EXHIBIT 10.11
REVOLVING LOAN
AGREEMENT
BETWEEN
ZIPLINK, LLC
AND
FLEET NATIONAL BANK
MARCH 31, 1998
REVOLVING LOAN AGREEMENT
AGREEMENT, made March 31, 1998, between ZIPLINK, LLC, a Connecticut limited
liability company, with its principal place of business at 40 Woodland Street,
Hartford, Connecticut 06105 ("BORROWER") and FLEET NATIONAL BANK, a national
banking association with an office located at 777 Main Street, Hartford,
Connecticut 06115 ("LENDER").
PREAMBLE
WHEREAS, Borrower has requested Lender to extend to Borrower a revolving
loan in the maximum aggregate principal amount of $15,000,000 (the "Loan").
WHEREAS, Lender has agreed to extend the Loan to Borrower subject to the
terms and conditions set forth below.
NOW, THEREFORE, for the mutual considerations contained in this Agreement,
Borrower and Lender agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 ACCOUNTING TERMS; ETC. Unless otherwise defined, all accounting
terms shall be construed, and all computations or classifications of assets and
liabilities and of income and expenses shall be made or determined in accordance
with GAAP consistently applied. As used herein, unless otherwise defined, the
following terms shall have the following meanings:
(a) "Agreement" shall mean this Revolving Loan Agreement as the same may
from time to time be amended, supplemented or otherwise modified.
(b) "Airtouch" shall mean Airtouch Communications, Inc., a Delaware
corporation.
(c) "Borrower Collateral" shall have the meaning provided in SECTION 7.1
hereof.
(d) "Borrowing Base" shall mean, as of any date as of which the amount
thereof shall be determined, an amount of up to the lesser of: (i) the
Commitment Amount, or (ii) the aggregate of the following: (A) sixty
percent (60%) of the then current market value of the Airtouch common
stock initially pledged by Guarantor as Collateral pursuant to the
Pledge Agreement, provided that if the market value of such Airtouch
common stock should thereafter decline, the percentage applicable
thereto for purposes of the calculation of the Borrowing Base
hereunder shall be increased, but not beyond seventy percent (70%), to
the extent necessary to offset the effect of such decline in value for
purposes of such calculation, plus (B) sixty percent (60%) of the then
current market of any additional Airtouch common
stock pledged by Guarantor to Lender as additional Collateral pursuant
to the Pledge Agreement, (C) seventy percent (70%) of the then current
market value of any additional Securities listed on the New York Stock
Exchange or American Stock Exchange and pledged by Guarantor to the
Lender as additional Collateral pursuant to the terms of the Pledge
Agreement, plus (D) fifty percent (50%) of the then current market
value of any Securities listed on any other stock exchange acceptable
to the Lender in its sole discretion and pledged by Guarantor to the
Lender as additional Collateral pursuant to the terms of the Pledge
Agreement, plus (E) eighty percent (80%) of the then current market
value of any municipal bonds having the highest rating by a nationally
recognized securities rating service and pledged by Guarantor to the
Lender as additional Collateral pursuant to the terms of the Pledge
Agreement, plus (F) ninety percent (90%) of the then current market
value of United States Treasury bonds and notes pledged by Guarantor
to the Lender as additional Collateral pursuant to the terms of the
Pledge Agreement.
(e) "Business Day" shall mean any day other than a day on which commercial
banks in Hartford, Connecticut are required or permitted by law to
close.
(f) "Closing Date" shall mean the date hereof.
(g) "Collateral" shall have the meaning provided in the Pledge Agreement.
(h) "Commitment Amount" shall mean FIFTEEN MILLION DOLLARS
($15,000,000.00), or such lesser amount as the Borrower may stipulate.
(i) "Defaulting Event" shall mean the occurrence of an Event of Default or
the occurrence of any condition or event which but for the giving of
notice or passage of time or both would constitute an Event of
Default.
(j) "Default Rate" shall have the meaning assigned in SECTION
3.1(C)hereof.
(k) "Dollar" and the sign "$" shall mean lawful money of the United States
of America.
(l) "ERISA" shall mean the Employee Retirement Income Security Act of 1974
and all rules and regulations promulgated pursuant thereto, as the
same may be supplemented or amended.
(m) "Event of Default" and "Events of Default" shall have the meanings
assigned in SECTION 8.1 hereof.
(n) "Financing Document" or "Financing Documents" shall mean this
Agreement, the Note, the Guaranty, the Pledge Agreement, and any and
all other instruments, agreements and documents executed in connection
herewith or therewith or
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related hereto or thereto, together with any amendments, supplements
or modifications hereto or thereto.
(o) "GAAP" shall mean generally accepted accounting principals.
(p) "Guarantor" means Henry M. Zachs
(q) "Guaranty" shall mean the Guaranty Agreement dated the date hereof
from the Guarantor to the Lender, as the same may from time to time be
amended, supplemented or otherwise modified.
(r) "Interest Period" shall mean, for a Revolving Loan, a period
commencing on (for the initial Interest Period) the date such
Revolving Loan is advanced or (for each subsequent Interest Period)
the first day after the expiration of the immediately preceding
Interest Period, and ending 30, 60 or 90 days thereafter, as the
Borrower may elect in the Notice of Borrowing; and provided that:
(i) any Interest Period that would otherwise end on a day that is not
a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in the next calendar month, in
which case such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (iii) below, end on the
last Business Day of a calendar month; and
(iii) unless agreed to in advance by the Lender, the Borrower may not
elect an Interest Period which would otherwise end after the end
of the Term.
(s) "LIBOR" or "LIBOR Rate" shall mean for the then current Interest
Period relating thereto the rate of interest per annum (rounded
upward, if necessary, to the nearest 1/32 of one percent) as
determined on the basis of the offered rates for deposits in U.S.
dollars for a period of time comparable to such Interest Period which
appears on the Telerate page 3750 as of 11:00 a.m. London time on the
day that is two (2) London Banking Days preceding the first day of
such Interest Period; provided, however, if the rate described above
does not appear on the Telerate System on any applicable interest
determination date, the LIBOR Rate shall be the rate (rounded upwards
as described above, if necessary) for deposits in dollars for a period
substantially equal to the Interest Period on the Reuters Page "LIBO"
(or such other page as may replace the LIBO Page on that service for
the purpose of displaying such rates), as of 11:00 a.m. (London Time),
on the day that is two (2) London Banking Days prior to the beginning
of such Interest Period. If both the Telerate and Reuters system are
unavailable, then the rate for that date will be determined on the
basis of the offered rates for deposits in U.S. dollars for a period
of time comparable to such Interest Period which are offered by four
major
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banks in the London interbank market at approximately 11:00 a.m.
London time, on the day that is two (2) London Banking Days preceding
the first day of such Interest Period as selected by the Lender. The
principal London office of each of the four major London banks will be
requested to provide a quotation of its U.S. dollar deposit offered
rate. If at least two such quotations are provided, the rate for that
date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date will be
determined on the basis of the rates quoted for loans in U.S. dollars
to leading European banks for a period of time comparable to such
Interest Period offered by major banks in New York City at
approximately 11:00 a.m. New York City time, on the day that is two
(2) London Banking Days preceding the first day of such Interest
Period. In the event that the Bank is unable to obtain any such
quotation as provided above, it will be deemed that LIBOR cannot be
determined, and the Lender will set an interest rate for the Revolving
Loans by such means as it shall reasonably deem equitable so that such
rate is comparable to the rate that would be established by the
foregoing means. In the event that the Board of Governors of the
Federal Reserve System shall impose a Reserve Percentage with respect
to LIBOR deposits of the Lender, then for any period during which such
Reserve Percentage shall apply, LIBOR shall be equal to the amount
determined above divided by an amount equal to one minus the Reserve
Percentage.
(t) "Loan" means the revolving loan made pursuant hereto in the maximum
principal amount of the Commitment Amount.
(u) "London Banking Day" means any day on which commercial banks are open
for business in London, England.
(v) "Note" means the Revolving Loan Note.
(w) "Notice of Borrowing" shall have the meaning assigned in SECTION 2.3
hereof.
(x) "Obligation" and "Obligations" mean and include all loans, advances,
interest, indebtedness, liabilities, obligations, fees, charges,
expenses, guaranties, covenants and duties at any time owing by
Borrower to Lender of every kind and description, whether or not
evidenced by any note or other instrument, whether or not for the
payment of money, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, including,
but not limited to, the Revolving Loans, and all other indebtedness,
liabilities and obligations of Borrower arising under this Agreement
and the other Financing Documents or otherwise, and all costs,
expenses, fees, charges incurred by Lender hereunder or otherwise with
respect to Borrower, including without limitation fees and expenses of
attorneys and other professionals incurred in connection with any of
the foregoing, or in any way connected with, involving or relating to
the preservation, enforcement, protection or defense of, or
realization under this Agreement, any of the other Financing
Documents, any related agreement, document or instrument, the
Collateral, the Borrower Collateral and the rights and remedies
hereunder or thereunder.
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(y) "Plan" means any employee benefit plan or other plan maintained by
Borrower or any entity affiliated with Borrower for employees covered
by Title I of ERISA.
(z) "Pledge Agreement" shall mean that certain Stock Pledge Agreement of
even date herewith by and between Guarantor and Lender, pursuant to
which Guarantor is pledging the Collateral to Lender.
(aa) "Revolving Loan" and "Revolving Loans" have the respective meanings
assigned in SECTION 2.1 hereof.
(bb) "Revolving Loan Account" shall mean the revolving loan account
maintained by the Borrower with the Lender.
(cc) "Revolving Loan Note" shall have the meaning assigned in SECTION 2.3
hereof.
(dd) "Security" or "Securities" shall have the meaning assigned in the
Pledge Agreement.
(ee) "Term" shall have the meaning assigned in SECTION 10.1 hereof.
ARTICLE II
REVOLVING LOANS
SECTION 2.1 AMOUNTS. Subject to the terms and conditions contained in this
Agreement, and so long as no Defaulting Event has occurred, Lender agrees to
make advances on the Loan (the "Revolving Loans" and, individually, a "Revolving
Loan") to Borrower from time to time until terminated as provided below in
principal amounts not exceeding in the aggregate at any one time outstanding the
Borrowing Base, it being agreed and understood that at no time shall the maximum
aggregate principal amount of the Revolving Loans outstanding exceed the
Borrowing Base.
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SECTION 2.2 PAYMENT.
(a) Interest only as accrued shall be due and payable on the Revolving
Loans on the first day of each month commencing May 1, 1998; provided,
however, that the entire outstanding principal amount of the Revolving
Loans plus all accrued and outstanding interest thereon, and all other
amounts hereunder, shall be due and payable on April 1, 2001.
(b) In the event that the market value of the Airtouch common stock
initially pledged as Collateral pursuant to the Pledge Agreement shall
decline so as to cause the outstanding principal balance of the
Revolving Loans to exceed seventy percent (70%) but not eighty percent
(80%) of the then current market value of such common stock (unless
the Guarantor shall have pledged additional Collateral to Lender as
permitted by and pursuant to the Pledge Agreement so that the
outstanding principal balance of the Revolving Loans does not exceed
the Borrowing Base), a Defaulting Event shall be deemed to have
occurred, which Defaulting Event shall constitute an Event of Default
unless, within thirty (30) days of the date such outstanding principal
balance first exceeds seventy percent (70%) of the current market
value of such common stock, the Borrower either pays down the
outstanding principal balance of the Revolving Loans or the Guarantor
pledges additional Collateral pursuant to the Pledge Agreement, in
either case so that the outstanding principal balance of the Revolving
Loans as of such date no longer exceeds the Borrowing Base. In the
event that the market value of the Airtouch common stock initially
pledged as Collateral pursuant to the Pledge Agreement shall decline
so as to cause the Commitment Amount to exceed eighty percent (80%) of
the current market value of such common stock (unless the Guarantor
shall have pledged additional Collateral to Lender as permitted by and
pursuant to the Pledge Agreement so that the outstanding principal
balance of the Revolving Loans does not exceed the Borrowing Base), a
Defaulting Event shall be deemed to have occurred, which Defaulting
Event shall constitute an Event of Default unless, within five (5)
days of the date such outstanding principal balance first exceeds
eighty percent (80%) of the current market value of such common stock,
the Borrower pays down the outstanding principal balance of the
Revolving Loans or the Guarantor pledges additional Collateral
pursuant to the Pledge Agreement, in either case so that the
outstanding principal balance of Revolving Loans as of such date no
longer exceeds the Borrowing Base.
(c) In the event that the principal amount of the Revolving Loans
outstanding at any time shall exceed the Borrowing Base for any reason
other than one described in subparagraph (b) above, the Borrower
shall, within five (5) days after such outstanding principal amount
first exceeds the Borrowing Base, either pay down the outstanding
principal balance of the Revolving Loans or cause the Guarantor to
pledge additional Collateral pursuant to the terms of the Pledge
Agreement, in either case so that the outstanding principal balance of
the Revolving Loans no longer exceeds the Borrowing Base. In the event
that the Borrower has not reduced
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such principal balance below the Borrowing Base by the end of such
five (5) day period, an Event of Default shall immediately exist.
SECTION 2.3 ABILITY TO REBORROW, PROCEDURE FOR ADVANCES, NOTICE OF
BORROWING, REVOLVING LOAN NOTE, REVOLVING LOAN ACCOUNT, ETC. Within the limits
of the Borrowing Base and the Term, so long as Borrower is in compliance with
all of the terms and conditions of this Agreement and the other Financing
Documents and no Defaulting Event has occurred, Borrower may request borrowings,
repay and request reborrowings of Revolving Loans. Whenever Borrower desires an
advance, Borrower shall notify Lender in writing or by telephone of the proposed
borrowing. Such notice (each, a "Notice of Borrowing") shall specify the date of
the proposed borrowing and the amount to be borrowed. Each Notice of Borrowing
must be received by Lender no later than 10:00 a.m., Hartford, Connecticut time
on the second London Banking Day preceding the business day on which such
borrowing is requested. The Borrower shall not request any advance in an amount
less than One Hundred Thousand Dollars ($100,000.00) and shall not request more
than one advance per week. In addition to this Agreement, the Revolving Loans
shall be evidenced by a revolving loan promissory note payable to Lender in the
form of EXHIBIT "A" attached hereto (the "Revolving Loan Note"). Insofar as
Borrower may request and Lender shall make Revolving Loans hereunder, Lender
shall enter such advances as debits on a revolving loan account maintained by
Borrower with Lender (the "Revolving Loan Account") and deposit such amounts in
a demand deposit checking account maintained by Borrower with Lender. Lender may
also record to the Revolving Loan Account, in accordance with customary
accounting practices and procedures, all fees, accrued and unpaid interest, late
fees, usual and customary charges for the maintenance and administration of
checking and any other accounts maintained by Borrower with Lender and other
fees, charges and liens which are properly chargeable to Borrower under this
Agreement; all payments, subject to collection, made by Borrower on account of
indebtedness evidenced by the Revolving Loan Account; all proceeds of Borrower
Collateral which are finally paid to Lender in its own office in cash or
collected items; and other appropriate debits and credits. Lender shall record
as credits to the Revolving Loan Account, in accordance with customary
accounting practices and procedures, all Revolving Loan payments made by
Borrower. Borrower hereby authorizes Lender to maintain the Revolving Loan
Account and agrees that the amount shown on the Revolving Loan Account as
outstanding from time to time shall constitute the amount owing to Lender by
reason of the Revolving Loans and other appropriate charges and credits
hereunder, absent manifest error. Borrower hereby authorizes Lender to make such
charges as are described in this Section 2.3 against the Revolving Loan Account
or any other account maintained by Borrower with Lender.
SECTION 2.4 MONTHLY STATEMENTS. On a monthly basis, Lender may render a
statement for the Revolving Loan Account, which statement shall be considered
correct and accepted by Borrower and conclusively binding upon Borrower unless
Borrower notifies Lender to the contrary within thirty (30) days of the receipt
of said statement by Borrower.
SECTION 2.5 LENDER DISCRETION. Nothing herein shall be construed to
prohibit Lender from lending in excess of the Borrowing Base, it being agreed
that all such loans and advances shall be at Lender's sole discretion and shall
not establish a pattern or custom binding upon Lender.
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ARTICLE III
INTEREST, FEES AND OTHER CHARGES
SECTION 3.1 INTEREST.
(a) INTEREST RATES. So long as no Defaulting Event or Event of Default has
occurred, each of the Revolving Loans shall bear interest for the
applicable Interest Period at a fixed rate per annum equal to the
LIBOR Rate, plus .30%. The Borrower shall elect the length of each
applicable Interest Period, subject to the provisions of this
Agreement. At the expiration of an applicable Interest Period for a
Revolving Loan, the Borrower may elect the length of the next Interest
Period for such Revolving Loan. The Borrower shall not choose an
Interest Period that extends beyond the end of the Term.
(b) PAYMENT OF INTEREST. So long as any of the Obligations remain
outstanding, interest on the Revolving Loans shall be due and payable
without notice or demand monthly in arrears beginning on May 1, 1998
and continuing on the first day of each and every month thereafter
through and including April 1, 2001.
(c) DEFAULT INTEREST RATE. Notwithstanding the foregoing, interest on the
Revolving Loans, at all times after the occurrence of an Event of
Default, and interest on all payments of interest that are not paid
when due, shall accrue at a rate per annum equal to three percentage
points (3.0%) above the applicable interest rates otherwise in effect
under this Agreement (the "Default Rate").
(d) CALCULATION OF INTEREST. Interest on the Revolving Loans shall be
calculated on the basis of a 360-day year and the actual number of
days elapsed.
(e) LATE PAYMENT. If any interest installment due hereunder or under the
Note is not paid within ten (10) days after the date it is due and
payable, without in any way affecting Lender's right to make demand
hereunder or to declare an Event of Default to have occurred, Lender
may in its sole discretion assess a late charge equal to five percent
(5%) of such late payment against Borrower, which late charge shall be
immediately due and payable and may be paid by a charge to Borrower's
Revolving Loan Account as contemplated in Section 2.3 above.
(f) LAWFUL INTEREST. It being the intent of the parties that the rate of
interest and all other charges to Borrower be lawful, if for any
reason the payment of a portion of interest, fees or charges as
required by this Agreement would exceed the limit established by
applicable law which a lender such as Lender may charge to a
commercial borrower such as Borrower, then the obligation to pay
interest or charges shall automatically be reduced to such limit and,
if any amounts in excess of such limits shall have been paid, then
such amounts shall be applied to the unpaid principal amount of the
Obligations or refunded so that under no
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circumstances shall interest or charges required hereunder exceed the
maximum rate allowed by law, as aforesaid.
(g) SWAP ARRANGEMENT. In order for Borrower to make regular payments as if
the interest rates on the Revolving Loans were fixed, the Lender shall
extend to Borrower the right, but not the obligation, to enter into an
interest rate swap agreement with respect to the Loan, such swap
agreement to be in a form provided by and acceptable to the Lender in
its sole discretion. In the event Borrower elects to enter into a swap
arrangement with Lender, all Revolving Loans to which the swap relates
shall use thirty (30) day Interest Periods only and shall bear
interest per annum at the LIBOR Rate plus .20% for each such thirty
(30) day Interest Period.
SECTION 3.2 PREPAYMENT.
(a) The Borrower shall have the right at any time and from time-to-time to
prepay any Revolving Loan subject to the rights of the Borrower to
reborrow as set forth in this Agreement, together with the applicable
premium.
(b) If the outstanding balance of the Revolving Loans shall, at any time,
exceed the Borrowing Base, the Borrower shall immediately repay the
Revolving Loans in the amount of such excess.
(c) The Borrower agrees to pay to the Lender a prepayment fee on the
principal amount of the Revolving Loans being prepaid equal to the
excess, discounted to its present value as of the date paid to Lender,
of (i) the amount of interest which otherwise would have accrued on
the principal amount of the Revolving Loans being prepaid during the
period (the "Indemnity Period") commencing with the date of such
prepayment and ending on the last day of the applicable Interest
Period at the rate of interest applicable to such Revolving Loan
during such Interest Period over (ii) the amount of interest which
would be earned by the Lender during the Indemnity Period if it
invested the principal amount so prepaid at a rate per annum
determined by the Lender as the rate it would bid in the London
interbank market for a deposit of eurodollars in an amount
approximately equal to such principal amount for a period of time
comparable to the Indemnity Period, plus any other reasonable expenses
that the Lender may sustain or incur by reason of the prepayment. In
the event that Borrower has entered into a swap arrangement as
described above, Borrower agrees to pay to Lender upon prepayment of
any Revolving Loans to which such swap relates a yield maintenance fee
that compensates Lender for any actual loss or expense sustained or
incurred by Lender in respect of such swap arrangement as a result of
such prepayment. For the purposes of this Section, the determination
by the Lender of any prepayment, fees and expenses shall be conclusive
if made reasonably and in good faith. A certificate as to any
additional amounts payable pursuant to this Section setting forth the
basis and method of determining such amounts shall be conclusive,
absent manifest error, as to determination by the Lender set forth
therein if made reasonably and in good faith.
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(d) The above premiums for prepayment of the Revolving Loans apply at any
time the Revolving Loans are prepaid, for any reason, including demand
due to the occurrence of an Event of Default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Lender that:
(a) GOOD STANDING AND QUALIFICATION. It is duly organized, validly
existing and in good standing under the laws of the State of
Connecticut. It has all requisite power and authority to own and
operate its properties and to carry on its business as presently
conducted and is duly qualified to do business and is in good standing
as a foreign limited liability company in each jurisdiction where the
failure to so qualify would have a material adverse effect on the
Borrower.
(b) AUTHORITY. It has full power and authority to enter into this
Agreement, the Note and the other Financing Documents to which it is a
party, to make the borrowings contemplated herein, to execute and
deliver the Note and the other Financing Documents to which it is a
party, and to incur the obligations provided for herein and therein,
all of which have been duly authorized by all necessary and proper
action. No other consent or approval or the taking of any other action
in respect of its members or of any public authority is required as a
condition to the validity or enforceability of this Agreement, the
Note, the other Financing Documents or any other instrument, document
or agreement delivered in connection herewith or therewith.
(c) BINDING AGREEMENTS. This Agreement, the Note and the other Financing
Documents executed and/or delivered by Borrower in connection herewith
or therewith constitute valid and legally binding obligations of
Borrower, enforceable in accordance with their respective terms,
except as enforcement may be limited by principles of equity,
bankruptcy, insolvency, or other laws affecting the enforcement of
creditors' rights generally.
(d) LITIGATION. Except as set forth on Schedule 4.1(d) hereof, there are
no actions, suits or proceedings pending against Borrower before any
court or administrative agency, nor are there any actions, suits or
proceedings threatened, which, either in any case or in the aggregate,
would materially and adversely affect the financial condition, assets
or operations of Borrower, nor are there any such actions, suits or
proceedings which question the validity of this Agreement, the Note,
any of the
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other Financing Documents, or any action to be taken in connection
with the transactions contemplated hereby or thereby.
(e) NO CONFLICTING LAW OR AGREEMENTS. The execution, delivery and
performance by Borrower of this Agreement, the Note and the other
Financing Documents, as the case may be, do not (i) violate any
provision of its Articles of Organization or Operating Agreement or
any order, decree or judgment, or any provision of any statute, rule
or regulation; (ii) violate or conflict with, result in a breach of or
constitute (with notice or lapse of time, or both) a default under any
agreement, mortgage, indenture or other contract or undertaking to
which it is a party, or by which its properties are bound; and (iii)
result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any property or assets of
Borrower except for the liens granted hereunder to Lender.
(f) TAXES. It has filed all tax returns which are required to be filed and
all federal, state, municipal, franchise and other taxes shown on such
filed returns have been paid or are being diligently contested by
appropriate proceedings and have been reserved against, as required by
GAAP, consistently applied.
(g) FINANCIAL STATEMENTS. It has heretofore delivered to Lender: (i) its
annual balance sheet as of December 31, 1997, and the related
statements of income, retained earnings and cash flows for the fiscal
year or period then ended. Each of such statements fairly presents in
all material respects its consolidated financial condition as of the
dates and for the periods referred to and has been prepared in
accordance with GAAP consistently applied by it throughout the periods
involved. There are no liabilities, direct or indirect, fixed or
contingent, of Borrower as of the dates of said balance sheets which
are required to be disclosed and listed under GAPP and which are not
reflected in such statements or in the notes thereto.
(h) ADVERSE DEVELOPMENTS. Since September 1, 1997, there has been no
material adverse change in the financial condition, business,
operations, affairs or prospects of Borrower or in any of its
properties or assets.
(i) TITLE TO ASSETS. It has good title to its properties and assets,
including the properties and assets reflected in the financial
statements referred to herein. Such properties and assets are not
subject to any mortgage, pledge, lien, lease, encumbrance or charge
except those shown on Schedule 4.1(i), if any.
(j) REGULATIONS G, T, U AND X. The proceeds of the borrowings hereunder
are not being used and will not be used, directly or indirectly, for
the purposes of purchasing or carrying any margin stock in
contravention, or which would cause any Lender to be in violation, of
Regulations G, T, U or X promulgated by the Board of Governors of the
Federal Reserve System.
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(k) COMPLIANCE. It is not in default with respect to any order, writ,
injunction or decree of any court or of any federal, state, municipal
or other governmental department, commission, board, bureau, agency,
authority or official, nor is it in violation of any law, statute,
rule or regulation to which it is or its properties are subject and it
has not received notice of any such default from any party and is not
in default in the payment or performance of any of its obligations to
any third parties or in the performance of any mortgage, indenture,
lease, contract or other agreement to which it is a party or by which
any of its assets or properties are bound.
(l) PENSION PLANS.
(i) No fact, including but not limited to any "reportable event", as
that term is defined in Section 4043 of ERISA, exists in
connection with any Plan which might constitute grounds for
termination of any such Plan by the Pension Benefit Guaranty
Corporation (the "PBGC"), or for the appointment by the
appropriate United States District Court of a trustee to
administer any such Plan. Each Plan of the Borrower, if any, is
described on SCHEDULE 4.1(L) attached hereto;
(ii) No "prohibited transaction" within the meaning of Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code") exists or will exist upon the execution and
delivery of this Agreement and the other Financing Documents, or
the performance by the parties hereto or thereto of their
respective duties and obligations hereunder and thereunder;
(iii) Any Plan complies currently, and has complied in the past, both
as to form and operation, with its terms and with provisions of
the Code and ERISA, and all applicable regulations thereunder and
all rules issued by the Internal Revenue Service, U.S. Department
of Labor and the PBGC and as such, is and remains a "qualified"
plan under the Code;
(iv) No actions, suits or claims are pending (other than routine
claims for benefits) against any Plan, or the assets of any such
Plan; and
(v) The Borrower has performed all obligations required to be
performed by it under any Plan is not in default, or in violation
of any Plan.
(m) OFFICE. Its chief executive office and principal place of business,
and the office where its books and records concerning Borrower
Collateral are kept, is at 900 Chelmsford Street, Lowell,
Massachusetts 01851.
(n) PLACES OF BUSINESS. Except as set forth on the attached SCHEDULE
4.1(n), it has no other places of business and locates no Borrower
Collateral, specifically including books and records, at any location
other than as set forth in the first paragraph of
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this Agreement. It shall locate a full and complete set of its books
and records in its offices at the chief executive office described in
the immediately preceding paragraph.
(o) UNIONS. It is not a party to any collective bargaining or union
agreement.
(p) LICENSES. It has all licenses, permits and other permissions required
by any government, agency or subdivision thereof, or from any
licensing entity necessary for the conduct of its business, all of
which it represents to be in good standing and in full force and
effect.
(q) BORROWER COLLATERAL. It is and shall continue to be the sole owner of
the Borrower Collateral; Borrower is fully authorized to sell,
transfer, pledge and/or grant a security interest in each and every
item of the Borrower Collateral to Lender; all documents and
agreements related to the Borrower Collateral shall be true and
correct and in all respects what they purport to be; all signatures
and endorsements that appear thereon shall be genuine and all
signatories and endorsers shall have full capacity to contract; none
of the transactions underlying or giving rise to the Borrower
Collateral shall violate any applicable state or federal laws or
regulations; all documents relating to the Borrower Collateral shall
be legally sufficient under such laws or regulations and shall be
legally enforceable in accordance with their terms; and Borrower
agrees to defend the Borrower Collateral against the claims of all
persons other than Lender.
(r) TRADENAMES. Except as set forth on the attached SCHEDULE 4.1(r), it
does not have any tradenames.
(s) FINANCIAL INFORMATION. All financial information submitted by it to
Lender, whether previously or in the future, is and will be true,
correct and complete in all material respects.
(t) PARENT, AFFILIATE OR SUBSIDIARY CORPORATIONS. Except as set forth on
the attached SCHEDULE 4.1(t), Borrower has no parent corporation and
has no affiliate or subsidiary.
(u) OFFICERS AND DIRECTORS. The officers, members and managers of Borrower
are set forth on the attached SCHEDULE 4.1(u).
(v) PAYMENT OF DEBTS. Prior to and immediately after receiving the
Revolving Loans, the Borrower is solvent and able to pay its debts as
they come due.
(w) USE OF PROCEEDS. It will use the proceeds of the Revolving Loans
solely (i) for refinancing in full its indebtedness to Bank of Boston
Connecticut; and (ii) for working capital purposes.
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ARTICLE V
CONDITIONS OF LENDING
SECTION 5.1 CONDITIONS OF THE INITIAL REVOLVING LOAN. Subject to the terms
hereof, the obligation of Lender to make the Loan under this Agreement is
subject to the fulfillment of the following conditions precedent at the time of
the execution of this Agreement:
(a) NOTE. Lender shall have received a duly executed Revolving Loan Note
drawn to its order.
(b) EVIDENCE OF ACTION. Lender shall have received certified copies of all
manager and member action (in form and substance satisfactory to
Lender) taken by Borrower to authorize the execution, delivery and
performance of this Agreement, the Note, and the other Financing
Documents to which it is a party, and the borrowings to be made
hereunder and thereunder, together with true copies of Borrower's
Articles of Organization and Operating Agreement and such other papers
as Lender or its counsel may require.
(c) OPINION OF COUNSEL. Lender shall have received a favorable written
opinion of counsel for Borrower and the Guarantor, and accompanied by
such supporting documents as Lender or its counsel may require.
(d) GUARANTOR'S DOCUMENTS. Lender shall have received the Guaranty and the
Pledge Agreement, each duly executed by the Guarantor.
(e) UCC-1 FINANCING STATEMENTS. Lender shall have received from Borrower
and the Guarantor duly executed UCC-1 financing statements and such
other documents as Lender deems necessary or proper to perfect the
security interest in the Collateral and the Borrower Collateral, all
of which shall be in form, scope and substance satisfactory to Lender
and its counsel.
(f) STOCK CERTIFICATES. Lender shall have received the Pledged Stock (as
defined in the Pledge Agreement) along with stock powers executed in
blank, and all other conditions and requirements of the Pledge
Agreement shall have been met to the satisfaction of the Lender and
its counsel.
(g) INSURANCE. Lender shall have received evidence of insurance of such
types and in such amounts and with such companies reasonably
satisfactory to Lender, and Lender shall be named as a loss payee on
all such insurance.
(h) SOLVENCY CERTIFICATE. Lender shall have received a Solvency
Certificate from the Guarantor in the form of EXHIBIT "B" attached
hereto.
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(i) FINANCIAL STATEMENTS. Lender shall have received such internally
generated financial statements of the Borrower and the Guarantor as
Lender shall require in its sole discretion.
(j) NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the financial condition or operating condition of Borrower
or Guarantor since September 1, 1997.
(k) REGULATION U. Borrower shall have executed and delivered to Lender
such documentation as Lender shall require to evidence and confirm
that the Revolving Loans will not be used in any fashion as to cause
the Lender to be in violation of Regulation U or any other regulation
promulgated by the Board of Governors of the Federal Reserve System
relating to "margin stock".
(l) FURTHER DOCUMENTS. Lender shall have received such further documents,
instruments and agreements as Lender may request.
SECTION 5.2 CONDITIONS OF ADDITIONAL REVOLVING LOANS. In addition to the
conditions in Section 5.1 above, Lender shall make no further Revolving Loans
(collectively, the "Further Loans") unless the following conditions shall exist
or have been satisfied by Borrower at the time any Further Loan is requested:
(a) ABSENCE OF TERMINATION OR DEFAULT. Lender shall not have terminated
the Revolving Loan facility hereunder, nor shall a Defaulting Event or
Event of Default exist.
(b) COMPLIANCE CERTIFICATES. On the date of each request for a Revolving
Loan hereunder, and from time-to-time as Lender shall have requested,
Borrower shall have delivered to Lender, upon Lender's request, a
Certificate of Compliance executed by its chief financial officer (or
officer with equivalent position) which shall state, among other
things, that: (i) Borrower has complied, and is when in compliance,
with all the terms, covenants and conditions of this Agreement and the
other Financing Documents which are binding upon it; (ii) there exists
no Event of Default or Defaulting Event; and (iii) the representations
and warranties contained herein and in the other Financing Documents
are true and correct with the same effect as though such
representations and warranties had been made as of the time of each
Further Loan.
(c) BORROWING BASE. The indebtedness of Borrower by virtue of the making
of any Further Loan shall not exceed the Borrowing Base. Borrower
shall not request any Further Loan if the effect of such Further Loan
shall be to cause the principal balance of all outstanding Revolving
Loans to exceed the Borrowing Base.
(d) FURTHER DOCUMENTS. Lender shall have received such further documents,
instruments and agreements as Lender may reasonably request.
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ARTICLE VI
COVENANTS
A. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that from the date hereof until payment and
performance in full of all Obligations, and until the termination of this
Agreement, unless Lender otherwise consents in writing, Borrower shall:
SECTION 6.1 FINANCIAL STATEMENTS. Deliver or cause to be delivered to
Lender:
(a) within ninety (90) days after the close of each fiscal quarter of
Borrower and the close of each fiscal year of Borrower, internally
prepared financial statements of Borrower including (i) balance sheet;
(ii) statement of income; and (iii) statement of retained earnings,
each as of the close of such quarter or fiscal year, respectively, and
for that portion of the fiscal year-to-date then ended, and each
prepared on a basis consistent with that of the preceding quarter or
containing disclosure of the effect on financial condition or results
of operations of any change in the application of GAAP during such
period, and each certified by the chief financial officer (or
equivalent position) of Borrower as being accurate and fairly
presenting the financial condition of Borrower; provided that if any
Defaulting Event or Event of Default shall exist, such annual
financial statement shall be audited by an independent certified
public accountant.
(b) contemporaneously with the delivery to shareholders or governmental
agencies, copies of all reports and information delivered to
shareholders or filed with governmental agencies;
(c) within one hundred twenty (120) days after the close of each calendar
year, the Guarantor shall deliver to Lender (i) annual updates of
personal financial statements and (ii) personal tax returns prepared
by an accountant reasonably acceptable to Lender;
(d) promptly upon Lender's written request, such other information about
the financial condition and operations of Borrower or the Guarantor,
as Lender may, from time to time, reasonably request; and
(e) promptly upon becoming aware of any Event of Default, or the
occurrence or existence of a Defaulting Event, notice thereof in
writing.
SECTION 6.2 INSURANCE AND ENDORSEMENTS. (a) Keep the Borrower Collateral
insured against fire and other hazards (so-called "All Risk" coverage) in
amounts and with companies satisfactory to Lender to the same extent and
covering such risks as is customary in the same or a similar business; maintain
public liability coverage, including without limitation, products
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liability coverage, against claims for personal injuries or death; and maintain
all worker's compensation, employment or similar insurance as may be required by
applicable law; and (b) all insurance shall contain such terms, be in such form,
and be for such periods reasonably satisfactory to Lender, and be written by
such carriers duly licensed by the appropriate states where any Borrower
Collateral is located and reasonably satisfactory to Lender. Without limiting
the generality of the foregoing, such insurance must provide that it may not be
cancelled without thirty (30) days' prior written notice to Lender. Borrower
shall cause Lender to be endorsed as a loss payee with a long form Lender's Loss
Payable Clause, in form and substance acceptable to Lender on all insurance. In
the event of failure to provide and maintain insurance as herein provided,
Lender may, at its option, provide such insurance and charge the amount thereof
to the Revolving Loan Account. Borrower shall furnish to Lender certificates or
other satisfactory evidence of compliance with the foregoing insurance
provisions. Borrower hereby irrevocably appoints Lender as its attorney-in-fact,
coupled with an interest, to make proofs of loss and claims for insurance, and
to receive payments of the insurance and execute and endorse all documents,
checks and drafts in connection with payment of the insurance. Any insurance
proceeds received by Lender shall be applied to the Obligations in such order
and manner as Lender shall determine in its sole discretion.
SECTION 6.3 TAX AND OTHER LIENS. Comply with all statutes and government
regulations and pay all taxes, assessments, governmental charges or levies, or
claims for labor, supplies, rent and other obligations made against it or its
property which, if unpaid, might become a lien or charge against Borrower or its
properties, except liabilities being contested in good faith and against which,
if requested by Lender, Borrower shall set up reserves in amounts and in form
satisfactory to Lender.
SECTION 6.4 PLACE OF BUSINESS. Maintain its chief place of business and
chief executive offices at the address set forth in Section 4.1(m) unless
Borrower shall have given Lender thirty (30) days' prior written notice of any
change in such place of business.
SECTION 6.5 INSPECTIONS. Allow Lender by or through any of its officers,
attorneys, and/or accountants designated by it, for the purpose of ascertaining
whether or not each and every provision hereof and of any related agreement,
instrument and document is being performed, to enter the offices and plants of
Borrower to examine or inspect any of the properties, books and records or
extracts therefrom, to make copies of such books and records or extracts
therefrom, and to discuss the affairs, finances and accounts thereof with
Borrower all at such reasonable times, upon reasonable notice and as often as
Lender or any representative of Lender may reasonably request.
SECTION 6.6 LITIGATION. Promptly advise Lender of the commencement or
threat of litigation, including arbitration proceedings and any proceedings
before any governmental agency (but excluding product liability claims which are
either fully covered by insurance or adequately covered by insurance and which
is not likely to have a material adverse effect on the business, assets or
condition (financial or otherwise) of Borrower), which is instituted against
Borrower or the Guarantor and is reasonably likely to have a materially adverse
effect upon the condition, financial, operating or otherwise, of Borrower or the
Guarantor.
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SECTION 6.7 MAINTENANCE OF EXISTENCE. Maintain its existence and comply
with all valid and applicable statutes, rules and regulations, and maintain its
properties in good repair, working order and operating condition. Borrower shall
immediately notify Lender of any event causing material loss in the value of its
assets.
SECTION 6.8 ERISA. Immediately notify Lender of any event which causes it
not to be in compliance in all material respects with ERISA.
SECTION 6.9 NOTICE OF CERTAIN EVENTS. Give prompt written notice to Lender
of:
(a) any material dispute that may arise between Borrower and any
governmental regulatory body or law enforcement agency;
(b) any labor controversy resulting or likely to result in a strike or
work stoppage against Borrower;
(c) any proposal by any public authority to acquire the assets or business
of Borrower;
(d) the location of any Borrower Collateral other than at Borrower's
places of business disclosed in this Agreement other than Borrower
Collateral in transit in the ordinary course of Borrower's business;
(e) any proposed or actual change of the name, identity or structure of
Borrower; and
(f) any other matter which has resulted or is reasonably likely to result
in a material adverse change in the financial condition or operations
of Borrower or Guarantor.
SECTION 6.10 DEFAULTS. Upon the occurrence of an Event of Default or of a
Defaulting Event, give prompt written notice of such occurrence to Lender signed
by the president or chief financial officer of Borrower describing such
occurrence and the steps, if any, being taken to cure the Event of Default or
Defaulting Event.
SECTION 6.11 DUTIES. Comply with any and all federal, state and local laws
affecting its business. Borrower agrees to indemnify Lender against and hold
Lender harmless from, all claims, actions and losses, including reasonable
attorneys' fees and costs incurred by Lender arising from any contention,
whether well founded or otherwise, that there has been a failure to comply with
such laws.
SECTION 6.12 BORROWER COLLATERAL DUTIES. Do whatever Lender may reasonably
request from time to time by way of obtaining, executing, delivering and filing
financing statements, assignments and other notices and amendments and renewals
thereof, and Borrower will take any and all steps and observe such formalities
as Lender may request, in order to create and maintain a valid and enforceable
first lien upon, pledge of, and first priority security interest in, any and all
of the Borrower Collateral. Lender is authorized to file financing statements
without the signature of Borrower and to execute and file such financing
statements on behalf of Borrower as
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specified by the Uniform Commercial Code to perfect or maintain its security
interest in all of the Borrower Collateral. All reasonable charges, expenses and
fees Lender may incur in filing any of the foregoing, together with reasonable
costs and expenses of any lien search required by Lender, and any taxes relating
thereto, shall be charged to the Revolving Loan Account and added to the
Obligations.
SECTION 6.13 OFFICERS, MEMBERS AND MANAGERS. Promptly notify Lender in
writing upon any changes or additions to Borrower's officers, members or
managers.
B. NEGATIVE COVENANTS.
Borrower covenants and agrees that from the date hereof until payment and
performance in full of all Obligations, and until the termination of this
Agreement, unless Lender otherwise consents in writing, Borrower shall not:
SECTION 6.14 ENCUMBRANCES. After the occurrence of an Event of Default or
Defaulting Event, incur or permit to exist any lien, mortgage, charge or other
encumbrance against any of the Borrower Collateral, except: (a) liens required
or expressly permitted by this Agreement; (b) pledges or deposits in connection
with or to secure worker's compensation, unemployment or liability insurance;
and (c) those listed on SCHEDULE 4.1(i) attached hereto.
SECTION 6.15 CONSOLIDATION OR MERGER. Merge into or consolidate with or
into any entity, except in connection with an Incorporation Transaction as that
term is defined in the Borrower's Operating Agreement, provided the surviving
corporation executes and delivers all documents required by Lender, including,
without limitation, an assumption of all of the Obligations.
SECTION 6.16 SALE AND LEASE OF ASSETS. Sell or lease any of the assets of
Borrower, except for sales of inventory and equipment in the ordinary course of
business consistent with past practices and on an arms-length basis.
SECTION 6.17 NAME CHANGES. Change its name or conduct its business under
any trade name or style other than as set forth in this Agreement.
SECTION 6.18 PROHIBITED TRANSFERS. Transfer, in any manner, either directly
or indirectly, any cash, property, or other assets to any parent or any of its
affiliates or subsidiaries, or any shareholder, officer and director, other than
sales made in the ordinary course of business and for fair consideration on
terms no less favorable than if such sale had been an arms-length transaction
between Borrower and an unaffiliated entity.
SECTION 6.19 MANAGEMENT CHANGE. Suffer any change in the ownership interest
of the Guarantor in the Borrower or in the Guarantor's participation in the
management of the Borrower.
ARTICLE VII
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BORROWER COLLATERAL
SECTION 7.1 GRANT. To secure the prompt payment and performance of each and
all of the Obligations, Borrower pledges, assigns, transfers and grants to
Lender a continuing, first lien security interest in the following property of
Borrower, now owned or hereafter acquired or arising (herein called the
"Borrower Collateral"):
(a) All accounts and accounts receivable related to or arising from the
sale or lease of inventory or rendering of services by Borrower (the
"Accounts") and all other accounts, bank accounts, contracts, contract
rights, notes, documents, chattel paper, instruments, acceptances,
drafts or other forms of obligations and receivables (collectively
with Accounts, the "Receivables"), whether or not the same are listed
on any schedules, assignments or reports furnished to Lender from time
to time, and whether such Receivables are now existing or are created
or .arise at any time hereafter, together with all goods, inventory
and merchandise returned by or reclaimed by or repossessed from
customers wherever such goods, inventory and merchandise are located,
and all proceeds thereto including without limitation, proceeds of
insurance thereon and all guaranties, securities, and liens which
Borrower may hold for the payment of any such Receivables, including
without limitation, all rights of stoppage in transit, replevin and
reclamation and all other rights and remedies of an unpaid vendor or
lienor, and any liens held by Borrower as a mechanic, contractor,
subcontractor, processor, materialman, machinist, manufacturer,
artisan, or otherwise;
(b) All documents, instruments, documents of title, general intangibles,
policies and certificates of insurance, guaranties, securities,
chattel paper, deposits, tax returns, proceeds of insurance, proceeds
of an eminent domain or condemnation award, cash, liens or other
property, which are now or may hereinafter be in the possession of
Borrower or as to which Borrower may now or hereafter control
possession by documents of title or otherwise, including, but not
limited to, all property at locable to unshipped orders relating to
Receivables and Inventory;
(c) All books, records, customer lists, supplier lists, ledgers, evidences
of shipping, invoices, purchase orders, sales orders and all other
evidences of Borrower's business records, including all cabinets,
drawers, etc. that may hold the same; computer records, lists,
software, programs, wherever located, all whether now existing or
hereafter arising or acquired;
(d) All of Borrower's inventory, whether now owned or hereafter acquired,
including without limitation (collectively herein called the
"Inventory"): (i) all goods manufactured or acquired for sale or
lease, and any piece goods, raw materials, work in process and
finished merchandise, findings or component materials, and all
supplies, goods, incidentals, office supplies, packaging materials,
and any and all items including machinery and equipment used or
consumed in the operation of the business of Borrower or which
contribute to the finished product or to the
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sale, promotion and shipment thereof, in which Borrower now or at any
time hereafter may have an interest; (ii) all inventory whether or not
the same is in transit or in the constructive, actual or exclusive
occupancy or possession of Borrower or is held by Borrower or by
others for the Accounts, including without limitation, all goods
covered by purchase orders and contracts with suppliers and all goods
billed and held by suppliers; (iii) all inventory which may be located
on premises of Borrower or of any carrier, forwarding agents,
truckers, warehousemen, vendors, selling agents or third parties; (iv)
all general intangibles relating to or arising out of inventory; and
(v) all proceeds and products of the foregoing resulting from the
sale, lease or other disposition of inventory, including cash,
accounts receivable, other non-cash proceeds and trade-ins;
(e) All general intangibles, including without limitation, tax refunds,
proceeds of insurance, eminent domain awards, condemnation proceeds,
and patents, copyrights, tradenames, trademarks, applications
therefor, and licenses to any patent, copyright, trademark, or
tradename that Borrower now owns, has the right to use or may
hereafter own or acquire the right to use;
(f) All equipment, machinery, appliances, and furniture and fixtures, now
existing or hereafter arising, wherever located, and all contracts,
contract rights and chattel paper arising out of any lease of any of
the foregoing;
(g) All other collateral in which Borrower may hereafter grant to Lender a
security interest; and
(h) All renewals, substitutions, replacements, additions, accessions,
proceeds, and products of any and all of the foregoing, including
without limitation, all proceeds of credit, fire and other insurance.
SECTION 7.2 SUBORDINATION AND RELEASE. In the event that no Defaulting
Event or Event of Default shall exist, and the outstanding principal amount of
the Revolving Loans shall not otherwise exceed the Borrowing Base, then, upon
written request of the Borrower, with the written consent of the Guarantor, each
delivered at least ten (10) days in advance of the requested date of
subordination or release, Lender shall execute and deliver such documents as
shall be reasonably requested by Borrower in order to subordinate Lender's
security interest in any or all of the Borrower Collateral to that of another
creditor of Borrower or release Lender's interest in any or all of the Borrower
Collateral, as requested by Borrower; provided that (a) all costs and expenses
associated with such subordination or release shall be borne by Borrower, and
(b) in no event shall Lender be required to make any representation, warranty,
covenant or agreement in connection with such subordination or release beyond
the subordination or release of its security interest in the Borrower
Collateral. In no event shall Lender be required to take any action with respect
to the Collateral, in which Lender shall in all events retain a perfected
first-priority security interest. In no event shall Lender be required to
subordinate or release its security interest in the Borrower Collateral if a
Defaulting Event or Event of Default shall exist on the date of the requested
subordination or release, or if the outstanding principal balance of the
Revolving Loans otherwise exceeds the Borrowing Base on such date.
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The Borrower shall not request the release of any Borrower Collateral pursuant
to this Section 7.2 or otherwise without the written consent of the Guarantor.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 EVENTS OF DEFAULT. Any and all Obligations, including without
limitation, the Obligations arising pursuant to or in connection with the
Revolving Loans shall, at the option of Lender and notwithstanding any time or
credit allowed by any note or agreement, become immediately due and payable
without notice if any one or more of the following events (herein called "Events
of Default" and individually, an "Event of Default") shall occur:
(a) Borrower's failure to pay principal due hereunder or under the Note or
under any other Financing Document;
(b) Borrower's failure to pay interest or any other sum due hereunder or
under the Note or under any other Financing Document (except as
provided in (a) above) for three (3) business days after notice from
Lender; provided that Lender shall not be obligated to wait such three
(3) day period after notice in the event that Lender reasonably
concludes that such delay will materially impair its ability to
recover from the Borrower, the Guarantor, the Collateral or the
Borrower Collateral.
(c) The occurrence of an Event of Default under Section 2.2(b) or (c)
hereof;
(d) Borrower's failure to pay or perform when due any other covenant,
duty, indebtedness, liability or obligation arising under this
Agreement or any other Financing Document, or any such failure by
Guarantor under any Financing Document, in each case within fifteen
(15) days after notice from Lender, provided that if any such covenant
cannot be reasonably performed within fifteen (15) days it shall not
constitute an Event of Default if Borrower or Guarantor, as the case
may be, has commenced performance within such fifteen (15) day period
and diligently completes the same;
(e) any representation or warranty by Borrower herein or by Borrower or
Guarantor in any other Financing Document or otherwise made to Lender
in connection with the Loan is untrue in any material respect;
(f) the failure by Borrower to maintain the insurance required by this
Agreement or any other Financing Document;
(g) the failure of the Borrower or Guarantor generally to pay its debts as
such debts become due;
(h) the entry of a decree or order for relief by a court having
jurisdiction in respect of the Borrower or Guarantor in an involuntary
case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state
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bankruptcy, insolvency or other similar law, or the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the Borrower or the Guarantor or for any
substantial part of the Borrower's or Guarantor's property, and the
continuance of any such decree or order unstayed and in effect for a
period of sixty (60) consecutive days; or upon the commencement by the
Borrower or the Guarantor of a voluntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar
law, or the consent by the Borrower or the Guarantor to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of the Borrower or the Guarantor or for any substantial part of the
property of the Borrower or the Guarantor or the making by the
Borrower or the Guarantor of any assignment for the benefit of
creditors;
(i) a final, unappealed judgment shall be entered against the Guarantor by
any court for the payment of money which is not satisfied within
thirty (30) days after the last date for which an appeal can be filed
and which, together with all such other outstanding judgments against
the Borrower or the Guarantor, as applicable, exceeds $750,000 in the
aggregate;
(j) the occurrence of a default or event of default (howsoever defined)
under the Pledge Agreement, the Guaranty or any other Financing
Document;
(k) the declaration of a default under any material obligation of Borrower
or Guarantor to any other creditor; and
(l) for so long as any stock of Airtouch shall constitute Collateral,
Airtouch shall fail to be current on any regular, periodic or other
required filing with the Securities and Exchange Commission.
Upon the occurrence of any Event of Default, at the option of Lender: (x)
any and all Obligations, including without limitation the Obligations arising
from or in connection with the Revolving Loans, shall become immediately due and
payable, and (y) Borrower's eligibility to request any further Revolving Loans
shall automatically and immediately terminate, without presentment, demand,
protest, notice of protest or other notice or requirements of any kind, all of
which Borrower expressly waives. Notwithstanding the foregoing sentence, if any
Event of Default under clause (h) occurs, the acceleration of Obligations and
termination of Borrower's eligibility to request further Revolving Loans shall
be automatic.
Thereafter, Lender may proceed to enforce the rights of Lender whether by
suit in equity or by action at law, whether for specific performance of any
covenant or agreement contained in this Agreement, the Note or the other
Financing Documents, or in aid of the exercise of any power granted in either
this Agreement or the Note or any other Financing Document, or it may proceed to
obtain judgment or any other relief whatsoever appropriate to the enforcement of
such rights, or proceed to enforce any legal or equitable right which Lender may
have by reason of the occurrence of any Event of Default hereunder.
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ARTICLE IX
RIGHTS AND REMEDIES OF LENDER
SECTION 9.1 REMEDIES OF LENDER. Upon the occurrence of any Event of
Default, Lender shall have in any jurisdiction where enforcement hereof is
sought, in addition to all other rights and remedies which Lender may have under
law and equity, the following rights and remedies, all of which may be exercised
with or without further notice to Borrower and without a prior judicial or
administrative hearing, which notice and hearing are expressly waived: to
enforce or foreclose the liens and security interests created under this
Agreement or under any other Financing Document relating to Borrower Collateral
by any available judicial procedure or without judicial process; to enter any
premises where any Borrower Collateral may be located for the purpose of taking
possession or removing the same; to sell, assign, lease, or otherwise dispose of
Borrower Collateral or any part thereof, either at public or private sale, in
lots or in bulk, for cash, on credit or otherwise, with or without
representations or warranties, and upon such terms as shall be acceptable to
Lender, all at Lender's sole option and as Lender in its sole discretion may
deem advisable; to bid or become purchaser at any such sale if public; and, at
the option of Lender, to apply or be credited with the amount of all or any part
of the Obligations owing to Lender against the purchase price bid by Lender at
any such sale.
SECTION 9.2 SPECIFIC POWERS. Lender may at any time, after the occurrence
of an Event of Default, at Lender's sole reasonable discretion: (i) give notice
of assignment to any entity obligated to Borrower upon an Account (an "Account
Debtor"); (ii) collect Receivables and charge, or cause to be charged, the
collection costs and expenses to the Revolving Loan Account; (iii) exercise all
other rights granted in this Agreement and the other Financing Documents; (iv)
receive, open and dispose of all mail addressed to Borrower and notify the Post
Office authorities to change the address for delivery of Borrower's mail to an
address designated by Lender; (v) endorse the name of Borrower on any checks or
other evidence of payment that may come into possession of Lender and on any
invoice, freight or express bill, bill of lading or other document; (vi) in the
name of Borrower or otherwise, demand, sue for, collect and give acquittance for
any and all monies due or to become due on Receivables; (vii) compromise,
prosecute or defend any action, claim or proceeding concerning Receivables; and
(viii) do any and all things necessary and proper to carry out the purposes
contemplated in this Agreement, the other Financing Documents and any other
agreement between the parties. Neither Lender nor any person acting as its
representative hereunder shall be liable for any acts or omissions or for any
error of judgment or mistake of fact or law, except for bad faith or willful
misconduct or failure to act in a commercially reasonable manner. Borrower
agrees that the powers granted hereunder, being coupled with an interest, shall
be irrevocable so long as any Obligation remains unsatisfied. Notwithstanding
the foregoing, it is understood that Lender is under no duty to take any of the
foregoing actions and that after having made demand upon Account Debtors for
payment, Lender shall have no further duty as to the collection or protection of
Receivables or any income therefrom and no further duty to preserve any rights
pertaining thereto, other than the safe custody thereof.
SECTION 9.3 DUTIES AFTER DEMAND OR DEFAULT. Borrower will, at Lender's
request, assemble all Borrower Collateral and make it available to Lender at
places which Lender may
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reasonably select, whether at the premises of Borrower or elsewhere and will
make available to Lender all premises and facilities of Borrower for the purpose
of Lender taking possession of Borrower Collateral or of removing or putting the
Borrower Collateral in salable form. In the event any goods called for in any
sales order, contract, invoice or other instrument or agreement evidencing or
purporting to give rise to any Receivable shall not have been delivered or shall
be claimed to be defective by any customer, Lender shall have the right in its
discretion to use and deliver to such customer any goods of Borrower to fulfill
such order, contract or the like so as to make good any such Receivable. If any
Borrower Collateral shall require repairing, maintenance, preparation, or the
like, or is in process or other unfinished state, Lender shall have the right,
but shall not be obligated, to do such repairing, maintenance, preparation,
processing or completion of manufacturing for the purpose of putting the same in
such salable form as Lender shall deem appropriate, but Lender shall have the
right to sell or dispose of such Borrower Collateral without such processing.
The net cash proceeds resulting from the collection, liquidation, sale, lease or
other disposition of Borrower Collateral shall be applied first to the expenses
(including all reasonable attorneys' and professionals' fees) of retaking,
holding, storing, processing and preparing for sale, selling, collecting,
liquidating and the like and then to the satisfaction of all Obligations,
application as to particular Obligations or against principal or interest or
other sums to be at Lender's sole discretion, and then, upon full and final
payment of the Obligations, and unless otherwise prohibited by court order or
law, to Borrower, it being agreed that if any such payment made to Lender is
recovered from or repaid by Lender in whole or in part in any bankruptcy,
insolvency or similar proceeding instituted by or against Borrower, this
Agreement automatically shall be reinstated without any further action by
Borrower and Lender. Borrower shall be liable to Lender and shall pay to Lender
on demand any deficiency which may remain after such sale, disposition,
collection or liquidation of Borrower Collateral.
SECTION 9.4 CUMULATIVE REMEDIES. The enumeration of Lender's rights and
remedies set forth in this Article is not intended to be exhaustive and the
exercise by Lender of any right or remedy shall not preclude the exercise of any
other rights or remedies, all of which shall be cumulative and shall be in
addition to any other right or remedy given hereunder or under any other
agreement between the parties or which may now or hereafter exist in law or at
equity or by suit or otherwise. No delay or failure to take action on the part
of Lender in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the exercise of any
other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between Borrower and Lender or its
employees shall be effective to change, modify or discharge any provision of
this Agreement or to constitute a waiver of any Event of Default.
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ARTICLE X
TERM AND TERMINATION
SECTION 10.1 TERM AND TERMINATION. Unless sooner terminated by Lender as a
result of an Event of Default or a Defaulting Event, Borrower's eligibility to
request Revolving Loans shall commence on the date hereof and shall continue for
a period through and including March 31, 2001 (the "Term"). Borrower's
eligibility to request Revolving Loans may be extended after the Term only with
the express written consent of both Borrower and Lender. At the end of the Term,
Borrower shall pay the entire balance of the Revolving Loans outstanding and all
other outstanding Obligations. Further, upon termination of the Revolving Loan
facility, all of the rights, interests and remedies of Lender and Obligations of
Borrower shall survive and Borrower shall have no right to receive, and Lender
shall have no obligation to make, any further Revolving Loans. Upon full, final
and indefeasible payment of the Obligations to Lender, all rights and remedies
of Borrower and Lender hereunder shall cease, so long as any payment so made to
Lender and applied to the Obligations is not thereafter recovered from or repaid
by Lender in whole or in part in any bankruptcy, insolvency or similar
proceeding instituted by or against Borrower, whereupon this Agreement shall be
automatically reinstated without any further action by Borrower and Lender and
shall continue to be fully applicable to such Obligations to the same extent as
though the payment so recovered or repaid had never been originally made on such
Obligations.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 PAYMENT SET-ASIDE. To the extent that Borrower makes a payment
or payments to Lender (whether hereunder, under the Note, or under the other
Financing Documents) or Lender enforces its security interests or rights or
exercises its right of setoff, and such payment or payments or the proceeds of
such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to Borrower, a
trustee, receiver or any other person under any law (including without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action) in each case in connection with any bankruptcy or similar
proceeding involving Borrower, then to the extent of any such restoration, the
obligation, or part thereof originally intended to be satisfied, 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 11.2 SET-OFF. Borrower hereby gives Lender a lien and right of
setoff for all its liabilities to Lender upon and against all its deposits,
credits, collateral and property now or hereafter in the possession or control
of Lender or in transit to it. Lender may, upon the occurrence of any Event of
Default, apply or set off the same, or any part thereof, to any liability of
Borrower to Lender, even though unmatured.
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SECTION 11.3 COVENANTS TO SURVIVE; BINDING AGREEMENT. All covenants,
agreements, warranties and representations made herein, in the Note, in the
other Financing Documents, and in all certificates or other documents of
Borrower shall survive the advances of money made by Lender to Borrower
hereunder and the delivery of the Note and the other Financing Documents, and
all such covenants, agreements, warranties and representations shall be binding
upon and inure to the benefit of Lender and its successors and assigns, whether
or not so expressed.
SECTION 11.4 CROSS-DEFAULT. Borrower acknowledges and agrees that an Event
of Default and/or Defaulting Event under any one of the Financing Documents
shall constitute an Event of Default or Defaulting Event under all of the other
Financing Documents.
SECTION 11.5 AMENDMENTS AND WAIVERS. Neither this Agreement, the Note, the
Guaranty, the Pledge Agreement, the other Financing Documents, nor any term,
covenant or condition hereof or thereof may be changed, waived, discharged,
modified or terminated except by a writing executed by the parties hereto or
thereto. No failure on the part of Lender to exercise, and no delay in
exercising, any right, remedy or power hereunder or under the Note or the other
Financing Documents shall preclude any other or future exercise thereof, or the
exercise of any other right, remedy or power.
SECTION 11.6 NOTICES. All notices or other communications required or
permitted to be given under this Agreement shall be considered properly given if
sent by a nationally recognized overnight messenger service or mailed first
class United States mail, postage prepaid, registered or certified mail, with
return receipt requested, or by delivery of same to the address listed below by
prepaid messenger or telegram, as follows:
If to Borrower: ZIPLINK, LLC
40 Woodland Street
Hartford, Connecticut 06105
Attn: Henry M. Zachs
With a copy to:
Brenner, Saltzman & Wallman
271 Whitney Avenue
New Haven, Connecticut 06511
Attn: Wayne A. Martino
If to Lender: Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention: Brian Howard, Private Clients Group
Mail Stop: CTMOHO3A
or such other place as any party hereto may be notified in writing as a place
for service or notice hereunder. Notice so sent shall be effective upon delivery
to such address, whether or not receipt thereof is acknowledged or is refused by
the addressee or any person at such address.
-28-
SECTION 11.7 WAIVERS.
(a) BORROWER WAIVES DILIGENCE, DEMAND, PRESENTMENT FOR PAYMENT, NOTICE OF
NONPAYMENT, PROTEST AND NOTICE OF ANY RENEWALS OR EXTENSIONS. BORROWER
ACKNOWLEDGES THAT THE LOANS EVIDENCED HEREBY ARE COMMERCIAL TRANSACTIONS AND
WAIVES ITS RIGHT TO NOTICE AND HEARING UNDER CHAPTER 903A OF THE CONNECTICUT
GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH
RESPECT TO ANY PREJUDGMENT REMEDY WHICH LENDER MAY DESIRE TO USE, AND FURTHER
WAIVES ITS RIGHTS TO REQUEST THAT LENDER POST A BOND, WITH OR WITHOUT SURETY, TO
PROTECT BORROWER AGAINST DAMAGES THAT MAY BE CAUSED BY ANY PREJUDGMENT REMEDY
SOUGHT OR OBTAINED BY LENDER.
(b) BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION
OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO
THE FINANCING TRANSACTIONS OF WHICH THIS AGREEMENT IS A PART AND/OR THE
ENFORCEMENT OF ANY OF LENDER'S RIGHTS, INCLUDING WITHOUT LIMITATION, TORT
CLAIMS. BORROWER ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY,
WITHOUT DURESS AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER
WITH ITS ATTORNEYS. BORROWER FURTHER ACKNOWLEDGES THAT LENDER HAS NOT
REPRESENTED TO BORROWER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
(c) BORROWER ACKNOWLEDGES THAT IT MAKES THE FOREGOING WAIVERS IN (A) AND
(b) ABOVE, KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER CONSIDERATION
OF THE RAMIFICATIONS OF SUCH WAIVERS WITH ITS ATTORNEYS.
SECTION 11.8 SECTION HEADINGS; SEVERABILITY; ENTIRE AGREEMENT. Section and
subsection headings have been inserted herein for convenience only and shall not
be construed as part of this Agreement. Every provision of this Agreement, the
Note and the other Financing Documents is intended to be severable; if any term
or provision of this Agreement, the Note, the other Financing Documents, or any
other document delivered in connection herewith shall be invalid, illegal or
unenforceable for any reason whatsoever, the validity, legality and
enforceability of the remaining provisions hereof or thereof shall not in any
way be affected or impaired thereby. All Exhibits and Schedules to this
Agreement shall be annexed hereto and shall be deemed to be part of this
Agreement. This Agreement, the other Financing Documents, and the Exhibits and
Schedules attached hereto and thereto embody the entire agreement and
understanding between Borrower and Lender and supersede all prior agreements and
understandings relating to the subject matter hereof unless otherwise
specifically reaffirmed or restated herein.
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SECTION 11.9 GOVERNING LAW. This Agreement and the other Financing
Documents, and all transactions, assignments and transfers hereunder and
thereunder, and all the rights of the parties, shall be governed as to validity,
construction, enforcement and in all other respects by the laws of the State of
Connecticut (but not its conflicts of law provisions). Borrower agrees that the
Superior Court for the Judicial District of Hartford or the United States
District Court for the District of Connecticut at Hartford shall have
jurisdiction to hear and determine any claims or disputes pertaining to the
financing transactions of which this Agreement is a part and/or to any matter
arising or in any way related to this Agreement or any other agreement between
Lender and Borrower, and Borrower expressly submits and consents in advance to
such jurisdiction in any action or proceeding.
SECTION 11.10 INDEMNIFICATION. In consideration of Lender's execution and
delivery of this Agreement and Lender's making of the Revolving Loans hereunder
and in addition to all other obligations of Borrower under this Agreement,
Borrower hereby agrees to defend, protect, indemnify and hold harmless Lender,
its successors, assigns, officers, directors, employees and agents (including
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Indemnities") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages and expenses in connection therewith
(irrespective of whether any such Indemnities is a party to any action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements as and when incurred (the "Indemnifiable Liabilities")
incurred by the Indemnities or any of them as a result of, or arising out of, or
relating to (i) the execution, delivery, performance or enforcement of this
Agreement and the other Financing Documents and any instrument, document or
agreement executed pursuant hereto to any of the Indemnities; (ii) Lender's
status as lender to, or creditor of, Borrower; or (iii) the operation of
Borrower's business from and after the date hereof. To the extent that the
foregoing undertaking by Borrower may be unenforceable for any reason, Borrower
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnifiable Liabilities which is permissible under applicable law.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
ZIPLINK, LLC
By: S/Henry M. Zachs
-----------------------
Name: Henry M. Zachs
FLEET NATIONAL BANK
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By: /S/Brian A. Howard
-----------------------
Brian A. Howard
Assistant Vice President
-31-
SCHEDULES
Schedule 4.1(d) -- Litigation
Schedule 4.1(i) -- Liens
Schedule 4.1(l) -- Pension Plans
Schedule 4.1(n) -- Collateral Locations
Schedule 4.1(r) -- Tradenames
Schedule 4.1(t) -- Affiliates, Parents and Subsidiaries
Schedule 4.1(u) -- Officers, Members and Managers
EXHIBIT A
"REVOLVING LOAN NOTE"
EXHIBIT A
REVOLVING LOAN NOTE
$15,000,000.00 March 31, 1998
Hartford, Connecticut
For value received, the undersigned, ZIPLINK, LLC (the "Borrower"),
promises to pay to the order of FLEET NATIONAL BANK (the "Lender") at its
office at 777 Main Street, Hartford, Connecticut 06115, or at such other
place as Lender may designate, the principal amount of FIFTEEN MILLION AND
00/100 DOLLARS ($15,000,000.00), or such amount thereof as shall be
outstanding pursuant to the Loan Agreement (as hereafter defined) together
with interest on the unpaid balance of this Note, beginning as of the date
hereof, at a rate per annum for each Interest Period equal to the LIBOR Rate
plus .30% for such Interest Period, or such other rate as shall be provided
in the Loan Agreement, together with all taxes levied or assessed on this
Note or the debt evidenced hereby against Lender, and together with all
costs, expenses and attorneys' fees incurred in the collection of this Note,
or to enforce or foreclose any security agreement, pledge agreement or other
document including, without limitation, the Loan Agreement and the Pledge
Agreement (as hereinafter defined), securing or relating to this Note, or in
protecting or defending the lien thereof, or in any litigation or matter
arising from or connected therewith or with this Note. Interest shall be
computed monthly in arrears on the basis of a 360-day year and actual days
elapsed. The interest rate for each Revolving Loan shall be determined in
accordance with the terms of the Loan Agreement. The terms "Interest Period",
"LIBOR Rate" and "Revolving Loan" as used herein shall have the definitions
assigned in the Loan Agreement.
The principal amount of this Note shall be advanced, upon the request of
Borrower pursuant to a certain Revolving Loan Agreement between Borrower and
Lender of even date herewith (the "Loan Agreement"). This Note is issued and
secured pursuant to the Loan Agreement, the terms of which are deemed
incorporated by reference. This Note is guaranteed by a Guaranty of even date
herewith (the "Guaranty") from Henry M. Zachs (the "Guarantor"). The Guaranty
is secured by a Stock Pledge Agreement of even date herewith between
Guarantor and Lender (the "Pledge Agreement") pursuant to which the Guarantor
has pledged certain marketable securities to the Lender. Lender shall
maintain a Revolving Loan Account (as defined in the Loan Agreement) on which
it will keep record of all outstanding amounts hereunder.
Interest shall be paid on the first day of each month beginning on the
first day of May, 1998 and continuing on the first day of each month
thereafter, until the principal balance with accrued interest thereon is paid
in full. If not sooner paid, the entire principal balance plus accrued
interest thereon shall be paid in full on April 1, 2001.
Borrower may repay this Note in whole or in part at any time, provided
that Borrower shall pay such fees and premiums in connection with a
prepayment as are set forth in the Loan Agreement.
Upon the occurrence of an Event of Default under and as defined in the
Loan Agreement, the entire indebtedness, with accrued interest thereon due
under this Note, shall, at the option of Lender, become immediately due and
payable without demand or notice of any kind. Borrower agrees that the
interest rate shall increase by three (3%) percentage points per annum over
the otherwise applicable rate upon the occurrence of such Event of Default.
If any interest installment due hereunder is not paid within ten (10)
days after the date it is due, a late charge equal to five percent (5%) of
said amount shall be assessed against Borrower, and shall be immediately due
and payable without demand or notice of any kind.
All payments received hereunder shall be applied first to late charges,
prepayment premiums and fees, and other costs and expenses, then to accrued
interest and then to principal, except as otherwise provided herein or in the
Loan Agreement or Pledge Agreement.
Borrower hereby grants to Lender a lien and right of setoff for all of
Borrower's liabilities to Lender upon and against all the deposits, credits,
collateral and property of Borrower, now or hereafter in the possession or
control of Lender or in transit to it. Lender may, at any time, apply or set
off the same, or any part thereof, to any liability of Borrower, whether or
not matured or demanded.
Notwithstanding any provisions of this Note to the contrary, the rate of
interest to be paid by Borrower to Lender under this Note shall not exceed
the highest or the maximum rate of interest permitted to be charged by Lender
under applicable laws. Any amounts paid by Borrower to Lender in excess of
such rate shall be deemed to be partial prepayments of principal hereunder.
No delay or omission by Lender in exercising any right hereunder, nor
failure by Lender to insist upon the strict performance of any terms herein,
shall operate as a waiver of such right, any other right hereunder, or any
terms herein. No waiver of any right shall be effective unless in writing and
signed by Lender, nor shall a waiver on one occasion be constituted as a bar
to, or waiver of, any such right on any future occasion.
Borrower and each and all endorsers, guarantors and sureties of this
Note waive diligence, demand, presentment for payment, notice of nonpayment,
protest and notice of protest, and notice of any renewals or extensions of
this Note, and all rights under any statute of limitations, and all
endorsers, guarantors and sureties agree that the time for payment of this
Note may be extended at Lender's sole discretion, without impairing their
liability thereon, and further consent to the release of all or any part of
the security for the payment hereof, at the discretion of Lender, or the
release of any party liable for this obligation without affecting the
liability of the other parties hereto.
THE BORROWER ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS NOTE IS A
COMMERCIAL TRANSACTION, AND WAIVES ITS RIGHT TO NOTICE AND HEARING UNDER
CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS NOW CONSTITUTED OR
HEREAFTER AMENDED OR AS OTHERWISE ALLOWED UNDER ANY STATE OR FEDERAL LAW WITH
RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE LENDER MAY DESIRE TO USE, AND
FURTHER WAIVES ITS RIGHTS TO REQUEST THE LENDER POST A BOND, WITH OR WITHOUT
SURETY, TO
-2-
PROTECT BORROWER AGAINST DAMAGES THAT MAY BE CAUSED BY ANY PREJUDGMENT REMEDY
SOUGHT OR OBTAINED BY LENDER. THE BORROWER ACKNOWLEDGES THAT IT MAKES THESE
WAIVERS KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER CONSIDERATION
OF THE RAMIFICATIONS OF THESE WAIVERS WITH ITS ATTORNEYS.
THE BORROWER WAIVES TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION,
PROCEEDING OR ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO
THIS NOTE OR THE FINANCING TRANSACTION OF WHICH THIS NOTE IS A PART, OR THE
DEFENSE OR ENFORCEMENT OF ANY OF THE LENDER'S RIGHTS AND REMEDIES IN
CONNECTION THEREWITH. THE BORROWER ACKNOWLEDGES THAT IT MAKES THIS WAIVER
KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER CONSIDERATION OF THE
RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.
This Note shall be governed by and construed in accordance with the laws
of the State of Connecticut.
All references to the "Borrower" or the "Lender" shall apply to their
respective successors and assigns.
ZIPLINK, LLC
By:
---------------------------------
Henry M. Zachs
Its Manager
-3-
EXHIBIT B
"SOLVENCY CERTIFICATE"
EXHIBIT B
SOLVENCY CERTIFICATE
Personally appeared before me, the undersigned, who, being first duly
sworn according to law, deposes and says:
1. He has personal knowledge of the facts sworn to in this Certificate.
2. As of the date hereof and upon and after the initial funding of the
$15,000,000 revolving loan facility (the "Loan") being extended to ZIPLINK,
LLC (the "Borrower") by Fleet National Bank (the "Lender") pursuant to the
Revolving Loan and Security Agreement (the "LOAN AGREEMENT") of this date and
the undersigned's execution and delivery of (i) the Guaranty of even date
(the "Guaranty"), guarantying the obligations of Borrower under the Loan
Agreement and other related documents and instruments and (ii) the Stock
Pledge Agreement of even date herewith (the "Pledge Agreement") pursuant to
which the undersigned pledged certain shares of capital stock as collateral
for the Guaranty, (a) the undersigned is "Solvent" as that term is defined
below, (b) no petition in bankruptcy has been filed, whether voluntary or
involuntary, by or against the undersigned, and (c) there has not been an
assignment for the benefit of creditors filed under the bankruptcy or
insolvency laws of the United States or any state thereof or any other action
brought under the aforesaid bankruptcy or insolvency laws against or with
respect to the undersigned. "Solvent," as used herein means that the
undersigned's total tangible assets as a going concern on a fair market basis
exceed its total liabilities, calculated in accordance with generally
accepted accounting principles, consistently applied.
3. The undersigned does not contemplate filing a petition in bankruptcy
or for a reorganization under the Bankruptcy Code, and the undersigned does
not have any knowledge of any threatened bankruptcy or insolvency proceedings
against the undersigned.
4. The transactions contemplated by the documents evidencing, securing
and guarantying the Loan, including, without limitation the Loan Agreement,
the Guaranty, the Pledge Agreement and the Note (as defined in the Loan
Agreement) (collectively, the "FINANCING AGREEMENTS"), are not intended to
hinder, delay or defraud either the undersigned's present or future creditors.
5. The undersigned does not intend to incur debts beyond its ability to
pay them as they mature.
6. The aggregate of the undersigned's property and assets at a fair
valuation is sufficient in amount to pay its debt.
7. The undersigned has examined the representations, warranties,
amendments, and covenants contained in the Financing Agreements, and the
undersigned certifies that, as of the date hereof, all of the certificates,
statements, representations, warranties
and covenants as to past or present existing facts which are contained
therein are true and correct in all material respects, and that no default
exists as of the date hereof.
8. The statements contained herein shall be continuing in nature and
shall be deemed to have been remade upon each borrowing by the Borrower under
the Financing Agreements, unless and until the undersigned gives the Lender
prior written notice (in the manner and to the persons required by the
Financing Agreements) to the contrary. The undersigned hereby acknowledges
that the Lender has relied upon the warranties, representations, agreements
and covenants contained herein.
9. The financial statements previously submitted to the Lender are a
fair presentation of the assets and liabilities of the Borrower and the
undersigned as of the date of such financial statements and there has not
been a material adverse change in the financial or other condition of the
Borrower or the undersigned since such date.
10. This Certificate is made to induce the Lender to extend the Loan to
the Borrower.
----------------------------------------
Henry M. Zachs
Subscribed and sworn to before
me this _____ day of March, 1998.
- ---------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires
-3-
MODIFICATION TO LOAN AGREEMENT
THIS MODIFICATION TO LOAN AGREEMENT (this "Modification"), dated October
15, 1998, by and between FLEET NATIONAL BANK, a national banking association
with an office located at 777 Main Street, Hartford, Connecticut 06115
("Lender") and ZIPLINK, LLC, a Connecticut limited liability company, with
its principal place of business at 40 Woodland Street, Hartford, Connecticut
06105 ("Borrower").
PREAMBLE
WHEREAS, Borrower and Lender entered into a Revolving Loan Agreement,
dated March 31, 1998 (the "Agreement"), pursuant to which Lender extended a
revolving loan to Borrower in the original principal amount of $15,000,000
(the "Loan"); and
WHEREAS, Borrower and Lender wish to amend the Agreement to increase the
amount of the Loan and make certain other changes.
NOW, THEREFORE, for the mutual consideration contained in this
Modification and the Agreement, Borrower and Lender agree as follows:
1. The title of the Agreement is changed in all applicable places to
"Revolving Loan and Security Agreement."
2. The amount "$15,000,000" is deleted in the Preamble of the Agreement and
"$20,000,000" shall be added in its place.
3. The definition of "Commitment Amount" in Section 1.1(h) of the Agreement is
deleted and the following is added in its place:
"Commitment Amount" shall mean TWENTY MILLION AND
00/100 DOLLARS ("$20,000,000.00"), or such lesser amount
as the Borrower may stipulate.
4. The following is added as Section 2.6 of the Agreement:
"SECTION 2.6 OVERADVANCES. Lender may, in its sole discretion and
subject to the terms and conditions set forth in this Agreement or any other
conditions which Lender may impose in its sole discretion, including, without
limitation, the payment of fees, an increased interest rate, or posting of
additional collateral, make temporary advances so that the aggregate
principal amount of all outstanding Revolving Loans is in excess of the
Borrowing Base or the Commitment Amount from time to time (each such
temporary Revolving Loan is referred to herein as an "Overadvance"). Nothing
contained in this Section 2.6 or elsewhere in this Agreement shall constitute
or be deemed to constitute a commitment or agreement by Lender to make any
Overadvances, nor shall the making of
an Overadvance at any time or from time to time constitute or be deemed to
constitute a course of dealing by Lender with respect to Overadvances."
5. Exhibit "A" to the Agreement is deleted and Exhibit "A" in the form
attached to this Modification is added in its place.
6. In all other respects, the terms and conditions of the Agreement are hereby
ratified and confirmed.
IN WITNESS WHEREOF, the parties set their hands as of the date first
provided above.
ZIPLINK, LLC
By: s/ Henry M. Zachs
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Henry M. Zachs
Its Manager
FLEET NATIONAL BANK
By:s/Brian A. Howard
-----------------------------
Brian A. Howard
Its Assistant Vice President
EXHIBIT "A"
AMENDED AND RESTATED REVOLVING LOAN NOTE
EXHIBIT A
AMENDED AND RESTATED REVOLVING LOAN NOTE
$20,000,000.00 Dated March 31, 1998, amended and
restated as of October 15, 1998
Hartford, Connecticut
For value received, the undersigned, ZIPLINK, LLC (the "Borrower"),
promises to pay to the order of FLEET NATIONAL BANK (the "Lender") at its
office at 777 Main Street, Hartford, Connecticut 06115, or at such other
place as Lender may designate, the principal amount of TWENTY MILLION AND
00/100 DOLLARS ($20,000,000.00), or such amount thereof as shall be
outstanding pursuant to the Loan Agreement (as hereafter defined) together
with interest on the unpaid balance of this Note, beginning as of the date
hereof, at a rate per annum for each Interest Period equal to the LIBOR Rate
plus .30% for such Interest Period, or such other rate as shall be provided
in the Loan Agreement, together with all taxes levied or assessed on this
Note or the debt evidenced hereby against Lender, and together with all
costs, expenses and attorneys' fees incurred in the collection of this Note,
or to enforce or foreclose any security agreement, pledge agreement or other
document including, without limitation, the Loan Agreement and the Pledge
Agreement (as hereinafter defined), securing or relating to this Note, or in
protecting or defending the lien thereof, or in any litigation or matter
arising from or connected therewith or with this Note. Interest shall be
computed monthly in arrears on the basis of a 360-day year and actual days
elapsed. The interest rate for each Revolving Loan shall be determined in
accordance with the terms of the Loan Agreement. The terms "Interest Period",
"LIBOR Rate" and "Revolving Loan" as used herein shall have the definitions
assigned in the Loan Agreement.
The principal amount of this Note shall be advanced, upon the request of
Borrower pursuant to a certain Revolving Loan Agreement between Borrower and
Lender, dated March 31, 1998, as amended by that Modification to Loan
Agreement, dated October 15, 1998, and as further amended from time to time
(the "Loan Agreement"). This Note is issued and secured pursuant to the Loan
Agreement, the terms of which are deemed incorporated by reference. This Note
is guaranteed by a Guaranty, dated March 31, 1998, as amended from time to
time (the "Guaranty"), from Henry M. Zachs (the "Guarantor"). The Guaranty is
secured by a Stock Pledge Agreement dated March 31, 1998, between Guarantor
and Lender, as amended from time to time (the "Pledge Agreement"), pursuant
to which the Guarantor has pledged certain marketable securities to the
Lender. Lender shall maintain a Revolving Loan Account (as defined in the
Loan Agreement) on which it will keep record of all outstanding amounts
hereunder.
Interest shall be paid on the first day of each month beginning on the
first day of May, 1998 and continuing on the first day of each month
thereafter, until the principal balance with accrued interest thereon is paid
in full. If not sooner paid, the entire principal balance plus accrued
interest thereon shall be paid in full on April 1, 2001.
Borrower may repay this Note in whole or in part at any time, provided
that Borrower shall pay such fees and premiums in connection with a
prepayment as are set forth in the Loan Agreement.
Upon the occurrence of an Event of Default under and as defined in the
Loan Agreement, the entire indebtedness, with accrued interest thereon due
under this Note, shall, at the option of Lender, become immediately due and
payable without demand or notice of any kind. Borrower agrees that the
interest rate shall increase by three (3%) percentage points per annum over
the otherwise applicable rate upon the occurrence of such Event of Default.
If any interest installment due hereunder is not paid within ten (10)
days after the date it is due, a late charge equal to five percent (5%) of
said amount shall be assessed against Borrower, and shall be immediately due
and payable without demand or notice of any kind.
All payments received hereunder shall be applied first to late charges,
prepayment premiums and fees, and other costs and expenses, then to accrued
interest and then to principal, except as otherwise provided herein or in the
Loan Agreement or Pledge Agreement.
Borrower hereby grants to Lender a lien and right of setoff for all of
Borrower's liabilities to Lender upon and against all the deposits, credits,
collateral and property of Borrower, now or hereafter in the possession or
control of Lender or in transit to it. Lender may, at any time, apply or set
off the same, or any part thereof, to any liability of Borrower, whether or
not matured or demanded.
Notwithstanding any provisions of this Note to the contrary, the rate of
interest to be paid by Borrower to Lender under this Note shall not exceed
the highest or the maximum rate of interest permitted to be charged by Lender
under applicable laws. Any amounts paid by Borrower to Lender in excess of
such rate shall be deemed to be partial prepayments of principal hereunder.
No delay or omission by Lender in exercising any right hereunder, nor
failure by Lender to insist upon the strict performance of any terms herein,
shall operate as a waiver of such right, any other right hereunder, or any
terms herein. No waiver of any right shall be effective unless in writing and
signed by Lender, nor shall a waiver on one occasion be constituted as a bar
to, or waiver of, any such right on any future occasion.
Borrower and each and all endorsers, guarantors and sureties of this
Note waive diligence, demand, presentment for payment, notice of nonpayment,
protest and notice of protest, and notice of any renewals or extensions of
this Note, and all rights under any statute of limitations, and all
endorsers, guarantors and sureties agree that the time for payment of this
Note may be extended at Lender's sole discretion, without impairing their
liability thereon, and further consent to the release of all or any part of
the security for the payment hereof, at the discretion of Lender, or the
release of any party liable for this obligation without affecting the
liability of the other parties hereto.
THE BORROWER ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS NOTE IS A
COMMERCIAL TRANSACTION, AND WAIVES ITS RIGHT TO NOTICE AND HEARING UNDER
CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS
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NOW CONSTITUTED OR HEREAFTER AMENDED OR AS OTHERWISE ALLOWED UNDER ANY STATE
OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE LENDER MAY
DESIRE TO USE, AND FURTHER WAIVES ITS RIGHTS TO REQUEST THE LENDER POST A
BOND, WITH OR WITHOUT SURETY, TO PROTECT BORROWER AGAINST DAMAGES THAT MAY BE
CAUSED BY ANY PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY LENDER. THE BORROWER
ACKNOWLEDGES THAT IT MAKES THESE WAIVERS KNOWINGLY, VOLUNTARILY, WITHOUT
DURESS AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF THESE WAIVERS
WITH ITS ATTORNEYS.
THE BORROWER WAIVES TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION,
PROCEEDING OR ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO
THIS NOTE OR THE FINANCING TRANSACTION OF WHICH THIS NOTE IS A PART, OR THE
DEFENSE OR ENFORCEMENT OF ANY OF THE LENDER'S RIGHTS AND REMEDIES IN
CONNECTION THEREWITH. THE BORROWER ACKNOWLEDGES THAT IT MAKES THIS WAIVER
KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER CONSIDERATION OF THE
RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.
This Note shall be governed by and construed in accordance with the laws
of the State of Connecticut.
All references to the "Borrower" or the "Lender" shall apply to their
respective successors and assigns.
This Amended and Restated Revolving Loan Note amends, restates and
supersedes that certain Revolving Loan Note of the Borrower, dated March 31,
1998, in the original principal amount of $15,000,000.00.
ZIPLINK, LLC
By:
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Henry M. Zachs Its Manager
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