing Date from time to time in connection therewith)
whether or not the transactions contemplated hereby are consummated, and to pay
all reasonable expenses of the Agent and the Lenders party to this Agreement on
the Closing Date (including reasonable fees and expenses of counsel to the
Agent and the Lenders party to this Agreement on the Closing Date, or of any
consultants or other experts retained by the Agent and the Lenders party to
this Agreement on the Closing Date) incurred in connection with the preparation
and review of the form of any Instrument relevant to this Agreement, the Notes
or any other Loan Document. The Borrower also agrees to pay and hold the Agent
and the Lenders harmless from any stamp, documentary, intangibles, transfer or
similar taxes or charges, and all recording or filing fees with respect to the
Loan Documents or any payments to be made thereunder and all title insurance
premiums, surveyors costs and valuation fees, and to reimburse the Agent and
each Lender upon demand for all reasonable out-of-pocket expenses (including
reasonable attorneys' fees and expenses) incurred by the Agent or such Lender
in enforcing the Obligations of the Borrower or any Subsidiary under this
Agreement or any other Loan Document or related Document or in connection with
any restructuring or "work-out" of any Obligations.
SECTION 10.4. INDEMNIFICATION. In consideration of the
execution and delivery of this Agreement by the Agent and each Lender, the
making of the Term Loan and the extension of the Revolving Loan Commitment, the
Borrower hereby indemnifies, exonerates and holds the Agent and each Lender,
each of their respective successors and assigns, each of the respective
officers, directors, employees, partners, attorneys and agents of the Agent and
each Lender and each of their respective successors and assigns (collectively,
the "LENDER PARTIES") free and harmless from and against any and all actions,
causes of action, suits, losses, costs, liabilities (including, but not limited
to, Environmental Liabilities and Costs), damages and expenses (irrespective of
whether such Lender Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and disbursements
(the "INDEMNIFIED LIABILITIES"), incurred by the Lender Parties or any of them
or asserted or awarded against the Lender Parties or any of them as a result
of, or arising out of, or relating to:
(a) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of any Loan,
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including, without limitation, the Acquisitions;
(b) the use of any of the proceeds of the Loans by the
Borrower for any other purpose;
(c) any information furnished by the Borrower in
connection with the syndication of this Agreement;
(d) the making of any claim by any investment banking
firm, broker or third party in each case claiming through the Borrower or any
of its Subsidiaries or as a result of their relationship to such parties that
it is entitled to compensation from the Agent or any Lender in connection with
this Agreement;
(e) the entering into and performance of this Agreement
and any other Loan Document by any of the Lender Parties (other than the breach
by such Lender Party of this Agreement);
(f) the existence of any contaminant, in, under, on or
otherwise affecting any property owned, used, operated, or leased by Borrower
or any Subsidiary in the past, present, or future or any surrounding areas
affected by such property, regardless of whether the existence of the
contaminant is related to the past, present, or future operations of the
Borrower and its Subsidiaries, or their predecessors in interest or any other
Person; any Environmental Liabilities and Costs related to any property owned,
used, operated, or leased by Borrower or any Subsidiary in the past, present,
or future; any Environmental Liabilities and Costs related to the past,
present, or future operations of the Borrower or any Subsidiaries; any alleged
violations of any Environmental Law related to any property owned, used,
operated, or leased by Borrower or any Subsidiary in the past, present, or
future; any alleged violations of any Environmental Law related to the past,
present, or future operations of the Borrower or any Subsidiaries; the
performance of any remedial action that is related to any property owned, used,
operated, or leased by Borrower or any Subsidiaries in the past, present, or
future; the performance of any remedial action that is related to the past,
present, or future operations of the Borrower or any Subsidiaries; and the
imposition of any Lien on any property affected by this Agreement or any of the
other Loan Documents arising from any Environmental Liabilities or Costs;
(g) the breach in any material respect by Borrower of any
representation or warranty set forth in this Agreement or any Loan Document;
(h) the failure of Borrower to comply in any material
respect with any term, condition, or covenant set forth in this Agreement or
any Loan Document; or
(i) any claim, litigation, investigation or proceeding
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relating to any of the foregoing, whether or not the Agent or any Lender (or
any of their respective officers, directors, partners, employees or agents) is
a party thereto;
EXCEPT FOR any such Indemnified Liabilities arising for the account of a
particular Lender Party by reason of the relevant Lender Party's bad faith,
gross negligence or wilful misconduct as determined by a final and
nonappealable decision of a court of competent jurisdiction. If and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. The foregoing indemnity shall become effective immediately
upon the execution and delivery hereof and shall remain operative and in full
force and effect notwithstanding the consummation of the transactions
contemplated hereunder, the repayment of any of the Loans made hereunder, the
invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Document, or any investigation made by or on behalf of any
Lender or the Agent.
SECTION 10.5. SURVIVAL. The obligations of the Borrower
under SECTIONS 2.4, 3.5, 10.3 and 10.4, and the obligations of the Lenders
under SECTION 9.1, shall in each case survive any termination of this
Agreement. The representations and warranties made by the Borrower in this
Agreement, the Notes and in each other Loan Document shall survive the
execution and deliver of this Agreement, the Notes and each such other Loan
Document.
SECTION 10.6. SEVERABILITY. Any provision of this
Agreement, the Notes or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, the Notes or such
other Loan Document or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 10.7. HEADINGS. The various headings of this
Agreement, the Notes and of each other Loan Document are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement, the Notes or such other Loan Document or any provisions hereof or
thereof.
SECTION 10.8. COUNTERPARTS, EFFECTIVENESS, ETC. This
Agreement may be executed by the parties hereto in several counterparts, each
of which shall be executed by the Borrower and the Agent and be deemed to be an
original and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrower and each Lender (or notice thereof
satisfactory to the Agent) shall have been received by the Agent and notice
thereof
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shall have been given by the Agent to the Borrower and each Lender.
SECTION 10.9. GOVERNING LAW; ENTIRE AGREEMENT. (a) THIS
AGREEMENT AND THE NOTES SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement, the
Notes and the other Loan Documents constitute the entire understanding among
the parties hereto with respect to the subject matter hereof and supersede any
prior agreements, written or oral, with respect thereto.
(b) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR RELATED DOCUMENT, AND EACH HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. THE BORROWER
AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE WITH RESPECT TO ANY SUCH
ACTION OR PROCEEDING BROUGHT BY IT AGAINST THE AGENT OR ANY LENDER. EACH PARTY
TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING.
(c) The Borrower hereby irrevocably designates, appoints
and empowers CT Corporation System, whose present address is 1633 Broadway, New
York, New York 10019, as its authorized agent to receive, for and on its
behalf and its property, service of process in the State of New York when and
as such legal actions or proceedings may be brought in the courts of the State
of New York or of the United States of America sitting in New York, and such
service of process shall be deemed complete upon the date of delivery thereof
to such agent whether or not such agent gives notice thereof to the Borrower,
or upon the earliest of any other date permitted by applicable law. The
Borrower shall furnish the consent of CT Corporation System so to act to the
Agent on or prior to the Closing Date. It is understood that a copy of said
process served on such agent will as soon as practicable be forwarded to the
Borrower, at its address set forth below, but its failure to receive such copy
shall not affect in any way the service of said process on said agent as the
agent of the Borrower. The Borrower irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or
proceeding by the mailing of the copies thereof by certified mail, return
receipt requested, postage prepaid, to it at its address set forth herein, such
service to become effective upon the earlier of (i) the date 10 calendar days
after such mailing or (ii) any earlier date permitted by applicable law. The
Borrower agrees that it will at all times continuously maintain an agent to
receive service of process in the State of New York on behalf of itself and its
properties and in the event that, for any reason, the agent named above or its
successor shall no longer serve as its agent to receive service of process in
the State of New York on its behalf,
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it shall promptly appoint a successor so to serve and shall advise the Agent
and the Lenders thereof (and shall furnish to the Agent the consent of any
successor agent so to act). Nothing in this SECTION 10.9 shall affect the
right of the Agent or any Lender to bring proceedings against the Borrower in
the courts of any other jurisdiction or to serve process in any other manner
permitted by applicable law.
SECTION 10.10. SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; PROVIDED, HOWEVER, that the Borrower may not
assign or transfer its rights or obligations hereunder without the prior
written consent of all Lenders; and the rights of sale, assignment and transfer
of the Lenders are subject to SECTION 10.11.
SECTION 10.11. SALE AND TRANSFERS, PARTICIPATIONS, ETC.
(a) Any Lender may at any time sell to one or more
Participants participating interests in any Loan owing to such Lender, any Note
held by such Lender, the Revolving Loan Commitment of such Lender, or any other
interest of such Lender hereunder. In the event of any such sale by a Lender
of participating interests to a Participant, such Lender's obligations under
this Agreement shall remain unchanged and such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Note for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. The Borrower
agrees that if amounts outstanding under this Agreement and the Notes are due
or unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of setoff in respect of its participating interest in amounts
owing under this Agreement and any Note to the same extent as if the amount of
its participating interest were owing directly to it as a Lender under this
Agreement or any Note, PROVIDED that such right of setoff shall be subject to
the approval of the Required Lenders and to the obligations of such Participant
to share with the Lenders, and the Lenders agree to share with such
Participant, as provided in SECTION 3.7 as if the Participant were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of (i) SECTION 10.4 and (ii) SECTIONS 2.4 and 3.6, with respect to
its participation in the Commitments and the Loans outstanding from time to
time; PROVIDED, that no Participant shall be entitled to receive any greater
amount pursuant to the Sections referred to in clause (ii) than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred. No Lender shall grant
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any participation under which the Participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Loan Document except to
the extent such amendment or waiver would (i) extend the due date for, or
reduce the amount of, any payment or prepayment of principal of or interest on
the Loan or reduce the principal amount of or rate of interest on the Loan
(except in connection with a waiver of interest at the Post-Default Rate) (it
being understood that a waiver of any Default or Event of Default shall not
constitute a change in the terms of such participation, and that an increase in
the Loan shall be permitted without consent of any Participant if the
Participant's participation is not increased as a result thereof), (ii) release
a substantial part of the Collateral, or (iii) consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement.
(b) Subject to the provisions of clause (g) of this
SECTION 10.11, with the consent of the Required Lenders and the consent of the
Borrower (which consent, in all instances, shall not be unreasonably withheld
or delayed), any Lender may at any time sell to any Purchasing Lender all or
any part in a minimum amount of $1,000,000, of its rights and obligations under
this Agreement and the Notes pursuant to a Transfer Supplement, executed by
such Purchasing Lender, such transferor Lender, the Agent and the Borrower.
Upon (i) such execution of such Transfer Supplement, and (ii) delivery of a
fully executed copy thereof to the Borrower, such Purchasing Lender shall for
all purpose be a Lender party to this Agreement and shall have all the rights
and obligations of a Lender under this Agreement, to the same extent as if it
were an original party hereto with a Revolving Percentage and Term Percentage
as set forth in such Transfer Supplement, and no further consent or action by
the Borrower, the Lenders or the Agent shall be required. Such Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of Revolving Percentages and Term Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Notes. Upon
the consummation of any transfer to a Purchasing Lender pursuant to this
paragraph (b), the transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that, if required, replacement Notes are issued to
such transferor Lender and new Notes to the Purchasing Lender in the amount
equal to their respective Revolving Loan Commitments and outstanding Loans, as
appropriately adjusted pursuant to such Transfer Supplement.
(c) The Agent shall maintain at its address referred to
herein a copy of each Transfer Supplement delivered to it and the Register for
the recordation of the names and addresses of the Lenders and the Revolving
Loan Commitment of, and principal amount of the Loans owing to, each Lender
from time to time. The entries
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in the Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as the owner of the Loans recorded therein for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of a Transfer Supplement executed by
a transferor Lender, the Agent and a Purchasing Lender together with payment by
such Purchasing Lender to the Agent, for the account of the Agent and not for
the account of the Lenders, of a registration and processing fee of $2,500, and
the Notes subject to such Transfer Supplement, the Agent shall (i) accept such
Transfer Supplement, (ii) record the information therein in the Register and
(iii) give prompt notice of such acceptance and recordation to the Lenders and
the Borrower.
(e) If, pursuant to this SECTION 10.11, any interest in
this Agreement or any Note is transferred to any Participant or Purchasing
Lender which is organized under the laws of any jurisdiction other than the
United States or any State thereof, the transferor Lender shall cause such
Participant or Purchasing Lender, concurrently with the effectiveness of such
transfer, (i) to represent to the transferor Lender (for the benefit of the
transferor Lender, the Agent and the Borrower) that under applicable law and
treaties no taxes will be required to be withheld by the Agent, the Borrower or
the transferor Lender with respect to any payments to be made to such
Participant or Purchasing Lender in respect of the Loans or Commitments, (ii)
to furnish to the transferor Lender, the Agent and the Borrower two properly
executed original Internal Revenue Service Forms 4224 or 1001 (or any
successor forms) and properly executed Internal Revenue Service Forms W-8 and
W-9, as the case may be, (wherein such Participant or Purchasing Lender claims
entitlement to complete exemption from the United States federal withholding
tax on all interest payments hereunder and all fees payable under SECTION 2.3)
and (iii) to agree (for the benefit of the transferor Lender, the Agent and the
Borrower) to provide the transferor Lender, the Agent and the Borrower new
Internal Revenue Service Forms 4224 or 1001 upon the expiration or obsolescence
of any previously delivered form or after the occurrence of any event requiring
a change in the most recent forms delivered by it to the Transferor Lender, the
Agent and the Borrower, and comparable statements in accordance with applicable
United States laws and regulations and amendments duly executed and completed
by such Participant or Purchasing Lender, and to comply from time to time with
all applicable United States laws and regulations with regard to such
withholding tax exemption.
(f) Notwithstanding anything to the contrary set forth in
this SECTION 10.11, but subject to the provisions of clause (g)
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of this SECTION 10.11, (i) any Lender may sell to any of its Affiliates all or
any part of its rights and obligations under this Agreement and the Notes, (ii)
any Lender may create a security interest in all or any portion of its rights
under this Agreement (including, without limitation, the Loans owing to it and
the Notes held by it) in favor of the Federal Reserve Bank in accordance with
Regulation A of the F.R.S. Board, and (iii) upon the occurrence and during the
continuance of an Event of Default, any Lender may sell to any Purchasing
Lender all or any part of its rights and obligations under this Agreement and
the Notes, in the case of clause (i) or (iii) above, notwithstanding that the
Borrower does not consent to such sale, provided such Lender has obtained the
consent of the Agent (which consent shall not be unreasonably withheld or
delayed) and otherwise meets the requirements of this SECTION 10.11. The Agent
agrees to waive the registration and processing fee set forth in clause (d) of
this SECTION 10.11 in connection with the exercise by any Lender of its rights
under clause (i) of the preceding sentence prior to April 15, 1996.
(g) If any transfer of a Term Note is not made pursuant
to an effective registration statement under the Securities Act, the Lender
desiring to transfer such Term Note will, if reasonably requested by the
Borrower, deliver to the Borrower an opinion of counsel, which may be counsel
to such Lender but which counsel must be reasonably satisfactory to the
Borrower (provided that King & Spalding and Lowenstein, Sandler, Kohl, Fisher &
Boylan shall be deemed reasonably satisfactory), reasonably satisfactory in
form, scope and substance to the Borrower, that such Term Note may be sold
without registration under the Securities Act, and the Purchasing Lender shall
upon purchase of such Term Note or portion thereof be deemed to have affirmed
and agreed to the investment representation set forth in SECTION 2.5. Each
Lender agrees that its Term Note will bear the following legend:
"THIS TERM NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION,
OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO
THE HOLDER) AS TO AN EXEMPTION, FROM THE
REGISTRATION PROVISIONS OF SAID ACT OR LAWS."
Each Lender further agrees that its Term Note will bear the following legend:
"THIS TERM NOTE IS SUBJECT TO THE TERMS OF A CREDIT
AGREEMENT, DATED AS OF MARCH 15, 1996, BETWEEN
PHONETEL TECHNOLOGIES, INC. (THE "BORROWER"), THE
LENDERS NAMED
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THEREIN, AND INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION, AS AGENT FOR THE LENDERS, COPIES
OF EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF
THE BORROWER. ANY SALE OR TRANSFER OF THE SECURITIES
EVIDENCED BY THIS TERM NOTE IS SUBJECT TO THE TERMS
OF SAID CREDIT AGREEMENT AND ANY SALE OR TRANSFER OF
SUCH SECURITIES IN VIOLATION OF SAID CREDIT AGREEMENT
SHALL BE INVALID."
(h) If any transfer of any shares of Series B Special
Preferred Stock or Common Stock issued upon conversion of Series B Special
Preferred Stock (any such shares, "TERM NOTE SHARES") is not made pursuant to
an effective registration statement under the Securities Act, the holder
desiring to transfer such Term Note Shares will, if reasonably requested by the
Borrower, deliver to the Borrower an opinion of counsel, which may be counsel
to such holder but which counsel must be reasonably satisfactory to the
Borrower (provided that King & Spalding and Lowenstein, Sandler, Kohl, Fisher &
Boylan shall be deemed reasonably satisfactory), reasonably satisfactory in
form, scope and substance to the Borrower, that such Term Note Shares may be
sold without registration under the Securities Act, as well as (i) an
investment covenant reasonably satisfactory to the Borrower signed by the
proposed transferee (except that no such covenant will be required in
connection with a transfer effected in accordance with Rule 144A under the
Securities Act), and (ii) an agreement by such transferee to the impression of
the restrictive legends set forth below on the Term Note Shares.
All Term Note Shares will bear the following legend (the "SECURITIES LEGEND"):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS, SAID
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION, OR AN
OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE
HOLDER) AS TO AN EXEMPTION, FROM THE REGISTRATION
PROVISIONS OF SAID ACT OR LAWS."
Notwithstanding the foregoing provisions of this clause (h) of SECTION 10.11,
the restrictions upon the transferability of Term Note Shares and the
Securities Legend requirements set forth in this clause (h) of this SECTION
10.11 shall terminate as to any such Term Note Shares (i) when and so long as
such Term Note Shares shall have been effectively registered under the
Securities Act and
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disposed of pursuant thereto or (ii) when the Borrower shall have received an
opinion of counsel reasonably satisfactory to it that such Securities Legend is
not required in order to ensure compliance with the Securities Act. Whenever
the restrictions imposed by this clause (h) of SECTION 10.11 shall terminate
as to any Term Note Shares as hereinabove provided, the holder thereof shall be
entitled to receive from the Borrower, at the expense of the Borrower, a new
certificate or certificates for such Term Note Shares bearing the following
legend in place of the Securities Legend set forth above:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE TERMINATED
ON ______________, 19__, AND ARE OF NO FURTHER FORCE
AND EFFECT."
In addition, each certificate representing Term Note Shares will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS OF CLAUSE (H) OF SECTION 10.11
OF A CREDIT AGREEMENT, DATED AS OF MARCH 15, 1996,
BETWEEN PHONETEL TECHNOLOGIES, INC. (THE "COMPANY"),
THE LENDERS NAMED THEREIN, AND INTERNATIONALE
NEDERLANDEN (U.S.) CAPITAL CORPORATION ("ING") AS
AGENT FOR THE LENDERS, COPIES OF EACH OF WHICH ARE ON
FILE AT THE MAIN OFFICE OF THE COMPANY. ANY SALE OR
TRANSFER OF THE SECURITIES EVIDENCED BY THIS
CERTIFICATE IS SUBJECT TO THE TERMS OF SAID AGREEMENT
AND ANY SALE OR TRANSFER OF SUCH SECURITIES IN
VIOLATION OF SAID AGREEMENT SHALL BE INVALID."
SECTION 10.12. OTHER TRANSACTIONS. Nothing contained herein
shall preclude the Agent or any other Lender from engaging in any transaction,
in addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 10.13. CONFIDENTIALITY. (a) The Lenders and the
Agent shall treat any information concerning the Borrower (whether prepared by
the Borrower, its advisors or otherwise) which has been or will be furnished by
or on behalf of the Borrower or any Subsidiary thereof (herein collectively
referred to as the "CONFIDENTIAL INFORMATION") in accordance with the customary
procedures for handling confidential information of this nature and
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will not willfully disclose any Confidential Information to any other party,
except as otherwise provided herein. The Confidential Information will be used
solely in connection with the transactions contemplated by the Loan Documents
or as otherwise authorized by the Borrower. The term "Confidential
Information" does not include information which (i) is or becomes generally
available to the public other than as a result of a disclosure by the Agent,
the Lenders or their respective affiliates, directors, officers or employees,
or (ii) becomes available on a nonconfidential basis from a source other than
the Borrower, any of its Subsidiaries, or their advisors, provided that such
source is not known by the Agent or the Lenders to be bound by a
confidentiality agreement with or other obligation of secrecy to the Borrower
or any of its Subsidiaries.
(b) Notwithstanding the foregoing, (i) Confidential
Information may be disclosed to the Agent's and Lenders' affiliates, directors,
partners, officers, employees and advisors who are in a confidential
relationship with such Person or who are informed of the confidential nature of
such information, (ii) Confidential Information may be disclosed as reasonably
required by any proposed syndicate member or any proposed transferee or
participant in connection with the contemplated transfer of any Note or
participation therein or of any Loan Document or related document, PROVIDED
that any such proposed syndicate member or proposed transferee or participant
shall have agreed in writing for the Borrower's benefit to be bound by the
terms of this SECTION 10.13, and shall agree to return any Confidential
Information, and will not retain any copies, extracts or other reproductions in
whole or in part of such Confidential Information, if it does not become a
syndicate member, transferee or participant, (iii) Confidential Information may
be disclosed to the extent requested or required by bank regulators or auditors
or any administrative body or commission to whose jurisdiction the Agent or a
Lender may be subject, (iv) Confidential Information may be disclosed to the
extent required by law, regulation, subpoena, judicial order or legal process,
provided that notice of such requirement or order shall be promptly furnished
to the Borrower unless such notice is legally prohibited, (v) Confidential
Information may be disclosed to the extent required by the rules of any
securities exchange on which securities of the Agent or any Lender are listed
and traded, (vi) Confidential Information may be disclosed in connection with
the enforcement by the Agent or any Lender of its rights under the Loan
Documents or in connection with any litigation between any Loan Party and the
Agent or any Lender with respect to the Loan or any Loan Document, and (vii)
Confidential Information may be disclosed to the extent the Borrower consents
to such disclosure.
SECTION 10.14. CHANGE IN ACCOUNTING PRINCIPLES. If
(a) any changes in accounting principles from those used
in the preparation of the financial statements referred to in
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clause (a)(i) of SECTION 5.4 hereafter occur as a result of the promulgation of
rules, regulations, pronouncements or opinions by the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) result in a change in
the method of calculation of financial covenants, standards or terms found in
this Agreement; or
(b) there is any change in the Borrower's Fiscal Year
with the Required Lenders' prior written consent pursuant to SECTION 6.2.16
hereof;
the parties hereto agree to enter into negotiations in order to amend such
financial covenants, standards or terms so as to equitably reflect such changes
with the desired result that the evaluations of the Borrower's financial
condition shall be the same after such changes as if such changes had not been
made; PROVIDED, HOWEVER, that, until the parties hereto have reached a
definitive agreement on such amendments the Borrower shall not change its
Fiscal Year and the Borrower's financial condition and operations shall
continue to be evaluated on the same principles as those used in the
preparation of the financial statements referred to in clause (a)(i) of SECTION
5.4.
SECTION 10.15. WAIVER OF JURY TRIAL, ETC. THE AGENT, THE
LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE
ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE
NOTES OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, SUCH LENDERS,
OR THE BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND
SUCH LENDERS ENTERING INTO THIS AGREEMENT.
SECTION 10.16. LIMITATION OF LIABILITY. Neither the Agent,
the Lenders nor any Affiliate thereof shall have any liability with respect to,
and THE BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON, ANY CLAIM
FOR ANY SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
SUFFERED BY THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY
RELATED TO THIS AGREEMENT, THE LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED
HEREIN, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH.
SECTION 10.17. USURY SAVINGS CLAUSE. Notwithstanding
anything to the contrary in this Agreement or any other Loan Document, if at
any time any rate of interest accruing on any Obligation, when aggregated with
all amounts payable by the Borrower or any other Loan Party under any of the
Loan Documents that are deemed or construed to be interest accrued or accruing
on such Obligation under applicable law, exceeds the highest rate of interest
permissible under any law which a court of competent
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jurisdiction shall, in a final determination, deem applicable to such Lender
with respect to such Obligation (each a "MAXIMUM LAWFUL RATE"), then in such
event and so long as the Maximum Lawful Rate would be so exceeded, such rate of
interest shall be reduced to the Maximum Lawful Rate; PROVIDED that if at any
time thereafter such rate of interest accruing on Obligations held by such
Lender is less than the Maximum Lawful Rate, the Borrower shall continue to pay
interest to such Lender at the Maximum Lawful Rate until such time as the total
interest received by such Lender in respect of the Obligations held by it is
equal to the total interest which such Lender would have received had interest
on all Obligations held by such Lender (but for the operation of this SECTION
10.17) accrued at the rate otherwise applicable under this Agreement and the
other Loan Documents. Thereafter, interest payable to such Lender in respect
of the Obligations held by it shall accrue at the applicable rate set forth in
this Agreement or other Loan Documents unless and until such rate again exceeds
the Maximum Lawful Rate, in which event this SECTION 10.17 shall again apply.
In no event, shall the total interest received by any Lender pursuant to the
terms hereof exceed the amount which such Lender could lawfully have received
had interest been calculated for the full term of this Agreement at the Maximum
Lawful Rate. In the event that the Maximum Lawful Rate is calculated pursuant
to this SECTION 10.17, (a) if required by applicable law, such interest shall
be calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made, and (b) if
permitted by applicable law, the Borrower and such Lender shall (i)
characterize any non-principal payment as an expense, fee or premium rather
than as interest, (ii) exclude voluntary prepayments and the effect thereof,
and (iii) amortize, prorate, allocate and spread in equal or unequal parts the
total amount of interest throughout the entire contemplated term of the Loans
so that interest for the entire term of the Loans shall not exceed the Maximum
Lawful Rate. In the event that a court of competent jurisdiction,
notwithstanding the provisions of this SECTION 10.17 shall make a final
determination that any Lender has received interest in excess of the Maximum
Lawful Rate, such Lender shall, to the extent permitted by applicable law,
promptly apply such excess, FIRST to any interest due and outstanding under
this Agreement and the other Loan Documents, SECOND to any principal due and
payable under this Agreement and the Notes, THIRD to the remaining principal
amount of the Notes and FOURTH to other unpaid Obligations held by such
Lender, and thereafter shall refund any excess to the Borrower or as a court of
competent jurisdiction may otherwise order.
SECTION 10.18. CONFLICT IN LOAN DOCUMENTS. To the extent
there is any actual irreconcilable conflict between the provisions of this
Agreement and any other Loan Document, the provisions of this Agreement shall
prevail.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
PHONETEL TECHNOLOGIES, INC.
By:_______________________________
Peter G. Graf
Chairman and
Chief Executive Officer
Attest:____________________________________________
Name:
Title:
[CORPORATE SEAL]
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PERCENTAGE
50% - Revolving INTERNATIONALE NEDERLANDEN (U.S.)
Percentage CAPITAL CORPORATION, AS AGENT AND AS
LENDER
50% - Term Percentage
By:_______________________________
James W. Latimer
Managing Director
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50% - Revolving CERBERUS PARTNERS, L.P., AS LENDER
Percentage
By: Cerberus Associates, L.P., its
50% - Term Percentage general partner
By:__________________________
Stephen Feinberg
General Partner
Address for Notices:
950 Third Avenue
20th Floor
New York, New York 10022
Attention: Mr. Seth P. Plattus
Telecopier No: (212) 421-2847
with a copy to:
Lowenstein, Sandler, Kohl, Fisher & Boylan
65 Livingston Avenue
Roseland, New Jersey 07068-1791
Attention: Robert G. Minion, Esq.
Telecopier No: (201) 992-5820
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SCHEDULE 1
----------
DISCLOSURE SCHEDULE
_______________________________________________________________
ITEM 1 (Transaction Costs)
ITEM 2 (Sources and Uses)
ITEM 3 (Indebtedness to be Refinanced)
ITEM 4 (Litigation)
ITEM 5 (Governmental Licenses)
ITEM 6 (Exceptions to GAAP)
ITEM 7 (Benefit Plans)
ITEM 8 (Labor Controversies)
ITEM 9 (Intellectual Property)
ITEM 10 (Insurance)
ITEM 11 (Indebtedness)
ITEM 12 (Environmental Matters)
ITEM 13 (Consents)
ITEM 14 (Contracts)
ITEM 15 (Employment Contracts)
ITEM 16 (Subsidiaries)
ITEM 17 (Termination of Material Contracts)
ITEM 18 (Existing Indebtedness)
ITEM 19 (Liens)
ITEM 20 (Leases)
ITEM 21 (Existing Investments)
ITEM 22 (Transactions with Affiliates)
ITEM 23 (Take or Pay Contracts)
ITEM 24 (Preemptive Rights, Options, Warrants)
ITEM 25 (Voting and Transfer Agreements)
ITEM 26 (Registration Rights)
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SCHEDULE 2
----------
TELEPHONE PLACEMENT AGREEMENT
____________________________________________________________________________
[Attach PhoneTel's Basic Telephone Placement Agreement]
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SCHEDULE 3
----------
CASH MANAGEMENT SYSTEM
_______________________________________________________________________________
The Borrower agrees to establish on or prior to April 15, 1996 (the
"EFFECTIVE DATE"), and to thereafter maintain at all times, the cash management
system described below:
1. Neither the Borrower nor any of its Subsidiaries shall
maintain any deposit, checking, operating or other bank account except for the
Coin Concentration Account and the Receivables Concentration Account described
below, and those accounts of the Borrower and its Subsidiaries identified below
in paragraph 12. The Borrower shall not permit the aggregate Net Balances in
its Disbursement Account and any other deposit account of the Borrower and its
Subsidiaries (other than the Blocked Accounts and Concentration Accounts), to
exceed on any Business Day $150,000. If as of the close of any Business Day
such Net Balances so exceed $150,000, the Borrower shall make a mandatory
prepayment of the Revolving A Loans and the Revolving B Loans on such Business
Day in the amount of such excess. As used herein "NET BALANCE" means the
amount of collected funds in an account less the amount of all unpaid checks,
drafts and other items drawn on such account.
2. Commencing on the Effective Date, the Borrower and its
Subsidiaries shall deposit or cause to be deposited, on the date of receipt
thereof, all cash collected from Telephones into one or more accounts
identified below in paragraph 12 as "Blocked Accounts" (collectively, the
"BLOCKED ACCOUNTS").
3. On or before the Effective Date, the Borrower shall have
established a concentration account in the Borrower's name (the "COIN
CONCENTRATION ACCOUNT") and a second concentration account in the Borrower's
name (the "RECEIVABLES CONCENTRATION ACCOUNT"), each at a bank reasonably
acceptable to the Required Lenders. The Coin Concentration Account and the
Receivables Concentration Account are collectively referred to as the
"Concentration Accounts".
4. On or before the Effective Date, each of the Borrower shall
have delivered to each account debtor with respect to its accounts receivables
an irrevocable notice and direction to mail all payments in respect of accounts
receivable to a lockbox established with the bank at which the Receivables
Concentration Account is established, which payments are to be deposited
directly by such bank into the Receivables Concentration Account in accordance
with the terms of the Receivables Concentration Account Agreement described
below. In the event that, notwithstanding the irrevocable notices and
directions given by the Borrower and its Subsidiaries to account debtors, the
Borrower or any its Subsidiaries receives any check or other item of payment
with respect to its accounts receivable the Borrower or such Subsidiary shall
hold such items in trust for the benefit of the Agent and deposit the same on
the date of receipt thereof in the Receivables Concentration Account.
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5. On or before the Effective Date, the banks at which the
Blocked Accounts are maintained shall have entered into tri-party blocked
account agreements (the "BLOCKED ACCOUNT AGREEMENTS") with the Agent, the
Borrower and any other depositor, in form and substance reasonably satisfactory
to the Required Lenders. Each such Blocked Account Agreement shall provide,
among other things, that (a) such bank executing such agreement has no rights
of set-off or recoupment or any other claim against such Blocked Account, other
than for payment of its service fees and other charges directly related to the
administration of such account, (b) such bank agrees to sweep on a daily basis
all amounts received in the Blocked Account to the Coin Concentration Account
and (c) the Agent has exclusive dominion and control of, and a first priority
security interest in, such Blocked Account.
6. On or before the Effective Date, the bank at which the Coin
Concentration Account is maintained shall have entered into a tri-party
concentration account agreement (the "COIN CONCENTRATION ACCOUNT AGREEMENT")
with the Agent and the Borrower, in form and substance reasonably satisfactory
to the Required Lenders. Such Coin Concentration Account Agreement shall
provide, among other things, that (a) such bank executing such agreement has no
rights of set-off or recoupment or any other claim against such Coin
Concentration Account, other than for payment of its service fees and other
charges directly related to the administration of such account, (b) such bank
agrees to sweep on a daily basis all amounts received in the Coin Concentration
Account to the Collection Account and (c) the Agent has exclusive dominion and
control of, and a first priority security interest in, the Coin Concentration
Account.
7. On or before the Effective Date, the bank at which the
Receivables Concentration Account is maintained, shall have entered into a
tri-party concentration account agreement (the "RECEIVABLES CONCENTRATION
ACCOUNT AGREEMENT") with the Agent and the Borrower, in form and substance
reasonably satisfactory to the Required Lenders. Such Receivables Accounts
Concentration Account Agreement shall provide, among other things, that (a)
such bank executing such agreement has no rights of set-off or recoupment or
any other claim against such Receivables Concentration Account, other than for
the payment of its service fees and other charges directly related to the
administration of such account, (b) such bank shall deposit all receipts from a
lockbox to be established with such bank into the Receivables Concentration
Account, (c) such bank agrees to sweep on a daily basis all amounts received in
the Receivables Concentration Account to the Collection Account, and (d) the
Agent has exclusive dominion and control of, and a first priority security
interest in, the Receivables Concentration Account.
8. The Borrower may maintain, in its name, an account (the
"DISBURSEMENT ACCOUNT") at a bank reasonably acceptable to the Required Lenders
into which the Agent shall, from time to time, deposit proceeds of Revolving A
Loans or Revolving B Loans made pursuant to SECTION 2.1.1 or SECTION 2.1.2 for
use solely in accordance with the provisions of SECTION 3.9. The Disbursement
Account as of the Closing Date is identified below in paragraph 12
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as the "Disbursement Account".
9. All amounts deposited in the Collection Account shall be
deemed received by the Agent in accordance with the terms of SECTION 3.6. In
no event shall any amount be so applied unless and until such amount shall have
been credited in immediately available funds to the Collection Account.
10. The Borrower hereby constitutes and irrevocably appoints, from
and after the Closing Date until payment in full of all Loans and the
termination of the Commitments, the Agent as its true and lawful attorney, with
full power of substitution, to demand, collect, receive and sue for all amounts
which may become due and payable under the Blocked Accounts, Coin Concentration
Account, and the Receivables Concentration Account, and to exercise all
withdrawal receipts or other orders for the Borrower or any of its Subsidiaries
in the Agent's own name or in the Borrower's or its Subsidiary's name or
otherwise, which the Agent deems necessary or appropriate to protect and
preserve its right, title and interest in such accounts.
11. Upon the request of the Required Lenders, the Borrower shall
forward to the Lenders, on a daily basis, evidence of the deposit of all items
of payment received by the Borrower into the Blocked Accounts, the Coin
Concentration Account and the Receivables Concentration Agreement, and copies
of all such checks and other items, in form and substance reasonably
satisfactory to the Required Lenders.
12. The following consists of all of the deposit, checking,
operating and other bank accounts of the Borrower and its Subsidiaries as of
the Closing Date.
(a) The Blocked Accounts described below:
Name/ABA # of Bank Account Number
------------------ ---------------
Bank of America-CA/122000661 12209-31976
Bank of Boston/011000390 542-44818
Bank of New York/021202719 610-4685593
Bank One-WV/043400065 625137419
Dubuque Bank & Trust-IA/
073900535 101761
Mercantile Bank-IL/081202759 850004895-7
First Union National Bank-NC/
053107659 2075287097380
Flagship Bank-MA/011032616 2025099612
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Key Bank-WA/125000574 2185001371
M & T Bank-NY/022000046 11475811
Merchants Bank-TX/113102044 0070108993
Bank of America-NV/122400724 245845037
First American-TN/064100674 3000041422
First Union National Bank-FL/
067006432 2168752468050
National City Bank-OH/041200144 2569167
NationsBank-TX/111317721 3590011436
NationsBank-VA/051400646 0010059122
NBD Bank-IN/074000052 07648456
Old Kent-MI/072402115 9104063
West One Bank-WA/125107833 6002625561
Huntington National Bank-OH/
044000024 01661388102
(b) The Disbursement Account described below:
Name/ABA # of Bank Account Number
------------------ --------------
Huntington National Bank-OH/
044000024 01669505107
(c) The following other accounts:
Name/ABA # of Bank Account Number
------------------ --------------
None.
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SCHEDULE 4
----------
INELIGIBLE TELEPHONES
______________________________________________________________________________
Description of
Telephones Cure
-------------- ----
193 Telephones located Approval of North
in North Carolina Carolina Public
Utility Commission
___ Telephones located Obtain valid
in Florida Telephone Placement
Agreement
___ Telephones located Obtain valid
in miscellaneous Telephone Placement
locations Agreement
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