TERM LOAN AND SECURITY AGREEMENT Dated as of November ____, 2008 Among CAPITAL GROWTH SYSTEMS, INC., GLOBAL CAPACITY GROUP, INC., CENTREPATH, INC., 20/20 TECHNOLOGIES, INC., 20/20 TECHNOLOGIES I, LLC, NEXVU TECHNOLOGIES, LLC, FNS 2007, INC., MAGENTA...
Exhibit
10.8
Dated
as
of November ____, 2008
Among
CAPITAL
GROWTH SYSTEMS, INC.,
GLOBAL
CAPACITY GROUP, INC.,
CENTREPATH,
INC.,
20/20
TECHNOLOGIES, INC.,
20/20
TECHNOLOGIES I, LLC,
NEXVU
TECHNOLOGIES, LLC,
FNS
2007,
INC.,
MAGENTA
NETLOGIC LIMITED,
CAPITAL
GROWTH ACQUISITION, INC., and
VANCO
DIRECT USA, LLC, t/b/k/a GLOBAL CAPACITY DIRECT, LLC
(as
Borrowers),
THE
LENDERS SIGNATORY HERETO FROM TIME TO TIME,
(as
Lenders),
and
ACF
CGS,
L.L.C.
(as
Agent)
TABLE
OF CONTENTS
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Page
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1.
|
Definitions
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2
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2.
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Borrowing
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14
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3.
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Interest
and Fees
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20
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4.
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Representations
and Warranties of Borrowers
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21
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5.
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Collateral
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25
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6.
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Financial
Covenants
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26
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7.
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Collateral
Covenants
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26
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8.
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Negative
Covenants
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30
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9.
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Reporting
and Information
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32
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10.
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Inspection
Rights; Expenses; Etc.
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33
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11.
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Rights
of Setoff, Application of Payments, Etc.
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34
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12.
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Attorney-in-Fact
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34
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13.
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Defaults
and Remedies
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35
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14.
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Indemnification
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38
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14.
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Indemnification
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43
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General
Provisions
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44
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Attachments:
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Addendum
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Exhibit
A - Lender and Lenders’ Commitment
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Exhibit
B - Form of Compliance Certificate
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||
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Exhibit
C - Form of Term Note
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||
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Exhibit
D - Employment Agreements
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This
TERM
LOAN AND SECURITY AGREEMENT (this “Agreement”)
is
entered into as of the ___ day of September, 2008 among CAPITAL GROWTH SYSTEMS,
INC., a Florida corporation (“Parent”),
GLOBAL CAPACITY GROUP, INC., a Texas corporation (“GCG”),
CENTREPATH, INC., a Delaware corporation (“Centrepath”),
20/20
TECHNOLOGIES, INC., a Delaware corporation (“20/20
Inc.”),
20/20
TECHNOLOGIES I, LLC, a Delaware limited liability company (“20/20
LLC”),
NEXVU
TECHNOLOGIES, LLC, a Delaware limited liability company (“Nexvu”),
FNS
2007, INC., a Delaware corporation (“FNS”),
MAGENTA NETLOGIC LIMITED, a company incorporated under the laws of England
and
Wales (“Magenta”),
CAPITAL GROWTH ACQUISITION, INC., a Delaware corporation (“CG
Acquisition”),
VANCO
DIRECT USA, LLC, t/b/k/a Global Capacity Direct, LLC, a Delaware limited
liability company (“Vanco”;
Parent, GCG, Centrepath, 20/20 Inc., 20/20 LLC, Nexvu, FNS, Magenta, CG
Acquisition and Vanco are referred to herein individually as a “Borrower”
and
collectively as the “Borrowers”),
the
lenders from time to time party hereto (each a “Lender”
and
collectively, the “Lenders”)
and
ACF CGS, L.L.C., a Delaware limited liability company, as agent for the Lenders
(in such capacity, together with any successors in such capacity, the
“Agent”).
RECITALS:
WHEREAS,
Borrowers have requested that the Lenders provide Borrowers with a secured
term
loan and Lenders are willing to provide a secured term loan to Borrowers
on the
terms set forth herein, which secured term loan Borrowers will use for the
purposes permitted hereunder; and
WHEREAS,
Borrowers’ business is a mutual and collective enterprise and Borrowers believe
that the consolidation of the secured term loan and other financial
accommodations under this Agreement will enhance the aggregate borrowing
powers
of Borrowers and facilitate the administration of their loan relationship
with
Agent and each of the Lenders, all to the mutual advantage of Borrowers;
and
WHEREAS,
each Borrower acknowledges that it will receive substantial direct and indirect
benefits by reason of the making of the secured term loan and other financial
accommodations to Borrowers as provided in this Agreement, by virtue of
Borrowers’ various inter-relationships as joint guarantors or joint obligors and
the beneficiaries thereof, as lessors and lessees, as suppliers and customers,
and as joint venturers; and
WHEREAS,
Lender’s willingness to extend financial accommodations to Borrowers, and to
administer Borrowers’ collateral security therefor, on a combined basis as more
fully set forth in this Agreement, is done solely as an accommodation to
Borrowers and at Borrowers’ request and in furtherance of Borrowers’ mutual and
collective enterprise.
NOW,
THEREFORE, in consideration of the mutual conditions and agreements set forth
in
this Agreement, and for good and valuable consideration, the receipt of which
is
hereby acknowledged, the parties hereto agree as follows.
1. Definitions.
For
purposes of this Agreement:
“20/20
Inc. Stock Pledge Agreement”
means
that certain Pledge Agreement dated as of the date hereof, granted by 20/20
Inc.
in favor of the Agent, on behalf if itself and the Lenders, with respect
to its
Stock in 20/20 LLC.
“20/20
LLC Stock Pledge Agreement”
means
that certain Pledge Agreement dated as of the date hereof, granted by 20/20
LLC
in favor of the Agent, on behalf of itself and the Lenders, with respect
to its
Stock in Magenta.
“Accounts”
means
all presently existing or hereafter arising accounts receivable due each
Borrower (including medical and health-care-insurance receivables), book
debts,
notes, drafts and acceptances and other forms of obligations now or hereafter
owing to each Borrower, whether or not arising from the sale or lease of
goods
or the rendition of services by such Borrower (including any obligation that
might be characterized as an account, contract right, general intangible
or
chattel paper under the UCC), all of each Borrower’s rights in, to and under all
purchase orders now or hereafter received by such Borrower for goods and
services, all proceeds from the sale of Inventory, all monies due or to become
due to each Borrower under all contracts for the sale or lease of goods or
the
rendition of services by such Borrower (whether or not yet earned) (including
the right to receive the proceeds of said purchase orders and contracts),
all
amounts payable to each Borrower under any insurance policy, all collateral
security and guarantees of any kind given by any obligor with respect to
any of
the foregoing, and all goods returned to or reclaimed by each Borrower that
correspond to any of the foregoing.
“Account
Control Agreements”
shall
mean collectively, the Private Bank Account Control Agreement and the HSBC
Account Control Agreement.
“Acquisition”
means
the acquisition by CG Acquisition of 100% of the membership interests of
Vanco
pursuant to the Acquisition Documents.
“Acquisition
Documents”
means
the Interest Purchase Agreement and the Management Services Agreement, together
with all other agreements, instruments, opinions of counsel and other documents
executed and/or delivered in connection with the Acquisition.
“Addendum”
means
the Addendum to Term Loan and Security Agreement attached hereto, as the
same
may be amended and in effect from time to time.
“Adjusted
Working Capital”
means
the remainder of (a) the consolidated current assets of the Borrowers minus
the amount of cash and cash equivalents included in such consolidated current
assets, minus (b) the consolidated current liabilities of the Borrowers
minus the amount of consolidated short-term Indebtedness (including current
maturities of long-term Indebtedness) of the Borrowers included in such
consolidated current liabilities.
2
“Affiliate”
means,
with respect to a Person, (a) any family member, officer, director, employee
or
managing agent of such Person, and (b) any other Person (i) that, directly
or
indirectly, through one or more intermediaries, controls, or is controlled
by,
or is under common control with, such given Person, (ii) that, directly or
indirectly beneficially owns or holds 10% or more of any class of voting
stock
or partnership or other interest of such Person or any subsidiary of such
Person, or (iii) 10% or more of the voting stock or partnership or other
interest of which is directly or indirectly beneficially owned or held by
such
Person or a subsidiary of such Person. The term “control” means the possession,
directly or indirectly, of the power to direct or cause the direction of
the
management and policies of a Person, whether through ownership of voting
securities or partnership or other interests, by contract or
otherwise.
“Agent”
has
the
meaning set forth in the preamble hereto.
“Agent
Advances”
has
the
meaning specified therefor in Section
14(h).
“Agreement
Date”
means
the date as of which this Agreement is dated.
“Annualized
EBITDA”
shall
mean the trailing period EBITDA annualized to twelve (12) months.
“Applicable
Authorization States”
means
the states of Arizona, Delaware, Georgia, Indiana, Pennsylvania, Tennessee
and
West Virginia.
“Applicable
Margin”
means
the rate of interest to be paid on the unpaid principal amount of the Term
Note
from and after the Agreement Date. For the period from and after the Agreement
Date, the Applicable Margin shall be 14% per annum payable monthly, of which
9%
shall be paid in cash, and 5% shall be capitalized, compounded and added
to the
unpaid principal amount of the Term Note monthly (whereupon from and after
such
date such additional amounts shall also accrue interest) (such interest,
“PIK
Interest”).
“Applicable
Rate”
means
a
rate equal to the sum of (i) the Prime Rate, plus (ii) the Applicable
Margin.
“Assignment
and Acceptance”
shall
mean an assignment and acceptance entered into by a Lender and an assignee,
and
accepted by the Agent, in form approved by the Agent.
“Borrowers’
Agent”
means
Parent, in its capacity as agent for itself and the other Borrowers pursuant
to
Section
2(j).
“Borrower
Asset Sales”
has
the
meaning set forth in Section
2(c)(i).
“BT
Receivable”
means
those certain receivables related to Magenta invoices OPT-20080807-1 and
OPT-20080331-2 as defined in the BT Receivables Agreement.
“BT
Receivables Agreement”
means
that certain Second Amendment to British Telecommunications and Magenta netLogic
Ltd. Camera Agreement 10693 dated September 30, 2008.
3
“BT
Receivable Payment”
means
any cash received by a Borrower with respect to the BT Receivable.
“Business
Day”
means
any
day excluding Saturday, Sunday, and any day which is a legal holiday under
the
laws of the State of New York or which is a day on which Agent is otherwise
closed for transacting business with the public.
“Capitalized
Lease”
means
a
lease that is required to be capitalized for financial reporting purposes
in
accordance with GAAP.
“Capitalized
Lease Obligations”
means
that portion of the obligations under a Capital Lease that is required to
be
capitalized in accordance with GAAP.
“Cash
Balance”
means,
at any time, unrestricted cash and cash equivalents of Borrowers, on deposit
with (i) the Depository Bank and subject to the Private Bank Account Control
Agreement, and (ii) HSBC USA, National Association and subject to the HSBC
Account Control Agreement.
“CG
Acquisition Stock Pledge Agreement”
means
that certain Pledge Agreement dated as of the date hereof, granted by CG
Acquisition in favor of Agent, on behalf of itself and the Lenders, with
respect
to its Stock in Vanco.
“Collateral”
has
the
meaning set forth in Section
5(a).
“Commitment”
means
with respect to each Lender, the commitment of such Lender to make the Term
Loan
to the Borrowers in the amount set forth in Exhibit
A
hereto,
as the same may be terminated or reduced from time to time in accordance
with
the terms of this Agreement.
“Credit
Party”
means
each Borrower, any other Person primarily or secondarily, directly or
indirectly, liable on any of the Obligations, or any other Person which has
granted a Lien on any assets of such Person as collateral for any of the
Obligations, and “Credit
Parties”
means
all of the foregoing Persons collectively.
“Customer”
means
any customer of any Borrower.
“Debenture
Documents”
means
the Debenture Purchase Agreements and all debentures, security agreements,
guarantees and other agreements executed and/or delivered in connection with
the
Debenture Indebtedness.
“Debenture
Indebtedness”
means
Indebtedness of Parent (which is guaranteed by certain other Borrowers)
evidenced by the debentures issued pursuant to the Debenture Purchase
Agreements, as described in Item
9 of the Addendum.
“Debenture
Intercreditor Agreement”
means
that certain Debt Subordination and Intercreditor Agreement dated on or about
the Agreement Date among Agent, for the benefit of the Agent and the Lenders,
and the Debenture Purchasers.
4
“Debenture
Purchasers”
means
the Purchasers under and as defined in the Debenture Purchase Agreements
and any
successor holders of Debenture Indebtedness permitted under the Debenture
Intercreditor Agreement.
“Debenture
Purchase Agreements”
mean
each of: (a) that certain Securities Purchase Agreement dated as of March
11,
2008, among Parent and the Debenture Purchasers party thereto, as modified
and
amended pursuant to that certain Consent, Waiver, Amendment and Exchange
Agreement dated on or about the Agreement Date, pursuant to which Parent
agrees
to issue debentures to such Debenture Purchasers to cover the outstanding
interest payable for the remainder of the terms of their original debentures
and
to cover the remaining penalties associated with failure to meet the maximum
negotiated obligations pursuant to the Registration Rights Agreement between
Parent and such Debenture Purchasers; (b) that certain Note Purchase Agreement
dated as of September 25, 2008, between Parent and Aequitas Catalyst Fund,
LLC
–Series B; (c) that certain Securities Purchase Agreement dated on or about
the
Agreement Date among Parent and the Debenture Purchasers party thereto; and
(d)
the Interest Purchase Agreement to the extent the same provides, for the
issuance of a debenture to the Administrator in the original principal amount
of
$4,000,000.
“Depository
Bank”
shall
mean The Private Bank and Trust Company, its successors and assigns, in its
capacity as the provider of cash management services to the
Borrowers.
“Default”
has
the
meaning set forth in Section
13(a).
“EBITDA”
means
for Borrowers on a consolidated basis, net income (excluding non-recurring
gains
and extraordinary gains) before provision for interest expense, taxes,
depreciation, amortization, and financing and transaction fees relating to
the
initial closing of this Agreement and the Acquisition ,determined in accordance
with GAAP, and excluding, in any event, any non-cash impact on income or
loss
from application of variable accounting rules or requirements, and any expenses
associated with original issue discounts and Stock based
compensation.
“Employment
Agreements”
means,
collectively, the Employment Agreements between Parent and each of (i) Xxxxxxx
X. Xxxxx, (ii) Xxxxxx X. Xxxx, (iii) Xxxxxx X. Xxxxxx, (iv) Xxx XxXxxxxx,
and
(v) Xxxxx Xxxxxx, each as attached hereto as Exhibit
D.
“Equipment”
means
all of each Borrower’s machinery, apparatus, equipment, motor vehicles,
tractors, trailers, rolling stock, fittings, fixtures and other tangible
personal property of every kind and description, together with all parts,
accessories and special tools and all increases and accessions thereto and
substitutions and replacements therefor.
“Excess
Cash Flow”
means,
with respect to any fiscal period for the Borrowers on a consolidated basis
determined in accordance with GAAP, (a) EBITDA, plus
(b) any
net decrease (or minus any net increase) in Adjusted Working Capital during
such
period, minus
(c) the sum of (i) the cash portion of interest actually paid during
such period, (ii) the cash portion of income taxes paid during such period,
(iii) all principal payments made in cash with respect of the Term Loan (if
any), and (iv) the cash portion of capital expenditures made during such
period and in accordance with Item
21 of the Addendum.
5
“Excluded
Equipment”
means
the Equipment owned by any Borrower or Vanco, as the case may be, and used
in
connection with the delivery of telecommunications services as part of the
respective business operations of any Borrower or Vanco within the Applicable
Authorization States.
“Extraordinary
Receipts”
means
any cash received by a Borrower with respect to (a) federal and state tax
refunds (but only to the extent such state tax refunds exceed $25,000, in
the
aggregate in any fiscal year), (b) pension plan reversions,
(c) proceeds of insurance (including key man life insurance and, unless
Agent provides its prior written consent otherwise, business interruption
insurance, but excluding any casualty insurance), (d) judgments, proceeds
of settlements or other consideration of any kind in connection with any
cause
of action, including without limitation, awards or settlements in respect
of
condemnation and eminent domain proceedings, (e) indemnity payments,
(f) any purchase price adjustment received in connection with any purchase
agreement (other than relating to ordinary purchases of goods and services
in
the ordinary course of business), excluding in all events, any future proceeds
from the previous asset sale transactions involving Nexvu or FNS, and (g)
at any
time that a Default shall exist and at the sole discretion of Agent, any
other
cash received by a Borrower not in the ordinary course of business.
“FCC”
means
the U.S. Federal Communications Commission.
“Final
Closing”
means
the release from escrow of the Purchased Membership Interests pursuant to
the
Acquisition Documents.
“Funding
Date”
means
a
date (i) no later than one (1) Business Day following the delivery of
notification to the Agent, in form and substance satisfactory to Agent in
its
sole discretion, that the STA Requests (as such term is defined in the Interest
Purchase Agreement) have been approved and (ii) on which satisfaction of
the
applicable conditions set forth in Item
2 of the Addendum
have
occurred.
“GAAP”
means
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute
of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board that are applicable to the circumstances as of
the
date of determination and applied on a consistent basis.
“General
Intangibles”
means
all of each Borrower’s present and future general intangibles and all other
presently owned or hereafter acquired intangible personal property of each
Borrower (including payment intangibles, all rights under insurance policies
and
any and all choses or things in action, goodwill, patents and patent
applications, trade names, servicemarks, trademarks and trademark applications,
copyrights, blueprints, drawings, purchase orders, customer lists, monies
due or
recoverable from pension funds, route lists, infringement claims, software,
computer programs, computer discs, computer tapes, literature, reports,
catalogs, deposit accounts, tax refunds and tax refund claims) other than
Goods
and Accounts, as well as each Borrower’s books and records relating to any of
the foregoing.
6
“Goods”
means
all of each Borrower’s present and hereafter acquired goods, as defined in the
UCC, wherever located, including imbedded software to the extent included
in
“goods” as defined in the UCC, manufactured homes, and standing timber that is
to be cut and removed for sale.
“Governing
Documents”
shall
mean, with respect to any Person, its certificate or articles of incorporation,
certificate of formation, or, as the case may be, certificate of limited
partnership, its by-laws, operating agreement or, as the case may be,
partnership agreement or other constitutive documents and all shareholder
agreements, voting trusts and similar arrangements applicable to any of its
Stock.
“Governmental
Approvals”
means
all authorizations, consents, approvals, licenses and exemptions of,
registrations and filings with, and reports to, all governmental bodies,
whether
federal, state, local or foreign national or provincial and all agencies
thereof, including, without limitation, any domestic and international Section
214 authorizations from the FCC and certificates of public convenience and
necessity or the equivalent from various state telecommunications regulatory
commissions.
“HSBC
Account Control Agreement”
shall
mean the Account Control Agreement dated on or about the Agreement Date,
among
the Agent, for the benefit of the Agent and the Lenders, the Borrowers and
HSBC
USA, National Association.
“Indebtedness”
shall
mean the aggregate amount of, without duplication, (a) all obligations of
each
Borrower for borrowed money, (b) all obligations of each Borrower evidenced
by
bonds, debentures, notes or other similar instruments, (c) all obligations
of
each Borrower to pay the deferred purchase price of property or services
(excluding trade payables that are aged less than ninety (90) days), (d)
all
Capitalized Lease Obligations of each Borrower, (e) all obligations or
liabilities of any other Person secured by a Lien on any asset of any Borrower,
whether or not such obligation or liability is assumed, (f) all obligations
or
liabilities of others guaranteed by any Borrower; and (g) any other obligations
or liabilities which are required by GAAP to be shown as debt on the balance
sheet of any Borrower.
“Intellectual
Property”
means
any and all licenses, patents, copyrights, trademarks, designs and the goodwill
associated with such trademarks.
“Interest
Expense”
means,
for any period, the aggregate of the interest expense of the Borrowers for
such
period, determined on a consolidated basis in accordance with GAAP.
“Interest
Purchase Agreement”
means
that certain Interest and Loan Purchase Agreement dated as of November 14,
2008
among CG Acquisition, Seller, and the Administrators party thereto.
“Inventory”
means
all of each Borrower’s inventory as defined in the UCC, together with all of
each Borrower’s present and future inventory, including goods held for sale or
lease or to be furnished under a contract of service and all of each Borrower’s
present and future raw materials, work in process, finished goods, shelving
and
racking upon which the inventory is stored and packing and shipping materials,
wherever located, and any documents of title representing any of the
above.
7
“Investment”
shall
mean the purchase or acquisition of any capital stock, equity interest, or
any
obligations or other securities of, or any interest in, any Person, or the
extension of any advance, loan, extension of credit or capital contribution
to,
any Person.
“Lien”
means
any
security interest, security title, mortgage, deed to secure debt, deed of
trust,
lien, pledge, charge, conditional sale or other title retention agreement,
or
other encumbrance of any kind in respect of any property, including
the interest of each lessor under any capitalized lease and the interest
of any
bondsman under any payment or performance bond, in, of or on any assets or
properties of a Person, whether now owned or hereafter acquired and whether
arising by agreement or operation of law.
“Loan
Documents”
means,
collectively,
this Agreement and all other agreements, instruments, certificates and other
documents executed and/or delivered in connection with this Agreement, including
collateral documents, security agreements, pledges, guaranties, mortgages,
deeds
of trust, assignments, subordination agreements, intercreditor agreements,
warrants and registration rights agreements (it being understood, however,
that
any termination of this Agreement shall not terminate or otherwise limit
Agent’s
or any Lender’s rights under any such warrant, registration rights agreement or
other related document unless Agent expressly so agrees in writing) and all
other agreements executed or delivered by any Borrower or any other Credit
Party
or any Affiliate of any Borrower or any other Credit Party pursuant hereto
or in
connection herewith.
“Magenta
Account”
has
the
meaning set forth in Section
7(k)(ii).
“Magenta
Three-Party Account Agreement”
shall
mean the Three-Party Account Agreement dated on or about the Agreement Date,
among the Agent, for the benefit of the Agent and the Lenders, Magenta and
HSBC
Bank, plc.
“Management
Services Agreement”
means
that certain Management Services Agreement dated as of November 14, 2008,
among
CG Acquisition, Seller, and the Administrators party thereto.
“Material
Adverse Effect”
shall
mean any state of facts, events, changes or effects that is materially adverse
to or materially impairs: (a) the business, results of operations, properties,
assets, condition (financial or otherwise) or prospects of the Borrowers
taken
as a whole; (b) the ability of Borrowers to perform the Obligations in
accordance with the terms of the Loan Documents, or the ability of Agent
or any
of the Lenders to enforce any of its rights or remedies with respect to the
Obligations or under the Loan Documents; or (c) the Collateral (including
the
value and condition thereof) or Agent’s or any Lender’s Liens on the Collateral
or the priority of such Liens.
“Material
Contract”
means,
with respect to any Person, (i) each contract or agreement to which such
Person
or any of its Subsidiaries is a party involving aggregate consideration payable
to or by such Person or such Subsidiary of $250,000 or more, (ii) the
Acquisition Documents and (iii) all other contracts or agreements material
to
the business, operations, condition (financial or otherwise), performance,
prospects or properties of such Person or such Subsidiary.
8
“Monthly
Recurring Circuit Revenue”
means
the aggregate monthly invoice amount for all monthly xxxxxxxx issued by any
of
the Borrowers with respect to their circuit business. The monthly recurring
circuit revenue will equal the total monthly billing amount determined as
of the
date the Borrowers issue their monthly invoices (usually the 1st
day of
the month).
“Negotiable
Collateral”
means
all of each Borrower’s present and future letters of credit, advises of credit,
notes, drafts, instruments, and documents, including, without limitation,
bills
of lading, leases, and chattel paper, and each Borrower’s books and records
relating to any of the foregoing.
“Net
Cash Proceeds”
means:
(a) with
respect to any sale or disposition by a Borrower of property or assets, the
amount of cash proceeds received (directly or indirectly) from time to time
(whether as initial consideration or through the payment of deferred
consideration) by or on behalf of a Borrower, in connection therewith after
deducting therefrom only (i) the amount of any Indebtedness secured by any
Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or
any Lender under this Agreement or the other Loan Documents and
(B) Indebtedness assumed by the purchaser of such asset) which is required
to be, and is, repaid in connection with such sale or disposition, (ii)
all fees, commissions, and expenses related thereto and required to be paid
by a
Borrower in connection with such sale or disposition and (iii) taxes paid
or payable to any taxing authorities by a Borrower in connection with such
sale
or disposition, in each case to the extent, but only to the extent, that
the
amounts so deducted are, at the time of receipt of such cash, actually paid
or
payable to a Person that is not an Affiliate of a Borrower, and are properly
attributable to such transaction;
(b) with
respect to the issuance or incurrence of any Indebtedness by a Borrower,
or the
issuance by a Borrower of any shares of its Stock (excluding sales of Stock
in
the Parent pursuant to warrants or options in existence as of the date hereof),
the aggregate amount of cash received (directly or indirectly) from time
to time
(whether as initial consideration or through the payment or disposition of
deferred consideration) by or on behalf of a Borrower in connection with
such
issuance or incurrence, after deducting therefrom only (i) all fees,
commissions, and expenses related thereto and required to be paid by a Borrower
in connection with such issuance or incurrence, and (ii) taxes paid or payable
to any taxing authorities by a Borrower in connection with such issuance
or
incurrence, in each case to the extent, but only to the extent, that the
amounts
so deducted are, at the time of receipt of such cash, actually paid or payable
to a Person that is not an Affiliate of a Borrower, and are properly
attributable to such transaction; and
(c) with
respect to any Extraordinary Receipts received by a Borrower, the amount
of cash
proceeds received (directly or indirectly) from time to time (whether as
initial
consideration or through the payment of deferred consideration) by or on
behalf
of a Borrower, in connection therewith after deducting therefrom only (i)
all fees, commissions, and expenses related thereto and required to be paid
by a
Borrower in connection with such Extraordinary Receipts and (ii) taxes paid
or payable to any taxing authorities by a Borrower in connection with such
Extraordinary Receipts, in each case to the extent, but only to the extent,
that
the amounts so deducted are, at the time of receipt of such cash, actually
paid
or payable to a Person that is not an Affiliate of a Borrower, and are properly
attributable to such Extraordinary Receipts.
9
“New
Lending Office”
has
the
meaning set forth in Section
2(o).
“Nexvu
Stock Pledge Agreement”
means
that certain Pledge Agreement dated as of the date hereof, granted by Nexvu
in
favor of Agent, on behalf of itself and the Lenders, with respect to its
Stock
in Nexvu Manager, Inc. and Nexvu APM, LLC.
“Obligations”
means
all indebtedness, obligations and liabilities of each Credit Party to Agent,
any
of the Lenders, and any of their Affiliates, individually or collectively,
under
the Loan Documents, whether now existing or hereafter arising, whether presently
contemplated or not, regardless of how the same arise, or whether evidenced
by
any instrument, agreement or book account, including, but not limited to,
the
Term Loan (including any modification, renewal or extension), and all interest,
taxes, fees, charges, expenses, indemnity obligations and attorney’s fees
(whether or not such attorney is a regularly salaried employee of Agent or
any
of the Lenders or any of their Affiliates) chargeable to any Credit Party
or
incurred by Agent or any of the Lenders under this Agreement or any other
Loan
Document.
“Parent
Stock Pledge Agreement”
means
that certain Pledge Agreement of even date herewith granted by Parent in
favor
of Agent, on behalf if itself and the Lenders, with respect to its Stock
in
CentrePath, GCG, 20/20 Inc., FNS, Nexvu and CG Acquisition.
“Participant
Register”
has
the
meaning specified therefor in Section
16(f)(vii).
“Permitted
Dispositions”
means
(a) sales or other dispositions of Inventory and Equipment that is
substantially worn, damaged, or obsolete or no longer used or usable in the
business of the Borrowers, in each case, in the ordinary course of business
and
for fair consideration and on terms no less favorable to the Borrowers than
would be obtainable in a comparable arm's length transaction with a Person
that
is not an Affiliate thereof, and (b) sales of Inventory to buyers in the
ordinary course of business.
“Permitted
Indebtedness”
shall
mean and include: (a) the Obligations; (b) Indebtedness arising from the
endorsement of instruments in the ordinary course of business of a Borrower;
(c)
Subordinated Debt; (d) Indebtedness existing as of the date hereof to the
extent listed on Item
9
of the Addendum;
(e)
Indebtedness in connection with purchase money security interests constituting
Permitted Liens and Capitalized Leases not to exceed, in aggregated principal
amount for all Borrowers on a consolidated basis, the amount set forth on
Item
20 of the Addendum
at any
one time outstanding; (f) Indebtedness consisting of reimbursement
obligations under surety, indemnity, performance, release and appeal bonds
and
guarantees thereof and letters of credit issued to landlords in the ordinary
course of business of a Borrower; and (g) extensions, refinancings, refundings,
renewals, modifications, amendments and restatements of any Permitted
Indebtedness that do not increase the principal amount or interest rate per
annum thereof, shorten the maturity thereof or accelerate the principal payments
thereof.
10
“Permitted
Investments”
shall
mean and include: (a) deposit accounts with commercial banks organized under
the
laws of the United States or a state thereof to the extent such deposits
are
fully insured by the Federal Deposit Insurance Corporation in which Agent
has a
perfected, first-priority security interest, and up £75,000 at any time in the
Magenta Account, as disclosed to Agent on Item
14 of the Addendum,
in the
United Kingdom without such a security interest and provided such account
shall
be maintained at all times in accordance with the terms of Section
7(k)(ii)
of this
Agreement; (b) Investments in money market accounts maintained by banks or
financial institutions having a net worth of not less than $50,000,000 in
which
Agent has a perfected, first-priority security interest; (c) Investments
in
certificates of deposit maintained by banks or financial institutions having
a
net worth of not less than $50,000,000 in which Agent has a perfected,
first-priority security interest; (d) Investments in marketable obligations
issued or fully guaranteed by the United States, or any agency thereof, and
maturing not more than one (1) year from the date of acquisition; (e)
Investments in open market commercial paper rated at least “A1” or “P1” or
higher by a national credit rating agency and maturing not more than one
(1)
year from the creation thereof; (f) Investments existing on the date hereof
to
the extent listed on Item
7
of the Addendum;
(g)
Investments pursuant to or arising under currency agreements or interest
rate
agreements entered into in the ordinary course of business of a Borrower,
but
only to the extent the same are entered into to hedge risk and not for
speculation; (h) Investments not to exceed $100,000 in the aggregate in any
fiscal year consisting of travel advances and employee relocation loans and
other employee loans and advances in the ordinary course of business of the
Borrowers; and (i) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or suppliers
and
in settlement of delinquent obligations of, and other disputes with, customers
or suppliers arising in the ordinary course of business the
Borrowers.
“Permitted
Liens”
means
(a) Liens or charges for current taxes, assessments or other governmental
charges which are not delinquent or remain payable without any penalty, or
the
validity of which is contested in good faith by appropriate proceedings upon
stay of execution of the enforcement thereof and for which appropriate reserves
have been established in accordance with GAAP; (b) deposits or pledges to
secure
(i) statutory obligations, (ii) surety or appeal bonds, (iii) bonds for release
of attachment, stay of execution or injunction; (iv) the performance of bids,
tenders or contracts (other than for the repayment of borrowed money); (v)
indemnity, performance or other bonds for the performance of bids, tenders
or
contracts (other than for the repayment of borrowed money); and (vi) obligations
to landlords in the ordinary course of business of the Borrowers; (c) statutory
Liens on property arising in the ordinary course of business which, in the
aggregate, do not materially impair the use of such property or materially
detract from the value of such property; (d) Liens existing on the Agreement
Date and described on Item
1
of the Addendum;
(e)
Liens on Equipment securing all or part of the purchase price of such Equipment;
provided,
however,
that
(i) such Lien is created contemporaneously with the acquisition of such
Equipment, (ii) such Lien attaches only to the specific items of Equipment
so
acquired, and (iii) such Lien secures only the Indebtedness incurred to acquire
such Equipment; (f) so long as the Debenture Intercreditor Agreement is in
full
force and effect, Liens on all or substantially all assets of Borrowers in
favor
of the Debenture Purchasers to secure the Debenture Indebtedness, including
the
indebtedness described in Item
9 of the Addendum;
(g)
Liens arising from judgments, decrees or attachments that do not constitute
a
Default under this Agreement; and (h) Liens in favor of Agent or any of the
Lenders securing any of the Obligations.
11
“Person”
means an
individual, corporation, partnership, limited liability company, association,
trust, unincorporated organization, government or any agency or political
subdivision thereof, or any other entity.
“PIK
Interest”
has
the
meaning set forth in the definition of “Applicable Margin”.
“Prime
Rate”
means,
at any time, the rate of interest noted in The
Wall Street Journal,
Money
Rates section, as the “Prime Rate” (currently defined as the base rate on
corporate loans posted by at least 75% of the nation’s thirty (30) largest
banks). In the event that The
Wall Street Journal
quotes
more than one rate, or a range of rates, as the Prime Rate, then the Prime
Rate
shall mean the average of the quoted rates. In the event that The
Wall Street Journal
ceases
to publish a Prime Rate, then the Prime Rate shall be the average of the
three
(3) largest U.S. money center commercial banks, as determined by Agent.
Notwithstanding the foregoing, for purposes of this Agreement, at no time
shall
the Prime Rate be less than five percent (5.0%) per annum. The Prime Rate
may
not be the lowest or best rate at which Agent calculates interest or the
Lenders
extend credit. Any change in the Prime Rate shall be effective for purposes
of
calculating interest hereunder as of the date of such change.
“Private
Bank Account Control Agreement”
shall
mean the Account Control Agreement dated on or about the Agreement Date,
among
the Agent, for the benefit of the Agent and the Lenders, the Borrowers and
the
Depository Bank.
“Pro
Rata Share”
means
the percentage obtained by dividing (i) such Lender's Commitment, by (ii)
the
Total Commitment.
“Purchased
Membership Interests”
means
the membership interests of Vanco to be purchased by CG Acquisition pursuant
to
the Acquisition Documents.
“Recurring
Circuit Margin”
means
for a particular measurement period (i) the difference between the Monthly
Recurring Circuit Revenue for the months comprising such measurement period
and
(ii) the direct cost to Borrowers of any circuits included within Monthly
Recurring Circuit Revenue for the months included within such measurement
period, but excluding any costs which are non-recurring.
“Register”
has
the
meaning set forth in Section
16(f)(iv).
“Registered
Loan”
has
the
meaning set forth in Section
16(f)(iv).
“Required
Lenders”
means
Lenders whose Pro Rata Shares aggregate at least 50.1%.
“Related
Fund”
means,
with respect to any Person, an Affiliate of such Person, or a fund or account
managed by such Person or an Affiliate of such Person.
“Seller”
means
Vanco plc (in administration), a United Kingdom corporation.
12
“Stock”
means
all shares, options, warrants, general or limited partnership interests,
membership interests or other equivalents (regardless of how designated)
of or
in a corporation, partnership, limited liability company or equivalent entity
whether voting or nonvoting, including common stock, preferred stock or any
other “equity security” (as such term is defined in Rule 3a11 of the General
Rules and Regulations promulgated by the Securities and Exchange Commission
under the Exchange Act) or equivalent securities issued by Magenta or any
other
foreign subsidiary.
“Strategic
Sourcing Business Unit”
means
the segment of the Borrowers’ business that provides network services for
clients, including design, installation, provisioning, management and monitoring
of circuits.
“Subordinated
Debt”
means
(a) so long as the Debenture Intercreditor Agreement remains in full force
and
effect, the Debenture Indebtedness, and (b) all of the Indebtedness owed
by any
Borrower to any other Person, the repayment of which is subordinated to the
repayment of the Obligations pursuant to the terms of a subordination agreement
approved by Agent and the Required Lenders in writing in their sole
discretion.
“Subsidiary”
means,
with respect to any Person, (a) any corporation of which an aggregate of
more
than 50% of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether,
at the time, Stock of any other class or classes of such corporation shall
have
or might have voting power by reason of the happening of any contingency)
is at
the time, directly or indirectly, owned legally or beneficially by such Person
or one or more Subsidiaries of such Person, or with respect to which any
such
Person has the right to vote or designate the vote of more than 50% or more
of
such Stock whether by proxy, agreement, operation of law or otherwise, and
(b)
any partnership or limited liability company in which such Person and/or
one or
more Subsidiaries of such Person shall have an interest (whether in the form
of
voting or participation in profits or capital contribution) of more than
50% or
of which any such Person is a general partner or managing member or may exercise
the powers of a general partner whether directly or indirectly, and (c) any
other Person (other than a corporation, limited liability company or
partnership) in which such Person, a Subsidiary of such Person or such Person
and one or more Subsidiaries of such Person, directly or indirectly, at the
date
of determination thereof, has (a) at least a majority ownership interest
or (b)
the power to elect or direct the election of a majority of the directors
or
other governing body of such Person.
“Term
Loan”
has
the
meaning set forth in Section
2(a).
“Term
Note”
has
the
meaning set forth in Section
2(b).
“Total
Commitment”
means
the sum of the amounts of the Lenders' Commitments.
“Transferee”
has
the
meaning set forth in Section
2(o).
“UCC”
means
the Uniform Commercial Code, as in effect from time to time, of the State
of New
York or of any other state the laws of which are required as a result thereof
to
be applied in connection with the issue of perfection of security interests;
provided,
however,
that to
the extent that the UCC is used to define any term herein or in any other
documents and such term is defined differently in different Articles or
Divisions of the UCC, the definition of such term contained in Article or
Division 9 shall govern.
13
Other
Definitional Provisions.
References to the “Addendum” or any “Section” or “Exhibit” refer to the Addendum
or a section or exhibit, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in Section 1
may,
unless the context otherwise requires, be used in the singular or the plural
depending on the reference. In this Agreement: words importing any gender
include the other genders; the words “including”, “includes” and “include” shall
be deemed to be followed by the words “without limitation”; references to
agreements and other contractual instruments shall be deemed to include
subsequent amendments, assignments, and other modifications thereto, but
only to
the extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement; references to any Person includes
their respective permitted successors and assigns or people succeeding to
the
relevant functions of such Persons; any and all terms which are defined in
the
UCC and are not defined herein shall be construed and defined in accordance
with
the definition of such terms under the UCC; all references to statutes and
related regulations shall include any amendments of same and any successor
statutes and regulations; all references to time of day shall refer to New
York,
New York time; and all references to financial calculations or statements
on a
“consolidated” basis mean calculations or statements that reflect information
and results with respect to Borrowers and no other Person. Unless otherwise
specifically indicated, all monetary amounts and references herein refer
to
United States dollars, and all amounts to be loaned and paid hereunder shall
be
in United States dollars. In the event that Agent receives any payment in
any
currency other than United States dollars, Agent shall determine the conversion
rate with respect to such amount in its reasonable discretion for purposes
of
determining the amount of the Obligations that have been satisfied.
(b) The
Term Note.
The
Term Loan shall be evidenced by separate promissory notes of the Borrowers
in
the form of Exhibit
C
attached
hereto payable to each Lender (the “Term
Note”)
in the
original principal amount of such Lender’s Commitment, dated as of the Agreement
Date (or such other date on which a Lender may become a party hereto in
accordance with Section
16(f) hereof) and
completed with appropriate insertions.
14
(c) Mandatory
Prepayments.
(i) Immediately
upon the receipt by any Borrower of the proceeds of any voluntary or involuntary
sale or disposition by any Credit Party of property or assets (including
casualty losses or condemnations but excluding sales or dispositions which
qualify as Permitted Dispositions) (“Borrower
Asset Sales”),
Borrowers shall
prepay the outstanding principal amount of the Obligations (including, without
limitation, any fees pursuant to Section
3(c)
due and
payable on the amount so prepaid) in an amount equal to 100% of the Net Cash
Proceeds (including
condemnation awards and payments in lieu thereof) received
by such Person in connection with such Borrower Asset Sale; provided
that,
solely in respect of any Borrower Asset Sales, so long as (A) no Default
shall have occurred and is continuing, (B) Borrower’s Agent shall have
given Agent prior written notice of Borrowers’ intention to apply such monies to
the costs of replacement of the properties or assets that are the subject
of
such sale or disposition, (C) the monies are held in a cash collateral
account in which Agent, for the benefit of the Agent and the Lenders has
a
perfected first priority security interest, and (D) Borrowers complete such
replacement, purchase, or construction within 90 days after the initial receipt
of such monies, Borrowers shall have the option to apply such monies to the
costs of replacement of the property or assets that are the subject of such
sale
or disposition unless and to the extent that such applicable period shall
have
expired without such replacement, purchase or construction being made or
completed, in which case, any amounts remaining in the cash collateral account
shall be paid to Agent for application against the Obligations. Nothing
contained in this Section
2(c)(i) shall
permit any Borrower to sell or otherwise dispose of any property or assets
other
than in accordance with the terms and conditions of this Agreement.
(ii) Immediately
upon the receipt by any Borrower of any Extraordinary Receipts, Borrowers
shall
prepay the outstanding principal amount of the Obligations (including, without
limitation, any fees pursuant to Section
3(c)
due and
payable on the amount so prepaid) in an amount equal to 100% of the Net Cash
Proceeds received by such Person in connection with such Extraordinary
Receipts.
(iii) Immediately
upon the issuance or incurrence by any Borrower of any Indebtedness (other
than
Indebtedness permitted hereunder) or the issuance by any Borrower of any
shares
of such Borrower’s Stock (excluding sales of Stock of the Parent pursuant to
warrants or options in existence as of the date hereof) Borrowers shall prepay
the outstanding principal amount of the Obligations (including, without
limitation, any fees pursuant to Section
3(c)
due and
payable on the amount so prepaid) in an amount equal to 100% of the Net Cash
Proceeds received by such Person in connection with such issuance or incurrence.
The provisions of this Section
2(c)(iii)
shall
not be deemed to be implied consent to any such issuance or incurrence otherwise
prohibited by the terms and conditions of this Agreement.
(iv) No
later
than two (2) Business Days following
the receipt by any Borrower of any BT Receivable Payment, Borrowers shall
prepay
the outstanding principal amount of the Obligations in an amount equal to
sixty-six percent (66%) of the BT Receivable Payment received by such Person.
A
payment hereunder shall not constitute a prepayment for purposes of any fees
payable under Item
5 of the Addendum.
15
(v) Within
ten (10) days following delivery to Agent and the Lenders of Borrowers’ monthly
financial statements pursuant to Section
9(a)
for the
month ended December 31, 2009 or, if such financial statements are not delivered
to Agent and the Lenders on the date such statements are required to be
delivered pursuant to Section
9(a),
ten
(10) days after the date such statements are required to be delivered to
Agent
and the Lenders pursuant to Section
9(a),
Borrowers shall prepay the outstanding principal amount of the Obligations
in an
amount equal to 50% of the Excess Cash Flow of the Borrowers for fiscal year
2009. If the information in the Borrowers’ audited financial statements
delivered pursuant to Section
9(a)
for
fiscal year 2009 proves to be incorrect such that the Borrowers have
overpaid
the
Excess Cash Flow payment referred to herein, then the Agent shall credit
such
overpayment to any interest then due and payable, if any, or the Borrowers’ next
scheduled payment of interest if no interest is then due and payable. If
the
information in the Borrowers’ audited financial statements delivered pursuant to
Section
9(a)
for
fiscal year 2009 proves to be incorrect such that the Borrowers have
underpaid
the
Excess Cash Flow payment referred to herein, then the amount of such
underpayment shall be immediately due and payable in cash to the Agent for
application to any outstanding Obligations. A
payment
hereunder shall not constitute a prepayment for purposes of any fees payable
under Item
5 of the Addendum.
(d) Voluntary
Prepayments.
Borrowers may prepay the principal balance of the Term Loan in whole or in
part
at any time upon at least 30 days’ prior written notice from Borrowers’
Agent
to Agent (which notice, once given shall be irrevocable). Any such prepayment
of
principal shall be accompanied by accrued interest on the amount so prepaid
and
any
fees pursuant to Section
3(c)
due and
payable on the amount so prepaid. Any portion of the Term Loan prepaid hereunder
may not be reborrowed.
(i) Agent
has
no
obligation to make the Term Loan to Borrowers or to extend any other financial
accommodation to any Borrower unless and until (A) Borrowers
deliver
to Agent, in form and substance satisfactory to Agent in its discretion,
each
agreement, instrument, legal opinion and other document specified on
Item
2
of the Addendum, and
(B)
each other condition precedent specified on Item
2
of the Addendum has
been
satisfied in a manner satisfactory to Agent in Agent’s sole discretion. Once the
conditions described in this Section
2(e) have
been
satisfied in Agent’s sole and absolute discretion, Agent shall provide Lender
with a letter confirming same.
(ii) Lenders’
obligation to make the Term Loan to Borrowers and extend other financial
accommodations to Borrowers is subject to the conditions that, as of the
Agreement Date, (A) no Default will have occurred and be continuing hereunder,
(B) there will have occurred no event or circumstance which has had or which
could reasonably be expected to have a Material Adverse Effect, (C) Borrowers’
representations and warranties set forth in this Agreement and the other
Loan
Documents will be true and correct and (D) the Borrowers’ application for
Special Temporary Authority has been approved by the applicable governmental
authorities, as defined and described in the Interest Purchase
Agreement.
16
(f) Repayment
of Term Loan.
The
entire outstanding principal balance of the Term Loan, together with all
accrued
and unpaid interest and all other outstanding Obligations, shall be due and
payable on the Termination Date as provided for in Item
3 of the Addendum,
unless
sooner due as a result of acceleration or demand hereunder. Borrowers
shall
make each payment required hereunder or under any other Loan Document without
setoff, deduction or counterclaim. All payments by Borrowers shall be made
to
Agent’s for the account of the Lenders or as otherwise directed by the Agent in
writing from time to time and shall be made in immediately available funds,
no
later than 2:00 p.m. (New York City time) on the date specified herein. Any
payment received by Agent (or such Person to whom the Agent has directed
payment) later than 2:00 p.m. (New York City time), shall be deemed to have
been received on the following Business Day and any applicable interest or
fee
shall continue to accrue until such following Business Day.
(h) Termination
on Default.
Notwithstanding the foregoing, should a Default occur and be continuing,
Agent
will have the right to terminate this Agreement at any time without
notice.
(i) Survival.
Notwithstanding termination, all the terms, conditions, and provisions hereof
(including Agent’s security interest in the Collateral, but excluding any
obligations of Agent hereunder) will continue to be fully operative until
all
Obligations have been fully disposed of, concluded, paid, satisfied, and
liquidated (other than inchoate indemnification obligations, unless Agent
determines in its reasonable discretion that any such indemnification
obligations are likely to become actual obligations and obligations under
the
warrant and registration rights agreement issued or executed in connection
herewith). All indemnification obligations of Borrowers hereunder and under
the
other Loan Documents shall survive termination of this Agreement and the
other
Loan Documents.
(j) Borrowers’
Agent.
Each
Borrower other than Parent hereby appoints Parent, and Parent shall act under
this Agreement and the other Loan Documents, as, the agent, attorney-in-fact
and
legal representative of all Borrowers for all purposes, including receiving
account statements and other notices and communications to Borrowers (or
any of
them) from Agent. Agent, and each of the Lenders, may rely, and shall be
fully
protected in relying, on any disbursement instruction, report, information
or
any other notice or communication made or given by Parent, whether in its
own
name, as Borrowers’ Agent, or on behalf of one or more Borrowers, and Agent and
each of the Lenders, shall not have any obligation to make any inquiry or
request any confirmation from or on behalf of any other Borrower as to the
binding effect on it of any such request, instruction, report, information,
other notice or communication, nor shall the joint and several character
of
Borrowers’ obligations hereunder be affected, provided, that the provisions of
this paragraph shall not be construed so as to preclude any Borrower from
taking
actions permitted to be taken by a “Borrower” hereunder.
17
(k) Joint
and Several Liability.
(i) The
Term
Loan made to Borrowers and all of the other Obligations of Borrowers, including
all interest, fees and expenses with respect thereto, shall constitute one
joint
and several direct and general obligation of all Borrowers. Notwithstanding
anything to the contrary contained herein, each Borrower shall be jointly
and
severally, with each other Borrower, directly and unconditionally liable
to
Agent and each of the Lenders for all Obligations, it being understood that
the
Term Loan to each Borrower inures to the benefit of all Borrowers, and that
Agent and each of the Lenders are relying on the joint and several liability
of
Borrowers as co-makers in extending the Term Loan hereunder. Each Borrower
hereby unconditionally and irrevocably agrees that upon default in the payment
when due (whether at stated maturity, by acceleration or otherwise) of any
principal of, or interest on, any Obligation payable to Agent or any of the
Lenders, it will forthwith pay the same, without notice or demand, unless
such
payment is then prohibited by application of law (provided such Obligation
shall
not be extinguished by any such prohibition).
(ii) No
payment or payments made by any Borrower or any other Person or received
or
collected by Agent from any Borrower or any other Person by virtue of any
action
or proceeding or any setoff or appropriation or application at any time or
from
time to time in reduction of or in payment of the Obligations shall be deemed
to
modify, reduce, release or otherwise affect the liability of each Borrower
under
this Agreement, and each Borrower shall remain liable for all of the remaining
Obligations until the Obligations are paid in full.
(l) Obligations
Absolute.
Each
Borrower agrees that the Obligations will be paid strictly in accordance
with
the terms of the Loan Documents, regardless of any law, regulation or order
now
or hereafter in effect in any jurisdiction affecting any of such terms or
the
rights of Agent or any of the Lenders with respect thereto, unless such payment
is then prohibited by applicable law (provided such Obligation shall not
be
extinguished by any such prohibition.) All Obligations shall be conclusively
presumed to have been created in reliance hereon. The Obligations and other
liabilities under this Agreement and the other Loan Documents shall be absolute
and unconditional irrespective of: (i) any lack of validity or
enforceability of any Loan Document or any other agreement or instrument
relating thereto; (ii) any change in the time, manner or place of payments
of, or in any other term of, all or any part of the Obligations, or any other
amendment or waiver thereof or any consent to departure therefrom, including
any
increase in the Obligations resulting from the extension of additional credit
to
any Borrower or otherwise; (iii) any taking, exchange, release of or
non-perfection in any Collateral, or any release or amendment or waiver of
or
consent to departure from any guaranty for all or any of the Obligations;
(iv) any change, restructuring or termination of the corporate or limited
liability structure or existence of any Borrower; or (v) any other
circumstance which may otherwise constitute a defense available to, or a
discharge of, any Borrower. This Agreement shall continue to be effective
or be
reinstated, as the case may be, if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned by Agent or any of
the
Lenders upon the insolvency, bankruptcy or reorganization of any Borrower
or
otherwise, all as though such payment had not been made.
18
(n) Contribution
and Indemnification among Borrowers.
Each
Borrower is obligated to repay the Obligations as joint and several obligors
under this Agreement. To the extent that any Borrower shall, under this
Agreement as a joint and several obligor, repay any of the Obligations
constituting any of the Term Loan made to another Borrower hereunder or other
Obligations incurred directly and primarily by any other Borrower (an
“Accommodation
Payment”),
then,
to the extent that such Borrower has not received the benefit of such repaid
Obligations (whether through an inter-company loan or otherwise), the Borrower
making such Accommodation Payment shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Borrowers in
an
amount, for each of such other Borrowers, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Borrower’s
Allocable Amount (as defined below) and the denominator of which fraction
is the
sum of the Allocable Amounts of all of the Borrowers. As of any date of
determination, the “Allocable
Amount”
of
each
Borrower shall be equal to the greater of (i) the amount of such repaid
Obligations actually received by such Borrower (whether through an inter-company
loan or otherwise), and (ii) the maximum amount of liability for Accommodation
Payments which could be asserted against such Borrower hereunder without
(x)
rendering such Borrower “insolvent” within the meaning of Title 11 of the United
States Code (the “Bankruptcy
Code”),
Section 2 of the Uniform Fraudulent Transfer Act (the “UFTA”),
or
Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”),
(y) leaving such Borrower with unreasonably small capital or assets, within
the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA,
or Section 4 of the UFCA, or (z) leaving such Borrower unable to pay
its debts as they become due within the meaning of Section 548 of the Bankruptcy
Code, Section 4 of the UFTA, or Section 5 of the UFCA. All rights and
claims of contribution, indemnification and reimbursement under this paragraph
shall be subordinate in right of payment to the prior payment in full of
the
Obligations.
19
(o) Non-U.S.
Lender.
Each
Lender (or any transferee or assignee thereof, including a participation
holder
(any such entity, a “Transferee”),
that
is organized under the laws of a jurisdiction other than the United States,
any
State thereof or the District of Columbia (a “NonU.S.
Lender”)
shall
deliver to the Agent and the Borrowers two properly completed and duly executed
copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,
or,
in the case of a Non-U.S. Lender claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of “portfolio interest”, a Form W-8BEN, or any subsequent versions
thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form
W-8,
a certificate representing that such Non-U.S. Lender is not a bank for purposes
of Section 881 (c) of the Internal Revenue Code, is not a 10-percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code)
of the
Parent and is not a controlled foreign corporation related to the Parent
(within
the meaning of Section 864(d)(4) of the Internal Revenue Code)), in each
case
claiming complete exemption from U.S. Federal withholding tax on payments
by the
Credit Parties under this Agreement. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement
(or,
in the case of a Transferee that is a participation holder, on or before
the
date such participation holder becomes a Transferee hereunder) and on or
before
the date, if any, such Non-U.S. Lender changes its applicable lending office
by
designating a different lending office (a “New
Lending Office”).
In
addition, each Non-U.S. Lender shall deliver such forms or any other forms
required under applicable law within 20 days after receipt of a written request
therefor from the Borrowers or the Agent. Notwithstanding any other provision
of
this Section
2(o),
a
Non-U.S. Lender shall not be required to deliver after the date hereof any
form
pursuant to this Section
2(o)
that
such Non-U.S. Lender is not legally able to deliver.
| 3. |
Interest
and Fees.
|
(a) Interest
on the Term Loan.
The
Term Note shall bear interest at the Applicable Rate. Interest on the Term
Note
shall be computed on the basis of the actual number of days elapsed over
a year
of 360 days. All accrued interest on the Term Note shall be payable monthly
in
arrears, in cash or in PIK Interest, as specified in the definition of
Applicable Margin.
(c) Fees.
Borrowers will pay to Agent (to be allocated among the Lenders in accordance
with their Pro Rata Shares) the fees set forth in Item
5
of the Addendum.
20
(d) No
Usury.
Borrowers acknowledge that Agent does not intend to reserve, charge or collect
interest on money borrowed under this Agreement at any rate in excess of
the
rates permitted by applicable law and that, should any interest rate provided
for in this Agreement exceed the legally permissible rate(s), the rate will
automatically be reduced to the maximum rate permitted under applicable law.
If
Agent should collect any amount from Borrowers which, if it were interest,
would
result in the interest rate charged hereunder exceeding the maximum rate
permitted by applicable law, such amount will be applied to reduce principal
of
the Obligations or, if no Obligations remain outstanding, will be refunded
to
Borrowers.
| 4. |
Representations
and Warranties of Borrowers.
|
(a) Authority,
Compliance with Laws, Litigation, No Material Adverse Change,
Etc.
Borrowers represent and warrant to Agent and the Lenders that: (i) the exact
legal name, type of organization, jurisdiction of organization and
organizational identification number of each Borrower are fully and accurately
set forth on Item
6
of the Addendum,
and
each Borrower is duly organized and validly existing under the laws of its
jurisdiction of organization; (ii) the execution, delivery, and performance
of
this Agreement and the other Loan Documents are within each Borrower’s corporate
or limited liability company powers, have been duly authorized by all necessary
corporate or limited liability company action, do not violate (A) any Borrower’s
constituent documents, any law or regulation, including without limitation,
(B)
any law or regulation relating to occupational health and safety or protection
of the environment, applicable to any Borrower, or any indenture, agreement,
or
undertaking to which any Borrower is a party or by which any Borrower or
any
Borrower’s property is bound, except where such violation could not reasonably
be expected to have a Material Adverse Effect; (iii) this Agreement and the
other Loan Documents to which any Borrower is a party constitute valid, binding
and enforceable obligations of each Borrower party thereto in accordance
with
the terms hereof and thereof, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, moratorium or other similar
laws
applicable to creditors’ rights generally or by generally applicable equitable
principles affecting the enforcement of creditors’ rights; (iv) no Borrower has
any subsidiaries or other investments in other Persons, except as set forth
on
Item
7
of the Addendum
and
except for other Permitted Investments; (v) except as set forth on Item
29 of the Addendum,
each
Borrower is in compliance in all material respects with all laws, rules and
regulations applicable to such Borrower, including laws, rules or regulations
concerning the environment, occupational health and safety and pensions or
other
employee benefits; (vi) except as set forth on Item
8
of the Addendum,
there
is no litigation or investigation pending against any Borrower (or, so far
as
any Borrower is aware, threatened) which, if it were decided adversely to
such
Borrower, could reasonably be expected to have a Material Adverse Effect
(taking
into account any insurance coverage that has been acknowledged by the insurer);
(vii) other than debt that is to be repaid from the Term Loan hereunder,
no
Borrower is indebted to any other Person for money borrowed nor has any Borrower
issued any guaranty of payment or performance by any other Person, except
for
Permitted Indebtedness; (viii) since the date of the financial statements
of
Borrowers most recently delivered to Agent, there has been no material adverse
change in any Borrower’s business, any Borrower’s financial or operational
condition or any Borrower’s business prospects; and (ix) each Borrower is, and
after giving effect to the consummation of the Acquisition, the incurrence
of
the Term Loan under this Agreement and the application of the proceeds of
such
Term Loan, the Borrowers, on a consolidated basis, will be, solvent and will
have sufficient revenues to pay the Borrowers’ obligations as they come due and
adequate capital with which to conduct the Borrowers’ business, all determined
on a consolidated basis.
21
(b) Title
to Assets, Other Collateral Matters.
Borrowers represent and warrant to Agent and the Lenders that: (i) subject
to
the escrow established for the Purchased Membership Interests pursuant to
the
Acquisition Documents, Borrowers have good and marketable title to the
Collateral, free of all Liens except for Permitted Liens, and no financing
statement, mortgage, notice of Lien, deed of trust, security agreement, or
any
other agreement or instrument creating or giving notice of any Lien against
any
of the Collateral has been signed, authorized or delivered by any Borrower,
except in Agent’s favor for the benefit of the Agent and the Lenders, and except
with respect to Permitted Liens; (ii) the Accounts are not subject to any
material dispute, claim or right of offset and are validly owing by the
applicable Customers and, subject to immaterial exceptions, are collectible
by
Borrowers in the ordinary course of business; (iii) all Inventory is in good
condition, meets all applicable governmental standards and is currently usable
or saleable in the ordinary course of the applicable Borrower’s business for a
price approximating at least such Borrower’s cost thereof; (iv) all Equipment is
in good condition and state of repair, ordinary wear and tear excepted; (v)
all
Collateral meets applicable government standards in all material respects;
(vi)
in the past five years, except as set forth on Item
9
of the Addendum
(A) no
Borrower has used any other legal, trade or fictitious names, and (B) other
than
the Acquisition, no Borrower has been a party to any merger or purchased
assets
from any other Person other than in the ordinary course of business; and
(vii)
the chief executive office and principal place of business of each Borrower,
all
Inventory, all Equipment and all other Collateral is located at the addresses
(including the county) set forth on Item
11
of the Addendum and
has
not been located at any other location during the five year period prior
to the
Agreement Date.
(c) Ownership
Structure. Borrowers
represent and warrant that Item
12
of the Addendum
accurately describes the ownership of each Borrower’s
capital stock, membership interests or other equity interests.
(d) Acquisition.
Borrowers
represent and warrant to Agent and the Lenders that (i) Borrowers
have
furnished to Agent true, complete and correct copies of all of the Acquisition
Documents (including any schedules, exhibits and annexes thereto) as in effect
on the date hereof; (ii) none of the Acquisition Documents has been amended,
supplemented or modified; (iii) the Acquisition Documents constitute the
complete understanding among the parties thereto in respect of the Acquisition
and the other matters and transactions covered thereby; (iv) each Acquisition
Document has been duly executed and delivered by the parties thereto and
is a
legal, valid and binding obligation of each such party, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally or by general equitable
principles; and (v) the Borrowers are not aware of any fact or circumstance
that
would prohibit the Acquisition from occurring including, without limitation,
the
Final Closing.
(e) Consummation
of Transactions.
Subject
to the occurrence of the Final Closing upon satisfaction of the conditions
precedent set forth in Section
1.5
of the
Interest Purchase Agreement, Borrowers represent and warrant to Agent and
the
Lenders that, on
the
Agreement Date, the transactions contemplated by the Acquisition Documents
will
have been consummated in accordance with all applicable laws (except where
such
non-compliance could not reasonably be expected to have a Material Adverse
Effect) and, except as consented to in writing by Agent, in the manner provided
therein in accordance with the terms thereof without any material waivers
or
amendments thereto, and each of the material conditions to such consummation
set
forth in the Acquisition Documents shall have been fulfilled without any
waiver
of any such material conditions. Agent acknowledges that the Purchased
Membership Interests shall be held in escrow pursuant to the satisfaction
of
certain conditions specified in the Interest Purchase Agreement, and Borrowers
represent and warrant to Agent and Lenders that (i) the Purchased Membership
Interests will be owned by CG Acquisition free of such escrow arrangement
or any
claim by Seller no later than 90 days after the Agreement Date, and (ii)
the
Seller has no right to remove the Purchased Membership Interests from such
escrow arrangement or otherwise reclaim the Purchased Membership Interests
or
prevent CG Acquisition from becoming the absolute owner thereof no later
than 90
days following the Agreement Date.
22
(f) Licenses
and Governmental Approvals.
Borrowers represent and warrant to Agent and Lenders that, except for those
Governmental Approvals the absence of which could not reasonably be expected
to
have a Material Adverse Effect, (i) each Borrower has all
Governmental Approvals required by applicable law in order to operate its
business; (ii) all such Governmental Approvals are in full force and effect;
and
(iii) Agent and each of the Lenders are not required to obtain any such
Governmental Approval in order to enter into the transactions contemplated
by
this Agreement or to exercise their rights and remedies hereunder (including
the
liquidation of the Collateral and collecting the Accounts), except for such
consents and approvals as may be required by the FCC or any state public
service
commission in connection with the transfer of control or assignment of a
licensee of, or an authorization or license issued by such governmental entity
to Vanco and as set forth on Item
29 of the Addendum
and
except for such consents and approvals that that would be required under
federal
law for Agent and each of the Lenders to exercise their rights and remedies
hereunder.
(g) Additional
Representations.
Borrowers represent and warrant to Agent and the Lenders that: (i) no Borrower
is engaged as one of such Borrower’s principal activities in owning, carrying or
financing the purchase or ownership by others of “margin stock” (as defined in
Regulation U of the Board of Governors of the Federal Reserve System); (ii)
no
Borrower owns any real property or leases any real property other than as
listed
on Item
13
of the Addendum;
(iii) a
true, correct and complete list of any warehousemen, processors, consignees
or
other bailees with possession or control of any Inventory is set forth on
Item
13
of the Addendum;
and
(iv) a true, correct and complete list and brief description of all bank
accounts maintained by each Borrower with any bank or financial institution
is
set forth on Item
14
of the Addendum.
(h) Intellectual
Property.
Borrowers represent and warrant to Agent and the Lenders that, each Borrower
owns, or holds licenses in, all trademarks, trade names, copyrights, patents,
patent rights, and licenses that are necessary to the conduct of its business
as
currently conducted and as proposed to be conducted, and attached hereto
as
Item
15 of the Addendum
is a
true, correct, and complete listing of all patents, patent applications,
trademarks, trademark applications, copyrights, and copyright registrations
as
to which a Borrower is the owner or is an exclusive licensee. There is no
action, proceeding, claim or complaint pending or, to the best knowledge
of
Borrowers, after reasonable inquiry, threatened in writing to be brought
against
any Borrower which would be reasonably likely to jeopardize any of such Person’s
interest in any of the foregoing licenses, patents, copyrights, trademarks,
trade names, designs or applications.
23
(i) Leases.
Borrowers represent and warrant that, each Borrower enjoys peaceful and
undisturbed possession under all leases material to their business and to
which
they are parties or under which they are operating and all of such material
leases are valid and subsisting and no material default by a Borrower exists
under any of them.
(j) Material
Contracts.
Borrowers represent and warrant that, set forth on Item
16 of the Addendum is
a
description of all Material Contracts of the Borrowers, showing the parties
and
principal subject matter thereof and amendments and modifications thereto.
Except for matters which, either individually or in the aggregate, could
not
reasonably be expected to result in a Material Adverse Effect, each Material
Contract (other than those that have expired at the end of their normal terms)
(a) is in full force and effect and is binding upon and enforceable against
the applicable Borrower and, to the best of Borrowers’ knowledge, each other
Person that is a party thereto in accordance with its terms, (b) is not in
default due to the action or inaction of any Borrower and (c) neither the
consummation of the Acquisition, nor the consummation of the financing
arrangements contemplated hereunder, will constitute or create a default
or
create a right of termination under any Material Contract.
(k) Customers
and Suppliers.
Borrowers represent and warrant that, set forth on Item
17 of the Addendum
is a
list of the top 20 largest customers of the Credit Parties and the top 20
largest suppliers of Credit Parties, in each case for the year ended December
31, 2007 and the six-month period ended June 30, 2008. Except as contemplated
by
the BT Receivables Agreement, there has not been, and none of Credit Parties
have received notice of, any termination or cancellation of, or a materially
adverse modification or change in, the business relationship with any of
the 10
largest customers and suppliers, and, to the knowledge of Credit Parties,
such
customers and suppliers intend to renew their customer or supplier contracts,
as
applicable, in the ordinary course and on terms as favorable as those currently
in place.
(l) Taxes.
Borrowers represent and warrant that, each of the Credit Parties has filed
all
federal, state, and other tax returns and reports required to be filed, and
have
paid all federal, state, and other taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income
or
assets otherwise due and payable.
(m) FCC
Licenses, Etc.
Except
for any change of control or similar applications to be filed with respect
to
Vanco as described in Item
29 of the Addendum,
Borrowers represent and warrant that, all FCC, state public utility commission
and other required permissions and licenses are in good standing, and that
Borrowers are not aware of any claim, purported claim or unrealized claim
against the validity of the Borrowers’ ability to operate now and into the
future under such existing licenses.
(n) Working
Capital.
Borrowers represent and warrant that after giving effect to the transactions
contemplated in the Debenture Documents and this Agreement (i) the Borrowers,
on
a consolidated basis, have not less than (a) ($8,453,687) in Adjusted Working
Capital and (b) not less than $6,000,000 in cash; and (ii) the aging
and collectability of the Borrowers' accounts receivable is in all material
respects similar to the aging and collectability of the accounts receivable
reflected by the financial statements delivered to Agent pursuant to
Item
2(p) of the Addendum.
24
(a) Grant
of Security Interest.
To
induce the Lenders to accept this Agreement and to make the Term Loan to
Borrowers, each Borrower hereby grants to Agent, for itself and as agent
for
each Lender, a security interest in, and assigns, mortgages and pledges to
Agent, for itself and as agent for any each Lender, all of such Borrower’s
right, title and interest in and to all of such Borrower’s property (other than
Excluded Equipment), whether real or personal, tangible or intangible, now
owned
or existing or hereafter acquired or arising, including all of the following
(collectively, the “Collateral”):
(i) all
Accounts, Inventory,
Equipment (other than Excluded Equipment), Goods, General Intangibles,
Intellectual Property and Negotiable Collateral;
(ii) all
investment property, securities and securities accounts and financial assets,
as
well as all bank and depository accounts and all funds on deposit
therein;
(iii) all
chattel paper (whether tangible or electronic) and contract rights;
(iv) all
guaranties, collateral, Liens on real or personal property, leases, letters
of
credit, letter-of-credit rights, supporting obligations, and all other rights,
agreements, and property securing or relating to payment of Accounts or any
other Collateral;
(v) all
documents, books and records relating to any Collateral or to any Borrower’s
business;
(vi) all
Governmental Approvals and all proceeds from Governmental Approvals, but
in each
case only to the extent permitted under applicable law (including, without
limitation, the Communications Act of 1934);
(vii) all
other
property of any Borrower now or hereafter in the possession or control of
Agent
or any of Agent’s Affiliates (including cash, money, credits and balances of any
Borrower held by or on deposit with Agent or any Affiliate of Agent);
(viii) all
other
assets of any Borrower in which Agent receives a security interest to secure
all
or part of the Obligations or which hereafter come into the possession, custody
or control of Agent or any Affiliate of Agent;
(ix) all
of
each Borrower’s commercial tort claims listed on (A) Item
18
of the Addendum (which
Borrowers represent and warrant is a true, accurate and complete list of
all of
each Borrower’s commercial tort claims as of the Agreement Date) or (B) any
other writing provided to Agent pursuant to Section
7(g);
and
(x) all
proceeds and products of all of the foregoing in any form, including amounts
payable under any policies of insurance insuring all or any of the foregoing
against loss or damage, all parts, accessories, attachments, special tools,
additions, replacements, substitutions and accessions to or for all or any
of
the foregoing, all condemnation or requisition payments with respect to all
or
any of the foregoing and all increases and profits received from all or any
of
the foregoing.
25
(b) Obligations.
Such
grant, assignment, mortgage and transfer is made for the purpose of securing,
and the Collateral secures and will continue to secure, all of the Obligations;
provided that upon satisfaction of all Obligations other than inchoate
indemnification obligations and obligations under the warrant or the
registration rights agreement, the Lenders shall release any Liens in the
Collateral.
(c) Excluded
Equipment.
Borrowers agree that Agent shall automatically have a security interest in
the
Excluded Equipment promptly after receiving any Governmental Approvals required
for the lawful grant of such security interest. Borrowers agree to execute
and
deliver to Agent such security agreements and other documents confirming
such
grant as Agent may reasonably request, but any failure to do so shall not
limit
Agent’s security interest therein pursuant to the first sentence of this
paragraph. Each Borrower represents and warrants to Agent that it does not
own
any Excluded Equipment.
6. Financial
Covenants.
Unless
the Required Lenders shall otherwise consent in writing, the Borrowers, on
a
consolidated basis, shall comply with each of the financial covenants set
forth
on Item
19
of the Addendum.
(a) Accounts.
Borrowers will notify Agent promptly of and settle all Customer disputes,
but,
if Agent so elects while a Default exists, Agent will have the right at all
times to settle, compromise, adjust, or litigate all Customer disputes directly
with the Customer or other complainant upon such terms and conditions as
Agent
deems advisable without incurring liability to any Borrower for Agent’s
performance of such acts. Agent may, at any time and from time to time, contact
Customers to verify Accounts and, while a Default exists, Agent may notify
Customers of Agent’s security interest in the Accounts and instruct such
Customers to pay such Accounts to one of the bank accounts listed on
Item
14 of the Addendum.
All of
each Borrower’s books and records concerning Accounts and a copy of each
Borrower’s general ledger will be maintained at the address of Borrowers’ chief
executive office set forth on Item
11
of the Addendum.
All
Accounts will be, in all material respects and except as otherwise indicated
in
writing to Agent, bona fide and
existing obligations of Customers arising out of the sale of goods and/or
the
rendering of services by Borrowers in the ordinary course of Borrowers’
business, owned by and owing to the applicable Borrower without defense,
setoff
or counterclaim, and will be subject to a perfected, first-priority security
interest in Agent’s favor and will be free and clear of all Liens other than
Permitted Liens.
(b) Inventory.
All
Inventory will at all times be located at one of the Inventory locations
set
forth on Item
11
of the Addendum
as the
current location of Borrowers’ chief executive office or a current location of
other Collateral set forth on the Addendum, will be subject to a perfected,
first-priority security interest in Agent’s favor and will be free and clear of
all Liens other than Permitted Liens. Sales of Inventory will be made in
compliance with all material requirements of applicable law.
26
(c) Equipment.
Borrowers will maintain all Equipment used or useful in Borrowers’ business in
good and workable condition, ordinary wear and tear excepted, and, except
for
Excluded Equipment only for the first 90 days after the Agreement Date, subject
to a perfected, first-priority security interest in Agent’s favor and free and
clear of all other Liens (other than Permitted Liens), at one of the locations
set forth on Item
11
of the Addendum
as the
current location of Borrowers’ chief executive office or a current location of
other Collateral set forth on the Addendum.
(d) Defense
of Title.
All
Collateral will at all times be owned by Borrowers, and Borrowers will defend
Borrowers’ title to the Collateral against the claims of third parties.
Borrowers will at all times keep accurate and complete records of the
Collateral.
(e) Perfection;
Further Assurances.
No
Borrower shall change its name, jurisdiction of organization, type of
organization or organizational identification number; provided, however,
that
Vanco may change its name to “Global Capacity Direct, LLC” so long as Borrowers
provide Agent with at least 5 Business Days’ notice of such name change.
Borrowers will give Agent at least 30 days’ prior written notice of any change
in the location of any Borrower’s principal place of business or chief executive
office, any change in the locations of any Borrower’s Inventory or Equipment and
any acquisition by any Borrower of any interest in real property. Each Borrower
will, at Borrowers’ expense, promptly execute and deliver from time to time at
Agent’s request and pay the costs of filing such additional financing
statements, mortgages, or other evidences of Liens as may be necessary or
desirable to perfect or continue perfection of Agent’s security interest in
Borrowers’ property or, at Agent’s request, to create and perfect a Lien on
newly acquired real property. Borrowers will use all reasonable efforts to
obtain from any landlord, warehouseman, or other third party operator of
premises on which any Collateral is located an acceptable Lien waiver or
subordination agreement in Agent’s favor with respect to such Collateral. In the
event that any Collateral, including proceeds, is evidenced by or consists
of
Negotiable Collateral, Borrowers shall, immediately upon written request
therefor from Agent, endorse and assign such Negotiable Collateral over to
Agent
and deliver actual physical possession of the Negotiable Collateral to Agent.
Borrowers shall at any time and from time to time take such steps as Agent
may
request for Agent (i) to obtain an acknowledgment, in form and substance
satisfactory to Agent, of any bailee having possession of any of the Collateral
that such bailee holds such Collateral for Agent, (ii)
to
obtain “control” of any investment property, deposit accounts, letter-of-credit
rights or chattel paper (including electronic chattel paper) in accordance
with
Article 9 of the UCC, with any agreements establishing control to be in form
and
substance satisfactory to Agent, (iii) to have Agent’s Lien noted on each
certificate of title evidencing any Collateral, and (iv)
otherwise to insure the continued perfection and priority of Agent’s security
interest in any of the Collateral and of the preservation of its rights therein.
Agent may, from time to time at Borrowers’ expense, obtain an appraisal on some
or all of the Collateral; provided, however, that Borrowers shall not be
required to reimburse Agent for more than one such appraisal per calendar
year
(it being understood that any such appraisal conducted while a Default exists
shall not count against such one-per-year limitation).
27
(f) Insurance.
Borrowers will obtain and maintain in full force and effect insurance covering
the Collateral against all customary risks to which the Collateral is exposed,
including loss, damage, fire, theft, and all other such customary risks,
in such
amounts, with such companies, under such policies and in such form as will
be
reasonably satisfactory to Agent, which policies will name Agent, for itself
and
each of the Lenders, as an additional insured and provide that loss thereunder
will be payable to Agent as Agent’s interests may appear upon a loss payee
endorsement reasonably acceptable to Agent. Borrowers will also obtain and
maintain in full force and effect liability insurance and such other types
of
insurance as Agent may reasonably require (including business interruption
insurance), in each case against such risks, in such amounts, with such
companies, under such policies and in such form as will be reasonably
satisfactory to Agent. All proceeds of any such insurance will be paid over
to
Agent directly, and Agent may apply such proceeds to payment of the Obligations,
whether or not due, in such order of application as Agent determines or,
in
Agent’s sole discretion, apply such proceeds, in whole or in part, to the
replacement, restoration or rebuilding of the lost or damaged property.
Borrowers will provide to Agent on or prior to the Agreement Date and from
time
to time thereafter, certificates showing such coverage in effect and, at
Agent’s
request, the underlying policies.
(h) Financing
Statements.
Agent
may at any time and from time to time file financing statements, continuation
statements and amendments thereto that describe the Collateral as “all assets”
of Borrowers or words of similar effect and which contain any other information
required by Part 5 of Article 9 of the UCC for the sufficiency or filing
office acceptance of any financing statement, continuation statement or
amendment, including whether the applicable Borrower is an organization,
the
type of organization and any organization identification number issued to
any
Borrower, and each Borrower hereby ratifies and re-authorizes any such financing
statement filed by Agent on or prior to the Agreement Date. Each Borrower
agrees
to furnish any such information to Agent promptly upon request. Any such
financing statements, continuation statements or amendments may be signed
by
Agent on behalf of any Borrower or filed by Agent without the signature of
any
Borrower and may be filed at any time in any jurisdiction. Each Borrower
acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement
naming any Borrower as the debtor and Agent as the secured party without
the
prior written consent of Agent, and each Borrower agrees that it shall not
do so
without the prior written consent of Agent.
| (i) |
Governmental
Approvals.
|
(i) Each
Borrower
shall
maintain in full force and effect all Governmental Approvals required by
applicable law in order to operate such Borrower’s
business, except for those Governmental Approvals, the absence of which could
not reasonably be expected to result in a Material Adverse Effect. Borrowers
shall
promptly notify Agent in the event that any such license or approval is revoked
or if any Borrower receives any notice from any licensing authority or other
governmental authority which alleges that any Borrower is or may be in violation
of any applicable law, rule, regulation or licensing
requirement.
28
(ii) Borrowers
shall, as described below, act immediately, upon notice of a Default, to
permit
Lender to realize the full value of foreclosure on the Collateral, including,
without limitation, by obtaining any and all regulatory approvals required
to do
so. For example, and without limitation of the foregoing, if the approval
of the
FCC or any state public service commission is required in connection with
any
action taken by the Agent or any Lender (including any of their respective
agents, officers, and attorneys) in the exercise of their rights and remedies
hereunder with respect to the Collateral, in order to facilitate the intended
realization of the value of the Collateral the Borrowers shall immediately
and
in no event later than three (3) Business Days following notice thereof take
such action as is requested by Lender or Agent to obtain each and any approval
required to allow a Lender the full benefit of the Collateral and Borrowers
shall diligently pursue the obtaining of such approvals until obtained in
accordance with the instructions of Agent or a Lender and applicable law.
For
avoidance of doubt, and by way of example, immediately upon notice thereof,
Borrowers shall or shall cause their counsel to prepare, or at the option
of
Agent or a Lender to cooperate with counsel of Agent or a Lender in preparing,
relevant applications to the FCC and each applicable state public service
commission to seek approval of a substantial transfer of control of the
applicable Borrower or its licenses and authorizations as instructed by Agent
or
a Lender, or to do any other action to protect for a Lender the value of
the
applicable Borrower’s licenses and authorizations. Without diminution of the
foregoing, the Borrowers shall, immediately following the occurrence of a
Default which is continuing, upon the written request and instructions of
the
Agent, execute and deliver (or cause the execution and delivery of) all relevant
applications, certificates, instruments, agreements and other documents to
the
FCC or the applicable state public service commission, or at the option of
Agent
or a Lender, to Agent or a Lender for filing with Borrowers’ cooperation, which
are required to be filed in connection with obtaining any required approval
of
the FCC or any state public service commission and take such other action
as the
Agent may request in connection therewith.
(j)
Conduct
of Business.
The
Borrowers shall conduct their business in substantially the same manner
as
currently conducted.
(k)
Bank
Accounts.
(i) The
Borrowers (other than Magenta) will maintain their principal accounts for
operation, administration, cash management and other deposit accounts for
the
conduct of the Borrowers’ business with the Depository Bank. On or prior to the
Agreement Date, the Borrowers will establish and maintain (so long as the
Obligations are outstanding), the Private Bank Account Control Agreement,
which
shall be applicable to all bank accounts of the Borrowers, other than the
bank
account maintained by Magenta in the United Kingdom and the account subject
to
the HSBC Account Control Agreement.
(ii)
Magenta
will maintain a single bank account (as disclosed to Agent on Item
14 of the Addendum)
with
HSBC Bank plc (the “Magenta
Account”).
On or
prior to the Agreement Date, Magenta will establish and maintain (so long
as the
Obligations are outstanding), the Magenta Three-Party Account Agreement,
pursuant to which all amounts deposited in the Magenta Account in excess
of
£75,000 shall automatically be transferred (on a daily basis if applicable)
to
the account of Borrowers identified in the Magenta Three-Party Account Agreement
which is subject to the HSBC Account Control Agreement.
29
(l) Employment
Agreements.
The
non-compete provisions contained in the Employment Agreements shall remain
in
full force and effect and shall not be amended, modified or waived without
the
Agent’s written consent.
8. Negative
Covenants.
So long
as any principal of or interest on the Term Loan or any other Obligation
(whether or not due) shall remain unpaid (other than inchoate indemnification
obligations and obligations under the warrant or the registration rights
agreement), the Borrowers shall comply with the covenants set forth in this
Section
8,
unless
the Required Lenders shall otherwise consent in writing.
(a) No
Merger or Disposition of Assets.
No
Borrower will merge or consolidate with any other Person, or purchase all
or
substantially all of the assets of any other Person, or sell, transfer, lease,
abandon, or otherwise dispose of a substantial portion of such Borrower’s assets
or any of the Collateral or any interest therein, except that, so long as
no
Default has occurred and is continuing, each Borrower may make Permitted
Dispositions.
(b) No
Debt or Liens; Taxes.
No
Borrower will obtain or attempt to obtain from any Person other than Agent
any
loans, advances, or other financial accommodations or other Indebtedness
of any
kind, nor will any Borrower enter into any direct or indirect guaranty of
any
obligation of another Person, other than Permitted Indebtedness. No Borrower
will permit any of its assets to be subject to any Lien other than Permitted
Liens. Each Borrower shall pay when due (or before the expiration of any
extension period) any tax or other assessment (including all required payments
or deposits with respect to withholding taxes), and Borrowers will, upon
request
by Agent, promptly furnish Agent with proof satisfactory to Agent that Borrowers
have made such payments and deposits.
(c) No
Distributions; Payments on Subordinated Debt.
No
Borrower will retire, repurchase or redeem any of such Borrower’s Stock in such
Borrower, nor declare or pay any dividend in cash or other property (other
than
additional shares of Stock) to any owner or holder of such Borrower’s Stock;
provided,
however,
that
any Borrower may pay cash dividends or distributions to any other Borrower
which
owns such Borrower’s Stock. No Borrower will refinance, repurchase, defease or
make any payment on any Subordinated Debt, other than payments expressly
permitted by the Debenture Intercreditor Agreement or subordination provisions
applicable to such Subordinated Debt.
(d) No
ERISA Liabilities.
Borrowers will make timely payments of all contributions required to meet
the
minimum funding standards for Borrowers’ employee benefit plans subject to the
Employee Retirement Income Security Act of 1974 (as amended, “ERISA”)
and
will promptly report to Agent the occurrence of any reportable event (as
defined
in ERISA) and any giving or receipt by any Borrower of any governmental notice
(other than routine requests for information) in respect of any such
plan.
30
(e) Transactions
with Affiliates.
No
Borrower will engage in any transaction with any of such Borrower’s or any other
Borrower’s officers, directors, employees or other Affiliates, except for an
“arms-length” transaction on terms no less favorable to such Borrower than would
be granted to such Borrower in a transaction with a Person who is not an
Affiliate of any Borrower, which transaction shall be approved by such
Borrower’s disinterested directors or managers and shall be disclosed in a
timely manner to Agent prior to the consummation of the
transaction.
(f) Loans/Investments.
No
Borrower will make any loans or advances to or extend any credit to any Person
except (i) the extension of trade credit to customers in the ordinary course
of
business; and (ii) Permitted Investments. No Borrower shall purchase, acquire
or
otherwise invest in any Person except Permitted Investments and investments
in
other Borrowers; provided,
however,
that
the aggregate amount of intercompany advances and other transfers to Magenta
by
the other Borrowers shall not exceed the actual cash expenses of Magenta,
which
such actual cash expenses shall be in the ordinary course and consistent
with
past practices of Magenta. Without limiting the generality of the foregoing,
no
Borrower shall create any new subsidiary or make loans to, transfer any money
or
other assets to or otherwise invest in any subsidiary unless such subsidiary
is
or becomes a Borrower hereunder pursuant to documentation acceptable to Agent
in
its reasonable discretion.
(g) Capital
Expenditures.
Borrowers shall not make or incur capital expenditures in excess of the amount
set forth on Item
21
of the Addendum
during
any fiscal year, determined for all Borrowers on a consolidated
basis.
(h) Compensation.
Borrowers shall not increase the total compensation paid to their officers
or
directors (or any of their relatives), including salaries, withdrawals, fees,
bonuses, commissions, drawing accounts and other payments, whether directly
or
indirectly, in money or otherwise, during any fiscal year of Borrowers in
an
aggregate amount for all such officers and directors in excess of the limit
specified in Item
22
of the Addendum.
(i) Amendments
of Documents.
No
Borrower
shall amend or modify (i) any Acquisition Document or
any
other note, instrument or agreement in connection with the Acquisition without
the prior written consent of Agent, (ii)
its
articles or certificate of incorporation, articles or certificate of
organization, by-laws, limited liability company agreement or other constituent
documents, or (iii) any Debenture Document or
any
other note, instrument or agreement in connection with any other Subordinated
Debt without the prior written consent of Agent; provided, however, that
Borrowers may amend the Debenture Documents without the consent of the Agent
to
the extent expressly permitted by the Debenture Intercreditor
Agreement.
(j) Capitalized
Leases.
The
Borrowers, taken as a whole, shall not incur greater than $500,000 in additional
Capitalized Lease Obligations after the date hereof; provided further,
that
such Capitalized Lease Obligations shall be (i) on terms and conditions
consistent with current market conditions for equipment of that kind, and
(ii)
solely for the purchase and/or lease of new pieces of or as a replacement
of
existing equipment.
(k) Use
of Proceeds.
Borrowers shall not use the proceeds of the Term Loan for any purpose other
than
(i) consummating the Acquisition, and (ii) general working capital
purposes.
31
(l) BT
Receivable.
Borrowers
shall not compromise or settle any dispute, provide a discount, write-off,
or
waive collection of any part of the BT Receivable without
the prior written consent of the Agent.
| 9. |
Reporting
and Information.
|
(a) Financial
Statements Borrowers
will
submit to Agent as soon as available, and in any case not later than thirty
(30)
days after the end of each month, a balance sheet and a detailed statement
of
profit and loss by business unit and a statement of cash flows, in each case
prepared in accordance with GAAP on a consolidated (and, if requested by
Agent,
consolidating) basis, certified by the chief financial or accounting officer
of
Parent as presenting fairly, in accordance with GAAP, Borrowers’
financial condition as of the last day of such month and Borrowers’
results of operations for such month and for the portion of Borrowers’
fiscal
year ending with such month. Borrowers
will
also submit to Agent annual financial statements within 120 days after the
end
of each fiscal year, including a balance sheet and the related statement
of
profit and loss and stockholders’ equity, and a statement of cash flows, in each
case prepared in accordance with the requirements set forth on Item
23
of the Addendum
on a
consolidated (and, if requested by Agent, consolidating) basis. Borrowers
will
also submit to Agent annually at least 60 days prior to Borrowers’
fiscal
year end forecasted financial statements for the upcoming fiscal year,
containing a projected balance sheet and profit and loss statement on a
consolidated (and, if requested by Agent, consolidating) basis. Together
with
each monthly and annual financial statement, Borrowers
will
deliver to Agent the certification of the chief financial or accounting officer
of Parent in the form of Exhibit
B
attached
hereto to the effect that Borrowers
are in
compliance with the terms and conditions of this Agreement, and setting forth
in
detail the calculation of all financial covenants, or, if Borrowers
are not
in compliance, describing the nature of any noncompliance and the steps
Borrowers
are
taking or propose to take to remedy the same. Borrowers shall, promptly,
upon
request, furnish such other information concerning the condition, operations,
financial or otherwise, of any Borrower as the Agent may from time to time
request.
(b) Collateral
Reports.
Borrowers shall deliver to Agent within fifteen (15) days after the end of
each
month a report, reflecting the status as of the end of each month or for
the
month then ended, as the case may be, and certified by the Chief Executive
Officer or Chief Financial Officer of Parent as being true and correct in
all
material respects, containing (i)
a
current detailed aging, by total and by Customer, of Borrowers’ Accounts,
(ii)
a
current detailed aging, by total and by vendor, of Borrowers’ accounts payable,
(iii)
a
schedule detailing loans and intercompany transfers to Magenta from any other
Borrower, and (iv)
a true,
correct and complete copy of each new material contract entered into by any
Borrower for the sale, lease or other provision of goods or services by such
Borrower and for the lease or purchase of circuit capacity by any Borrower,
all
of which shall be set forth in a form and shall contain such information
as is
reasonably acceptable to Agent. At Agent’s request, Borrowers shall deliver such
information more or less often than described above and such other information
with respect to the Collateral, Borrowers or Borrowers’ business or financial
condition as Agent may reasonably request from time to time.
(c) Tax
Returns.
Borrowers shall provide Agent with a copy of all federal tax returns of each
Borrower no later than seven days after the earlier of (i) the filing date
thereof, or (ii) the deadline for filing with respect thereto (giving effect
to
any applicable extension in accordance with applicable law).
32
(d) SEC
Filings.
Borrowers shall provide Agent with a copy of all reports and other filings
made
by Borrowers with the Securities and Exchange Commission no later than seven
days after the earlier of (i) the filing date thereof, or (ii) the deadline
for
filing with respect thereto (giving effect to any applicable extension in
accordance with applicable law).
(e) BT
Receivable.
Borrowers will submit to Agent, promptly, and in any case not later than
(i) one
(1) day following each receipt of a BT Receivable Payment and (ii) two (2)
Business Days after the end of each month, a reconciliation and report showing
any amounts collected with respect of the BT Receivable, the amount left
uncollected and, any issues, disputes and offsets with respect to collection
of
the BT Receivable, and such additional information with respect thereto as
requested by Agent.
(f) Monthly
Recurring Circuit Revenue and Recurring Circuit Margin.
Borrowers will submit to Agent, as soon as available, and in any case not
later
than thirty (30) days after the end of each month, a summary of Monthly
Recurring Circuit Revenue and Recurring Circuit Margin for the Strategic
Sourcing Business Unit.
(g) Other
Information.
Borrowers will notify Agent as promptly as possible of any Default, any receipt
by any Borrower of notice from any governmental authority that any Borrower
has
or may have violated any law, rule or regulation applicable to any Borrower
or
the terms or conditions of any permit or license any Borrower holds or is
required to hold in connection with the conduct of such Borrower’s business, any
amendment to any Borrower’s constituent documents and any change in any
Borrower’s senior management, and the commencement of any material litigation,
claim or action by or against any Borrower.
| 10. |
Inspection
Rights; Expenses; Etc.
|
(a) Field
Examinations; Inspections.
Agent
and any of the Lenders, shall have the right without hindrance or delay to
conduct field examinations to inspect the Collateral, all other assets of
Borrowers or any portion thereof, Borrowers’ books and records and all other
aspects of Borrowers’ business, and to examine and make copies of Borrowers’
records, the Collateral and all other assets of Borrowers or any portion
thereof, in each case wherever located, and Agent and any of the Lenders
may
enter upon each Borrower’s premises for such purposes, without notice, during
business hours. Borrowers will assist Agent and any of the Lenders in whatever
way necessary to make each such examination, and Borrowers agree to pay for
such
examinations as more fully described on Item
24
of the Addendum.
Agent
and any of the Lenders may discuss each Borrower’s financial condition with
Borrowers’ independent accountants without liability to Agent or any of the
Lenders or such accountants. Agent and any of the Lenders shall have full
access
to all records available to Borrowers from any credit reporting service,
bureau
or similar service and shall have the right to examine and make copies of
any
such records. Agent and any of the Lenders may exhibit a copy of this Agreement
to such service and such service shall be entitled to rely on the provisions
hereof in providing access to Agent and any of the Lenders as provided
herein.
33
(b) Performance
by Agent.
Agent
may, from time to time at Agent’s option, perform any agreement of any Borrower
hereunder which such Borrower fails to perform and take any other action
which
Agent deems necessary for the maintenance or preservation of any of the
Collateral or Agent’s interest therein, and Borrowers agree to reimburse Agent
immediately on demand for all of Agent’s expenses in connection with the
foregoing (including, without being limited to, reasonable fees and expenses
of
legal counsel), together with interest thereon at the default rate of interest
provided for herein from the date any such expense is incurred until reimbursed
by Borrowers.
11. Rights
of Setoff, Application of Payments, Etc.
Agent
and any of the Lenders will be entitled to hold or set off all sums and all
other property of any Borrower at any time to any Borrower’s credit or in
Agent’s or any Lender’s possession (or the possession of any of Agent’s or
Lender’s Affiliates) by pledge or otherwise or upon or in which Agent or any of
the Lenders may have a Lien, as security for any and all of the Obligations.
Recourse to the Collateral or other security for the Obligations will not
at any
time be required and each Borrower hereby waives any right of marshalling
that
such Borrower may have. Each Borrower’s obligation to pay or repay the
Obligations is unconditional. Borrowers agree that, while a Default exists,
Agent or any of the Lenders may take such action with regard to the custody
and
collection of Accounts as Agent or any of the Lenders may deem necessary.
Each
Borrower agrees that failure to take any action with regard to any given
Account
will not be unreasonable until and unless Agent receives a written request
for
specific action from Borrowers’ Agent with regard thereto and fails to respond
thereto within a commercially reasonable time. Each Borrower irrevocably
waives
the right to direct the application of any and all payments and collections
at
any time or times hereafter received by Agent or any of the Lenders from
or on
behalf of any Borrower, and each Borrower hereby irrevocably agrees that
Agent
or any of the Lenders shall have the continuing exclusive right to apply
and
reapply any and all such payments and collections received at any time or
times
hereafter by Agent or any of the Lenders against the Obligations, in such
manner
and in such order as the Lenders may deem advisable.
12. Attorney-in-Fact.
Each
Borrower hereby appoints and constitutes Agent as such Borrower’s
attorney-in-fact: (a) at any time, (i) to endorse such Borrower’s name upon any
notes, acceptances, checks, drafts, money orders, and other evidences of
payment
that come into Agent’s possession and to deposit or otherwise collect the same;
(ii) to send verifications of Accounts to Customers; and (iii) to execute
in
such Borrower’s name any financing statements, affidavits and notices with
regard to any and all Lien rights; and (b) while any Default exists, (i)
to
receive, open, and dispose of all mail addressed to such Borrower; (ii) to
notify the postal authorities to change the address and delivery of mail
addressed to such Borrower to such address as Agent may designate; (iii)
to sign
such Borrower’s name on any invoice or xxxx of lading relating to the
Collateral, on drafts against Customers, and notices to Customers; (iv) to
sign
any agreement or certificate in connection with any insurance policy of any
Borrower (including all documentation to receive benefit payments thereunder
and
to cancel such insurance policy and receive a refund of the unearned premium
with respect thereto); and (v) to do all other acts and things necessary
to
carry out this Agreement. All acts of said attorney-in-fact are hereby
authorized, ratified and approved, and said attorney-in-fact will not be
liable
for any errors or mistake of fact or law. This power, being coupled with
an
interest, is irrevocable while any of the Obligations remain unpaid or Agent
has
any commitment to Borrowers under this Agreement or otherwise (other than
inchoate indemnification obligations, unless Agent determines in its reasonable
discretion that any such indemnification obligations are likely to become
actual
obligations and other than inchoate indemnification obligations and obligations
under the warrant and the registration rights agreement).
34
| 13. |
Defaults
and Remedies.
|
35
(b) Remedies.
If a
Default occurs and is continuing, in each case without demand or notice to
any
Borrower, any other Credit Party or any other Person (unless such notice
is
expressly required hereunder or under applicable law), the Required Lenders
may
authorize and instruct the Agent to do any one of the following on behalf
of the
Lenders, all of which such actions are, subject to any applicable law to
the
extent any such law may not be waived, permitted under this
Agreement:
(i) declare
the entire principal amount of the Term Loan outstanding hereunder, all interest
thereon, any unpaid fees and all other Obligations of any kind or nature
to be,
and thereupon the same will immediately become, due and payable in full;
and, in
the event of a Default described under clause (vi) of Section
13(a),
such
termination and acceleration shall automatically occur without any notice,
demand or presentment of any kind.
(ii) notify
Customers that the Accounts have been assigned to Agent and that Agent has
a
security interest therein, collect them directly, and charge the collection
costs and expenses to Borrowers’ loan account.
(iii) exercise
any right or remedy available to any Borrower under one or more contracts
of
such Borrower and sell or otherwise dispose of any such contract.
(iv) (A)
exercise any of its remedies under any other Loan Document, (B) apply any
cash
collateral to the Obligations (without limiting the foregoing, Agent may
instruct any bank or other financial institution holding any cash, certificate
of deposit or other Collateral to pay over such Collateral to Agent), and
(C)
draw on any letter of credit issued for the benefit of Agent in connection
with
this Agreement or any other Loan Document and apply the proceeds thereof
to the
Obligations.
36
(v) make
such
payments and do such acts as Agent considers necessary or reasonable to protect
its security interest in the Collateral. Borrowers authorize Agent or any
of the
Lenders to enter each premises where any Collateral is located, take and
maintain possession of the Collateral, or any part of it, and to pay, purchase,
contest or compromise any Lien which in Agent’s opinion appears to be prior or
superior to its security interest and to pay all expenses incurred in connection
therewith.
(vi) ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale and sell the Collateral. Any
such
sale may be either a public or private sale, or both, by way of one or more
contracts or transactions, for cash or on terms. It is not necessary that
the
Collateral be present at any such sale.
(vii) without
regard to any waste, adequacy of the security or solvency of any Borrower,
apply
for the appointment of a receiver of the Collateral, to which appointment
each
Borrower hereby consents, whether or not foreclosure or repossession proceedings
have been commenced hereunder or under any other Loan Document and whether
or
not a foreclosure sale or secured party sale has occurred.
(viii) cancel
any insurance policy of any Borrower in exchange for a refund of the unearned
premium with respect thereto, and each Borrower hereby authorizes any insurance
company which has issued any such policy to make such payment directly to
Agent
for application to the Obligations;
(ix) exercise
any of the remedies available to Agent as a secured party under the UCC as
in
effect in any applicable jurisdiction, or otherwise available to Agent under
applicable law. Borrowers agree, upon demand by Agent or any of the Lenders,
while a Default exists, to cease the sale or other disposition of the
Collateral, except with Agent’s prior written consent, and to assemble at
Borrowers’ expense all the Collateral at a convenient place acceptable to Agent.
Agent may charge to Borrowers’ loan account and Borrowers will pay Agent upon
demand all costs and expenses, including reasonable attorneys’ fees (including
fees of attorneys that are regular salaried employees of Agent or any of
its
Affiliates), in connection with: (A) the liquidation of any Collateral; (B)
obtaining or enforcing payment of the Obligations; (C) the settlement,
adjustment, compromise, or litigation of Customer disputes; or (D) the
prosecution or defense of any action or proceeding either against Agent or
against any Borrower concerning any matter growing out of or in connection
with
this Agreement and/or any Collateral and/or any Obligations. If at any time
Agent pays any state, city, local, federal, or other tax or levy attributable
to
the Collateral (excluding taxes on income realized by Agent), Borrowers will
repay to Agent the amount of tax so paid by Agent. Borrowers agree that Agent
may apply any proceeds from disposition of the Collateral first to satisfy
obligations secured by Liens prior to Agent’s security interest. Borrowers will
remain liable and will pay on demand any deficiencies arising upon the
liquidation of any Collateral held by Agent or any of the
Lenders.
37
(c) Notices.
If any
notice of intended disposition of the Collateral or of any other act by Agent
is
required by law or court order and a specific time period is not stated therein,
such notice, if given five (5) Business Days before such disposition or act,
in
accordance with the provisions of Section
16(a),
will be
deemed reasonably and properly given.
(d) License.
Each
Borrower hereby grants to Agent a license or other right to use, without
charge,
such Borrower’s labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks and advertising matter, or any property
of a
similar nature, as it pertains to the Collateral, in completing production
of,
advertising for sale and selling any Collateral, and each Borrower agrees
that
all of its rights under all licenses and all franchise agreements shall inure
to
Agent’s benefit.
(e) Remedies
Cumulative.
Agent’s
and any Lender’s rights and remedies under this Agreement and all other Loan
Documents shall be cumulative. Agent and any of the Lenders shall have all
other
rights and remedies not inconsistent herewith as provided under the UCC,
by law,
or in equity. No exercise by Agent or any of the Lenders of one right or
remedy
shall be deemed an election, and no waiver by Agent or any of the Lenders
of any
default on Borrowers’ part shall be deemed a continuing waiver. No delay by
Agent or any of the Lenders shall constitute a waiver, election or acquiescence
by it.
| 14. |
Agent.
|
(a) Appointment.
Each
Lender hereby irrevocably appoints and authorizes the Agent to perform the
duties of the Agent as set forth in this Agreement including: (i) to receive
on
behalf of each Lender any payment of principal of or interest on the Term
Loan
outstanding hereunder and all other amounts accrued hereunder for the account
of
the Lenders and paid to the Agent, and, subject to Section
2
of this
Agreement, to distribute promptly to each Lender its Pro Rata Share of all
payments so received; (ii) to distribute to each Lender copies of all material
notices and agreements received by the Agent and not required to be delivered
to
each Lender pursuant to the terms of this Agreement, provided that the Agent
shall not have any liability to the Lenders for the Agent's inadvertent failure
to distribute any such notices or agreements to the Lenders; (iii) to maintain,
in accordance with its customary business practices, ledgers and records
reflecting the status of the Obligations, the Term Loan, and related matters
and
to maintain, in accordance with its customary business practices, ledgers
and
records reflecting the status of the Collateral and related matters; (iv)
to
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to this Agreement or any
other
Loan Document; (v) to make the Term Loan and Agent Advances, for the Agent
or on
behalf of the applicable Lenders as provided in this Agreement or any other
Loan
Document; (vi) to perform, exercise, and enforce any and all other rights
and
remedies of the Lenders with respect to the Credit Parties, the Obligations,
or
otherwise related to any of same to the extent reasonably incidental to the
exercise by the Agent of the rights and remedies specifically authorized
to be
exercised by the Agent by the terms of this Agreement or any other Loan
Document; (vii) to incur and pay such fees necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to this
Agreement or any other Loan Document; and (viii) subject to Section
14(c)
of this
Agreement, to take such action as the Agent deems appropriate on its behalf
to
administer the Term Loan and the Loan Documents and to exercise such other
powers delegated to the Agent by the terms hereof or the other Loan Documents
(including, without limitation, the power to give or to refuse to give notices,
waivers, consents, approvals and instructions and the power to make or to
refuse
to make determinations and calculations) together with such powers as are
reasonably incidental thereto to carry out the purposes hereof and thereof.
As
to any matters not expressly provided for by this Agreement and the other
Loan
Documents (including, without limitation, enforcement or collection of the
Term
Loan), the Agent shall not be required to exercise any discretion or take
any
action, but shall be required to act or to refrain from acting (and shall
be
fully protected in so acting or refraining from acting) upon the instructions
of
the Required Lenders, and such instructions of the Required Lenders shall
be
binding upon all Lenders and all makers of the Term Loan; provided,
however,
that
the Agent shall not be required to take any action which, in the reasonable
opinion of the Agent, exposes the Agent to liability or which is contrary
to
this Agreement or any other Loan Document or applicable law.
38
(b) Nature
of Duties.
The
Agent
shall have no duties or responsibilities except those expressly set forth
in
this Agreement or in the other Loan Documents. The duties of the Agent shall
be
mechanical and administrative in nature. The Agent shall not have by reason
of
this Agreement or any other Loan Document a fiduciary relationship in respect
of
any Lender. Nothing in this Agreement or any other Loan Document, express
or
implied, is intended to or shall be construed to impose upon the Agent any
obligations in respect of this Agreement or any other Loan Document except
as
expressly set forth herein or therein. Each Lender shall make its own
independent investigation of the financial condition and affairs of the Credit
Parties in connection with the making and the continuance of the Term Loan
hereunder and shall make its own appraisal of the creditworthiness of the
Credit
Parties and the value of the Collateral, and the Agent shall have no duty
or
responsibility, either initially or on a continuing basis, to provide any
Lender
with any credit or other information with respect thereto, whether coming
into
its possession before the Term Loan hereunder or at any time or times
thereafter, provided that, upon the reasonable request of a Lender, the Agent
shall provide to such Lender any documents or reports delivered to the Agent
by
the Credit Parties pursuant to the terms of this Agreement or any other Loan
Document. If the Agent seeks the consent or approval of the Required Lenders
to
the taking or refraining from taking any action hereunder, the Agent shall
send
notice thereof to each Lender. The Agent shall promptly notify each Lender
any
time that the Required Lenders have instructed the Agent to act or refrain
from
acting pursuant hereto.
(c) Rights,
Exculpation, Etc. The
Agent
and its directors, officers, agents or employees shall not be liable for
any
action taken or omitted to be taken by them under or in connection with this
Agreement or the other Loan Documents, except for their own gross negligence
or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction. Without limiting the generality of the foregoing, the Agent
(i)
may treat the payee of the Term Loan as the owner thereof until the Agent
receives written notice of the assignment or transfer thereof, pursuant to
Section
16(f)
hereof,
signed by such payee and in form satisfactory to the Agent; (ii) may consult
with legal counsel (including, without limitation, counsel to the Agent or
counsel to the Credit Parties), independent public accountants, and other
experts selected by any of them and shall not be liable for any action taken
or
omitted to be taken in good faith by any of them in accordance with the advice
of such counselor experts; (iii) make no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements,
certificates, warranties or representations made in or in connection with
this
Agreement or the other Loan Documents; (iv) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of
any
Person, the existence or possible existence of any Default, or to inspect
the
Collateral or other property (including, without limitation, the books and
records) of any Person; (v) shall not be responsible to any Lender for the
due
execution, legality, validity, enforceability, genuineness, sufficiency or
value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (vi) shall not be deemed
to
have made any representation or warranty regarding the existence, value or
collectibility of the Collateral, the existence, priority or perfection of
the
Agent's Lien thereon, or any certificate prepared by any Borrower in connection
therewith, nor shall the Agent be responsible or liable to the Lenders for
any
failure to monitor or maintain any portion of the Collateral. The Agent shall
not be liable for any apportionment or distribution of payments made in good
faith, and if any such apportionment or distribution is subsequently determined
to have been made in error the sole recourse of any Lender to whom payment
was
due but not made, shall be to recover from other Lenders any payment in excess
of the amount which they are determined to be entitled. The Agent may at
any
time request instructions from the Lenders with respect to any actions or
approvals which by the terms of this Agreement or of any of the other Loan
Documents the Agent is permitted or required to take or to grant, and if
such
instructions are promptly requested, the Agent shall be absolutely entitled
to
refrain from taking any action or to withhold any approval under any of the
Loan
Documents until it shall have received such instructions from the Required
Lenders. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting under this Agreement or any of the other Loan Documents
in accordance with the instructions of the Required Lenders.
39
(d) Reliance. The
Agent
shall be entitled to rely upon any written notices, statements, certificates,
orders or other documents or any telephone message believed by it in good
faith
to be genuine and correct and to have been signed, sent or made by the proper
Person, and with respect to all matters pertaining to this Agreement or any
of
the other Loan Documents and its duties hereunder or thereunder, upon advice
of
counsel selected by it.
(e) Indemnification.
To
the
extent that the Agent is hot reimbursed and indemnified by any Credit Party,
the
Lenders will reimburse and indemnify the Agent from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits,
costs, expenses, advances or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against the Agent in any
way
relating to or arising out of this Agreement or any of the other Loan Documents
or any action taken or omitted by the Agent under this Agreement or any of
the
other Loan Documents, in proportion to each Lender's Pro Rata Share, including,
without limitation, advances and disbursements made pursuant to Section
14(h);
provided,
however,
that no
Lender shall be liable for any portion of such liabilities, obligations,
losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances
or
disbursements for which there has been a final judicial determination that
such
liability resulted from the Agent's gross negligence or willful misconduct,
as
determined by a final judgment of a court of competent jurisdiction. The
obligations of the Lenders under this Section
14(e)
shall
survive the payment in full of the Term Loan and the termination of this
Agreement.
40
(f) Agent
Individually.
With
respect to its Pro Rata Share of the Total Commitment hereunder and the Term
Loan made by it, the Agent shall have and may exercise the same rights and
powers hereunder and is subject to the same obligations and liabilities as
and
to the extent set forth herein for any other Lender or maker of the Term
Loan.
The terms “Lenders” or “Required Lenders” or any similar terms shall, unless the
context clearly otherwise indicates, include the Agent in its individual
capacity as a Lender or one of the Required Lenders. The Agent and its
Affiliates may accept deposits from, lend money to, and generally engage
in any
kind of banking, trust or other business with the Borrowers as if it were
not
acting as the Agent pursuant hereto without any duty to account to the other
Lenders.
(g) Successor
Agent.
(i)
The
Agent
may resign from the performance of all its functions and duties hereunder
and
under the other Loan Documents at any time by giving at least 30 Business
Days'
prior written notice to the Borrowers and each Lender. Such resignation shall
take effect upon the acceptance by a successor Agent of appointment pursuant
to
clauses (ii) and (iii) below or as otherwise provided below.
(ii)
Upon
any
such notice of resignation, the Required Lenders shall appoint a successor
Agent. Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested
with
all the rights, powers, privileges and duties of the Agent, and the Agent
shall
be discharged from its duties and obligations under this Agreement and the
other
Loan Documents. After the Agent's resignation hereunder as the Agent, the
provisions of this Paragraph
14
shall
inure to its benefit as to any actions taken or omitted to be taken by it
while
it was the Agent under this Agreement and the other Loan Documents.
(iii)
If
a
successor Agent shall not have been so appointed within said 30 Business
Day
period, the Agent shall then appoint a successor Agent who shall serve as
the
Agent until such time, if any, as the Required Lenders appoint a successor
Agent
as provided above
(h) Collateral
Matters.
(i)
The
Agent may from time to time make such disbursements and advances (“Agent
Advances”)
which
the Agent, in its sole discretion, deems necessary or desirable to preserve,
protect, prepare for sale or lease or dispose of the Collateral or any portion
thereof, to enhance the likelihood or maximize the amount of repayment by
the
Borrower of the Term Loan and other Obligations or to pay any other amount
chargeable to the Borrowers pursuant to the terms of this Agreement, including,
without limitation, costs, fees and expenses as described in Section
16(j).
The
Agent Advances shall be repayable on demand and be secured by the Collateral
and
shall bear interest at a rate per annum equal to the rate of interest then
applicable to the Term Loan. The Agent Advances shall constitute Obligations
hereunder. The Agent shall notify each Lender and the Borrowers in writing
of
each such Agent Advance, which notice shall include a description of the
purpose
of such Agent Advance. Without limitation to its obligations pursuant to
Section
14(e),
each
Lender agrees that it shall make available to the Agent, upon the Agent's
demand, in Dollars in immediately available funds, the amount equal to such
Lender's Pro Rata Share of each such Agent Advance. If such funds are not
made
available to the Agent by such Lender, the Agent shall be entitled to recover
such funds on demand from such Lender, together with interest thereon for
each
day from the date such payment was due until the date such amount is paid
to the
Agent at the Default Rate.
41
(ii)
The
Lenders hereby irrevocably authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral upon termination of the Total Commitment and payment and satisfaction
of the Term Loan and all other Obligations which have matured and which the
Agent has been notified in writing are then due and payable; or constituting
property being sold or disposed of in the ordinary course of Borrower's or
any
of its Subsidiaries' business or otherwise in compliance with the terms of
this
Agreement and the other Loan Documents; or constituting property in which
neither Borrowers nor any of their Subsidiaries owned any interest at the
time
the Lien was granted or any time thereafter; or if approved, authorized or
ratified in writing by the Lenders. Upon request by the Agent at any time,
the
Lenders will confirm in writing the Agent's authority to release particular
types or items of Collateral pursuant to this Section
14(h)(i).
(iii)
Without in any manner limiting the Agent's authority to act without any specific
or further authorization or consent by the Lenders (as set forth in Section
14(h(ii)),
each
Lender agrees to confirm in writing, upon request by the Agent, the authority
to
release Collateral conferred upon the Agent under Section
14(h)(ii).
Upon
receipt by the Agent of confirmation from the Lenders of its authority to
release any particular item or types of Collateral, and upon prior written
request by any Credit Party, the Agent shall (and is hereby irrevocably
authorized by the Lenders to) execute such documents as may be necessary
to
evidence the release of the Liens granted to the Agent for the benefit of
the
Agent and the Lenders upon such Collateral; provided,
however,
that
(i) the Agent shall not be required to execute any such document on terms
which,
in the Agent's opinion, would expose the Agent to liability or create any
obligations or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Lien upon (or obligations
of
any Credit Party in respect of) all interests in the Collateral retained
by
Borrowers or any of their Subsidiaries.
(iv)
The
Agent shall have no obligation whatsoever to any Lender to assure that the
Collateral exists or is owned by the Credit Parties or is cared for, protected
or insured or has been encumbered or that the Lien granted to the Agent pursuant
to this Agreement or any other Loan Document has been properly or sufficiently
or lawfully created, perfected, protected or enforced or is entitled to any
particular priority, or to exercise at all or in any particular manner or
under
any duty of care, disclosure or fidelity, or to continue exercising, any
of the
rights, authorities and powers granted or available to the Agent in this
Section
14(h)
or in
any other Loan Document, it being understood and agreed that in respect of
the
Collateral, or any act, omission or event related thereto, the Agent may
act in
any manner it may deem appropriate, in its sole discretion, given the Agent's
own interest in the Collateral as one of the Lenders and that the Agent shall
have no duty or liability whatsoever to any other Lender, except as otherwise
provided herein.
42
(i) Agency
for Perfection.
Each
Lender hereby appoints the Agent and each other Lender as agent and bailee
for
the purpose of perfecting the security interests in and liens upon the
Collateral in assets which, in accordance with Article 9 of the UCC, can
be
perfected only by possession or control (or where the security interest of
a
secured party with possession or control has priority over the security interest
of another secured party) and the Agent and each Lender hereby acknowledges
that
it holds possession of or otherwise controls any such Collateral for the
benefit
of the Agent and the Lenders as secured party. Should any Lender obtain
possession or control of any such Collateral, such Lender shall notify the
Agent
thereof, and, promptly upon the Agent's request therefor shall deliver such
Collateral to the Agent or in accordance with the Agent's instructions.
In
addition,
the Agent shall also have the power and authority hereunder to appoint such
other sub-agents as may be necessary or required under applicable state law
or
otherwise to perform its duties and enforce its rights with respect to the
Collateral and under the Loan Documents. Borrowers by their execution and
delivery of this Agreement hereby consents to the foregoing.
15. Indemnification.
(a) Borrowers
jointly and severally agree to defend, indemnify, and hold harmless Agent
and
Agent’s and any of the Lender’s participants, directors, officers, employees,
Affiliates, representatives, attorneys and agents (each an “Indemnified
Person”)
from
and against any and all penalties, fines, liabilities, damages, costs, or
expenses of whatever kind or nature asserted against any such Indemnified
Person, arising out of, or in any way related to this Agreement or any other
Loan Document, or the transactions contemplated hereby or thereby, including
by
reason of the violation of any law or regulation relating to the protection
of
the environment or the presence, generation, disposal, release, or threatened
release of any hazardous materials in connection with any Borrower’s business
on, at or from any property at any time owned or operated by any Borrower,
including, without limitation, reasonable attorneys’ and consultants’ fees,
investigation and laboratory fees, court costs, and litigation expenses actually
incurred. Without limiting the foregoing and for purposes other than Capstone
Investments, Borrowers represent and warrant that there has been no loan
broker
or investment banker involved in connection with the transactions contemplated
hereby, and Borrowers agree to indemnify and hold Agent and any of the Lenders
and their participants harmless from any claim of compensation payable to
any
loan broker or investment banker in connection with the transactions
contemplated hereby.
(b) All
payments by any Borrower hereunder or under any other Loan Document shall
be
made free and clear of and without deduction or withholding for any and all
taxes other than income taxes imposed on Agent or any of the Lenders
(“Indemnified
Taxes”),
unless such Taxes are required by law or the administration thereof to be
withheld or deducted. If any Borrower, Agent or Lender or any participant
is
required by applicable law to deduct or pay any Indemnified Taxes in respect
of
any payment by or on account of any obligation of a Borrower hereunder or
under
any other Loan Document, then, if requested by Agent, any Lender or any
participant, the sum payable shall be increased by that Borrower by such
amount
as is necessary so that after making or allowing for all required deductions
and
payments (including deductions and payments applicable to additional sums
payable under this Section), Agent and any of the Lenders and their participants
receive an amount equal to the sum Agent and any of the Lenders and such
participants would have received had no such deductions or payments been
required.
43
(c) Borrowers
shall indemnify Agent, the Lenders and their participants, within 5 days
after
written demand therefor, for the full amount of any Indemnified Taxes (including
Indemnified Taxes imposed or asserted on or attributable to amounts payable
under this Section) paid by Agent, any of the Lenders and their participants
and
any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes were correctly or
legally
imposed or asserted by the relevant governmental authority. A certificate
as to
the amount of such payment or liability delivered to Borrowers’ Agent by Agent
or any participant shall be conclusive absent manifest error.
(d) As
soon
as practicable after any payment of Indemnified Taxes by a Borrower to a
governmental authority, Borrowers’ Agent shall deliver to Agent the original or
a certified copy of a receipt issued by such governmental authority evidencing
such payment, a copy of the return reporting such payment or other evidence
of
such payment reasonably satisfactory to Agent.
(b) Amendments,
Etc.
No
amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent to any departure by any Credit Party therefrom,
shall
in any event be effective unless the same shall be in writing and signed
by the
Required Lenders or by the Agent with the consent of the Required Lenders,
and
then such waiver or consent shall be effective only in the specific instance
and
for the specific purpose for which given, provided,
however,
that no
amendment, waiver or consent shall (i) increase the Commitment of any Lender,
reduce the principal of, or interest on, the Term Loan payable to any Lender,
reduce the amount of any fee payable for the account of any Lender, or postpone
or extend any date fixed for any payment of principal of, or interest or
fees
on, the Term Loan payable to any Lender, in each case without the written
consent of any Lender affected thereby, (ii) increase the Total Commitment
without the written consent of each Lender, (iii) change the percentage of
the
Commitments or of the aggregate unpaid principal amount of the Term Loan
that is
required for the Lenders or any of them to take any action hereunder, (iv)
amend
the definition of “Required Lenders” or “Pro Rata Share”, (v) release all or a
substantial portion of the Collateral (except as otherwise provided in this
Agreement and the other Loan Documents) or subordinate any Lien granted in
favor
of the Agent for the benefit of the Lenders (except as otherwise provided
in
this Agreement and the other Loan Documents), or release the Borrower or
(vi)
amend, modify or waive this Section
16(b)
of this
Agreement, in each case, without the written consent of each Lender.
Notwithstanding the foregoing, no amendment, waiver or consent shall, unless
in
writing and signed by the Agent, affect the rights or duties of the Agent
(but
not in its capacity as a Lender) under this Agreement or the other Loan
Documents.
44
(c) No
Waiver.
No
waiver hereunder will be valid unless in writing signed by Required Lenders
(or
by Agent at the request of the Required Lenders) and then only to the extent
therein stated. No delay or failure on Agent’s or any Lender’s part in the
exercise of any right or remedy hereunder will operate as a waiver thereof
or of
Agent’s or any Lender’s right to exercise any other right or
remedy.
(d) Time
of Essence.
Time is
of the essence of this Agreement.
(e) Severability.
Wherever possible, each provision of this Agreement will be interpreted in
such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement will be prohibited by or invalid under applicable law,
such
provision will be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
(f) Assignments
and Participations.
(i)
This
Agreement and the other Loan Documents shall be binding upon and inure to
the
benefit of each Credit Party and the Agent and each Lender and their respective
successors and assigns; provided,
however,
that
none of the Credit Parties may assign or transfer any of its rights hereunder
without the prior written consent of each Lender and any such assignment
without
the Lenders' prior written consent shall be null and void.
(ii)
Each
Lender may assign to one or more other lenders or other entities all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and the Term Loan made by
it);
provided,
however,
that
(A) such assignment is in an amount which is at least $500,000 or a multiple
of
$100,000 in excess thereof (or the remainder of such Lender's Commitment)
(except such minimum amount shall not apply to an assignment by a Lender
to (x)
an Affiliate of such Lender or a Related Fund of such Lender or (y) a group
of
new Lenders, each of whom is an Affiliate or Related Fund of each other to
the
extent the aggregate amount to be assigned to all such new Lenders is at
least
$500,000 or a multiple of $100,000 in excess thereof), (B) the parties to
each
such assignment shall execute and deliver to the Agent, for its acceptance,
an
Assignment and Acceptance, and such parties shall deliver to the Agent a
processing and recordation fee of $5,000 (except the payment of such fee
shall
not be required in connection with an assignment by a Lender to an Affiliate
of
such Lender or Related Fund of such Lender), and (C) no written consent of
the
Agent shall be required in connection with any assignment by a Lender to
an
Affiliate of such Lender or a Related Fund of such Lender. Upon such execution,
delivery and acceptance, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least 3 Business
Days after the delivery thereof to the Agent (or such shorter period as shall
be
agreed to by the Agent and the parties to such assignment), (1) the assignee
thereunder shall become a “Lender” hereunder and, in addition to the rights and
obligations hereunder held by it immediately prior to such effective date,
have
the rights and obligations hereunder that have been assigned to it pursuant
to
such Assignment and Acceptance and (2) the assigning Lender thereunder shall,
to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease
to
be a party hereto). Notwithstanding anything contained to the contrary in
this
Section
16(f)(ii),
a
Lender may assign any or all of its rights under the Loan Documents to an
Affiliate of such Lender or a Related Fund of such Lender without delivering
an
Assignment and Acceptance to the Agent; provided, that (x) the Borrowers
and the
Agent may continue to deal solely and directly with such assigning Lender
in
connection with the interest so assigned until such Lender and its assignee
shall have executed and delivered an Assignment and Acceptance to the Agent
for
recordation and (y) the failure of such assigning Lender to deliver an
Assignment and Acceptance to the Agent or any other Person shall not affect
the
legality, validity or binding effect of such assignment.
45
(iii)
By
executing and delivering an Assignment and Acceptance, the assigning Lender
and
the assignee thereunder confirm to and agree with each other and the other
parties hereto as follows: (A) other than as provided in such Assignment
and
Acceptance, the assigning Lender makes no representation or warranty and
assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any other Loan Document or
the
execution, legality, validity, enforceability, genuineness, sufficiency or
value
of this Agreement or any other Loan Document furnished pursuant hereto; (B)
the
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Credit Party
or
any of its Subsidiaries or the performance or observance by any Credit Party
of
any of its obligations under this Agreement or any other Loan Document furnished
pursuant hereto; (C) such assignee confirms that it has received a copy of
this
Agreement and the other Loan Documents, together with such other documents
and
information it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (D) such assignee
will,
independently and without reliance upon the assigning Lender, the Agent or
any
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Loan Documents; (E) such assignee
appoints and authorizes the Agent to take such action as agent on its behalf
and
to exercise such powers under this Agreement and the other Loan Documents
as are
delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental hereto and thereto; and (F) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Loan Documents
are required to be performed by it as a Lender.
(iv)
The
Agent
shall, on behalf of the Borrowers, maintain, or cause to be maintained at
the
Payment Office, a copy of each Assignment and Acceptance delivered to and
accepted by it and a register (the “Register”)
for
the recordation of the names and addresses of the Lenders and the Commitments
of, and principal amount of the Term Loan (the “Registered
Loans”)
owing
to each Lender from time to time. Other than in connection with an assignment
by
a Lender to an Affiliate of such Lender or a Related Fund of such Lender,
the
entries in the Register shall be conclusive and binding for all purposes,
absent
manifest error, and the Borrowers, the Agent and the Lenders shall treat
each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection
by
the Borrowers and any Lender at any reasonable time and from time to time
upon
reasonable prior notice. In the case of any assignment by a Lender to an
Affiliate of such Lender or a Related Fund of such Lender, and which assignment
is not recorded in the Register, the assigning Lender shall maintain a register
comparable to the Register.
46
(v)
Upon
its
receipt of an Assignment and Acceptance executed by an assigning Lender and
an
assignee, together with any promissory notes subject to such assignment,
the
Agent shall, if the Agent consents to such assignment and if such Assignment
and
Acceptance has been completed (A) accept such Assignment and Acceptance and
(B)
record the information contained therein in the Register.
(vi) A
Registered Loan (and the registered note, if any, evidencing the same) may
be
assigned or sold in whole or in part only by registration of such assignment
or
sale on the Register (or in the case of any assignment by a Lender to an
Affiliate of such Lender or a Related Fund of such Lender, and which assignment
is not recorded in the Register, a register comparable to the Register) (and
each registered note shall expressly so provide). Any assignment or sale
of all
or part of such Registered Loan (and the registered note, if any, evidencing
the
same) may be effected only by registration of such assignment or sale on
the
Register (or in the case of any assignment by a Lender to an Affiliate of
such
Lender or a Related Fund of such Lender, and which assignment is not recorded
in
the Register, a register comparable to the Register), together with the
surrender of the registered note, if any, evidencing the same duly endorsed
by
(or accompanied by a written instrument of assignment or sale duly executed
by)
the holder of such registered note, whereupon, at the request of the designated
assignee(s) or transferee(s), one or more new registered notes in the same
aggregate principal amount shall be issued to the designated assignee(s)
or
transferee(s). Prior to the registration of assignment or sale of any Registered
Loan (and the registered note, if any, evidencing the same) on the Register,
the
Agent shall treat the Person in whose name such Registered Loan (and the
registered note, if any, evidencing the same) is registered as the owner
thereof
for the purpose of receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary.
(vii)
In
the
event that any Lender sells participations in a Registered Loan, such Lender
shall maintain a register on which it enters the name of all participants
in the
Registered Loans held by it (the “Participant
Register”).
A
Registered Loan (and the registered note, if any, evidencing the same) may
be
participated in whole or in part only by registration of such participation
on
the Participant Register (and each registered note shall expressly so provide).
Any participation of such Registered Loan (and the registered note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.
(viii)
Any
foreign Person who purchases or is assigned or participates in any portion
of
such Registered Loan shall comply with Section
2(o).
(ix)
Each
Lender may sell participations to one or more banks or other entities in
or to
all or a portion of its rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, all or a portion of
its
Commitments and the Term Loan made by it); provided, that (A) such Lender's
obligations under this Agreement (including without limitation, its Commitments
hereunder) and the other Loan Documents shall remain unchanged; (B) such
Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, and the Borrowers, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with
such
Lender's rights and obligations under this Agreement and the other Loan
Documents; and (C) a participant shall not be entitled to require such Lender
to
take or omit to take any action hereunder except (1) action directly effecting
an extension of the maturity dates or decrease in the principal amount of
the
Term Loan, (2) action directly effecting an extension of the due dates or
a
decrease in the rate of interest payable on the Term Loan or the fees payable
under this Agreement, or (3) actions directly effecting a release of all
or a
substantial portion of the Collateral or any Credit Party (except as set
forth
in Section
14(h)
of this
Agreement or any other Loan Document).
47
(g) Governing
Law; Submission to Jurisdiction, Service, Etc.
This
Agreement and the other Loan Documents shall be governed by and construed
in
accordance with the substantive laws (other than conflict of law provisions
and
principles, but including Section 5-1401 and Section 5-1402 of the General
Obligations Law) of the State of New York. Each Borrower hereby consents
to the
non-exclusive jurisdiction of any United States Federal Court sitting in
New
York, New York or any New York state court sitting in New York, New York
in any
action, suit or other proceeding arising out of or relating to this Agreement
or
any of the other Loan Documents, and each Borrower irrevocably agrees that
all
claims and demands in respect of any such action, suit or proceeding may
be
heard and determined in any such court and irrevocably waives any objection
it
may now or hereafter have as to the venue of any such action, suit or proceeding
brought in any such court or that such court is an inconvenient forum. Each
Borrower waives personal service of any and all process upon it and consents
that all such service of process may be made by registered mail (return receipt
requested) directed to Parent at Borrowers’ address for notices pursuant to this
Agreement, and service so made shall be deemed to be completed with respect
to
all Borrowers five (5) days after the same shall have been so deposited in
the
United States mails. Nothing herein shall limit the right of Agent or any
of the
Lenders to bring proceedings against any Borrower or any Affiliate of any
Borrower in the courts of any other jurisdiction. Any judicial proceeding
commenced by any Borrower against Agent or any of the Lenders or any other
holder of any Obligations, or any Affiliate of Agent or any of the Lenders
or
any other holder of any Obligations, involving, directly or indirectly, any
matter in any way arising out of, related to or connected with any Loan Document
shall be brought only in a United States Federal Court or New York state
court
sitting in New York, New York. Nothing in this Agreement shall be deemed
or
operate to affect the right of Agent or any of the Lenders to serve legal
process in any other manner permitted by law or to preclude the enforcement
by
Agent or any of the Lenders of any judgment or order obtained in such forum
or
the taking of any action under this Agreement or any other Loan Document
to
enforce same in any other appropriate forum or jurisdiction.
(h) Waiver
of Jury Trial.
TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWERS, EACH LENDER AND AGENT
HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, THE OBLIGATIONS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
OR
THEREBY OR ANY PARTY’S ACTIONS IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT HEREOF OR THEREOF. EACH BORROWER, EACH LENDER AND Agent ACKNOWLEDGE
THAT SUCH WAIVER IS MADE WITH FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE
OF
THE RIGHTS AND BENEFITS WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF
COUNSEL
OF ITS CHOOSING.
48
(i) Waiver
of Hearing.
EACH
BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES ALL RIGHTS
WHICH
SUCH BORROWER HAS UNDER APPLICABLE LAW TO NOTICE AND TO A JUDICIAL HEARING
PRIOR
TO THE ISSUANCE OF A WRIT OF POSSESSION ENTITLING AGENT, ANY OF THE LENDERS,
THEIR SUCCESSORS AND ASSIGNS TO POSSESSION OF THE COLLATERAL UPON A DEFAULT.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING AND WITHOUT LIMITING ANY
OTHER
RIGHT WHICH Agent OR ANY OF THE LENDERS MAY HAVE, EACH BORROWER CONSENTS
THAT,
IF Agent OR ANY OF THE LENDERS FILES A PETITION FOR AN IMMEDIATE WRIT OF
POSSESSION IN COMPLIANCE WITH APPLICABLE LAW AND THIS WAIVER OR A COPY HEREOF
IS
ALLEGED IN SUCH PETITION AND ATTACHED THERETO, THE COURT BEFORE WHICH SUCH
PETITION IS FILED MAY DISPENSE WITH ALL RIGHTS AND PROCEDURES HEREIN WAIVED
AND
MAY ISSUE FORTHWITH AN IMMEDIATE WRIT OF POSSESSION IN ACCORDANCE WITH
APPLICABLE LAW, WITHOUT THE NECESSITY OF AN ACCOMPANYING BOND TO THE EXTENT
OTHERWISE REQUIRED BY APPLICABLE LAW.
(j) Expenses.
Borrowers shall pay on demand all of Agent’s and any of the Lender’s costs and
expenses in connection with underwriting and performing due diligence with
respect to the transactions contemplated hereby and the preparation,
reproduction, execution, delivery, administration and enforcement of this
Agreement, including the reasonable fees and out-of-pocket expenses of Agent’s
and any of the Lender’s counsel, in each case whether incurred on, prior or
subsequent to the Agreement Date. In addition, Borrowers shall pay any and
all
stamp and other taxes and recording and filing fees payable in connection
with
the execution and delivery of all other instruments and documents to be
delivered hereunder. All provisions in this Agreement providing for the payment
or reimbursement of Agent’s or any of the Lender’s attorneys’ fees and expenses
include, without limitation, such fees and expenses incurred pursuant to
or in
connection with proceedings brought under 11 U.S.C., the Federal Bankruptcy
Code.
(k) Execution
in Counterparts; Execution by Fax or E-Mail; Waiver of
Acceptance.
This
Agreement may be executed in separate counterparts, all of which shall
constitute one and the same agreement. Delivery of an executed counterpart
of
this Agreement or any other Loan Document by facsimile or e-mail shall be
equally as effective as delivery of an original executed counterpart of this
Agreement or such other Loan Document. Any party delivering an executed
counterpart of this Agreement or any other Loan Document by facsimile or
e-mail
also shall deliver an original executed counterpart of this Agreement or
such
other Loan Document, but the failure to deliver an original executed counterpart
shall not affect the validity, enforceability, and binding effect of this
Agreement or such other Loan Document. To the fullest extent permitted by
applicable law, each Borrower waives notice of Agent’s and any of the Lender’s
acceptance of this Agreement and the other Loan Documents.
49
(l) No
Third-Party Beneficiaries.
Except
as expressly set forth herein, neither (i) any stockholder or owner of any
other
equity interest in any Borrower, (ii) any of Borrower’s employees or creditors
(other than Agent and any of the Lenders and their Affiliates), nor (iii)
any
other Person claiming by or through any Borrower shall be entitled to rely
on
this Agreement or have any rights, remedies or claims against Agent or any
of
the Lenders or any Affiliates of them under or in connection with this
Agreement.
(m) Entire
Agreement.
This
Agreement and the other Loan Documents embody the entire agreement and
understanding among Agent, the Lenders and Borrowers and supersede all prior
agreements and understandings relating to the subject matter
hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
50
IN
WITNESS WHEREOF, the undersigned have executed this Term Loan and Security
Agreement as of the day and year first above written.
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Borrowers:
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CAPITAL
GROWTH SYSTEMS, INC.
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By:
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Name:
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Title:
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GLOBAL
CAPACITY GROUP, INC.
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By:
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Name:
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Title:
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CENTREPATH,
INC.
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By:
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Name:
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Title:
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20/20
TECHNOLOGIES, INC.
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By:
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Name:
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Title:
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20/20
TECHNOLOGIES I, LLC
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By:
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Name:
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Title:
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NEXVU
TECHNOLOGIES, LLC
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By:
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Name:
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Title:
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FNS
2007, INC.
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By:
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Name:
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Title:
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CAPITAL
GROWTH ACQUISITION, INC.
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By:
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Name:
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Title:
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VANCO
DIRECT USA, LLC t/b/k/a GLOBAL CAPACITY DIRECT, LLC
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By:
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Name:
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Title:
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MAGENTA
NETLOGIC LIMITED
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By:
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Name:
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Title:
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52
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Agent
and Lender:
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ACF
CGS, L.L.C.
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By:
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Name:
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Title:
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